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Corporation to ECNZ and Industrial Research Limited dated 2 October 1997.

(d) A contract between ECNZ and Fletcher Construction New Zealand and South Pacific Limited, Dillingham Construction International Inc. and Ilbau Gesellschaft mbH relating to the construction and maintenance of the Manapouri second tailrace tunnel (undated).

(e) The agreement between Her Majesty the Queen in respect of the Government of New Zealand acting by and through the Minister of Electricity, and Consolidated Zinc Proprietary Limited dated 15 August 1963.

(f) The agreement to Supply Electricity between Her Majesty the Queen in right of New Zealand and Comalco Power (New Zealand) Limited dated 30 April 1981.

(g) The Electricity Supply Agreement between ECNZ, Comalco Power (N.Z.) Limited and New Zealand Aluminium Smelters limited dated 20 August 1993.

(h) The Tiwai Point Connection Contract between ECNZ and Transpower New Zealand Limited dated 9 November 1993.

(i) A deed between ECNZ and Contact Energy Limited dated 16 January 1996.

(j) The Contact Deed between ECNZ, Comalco Power (N.Z.) Limited and New Zealand Aluminium Smelters Limited dated 30 October 1997.

(k) An agreement between ECNZ and the Royal New Zealand Ballet for sponsorship until 30 June 2000.

(l) ARC Project Generation Control System Contract between ECNZ and Voith Hydro Inc dated 22 January 1997 (ECNZ contract # EC96108).

If ECNZ and South Island SOE are unable to arrange for any of the above agreements to be novated or assigned with effect from the settlement time then ECNZ will, in accordance with clause 2.5 (c) of the Draft South Island Agreement, hold that agreement on trust for the benefit of South Island SOE and South Island SOE will be responsible for the performance of ECNZ’s obligations under that agreement and will indemnify ECNZ for any liability arising from that agreement.

7. ECNZ and South Island SOE to enter into New Contracts

ECNZ and/or South Island SOE (as the case may be) are to enter into the following agreements with effect from the settlement time:

(a) An agreement between South Island SOE and the Crown under which the Crown will provide equity funding to South Island SOE.

(b) A deed of assumption and release between ECNZ, South Island SOE and the Crown relating to certain rights and obligations of the parties arising under the Crown Sale Deed substantially in the form set out in Schedule 3 of the Draft South Island Agreement.

(c) An agreement between South Island SOE and ECNZ under which ECNZ will provide establishment funding to South Island SOE. This will be on back-to-back terms with ECNZ’s current debt facilities.

(d) An offsetting hedge contract between ECNZ and Waikato SOE, Huntly SOE and South Island SOE providing for the allocations, in the proportions agreed, of all hedge income received and liabilities incurred under ECNZ’s current hedge contracts and a hedge allocation agreement between ECNZ and Huntly SOE, Waikato SOE and South Island SOE under which those proportions are agreed.

(e) Heads of agreement between South Island SOE and Transpower New Zealand Limited relating to the interim connection of the Power Stations to the national grid and other transmission services including the HVDC link.

(f) Intellectual Property Agreement.

(g) The Common Store Agreement referred to in the Intellectual Property Agreement.

(h) An agreement between Huntly SOE, Waikato SOE and South Island SOE to provide spot and contract revenue data to an independent third party to facilitate the calculation of prices under the Comalco agreements held by South Island SOE.

ECNZ and South Island SOE are required to enter into a loan agreement for a short term working capital facility to be provided by ECNZ during the period from the date of these directions to the settlement date.

8. Operation of Business by ECNZ prior to Settlement

ECNZ is until settlement:

(a) to continue to operate in accordance with the 1998–99 business plan and budgets, its statement of corporate intent and current management procedures and policies.

(b) to continue to operate the power stations and other assets as a reasonable and prudent operator.

(c) to not enter into any contract which would have a material impact on the future viability or competitiveness of South Island SOE or which will impact on South Island’s cashflow by $500,000 or more in any 1 year or alter the value of the assets or liabilities to be transferred to South Island SOE by $5,000,000 except with prior consultation with South Island SOE and, if the contract does not form part of ECNZ’s current business plan, with the approval of South Island SOE. Consultation and approval will not be required in emergency situations.

9. Transfer of Generation Group Employees

South Island SOE is to work in co-operation with ECNZ regarding ECNZ terminating the employment of the Generation Group Employees at the same time as South Island SOE makes those employees formal offers of employment on substantially the same terms and conditions as the employees’ current arrangements.

10. No Reliance on ECNZ

(a) ECNZ will transfer no better title to any asset to South Island SOE than ECNZ has at settlement time.

(b) South Island SOE is to release ECNZ from all liability and claims in respect of the agreement, other than for performance by ECNZ under the agreement.

(c) South Island SOE is to acknowledge that it has not relied on any statement, representation, warranty, condition, promise or undertaking by or on behalf of ECNZ at any time or in any circumstances unless expressly set out in the agreement.

Schedule 3

Assets and liabilities to be transferred to Waikato SOE and associated terms and conditions

Interpretation

In this Schedule 3, except where the context requires otherwise:

Expressions defined in the Draft Waikato Agreement have the same meanings in this Schedule 3;

References (by number) to clauses are to the clauses in the Draft Waikato Agreement.