Victorian Consolidated Legislation

Loy Yang B Act 1992 - SCHEDULE 1

STATE AGREEMENT THIS AGREEMENT is made the 1992 BETWEEN: The Honourable David
White in his capacity as Minister for Manufacturing and Industry Development,
for and on behalf of the State of Victoria (the "State"); and State
Electricity Commission of Victoria, a body corporate established by the
State Electricity Commission Act 1958 ("SECV"); Loy Yang B Power Station Pty
Ltd (A.C.N. 052 530 551) of Monash House, 15 William Street, Melbourne,
Victoria ("LYBPS"); and Victorian Power Station Investments Pty Ltd, (A.C.N.
054 752 377) of 7th Floor, 228 Victoria Parade, East Melbourne, Victoria
("VPSI"); and Mission Energy Australia Pty Ltd (A.C.N. 055 563 785) of Level
37, 101 Collins Street, Melbourne, Victoria for and on behalf of the Latrobe
Power Partnership ("LPP"), A Limited Partnership of which Mission Energy
Australia Pty Ltd is a general partner. (LYBPS, VPSI and LPP are referred to
in this Agreement as the "Participants", which term includes their respective
successors and permitted assigns under this Agreement).

WHEREAS: A. SECV is currently constructing the Power Station on its own behalf
at Loy Yang near Traralgon in the State of Victoria. B. The Participants
intend to form an unincorporated joint venture to acquire, construct,
commission, test, operate, maintain and decommission the Power Station. C. The
Participants are negotiating a number of agreements relating to or connected
with the Power Station. D. The Participants have requested the State to
provide certain undertakings and assurances relating to the Power Station.

E. Recognising the benefits to the State from the involvement of the
Participants in the completion and operation of the Power Station, the State
has agreed to provide those undertakings and assurances in accordance with and
subject to the terms of this Agreement. NOW IT IS AGREED as follows:
1. INTERPRETATION 1.1. Definitions In this Agreement unless the contrary
intention appears: "Coal Supply Agreement" means the agreement pursuant to
which SECV is to maintain a capability to supply and, as requested by the
Participants, is to supply brown coal from the open cut mine at Loy Yang in
accordance with appropriate quantity and quality limits, for use in the Power
Station, and the Participants are to pay SECV for maintaining the supply
capability and for the coal used; "Commonwealth" means the Commonwealth of
Australia and includes the Government for the time being thereof; "Completion
of Construction Agreement" means the construction agreement pursuant to which
SECV, as independent contractor for the Participants, is to complete
construction of the Power Station (including the first generating unit of
approximately 500 megawatts scheduled for completion in the second half of
calendar year 1993 and the second generating unit of approximately 500
megawatts scheduled for completion in the second half of calendar year 1996);
"Council" has the same meaning as in the Local Government Act 1989; "Joint
Venture" means the unincorporated joint venture to be formed between the
Participants pursuant to the Joint Venture Agreement; "Joint Venture
Agreement" means the agreement providing for the establishment of an
unincorporated joint venture for the purpose of acquiring (as tenants in
common in undivided shares), operating and maintaining the Power Station,
regulating the rights, interests and obligations of the Participants,
providing for the establishment of a management committee to oversee the
operations of the joint venture, establishing the basis upon which disputes in
relation to the joint venture are to be resolved and regulating financial
arrangements between the Participants in relation to the joint venture; "Loy
Yang B Act" means the Act authorising and ratifying the execution of this
Agreement by the State; "Minister" means the Minister of the State for the
time being responsible for administering the Loy Yang B Act; "Miscellaneous
Services Agreement" means the agreement pursuant to which, among other things,
SECV is to supply or provide certain services and supplies (including
electrical energy, ash disposal, saline waste disposal, neutralised chemical
waste disposal, low quality water, high quality water, gas, auxiliary fuel,
drainage and sewage disposal) in connection with the operation of the Power
Station and which is to establish rights of access and easements to facilitate
access to and from the Power Station and adjoining land for the purposes of
supplying these goods and services; "Operating and Maintenance Agreement"
means the agreement pursuant to which Mission Energy Management Australia Pty
Ltd is to be appointed by the Participants to operate and maintain the Power
Station on their behalf in accordance with prescribed performance standards,
planned annual performance levels, and budgets and programs which have been
approved by the management committee established under the Joint Venture
Agreement; "Operator" means the operator appointed under the Operating and
Maintenance Agreement; "Permit" includes a permit, licence, consent, approval,
exemption, permission or other authorisation; "Power Station" means the coal
fired power station of approximately 1000 megawatts at Loy Yang near Traralgon
and known as Loy Yang B and related facilities; "Power Supply Agreement" means
the agreement pursuant to which the Participants will maintain a capability to
supply electricity from the Power Station to SECV, and the Participants will
supply electricity to SECV as it requires, and SECV will pay to the
Participants a capability charge referable to the capability to supply
maintained by the Participants and an energy charge referable to electricity
supplied by the Participants to SECV;

"Project" means the acquisition, construction, commissioning, testing,
operation, maintenance and decommissioning of the Power Station and the sale
and supply of electricity in accordance with the Project Agreements and all
ancillary or related activities; "Project Agreements" means the Joint Venture
Agreement, Operating and Maintenance Agreement, Sale of Assets Agreement,
Completion of Construction Agreement, Power Supply Agreement, Coal Supply
Agreement and Miscellaneous Services Agreement; "Sale of Assets Agreement"
means the agreement pursuant to which, among other things, the Power Station
(to the extent constructed), the land on which the Power Station is being
constructed and various related fixtures and completed chattels will be sold
by SECV to the Participants, as tenants in common in accordance with their
respective shares in the joint venture, for a price specified; "statutory
body" means any body constituted by or under a State or Commonwealth Act for a
public purpose; "taxes" means taxes, levies, imposts, deductions, rates,
charges, withholdings and duties (including, but not limited to, stamp and
transaction duties), together with any related interest, penalties, fines and
other charges, imposed under any Act. 1.2. Interpretation (a) In this
Agreement unless the contrary intention appears:

   (i)  a reference to this Agreement or another instrument includes any
        variation or replacement of either of them;

   (ii) a reference to a statute, ordinance, code or other law includes
        regulations and other instruments under it and consolidations,
        amendments, re-enactments or replacements of any of them; (iii) the
        singular includes the plural and vice versa; (iv) one gender includes
        the other genders;

   (v)  the word "person" includes a firm, a body corporate, an unincorporated
        association or an authority; and

(vi) a reference to a person includes a reference to the person's executors,
administrators, successors, substitutes (including, but not limited to,
persons taking by novation) and permitted assigns. (b) In interpreting this
Agreement, a construction that would promote the purpose or object underlying
this Agreement must be preferred to a construction that would not promote that
purpose or object. 1.3. Appointment of Operator (a) The parties acknowledge
that each Participant has authorised and designated the Operator to act, or
will cause the Operator to be authorised and designated to act, as its
representative on its behalf for those purposes of this Agreement specified in
paragraph (b). A Participant is bound by any act or decision made on its
behalf by the Operator within the scope of its authority as specified under or
in accordance with paragraph (b). A Participant may at any time by notice to
the State revoke or vary the authorisation with respect to all or any of the
purposes specified under or in accordance with paragraph (b). (b) The purposes
referred to in paragraph (a) are:

   (i)  the provision of copies of documents to the Minister under Clauses 3.1
        and 3.2;

   (ii) the seeking of approvals from the Minister under Clause 5; (iii) the
        making of requests under Clauses 4.1, 4.2, 4.3 and 4.4; and (iv) any
        other purpose specified by notice in writing by a Participant to the
        Minister and each other Participant. 1.4. Rights and obligations of
        each Participant under this Agreement are several and no Participant
        is responsible for the obligations of any other Participant.
2. CONDITIONS PRECEDENT 2.1. Clauses 1, 2 and 3 take effect on the date of
this Agreement. 2.2. Subject to Clause 2.6, the remainder of this Agreement
does not come into effect until: (a) each of the Project Agreements, in a form
acceptable to the Minister, has been executed; (b) an agreement or agreements
between the Participants (or the Operator on behalf of the Participants) and
the union or unions whose members are to be employed at the Power Station has
been executed; and (c) the Minister has received confirmation in form and
substance satisfactory to the Minister that financial accommodation to be
obtained by the Participants (other than a Participant which is a statutory
body or a Participant all of the shares in which are owned, directly or
indirectly, by or on behalf of a statutory body or by or on behalf of the
State) for the purposes of the Project and equity to be provided for the
purposes of the Project will not be included in the State's global limit
allocations by the Australian Loan Council.
2.3   (a)	Each party will use all reasonable endeavours to promptly obtain the fulfilment of the condition precedent described in Clause 2.2(a).
(b) Each Participant will use all reasonable endeavours to promptly obtain the
fulfilment of the condition precedent described in Clause 2.2(b). (c) The
Minister will use all reasonable endeavours to promptly obtain the fulfilment
of the condition precedent described in Clause 2.2(c). 2.4. If each condition
in Clause 2.2 is not completely fulfilled or waived on or before 30 June 1992,
or by a later date agreed to by each party before 30 June 1992, then this
Agreement may be terminated by a party after the relevant date on giving 30
days written notice to each other party. 2.5. If this Agreement is terminated
pursuant to Clause 2.4 none of the parties shall have any claim against any
other of them with respect to any matter or thing arising out of, done or
omitted to be done or performed under this Agreement (other than a claim
arising under clause 2.3). 2.6. The condition precedent described in Clause
2.2(c) may be waived in whole or in part by the Minister and any other
condition precedent described in Clause 2.2 may be waived with the consent of
all parties to this Agreement.
3. MINISTER'S COPIES OF AGREEMENTS AND VARIATIONS 3.1. Promptly after
executing any Project Agreement the Participants will ensure that an accurate
copy of it is given to the Minister. 3.2. Promptly after executing any
variation to or modification or replacement of any Project Agreement the
Participants will ensure that an accurate copy of the variation, modification
or replacement is given to the Minister.
4. OBLIGATIONS OF THE STATE 4.1. Procurement of goods and services If any
goods or services for the purposes of the Project are required to be supplied
to SECV, the Participants or the Operator by any agent or instrument of the
Commonwealth or the State, statutory body or Council, the State will, if
requested to do so by SECV, the Participants or by the Operator on behalf of
the Participants: (a) make representations to the relevant agent, instrument,
statutory body or Council for the supply of those goods or services; and (b)
endeavour to procure (but without any obligation to pay for or to subsidise)
the timely supply of those goods or services by the relevant agent,
instrument, statutory body or Council on terms and conditions no less
favourable than those which at the time apply generally to the provision of
such goods or services by the relevant agent, instrument, statutory body or
Council. 4.2. Grants of interests in Crown land The State must grant or cause
to be granted to SECV or the Participants at the request of or on behalf of
any of them such interest in such Crown land as the Minister determines is:
(a) necessary for the purposes of the Project; and (b) not required or
reasonably likely to be required by the State for any purpose (including,
without limitation, its sale), on terms and conditions which are reasonable in
all the circumstances. 4.3. Issue and procurement of Government permits If any
Permit is required by SECV, the Participants, the Operator or any other person
from the Commonwealth or the State or any agent or instrument of the
Commonwealth or the State, statutory body or Council for the purposes of the
Project and the person requiring such Permit has made due application for the
permit to be granted or to be reissued, renewed or extended (as the case may
be), the State will, if requested to do so by SECV, the Participants or by the
Operator on behalf of the Participants: (a) if the Permit is required from the
State, if reasonable to do so and consistent with any requirements generally
applicable to the granting, reissue, renewal or extension of such a Permit,
promptly grant, reissue, renew or extend the Permit; and (b) if the Permit is
required from the Commonwealth or an agent or instrument of the Commonwealth
or the State, a statutory body or Council: (i) make representations to the
Commonwealth or the relevant agent, instrument, statutory body or Council for
the grant, reissue, renewal or extension of the Permit; and (ii) endeavour to
procure (but without any obligation to pay for or to subsidise) the timely
grant of the Permit by the Commonwealth or the relevant agent, instrument,
statutory body or Council on terms and conditions no less favourable than
those which at the time apply generally to the granting, reissue, renewal or
extension of such a Permit by the Commonwealth or the relevant agent,
instrument, statutory body or Council. 4.4. Representations to Commonwealth If
requested to do so by SECV, the Participants (or by the Operator on behalf of
the Participants), the State will make representations to the Commonwealth
with respect to the removal by the Commonwealth of any adverse effect caused
by Commonwealth policies or actions or likely to be caused by proposed
Commonwealth policies or actions on: (a) the progress or cost of construction
of the Power Station; (b) the operation or maintenance of the Power Station;
(c) the legal rights of, or economic benefits to, the Participants under this
Agreement and the Project Agreements; or (d) the formation or operation of the
Joint Venture.



4.5. Non-discrimination (a) The State will not take or continue and will not
authorise or (insofar as it is competent to do so) permit any agent,
instrument or statutory body of the State, or Council, to take or continue any
action or combination of actions (including the imposition of any taxes or the
making of any local laws) which- (i) as between- (A) the Power Station or the
rights, benefits or obligations of any Participant in relation to the Power
Station; and (B) other power stations and related facilities for the
generation of electricity located in the State or the rights, benefits or
obligations of the proprietors of those other power stations and related
facilities- is discriminatory to a material extent in respect of- (C) income,
titles, property or other assets; (D) products, by-products, materials or
services used or produced by, or through the operation of, the Power Station;
or (E) the generation, disposal or sale of electricity produced by the Power
Station; (ii) modifies or reduces the rights or adds to the obligations of the
Participants or the Operator under this Agreement or any Project Agreement in
a way which is discriminatory; or (iii) adds to the rights of the State, or of
any body all the shares in which are owned (directly or indirectly) by or on
behalf of the State and which is a party to a joint venture or partnership
relating to the Power Station, under this Agreement or any Project Agreement
in a way which is discriminatory; or (iv) in the case of a local law, modifies
or reduces the rights or adds to the obligations which the Participants or the
Operator have at the date of this Agreement in a way which is discriminatory.

(b) Without limitation, the matters set out below must be taken into account
in determining whether taking, or continuing an action or combination of
actions contravenes paragraph (a)(i), (ii) or (iii): (i) the purpose of the
action or combination of actions; and (ii) the effect or potential effect of
the action or combination of actions, including: (a) whether the Power Station
or the rights, benefits or obligations of the Participants in relation to the
Power Station is or are the only thing or things affected or potentially
affected; and

   (b)  whether in the same circumstances other power stations and related
        facilities located in the State or the rights, benefits or obligations
        of the proprietors of those other power stations and related
        facilities would be affected or potentially affected; and

   (c)  For the avoidance of doubt, each party to this Agreement acknowledges
        that:

   (i)  the exercise of a right conferred on a person by this Agreement or a
        Project Agreement, or the performance or satisfaction of an obligation
        imposed on a person by this Agreement or a Project Agreement, does not
        contravene paragraphs (a)(i), (ii) or (iii); and

   (ii) if an action or combination of actions is not directed at affecting
        the Power Station or affecting, modifying or reducing the rights or
        benefits or adding to the obligations of a Participant in relation to
        the Power Station but, as a result solely of SECV or another body
        being a statutory body of the State, that action or combination of
        actions affects or potentially affects the Power Station or affects,
        modifies or reduces or potentially affects, modifies or reduces the
        rights or benefits or adds to or potentially adds to the obligations
        of a Participant in relation to the Power Station in a way that is
        different to its effect or potential effect on other power stations
        and related facilities owned by SECV or another statutory body or the
        rights, benefits or obligations of SECV or another statutory body as
        proprietor of those other power stations and related facilities, then
        that action or combination of actions does not contravene paragraphs
        (a)(i), (ii) or (iii). 4.6. Clause 4.5 does not prevent or restrict
        the State, SECV or any agent, instrument or statutory body of the
        State, or Council, taking any action or combination of actions which
        is or involves: (a) a sale, lease or other disposal of all or part of
        any interest in: (i) a power station or the Power Station; or (ii)
        facilities associated with the generation by, or supply, transmission
        or distribution of electricity from, a power station, on terms
        different to those contained in a contract; (b) the supply of
        products, by-products, materials or services used or produced by, or
        through the operation of, a power station on terms different to those
        contained in a contract; (c) the sale, purchase or supply of
        electricity from a power station on terms different to those contained
        in a contract; or (d) the issue of a Permit in respect of a power
        station which Permit is subject to conditions different to the
        conditions applying to an equivalent Permit issued in respect of the
        Power Station, and the taking of an action or combination of actions
        described in paragraphs (a)-(d) does not contravene Clause 4.5. 4.7.
        In Clause 4.6: (a) "power station" means a power station for the
        generation of electricity other than the Power Station; and (b)
        "contract" means a Project Agreement, this Agreement or any other
        agreement entered into for the purposes of the Project by the Operator
        or by one or more Participants.
5. LIABILITY OF THE STATE A variation, modification or replacement of a
Project Agreement after the date of this Agreement does not vary, modify or
reduce the rights or add to the obligations of the State under this Agreement
unless that variation, modification or replacement has been approved for the
purposes of this Agreement by notice in writing by the Minister.
6. ASSIGNMENT
6.1   (a)	Rights under this Agreement or any part of this Agreement cannot be assigned, mortgaged, charged, disposed of or otherwise dealt with by a Participant except as provided in this Clause;
(b) An assignment, mortgage, charge, disposition or other dealing with rights
under this Agreement or any part of this Agreement other than as provided in
this Clause is void. 6.2. A Participant may assign, mortgage, charge, dispose
of or otherwise deal with its rights under this Agreement or any part of this
Agreement with the prior written consent of the Minister. 6.3. A Participant
may mortgage or charge its rights under this Agreement or any part of this
Agreement: (a) in favour of any other party to a Project Agreement to secure
the performance by that Participant of its obligations under that Project
Agreement; and (b) in favour of any other person to secure the payment or
repayment of (or satisfaction of reimbursement obligations with respect to)
financial accommodation provided to or for the benefit of that Participant for
the purpose, directly or indirectly, of financing or refinancing costs of
acquiring, holding, developing or maintaining that Participant's interest in
the Project- subject to that Participant first procuring the mortgagee or
chargee to enter into a deed of covenant in favour of the Minister (in such
form as the Minister reasonably requires) pursuant to which the mortgagee or
chargee agrees that, in the exercise of any power of sale or other power of
enforcement contained in the instrument creating the mortgage or charge or
conferred by law, the mortgagee or chargee will be bound to comply with the
provisions of this Clause 6.

6.4. A Participant may assign, dispose of or otherwise deal with its rights
under this Agreement or any part of this Agreement to an assignee or disponee
of its rights or an equivalent part of its rights under the Joint Venture
Agreement subject to that Participant first procuring the assignee or disponee
to enter into a deed of covenant in favour of the Minister (in such form as
the Minister reasonably requires) pursuant to which the assignee or disponee
agrees to be bound by this Agreement as if named as a party to this Agreement
in place of that Participant from which its interest is derived to the extent
of the interest assigned, disposed of or otherwise dealt with. 6.5. The
Minister may require as a condition to the granting of consent under Clause
6.2 that a Participant procure the execution by the assignee, mortgagee,
chargee, disponee or other relevant person of a deed of covenant in favour of
and in such form as the Minister reasonably requires: (a) in the case of a
mortgagee or chargee, pursuant to which the mortgagee or chargee agrees that,
in the exercise of any power of sale or power of enforcement contained in the
instrument creating the mortgage or charge or conferred by law, the mortgagee
or chargee will be bound to comply with the provisions of this Clause 6; or
(b) in the case of an assignee, disponee or other relevant person, pursuant to
which the assignee, disponee or other relevant person agrees to be bound by
this Agreement as if named as a party to this Agreement in place of the
Participant from which its interest is derived to the extent of the interest
assigned, disposed of or otherwise dealt with. 6.6. A Participant which has
assigned, disposed of or otherwise dealt with its rights under this Agreement
in accordance with this Clause will be released from its obligations under
this Agreement to the extent of the interest so assigned, disposed of or
otherwise dealt with.
7. TERMINATION 7.1. If a Participant goes into liquidation (other than a
voluntary liquidation for the purpose of reconstruction) and there is a
failure by that Participant to observe a financial obligation under the Joint
Venture Agreement which failure is not cured within 90 days, the State may by
notice in writing given to that Participant terminate the obligations of the
State to that Participant under this Agreement. Termination under this Clause
does not prejudice any right, obligation or liability of the State, that
Participant or any other Participant then accrued or incurred under this
Agreement and does not prejudice any right, obligation or liability of the
State or other Participant thereafter arising under this Agreement. 7.2. The
State may by notice in writing to the Participants terminate this Agreement at
any time after the Power Supply Agreement has been terminated (whether by
effluxion of time or otherwise) or discharged, but such termination will be
without prejudice to any right, obligation or liability of the State or a
Participant then accrued or incurred under this Agreement.
8. NOTICES 8.1. A notice, approval, consent or other communication in
connection with this Agreement: (a) must be in writing; and (b) must be left
at the address or sent by registered post (airmail if posted to or from a
place outside Australia) to the address notified by the addressee to each
other party for the purposes of this Agreement or if the addressee notifies
another address then to that address. 8.2. A notice, approval, consent or
other communication takes effect from the time it is received unless a later
time is specified in it. 8.3. A letter sent by registered post is taken to be
received on the seventh (fourteenth, if posted to or from a place outside
Australia) day after posting.
9. VARIATION OF AGREEMENT This Agreement may from time to time be added to,
substituted, cancelled or varied in accordance with section 9 of the
Loy Yang B Act.
10. WAIVER A provision or a right granted under this Agreement may not be
waived except in writing signed by the party granting the waiver.
11. EXERCISE OF RIGHTS A party may, subject to Clause 12, exercise a right,
power or remedy at its discretion, and separately or concurrently with another
right, power or remedy. A single or partial exercise of a right, power or
remedy by a party does not prevent a further exercise of that or of any other
right, power or remedy. Failure by a party to exercise or delay in exercising
a right, power or remedy does not prevent its exercise.
12. APPROVALS AND CONSENTS The Minister and each party must act reasonably in
making a decision or giving or withholding approval or consent under any
provision of this Agreement.
13. REMEDIES CUMULATIVE The rights, powers and remedies provided in this
Agreement are cumulative with and not exclusive of the rights, powers or
remedies provided by law independently of this Agreement.
14. FURTHER ASSURANCES Each party agrees, at its own expense, to do everything
reasonably necessary to give effect to this Agreement (if it is requested to
do so by another party), including, but not limited to, the execution of
documents.
15. GOVERNING LAW, JURISDICTION AND SERVICE OF PROCESS 15.1. This Agreement is
governed by the law in force in Victoria. 15.2. Each party irrevocably and
unconditionally submits to the exclusive jurisdiction of the courts of
Victoria and courts of appeal from them for determining any dispute concerning
this Agreement. Each party waives any right it has to object to any action
being brought in those courts including, but not limited to, claiming that the
action has been brought in an inconvenient forum or that those courts do not
have jurisdiction. 15.3. Without preventing any other mode of service, any
document in an action (including, but not limited to, any writ of summons or
other originating process or any third or other party notice) may be served on
any party by being delivered to or left for that party at its address for
service of notices under Clause 8. IN WITNESS WHEREOF this Agreement has been
executed by the parties on the day and year first above written. SIGNED by
DAVID WHITE in the presence of: THE COMMON SEAL of STATE ELECTRICITY
COMMISSION OF VICTORIA was affixed in the presence of: THE COMMON SEAL of LOY
YANG B POWER STATION PTY LTD was affixed in the presence of: THE COMMON SEAL
of VICTORIAN POWER STATION INVESTMENTS PTY LTD was affixed in the presence of:
THE COMMON SEAL of MISSION ENERGY AUSTRALIA PTY LTD was affixed in the
presence of: __________________