1 Exhibit B-1
STRATEGIC ALLIANCE AGREEMENT
between
CONSOLIDATED NATURAL GAS COMPANY
and
METNORTH ENERGY
2
CONTENTS
SECTION HEADING PAGE
Parties 1
Recitals 1
1. Definitions 2
2. Objects of Strategic Alliance 2
3. Contribution by ME 2
4. Contribution by CNG 3
5. Project Opportunities 4
6. Management 4
7. Business Plans 5
8. Publicity 6
9. Confidentiality 7
10. Conditions 7
11. Assignment 8
12. Term 8
13. Mediation 8
14. Termination 9
15. Address for Notice 9
16. Relationship of Parties 10
17. Entire Agreement 10
18. Further Assurances 11
19. Variation 11
20. Governing Law 11
21. Interpretation 11
Annexure A 13
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STRATEGIC ALLIANCE AGREEMENT
THIS AGREEMENT is made on the 7th day of November, 1995 between
CONSOLIDATED NATURAL GAS COMPANY of 000 Xxxxxxx Xxxxxx, Xxxxxxxxxx, in the
State of Pennsylvania, United States of America ("CNG"); and
METNORTH ENERGY of 000 Xxxxxx Xxxxxx, Xxxxxx in the State of New South Wales,
Australia ("ME").
WHEREAS
A. The Council of Australia Governments has resolved that to the maximum
extent possible competition should be encouraged in the production,
transmission, distribution and marketing of energy throughout Australia;
B. Competition in electricity and natural gas markets is expected to phase
in commencing in 1996;
C. Australian and foreign enterprises will compete with each other within
Australia and, in order to do so successfully and to avoid being
disadvantaged, Australian enterprises will need to participate in the
international energy markets, especially in Asia;
D. ME is the largest distributor of electricity in Australia and intends to
expand its activities in the energy sector throughout Australia and Asia
and strive to become Australia's leading total energy services
organization;
E. ME does not have expertise in the natural gas sector of the energy
industry;
F. CNG is one of the largest producers, transporters, distributors and
marketers of natural gas and energy services in North America and in
addition has experience in generating, and marketing electricity;
G. CNG has broad experience in operating in a competitive energy market in
North America which is serving as a model for competitive energy market
regimes in many parts of the world including Asia
H. CNG wishes to enter the energy markets of Australia and Asia;
I. ME and CNG have agreed:
- to jointly seek out and evaluate "Opportunities" in the energy
sector in Australia and Asia;
that CNG will provide ME with technical and marketing expertise
to support ME's "total energy solutions" objectives in Australia
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NOW THEREFORE the parties hereby agree as follows:
I. DEFINITIONS
1.1 "EFFECTIVE DATE" has the meaning set out in Clause 12.
1.2 OPPORTUNITY - means a potential investment opportunity or project which
the Parties agree to investigate.
1.3 "PARTY" or "PARTIES" means one or more of the parties to this Agreement.
1.4 "TERRITORY" has the meaning set out in Clause 2.1.
1.5 "INCONTESTABLE ENERGY MARKET" means the market structure in place for
retailing electricity in Australia as at 1 November 1995.
1.6 "VENTURE" has the meaning set out in Clause 2.1.
2. OBJECTS OF STRATEGIC ALLIANCE
2.1 CNG and ME hereby agree to cooperate and work together in a strategic
alliance ("the Venture") with the object of seeking out, identifying,
evaluating and participating in Opportunities in the energy sector
(including without limitation, electricity and gas generation,
production, transmission, distribution, marketing, sale and related
services) in Australia, those Asian countries listed in Annexure "A"
hereto and such other Asian countries as agreed between the parties from
time to time ("xxx Xxxxxxxxx").
2.2 Unless the parties otherwise agree in writing the strategic alliance
shall be strictly limited to the activities specified in this Agreement
and nothing in this Agreement shall be implication or otherwise, operate
to extend the strategic alliance beyond such activities.
2.3 ME will continue its separate business activities in the "uncontestable
energy market" in New South Wales.
3. CONTRIBUTION BY ME
3.1 ME shall contribute the following to the Venture:
(a) expertise and experience in design, construction and operation of
technology relevant to all aspects of the electricity industry
and marketing of electricity;
(b) knowledge of the diversity of electricity customer types and
their needs;
(c) the benefit of its business establishment in Australia and Asia;
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(d) understanding of the industry and general business regulatory
regimes of Australia and throughout Asia;
(e) the recognition of ME's management that markets within the
Territory offer energy investment opportunities;
(f) an established basis for energy operations in Asia;
(g) in respect of any business plan and budget approved by the
Management Committee, such funds, expertise, plant, equipment and
facilities as ME agreed to contribute when it approved the
business plan and budget.
4. CONTRIBUTION BY CNG
4.1 CNG shall contribute the following to the Venture:
(a) expertise and experience in design, construction and operation of
technology relevant to all aspects of the natural gas industry
and marketing of natural gas;
(b) knowledge of the diversity of natural gas customers and their
needs;
(c) business contacts and experience with US headquartered:
(i) multinational corporations with business operations in
Asia; and
(ii) aid agency and financial institutions with interests and
operations in Asia;
(d) a detailed understanding of the regulatory regimes applicable to
the electricity and natural gas industries of North America.
These regimes are models being considered by Governments in Asia
when establishing their own regimes;
(e) the recognition of CNG's management that markets within the
Territory offer energy investment opportunities;
(f) experience as a fully integrated electricity, natural gas and oil
company operating in a competitive and integrated energy market.
(g) in respect of any business plan and budget approved by the
Management Committee, such funds, expertise, plant, equipment and
facilities as CNG agreed to contribute when it approved the
business plan and budget.
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4.2 CNG will locate employees in Sydney to work with ME to jointly identify
and investigate Opportunities within the Territory and to support ME's
marketing and total energy
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solutions within Australia with marketing and technical expertise not
currently available within ME.
5. PROJECT OPPORTUNITIES
5.1 If either Party is offered or becomes aware of, an "Opportunity" to
participate either as an investor or supplier of goods or services to an
energy project in the Territory, that Party shall promptly notify the
other Party, giving full details of the Opportunity. The parties shall
have a period of fourteen (14) days within which to agree to further
investigate and pursue the Opportunity jointly.
5.2 If the Parties elect to proceed together to investigate, pursue and
participate in any Opportunity:
(a) the Parties shall, at their own expense, participate in a joint
evaluation process and enter into further agreements as between
themselves as appropriate, relating to their respective
participation in any such project;
(b) neither Party shall separately submit any tender or bid during
the evaluation process without consultation with the other. If,
having evaluated an Opportunity, either Party elects not to
proceed with such Opportunity, then the remaining Party may make
its own separate arrangements with respect to said Opportunity;
and
(c) the Parties agree to use their best endeavors to reach prompt and
timely agreement with respect to evaluation of Opportunities. If
no agreement is reached within a reasonable time (in the opinion
of either Party reached in good faith), then the issue becomes
subject to mediation under Section 13.
5.3 Notwithstanding the provisions of Clauses 5.1 and 5.2, nothing in this
Agreement shall oblige either Party to make any bid or enter into
further agreements with the other Party in order to participate in
projects in Australia, Asia or elsewhere.
6. MANAGEMENT
6.1 The Venture shall be managed by a Management Committee which will have
such duties and responsibilities as the Parties may from time to time
agree.
6.2 The Management Committee:
(a) shall be comprised of six members (three representatives from
each Party);
(b) shall have a chairman appointed by ME who shall be one of its
representatives;
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(c) chairman shall not have a casting vote;
(d) shall have a quorum for its meetings of two representatives from
each Party.
6.3 The role of the Management Committee shall be:
(a) to manage the relationship between the parties;
(b) to seek out and review Opportunities;
(c) agree upon which Opportunities will be jointly evaluated;
(d) to provide a forum for the Parties to negotiate and structure
appropriate joint venture agreements including capital and
operating budgets for each such joint venture;
(e) to approve business plans for the Venture;
(f) to facilitate coordination of the activities of the Parties in
relation to the Venture, including without limitation in regard
to information exchange and preparation and submission of tenders
and bids;
(g) to review operation of the Venture;
(h) provide a monthly activity report to the Parties;
6.4 Meetings of the Management Committee shall, unless the Parties agree
otherwise, be held quarterly in Sydney or by conference telephone with
members present personally or by proxy.
6.5 CNG and ME shall bear their own expenses, including any travel and
accommodation expenses, incurred in relation to Management Committee
meetings.
7. BUSINESS PLANS
7.1 Within ninety (90) days following the date hereof, the parties shall
prepare an initial business plan and strategy relating to the initial
eighteen (18) months operation of the Venture. Similar plans and
strategies shall be prepared for successive 18 month periods each May
and November. The initial business plan shall have as an objective the
identification of not less than twenty-five (25) Opportunities.
7.2 Except as otherwise provided in this Agreement or separately agreed in
writing by the parties, the parties shall bear their own costs in
connection with the Venture.
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7.3 In recognition that CNG will incur certain Additional Direct Expenses as
a result of supporting ME's marketing activities. CNG will be entitled
to be reimbursed a portion of said Additional Direct Expenses up to a
maximum of US$150,000 for each year during which support is provided.
Additional Direct Expenses are defined as Cost of Living Adjustment.
Employer Paid Post Housing, Home Housing Spendable, Assignee and Family
Home Leave, Education, Home Housing Maintenance, Motor Vehicle Lease and
Maintenance, Other Taxable Allowance. Storage, Moving In and Moving Out
Airfares, Shipment In and Out, Temporary Living Expenses, Relocation
Allowance In and Out, and Home and Host Country Tax Costs. CNG shall be
solely responsible for salary and benefits payable to its employees.
7.4 To the extent that said payment is less than CNG's Additional Direct
Expenses, CNG shall be entitled to receive gross profits (defined as
sales revenue less the cost of product) from the sale of natural gas by
ME in each year when marketing assistance is provided, subject to such
reimbursement not exceeding the total of CNG's Additional Direct
Expenses and in any case capped at US$300,000. In any year when such
gross profits are insufficient to provide full reimbursement, such
shortfall shall be carried forward into the following year or years
until the total Additional Direct Expenses incurred hereunder have been
reimbursed to CNG.
8. PUBLICITY
8.1 A Party may make public announcements and disclosures reasonably
necessary to comply with any statutory or regulatory obligations in
Australia, the United States or elsewhere, provided that if either Party
wishes to make a public announcement or other disclosure of this
Agreement or any other agreement or arrangement between the parties,
that Xxxxx shall notify the other Party of the proposed announcement as
far in advance as is reasonably possible and shall give due
consideration to the wishes of the other Party with regard to the text
of such announcement. Each Party shall keep the other fully informed in
relation to any such announcement or other publicity relating to the
Venture.
8.2 So long as this Agreement is in force, CNG agrees to allow use of its
full name, the letters CNG and/or the word "CONSOLIDATED" in connection
with the Venture upon and subject to CNG's usual guidelines and controls
on such use from time to time.
8.3 So long as this Agreement is in force, ME agrees to allow use of its
full name or approved abbreviations or variations thereof in connection
with the Venture upon and subject to ME's usual guidelines and controls
on such use from time to time.
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9. CONFIDENTIALITY
9.1 CNG and ME agree to use their best endeavors to:
(a) preserve the secrecy of all confidential information disclosed to
it by the other;
(b) keep such information secure and protected against theft, damage,
loss or unauthorized access;
(c) not to use such information for any purpose except as
contemplated by this Agreement; and
(d) ensure that these obligations are observed by its affiliates,
employees, agents and contractors.
9.2 For the purpose of this Section 9, confidential information
includes information relating to the business or affairs of each Party
including technical information relating to energy distribution and
marketing, supplies and buyer information, trade secrets and other sales
and/or marketing information.
9.3 Notwithstanding the provisions of Clause 9.2, confidential
information does not include information disclosed by a Party to the
other Party which:
(a) is in the public domain when received;
(b) subsequently comes into the public domain through no fault of the
recipient;
(c) is lawfully received by the recipient from a third Party on an
unrestricted basis; or
(d) is already known to the recipient prior to receipt.
9.4 The provisions of this clause shall survive the variation,
renewal, termination or expiry of this Agreement.
10. CONDITIONS
10.1 This Agreement and the arrangement between the parties contemplated
hereby shall be subject to:
(a) the approval of the United States Securities and Exchange
Commission under the United States Public Utility Holding Company
Xxx 0000; and
(b) in the case of ME, ratification by ME's Board of Directors.
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10.2 If, in respect of the condition in Sub-Clause 10.1 (a), CNG in its sole
discretion considers the approval has been given subject to unacceptable
conditions or is advised by the above mentioned body that approval is
not required, CNG may waive that condition.
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11. ASSIGNMENT
11.1 Neither Party may assign any of its right under this Agreement without
the prior written consent of the other Party.
11.2 Notwithstanding the provisions of Clause 11.1, either Party may without
any consent of the other Party assign its right under this Agreement to
its wholly owned subsidiary ("Subsidiary") by written notice provided
that the Subsidiary covenants in writing with the other Party to be
bound by all the terms and conditions of this Agreement.
12. TERM
12.1 This Agreement shall become effective on whichever is the later of 1
January 1996 or the date the last of the conditions provided for in
Section 10 is satisfied ("Effective Date") and will continue for an
initial period of three (3) years thereafter. It is anticipated however
that marketing assistance hereunder will not be required after 18 months
from the effective date.
12.2 After the initial term of three (3) years, this Agreement shall be
renewed automatically from year to year for successive one (1) year
terms on the same terms and conditions as are set out herein unless
either Party gives to the other Party at least 90 days' written notice
prior to the expiration of any current term, of its wish that the
agreement not be renewed in which case the agreement shall expire at the
end of that term.
13. MEDIATION
13.1 If a Party is of the opinion that the other Party is in breach of this
Agreement or that the provisions of the Agreement do not meet the needs
of the Venture, it may by notice set out, as the case may be, details
of:
(a) the alleged breach;
(b) the proposed amendments to this Agreement.
13.2 If the Parties are unable to agree within fourteen (14) days, upon:
(a) the need to or how to rectify the alleged breach of this
Agreement; or
(b) the need for or the form of any amendment to the Agreement,
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they will submit themselves to a process of mediation under the guidance
of Mediate Today Pty Ltd or a similar organization.
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13.3 If after mediation the Parties are unable or unwilling to resolve their
differences either Party may then proceed to terminate this Agreement as
provided in Section 14.
14. TERMINATION
14.1 Having first complied, in good faith, with the provisions of Section 13
either Party may terminate this Agreement upon giving not less than
ninety (90) days' written notice of termination to the other Party.
14.2 Notwithstanding the provisions of Clause 14.1, either Party may
terminate this Agreement immediately by written notice to the other
Party if the other Party:
(a) becomes insolvent, has a receiver, manager or administrator
appointed over the whole or any parts of its assets or business;
or
(b) commits an irremediable material breach of this Agreement.
14.3 Neither Party shall be liable to the other for loss or damage of any
kind resulting from expiration or termination of this Agreement in
accordance with its terms provided that such expiration or termination
shall be without prejudice to any cause of action accruing prior to
expiration or termination.
15. ADDRESS FOR NOTICE
15.1 All notices sent in relation to this Agreement must be in writing and
addressed to the recipient at the address or facsimile number set out
below or to such other address or facsimile number as a Party may notify
the other from time to time:
(a) Consolidated Natural Gas Company
(Attention: Xxxxxxx X Xxxxxxxx
Senior Vice President and General Counsel)
Address: 000 Xxxxxxx Xxx.
00xx Xxxxx
Xxxxxxxxxx XX 00000
U.S.A.
Facsimile No: 000-000-0000
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(b) MetNorth Energy
(Attention: Xxxxxxx X Xxxx
General Manager, Natural Gas)
Address: 000 Xxxxxx Xxxxxx
Xxxxxx XXX 0000
XXXXXXXXX
Facsimile No: 0-000-0000
15.2 A notice will be deemed to be duly received:
(a) if sent by hand, when left at the address of the recipient;
(b) if sent by pre-paid post, five (5) days (if posted within
Australia to an address in Australia) or ten (10) days (if posted
from one country to another) after the date of posting;
(c) if sent by facsimile, upon receipt by the sender of an
acknowledgment or transmission report generated by the machine
from which the facsimile was sent indicating that the facsimile
was sent in its entirety to the recipient's facsimile number.
16. RELATIONSHIP OF PARTIES
16.1 Nothing in this Agreement shall constitute the parties as partners,
joint venturers, coowners or constitute either Party as the agent,
employee or representative of the other.
16.2 Each Party agrees not to purport to bind, undertake, commit or enter
into contractual relations with third parties on behalf of the other
Party.
16.3 Each Party agrees, in the event of breach by it of Clause 16.2, to
indemnify and keep indemnified the other Party against any losses,
debts, liabilities, obligations, claims, actions, suit and/or demands
incurred by the Party and arising out of the Party's breach of Clause
16.2.
17. ENTIRE AGREEMENT
17.1 This Agreement contains all the terms agreed between the parties
regarding the subject matter hereof and supersedes any prior agreements,
understandings or arrangements between them, whether oral or in writing
including the Memorandum of Understanding dated August 29, 1995.
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17.2 No representation, undertaking or promise shall be taken to have been
given or be implied from anything written in negotiations between the
parties prior to this Agreement except as set out in this Agreement.
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18. FURTHER ASSURANCES
18.1 Each Party will, at its own expense and when requested by another Party,
promptly do, execute and deliver everything reasonably necessary to the
purpose of or to give full effect to this Agreement.
19. VARIATION
19.1 No variation or amendment to this Agreement shall be effective unless in
writing and signed by authorized representatives of the Parties.
20. GOVERNING LAW
20.1 This Agreement is governed by and construed in accordance with the laws
in force for the time being in the State of New South Wales.
21. INTERPRETATION
21.1 Headings included in this Agreement are for convenience only and shall
be disregarded in construing this Agreement.
21.2 Words importing singular include the plural and vice versa Words
importing natural persons include corporations.
21.3 Reference to annexures are the annexures to this Agreement.
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EXECUTED as an Agreement.
SIGNED for and on behalf of
CONSOLIDATED NATURAL GAS
COMPANY by its duly authorized
representative in the presence of: Xxxxxx X. Xxxxxxxx, Xx.
Signature of
Xxxxxxx X. Xxxxxxxx
Signature of Witness
Xxxxxxx X. Xxxxxxxx
Name of Witness
SIGNED for and on behalf of
METNORTH ENERGY by its duly
authorized representative in the
presence of: Xxxxx X. Xxxxxxxxx
Signature of
A. R. Xxxx
Signature of Witness
A. R. Xxxx
Name of Witness
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ANNEXURE A
SOUTH-EAST ASIAN COUNTRIES
* Bangladesh
* Brunei
* Cambodia
* Peoples' Republic of China
* Hong Kong
* India
* Indonesia
* Japan
* North Korea
* South Korea
* Laos
* Malaysia
* Myanmar
* New Zealand
* Pakistan
* Papua New Guinea
* Philippines
* Singapore
* Sri Lanka
* Thailand
* Vietnam
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AMENDMENT
THIS AMENDMENT dated the 22nd day of November, 1995, to that certain
Strategic Alliance Amendment dated the 7th day of November, 1995, by and
between Consolidated Natural Gas Company ("CNG"), of Pittsburgh, Pennsylvania,
USA, and MetNorth Energy, of Sydney, NSW, Australia.
WHEREAS, CNG and MetNorth desire to amend clause 5.1 of the Strategic
Alliance Agreement between them dated the 7th day of November, 1995.
NOW, THEREFORE, CNG and MetNorth agree as follows:
1. That Clause 5.1 of the Strategic Alliance Agreement be revised to
read, in its entirety, as follows:
"5.1 If the Parties' employees who are assigned to the Management
Committee jointly identify an Opportunity, they shall have a
period of fourteen (14) days within which to agree to further
investigate and pursue the Opportunity jointly."
EXECUTED as an agreement this 22nd day of November, 1995.
CONSOLIDATED NATURAL GAS COMPANY
By Xxxxxxx X. Xxxxxxxx
Senior Vice President and
General Counsel
-- and --
METNORTH ENERGY
By A. R. Xxxx
General Manager, Natural Gas
