EXHIBIT 4(I)
TXU AUSTRALIA HOLDINGS (PARTNERSHIP) LIMITED
PARTNERSHIP
CREDIT WRAPPED AUD MEDIUM TERM NOTES
REIMBURSEMENT AGREEMENT
----------------------------------------------
TXU AUSTRALIA HOLDINGS (PARTNERSHIP) LIMITED
PARTNERSHIP
(ISSUER)
TXU AUSTRALIA HOLDINGS (AGP) PTY LTD
(GENERAL PARTNER)
TXU (NO. 8) PTY LTD
AND
TXU AUSTRALIA HOLDINGS PTY LTD
(GUARANTORS)
MBIA INSURANCE CORPORATION
(FINANCIAL GUARANTOR)
▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
The Chifley Tower
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇
Tel ▇▇ ▇ ▇▇▇▇ ▇▇▇▇
Fax ▇▇ ▇ ▇▇▇▇ ▇▇▇▇
(C)Copyright ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇ 2000
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
TABLE OF CONTENTS
1. DEFINITIONS AND INTERPRETATION 2
1.1 Definitions 2
1.2 Interpretation 21
1.3 Document or agreement 23
1.4 Determination, statement or certificate 23
1.5 Listing requirements included as law 23
1.6 Partnership actions 23
1.7 Headings 23
2. CONDITIONS PRECEDENT 24
3. REPRESENTATIONS AND WARRANTIES 25
3.1 Representations and warranties 25
3.2 Reliance on representations and warranties 30
3.3 Repetition 30
4. UNDERTAKINGS 30
4.1 General undertakings 30
4.2 Hedge Undertakings 37
4.3 Negative Undertakings 38
4.4 Financial Undertakings 43
4.5 Distributions 43
4.6 Term of undertakings 45
5. EVENTS OF DEFAULT 45
5.1 Events of Default 45
5.2 Consequences 50
6. INTEREST ON OVERDUE AMOUNTS 50
7. FEE 51
7.1 Fee 51
7.2 Claims Processing Fee 51
8. TAXATION 51
9. SUBROGATION AND REIMBURSEMENT OBLIGATIONS 52
9.1 Subrogation 52
9.2 Reimbursement 52
10. INDEMNITIES 52
11. CURRENCY INDEMNITY 53
11.1 General 53
11.2 Reimbursement 53
12. EXPENSES 53
PAGE (I)
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
13. STAMP DUTIES AND GST 54
13.1 Stamp duties and other Taxes 54
13.2 GST 54
14. SET-OFF 55
15. WAIVERS, REMEDIES CUMULATIVE 55
16. CONSENTS AND OPINIONS 56
17. SEVERABILITY OF PROVISIONS 56
18. SURVIVAL OF REPRESENTATIONS AND INDEMNITIES 56
19. MORATORIUM LEGISLATION 56
20. ASSIGNMENTS; REINSURANCE; THIRD PARTY RIGHTS 57
21. TERM 57
22. FURTHER ASSURANCES 58
23. CONFIDENTIALITY 58
23.1 Confidentiality 58
23.2 Permitted disclosure 58
23.3 Survival of obligation 59
24. NOTICES 59
25. OBLIGATIONS ABSOLUTE 60
26. LIMITATION OF LIABILITY 60
27. AUTHORISED OFFICERS 60
28. GOVERNING LAW AND JURISDICTION 61
29. AMENDMENTS 61
30. COUNTERPARTS 61
31. ACKNOWLEDGEMENTS 61
32. ENTIRE AGREEMENT 62
ANNEXURE A 65
Form of Financial Guarantee 65
ANNEXURE B 71
Verification Certificate 71
EXHIBIT A 74
Form of Deed of Common Terms 74
PAGE (II)
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
DATE September 2000
----------
PARTIES
----------
1. TXU AUSTRALIA HOLDINGS (PARTNERSHIP) LIMITED PARTNERSHIP (ABN 40 315
470 807) a limited partnership formed and registered under the
Partnership ▇▇▇ ▇▇▇▇ of Victoria (the ISSUER), the general partner
of which is:
TXU AUSTRALIA HOLDINGS (AGP) PTY LTD (ABN 16 086 014 931) having an
office at ▇▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ; and
the limited partners of which are: TXU AUSTRALIA (LP) ▇▇. ▇ ▇▇▇▇▇▇▇
(▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇), a company incorporated under the laws of England
and Wales and having its registered office at ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇; and TXU AUSTRALIA (LP) NO. 2
LIMITED (ARBN 086 406 724), a company incorporated under the laws of
England and Wales and having its registered office at ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇;
2. TXU AUSTRALIA HOLDINGS (AGP) PTY LTD (ABN 16 086 014 931) having an
office at ▇▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ (the
GENERAL PARTNER);
3. TXU (NO. 8) PTY LTD (ABN 15 085 235 776) (TXU8)and TXU
AUSTRALIA HOLDINGS PTY LTD (ABN 97 086 006 859)
(Holdco), each having an office at ▇▇▇▇▇ ▇▇, ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ (each a GUARANTOR
and together the GUARANTORS); and
4. MBIA INSURANCE CORPORATION, a New York Stock insurance corporation
(the FINANCIAL GUARANTOR).
RECITALS
----------
A The Issuer proposes to partially re-finance its existing Finance
Debt by the issue of MTNs.
B The Financial Guarantor has agreed to issue the Financial Guarantee
in favour of the Guarantee Trustee.
C The Guarantors are wholly owned subsidiaries of the Issuer and have
agreed to enter into the Deed of Guarantee and Indemnity under which
they will jointly and severally guarantee payment of all amounts
payable at any time by the Issuer under the MTNs, and this
Reimbursement Agreement and certain other documents.
PAGE 1
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
D In consideration of the issue of the Financial Guarantee, the Issuer
has agreed to pay the Fee and each of the Issuer, the General
Partner and the Guarantors has agreed to enter into this
Reimbursement Agreement.
--------------------------------------------------------------------------------
IT IS AGREED as follows.
1. DEFINITIONS AND INTERPRETATION
--------------------------------------------------------------------------------
1.1 DEFINITIONS
The following definitions apply unless the context requires otherwise.
ACTION means action which may result in an amendment, waiver,
determination, consent, approval, release or discharge.
ALP LOAN AGREEMENT means the loan agreement dated 24 February 1999 between
Holdco (as lender) and the Core Borrowers (as borrowers) as amended by a
deed dated 22 February 2000.
AMOUNT OWING means, at any time for or in respect of a Senior Creditor, the
total of all amounts which are then due for payment, or which will or may
become due for payment in connection with any Senior Finance Document, any
MBIA Document or any MTN Document (including, in each case, transactions in
connection with them) to that Senior Creditor or to the Trustee for the
account of that Senior Creditor and includes, in respect of a Hedge
Counterparty, the Hedge Exposure of that Hedge Counterparty.
AUDITORS means any internationally recognised accounting firm appointed by
the Issuer.
AUSTRALIAN ACCOUNTING STANDARDS means the accounting standards within the
meaning of the Corporations Law and, where not inconsistent with those
accounting standards and the Corporations Law, generally accepted
accounting principles and practices in Australia consistently applied by a
body corporate or as between bodies corporate.
AUTHORISATION includes:
(a) any consent, authorisation, registration, filing, agreement,
notarisation, certificate, permission, licence, approval, authority,
arrangement, exemption or similar instrument (whether from, by or with
a Governmental Agency or any other person); or
(b) in relation to anything which will be prohibited or restricted in
whole or in part by law if a Governmental Agency intervenes or acts in
any way within a specified period after application, lodgement,
filing, registration or notification, the expiry of that period
without the intervention or action.
AUTHORISED OFFICER means:
PAGE 2
(a) in the case of the Issuer, a Relevant Company or any other Obligor, a
person appointed and notified to the Financial Guarantor to act as an
Authorised Officer under the Transaction Documents to which it is a
party and whose specimen signature has been given to the Financial
Guarantor; and
(b) in respect of the Financial Guarantor, the President, Secretary and
any Assistant Secretary, Managing Director, Director, Manager,
Executive Vice President, Senior Vice President or Vice President.
BANK ▇▇▇▇ RATE has the meaning given in the Deed of Common Terms.
BUSINESS DAY means a day (not being a Saturday, Sunday or public holiday)
on which banks are open for general banking business in Melbourne and
Sydney.
CALCULATION DATE means 31 March, 30 June, 30 September and 31 December in
each year commencing on 30 September 2000.
CALCULATION PERIOD means, in relation to any Calculation Date, the 12 month
period ending on that Calculation Date.
CLOSING DATE means the date on which the Financial Guarantee is issued.
COMMITMENT LETTER means the letter dated [*] September 2000 from the
Financial Guarantor to the Issuer (section 2 of which is superseded by the
MBIA Fee Agreement).
CONDITIONS means, in relation to the MTNs, the Terms and Conditions of the
MTNs, as set out in Schedule 1 to the Credit Wrapped Note Deed Poll.
CONSOLIDATED INTEREST COVER RATIO means, on any Calculation Date in respect
of any Calculation Period, the ratio of:
(a) EBITDA:
to:
(b) Debt Service in respect of or in connection with Consolidated
Senior Debt (which includes, without limitation, all net amounts
paid or payable by, or to, any Hedge Counterparty or other
financial institution in respect of or in connection with any
interest rate Hedge Agreement),
for that Calculation Period.
CONSOLIDATED NET WORTH means the aggregate, on a consolidated basis, of the
paid up capital, retained profits and reserves (excluding the amount of all
asset revaluation reserves after the Closing Date) of the Group:
(a) less:
(i) all minority interests;
(ii) any paid up capital or share premium in respect of shares or
stock capable of being redeemed;
(b) plus the aggregate of Qualifying Subordinated Debt.
PAGE 3
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
CONSOLIDATED SENIOR DEBT means at any time the sum of:
(a) the total Amount Owing to the Senior Creditors; and
(b) the aggregate outstanding principal amount of all other Indebtedness
of the Core Borrowers and Permitted Indebtedness of the Group
(excluding the Core Borrowers) on a consolidated basis which is not
Junior Debt.
CONTESTED TAXES means a Tax payable by an Obligor:
(a) that is being diligently contested by it in good faith and in
accordance with proper procedures;
(b) that is not required by applicable law to be paid before the liability
is contested; and
(c) in respect of which it has set aside sufficient reserves of liquid
assets to pay the Tax and any fine, penalty or interest payable if the
contest is unsuccessful.
CONTROLLER has the meaning it has in the Corporations Law.
CORE BORROWER means the Issuer, the General Partner and each Limited
Partner.
CORE BUSINESS means the generation, storage, processing, supply,
transmission, distribution and sale of energy products and any ancillary
activities and other activities which permit the more efficient utilisation
of assets and resources of the Group (so long as these ancillary or other
activities do not represent a material diversification of the Core Business
or a material diversion of financial resources from the Core Business of
the generation, storage, processing, supply, transmission, distribution and
sale of energy products).
COSTS includes costs, charges and expenses, including those incurred in
connection with advisers.
CREDITOR means each Senior Creditor and each Junior Creditor. Where the
term is used in relation to the obligations of any one of those persons "to
the Creditors" it is a reference to the obligations of that person to each
other person which is a Creditor.
CREDIT WRAPPED NOTE DEED POLL means the Credit Wrapped MTN Deed Poll dated
on or about [*] September 2000 executed by the Issuer in favour of the
holders of certain notes.
DEALERS means the banks and financial institutions set out in schedule 1 to
the Dealer Agreement in their capacity as dealers under the Dealer
Agreement.
DEALER AGREEMENT means the Dealer Agreement dated on or about the date of
this Reimbursement Agreement by and among the Issuer, the Guarantors, the
Arranger and the Dealers named in it.
PAGE 4
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
DEBT SERVICE means, in respect of any Calculation Period and on a
consolidated basis, all Interest (including, but not limited to:
(a) any discount on any ▇▇▇▇, debenture, bond, note or other security;
(b) any discount in respect of any receipts or receivables which have been
sold by the Group to any person (including, without limitation, under
any securitisation program or facility);
(c) any line, facility, commitment, acceptance, usage, discount, guarantee
or other fees and amounts incurred on a regular or recurring basis
which are payable in relation to Indebtedness (which, for the
avoidance of doubt, excludes any establishment, underwriting or other
upfront fees);
(d) any dividend payable on redeemable preference shares or on any other
share or stock the obligations in respect of which constitute
Indebtedness;
(e) capitalised interest;
(f) the portion of rental or hire payments in the nature of interest under
any finance lease, sale and leaseback or hire purchase agreement to
which any member of the Group is a party;
(g) Interest, premiums, fees, break costs and any other amounts paid,
payable or incurred by any member of the Group under any Derivative
Transaction less Interest, premiums, fees and any other amounts paid,
payable or incurred to any member of the Group by the counterparty to
the Derivative Transaction),
which, in accordance with Australian Accounting Standards, is or would be
regarded as paid, payable or incurred by the Group in that Calculation
Period.
DEED OF COMMON TERMS means the deed so entitled dated 24 February 1999
between the Core Borrowers, the Obligors, Texas, the Financiers, Hedge
Counterparties and Junior Financiers named therein, the Trustee and certain
other parties, a copy of which is exhibited to this Agreement as Exhibit A.
DEED OF GUARANTEE AND INDEMNITY means the deed poll so entitled dated on or
about the date of this Reimbursement Agreement and made by the Guarantors.
DERIVATIVE TRANSACTION means a contract, agreement or arrangement (other
than in respect of the price of electricity or gas) which is:
(a) a futures contract (as defined in the Corporations Law); or
(b) an interest rate or currency hedge, swap, option, a swaption, a
forward rate agreement or any other contract, agreement or arrangement
similar to or having in respect of its subject matter a similar effect
to any of the above.
DISTRIBUTION AREA means, as the context may require:
PAGE 5
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
(a) the area in Victoria in which Westar is authorised to provide services
by means of distribution pipelines or distribute and supply gas, being
that area defined as the "Distribution Area" and described in schedule
2 to Westar's Distribution Licence;
(b) the area in Victoria in which Eastern is authorised to distribute and
supply electricity, being that area defined as the "Distribution Area"
and described in schedule 2 to Eastern's Distribution Licence; and
(c) any other area in which an Obligor is authorised to distribute or
supply energy products.
DISTRIBUTION LICENCE means, as the context may require:
(a) the distribution licence issued by ORG pursuant to the Gas Industry
▇▇▇ ▇▇▇▇ with effect from 11 December 1997, as amended and transferred
to Westar;
(b) the distribution licence issued to Eastern by ORG pursuant to the
Electricity Industry ▇▇▇ ▇▇▇▇ in effect from 3 October 1994, as
amended; and
(c) any other licence issued or transferred to, or held by, an Obligor to
distribute or supply energy products.
EASEMENTS means all easements, rights or privileges held by or vested in or
deemed to be held by or vested in an Obligor (whether under the Gas
Industry ▇▇▇ ▇▇▇▇, the Electricity Industry ▇▇▇ ▇▇▇▇ or otherwise) in,
over, appurtenant to or affecting any real property.
EASTERN means TXU Electricity Limited (ACN 064 651 118) formerly known as
Eastern Energy Limited.
EASTERN NOTES means the notes issued by Eastern under the Indenture dated 1
December 1996 between Eastern and The Bank of New York, as trustee,
comprising US$250,000,000 6.25% Senior Notes due 2006 and US$100,000,000
7.25% Senior Notes due 2016.
EBITDA means, in respect of any Calculation Period, the earnings of the
Group (including the proceeds of any claim under a business interruption
insurance policy and any interest earnings) on a consolidated basis and
before:
(a) abnormal items (which includes the sale proceeds from the disposal of
assets);
(b) extraordinary items including, without limitation, costs arising on
the termination of any Derivative Transaction;
(c) Debt Service;
(d) income tax; and
(e) depreciation and amortisation.
PAGE 6
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
ENFORCEMENT ACTION means, in relation to an Obligor:
(a) a right arising from a default by an Obligor is exercised or enforced
against the Obligor including, without limitation, the making of a
declaration under clause 5.2 of this Reimbursement Agreement or a
demand for payment under the Deed of Guarantee and Indemnity;
(b) an application is made for, or a notice is given or other step is
taken with a view to:
(i) insolvency, liquidation, administration, dissolution or similar
proceedings with respect to the Obligor;
(ii) an administration, arrangement, composition or assignment for the
benefit of creditors, or any class of creditors, of the Obligor;
or
(iii) the appointment of any person as a Controller in relation to
property of an Obligor,
whether by petition, application, convening of a meeting, voting in favour
of a resolution or otherwise.
ENVIRONMENT means all aspects of the surroundings of human beings,
including:
(a) the physical characteristics of those surroundings such as the land,
the waters and the atmosphere; and
(b) the biological characteristics of those surroundings such as animal,
plants and other forms of life; and
(c) the aesthetic characteristics of those surroundings such as their
appearance, sounds, smells, tastes and textures.
ENVIRONMENTAL LAW means a law regulating or otherwise relating to the
Environment including, but not limited to, any law relating to land use,
planning, water catchments, pollution of air or water, noise, smell,
contamination, chemicals, waste, pesticides, use of dangerous goods or
hazardous substances, noxious trades or any other aspect of protection of
the Environment.
EVENT means the happening of any of these events:
(a) an order is made that an Obligor be wound up; or
(b) a liquidator is appointed in respect of an Obligor; or
(c) a provisional liquidator is appointed in respect of an Obligor and the
provisional liquidator is ordered or required to admit all debts to
proof or pay all debts capable of being admitted to proof
proportionately; or
(d) an Obligor enters into, or resolves to enter into, a scheme of
arrangement, deed of company arrangement or composition with, or
assignment for the benefit of, all or any class of its creditors; or
(e) an Obligor resolves to wind itself up or otherwise dissolve itself.
PAGE 7
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
EVENT OF DEFAULT means an event specified in clause 5.
EXCLUDED SUBSIDIARY means each of:
(a) TXU (No.6) Pty Ltd (ACN 081 688 913); and
(b) TXU Australia (Queensland) Pty Ltd (ACN 081 754 538),
unless and until any of those bodies corporate become Obligors in
accordance with the Deed of Common Terms.
FEE means the fee described in the MBIA Fee Letter payable by the Issuer to
MBIA on or before the Closing Date in consideration of the issue of the
Financial Guarantee by MBIA.
FINANCE DOCUMENT means any Senior Finance Document, any Junior Finance
Document, any other document which the Core Borrowers and the Financial
Guarantor agree in writing is to be a Finance Document and any other
instrument connected with any of them.
FINANCIAL GUARANTEE means the guarantee to be issued by the Financial
Guarantor under this Reimbursement Agreement, the form of which is set out
in Annexure A.
FINANCIAL STATEMENTS means:
(a) a profit and loss statement;
(b) a balance sheet; and
(c) a statement of cash flows,
together with any notes to those documents and a directors' declaration as
required under the Corporations Law (in the case of a body corporate
incorporated in Australia) and any other information necessary to give a
true and fair view.
FINANCIAL YEAR means each 12 month period ending on 31 December in each
year.
FINANCIER has the meaning given in the Deed of Common Terms.
FRANCHISE AREA means the area in Victoria in which Kinetik is authorised to
sell gas, being that area defined as the "Franchise Area" and described in
schedule 2 to Kinetik's gas Retail Licence.
GENERATION ASSET means any asset utilised or employed in the generation of
electricity.
GENERATION LICENCE means any licence issued or transferred to, or held by,
an Obligor to generate electricity or other energy products
GOOD OPERATING PRACTICE means the standard of operating and engineering
practice that would reasonably be expected from a prudent utility located
in Australia (not being owned and operated by a Governmental Agency) for
the generation, supply, storage, processing, transmission, distribution or
sale of energy products under conditions comparable to those applicable to
the Infrastructure, consistent with applicable laws, regulations, codes and
PAGE 8
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
licences. The determination of comparable conditions will take into account
factors such as the design and specifications, relative size, age, load
characteristics and technological status of the Infrastructure and assets
deployed in the Core Business.
GOVERNMENTAL AGENCY means any government, any minister of a government or
any governmental or semi-governmental entity, agency or authority
(including, without limitation, the Australian Competition and Consumer
Commission and the ORG).
GROUP means the Core Borrowers and their Subsidiaries and includes, without
limitation, each Obligor.
GUARANTEE means the guarantee and indemnity dated 24 February 1999 between
the Core Borrowers, Holdco, TXU8 and TXU9 in favour of the Trustee as
amended by a deed dated 22 February 2000 pursuant to which the Core
Borrowers and TXU9 were released from their obligations under the guarantee
and indemnity and by an agreement dated 22 February 2000.
GUARANTEE TRUSTEE means Chase Capital Markets Fiduciary Services Australia
Limited (ACN 002 916 396).
GUARANTEE TRUSTEE DEED POLL means the deed poll so entitled dated on or
about the date of this Reimbursement Agreement between the Financial
Guarantor and the Guarantee Trustee.
GUARANTEED MONEY means any moneys payable, owing but not currently payable,
contingently owing, or remaining unpaid by the Issuer or a Relevant Company
to the Financial Guarantor pursuant to either the MBIA Fee Letter or this
Reimbursement Agreement or any other MBIA Document or MTN Document.
HALF YEAR means each period of six months ending on 30 June and 31 December
in each year.
HEDGE AGREEMENT means each interest rate or currency hedging document
(including any restatement of any earlier document) or transaction entered
into between any Core Borrower or Eastern and any Hedge Counterparty or
other financial institution from time to time.
HEDGE COUNTERPARTY has the meaning given in the Deed of Common Terms.
HEDGE EXPOSURE means in respect of a Hedge Counterparty at the applicable
date the amount which is H in the following formula:
H = M to M + Unpaid Amounts
where:
M TO M is the result of the ▇▇▇▇ to market calculation of the
obligations under the Hedge Agreements to which it is a party provided
that M to M will be a positive number if it represents a liability of
any Core Borrower or Eastern (as the case may be) to the Hedge
Counterparty and a negative number if it represents a liability of the
PAGE 9
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
Hedge Counterparty to any Core Borrower or Eastern (as the case may
be).
UNPAID AMOUNTS is any amount due and payable but unpaid under the
Hedge Agreements to which it is a party provided that Unpaid Amounts
will be a positive number if it represents amounts owing by any Core
Borrower or Eastern (as the case may be) to the Hedge Counterparty and
a negative number if it represents amounts due and payable but unpaid
by the Hedge Counterparty to Core Borrower or Eastern (as the case may
be),
provided that if H is a negative number it shall be deemed to be equal to
zero.
HEDGE LIABILITIES means all present and future liabilities (actual or
contingent) payable or owing by the Core Borrowers and Eastern to a Hedge
Counterparty or any of them under or in connection with the Hedge
Agreements, whether or not matured and whether or not liquidated, together
in each case with:
(a) any novation, deferral or extension of any of those liabilities
permitted by the terms of this Reimbursement Agreement;
(b) any claim for damages or restitution arising out of, by reference to,
or in connection with, any of the Hedge Agreements;
(c) any claim, flowing from any recovery by the Core Borrowers or Eastern
or a receiver or liquidator appointed to the Core Borrowers or Eastern
or any other person of a payment or discharge in respect of any of
those liabilities on grounds of any insolvency provision or otherwise;
and
(d) any amount (such as post-insolvency interest) which would be included
in any of the above but for any discharge, non-provability,
unenforceability or non-allowability of the same as a result of any
insolvency provisions.
HOLDCO - TXUA LOAN AGREEMENT means the loan agreement dated 24 February
1999 between Holdco (as lender) and TXUA (as borrower) as amended by a deed
dated 22 February 2000.
HOLDER means a person whose name is entered in the Register from time to
time as the holder of an MTN, or where the MTN is held jointly by more than
one person, the persons whose names appear in the Register as the joint
holders of that MTN and, when an MTN is entered into the Austraclear
system, includes Austraclear Services Limited (ACN 003 284 419) acting on
behalf of a member of the Austraclear system.
INDEBTEDNESS means any debt or other monetary liability (whether actual or
contingent) in respect of moneys borrowed or raised or any financial
accommodation (including in respect of any moneys raised from the sale or
securitisation of any receipts or receivables) whatever, or in the case of
paragraph (h) below, a Derivative Transaction, including a debt or
liability under or in respect of any:
PAGE 10
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
(a) ▇▇▇▇, bond, debenture, note or similar instrument;
(b) acceptance, endorsement or discounting arrangement;
(c) guarantee granted by a financial institution guaranteeing the payment
of a debt (the "guaranteed debt"), in which case the guaranteed debt
will not be included;
(d) finance lease or sale and leaseback (and for the purposes of clause
4.3(b), operating lease);
(e) deferred purchase price (for more than 180 days) of any asset or
service;
(f) obligation to deliver goods or provide services paid for in advance by
any financier or in relation to any other financing transaction;
(g) amount of capital and premium payable or in connection with the
reduction of any preference shares or any amount of purchase price
payable for or in connection with the acquisition of redeemable
preference shares;
(h) Derivative Transaction; or
(i) guarantee, indemnity or guarantee and indemnity,
and irrespective of whether the debt or liability is owed or incurred alone
or severally or jointly or both with any other person. For the purpose of
calculating the principal amount of any Indebtedness under:
(j) any securitisation of receipts or receivables, the principal amount
shall be taken to be the discounted amount of proceeds paid in
exchange for the receipts or receivables; and
(k) any finance lease or sale and leaseback, the aggregate portion of all
rental in the nature of principal.
INFORMATION MEMORANDUM means at any time the then latest information
memorandum (and any supplement to it, (whether in printed or electronic
form) prepared on behalf of, and approved in writing by, the Issuer in
connection with the issue of MTNs, all documents incorporated by reference
in it, and such other information (including in the case of a tranche of
MTNs, a Pricing Supplement) approved in writing by the Issuer from time to
time.
INFRASTRUCTURE means:
(a) all gas transmission and distribution pipes, and all other plant and
equipment used in the reticulation, transmission or metering of gas
which, in its ordinary use, is located in a fixed position wherever
located, but excludes motor vehicles and mobile plant owned or leased
by the Group; and
(b) all electricity transmission and distribution lines, power poles,
underground cables, stations, sub-stations, switchyard equipment and
all other plant and equipment used in the reticulation, transformation
or metering of electrical power, which in its ordinary use, is located
in a fixed position wherever located, but excludes motor vehicles and
mobile plant owned or leased by the Group; and
PAGE 11
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
(c) all Easements.
INFRASTRUCTURE ASSETS means any asset which forms part of the
Infrastructure.
INSOLVENCY EVENT means the happening of any of these events:
(a) an order is made that an entity be wound up;
(b) an application is made to a court that an entity be wound up or for an
order appointing a liquidator or provisional liquidator in respect of
an entity (and is not stayed or dismissed within 14 days) unless the
entity satisfies the Financial Guarantor within 14 days of it being
made that the application is frivolous or vexatious;
(c) a liquidator or provisional liquidator is appointed in respect of an
entity, whether or not under a court order;
(d) except to reconstruct or amalgamate while solvent on terms approved by
the Financial Guarantor, an entity enters into, or resolves to enter
into, a scheme of arrangement, deed of company arrangement or
composition with, or assignment for the benefit of, all or any class
of its creditors, or it proposes a reorganisation, moratorium or other
administration involving any class of its creditors;
(e) an entity resolves to wind itself up, or otherwise dissolve itself, or
gives notice of intention to do so, except to reconstruct or
amalgamate while solvent on terms approved by the Financial Guarantor
or is otherwise wound up or dissolved;
(f) a Controller is appointed to or over all or any part of the assets or
undertaking of the entity or the holder of any Security Interest takes
possession of any asset of the entity;
(g) an entity is or is deemed by law or a court to be insolvent;
(h) an entity takes any steps to obtain protection or is granted
protection from its creditors, under any applicable legislation or an
administrator is appointed to an entity or steps are taken by the
directors of the entity to make such an appointment; or
(i) anything analogous or having a substantially similar effect to any of
the events specified above happens under the law of any applicable
jurisdiction.
INTERCOMPANY LOAN AGREEMENT means each of:
(a) the ALP Loan Agreement;
(b) the Holdco - TXUA Loan Agreement;
(c) the TXUA - TXU8 Loan Agreement; and
(d) the TXU8 Loan Agreement.
INTERCOMPANY LOAN DEBT means any amount actually or contingently owing
under or in connection with an Intercompany Loan Agreement.
PAGE 12
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
INTEREST includes, in relation to any principal or other amount of
Indebtedness, interest, fees, commissions and charges and any other amounts
in the nature of interest or the payment of which has a similar effect or
purpose to the payment of interest.
JUNIOR CREDITOR means each of:
(a) each Junior Financier;
(b) TXUA;
(c) Texas; and
(d) any other person who is owed Qualifying Subordinated Debt or
Subordinated Guarantee Debt.
JUNIOR DEBT has the meaning given in the Deed of Common Terms.
JUNIOR FINANCE DEBT has the meaning given in the Deed of Common Terms.
JUNIOR FINANCE DOCUMENT has the meaning given in the Deed of Common Terms.
JUNIOR FINANCIER has the meaning given in the Deed of Common Terms.
KINETIK means TXU Pty Ltd (ACN ▇▇▇ ▇▇▇ ▇▇▇), formerly known as Kinetik
Energy Pty Ltd.
LATE PAYMENT RATE means the unsecured overdraft rate announced by National
Australia Bank Limited on each Business Day plus 2 per cent.
LICENCE means the Distribution Licences, the Generation Licences, the
Retail Licences and any other Authorisation granted to any Obligor to
generate, distribute, store, process, supply or sell energy products.
LICENCE HOLDER means each or all of Eastern, Westar, Kinetik, TXU (South
Australia) Pty Ltd (ABN 84 ▇▇▇ ▇▇▇ ▇▇▇) and any other Obligor that becomes
the holder of a Licence.
LIMITED PARTNER means each of TXU Australia (LP) No.1 Limited (ARBN 086 406
733) and TXU Australia (LP) No.2 Limited (ARBN 086 406 724), each in their
respective capacity as limited partners of the Issuer.
LIQUIDATION includes receivership, compromise, arrangement, amalgamation,
administration, reconstruction, winding up, dissolution, assignment for the
benefit of creditors and bankruptcy.
LOSS includes any consequential loss, and any costs, liability, claim,
suit, proceeding, cause of action, demand or action.
MATERIAL ADVERSE EFFECT means a material adverse effect on:
(a) the legality, validity or enforceability of an MBIA Document, MTN
Document, Intercompany Loan Agreement, the Partnership Deed or the
Deed of Common Terms; or
PAGE 13
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
(b) an Obligor's ability to observe its obligations under any MBIA
Document, MTN Document, Intercompany Loan Agreement, the Partnership
Deed or the Deed of Common Terms; or
(c) the ability of an Obligor to carry on its business as it is being
conducted at the time preceding the event; or
(d) the rights of the Financial Guarantor under any MBIA Document or MTN
Document.
MATERIAL CONTRACT means:
(a) the Partnership Deed;
(b) each Intercompany Loan Agreement;
(c) the Deed of Common Terms;
(d) any contract having a term of more than 12 months for the purchase of
energy products by an Obligor (and, for the avoidance of doubt, does
not include any Derivative Transaction or similar transaction,
including energy trading) and under which the consideration payable by
that Obligor in any 12 month period exceeds $50,000,000;
(e) any contract entered into by an Obligor relating to access to or the
use of, or maintenance of any transmission, distribution network or
system and under which the consideration payable by, or received by
(as the case may be) that Obligor in any 12 month period exceeds
$50,000,000;
(f) any contracts governed by the master vesting terms and conditions
relating to Eastern;
(g) the master hedge agreement between Eastern and AES Transpower Holdings
Pty Ltd dated 6 May 1999; and
(h) any other document which a Relevant Company and the Financial
Guarantor agree in writing will be a Material Contract for the
purposes of this Reimbursement Agreement.
MATERIAL OPERATING SUBSIDIARY means each Subsidiary of the Core Borrowers
which:
(a) contributes or in the current or following Financial Year is likely to
contribute more than 10 % of the EBITDA of the Group; or
(b) which has total assets having a value of more than $100,000,000,
unless the subsidiary has been released from its obligations under the Deed
of Common Terms in accordance with the Deed of Common Terms and with the
prior written approval of the Financial Guarantor and, as at the Closing
Date, each of TXUA, Eastern, Kinetik, Westar, WUGS and TXU (South
Australia) Pty Ltd (ABN 84 ▇▇▇ ▇▇▇ ▇▇▇) is a Material Operating Subsidiary.
MATERIAL REGULATORY INSTRUMENT includes:
(a) the MSO Rules;
PAGE 14
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
(b) the Victorian Gas Industry Tariff Order;
(c) the Wimmera and Colac Tariff Order;
(d) the National Third Party Access Code for Natural Gas Pipeline Systems
and the Victorian Third Party Access Code for Natural Gas Pipeline
Systems;
(e) the Access Arrangements for the distribution system;
(f) the National Electricity Code;
(g) the Victorian Electricity Supply Industry Tariff Order;
(h) the undertaking given to the Australian Competition and Consumer
Commission under section 44ZZA of the Trade Practices Act (Cth) given
by Eastern as contemplated by the National Electricity Code; and
(i) any guidelines, regulations or determinations issued or made by the
Office of Regulator-General established under the Office of the
Regulator-General ▇▇▇ ▇▇▇▇,
any other regulatory instrument, requirement, Authorisation or code made
under, contemplated by or connected with any of the above (including
without limitation any variation, amendment or replacement of any of the
instruments referred to above) which has a material impact on an Obligor in
any relevant jurisdiction.
MBIA DOCUMENT means:
(a) this Reimbursement Agreement;
(b) the Financial Guarantee;
(c) the MBIA Fee Letter;
(d) the Guarantee Trustee Deed Poll;
(e) the Payment Agency and Registry Services Agreement;
(f) the Subscription Agreement;
(g) any other document or agreement which the Issuer and the Financial
Guarantor agree is an MBIA DOCUMENT for the purposes of this
Reimbursement Agreement; or
(h) a document or agreement entered into or provided under or in
connection with, or for the purpose of amending or novating, any of
the above. It includes an undertaking by or to a party or its lawyers
under or in relation to any of the above.
MBIA FEE AGREEMENT means the agreement dated on or about the date of this
Reimbursement Agreement between MBIA and the Issuer setting out, among
other things, the Fee payable by the Issuer to MBIA in consideration for
the issue of the Financial Guarantee by MBIA.
MBIA FEE LETTER means:
(c) the Commitment Letter; or
PAGE 15
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
(d) the MBIA Fee Agreement.
MOODY'S means ▇▇▇▇▇'▇ Investors Service, Inc., or any of its Subsidiaries.
MSO RULES has the meaning given in the Gas Industry ▇▇▇ ▇▇▇▇.
MTN PROGRAMME means the medium term note programme created by the Issuer on
or about the date of this Reimbursement Agreement under which it may from
time to time issue MTNs.
MTNS means any credit wrapped notes issued by the Issuer under the MTN
Programme.
MTN DOCUMENT means:
(a) the Credit Wrapped MTN Deed Poll;
(b) the Deed of Guarantee and Indemnity;
(c) each MTN;
(d) each Pricing Supplement; and
(e) the Information Memorandum.
NATIONAL ELECTRICITY CODE has the meaning given to the word "Code" in the
National Electricity Law.
OBLIGOR has the meaning given in the Deed of Common Terms and, without
limitation, includes Joule Resources Pty Limited (ACN 081 074 188)
(formerly known as TXU (No.3) Pty Ltd), TXU (South Australia) Pty Ltd (ABN
84 ▇▇▇ ▇▇▇ ▇▇▇) (formerly known as TXU (No.5) Pty Ltd) and TXU Torrens
Island.
ORG means the Office of the Regulator-General established under the Office
of the Regulator-General ▇▇▇ ▇▇▇▇ or its equivalent established in any
jurisdiction other than Victoria.
PARTNERSHIP DEED means the deed dated 27 January 1999 between each Core
Borrower establishing the Issuer, as amended by deeds dated 23 February
1999, 16 May 2000 and 31 May 2000.
PAYMENT AGENCY AND REGISTRY SERVICES AGREEMENT means the agreement so
entitled dated on or about the date of this Reimbursement Agreement between
the Issuer, the Guarantee Trustee and the Financial Guarantor.
PERMITTED DISPOSAL means:
(a) any disposal for fair value of obsolete assets which are no longer
required for the operation of the business in accordance with Good
Operating Practice, and except for assets which are Infrastructure
Assets, the disposal of assets in exchange for other assets of
comparable value and utility;
(b) any disposal of an asset (other than an Infrastructure Asset) provided
that the aggregate value of all assets disposed of by the Group in any
Financial Year (excluding disposals permitted under any other
paragraph of this definition) does not exceed 5% of the total assets
PAGE 16
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
of the Group (as measured by reference to the audited consolidated
Financial Statements for the previous Financial Year);
(c) the disposal of an Infrastructure Asset but only if:
(i) it is necessary or desirable in accordance with Good Operating
Practice to replace that Infrastructure Asset and that asset is
replaced in the ordinary course of business by an asset which is
capable of performing the same function as the asset replaced and
whose selection, purchase, installation and use is in accordance
with Good Operating Practice; or
(ii) the Infrastructure Asset is surplus to its requirements having
regard to Good Operating Practice in relation to the Core
Business and the value of that Infrastructure Asset together with
the value of all other surplus Infrastructure Assets disposed of
by the Group in any Financial Year does not exceed in aggregate
$30,000,000;
(d) disposals and acquisitions between Obligors;
(e) disposals of energy products in the ordinary course of business; or
(f) the disposal of any asset the subject of a contract of sale entered
into prior to the Closing Date and which has been notified to the
Financial Guarantor in writing prior to the Closing Date and the
disposal of the Rowville electricity transformation and switching
facility.
PERMITTED INDEBTEDNESS means in relation to the Obligors (other than the
Core Borrowers):
(a) any Indebtedness incurred by the Guarantors under the Guarantee, any
other guarantee and indemnity of any Consolidated Senior Debt or the
Deed of Guarantee and Indemnity;
(b) any Indebtedness under the Intercompany Loan Agreements;
(c) any Subordinated Guarantee Debt;
(d) any Indebtedness under any Transactional Banking Agreement;
(e) any guarantee and/or indemnity issued by an Obligor in relation to the
obligations of another Obligor provided those obligations are or have
been incurred in the ordinary course of the Core Business;
(f) any Indebtedness of Eastern under:
(i) the Eastern Notes; or
(ii) Hedge Agreements in place as at the Closing Date solely to manage
the interest rate and currency exposure of Eastern under the
Eastern Notes;
(g) any Indebtedness under any equipment lease, provided there is no
breach of clause 4.3(q) of this Reimbursement Agreement;
(h) any Indebtedness incurred in the ordinary course of business by a TXU8
Borrower in favour of another TXU8 Borrower;
PAGE 17
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
(i) the obligation of a TXU8 Borrower to indemnify another TXU8 Borrower
in respect of any payments made by that other TXU8 Borrower to TXU8
under the TXU8 Loan Agreement; or
(j) any other Indebtedness approved in writing by the Financial Guarantor.
PERMITTED SECURITY INTEREST means:
(a) any Security Interest arising by operation of law in the ordinary
course of business securing Taxes which are not yet in arrears and can
subsequently be paid without penalty or which are Contested Taxes;
(b) any mechanic's, workmen's or any like lien or right of set-off arising
in the ordinary course of business, securing or otherwise relating to
Indebtedness which is not yet overdue or which has been contested or
litigated in good faith, where the aggregate amount of the
Indebtedness in respect of all such liens and rights of set-off does
not at any time exceed $500,000;
(c) any Security Interest in respect of deposits of money or property in
an amount, or of a value, not exceeding $1,000,000 in aggregate, by
way of security for the performance of any statutory obligations
arising in the ordinary course of business;
(d) the Deed of Common Terms;
(e) the fixed and floating charge dated 1 December 1996 (ASIC Charge No.
517872) granted by Eastern in favour of Westpac Banking Corporation,
subsequently transferred to Westpac Custodian Nominees Limited and to
be transferred to National Australia Bank Limited provided that at no
time does it secure any moneys, liabilities or other obligations;
(f) any right of set off arising under a Material Contract or in favour of
NEMMCO or VENCorp over cash deposits, bank guarantees or similar
instruments lodged by any Obligor by way of compliance with prudential
requirements arising under any Material Regulatory Instrument; and
(g) any other Security Interest approved in writing by the Financial
Guarantor.
POTENTIAL EVENT OF DEFAULT means an event which, with the giving of notice
or lapse of time, would become an Event of Default.
POWER means a power, right, authority, discretion or remedy which is
conferred on the Financial Guarantor:
(a) by this Reimbursement Agreement, any MBIA Document or any MTN
Document; or
(b) by law in relation to this Reimbursement Agreement, any MBIA Document
or any MTN Document.
PAGE 18
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
PRICING SUPPLEMENT has the meaning given in the Credit Wrapped Note Deed
Poll.
PROPERTIES means all properties or premises leased, occupied or used or
owned by an Obligor at any time.
QUALIFYING SUBORDINATED DEBT means the principal amount (excluding
capitalised interest) of any Indebtedness of the Core Borrowers which is
subordinated on the same terms as Junior Debt is subordinated under the
Deed of Common Terms and in respect of which the other requirements
specified in the Deed of Common Terms have been satisfied.
QUARTER means each period of three months ending on 31 March, 30 June, 30
September and 31 December in each year.
RATING means, at any time, the most recent published long term credit
rating from S&P or Moody's for the Issuer.
RATING AGENCIES means, collectively, ▇▇▇▇▇'▇ Investors Service, Inc. and
Standard & Poor's Ratings Group.
REGISTER has the meaning given in the Credit Wrapped MTN Deed Poll.
RELATED ENTITY has the meaning it has in the Corporations Law.
RELEVANT COMPANY means the General Partner and each Guarantor.
RETAIL LICENCE means:
(a) the gas retail licence issued by ORG pursuant to the Gas Industry ▇▇▇
▇▇▇▇ with effect from 11 December 1997, as amended and transferred to
Kinetik;
(b) the electricity retail licence issued by ORG pursuant to the
Electricity Industry ▇▇▇ ▇▇▇▇ with effect from 5 November 1997, as
amended and transferred to Kinetik;
(c) the electricity retail licence issued to Eastern by ORG pursuant to
the Electricity Industry ▇▇▇ ▇▇▇▇ with effect from 3 October 1994, as
amended; and
(d) any other licence issued or transferred to, or held by, an Obligor to
sell energy products.
S&P means any member of the Standard & Poor's Ratings Group.
SECURITY INTEREST means any security for the payment of money or
performance of obligations including a mortgage, charge, lien, pledge,
trust or power.
SENIOR CREDITORS has the meaning given in the Deed of Common Terms but for
the purposes of this Reimbursement Agreement includes the Financial
Guarantor.
SENIOR DEBT means any amount actually or contingently owing under or in
connection with the Senior Finance Documents, whether or not then due and
payable.
PAGE 19
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
SENIOR FINANCE DOCUMENT has the meaning given in the Deed of Common Terms
but includes this Reimbursement Agreement.
SUBORDINATED GUARANTEE DEBT means any Indebtedness of Holdco and TXU8 under
a guarantee and indemnity of any Qualifying Subordinated Debt provided that
any such Indebtedness is subordinated on the same terms as Junior Debt is
subordinated under the Deed of Common Terms.
SUBORDINATED INDEBTEDNESS means all liabilities of an Obligor in connection
with any Indebtedness which is fully subordinated to the interests of the
Senior Creditors in accordance with clause 4 of the Deed of Common Terms.
SUBSCRIPTION AGREEMENT means the agreement so entitled dated on or about
the date of this Reimbursement Agreement and made between the Issuer, the
Guarantors, the Financial Guarantor, the Dealers and the Lead Managers
named in that agreement.
SUBSIDIARY of an entity means:
(a) another entity which is a subsidiary of the first within the meaning
of part 1.2 division 6 of the Corporations Law;
(b) another entity which is a subsidiary of or otherwise controlled by the
first within the meaning of any approved accounting standard; or
(c) in relation to a Core Borrower, a corporation which is owned or
controlled by that Core Borrower and other Core Borrowers,
and for the avoidance of doubt, the Core Borrowers will each be deemed to
be a "body corporate" for the purposes of part 1.2 division 6 of the
Corporations Law.
SURETY means a person (other than an Obligor) which at any time is liable
by guarantee or otherwise alone or jointly, or jointly and severally, to
pay or indemnify against non-payment of the Senior Debt or Junior Debt.
TAXES means taxes, levies, imposts, charges and duties imposed by any
authority (including stamp and transaction duties) together with any
related interest, penalties, fines and expenses in connection with them,
except if imposed on the overall net income of a Creditor.
TEXAS means TXU Corp..
TRANSACTION DOCUMENTS means each:
(a) MBIA Document;
(b) MTN Document;
(c) Licence;
(d) Material Contract;
(e) any document which the Issuer or a Relevant Company acknowledges in
writing to be a Transaction Document for the purposes of this
Reimbursement Agreement; and
(f) any other document connected with any of them.
PAGE 20
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
TRANSACTIONAL BANK means any financial institution which has or may provide
a Transactional Banking Facility to any Obligor and which is a Financier or
has agreed to be bound by the terms of the Deed of Common Terms and has
executed and delivered to the Trustee a New Creditor Accession Deed in
accordance with the Deed of Common Terms.
TRANSACTIONAL BANKING AGREEMENT means any agreement in force from time to
time between any Obligor and a Transactional Bank setting out the terms and
conditions applicable to a Transactional Banking Facility.
TRANSACTIONAL BANKING FACILITY includes any of the following:
(a) overdraft, credit card, equipment lease, bank guarantee, insurance
bond or similar facility; and
(b) payroll, cheque encashment, merchant arrangements and tape negotiation
advice and same-day transaction, funds transfer, direct debit and
payment and settlement facilities which are provided by a bank, and
where relevant, are settled between an Obligor and that bank within
the same day.
TRUSTEE means National Australia Bank Limited and any successor in its
capacity as Trustee under the Deed of Common Terms.
TXUA means TXU Australia Pty Ltd (ACN ▇▇▇ ▇▇▇ ▇▇▇).
TXUA-TXU8 LOAN AGREEMENT means the loan agreement dated 24 February 1999
between TXUA (as lender) and TXU8 (as borrower) as amended by a deed dated
22 February 2000.
TXU8 means TXU (No. 8) Pty Ltd (ABN 15 085 235 776).
TXU8 BORROWER means each Obligor other than the Core Borrowers, Holdco and
TXUA.
TXU8 LOAN AGREEMENT means the agreement dated 22 February 2000 between TXU8
(as lender) and the TXU8 Borrowers (as borrowers).
TXU9 means TXU (No. 9) Pty Ltd (ACN 085 235 801).
WESTAR means TXU Networks (Gas) Pty Ltd (ACN 086 015 036), formerly known
as Westar Pty Ltd.
TXU TORRENS ISLAND means TXU Torrens Island Pty Ltd (ACN 081 074 197).
WUGS means Western Underground Gas Storage Pty Ltd (ACN 079 089 311).
1.2 INTERPRETATION
HEADINGS are for convenience only and do not affect interpretation. The
following rules apply unless the context requires otherwise:
(a) the SINGULAR includes the plural and the converse;
(b) a GENDER includes all genders;
PAGE 21
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
(c) where a WORD or PHRASE is defined, its other grammatical forms have a
corresponding meaning;
(d) a reference to a PERSON, corporation, trust, partnership,
unincorporated body or other entity includes any of the foregoing;
(e) a reference to a CLAUSE, ANNEXURE or SCHEDULE is a reference to a
clause of, or annexure or schedule to, this Reimbursement Agreement;
(f) a reference to a PARTY to this Reimbursement Agreement or another
agreement or document includes the party's successors and permitted
substitutes or assigns;
(g) A reference to an AGREEMENT or DOCUMENT is to the agreement or
document as amended, novated, supplemented or replaced from time to
time, except to the extent prohibited by this Reimbursement Agreement.
(h) a reference to LEGISLATION or to a provision of legislation includes a
modification or re-enactment of it, a legislative provision
substituted for it and a regulation or statutory instrument issued
under it;
(i) a reference to WRITING includes a facsimile transmission and any means
of reproducing words in a tangible and permanently visible form;
(j) a reference to CONDUCT includes an omission, statement or undertaking,
whether or not in writing;
(k) a reference to an amount for which a person is CONTINGENTLY LIABLE
includes an amount which that person may become actually or
contingently liable to pay if a contingency occurs, whether or not
that liability will actually arise;
(l) mentioning anything after INCLUDE, INCLUDES or INCLUDING does not
limit what else may be included;
(m) a reference to an ASSET includes any real or personal, present or
future, tangible or intangible property or asset (including
Intellectual Property) and any right, interest, revenue or benefit in,
under or derived from the property or asset;
(n) an Event of Default SUBSISTS until it has been waived in writing by
the Financial Guarantor or has otherwise been remedied to the
reasonable satisfaction of the Financial Guarantor;
(o) a reference to any thing (including without limitation, any amount) is
a reference to the whole and each part of it and a reference to a
group of persons is a reference to all of them collectively, to any
two or more of them collectively and to each of them individually;
(p) an accounting term is a reference to that term as it is used in
Australian Accounting Standards; and
PAGE 22
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
(q) a reference to an Act, Statute or any other law is, unless otherwise
stated, a reference to an Australian Act, Statute or law.
1.3 DOCUMENT OR AGREEMENT
A reference to:
(a) an AGREEMENT includes a Security Interest, guarantee, undertaking,
deed, agreement or legally enforceable arrangement whether or not in
writing; and
(b) a DOCUMENT includes an agreement (as so defined) in writing or a
certificate, notice, instrument or document.
A reference to a specific agreement or document includes it as amended,
novated, supplemented or replaced from time to time, except to the extent
prohibited by this Reimbursement Agreement.
1.4 DETERMINATION, STATEMENT OR CERTIFICATE
Except where otherwise provided in an MBIA Document any determination,
statement or certificate by the Financial Guarantor or the Auditors or an
Authorised Officer of the Financial Guarantor provided for in this
Reimbursement Agreement is sufficient evidence of each thing determined,
stated or certified unless it is proven wrong.
1.5 LISTING REQUIREMENTS INCLUDED AS LAW
A listing rule or business rule (each as defined in section 603 of the
Corporations Law) of a stock exchange will be regarded as a LAW.
1.6 PARTNERSHIP ACTIONS
If an MBIA Document requires or permits any act, matter or thing to be done
by the Core Borrowers, that act, matter or thing must be done by the
General Partner as general partner in the Issuer and, once done, will be
deemed to bind:
(a) each Core Borrower and the Issuer; and
(b) each of the partners in the Issuer in accordance with the Partnership
Deed.
1.7 HEADINGS
The headings of clauses and sub-clauses and the Table of Contents contained
in this Reimbursement Agreement are provided for convenience only. They
form no part of this Reimbursement Agreement and shall not affect its
construction or interpretation. Unless otherwise indicated, all references
to clauses, sub-clauses and paragraphs in this Reimbursement Agreement
refer to the corresponding clauses, sub-clauses and paragraphs of this
Reimbursement Agreement.
PAGE 23
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
2. CONDITIONS PRECEDENT
--------------------------------------------------------------------------------
The Financial Guarantor agrees to issue the Financial Guarantee on the
Closing Date subject to it receiving, in form and substance satisfactory to
it, each of the following conditions precedent:
(a) (VERIFICATION CERTIFICATE) a certificate in relation to each Relevant
Company given by a director of the Relevant Company substantially in
the form of annexure A with the attachments referred to and dated not
earlier than seven days before the Closing Date;
(b) (DOCUMENTS)
(i) duly executed counterparts of each MBIA Document;
(ii) a certified copy of each MTN Document, Licence, Intercompany Loan
Agreement and the Partnership Deed; and
(iii) 5 originals of the Information Memorandum;
(c) (LEGAL OPINIONS) an opinion addressed to the Financial Guarantor from:
(i) ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Australian legal advisers to the Relevant
Companies;
(ii) ▇▇▇▇▇▇ ▇▇▇▇, English legal advisers to TXUA No. 1 and TXUA No. 2;
and
(iii) ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Australian legal advisers to the Guarantee
Trustee and Paying Agent;
(d) (RISK MANAGEMENT) evidence that the Core Borrowers are complying with
their hedging obligations under clause 4.2;
(e) (RATINGS)
(i) evidence that the Issuer has been assigned a rating by both S&P
and ▇▇▇▇▇'▇ and, as at the Closing Date, holds a rating of at
least BBB (from S&P) and Baa2 (from ▇▇▇▇▇'▇);
(ii) confirmation that the MTNs:
(A) at the time of issue, would be rated at least BBB by S&P and
Baa2 by ▇▇▇▇▇'▇ without the issue of the Financial
Guarantee; and
(B) when issued, will be rated "AAA" by S&P and "Aaa" by
▇▇▇▇▇'▇;
(f) (FEE) the Issuer has paid to the Financial Guarantor the Fee in
accordance with the MBIA Fee Letter and otherwise satisfied the
requirements of the Commitment Letter;
(g) (REPRESENTATIONS AND WARRANTIES; CERTIFICATES) a certificate of an
Authorised Officer of each Relevant Company confirming that the
representations and warranties made and given by the Relevant Company
(including in the case of the General Partner, in respect of the
Issuer and each Limited Partner and, in the case of Holdco, in respect
PAGE 24
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
of each Obligor, other than a Limited Partner, which is not a party to
this Agreement) as set forth in this Reimbursement Agreement are true
and correct as of the Closing Date as if made on the Closing Date;
(h) (APPROVALS, ETC) true and correct copies of all approvals, licenses
and consents, if any, required to be obtained in connection with the
completion of the issue of the MTNs;
(i) (LEGALITY) evidence that no statute, rule, regulation or order shall
have been enacted, entered or deemed applicable by any government or
governmental or administrative agency or court that would make the
transactions contemplated by any of the Transaction Documents illegal
or otherwise prevent the consummation of those transactions; and
(j) (NO DEFAULT) evidence that no Event of Default or Potential Event of
Default shall have occurred.
3. REPRESENTATIONS AND WARRANTIES
--------------------------------------------------------------------------------
3.1 REPRESENTATIONS AND WARRANTIES
Each Relevant Company makes the following representations and warranties in
the case of the General Partner, in respect of itself, the Issuer and each
Limited Partner and, in the case of Holdco, in respect of itself and each
Obligor, other than a Limited Partner, which is not a party to this
Reimbursement Agreement):
(a) (INCORPORATION AND EXISTENCE) the General Partner, each Limited
Partner and each Guarantor has been incorporated as a company limited
by shares in accordance with the laws of its place of incorporation,
is validly existing under those laws and has power and authority to
carry on its business as it is now being conducted;
(b) (POWER) the General Partner has power (including, without limitation,
power under the Partnership Deed to bind the Partnership and the
General Partner and each Guarantor has power to enter into the
Transaction Documents to which it is a party and observe its
obligations under them and in the case of the General Partner to issue
the MTNs on behalf of the Issuer;
(c) (AUTHORISATIONS) the General Partner has in full force and effect the
Authorisations necessary for it to bind the Issuer and the General
Partner and each Guarantor has in full force and effect the
Authorisations necessary for it to enter into the Transaction
Documents to which it is a party, to observe its obligations and
exercise its rights under them and to allow them to be enforced;
(d) (VALIDITY OF OBLIGATIONS) its obligations under the Transaction
Documents to which it is a party are valid and binding and are
enforceable against it (and, in the case of the General Partner, the
PAGE 25
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
Issuer) in accordance with their terms except to the extent limited by
equitable principles and laws affecting creditors' rights generally;
(e) (NO CONTRAVENTION OR EXCEEDING POWER) the Transaction Documents to
which it is a party and the transactions under them which involve it
do not :
(i) contravene its constituent documents (if any); or
(ii) contravene any law or obligation by which it is bound or to which
any of its assets are subject which, in the case of the Licences
or the Material Contracts to which it is a party, has or is
likely to have a Material Adverse Effect; or
(iii) cause a limitation on its powers or the powers of its directors
to be exceeded;
(f) (ACCOUNTS) its most recent audited Financial Statements last given to
the Financial Guarantor are a true and fair statement of its financial
position as at the date to which they are prepared and disclose or
reflect all its actual and contingent liabilities as at that date;
(g) (CONSOLIDATED ACCOUNTS) if it is required to prepare consolidated
Financial Statements under the Corporations Law, the most recent
audited consolidated Financial Statements of the economic entity
constituted by it and the entities which it controls last given to the
Financial Guarantor are a true and fair statement of the economic
entity's financial position as at the date to which they are prepared
and disclose or reflect all the economic entity's actual and
contingent liabilities as at that date;
(h) (NO MATERIAL CHANGE) there has been no change in its financial
position since the date to which its Financial Statements last given
to the Financial Guarantor were prepared which is likely to have a
Material Adverse Effect;
(i) (NO MATERIAL CHANGE TO ECONOMIC ENTITY) if it is required to prepare
consolidated Financial Statements under the Corporations Law, there
has been no change in the consolidated financial position of the
economic entity constituted by it and the entities which it controls
since the date to which the consolidated Financial Statements of the
economic entity last given to the Financial Guarantor were prepared
which is likely to have a Material Adverse Effect; (J) (EVENT OF
DEFAULT) no Event of Default which has not been waived or (to the best
of its knowledge, information and belief having made due enquiry)
Potential Event of Default (except if notice of that Potential Event
of Default has been given to the Financial Guarantor) continues
unremedied;
(k) (DEFAULT UNDER LAW - MATERIAL ADVERSE EFFECT) it is not in default
under any Transaction Document to which it is a party or in breach of
a law or obligation affecting it or its assets in a way which is or
has likely to have a Material Adverse Effect;
PAGE 26
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
(l) (LITIGATION) there is no proceeding or any pending or (to the best of
its knowledge, information and belief having made due enquiry)
threatened proceeding affecting it or any of its assets before a
court, Governmental Agency, commission or arbitrator which could
reasonably be expected to result in a Material Adverse Effect;
(m) (NOT A TRUSTEE) it does not enter into, and has not entered into, any
Transaction Document as trustee;
(n) (OWNERSHIP OF PROPERTY) it is the beneficial owner of and has good
title to all property held by it or on its behalf and all undertakings
carried on by it free from Security Interests other than Permitted
Security Interests;
(o) (BENEFIT) it benefits by entering into the Transaction Documents to
which it is a party;
(p) (SOLVENCY) no Insolvency Event has occurred and is continuing in
respect of it;
(q) (NO BENEFIT TO RELATED PARTY) it has not contravened and will not
contravene section 243H or section 243ZE of the Corporations Law by
entering into any Transaction Document or participating in any
transaction in connection with a Transaction Document;
(r) (NO IMMUNITY) it has no immunity from the jurisdiction of a court or
from legal process;
(s) (INFORMATION) to the best of its knowledge and belief, having made due
enquiry, all historical information provided to the Financial
Guarantor by or on behalf of a Relevant Company in connection with the
Transaction Documents is true and accurate in all material respects as
at the date when such information was provided and, to the best of its
knowledge, there are no material facts or circumstances which have not
been disclosed to the Financial Guarantor and which, if disclosed,
might reasonably be expected to significantly adversely affect the
decision of a person considering whether to provide financial
accommodation to a Relevant Company and all forecasts and projections
have been made in good faith;
(t) (SHAREHOLDINGS) from and including the Closing Date:
(i) Texas is the ultimate holding company of the Core Borrowers; and
(ii) the Core Borrowers directly or indirectly own and control all of
the issued shares in each other Obligor;
(u) (CONTROL) Texas ultimately controls the composition of the board of
directors of each Obligor and no person other than Texas and the board
of directors of the relevant Obligor has management and operational
control of an Obligor;
(v) (SUBSIDIARIES) all Subsidiaries of the Core Borrowers are Obligors
other than the Excluded Subsidiaries and the Core Borrowers do not
PAGE 27
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
have any Subsidiaries other than those notified by them to the
Financial Guarantor;
(w) (RANKING) its obligations under the MBIA Documents and the MTN
Documents to which it is a party rank in all respects:
(i) at least equally with all its other unsecured and unsubordinated
indebtedness (actual or contingent and whether present or
future), except liabilities mandatorily preferred by law; and
(ii) in terms of repayment or payment in winding up, in priority to
all Subordinated Indebtedness and other Junior Debt;
(x) (TAXATION) to the best of its knowledge, information and belief having
made due enquiry, it has complied with all material taxation laws in
all jurisdictions in which it is subject to Taxes, it has paid all
material Taxes due and payable by it, other than Contested Taxes;
(y) (INSURANCE) all insurances required under the Deed of Common Terms in
relation to the Issuer's or that Relevant Company's or Obligor's:
(i) business, assets and operations, including loss of revenue
arising from loss or damage to its own assets or the assets of
all suppliers or customers;
(ii) public liability in regard to all operations in respect of
general and products liability, including the failure of gas
supply liability, bushfire liability;
(iii) professional indemnity liability; and
(iv) directors and officers liability,
have been effected and are in full force and effect, it has not made
any material misstatement or misrepresentations or omitted to disclose
any material facts to the insurers or their agents in relation thereto
and it is not aware of any reason giving rise to any right or
likelihood that any such policies may be terminated or that any
insurers thereunder will refuse to pay any claim when made;
(z) (INTELLECTUAL PROPERTY) the Obligors own, or have the right and
licence to use, all trade secrets, confidential information, know-how,
patents, trade marks, designs (whether registered or unregistered),
copyright, and computer programs necessary for the conduct of the Core
Business;
(aa) (ENVIRONMENTAL LAWS) the occupation, use and development of each of
its Properties complies with all Environmental Laws and all
Authorisations required under any Environmental Law relating to those
Properties are in full force and effect other than non-compliances
which are neither likely to have a Material Adverse Effect nor likely
to create any potential liability for the Financial Guarantor;
PAGE 28
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
(bb) (LICENCES) the Licences are validly issued under the Gas Industry ▇▇▇
▇▇▇▇, the Electricity Industry ▇▇▇ ▇▇▇▇ or other relevant legislation,
as the case may be, and are in full force and effect and, to the best
of its knowledge, no event or circumstance has arisen or is likely to
arise which may give rise to any right to revoke, rescind, terminate
or suspend any Licence other than an event or circumstance in respect
of which:
(i) the ORG has issued a `no action' letter which is still in effect
indicating that the ORG will not be taking any action; or
(ii) there has been insufficient time to obtain a `no action' letter
from the ORG and in respect of which it has been demonstrated to
the Financial Guarantor that there has been diligent pursuit of
the issue by the ORG of a `no action' letter and the remedy of
any actual or potential contravention of a Licence condition
arising from the event or circumstance and that a `no action'
letter is likely to be issued by the ORG; or
(iii) the event or circumstance could not reasonably be expected to
cause the ORG to exercise any right to revoke, rescind, terminate
or suspend any Licence;
(cc) (OTHER MATERIAL AUTHORISATIONS) no other material Authorisations are
required which have not been or cannot now be obtained by each Licence
Holder to enable it to conduct its business;
(dd) (SINGLE PURPOSE) it does not carry on any business activities other
than activities in connection with the Core Business;
(ee) (MATERIAL REGULATORY INSTRUMENTS AND CONTRACTS) each Licence Holder is
not:
(i) (without affecting paragraph (cc) above), in breach of any
Material Regulatory Instrument which has or is likely to have a
Material Adverse Effect; and
(ii) in default under any Material Contract to which it is a party
where such default has or is likely to have a Material Adverse
Effect;
(ff) (PARTNERSHIP) the Issuer is a limited partnership established pursuant
to the Partnership Deed and within the meaning of and validly
constituted and existing and registered under Part 3 of the
Partnership ▇▇▇ ▇▇▇▇ of Victoria;
(GG) (EXCLUDED SUBSIDIARIES) none of the Excluded Subsidiaries owns any
assets (other than assets relevant to its status as a body corporate
and which have a nominal value) or conducts or carries on any business
activities; and
(hh) (DEED OF COMMON TERMS) Exhibit A to this Reimbursement Agreement is a
true and complete copy of the Deed of Common Terms.
PAGE 29
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
3.2 RELIANCE ON REPRESENTATIONS AND WARRANTIES
Each Relevant Company acknowledges that the Financial Guarantor has entered
into the MBIA Documents to which it is a party in reliance on the
representations and warranties in this clause.
3.3 REPETITION
Each representation and warranty made under clause 3.1 is made on the
Closing Date and shall be taken to be repeated (by reference to the facts
and circumstances then subsisting) on the date of delivery of a compliance
certificate in accordance with clause 4.1(k) of this Agreement. Each
Relevant Company agrees to notify the Financial Guarantor of anything that
happens that would mean it could not truthfully repeat (by reference to the
facts and circumstances then subsisting) all the representations and
warranties in this clause 3 on the date of delivery of a compliance
certificate in accordance with clause 4.1(k) of this agreement. A
notification under this clause 3.3 does not limit the Financial Guarantor's
rights under clause 5.
4. UNDERTAKINGS
--------------------------------------------------------------------------------
4.1 GENERAL UNDERTAKINGS
Each Relevant Company undertakes to the Financial Guarantor (and the
General Partner also undertakes to procure that the Issuer and each Limited
Partner, and Holdco further undertakes to procure that each Obligor (other
than a Limited Partner) which is not a party to this Reimbursement
Agreement, in each case complies with the undertakings in this clause 4.1
as if it had given them directly to the Financial Guarantor as a party to
this Agreement) to:
(a) (ACCOUNTING RECORDS) keep proper accounting records and ensure that
each of its Subsidiaries does the same;
(b) (INFORMATION) give the Financial Guarantor any document or other
information that the Financial Guarantor reasonably requests from time
to time;
(c) (STATUS CERTIFICATES) on reasonable request from the Financial
Guarantor, if the Financial Guarantor considers in good faith that an
Event of Default or Potential Event of Default may have occurred, give
the Financial Guarantor a certificate signed by two of its directors
which states whether an Event of Default or Potential Event of Default
continues unremedied;
(d) (MAINTAIN AUTHORISATIONS) obtain, renew on time and comply with the
terms of, each Authorisation necessary for it to enter into the
Transaction Documents to which it is a party, to observe its
obligations and exercise its rights under them and to allow them to be
enforced;
(e) (ANNUAL ACCOUNTS) give audited Financial Statements of each Material
Operating Subsidiary for each Financial Year to the Financial
PAGE 30
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
Guarantor as soon as practicable and in any event by no later than 90
days after the end of that year;
(f) (ANNUAL CONSOLIDATED ACCOUNTS) give the audited consolidated Financial
Statements of the Group for each Financial Year to the Financial
Guarantor as soon as practicable and in any event by no later than 90
days after the end of that year;
(g) (HALF YEARLY ACCOUNTS) give the unaudited Financial Statements of each
Material Operating Subsidiary for the first half of each Financial
Year to the Financial Guarantor as soon as practicable and in any
event by no later than 60 days after the end of that half year;
(h) (HALF YEARLY CONSOLIDATED ACCOUNTS) give the unaudited consolidated
Financial Statements of the Group for the first half of each Financial
Year to the Financial Guarantor as soon as practicable and in any
event by no later than 60 days after the end of that half year;
(i) (QUARTERLY ACCOUNTS) give unaudited quarterly consolidated management
accounts for the Group (in a form approved by the Financial Guarantor)
certified by an Authorised Officer of the Core Borrowers for the
Quarters ending 31 March and 30 September in each year to the
Financial Guarantor as soon as practicable and in any event by no late
than 60 days after the end of that Quarter;
(j) (FINANCIAL PROJECTIONS) give annual financial projections (on a
consolidated basis incorporating profit and loss, balance sheet and
cashflow projections together with a brief commentary and listing the
assumptions made in calculating those projections) for the Group for
each Financial Year to the Financial Guarantor as soon as practicable
and in any event by no later than the commencement of that Financial
Year;
(k) (COMPLIANCE CERTIFICATE) give to the Financial Guarantor promptly
after the release of the management accounts for each Quarter, a
certificate which certificate must:
(i) be signed by an Authorised Officer of the Core Borrowers;
(ii) set out in reasonable detail the computations and financial and
other information necessary to establish compliance by the Core
Borrowers with the financial undertakings in clause 4.4;
(iii) state whether any Event of Default or (to the best of its
knowledge, information and belief having made due enquiry)
Potential Event of Default has occurred and is subsisting;
(iv) in the case of the certificate delivered in connection with the
management accounts for the end of a Financial Year, be
subsequently confirmed in writing by its Auditors at the time of
delivery of the annual Financial Statements as being correct so
far as it relates to compliance by the Core Borrowers with the
financial undertakings in clause 4.4; and
(v) state the amount and term of the Hedge Agreements entered into by
the Core Borrowers and Eastern and that the Core Borrowers are in
compliance with their obligations under clause 4.2;
PAGE 31
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
(l) (FINANCIAL STATEMENTS) ensure that the Financial Statements referred
to above:
(i) are prepared in accordance with Australian Accounting Standards;
and
(ii) at the time of delivery, give a true and fair view of the state
of affairs of the Group or the Material Operating Subsidiary, as
the case may be, as at the date on which, and for the period in
respect of which, they are prepared or an explanation of any
divergence between the Financial Statements as presented and such
a true and fair view; and
(m) (INCORRECT REPRESENTATION OR WARRANTY) immediately upon becoming aware
notify the Financial Guarantor if any representation or warranty made
by it or on its behalf in connection with any MBIA Document or MTN
Document is found to be materially incorrect or misleading;
(n) (ENSURE NO EVENT OF DEFAULT) do everything within its powers necessary
to ensure that no Event of Default occurs;
(o) (NOTIFY DETAILS OF EVENT OF DEFAULT OR POTENTIAL EVENT OF DEFAULT) if
an Event of Default or Potential Event of Default occurs, upon
becoming aware, notify the Financial Guarantor giving full details of
the event and any step taken or proposed to remedy it;
(p) (LITIGATION) promptly notify the Financial Guarantor in writing and in
reasonable detail, and keep the Financial Guarantor informed, of any
litigation or administrative or arbitration or other proceedings
before or of any Governmental Agency, court, commission or arbitrator
taking place, commenced, pending or, to the best of its knowledge,
threatened against it or any of its assets:
(i) in the case of a Licence Holder, under section 36 of the Office
of the Regulator-General ▇▇▇ ▇▇▇▇; or
(ii) in the case of a Licence Holder, under the Electricity Industry
▇▇▇ ▇▇▇▇, Gas Industry ▇▇▇ ▇▇▇▇ or the Gas Pipelines Access Law
in relation to a "civil penalty provision", "conduct provision"
or "regulatory provision" (as defined in those Acts or Law); or
(iii) which could reasonably be expected to result in it incurring a
liability in excess of $10,000,000 or which has or is likely to
have a Material Adverse Effect;
(q) (CONSTITUTION) promptly notify the Financial Guarantor of any proposal
to change to its constitution;
(r) (ENVIRONMENTAL MATTERS) promptly notify the Financial Guarantor of any
breach or potential breach of any Environmental Law or other law or of
any complaint or the issuing of any proceedings or notice or
requirements against or upon it in respect of, or which is or is
likely to result in, any potential environmental liability or
PAGE 32
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
contravention of any Environmental Law which has or would have a
Material Adverse Effect;
(s) (REGULATORY) provide notice to the Financial Guarantor as soon as it
becomes aware of any of the following in relation to any Licence
Holder:
(i) any material breach of the Gas Industry ▇▇▇ ▇▇▇▇, the Electricity
Industry ▇▇▇ ▇▇▇▇, the Office of the Regulator-General ▇▇▇ ▇▇▇▇,
the Gas Pipelines Access Law, the Pipelines ▇▇▇ ▇▇▇▇, the Gas
Safety ▇▇▇ ▇▇▇▇, National Electricity Law or the Electricity
Safety ▇▇▇ ▇▇▇▇;
(ii) any breach of a material term of any Licence;
(iii) any actual or proposed amendment, variation or cancellation of
any of the Licences;
(iv) any material breach of a Material Regulatory Instrument or a
Material Contract to which the Licence Holder is a party;
(v) any actual or proposed material amendment or variation of any
Material Contract to which the Licence Holder is a party;
(vi) any actual or proposed issue to a third party of a distribution
licence in respect of a Distribution Area;
(vii) in relation to a class of customers, any actual or proposed
issue to a third party of a gas retail licence in respect of a
class of customers in the Franchise Area prior to those customers
being considered contestable;
(viii) any order or provisional order under section 35 of the Office
of Regulator-General ▇▇▇ ▇▇▇▇ made, served or threatened to be
made or served on the Licence Holder or its business by the ORG;
(ix) any actual or proposed inquiry under Part 4 of the Office of the
Regulator-General ▇▇▇ ▇▇▇▇ concerning the Licence Holder which is
likely to have a Material Adverse Effect;
(x) any actual or proposed price determination under Part 3 of the
Office of the Regulator-General ▇▇▇ ▇▇▇▇ concerning the Licence
Holder prices or charges for distribution services, retail
services or other services and cost pass throughs which
determination (if made) is likely to have a Material Adverse
Effect;
(xi) the ORG is considering or threatening to appoint an administrator
to all or any part of the business of the Licence Holder under
the Gas Industry ▇▇▇ ▇▇▇▇ or the Electricity Industry Act 1993 or
other equivalent legislation in any other relevant jurisdiction;
PAGE 33
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
(xii) the possible or threatened suspension of the Licence Holder
under or pursuant to any Material Regulatory Instrument or
relevant statute;
(t) (NOTICES) procure that any Licence Holder promptly provide to the
Financial Guarantor a copy of any notice given to it under clause 3.4
of a Distribution Licence or a Retail Licence;
(u) (PERMITTED DISPOSALS) promptly notify the Financial Guarantor of any
Permitted Disposals (other than disposals in the ordinary course of
business) by it or any other Obligor of any single asset or assets
having an aggregate value which exceeds $10,000,000 in any Financial
Year and provide the Financial Guarantor with such information about
such Permitted Disposals as the Financial Guarantor reasonably
requests;
(v) (CORE BUSINESS) engage only in, and continue to engage only in,
activities which relate to the Core Business;
(w) (LICENCES) procure that each Licence Holder:
(i) complies in all material respects with the legislation referred
to in clause 4.1(s)(i) and the Material Regulatory Instruments
where failure to comply has or is likely to have a Material
Adverse Effect;
(ii) complies with the terms and conditions of the Licences except in
respect of an event or circumstance in respect of which:
(A) the ORG has issued a "no action" letter, which is still in
effect, to a Licence Holder indicating that the ORG will not
be taking any action in respect of that event or
circumstance; or
(B) there has been insufficient time to obtain a "no action"
letter from the ORG and the Licence Holder has demonstrated
to the Financial Guarantor that it has been diligently
pursuing the issue by the ORG of a "no action" letter and
the remedy of any actual or potential contravention of a
Licence condition arising from the event or circumstance and
that a "no action" letter is likely to be issued by the ORG;
and
(iii) take all necessary steps to remedy any breach by the Licence
Holder of any Material Regulatory Instrument, any Licence or any
Material Contract to which it is a party or any breach of the
legislation referred to in clause 4.1(s)(i) without delay;
(x) (INFRASTRUCTURE) procure that any Obligor which holds a Distribution
Licence protects, keeps, maintains and preserves the Infrastructure in
good working order and condition and renews or replaces when worn out,
obsolete or destroyed all present or future components of the
Infrastructure which are necessary for the conduct of the Core
Business;
PAGE 34
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
(y) (GOOD STANDING) maintain its good standing, ensure that it remains
entitled to carry on business and own property in each jurisdiction in
which such entitlement is necessary; and
(z) (LAWS) comply at all times with the requirements of all applicable
laws and the lawful orders or decrees of any Governmental Agency where
failure to comply is likely to have a Material Adverse Effect;
(aa) (AUTHORISATIONS) procure that each Licence Holder promptly obtains,
maintains and renews on time each Authorisation to be obtained by it
which is necessary for carrying on its Core Business;
(bb) (TAXES) pay when due all Taxes payable by it, other than Contested
Taxes;
(cc) (BUSINESS) ensure that its business is conducted in a proper and
efficient manner in accordance with prudent business practices and in
accordance with legislation referred to in clause 4.1(s)(i), the
Licences, the Material Regulatory Instruments, the Material Contracts
and Good Operating Practice;
(dd) (COPIES) in the case of the Core Borrowers, promptly deliver to the
Financial Guarantor a copy of each report, statement or notice given
to its shareholders in their capacity as such where such report,
statement or notice is required by law or regulation to be given to
such shareholders, and procure that each Material Operating Subsidiary
does the same;
(ee) (INTELLECTUAL PROPERTY) procure that each Licence Holder, maintains,
preserves and protects all copyrights, patents, trade marks (whether
registered or common law marks), trade names, trade secrets,
confidential information, know-how and other intellectual property
material to its business in accordance with prudent business so that
the business carried on in connection with them may be properly and
advantageously conducted at all times;
(ff) (INSURANCE)
(i) keep all of its property and assets insured to the extent it is
insurable on reasonable and commercial terms with insurers in
accordance with clause 6.1(gg) of the Deed of Common Terms;
(ii) maintain insurance for general and products liability,
professional indemnity, directors and officers liability, workers
compensation, public liability and other insurances in accordance
with clause 6.1(gg) of the Deed of Common Terms;
(iii) pay each insurance premium in a manner prescribed by the
insurers to ensure the continuity of cover and, on request from
the Financial Guarantor, produce receipts for the payment;
(iv) not do or permit anything to be done or fail to do anything which
prejudices any insurance;
PAGE 35
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
(v) immediately rectify anything which might prejudice any insurance
and immediately reinstate the insurance if it lapses;
(vi) not, without the consent of the Financial Guarantor, materially
restrict the coverage under, cancel or allow to lapse insurance
in connection with any of its property, assets and liability; and
(vii) notify the Financial Guarantor immediately when an event occurs
which gives rise or might give rise to a claim exceeding
$5,000,000 under or which could materially prejudice a policy of
insurance required by this clause or if any policy of insurance
required by this clause is cancelled;
(gg) (GROUP RELATIONS) except as permitted under clause 4 of the Deed of
Common Terms in relation to any Indebtedness from one Obligor to
another Obligor not take (and procure that no other Obligor takes or
brings) any action or bring any proceedings in respect of any money
owing or due for payment in relation thereto or any failure to comply
with any obligations thereunder without the prior written consent of
the Financial Guarantor;
(hh) (MATERIAL CONTRACTS) ensure that each Material Contract remains in
full force and effect (except where it is discharged or terminated by
performance in accordance with its terms);
(ii) (TXU8 LOAN) ensure that at all times the Indebtedness owed by the TXU8
Borrowers to TXU8 under the TXU8 Loan Agreement (after deducting any
Indebtedness owing by TXU8 to the TXU8 Borrowers) exceeds the amount
of the Consolidated Senior Debt less:
(i) the Amount Owing to any Transactional Bank in respect of or in
connection with any Transactional Banking Facility; and
(ii) any amount which will or may become due for payment (but is not
actually then due for payment) under an MBIA Document;
(jj) (TXU8 BORROWERS) ensure that all Obligors (other than the Core
Borrowers, Holdco and TXUA) are jointly and severally liable for the
Indebtedness owing to TXU8 under the TXU8 Loan Agreement;
(kk) (STATEMENT OF POLICY AND PRINCIPLES) notify the Financial Guarantor of
any change in the Group's statement of policy and principles in
relation to energy trading from that in existence as at the Closing
Date and deliver a copy of the revised statement to the Financial
Guarantor as soon as practicable after the change occurs;
(ll) (RATINGS) in the case of each Core Borrower, use its best endeavours
to ensure that the Issuer maintains at all times during the term of
this Reimbursement Agreement a rating of at least BBB- from S&P and
Baa3 from ▇▇▇▇▇'▇; and
(mm) (SUBORDINATION) ensure that each Relevant Company and Obligor observes
and performs the agreements and undertakings on its part contained in,
and the other provisions of, clause 4 of the Deed of Common Terms for
PAGE 36
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
the benefit of the Financial Guarantor, as if that clause 4 was set
out in full in this Agreement with the Financial Guarantor
constituting a Senior Creditor, and the Guaranteed Money constituting
Senior Debt, for the purposes of that clause.
4.2 HEDGE UNDERTAKINGS
Each of the Core Borrowers undertakes as follows (and will procure that
Eastern performs and observes the undertakings in this clause 4.2 as if it
had given them directly to the Financial Guarantor as a party to this
Reimbursement Agreement):
(a) (PERFORM ▇▇▇▇▇▇) it will perform and observe all of the obligations on
its part (and procure that each Obligor which is not a party to this
Reimbursement Agreement performs and observes all of the obligations
on their part) contained in the Hedge Agreements referred to in this
clause 4.2;
(b) (MINIMUM INTEREST HEDGING) with effect on and from the Closing Date,
it will have in force, or procure that there are in force, Hedge
Agreements with financial institutions under which the Group's
Interest expense in respect of not less than 50% of the aggregate of
all Indebtedness of the Group, with a maturity, program life or
availability period of more than 364 days outstanding from time to
time, is hedged at all times for a period not less than three years.
(If the Interest payable under an instrument in respect of
Indebtedness is calculated by reference to a fixed rate and not a
variable rate, the instrument shall be deemed to be a Hedge Agreement
for the purpose of this paragraph);
(c) (MINIMUM CURRENCY HEDGING) with effect on and from the Closing Date,
it will use its best endeavours to have in force, or procure that
there are in force, Hedge Agreements with financial institutions under
which the Group's full obligations in respect of all Consolidated
Senior Debt of the Group denominated in any currency other than
Australian dollars, are hedged at all times;
(d) (▇▇▇▇ TO MARKET) notwithstanding any other term in any Senior Finance
Document and excluding any Hedge Agreements in place as at the Closing
Date, the Core Borrowers and Eastern shall not be obliged to enter
into any Hedge Agreement in respect of any of the Group's Interest
expense which would require the Core Borrowers and Eastern, under
United States or Australian generally accepted accounting principles,
to ▇▇▇▇ to market the obligations under any such Hedge Agreement,
provided always that the Core Borrowers shall (and shall procure that
Eastern shall) use their best endeavours to hedge the Group's Interest
expense as required by paragraph (b) above; and
(e) (MAXIMUM HEDGING) the Core Borrowers may enter into hedging
arrangements with Hedge Counterparties not otherwise hedged in
accordance with this clause 4.2 but must not at any time enter into
PAGE 37
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
interest rate hedging arrangements to hedge in excess of 100% of the
Group's Interest expense in respect of the Indebtedness of the Group.
4.3 NEGATIVE UNDERTAKINGS
Each Relevant Company undertakes that it will not (and the General Partner
also undertakes to procure that the Issuer and each Limited Partner, and
Holdco further undertakes to procure that each Obligor (other than a
Limited Partner) which is not a party to this Reimbursement Agreement,
complies in each case with the undertakings in this clause 4.3 as if it had
given them directly to the Financial Guarantor as a party to this
Agreement):
(a) (ENCUMBRANCES) create or allow to exist or subsist any Security
Interest on the whole or any part of its present or future property,
except for Permitted Security Interests;
(b) (DEBT RESTRICTION) in the case of:
(i) each Obligor other than the Core Borrowers and TXU8, without the
prior written consent of the Financial Guarantor incur any
Indebtedness other than Permitted Indebtedness;
(ii) any Obligor, without the prior written consent of the Financial
Guarantor, incur any Indebtedness (other than the Junior Finance
Debt or any Indebtedness incurred by an Obligor under any lease
or licence which it is permitted to enter into in accordance with
clause 4.3(q) (except for a lease or licence permitted under
clause 4.3(q)(iii) and (iv))) which is otherwise permitted under
this Reimbursement Agreement to be incurred in favour of a
creditor if that creditor has:
(A) any interest in or rights over (including, without
limitation, a Security Interest) any assets owned or leased
by, or licensed to, or otherwise used by the Group; or
(B) the benefit of any guarantee, indemnity, letter of credit,
legally binding letter of comfort or suretyship, put option
or any similar instrument or obligation ("SUPPORT") in
connection with that Indebtedness,
unless the Financial Guarantor is granted an equivalent interest
in or rights over such assets or support (as the case may be);
and
(iii) TXU8, incur any Indebtedness other than Permitted Indebtedness
permitted under paragraph (a),(b), (c) and (k) of the definition
of "Permitted Indebtedness" in clause 1.1;
(c) (DISPOSALS OF ASSETS) sell, transfer or otherwise dispose of any asset
(whether in a single transaction or in a series of transactions and
whether voluntarily or involuntarily and including by disposal of an
asset which is subsequently leased-back):
PAGE 38
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
(i) which is an interest in a Licence or Material Contract to which
it is a party (except a sale, transfer or other disposal from an
Obligor to another Obligor); or
(ii) any other asset unless it is a Permitted Disposal,
provided that the Financial Guarantor shall reasonably consider (but
without any obligation to approve) any sale and lease-back proposal if
it has received:
(iii) a copy of the documents relevant to the transaction;
(iv) a satisfactory opinion from an Australian law firm or accounting
firm as to the tax implications of the transaction;
(v) in circumstances where the Financial Guarantor's legal counsel
are of the view that there are Australian taxation issues and
have recommended that a ruling be obtained from the Australian
Taxation Office, a favourable ruling from the Australian Taxation
Office; and
(vi) evidence that there will be no adverse impact on the cashflow of
the Obligors or the rights of the Financial Guarantor under the
Transaction Documents;
(d) (SECURITISATION) assign, sub-participate an interest in, otherwise
dispose of, or create or allow to exist any Security Interest over,
receivables arising from network charges, or any other receivables or
other monetary assets except for a securitisation programme where the
proceeds received or receivable by the Group are applied to
permanently repay and reduce Senior Debt and provided that such
securitisation programme constitutes a Permitted Disposal;
(e) (ENVIRONMENTAL LAW) by any act or omission or series of acts or
omissions breach any Environmental Law if the breach has or is likely
to have a Material Adverse Effect;
(f) (SPECULATIVE TRANSACTIONS) engage in or enter into any Derivative
Transaction or any similar transaction, including in respect of energy
trading, other than under Hedge Agreements, unless that transaction
would be a transaction which would ordinarily be carried out by a
prudent, responsible company carrying on a major utilities business
and be in accordance with Good Operating Practice;
(g) (LICENCES) in the case of the Licence Holders, vary or allow to be
varied in any material respect a Licence without the prior written
consent of the Financial Guarantor (such consent not to be
unreasonably withheld);
(h) (VARIATION OF AGREEMENTS) without the prior written consent of the
Financial Guarantor:
(i) vary or allow to be varied any Intercompany Loan Agreement or the
Deed of Common Terms or vary or allow to be varied in any
PAGE 39
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
material adverse respect any other Material Contract to which it
is party;
(ii) cancel, revoke, surrender or repudiate any Material Contract to
which it is a party; or
(iii) terminate, permit the termination of or do anything or refrain
from doing anything which would entitle any other person to
terminate any Material Contract to which it is a party (other
than discharge by performance in accordance with its terms)
unless it is replaced immediately in substantially the same
terms;
(i) (PARTNERSHIPS AND JOINT VENTURES) enter into any partnerships or joint
venture agreements or agreements of similar effect without the prior
written consent of the Financial Guarantor unless entered into in the
course of the Core Business;
(j) (SUBSIDIARIES) create or acquire any Subsidiary without the prior
written consent of the Financial Guarantor unless:
(i) the Financial Guarantor is provided with the same deeds,
documents, instruments and assurances as the Trustee requires in
respect of that Subsidiary in accordance with clause 6.3(j) of
the Deed of Common Terms; and
(ii) the Subsidiary carries on only activities in connection with the
Core Business;
(k) (LOANS) be the creditor in respect of any Indebtedness except for:
(i) deposits made with a Financier in the ordinary course of
business;
(ii) in the case of a Licence Holder, Indebtedness extended to
customers on arm's-length terms in the ordinary course of
business;
(iii) loans which are permitted to be made in accordance with clause
4.5;
(iv) Permitted Indebtedness; or
(v) as approved in writing by the Financial Guarantor;
(l) (ARM'S-LENGTH TERMS) enter into any transaction with any person
otherwise than on arm's-length terms and for full market value;
(m) (PARTNERSHIP) in the case of each Core Borrower, resign from,
terminate or dissolve the Issuer or attempt to do so without the prior
written consent of the Financial Guarantor;
(n) (SUBORDINATED DEBT) incur any Subordinated Indebtedness other than
Qualifying Subordinated Debt;
(o) (EXCLUDED SUBSIDIARY) permit any Excluded Subsidiary to own any assets
(other than assets relevant to its status as a body corporate and
which have a nominal value) or to conduct or carry on any business
PAGE 40
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
activities unless and until the Excluded Subsidiary has executed and
delivered to the Trustee an accession deed in accordance with clause
6.3(r) of the Deed of Common Terms under which it agrees to be bound
as an Obligor under the Deed of Common Terms and a deed under which it
agrees to be bound jointly and severally as a borrower under the TXU8
Loan Agreement;
(p) (HOLDCO) in the case of Holdco, own any assets (other than assets
relevant to its status as a body corporate and which have a nominal
value) or conduct or carry on any business activities except:
(i) its interest in the ALP Loan Agreement and Holdco-TXUA Loan
Agreement; and
(ii) the shares held by it in TXUA and TXU (No. 12) Pty Ltd;
(q) (LEASES) enter into or permit to subsist any lease or licence of any
assets if the aggregate of all rent or licence fees payable in respect
of all such leases and licences exceeds $5,000,000 in any Financial
Year, provided that an Obligor may lease or license:
(i) interests in real property but excluding any plant and equipment
whether or not it is affixed or attached to land and may
constitute a fixture;
(ii) motor vehicles;
(iii) except in the case of TXUA, Generation Assets situated in South
Australia upon the condition that the Obligors are not, and will
not be, in breach of clause 4.3(b) of this Reimbursement
Agreement in connection with the lease or licence;
(iv) except in the case of TXUA, any other Generation Asset or other
Infrastructure Asset provided that:
(A) the Obligors are not, and will not be, in breach of clause
4.3(b) of this Reimbursement Agreement in connection with
the lease or licence;
(B) the arrangements with the lessor or licensor incorporate a
right or benefit in favour of the Financial Guarantor,
whether or not an equivalent right or benefit is granted to
any specific creditor, that in the event of the lessor or
licensor being entitled to repossess the relevant leased or
licensed assets and/or terminate the lease or licence, the
Financial Guarantor will have an entitlement (but no
obligation) which is enforceable against the lessor or
licensor to, either directly or through a nominee:
(aa) receive at least 30 days notice from the lessor or
licensor of the lessor's or licensor's intention to
repossess the relevant leased or licensed assets and/or
terminate the lease or licence;
PAGE 41
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
(bb) remedy or procure the remedy of any defaults by the
relevant Obligor under the lease or licence;
(cc) enter into possession of and manage and operate the
relevant leased or licensed assets as if it were the
lessee or licensee provided it agrees to become bound
by the terms of the lease or licence and perform the
obligations of the lessee or licensee; and
(dd) within a period of not less than 6 months from taking
possession, to sell, transfer, assign, novate or
otherwise dispose of or procure the sale, transfer,
assignment, novation or disposal of the lease or
licence to a respectable, solvent and skilled person
capable of performing the lessee's or licensee's
obligations under the lease or licence who is approved
by the lessor;
(r) (GENERATION ASSETS) acquire after the Closing Date any Generation
Asset if as a result the aggregate value of all Generation Assets
owned or leased by the Group exceeds 20% of the aggregate value of all
assets of the Group;
(s) (TXU8) in the case of TXU8, own any assets (other than assets relevant
to its status as a body corporate and which have a nominal value) or
conduct or carry on any business activities except:
(i) its interest in the TXUA - TXU8 Loan Agreement and the TXU8 Loan
Agreement; and
(ii) its liabilities under any Permitted Indebtedness it is permitted
to incur under this Reimbursement Agreement; and
(iii) the shares held by it in TXU9;
(t) (WESTPAC CHARGE) permit or allow any moneys, liabilities or
obligations to be secured at any time by the Security Interest
referred to in paragraph (e) of the definition of "Permitted Security
Interest" in clause 1.1;
(u) (TXUA) in the case of TXUA, own any assets (other than assets relevant
to its status as a body corporate and which have a nominal value) or
conduct or carry on any business activities except:
(i) its interest in the TXUA - TXU8 Loan Agreement and the Holdco -
TXUA Loan Agreement;
(ii) the shares held by it in TXU8, the TXU8 Borrowers and the
Excluded Subsidiaries;
(iii) any Permitted Indebtedness under this Reimbursement Agreement;
(iv) general administration and support services for the Group;
PAGE 42
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
(v) (SUBORDINATED DEBT) without the prior written consent of the
Financial Guarantor, do or permit to be done any act, matter or
thing which, under clause 4.10 of the Deed of Common Terms, an
Obligor cannot do or permit to be done without the consent of the
Senior Creditors.
4.4 FINANCIAL UNDERTAKINGS
Each Core Borrower undertakes to ensure that:
(a) the ratio of Consolidated Senior Debt (but excluding:
(i) the Hedge Exposures of the Hedge Counterparties and any other
financial institution which is a party to a Hedge Agreement
(applying the definition of Hedge Exposure as if that financial
institution was a Hedge Counterparty); and
(ii) any amount which will or may become due for payment (but is not
actually then due for payment) under an MBIA Document.
to Consolidated Net Worth is no greater than 70:30 at all times;
(b) the Consolidated Interest Cover Ratio as at: (i) 30 September 2000
will be not less than 1.65:1; and (ii) each subsequent Calculation
Date will be not less than 1.75:1; and
(c) the Consolidated Net Worth will not be less than $1,300,000,000 at all
times.
4.5 DISTRIBUTIONS
(a) No Core Borrower shall:
(i) subject to clause 4.5(d), declare or distribute any dividends or
make any other distribution whatever to shareholders or holders
of equity or capital in any Core Borrower;
(ii) redeem or buy back any of the issued share capital of any Core
Borrower or reduce the capital of Core Borrower;
(iii) make any loan to any Core Borrower (in its individual capacity)
or to any Related Entity (other than an Obligor) or make any
payment or repayment of any loan; or
(iv) prepay or repay any amount of principal in respect of Junior
Finance Debt, Qualifying Subordinated Debt or other Subordinated
Indebtedness (unless that Junior Finance Debt, Qualifying
Subordinated Debt or other Subordinated Indebtedness is repaid
(directly or indirectly) by means of or refinanced and replaced
by Qualifying Subordinated Debt or Consolidated Senior Debt); or
(v) pay any Interest in respect of Junior Finance Debt, Qualifying
Subordinated Debt or other Subordinated Indebtedness having a
PAGE 43
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
principal amount which exceeds 15% of the aggregate of
Consolidated Senior Debt and Consolidated Net Worth,
unless the following conditions are satisfied:
(vi) no Event of Default or Potential Event of Default is subsisting
or would occur as a result of the declaration, distribution,
payment, repayment, reduction, redemption or loan; and
(vii) the Consolidated Interest Cover Ratio as at:
(A) 30 September 2000 and 31 December 2000 is not less than
1.90:1; and
(B) each Calculation Date occurring on or after 31 March 2001 is
not less than 2.00:1; and
(viii) the Obligors are not in default in respect of any monetary
obligation which is included in Consolidated Senior Debt.
(b) The Core Borrowers may pay Interest in respect of Junior Finance Debt,
Qualifying Subordinated Debt or other Subordinated Indebtedness having
a principal amount which is 15% or less of the aggregate of
Consolidated Senior Debt and Consolidated Net Worth and the Core
Borrowers may elect upon which Junior Finance Debt, Qualifying
Subordinated Debt or other Subordinated Indebtedness they pay Interest
which they are permitted to pay provided that:
(i) no Senior Debt is due and payable but unpaid;
(ii) no Event of Default or Potential Event of Default has occurred
and is subsisting; and
(iii) the relevant interest rate complies with clause 4.5(c).
(c) The interest rate or effective interest rate applicable to any
Interest which the Core Borrowers are permitted to pay under clause
4.5(b) must be:
(i) where the lender is a Related Entity of the Core Borrowers, no
more than 5% per annum above the Bank ▇▇▇▇ Rate applicable from
time to time ; and
(ii) in all other circumstances, an interest rate or effective
interest rate determined on normal arm's length commercial terms.
(d) Notwithstanding clause 4.5(a), no Core Borrower may declare or
distribute any declared dividends or make any other distribution to
shareholders or holders of equity or capital in any Core Borrower
(other than permitted payments in respect of Junior Finance Debt,
Qualifying Subordinated Debt or other Subordinated Indebtedness) on or
before 31 December 2000.
PAGE 44
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
4.6 TERM OF UNDERTAKINGS
Each undertaking in this clause continues from the date of this
Reimbursement Agreement until the Guaranteed Money is fully and finally
repaid.
5. EVENTS OF DEFAULT
--------------------------------------------------------------------------------
5.1 EVENTS OF DEFAULT
Each of the following is an Event of Default (whether or not it is within
the Issuer's or a Relevant Company's power to prevent it):
(a) (PAYMENT) the Issuer or a Relevant Company does not pay, in the manner
provided in an MBIA Document or an MTN Document, any money payable
(excluding Interest) when due or, in the case of Interest, any
Interest due under an MBIA Document or an MTN Document within two
Business Days of the due date;
(b) (BREACH OF FINANCIAL UNDERTAKINGS) a Core Borrower fails at any time
to comply with the undertakings in clauses 4.4(a) or 4.4(c) or, in
respect of the undertaking in clause 4.4(b):
(i) the Core Borrowers fail to deliver to the Financial Guarantor a
certificate of compliance on the due date as required by clause
4.1(k);
(ii) it is apparent from a certificate of compliance or from the
Financial Statements delivered to the Financial Guarantor in
accordance with clause 4.1 that the Core Borrowers are in breach
of the undertaking in clause 4.4(b);
(iii) a Core Borrower gives notice to the Financial Guarantor of a
breach of its undertaking in clause 4.4(b); or
(iv) the Financial Guarantor gives notice in writing to the Core
Borrowers that they are in breach of the undertaking in clause
4.4(b) and the Core Borrowers are in fact in breach of that
undertaking;
(c) (REGULATORY EVENTS) a Relevant Company fails to comply with its
undertakings, whether made or given in respect of itself or any other
person, in clause 4.1(w) (Licences) or 4.3(h) (Variation of
Agreements) or fails to give notice in accordance with clause 4.1(s)
(Regulatory) in respect of a matter referred to in clause 4.1(s) which
matter has or is likely to have a Material Adverse Effect or is likely
to lead to the revocation or cancellation of a Licence or the
termination of a Material Contract to which it is a party;
(d) (OTHER DEFAULTS) a Relevant Company commits any breach of, or defaults
in the due performance or observance of any of its obligations or
undertakings, whether made or given in respect of itself or any other
person, under the MBIA Documents or the MTN Documents (other than a
breach or default described in paragraph (a), (b) or (c) above) and
PAGE 45
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
the breach or default, if capable of remedy, continues unremedied for
30 days after the Relevant Company receives a notice from the
Financial Guarantor of the breach or default or, where a specific
period of grace is allowed in the MBIA Documents or the MTN Documents
for that breach or default, the breach or default remains unremedied
at the end of that grace period;
(e) (CROSS DEFAULT) any Indebtedness of an Obligor (other than the Junior
Finance Debt or any Qualifying Subordinated Debt) exceeding in
aggregate $10,000,000 (or its equivalent in another currency):
(i) is not satisfied on time or at the end of any applicable period
of grace;
(ii) becomes prematurely payable and is not discharged when due; or
(iii) is not discharged at maturity or when duly called;
(f) (EXECUTION AGAINST PROPERTY) execution of a court order or other legal
right is levied and not stayed, withdrawn or satisfied within 10
Business Days of being made or a judgment is enforced or an order or
Security Interest is enforced, or becomes enforceable, against any
property of an Obligor for an amount exceeding $5,000,000;
(g) (MISREPRESENTATION) any representation, warranty or statement made or
deemed to be made in an MBIA Document or an MTN Document or otherwise
made or deemed to be made by or on behalf of a Relevant Company or any
other Obligor in favour of the Financial Guarantor proves to have been
or is found to have been untrue, incorrect or misleading in any
material respect when made or deemed made;
(h) (INSOLVENCY EVENT) an Insolvency Event occurs in respect of an
Obligor, except in the case of a members voluntary winding up or a
voluntary deregistration or dissolution of an Obligor which owns no
assets and is solvent;
(i) (CESSATION OF BUSINESS) an Obligor stops payment generally, ceases to
carry on its business or a material part of it, or threatens to do
either of those things, except to effect a members voluntary winding
up or to deregister, dissolve, reconstruct or amalgamate while solvent
on terms approved by the Financial Guarantor;
(j) (REDUCTION OF CAPITAL) an Obligor takes action to reduce its capital
or passes a resolution referred to in section 254N of the Corporations
Law, in either case without the prior written consent of the Financial
Guarantor provided that a reduction of capital in relation to shares
held by the Core Borrowers in Holdco to facilitate the payment of any
portion of the Amount Owing to a Senior Creditor shall be permitted;
(k) (SHARE BUY-BACK) an Obligor without the prior written consent of the
Financial Guarantor:
PAGE 46
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
(i) effects, or enters or attempts to enter into an agreement to
effect, a buy-back of any of its shares other than an employee
share scheme buy-back or an odd lot buy-back;
(ii) passes a resolution under section 257C or section 257D of the
Corporations Law, other than a resolution pursuant to an employee
share scheme buy-back, or convenes a meeting to consider such a
resolution; or
(iii) applies to a court to convene any such meeting or to approve any
such resolution or buy-back;
provided that a buy-back of any shares held by the Core Borrowers in Holdco
to facilitate the payment of any portion of the Amount Owing to a Senior
Creditor shall be permitted and for the purposes of this paragraph words
and expressions which are used in this paragraph and which are defined in
the Corporations Law have the meanings given to them in the Corporations
Law; or
(l) (INVALIDITY):
(i) any party to an MBIA Document (other than the Financial
Guarantor) or a person on that party's behalf claims that an MBIA
Document or a material clause in an MBIA Document is wholly or
partly void, voidable or unenforceable;
(ii) any party to an MTN Document (other than the Financial Guarantor
or a Holder of an MTN) or a person on that party's behalf claims
that an MTN Document or a material clause in an MTN Document is
wholly or partly void, voidable or unenforceable; or
(iii) an MBIA Document or an MTN Document or a material clause in an
MBIA Document or an MTN Document is or becomes wholly or partly
void, voidable or unenforceable, and, if that state of affairs is
remediable, each Relevant Company and other party (excluding the
Financial Guarantor and the Holders of the MTNs) to that MBIA
Document or MTN Document fails promptly to take all steps
reasonably requested by the Financial Guarantor to remedy, in
co-operation with the Financial Guarantor and the Holders of the
MTNs, the relevant defect;
(m) (CHANGE IN CIRCUMSTANCES) a change occurs in a circumstance which is
warranted under an MBIA Document or an MTN Document to exist or in the
business, assets or financial condition of an Obligor or any other
event or series of events, whether related nor not, occurs which has,
or is likely to have, a Material Adverse Effect and, if capable of
remedy, is not remedied within 30 days after the General Partner
receives a notice of such event from the Financial Guarantor;
(n) (CHANGE OF CONTROL) Texas ceases for any reason to own, directly or
indirectly, not less than 51% of the issued share capital of each
Obligor;
PAGE 47
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
(o) (CHANGE OF CONSTITUTION) without the prior written consent of the
Financial Guarantor, an Obligor materially changes, or passes a
resolution to materially change, its constitution;
(p) (INVESTIGATION) a person is appointed under the Corporations Law or
other companies and securities legislation to investigate any part of
the affairs of any Obligor unless the Obligor has demonstrated to the
reasonable satisfaction of the Financial Guarantor within 10 Business
Days of the appointment that no Material Adverse Effect will, or is
likely to, result from the investigation or as a consequence thereof;
(q) (SEIZURE) all or any material part of the assets of any Obligor are
seized or otherwise appropriated by, or custody thereof is assumed by
any Governmental Agency or any Obligor is otherwise prevented from
exercising normal control over all or a material part of its assets or
loses any of the rights or privileges necessary to maintain its
existence or to carry on its business, unless the Obligor has
demonstrated to the reasonable satisfaction of the Financial Guarantor
within 10 Business Days of such seizure, appropriation, assumption of
custody or execution ("EXERCISE OF RIGHTS") that no Material Adverse
Effect will, or is likely to, result from such Exercise of Rights or
as a consequence thereof;
(s) (ENVIRONMENTAL EVENT) any Governmental Agency takes any action, or
there is any claim or requirement of substantial expenditure or
alteration of activity, under any Environmental Law, or there is any
breach or threatened breach of any Authorisation, which is likely to
have a Material Adverse Effect or any circumstance arises which may
give rise to such action, claim, requirement or breach and, if capable
of remedy, an Obligor fail to take steps (to the satisfaction of the
Financial Guarantor) to remedy the matter within 30 days of becoming
aware of such Governmental Agency action, claim, breach or threatened
breach; or
(r) (LICENCES):
(i) a Licence Holder fails to take any step necessary or desirable to
preserve a Licence or to avoid a Licence being placed in
jeopardy;
(ii) a Licence is varied in a material adverse respect without the
prior written consent of the Financial Guarantor or is suspended,
cancelled, transferred (except to another Obligor), revoked or
allowed to lapse;
(iii) any person (other than an Obligor) is issued a distribution
licence in respect of all or any part of a Distribution Area and
the issue of the licence is likely to have a Material Adverse
Effect;
(iv) a Licence Holder receives any notice of revocation of a Licence;
(v) an administrator is appointed to all or any part of the business
of a Licence Holder under the Gas Industry ▇▇▇ ▇▇▇▇, or the
PAGE 48
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
Electricity Industry Act 1993 or any corresponding legislation in
a jurisdiction other than Victoria;
(vi) the receipt by a Licence Holder of a notice of intention to serve
a provisional or final enforcement order or the receipt by a
Licence Holder of a provisional or final enforcement order under
the Office of the Regulator-General Act 1994 or any corresponding
legislation in a jurisdiction other than Victoria; or
(vii) a material clause in a Licence is or becomes wholly or partly
void, voidable or unenforceable, or is claimed to be so by an
Obligor or by anyone on its behalf and, if capable of remedy,
that state of affairs is not remedied within 10 Business Days of
the respective Obligor becoming aware of it;
(s) (LEGISLATION) any legislation is passed or amended (including, without
limitation, any amendment to the Gas Industry ▇▇▇ ▇▇▇▇, the
Electricity Industry ▇▇▇ ▇▇▇▇, the Office of the Regulator-General Act
1994) or a Material Regulatory Instrument is amended which has a
Material Adverse Effect;
(t) (VOIDABLE PROVISIONS) a Material Contract or any material provision of
a Material Contract is or becomes void, voidable or unenforceable;
(u) (BREACH) there occurs a breach or event of default under any of the
Material Contracts , or an Obligor fails to exercise or enforce its
rights under any of them, and the breach or failure has or is likely
to have a Material Adverse Effect;
(v) (ANY OTHER EVENT) any other event which a Relevant Company and the
Financial Guarantor may agree shall be an Event of Default for the
purposes of this clause 5 occurs;
(w) (CHANGE IN GROUP STRUCTURE) an Obligor (other than the Core Borrowers)
ceases to be a wholly owned Subsidiary of the Core Borrowers;
(x) (HEDGE AGREEMENT) an event of default (other than in relation to the
Hedge Counterparty) occurs under a Hedge Agreement;
(y) (SUSPENSION) an event of default or default event occurs in relation
to a Licence Holder under the MSO Rules or the National Electricity
Code which is likely to lead to the suspension of the Licence Holder
under those Rules or that Code; or
(z) (SECURITY INTEREST) any Security Interest is created or allowed to
exist or subsist on any shares held in the Core Borrowers or an
Obligor creates or allows to exist or subsist a Security Interest on
the whole or any part of its present or future property except for a
Permitted Security Interest and the Security Interest is not
discharged and released within 30 days after the General Partner
receives a notice of such event from the Financial Guarantor.
PAGE 49
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
5.2 CONSEQUENCES
In addition to any other rights provided by law or any Transaction
Document, at any time after an Event of Default, while the Event of Default
subsists, the Financial Guarantor may do all or any of the following:
(a) by notice to the Issuer and the Relevant Companies, or any of them,
declare the Guaranteed Money immediately due and payable, or to be due
and payable on demand, and the recipient of any such notice shall
immediately pay the Guaranteed Money or pay the Guaranteed Money on
demand (as the case may be);
(b) exercise all or any of its rights under the Transaction Documents; and
(c) take whatever action at law or in equity as may appear necessary or
desirable in its judgment to collect the amounts then due to it under
this Reimbursement Agreement or the Transaction Documents or to
enforce performance and observance of any obligation, agreement or
covenant of the Issuer or any Relevant Company under this
Reimbursement Agreement or the Transaction Documents.
Unless otherwise expressly provided, no remedy herein conferred upon or
reserved is intended to be exclusive of any other available remedy, but
each remedy shall be cumulative and shall be in addition to other remedies
given under this Reimbursement Agreement or the other Transaction
Documents. No delay or omission to exercise any right or power accruing
under this Reimbursement Agreement or any other Transaction Documents upon
the happening of any event set forth in clause 5.1 shall impair any such
right or power or shall be construed to be a waiver thereof, but any such
right and power may be exercised from time to time and as often as may be
deemed expedient. In order to entitle the Financial Guarantor to exercise
any remedy hereunder, it shall not be necessary to give any notice, other
than such notice as may be required by this clause or as may be required
under any MBIA Document or MTN Document.
6. INTEREST ON OVERDUE AMOUNTS
--------------------------------------------------------------------------------
(a) (ACCRUAL) Interest accrues on each unpaid amount which is due and
payable by the Issuer or a Relevant Company under or in respect of any
MBIA Document or MTN Document (including interest payable under this
clause):
(i) on a daily basis up to the date of actual payment from (and
including) the due date or, in the case of an amount payable by
way of reimbursement or indemnity, the date of disbursement or
loss, if earlier;
(ii) both before and after judgment (as a separate and independent
obligation); and
(iii) at the Late Payment Rate.
(b) (PAYMENT) The Issuer and any Relevant Company shall pay interest
accrued under this clause 6 on demand by the relevant creditor and on
PAGE 50
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
the last Business Day of each calendar month. That interest is payable
in the currency of the unpaid amount on which it accrues.
7. FEE
--------------------------------------------------------------------------------
7.1 FEE
The Issuer shall pay to the Financial Guarantor fees (including, without
limitation, legal and rating agency fees), costs and expenses as agreed in
the MBIA Fee Letter.
7.2 CLAIMS PROCESSING FEE
On each occasion that the Financial Guarantor is required under the
Financial Guarantee to pay to the Guarantee Trustee (or the Paying Agent on
its behalf) any amount in respect of a MTN which the Issuer has failed to
pay on the originally scheduled maturity date for that MTN, and the Issuer
subsequently makes, or procures, payment (in whole or in part) of the
amount due on the MTN prior to the expiry of the 2 Business Day grace
period permitted under the Conditions in respect of such payment, the
Issuer shall pay a non-refundable fee of A$100,000 to the Financial
Guarantor within 2 Business Days of such payment of principal by it.
8. TAXATION
--------------------------------------------------------------------------------
In the event that any Australian Taxes (excluding taxes on the net income
of the Financial Guarantor, but including taxes imposed as a result of the
application of Division 15 of Part III of the Australian Income Tax
Assessment Act 1936), duties, withholding or deduction is or becomes
applicable to the Fee or any amount payable to the Financial Guarantor
under this Reimbursement Agreement, the Issuer or Relevant Company which is
obliged to pay such amount will pay to the Financial Guarantor, on demand
at any time, such additional amounts as are necessary to ensure that the
net amount of the Fee (or other amount) received by the Financial Guarantor
after such withholding, deduction or other payment of tax or duty shall
equal the Fee (or other amount) which would have been received or retained
by the Financial Guarantor in the absence of such withholding, deduction or
other payment of tax or duty. Without prejudice to the survival or any
other right or obligation under this Reimbursement Agreement, the
obligations of the Issuer and each Relevant Company contained in this
clause 8 shall survive the termination of this Reimbursement Agreement or
the payment of any other amount payable hereunder.
PAGE 51
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
9. SUBROGATION AND REIMBURSEMENT OBLIGATIONS
--------------------------------------------------------------------------------
9.1 SUBROGATION
The Issuer and each Relevant Company agrees that the Financial Guarantor
shall be subrogated to the rights of the Holders to the extent of any
payment made by the Financial Guarantor under the Financial Guarantee.
9.2 REIMBURSEMENT
The Issuer and each Relevant Company agrees to reimburse the Financial
Guarantor for any payment made by the Financial Guarantor under or in
connection with the Financial Guarantee or any other MBIA Document or MTN
Document, which reimbursement shall be due and payable on the date that any
amount is paid thereunder, (or, in the case of the MBIA Fee Letter, on the
date specified therein) in an amount equal to the amount paid on such date
and all amounts previously paid that remain unreimbursed (or, in the case
of the MBIA Fee Letter, in the amount specified therein), together with
interest on any and all amounts remaining unreimbursed (to the extent
permitted by law, if in respect of any unreimbursed amounts representing
interest). From the date such amounts became due until paid in full, such
amounts shall accrue interest at a rate equal to the Late Payment Rate.
10. INDEMNITIES
--------------------------------------------------------------------------------
On demand the Issuer and each Relevant Company shall indemnify the
Financial Guarantor and each officer, director and employee of the
Financial Guarantor (each an INDEMNIFIED PARTY) against any claim, damages,
demands, loss, cost, charge, liability or expense (or actions in respect
thereof) the Indemnified Party may sustain or incur (in the currency in
which such amounts are incurred) as a direct or indirect consequence of:
(a) the occurrence of any Event of Default or Potential Event of Default;
(b) the breach or alleged breach (other than an allegation by the
Financial Guarantor) of any representation and warranty or undertaking
made or issued by or in respect of the Issuer or a Relevant Company
and which is contained in an MBIA Document or an MTN Document;
(c) any exercise or attempted exercise of any right, power or remedy under
any MBIA Document or MTN Document or any failure to exercise any such
right, power or remedy; and
(d) the Financial Guarantor's participation in the MBIA Documents, the MTN
Documents and the transactions they contemplate including any payment
or claim under the Financial Guarantee.
PAGE 52
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
11. CURRENCY INDEMNITY
--------------------------------------------------------------------------------
11.1 GENERAL
On demand the Issuer and each Relevant Company shall indemnify the
Financial Guarantor against any deficiency which arises whenever, for any
reason (including as a result of a judgment or order or Liquidation):
(a) the Financial Guarantor receives or recovers an amount in one currency
(the PAYMENT CURRENCY) in respect of an amount denominated under an
MBIA document or an MTN Document in another currency (the DUE
CURRENCY); and
(b) the amount actually received or recovered by the Financial Guarantor
in accordance with its normal practice when it converts the Payment
Currency into the Due Currency is less than the relevant amount of the
Due Currency.
11.2 REIMBURSEMENT
Where an amount to be reimbursed or indemnified against under an MBIA
Document or MTN Document is denominated in another currency, if the
Financial Guarantor so requests, the Issuer and each Relevant Company shall
reimburse or indemnify it against the amount of Australian dollars which
the Financial Guarantor certifies that it used to buy the relevant amount
of the other currency in accordance with its normal procedures. If the
Financial Guarantor does not so request, the Issuer and each Relevant
Company shall reimburse or indemnify it in the relevant currency.
12. EXPENSES
--------------------------------------------------------------------------------
On demand the Issuer shall reimburse:
(a) the Financial Guarantor for its expenses in relation to the
preparation, negotiation, execution and completion of the MBIA
Documents, the MTN Documents and any subsequent consent, agreement,
approval, waiver or amendment;
(b) the Financial Guarantor (where it has acted in good faith) for its
expenses in relation to any actual or contemplated enforcement of the
MBIA Documents or MTN Documents, or actual or contemplated exercise,
preservation or consideration of any rights, powers or remedies under
the MBIA Documents or MTN Documents including defending, monitoring or
participating in any litigation or proceeding (including any
insolvency or bankruptcy proceeding in respect of any party to any
MBIA Documents or MTN Document or any associate thereof) relating to
any of the MBIA Documents or MTN Documents, any party to any of the
MBIA Documents or MTN Documents, in its capacity as such a party;
PAGE 53
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
(c) the Financial Guarantor for its expenses in relation to the cure, or
attempted cure, of any default or breach of an MBIA Document or MTN
Document by a Relevant Company;
(d) the Financial Guarantor for its reasonable expenses incurred with
reasonable cause in relation to any inquiry by a Government Agency
concerning a Relevant Company or an Obligor; and
(e) the Financial Guarantor for its expenses in relation to any accounts
established to facilitate payments under the Financial Guarantee.
This includes legal costs and expenses (including in-house lawyers and
accountants charged at their usual rates) on a full indemnity basis and
travelling and out of pocket expenses, any expenses incurred in any review
or environmental audit or in retaining consultants to evaluate matters of
material concern to the Financial Guarantor, and administrative costs
including any time of its executives and employees (whose time and costs
are to be charged at reasonable rates).
13. STAMP DUTIES AND GST
--------------------------------------------------------------------------------
13.1 STAMP DUTIES AND OTHER TAXES
(a) The Issuer shall pay all stamp, transaction, registration and other
Taxes (including fines and penalties) which may be payable in relation
to the execution, delivery, performance or enforcement of any
Transaction Document or any payment or receipt or any other
transaction contemplated by any Transaction Document.
(b) Those Taxes include financial institutions duty, debits tax or other
Taxes payable by return and Taxes passed on to the Financial Guarantor
by any bank or financial institution.
(c) On demand the Issuer shall indemnify the Financial Guarantor against
any liability resulting from delay or omission to pay those Taxes
except to the extent the liability results from failure by the
Financial Guarantor to pay any Tax after having been put in funds to
do so by a Relevant Company.
13.2 GST
All payments to be made or other consideration provided (PAYMENTS) under or
in connection with any MBIA Document and any MTN Document have been
calculated without regard to GST.
(a) If all or part of any such Payment is the consideration for a taxable
supply by the Issuer or a Relevant Company to the Financial Guarantor
or by the Financial Guarantor to the Issuer or a Relevant Company for
GST purposes then, when the payer makes the payment:
(i) it must pay to the payee an additional amount equal to that
payment (or part) multiplied by the appropriate rate of GST
PAGE 54
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
(currently 10%) provided the amount of the payment must not
exceed the actual amount of GST payable on the relevant taxable
supply; and
(ii) the payee will provide to the payer a tax invoice complying with
the relevant GST legislation as a precondition to payment of any
amount under this clause 13.2.
(b) Where under any MBIA Document or MTN Document the Issuer or a Relevant
Company is required to reimburse or indemnify the Financial Guarantor
for an amount or part of an amount, the Issuer or the Relevant Company
will pay the relevant amount (including any sum in respect of GST)
less any GST input tax credit or partial input tax credit the
Financial Guarantor (or its representative member) is entitled to
claim in respect of that amount.
(c) Where under any MBIA Document or MTN Document the Financial
Guarantor is required to reimburse or indemnify the Issuer or a
Relevant Company for an amount or part of an amount, the Financial
Guarantor will pay the relevant amount (including any sum in respect
of GST) less any GST input tax credit or partial input tax credit
the Issuer or the Relevant Company (or its representative member) is
entitled to claim in respect of that amount.
14. SET-OFF
--------------------------------------------------------------------------------
The Financial Guarantor may apply any credit balance in any currency
(whether or not matured) in any of the Issuer's or any Relevant Company's
accounts with the Financial Guarantor towards satisfaction of any sum at
any time due and payable by it to the Financial Guarantor under or in
relation to any Transaction Document.
15. WAIVERS, REMEDIES CUMULATIVE
--------------------------------------------------------------------------------
(a) No failure by Financial Guarantor to exercise, and no delay by
Financial Guarantor in exercising, any right hereunder shall operate
as a waiver thereof. The exercise by Financial Guarantor of any right
hereunder shall not preclude the exercise of any other right, and the
remedies provided herein to Financial Guarantor are declared in every
case to be cumulative and not exclusive of any remedies provided by
law or equity.
(b) The Financial Guarantor shall have the right, to exercise in its
complete discretion, the waiver of any Event of Default hereunder, by
written waiver setting forth the terms, conditions and extent of such
waiver and signed by Financial Guarantor and delivered to the General
Partner. Unless such written waiver expressly provides to the
contrary, any waiver so granted shall extend only to the specific
event or occurrence which gave rise to the Event of Default so waived
PAGE 55
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
and not to any other similar event or occurrence which occurs
subsequent to the date of such waiver.
16. CONSENTS AND OPINIONS
--------------------------------------------------------------------------------
Except where expressly stated the Financial Guarantor may give or withhold,
or give conditionally, approvals and consents, may be satisfied or
unsatisfied, may form opinions, and may exercise its Powers, at its
absolute discretion.
17. SEVERABILITY OF PROVISIONS
--------------------------------------------------------------------------------
The parties agree that any provision of any MBIA Document or MTN Document
to which it is a party which is prohibited or unenforceable in any
jurisdiction is ineffective as to that jurisdiction to the extent of the
prohibition or unenforceability. That does not invalidate the remaining
provisions of that MBIA Document or MTN Document nor affect the validity or
enforceability of that provision in any other jurisdiction.
18. SURVIVAL OF REPRESENTATIONS AND INDEMNITIES
--------------------------------------------------------------------------------
(a) All representations and warranties in any MBIA Document survive the
execution and delivery of the MBIA Documents and the provision of
advances and accommodation.
(b) Each indemnity in any MBIA Document:
(i) is a continuing obligation;
(ii) is a separate and independent obligation; and
(iii) survives termination or discharge of the relevant MBIA Document.
19. MORATORIUM LEGISLATION
--------------------------------------------------------------------------------
To the full extent permitted by law all legislation which at any time
directly or indirectly:
(a) lessens, varies or affects in favour of the Issuer or a Relevant
Company any obligation under an MBIA Document; or
(b) delays, prevents or prejudicially affects the exercise by the
Financial Guarantor of any right, power or remedy conferred by any
MBIA Document,
is excluded from the MBIA Documents.
PAGE 56
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
20. ASSIGNMENTS; REINSURANCE; THIRD PARTY RIGHTS
--------------------------------------------------------------------------------
(a) The Issuer or a Relevant Company may not assign or transfer any of its
rights or obligations under any MBIA Document without the prior
written consent of the Financial Guarantor.
(b) This Reimbursement Agreement shall be a continuing obligation of the
parties hereto and shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted
assigns.
(c) The Financial Guarantor shall have the right to give participations in
its rights under this Reimbursement Agreement and to enter into
contracts of reinsurance with respect to the Financial Guarantee upon
such terms and conditions as the Financial Guarantor may in its
discretion determine and at no cost to a Relevant Company; provided,
however, that no such participation or reinsurance agreement or
arrangement shall relieve the Financial Guarantor of any of its
obligations under this Reimbursement Agreement or under the Financial
Guarantee and a Relevant Company shall not be liable for any
additional or increased costs as a result thereof.
(d) Except as provided herein with respect to permitted assigns,
participants and reinsurers, nothing in this Reimbursement Agreement
shall confer any right, remedy of claim, express or implied, upon any
person, including, particularly, any holders of the MTNs or the
Dealers, other than the parties hereto, and all the terms, covenants,
conditions, promises and agreements contained herein shall be for the
sole and exclusive benefit of the parties hereto.
(e) Neither the Financial Guarantor nor any of its officers, directors or
employees shall be liable or responsible for: (a) the use that may be
made of the Financial Guarantee by the Issuer or any Relevant Company
or for any acts or omissions of the Issuer or any Relevant Company in
connection therewith; or (b) the validity, sufficiency, accuracy or
genuineness of documents delivered to the Financial Guarantor in
connection with any claim under the Financial Guarantee, or of any
signatures thereon, even if such documents or signatures should in
fact prove to be in any or all respect invalid, insufficient,
fraudulent or forged (unless the Financial Guarantor shall have actual
knowledge thereof). In furtherance and not in limitation of the
foregoing, the Financial Guarantor may accept documents that appear on
their face to be in order, without responsibility for further
investigation.
21. TERM
--------------------------------------------------------------------------------
This Reimbursement Agreement shall take effect on the Closing Date and
shall remain in effect in accordance with its terms until the later of:
(a) such time as the Financial Guarantor is no longer subject to a claim
under the Financial Guarantee; and
PAGE 57
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
(b) all amounts payable to the Financial Guarantor by the Issuer and each
Relevant Company under the Transaction Documents and all amounts
payable under the MTNs have been paid in full.
22. FURTHER ASSURANCES
--------------------------------------------------------------------------------
The Issuer and each Relevant Company agrees that it will, from time to
time, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, such supplements hereto and such further
instruments as the Financial Guarantor may reasonably request and as may be
required in the Financial Guarantor's reasonable judgment to effect the
intention of or facilitate the performance of this Reimbursement Agreement.
23. CONFIDENTIALITY
--------------------------------------------------------------------------------
23.1 CONFIDENTIALITY
Subject to the following sub-clause, the Financial Guarantor shall not
disclose any unpublished information or documents supplied by the Issuer or
any Relevant Company in connection with the Transaction Documents which are
specifically indicated by the Issuer or any Relevant Company to be
confidential and which are not in the public domain.
23.2 PERMITTED DISCLOSURE
The Financial Guarantor may disclose any confidential information or
documents:
(a) in enforcing a Transaction Document or in a proceeding arising out of
or in connection with a Transaction Document or to the extent that
disclosure is regarded by the Financial Guarantor as necessary to
protect its interests;
(b) if required under a binding order of a Governmental Agency (including,
without limitation, any governmental or semi-governmental entity,
agency, authority or department of or in the United States of America
or any state thereof) or any procedure for discovery in any
proceedings;
(c) if required under any law or any administrative guideline, directive,
request or policy whether or not having the force of law and, if not
having the force of law, the observance of which is in accordance with
the practice of responsible insurers or financial institutions
similarly situated;
(d) as required or permitted by any Transaction Document;
(e) to its legal advisers, its consultants the Rating Agencies and
reinsurers; or
(f) with the prior written consent of the Issuer or any Relevant Company.
PAGE 58
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
23.3 SURVIVAL OF OBLIGATION
This clause 23 survives the termination of this Reimbursement Agreement.
24. NOTICES
--------------------------------------------------------------------------------
All notices, requests, demands, consents, approvals, agreements or other
communications to or by a party to this Reimbursement Agreement:
(a) must be in writing;
(b) must be signed by an Authorised Officer of the sender; and
(c) will be deemed to be duly given or made:
(i) (in the case of delivery in person or by post or facsimile
transmission) when delivered, received or left at the address of
the recipient shown in paragraph (d) or to any other address
which it may have notified the sender; or
(ii) (in the case of a telex) on receipt by the sender of the
answerback code of the recipient at the end of transmission,
but if delivery or receipt is on a day on which business is not
generally carried on in the place to which the communication is sent
or is later than 4pm (local time), it will be taken to have been duly
given or made at the commencement of business on the next day on which
business is generally carried on in that place.
(d) Notices shall be sent to:
(i) FINANCIAL GUARANTOR:
MBIA Insurance Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇ ▇▇▇▇▇
▇▇▇
Attention: Insured Portfolio Management International
Facsimile: (▇▇▇) ▇▇▇ ▇▇▇▇
(ii) THE ISSUER OR THE GENERAL PARTNER:
TXU Australia Holdings (Partnership) Limited Partnership/TXU
Australia Holdings (AGP) Pty Ltd
▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
Attention: Assistant Treasurer
Facsimile: 613 9229 6222
Telephone: ▇▇▇ ▇▇▇▇ ▇▇▇▇/6226
PAGE 59
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
(iii) THE GUARANTORS
TXU (No.8) Pty Limited/TXU Australia Holdings Pty Ltd
▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
Attention: Assistant Treasurer
Facsimile: 613 9229 6222
Telephone: ▇▇▇ ▇▇▇▇ ▇▇▇▇/6226
25. OBLIGATIONS ABSOLUTE
--------------------------------------------------------------------------------
Subject only to clause 26, the obligations of the Issuer and each Relevant
Company hereunder shall be absolute and unconditional and shall be paid or
performed strictly in accordance with this Reimbursement Agreement under
all circumstances irrespective of:
(a) any lack of validity or enforceability of, or any amendment or other
modifications of, or waiver, with respect to any of the Transaction
Documents or the MTNs;
(b) any exchange or release of any other obligations hereunder;
(c) the existence of any claim, setoff, defence, reduction, abatement or
other right that one party may have at any time against the other; and
(d) any other circumstances that might otherwise constitute a defence
available to, or discharge of, the Issuer or any Relevant Company in
respect of any Transaction Document.
26. LIMITATION OF LIABILITY
--------------------------------------------------------------------------------
The Financial Guarantor acknowledges that the liability of each Limited
Partner to contribute to the debts or obligations of the Issuer is, subject
to the Partnership ▇▇▇ ▇▇▇▇ of Victoria, limited to the amount shown in
relation to it in the Register (as defined in the Partnership ▇▇▇ ▇▇▇▇ of
Victoria) as to the extent to which it is liable to contribute. Nothing in
this Reimbursement Agreement or the other Transaction Documents imposes any
liability on either Limited Partner in excess of the limit referred to in
this clause 26 provided that this limitation does not affect the amount of
any Amount Owing, the Guaranteed Money or the liability of the Issuer or
any Relevant Company under the MBIA Documents and the MTN Documents.
27. AUTHORISED OFFICERS
--------------------------------------------------------------------------------
The Issuer and each Relevant Company irrevocably authorises the Financial
Guarantor to rely on a certificate by any person purporting to be its
director or secretary as to the identity and signatures of its Authorised
Officers. Each Relevant Company warrants that those persons have been
PAGE 60
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
authorised to give notices and communications under or in connection with
the Transaction Documents.
28. GOVERNING LAW AND JURISDICTION
--------------------------------------------------------------------------------
THIS REIMBURSEMENT AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS. THE ISSUER AND EACH RELEVANT COMPANY
IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF ANY COURT OF THE
STATE OF NEW YORK OR ANY UNITED STATES FEDERAL COURT SITTING, IN EACH CASE,
IN THE BOROUGH OF MANHATTAN, ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇
OF AMERICA, AND ANY APPELLATE COURT FROM ANY THEREOF IN ANY SUIT, ACTION OR
PROCEEDING THAT MAY BE BROUGHT BY OR ON BEHALF OF THE FINANCIAL GUARANTOR
IN CONNECTION WITH THIS REIMBURSEMENT AGREEMENT, ANY MBIA DOCUMENT OR ANY
MTN DOCUMENT.
29. AMENDMENTS
--------------------------------------------------------------------------------
This Reimbursement Agreement may be amended, modified or terminated only by
written instrument or written instruments signed by the parties hereto.
30. COUNTERPARTS
--------------------------------------------------------------------------------
This Reimbursement Agreement may be executed in any number of counterparts.
All counterparts together will be taken to constitute one instrument.
31. ACKNOWLEDGEMENTS
--------------------------------------------------------------------------------
The Issuer and each Relevant Company confirms that:
(a) it has not entered into this Reimbursement Agreement in reliance on,
or as a result of, any statement or conduct of any kind of or on
behalf of the Financial Guarantor or any of the Financial Guarantor
(including any advice, warranty, representation or undertaking); and
(b) neither the Financial Guarantor nor any Related Entity of the
Financial Guarantor is obliged to do anything (including disclose
anything or give advice),
except as expressly set out in the MBIA Documents.
PAGE 61
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
32. ENTIRE AGREEMENT
--------------------------------------------------------------------------------
The MBIA Documents and the MTN Documents set forth the entire agreement
among the parties with respect to the subject matter hereof, and this
Reimbursement Agreement supplements and supersedes any agreement or
understanding that may have existed between the parties prior to the date
hereof in respect of such subject matter.
Each attorney executing this Reimbursement Agreement states that he has no
notice of revocation or suspension of his power of attorney.
ISSUER
SIGNED SEALED AND DELIVERED )
by )
for TXU AUSTRALIA HOLDINGS )
(PARTNERSHIP) LIMITED )
PARTNERSHIP being signed sealed and )
delivered by an attorney for TXU )
AUSTRALIA HOLDINGS (AGP) PTY )
LTD, the general partner of the TXU )
Australia Holdings (Partnership) Limited )
Partnership under power of attorney in )
the presence of: ) -----------------------------------
Signature
--------------------------------------
Witness
-------------------------------------- -----------------------------------
Print name Print name
PAGE 62
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
GENERAL PARTNER
SIGNED SEALED AND DELIVERED )
by )
as attorney for TXU AUSTRALIA )
HOLDINGS (AGP) PTY LTD under power )
of attorney in the presence of: ) -----------------------------------
Signature
--------------------------------------
Witness
-------------------------------------- -----------------------------------
Print name Print name
GUARANTORS
SIGNED SEALED AND DELIVERED by )
as attorney for TXU (NO. 8) PTY LTD )
under power of attorney in the )
presence of: )
-----------------------------------
Signature
--------------------------------------
Witness
-------------------------------------- -----------------------------------
Print name Print name
SIGNED SEALED AND DELIVERED )
by )
as attorney for TXU AUSTRALIA )
HOLDINGS PTY LTD under power of )
attorney in the presence of: ) -----------------------------------
Signature
--------------------------------------
Witness
-------------------------------------- -----------------------------------
Print name Print name
PAGE 63
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
FINANCIAL GUARANTOR
MBIA INSURANCE CORPORATION
By:
-----------------------------------
PAGE 64
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
ANNEXURE A
FORM OF FINANCIAL GUARANTEE
--------------------------------------------------------------------------------
FINANCIAL GUARANTEE
Financial Guarantor address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇ of America
Obligor: TXU Australia Holdings (Partnership) Limited Partnership Financial
Guarantee Number: 33043
Guarantors: TXU (No.8) Pty Limited (ABN 15 085 235 776) and TXU Australia
Holdings Pty Limited (ABN 97 086 006 859)
Obligations: A$[*] Notes due [*] issued by the Obligor
Fee: As separately agreed in a fee agreement between the Financial Guarantor and
the Obligor dated on or about the date of this Financial Guarantee.
MBIA INSURANCE CORPORATION (the "Financial Guarantor"), in consideration of the
payment of the Fee, receipt of which is hereby acknowledged, and subject to the
terms of this Financial Guarantee, hereby irrevocably and unconditionally agrees
to pay to Chase Capital Markets Fiduciary Services Australia Limited (ABN 48 002
916 396) as trustee on behalf of the Noteholders, or its successor (the
"Guarantee Trustee") that portion of the principal of and interest on the
above-described obligations (the "Obligations") which shall become Due for
Payment but shall be unpaid by reason of Nonpayment. References herein to the
Guarantee Trustee shall include references to the Paying Agent acting on its
behalf.
The Financial Guarantor will make such payments to the Guarantee Trustee (but
not the Paying Agent) on the later of (i) the date on which such amount is Due
for Payment or (ii) two New York and Sydney Business Days following receipt by
the Financial Guarantor at its address specified above of notification by the
Guarantee Trustee to the Financial Guarantor of Nonpayment.
PAGE 65
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
PRINCIPAL
The Guarantee Trustee shall disburse unpaid principal to a Noteholder (or its
paying agent) subject to (i) the receipt of sufficient cleared funds from the
Financial Guarantor by 3:00pm (Sydney time) one Sydney Business Day before
payment is made to the Noteholder by the Guarantee Trustee and (ii) upon an
assignment to the Financial Guarantor or its Nominee of the rights of the
respective Noteholder to claim payment of the relevant principal amount from the
Obligor. Those rights will be automatically assigned to the Financial Guarantor
or its Nominee pursuant to the terms of the Obligations upon payment by the
Financial Guarantor to the Guarantee Trustee, except that where the Obligations
are not lodged in the Austraclear System the Guarantee Trustee, on behalf of the
Financial Guarantor, shall only pay such unpaid principal upon receipt of a
transfer form (in respect of which any taxes, duties or other governmental
charges have been paid by the relevant Noteholder) satisfactory to the Guarantee
Trustee and duly executed by the Noteholder or such Noteholder's duly authorised
representative, so as to permit ownership of such Obligation to be registered in
the name of the Financial Guarantor or its Nominee.
INTEREST
The Guarantee Trustee shall disburse unpaid interest to a Noteholder (or its
paying agent) subject to (i) the receipt of sufficient cleared funds from the
Financial Guarantor by 3:00pm (Sydney time) one Sydney Business Day before
payment is made to the Noteholder by the Guarantee Trustee and (ii) upon an
assignment to the Financial Guarantor or its Nominee of the rights of the
respective Noteholder to claim payment of the relevant interest amount from the
Obligor. Those rights are automatically assigned to the Financial Guarantor or
its Nominee pursuant to the terms of the Obligations upon payment by the
Financial Guarantor to the Guarantee Trustee.
GUARANTEE TRUSTEE
The Financial Guarantor's obligations hereunder with respect to the Obligations
shall be discharged to the extent that funds are paid by the Financial Guarantor
to the Guarantee Trustee , whether or not such funds are properly applied by the
Guarantee Trustee. This guarantee does not guarantee against non-payment of the
Notes resulting from the insolvency, negligence or any other act or omission of
the Guarantee Trustee or any trustee or paying agent.
SUBROGATION
The Financial Guarantor shall be subrogated to all of the Noteholders' rights to
payment on, and otherwise under and in relation to, the Obligations to the
extent of the disbursements so made by the Financial Guarantor to the Guarantee
Trustee.
U.S. WITHHOLDING TAX
All payments by the Financial Guarantor or the Guarantee Trustee under this
Financial Guarantee shall be made without withholding or deduction for, or on
account of, any taxes, duties, assessments or other governmental charges of
whatever nature imposed, levied, collected, withheld or assessed by the United
PAGE 66
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
States of America or any political subdivision or taxing authority therein or
thereof unless such withholding or deduction is required by law. If any
withholding or deduction is so required, the Financial Guarantor shall pay such
amounts ("Additional U.S. Amounts") for the account of each Noteholder in
respect of which a withholding or deduction has been made as may be necessary in
order that the net amounts receivable by the relevant Noteholder after such
withholding or deduction shall equal the principal and interest which would have
been receivable by such Noteholder from the Obligor in respect of the
Obligations in the absence of such withholding or deduction. Provided, however,
that no such Additional U.S. Amounts shall be payable in respect of any
Obligation:
(a) to or in respect of any Noteholder which is liable or subject to such
withholding or deduction by reason of its having some connection with the
United States of America other than the mere holding of the Obligations;
(b) to or in respect of any Noteholder which would not be subject to such
withholding or deduction if it had provided the Financial Guarantor or the
Guarantee Trustee with a correct, complete and duly executed U.S. Internal
Revenue Service Form W-8 or W-9 (or any successor thereto) with respect to
payments to be made prior to January 1, 2001 or a correct, complete and
duly executed U.S. Internal Revenue Service Form W-8BEN or Form W-9 (or any
successors thereto) with respect to payments to be made thereon or
thereafter, or otherwise made a declaration of non-residence or made any
other claim or filing for exemption to which it is entitled;
(c) to or in respect of any Noteholder which has presented or claimed payment
of such Obligation for payment in the United States of America; or
(d) presented for payment or in respect of which payment is claimed more than
30 days after such Obligation is Due for Payment except to the extent that
the relevant Noteholder would have been entitled to such Additional U.S.
Amounts if it had presented or claimed payment of the Obligation for the
payment on the last day of such period of 30 days.
AUSTRALIAN WITHHOLDING TAX
All payments by the Financial Guarantor or the Guarantee Trustee under this
Financial Guarantee shall be made without set-off or counterclaim and free and
clear of, and without deduction of or on account of, any taxes, levies, duties,
charges, deductions or withholding of any nature (together, "Taxes") now or
hereafter imposed, levied, collected, withheld or assessed in or on behalf of
the Commonwealth of Australia or any political subdivision therein or thereof
unless such withholding or deduction is required by law. In that event the
Financial Guarantor will pay such additional amounts ("Additional Australian
Amounts") as may be necessary in order that the net amount received by the
Noteholders after such withholding or deduction equals the respective amounts
which would otherwise have been receivable in respect of the Obligations in the
absence of such withholding or deduction, except that no Additional Australian
Amounts are payable in relation to any payments in respect of any Obligation:
PAGE 67
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
(a) to, or to a third party on behalf of, a Noteholder who is liable to such
Taxes in respect of such Obligation by reason of the Noteholder having some
connection with the Commonwealth of Australia (or any political subdivision
therein or thereof) other than the mere holding of such Obligation or
receipt of payment (whether in respect of principal, redemption amount,
interest or otherwise) in respect of it;
(b) to, or to a third party on behalf of, a Noteholder who could lawfully avoid
(but has not so avoided) such deduction or withholding by complying or
procuring that any third party complies with any statutory requirements or
by making or procuring that any third party makes a declaration of
non-residence or similar cause for exemption to any tax authority in the
place where payment under the Obligation is made;
(c) presented for payment more than 30 days after the relevant amount is Due
for Payment except to the extent that a Noteholder would have been entitled
to Additional Australian Amounts on presenting the same for payment on the
last day of the period of 30 days assuming, whether or not such is in fact
the case, that day to have been a Business Day;
(d) to, or to a third party on behalf of, a Noteholder who is liable to the
Taxes in respect of the Obligation by reason of the Noteholder being an
associate of the Obligor within the meaning of section 128F(9) of the Tax
Act;
(e) to, or to a third party on behalf of an Australian resident Noteholder, if
that person has not supplied an appropriate tax file number or exemption
details; or
(f) in such other circumstances as are specified in the Pricing Supplement.
INSOLVENCY
In the event that any payment of principal of or interest on an Obligation which
has become Due for Payment and which is made to a Noteholder by the Obligor or a
Guarantor is recovered from the Noteholder pursuant to any applicable Australian
insolvency law in accordance with a final, nonappealable order of a court of
competent jurisdiction as a result of the insolvency of the Obligor or the
Guarantor, such Noteholder will be entitled to payment from the Financial
Guarantor to the extent of such recovery if sufficient funds are not otherwise
available, upon the assignment of the rights in respect of such an Obligation as
referred to above.
DEFINITIONS
"Austraclear" means Austraclear Ltd (ABN 94 002 060 773).
"Austraclear System" means the system operated by Austraclear for holding
securities and electronic recording and settling of transactions in those
securities between members of that system.
"Business Day" means a day on which commercial banks are open for business
(including dealings in foreign exchange and foreign currency deposits ) in the
relevant city.
PAGE 68
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
"Due for Payment", when referring to the principal of Obligations, is when the
originally scheduled maturity date has been reached and does not refer to any
earlier date on which payment is due by reason of call for redemption,
acceleration or other advancement of maturity; and, when referring to interest
on the Obligations, is when the originally scheduled date for payment of
interest has been reached.
"Guarantor" means TXU (No.8) Pty Limited (ABN 15 085 235 776) or TXU Australia
Holdings Pty Limited (ABN 97 086 006 859).
"Nominee" means any person specified by the Financial Guarantor to the Guarantee
Trustee from time to time on or prior to payment by the Financial Guarantor to
the Guarantee Trustee.
"Nonpayment" means the failure of the Obligor and the Guarantors to have
provided sufficient funds to the Paying Agent for payment in full of all
principal of and Scheduled Interest on the Obligations which are Due for Payment
pursuant to the terms of the Obligations.
"Noteholder" means any person, other than the Obligor, any associate (as defined
in section 128F(9) of the Tax Act) or any related body corporate (as defined in
the Corporations Law of Australia) of the Obligor, who at the time of Nonpayment
is the owner of an Obligation.
"Paying Agent " means Chase Capital Markets Fiduciary Services Australia Limited
(ABN 48 002 916 396) or such other person as is from time to time appointed as
Paying Agent in respect of the Obligations.
"Pricing Supplement" means the pricing supplement prepared in relation to the
Obligations and confirmed in writing by each of the Obligor and the Financial
Guarantor.
"Scheduled Interest" means interest (other than default interest) which accrues
pursuant to the terms of the Obligations.
"Tax Act" means the Income Tax Assessment ▇▇▇ ▇▇▇▇, and the Income Tax
Assessment ▇▇▇ ▇▇▇▇, of the Commonwealth of Australia. References to any statute
or other law, or any section or other part thereof, includes any regulation and
other instrument under it and any consolidation, amendment, re-enactment or
replacement of any of them.
All payments to be made by the Financial Guarantor under this Financial
Guarantee are to be made in Australian dollars. This Financial Guarantee is
noncancelable. The Fee for this Financial Guarantee is not refundable for any
reason, including payment of the Obligations prior to maturity. This Financial
Guarantee does not guarantee against loss of any prepayment or other
acceleration payment which at any time may become due in respect of any
Obligation, other than at the sole option of the Financial Guarantor, nor
against any risk other than Nonpayment. THIS FINANCIAL GUARANTEE IS BEING ISSUED
UNDER AND PURSUANT TO, AND SHALL BE CONSTRUED UNDER, THE LAWS OF THE STATE OF
NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
This Financial Guarantee is not covered by the Property/Casual Insurance
Security Fund specified in Article 76 of the New York Insurance Law.
PAGE 69
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
IN WITNESS WHEREOF, the Financial Guarantor has caused this guarantee to be
executed in facsimile on its behalf by its duly authorized officers, this [*]
day of September 2000.
MBIA INSURANCE CORPORATION
---------------------------------------
President
---------------------------------------
Assistant Secretary
PAGE 70
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
ANNEXURE B
VERIFICATION CERTIFICATE
--------------------------------------------------------------------------------
To: MBIA Insurance Corporation
TXU AUSTRALIA HOLDINGS (PARTNERSHIP) LIMITED PARTNERSHIP
CREDIT WRAPPED AUD MEDIUM TERM NOTES
I [*] am a [director] of [*] Limited of [*] (the COMPANY).
I refer to the Reimbursement Agreement (the REIMBURSEMENT AGREEMENT) dated on or
about [*] August 2000 between TXU Australia Holdings (Partnership) Limited
Partnership, TXU Australia Holdings (AGP) Pty Ltd, TXU (No. 8) Pty Ltd, TXU
Australia Holdings Pty Ltd and yourselves.
Definitions in the Reimbursement Agreement apply in this Certificate.
I CERTIFY as follows.
1. Attached to this Certificate are complete and up to date copies of:
(a) the constitution and other constituent documents of the Company
(marked "A");
(b) a duly stamped and registered power of attorney granted by the Company
for the execution of each MBIA Document and MTN Document to which it
is expressed to be a party (marked "B"). That power of attorney has
not been revoked or suspended by the Company and remains in full force
and effect; [and]
[(c) extracts of minutes of a meeting of the directors of the Company
approving execution of each MBIA Document and MTN Document to which it
is expressed to be a party, appointing attorneys for that purpose and
appointing Authorised Officers of the Company for the purpose of the
MBIA Documents and the MTN Documents (marked "C"). Those resolutions
have not been amended, modified or revoked and are in full force and
effect;
[(d) INSERT OTHER MATTERS TO BE VERIFIED, E.G. ANY CERTIFICATE OF
COMPLIANCE.]
2. The following are signatures of the Authorised Officers of the Company and
the persons who have been authorised to sign each MBIA Document and each
MTN Document to which it is expressed to be a party and to give notices and
PAGE 71
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
communications under or in connection with the MBIA Documents and the MTN
Documents.
PAGE 72
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
AUTHORISED OFFICERS
NAME POSITION SIGNATURE
*
*
*
SIGNATORIES
NAME POSITION SIGNATURE
*
*
*
Signed:
Director
Print name
DATED 2000
PAGE 73
REIMBURSEMENT AGREEMENT ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
EXHIBIT A
FORM OF DEED OF COMMON TERMS
--------------------------------------------------------------------------------
PAGE 74
