CRL Project Delivery Agreement

Execution Version

Project Delivery Agreement City Rail Link Project Her Majesty the Queen in right of New Zealand (Crown) Auckland Council (Council) City Rail Link Limited (CRLL)

20th Floor, Lumley Centre, 88 Shortland Street, Auckland 1010 T +64 9 3539700 F +64 9 3539701 www.minterellison.co.nz 18382147 Agreement

Project Delivery Agreement Details

5

Part A – General Matters

7

1.

Definitions and Interpretation

7

2.

Conditions Precedent

7

Part B – Nature of Parties’ Obligations

8

3.

8

Nature of Parties’ Roles

Part C – Delivery of CRL Project by CRLL

9

4.

9

Project Delivery

Part D – CRL Project Contracts

14

5.

Project Contracts

14

6.

Land and Asset Management

17

Part E – Funding by Sponsors

20

7.

Funding commitment

20

8.

Forecast Project Costs

21

9.

Mitigation of Costs

21

10.

Permitted Funding Purposes

21

11.

Sponsor failure to pay

22

12.

Asset sale proceeds

22

Part F – Interaction, Monitoring, Information and Records

23

13.

Sponsor Interface

23

14.

Reporting and records

24

15.

Audits

26

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 2

Part G – Adverse Events and Monitoring Points

27

16.

Adverse events

27

17.

Monitoring Points

27

18.

CRLL Default

29

19.

Remedial Action Plan

30

Part H – General Provisions

32

20.

Intellectual Property

32

21.

Communications

33

22.

Disputes

33

23.

Company representations and warranties

33

24.

Tax Treatment

34

25.

Confidentiality

34

26.

Notices

35

27.

General Matters

36

Schedule 1 : Definitions and Interpretation

40

Schedule 2 : Project Scope

51

Schedule 3 : Sponsors’ Requirements

52

Schedule 4 : Review and Approval Process

57

Schedule 5 : Project Delivery Schedule

66

Schedule 6 : Forecast Project Costs

69

Schedule 7 : Quarterly Reports

70

Schedule 8 : Completion Requirements

71

Schedule 9 : Change Procedure

74

Schedule 10 : Funding

79

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 3

Schedule 11 : Funding request

83

Schedule 12 : Disputes Resolution

85

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 4

Details Date

30 June 2017

Parties Name Short name

Her Majesty the Queen in right of New Zealand Crown

Name Short name

Auckland Council Council

Name Short name

City Rail Link Limited CRLL

Background A

The CRL Project is a significant infrastructure project to enhance the capacity and performance of Auckland rail services and improve transport outcomes in Auckland.

B

As further described in Schedule 2 of this Agreement, the CRL Project consists of:

C

D

(a)

a 3.45 km twin tunnel underground metro rail link, connecting Britomart Station to the Western Line in the vicinity of the existing Mt Eden Station, doubling rail capacity into the Auckland City centre; and

(b)

two new underground stations, modification to Mount Eden station, modifications to the Western Line at the connection points, modifications at Britomart Station and modifications to the existing railway network.

The Crown and Council have, through a Sponsors’ Agreement dated on or around the date of this Agreement, agreed to fund the development and delivery of the CRL Project (which to date has been managed through Auckland Transport), and collaborate on other initiatives, with the following overarching objectives: (a)

improve transport access into and around the Auckland City centre for a rapidly growing Auckland;

(b)

improve the efficiency and resilience of the transport network of urban Auckland;

(c)

significantly contribute to lifting and shaping Auckland’s economic growth;

(d)

provide a sustainable transport solution that minimises environmental impacts;

(e)

contribute positively to a liveable, vibrant and safe city; and

(f)

deliver the CRL Project with a ‘best for Auckland’ approach.

The Crown and Council have incorporated CRLL to deliver the CRL Project on the terms of this Agreement.

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 5

E

The parties record their shared expectation that the management, delivery and completion of the CRL Project, and the engagement between CRLL and the Sponsors, will seek to be an exemplar model for the efficient and effective provision of public infrastructure through central and local government collaboration.

F

This Agreement sets out:

G

(a)

the terms on which CRLL is to deliver the CRL Project;

(b)

the basis of Sponsor funding for CRLL to deliver the CRL Project;

(c)

processes for Sponsor assurance in relation to delivery of the CRL Project; and

(d)

the key delivery objectives and other terms and conditions on which CRLL is appointed to deliver the CRL Project.

The Parties shall promote the following relationship behaviours in all their dealings with the other Parties in connection with the CRL Project: (a)

the establishment of a relationship based on mutual trust;

(b)

openness, promptness, consistency and fairness in all dealings and communications;

(c)

non-adversarial dealings and constructive problem-solving approaches; and

(d)

working co-operatively and helpfully to facilitate the other Parties perform their roles.

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 6

Part A – General Matters 1.

Definitions and Interpretation

1.1

Defined terms In this Agreement capitalised terms have the meaning given to those terms in Schedule 1, Part I.

1.2

Interpretation (a)

Interpretation of the terms and conditions of this Agreement shall be subject to the provisions of Schedule 1, Part II.

(b)

Except as otherwise expressed in this Agreement, any specific terms and conditions will prevail over any general terms and conditions.

2.

Conditions Precedent

2.1

Conditions Precedent (a)

(b)

This Agreement comes into effect on the later of 1 July 2017 or satisfaction of the following conditions: (i)

the Sponsors’ Agreement has been duly executed by all parties to that document; and

(ii)

a Special Resolution (as that term is defined in the CRLL constitution) has been passed adopting the revised constitution of CRLL.

Each of the conditions precedent set out in clause 2.1(a) are for the sole benefit of the Sponsors and must be met to the Sponsors’ satisfaction acting reasonably. Conditions precedent may only be waived jointly by the Sponsors in writing acting in their sole discretion.

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 7

Part B – Nature of Parties’ Obligations 3.

Nature of Parties’ Roles

3.1

Co-operation The Parties agree to co-operate with each other to facilitate the implementation of the CRL Project.

3.2

No surprises CRLL shall consult freely and make full and frank disclosure to the Sponsors concerning the management, delivery and completion of the CRL Project and shall keep the Sponsors fully informed of any matters or dealings in connection with the CRL Project which it considers to be material in nature and which relate to matters or dealings of substance under or in connection with this Agreement.

3.3

3.4

Sponsors’ statutory functions (a)

Nothing in, or contemplated by, this Agreement or any other Sponsor Document will be construed or interpreted as restricting or otherwise affecting the discretion of a Sponsor to exercise any of its executive or statutory powers or functions under any Law, or to require the Sponsor or any Government Entity to interfere with or influence the exercise of any statutory power or discretion by any person, including the Crown or another Governmental Entity.

(b)

Neither the exercise by a Sponsor of its rights nor the performance by a Sponsor of its obligations, whether pursuant to this Agreement and/or any other Sponsor Documents, shall limit or fetter that Sponsor’s discretion in the discharge or exercise of its duties or powers under Laws.

No obligation to influence The Parties expressly acknowledge and agree that neither the Crown nor the Council is obliged, in performing any of the duties and obligations of the Crown or Council (as applicable) under this Agreement, to exercise a power, function or duty that is granted to or within the responsibility of any other Governmental Entity, or to influence, over-ride or direct any Governmental Entity in the proper exercise and performance of its legal duties and functions.

3.5

Statutory context (a)

This Agreement is additional to the performance and accountability requirements that may apply to CRLL by virtue of the Public Finance Act, the Companies Act or any other applicable Laws.

(b)

This Agreement constitutes a “binding agreement” under section 17A(5) of the Local Government Act 2002, to the extent it relates to local government infrastructure funding.

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 8

Part C – Delivery of CRL Project by CRLL 4.

Project Delivery

4.1

Primary object of CRLL

4.2

(a)

CRLL’s primary object is to manage, deliver and Complete the CRL Project in accordance with the terms and conditions of this Agreement, including the Sponsors’ Requirements.

(b)

CRLL will not carry out any other business without prior written unanimous Sponsor approval.

Project delivery (a)

(b)

CRLL shall manage and deliver the CRL Project and achieve Practical Project Completion and Final Project Completion: (i)

so as to satisfy the Sponsors’ Requirements;

(ii)

in a manner consistent with the Delivery Strategy;

(iii)

in accordance with the terms of this Agreement, the Project Contracts to which it is a party and the Delivery Partner Agreements;

(iv)

using all reasonable endeavours to meet the Key Milestones;

(v)

so that the Project Delivery Date occurs on or before the Target Project Delivery Date and the Final Completion Date occurs on or before the Target Final Completion Date;

(vi)

so as to minimise Forecast Project Costs in accordance with best value and prudent practices;

(vii)

using all reasonable endeavours to ensure the CRL Project is delivered within the Target Delivery Cost; and

(viii)

in a manner which enables, upon Practical Project Completion, the assets and systems forming the CRL Project Works to be able to be handed over to the Operator for immediate operation or otherwise retained and operated by CRLL.

Without limiting clause 4.2(a), CRLL shall: (i)

strictly comply, and ensure that all CRLL Personnel strictly comply, with all HSE Legislation and do all things necessary and in a manner that ensures that CRLL satisfies its obligations under all HSE Legislation in relation to the CRL Project;

(ii)

ensure that the Delivery Strategy clearly sets out how CRLL will implement the health and safety requirements in relation to the CRL Project, and

as between CRLL and the Sponsors, neither Sponsor shall have any responsibility or liability to CRLL for the safety of any design which forms part of the CRL Project Works and, without prejudice to the foregoing provisions of this clause 4.2 CRLL shall either retain or impose on the Delivery Contractors, such responsibility, together with a responsibility to ensure the adequacy, stability and safety of all site operations and methods of construction in relation to the CRL Project Works. (c)

Without limiting clause 4.2(a), CRLL shall: (i)

procure that all Consents necessary for the design, construction, completion and commissioning of the CRL Project Works, or to carry out its other obligations

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 9

under or in connection with this Agreement, are obtained and maintained in force for the duration of the CRL Project;

4.3

(ii)

have due regard to the reputation of CRLL and the Sponsors in managing, delivering and Completing the CRL Project; and.

(iii)

CRLL shall at all times ensure that the CRL Project including the CRL Project Works is adequately insured in accordance with Good Industry Practice and shall ensure that each party to the Project Contracts and Delivery Partner Agreements: (A)

procures adequate insurance coverage that is consistent with Good Industry Practice;

(B)

maintains such insurances for the duration of the Project Contracts or Delivery Partner Agreement (as the case may be) or longer in accordance with Good Industry Practice; and

(C)

ensure that the Delivery Strategy clearly sets out how CRLL will implement the insurance requirements in relation to the CRL Project.

Sponsors’ Requirements (a)

The Sponsors’ Requirements are set out in Schedule 3. The Sponsors’ Requirements shall only be amended in accordance with Schedule 9.

(b)

Without limiting the obligations of CRLL under this Agreement, at any time: (i)

CRLL may seek clarification from the Sponsors in relation to any requirement of the Sponsors’ Requirements that it considers to be unclear or ambiguous; and

(ii)

the Sponsors may clarify the Sponsors’ Requirements,

and such clarification:

(c)

4.4

(iii)

shall form part of the Sponsors’ Requirements; and

(iv)

shall not relieve CRLL of any obligations or liability under this Agreement.

The rights of the Sponsors to clarify the Sponsors’ Requirements shall not prejudice the rights of the Sponsors to require, or CRLL to request, a Change in accordance with Schedule 9.

Standard of care CRLL will discharge its obligations under this Agreement, including managing the delivery of the CRL Project, using the level of reasonable skill, care and diligence to be expected of an entity experienced in managing and delivering projects similar to the CRL Project. Without prejudice to the generality of the foregoing, CRLL must, at all times, comply with:

4.5

(a)

the Sponsors’ Requirements;

(b)

Good Industry Practice; and

(c)

all applicable Laws, Applicable Standards and Consents.

Delivery Strategy (a)

The Sponsors wish to be assured that CRLL has the necessary delivery strategy, management structures and capability to successfully deliver the CRL Project.

Accordingly, CRLL shall develop all plans, documents, strategies and policies which comprise the Delivery Strategy:

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 10

(i)

to fulfil the Sponsors’ Requirements;

(ii)

to comply with this Agreement;

(iii)

to allocate risks in relation to the CRL Project efficiently and with the party best placed to manage such risks; and

(iv)

consistent with Good Industry Practice,

in each case, to assure the Sponsors that CRLL has the necessary tools and structures to successfully deliver the CRL Project. Without limiting the foregoing, Sponsors would expect the Delivery Strategy to include plans, documents, strategies and policies in relation to health and safety, environment, interface management, assurance, risk management, consenting, stakeholder engagement, insurance and completion. (b)

4.6

The Delivery Strategy shall be presented to Sponsors by CRLL as follows: (i)

through the Review Point process set out in Schedule 4; and

(ii)

submission of the specific documents set out in paragraph 4.1 of Schedule 4 (including any material amendment, variation or supplement to the same) to Sponsors for approval in accordance with the requirements of Schedule 4.

(c)

In the case of any inconsistency or conflict between the Sponsors’ Requirements and the Delivery Strategy, the Sponsors’ Requirements shall take precedence.

(d)

Subject to clause 4.5(a) and the provisions of Schedule 4, CRLL may develop, prepare, vary and amend the Delivery Strategy in such manner as it considers appropriate.

(e)

Following any material amendment or variation to the Delivery Strategy, CRLL shall provide a copy of the revised Delivery Strategy to the Sponsors.

Sponsor assurance (a)

(b)

Notwithstanding the Sponsors’ rights under clause 4.5 above, CRLL acknowledges that the Sponsors have the rights set out in this Agreement to monitor and gain assurance that the CRL Project is being managed, delivered and completed by CRLL in accordance with the terms and conditions of this Agreement. Such assurance shall be provided primarily through: (i)

reporting by CRLL and monitoring of the CRL Project by CRLL and the Sponsors;

(ii)

notification, review and approval by the Sponsors of Material Contracts and key decisions requiring approval as set out in this Agreement;

(iii)

discrete Review Points at which CRLL shall satisfy the Sponsors that CRLL has the necessary Delivery Strategy, management structures and capability to successfully manage, deliver and Complete the CRL Project; and

(iv)

increased rights of monitoring and oversight by Sponsors in the event of certain circumstances including cost overruns, delays, CRLL Default or the occurrence of Adverse Events or specific Monitoring Points.

CRLL further acknowledges and accepts that in addition to the general requirements that CRLL shall prepare and implement the Delivery Strategy for the CRL Project, various specific matters shall require Sponsor approval including: (i)

key aspects of the Delivery Strategy as set out in Schedule 4, and any material changes, amendment, termination, replacement or variation of the same;

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 11

4.7

(ii)

Material Contracts to be entered into by CRLL for delivery of the CRL Project, and any amendment, termination, replacement or any variation that is not a Permitted Variation in respect of such contracts; and

(iii)

settlement of material claims or disputes with third parties.

Project Delivery Schedule CRLL shall prepare and maintain a schedule setting out the anticipated critical path timetable for the CRL Project (the Project Delivery Schedule). The Project Delivery Schedule as at the date of this Agreement is set out in Schedule 5. The Project Delivery Schedule shall at all times identify: (a)

key procurement dates for all Material Contracts;

(b)

Key Milestones including commencement and completion dates for key design, construction and commissioning phases and activities for each element of the CRL Project including Works Packages;

(c)

key third-party project dependencies including required dates for all key inputs required in accordance with this Agreement from either of the Sponsors and other relevant stakeholders;

(d)

key dates under all Delivery Partner Agreements;

(e)

the Target Project Delivery Date and the Target Final Completion Date; and

(f)

an indicative timetable for the remaining land acquisition process for the CRL Project, if relevant,

and the Project Delivery Schedule shall record CRLL’s actual and anticipated progress of these matters, including the Target Project Delivery Date and Final Completion Date.

4.8

Project Management CRLL shall organise, manage and co-ordinate the delivery of each of the Project Contracts and Delivery Partner Agreements so that: (a)

the progress of the design process for the CRL Project Works, and the provision of design inputs and solutions for and from each element of the CRL Project, is properly planned and co-ordinated across the CRL Project as a whole;

(b)

the progress of the construction and completion of each element of the CRL Project Works that interfaces with other elements of the CRL Project Works, is properly planned and co-ordinated across the CRL Project as a whole; and

(c)

the commissioning, acceptance, completion and handover process for each of the Project Contracts is properly planned and co-ordinated across the CRL Project as a whole,

in each case so as to promote the efficient, timely and cost-effective delivery of the CRL Project and the satisfaction of the Sponsors’ Requirements.

4.9

Changes The provisions of Schedule 9 will apply if either the Sponsors or CRLL propose, or is determined to have proposed, a Change.

4.10

Optimisation projects and additional tasks

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 12

CRLL acknowledges that, pursuant to the Sponsors’ Agreement, the Sponsors may consider matters related to the CRL Project or in connection with the Sponsors’ Agreement which are outside the scope of the CRL Project. Accordingly:

4.11

(a)

CRLL shall, when requested by the Sponsors, engage constructively with the Sponsors in respect of any such matter; and

(b)

the Sponsors may, from time to time, request CRLL to undertake any such matter as an additional task, in which case CRLL shall promptly meet with representatives of the Sponsors to discuss in good faith the terms and conditions, including as to the provision of necessary additional funding, on which such tasks may be undertaken by CRLL.

Post-Completion operations (a)

No later than the date of award of the Work Package C3 and C7 contracts, the Sponsors will notify CRLL of the arrangements to apply following Practical Project Completion of the CRL Project in relation to the ownership and ongoing operation of the CRL Project (Post-Completion Notice). Such notification shall include matters such as: (i)

whether CRLL or any third party is going to be responsible for the on-going ownership and/or operation of the Completed CRL Assets;

(ii)

the governance of CRLL;

(iii)

transfer of the Completed CRL Assets to the Sponsors or any third party nominee of the Sponsors;

(iv)

transfer of CRLL shares;

(v)

how CRLL will be funded if it, as opposed to any third party nominee, is chosen to own and/or operate the Completed CRL Assets; and/or

(vi)

any other matters which the Sponsors consider reasonable.

(b)

CRLL shall comply with the requirements of the Post-Completion Notice. Upon receipt of the Post-Completion Notice by CRLL from the Sponsors, the Parties shall co-operate with each other and act reasonably in order to implement the terms of the Post-Completion Notice.

(c)

Where the Sponsors have elected for a third party nominee to be responsible for the completion and/or operation of the Completed CRL Assets, the Parties shall co-operate with each other and act reasonably to implement an orderly cessation to the activities contemplated by this Agreement, the Project Contracts and the Delivery Partner Agreements from the date set out in the Post Completion Notice. Such matters may require CRLL to: (i)

immediately commence to demobilise and wind down its activities so as to cease its activities and operations in a prompt, orderly and costs-efficient manner;

(ii)

deliver to the Sponsors all information, materials, documents and records that it holds in relation to the CRL Project;

(iii)

transfer all assets, agreements, contracts, security, warranties, guarantees, Consents and documentation relating to the CRL Project to any entity directed by the Sponsors;

(iv)

co-operate with the Sponsors in the transfer of information and disposition of any work in progress; and

(v)

comply with all other reasonable requests from the Sponsors.

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 13

Part D – CRL Project Contracts 5.

Project Contracts

5.1

Procurement of Project Contracts (a)

(b) 5.2

(i)

CRLL shall be entitled at its sole discretion to procure, award and execute the Project Contracts;

(ii)

CRLL is solely responsible for the selection of each Delivery Contractor; and

(iii)

CRLL must ensure, in each case, that each such Delivery Contractor is, or is supported by entities which are, creditworthy, qualified and has the relevant experience and expertise to perform the work it is required to carry out.

CRLL shall not enter into a Project Contract other than in accordance with the Delivery Strategy and Schedule 4.

Material Contracts (a)

Notwithstanding clause 5.1, in relation to all Material Contracts CRLL and the Sponsors shall comply with the provisions of Schedule 4 of this Agreement.

(b)

With respect to each Material Contract, CRLL shall:

(c)

5.3

Subject to complying with the Delivery Strategy and subject to the requirements of this Agreement (including clauses 5.2 to 5.6 below):

(i)

comply in all material respects with its obligations under such contract;

(ii)

ensure there are appropriate provisions to govern the resolution of disputes and to permit joinder of disputes under multiple Project Contracts and/or Delivery Partner Agreements;

(iii)

obtain the Sponsors’ prior written approval to any material amendment, waiver or modification to such Material Contract (including any change in risk allocation as approved through the Delivery Strategy in accordance with clause 4.5 and Schedule 4);

(iv)

not terminate, or take any step to terminate, a Material Contract without the prior written approval of the Sponsors; and

(v)

promptly advise the Sponsors of any early termination of, or step taken by a Material Contractor to terminate, a Material Contract upon becoming aware of the same.

From the date of novation of each Early Works Package, CRLL shall be responsible for compliance with, and performance of, such Early Works Package and shall assume all accrued and future liability of Auckland Transport under such Early Works Package in accordance with the terms of the Transfer Agreement.

Variations approval process (a)

CRLL shall not, without the Sponsors’ prior written consent, at any time, enter into, instruct or agree to a Variation, other than a Permitted Variation. All Variations other than a Permitted Variation will require the prior written approval of the Sponsors, such approval to be provided in accordance with the process set out in this clause 5.3.

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 14

(b)

5.4

Where approval is required in relation to a Variation, prior to issuing or agreeing to such Variation, CRLL shall provide the following information (in form and substance satisfactory to the Sponsors (acting reasonably)), for approval: (i)

the reasons for the Variation;

(ii)

details of the Variation including impact of the Variation on the Forecast Project Costs and the Project Delivery Schedule;

(iii)

relevant provisions of the contract entitling the relevant contractor to the Variation; and

(iv)

any other information which may reasonably be required by the Sponsors.

(c)

Following receipt of the information referred to in paragraph 5.3(a) above, the Sponsors will, within 20 Working Days, approve or reject the proposed Variation on the grounds set out at paragraph 3.1.1 of Schedule 4 and the manner set out in paragraph 3.1.2 of Schedule 4.

(d)

If the Sponsors reject the Variation, CRLL shall not proceed with the Variation until the reasons for the Sponsors’ rejection have been addressed to the reasonable satisfaction of the Sponsors.

Major Transaction approval To the extent that entry into any Material Contract is or may be a Major Transaction of CRLL under the Companies Act, written approval provided in accordance with the “Approval Needed” process set out in Schedule 4 of this Agreement in respect of such Material Contract shall constitute approval of such Major Transaction pursuant to section 129 of the Companies Act and CRLL’s constitution, and the parties agree that the method under this Agreement by which the Sponsors are required to approve such contracts is deemed to be a resolution under the Companies Act and that approval by both Sponsors shall therefore constitute a Special Resolution (as defined in CRLL’s constitution).

5.5

5.6

Approval of replacement Material Contractor (a)

CRLL must not replace any Material Contractor without the prior approval of Sponsors.

The requirements of Schedule 4 shall apply equally to the proposed appointment of any replacement contractor for a Material Contract.

(b)

CRLL must: (i)

notify the Sponsors in writing if it proposes to replace a Material Contractor at any time;

(ii)

provide details to the Sponsors of the identity of the proposed replacement Material Contractor and the nature and scope of the services that CRLL intends the replacement Material Contractor to undertake;

(iii)

provide to the Sponsors a copy of the proposed contract to which the replacement Material Contractor will be made party; and

(iv)

provide any more information known to CRLL or about the proposed replacement Material Contractor that the Sponsors may reasonably require.

Delivery Partner Agreements (a)

CRLL shall negotiate and enter into Delivery Partner Agreements, as required for the purpose of the management, delivery, implementation and completion of the CRLL Project.

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 15

5.7

(b)

CRLL shall ensure that the roles and responsibilities of each Delivery Partner including but not limited to each Delivery Partner’s role in any Change process under this Agreement is clearly set out in the relevant Delivery Partner Agreement.

(c)

CRLL shall ensure, prior to entering into any proposed Delivery Partner Agreement, that the Sponsors have approved the terms of such proposed Delivery Partner Agreement in accordance with the provisions of this Agreement.

(d)

CRLL shall use its best endeavours to ensure that Delivery Partner Agreements with each of Auckland Transport and KiwiRail are entered into prior to the end of December 2017.

(e)

CRLL shall comply in all material respects with its obligations under the Delivery Partner Agreements and shall not be relieved from any obligation or liability under or in connection with this Agreement by the entry into any Delivery Partner Agreement.

(f)

CRLL shall obtain the Sponsors’ prior written approval to any material amendment, variation, waiver or modification to a Delivery Partner Agreement.

(g)

CRLL must promptly advise the Sponsors of any event that may give rise to a right of termination by any party to a Delivery Partner Agreement, including details of the reasons giving rise to such right of termination.

(h)

CRLL shall not terminate, or take any step to terminate, any Delivery Partner Agreement without the prior written approval of the Sponsors.

Management of Contracts (a)

(b)

In relation to each of the Project Contracts and Delivery Partner Agreements, unless otherwise agreed with the Sponsors, CRLL shall: (i)

comply in all material respects with its obligations under the Project Contracts and the Delivery Partner Agreements;

(ii)

not assign, transfer, novate or otherwise dispose of any of its rights and/or obligations under any such contract in whole or in part;

(iii)

take all steps necessary to protect, maintain, exercise and enforce all its rights in accordance with their terms. Such steps shall include requiring, specifically, that any engineer to any contract, principal or employer’s representative or similar, enforces the terms of such contract and CRLL’s rights under it promptly and in accordance with its terms;

(iv)

not agree to any other party to any such contract assigning any of its rights and/or transferring any of its obligations under any such document in whole or in part, save to the extent that such assignment is by way of security in favour of a funder providing financing to the relevant counterparty for the performance of its obligations pursuant to such contract; and

(v)

acquire and retain all property, rights and interests which are necessary for the performance of CRLL’s obligations under this Agreement or any other Project Contract or Delivery Partner Agreement.

In relation to all Project Contracts (other than Material Contracts, in respect of which clauses 5.2 and 5.3 shall apply), CRLL shall: (i)

not, without the Sponsors’ prior written consent, at any time, enter into, instruct or agree to a Variation, other than a Permitted Variation; or

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 16

(ii)

5.8

not amend, waive or modify or agree to the amendment, waiver or modification of any Project Contract which would result in such Project Contract, following the amendment, waiver or modification, conflicting with or being other than in accordance with the Delivery Strategy, the Sponsors’ Requirements or the terms of this Agreement.

Arms’ Length Transactions CRLL shall not enter into any agreement, transaction or other arrangement whatsoever (including all Material Contracts, Project Contracts and Delivery Partner Agreements) with or for the benefit of any other person other than in the ordinary course of business and on arm's length terms.

5.9

Claims Management Unless otherwise agreed by the Sponsors, CRLL shall: (a)

on a basis consistent with the best interests of the CRL Project and the reputation of CRLL and the Sponsors, take all steps necessary to defend any adjudication, litigation, arbitration or administrative proceedings which are current, threatened or pending against it;

(b)

notify the Sponsors of:

(c)

(i)

any claims (other than regular payment claims), disputes or proceedings raised or made by or against CRLL or any other party under any Project Contract and/or Delivery Partner Agreement; and

(ii)

any other claims, disputes or proceedings raised or made by or against CRLL;

keep the Sponsors informed on a regular basis in reasonable detail of the progress of such claims, disputes or proceedings and, if requested by the Sponsors, provide copies of all documentation relating to the same;

(d)

(e)

use all reasonable endeavours to ensure that any claim, dispute or proceeding does not bring the name of either of the Sponsors or the CRL Project into disrepute; and

(f)

subject to this clause 5.9, as between the Sponsors and CRLL, be responsible for the management, conduct and the discharge, or procuring the discharge (as applicable) by the responsible party, of any claim, dispute or proceeding brought against either CRLL or the Sponsors (save to the extent that either Sponsor notifies CRLL and the other Sponsor that it will manage and conduct a claim, dispute or proceeding made against it) byany third party arising from the implementation of the CRL Project.

6.

Land and Asset Management

6.1

Land (a)

CRLL will be transferred the legal and beneficial title to the Initial CRL Project Assets required for the CRL Project Works in accordance with the provisions of the Transfer Agreement.

(b)

Council agrees to: (i)

provide CRLL (and to ensure Auckland Transport does the same) with access to land owned or controlled by Council and Auckland Transport, including the relevant parts of the legal road corridor, reasonably required by CRLL for

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 17

construction of the CRL Project and for ongoing operation/maintenance of the Completed CRL Assets post completion. No licence fees will be charged for such access unless otherwise agreed by the Sponsors. The Sponsors will determine the most appropriate arrangements to formalise access for construction and ongoing operation/maintenance post completion (i.e. licence, easement, perpetual lease, registerable or otherwise,) on such terms and conditions as may be agreed, which will be subject to approval by the Sponsors, and which must provide for full access needed for construction and ongoing operation/maintenance and should be no more onerous than terms typical of a licence arrangement between Council and its Council controlled-organisations. The Parties acknowledge that, at all times, Auckland Transport retains its powers as a road controlling authority; (ii)

notwithstanding clause 6.1(b)(i) proceed with (and to ensure Auckland Transport does the same) road stopping of the subterranean area of the CRL Project Works within the legal road corridor to create a fee simple stratum estate which will be transferred to CRLL (or the eventual owner of the Completed CRL Assets) to the extent permitted by law. If road stopping to effect a transfer of the relevant road corridor land is not permitted by law, then Auckland Council will procure Auckland Transport to grant a long-term leasehold interest in the subterranean area of the CRL Project Works within the legal road corridor (subject to first obtaining subdivision consent (if required) for such lease) to CRLL (or if determined by the Sponsors the eventual owner of the Completed CRL Assets) which must be perpetual, fully transferable, and otherwise on terms to be agreed between Auckland Council (if applicable), Auckland Transport and the lessee, which will be subject to approval by the Sponsors.

(iii)

on completion of the purchase of the subterranean area of the CRL Project Works within the Commercial Bay development, being the Stratum Estate (as defined in the agreement relating to the redevelopment of the Downtown Shopping Centre with Precinct Properties Downtown Limited and Precinct Properties New Zealand Limited), transfer the Stratum Estate to CRLL (or if determined by the Sponsors the eventual owner of the Completed CRL Assets), ;

(iv)

grant CRLL a non-exclusive licence to use the “Bledisloe Carpark” site (contained in certificates of title NA 485/235, NA 1589/36, NA 1193/78, NA 75B/323) for construction of the CRL Project and otherwise upon terms and conditions to be agreed by the Council and CRLL (but which will be no more onerous than a typical licence arrangement between Council and its Council controlledorganisations), which must reserve to the Council necessary access for the Council and its tenants to the loading dock and certain carparks on the Bledisloe Carpark site;

(v)

reserve an agreed allocated area of the Bledisloe Carpark site for the construction of the Aotea station box (designated area to be agreed between CRLL and the Council prior to any contract for the design being confirmed for the Aotea station box); and

(vi)

at the appropriate time taking the Project Delivery Schedule into account, undertake all reasonable measures, at CRLL’s cost, to subdivide and create a separate stratum title for the Aotea station box and transfer the stratum title for the Aotea station box to CRLL (or the eventual owner of the Completed CRL Assets), or if otherwise agreed by the Sponsors grant CRLL an interest/rights in the Aotea station box, for consideration calculated on an arm’s length basis in accordance

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 18

with the provisions of the Public Works Act 1981 (PWA) (which are to include market valuation and compensation).

6.2

6.3

6.4

Public Works Act acquisitions (a)

CRLL shall entirely at its own cost and expense, undertake acquisitions of any subterranean land and surface land interests required for the CRL Project under the Public Works Act 1981 (other than within the road corridor), by applying to the Minster of Lands under section 186(1) of the Resource Management Act 1991 to have the land acquired or taken on its behalf.

(b)

If CRLL is unable to undertake the land acquisitions by the process set out at clause 6.2(a), then it is intended that Council will at the request and cost of CRLL undertake those acquisitions or takings on CRLL’s behalf and will exercise the relevant powers (including compulsory acquisition powers) under the PWA for that purpose, subject to an agreement being entered between a Minister of the Crown and Council in accordance with the requirements of s224 PWA for Council to carry out any such acquisitions for the CRL Project on CRLL’s behalf. CRLL and Council will in that event work together to establish suitable protocols and processes to facilitate those acquisitions.

Asset ownership and control (a)

The Sponsors intend that CRLL shall develop, own and control all the Completed CRL Assets pending the Sponsors’ decision on how the Completed CRL Assets should be transferred to their designated nominee(s).

(b)

CRLL shall ensure, so far as reasonably practicable, it has at all times unencumbered ownership and rights to transfer, free of all adverse claims and interests, all Completed CRL Assets and/or all Initial CRL Project Assets (save for any existing encumbrances at the date of transfer to CRLL), including land, improvements, chattels and intangible property (including design IP and branding).

Transfer of Contracts (a)

CRLL shall ensure at all times it has unfettered rights to transfer and/or novate all Project Contracts and Delivery Partner Agreements to the Sponsors’ designated nominee(s) as notified to CRLL by the Sponsors pursuant to clause 4.11.

(b)

CRLL shall ensure that all Project Contracts and Delivery Partner Agreements include adequate provisions to enable CRLL to meet its obligations under clause 6.4(a).

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 19

Part E – Funding by Sponsors 7.

Funding commitment

7.1

Sponsor Funding (a)

Subject to the provisions of this Agreement: (i)

the Crown agrees to provide funding to CRLL to meet 50% of the Forecast Project Costs, up to the Crown Funding Amount; and

(ii)

Council agrees to provide funding to CRLL to meet 50% of the Forecast Project Costs, up to the Auckland Council Funding Amount,

with such funding to be provided by way of subscription for Shares. (b)

Payment of any amount by the Crown and Council pursuant to this clause 7 is subject to, and the Parties shall comply, with Schedule 10 and Schedule 11.

(c)

For the avoidance of doubt, each Sponsor’s funding commitment under this Agreement is given by each Sponsor severally (as to 50% each) and not jointly nor jointly and severally.

(d)

Notwithstanding any other provision of this Agreement, the Crown will not and is not required to provide any of the Crown Funding Amount under this Agreement until:

(e) 7.2

(i)

the Transfer Agreement, in a form satisfactory to and approved by the Sponsors, has been duly executed by all parties to that document and Completion (as that term is defined in the Transfer Agreement) is achieved; and

(ii)

the Settlement Agreement has been duly executed by all parties to that document.

Until the conditions in clause 7.1(d) are satisfied, Council will provide interim funding associated with the CRL Project (as provided in the Settlement Agreement).

Target Delivery Cost, Total Available Funding and Monitoring Points (a)

CRLL acknowledges and agrees that: (i)

the Target Delivery Cost has been approved by the Sponsors;

(ii)

the Sponsors’ commitments are to fund up to the Crown Funding Amount and the Auckland Council Funding Amount respectively; and

(iii)

neither Sponsor shall have any obligation nor commitment to the other Sponsor or to CRLL to fund CRLL in any amount which, when added together with any previous amount funded under this Agreement (other than an amount that a NonDefaulting Sponsor elects to fund pursuant to paragraph 5(c) of Schedule 10), would result in an amount payable by that Sponsor which is greater than its respective Sponsor Committed Funding.

(b)

To the extent that any Monitoring Point thresholds under this Agreement are or become higher than the Total Available Funding amount, this shall not to be interpreted, or taken

by CRLL, as an undertaking by either Sponsor to pay, any amount above the Crown Funding Amount or the Auckland Council Funding Amount, as the case may be.

(c)

CRLL is responsible for meeting all costs, expenses and liabilities arising out of or in connection with the CRL Project and the Permitted Funding Purposes from the Total Available Funding, including:

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 20

8.

9.

(i)

CRLL’s own costs and expenses including company overheads;

(ii)

all costs, losses, claims, expenses and liabilities;

(iii)

shared services charges;

(iv)

personnel, capital equipment, disbursements and operating assets;

(v)

payments under all Project Contracts and Project Delivery Agreements; and

(vi)

Consent fees.

Forecast Project Costs (a)

The schedule of Forecast Project Costs, including the Quarterly Cash Flow Forecast as at the Execution Date, for CRLL and the CRL Project is set out in Schedule 6.

(b)

Each quarter CRLL shall prepare and submit to the Sponsors (whether as part of a Funding Request or not) a Quarterly Cash Flow Forecast and updated Forecast Project Costs for CRLL and the CRL Project.

Mitigation of Costs CRLL shall, at all times, perform its obligations and exercise its rights under this Agreement in such a manner as to mitigate, to the fullest extent possible: (a)

any costs, expenses and/or other liabilities that would otherwise accrue to the account of either or both Sponsors; and/or

(b)

the funding commitment of the Sponsors under this Agreement.

10. Permitted Funding Purposes (a)

CRLL shall use the funding made available by either Sponsor under this Agreement and/or the proceeds from any asset sale as permitted under this Agreement from time to time for the following purposes only: (i)

in connection with CRLL's management, delivery and completion of the CRL Project in accordance with this Agreement including, without limitation, carrying out its obligations, discharging its liabilities and exercising its rights under this Agreement, the Delivery Partner Agreements, the Material Contracts and any other Project Contracts;

(ii)

for maintaining CRLL as a corporate, operational and business entity with the purpose of delivering the CRL Project, including staff and human resource costs, accommodation, information technology infrastructure, Consents, corporate costs, directors' remuneration and other costs typically incurred by a public sector organisation of CRLL's nature;

(iii)

for purposes reasonably ancillary and/or related to the purposes in clauses 10(a)(i) and (ii);

(iv)

for the purpose to which it has been allocated in the relevant Funding Request; and/or;

(v)

for any other purposes expressly agreed by the Sponsors in writing.

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 21

(b)

CRLL shall not use any of the funding from the Sponsors under this Agreement and/or the proceeds from any asset sale as permitted under this Agreement for any purpose other than those specified in clause 10(a).

(c)

The Sponsors are not bound to monitor or verify the application of any funding received

by CRLL from the Sponsors under this Agreement.

11. Sponsor failure to pay The provisions of paragraph 5 of Schedule 10 shall apply if either Sponsor fails to pay all or any part of a Funding Amount under a Compliant Funding Request in accordance with Schedule 10 of this Agreement.

12. Asset sale proceeds The Parties acknowledge that it is intended that the proceeds of any asset sale as permitted under this Agreement will be either: (a)

used by CRLL to reduce the amount of funding required from the Sponsors; or

(b)

if the proceeds are received after all funding requests have been made under this Agreement, distributed to the Sponsors (as shareholders).

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 22

Part F – Interaction, Monitoring, Information and Records 13. Sponsor Interface 13.1

13.2

13.3

Sponsors’ Representative (a)

The Sponsors shall notify CRLL on or about the date of this Agreement of the identity of the person whom they have appointed to be the lead of the Joint Sponsor Team (the Sponsors’ Representative).

(b)

The Sponsors’ Representative shall be the primary point of contact and communication between the Sponsors and CRLL for all purposes related to this Agreement, including communicating decisions of the Sponsors to CRLL.

(c)

The Sponsors’ Representative shall not have the authority to bind the Sponsors or to exercise any of the Sponsors’ powers or rights under this Agreement unless expressly authorised in writing by the Sponsors.

(d)

The Sponsors may, from time to time, jointly notify CRLL in writing of any change to the identity of the Sponsors’ Representative and the date from which the change shall take effect.

CRLL’s Representative (a)

CRLL shall, from time to time, notify the Sponsors in writing of the person it appoints as CRLL’s Representative for the purposes of this Agreement (the CRLL Representative).

(b)

CRLL shall ensure that it always has a person representing it as CRLL’s Representative as long as any obligations under this Agreement remain to be performed by CRLL. CRLL’s Representative must be available as and when required within Business Hours.

(c)

CRLL shall ensure that CRLL’s Representative: (i)

has sufficient experience and skills to undertake the role;

(ii)

is provided with all necessary information and documentation within its possession or control to enable CRLL’s Representative to fully and effectively perform their functions and responsibilities;

(iii)

implements such internal procedures as are necessary to ensure that all material events relating to this Agreement are brought to the attention of CRLL’s Representative and then disclosed to the Sponsors;

(iv)

is present at such times as are necessary to ensure that CRLL is complying with its obligations under this Agreement; and

(v)

is at all times during Business Hours fully contactable by: (i)

the Assurance Manager, or their delegate; and

(ii)

the Sponsors’ Representative, or their delegate.

Assurance Manager (a)

Without limiting any right the Sponsors may have under this Agreement, applicable Laws or otherwise, the Sponsors may elect at any time to review or monitor (including procuring a third party to do so), the CRL Project Works for any purpose, including to ensure that the CRL Project is being delivered in accordance with this Agreement.

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 23

13.4

(b)

The Sponsors may, by providing 10 Working Days’ notice to CRLL, jointly appoint one or more assurance manager(s) (the Assurance Manager) for the purposes of carrying out the functions referred to in clause 13.4 for the benefit of the Sponsors.

(c)

The Sponsors may change the identity of an Assurance Manager by jointly providing 10 Working Days’ notice to CRLL advising the identity of the new Assurance Manager and the date of the change.

Assurance Manager’s Functions (a)

13.5

The Assurance Manager’s functions shall include, without limitation: (i)

providing independent, informed advice to the Sponsors on progress of the CRL Project in respect of time, costs and quality;

(ii)

providing the Sponsors with oversight and analysis of any changes in scope, including any Change;

(iii)

monitoring CRLL's compliance with this Agreement;

(iv)

reviewing CRLL reporting output and carrying out additional audits or reviews to satisfy the Sponsors of the adequacy and completeness of the same;

(v)

advising the Sponsors with regard to the capability and resources deployed by CRLL and its contractors; and

(vi)

performing any other function reasonably required by the Sponsors.

(b)

In exercising its functions pursuant to clause 13.4(a), the Assurance Manager shall be afforded full access, review and audit rights over the performance by CRLL, including pursuant to, or in connection with, any Project Contract and Delivery Partner Agreement.

(c)

The Assurance Manager shall not have the authority to bind the Sponsors or to exercise any of the Sponsors' powers under this Agreement.

(d)

The Assurance Manager is not responsible for the Sponsors' compliance with their obligations under this Agreement.

CRLL to provide assistance (a)

CRLL shall (and shall procure that each of its employees, agents, contractors, subcontractors and consultants shall) provide the Assurance Manager with such information (including all CRLL correspondence, files, records and documents), assistance and access (including all physical space) as the Assurance Manager may reasonably require.

(b)

The Assurance Manager shall be provided with an office and such other facilities as the Assurance Manager may reasonably require at CRLL's main project offices.

14. Reporting and records 14.1

Reporting As from the Effective Date, CRLL must: (a) on a monthly basis, report to the Sponsors, which at CRLL’s election may be by way of provision of papers or presentations provided to the CRLL Board and minutes of meetings of the CRLL Board, with information to keep the Sponsors currently informed in relation to the CRL Project, and which shall include the following minimum requirements: (i)

expenditure and financial status of the CRL Project;

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 24

14.2

(ii)

any delay or likely delay to the CRL Project or material part of the CRL Project; and

(iii)

operational, procurement and delivery of the CRL Project including health and safety and environmental performance, quality of the works and any material issues arising under, or in connection with, a Project Contract or Delivery Partner Agreement;

(b)

submit to the Sponsors a quarterly report (Quarterly Report) in the form set out in Schedule 7, such report to relate to each preceding quarter and to be provided within 5 Working Days after the end of each such period commencing after the Effective Date;

(c)

submit to the Sponsors such additional reports and information relating to the CRL Project as the Sponsors may reasonably request; and

(d)

provide the Sponsors with all papers relevant to the CRLL Board, including presentations made to the CRLL Board and minutes of meetings of the CRLL Board.

Financial reporting obligations CRLL shall provide each of the Sponsors with the audited financial statements of CRLL as soon as they are prepared together with such other information regarding CRLL's financial condition as either of the Sponsors may reasonably require. CRLL shall provide such information in any form reasonably required and agreed by the Sponsors and, without limitation, that allows consolidation for public sector accounting purposes (where applicable).

14.3

Records CRLL shall at all times monitor the delivery of the CRL Project Works and shall: (a)

at all times maintain all records relating to the performance of its obligations and exercise of its rights under this Agreement, the Project Contracts and the Delivery Partner Agreements, including: (i)

particulars of the Forecast Project Costs, actual costs incurred by CRLL in relation to the CRL Project (including those incurred pursuant to any Project Contract, Delivery Partner Agreement or other direct CRLL related costs such as costs of employees, insurances, office and administration and other overhead);

(ii)

Tax payments;

(iii)

administrative overheads;

(iv)

design, construction and engineering information (including drawings);

(v)

payments made to or received from contractors and other parties to any Project Contract or any Delivery Partner Agreement;

(vi)

details of any material defects identified in the CRL Project Works;

(vii)

details of any infringement notices received by CRLL;

(viii)

health and safety incidents;

(ix)

capital and operating expenditure;

(x)

such other items as the Sponsors may reasonably require from time to time to conduct costs audits for verification of expenditure for the purpose of this Agreement; and

(xi)

other matters relevant to CRLL's reporting requirements;

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 25

(b)

with respect to the maintenance of records referred to in clause 14.3(a), comply with best accountancy practice, generally accepted accounting principles (as applicable) and any applicable Laws;

(c)

at all times maintain a full record of particulars of the costs of carrying out the relevant parts of the CRL Project Works and shall procure that each Delivery Contractor do the same;

(d)

make available the books of account, evidencing CRLL's maintenance of such records for inspection by either of the Sponsors and their representatives (including the Assurance Manager) upon reasonable notice; and

(e)

provide such facilities as either of the Sponsors reasonably require for their respective representatives (including the Assurance Manager) to visit any place where the records are held and examine and copy the records maintained under this clause 14.3.

15. Audits (a)

The Sponsors may, at any time and from time to time, initiate an audit to verify CRLL’s compliance with and performance of its obligations under this Agreement, including compliance with the Delivery Strategy.

(b)

The Sponsors must:

(c)

(d)

(i)

give CRLL reasonable notice of when the audit is to be conducted;

(ii)

give CRLL an estimate of the audit’s duration; and

(iii)

advise CRLL of the individuals to whom the Sponsors wish to have access.

CRLL must: (i)

provide such information, explanations and documentation requested by the persons undertaking the audit for the Sponsors that are relevant to the conduct of the audit; and

(ii)

make the records available to those undertaking the audit on behalf of the Sponsors.

Upon the conclusion of any audit, the person that has undertaken the audit shall prepare a report and make that report available to the Sponsors and CRLL. The Parties must review that report together as soon as practicable after it is issued. If that report reveals failure on the part of CRLL to be in compliance with any of its obligations, CRLL shall promptly take such steps necessary to remedy or mitigate the effect of those failures.

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 26

Part G – Adverse Events and Monitoring Points 16. Adverse events 16.1

Adverse Events (a)

CRLL shall promptly notify the Sponsors if any, delay, risk, event, circumstance or series of events or circumstances occurs which has, or is likely to have, any material adverse impact, without limitation, on: (i)

the CRL Project and/or its implementation;

(ii)

the Forecast Project Costs;

(iii)

operational, delivery or procurement matter which may have or has had material adverse consequences including in relation to health and safety, environmental, quality or employment matters;

(iv)

any Key Milestone or any of the dates set out in the Project Delivery Schedule including the Target Project Delivery Date and/or the Target Final Completion Date; or

(v)

the reputation of the Sponsors, CRLL or the CRL Project,

(such an event being an Adverse Event). (b)

Any notice given by CRLL under clause 16.1(a) in relation to an Adverse Event (Adverse Event Notice) shall provide details of the nature of the event and its potential consequences and impact on the CRL Project and the matters set out above.

(c)

Regardless of whether CRLL has provided such notification, where the Sponsors consider (acting reasonably) that an Adverse Event has occurred or is likely to occur, the Sponsors may issue CRLL with a notice informing CRLL that the Sponsors consider that an Adverse Event has occurred.

(d)

CRLL shall use all reasonable endeavours to prevent and mitigate the effects of any Adverse Event.

(e)

Following provision of an Adverse Event Notice and/or a notice provided under clause 16.1(c), the Sponsors may require CRLL to promptly (and in any event within such period as may be reasonably specified by the Sponsors) prepare a Remedial Action Plan in accordance with clause 19.

(f)

The Sponsors shall notify CRLL of any action which they reasonably require CRLL to take to mitigate the effects of the Adverse Event. This notification may be given by the Sponsors at any time following receipt of an Adverse Event Notice (whether before, during or after receipt of any Remedial Action Plan).

(g)

For the avoidance of doubt, if and to the extent either clause 17 or clause 18 applies, then the provisions of this clause 16 shall not apply.

17. Monitoring Points 17.1

Notification (a)

CRLL shall notify the Sponsors promptly, and in any event within 5 Working Days, upon (for any reason whatsoever):

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 27

17.2

Forecast Project Costs exceeding or likely to exceed the amount set out in limb (a) of the definition of any of the Monitoring Points; or

(ii)

anticipated delay in the CRL Project Works or any part of it, such that limb (b) of the definition of any of the Monitoring Points is triggered.

(b)

The Sponsors may notify CRLL in the event that they consider (such determination being at the absolute discretion of the Sponsors and including as a result of findings in relation to a Review Point) that the events in clause 17.1(a)(i) or clause 17.1(a)(ii) have occurred or are likely to occur.

(c)

For the avoidance of doubt, if and to the extent the provisions of clause 18 apply then this clause 17 shall not apply.

Remedial Action Plan and Monitoring Point 1 (a)

17.3

(i)

At any time after a notice has been served by either Party pursuant to clause 17.1, CRLL shall provide (within 30 days) to the Sponsors a Remedial Action Plan in accordance with clause 19.1. Any such Remedial Action Plan prepared by CRLL shall, in addition to the matters set out in clause 19.1, include the following: (i)

the reasons for, and circumstances giving rise to, the Forecast Project Costs exceeding the relevant Monitoring Point amount and/or the delay, as the case may be;

(ii)

a detailed proposal setting out how CRLL proposes to reduce the Forecast Project Costs below the Target Delivery Cost, which proposal shall reflect and address the Sponsors’ guidance;

(iii)

a detailed proposal setting out how CRLL proposes to revise the Project Delivery Schedule to mitigate the effects of the delay, and in any event to ensure that; (A)

the Project Delivery Date shall occur no later than the Target Project Delivery Date; and

(B)

the Final Completion Date shall occur no later than the Target Final Completion Date;

(iv)

conditions of or criteria for such a plan; and

(v)

any other relevant information or other information reasonably requested by the Sponsors.

(b)

If the Sponsors approve such Remedial Action Plan, CRLL shall implement its proposals set out in such plan to reduce the Forecast Project Costs below the Target Delivery Cost and/or mitigate the effects of the delay and ensure that the Project Delivery Date shall occur no later than the Target Project Delivery Date and the Final Completion Date shall occur no later than the Target Final Completion Date, as the case may be.

(c)

If the Monitoring Point Remedial Action Plan is not approved by the Sponsors, CRLL shall amend the plan as required by the Sponsors and shall not implement any such plan prior to receiving approval from the Sponsors.

Monitoring Point 2: Board observer (a)

Without prejudice and in addition to the rights and obligations of the parties under clause 17.2, the Companies Act, and the constitution of CRLL, at any time after a notice has been served pursuant to clause 17.1 that Forecast Project Costs has exceeded or is likely to exceed the amount set out in limb (a) of the definition of Monitoring Point 2, or there is an

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 28

anticipated delay in the CRL Project Works or any part of it, such that such that limb (b) of the definition of Monitoring Point 2 is triggered:

(b) 17.4

(i)

the Sponsors may serve notice on CRLL appointing an observer or observers to the Board of CRLL; and

(ii)

require CRLL to provide such information to the observer(s) as the Sponsors consider necessary for the observer(s) to perform their functions.

CRLL shall comply with the instructions of the Sponsors as set out in the notice serviced pursuant to clause 17.3(a).

Monitoring Point 3: Replacement of Directors Without prejudice and in addition to the rights and obligations of the parties under Clause 17.2, and 17.3, the Companies Act and the constitution of CRLL, at any time after a notice has been served pursuant to clause 17.1 that Forecast Project Costs has exceeded or is likely to exceed the amount set out in limb (a) of the definition of Monitoring Point 3, or there is an anticipated delay in the CRL Project Works or any part of it, such that limb (b) of the definition of Monitoring Point 3 is triggered, the Sponsors may serve notice on CRLL to replace one or more (including all) of the directors of CRLL.

18. CRLL Default (a)

A CRLL Default occurs if CRLL fails to comply with a material undertaking of CRLL under this Agreement (CRLL Default). Without limiting the foregoing, CRLL Default shall include: (i)

any wilful or negligent misreporting by CRLL to the Sponsors;

(ii)

failure by CRLL to comply in any material respect with any Sponsor direction under clause 19.1(f) in relation to a Remedial Action Plan;

(iii)

failure by CRLL to comply in any material respect with any Remedial Action Plan approved by Sponsors in accordance with clause 17.2(b);

(iv)

failure by CRLL to comply in any material respect with the provisions of clause 4;

(v)

failure by CRLL to obtain approval of the Sponsors as required by this Agreement;

(vi)

failure to comply with requirements of Sponsors in relation to Review Points within 10 Working Days of a written notice from the Sponsors informing CRLL of the same and requiring CRLL to remedy such failure; or

(vii)

any material breach by CRLL of its obligations under this Agreement, any Material Contract or Delivery Partner Agreement, other than to the extent that the same may have been caused or contributed to by the Sponsors.

(b)

Upon the occurrence of a CRLL Default, the Sponsors may require CRLL to take such action in respect of the implementation, delivery and management of the CRL Project as the Sponsors, in their discretion, determine necessary or advisable. Such actions may include, without limitation, requiring CRLL to prepare and implement a Remedial Action Plan in accordance with clause 19.1 (to the extent such plan has not previously been prepared by CRLL), increased monitoring as well as exercising the rights available to Sponsors set out in clauses 17.3 and 17.4.

(c)

If the Sponsors require CRLL to take action pursuant to clause 18(b), CRLL shall comply with the Sponsors’ instructions in respect of such action until such time as the Sponsors notify CRLL otherwise.

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 29

(d)

Following the occurrence of a CRLL Default, CRLL will promptly provide such assistance and such information to the Sponsors as the Sponsors reasonably require.

19. Remedial Action Plan 19.1

Remedial Action Plan (a)

CRLL will promptly, and in any event within the period required to do so, prepare a Remedial Action Plan in consultation with the Sponsors and each Party will ensure that appropriate representatives consult and collaborate in the development of the Remedial Action Plan.

(b)

The Remedial Action Plan will be a document that sets out in reasonable detail a proposal, or a range of proposals, to address the impact of the Relevant Event. It may include any proposals reasonably considered by CRLL to be appropriate and viable having regard to the nature and circumstances of the Relevant Event and shall specify details for implementing such proposals and CRLL's forecast of the impact of such proposals on its obligations under this Agreement.

(c)

Without limiting the foregoing, the Remedial Action Plan shall include the following: (i)

a comprehensive description of the Relevant Event and its general nature and seriousness and (where relevant) the date of its occurrence and its anticipated duration;

(ii)

CRLL's best estimate of the effect that the Relevant Event will have on the Forecast Project Costs, including when CRLL expects that any additional costs will be incurred, by way of a revised Forecast Project Costs schedule, specifying the reasons for any additional costs or material change in the revised Forecast Project Costs and identifying any alternative strategies to avoid or mitigate additional costs;

(iii)

CRLL's best estimate of any delay that the Relevant Event will cause to the achievement of the Project Delivery Schedule (including any Key Milestones, the Target Project Delivery Date and the Target Final Completion Date) as a result of such delay, including: (A)

providing an estimate of the probable effect of the delay;

(B)

specifying whether or not any of CRLL’s contingency plans (or any adaptation of the same) can be utilised to avoid or mitigate the delay;

(C)

identifying any alternative strategies to avoid or mitigate the delay; and

(D)

providing a revised Project Delivery Schedule, showing the manner and the periods in which CRL Project Works is to be carried out to achieve the Target Project Delivery Date and the Target Final Completion Date;

(iv)

CRLL's opinion of any other adverse effects the Relevant Event will have on the CRL Project or on CRLL's ability to discharge its obligations under this Agreement;

(v)

details of the action that CRLL proposes to take to mitigate the time and costs impacts of the Relevant Event;

(vi)

any steps that CRLL suggests that the Sponsors should take to address the impacts of the Relevant Event (for the avoidance of doubt, the Sponsors shall not be obliged to accept CRLL's suggestion);

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 30

(vii)

the likely impact (if any) on the Sponsors’ Requirements and/or the Delivery Strategy;

(viii)

a revised Quarterly Report and the Project Delivery Schedule to reflect the impact of the Relevant Event; and

(ix)

any other information reasonably requested by the Sponsors in relation to the Relevant Event.

(d)

The Parties shall meet as soon as reasonably practicable following the issue of the Remedial Action Plan with a view to discussing and agreeing the likely consequences of the Relevant Event.

(e)

The Sponsors' response to the Remedial Action Plan may be to:

(f)

(i)

agree to part or all of the proposals set out in the Remedial Action Plan, in which case CRLL (and, to the extent specified in the Remedial Action Plan, the Sponsors) shall implement the Remedial Action Plan in accordance with its terms including making such amendments to this Agreement as the Sponsors may agree;

(ii)

without prejudice to Schedule 9, request that CRLL revise the Remedial Action Plan to take into account any alternative proposals suggested by the Sponsors, in which case CRLL shall, acting reasonably, revise the Remedial Action Plan; or

(iii)

require CRLL to take any other action, as the Sponsors reasonably see fit in the circumstances, and any such response shall be without prejudice to the other rights that are available to the Sponsors under the terms of this Agreement and the other Sponsor Documents.

CRLL shall promptly take such action, if any, as is necessary to give effect to the Sponsors direction under clause 19.1(e).

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 31

Part H – General Provisions 20. Intellectual Property 20.1

CRL Intellectual Property (a)

Unless the Sponsors otherwise agree, CRLL shall procure that it: (i)

owns (whether by assignment or otherwise), free from all third party rights, all Intellectual Property created or developed exclusively in connection with the CRL Project (including all design drawings and plans) (Developed CRL IP);

(ii)

owns, or is granted a perpetual, irrevocable, transferable, sub-licensable (including the right to grant further subordinate licences to any third party), royalty-free licence of all other Intellectual Property necessary for the CRL Project (Background CRL IP) for use in connection with the CRL Project, provided that:

(iii)

20.2

(A)

CRLL shall obtain ownership of Background CRL IP to the extent ownership is available on commercially reasonable terms (taking into account best value principles); and

(B)

in relation to software for which a Standard Software Licence is obtainable, CRLL may accept such Standard Software Licence provided its terms are reasonable and at least as favourable to CRLL as those generally available; and

is able to comply with its obligations under clauses 20.1(b), (c), (d) and (e) below.

(b)

CRLL grants separately to each of the Sponsors, the Operator, any eventual owner of the Completed CRL Assets and their respective Affiliates and any other person involved in the CRL Project (IP Licensees) a perpetual, irrevocable, transferable, sub-licensable, royalty-free, non-exclusive licence (or, as the case may be, sub-licence) to use the CRL Intellectual Property.

(c)

Other than in respect of Standard Software Licences, CRLL shall procure that each IP Licensee is promptly provided with copies of the latest versions of all documentation (including training manuals and technical information (including in any electronic format)) and software (in executable object code) used in connection with the CRL Project, as that IP Licensee may from time to time reasonably request.

(d)

CRLL shall notify the Sponsors, on request, of details (including the owner, scope, type of Intellectual Property and any registration number) of material CRL Intellectual Property in existence from time to time.

(e)

CRLL shall ensure that the terms of the Project Contracts and the Delivery Partner Agreements allow it to comply with its obligations set out in this clause 20.

Moral Rights CRLL, in respect of all CRL Intellectual Property to the extent permitted by applicable Laws, will not, and will take all reasonable steps to ensure that no third party will sue, enforce any claim, bring any action or exercise any cure in respect of any breach or alleged breach of any person’s Moral Rights in respect of any CRL Intellectual Property against the Sponsors, or any third party to whom the Sponsors license (whether express or implied), or grants any other rights to use, possess, modify, vary or amend any CRL Intellectual Property.

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 32

21. Communications (a)

CRLL shall develop a protocol (which shall be subject to the review and approval of the Sponsors in accordance with Schedule 4) for external communications and promotional activity by CRLL and the Sponsors in relation to the CRL Project as part of the Delivery Strategy (Communications Strategy).

(b)

CRLL will be responsible for all day-to-day communications, announcements and brand management concerning the CRL Project, in accordance with the Communications Strategy.

(c)

The Communications Strategy shall, amongst other things, include the following: (i)

provide for prior consultation and approval by the Sponsors of announcements to the public or third party contactors concerning this Agreement or the Sponsors;

(ii)

an engagement process with Sponsors on matters concerning public statements about the CRL Project (including performance and cost related matters);

(iii)

collaboration on public transport promotion and matters impacting the wider Sponsor objectives work streams such as long-term ownership and operation of the commuter rail network;

(iv)

ensure that the Sponsors are given appropriate branding recognition in relation to their funding of the CRL Project; and

(v)

any other matters that should be included in such strategy consistent with Good Industry Practice.

(d)

Following approval of the Communications Strategy by the Sponsors, the Parties shall each comply with the Communications Strategy in relation to any announcement or external communication in relation to the CRL Project.

(e)

The Communications Strategy must not prevent a Party from being able to comply with the legally binding requirements of any applicable Law, order of court, tribunal, authority, governmental or regulatory body.

22. Disputes 22.1

Disputes under or in connection with this Agreement The Parties shall comply with the provisions of Schedule 12 in relation to resolution of Disputes under or in connection with this Agreement.

23. Company representations and warranties 23.1

Negative undertakings CRLL will not, without the Sponsors’ prior written consent, at any time: (a)

create or permit to subsist any Security Interest over, in relation to or otherwise affecting, any of its assets, other than a Permitted Security Interest;

(b)

whether by a single transaction, or a number of related or unrelated transactions and whether at the same time or over a period of time, dispose of any of its assets (including any land) or enter into any agreement or heads of terms in relation to a developmental opportunity in relation to any land or development;

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 33

(c)

lend or otherwise provide any other financial accommodation to any person, other than on arm’s length commercial terms;

(d)

incur or allow or permit to subsist any Debt (including by giving a guarantee), other than Permitted Debt;

(e)

enter into or incur any off balance sheet commitment;

(f)

undertake any property or land development;

(g)

enter into:

(h)

(i)

any partnership or joint venture;

(ii)

any transaction other than on arm’s length terms; or

(iii)

any transaction with any related company or any subsidiary of CRLL except for value in the ordinary course of business on an arm’s length basis and on normal commercial terms; or

assign transfer charge or otherwise deal with its rights in any land or any other assets owned by CRLL.

25. Confidentiality 25.1

Protection of Confidential Information Each Party must: (a)

use the Confidential Information only for purposes related to this Agreement, the other Sponsor Documents and the CRL Project; and

(b)

subject to clause 25.2, keep the Confidential Information confidential and not disclose it or allow it to be disclosed to any third party except with the prior written approval of the other Parties.

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 34

25.2

Permitted exceptions Without limiting clause 25.1, each Party’s obligations of confidentiality under clause 25.1 shall not apply to the disclosure of Confidential Information:

25.3

(a)

reasonably required by any Party for the performance of its obligations under this Agreement or any other Sponsor Document, provided that the relevant Party procures that any party to whom it discloses is subject to the same confidentiality obligations contained in this clause 25.1 in all material respects;

(b)

reasonably made by any Party to those of its directors, employees or officers for any purpose related to or ancillary to this Agreement or any other Sponsor Document, and who have a need to know such information for the purposes of this Agreement or any other Sponsor Document or otherwise for the proper performance of their duties provided that the relevant recipient agrees to treat the Confidential Information on materially the same confidential basis as under this clause 25;

(c)

reasonably required or made by any Party to any third party providing works or services in respect of the CRL Project, to the extent that they have a ‘need to know’ that Confidential Information and who agrees to treat the Confidential Information on materially the same confidential basis as under this clause 25;

(d)

that is already in the public domain (except to the extent of a breach of this Agreement or any other obligation of confidence);

(e)

that is already in the lawful possession of the receiving party (except to the extent of a breach of this Agreement or any other obligation of confidence);

(f)

to the extent required to be disclosed by the legally binding requirements of any applicable Law, order of court, tribunal, authority, governmental or regulatory body;

(g)

to the Prime Minister, a Minister or other officer of Parliament; or

(h)

to the Mayor, provided that the Mayor is made aware of the confidential nature of that Confidential Information.

Official Information Legislation Each Party acknowledges that the other Parties are or may be subject to the Official Information Legislation and that the Parties may be obliged to disclose Confidential Information under the Official Information Legislation if so requested and if there is no good reason under the terms of the relevant legislation to withhold that information. Each Party shall use reasonable endeavours to advise the other Parties of any request received by it under the Official Information Legislation that relates to Confidential Information of any other Party.

25.4

Sponsor engagement of third party Where the Sponsors engage any third party to provide works or services in respect of the CRL Project, prior to such engagement, the Sponsors shall consult with CRLL to ensure no conflict of interest arises or may arise as a result of such engagement.

26. Notices 26.1

Notices in Writing Any notice or other communication to be given under this Agreement: (a)

must be in writing; and

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 35

(i)

for day to day operational matters must be addressed to either the CRLL Representative or the Sponsors’ Representative (as applicable); and

(ii)

for all other matters including for the purposes of Schedule 12 (Dispute Resolution) must be addressed to the recipient at the relevant address nominated set out below (in each case or as otherwise notified by a Party to the other Party from time to time):

Party

Crown

Council

CRLL

Address:

Ministry of Transport 318 Lambton Quay PO Box 3175 Wellington 6011

Auckland Council

City Rail Link Limited

135 Albert Street

PO Box 105777

Auckland 1010

Auckland 1141

Email: Attention:

26.2

Chief Executive Officer, Chief Executive Officer copied to the Chief Legal Advisor

Project Director

Delivery of Notices (a)

Subject to clause 26.2(b), a notice or other communication may be effected by hand, by post with postage prepaid, or by email. A notice or other communication is taken to have been received: (i)

if the notice or other communication is delivered by hand to the receiver, at the time of delivery;

(ii)

if the notice or other communication is posted in a postage paid registered envelope addressed to the receiver, at the time when it would be received in the ordinary course of registered post then prevailing; or

(iii)

if the notice or document is sent by email, at the time shown on the delivery receipt stating that the email was received by the recipient,

but if receipt or deemed receipt is on a day which is not a Working Day or is after 5:00pm at the place of receipt, it is taken as received at 9:00am on the next Working Day. (b)

Any notice to a Party under Schedule 12 (Dispute Resolution) may be sent by email provided it is also given by hand or by registered post.

27. General Matters 27.1

Sponsor Reputation CRLL undertakes not to act in such a manner as will bring the name of either of the Sponsors into disrepute.

27.2

Approvals (a)

Any review, approval, comment, acknowledgment or certificate given by the Sponsors under this Agreement shall not relieve CRLL from any liability or modify, any of CRLL’s duties, obligations, or responsibilities under this Agreement, unless such duties,

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 36

obligations, or responsibilities are modified in accordance with the Change process set out in Schedule 9. (b)

27.3

Neither the Sponsors’ participation in any workshops, presentations or other forum nor any review or approval of, comments upon or failure to review, approve or comment upon any document the Sponsors’ Representative or anyone else on behalf of the Sponsors will: (i)

relieve CRLL from, or alter or affect, CRLL’s obligations or liabilities under this Agreement;

(ii)

constitute any representation by the Sponsors or anyone acting on their behalf as to the compliance of any such document submitted with the requirements of this Agreement; or

(iii)

affect the time for performance by CRLL of its obligations under this Agreement.

Assignment CRLL shall not, and shall not purport to, assign, transfer, charge or otherwise deal with all or any of its rights and/or obligations under this Agreement nor grant, declare, create or dispose of any right or interest in it, without the prior written consent of the Sponsors.

27.4

Legal costs Subject to any express provision in this Agreement to the contrary, each Party is to pay its own legal and other costs and expenses relating directly or indirectly to the preparation of, and performance of its obligations under, this Agreement.

27.5

Amendment No amendment, modification or variation of, or waiver in respect of, this Agreement shall be valid unless it is in writing and signed by or on behalf of each of the Parties.

27.6

27.7

27.8

No Agency or Partnership (a)

Nothing in this Agreement creates or constitutes or is deemed to create or constitute any relationship of employment, trust, agency or partnership between the Parties.

(b)

Neither Sponsor may enter into any contracts, commitments, debts or other legal documents or arrangements in the name of the other Sponsor or to take any act or step to bind or commit the other Party.

Waiver and exercise of rights (a)

A failure to exercise or enforce, or a delay in exercising or enforcing or the partial exercise or enforcement of, a right provided by law or under this Agreement does not preclude, or operate as a waiver of, the exercise or enforcement, or further exercise or enforcement, of that or any other right provided by law or under this Agreement.

(b)

A waiver or consent given by a Party under this Agreement is only effective and binding on that Party if it is given or confirmed or exercised in writing by that Party.

Privity Nothing in this Agreement is intended to, or does, confer any benefits or enforceable rights or interests upon, or makes any representation to, any person other than the contracting parties.

27.9

Survival

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 37

Any indemnity or any obligation of confidence under this document is independent and survives termination of this Agreement. Any other term by its nature intended to survive termination of this Agreement survives termination of this Agreement.

27.10 Further assurance (a)

Each Party is to promptly execute all documents and do all things that the other Parties may from time to time reasonably require of it to effect, perfect or complete the provisions of this Agreement and any transaction contemplated by it.

(b)

Each Party shall ensure that its internal governance arrangements are such that it is able to comply with its respective obligations under this Agreement.

27.11 Counterparts This Agreement may consist of a number of counterparts and if so the counterparts taken together constitute one and the same instrument.

27.12 Governing law and jurisdiction This Agreement is governed and is to be construed under the laws in force in New Zealand.

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 38

Schedule 1: Definitions and Interpretation Part I – Definitions In this Agreement: Adverse Event has the meaning given in clause 16.1(a).

Adverse Event Notice has the meaning given in clause 16.1(b).

Affiliate means a person that is a “related company” of any relevant person.

Agreement means this Project Delivery Agreement.

Applicable Standards means all codes of practice or other guidelines issued by any Government Entity or other body having jurisdiction to issue such guidelines in respect of the CRL Project.

Assurance Manager has the meaning given in clause 13.3(b).

AT Delivery Partner Agreement means the agreement of that name to be entered into by the parties thereto on or about the date of this Agreement.

Auckland Council Funding Amount means the GST exclusive aggregate total funding to be provided by the Council as set out in the Sponsors Agreement.

Auckland Transport means a council-controlled organisation of the Auckland Council in the form of a body corporate with perpetual succession, established under section 38 of the Local Government (Auckland Council) Act 2009.

Authorised Representative means, in respect of CRLL, a director or a person it notifies to the Sponsors as being authorised to act as its authorised representative for the purposes of this Agreement where the Sponsors have no notice of revocation of that authority.

Background CRL IP has the meaning given in clause 20.1(a).

Business Hours means from 7.00am to 5.00pm on a Working Day. Change means: (a)

any variation or amendment proposed by either the Sponsors or CRLL (whether by way of addition, deletion, amendment or further definition) to the CRL Project scope as set out in Schedule 2 or to the Sponsors’ Requirements;

(b)

any requirement of the Sponsors for CRLL to change the manner in which CRLL undertakes the design, construction, commissioning and completion of the CRL Project or the Works Packages, including any change to the Delivery Strategy, any additional or removed requirement or constraint unless such change is required to ensure that CRLL complies with its obligations under this Agreement;

(c)

any requirement of the Sponsors for CRLL to procure any study, investigation, design or other service or report in connection with the CRL Project which CRLL is not otherwise required to provide pursuant to this Agreement; and

(d)

any other matter that this Agreement specifically deems to be a Change.

Change Appraisal means any written report delivered by CRLL in accordance with paragraph 4.1 of Schedule 9 and containing the information specified in paragraph 4.2 of Schedule 9.

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 40

Change Appraisal Instruction means a written notification provided by the Sponsors pursuant to paragraph 3.2(b) of Schedule 9 and containing the information specified in paragraph 3.3 of Schedule 9.

Change Confirmation Notice has the meaning given to such term in paragraph 7.1 of Schedule 9.

Change Notice means either (a) a notice served jointly by the Sponsors on CRLL pursuant to paragraph 1.1 of Schedule 9 or (b) a notice served by CRLL on the Sponsors pursuant to paragraph 1.2 of Schedule 9, as the context may require.

Change Rejection Notice has the meaning given to such term in paragraph 7.3 of Schedule 9.

Communications Strategy has the meaning given in clause 21.

Companies Act means the Companies Act 1993.

Companies Office means a New Zealand government agency of that name that provides business registry services in relation to corporate entities, securities over personal property, capital markets and financial products.

Completed CRL Assets means all works constructed, procured, commissioned and brought in to service pursuant to the Works Packages and includes, as the case may be, the Initial CRL Project Assets.

Confidential Information means: (a)

(b)

(c)

all information and trade secrets already communicated or subsequently communicated under or in connection with this Agreement or otherwise with respect to the subject matter of this Agreement including (without limitation) any information obtained: (i)

in the course of negotiations leading to the conclusion of this Agreement; or

(ii)

in the performance of this Agreement;

any information about the business or property of a person including (without limitation) any information: (i)

relating to the financial position of that person;

(ii)

concerning that person’s suppliers and customers or its agents or brokers;

(iii)

relating to that person’s internal management, structure, personnel or strategies; or

(iv)

comprising the terms of this Agreement; and

all information in respect of any materials in which any person has Intellectual Property rights in accordance with the terms of this Agreement.

Consents means any consents, permissions, approvals, certificates, permits, licences or authorisations of a Government Entity or judicial body or otherwise by Law, which are required for the CRL Project.

CRL Intellectual Property means the Background CRL IP and the Developed CRL IP. CRL Project is the project generally known as the ‘City Rail Link’ and means the project for the development, design, procurement, construction, commissioning, integration and completion of a railway transport system as described in more detail in Schedule 2.

CRLL Board means the board of directors of CRLL. Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 41

CRLL Default has the meaning given in clause 18(a).

CRLL Personnel means any director, officer, employee or agent of, or contractor to CRLL. CRLL Representative has the meaning given in clause 13.2(a).

CRL Project Works means the permanent and temporary works required for the implementation of the CRL Project and for the avoidance of doubt includes the Early Works.

Crown Funding Amount means the GST exclusive aggregate total funding to be provided by the Crown as set out in the Sponsors Agreement.

Debt means any present or future actual or contingent indebtedness or other monetary liability in respect of borrowed money or money raised or any financial accommodation.

Defaulting Sponsor has the meaning given to that term in Schedule 10.

Delivery Contractors means each of the counterparties to the Project Contracts.

Delivery Partner Agreements means the agreements for services entered or to be entered into between: (a) CRLL and each of Auckland Transport and KiwiRail either bilaterally or in tri-partite form; and (b) CRLL and any future third party owner or operator, in relation to the CRL Project.

Delivery Strategy means the strategy to be developed by CRLL setting out the manner in which CRLL intends to procure the implementation of the CRL Project, as the same may be amended from time to time by CRLL in accordance with clause 4.5 and Schedule 4.

Developed CRL IP has the meaning given in clause 20.1(a).

Dispute means any dispute, disagreement, difference of opinion or deadlock arising between any of the Parties under, in respect of or in connection with any matter arising from this Agreement, any other Sponsor Document or otherwise in connection with the CRL Project.

Dispute Resolution Procedure means the procedure for the escalation and resolution of Disputes set out in Schedule 12.

Early Works means any design, construction, services (including procurement of materials or equipment) or works in furtherance of the CRL Project Works undertaken prior to the date of this Agreement.

Early Works Package means each of the following packages of Early Works: (a)

Contract C1 (Lower Queen Street);

(b)

Contract C2 (Lower Albert Street); and

(c)

Downtown Shopping Centre.

Effective Date means the date this Agreement becomes unconditional under and in accordance with clause 2.1.

Execution Date means the date that this Agreement was executed by all parties.

Final Completion Date means the date on which Final Project Completion of the entire CRL Project Works occurs, as approved by the Sponsors in accordance with Schedule 8.

Final Project Completion has the meaning given to that term in Schedule 8.

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 42

Final Project Completion Certificate has the meaning given in Schedule 8.

Forecast Project Costs means the forecasted total cost of the CRL Project as set out in Schedule 6, as may be adjusted from time to time in accordance with this Agreement.

Funding Amount means the amount of Sponsor Committed Funding requested in a Funding Request.

Funding Date has the meaning set out in the relevant Funding Request.

Funding Request means a request in the form set out in Schedule 11 requesting a Funding Amount from the Sponsors under the terms of this Agreement, properly completed and given in accordance with clause Schedule 10.

Good Industry Practice means practices corresponding with or equivalent to successful, reliable and safe examples of relevant modern designs, construction methods, systems and systems operation, railway operation and management and governance procedures employed on recent international railway and tunnelling projects or major construction works.

Governmental Entity means any government, or any governmental or semi-governmental entity, person or authority, body politic (but excluding any political party), government department, local government authority or statutory authority and includes (unless the context otherwise requires) the Crown.

GST means goods and services tax chargeable in accordance with the GST Act. GST Act means the Goods and Services Tax Act 1985.

HSE Legislation means, the Health and Safety at Work Act 2015 and includes all regulations and approved codes of practice under that Act and any other applicable health and safety laws, including the Railways Act. Initial Change Appraisal has the meaning given in Schedule 9 at paragraph 2.1.

Initial CRL Project Assets means the assets, contracts, arrangements, property (real and personal), rights and interests whatsoever and howsoever held (legally or beneficially), that are held and required for the CRL Project, and that are to be transferred to CRLL pursuant to the Transfer Agreement.

Intellectual Property means patents, registered designs, petty patents, utility models, trade marks (including logos and trade dress), domain names, copyright, circuit layouts, rights in computer software and databases, rights in inventions, know-how and business process and methods, (in each case) whether registered or unregistered (including applications for the grant of any of the foregoing) and all rights or forms of protection that are capable of intellectual property protection under applicable Law. Joint Sponsor Team means the joint sponsor team established under the Sponsors’ Agreement.

Key Milestones means the specific stages or events in undertaking the CRL Project identified in the Project Delivery Schedule as key milestones.

KiwiRail means KiwiRail Holdings Limited trading as KiwiRail which is the State-Owned Enterprise that owns and operates New Zealand’s rail and ferry transport networks.

Laws means those principles of New Zealand law established by the courts, statutes, regulations, ordinances, by-laws and any other subordinate forms of rulemaking of government, any local authority, the Crown or any other Governmental Entity as well as any Consents (and any conditions or requirements under them).

Local Government Act means, the Local Government Act 2002.

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 43

Material Contract means the Works Packages C3, C5, C6, C7, C8, C9, and any commissioning framework agreement or equivalent to be entered into by CRLL. Material Contractor means each of the counterparties to Material Contracts.

Mayor means the mayor of Auckland.

Minister means any member of Parliament who is appointed by the Governor-General of New Zealand to hold office as a minister of the Crown.

Minister of Transport means a member of Parliament who is appointed by the GovernorGeneral of New Zealand to hold office as a minister of the Crown for the ministry of transport.

Monitoring Point means any or all of Monitoring Point 1, Monitoring Point 2, or Monitoring Point 3.

Monitoring Point 1 means: (a)

in relation to costs, an amount equal to

Monitoring Point 2 means: (a)

in relation to costs, an amount equal to

Monitoring Point 3 means: (a)

in relation to costs, an amount equal to

Moral Rights has the meaning given under Part 4 of the Copyright Act 1994 and any corresponding or similar rights granted under any other laws anywhere in the world.

Non-Defaulting Sponsor has the meaning given to that term in Schedule 10.

Official Information Legislation means: (a)

the Official Information Act 1982; and

(b)

the Local Government Official Information and Meetings Act 1987.

Operator means an entity or entities appointed from time to time to operate the CRL Project Works or part thereof once complete.

Party means a party to this Agreement.

Permitted Debt means any Debt: (a)

owing by CRLL to a trade supplier on the supplier’s normal commercial terms and in the ordinary course of CRLL’s trading activities;

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 44

(b)

owing by CRLL to any of the Sponsors; or

(c)

permitted in writing by the Sponsors.

Permitted Security Interest means any Security Interest: (a)

created in favour of the Sponsors; or

(b)

created with the Sponsors’ prior written consent; or

(c)

which is: (i)

a deemed security interest under section 17(1)(b) of the PPSA which does not secure payment or performance of an obligation; or

(ii)

a lien arising solely by operation of law and in the ordinary course of business of CRLL provided the debt it secures is paid when due or is contested in good faith by appropriate proceedings; or

(iii)

a Security Interest taken in collateral by a seller to the extent that it secures the obligation to pay all or part of the purchase price of that collateral, where that collateral is purchased in the ordinary course of business of the buyer and the purchase price is paid within 60 days of supply; or

(iv)

a netting or set-off arrangement entered into in the ordinary course of a person’s banking arrangements for the purpose of netting debit and credit balances.

Permitted Variation means a Variation: (a)

under a Project Contract (other than a Material Contract) that involves CRLL incurring additional expenditure under the Project Contract of and will not change or affect the scope of the CRL Project as set out in Schedule 2 or the Sponsors’ Requirements or the ability of the CRL Project Works to be delivered within the Target Delivery Cost and Practical Project Completion to occur by the Target Project Delivery Date and/or Final Completion to occur by the Target Final Completion Date; or

(b)

under a Material Contract, that involves a Variation to the works where the additional expenditure under that Material Contract as a result of that Variation is and in respect of which CRLL certifies to Sponsors that such Variation: (i)

will not cause an extension of time for performance by a contractor under the relevant Material Contract which results, or is likely to result, in a delay to the Project Delivery Date and/or the Final Completion Date;

(ii)

will not result in, and is not likely to result in, the budget for that Material Contract (taking into account all variations) being exceeded by an amount greater than the contingency provision allowed in the Forecast Project Costs for that Material Contract;

(iii)

will not change or affect either the scope of the CRL Project as set out in Schedule 2 or the Sponsors’ Requirements; and

(iv)

can be carried out within the terms of all relevant Consents;

provided that, in each case, the Variation is not inconsistent with the scope of the CRL Project (including the quality and character).

Post-Completion Notice has the meaning given to that term in clause 4.11.

PPSA means the Personal Property Securities Act 1999.

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 45

Practical Project Completion has the meaning given to that term in Schedule 8.

Practical Project Completion Certificate has the meaning given in Schedule 8.

Prime Minister means a person who is the head of the elected government in New Zealand at the relevant time.

Project Contract means any agreement entered into or to be entered into by CRLL (including those novated over to CRLL pursuant to the Transfer Agreement and including all Material Contracts) in relation to the implementation of the CRL Project, other than the Delivery Partner Agreements and this Agreement.

Project Delivery Schedule means the schedule set out at Schedule 5 as may be amended from time to time in accordance with this Agreement.

Project Delivery Date means the date on which Practical Project Completion of the CRL Project Works occurs, as approved by the Sponsors in accordance with Schedule 8.

Public Finance Act means the Public Finance Act 1989.

Quarterly Cash Flow Forecast means the quarterly cash flow forecast for the whole CRL Project setting out for each quarter, the forecast actual expenditure for the relevant quarter together with an appropriate allowance for contingency, in a form and with sufficient details satisfactory to Sponsors, to be provided to the Sponsors with each Funding Request.

Quarterly Report has the meaning at clause 14.1(a).

Railways Act means the Railways Act 2005.

Relevant Event means, as appropriate, an Adverse Event, a Monitoring Point or a CRLL Default.

Remedial Action Plan means the plan prepared in accordance with clause 19.1.

Review Point has the meaning given to that term in Schedule 4.

Security Interest means: (a)

a mortgage, pledge, charge, lien, assignment, hypothecation, encumbrance, deferred purchase, title retention, finance lease, contractual right of set-off, flawed asset arrangement, sale-and-repurchase and sale-and-leaseback arrangement, order or other arrangement of any kind, the economic effect of which is to secure a creditor; and

(b)

a “security interest” as defined in the PPSA.

Settlement Agreement means the agreement of that name entered into between Auckland Transport, Auckland Council, Crown and CRLL addressing various matters to be resolved between those parties in relation to the transfer of assets, rights and contracts relating to the CRL Project and issue of shares by CRLL to Council and Crown as specified therein.

Shareholding Ministers means the Minister of Transport and Minister of Finance, in their capacity as shareholders of CRLL. Shares means shares in CRLL. Sponsor Committed Funding means the Crown Funding Amount and the Auckland Council Funding Amount to be made available by the Sponsors to CRLL as set out in the Sponsors Agreement.

Sponsor Documents has the meaning given to that term in the Sponsors’ Agreement.

Sponsors’ Representative has the meaning given to it in clause 13.1(a).

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Project Delivery Agreement | page 46

Sponsors’ Requirements means the requirements of the Sponsors in respect of the CRL Project as set out in Schedule 3.

Sponsors means the Crown and the Council.

Sponsors’ Agreement means the agreement of that name between the Crown and Auckland Council dated on or about the date of this Agreement.

Standard Software Licence means a licence of uncustomised software available off-the-shelf on arm’s length terms.

Subscription Shares means the number of Class B Shares in the capital of CRLL specified in a Funding Request, having the rights attaching to such class of shares as set out in CRLL’s constitution.

Target Delivery Cost means the amount approved by the Sponsors as the budget for the management, delivery and completion of the CRL Project, which as at the date of this Agreement is as may be adjusted from time to time in accordance with this Agreement.

Target Final Completion Date means the expected date for Final Project Completion of the CRL Project, Target Project Delivery Date means the expected date for Practical Project Completion of the CRL Project, Tax means any tax, levy, impost, stamp or other duty and any other charge, deduction or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).

Total Available Funding means the aggregate of the Crown Funding Amount and Auckland Council Funding Amount, to be made available by the Sponsors to CRLL pursuant to and in accordance with this Agreement which at the Execution Date is inclusive of Stage 1 Works Costs as defined in the Sponsors’ Agreement.

Transfer Agreement means the agreement entered into between Auckland Transport, Auckland Council and CRLL in relation to the transfer of assets, rights and contracts relating to the CRL Project.

Variation means, as the context requires, a change to a Project Contract (including any change in nature, quality or quantity of work to be provided therein) which is instructed or deemed to be a variation thereunder or any extension of time for performance under that Project Contract or proposed increase to the contract price.

Working Day means a day that is not a Saturday, Sunday or public holiday in Auckland.

Works Packages means each of the following packages of work forming part of the CRL Project Works: (a)

Contract C1 (Lower Queen Street);

(b)

Contract C2 (Lower Albert Street);

(c)

Downtown Shopping Centre;

(d)

Contract C3 (Stations and Tunnels);

(e)

Contract C5 (Western Line);

Minter Ellison Rudd Watts | Ref VXN- 201012445

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(f)

Contract C6 (Mt Eden Stormwater Diversion)

(g)

Contract C7 (Tunnel Trackwork and Railway Systems);

(h)

Contract C8 (Wider Network Improvements);

(i)

Contract C9 (Britomart East connection); and

(j)

any other works package that the Sponsors agree is to be a ‘Works Package’ for the purposes of this Agreement.

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 48

Part II – Interpretation In this Agreement, unless the context otherwise requires: (a)

headings are for convenience only and do not affect the interpretation of this Agreement;

(b)

words importing: (i)

the singular include the plural and vice versa; and

(ii)

any gender includes the other gender;

(c)

if a word or phrase is defined the same words and phrases have corresponding definitions;

(d)

where a word or expression is defined in the contract e.g. Sponsor, other parts of speech and grammatical forms of that word or expression have a corresponding meaning e.g.

Sponsors;

(e)

a reference to: (i)

(ii)

a person includes: (A)

a natural person, partnership, body corporate, association, governmental or local authority or agency or other entity; and

(B)

its legal personal representatives, successors and permitted assigns;

a body, other than a party to this Agreement (including an institute, association or authority), whether statutory or not: (A)

which ceases to exist; or

(B)

whose powers or functions are transferred to another body,

is a reference to the body which replaces it or which substantially succeeds to its powers or functions (iii)

a party, clause, annexure, appendix, exhibit or schedule are references to parties, clauses, annexures, appendices, exhibits or schedules of or to (as the case may be) this Agreement;

(iv)

a document or instrument includes the document or instrument as novated, altered, varied, supplemented or replaced from time to time;

(v)

a statute, ordinance, code or other law includes regulations and other statutory instruments under it and consolidations, amendments, re-enactments or replacements of any of them;

(vi)

a right includes a benefit, remedy, discretion, authority or power;

(vii)

an obligation includes a warranty or representation and a reference to a failure to observe or perform an obligation includes a breach of warranty or representation;

(viii)

provisions or terms of this Agreement or another document, agreement understanding or arrangement include a reference to both express and implied provisions and terms;

(ix)

time is to local time in New Zealand;

(x)

“$” or “dollars” is a reference to the lawful currency of New Zealand;

(xi)

writing includes any mode of representing or reproducing words in tangible and permanently visible form, and includes facsimile transmission;

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(xii)

anything (including, without limitation, any amount) is a reference to the whole or any part of it and a reference to a group of things or persons is a reference to any one or more of them; and

(xiii)

a month is to a calendar month;

(f)

the term including means “including, without limiting the generality of the foregoing”;

(g)

the meaning of “or” will be that of the inclusive, being one, some or all of a number of possibilities; and

(h)

if a day on or by which an obligation must be performed or an event must occur is not a Working Day, the obligation must be performed or the event must occur on or by the next Working Day.

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Schedule 2: Project Scope

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Scope For City Rail Link Limited Project Development Agreement 30 June 2017

1 | AT CRL Integrated Project Office Overview | September 2016

EXPRESS

2

CRL | Scope for Project Development Agreement | 30 June 2017

City Rail Link Scope

4

Operations

5

Property Contract C1 – Britomart

5

. ..

.

6

.

6

Contract C2 – Albert St Contract DSC – Precinct Properties

6

.

Contract C3 – Stations and Tunnels

.

Contract C5 – Western Line

Contract C8 – Wider Network Improvements

-

Aotea

-

Karanghape Road

-

Mt Eden

3

CRL | Scope for Project Development Agreement | 30 June 2017

..

8

..

8 9

. .

.. ..

Urban Realm Exclusions

7

.

Development Britomart

.

.

Contract C9 – Britomart East

-

6

.

Contract C6 – Mt Eden Stormwater Diversion Contract C7 - Tunnel Trackwork and Railway Systems

...

. ..

.

9

10

.

12

.

13

City Rail Link Scope The City Rail Link (CRL) will include new twin 3.4km tunnels track and operational equipment running underground from Britomart Station via new stations at Aotea and Karangahape Road to a reconfigured Mt Eden Station doubling the capacity for inbound trains to the city centre and increasing the capacity of the entire metro rail system.

The route and contract packaging is shown below:

The horizontal alignment of the route is governed by the use of tracks 1 and 5 within Britomart station to provide the through tracks exiting to the west of the existing Britomart station, under Lower Queen Street, avoiding the foundations of the existing Zurich building whilst passing under the Commercial Bay shopping centre redevelopment site. The alignment proceeds in a cut and cover construction method under Albert Street to a new station at Aotea, between Wyndham and Wellesley Streets. The below ground alignment from Mayoral Drive to Pitt Street is formed in bored tunnels to a new mined tunnel station at Karangahape. The bored tunnels continue to a location under the Newton ridge where the east and west facing track junctions are formed in mined cavern construction that link to cut and cover construction to join the east facing connection to the Western Line at Normanby Road and the west facing connection at Porters Avenue.

4

CRL | Scope for Project Development Agreement | 30 June 2017

The vertical track alignment joins the existing tracks at Britomart station in the north to the existing tracks on the North Auckland Western Line at Mt Eden to the south, rising approximately 70m in 3.5 km distance. The vertical alignment in Albert Street rises from the west of Britomart to arrive at Victoria Street approximately 2m above the Orakei main sewer, 14m below Albert Street, to provide a level platform at Aotea station. The bored tunnels continue to climb to the south of Aotea at approximately 3.5% gradient to arrive at a level platform for Karangahape station. The alignment continues to climb at approximately 3.5% passing beneath the Central Motorway junction to a point approximately 42m below the Newton ridge where the mined east and west facing connection caverns are created to provide grade separation. The tunnels proceed to the south to the cut and cover connections to the Western Line to the east and west of Mt Eden station.

Operations Track, stations and systems installations for the CRL infrastructure are designed to support operations for an ultimate capacity of 24 CAF 6 carriage trains per hour in each direction and the ultimate passenger throughput of 18,000 passengers in each direction. Space proofing within stations will provide capacity to operate safely in the event of train service disruption. No diesel traction to be used for operating passenger services and no freight services to be operating on the CRL underground infrastructure.

Property The project has completed the acquisition of all surface properties for the permanent and temporary works associated with the CRL. This includes the acquisition of all temporary construction sites required to construct the CRL. The acquisition of all subterranean property rights where the CRL works pass under existing titles is currently underway.

5

CRL | Scope for Project Development Agreement | 30 June 2017

Contract C1 - Britomart works Tunneling under the Chief Post Office and Lower Queen Street. Construct temporary facilities at rear of Britomart Station before closing Britomart front entry (reopens 2023). Existing contract.

Contract - Downtown Shopping Centre Tunneling under the redevelopment of Downtown Shopping Centre. Works being undertaken by Precinct Properties Ltd (PPL) on behalf of CRL at CRL’s cost as per agreement with PPL (this is separate from C1 and C2). Existing contract.

Contract C2 - Albert Street works Construct tunnels with cut and cover trenching across Custom Street and up Albert Street to the south side of Wyndham Street. Reinstate Albert Street as a boulevard (reinstatement of the street as per the conditions of the Designation) with bus priority lanes and wider footpaths. Existing contract.

Contract C3 - Tunnels and Stations The C3 contract includes the majority of the CRL tunnelling work and the Aotea, Karangahape Road and Mount Eden Stations. The tunnelling extends from between the cut and cover tunnels constructed

by C2 (corner of Albert and Wyndham Streets) to the portals at Mount Eden. This will likely include sections of cut and cover tunnels, TBM bored tunnels, trenches, mined shafts, station platform tubes and cross passages.

The C3 Contract will include: •

Designing and constructing all tunnels between the cut and cover tunnels constructed by C2 and Mount Eden to include; cut and cover tunnels, TBM bored tunnels, mined station tunnels, shafts, cross passages and station equipment rooms.

•

6

Designing and constructing underground stations at Aotea Square and Karangahape Road

CRL | Scope for Project Development Agreement | 30 June 2017

•

Designing and constructing the Mount Eden CRL station including which will provide passenger access to/from CRL trains. Designing and constructing the above platform level structures including station footbridge connecting the CRL platforms with the Mount Eden North Auckland Line Station (the current station). Designing and constructing a new station entrance.

•

Station fit out including architectural finishes, Heating Ventilation and Air Conditioning, HV and LV Power distribution, Mechanical and Electrical control, Station Earthing and Bonding, Station Fire Systems, Escalators and Lifts.

•

Designing and constructing retail spaces within station entrances.

•

Design and installation of the Mount Eden Station footbridge and for all platform and station fit out with the scope boundary being the top of finished platform level.

Contract C5 - Western Line The C5 contract includes for the reconstruction of the Western Line rail corridor between the State Highway 1 overbridges and Dominion Road. The works include constructing trenches and track lowering to enable grade separation of the Normanby Road level crossing and for the new CRL connections. The works must be undertaken in stages to enable the Western Line to continue operating albeit with a period of single track running and a series of blocks of line.

Contract C6 - Mt Eden Stormwater Diversion Diversion of Mt Eden bulk stormwater pipe in advance of C3 and C5 works.

Contract C7 - Tunnel Trackwork and Railway Systems The C7 contract includes all tunnel trackwork and rail systems between Britomart Station and the connection with the Western Line at Mount Eden. C7 will be responsible for the integration of these systems both with the existing operational infrastructure and the new infrastructure provided by other CRL contract packages.

7

CRL | Scope for Project Development Agreement | 30 June 2017

The systems include track work, signalling, traction power and overhead line, control systems including for the tunnel and stations, fire engineering, tunnel ventilation, communication systems, tunnel services and trackside auxiliaries.

The Tunnel Trackwork and Railway Systems Contractor will be responsible for: •

Designing and implementing rail systems for the CRL project from Britomart Station to Mt Eden Station, including tunnel track work, signalling systems, Rigid Overhead Conductor Beam (OLE), Traction switchgear, Earthing and Bonding, all operational communications systems, fire engineering, certain operational control systems, tunnel ventilation systems, and spatial provision for future Platform Screen Doors (physically separating the platform and track).

•

Designing and implementing trackside auxiliary systems such as cable containment, tunnel lighting, tunnel signage, tunnel fire main, un-pumped drainage, cross passage doors and emergency tunnel walkway.

•

Undertaking a range of civil works required for the installation of these systems (for example, concrete works for the track form).

•

Leading systems integration, end-to-end commissioning and interoperability with existing and future related rail systems.

8

CRL | Scope for Project Development Agreement | 30 June 2017

Contract C8 - Wider Network Improvements The additional infrastructure requirements to enable the CRL train plan and deliver the benefits of the CRL (above those assumed in the do minimum network) are: •

Henderson Station additional platform and turnback siding allowing terminating services at the additional platform.

•

Otahuhu Station additional platform and turnback siding allowing terminating services at the additional platform.

•

Newmarket crossover.

•

Strand crossover.

Contract C9 - Britomart East The C9 contract includes: •

Rearranging trackwork in the 'throat' area where the twin tunnels meet Britomart Station (between Britomart Place and Tangihua Street).

•

Reducing the number of platforms from 5 to 4 and widen the 2 existing outside platforms (1 and 5).

•

Provision of additional vertical access at the eastern end of the station from widened platforms with changes to the lower 2 levels of the station.

Work is to be completed after CRL has opened and Britomart is operating as a through- rather than terminating-station. Involves a very significant interface with the operational railway.

9

CRL | Scope for Project Development Agreement | 30 June 2017

Development (works to be carried out within contracts C1 and C3 to enable future above station development) Britomart (strengthening within C1) The Britomart station design provides for additional structural strengthening to future proof for a 17,000 sqm commercial development opportunity to the rear of the CPO. This work is part of the C1 scope.

Aotea Station (strengthening within C3) The Aotea station design provides for future proofing for a 17-24 storey commercial development opportunity above and beside the southern entrance. Future proofing is to be via increased column sizes within the station entrance building and supporting structure below ground to accommodate the additional load paths. Additionally, a crash deck has been included within the entrance building design to permit the commercial development to take place above an operational station. The installation of a permanent roof and crash deck can be avoided if the construction of the development is undertaken at the same time as the station building.

The design future proofs for below ground connections between the station concourse and adjacent commercial developments at Sky City and the NDG tower, provided agreement is reached with each party to fund all works required to support the connections.

10

CRL | Scope for Project Development Agreement | 30 June 2017

Karangahape Road (strengthening within C3) The design future proofs for a 7 to 8 storey residential development above the station entrance at Mercury Lane with the predicted load paths being carried by the Mercury Lane shaft structure (Site A). Additionally, a crash deck has been included within the entrance building design to permit the commercial development to take place above a fully operational station.

Mt Eden (strengthening etc within C3) The design provides for future proofing for commercial development above and beside new track alignments in tunnels and above the CRL station platform construction. Future proofing includes the enhancement of below ground structures to tunnels, increased structure above and beside the CRL platform trench and a structural deck spanning the CRL platform sufficient to place a future development footprint without impacting upon the CRL operations. Reinstatement of roads optimise the development potential of the site.

Total development potential within construction yard includes capacity for up to 2,100 residents and 650 jobs once fully developed.

11

CRL | Scope for Project Development Agreement | 30 June 2017

Urban Realm The CRL designation conditions require the reinstatement of the urban realm in modern equivalent form to all areas affected by the works.

Council’s Auckland Development Office (ADO) 
 and BDO have identified enhanced specifications for urban realm and universal access elements beyond the agreed CRL scope. These will be funded by separate AC budgets and the Auckland City Centre Advisory Board (ACCAB) have already endorsed spending $20 million from the City Centre Targeted Rate towards achieving a higher quality reinstatement of Albert St. Public art is built into the reference design scope ($1.5m). Additional requests for artwork, including requests from AC public arts group, will be required to be self funding.

12

CRL | Scope for Project Development Agreement | 30 June 2017

Exclusions from CRL Scope The following are not included within the scope of the CRL: •

Additional trains.

•

The Auckland network third traction sub-station.

•

The provision of the Northern Regional Control Centre (NRCC).

•

Rail network improvements beyond the items listed under Contract C8

•

Seismic upgrading to 100% of code requirement of the CPO building at Britomart.

•

General maintenance equipment for the project.

•

Remedial and deferred maintenance.

•

SkyCity and NDG development connections, on the basis that they will be wholly funded by the outside parties.

•

13

Fitting out of commercial tenancies.

CRL | Scope for Project Development Agreement | 30 June 2017

Schedule 3: Sponsors’ Requirements 1. Purpose of this document 1.1

The purpose of these Sponsors’ Requirements is to: (a)

establish and describe the Sponsors’ high-level requirements and objectives for the CRL Project as at the date of this Agreement;

(b)

set out the minimum requirements that the CRL Project must achieve at the Project Delivery Date and the Final Delivery Date; and

(c)

set outcomes which are consistent with the objectives of the CRL Project as set out in paragraph 3 below.

1.2

All design, construction and commissioning of the CRL Project, whether performed by CRLL or others and whether before or after the establishment of CRLL, shall be carried out in a manner that accords with the principles set out in these Sponsors’ Requirements.

1.3

CRLL shall demonstrate at agreed Review Points and other times during the CRL Project as required under the Agreement that the requirements set out in these Sponsors’ Requirements are being met as part of the Sponsor assurance process.

2. Description of the CRLL Project 2.1

The scope of the CRL Project is described and set out in detail at Schedule 2.

2.2

In brief, the CRLL Project is 3.45km twin tunnel underground rail link from the Britomart Transport Centre connecting to the Auckland Rail Network at a redeveloped Mount Eden Station with two new underground stations at Aotea and Karangahape Road.

2.3

It is central to Auckland Council’s and Crown’s commitment to providing a first class, integrated public transport network in Auckland. It will provide a step change in the Auckland rail system by removing a dead end terminus at Britomart where trains have to enter and reverse out on the two tracks available and ending the need for Western Line trains having to reverse at the second busiest station, Newmarket. It will also significantly increase rail capacity around the network and into Auckland’s city centre and provide two new stations in the heart of Auckland’s commercial hub.

3. High-Level Objectives of the CRL Project 3.1

Without limiting the overarching objectives set out in Recital C of this Agreement, these Sponsors’ Requirements include the following objectives for the CRL Project: (a)

the statement of project objectives for the CRL Project as set out in Appendix 1;

(b)

value for money will be delivered at all stages of the CRL Project;

(c)

planning, procurement, construction, commissioning and implementation of service shall be consistent with the Government’s overall approach to the provision of major capital projects and Auckland Council’s plans for the development of Auckland’s infrastructure.

(d)

the CRL Project shall support the Government’s/Auckland Mayor's plans for public transport provision, particularly in relation to where it interfaces with other existing and

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future transport schemes and shall be integrated with the Auckland Mayor’s transport and sustainability strategies (as set out in the Auckland Long Term Plan); (e)

procured in accordance with international best practice for similar projects;

(f)

robust cost control mechanisms shall be in place throughout the lifetime of the CRL Project, that seek to optimise overall whole of life costs, whilst also wherever possible reducing direct capital funding requirements on Sponsors;

(g)

the design and delivery of the CRL Project meets the design capacity as set out in these Sponsors’ Requirements;

(h)

health and safety regimes prepared and implemented in accordance with Good Industry Practice during all phases of the CRL Project;

(i)

compliance with applicable law;

(j)

performance and reliability of the Completed CRL Assets consistent with Good Industry Practice;

(k)

designed, procured and constructed in a manner that contemplates and facilitates eventual expansion or renewal;

(l)

stations designed to minimise the net cost of property acquisition and optimise commercial value to the benefit of the CRL Project, subject to operational and safety requirements being met;

(m)

CRL Project is procured, designed and constructed in a manner that facilitates a linkage with Auckland’s other transport modes and future plans;

(n)

quality assurance, environmental assurance, risk assurance and safety regimes shall be established and implemented during all phases of the CRL Project and its subsequent operation; and

(o)

the construction of CRL Project Works shall aim to minimise disruption to existing services, adjacent land owners and affected transport users.

4. Required Outputs 4.1

4.2

Passenger Service Requirements and Performance (a)

CRL shall be designed to achieve a peak line capacity of 24 timetabled trains per hour per direction;

(b)

CRL shall support the operation of 6 car trains with a normal maximum capacity of 750 persons and an abnormal maximum capacity of 930 persons;

(c)

CRL shall support the operation of a normal peak line flow of 18,000 passengers per hour per direction; and

(d)

CRL maximum normal run time Britomart to Grafton (and vice versa) shall be 9 minutes and 50 seconds. CRL maximum run time Britomart to Kingsland (and vice versa) shall be 11 minutes and 00 seconds.

Design Cases and CRL Infrastructure

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(a)

(b)

4.3

4.4

The Operating Principles for Design Definition Document Rev D dated 6 January 2016 (OPDD) refers to three design cases as follows: (i)

Design Case 1 for CRL opening in 2024 with 15 tphpd;

(ii)

Design case 2 for the first 10 years of operation with 18 tphpd; and

(iii)

Design case 3 for ultimate design capacity at 24 tphpd.

Notwithstanding the OPDD: (i)

the CRL infrastructure design and delivery shall be based around Design Case 3; and

(ii)

the CRL rail systems, rolling stock and station fit out shall be designed and delivered around Design Case 3.

Stations (a)

Two new stations will be constructed, delivered and made operational to the required CRL specification and standards at Aotea and Karangahape Road.

(b)

Two existing stations at Mt Eden Station and Britomart will be suitably modified, delivered and made operational to the required CRL specifications and standards.

(c)

Britomart station shall be designed for 26 trains per hour per day adopting the use of non through platforms (the additional 2 tphpd are to accommodate an additional two terminating services per hour using the central non-through platforms).

(d)

The CRL stations shall be designed to achieve the stated level of customer service as per Design Case 3. The initial provision for station equipment shall cater for Design Case 2, provided it is cost effective to stage the installation of equipment.

(e)

The CRL stations shall also be designed to accommodate the following rail to rail interchange demands: (i)

at Mt Eden station for interchange between the West Line and Newmarket service;

(ii)

at Britomart station with potential intercity and other terminating services; and

(iii)

at Aotea Station with the possible future North Shore line.

(f)

CRL stations will deliver passenger journey times between the street and platforms at each station which are as short as reasonably practicable.

(g)

Step free access shall be provided to all levels of the stations.

Signalling CRL signalling capacity to support operational service frequency shall be 30 trains per hour per direction.

4.5

Other Requirements (a)

Other required outputs of the CRL Project are set out in detail in the OPDD, including without limitation: (i)

the operational requirements;

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(ii)

system integration into the Auckland passenger rail network;

(iii)

capacity requirements;

(iv)

safety requirements;

(v)

customer needs;

(vi)

network and station control requirements;

(vii)

station requirements;

(viii)

train operations;

(ix)

asset management; and

(x)

maintenance requirements,

(b)

Subject to paragraph (c) below, the OPDD shall be deemed incorporated into and shall form part of these Sponsors’ Requirements. To the extent of any inconsistency or ambiguity between the contents of this Schedule 3 and the OPDD, the contents of this Schedule 3 shall have precedence to the extent necessary to resolve such inconsistency or ambiguity.

(c)

For the purposes of these Sponsors’ Requirements, the following sections of the OPDD shall be amended as stated below: (i)

Clause 2.4 is deleted;

(ii)

OC19 is deleted;

(iii)

OC20 is deleted;

(iv)

Notwithstanding clause 6.2, CRLL shall ensure that appropriate safety cases are in place for the CRL Project; and

(v)

Notwithstanding clause 11.1.3, all branding in relation to the CRL Project shall be undertaken in accordance with the Communications Strategy approved by the Sponsors.

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Appendix 1 – Statement of Project Objectives 1.

Improve transport access in and around the city for a rapidly growing Auckland (a)

2.

3.

4.

5.

Future proof for expected growth.

Improve the efficiency and resilience of the transport network of urban Auckland (a)

Improve journey time, frequency and reliability of all transport modes

(b)

Maximise the benefits of existing and proposed investment in transport

(c)

Release the rail capacity constraint at Britomart

Significantly contribute to lifting and shaping Auckland’s economic growth (a)

Support economic development opportunities

(b)

Provide the greatest amount of benefit for cost

(c)

Enable a more productive and efficient City Centre

Provide a sustainable transport solution that minimises environmental impacts (a)

Limit visual, air quality and noise effects

(b)

Contribute to the country’s carbon emission targets

Contribute positively to a liveable, vibrant and safe city (a)

Enhance the attractiveness of the city as a place to live, work and visit

(b)

Protect our cultural and historic heritage for future generations

(c)

Help safeguard the city and community against rising transport cost

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Schedule 4: Review and Approval Process

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Schedule 5: Project Delivery Schedule

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Schedule 6: Forecast Project Costs

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Schedule 7: Quarterly Reports 1.1

1.2

Report timing (a)

CRLL is to provide the Sponsors with a report at the end of every quarter.

(b)

The report must be provided to the Sponsors within 10 Working Days of the end of every quarter.

Report content (a)

CRLL is to determine the form of the Quarterly Reports.

(b)

The Quarterly Reports must include the following information, calculated as at the last day of the quarter:

(c)

(i)

the Forecast Project Costs;

(ii)

the actual cost information for the relevant quarter (both works related costs and CRLL costs); and

(iii)

the performance of works against the Project Delivery Schedule, including the Target Project Delivery Date and the Target Final Completion Date and any relevant information which relates to any delays.

The quarterly reports must be accompanied by a letter or report from a director of the company confirming, in respect of the CRL Project Works for which Sponsor Committed Funding was provided for the relevant quarter (Relevant Works), as at the last day of that quarter: (i)

that the Key Milestones are being complied with, or, where a Key Milestone was not complied with, an explanation why the relevant Key Milestone(s) was not complied with;

(ii)

the costs to complete the Relevant Works and the details of any material cost overrun in respect of the Relevant Works that subsists;

(iii)

the estimated practical completion date for the Relevant Works;

(iv)

that, in respect of all progress claims from contractors paid during the calendar month, the contractor was entitled to be paid the amount claimed in that progress claim in accordance with the relevant contract; and

(v)

that all payments made during the calendar month in respect of the Relevant Works using the relevant Funding Amount were provided for in the Project Budget or an explanation of any material departure from that budget.

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 70

Schedule 8: Completion Requirements 1.

2.

Introduction (a)

This schedule sets outs and describes what constitutes “completion” for the purposes of the Agreement.

(b)

Completion in respect of the CRLL Project Works is expected to happen in the following two stages: (i)

Stage 1 – Practical Project Completion - is at the stage when all those elements set out in paragraph 2 below have been completed to the satisfaction of the Sponsors; and

(ii)

Stage 2 - Final Project Completion – is at the stage when all those elements set out in paragraph 4 below have been completed to the satisfaction of the Sponsors.

Practical Project Completion Practical Project Completion of the CRL Project Works is at the stage when, without limitation: (a)

Practical Completion (as that term is defined in the C7 Contract) is achieved under Work Package C7;

(b)

practical completion (or equivalent) is achieved under all other Project Contracts, as that term is defined in the relevant Project Contracts, other than with respect to Work Package C9;

(c)

all necessary testing and commissioning activities have been undertaken and CRLL has obtained all necessary Consents, certificates and approvals required for the City Rail Link to function as an operating railway capable of commercial operation for immediate public use, including written confirmation from the Operator and any eventual owner of the Completed CRL Project Assets that the CRL Project Works are ready for use;

(d)

all documentation, certification, assurances and information including those relating to the design, construction, integration, testing, commissioning, completion, occupation, use and maintenance of the CRL Project Works (other than those related specifically to Work Package C9) have been obtained by CRLL and handed over to the Operator or third party nominee of the Sponsors to ensure the CRL Project Works is capable of commercial operation for immediate public use;

(e)

all the current manufacturer or design/construction warranties in respect of the CRLL Project Works (other than those relating to Work Package C9) are in a form ready to be novated or assigned to the relevant Operator/eventual asset owner or third party nominee of the Sponsors; and

(f)

the assets, systems, inter-related maintenance activities and operating processes forming the CRL Project Works are both fully defined, accepted and able to be commercially operated by the end Operator or a third party nominee of the Sponsors as part of the Auckland passenger rail network; and

(g)

the functional requirements set out in the Sponsors’ Requirements are met including without limitation:

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 71

3.

4.

(i)

enabling passenger train services of up to 24 trains per hour per direction timetabled through the CRL tunnel;

(ii)

enabling train service operations to the CRL train plan comprising the train customer timetable, rolling stock allocation plan and timetable performance specification; and

(iii)

enabling the operation of a normal peak line flow of 18,000 passengers per hour per direction through the CRL tunnel and stations;

Practical Project Completion Certification (a)

CRLL shall issue a certificate to the Sponsors no later than 5 Working Days after the date on which it considers that it has achieved Practical Project Completion in respect of the CRLL Project Works (Practical Project Completion Certificate) together with all required supporting evidence, including written confirmation from CRLL that it has received everything it needs for the purposes of achieving Practical Project Completion from Auckland Transport and KiwiRail under their respective Delivery Partner Agreement(s).

(b)

The Sponsors shall review such evidence to ensure that the Practical Project Completion criteria set out in paragraph 2 above have been satisfied. In this review, approval and sign-off process the Sponsors may consult with and seek assurance from: (i)

the Assurance Manager; and

(ii)

Auckland Transport, KiwiRail and/or the Operator (if any).

(c)

The Sponsors shall either approve or reject the Practical Project Completion Certificate where the Sponsors, acting reasonably, consider that the requirements in paragraph 2 have not been satisfied.

(d)

If the Sponsors withhold approval of the Practical Project Completion Certificate, CRLL shall re-submit the Practical Project Completion Certificate once it has addressed the Sponsors' comments or issues and the provisions of this paragraph 3 shall apply to the resubmitted certificate, save that in respect of any subsequent application for approval of the Practical Project Completion Certificate, the Sponsors shall only be entitled to withhold their approval to the extent that CRLL has not addressed the comments or issues previously raised by the Sponsors under this Schedule.

(e)

The date of Practical Project Completion shall be the date the Practical Project Completion Certificate, or re-submitted certificate (as applicable), is approved by the Sponsors.

Final Project Completion Final Project Completion of the CRL Project Works is at the stage when, without limitation: (a)

Practical Project Completion (as set out in paragraph 2 above) is achieved;

(b)

practical completion (or equivalent) is achieved under Work Package C9, as that term is defined in that contract;

(c)

any other works, defects or remedial works that may have been identified as part of the Practical Project Completion have been completed, remedied or addressed;

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 72

5.

(d)

all documentation, certification, assurances and information including those relating to the design, construction, integration, testing, commissioning, completion, occupation, use and maintenance of the CRL Project Works (including Work Package C9) have been obtained

by CRLL and handed over to the Operator or third party nominee of the Sponsors to ensure the CRL Project Works is capable of commercial operation for public use;

(e)

all then current manufacturer or design/construction warranties in respect of the Work Package C9 are in a form ready to be novated or assigned to the relevant Operator/third party nominee of the Sponsors; and

(f)

all other obligations of CRLL pursuant to this Agreement have been fully and finally discharged.

Final Project Completion Certification (a)

CRLL shall issue a certificate to the Sponsors no later than 5 Working Days after the date on which it considers that it has achieved Final Project Completion in respect of the CRLL Project Works (Final Project Completion Certificate) together with all required supporting evidence, including written confirmation from CRLL that it has received everything it needs for the purposes of achieving Final Project Completion from Auckland Transport and KiwiRail under their respective Delivery Partner Agreement(s).

(b)

The Sponsors shall review such evidence to ensure that the Final Project Completion criteria set out in paragraph 4 above have been satisfied. In this review and approval process the Sponsors may consult with and seek assurance from: (i) (ii)

6.

the Assurance Manager; and Auckland Transport, KiwiRail and/or the Operator (if any).

(c)

The Sponsors shall either approve or reject the Final Project Completion Certificate where the Sponsors (acting reasonably) consider that the requirements in paragraph 4 have not been satisfied.

(d)

If the Sponsors withhold approval of the Final Project Completion Certificate, CRLL shall re-submit the Final Project Completion Certificate once it has addressed the Sponsors' comments or issues and the provisions of this paragraph 5 shall apply to the re-submitted certificate, save that in respect of any subsequent application for approval of the Final Project Completion Certificate, the Sponsors shall only be entitled to withhold their approval to the extent that CRLL has not addressed the comments or issues previously raised by the Sponsors under this Schedule.

(e)

The date of Final Project Completion shall be the date the Final Project Completion Certificate or re-submitted certificate (as applicable) is approved by the Sponsors.

CRLL obligations CRLL shall provide to the Sponsors, as soon as practicable after receipt by CRLL a copy of each practical completion certificate issued under a Project Contract for the relevant CRLL Project Works or separable portion, together with any identified defects schedule from the Project Contactor or engineer to the Project Contract (if applicable).

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 73

Schedule 9: Change Procedure 1.

2.

Change Notice 1.1

If the Sponsors wish to propose a Change, they shall jointly serve a notice on CRLL. Such notice shall set out details of the proposed Change in sufficient detail to enable CRLL to provide the Initial Change Appraisal in accordance with paragraph 2.

1.2

If CRLL wishes to propose a Change, it shall serve a notice on the Sponsors. Such notice shall set out details of the proposed Change and shall include the Initial Change Appraisal in accordance with paragraph 2.

1.3

In the event that CRLL proposes a Change pursuant to paragraph 1.2, the Sponsors shall evaluate such Change in good faith, taking into account all issues and circumstances relevant at the time.

Initial Change Appraisal 2.1

CRLL shall deliver to the Sponsors a written report (Initial Change Appraisal) which shall set out: (a)

in the case of a Change proposed by CRLL pursuant to paragraph 1.2, CRLL's reasons for requesting the proposed Change;

(b)

CRLL's initial assessment of any impact of the proposed Change on any of the dates or activities referred to in the Project Delivery Schedule;

(c)

CRLL's initial assessment of any impact of the proposed Change on the scope of the CRL Project, including any changed or altered works required to implement the proposed Change and any related temporary works or railway possession requirements necessary to give effect to the proposed Change;

(d)

CRLL's initial assessment of the impact of the proposed Change on the operation and maintenance regime for the completed CRL Project railway;

(e)

CRLL's initial assessment of the impact of the proposed Change on the operations of the completed CRL Project and wider Auckland rail network;

(f)

CRLL's initial assessment of any additional or changed risks that are introduced as a consequence of the proposed Change;

(g)

CRLL's estimate of the cost (or saving) of implementing the proposed Change and impact on Forecast Project Costs, broken down in reasonable detail to identify the various elements of the cost (or saving) including the impact on future operating expenditure;

(h)

CRLL's reasonable estimate of the cost and time required to prepare a Change Appraisal in respect of the proposed Change in accordance with paragraph 4 (including details of any surveys, investigatory or design works, or any preliminary or advance works, that would have to be commenced in advance of

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 74

preparing or finalising a Change Appraisal in respect of the proposed Change); and (i)

2.2

3.

where a Change is proposed by the Sponsors is, whether in the reasonable opinion of CRLL, such Change is technically feasible.

The Initial Change Appraisal shall: (a)

in the event that the Change is proposed by the Sponsors pursuant to paragraph 1.1, be delivered by CRLL to the Sponsors as soon as reasonably practicable and in any event within 20 Working Days after receipt of the Change Notice; or

(b)

in the event that the Change is proposed by CRLL pursuant to paragraph 1.2, be delivered by CRLL to the Sponsors simultaneously with the Change Notice.

Procedure Following submission of an Initial Change Appraisal 3.1

If the Initial Change Appraisal states that, in the reasonable opinion of CRLL, a Change proposed by the Sponsors is either technically unfeasible, unsafe or contrary to any applicable Law, then CRLL shall be entitled to object to the implementation of the proposed Change. If the Sponsors disagree with CRLL's opinion, then all of the Parties shall seek to agree the matter(s) in dispute and the Sponsors may refer the matter(s) for resolution under the Dispute Resolution Procedure set out in Schedule 12. CRLL shall not be obliged to take any further action in relation to the Change pending the resolution of such dispute. If it is agreed or determined that CRLL's objection is valid, the proposed Change shall be withdrawn.

3.2

Save to the extent that paragraph 3.1 applies, following receipt of the Initial Change Appraisal, the Sponsors may:

3.3

(a)

issue a Change Confirmation Notice instructing CRLL to proceed with the implementation of the Change in accordance with paragraph 7; or

(b)

issue a Change Appraisal Instruction instructing CRLL to prepare a Change Appraisal in respect of the proposed Change and notifying CRLL of the due date for delivery of the Change Appraisal; or

(c)

issue an instruction not to proceed with the proposed Change in accordance with paragraph 7.3.

A Change Appraisal Instruction provided by the Sponsors under paragraph 3.2(b) shall: (a)

include any additional information in respect of the proposed Change which the Sponsors require CRLL to consider when preparing the Change Appraisal; and

(b)

specify any reporting format, breakdown of cost estimates or any other matters specifically required to be included in the Change Appraisal Instruction.

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 75

4.

Change Appraisal 4.1

Following the issue of a Change Appraisal Instruction, CRLL shall deliver a written report (Change Appraisal) to the Sponsors as soon as reasonably practicable (and in any event by the date specified in the Change Appraisal Instruction) after receipt of the Change Appraisal Instruction.

4.2

The Change Appraisal shall set out: (a)

CRLL's detailed assessment of the matters referred to in paragraph 2.1 and any other impact of the proposed Change on the performance of CRLL's obligations under this Agreement;

(b)

whether relief from compliance with obligations is required as a consequence of the proposed Change;

(c)

any amendments required to this Agreement or any Delivery Partner Agreement or Project Contract as a result of the proposed Change;

(d)

any new or amended Consents which are required in order to implement the proposed Change and any assistance which CRLL anticipates it will require from either of the Sponsors in order to obtain such Consents;

(e)

CRLL's proposed Changes to the funding commitments (timing and amount) and Monitoring Points 1, 2 and 3 to take account of the aggregate costs (or saving) of implementing the proposed Change, including breakdown of

(f)

5.

(i)

any increase or decrease in capital expenditure;

(ii)

third party costs;

(i)

CRLL’s own internal management and overhead costs;

(ii)

any costs, fees and expenses in respect of external advisers engaged in connection with the proposed Change;

(iv)

any increase or decrease in the costs of the Operators that are reimbursable by CRLL; and

any other information as may be reasonably required by the Sponsors to properly assess the Change Appraisal.

Procedure following submission of a change appraisal 5.1

As soon as practicable after the Sponsors receive the Change Appraisal, the Parties shall discuss and endeavour to agree (acting reasonably) the matters set out in the Change Appraisal. During such discussions, the Sponsors may: (a)

request that CRLL:

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 76

(b)

6.

(i)

provide any further breakdown or details in respect of any price or time estimate as the Sponsors may reasonably require;

(ii)

procure that the Delivery Contractors shall minimise any increase in Costs and maximise any reduction in Costs;

(iii)

demonstrate how any expenditure to be incurred or avoided is being measured in a cost effective manner, including showing that when such expenditure is incurred; and/or

notify CRLL that it wishes to amend the proposed Change providing full details of any proposed amendment in which case CRLL shall submit an amended Change Appraisal within 30 Working Days of such notification or such longer period as is reasonably agreed between the Parties.

5.2

All evidence and information provided by CRLL in response to a request under paragraph 5.1 shall be provided on an open book basis.

5.3

Once the contents of the Change Appraisal have been agreed in accordance with paragraph 5.1, the Sponsors may, acting in their sole discretion, within 10 Working Days (or such longer period as the Sponsors may agree) issue a Change Confirmation Notice instructing CRLL to proceed with the implementation of the Change in accordance with paragraph 7.

Change appraisal costs 6.1

The Sponsors shall jointly be responsible for payment to CRLL of the costs, fees and expenses reasonably and properly incurred by CRLL in preparing and amending a Change Appraisal to the extent that such Change Appraisal relates to a Change that was requested by the Sponsors pursuant to paragraph 1.1.

6.2

Whilst preparing and amending a Change Appraisal which relates to a Change that was requested by the Sponsors pursuant to paragraph 1.1, CRLL shall provide a report to the Sponsors on a monthly basis showing: (a)

the Costs, fees and expenses reasonably and properly incurred pursuant to paragraph 6.1 up to the date of the report; and

(b)

CRLL's estimate of the Costs, fees and expenses which it anticipates it will incur in total.

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 77

7.

Implementation of Sponsor Change 7.1

If the Sponsors wish CRLL to proceed with the proposed Change, the Sponsors shall notify CRLL of the same (Change Confirmation Notice) and such notice shall include the Sponsors’ determination of the additional funding and/or any extension of time to be provided to CRLL for the implementation of such Change (in which case the Sponsors shall include details of the consequential amendments to each of the Auckland Council Funding Amount and the Crown Funding Amount and other relevant parts of this Agreement).

7.2

Following issue of a Change Confirmation Notice, the Parties shall promptly take such action, if any, as is necessary to facilitate the Change (including making amendments to this Agreement) and CRLL shall exercise its rights under the Project Contracts and Delivery Partner Agreements (as the case may be) to procure the implementation of the Change.

7.3

If the Sponsors do not want CRLL to proceed with the proposed Change, they shall jointly notify CRLL of the same (Change Rejection Notice).

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 78

Schedule 10: Funding 1.

Conditions precedent to payment of Funding Payment of any part of the Sponsor Committed Funding is subject to the satisfaction of the following conditions precedent (as determined by the Sponsors in their absolute discretion):

2.

(a)

in the case of the first Funding Request: (i) this Agreement becoming unconditional; the Transfer Agreement, in a form satisfactory to and approved by the Sponsors, has been duly executed by all parties to that document and Completion (as that term is defined in the Transfer Agreement) is achieved; and (iii) the Settlement Agreement has been duly executed by all parties to that document;

(b)

the Sponsors having received a Funding Request in accordance with paragraph 2 of Schedule 10;

(c)

the Funding Amount being the amount of funding required by CRLL for the next quarter immediately following receipt of the relevant Funding Request, and: (i)

being for an amount not greater than the forecast costs attributable to the relevant quarter to which the Funding Request relates as set out in the most recent Quarterly Cash Flow Forecast and Forecast Project Costs submitted by CRLL in accordance with and pursuant to clause 8 of the Agreement; and

(ii)

when aggregated with all other Sponsor Committed Funding paid under this Agreement, not exceeding the Total Available Funding;

(d)

the Funding Request meeting all the requirements of paragraph 2(c)-(f), including (without limitation) the provision of information that meets the requirements of paragraph 5 of Schedule 11; and

(e)

any approvals needed for the issue of the Subscription Shares having been obtained.

Funding Request (a)

On or before 11:00am on the 20th day of the month (or the Working Day prior to the 20th if the 20th is not a Working Day) prior to the commencement of the next funding quarter, CRLL must issue to the Sponsors a Funding Request for the amount of Sponsor Committed Funding to be provided for the next quarter.

(b)

A Funding Request is irrevocable and is effective on actual receipt by the Sponsors.

(c)

Each Funding Request must be: (i)

in or substantially in the form set out in Schedule 11;

(ii)

accompanied by all additional documentation which is particularised in Schedule 11; and

(iii)

duly completed and signed by an Authorised Representative of CRLL.

(d)

Only one Funding Amount may be requested from the Sponsors in each Funding Request, and must be for equal amounts from each Sponsor.

(e)

CRLL must not give a Funding Request which would breach a provision of this Agreement.

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 79

3.

Waiver The conditions precedent in paragraph 1 are for the sole benefit of the Sponsors, and may only be waived by written notice from the Sponsors to CRLL.

4.

Payment of Funding Amount and issue of Subscription Shares (a)

In respect of any Funding Request, provided that all conditions precedent under paragraph 1 have been satisfied (or waived), that Funding Request shall be deemed to be a “Compliant” Funding Request.

(b)

In respect of a Compliant Funding Request: (i)

the Crown shall pay to CRLL the amount specified as the ‘Crown Requested Funding’ in the relevant Compliant Funding Request (the Crown Requested Funding); and

(ii)

Council shall pay to CRLL the amount specified as the ‘Council Requested Funding’ in the relevant Compliant Funding Request (the Council Requested Funding),

in the manner requested in the relevant Compliant Funding Request. (c)

In respect of any Funding Request where one or more of the conditions precedent under paragraph 1 have not been satisfied (and such condition precedent has not been waived), such Funding Request shall be deemed to be a “Non-Compliant” Funding Request.

Where a Funding Request is deemed to be a Non-Compliant Funding Request: (i)

the Sponsors will be under no obligation to provide the Crown Requested Funding or the Council Requested Funding (as applicable) requested in such NonCompliant Funding Request; and

(ii)

the Sponsors will give notice to CRLL (Non-Compliance Notice) that the applicable Funding Request is Non-Compliant. If the reason for such NonCompliance is capable of remedy, the Non-Compliance Notice shall also specify what actions (if any) are required to remedy that Non-Compliant Funding Request by the date that is not less than 5 Working Days prior to the applicable Funding Date (Remedy Date).

(d)

If a Non-Compliant Funding Request is remedied to the satisfaction of the Sponsors (in their absolute discretion) by the applicable Remedy Date, the Funding Request shall be deemed to be Compliant and the provisions of paragraphs 4(a) and 4(b) shall apply.

(e)

If a Non-Compliant Funding Request has not been remedied to the satisfaction of the Sponsors (in their absolute discretion) by the Remedy Date, or in the sole opinion of the Sponsors is incapable of remedy, the Sponsors shall meet and discuss the matter. In the event that:

(f)

(i)

both the Sponsors elect to pay the Funding Amount requested under a NonCompliant Funding Request, then CRLL shall perform its obligations under paragraph 4(f); or

(ii)

the Sponsors decide not to pay the Funding Amount requested under a NonCompliant Funding Request, the matter may be referred to the dispute resolution process under Schedule 12.

Following payment of any Crown Requested Funding or Council Requested Funding in accordance with this Schedule, CRLL shall issue the Subscription Shares to the

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 80

Crown/Council (as applicable) in accordance with the provisions of CRLL’s constitution and update CRLL’s share register and the Companies Office accordingly. (g)

5.

Subject to paragraph 7 below, any Crown Requested Funding or Council Requested Funding must be paid in full together with any interest accrued under paragraph 5(b) before any Subscription Shares are issued in respect of that Crown Requested Funding or Council Requested Funding (as applicable).

Sponsor failure to pay (a)

CRLL shall, as soon as practicable, notify both Sponsors in writing if a Sponsor (Defaulting Sponsor) fails to pay all or any part of the Crown Requested Funding/Council Requested Funding (as applicable) under a Compliant Funding Request (or under a Non-Compliant Funding Request where the Sponsors have elected to pay the Funding Amount in accordance with paragraph 4(e)(i)) in accordance with this Schedule 10. The amount unpaid by the Defaulting Sponsor shall be the Outstanding Amount.

(b)

Interest shall accrue on the Outstanding Amount at the rate equal to the Reserve Bank of New Zealand Official Cash Rate plus 5% per annum, accruing daily, during the period from and including the date on which the default was made until but excluding the day the Outstanding Amount (and all interest on that amount) has been paid in full.

(c)

At any time after receiving a notice under paragraph 5(a), the Sponsor who is not the Defaulting Sponsor (Non-Defaulting Sponsor) may (but is not obliged to) elect to pay the Outstanding Amount (plus any interest accrued on that amount under paragraph 5(b)) (the NDS Payment Amount) to CRLL. The Non-Defaulting Sponsor shall give notice to both CRLL and the Defaulting Sponsor of its election to pay the NDS Payment Amount.

(d)

Within 5 Working Days after giving notice under paragraph 5(c), the Non-Defaulting Sponsor will pay the NDS Payment Amount to CRLL and on receipt of such funds CRLL will issue to the Non-Defaulting Sponsor that number of Subscription Shares corresponding to the Outstanding Amount that the Defaulting Sponsor would have received had it paid the NDS Payment Amount, with such shares (Default Shares) to be held by the Non-Defaulting Sponsor in accordance with this paragraph 5.

(e)

The Defaulting Sponsor agrees and acknowledges that, on payment of an NDS Payment Amount by the Non-Defaulting Sponsor in accordance with the above provisions, the Defaulting Sponsor is indebted to the Non-Defaulting Sponsor for an amount equal to the NDS Payment Amount (a Sponsor Loan).

(f)

Each Sponsor Loan shall: (i)

be repayable on demand (which demand may be made by the Non-Defaulting Sponsor at any time in its absolute discretion); and

(ii)

accrue interest at the rate equal to the Reserve Bank of New Zealand Official Cash Rate plus 5% per annum, accruing daily, during the period from and including the date that the NDS Payment Amount was paid by the Non-Defaulting Sponsor to but excluding the date on which the Defaulting Sponsor repays the Sponsor Loan together with all accrued interest to the Non-Defaulting Sponsor.

(g)

For the avoidance of doubt, the Defaulting Sponsor may repay the Sponsor Loan (plus interest) to the Non-Defaulting Sponsor either before or after a notice of demand is given by the Non-Defaulting Sponsor in accordance with this clause 5.

(h)

On:

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 81

(i)

6.

(i)

payment in full of the Outstanding Amount (plus interest) by the Defaulting Sponsor to CRLL (if the Non-Defaulting Sponsor has not by then elected to pay the Outstanding Amount on behalf of the Defaulting Sponsor in accordance with paragraph 5(c)), CRLL shall issue Subscription Shares to the Defaulting Sponsor in accordance with paragraph 4(f) (and for the avoidance of doubt such Subscription Shares shall only be issued in relation to the Outstanding Amount, and not in relation to any interest paid on that amount); or

(ii)

repayment in full of the Sponsor Loan (plus interest) by the Defaulting Sponsor to the Non-Defaulting Sponsor (if the Non-Defaulting Sponsor does elect to pay the Outstanding Amount on behalf of the Defaulting Sponsor in accordance with paragraph 5(c)), the Non-Defaulting Sponsor shall execute and deliver to CRLL a share transfer form transferring the Default Shares to the Defaulting Sponsor, and CRLL will register that share transfer form upon receipt and update its share register regarding the share transfer.

While a Non-Defaulting Sponsor holds Default Shares, the proceeds of any distribution on those Default Shares (including any liquidation, solvent dissolution etc.) (Proceeds) will be paid to the Non-Defaulting Sponsor.

Approvals Each Shareholding Minister and the Council (being all shareholders and entitled persons of CRLL (as defined in the Companies Act)):

7.

(a)

agree and concur pursuant to section 107(2) of the Companies Act to the issue of all Subscription Shares in accordance with this Agreement;

(b)

consent to becoming a holder of all Subscription Shares issued to them pursuant to a Funding Request or as a result of paragraph 5;

(c)

approve, pursuant section 129 of the Companies Act, the issue of all Subscription Shares and any other transactions relating to the Sponsor Committed Funding to the extent that those actions or series of actions constitute a major transaction of CRLL, and agree that their signatures on this Agreement shall constitute a special resolution to this effect; and

(d)

agree that they will provide any other approvals or authorisations required under the Companies Act or CRLL’s constitution (if applicable) within 5 Working Days of the Sponsors’ receipt of the Funding Request.

Set off for interim funding The Parties acknowledge that Council has provided, or will provide, interim funding to CRLL pursuant to clause 7.1(e) and the Settlement Agreement (Interim Funding). It is further acknowledged and agreed that, notwithstanding any other provision of this Agreement, Council may (by written notice to CRLL and Crown) set off an obligation of Council to make payment of a Council Requested Funding against an obligation of CRLL to Council to repay Interim Funding advanced by Council to CRLL, and such set off shall not affect the share issue which would have occurred should Council have paid the Council Requested Funding.

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 82

Schedule 11: Funding request [CRLL’S LETTERHEAD]

[Date] To: Attention:

[Insert Crown and Council address] [●]

Email:

[●]

Funding Request – Project Delivery Agreement dated [●] (the Agreement)

We give you irrevocable notice requesting part of the Sponsor Committed Funding as follows.

Expressions defined in the Agreement apply in this Funding Request (except if otherwise defined in this Funding Request).

1.

Funding Request

(a)

We request part of the Sponsor Committed Funding in the amount of: (A)

$[●] from the Crown (the Crown Requested Funding); and

(B)

$[●] from Council (the Council Requested Funding),

(together, the Funding Amount) to be paid on [date], being the first Working Day of the relevant quarter (the Funding Date). (b) 2.

3.

The Funding Amount will be used for [describe purpose]).

Issue of Shares

(a)

In consideration for the payment of the Crown Requested Funding referred to in paragraph 1, CRLL will issue on the Funding Date, [●] Class B Shares to the Shareholding Ministers (with 50% of such shares to be issued to each Shareholding Minister) in accordance with Schedule 1 of CRLL’s constitution.

(b)

In consideration for the payment of the Council Requested Funding referred to in paragraph 1, CRLL will issue on the Funding Date, [●] Class B Shares to Council in accordance with Schedule 1 of CRLL’s constitution.

Payment

We request that the Crown credit the Crown Requested Funding and the Council credit the Council Requested Funding to [our account with [name of bank and branch] numbered [account number]] by 3:00 p.m. on the Funding Date.

4.

Confirmations

We confirm that the information set out in the attachments to this Funding Request is accurate.

5.

Attachments

Attached to this Funding Request is: (a)

a Quarterly Cash Flow Forecast for the quarter to which this Funding Request relates;

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 83

(b)

the remaining budget for the CRL Project at the beginning of the upcoming quarter updated to include the updated Forecast Project Costs;

(c)

a request for any approvals required pursuant to the Companies Act and/or CRLL’s constitution; and

(d)

a letter from a director of CRLL: (A)

confirming that the CRL Project is being constructed in a manner consistent with the Agreement, to the quality required by the Agreement, the Delivery Partner Agreements and any Project Contracts, within time and within budget;

(B)

identifying any material risks to the CRL Project and, if any are identified, explaining how CRLL is addressing those risks (delete if not applicable); and

(C)

certifying that CRLL is compliant with all of its obligations under this Agreement.

..................................................

Authorised Representative of CRLL Name and title (print):

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Schedule 12: Disputes Resolution 1.

2.

Disputes Notification (a)

The Parties shall use their respective best efforts to identify any matter which may become a Dispute as early as practicable and to incorporate appropriate dispute avoidance systems as part of their relationship at a working level.

(b)

Notwithstanding paragraph 1(a), any Party may refer any Dispute arising out of this Agreement for resolution in accordance with this Schedule 12 by written notice setting out the nature of the Dispute to the other Parties.

First level: senior representatives As soon as practicable but in any event within 5 Working Days of a Dispute being referred to the Dispute Resolution Procedure, except as otherwise expressly provided in this Agreement, the Parties shall each nominate an appropriate senior representative (the First Level Representatives), taking account of the nature of the Dispute to meet and discuss such Dispute in good faith to resolve such Dispute. The First Level Representatives shall meet promptly following their nomination.

3.

4.

Second level: CEO’s and other Senior Officers (a)

If the First Level Representatives do not resolve the Dispute within 15 Working Days (or such longer period as the Parties may agree) of receipt by the Parties of a notice of Dispute, the Dispute shall be referred for discussion and resolution between the Chief Executive Officers of Council and CRLL and the Ministry of Transport (the Second Level Representatives). In any event, either Parties’ First Level Representative, upon receipt of a notice of Dispute, taking the nature and consequences of the Dispute into consideration, may refer the Dispute immediately for discussion and resolution between the Second Level Representatives.

(b)

Following referral of the Dispute to the Second Level Representatives, the Second Level Representatives shall meet and discuss such Dispute in good faith to resolve such Dispute.

Third level: Minister of Transport and Mayor (a)

If the Dispute has not been resolved through discussion of the Second Level Representatives within 20 Working Days (or such longer period as the Sponsors may agree) of such Dispute being referred to such representatives then either Second Level Representative may refer such Dispute for discussion between the Minister of Transport the Mayor (or their appointed representatives) and the chairperson of the CRLL Board.

(b)

Until the Dispute has been resolved by agreement of the Parties or pursuant to an alternative dispute resolution process by which the Parties have agreed to be bound, the Minister of Transport and the Mayor (or their appointed representatives) the chairperson of CRLL Board shall use reasonable endeavours to resolve the relevant Dispute in good faith and shall discuss the Dispute on a timely basis following any reasonable request by the other to do so.

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 85

5.

Consultation At any time prior to the resolution of a Dispute, the representatives of the Parties participating in the Dispute Resolution Procedure may agree (but shall not be obliged) to consult with, and seek an opinion or recommendations with respect to the resolution of the Dispute from, any person (including a third party expert); provided that, notwithstanding any other provision of this Agreement, the Parties shall not be bound by any decision, opinion or recommendation of any person (excluding any court of competent jurisdiction) with respect to a Dispute unless the Parties expressly agree to be so bound. Notwithstanding the foregoing, each of the Parties may consult with or request statements or information from any person on its own behalf in connection with any Dispute.

6.

Status of Dispute pending resolution Unless the Parties agree otherwise, prior to any Dispute being resolved by the Parties, the Parties shall continue to comply with their respective obligations under this Agreement and shall not take any action in furtherance of a proposed resolution which has not been agreed by the Parties.

7.

Remedies Without prejudice to any other rights and remedies that the Parties might have, each Party agrees that damages may not be an adequate remedy for any breach of this Agreement and that CRLL might therefore be entitled to seek such other remedies as may be appropriate as an alternative to damages, but solely to the extent required to address any threatened or actual failure by a Sponsor to make a payment due and payable under this Agreement.

8.

No Proceedings Save to the extent permitted in paragraph 7 above, each of the Parties agrees and undertakes that it shall not take any formal proceedings or action of any kind (whether through the courts or arbitration) against any other Party to this Agreement or its Affiliates in respect of any claim it might have in relation to this Agreement.

Minter Ellison Rudd Watts | Ref VXN- 201012445

Project Delivery Agreement | page 86