Gold Coast Rapid Transit: ProjectAgreements Summary

Introduction

This report summarises the main contracts forthe Gold Coast Rapid TransitProject which is being delivered in partnership with the private sector

It has been prepared by the Queensland Department of Transport and MainRoads (DTMR) in accordance with the public disclosure requirements of theQueensland Government's 2008 guidelines Pubffc Private PartnershipsGuidance Material- Value for Money Framework and Probity and ProcessGovernance (Guidelines). and has been submitted to the AuditorGeneralforendorsement as a fair account of the Project's contracts, prior to tabling inParliament

As required by the Guidelines, this report

(a) details those contracts to which DTMR is a party; but

(b) does not disclose the private sector parties' cost structure or profitmargins. its intellectual properly or other matters where disclosure wouldputthem at a commercial disadvantage with competitors

This report also explains other contracts that the State is not a party to theextent necessary to explain the State's exposure

This report has been prepared for information purposes for Parliament and thepublic and is not intended for use as a substitute forthe contracts

The Project

On 7 July 2009. the Queensland Government announced that a new 13I .6

kilometre light rail system connecting the key coastal corridor centre of GrimthUniversity. Gold Coast University Hospital. Southport, Surfers Paradise andBroadbeach would be constructed and operated though the Gold Coast RapidTransit Project(the Project) using the Public Private Partnership model

On 5 May 2011. the State entered into the Project Deed with GoldLinQ Pty Ltd(GoldLinQ), the Operator Franchisee. to deliver the Project

Financial Close was achieved on 7 June 2011

The Projectinvolves two distinct phases

(a) the design and construction phase (D&C Phase) which commenced on 7June 2011; and

(b) the operations phase (Operations Phase) which will commence uponcompletion of construction of the light rail system and end on 31 May2029. unless terminated earlier

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I .2

I .3

I. 4

I .5

I .7

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6026842!10

1.10 The Projectinvolves the Operator Franchisee and its subcontractors takingresponsibility forthe design, construction, ongoing operation and maintenanceand partial financing of the new lightrail system over a concession periodending on 31 May 2029. The scope of the ongoing tasks to be undertaken bythe Operator Franchisee includes the operation and maintenance of the lightrail system which. among other things. comprises the light rail vehicles and thelight rail stations

PPP delivery will allow the State to open the light rail system sooner than couldhave been done under a traditional procurement method and will lock in theoperation and maintenance funding forthe lightrail system overthe course ofthe 15 year concession period

The State provided a capital contribution in respect of the Project via capitalcontribution payments (State Construction Payments) during the D&CPhase

tit

1.12

The State will pay the Operator Franchisee a performance based monthlypayment during the Operations Phase untilthe end of the contractterm on 31May 2029

Process in awarding the contract1.14 The evaluation and contract finalis ation processes were conducted in

accordance the Queensland Governments Public Private Partnershin policy-achieving value formoneyin pubffc Infrastructure andservice delivery

On 11 December 2009. DTMR issued an Invitation for Expressions ofInterest(EOl) forthe Project. Six consortia responded to the EQl and threeconsortia were shornisted and invited on I July 2010 to submit binding bidsBinding bids were required by 30 November 2010

The bids were subjected to extensive evaluation in accordance with anevaluation plan. All evaluation processes were overseen by the Project'sProbity Auditor. Details aboutthe evaluation plan and process are included inthe Probity Audit Report below

GoldLinQ and the Minister for Transport signed the Project Deed on 5 May20.1. On 6 May 2011, following entry into the Project Deed. the Stateannounced the selection of GoldLinQ as the successful proponent

Financial Close occurred on 7 June 2011

1.13

1.15

1.16

1.17

1.18

2 OverviewoftheProjectcontractProject participants2. I An overview of the Project's contract structure. key participants. and debt and

equity structure are detailed in the diagrams below (Figures f and 2)

The Minister for Transport has entered into the contractual arrangements(Project Documents) on behalfofthe State acting through DTMR

6026e42/to page 2

Figure I - Contractual structure

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2.2 The primary private sector parties which have contracted with the State are

(a) GoldLinQ Pty Ltd (Operator Franchisee) which is wholly owned byGoldLinQ Holdings Pty Ltd, which is in turn owned by Keolis SA, AvengAustralia (GCRT) Pty Ltd. Plenary Group Ply Ltd. the Palisade'sAustralian Social Infrastructure Fund Marubeni Corporation. MarubeniAustralia Ltd and IPP (AUSt) Ltd

(b) BombardierTransportation Australia Pty Ltd and MCConnellDowellConstructors (AUSt) Pty Ltd. as an unincorporated joint venture. eachjointly and severally liable as the D&C Contractor under the D&CContract

to) Bombardierlnc the ultimate parent company of BombardierTransportation Australia Piy Ltd and Aveng Australia Holdings Pty Ltd.which indirectly owns MCConnell Dowell Constructors (AUSt) Pty Ltd, theD&C Guarantors. each guarantee the performance by its subsidiary ofits obligations under the D&C Contract. '

(d) KDR Gold Coast Pty Ltd. the O&M Contractor under the O&MContract

(e) Keolis SA and Downer EDI Limited. the O&M Guarantors. whichindirectly own all of the issued share capital in the O&M Contractor, eachguarantee the performance of the obligations of the O&M Contractorunder the O&M Contract

co BombardierTransportation Australia Pty Ltd which in its capacity asRolling Stock Subcontractor is to provide maintenance activities inrespect to the light rail vehicles under the Rolling Stock Sub-Contract

(g) Bombardier Inc in its capacity as Rolling Stock Guarantor. is theultimate holding company of the Rolling Stock Subcontractor andguarantees the performance of the obligations of the Rolling StockSubcontractor under the Rolling Stock Sub-Contract

(h) Hyder Consulting Pty Limited and APP Corporation Pty Ltd, as anunincorporated joint venture trading as CERT-TRAM, are jointly andseverally liable as the Independent Verifier contracted under theIndependent Verifier Deed to undertake independent verification servicesrelating to the design documentation and the manufacture. construction.installation. supply or commissioning of the Project works and issuecertificates as required by the Project Deed

co GoldLinQ Securitisation Pty Limited (Secure Co)is the financingvehicle in relation to the Project and has contracted with the State andthe Operator Franchisee as part of the financing arrangements forthe

' Note: at Financial Close. Aveng Limiled. Ihe ullimale parenl company of MeConnell Dowell Constructors (AUSl) PlyLid was unable to obtain the necessary approvals under Soulh African law to enlerinlo the D&C Guarantee. AvengLimi!ed's Australia subsidiary Aveng Australia Holdings Ply Lid has provided a guamnlee and Aveng Limited hasundertaken to seek to provide a guarantee in accordance with South African law In the eventlhalAveng Limiled isunable to provide the guarantee. the current arrangement will con!Inue

6026B42!10 page 5

Project. Secure Co is the borrower under the financing documents withthe debt financiers

in Permanent Custodians Limited is the Security Trustee and Agent ofthe debt financiers

Contractual Structure

The primary contractis the Gold Coast Rapid Transit Project Deed (Project2.3

Deed), dated 5 May 201, , between the State and the Operator Franchisee

Under the Project Deed, the Operator Franchisee has agreed to design.construct. manufacture. install and commission the light rail system fortheState and operate and maintain the lightrail system in the Operations Phase inreturn for monthly service payments

The Project Deed sets outthe terms under which

(a) the Operator Franchisee must design, construct, and commission thelight rail system and manufacture and installthe light rail vehicles. Thiswill be achieved through contractual arrangements that the OperatorFranchisee has put in place with the D&C Contractor

The performance of the D&C Contractor under the D&C Contract withthe Operator Franchisee has been guaranteed to the OperatorFranchisee by the D&C Guarantors. under respective parent companyguarantees

The Independent Verifier appointed under the Independent VerifierDeed, will independently verify the design documentation and themanufacture, construction, installation. supply and commissioning of theProject works, make certain determinations under the Project Deed andissue certificates as required by the Project Deed

(b) The Operator Franchisee must operate and maintain the lightrail systemthrough to the expiry date of 2029 (unless terminated earlier)

This will be achieved through contractual arrangements between theOperator Franchisee and the O&M Contractor

The performance of the O&M Contractor under the O&M Contractwiththe Operator Franchisee has been guaranteed to the OperatorFranchisee by the O&M Guarantors

Ticketing and fare collection will be provided by the TranLink TransitAuthority (TTA). The terms of this arrangement are set out in the TrADirect Deed between TTA and the Operator Franchisee and the TTA-State Deed between the State and TrA

(c) The Operator Franchisee must maintain the lightrailvehicles though tothe expiry date of 2029 (unless terminated earlier)

This will be achieved through contractual arrangements between theO&M Contractor and the Rolling Stock Contractor

2.4

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6026842!to page 6

The performance of the Rolling Stock Contractor under its Rolling StockSub-contractwith the O&M Contractor has been guaranteed by theRolling Stock Guarantor

(d) The State will make performance based payments to the OperatorFranchisee in respect of its obligations under the Project Deed. Anabatement regime is contained in a schedule to the Project Deed.whereby deductions will be made if specified key performance indicators(KPls) are riot met

(e) The State has granted to the Operator Franchisee a construction licenceforthe D&C Phase of the Project and will grant a lease overthe site tothe Operator Franchisee forthe Operations Phase

in The construction licence is overthe construction site forthe D&C Phaseuntil completion. In respect to works undertaken by Operator Franchiseeon behalf of the State and returned to the State, GCCC or other propertyor asset owner before completion (Returned Works). the constructionlicence will continue beyond completion untilthe end of the defectsliability period forthose works. The construction licence includes a rightto sub-licence to the D&C Contractor

(9) The Operator Franchisee acknowledges that the construction site is usedby other persons and will riot be available exclusively to the OperatorFranchisee. Operator Franchisee must minimise disturbance andinconvenience to businesses, operations and infrastructure on. oradjacentto, the construction site

(h) During the Operations Phase, the parties will enter into the System SiteLease overthe site (the Agreement to Lease provides forthe future grantof this lease). This lease includes a right to sub-licence to the O&MContractor and the Rolling Stock Contractor

Some of the other rights and obligations of the State and the OperatorFranchisee are subject to restrictions or additional process requirements underthe

2.6

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(b)

(c)

(d)

(e)

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(h)

(i)

in

Debt Finance Side Deed;

Core Contractor Side Deeds;

Rolling Stock Side Deed;

Independent Verifier Deed;

State Deed of Charge;

Agreement to Lease;

IP Documents;

TrA Documents;

Coundl Documents;

Securitised Lease Structure Documents; and

6026842!, O page 7

2.7

00 DeedofAmendmentNo. tiprojectDeed)

Debt Finance Side Deed

2.8

The parties to the Debt Finance Side Deed are the State, the Security Trustee.the Agent, the Operator Franchisee and Secure Co

The State has rights to step-in and take overthe Project under the ProjectDeed, the Core Contractor Side Deeds and the Rolling Stock Side Deed, andhas security over all of the Operator Franchisee's and Secure Co's rights andinterests in the Project under the State Deed of Charge (refer below forsummaries of these documents). Similarly. the debtfinanciers have step-inrights and security under the debt financing documents. The Debt FinanceSide Deed governs the interaction between the State's and the debtfinanciers'respective rights. Under the Debt Finance Side Deed

(a) the State and the Security Trustee consent to the granting of the other'ssecurity;

(b) amendments to the debtfinancing documents and assignment of thedebt financiers' rights are restricted;

to) each party's enforcement rights are acknowledged and co-ordinated -including

co minimisation of disruption to the Project by debtfinancierenforcement;

00 the State's right to step-in orterminate ifthe debtfinanciers areexercising their enforcement rights; and

(11i) the priority with which any proceeds from enforcement of securitywill be applied

(d) intercreditor-type provisions in relation to the State's ConstructionPayments, including restrictions on the debt financiers' ability to releasefunds in the construction proceeds account and the application of equity

29

proceeds

Core Contractor Side Deeds/Rollin Stock Side Deed

The Core Contractors (D&C Contractor and O&M Contractor) have entered intoside deeds with the State. Under the Core Contractor Side Deeds

(a) the Core Contractor and its respective parent company guarantoracknowledges the State's rights under the Project Deed and State Deedof Charge to step-in and exercise all or any of the Operator Franchisee'spowers and obligations under the relevant Core Contract andsubsequently step-out. and the State's liability for any loss caused bystep-in is limited;

the State may require a novation of the relevant Core Contract(andrelated agreements) to itself or a third party ifthe Project Deed isterminated. This permits the State to either assume the role of theOperator Franchisee itself. or to appoint a replacement operator

(b)

60268421iO page 8

franchisee. whilst maintaining all downstream arrangements (forexample. ifthe Operator Franchisee is insolvent butthe State wishes forthe Core Contractor to continue to perlorm its obligations); and

to) the Core Contractor's ability to exercise its rights under the relevant CoreContract to suspend or terminate that Core Contractis restricted. TheCore Contractor must give the State prior notice and an opportunity torectify the underlying cause of the suspension ortermination right prior toexercising that right

The Rolling Stock Contractoris a subcontractor of the O&M Contractor and issigned up to a similar side deed to the Core Contractor Side Deeds with theState due to the importance of the light rail vehicles to the Project

2.10

2.11

Inde endent Verifier Deed

The parties to the Independent Verifier Deed are the State, the OperatorFranchisee and the Independent Verifier. Under the Independent VerifierDeed

(a) the State and the Operator Franchiseejointly appointthe Independent

(b)

Verifier.

the services to be performed by the Independent Verifier and relatedrequirements (e. g. quality of services. key people. etc) are set out;

provisions are included governing the payment of the IndependentVerifier;

the minimum insurances (including deductibles) required to be taken outby the Independent Verifier are prescribed; and

the interaction with. and priority over. the other independent certificationfunctions that the Independent Verifier is appointed to carry out withrespect to the downstream documents (i. e. under the IndependentCertifier Deed and Payment Certifier Deed) are addressed

(c)

(d)

(e)

2.12

State Deed of Char e

The parties to the State Deed of Charge are the State, the OperatorFranchisee and Secure Co. Under the State Deed of Charge

(a) the Operator Franchisee and Secure Co (each a chargor) grantthe Statea fixed and floating charge over all of its rights and interest in the Project;

(b) each changoris restricted from dealing with the secured properly(including by granting other security interests, selling. leasing, etc)withoutthe State's prior consent. other than in the ordinary course ofbusiness;

to) provisions are included covering when the State may appoint(andremove) a receiver overthe secured property and the receiver's powers;and

6026842110 page 9

to) the priority of application of moneys received by the receiver or the Slateas a result of exercising the State's rights overthe secured property isset out

A reement to Lease

2. ,3 The Agreement to Lease is the source of the Operator Franchisee's tenurerights and restrictions on those rights, including

(a) a licence overthe construction site forthe D&C Phase. The licenceextends beyond completion in respect of Returned Works (i. e. untiltheend of the defects liability period in respect of such works). Theconstruction licence includes a right to sub-license to the D&CContractor;

to) a schedule which provides the detail of the locations of the parcels ofland which will be made available to the Operator Franchisee by theState including. the date upon which each parcel will be made availableand any existing easements or other rights to which the OperatorFranchisee's rights under the construction licence are subject;

to) recognition of the State's rights and the early works contractors' rights ofaccess under the Project Deed, and recognition of the access rights ofparties with a superior interest in the land. The construction licence isgranted subject to such access rights; and

(d) provisions allowing forthe future grant of a lease overthe light railsystem site

IP Documents

2.14 Pursuant to the Escrow Deed. certain commercially sensitive. specialisedintellectual property is placed in escrow, rather than being provided to theState. To the extentthatinformation is necessary forthe operation andmaintenance of the Project. the State has limited rights to obtain the release ofsuch material from escrow including in the eventthat it exercises step-in rightsor certain early termination rights

The Deed of Assurance is a pro forma document which may be entered into ifthe State requires additional assurance from a third party IP provider that itconsents to the terms of the licence granted to the State under the ProjectDeed. Provisions equivalent to the content of this deed are also included in theCore Contractor Side Deeds

TTA Documents

2.15

2.16 The TrA Direct Deed is a deed between TrA and the Operator Franchiseewhich

(a) sets outthe detail of the parties' responsibilities forticketing and ticketingmachine maintenance; and

(b) acknowledges TrA's appointment by the State as the staterepresentative forthe purposes of certain sections of the Project Deed

6026842iiO page to

2.17

during the Operations Phase. primarily in respect of the day to dayoperations of the Project

The TrA Appointment Letter is the document under which the State appointsTrA as the State Representative forthe purposes of certain sections of theProject Deed during the Operations Phase

The TTA-State Deed documents the interface arrangements and respectiveresponsibilities of the State and TrA in respect of the Project. both during theD&C Phase (when TrA has limited involvement) and during the OperationsPhase (when TrA will be the State Representative forthe purposes of day today operations matters). In particular. it sets out

(a) the prindples of cooperation between the State and TTA;

to) that TTA must use reasonable endeavours not to do anything whichwould place the State in breach of those Project Documents to which theState is a party (State Project Documents);

to) that the State will give TrA copies of project plans and designdocumentation during the D&C Phase and will consider comments madeby TTA. During the Operations Phase. TrA as the State Representativewill have primary responsibility forthe Project plans. but must take intoaccountthe views of the State;

(co that TTA is responsible forthe electronic ticketing system;

to) that during the Operations Phase, TTA must provide information andconsult with the State about a number of things including, in relation toasset maintenance. special events, media releases. 0&M Manuals.safety, adverse events and breaches by the Operator Franchisee;

to that the State must also consultwith TrA about actions it takes inrelation to adverse events, Modifications. breaches by the OperatorFranchisee. termination and end of term arrangements; and

(9) that TrA is responsible forthe management of the payment claimsProcess

Coundl Documents

2.18

2.19 The Councillntertace Deed (between the State and GCCC) and the CouncilDirect Deed (between GCCC and the Operator Franchisee) address theinterface between GCCC and the Project, including in relation to designdevelopment. use of land, private development, Returned Works and the trafficnetwork. These deeds recognise that the Project will have a significantimpacton roads and other areas under the control and jurisdiction of GCCC

Under the Councillnteriace Deed

(a) the State agrees to provide GCCC with copies of Project plans. designdocumentation and updates of the D&C program and D&C phaseprogress reports (to the extentthatthey are relevant to GCCC). and

2.20

6026B42!, O page 11

procure that the Independent Verifier considers comments on thosedocuments made by GCCC;

to) the State shall procure that GCCC may inspect and review theconstruction of the Project works;

(c) GCCC permits the State to use and occupy parcels of GCCC freeholdland;

(d) GCCC has a rightto directthe implementation of pre-agreedmodifications and related payment obligations;

(e) a number of facilities will be returned to GCCC by the OperatorFranchisee (e. g. roadworks. Councilreserves and stormwaterinfrastructure). The State must ensure that a defects liability period of 24months applies to the Returned Works. The State also has a role indetermining disputes in relation to defects between the OperatorFranchisee and GCCC;

in GCCC agrees to include conditions in development approvals thatrequire developers to cooperate with the Operator Franchisee;

(9) the State and GCCC agree to a process for changes in signalling priorityand

un GCCC indemnifies the State for liabilities that the State has to theOperator Franchisee under the Project Deed caused by an act, omissionor breach of GCCC (including in relation to Contamination). The Stateindemnifies GCCC forthird party claims caused by a breach of the Stateor a fraudulent. negligent. unlawiul or wrongful act or omission of theState

Securitised Lease Structure Documents

2.21 In accordance with the Project Deed. the Securitisation Agreement and thePayment Directions Deed, the parties have entered into a securitised leasestructure whereby

(a) the State will pay to the Operator Franchisee a completion payment;

(b) Secure Co will pay to the State a securitisation payment; and

to) Secure Co is assigned the benefit of the payments due to the Stateunder the System Site Lease

The securitised lease structure provides additional value for money fortheState and does riot result in any increased State risk allocation

222

2.23

Deed of Amendment Not Pro^Ct Deed

The Deed of Amendment Not (Project Deed) was entered into by the Stateand the Operator Franchisee after the execution of the Project Deed but beforeFinancial Close. The Deed of Amendment was required to reflectthe updateddebt and equity documents that were riotfinalised at the time the Project Deedwas executed

6026842!10 page 12

Conditions Precedent

Although the Project Deed was executed on 5 May 2011, most of the terms,224

conditions and obligations in the Project Deed did not become binding until allthe conditions precedent were satisfied orwaived. A summary of theconditions precedent is included in Schedule I to this document

Each of the conditions precedents set out in Schedule I to this document weresatisfied. Accordingly. on 7 June 2011. following satisfaction of alltheconditions precedent. the Project Deed became unconditional

2.25

3 The ProjectDeedGeneral obligations of the Operator Franchisee and risks accepted

3. I

General obli ations and ob'ectives

The Operator Franchisee's general obligations are that it must undertake thefinancing. design. construction. manufacture. installation. testing.commissioning, operation, maintenance and handback of the lightrail systemin accordance with the Project Deed and other specified Project Documents

In fulfilling its obligations. the Operator Franchisee must have regard to theagreed objectives as contained in the Project Deed. A summary of theseagreed objectives is set outin Schedule 2 to this document

3.2

33

O erator Franchisee acce led risks

The Operator Franchisee has accepted risks associated with the Projectincluding

(a) risks associated with the costs offinaricing, designing, constructing,installing, manufacturing and commissioning the light rail system;

(b) the operation, maintenance and repair of the lightrail system;

to) the handback offhe lightrail system in a condition as specified in theProject Deed; and

to) the risk of liability fortaxes or duty being greater than estimated by theOperator Franchisee or its advisers

State retained risks

3.4 The State has retained some risks. which include the Compensation Eventslisted in Schedule 3 to this document. The risks retained by the State includethe following risks in respect to the site conditions and change in law

Site Conditions

The Operator Franchisee warrants that it has examined all documents andother information provided by the State prior to execution of the Project Deedand the State is riotliable for any inadequacy. inaccuracy or incompleteness ofthat information. The State is indemnified against loss suffered by a third partyas a result of relying on this information. where it has been disclosed by theOperator Franchisee

3.5

60268421tO page 13

3.6 The Operator Franchisee accepts the site and structures contained on the sitein their physical current condition. Although generally the Operator Franchiseeaccepts risks associated with site conditions. the State retains the followingrisks

(a) migrating contamination (i. e. contamination that migrates onto theProject area from outside the Project area);

to) contamination caused by the State;

to) contamination caused by the VB supercar event promoter,

(co the discovery of artefacts; and

(e) native titleclaims

Changein Law

Where a change in law necessitates a change to the lightrail system or resultsin an increase to the operating costs and meets certain criteria with respect tothe date of effect of the change in law. jurisdiction of the law and specifiedmonetary thresholds, then the State may be required to provide compensationto the Operator Franchisee in accordance with the principles set out in theProject Deed. Where a change in law leads to a beneficial outcome fortheOperator Franchisee (i. e. a cost saving)the State is entitled to share that costsaving in accordance with the same principles

Ifthe change in law results in increased capital expenditure during the D&CPhase of the Project. the Operator Franchisee will not be entitled to suchcompensation unless the change in law is a project specific change in law

Law. in this context, includes legislation (including subordinate legislation).court made law and Government policy requirements with which the OperatorFranchisee is legally required to comply

The Site, Access and Interface

The State has granted to the Operator Franchisee a construction licence for3.10

the D&C Phase and will grant a System Site Lease forthe Operations Phase inaccordance with the terms of the Agreement to Lease

The Operator Franchisee is responsible for gaining access to and from theProject area and unless otherwise provided will riot be entitled to make anyclaim againstthe State in connection with access, orfailure to gain or delay ingaining access. to and from the Project area

The Operator Franchisee has acknowledged that other persons (includingSurtside Buslines. TTA. DTMR and GCCC) have or may have existingoperations in and around the construction site. and that it must not wherereasonably possible interfere with or disruptthese existing operations (exceptwhere this is unavoidable as a result of carrying out construction in accordancewith the State Project Documents) and it must comply with related reasonabledirections of the State

37

3.8

3.9

3.11

3.12

6026842!10 page 14

Where the Operator Franchisee requires exlra land or access to temporaryworks areas in order to carry outthe Project activities, it must procure for itselfaccess to such land and obtain a release from any person with an interest inthe land

The Role of Parties, Representatives and Administration

The Project Deed requires the State to appoint a state representative as an3.14

agent of the State and provide delegated authority to actfor and on behalf ofthe State. The state representative may delegate powers. duties andauthorities under the Project Deed

The Operator Franchisee must appoint an Operator Franchisee representativewho has the power to actfor and on behalf of, and bind the OperatorFranchisee under the State Project Documents

A senior project group has been established with the state representative, theOperator Franchisee representative, a representative from TrA. two otherpersons from the Operator Franchisee, and one other person from the Stateholding positions more seniorthan the state representative and the OperatorFranchisee representative and such other persons as the parties agree on

An Independent Verifier has been jointly engaged by the State and theOperator Franchisee whose role is to independently verify the designdocumentation and the manufacture, construction. installation, supply orcommissioning of the Project works, make certain determinations under theProject Deed and issue certificates as required by the Project Deed

Design and Construction

The Operator Franchisee is responsible for designing, constructing,3.18

manufacturing. installing, testing and commissioning the light rail system inaccordance with the Project Deed. the performance scope and requirementsforthe Project(PSR) and as detailed in its response and design documentationwhich has been approved as construction design documentation

PSR

3. ,3

3.15

3.16

3.17

3.19 The PSR provides the technical detail of the design, construction. operationsand maintenance requirements and forms the output specification of theProject. The PSR forms part of the Project Deed

3.20

Desi n Documentation

The Operator Franchisee must submit design documentation to theIndependent Verifier and the State. The State may provide comments on thedesign documentation to the Operator Franchisee and the IndependentVerifier. The Independent Verifier(taking into consideration any commentsprovided by the State) will either rejectthe design documentation (if it does notcomply with the State Project Documents) or certify the Design DocumentationIn general, the Operator Franchisee must riot use the design documentation forconstruction purposes unless it has been certified by the Independent Verifier

The Operator Franchisee bears fullliability and responsibility forthe design of321

6026842!10 page 15

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the light rail system

^in

The initial D&C program is contained in an attachment to the PSR. It containsmilestones in relation to the works. completion dates and availability dates withrespect to the light rail system

The Operator Franchisee must periodically update the D&C program. If. in theopinion of the State. the updated D&C program does riot comply with the StateProject Documents. the Operator Franchisee must submit a revised D&Cprogram

Accommodation Works

3.23

3.24 In addition to the works necessary to constructthe light rail system. theOperator Franchisee must undertake accommodation works. Accommodationworks are those works that are required as a consequence of the constructionof the system in order to ensure that the amenity of, access to or functionalityof any property or structure affected by the Projectis maintained

Accommodation works are Returned Works and will be handed over by theOperator Franchisee prior to the end of the D&C Phase

3.25

3.26

Qualit Assurance manual and re ons

The Operator Franchisee must establish. implement, maintain and comply witha quality management system and quality management plan which satisfies therequirements of ISO 9001 and the DTMR specification MRTS50. 'SpecificQuality System Requirements" and ensure that allrecords are made availableto the State. the Independent Verifier and the State's nominees at alitimesthroughoutthe term

The Operator Franchisee must maintain up to date system documentation(including operations manuals and other data related to the O&M activities) atalitimes to a level sufficient to enable the State or a third party to carry outtheProject activities. This documentation will be delivered to the State at the end

327

3.28

of the term

Timin for coin letion of the works

3.29

The Operator Franchisee is required to notify the State of any circumstancesthat have caused or may cause a delay to the progress of the works

Where the works have or will be delayed by a compensation event or a reliefevent (refer to Schedule 3), the Operator Franchisee must advise the State assoon as practicable of the activities affected and the impact on milestonedates, completion dates, and the operation of the light rail system

The State will review the information provided by the Operator Franchisee andwill grant an extension of time where the Operator Franchisee is so entitledunder the Project Deed

At any time during the D&C Phase untilthe date which is 6 months prior to thedate for completion, ifthe Operator Franchisee considers it can achieve

330

3.31

6026842110 page 16

completion prior to the date for completion it may submit an earlier date to theState. The State will consider any early completion proposal in the context ofintegration with the broader public transport network in the Gold Coast regionand any other matters that it considers are relevant

The Operator Franchisee does notreceive the service payments untilcompletion has occurred and the Operations Phase has commenced. As theexpiry date of the term is a fixed date. ifthe completion is delayed (other thandue to a relief event or compensation event) and does riot occur by the date forcompletion. the Operator Franchisee will have a reduced timeframe in which itwill receive the service payments referred to in section 372

Operation

Throughoutthe Operations Phase. the Operator Franchisee must notify the3.33

3.32

Late coin letion of the works

State of any health and safety issues and any serious damage or defects in thelight rail system

O eratin obli ations

3.34

3.35

The Project Deed outlines the general operating obligations of the OperatorFranchisee

The Operator Franchisee must perform the O&M activities in accordance withthe Project Deed, good industry practice, the PSR. all applicable laws. theoperating plan and the annual maintenance plan and in a professional, timely,safe and environmentally friendly manner

3.36

Performance monitorin and re onin

3.37

The performance measurement system will be developed and operated by theOperator Franchisee

The State may monitor and review the performance of the O&M Activities byany method it sees in in duding by way of

(a) passengersatisfactionsurveys;

to) "mystery shoppers";

(c) other feedbackfrom passengers;

to) ariauditprocess;

(e) realtime and read-only access to the Operator Franchisee's operations.maintenance and control systems; and

in scheduled and unscheduled reviews and inspections of the lightrailsystem and the O&M activities

The Operator Franchisee will provide to the State a monthly invoiceaccompanied by a monthly performance report with work papers clearly settingoutthe derivation and calculation of any deductions made

KPls will be applied during the Operations Phase in order to measure the

.

3.38

3.39

60268421iO page 17

340

Operator Franchisee's achievement of the minimum performance outcomesand to monitor and measure the Operator Franchisee's performance

There are six categories of KPls against which the Operator Franchisee will bemeasured

(a) PassengerKP!s;

to) AssetKPls;

to) LightrailvehicleKPls;

(d) ReportingKPls;

(e) EnvironmentalKPls;and

Close-Out KPlsin

The Operator Franchisee's performance againstthe KPls will be used todetermine the performance abatements that will apply to the service paymentsreferred to in section 372

3.41

3.42

Markettestin IBenchmarkin

Every three years after the date of completion. a 'benchmarking exercise' willbe undertaken to determine the currentinsurance market. In respect of certaininsurances (leindustrial special risks. products and public liability and thirdparty damage for light rail vehicles) ifthe premiums payable are greater or lessthan the premiums on the last benchmarking date. the pass through insurancecomponent of the service payment will be adjusted accordingly

However. to the extentthatthe change in insurance premium payable isattributable to the performance or insurance history of the Operator Franchiseeorthe performance of the light rail system. no such adjustment will be made

Retail energy prices are similarly benchmarked every three years from the dateof completion. Prior to each benchmarking date. the Operator Franchisee willundertake a tender process acceptable to the State with no fewer than threeenergy retailers

The State has wide powers to participate in the tender process and theselection of the energy retailer must be acceptable to the State. Any change inthe energy price payable (whether greater or lessen will be passed onto to the

3.43

344

34,

3.45

State

S ecial Events and other interface issues

Althe beginning of each yearthe State will provide details of each specialevent in the upcoming year and the parties will agree a special event plan. TheOperator Franchisee will be paid a special event service payment for additionalservices provided during special events

The Operator Franchisee must cooperate and share information with DTMR,TTA and GCCC and other transport providers in relation to the integration ofthe Project and other transport infrastructure

TTA is responsible forthe electronic ticketing system (ETS). This requires

3.46

3.47

6026842JtO page 18

Operator Franchisee to

(a) coordinate and project manage the installation of the ETS by TTA;

(b) generally facilitate the provision of the ETS and attend meetings requiredfor its delivery and operation;

to) integrate the ETS with the project systems and ensure its staff aretrained in relation to the ETS;

(d) provide TTA with sufficient access to deliver and maintain the ETS; and

(e) notify TTA of any damage to the ETS

The State and TrA are responsible for setting and collecting fares and at notime will the Operator Franchisee have any rights to fare revenue

The Operator Franchisee is. however. responsible for and must make allnecessary arrangements forthe protection of revenue in duding taking steps tominimise fare evasion

EU!^

The State may. at any time, elect to implement an extension of the light railsystem. The Operator Franchisee acknowledges that it has no right orexpectation that it will be entitled to design, construct, operate or maintain orparticipate in any tender process in relation to any future stages

The Operator Franchisee must in relation to any future stage (whether or notinvited to tender or implement a modification in relation to the future stage) co-operate with the State and provide the State with access to information.documents or other material in relation to the Project

Ifthe State proposes a future stage. the Operator Franchisee must provide theState (and any person authorised by the State) with access to the Project areato enable investigations. surveys ortesting in relation to the future stage

348

3.49

3.50

3.51

3.52

3.53

CommercialO onunities

The Operator Franchisee may engage in retail opportunities such as cafes.newsagencies. automatic teller machines and food and beverage vendingmachines

The State may. at any time. enter into advertising arrangements in respect ofthe light rail system. Ifthe State elects to do this, the Operator Franchiseemust permitthe State access to the Project areas forthe purposes of placingadvertising material on the light rail system

The Operator Franchisee may pursue additional commercial opportunities(including advertising) by way of a modification ifthe Operator Franchisee is ofthe opinion that such additional commercial opportunities will result in a benefitto the State and the light rail system and will riot disruptthe Project activities orthe light rail system. The State is under no obligation to agree to any suchmodification

3.54

355

6026842/10 page 19

Modifications

State initiated Modifications

3.56 Any modification to the State's requirements may be proposed to the OperatorFranchisee. The Operator Franchisee must respond and outline the effects ofthe proposed modification, the time to implement the modification and ifapplicable. the time consequences on the overall Project and estimated cost

The State has the option to accept, reject or enter into negotiations to reach amutually acceptable position

Ifthe State accepts the Operator Franchisee's response and issues anacceptance notice the Operator Franchisee is required to amend (whereapplicable) design documentation, operating manuals and any other relevantdocumentation

Ifthe State proposes a modification during the D&C Phase that is likely toinvolve capital works with a cost of more than $1 million or during theOperations Phase that is likely to involve any capital works. the State mayrequire that the Operator Franchisee conduct a tender for all or part of theworks which would be required to effectthe modification

If. as a result of the tender process. a third party contractor carries outthemodification. the State may require the Operator Franchisee and the externalcontractorto enter into a co-ordination and interface agreement and theOperator Franchisee must not hinder, prevent or delay the State or itscontractors in undertaking this work

Ifthe State directs the Operator Franchisee to carry out a Modification it will berequired to compensate the Operator Franchisee in accordance with theestimated cost effect principles in the Project Deed

3.57

3.58

3.59

360

3.61

3.62

O erator Franchisee initiated modifications

3.63

The Operator Franchisee may. at any time, by notice to the State request amodification

The notice must state the effect of and set outthe reasons forthe proposedmodification. The notice must set outthe effects which the proposedModification will have on the workmanship. durability, functionality of anyelement of the works orthe light rail system, the Operator Franchisee's abilityto perform the O&M activities and the safety of the light rail system. Unlessotherwise agreed by the State. the Operator Franchisee must bear all costsand expenses of any Operator Franchisee initiated modification

Where a modification saving arises, the State will share equally in the savingswith the Operator Franchisee

3.64

3.65

Pre-a reed modifications and

The State may at any time. prior to the relevant election date, notify theOperator Franchisee that it elects to take up a pre-agreed modification. In thiscircumstance. the State will pay to the Operator Franchisee the pre-agreed

6026842110

re riced elements

page 20

modification costs and the Operator Franchisee will carry outits obligationsunder the Project Documents as amended by the pre-agreed modification

The Project Deed also includes pre-priced elements. which provide the Statewith price certainty if it elects to implement the pre-priced element(via amodification) before the expiry date of that pre-priced element

Payment and revenue

The net present cost to the State of the Public Private Partnership is3.67

366

3.68

$976 million. and includes costs associated with designing. constructing.financing and operating the system for a 15 year concession period,commencing in 2014 after the initial 3 year design and construct period

This is an availability based Public Private Partnership. The costs include

(a) monthly service payments forthe 15 year concession period based on aperformance and abatement regime;

(b)

(c) periodiclifecyclemaintenancepayments

GST is payable in respect to the above amount

State Construction Pa merit

3.69

a government contribution, paid out during the 3 year design andconstruction phase; and

370 In consideration for progressive Iy carrying outthe D&C works. the State agreesto pay to, or at the direction of Operator Franchisee, the State ConstructionPayments. The State will pay the Operator Franchisee. monthly, an amount nogreater than that set out in the State construction drawdown schedule. Allother monies required to fund the D&C works will be provided by the debtfinanciers and the equity providers

The State will only be obliged to make any State Construction Payment to theOperator Franchisee if(among other things)

(a) certain conditions in relation to the equity contribution have beensatisfied;

co) the drawings under the debtfinanciers' construction facility that havebeen made available are riot less than the aggregate State ConstructionPayments;

to) the Operator Franchisee has provided confirmation to the State from theAgentthatthe debtfinanciers' construction facility drawing due on thesame date has been or will be made available; and

(d) the aggregate of the State Construction Payments paid by the State(including the amount of the State Construction Payment payable forthecurrent month) does riot exceed the State Construction Payment limit

3.71

6026842110 page 21

3.72

Service Pa merits

The monthly service payments will comprise

(a) a performance-based gross monthly fee less deductions arising in theprevious month for

in lateservices;

(ii) early services;

(111) unavailable services;

(Iv) partially completed services; and

00 services failures measured by KPls outlined in the perlormancemanagement system;

to) any upwards or downwards adjustment to reflectthe consumer priceindex and labour price index;

to) a payment for any additional services required by the State;

(d) a payment for any special events services required by the Slater

(e) an energypaymentcomponent;

co ajifecyclepaymentcomponent;

(9) an insurance payment component; and

373 Ifthe State elects to take up a pre-agreed incdmcation, the OperatorFranchisee may make a claim forthe payment upon completion of the pre-agreed modification

Insurance, liability and indemnityInsurance and indemnities

(h) GST payable in respect of the above amounts

PAM WorksCom letion Pa merit

3.74 The Operator Franchisee releases and indemnifies the State from and againstany claim or loss suffered by the State. TTA GCCC or DTMR in respect of

(a) damage to, loss or destruction of, or loss of use of. any real or personalproperty;

to) any injury to, or death or disease of persons; or

(c) anythird party suits. claims, actions. demands. proceedings. penalty.costs. charges or expenses.

to the extent caused or contributed to by the use or occupation of the Projectarea by the Operator Franchisee or an act or omission of the OperatorFranchisee in relation to the Project orthe Project activities; and

(d) any breach or failure to comply with the terms of the State ProjectDocuments by the Operator Franchisee; or

6026842110 page 22

(e) negligent or unlawful acts or omissions orwilful misconduct by theOperator Franchisee.

except to the extentthat any such claim or loss above is a direct consequenceof circumstances such as

co a fraudulent. negligent. unlawiul orwrongful act or omission orwilfulmisconduct of the State or the VB supercar event promoter; or

to) a breach of the State of its express obligations under the Project Deed orother Project documents

3.75

Risk of loss or darna e

From the applicable access date to the site untilthe end of the term. theOperator Franchisee will bearthe risk of any destruction. loss or damage to theProject area. any area where the Project activities are being carried out and

(a) during the D&C Phase. the Projectworks; and

(b) during the Operations Phase. the lightrailsystem

3.76

Reinstatement and a

Where such destruction. loss or damage occurs to the Project works, theProject area orthe light rail system after the Date of Completion, the OperatorFranchisee must

(a) promptly repair. replace or remedy the destruction. loss or damage;

(b) promptly provide the State with notice of any such destruction. loss ordamage and any required repair. replacement or reinstatement; and

(c) apply allinsurance proceeds received towards the cost of repair.replacement or reinstatement

11cation of insurance roceeds

3.77

Liabilit for indirect or conse uentialloss

The State does not have any liability to the Operator Franchisee for anyindirect or consequentialloss incurred or sustained by the Operator Franchiseeas a result of an act or omission (where negligent or otherwise) or as a result ofa breach of the State Project Documents except in specified circumstances

The Operator Franchisee has no liability to the State in relation to indirect orconsequentialloss incurred or sustained by the State as a result of an act oromission (whether negligent or otherwise) or as a result of a breach of theState Project Documents except to the extent such indirect or consequentialloss is in respect of

(a) wilful misconduct, gross negligence. a criminal act orfraud of theOperator Franchisee;

to) a liability that cannot be limited or excluded at law.

to) a reduction to the service payment referred to in section 3.72;

(co economic loss which is required to be insured in compliance with theProject Deed;

3.78

6026e42!to page 23

(e) an injury to death or disease or persons; or

co any third party suitclaim. claim. action, demand. proceeding. penalty,cost, charge or expense. arising out of or in relation to a breach of theState Project Documents by the Operator Franchisee

Indirect or consequentialloss means loss of opportunity. profit. anticipatedprofit. business. business opportunities or revenue or any failure to achieveanticipated savings or any penalties under agreements other than the StateProject Documents

3.79

3.80

Insurance o11desre uired

3.81

The Operator Franchisee must effect and maintain the insurance policies setout in Schedule 4

Allinsurance policies must be made available to the State or sufficientevidence provided to the State to assure the State that the above insurancesare in place

The State has the right to request the Operator Franchisee to insure against arisk riot covered in the required insurance policies or increase the extent of. orchange the terms of an existing insurance policy. The State must relmbursethe Operator Franchisee for any additional premium that is incurred

3.82

383

Notices of otentialclaims

The Operator Franchisee and the State must notify each other of anyoccurrence or incidentthat might give rise to a claim the value of which isexpected to exceed $100,000 or $10,000 in respect to professional indemnityclaims and must keep the other informed of subsequent developmentsconcerning that occurrence orincidence or the claim

The Operator Franchisee and the State must inform the other if it becomesaware of any occurrence or incident which might materialIy reduce theOperator Franchisee's insurance cover

Uninsurable risks

384

385 The Operator Franchisee is riotrequired to effect or maintain a particular D&Cor Operations Phase insurance to the extentthatit covers a risk which isagreed to be uninsurable for so long as it remains uninsurable. A risk becomesuninsurable either because it is not available in the international insurance

market or because the associated premiums become so high that the risk isnot generally being insured against by private sector providers of facilitiessimilar to the light rail system. in each of Australia, the United Kingdom,Canada and the United States of America

Ifthe Operator Franchisee intends not to obtain insurance because it considersit to be uninsurable. the Operator Franchisee must at alltimes act in good faithwith respect to the State and must. notless than 45 Business Days before theOperator Franchisee is required to effectthatinsurance. notify the State onbecoming aware that the risk is, or is likely to become uninsurable

3.86

60268421iO page 24

3.87 If both parties agree that the risk is uninsurable. the parties must meet todiscuss the best way to manage the risk, through self-insurance or otherwise

If a risk is agreed to be uninsurable but after the meeting, agreement cannot bereached in respect of how best to manage the risk then the State may deductfrom the service payment an amount equal to the premium that was payablefor that risk

If an uninsurable risk occurs (and such occurrence does riot constitute a forcemajeure event) the State will either

(a) indemnify the Operator Franchisee forthe loss (including loss ofrevenue) or damage suffered or incurred by the Operator Franchisee upto an amount equal to the insurance proceeds that would have beenpayable had the relevantinsurance coverage continued; or

(b) ifthe works are orthe light rail system is wholly or substantially damagedor destroyed, terminate the Project Deed. in which case. a force majeureevent will be deemed to have occurred and the State will pay theOperator Franchisee an amount equal to the force majeure terminationamount(see termination section below)

Default, Termination, Step-in and Expiry of TermDefault and Termination

388

3.89

3.90 The Project Deed contains a number of Operator Franchisee default categoriesbeing

(a) OperatorFranchiseeTermination Events;

to) EventsofDefault.

to) PersistentBreachand FrequentBreach;

(d) Voluntary Termination;and

(e) Termination for ForceMajeure

Operator Franchisee Termination Events are those events which are so severeit is considered that the State should have the ability to terminate immediatelyEvents of Default occur where a less serious breach has occurred and where

those breaches are capable of cure

The content and consequences of each of the events listed above aredescrlbed in Schedule 5 to this document(and Schedule 6 in respectto Force

3.91

3.92

3.93

Majeure)

Ste -in sus ension and emer encies

The State may step-in and assume partial or total possession of the Projectand take other steps necessary to continue the Project activities where anevent or circumstance is

(a) a serious threatto, or may cause material damage to the health andsafety of persons, the environment. property or the safe and secureperformance of the Project Activities; or

6026842JIO page 25

3.94

to) requires the State to exercise responsibilities or functions at law

This right. however, is subject to the State notifying the Operator Franchisee ofthe relevant event and the Operator Franchisee being unwilling or unable toovercome that event. except where the Operator Franchisee is at fault or theState believes that it must step-in to discharge a legislative or public duty

Once the State has taken any required action and normal performance canresume. the State may directthe Operator Franchisee to recommence theProject Activities. During the step-in period the Operator Franchisee mustprovide assistance to the State in performing the Project, and must meetthecosts of the State where it has caused the step-in event

3.95

3.96

Ri his at the end of the term

At the end of the term. the Operator Franchisee must

(a) provide to the State or a new operator a handback package developed inconsultation with the State during the term;

(b) surrender to the State or its nominee the light rail system and site freefrom any encumbrances and in a state and condition which complies withthe Project Deed;

(c) co-operate with the State on the transfer of responsibility forthe Projectto the State or any new operator including the transfer of alititle, interestand right. providing advice and information and allowing site visits;

(d) allow a transition officer appointed by the State sufficient access to theProject;

(e) provide materials to the State and use reasonable endeavours to assistthe State with a re-tendering of the Project;

in procure the novation to the State or a new operator of any agreement.sublease or licence which the State may nominate; and

(g) ensure that an appropriate number of Project staff are available to beemployed by a new operator. and the State must procure that a newoperator makes offers of employment to those staff on no less favourableterms than under their employment with the Operator Franchisee

6026842JIO page 26

With effectfrom the expiry of the term. the Operator Franchisee Irrevocablyappoints the State (and its nominees) as its attorney to execute any novation oragreement which is contemplated within section 3.96

General provisions

^L!^!rig

The Operator Franchisee may subcontract construction activities or operationsor any part of them in accordance with the provisions set out below. However,in doing so. the Operator Franchisee is not relieved of any of its liabilities orobligations under the Project Deed and is at alltimes responsible fortheperformance of all subcontractors

The Operator Franchisee must

(a) promptly provide to the State a copy of each Core Contract(jethe D&CContract and the O&M Contract) and each significant contract(leinrelation to the D&C activities. a contract greater than $, O million. inrelation to the O&M activities, a contract greater than $500,000 perannum or any other contractthatthe State considers should besignificant);

to) not engage any new subcontractorwho would become a CoreContractor or a significant contractor withoutthe State's prior consent;

to) ensure that 00 Core Contractoris engaged in relation to the Projectactivities withoutthe Operator Franchisee and the relevant CoreContractor having delivered to the State a duly executed side deed; and

to) ifrequired by the State. procure that any significant contractor enter intoa side deed

3100 The Operator Franchisee must ensure that each other contractor engaged inrelation to the Project activities is reputable and has. or has access to sufficientexperience, expertise. ability and resources to perform its obligations to thestandards required by the State Project Documents

Utilities and Rates

3.97

3.98

3.99

3101 The Operator Franchisee must obtain. pay for, contractforthe provision of,acquire or otherwise procure or provide any utilities, including water. electricity,gas. telephone. drainage. sewerage and electronic communications, and allconnections to those utilities it needs to perform the Project activities. TheOperator Franchisee indemnifies the State againstloss suffered by the Statearising from any damage to these utilities which is caused by the OperatorFranchisee

It must obtain the consent of the State in relation to the construction of publicutility infrastructure outside the site and the proposed location of public utilityplant to be constructed (within or outside the site)

3102

Renewable Ener

6026e42!to

Allowances

page 27

3103 During the Operations Phase, the State may elect to match all or part of theelectricity consumption of the Project with renewable energy by acquiring, orrequiring the Operator Franchisee to acquire on the State's behalf, allowancesrepresenting the renewable energy equivalent to the total electricityconsumption of the Project

As such, the State may directthe Operator Franchisee to acquire renewableenergy allowances and deal with those allowances as directed by the State. Indoing so. the Operator Franchisee must establish an account with the relevantlegislative allowance registry

The State and the Operator Franchisee will meet annually to discuss thestrategy for purchase of allowances and unless otherwise notified by the State.the Operator Franchisee will not enter into a relevanttransaction withouttheprior approval of the State. The State will pay to the Operator Franchisee theamounts paid by the Operator Franchisee in purchasing any allowances plusany external costs incurred. In turn. the Operator Franchisee will account tothe State any amounts received by it should it sell any allowances

EQ!^^^

Force majeure events may lead to termination of the Project Deed. Thespecific events giving rise to force majeure and the consequences of thoseevents are detailed in Schedule 6 to this document

Restrictions on business

3104

3.1 05

3106

3107 The Operator Franchisee must riot. withoutthe prior consent of the State.conduct any business other than implementation of the Project

3108

Share Ca itsIDealin s

The Operator Franchisee must riot undertake any share capital dealings (otherthan share capital dealings which are specified as permitted share capitaldealings in the Project Deed) withoutthe consent of the State

The State may only withhold its consent to a proposed share capital dealing ifthe State is of the reasonable opinion that

(a) the new equity investor or equity investors are not solvent or reputable.have an interest or duty which conflicts in a material way with theinterests of the State or do not have a sufficient level of financial or

technical capacity; or

to) that the proposed share capital dealing is againstthe public interest.would adversely affectthe ability or capability of the Operator Franchiseeto perform its obligations. would have a material adverse effect on theProject or would increase the liability of the State

The Operator Franchisee is also required to ensure that designated investorshold their designed equity holding for a specified period of time (i. e. 2-4 yearsafter the date of completion)

3109

3110

60268421iO page 28

3111 The Operator Franchisee also has obligations to notify the State of any changein control of the Core Contractors. In certain circumstances, ifthe State does

not approve of the change in control. the Operator Franchisee may be requiredto terminate a Core Contract and re-tender the works or services performedunder that Core Contract

31.2

Restrictions on dealin and finance documents

Except as expressly permitted under the State Project Documents. theOperator Franchisee must not assign. novate. transfer, mortgage or charge itsinterests in the Project withoutthe prior consent of the State

The Operator Franchisee must riot create, permit or suffer any interest. securityinterest over. lease. licence. sell. transfer, or otherwise deal with, operate oruse or permit any other person to operate or use the lightrail system or anypart of the Project area unless approved by the State

The State may riot sell. transfer or assign or o1heMise dispose of its interest inthe State Project Documents (unless the State assigns its rights to receiverevenue) withoutthe Operator Franchisee's consent. The Operator Franchiseemust give its consent if

(a) it has been provided with the details of the proposed transferee;

(b) the terms and conditions of the proposed transfer; and

(c) the proposed transferee is an authority who agrees to be bound by theState's obligations under the State Project Documents

The Operator Franchisee must riot enter into any financing arrangements otherthan those already agreed to by the State in the debtfinancing documents ormake any material amendment to the debt financing documents withouttheprior consent of the State

The Operator Franchisee must not enter into any refinancing arrangementwithoutthe prior consent of the State. A breach of this condition is an event ofdefault

Where the State consents to a refinandng which results in a ratnancing gain,

3113

3114

3115

3. ,16

3117

3118

the Operator Franchisee agrees to pay to the State 50% of any gain

Arran ements in the lastthree ears of the Pro^Ct

Approximately three years and one year prior to the end of the term. the Statemay engage an independent assessor(approved by the Operator Franchisee)to carry out a handback audit

This survey will assess whether the lightrail system as at the date of thesurvey has been and is being maintained by the Operator Franchisee inaccordance with its obligations under the Project Deed. It will also determinethe amount(if any) required to be expended during the remainder of the termto ensure that the light rail system is at a standard that complies with the PSR

Within 20 business days of the handback survey. the Operator Franchiseemust provide to the State a bond with a face value of no less than the amount

3. ,, 9

3120

6026842!10 page29

determined by the independent assessorreferred to above. Ifthe OperatorFranchisee does not provide this bond the State will deduct an amountfromeach monthly service payment equal to 120% of the required bond amountdivided by the number of months untilthe scheduled expiry of the term which ispaid into a retention fund account held by the State

Ifthe Operator Franchisee fails to carry culthe necessary rectification.maintenance or reinediation work. the State will be entitled to carry outtheworks itself and the cost of such works will be a debt due and payable by theOperator Franchisee to the State

No less than three months prior to the Expiry Date, the Operator Franchiseemust provide the State a handback security bond with a face value of $10million. Ifthe Operator Franchisee fails to provide the handback security bond.the State may deduct $10 million (in aggregate)from the service paymentsuntilthe end of the term

3121

3. ,22

3123 Ifthe bank guarantee orthe retention amount in the retention accountis riotsumcientto meet all works that the Operator Franchisee must undertake tomeetits obligations under the handback requirements. the OperatorFranchisee will bearthe balance of such costs itself

Should there be a credit balance in the retention account at the end of the

project or the bank guarantee has not been called on and the OperatorFranchisee has carried out all work necessary to comply with its handbackobligations under the Project Deed, then any credit balance will be paid to theOperator Franchisee or the bank guarantee held by the State will be returned

3124

3125

Dis ute Resolution

3126

The Project Deed sets out procedures to be followed when there is a disputebetween the State and the Operator Franchisee

The dispute resolution procedures are as follows

(a) Each chief executive officer(or his or her delegate, who must riot be amember of the Senior Project Group parties) will seek to negotiate aresolution

(b) Ifthe dispute is notresolved by way of negotiation then. within 20business days after notice of the dispute was given (whether or nottheparties have met and undertaken negotiations)

(1) ifthe Project Deed provides that a dispute will be referred to anexpert for determination, either party may give notice requiring thatthe dispute be referred to expert determination; or

(ii) ifthe Project Deed does riot provide that a dispute will be referredto an expertfor determination. the State may within 10 businessdays of the 20 business day period issue a notice that the disputeis to be determined by litigation pursuant to court proceeding or ifthe State does notissue such notice within the required timeframe.the dispute will be referred to arbitration

6026842!to page 30

(c) Ifthe dispute is one which is required to be referred to an independentexpert. the parties must agree upon the appointment of an independentexpert to hearthe matter. If agreement is notreached regarding thisappointment, then the matter will be referred to the President of Instituteof Arbitrators and Mediators Australia to nominate a committee of no less

than three independent experts

The independent expert's decision will be final and binding on the partiesunless a party serves a notice of appeal on the other party within 20business days, in which case the matter may be referred by the State tocourt proceedings or arbitration or by the Operator Franchisee toarbitration

Any award of an arbitration tribunal will be final and binding on all parties

(d)

3127

(e)

Intellectual Pro ert

The Operator Franchisee warrants that it has the appropriate licences to all ofthe intellectual property required to pertorm the Project and indemnifies theState against any claim brought against it in respect to an infringement of thoselicences. The Operator Franchisee grants to the State a generalirrevocable,royalty free nori-exclusive licence to the intellectual property required fortheProject. subject to exceptions relating to material held in escrow, third partysoftware and materials relating to the equipment and vehicles

The material to be held in escrow forthe duration of the term includes

(a) all source code forthe software used in relation to the Project;

to) all documentation necessary to test, modify. maintain. further develop orregenerate the sofMare;

to) software tools. objectlibraries and methodologies necessary fortheState (or another person operating the Project) to test, modify. maintain.further develop or regenerate the software;

(d) intellectual property related to the light railvehicles; and

(e) intellectual property related to the signalling system

Escrow materials will be released to the State upon termination of the ProjectDeed as a result of an Operator Franchisee default or a force majeure event orupon expiry of the term. exercise of a step-in right by the State orwhere theparties otherwise agree to a release. However, the escrow materials whichrelate specifically to the vehicles or signalling system will not be released uponexpiry of the term. but rather 25 years after the date of the Project Deed or inaddition where such material is required for integration with the broadernetwork (including for a future stage)

The State may during the term view the preparation of the escrow material orrequire an independent audit of its quality and sumdency

Upon expiry of the Project Deed or at any time during the term allhe State'srequest. the Operator Franchisee must deliver to the State its licensed

3128

3129

3130

3131

6026842110 page 31

intellectual property. data produced in the course of the Project and in dudingthird party sofwiare and materials relating to the equipment, but excluding anyescrow material. This is in order forthe State to exercise ownership of theProject or for a third party to exercise those rights

In respect to any intellectual property owned by a third party. the OperatorFranchisee must upon expiry of the term or upon step-in by the State. usereasonable endeavours to sub-licence or assign those materials to the StateFor intellectual property related to the Project equipment(which includesdevice software or firmware)the Operator Franchisee must ensure that theState may use these materials upon transfer at the end of the term or uponstep-in. and has sufficient proprietary rights for such use. During the term, theOperator Franchisee must use reasonable endeavours to ensure that itmaintains its relationship with third party owners of intellectual property andshould the nature of any of those relationships change, or be likely to change.then the Operator Franchisee must notify the State and follow any subsequentState directions. In respect to any intellectual properly the State regards asbeing 'core' to the project. the Operator Franchisee must ensure that therelevantthird party provider enter into a Deed of Assurance in favour of theState

3.1 32

3133 For any intellectual properly owned by the State which is required by theOperator Franchisee to undertake the Project. the State grants an Irrevocable.royalty free non-exclusive licence to the Operator Franchisee forthe duration ofthe term

3134 The Operator Franchisee acknowledges that trade marks and the 'brand'belong to the State and to the extent any such material vests in the OperatorFranchisee. it will be assigned to the State. The Operator Franchisee must notuse the trademarks in a manner which is prejudicial to the State or to the valueof the trademarks and must comply with reasonable State directions in relationto them (including requirements for use and appearance)

Miscellaneous Provisions

3135

Amendments

The Project Deed may only be amended by a deed executed by or on behalfofeach party

Disclosure and confidentiality

Other than notices which the Operator Franchisee is required to disclose to anyrecognised stock eXchange, the Operator Franchisee must not make anypublic announcements in relation to the Project withoutthe consent of theState

3136

3.1 37 The State may publish or disclose the terms and conditions of any ProjectDocuments or any information in connection with any Project Document. Tothe extentthe information to be published or disclosed by the State containscommercially sensitive information (i. e. information specially identified in theProject Deed as such). the State may publish the information (without

6026842110 page 32

3138

consultation with the Operator Franchisee) ifthe commercially sensitiveinformation is redacted

The State is also required to use reasonable endeavours to maintain theconfidentiality of commercially sensitive information and if it proposes todisclose commercially sensitive information it must use reasonable endeavoursto consult with the Operator Franchisee (unless disclosure is required under agovernment policy)

The State may be required to disclose information regarding the Project(including the commercially sensitive information) in certain circumstancesIncluding under the Right to Information Act 2009 (Qld). to satisfy thedisclosure requirements of the Auditor General or to satisfy the requirements ofparliamentary accountability. including tabling information concerning theProject Documents in parliament

3.1 39

6026842110 page 33

Schedule I

The following is a summary of the conditions precedent under the Project Deed

(a) execution of all Project Documents (including finance documents and equitydocuments);

(b) evidence that all conditions precedent under the Project Documents (including thefinance documents and equity documents) are satisfied or waived;

to) insurance policies as required by the Project Deed to be in place by financial closeare in place;

(d) receipt by the State of copies of binding tax rulings from the Australian Tax Office;

(e) receipt by the State of the base case financial model and an auditreport on thebase case financial model;

in receipt by the State of powers of attorney, constitutions, board minutes, andspecimen signatures of authorised officers in respect of the Operator Franchiseeand other contracting entities;

(g) receipt by the State of legal opinions regarding the validity and enforceability ofany State project document entered into by a foreign entity;

(h) receipt by the State of unconditional approval from the Australian Treasureradvising that there was no objection under the Fore@n Acquisitions andTakeovers Act1975 (Cth)to the ownership of the Operator Franchisee and/oritsinterest in the Project;

(1) receipt by the State of the evidence that the Operator Franchisee and MCConnellDowell Constructors (AUSt) Pty Ltd (MacDow) hold contractor's licences under theQueenslandBuildrng Services Authority Act 7997 (Qld);

in receipt by the State of evidence that MacDow is accredited under the WHSAccreditation Scheme. and that such accreditation will not expire during the D&CPhase;

00 due appointment of MacDow as the pmdpal contractor under the WorkplaceHealth and Safety Act 7995 (Qld);

co the State satisfying itselfin relation to the processes required under the Nativerifle Act 7993 (Cth)to allow the Project to be carried outin accordance with theState project documents;

(in) compliance with the financial close adjustment protocol; and

(n) receipt by the State of evidence that the Operator Franchisee has accreditation forthe construction of a railway, railway tracks and associated track structures underthe Transport (Railsafety) Act20iO (Qld)

- Conditions Precedent

6026842110 page 34

Schedule 2

Set out below is a summary of agreed objectives as contained in the Project Deed

(a) (integrated transport network): to deliver a recognisable, accessible lightrailsystem which significantly enhances the transport network forthe Gold Coast by

(1) providing a high capacity transit system between significant activity centresalong the Gold Coast which could be enhanced by the delivery of futurestages of the light rail system;

(11) combining with existing and future bus and rail services to provide whole ofnetwork public transport outcomes; and

(111) encouraging patronage growih and increasing mode shift to public transport,which could be continued through the delivery of future stages of the lightrail system;

(b) (sustainability): to provide a rapid transit system with consistently high levels ofservice. comfort and reliability that will motivate people to use it as an alternativeto cartravelto reduce congestion and enhance the quality of life for futuregenerations of the Gold Coast;

(c) (city changing system): to deliver a system which integrates with and enhancesthe urban environment. supporting urban regeneration and sustainabledevelopment;

(d) (supportthe city's competitiveness):to provide a system which will improveaccessibility to key activity centres for residents and visitors, contribute toeconomic growth and maintain the Gold Coast's competitive advantage as acentre fortourism and emerging high value industries;

(e) (value for money and affordability):to deliver government and users of thesystem with value for money through a whole of life approach to delivery. optimumrisk allocation and innovative solutions forthe Project which are affordable forgovernment; and

co (partnership): to create a partnership relationship which will benefit and enhancethe reputation of the private sector and allthree levels of government and whichcould be expanded through the delivery offuture stages of the light rail system

- Project Objectives

6026842110 page 35

Schedule 3

Events

Coin ensation Events

The following compensation events are risks retained by the State and will entitleOperator Franchisee to appropriate compensation from the State

(at a breach of contract by the State. TTA or GCCC which adversely affects theOperator Franchisee;

to) failure by the State to allow access to the site to begin construction;

to) early works have not achieved practical completion on an area of the site requiredforthe Operator Franchisee to begin construction;

(d) any damage to the Project caused by the State. GCCC orTTA in carrying outworks in and around the site;

(e) a defectin early works related to a station, unless the State issues a modificationto the Operator Franchisee to rectify that defect;

to exercise of a State step-in. other than where it is caused by the OperatorFranchisee;

(9) a legal challenge to. or a suspension or revocation of, a key approval;

(h) an assumed legislative amendment not being implemented;

(1) a native title claim or discovery of an artefact on the Site, to the extentthis affectsthe Project;

in certain changes in law (see sections 3.7 - 3.9);

(k) migrating contamination orcontamination caused by the VB supercar eventpromoter;

(1) a delay by the Rail Safety Regulator in granting accreditation. provided that theOperator Franchisee is complying with its obligations in respect to the Regulatorand the delay is unreasonable;

(in) destruction. loss or damage to the Project as a result of an unlawful. fraudulent ornegligent act or omission of the State or otherwise caused by the VB supercarevent promoter; and

to) an exercise of power by the State orthe V8 supercar event promoter under orinconnection with the MotorRacing Events Act 7990 (Old) which materialIy differsfrom that described in the Project Documents and which disrupts the Project

- Compensation Events and Relief

6026842!10 page 36

Relief Events

The following events may entitle Operator Franchisee to an extension of time and I orrelieffrom its obligations under the State Project Documents. but will not entitle OperatorFranchisee to any compensation for additional or increased costs or lost revenue

(a) flood. fire. explosion. lightning, cyclone, hurricane. mudslide, landslide.earthquakes. droughts declared as a state of emergency and high seasinundation;

(b) a 'terrorist act" (as defined in section 5 of the Terrorism Insurance Act 2003 (Cth)as at the date of this deed);

to) war(declared or undeclared). armed conflict, riot, civilcommotion;

(d) ionising radiation. contamination by radioactivity, nuclearcontamination. orsudden and accidental chemical or biological contamination;

(e) failure by any authority to carry out works or provide services to the Project areawhich it is obliged by law to carry out or provide;

in any event or occurrence which causes loss or damage to the Projectworks. theProject area orthe light rail system;

(g) anyblockadeorembargo;

(h) any industrial action withinAustraliawhich

co affects the construction orlight rail operation or maintenance sectors orsignificant segments of those sectors; and

00 does not affect only the Project area, the Project works or the light railsystem;

(1) during the Operations Phase, electricity required forthe operation of the lightrailsystem riot being available for use (either at all or in the necessary quantity) at themains connection to the lightrail system site for any reason other than because.f

co any act or omission or lack of diligence by the Operator Franchisee; or

(ii) a dispute under the electricity supply contract or any other arrangementbetween the Operator Franchisee and ENERGEX; and

during the Operations Phase. an instruction of a government authority to suspendthe Project activities which prevents the Operator Franchisee from performing itsobligations

co

6026842110 page 37

Schedule 4

D&C Phase

The Operator Franchisee is required to effect and maintain the following insurancesduring the D&C Phase

(at professional indemnity insurance: for alleast $50,000,000 for any one claim and$50,000,000 in the aggregate for a period from financial close until at least 7 yearsfrom the date of completion;

(a) employers liability and workers compensation insurance: as required by law;

to) motor vehicle insurance:third party property damage of $30,000,000 for any oneoccurrence and unlimited in the aggregate; compulsory third party insurance asrequired by law;

(c) contract works (material damage)insurance: the full build value of the Project;

(d) contractworks (legal liability insurance): $200,000,000 for any one occurrenceand $200,000,000 in the aggregate for completed operations and productliabilityclaims;

(e) plant and equipment insurance: notless than current market value for any oneitem and notless than $10,000,000 any one occurrence, any one location;

co advanced business interruption insurance: notless than an amountequivalentto12 months of service payments (referred to in section 3.72) (without applying anyreduction to these service payments) and the policy to have a minimum 12 monthindemnity period;

(9) marine insurance: a limit of indemnity equivalent to notless than the maximumtotal value of the property to be transferred in any one shipment. plus a provisionforthe cost of freight, insurance. taxes and duties as may be applicable; and

- Insurance Policies

(h) anyotherinsurance required by law

O erations Phase

The Operator Franchisee is required to effect and maintain the following insurancesduring the Operations Phase

(a) employers liability and workers compensation insurance: as required by law;

co) motorvehicle insurance:third party property damage of $30,000,000 for any oneoccurrence and unlimited in the aggregate; compulsory third party insurance asrequired by law;

to) rolling stock insurance: own damage -fullreplacement value of allrolling stock ona full sum insured per unit; third party property damage - $100,000,000 for anyone occurrence and unlimited in the aggregate;

(d) industrial special risks insurance: fullreplacement value (excluding the fullreplacement value of the rolling stock) plus an additional amount sufficient tocover costs of demolition and removal of debris. fee for project managers and

6026842110 page 38

other consultants, and an amount to cover additional costs and expenses toexpedite the commencement and repair. replacement orreinstatement of the lightrail system;

business interruption insurance: notless than an amount equivalent to 12 monthsof service payments (referred to in section 372) (without applying any reduction tothese service payments) and the policy to have a minimum 12 month indemnityPeriod;

products and public liability insurance: $250,000,000 each and every occurrenceand in the annual aggregate for products claims; and

any other insurance required by law

(e)

to

(9)

6026842110 page 39

Schedule 5 - Default Events, OperatorFranchisee Termination Events, VoluntaryTermination and Termination Payments

Default Events

The following events are an event of default

(a) the Operator Franchisee fails to regularly and diligently progress the D&Cactivities;

(b) fraud or misleading conduct on the part of the Operator Franchisee in thepertormance of the Project

(c) cancellation of any equity or debtfunding;

(d) uriacceptability of certain availability or quality levels required under the ProjectDeed (note that more serious failures in respect to availability and I or quality mayresultin an immediate termination);

(e) failure by the Operator Franchisee to pay any amount due by it to the State;

in failure to provide any bonds required under the Project Deed;

(9) failure to comply with reporting obligations or submission by the OperatorFranchisee of a report containing a material inaccuracy;

(h) breach of the refinancing obligations contained in the Project Deed;

(1) a representation or warranty made by the Operator Franchisee in any StateProject Document proves to be untrue;

in an illegality event;

(k) breach of change of controlprovisions;

(1) breachofsubcontracting provisions; or

(in) any breach of an obligation under any State Project Document by the OperatorFranchisee (which does not otherwise entitle the State to reduce the ServicePayment)

Upon an Event of Default, the State may issue a default notice specifying (subjectto thedebt financiers' rights under the Debt Finance Side Deed) a cure period in which theOperator Franchisee may remedy the default, after which the parties may agree a cureplan. In the circumstance where the default is riot capable of being remedied. theparties must consult and agree to a prevention plan describing the actions andmeasures the Operator Franchisee will pursue to preventthat defaultfrom recurring

Any dispute in relation to the applicable cure period, cure plan or prevention plan maybe referred to the dispute resolution procedures under the Project Deed

Failure to remedy an event of default which is capable of being remedied within theapplicable cure period. failure to preventthe recurrence of an event of default which is

6026842110 page 40

the subject of a prevention plan or failure to submit, amend or implement a cure plan orprevention plan on the part of the Operator Franchisee will all entitle the State toterminate the Project Deed. This is dealtwith below in relation to Operator FranchiseeTermination Events

O erator Franchisee Termination Events

The following events are Operator Franchisee termination events(a) uriacceptability of certain availability or quality levels required under the Project

Deed (note that!ess serious failures in respect to availability and for quality mayresult only in a default);

(b) failure to complete by the sunset date or failure to complete by the scheduled datefor completion where the Independent Verifier forms the view that failure tocomplete by the sunset date will riot occur. This is referred to as the 'look forwardtest';

to) failure to commence any Project activities within 60 days of Financial Close;

to) persistent breach. which is an event which will arise where there are continuedbreaches by the Operator Franchisee. which are riot otherwise covered by thegeneral event of default regime. In relation to persistent breaches the State willprovide notice of the breaches to the Operator Franchisee so that it may rectifythe breach and to ensure it doesn't occur again. Ifthe breach continues, it willentitle the State to terminate immediately;

(e) frequent breaches. Similarly to persistent breach, frequent breaches are thoseless serious breaches which in aggregate substantially frustrate the objectives ofthe Project. significantly impairthe ability of the State to reach its objectives. havea material adverse effect on the system. passengers or the community. Likewiseto persistent breach, Operator Franchisee is given the opportunity to cease therelevant breaches prior to the State exercising its termination right;

co Operator Franchiseewholly or substantially abandons the Project;

(9) Failure to remedy an event of default which is capable of being remedied within anapplicable cure period;

(h) Failure to preventthe recurrence of an event of default which is the subject of aprevention plan;

co Failure to submit. amend or implement a cure plan or prevention plan;

in The insolvency of OperatorFranchisee;

(k) The insolvency of either the D&C Contractor or O&M Contractor ortheir parentcompany guarantors (where the relevantinsolvent party is notreplaced within ,20days);

(1) Failure to effect and maintain the insurances required pursuantto the terms of theProject Deed; or

(in) Operator Franchisee breaches the assignment provisions orthe restrictions onshare capital dealing contained in the Project Deed

6026842110 page41

If an Operator Franchisee Termination Event occurs and is subsisting. the State mayterminate the Project Deed on 10 business days notice to Operator Franchisee

VCIunta Termination

The State may voluntarily terminate the Project Deed and at any time with 60 daysnotice to Operator Franchisee

Termination Pa merits

Upon termination of the Project, the State will pay to the Operator Franchisee a pre-agreed termination payment. The method of calculating termination payments is set outin the Project Deed

6026842110 page42

Schedule 6

Force majeure events are defined in the Project Deed as any of the following

(a) flood. fire. explosion, lightning. cyclone. hurricane. mudslide. landslide.earthquakes, droughts declared as a state of emergency and high seasinundation;

(b) a 'terrorist act'(as defined in section 5 of the Terrorism Insurance Act 2003 (Cth)as at the date of this deed);

(c) war(declared or undeclared), armed conflict, riot, civilcommotion;

(d) ionising radiation, contamination by radioactivity, nuclearcontamination. orsudden and accidental chemical or biological contamination;

(e) failure by any authority to carry out works or provide services to the Project areawhich it is obliged by law to carry out or provide;

co any event or occurrence which causes loss or damage to the Project works. theProject area or the light rail system;

(9) anyblockadeorembargo;

to) any industrial action withinAustraliawhich

co affects the construction orlight rail operation or maintenance sectors orsignificant segments of those sectors and

(11) does riot affect only the Project area, the Projectworks or the lightrailsystem;

(1) during the Operations Phase. electricity required forthe operation of the light railsystem not being available for use (either at all or in the necessary quantity) at themains connection to the lightrail system site for any reason other than becauseof

- Force Majeure

(1) any act or omission or lack of diligence by the Operator Franchisee; or

(11) a dispute under the electricity supply contract orany other arrangementbetween the Operator Franchisee and ENERGEX; and

during the Operations Phase. an instruction of a government authority to suspendthe Project activities which prevents the Operator Franchisee from performing itsobligations.

O)

and.

(k) which exists or occurs for a continuous period exceeding 180 days and as a resultof which a party is prevented from or delayed in performing its obligations; and

(1) which has not occurred as a result of a an act or omission by the OperatorFranchisee and is riot within the control of the Operator Franchisee

On the occurrence of a force majeure event, the Operator Franchisee must notify theState as soon as practicable

6026842!, O page 43

The parties must meet as soon as reasonably practical following service of that notice

(a) determine whether a force majeure event has occurred;

(b) determine the extent to which the force majeure eventis covered by insurance;

(c) determine the estimated duration of the force majeure event; and

(co agree on appropriate measures to mitigate the effects of the force majeure eventand facilitate the continued performance of the State Project Documents

Ifthe parties cannot agree on appropriate terms to mitigate the effects of the forcemajeure event within 20 business days of the commencement of the force majeureevent and the force majeure eventis continuing. then either party may terminate theProject Deed by giving 20 business days notice to the other party

Ifthe Operator Franchisee is entitled to recover under any business interruptioninsurance policy, it may notterminate the Project Deed untilthe maximum indemnityperiod stated in the business interruption insurance policy has been exceeded

The State may suspend the Operator Franchisee's right to terminate. Ifthe Statesuspends the Operator Franchisee's right to terminate

(a) during the D&C Phase. it must pay to the Operator Franchisee. the OperatorFranchisee's debt servicing costs forthe period of suspension (less any insuranceproceeds recovered orwhich would have been recovered ifthe OperatorFranchisee had complied with its insurance obligations); and

(b) during the Operations Phase, it must pay to the Operator Franchisee the servicepayment that would have been payable ifthe Project activities had been carriedoutfull(less operating costs notincurred and insurance proceeds recovered)

Ifthe Operator Franchisee can recommence performing its obligations it must notify theState immediately

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