CRL Sponsors agreement

EXECUTION VERSION

SPONSORS AGREEMENT

Auckland Council Her Majesty the Queen in right of New Zealand

CONTENTS

1

Defined terms and interpretation .................................................................................... 2

2

Heads of Agreement......................................................................................................... 9

3

................................................................................................. 9

4

............................................................. 10

5

Establishment of CRLL .................................................................................................... 12

6

Delivery of the CRL Project............................................................................................. 13

7

Sponsor representation.................................................................................................. 14

8

PDA Assurance Process .................................................................................................. 15

9

Ultimate ownership and operation of CRL..................................................................... 16

10

Changes .......................................................................................................................... 16

11

Funding arrangements ................................................................................................... 17

12

Transfer of assets to CRLL .............................................................................................. 21

13

Adverse Events and Monitoring Points .......................................................................... 22

14

CRLL Default ................................................................................................................... 22

15

Intellectual Property....................................................................................................... 22

16

Disputes.......................................................................................................................... 23

17

Miscellaneous................................................................................................................. 23

Schedule 1 Funding failure ....................................................................................................... 32 Schedule 2

................. 34

Schedule 3 Not used................................................................................................................. 37 Schedule 4 Dispute resolution procedure................................................................................ 38 Schedule 5 Statutory Assurance Framework ........................................................................... 41 Schedule 6

.................................................................................... 44

Schedule 7 Exercise of Shareholder rights and powers ........................................................... 45 Schedule 8 CRLL Constitution................................................................................................... 47 Execution..................................................................................................................................... 30

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SPONSORS AGREEMENT

i

This AGREEMENT dated

30 June 2017

PARTIES Auckland Council (Auckland Council) Her Majesty the Queen in right of New Zealand acting by and through Her Minister of Finance and Her Minister of Transport (Crown)

INTRODUCTION A

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

B

The Sponsors have agreed to co-fund and partner on the delivery of the CRL Project, and collaborate on other initiatives, with the following overarching objectives: (a)

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

(b)

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

(c) (d)

provide a sustainable transport solution that minimises environmental impacts;

(e)

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

(f)

.

C

The Sponsors have incorporated CRLL to deliver the CRL Project in accordance with the Project Delivery Agreement.

D

This Agreement sets out the arrangements between the Sponsors for the governance of the CRL Project and their relationship as its co-sponsors.

E

The Sponsors also wish to work together in relation to wider benefits associated with the CRL Project and any future rail investment and the ownership and operating structure of the wider Auckland transport network. This Agreement sets out the .

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IT IS AGREED AS FOLLOWS: 1

DEFINED TERMS AND INTERPRETATION

1.1

Defined terms Capitalised terms used in this Agreement shall, unless defined in this Agreement or expressly stated otherwise, have the meanings given to them in the Project Delivery Agreement and: Asset has the meaning given to that term in the Transfer Agreement; Assurance Manager means such person or persons as the Sponsors may appoint from time to time under clause 7.4; Auckland Council Funding Amount means (inclusive of 50% of the Stage 1 Works Costs), as such amount may be adjusted in accordance with this Agreement; Claim means any claim, notice, demand, action, proceeding, investigation, litigation, arbitration, expert determination or judgment whether based in contract, tort, statute or otherwise; Confidential Information means: (a)

(b)

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

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

(ii)

in the performance of this Agreement;

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

relating to the financial position of that person;

(ii) brokers; (iii) strategies; or

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(iv) (c)

comprising the terms of this Agreement; and

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

Cost means any cost, damage, loss, Claim, liability or expense of any kind whatsoever; CRLL means City Rail Link Limited, a company incorporated and registered with the Registrar of Companies; CRLL Constitution means the constitution of CRLL, as the same may be amended from time to time; CRLL Default Event has the same meaning as CRLL Default (as defined under the Project Delivery Agreement); CRLL Intellectual Property has the meaning given in clause 15.2; CRLL Statement of Intent means the Statement of Intent that applies to CRLL in accordance with the Statutory Assurance Framework; CRLL Statement of Performance Expectations means the Statement of Performance Expectations that applies to CRLL in accordance with the Statutory Assurance Framework; Crown Entities Act means the Crown Entities Act 2004; Crown Funding Amount means (inclusive of 50% of the Stage 1 Works Costs), as such amount may be adjusted in accordance with this Agreement; Defaulting Sponsor has the meaning given in Schedule 1; Dispute means any dispute or difference (including any concern of one Sponsor regarding the performance of the other Sponsor under or in connection with this Agreement or any other Sponsor Document) arising between the parties in relation to any aspect of this Agreement and shall include any failure of the Sponsors to reach unanimous agreement in respect of any agreement, approval, consent, direction, waiver or decision required in relation to a Sponsor Approval Matter; Dispute Resolution Procedure means the procedure for the resolution of Disputes set out in Schedule 4; Early Works Agreements means the contracts entered in to by Auckland Transport known as: (a)

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C1 (Lower Queen Street);

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(b)

C2 (Lower Albert Street); and

(c)

Downtown Shopping Centre;

Encumbrance means any mortgage, lien, charge, pledge, claim, security interest (as defined in the Personal Property Securities Act 1999) or other encumbrance or third party interest; Execution Date means the date of this Agreement; Existing Sponsor Intellectual Property has the meaning given in clause 15.1(a); Funding Amount means, as the context requires: (a)

the Auckland Council Funding Amount; or

(b)

the Crown Funding Amount;

Funding Failure means any failure by a Sponsor to provide, or procure the provision of, any part of its Funding Amount at the time or in the amount required by the Project Delivery Agreement; Heads of Agreement means the terms agreed between the Sponsors recording the inprinciple commitment to the CRL Project on or about 14 September 2016; Joint Sponsor Team means the team established by the Sponsors in accordance with Schedule 2 (Part B); Non-Defaulting Sponsor has the meaning given in Schedule 1; Ordinary Shares has the meaning given in the CRLL Constitution; PDA Assurance Process means the notification, review, assurance and approval regimes and processes set out in the Project Delivery Agreement, including the various Project reviews; Proceedings means any investigation, prosecution, litigation, arbitration, enquiry or disciplinary proceedings (whether judicial, quasi-judicial or otherwise); Project Delivery Agreement means the agreement of that name between the Crown, Auckland Council and CRLL dated on or about the date of this Agreement; Public Finance Act means the Public Finance Act 1989; Responsible Ministers means the Minister of Finance and the Minister of Transport; Settlement Agreement means the agreement of that name entered into or to be entered into between Auckland Transport, Auckland Council, Crown and CRLL 18416836_1

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addressing various matters to be resolved between those parties in relation to the transfer of assets, rights and contracts relating to the CRL Project and issue of shares

by CRLL to Council and Crown as specified therein; Sponsor means either the Crown or Auckland Council and Sponsors means both the Crown and Auckland Council; Sponsor Approval Matter means any matter, circumstance or thing under this Agreement or any other Sponsor Document that requires the agreement between, approval or consent of or direction, waiver or decision by the Sponsors and includes the following: (a)

any amendment to any Sponsor Document;

(b)

any adjustment to the Target Project Delivery Date or the Target Final Completion Date;

(c)

any change to the Target Delivery Cost;

(d)

any change to a Monitoring Point;

(e)

whether a Funding Request is a Compliant Funding Request; and

(f)

any other matter, circumstance or thing under this Agreement or any other Sponsor Document reserved to the Sponsors or otherwise as the Crown and Auckland Council agree in writing from time to time;

Sponsor Documents means: (a)

this Agreement;

(b)

the Project Delivery Agreement;

(c)

the Transfer Agreement;

(d)

Settlement Agreement;

(e)

the CRLL Constitution; and

(f)

any other document that the Sponsors are party to in respect of the CRL Project,

and Sponsor Document means each or any one of them as the context requires; Sponsor Forum means the forum of representatives from both the Sponsors, as provided for in accordance with clause 7.2;

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means the single lead representative of the Sponsors, chosen from among the Joint Sponsor Team and appointed in accordance with Schedule 2 (Part B); Stage 1 Works Costs means: (a)

in relation to the Early Works Agreements: (i)

amounts paid by or on behalf of Auckland Transport on account of the initial contract price of each contract recorded as at the date of execution of such contracts and such additional amounts payable to the contractor under and in accordance with the relevant contract as agreed by the Crown (acting reasonably); and

(ii)

amounts paid by or on behalf of Auckland Transport in respect of any scope variation to such contracts as may be agreed by the Crown (acting reasonably) from time to time,

in each case to the extent such contract price, costs or amounts that can be demonstrated to the Crown (acting reasonably) relate directly to the CRL Project; and (b)

in relation to the works or services either carried out by, for or on behalf of, Auckland Transport in relation to the CRL Project prior to the Transfer Completion Date, the Costs that can be recognised as an asset and capitalised to the CRL Project and that can be demonstrated to the Crown (acting reasonably) as being directly related to the CRL Project;

(c)

those financing costs, including interest on the Stage 1 Works Costs, incurred

by Auckland Council or Auckland Transport in connection with the CRL Project from (and including) 1 July 2016 to the date that the Crown pays its share of the Stage 1 Works Costs in accordance with the Settlement Agreement; and

(d)

the price (as determined under the Settlement Agreement) payable for the Assets and Transfer Liabilities which are properly attributable to the undertaking and completion of the CRL Project and which are transferred to CRLL pursuant to the Transfer Agreement,

but, notwithstanding any provision of this Agreement, any other Sponsor Document or otherwise, to the contrary, shall exclude any Costs set out in clauses 11.3(a)(ii), 11.3(b) or 11.4; Statutory Assurance Framework means the statutory planning, reporting and assurance framework that applies to CRLL as a company listed in Schedule 4A of the Public Finance Act (under section 45OA(1)(n)) and is set out in Part 4 of the Crown Entities Act, and includes the obligation to produce: 18416836_1

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(a)

the CRLL Statement of Intent;

(b)

the CRLL Statement of Performance Expectations; and

(c)

annual report, including financial statements;

Total Available Funding means

(inclusive of the Stage 1 Works Costs);

Transfer Completion has th Agreement; Transfer Completion Date Transfer Agreement; and

Date

Transfer Liabilities has the same meaning Agreement.

1.2

Interpretation and construction In this Agreement, unless the context otherwise requires: (a)

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

(b)

words importing: (i)

the singular includes the plural and vice versa; and

(ii)

any gender includes the other gender;

(c)

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

(d)

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

(e)

a reference to: (i)

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a person includes: (A)

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

(B)

its legal personal representatives, successors and permitted assigns;

7

(ii)

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

which ceases to exist; or

(B)

whose powers or functions are transferred to another body,

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

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

(iv)

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

(v)

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

(vi)

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

(vii)

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

(viii)

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

(ix)

time is to local time in New Zealand;

(x)

(f)

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rence to the lawful currency of New Zealand;

(xi)

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

(xii)

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

(xiii)

a month is to a calendar month;

the term including

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(g)

the mea number of possibilities;

(h)

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

(i)

save to the extent expressly provided for, no term of the Agreement constitutes a stipulation for the benefit of any person who is not a party to the Agreement; and

(j)

no rule of construction applies to the disadvantage of a Sponsor because that Sponsor was responsible for the preparation of this Agreement or any part of it.

2

HEADS OF AGREEMENT

2.1

Termination of Heads of Agreement (a)

On the Execution Date, the Heads of Agreement is terminated.

(b)

Neither Sponsor shall:

(c)

2.2

l of a

(i)

have any liability to the other under or in connection with the Heads of Agreement; and/or

(ii)

be entitled to bring any claim against the other party under or in connection with the Heads of Agreement.

Nothing in clauses 2.1(a) or 2.1(b) affects the provisions of clauses 11.1 or 12.1(c).

Deemed approval To the extent that any matter required the consent or approval of the Sponsors under clause 3.2(a)(iii) of the Heads of Agreement prior to the termination of the Heads of Agreement under clause 2.1(a), each Sponsor agrees that at the Execution Date that Sponsor is deemed to have given such consent or approval (whether or not it was given under the Heads of Agreement).

3 3.1

IVES Sponsors Objectives (a)

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The Sponsors have agreed to fund the CRL Project in accordance with this Agreement and the other Sponsor Documents.

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(b)

3.2

The Sponsors also wish this Agreement to record their intention to work together in respect of policy objectives beyond the scope of the CRL Project under the Project Delivery Agreement (as at the Execution Date). The Sponsors shall discuss and endeavour to agree the means by which these policy objectives shall be achieved in accordance with the procedure outlined for the same in Schedule 6.

Structure of the CRL Project (a)

The Sponsors have agreed to work together as joint sponsors.

(b)

The Sponsors will fund CRLL to manage, deliver and complete the CRL Project in accordance with this Agreement and the other Sponsor Documents.

(c)

CRLL will be subject to a framework of Sponsor assurance, through which the Sponsors will assure themselves that CRLL will manage, deliver and complete the CRL Project in accordance with the requirements of the Project Delivery Agreement. CRLL is also required to comply with the Statutory Assurance Framework.

4 4.1

DECISIONS

RELATIONSHIP

Sponsors (a)

The Sponsors agree that, except where this Agreement or any other Sponsor Document provides to the contrary, the agreement between, approval or consent of or direction, waiver or decision by the Sponsors in respect of each or any Sponsor Approval Matter shall require the unanimous agreement between, approval or consent of or direction, waiver or decision by the Sponsors in writing.

(b)

Except where this Agreement or any other Sponsor Document provides to the contrary, in respect of each Sponsor Approval Matter each Sponsor shall be entitled to make their own decisions in respect of that Sponsor Approval Matter independently and at their own discretion. The Sponsors shall communicate their own decisions in respect of each Sponsor Approval Matter through the Sponsor Forum.

(c)

All Sponsor Approval Matters that are to be communicated to CRLL (including as required under the Project Delivery Agreement) shall be communicated to CRLL differences of opinion, approach or otherwise between them being resolved under this Agreement and, so far as is practicable, not communicated or made visible to CRLL.

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(d)

4.2

Without prejudice to any specific timeframe in this Agreement or other Sponsor Document, neither Sponsor shall unreasonably delay in giving its decision in respect of a Sponsor Approval Matter.

Relationship between the Sponsors (a)

Each Sponsor agrees that, except where this Agreement or any other Sponsor Document provides to the contrary: (i)

(ii)

4.3

it shall promote the following relationship behaviours in all its dealings with the other Sponsor in connection with the CRL Project: (A)

the establishment of a relationship based on mutual trust and equality;

(B)

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

(C)

non-adversarial dealings and constructive problem solving approaches; and

(D)

working co-operatively and helpfully to facilitate the other Sponsor to perform its role; and

it shall act in good faith towards the other Sponsor in all of its dealings pursuant to this Agreement and the other Sponsor Documents.

(b)

The Sponsors agree that they shall not take any action or require CRLL to take any action which would result in CRLL (including any member of the CRLL Board) contravening the CRLL Constitution or any Laws.

(c)

Each Sponsor shall commit and make available such resources and level of expertise as appropriate to exercise its rights, and comply with its obligations, under this Agreement and each other Sponsor Document in a timely manner and to facilitate the exercise and compliance by CRLL and the other Sponsor of their respective rights and obligations under the Sponsor Documents.

Disclosure of information Neither Sponsor warrants that any information or data provided by it to the other Sponsor is correct, complete or adequate as concerns its subject matter and such Sponsor shall not be responsible to the receiving Sponsor for any error, incompleteness or inaccuracy in such information or data.

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4.4

4.5

(a)

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

(b)

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

No obligation to influence Each Sponsor expressly acknowledges and agrees that the other Sponsor is not obliged, in performing any of its respective duties and obligations under this Agreement or any other Sponsor Document, to exercise a power, function or duty that is granted to or within the responsibility of any other Governmental Entity, or to influence, over-ride or direct any Governmental Entity in the proper exercise and performance of its legal duties and functions.

5

ESTABLISHMENT OF CRLL

5.1

Incorporation The Sponsors have incorporated CRLL as a limited liability company for the purpose of managing, delivering and completing the CRL Project.

5.2

Shareholder actions for establishment of CRLL The Sponsors shall exercise their rights and powers as shareholders to:

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(a)

provide all shareholder approvals necessary to revoke the existing CRLL Constitution and adopt a constitution in the form attached as Schedule 8;

(b)

provide all shareholder approvals necessary in relation to the issue of further Shares in relation to each tranche of funding approved by the Sponsors in accordance with the Project Delivery Agreement, the Settlement Agreement and the CRLL Constitution;

(c)

appoint directors to the CRLL Board in accordance with the CRLL Constitution; and

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(d)

approve the remuneration of directors of CRLL in accordance with the CRLL Constitution.

6

DELIVERY OF THE CRL PROJECT

6.1

Delivery of the CRL Project Each Sponsor agrees that: (a)

(b)

6.2

CRLL will be required to manage, deliver and complete the CRL Project in accordance with: (i)

the Project Delivery Agreement;

(ii)

the Statutory Assurance Framework, including duty to both Sponsors to act consistently with its objectives, functions, current CRLL Statement of Intent and current CRLL Statement of Performance Expectations (as set out in sections 92 and 94(1) of the Crown Entities Act, and applied by s45O(1)(f) of the Public Finance Act); and

(iii)

the CRLL Constitution; and

subject to the provisions of the Sponsor Documents, control and assurance (whether arising from the Project Delivery Agreement, the Statutory Assurance Framework, or the CRLL Constitution) will be exercised jointly by the Sponsors.

Implementation of Statutory Assurance Framework The Sponsors will implement the Statutory Assurance Framework in accordance with the process and principles set out in Schedule 5.

6.3

Exercise of powers and rights as shareholders The Sponsors agree that they shall comply with the provisions of Schedule 7 when jointly exercising their powers and rights as shareholders of CRLL.

6.4

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Optimisation projects and additional tasks (a)

The Sponsors may, at any time, consider matters related to the CRL Project or in connection with this Agreement which are outside the scope of the CRL Project.

(b)

Where the Sponsors agree that CRLL is to undertake any such matter as an additional task they shall so notify CRLL, and comply with their obligations, under clause 4.10 of the Project Delivery Agreement.

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7

SPONSOR REPRESENTATION

7.1

Minister of Transport and the Mayor of Auckland to meet The Minister of Transport and the Mayor of Auckland may meet from time to time for high-level discussion and collaboration regarding the CRL Project.

7.2

7.3

Sponsor Forum (a)

The Sponsors have agreed to establish, from the Execution Date, the Sponsor Forum. The Sponsor Forum shall remain in effect until obligations and liabilities under or in connection with this Agreement and each other Sponsor Document have been fully performed and satisfied.

(b)

The Sponsor Forum shall be organised, and shall operate and manage its proceedings, in accordance with Schedule 2 (Part A) of this Agreement.

Joint Sponsor Team and (a)

On the Execution Date and in accordance with Schedule 2 (Part B), the Sponsors shall establish the Joint Sponsor Team and appoint the Representative.

(b)

The Joint Sponsor Team shall operate and manage its proceedings in accordance with Schedule 2 (Part B) of this Agreement and the terms of reference, processes and procedures agreed by the Sponsors pursuant to Schedule 2 (Part B).

(c)

The shall be the primary point of contact between the Sponsors and CRLL for all purposes related to this Agreement and the Project Delivery Agreement, subject to the provisions of Schedules 2 and 5 and any other restrictions notified to CRLL by the Sponsors.

(d)

shall not have the authority to bind the Sponsors the Project Delivery Agreement.

Representative shall communicate to CRLL the decisions (including consents and approvals and in respect of the Sponsor Approval Matters) made or determined by Sponsors in accordance with this Agreement, and such decisions shall be binding upon the Sponsors.

7.4

Assurance Manager (a)

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The Sponsors shall appoint an Assurance Manager to act on their behalf for the purposes and in the manner set out in the Project Delivery Agreement. The Assurance Manager shall be appointed to provide one or more professional

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disciplines relevant to the successful delivery of the CRL Project.

Assurance Manager shall owe a duty of care to both Sponsors.

The

(b)

The Sponsors agree that the appointment of such initial representative shall take place promptly after the Execution Date. The Sponsors shall notify CRLL of the appointment of the Assurance Manager, including any replacement, and the scope and terms of that appointment, to the extent relevant to CRLL.

(c)

The Sponsors shall agree to the scope and term of engagement, including in respect of the fees payable to such Assurance Manager. The Sponsors shall each pay half the costs and other amounts payable to the Assurance Manager, in each case to their own account. No cost or amount payable to the Assurance Manager shall be part of or taken into account with respect to either Funding Amount or the Total Available Funding.

(d)

Where the Sponsors agree to terminate the appointment of the Assurance Manager or the appointment otherwise ends, the Sponsors shall jointly appoint a replacement Assurance Manager as soon as reasonably practicable following such termination or resignation. The provisions of clauses 7.4(a), 7.4(b) and 7.4(c) shall apply to the appointment of any such replacement, save that the appointment shall occur promptly after the date the current appointment terminates or otherwise ends.

(e)

The Assurance Manager shall not, unless otherwise expressly set out in the Assurance Manager , have any authority to: (i)

bind either or both of the Sponsors;

(ii)

issue instructions or approvals to CRLL;

(iii)

rights or powers under the Project Delivery Agreement; or

(iv)

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otherwise act in a manner which prejudices the rights of either Sponsor under the Sponsor Documents.

PDA ASSURANCE PROCESS (a)

The Sponsors have established the PDA Assurance Process as a method of providing assurance to themselves that the CRL Project is being delivered in accordance with the Project Delivery Agreement Requirements).

(b)

Subject to clause 7.3(c), the Sponsors agree that the PDA Assurance Process will be managed by the Joint Sponsor Team.

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(c)

9

ULTIMATE OWNERSHIP AND OPERATION OF CRL (a)

The Sponsors acknowledge that, pursuant to clause 4.11(a) of the Project Delivery Agreement, they must provide a Post-Completion Notice to CRLL by no later than the date of award of the Work Package C3 and C7 contracts.

(b)

In order to meet the requirements described in clause 9(a), the Sponsors shall, by no later than 1 August 2017 or such later date as the Sponsors may agree, meet to commence discussions in relation to determining the requirements in respect of the ownership and ongoing operation of the Completed CRL Assets including:

(c)

10

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Each Sponsors shall comply with the requirements of the Project Delivery Agreement, including in Schedule 4, in respect of the PDA Assurance Process.

(i)

the ultimate ownership and operation of the Completed CRL Assets including the matters set out in clause 4.11(a)(i)-(vi) of the Project Delivery Agreement; and

(ii)

the default position that is to apply in the event that the Sponsors cannot reach agreement as to the matters set out in clause 9(b)(i) by no later than the date of award of the Work Package C3 and C7 contracts, in order that a Post-Completion Notice is able to be provided to CRLL as required under and in accordance with clause 4.11(a) of the Project Delivery Agreement.

The Sponsors acknowledge that the Ministry of Transport is leading a policy review of the metro rail operating model in New Zealand. The Sponsors shall, in considering matters associated with the ownership and ongoing operation of the Completed CRL Assets, take into account the outcomes of such review.

CHANGES (a)

Where a Sponsor wishes to propose a Change, it shall notify the other Sponsor with reasonable details for the other Sponsor to consider the Change (including to consider whether to notify CRLL pursuant to paragraph 1 of Schedule 9 of the Project Delivery Agreement).

(b)

The Sponsors agree that they shall not require CRLL to implement a Change unless and until the Sponsors agree to that Change and the terms of that Change (including as set out in an Initial Change Appraisal or Change Appraisal) and any consequential changes required to this Agreement and any other Sponsor Document.

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11

FUNDING ARRANGEMENTS

11.1

Auckland Council Initial Funding The Crown acknowledges that, pursuant to the provisions of the Settlement Agreement, Auckland Council will provide interim funding to CRLL during July 2017 until the date that the funding conditions precedent under clause 7.1(d) of the Project Delivery Agreement have been satisfied or waived by the Sponsors.

11.2

Agreement to Fund (a)

Subject to clauses 11.2(c), 11.2(d), 11.3 and 11.4, the Sponsors agree to fund CRLL in equal amounts up to the Total Available Funding, subject to the provisions of this Agreement and each other Sponsor Document.

(b)

The mechanics and process under which funding is to be provided shall be as set out in Schedules 10 and 11 of the Project Delivery Agreement, or as otherwise agreed by the Sponsors.

(c)

Each Sponsor agrees that the Crown shall not have any obligation nor commitment to fund CRLL unless and until the conditions set out in clause 7.1(d) of the Project Delivery Agreement have been satisfied to the satisfaction of the Crown.

(d)

Subject to clauses 11.2(c), each Sponsor agrees that neither Sponsor shall have any obligation nor commitment to fund CRLL: (i)

until both the Project Delivery Agreement and the Transfer Agreement have become unconditional in accordance with their terms;

(ii)

to the extent that Sponsor is being asked to fund CRLL in an amount that, when added together with: (A)

any previous amount funded by that Sponsor to CRLL under the Project Delivery Agreement; and

(B)

an amount equal to the Stage 1 Works Costs which are Amount,

would result in an amount payable by that Sponsor which is greater than its Funding Amount (but not including any amounts which a NonDefaulting Sponsor elects to fund pursuant to paragraph 5(c) of Schedule 10 to the Project Delivery Agreement); or (iii)

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an amount unless and until the requirements imposed on CRLL in Schedules 10 and 11 of the Project Delivery Agreement in respect of 17

that amount have been satisfied or remedied in accordance with that Schedule or, where not satisfied or remedied, waived by agreement of the Sponsors (including pursuant to paragraph 4(e)(i) of Schedule 10 of the Project Delivery Agreement).

11.3

Extent of Crown Funding for Stage 1 Works Costs (a)

Subject to clauses 11.3(b) and 11.4, the Crown shall reimburse to Auckland Council fifty percent (50%) of the Stage 1 Works Costs as further particularised in the Settlement Agreement. To the extent that any such payment made by the Crown: (i)

does not reimburse Auckland Council for fifty percent (50%) of all Stage 1 Works Costs, subject to clause 11.3(b) and 11.4 any amount paid shall represent a partial and not a complete discharge of such obligation; or

(ii)

is in respect of any Costs incurred by, or on behalf of, either Auckland Transport or Auckland Council that is not a Stage 1 Works Cost (as may Council), Auckland Council shall reimburse that amount (with interest) to the Crown and such amount (including interest) shall not be part of or taken into account with respect to either Funding Amount or the Total Available Funding.

(b)

Notwithstanding clause 11.3(a), the Crown is not obliged to fund and for the purpose of this Agreement and each other Sponsor Document the Stage 1 Works Costs shall exclude: (i)

any financing costs (including interest on the Stage 1 Works Costs incurred by Auckland Council or Auckland Transport) in connection with the CRL Project up until 30 June 2016; nor

(ii)

any Stage 1 Works Costs to the extent they arise out of or in connection with any breach, delay, negligence or act or prevention on the part of Auckland Council or Auckland Transport,

and such amounts shall be paid by, and shall be to the sole account of, Auckland Council and shall not be part of or taken into account with respect to either Funding Amount or the Total Available Funding.

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SPONSORS AGREEMENT

18

11.4

Auckland Council Costs Notwithstanding any provision to the contrary whether in this Agreement (including clause 4.3), any Sponsor Document or otherwise: (a)

all financing costs (including interest on the Stage 1 Works Costs incurred by Auckland Council or Auckland Transport in connection with the CRL Project up until 30 June 2016);

(b)

any Cost to the extent it arises out of or in connection with:

(c)

(i)

any breach, delay, negligence or act or prevention on the part of Auckland Council or Auckland Transport prior to the Transfer Date;

(ii)

Auckland Council or Auckland Transport (as applicable) not at Transfer Completion being the absolute legal and beneficial owner of each Asset and/or not having full capacity and power to own, lease and operate such Assets and to transfer them to CRLL on Transfer Completion;

(iii)

Auckland Council and Auckland Transport not having transferred to CRLL (or holding beneficially for CRLL) all assets, contracts, arrangements, property (real and personal), rights and interests whatsoever and howsoever held in relation to the CRL Project;

(iv)

there being Encumbrances over or affecting any Asset at Transfer Completion (other than those disclosed in the Transfer Agreement); and

(v)

there being pending or threatened Proceedings affecting the Assets or the Employees (as defined in the Transfer Agreement) or affecting the Project), in respect of which verbal or written communication was given or received by Auckland Council or Auckland Transport prior to Transfer Completion, or facts or circumstances as at Transfer Completion which may have given rise to any Proceedings; and

where clause 11.7(c) applies, any Costs associated with strengthening works for the Bledisloe carpark and Britomart for above ground development purposes,

shall be paid by, and shall be to the sole account of, Auckland Council and shall not be part of or taken into account with respect to either Funding Amount or the Total Available Funding.

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SPONSORS AGREEMENT

19

Auckland Council acknowledges and agrees, for the purposes of the Contracts (Privity) Act 1982, the provisions of this clause 11.4 (and paragraph 3.3(c) of Schedule 4) are intended to confer a benefit on, and be enforceable by, CRLL. 11.5

Several liability The obligations of each Sponsor under this Agreement and each Sponsor Document are several and not joint and several. Accordingly, each of the Sponsors remains solely liable for its Funding Amount and the performance of its other obligations under this Agreement and each Sponsor Document.

11.6

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Failure to fund (a)

The procedure set out in Schedule 1 shall apply in the event of a Funding Failure by either Sponsor.

(b)

The Sponsors acknowledge and agree that while any Funding Failure is subsisting: (i)

notwithstanding clause 4.1(a), the Non-Defaulting Sponsor shall, at its sole discretion, exercise the right of both Sponsors to give any agreement, approval, consent, direction, waiver or decision with respect to the Sponsor Approval Matters (provided that such agreement, approval, consent, direction, waiver or decision does not commit the Defaulting Sponsor beyond its Funding Amount) and the exercise of such right by the Non-Defaulting Sponsor shall be deemed to be the unanimous agreement between, approval or consent of, or direction, waiver or decision by the Sponsors with respect to such Sponsor Approval Matters;

(ii)

the Defaulting Sponsor shall be solely responsible for paying all costs, losses and expenses incurred by CRLL as a result of such Funding Failure. A Funding Failure shall be deemed not to have been remedied until all amounts due and payable (including such amounts of interest) are paid;

(iii)

no amount payable under 11.6(b)(i) shall operate as a reduction in or contribution to the Defaulting or to reduce or contribute to the Total Available Funding; and

(iv)

neither Sponsor shall be relieved of its obligations under the Sponsor Documents, including its on-going obligations to make available its Funding Amount in the amounts and at the times set out in the Project Delivery Agreement.

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20

11.7

Bledisloe Carpark and Britomart strengthening works (a)

The Sponsors agree to meet after the Execution Date for the purposes of discussing a process that is to apply to determine the extent to which any strengthening works that CRLL (as at the date of the Project Delivery Agreement) is being required to perform for the Bledisloe carpark and/or Britomart are for remedial purposes or are for improvement of ground condition beyond its original condition. The Sponsors agree that they may need to jointly appoint a third party to provide this determination. In such circumstances, the Sponsors shall each pay half the costs and other amounts payable to that third party, in each case to their own account. No cost or amount payable shall be part of or taken into account with respect to either Funding Amount or the Total Available Funding.

(b)

Where it is determined, pursuant to the processes in clause 11.7(a) that CRLL (as at the date of the Project Delivery Agreement) is required to perform strengthening works for the Bledisloe carpark and/or Britomart for remediation purposes, the costs of such works must be accepted by the Sponsors as project costs and funded jointly.

(c)

Auckland Council must solely fund the proportion of costs of strengthening works on the sites which contributes to improvement of ground condition beyond its original condition.

12

TRANSFER OF ASSETS TO CRLL

12.1

Agreement to transfer

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(a)

Each Sponsor agrees to observe and perform all their respective obligations in connection with the transfer of land, other real property and assets under the Transfer Agreement and Settlement Agreement.

(b)

Subject to Laws (including any statutory provisions regarding railways and roads), Auckland Council shall procure that all Initial CRL Project Assets held by Auckland Council and/or Auckland Transport shall be transferred to CRLL or beneficially held for CRLL.

(c)

Auckland Council shall procure that either Auckland Council or Auckland Transport, as the case may be, shall provide CRLL with the leases and licenses set out in the Transfer Agreement. To the extent not transferred under the Transfer Agreement, Auckland Council shall comply with its obligations under clause 4.6 of the Heads of Agreement.

(d)

Neither Sponsor shall sell, transfer, assign, charge or otherwise dispose of any interest it may have in any land it holds that may be required for the purposes

SPONSORS AGREEMENT

21

of the CRL Project (including any land adjacent and/or interfacing with the route of the CRL Project) nor agree to do any of such things without first obtaining the prior written consent of the other Sponsor under this Agreement, and Auckland Council shall procure that Auckland Transport does the same.

13

ADVERSE EVENTS AND MONITORING POINTS

13.1

Occurrence of an Adverse Event The Sponsors agree that, as soon as practicable after: (a)

receiving an Adverse Event Notice from CRLL pursuant to clause 16.1 of the Project Delivery Agreement; or

(b)

either Sponsor notifying the other Sponsor that it considers that an Adverse Event has occurred or is likely to occur (as contemplated by clause 16.1(c) of the Project Delivery Agreement),

the Sponsors shall discuss and agree the effect and consequences of such notice and decide the matters and actions to be taken (if any) under the Project Delivery Agreement.

14

CRLL DEFAULT

14.1

CRLL Default Event Following the occurrence of a CRLL Default Event, the Sponsors shall consider the impact of such CRLL Default Event and take such action (if any) as the Sponsors may agree.

15

INTELLECTUAL PROPERTY

15.1

Background Intellectual Property

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(a)

As between the Sponsors, all Intellectual Property created or developed by either Sponsor prior to the Execution Date, in respect of, or in connection with, this Agreement or the CRL Project (Existing Sponsor Intellectual Property) shall remain the property of the Sponsor who created or developed such Existing Sponsor Intellectual Property.

(b)

Each Sponsor shall be entitled to require that the other Sponsor grant, or procure the grant of, a non-exclusive, irrevocable, royalty-free licence to use Sponsor Intellectual Property for the purposes of the CRL Project (subject to such reasonable conditions as may be determined

SPONSORS AGREEMENT

22

by the granting Sponsor) to the extent that the other Sponsor or its Affiliate holding the rights to the relevant Existing Sponsor Intellectual Property is entitled to license that Existing Sponsor Intellectual Property and that such licence is necessary or desirable for the requesting Sponsor to carry out its obligations under this Agreement or any other Sponsor Document to which it is a party.

15.2

CRLL Intellectual Property As between the Sponsors, all Intellectual Property created or developed by either Sponsor on or after the Execution Date, in respect of, or in connection with, this Agreement or the Project (CRLL Intellectual Property) shall be jointly owned by the Sponsors.

16

DISPUTES (a)

Disputes shall be resolved in accordance with Schedule 4.

(b)

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

17

MISCELLANEOUS

17.1

Precedence of documentation

17.2

(a)

In the event of any conflict, inconsistency or discrepancy between this Agreement, the Project Delivery Agreement and any other Sponsor Document, this Agreement shall take priority.

(b)

Where the Sponsors become aware of any such conflict, inconsistency or discrepancy, they shall work together for the purposes of agreeing to, and effecting, the amendments required to the relevant document to the extent necessary to remedy such conflict, inconsistency or discrepancy.

Confidential Information (a)

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Each Sponsor must: (i)

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

(ii)

subject to clause 17.2(b), keep the Confidential Information of the other Sponsor confidential and not disclose it or allow it to be

SPONSORS AGREEMENT

23

disclosed to any third party except with the prior written approval of the other Sponsor. (b)

17.3

(i)

any disclosure reasonably required by either Sponsor for the performance of its obligations under this Agreement or any other Sponsor Document, provided that the relevant Sponsor procures that any party to whom it discloses is subject to the same confidentiality obligations contained in this clause 17.2 in all material respects;

(ii)

any disclosure reasonably made by either Sponsor to those of its employees or officers who have a need to know such Confidential Information for the purposes of this Agreement or any other Sponsor Document or otherwise for the proper performance of their duties, provided that the Sponsor must ensure that the proposed recipient is made aware of and will comply with the terms of this clause 17.2;

(iii)

any disclosure reasonably made by either Sponsor to any Government Entity in respect of the CRL Project, who has a need to know that Confidential Information for the purposes of this Agreement or any other Sponsor Document, provided that the Sponsor must ensure that the proposed recipient is made aware of and will comply with the terms of this clause 17.2;

(iv)

any information which a Sponsor can demonstrate is already generally available in the public domain (except to the extent of a breach of this Agreement or any other obligation of confidence);

(v)

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

(vi)

disclosure of any information which is required by the legally binding requirements of any applicable Laws, order of court, tribunal, authority, governmental or regulatory body;

(vii)

disclosure of any information that is authorised by this Agreement; and

(viii)

disclosure of any information with the prior written consent of the other Sponsor.

Official Information Legislation (a)

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The confidentiality obligations of each Sponsor shall not apply to:

Each Sponsor acknowledges that the other Sponsor is subject to Official Information Legislation and that the other Sponsor is obliged to disclose

SPONSORS AGREEMENT

24

information, including Confidential Information, under the Official Information Legislation if so requested unless there is a good reason under the terms of the relevant legislation to withhold that information. Each Sponsor shall use reasonable endeavours to advise the other Sponsor of any request received by it under the Official Information Legislation that relates to Confidential Information of the other Sponsor. (b)

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Each Sponsor acknowledges and accepts that there may be good reasons for it to withhold Confidential Information, because making the information available may (without limitation): (i)

be likely to unreasonably prejudice the commercial position of a Sponsor, or another person (such as a contractor) who supplied or who is the subject of the information;

(ii)

be necessary to protect information that is subject to an obligation of confidence (for example, under this Agreement or another Sponsor Document) and making the information available may damage the public interest (for example, by prejudicing the financial or negotiating position of the Sponsors);

(iii)

be necessary to enable the Sponsors to carry out commercial activities, or negotiations; or

(iv)

be necessary to prevent the disclosure or use of official information for improper gain or improper advantage.

(c)

Subject to clause 17.3(d), each Sponsor shall use reasonable endeavours to advise the other Sponsor of any request received by it under the Official Information Legislation that relates to Confidential Information of the other Sponsor.

(d)

Each Sponsor is exclusively responsible for complying with its own obligations under the Official Information Legislation and will determine, in its own discretion, how it will respond to a request for information made under that legislation.

(e)

For the avoidance of doubt, a disclosure of Confidential Information made by either Sponsor (or by any person that a Sponsor has disclosed Confidential Information to pursuant to clause 17.2(b)) in accordance with the Official Information Legislation will not constitute a breach by that Sponsor of clause 17.2.

SPONSORS AGREEMENT

25

17.4

Announcements Except as required by Law or by governmental or other regulatory or supervisory body or authority of competent jurisdiction, public announcements relating to the progress of or any other aspect of the CRL Project shall be governed by such public relations strategy as shall from time to time be implemented by the Sponsors and otherwise shall take account of the Communications Strategy to be developed under the Project Delivery Agreement.

17.5

17.6

Branding (a)

Any promotion, branding or other publication or public statement in relation to the CRL Project shall reflect the role of the Crown and Auckland Council as the sponsors (in a form approved by the Sponsors).

(b)

The Sponsors shall endeavour to agree to the branding to be used in respect of the Project to collectively identify and promote each of the Sponsors to third parties.

Sponsor Reputation Each Sponsor undertakes not to act, in respect of the CRL Project, in such a manner as will bring the name of the other Sponsor into disrepute.

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SPONSORS AGREEMENT

26

17.8

17.9

No partnership or agency (a)

Nothing in this Agreement or any other Sponsor Document (or any of the arrangements contemplated by any of them) is or shall be deemed to constitute a partnership or any other similar type of association between the Sponsors and nothing in this Agreement or any other Sponsor Document (or any of the arrangements contemplated by any of them) shall make either Sponsor the agent of the other Sponsor for any purpose.

(b)

Unless the Sponsors agree otherwise in writing, no Sponsor shall: (i)

enter into any contracts or commitments as agent for the other Sponsor; or

(ii)

describe itself as such an agent or in any way hold itself out as being such an agent.

Waiver (a)

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

(b)

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

17.10 Invalidity

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(a)

If any provision of this Agreement is or becomes (whether or not pursuant to any judgment or otherwise) invalid, illegal or unenforceable in any respect under the law of any jurisdiction, the validity, legality and enforceability under the law of that jurisdiction of any other provision shall not be affected or impaired in any way thereby.

(b)

The Sponsors shall meet to negotiate in good faith to agree a valid, binding and enforceable substitute provision or provisions, (if necessary with reconsideration of other terms of this Agreement not so affected) so as to reestablish an appropriate balance of the commercial interests of the Sponsors.

SPONSORS AGREEMENT

27

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

17.12 Counterparts This Agreement may be executed in one or more counterparts each of which shall be deemed an original and all of which shall be deemed one and the same Agreement.

17.13 Notices (a)

Any notice or other communication to be given under this Agreement: (i)

must be in writing; and

(ii)

must be addressed to the recipient at the relevant address nominated set out below (or as otherwise notified by a Sponsor to the other Sponsor from time to time): The Crown

Auckland Council

Name of Representative:

Peter Mersi

Stephen Town

Position:

Chief Executive Officer

Chief Executive Officer

Address:

Ministry of Transport 318 Lambton Quay PO Box 3175 Wellington 6011

Auckland Council 135 Albert Street Auckland 1010

Chief Legal Advisor

Director Legal and Risk

Email: Copied to:

(iii)

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SPONSORS AGREEMENT

Subject to clause 17.13(a)(iv), a notice or other communication may be effected by hand, by post with postage prepaid, or by email. A notice or other communication is taken to have been received: (A)

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

(B)

if the notice or other communication is posted in a postage paid registered envelope addressed to the receiver, at the time

28

when it would be received in the ordinary course of registered post then prevailing; or (C)

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

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

Any notice to a party under Schedule 4 may be sent by email provided it is also given by hand or by registered post.

17.14 Restriction on right to transfer/assignment Neither Sponsor shall nor shall it purport to assign, transfer, charge or otherwise deal with all or any of its rights and/or obligations under this Agreement or any other Sponsor Document nor grant, declare, create or dispose of any right or interest in this Agreement or other Sponsor Document, without the prior written consent of the other Sponsor.

17.15 Variations No changes, amendments or modifications of the terms or conditions of this Agreement shall be valid unless reduced to writing and signed by both parties.

17.16 Conflict of interest The Sponsors agree to promote the highest standards of ethical business practice, and ensure they each have appropriate policies and processes in place to manage any conflicts of interest of staff, consultants, suppliers, advisers and Delivery Contractors, and other probity risks especially concerning the integrity of procurement processes and accountability for public funds.

17.17 Privity Subject to clause 11.4, nothing in this Agreement is intended to, or does, confer any benefits or enforceable rights or interests upon, or makes any representation to, any person other than the contracting parties.

17.18 Legal Costs Each party shall bear its own legal and other costs and expenses relating directly or indirectly to the preparation of, and performance of its obligations under, this

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29

SCHEDULE 1 FUNDING FAILURE 1

PROCEDURE RELATING TO A FUNDING FAILURE

1.1

If a Sponsor (Defaulting Sponsor) fails to pay all or any part of its Funding Amount under a Compliant Funding Request (or under a Non-Compliant Funding Request where the Sponsors have elected to pay the Funding Amount in accordance with paragraph 4(e)(i) of Schedule 10 the Project Delivery Agreement), such amount unpaid by the Defaulting Sponsor is the Outstanding Amount.

1.2

At any time after CRLL has issued a notice to the Sponsors under paragraph 5(a) of Schedule 10 of the Project Delivery Agreement, the Sponsor who is not the Defaulting Sponsor (Non-Defaulting Sponsor) may (but is not obliged to) elect to pay the Outstanding Amount (plus any interest pursuant to paragraph 5(b) of Schedule 10 the Project Delivery Agreement) (the NDS Payment Amount) to CRLL. The Non-Defaulting Sponsor shall give notice to both CRLL and the Defaulting Sponsor of its election to pay the NDS Payment Amount.

1.3

Within 5 Working Days after giving such notice (at its sole discretion) under paragraph 1.2 above, the Non-Defaulting Sponsor will pay the NDS Payment Amount to CRLL and on receipt of such funds CRLL will issue to the Non-Defaulting Sponsor that number of Subscription Shares corresponding to the Outstanding Amount that the Defaulting Sponsor would have received had it paid the NDS Payment Amount, with such shares (Default Shares) to be held by the Non-Defaulting Sponsor in accordance with this Schedule 1.

1.4

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

1.5

Each Sponsor Loan shall:

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(a)

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

(b)

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

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31

1.6

For the avoidance of doubt, the Defaulting Sponsor may repay the Sponsor Loan (plus interest) to the Non-Defaulting Sponsor either before or after a notice of demand is given by the Non-Defaulting Sponsor in accordance with this Schedule 1.

1.7

On:

1.8

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(a)

payment in full of the Outstanding Amount (plus interest) by the Defaulting Sponsor to CRLL (if the Non-Defaulting Sponsor has not by then elected to pay the Outstanding Amount on behalf of the Defaulting Sponsor in accordance with paragraph 5(c) of Schedule 10 of the Project Delivery Agreement), CRLL shall issue Subscription Shares to the Defaulting Sponsor in accordance with paragraph 4(f) of Schedule 10 of the Project Delivery Agreement (and for the avoidance of doubt such Subscription Shares shall only be issued in relation to the Outstanding Amount, and not in relation to any interest paid on that amount); or

(b)

repayment in full of the Sponsor Loan (plus interest) by the Defaulting Sponsor to the Non-Defaulting Sponsor (if the Non-Defaulting Sponsor does elect to pay the Outstanding Amount on behalf of the Defaulting Sponsor in accordance with paragraph 5(c) of Schedule 10 of the Project Delivery Agreement), the Non-Defaulting Sponsor shall execute and deliver to CRLL a share transfer form transferring the Default Shares to the Defaulting Sponsor, and CRLL will register that share transfer form upon receipt and update its share register regarding the share transfer.

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

SPONSORS AGREEMENT

32

SCHEDULE 2

SPONSOR FORUM, JOINT SPONSOR TEAM AND TIVE

PART A SPONSOR FORUM 1

Approach

1.1

Part A of this Schedule outlines: (a)

the process for appointment and removal of members of the Sponsor Forum;

(b)

frequency and procedure of Sponsor Forum meetings;

(c)

matters to be decided by the Sponsor Forum; and

(d)

the process for dispute resolution.

2

Sponsor Forum Members

2.1

Crown and Council shall have equal representation on the Sponsor shall comprise one representative from each Sponsor.

2.2

Each Sponsor must ensure that, through their appointed representative (and any replacement or alternative), they are appropriately represented at the Sponsor Forum and attend all meetings of the Sponsor Forum.

2.3

A Sponsor shall, by written notice to the other Sponsor, be entitled to replace its Sponsor Forum member from time to time.

2.4

Where a Sponsor Forum member is not available that Sponsor should be entitled to appoint an alternative.

3

Sponsors Forum meetings

3.1

The Sponsor Forum shall meet as necessary to:

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Forum, which

(a)

communicate the decisions required of the Sponsors in respect of the Sponsor Approval Matters;

(b)

where the Sponsors cannot reach agreement in respect of a Sponsor Approval and

(c)

discuss any other matter or thing which is referred to the Sponsor Forum or which arises in relation to the CRL Project.

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33

3.2

The Sponsor Forum members may participate in a meeting of the Sponsor Forum in person, or by means of a telephone conference, video or similar communication equipment whereby all persons participating in the meeting can hear each other and such participation shall constitute presence in person.

4

Deadlock of decision making at Sponsor Forum

4.1

If the Sponsor Forum does not reach unanimous agreement in respect of any Sponsor Approval Matter, they shall refer the Dispute in accordance with clause 16 of this Agreement.

PART B - JOINT SPONSOR TEAM 5

Establishment of Joint Sponsor Team

5.1

The Joint Sponsor Team shall be comprised of staff (or third party advisors) allocated by each Sponsor to the CRL Project.

5.2

A Sponsor shall, by written notice to the other Sponsor, be entitled to replace its representatives on the Joint Sponsor Team from time to time.

6

Roles and responsibilities of Joint Sponsor Team

6.1

The Joint Sponsor Team shall ensure that the Sponsors have sufficient information in respect of all Sponsor Approval Matters requiring the agreement between, approval or consent by or decision of the Sponsors from time to time.

6.2

After the Execution Date, the Sponsors shall agree to the:

6.3

(a)

terms of reference that apply to the Joint Sponsor Team; and

(b)

any procedures or processes to apply to the Joint Sponsor Team to facilitate performance of its roles and responsibilities.

The Sponsors may update the terms of reference and such procedures and processes at any time.

7 7.1

The Sponsors shall appoint one of the Joint Sponsor Team members to be the .

7.2

The Sponsors shall notify CRLL in writing of: (a)

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the identity of the

SPONSORS AGREEMENT

from time to time; 34

(b)

any change to the identity of the which that change shall take effect.

and the date from

8

Procedure for meetings of Joint Sponsor Team

8.1

The Joint Sponsor Team shall meet as necessary to perform the roles and responsibilities of the Joint Sponsor Team and shall ensure that they meet at least once every month and shall comply with the terms of reference and any processes and procedures that apply to them from time to time.

8.2

The Joint Sponsor Team members may participate in a Joint Sponsor Team meeting by means of a telephone conference, video or similar communication equipment whereby all persons participating in the meeting can hear each other and such participation shall constitute presence in person.

8.3

The Joint Sponsor Team shall be free to determine its own processes and procedures (provided that such processes and procedures are not inconsistent with the roles and responsibilities set out in this Schedule or the terms of reference, processes and procedures that the Sponsors have otherwise agreed are to apply to the Joint Sponsor Team from time to time).

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35

SCHEDULE 3 NOT USED

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36

SCHEDULE 4 DISPUTE RESOLUTION PROCEDURE 1

DISPUTE RESOLUTION PROCEDURE

1.1

Aim The aim of the Dispute Resolution Procedure in this Agreement is to enable the Sponsors to resolve any Dispute that arises between them.

1.2

Referral of Disputes Notwithstanding clause 16(b), either Sponsor may refer any Dispute for resolution in accordance with this Schedule by written notice to the other Sponsor setting out the nature of the Dispute.

Where the Dispute concerns any matter other than a failure of the Sponsors to reach unanimous agreement in respect of any agreement, approval, consent, direction, waiver or decision required in relation to a Sponsor Approval Matter, the Sponsors shall endeavour to resolve that Dispute through the Sponsor Forum. Where the Sponsor Forum has not resolved that Dispute within 10 Working Days of the referral of that Dispute by a Sponsor to the Sponsor Forum, the Dispute shall be referred to the First Tier under clause 1.3 below.

Where the Dispute is in respect of a failure of the Sponsors to reach unanimous agreement in respect of any agreement, approval, consent, direction, waiver or decision required in relation to a Sponsor Approval Matter, the Dispute shall be referred to the First Tier under clause 1.3 below.

1.3

First Tier Dispute Resolution Each Dispute shall be referred to the Chief Executive Officer of Auckland Council and the Chief Executive Officer of the Ministry of Transport who shall meet within 10 Working Days to attempt in good faith to resolve the Dispute.

1.4

Second Tier Dispute Resolution If the Dispute is not resolved within the time period set out in clause 1.3 above (or such longer period as the Sponsors may agree) of such Dispute being referred to such representatives then either Sponsor may refer the Dispute to the Minister of Transport and the Mayor of Auckland. Those persons shall meet to discuss the Dispute as soon as practicable and shall use all reasonable endeavours to resolve the dispute.

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37

2

CONSULTATION RIGHTS

2.1

Consultations with Other Persons At each tier of the dispute resolution process, the Sponsors may agree to consult with, and seek an opinion or recommendations from, any suitably qualified person (including a third party expert). However, the Sponsors shall not be bound by any decision, opinion or recommendation of such person unless the Sponsors have expressly agreed in writing to be so bound prior to such consultation, opinion or recommendation being sought.

3

OTHER DISPUTE RESOLUTION PROVISIONS

3.1

Obligation to Perform this Agreement Performance of this Agreement shall continue pending resolution of a Dispute unless the Sponsors agree to a suspension or if such continuation is impossible or is prevented on account of the nature of the Dispute.

3.2

No Formal Proceeding Subject to clause 3.3 of this Schedule, each Sponsor agrees and undertakes that it shall not take any formal proceedings or action of any kind (whether through the courts or arbitration) against the other in respect of any claim it might have in relation to this Agreement.

3.3

Proceedings permitted Clause 3.2 of this Schedule does not apply in respect of: (a)

a Funding Failure;

(b)

its share of the Stage 1 Works Costs;

(c)

right to recover any amount from Auckland Council under clause 11.4;

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(d)

any breach by a Sponsor of clause 12;

(e)

any loss or damage suffered or incurred by a Sponsor in connection with the as permitted under this Agreement; or

(f)

any other obligation or liability of a Sponsor to pay an amount (whether to the other Sponsor, CRLL or otherwise) under this Agreement or pursuant to any other Sponsor Document,

SPONSORS AGREEMENT

38

and the Sponsors agree that, in respect of such matters, the relevant Sponsor may commence proceedings or actions of any kind against the other Sponsor in any manner it so desires and whether or not it has complied with the processes in this Schedule 4.

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39

SCHEDULE 5 STATUTORY ASSURANCE FRAMEWORK 1

GENERAL

1.1

In accordance with section 45OA(2) of the Public Finance Act, the Sponsors (being the shareholders of CRLL) agree that Auckland Council, as the minority non-Crown shareholder, will be involved in the process for the preparation, review and amendment of the CRLL Statement of Intent and Statements of Performance Expectations on basis set out in this Schedule.

1.2

The provisions of this Schedule 5 (including paragraph 1.1) are subject always to clauses 4.4 or 4.5 of this Agreement.

2

ACKNOWLEDGEMENT

2.1

The Sponsors agree that the Statutory Assurance Framework requires that CRLL produce, in compliance with part in Part 4 of the Crown Entities Act:

2.2

(a)

Statement of Intent;

(b)

annual Statement of Performance Expectations; and

(c)

annual report, including financial statements.

The Sponsors agree and acknowledge that under sections 92 94 of the Crown Entities Act and section 45OA(1)(f) of the Public Finance Act: (a)

The Board of CRLL must ensure that CRLL acts in a manner consistent with its objectives, functions, current statement of intent and current statement of performance expectations;

(b)

If the Board of CRLL does not comply with its duties under sections 92 and 93 of the Crown Entities Act, subject to section 94 of that Act all or any of the members may be removed from office by the Sponsors.

2.3 statement of intent, and current statement of performance expectations jointly and in accordance with the processes set out in this Agreement and in the Project Delivery Agreement.

3

DECISION-MAKING

3.1

Where the Statutory Assurance Framework requires ministerial decision making, the Sponsors will provide their advice to the Responsible Ministers in accordance with

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40

paragraph 3.2 below and: (a) (b)

3.2

3.3

basis; and consistent with the timeframes imposed on the Responsible Ministers under section 136 to 157A of the Crown Entities Act.

The process for the preparation, review and amendment of CRLL Statement of Intent and Statements of Performance Expectations is as follows. (a)

Each Sponsor shall provide to the other, any information and/or advice that it wishes for the Sponsors to jointly provide to the Responsible Ministers for purposes connected with the Responsible Ministers exercising his or her or their powers under or in connection with in section 136 to 157A of the Crown Entities Act.

(b)

The Sponsors shall seek to agree to the information and/or advice that the Sponsors will provide to the Responsible Ministers.

(c)

In the event the Sponsors are not able to agree the information and/or advice to be provided to the Responsible Ministers, the information and/or advice of both Sponsors will both be provided to the Responsible Ministers.

(d)

Despite information and/or advice provided to the Responsible Ministers or any dispute between the Sponsors as to the information to be provided, the Sponsors acknowledge that the Responsible Ministers will retain discretion to exercise his or her or their powers under or in connection with section 136 to 157A of the Crown Entities Act.

The Crown will develop a protocol, for agreement with Auckland Council, to apply in relation to: (a)

the Sponsors engaging with the Responsible Ministers; and

(b)

the Sponsors engaging with CRLL,

regarding the Statutory Assurance Framework.

3.4

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Once the engagement protocol has been agreed, the Sponsors shall comply with this protocol. Unless and until this protocol is agreed, the Sponsors shall ensure that: (a)

the Sponsors the Responsible Ministers is by representative nominated under clause 17.13(a) (or his or her nominee); and

(b)

CRLL occurs between the Representative and the CRLL Representative.

SPONSORS AGREEMENT

41

3.5

The Sponsors will ensure that, if the Project Delivery Agreement is amended, the information provided to the Responsible Ministers properly accounts for that amendment.

3.6

Prior to CRLL drafting its first Statement of Intent, the Sponsors will prepare a letter of expectations to recommend to the Responsible Ministers and Mayor of Auckland to -level expectations in respect of the Statement of Intent, including that CRLL is required to deliver the CRL Project in accordance with the Project Delivery Agreement.

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42

SCHEDULE 6 S 1

WIDER OBJECTIVES

The Sponsors acknowledge and agree that there are wider policy matters associated with the CRL Project in relation to: (a)

optimising the wider benefits of the CRL Project, in relation to commercial and housing development opportunities across the wider Auckland rail network enabled by the CRL Project;

(b)

optimising the planning, funding and operating model of the Auckland rail network with a view to harmonising objectives and incentives, including responsibility for funding and the sharing of costs between the Crown and Auckland Council, across the Auckland road and rail transport networks; and

(c)

considering how any planning for future projects for investment in the Auckland rail network may leverage value uplift from commercial developments and housing development potential.

2

After the Execution Date, the Sponsors shall work together for the purposes of determining how these matters can be jointly considered.

3

The Sponsors acknowledge the work being separately undertaken by the Ministry of Transport and Auckland Council in relation to alternative funding sources (including value capture) associated with the development of large transport infrastructure projects. The Sponsors shall, in determining how the policy matters in paragraph 1 can be jointly considered, take into account the outcomes of such work.

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43

SCHEDULE 7 EXERCISE OF SHAREHOLDER RIGHTS AND POWERS

1

SHAREHOLDERS

1.1

Initial shareholding It is acknowledged that, pursuant to the processes set out in the Settlement Agreement, the voting shares held in CRLL will be as follows:

Sponsor

Shareholder

Number and class of Percentage of shares held voting rights

Crown

Minister of Transport

255 Ordinary Shares

25.5%

Minister of Finance

255 Ordinary Shares

25.5%

Auckland Council

490 Ordinary Shares

49%

Auckland Council

2

SHAREHOLDER REPRESENTATIONS

2.1

Each Sponsor, in its capacity as shareholder(s) of CRLL, undertakes to the other Sponsor: (a)

to exercise its shareholder rights consistently with the terms of this Agreement and the Project Delivery Agreement;

(b)

not sell, assign, transfer or otherwise dispose of any CRLL shares other than in accordance with the CRLL Constitution;

(c)

to ensure that CRLL does not issue any further CRLL shares to any person other than as permitted under the CRLL Constitution;

(d)

not to create or grant or permit the grant over or in respect of the CRLL shares of any mortgage, charge (fixed or floating), pledge, lien, hypothecation, guarantee, trust, right of set-off or other third party right or interest (legal or equitable) including any assignment by way of security, reservation of title or other security interest of any kind, howsoever created or arising, or any other agreement or arrangement (including a sale and repurchase agreement) having similar effect;

(e)

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44

2.2

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(f)

to enter into and comply in all material respects with the terms of the Sponsor Documents to which it is a party;

(g)

to the extent reasonably necessary in order to enable CRLL to implement the Project, to exercise and enforce its rights and perform its obligations under the Sponsor Documents to which it is a party;

(h)

not to initiate litigation or take other court or arbitration proceedings or action (and to procure that its Affiliates shall not take any such proceedings or action) against CRLL, its directors or senior management, without the prior written consent of the other Sponsor; and

(i)

without prejudice to the obligations of the directors of CRLL and the CRLL Constitution, not to initiate, propose or consent to any order or proposal to wind up CRLL or other voluntary proceeding seeking liquidation, administration (whether out of court or otherwise), reorganisation, readjustment or other relief under any bankruptcy, insolvency or similar Law or the appointment of a trustee, receiver, administrator (whether out of court or otherwise) or liquidator or similar officer, without the prior written approval of the both Sponsors.

For clarity, paragraph 2 of this Schedule is subject always to clauses 4.4 and 4.5 of this Agreement.

SPONSORS AGREEMENT

45

SCHEDULE 8 CRLL CONSTITUTION

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46

Constitution Under the Companies Act 1993 City Rail Link Limited (the Company)

12239153

Constitution 1.

Defined terms and interpretation

6

1.1 1.2 1.3 1.4 1.5 1.6

Defined terms Interpretation Other definitions have meaning set out in the Act Constitution subject to changes in the Act Use of electronic means Receipt of electronic communications

6 8 9 9 9 9

2.

Capacity and powers

9

2.1 2.2

Rights, powers and duties Full capacity

9 9

3.

Purpose and nature of Company

10

3.1 3.2 3.3 3.4 3.5 3.6

Purpose of Company Statement of Intent Nature of Company Compliance with certain provisions of the Crown Entities Act Application of Crown Entities Act generally Controller and Auditor-General

10 10 10 10 10 10

4.

Issue of Shares

11

4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9

Classes of Shares Issue of Shares No statutory pre-emptive rights Board may make Calls Redeemable Shares Requirements for Board issuing Shares Exceptions to requirements in case of certain Share issues Directors’ certificate on consideration for issue Directors' certificate to be filed

11 12 12 12 12 13 13 13 13

5.

Purchase of own Shares

13

6.

Transfer of Shares

14

6.1 6.2 6.3 6.4 6.5 6.6

Transfer of Shares Signed transfer Form of transfer Board’s right to refuse or delay registration of transfer Board resolutions refusing or delaying Share transfers Registration of transfer

14 14 14 14 14 15

7.

Call on Shares

15

7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9

Board may make Calls Calls to apply equally Notice of Calls Deemed receipt of notice Joint Shareholder liability Unpaid calls to accrue interest Current Shareholder liable No notice to new Shareholder required Agreement to differentiate between Calls

15 15 15 15 15 15 15 15 16

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8.

Distributions

16

8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8

Distributions must satisfy Solvency Test and have prior Shareholder approval Board to sign certificate Dividends payable pari passu Shareholder may waive rights to Dividend Dividends payable other than pari passu Investment of unclaimed Distributions Forfeiture of unclaimed Distributions Financial assistance on acquisition of Shares

16 16 16 16 16 16 16 16

9.

Alteration of Shareholder’s rights

17

9.1

Alteration of Shareholder’s rights

17

10.

Exercise of powers reserved to Shareholders

17

10.1 10.2

Powers reserved to Shareholders Powers exercised by Special Resolution

17 17

11.

Meetings of Shareholders

17

11.1 11.2 11.3 11.4 11.5 11.6 11.7 11.8 11.9 11.10 11.11 11.12 11.13 11.14 11.15 11.16 11.17 11.18 11.19

Annual Meeting Date of meeting Resolution instead of Annual Meeting Special Meetings Resolution in lieu of meeting More than one document Copy of resolution to non-signing Shareholder Chairperson of meetings of Shareholders Shareholders entitled to notice of meeting Date on which entitlement decided Notice of meeting Content of notice Irregularities in notice Accidental omission not to invalidate proceedings Method of holding meeting Adjournments Notice of the adjourned meeting Minutes Shareholder proposals for management review

17 18 18 18 18 18 18 18 18 19 19 19 19 19 19 19 19 19 20

12.

Voting at meetings

20

12.1 12.2 12.3 12.4 12.5 12.6 12.7 12.8 12.9 12.10 12.11 12.12 12.13 12.14

Quorum Lack of quorum Voting at actual meeting Voting at meeting by conference Declaration by chairperson that resolution is carried Demand of a poll Counting of votes on a poll Chairperson not entitled to casting vote Right of proxy to demand a poll Proxies Rights of proxy Appointment of proxy Representatives Postal votes

20 20 20 20 21 21 21 21 21 21 21 21 21 21

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12.15 12.16 12.17 12.18

Votes of joint holders Unpaid amounts Meetings of Interest Groups Other proceedings

22 22 22 22

13.

Appointment and removal

22

13.1 13.2 13.3 13.4 13.5 13.6 13.7 13.8 13.9 13.10 13.11 13.12 13.13 13.14 13.15 13.16

Number of Directors and composition of the Board Appointment of Directors Term of appointment Restrictions on appointment Removal of Directors Tenure of office Resignation Chairperson Shareholding qualification Appointment and removal of Alternate Directors Remuneration of Alternate Director Powers of Alternate Director Alternate Director counted in quorum No right to attend meetings if appointed Director present Termination of appointment of Alternate Director Address of Alternate Director required

22 22 22 22 22 22 23 23 23 23 23 23 24 24 24 24

14.

Indemnity and insurance

24

14.1 14.2 14.3 14.4 14.5 14.6

Types of proceedings that may be indemnified against Types of liability that may be indemnified against Insurance of Directors and employees Directors to sign certificate Entry in the Interests Register Definitions

24 24 25 25 25 25

15.

Powers and duties of the Board

25

15.1 15.2 15.3 15.4 15.5 15.6 15.7 15.8

Management by Board Powers of Board Duties under the Crown Entities Act Delegation by Board Board’s responsibility for delegation Proceedings of committees Exercise of powers in relation to employees Major Transactions

25 25 25 25 26 26 26 26

16.

Proceedings of the Board

27

16.1 16.2 16.3 16.4 16.5 16.6 16.7 16.8 16.9 16.10 16.11

Third Schedule Chairperson Convening a meeting Notice of meeting Notice not required to absent Director Irregularity in notice Method of holding meetings Acknowledgment of presence at meeting by conference Quorum Voting Chairperson does not have a casting vote

27 27 27 27 27 27 27 28 28 28 28

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16.12 16.13 16.14 16.15 16.16 16.17 16.18

Resolution passed by majority of votes Absence of vote counts for the resolution Alternate Director may attend Minutes Unanimous resolution Other proceedings Continuing Directors

28 28 28 28 28 28 29

17.

Interested Directors

29

17.1 17.2

Interested Directors may not vote Shareholder discretion

29 29

18.

Remuneration

29

18.1 18.2 18.3 18.4

Board’s power to authorise remuneration and other benefits is limited Shareholder approval required Reimbursement of reasonable expenses No compensation for loss of office

29 29 29 30

19.

Authority to bind

30

19.1 19.2 19.3

Method of contracting Resolution of authority proof of authority Attorneys

30 30 30

20.

Liquidation

30

20.1 20.2 20.3 20.4

Appointment of liquidator Distribution of surplus assets Distribution of assets in kind Distribution of assets on solvent dissolution

30 30 31 31

21.

Change of Company name

31

22.

Change of registered office or address for service

31

23.

Whole of government directions

31

24.

Crown’s shareholdings

31

24.1 24.2 24.3 24.4

Ministers of the Crown Change of Ministerial portfolio No transfer of Shares required Appointment of representative

31 32 32 32

25.

Council Representative

32

Schedule 1 – Issue of Class B Shares

33

1.

Definitions

33

2.

Requirements and procedure for issue of Class B Shares

33

3.

Issue of New Shares

33

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Part A - Administration and miscellaneous 1.

Defined terms and interpretation

1.1

Defined terms In this Constitution: Act means the Companies Act 1993; Alternate Director means a Director appointed pursuant to clause 13.10; Amalgamation means the completed act of the Company and one or more other companies amalgamating pursuant to Part XIII of the Act and continuing as one company, which may be one of the amalgamating companies or may be a new company; Annual Meeting means a meeting of Shareholders held pursuant to clause 11.1; Balance Date means the date adopted by the Company as the end of its financial year for the purpose of its annual financial statements; Board means the Directors numbering not less than the required quorum acting as the Board of Directors of the Company, and where one Director is a quorum it means that Director so acting alone; Call means a resolution of the Board under clause 7.1 requiring Shareholders to pay all or part of the unpaid amount of the issue price of any Shares and, where the context requires, means the obligation of a Shareholder to meet the amount due pursuant to such a resolution; Chairperson means the Chairperson of the Board appointed under clause 13.8; Class and Class of Shares means a class of Shares having attached to them identical rights, privileges, limitations, and conditions; Class B Share means a Share having the rights set out at clause 4.1(c); Company means City Rail Link Limited; Constitution means this constitution of the Company and all amendments to it from time to time; Council means the unitary authority established under the Local Government (Auckland Council) Act 2009; Council Representative means any person, as notified to the Board in writing by Council, who has express authority to act on behalf of the Council and who is not a Director of the Company; Crown means Her Majesty the Queen in right of New Zealand; Crown Entities Act means the Crown Entities Act 2004; Director means a person appointed and continuing in office for the time being, in accordance with this Constitution, as a director of the Company; Distribution, in relation to Shares held by a Shareholder, means: (a)

the direct or indirect transfer of money or property, other than Shares, by the Company to or for the benefit of the Shareholder; or

(b)

the incurring of a debt by the Company to or for the benefit of the Shareholder,

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whether by means of a purchase of property, the redemption or other acquisition of Shares, a distribution of indebtedness, or by some other means; Dividend means a Distribution by the Company other than a Distribution to which section 59 or section 76 of the Act applies; Interest Group, in relation to any action or proposal affecting rights attached to Shares, means a group of Shareholders: (a)

whose affected rights are identical; and

(b)

whose rights are affected by the action or proposal in the same way; and

(c)

who comprise the holders of one or more Classes of Shares.

For the purposes of this definition: (a)

one or more Interest Groups may exist in relation to any action or proposal; and

(b)

if: (i)

action is taken in relation to some holders of Shares in a Class and not others; or

(ii)

a proposal expressly distinguishes between some holders of Shares in a Class and other holders of Shares of that Class,

holders of Shares in the same Class may fall into two or more Interest Groups; Interests Register means a register kept by the Company at its registered office as required by section 189(1)(c) of the Act; Major Transaction, in relation to the Company, has the meaning given to it in section 129 of the Act; month means a calendar month; Ordinary Resolution means a resolution that is approved by a simple majority of the votes of those Shareholders entitled to vote and voting on the question; Ordinary Share means a Share having the rights set out at clause 4.1(b); Project Delivery Agreement means the agreement entered, or to be entered, into between the Company, the Crown and the Council relating to the delivery of the City Rail Link project; Public Finance Act means the Public Finance Act 1989; Register means the register of Shares required by section 87 of the Act to be kept; Registrar means the Registrar of Companies appointed under section 357(1) of the Act; Settlement Agreement means the agreement entered, or to be entered, into between the Company, the Crown, the Council and Auckland Transport relating to certain cash-flows, financial transactions and set offs in relation to the City Rail Link project.

Share means a share in the Company; Shareholder means a person: (a)

registered in the Register as the holder of one or more Shares; or

(b)

until the person’s name is entered in the Register, a person named as a Shareholder in the application for registration of the Company at the time of registration of the Company; or

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(c)

until the person’s name is entered in the Register, a person who is entitled to have that person’s name entered in the Register under a registered Amalgamation proposal as a Shareholder in an amalgamated company;

Shareholding Ministers means the Ministers of the Crown who hold shares in the Company; Solvency Test means an examination to be applied to the financial state of the Company, which will be satisfied if: (a)

the Company is able to pay its debts as they become due in the normal course of business; and

(b)

the value of the Company’s assets is greater than the value of its liabilities, including contingent liabilities and in respect of which regard has been had to the matters referred to in section 4(2) of the Act,

and, for the purpose of this definition, debts and liabilities have the meanings given to those terms in sections 52(4) or 108(5) of the Act, as applicable; Special Meeting means any meeting (other than an Annual Meeting) of Shareholders entitled to vote on an issue, called at any time by the Board or by any other person who is authorised by the Board to call meetings of Shareholders; Special Resolution means a resolution of Shareholders approved by a majority of 75 per cent or more of the votes of those Shareholders entitled to vote and voting on the question; Statement of Intent means the statement of intent to be completed by the Company from time to time in accordance with the applicable provisions of the Crown Entities Act; Working Day means a day of the week other than:

1.2

(a)

Saturday, Sunday, Good Friday, Easter Monday, Anzac Day, the Sovereign’s Birthday, Labour Day and Waitangi Day;

(b)

a day in the period commencing with the 25th day of December in any year and ending with the second day of January in the following year;

(c)

if the first day of January in any year falls on a Friday, the following Monday; and

(d)

if the first day of January in any year falls on a Saturday or Sunday, the following Monday and Tuesday.

Interpretation In this Constitution, unless the context otherwise requires: (a)

headings are inserted for convenience only and will be ignored in construing this Constitution;

(b)

the singular includes the plural and vice versa;

(c)

one gender includes the other genders;

(d)

a reference to a person includes an individual, partnership, firm, company, corporation, association, trust, estate, state or agency of a state, government or government department or agency, municipal or local authority and any other entity, whether or not incorporated and whether or not having separate legal personality;

(e)

written and in writing includes any means of reproducing words, figures or symbols: (i)

Minter Ellison Rudd Watts 17947714_2

in a tangible and visible form in any medium; or

Constitution | page 8

(ii)

1.3

in a visible form in any medium by electronic means that enables them to be stored in permanent form and be retrieved and read;

(f)

signature includes, in relation to a document in electronic form, an electronic signature created by a method which identifies the signatory and indicates the signatory’s approval of the information contained in the document

(g)

examples and the use of the word including and similar expressions do not limit what else may be included; and

(h)

a reference to a clause is to that clause in this Constitution unless stated otherwise.

Other definitions have meaning set out in the Act Subject to clause 1.1, expressions contained in this Constitution bear the same meaning as specified in the Act as amended from time to time.

1.4

Constitution subject to changes in the Act If the Act changes in a way that would, but for this clause, cause section 31 of the Act to apply to any clause then that clause will be deemed to be amended in the same manner as the change in the Act so that the Constitution does not contravene or become inconsistent with the Act.

1.5

Use of electronic means Where a legal requirement under the Act is reproduced in this Constitution, that legal requirement may be met, for the purposes of this Constitution, by using electronic means in accordance with the Electronic Transactions Act 2002 in the same manner as is required by the Electronic Transactions Act 2002 to meet that legal requirement under the Act. In this clause, the term “legal requirement� has the meaning given to it by the Electronic Transactions Act 2002.

1.6

Receipt of electronic communications For the purposes of section 11 of the Electronic Transactions Act 2002, a document under this Constitution which is sent in electronic form and by way of an electronic communication is taken to be received: (a)

if sent by the Company, on the Working Day it is sent or the next Working Day if sent outside normal business hours, provided that the electronic communication was correctly addressed to the address provided by the addressee for the receipt of electronic communications and no error message was received by the information systems used by the Company to send the electronic communication; and

(b)

if sent to the Company, at the time the electronic communication comes to the attention of the addressee or such other time as the sender and the Company may agree.

To avoid doubt, any document so sent may be in any widely used electronic form.

2.

Capacity and powers

2.1

Rights, powers and duties The Company, the Board, each Director and each Shareholder have the rights, powers, duties and obligations set out in the Act except to the extent that they are negated or modified, in accordance with the Act, by this Constitution.

2.2

Full capacity Subject to this Constitution, the Act, any other enactment and the general law, the Company has, both within and outside New Zealand, full capacity, rights, powers and privileges to carry on or

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undertake any business or activity, do any act, or enter into any transaction to pursue the purpose of the Company as set out at clause 3.1.

3.

Purpose and nature of Company

3.1

Purpose of Company The purpose of the Company is to manage, deliver and complete the City Rail Link project.

3.2

Statement of Intent The Company must prepare Statement(s) of Intent for the Company in accordance with section 45OA(1)(n) of the Public Finance Act.

3.3

3.4

Nature of Company (a)

The Company is a company named in Schedule 4A of the Public Finance Act from the date on which an Order in Council made under section 3AB of that Act amending Schedule 4A of that Act by adding the name of the Company to Schedule 4A of that Act takes effect.

(b)

The Company is not a Council-Controlled Organisation (as defined in section 6 of the Local Government Act 2002).

(c)

The Company is intended to operate in a financially sustainable manner.

Compliance with certain provisions of the Crown Entities Act Pursuant to section 45OA(1)(a)-(p) of the Public Finance Act, the Company will comply with sections: (a)

79, 81-85, 89-92, 94-97, 99, 100, 102, 107 to 111, 113, 114, 118 and 132 to 158 of the Crown Entities Act; and

(b)

161, 162, 163 and 164 of the Crown Entities Act (subject to section 160 of the Crown Entities Act),

to the extent that those sections apply to the Company, as if the Company was a Crown entity company under the Crown Entities Act, and as if those sections were expressly incorporated into this Constitution.

3.5

Application of Crown Entities Act generally For the avoidance of doubt, any sections of the Crown Entities Act which apply to the Company by virtue of the Public Finance Act, this Constitution or otherwise, will apply to the Company as if references in those sections to: (a)

Crown entity company were to the Company;

(b)

responsible Ministers were to the Shareholding Ministers;

(c)

Crown entity group were to the Company and its subsidiaries;

(d)

the board were to the Board of the Company; and

(e)

members were to Directors of the Company,

respectively.

3.6

Controller and Auditor-General Under the Public Audit Act 2001, the Controller and Auditor-General will be the auditor of the Company.

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Part B - Shares and Dividends 4.

Issue of Shares

4.1

Classes of Shares (a)

(b)

(c)

(d)

At the time of adoption of this Constitution, the Company has issued, or intends to issue, Shares of the following classes: (i)

Ordinary Shares, having the rights, powers and obligations set out in clause 4.1(b); and

(ii)

Class B Shares, having the rights, powers and obligations set out in clause 4.1(c).

Ordinary Shares: Each Ordinary Share confers on the holder: (i)

the right to vote at meetings of Shareholders and on a poll to cast one vote for each Share held;

(ii)

subject to the rights of any other Class of Shares, the right to an equal share in Dividends and other Distributions made by the Company; and

(iii)

subject to the rights of any other Class of Shares, the right to an equal share in the distribution of the surplus assets of the Company on its liquidation.

Class B Shares: The issue price of each fully paid up Class B Share shall be $1.00 (NZD). Each individual Class B Share confers on the holder: (i)

no rights to vote on any resolution at a meeting of Shareholders (other than where an action requires the approval of an affected interest group pursuant to clause 117 of the Act and this Constitution);

(ii)

subject to the rights of any other Class of Shares, the right to an equal share in Dividends and other Distributions made by the Company; and

(iii)

subject to the rights of any other Class of Shares, the right to an equal share in the distribution of the surplus assets of the Company on its liquidation.

Subject to the Act and this Constitution, further Shares in the Company (including different Classes of Shares) may be issued which have any one or more of the following features: (i)

rank equally with, or in priority to, existing Shares in the Company;

(ii)

are redeemable (as further described in clause 4.5);

(iii)

confer preferential rights to distributions of capital or income;

(iv)

confers special, limited, or conditional voting rights;

(v)

do not confer voting rights;

(vi)

are convertible;

(vii)

have limitations or restrictions on transferability; or

(viii)

any other terms the Board deems appropriate.

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4.2

Issue of Shares (a)

At all times, more than 50 per cent of the Ordinary Shares in the Company must be held by the Crown acting by or through two or more Ministers of the Crown, one of whom must be the Minister of Finance.

(b)

Shares may only be held by the Crown (through the Shareholding Ministers) and by the Council.

(c)

All Shares issued to the Crown (acting through the Shareholding Ministers) will be issued pro rata to the Shareholding Ministers in proportion to their existing holdings.

(d)

The Board may only issue Shares, or securities convertible into Shares, or options to acquire Shares, in the Company if the issue is:

(e)

(i)

made pursuant to the terms of the Settlement Agreement;

(ii)

made pursuant to the terms of the Project Delivery Agreement and Schedule 1 of this Constitution; or

(iii)

as otherwise approved by the Shareholders.

Subject to paragraphs (a), (b) and (d) above, the Board may: (i)

issue further Shares that rank as to voting or distribution rights, or both, equally with or prior to any existing Shares in the Company; and/or

(ii)

agree to issue further Shares that rank as to voting or distribution rights, or both, equally with or prior to any existing Shares in the Company,

to such persons and on such terms as the Board thinks fit. (f)

4.3

Other than in relation to Class B Shares issued under the Settlement Agreement and subject to paragraph 4.2(d)(iii), the Company shall follow the procedure set out in Schedule 10 of the Project Delivery Agreement and Schedule 1 of this Constitution in relation to an issue of (non-voting) Class B Shares to the Crown (acting through the Shareholding Ministers) and/or the Council.

No statutory pre-emptive rights Section 45 of the Act does not apply to the Company.

4.4

Board may make Calls The Board may make Calls on any Shareholder for any money that is unpaid on the Shareholder’s Shares and not otherwise payable at a specified time or times under this Constitution or the terms of issue of those Shares or any contract for the issue of those Shares. Clause 7 governs Calls on Shares.

4.5

Redeemable Shares If redeemable Shares are to be issued, the terms of issue of the redeemable Shares must make provision for the redemption of each redeemable Share by the Company: (a)

at the option of the Company; or

(b)

at the option of the holder of redeemable Shares; or

(c)

on a specified date,

for a consideration that is: (d)

specified; or

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4.6

(e)

to be calculated by reference to a formula; or

(f)

required to be fixed by a suitably qualified person who is not associated with or interested in the Company.

Requirements for Board issuing Shares Before the Board issues Shares pursuant to clause 4.2, it must:

4.7

(a)

decide the consideration for which the Shares will be issued (subject to clause 4.1(c) with respect to Class B Shares) and the terms on which they will be issued;

(b)

if the Shares are to be issued other than for cash, determine the reasonable present cash value of the consideration for the issue;

(c)

resolve that, in its opinion, the consideration for the Shares and their terms of issue are fair and reasonable to the Company and to all existing Shareholders; and

(d)

if the Shares are to be issued other than for cash, resolve that, in its opinion, the present cash value of that consideration is not less than the amount by which the Shares would be credited as paid up.

Exceptions to requirements in case of certain Share issues Clauses 4.6, 4.8 and 4.9 do not apply to:

4.8

(a)

any issue of Shares to which all entitled persons have agreed or concurred in accordance with section 107(2) of the Act;

(b)

the issue of Shares that are fully paid up from the reserves of the Company to all Shareholders of the same Class in proportion to the number of Shares held by each such Shareholder; or

(c)

the consolidation or subdivision of Shares.

Directors’ certificate on consideration for issue The Directors who vote in favour of a resolution under clause 4.6 must sign a certificate:

4.9

(a)

stating the consideration for, and the terms of, the issue;

(b)

describing the consideration in sufficient detail to identify it;

(c)

where a present cash value has been determined in accordance with clause 4.6(b), stating that value and the basis for assessing it;

(d)

stating that, in their opinion, the consideration for and terms of issue are fair and reasonable to the Company and to all existing Shareholders; and

(e)

if the Shares are to be issued other than for cash payable on issue, stating that, in their opinion, the present cash value is not less than the amount to be credited as paid up for the issue of the Shares.

Directors' certificate to be filed A copy of the Directors’ certificate given under clause 4.8 must be filed with the Registrar within 10 Working Days after it is given.

5.

Purchase of own Shares (a)

The Company may purchase or otherwise acquire its Shares in accordance with, and subject to, sections 58 to 65, 107, 108 and 110 to 112 of the Act and the Board may make

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an offer to acquire Shares to one or more Shareholders, provided that it does so in accordance with the procedure set out in section 61 of the Act. (b)

The Company may hold its own shares in accordance with section 67A to 67C of the Act. Unless the Board resolves otherwise, Shares purchased or otherwise acquired by the Company in accordance with this clause will be deemed to be cancelled immediately on purchase or acquisition.

6.

Transfer of Shares

6.1

Transfer of Shares (a)

(b)

6.2

Shares may only be transferred: (i)

in accordance with the provisions of the Project Delivery Agreement; or

(ii)

as approved by the Shareholders by Special Resolution.

Subject to clauses 6.1(a)(i) and 6.2, Shares may be transferred by entry of the name of the transferee on the Register.

Signed transfer For the purpose of transferring Shares, a form of transfer signed by the present holder of the Shares or the holder’s personal representative must be delivered to the Company or to the agent of the Company who maintains the Register.

6.3

Form of transfer The form of transfer:

6.4

(a)

may be in the form set out in the Schedule 18 of the Financial Markets Conduct Regulations 2014 or in any usual or common form, or any other form approved by the Board; and

(b)

must be signed by the transferee if registration as holder of the Shares would impose a liability to the Company on the transferee.

Board’s right to refuse or delay registration of transfer The Board may, within 30 Working Days of the receipt of a form of transfer of Shares, refuse or delay the registration of the transfer if:

6.5

(a)

the holder of the Shares has failed to pay an amount due to the Company in respect of those Shares; or

(b)

the Board considers that to effect the transfer would result in a breach of the law; or

(c)

the Board considers that it is not in the best interests of the Company to register the transfer; or

(d)

clauses 6.1 and 6.2 have not been complied with or the form of transfer has not been properly executed or does not comply with clause 6.3.

Board resolutions refusing or delaying Share transfers A resolution of the Board to refuse or delay a transfer of Shares must set out in full the reason for doing so, and a copy of the resolution must be sent to the transferor and transferee within five Working Days of the date of the resolution being passed.

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6.6

Registration of transfer Subject to clauses 6.2 and 6.3, on receipt of a duly completed form of transfer, the Company must enter the name of the transferee on the Register as holder of the Shares, unless the Board has resolved in accordance with clause 6.4 to refuse or delay the registration of the transfer of the Shares.

7.

Call on Shares

7.1

Board may make Calls Subject to the terms of issue of any Shares, the Board may resolve to require the holders of unpaid or partly paid Shares to pay all or part of the amount unpaid on the Shares. The terms of the resolution will constitute the terms of the obligation to pay the Call (including payment by instalments). The Call may be revoked or postponed at any time by the Board.

7.2

Calls to apply equally Subject to the terms of issue of any Class of Shares and to clause 7.9, unless all the holders of a Class of Shares subject to a Call unanimously agree, a Call (or the postponement or revocation of a Call) will apply to all the holders of Shares of the Class equally.

7.3

Notice of Calls Notice of the Call must be given to the Shareholder at the time of the Call or to a subsequent holder of the Shares. Failure to give notice to a Shareholder will not invalidate a Call but it will not be payable by that Shareholder until the notice has been served on the Shareholder. The notice must specify the day by which and the place at which the Call must be paid.

7.4

Deemed receipt of notice Subject to section 392(1)(b) of the Act, notice of a Call sent by post to a Shareholder to the address recorded in the Register as the address of the Shareholder will be deemed to have been received by the Shareholder the day after it was posted. To avoid doubt, the notice may be sent by way of an electronic communication in accordance with clause 1.6 if the Shareholder has provided the Company with an address for the receipt of electronic communications.

7.5

Joint Shareholder liability The joint holders of Shares are jointly and severally liable to pay all Calls in respect of the Shares.

7.6

Unpaid calls to accrue interest If a Call is not paid before or on the day appointed for payment, the person from whom the amount is due will be liable to pay interest on the sum (from the day appointed for payment until the time of actual payment) at such rate as the Board determines either at the time of the Call or subsequently. The Board may waive some or all of the payment of that interest.

7.7

Current Shareholder liable The liability for a Call which has become due and payable attaches to the current Shareholder and not a prior Shareholder, notwithstanding that at the date of the Call (or the date the Call fell due for payment) another person was the holder of the Shares or that the notice of the Call was served on the then Shareholder and not the current Shareholder.

7.8

No notice to new Shareholder required Following the registration in the Register of a change of ownership of Shares in respect of which a Call has been made, a notice of the Call is not required to be served on the new Shareholder.

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7.9

Agreement to differentiate between Calls The Board may, on the issue of Shares, by agreement with the Shareholders concerned, differentiate between the holders of the same Class as to the amount to be paid on the Shares and the times for payment.

8.

Distributions

8.1

Distributions must satisfy Solvency Test and have prior Shareholder approval Subject to clause 8.3, the Board may, if it is satisfied on reasonable grounds that the Company will satisfy the Solvency Test immediately after the Distribution and the Shareholders have approved the terms of such proposed Distribution by Special Resolution, authorise a Distribution by the Company to Shareholders of any amount and to any Shareholders as it thinks fit.

8.2

Board to sign certificate The Directors who vote in favour of a Distribution must sign a certificate stating that, in their opinion, the Company will satisfy the Solvency Test immediately after the Distribution. The grounds for that opinion must also be stated in that certificate.

8.3

Dividends payable pari passu Subject to clause 8.4 and 8.5, the Board may not authorise a Dividend: (a)

in respect of some but not all the Shares in a Class; or

(b)

that is of a greater value per Share in respect of some Shares of a Class than in respect of other Shares of that Class,

unless the amount of the Dividend in respect of a Share of that Class is in proportion to the amount paid to the Company in satisfaction of the Shareholder’s liability under this Constitution or under the terms of issue of the Share.

8.4

Shareholder may waive rights to Dividend A Shareholder may waive his or her entitlement to receive a Dividend by giving a notice in writing, signed by or on behalf of the Shareholder, to the Company.

8.5

Dividends payable other than pari passu If all the Shareholders of the same Class concur in writing in respect of each proposed Dividend, the Company may pay a Dividend which is distributed other than in accordance with clause 8.3.

8.6

Investment of unclaimed Distributions Any Distribution that has not been claimed after one year from the date of the Distribution may be invested or otherwise made use of by the Board for the benefit of the Company until it is claimed.

The Company will not be regarded as holding any such amount used on trust for the claimant.

8.7

Forfeiture of unclaimed Distributions Any Distribution remaining unclaimed for a period of five years from the date of the Distribution may be forfeited by the Board for the benefit of the Company, provided that the Board may in its discretion cancel the forfeiture and pay the Distribution to any person producing evidence satisfactory to the Board that he or she is entitled to the amount claimed.

8.8

Financial assistance on acquisition of Shares The Company may, subject to and in accordance with sections 76 to 80, 107 and 108 of the Act, give financial assistance (whether directly or indirectly) to a person for the purpose of, or in

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connection with, the purchase of Shares issued (or to be issued) by the Company, or by its holding company.

Part C - Shareholders’ rights and obligations 9.

Alteration of Shareholder’s rights

9.1

Alteration of Shareholder’s rights (a)

The Company must not take action that affects the rights attached to Shares unless that action has been approved by a Special Resolution of each Interest Group.

(b)

An issue of Shares will not be treated as an action affecting the rights attached to the existing Shares.

10. Exercise of powers reserved to Shareholders 10.1 Powers reserved to Shareholders Powers reserved to Shareholders by the Act or by this Constitution may be exercised: (a)

by Special Resolution (or, where specified in this Constitution, Ordinary Resolution) of the Shareholders at an Annual Meeting or a Special Meeting; or

(b)

by a resolution in lieu of a meeting pursuant to clause 11.5.

10.2 Powers exercised by Special Resolution When Shareholders exercise a power to approve any of the following, that power may only be exercised by a Special Resolution: (a)

an alteration to or revocation of this Constitution or the adoption of a new Constitution;

(b)

a Major Transaction;

(c)

an Amalgamation;

(d)

the liquidation of the Company;

(e)

the approval of a transfer of Shares in the Company other than pursuant to clause 6.1(a)(i);

(f)

the approval of a Distribution to the Shareholders pursuant to clause 8.1; or

(g)

matters relating to remuneration of the Directors pursuant to clause 18 which require Shareholder approval.

Any decision made by Special Resolution pursuant to this clause may be rescinded only by a Special Resolution, provided that a resolution to put the Company into liquidation cannot be rescinded.

11. Meetings of Shareholders 11.1 Annual Meeting The Board must, if required in accordance with section 120 of the Act, call an Annual Meeting of Shareholders to be held: (a)

not later than six months after the Balance Date of the Company; and

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(b)

not later than 15 months after the previous Annual Meeting, or in respect of the first Annual Meeting not later than 18 months after the date of the Company’s incorporation.

11.2 Date of meeting The Company must hold the Annual Meeting on the date on which it is called to be held.

11.3 Resolution instead of Annual Meeting It will not be necessary for the Company to hold an Annual Meeting if everything required to be done at that meeting (by resolution or otherwise) is done by resolution in accordance with section 122 of the Act.

11.4 Special Meetings A Special Meeting: (a)

may be called at any time by the Board or a person who is authorised by the Board to call the meeting; and

(b)

must be called by the Board on the written request of Shareholders holding not less than five per cent of the votes entitled to be cast on the issue.

11.5 Resolution in lieu of meeting A resolution in writing signed by not less than 75 per cent of the Shareholders who would be entitled to vote on that resolution at a meeting of Shareholders, who together hold not less than 75 per cent of the votes entitled to be cast on that resolution, is as valid as if it had been passed at a meeting of those Shareholders.

11.6 More than one document Any resolution in writing under clause 11.5 may consist of one or more documents in similar form (including letter, facsimiles, electronic mail, or other similar means of communication), each signed or assented to by or on behalf of one or more of the Shareholders entitled to vote on the resolution.

11.7 Copy of resolution to non-signing Shareholder Within five Working Days of a resolution being passed under this clause, the Company must send a copy of the resolution to every Shareholder who did not sign the resolution or on whose behalf the resolution was not signed.

11.8 Chairperson of meetings of Shareholders If the Shareholders have elected a Chairperson pursuant to clause 13.8, and that Chairperson is present at a meeting of Shareholders, he or she must chair the meeting. If no Chairperson has been elected or if, at any meeting of Shareholders, the Chairperson is not present within 15 minutes of the time appointed for the commencement of the meeting, the Shareholders present may choose one of their number to chair the meeting.

11.9 Shareholders entitled to notice of meeting The Shareholders entitled to receive notice of a meeting of Shareholders of a Class or Classes are those Shareholders of the relevant Class: (a)

if the Board has fixed a date for the purpose of establishing an entitlement to receive notice of the meeting, whose names are registered in the Register on that date; or

(b)

if the Board does not fix a date for the purpose of establishing an entitlement to receive notice of the meeting, whose names are registered in the Register at the close of business on the day immediately preceding the day on which the notice is given.

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11.10 Date on which entitlement decided A date fixed by the Board under clause 11.9(a) must not precede by more than 30 Working Days nor less than 10 Working Days the date on which the meeting is to be held.

11.11 Notice of meeting Written notice of the time and place of a meeting of Shareholders must be sent to every Shareholder entitled to receive notice of the meeting, and to every Director and the auditor of the Company, not less than 10 Working Days before the meeting.

11.12 Content of notice The notice referred to in clause 11.11 must state: (a)

the nature of the business to be transacted at the meeting in sufficient detail to enable a Shareholder to form a reasoned judgment in relation to it; and

(b)

the text of any special resolution to be submitted to the meeting.

11.13 Irregularities in notice An irregularity in a notice of a meeting is waived if all the Shareholders entitled to attend and vote at the meeting attend the meeting without protest as to the irregularity, or if all such Shareholders agree to the waiver.

11.14 Accidental omission not to invalidate proceedings The accidental omission to give notice of a meeting to, or a failure to receive notice of a meeting by, a Shareholder does not invalidate the proceedings at that meeting.

11.15 Method of holding meeting A meeting of Shareholders may be held either: (a)

by a number of Shareholders, who constitute a quorum, being assembled together at the place, date and time appointed for the meeting; or

(b)

by means of audio, or audio and visual, communication by which all Shareholders participating and constituting a quorum, can simultaneously hear each other throughout the meeting.

11.16 Adjournments The chairperson of a meeting of Shareholders may, at the request of those Shareholders present in person or by proxy who are, between them, able to exercise a majority of the votes able to be cast at the meeting, adjourn the meeting. No business will be transacted of any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.

11.17 Notice of the adjourned meeting If a meeting of Shareholders is adjourned for less than 30 days, it is not necessary to give notice of the time and place of the adjourned meeting other than by announcement at the meeting which is adjourned. In any other case, notice of the adjourned meeting will be given in accordance with clauses 11.11 and 11.12.

11.18 Minutes The Board must ensure that full and accurate minutes are kept of all proceedings at meetings of Shareholders. Minutes which have been signed as correct by the chairperson of the meeting are prima facie evidence of the proceedings.

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11.19 Shareholder proposals for management review (a)

Upon a Shareholder receiving notice of a shareholder meeting, or a Shareholder requesting that a special meeting of Shareholders be held, a Shareholder entitled to vote at that meeting of Shareholders may provide to the Board: (i)

Pursuant to section 109 of the Act, written notice of any matter relating to the management of the Company which the Shareholder proposes to raise for questioning, discussion or comment at the next meeting of Shareholders; and

(ii)

Pursuant to section 178 of the Act, a request for any information held by the Company relating to such matter.

(b)

Except as permitted by law, the Company must provide to the Shareholders the information requested under clause 11.19(a)(ii) not less than 5 Working Days prior to the next Shareholder meeting, to enable the Shareholders to review such material prior to the proposed discussion at the Shareholders meeting.

(c)

This clause does not limit the provisions of the Crown Entities Act.

12. Voting at meetings 12.1 Quorum A quorum for a meeting of Shareholders is present if those Shareholders who are present, or their proxies who are present, are between them able to exercise seventy five percent (75%) of the votes to be cast on the business to be transacted by the meeting. Subject to clause 12.2, no business may be transacted at a meeting of Shareholders if a quorum is not present.

12.2 Lack of quorum If a quorum is not present within 30 minutes after the time appointed for the meeting: (a)

in the case of a meeting called pursuant to a requisition of Shareholders under clause 11.4(b), the meeting is dissolved;

(b)

in the case of any other meeting, the meeting is adjourned to the same day in the following week at the same time and place, or to such other date, time and place as the Directors may appoint; and

(c)

if at the adjourned meeting a quorum is not present within 30 minutes after the time appointed for the meeting, the shareholders present or their proxies are a quorum.

12.3 Voting at actual meeting In the case of a meeting of Shareholders held under clause 11.15(a), unless a poll is demanded, voting at the meeting will be by whichever of the following methods is determined by the chairperson of the meeting: (a)

voting by voice; or

(b)

voting by show of hands.

12.4 Voting at meeting by conference In the case of a meeting of Shareholders held under clause 11.15(b), unless a poll is demanded, voting at the meeting will be by the Shareholders signifying individually their assent or dissent by voice.

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12.5 Declaration by chairperson that resolution is carried A declaration by the chairperson of the meeting that a resolution is carried by the requisite majority is conclusive evidence of that fact, unless a poll is demanded in accordance with clause 12.6.

12.6 Demand of a poll At a meeting of Shareholders, a poll may be demanded by: (a)

a Shareholder or Shareholders representing not less than 10 per cent of the total voting rights of all Shareholders having the right to vote at the meeting; or

(b)

a Shareholder or Shareholders holding Shares that confer a right to vote at the meeting and on which the aggregate amount paid up is not less than 10 per cent of the total amount paid up on all Shares that confer that right; or

(c)

the chairperson of the meeting.

A poll may be demanded either before or after the vote is taken on a resolution.

12.7 Counting of votes on a poll If a poll is taken, votes must be counted according to the votes attached to the Shares of each Shareholder present (in person or by proxy) and voting.

12.8 Chairperson not entitled to casting vote The chairperson of a Shareholders’ meeting is not entitled to a casting vote.

12.9 Right of proxy to demand a poll For the purposes of clause 12.6, the instrument appointing a proxy to vote at a meeting confers authority to demand or join in demanding a poll and a demand by a person as proxy for a Shareholder has the same effect as a demand by the Shareholder.

12.10 Proxies A Shareholder may exercise the right to vote either by being present or by proxy.

12.11 Rights of proxy A proxy for a Shareholder is entitled to attend, be heard, and vote at a meeting of Shareholders as if the proxy were the Shareholder.

12.12 Appointment of proxy A proxy must be appointed by notice in writing signed by the Shareholder, and the notice must state whether the appointment is for a particular meeting or a specified term. No proxy is effective in relation to a meeting unless a copy of the notice of appointment is produced before the start of the meeting.

12.13 Representatives A body corporate which is a Shareholder may appoint a representative to attend a meeting of Shareholders on its behalf in the same manner as that in which it could appoint a proxy.

12.14 Postal votes Unless the Board determines otherwise, Shareholders may not exercise the right to vote at a meeting by casting postal votes. If the Board determines that postal voting will be permitted at a meeting, the provisions of clause 7 of the first schedule to the Act (relating to postal votes) will apply, with such modifications (if any) as the Board thinks fit.

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12.15 Votes of joint holders Where two or more persons are recorded in the Register as the holder of a Share, the vote of the person named first in the Register and voting on a resolution will be accepted to the exclusion of the votes of the other joint holders.

12.16 Unpaid amounts If an amount due to the Company in respect of a Share has not been paid, that Share may not be voted at a Shareholders’ meeting other than at a meeting of an Interest Group.

12.17 Meetings of Interest Groups The provisions of clauses 11 and 12 will, with such consequential amendments as may be necessary, govern the proceedings of any meeting of an Interest Group.

12.18 Other proceedings Except as provided in this Constitution the Shareholders may regulate their own procedure.

Part D - The Board 13. Appointment and removal 13.1 Number of Directors and composition of the Board Subject to clause 16.18, the number of Directors may not be fewer than one. The maximum number of Directors from time to time shall be five.

13.2 Appointment of Directors A person may be appointed as a Director by Special Resolution. Two or more persons may be appointed by a single resolution.

13.3 Term of appointment Each member of the Board shall be appointed for a term of three years (or such shorter term as agreed by the Shareholders) and, at the end of such three year term, may be re-appointed for further periods of three years per term in accordance with clause 13.2.

13.4 Restrictions on appointment A person must not be appointed as a Director (or an Alternate Director) if the person is, at the time of the appointment, a member of Parliament or a member of the governing body or local board of the Council.

13.5 Removal of Directors A person may be removed as a Director by Special Resolution.

13.6 Tenure of office A person will cease to hold the office of Director if he or she: (a)

is removed under clause 13.5; or

(b)

resigns in writing under clause 13.7 and is not reappointed in accordance with this Constitution; or

(c)

becomes disqualified from being a Director pursuant to section 151 of the Act; or

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(d)

is prohibited from being a Director or promoter of or being concerned with or taking part in the management of a company under sections 382, 383 or 385 of the Act; or

(e)

dies; or

(f)

becomes a protected person under the Protection of Personal and Property Rights Act 1988; or

(g)

is under 18 years of age; or

(h)

is an undischarged bankrupt.

13.7 Resignation (a)

A Director may resign from office by signing a written notice of resignation and delivering it to the Company. The notice takes effect upon the later of the receipt of it at the address for service of the Company (including receipt of a facsimile or electronic copy) and any later time specified in the notice.

(b)

Any Director (or an alternate) who is elected to the Council’s governing body or a local board will be required to resign as a Director (or an alternate) before taking up such position. If a Director (or an alternate) does not resign prior to his or her election to the governing body of the Council or local board, that Director (or alternate) is deemed to have ceased to be a Director (or alternate) from the date of such election or employment.

13.8 Chairperson The Chairperson of the Board shall be chosen from amongst the Board members by the Shareholders by Special Resolution.

13.9 Shareholding qualification A Director is not required to hold Shares.

13.10 Appointment and removal of Alternate Directors Every Director may, by notice given in writing to the Company: (a)

appoint any person who is not disqualified by the Act from being a Director and whose appointment has been approved by the Shareholders to act as an Alternate Director in his or her place either for a specified period, or generally during the absence or inability to act from time to time of such director; and

(b)

remove that person from that office.

13.11 Remuneration of Alternate Director An Alternate Director will look to the Director appointing him or her and not the Company for remuneration, but will have the same rights as a Director to be recompensed by the Company for reasonable travelling, hotel and other expenses incurred by him or her in attending meetings of the Board or of the Shareholders or in relation to any other affairs of the Company.

13.12 Powers of Alternate Director (a)

While acting in the place of the Director who appointed him or her, an Alternate Director has, and may exercise and discharge all the powers, rights, duties and privileges of that Director (including the right to sign any document, including a written resolution, and to act as Chairperson, but excluding the right to appoint an Alternate). The Alternate Director is also subject in all respects to the same terms and conditions of appointment as that Director, except in respect of remuneration.

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(b)

A Director who is also an Alternate Director is entitled to exercise his or her voting and other powers as an Alternate Director in addition to and independently of the exercise of his or her powers as a Director.

13.13 Alternate Director counted in quorum For the purpose of establishing a quorum of the Board, an Alternate Director is deemed to be the Director appointing him or her, and if the Alternate Director is a Director he or she can count separately in both capacities.

13.14 No right to attend meetings if appointed Director present An Alternate Director does not have a right to attend, speak or vote at a meeting of the Board while his or her appointing Director is present.

13.15 Termination of appointment of Alternate Director An Alternate Director’s appointment terminates automatically if the Director who appointed him or her ceases to be a Director.

13.16 Address of Alternate Director required The notice of appointment of an Alternate Director must include an address for service of notice of meetings of the Board. Failure to give an address will not invalidate the appointment, but notice of meetings of the Board need not be given to the Alternate Director until an address is provided to the Company.

14. Indemnity and insurance 14.1 Types of proceedings that may be indemnified against The Board will cause the Company to indemnify a Director or employee of the Company or a related company for costs incurred by him or her in any proceeding: (a)

that relates to liability for any act or omission in his or her capacity as a Director or employee; and

(b)

in which judgment is given in his or her favour or in which he or she is acquitted, or which is discontinued.

14.2 Types of liability that may be indemnified against The Board will cause the Company to indemnify a Director or an employee of the Company or a related company in respect of: (a)

liability to any person other than the Company or a related company for any act or omission in his or her capacity as a Director or employee; or

(b)

costs incurred by the Director or employee in defending or settling any claim or proceeding relating to any liability under paragraph (a) above,

not being: (c)

criminal liability; or

(d)

liability for the breach of section 131 of the Act; or

(e)

in the case of an employee, liability for breach of any fiduciary duty owed to the Company or related company.

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14.3 Insurance of Directors and employees The Board may, subject to section 162 of the Act, cause the Company to effect insurance for Directors and employees of the Company or a related company in respect of: (a)

liability, not being criminal liability, for any act or omission in his or her capacity as a Director or employee; or

(b)

costs incurred by such Directors or employees in defending or settling any claim or proceeding relating to any such liability; or

(c)

costs incurred by a Director or employee in defending any criminal proceedings that have been brought against the Director or employee in relation to any act or omission in his or her capacity as a Director or employee and in which he or she is acquitted.

14.4 Directors to sign certificate The Directors who vote in favour of authorising the effecting of insurance under clause 14.3 must sign a certificate stating that, in their opinion, the cost of effecting the insurance is fair to the Company.

14.5 Entry in the Interests Register The Board must ensure that particulars of any indemnity given to, or insurance effected for, any Director or employee of the Company or related company are forthwith entered in the Interests Register.

14.6 Definitions For the purpose of this clause 14, Director includes a former Director and an Alternate Director and employee includes a former employee.

15. Powers and duties of the Board 15.1 Management by Board Subject to clause 15.2 and any restrictions in the Act, this Constitution, the business and affairs of the Company must be managed by or under the direction or supervision of the Board.

15.2 Powers of Board The Board has, and may exercise, all the powers necessary for managing, and for directing and supervising the management of, the business and affairs of the Company except to the extent that this Constitution, or the Act expressly requires those powers to be exercised by the Shareholders or any other person.

15.3 Duties under the Crown Entities Act Pursuant to section 92 of the Crown Entities Act, the Board must ensure that the Company acts in a manner consistent with its objectives, functions, current Statement of Intent (if any), and current Statement of Performance Expectations (if any).

15.4 Delegation by Board The Board may delegate to a committee of Directors, a Director, an employee of the Company, or any other person any one or more of its powers, other than the powers referred to in the following sections of the Act: (a)

section 23(1)(c) (change of company name);

(b)

section 42 (issue of other shares);

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(c)

section 44 (Shareholder approval for the issue of shares);

(d)

section 47 (consideration for the issue of shares);

(e)

section 49 (consideration for the issue of options and convertible securities);

(f)

section 52 (distributions);

(g)

section 54 (shares in lieu of dividends);

(h)

section 55 (shareholder discounts);

(i)

section 60 (offers to acquire shares);

(j)

section 61 (special offers to acquire shares);

(k)

section 69 (redemption of shares at the option of the company);

(l)

section 71 (special redemptions of shares);

(m)

section 76 (provision of financial assistance);

(n)

section 78 (special financial assistance);

(o)

section 80 (financial assistance not exceeding five per cent of shareholders’ funds);

(p)

section 84(4) (transfer of shares);

(q)

section 187 (change of registered office);

(r)

section 193 (change of address for service);

(s)

section 221 (manner of approving an amalgamation proposal); and

(t)

section 222 (short form amalgamations).

15.5 Board’s responsibility for delegation The Board is responsible for the exercise of a power by any delegate (where that power is delegated under clause 15.4) as if the power had been exercised by the Board, unless the Board: (a)

believed on reasonable grounds at all times before the exercise of the power that the delegate would exercise the power in conformity with the duties imposed on the Directors by the Act and this Constitution; and

(b)

has monitored, by means of reasonable methods properly used, the exercise of the power by the delegate.

15.6 Proceedings of committees The proceedings of meetings of any committee formed pursuant to clause 15.4 will be in accordance with the provisions of clause 16, with such consequential amendments as may be necessary, and any other rules that may be imposed on it by the Board.

15.7 Exercise of powers in relation to employees Nothing in this constitution limits the power of a Director to make provision for the benefit of employees of the Company in connection with the Company ceasing to carry on the whole or part of its business.

15.8 Major Transactions The Board may not procure or permit the Company to enter into a Major Transaction unless the transaction is: (a)

approved by a Special Resolution; or

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(b)

made contingent on approval by a Special Resolution.

16. Proceedings of the Board 16.1 Third Schedule The provisions of the third schedule to the Act are deleted and replaced by this clause 16.

16.2 Chairperson The Shareholders may elect a Director to be Chairperson in accordance with clause 13.8. The Director elected as Chairperson holds that office until he or she ceases to be a Director or the Shareholders elect a Chairperson in his or her place. If no Chairperson is elected, or if at a meeting of the Board the Chairperson is not present within five minutes after the time appointed for the commencement of the meeting, the Directors present may choose one of their number to be Chairperson of the meeting.

16.3 Convening a meeting A Director or, if requested by a Director to do so, an employee of the Company, may convene a meeting of the Board by giving notice in accordance with clauses 16.4 and 16.5.

16.4 Notice of meeting Not less than five Working Days’ notice of a meeting of the Board must be given to every Director who is in New Zealand. Notice of a meeting may be given by any means, including by telephone. Notice given by a letter addressed to a Director at his or her last known residential address will be deemed to have been given on the day following the day the letter is posted. The notice must include the date, time and place of the meeting and the matters to be discussed. To avoid doubt, the notice may be sent by way of an electronic communication in accordance with clause 1.6 if the Director has provided the Company with an address for the receipt of electronic communications.

16.5 Notice not required to absent Director Notice of a meeting of the Board must be given to every Director (whether or not that Director is in New Zealand) but if a Director is outside New Zealand, or to the knowledge of the Company is temporarily absent from New Zealand, and the Director has appointed an Alternate Director under the provisions of this Constitution, notice must be given to the Alternate Director.

16.6 Irregularity in notice The giving of a notice of a meeting or an irregularity in the notice is waived if all Directors entitled to receive notice of the meeting attend the meeting without protest as to the irregularity or if all Directors entitled to receive notice of the meeting agree to the waiver.

16.7 Method of holding meetings A meeting of the Board may be held either: (a)

by a number of Directors sufficient to form a quorum, being assembled together at the place, date, and time appointed for the meeting; or

(b)

by means of audio, or audio and visual communication, by which all the Directors participating in the meeting and constituting a quorum, can simultaneously hear each other throughout the meeting.

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16.8 Acknowledgment of presence at meeting by conference Where a meeting of the Board is held pursuant to clause 16.7(b), at the commencement of the meeting each Director participating must acknowledge his or her presence to all the other Directors participating. A Director may not leave the meeting by disconnecting his or her means of communication unless he or she has previously obtained the express consent of the Chairperson.

16.9 Quorum A quorum for a meeting of the Board is a majority of the Directors, or where the Company only has one Director, such Director. No business may be transacted at a meeting of Directors if a quorum is not present. An Alternate Director present at a meeting may be included for the purpose of establishing a quorum.

16.10 Voting Every Director has one vote.

16.11 Chairperson does not have a casting vote In the case of an equality of votes, the Chairperson does not have a casting vote.

16.12 Resolution passed by majority of votes A resolution of the Board is passed if it is agreed to by all Directors present without dissent, or the votes of the majority of Directors entitled to vote on the matter are cast are in favour of it.

16.13 Absence of vote counts for the resolution A Director present at a meeting of the Board is presumed to have agreed to, and to have voted in favour of, a resolution of the Board, unless he or she expressly dissents from (or votes against) the resolution at the meeting.

16.14 Alternate Director may attend An Alternate Director may attend and vote at meetings of the Board in accordance with and subject to clauses 13.10 to 13.13 if the Director that has appointed the Alternate Director is absent from the meeting.

16.15 Minutes The Board must ensure that full and accurate minutes are kept of all proceedings at meetings of the Board. Minutes of proceedings of the Board which have been signed correct by the Chairperson are prima facie evidence of the proceedings.

16.16 Unanimous resolution A resolution in writing, signed or assented to by all Directors then entitled to receive notice of a Board meeting or a sufficient majority to pass a Board resolution pursuant to clause 16.12, is as valid and effective as if it had been passed at a meeting of the Board duly convened and held.

Any such resolution may consist of several documents (including facsimile, electronic or other similar means of communication) in like form each signed or assented to by one or more Directors. A copy of any such resolution must be entered in the minute book of Board proceedings.

16.17 Other proceedings Except as provided in this clause 16, the Board may regulate its own procedure.

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16.18 Continuing Directors The continuing Directors will continue to comprise the Board notwithstanding any vacancy in the number of Directors. Other than where the minimum number of Directors is fixed as one, if their number is reduced below the number fixed by or pursuant to this Constitution as the minimum number of Directors, the continuing Directors will comprise the Board only for the purpose of summoning a Special Meeting.

17. Interested Directors 17.1 Interested Directors may not vote A Director of the Company who is interested in a transaction entered into, or to be entered into, by the Company may attend a meeting of Directors at which a matter relating to the transaction arises, and be included among the Directors present at the meeting for the purpose of a quorum, but must not: (a)

vote on any matter relating to the transaction (other than a transaction to which clause 14 applies, or a matter involving Directors’ remuneration which has previously been approved by the Shareholders by Special Resolution in accordance with clause 18.1);

(b)

sign a document relating to the transaction on behalf of the Company; or

(c)

do anything else as a Director in relation to the transaction.

17.2 Shareholder discretion The Shareholders may suspend or relax the prohibition on Interested Directors voting to any extent in respect of any particular transaction by written notice signed by them to the address for service of the Company.

18. Remuneration 18.1 Board’s power to authorise remuneration and other benefits is limited Subject to clause 18.3, the Board may not exercise the power conferred by section 161 of the Act to authorise the payment of remuneration or any other benefit of the kind referred to in that section to or in respect of a Director in his or her capacity as such, except where the provision of such remuneration or benefit has been approved by the Shareholders by Special Resolution.

18.2 Shareholder approval required The power of the Board to authorise: (a)

the making of loans by the Company to a Director or the giving of guarantees by the Company for debts incurred by a Director; and

(b)

the entering into of a contract to do any of the things set out in this clause 18,

is subject to the prior approval of the Shareholders.

18.3 Reimbursement of reasonable expenses The Board may authorise the reimbursement by the Company of reasonable travelling, hotel and other expenses incurred by Directors in attending meetings of the Board or Shareholders or in relation to any other affairs of the Company.

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18.4 No compensation for loss of office The Board will not authorise the payment of any compensation or other payment or benefit to a Director for loss of office as a Director.

Part E - Administration and miscellaneous 19. Authority to bind 19.1 Method of contracting A contract or other enforceable obligation may be entered into by the Company as follows: (a)

an obligation which, if entered into by a natural person, would, by law, be required to be by deed, may be entered into on behalf of the Company in writing signed under the name of the Company by: (i)

two or more Directors of the Company (or where there is only one Director, by that Director whose signature must be witnessed); or

(ii)

a Director, or any other person or class of persons authorised by the Board for that purpose, whose signature or signatures must be witnessed;

(iii)

one or more attorneys appointed by the Company in accordance with clause 19.3;

(b)

an obligation which, if entered into by a natural person, is by law, required to be in writing, may be entered into on behalf of the Company in writing by a person acting under the Company’s express or implied authority; and

(c)

an obligation which, if entered into by a natural person, is not, by law, required to be in writing, may be entered into on behalf of the Company in writing or orally by a person acting under the Company’s express or implied authority.

19.2 Resolution of authority proof of authority A copy of a resolution of the Board authorising a person to enter into a contract or other enforceable obligation on behalf of the Company will be proof of such authority notwithstanding that the authority may have been subsequently revoked.

19.3 Attorneys The Company may, by an instrument in writing executed in accordance with clause 19.1(a), appoint a person as its attorney either generally or in relation to a specified matter or matters. An act of the attorney in accordance with the instrument binds the Company.

20. Liquidation 20.1 Appointment of liquidator A liquidator of the Company may be appointed by a Special Resolution of those Shareholders entitled to vote and voting on the question.

20.2 Distribution of surplus assets Subject to the terms of issue of any Shares, upon the liquidation of the Company, any assets of the Company remaining after payment of the debts and liabilities of the Company and the costs of liquidation will be distributed among the holders of all Shares in proportion to their shareholding, provided however, that a holder of Shares not fully paid up will receive only a proportionate share Minter Ellison Rudd Watts 17947714_2

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of his or her entitlement being an amount which is in proportion to the amount paid to the Company in satisfaction of the liability of the Shareholder to the Company in respect of the Shares.

20.3 Distribution of assets in kind Upon the liquidation of the Company the liquidator may, with the sanction of an Ordinary Resolution and any other sanction required by law, divide amongst the Shareholders in kind the whole or any part of the assets of the Company (whether they consist of property of the same kind or not). The liquidator may for that purpose set such value, as the liquidator deems fair upon any assets to be divided as aforesaid and may determine how the division will be carried out as between the Shareholders holding different classes of Shares. The liquidator may, with the like sanction, vest the whole or any part of any such assets in trustees upon such trusts for the benefit of the Shareholders as the liquidator thinks fit (but so that no Shareholders will be compelled to accept any shares or other securities whereon there is any liability).

20.4 Distribution of assets on solvent dissolution For the purposes of a solvent dissolution under clause 318 of the Act, the Company will have distributed its surplus assets in accordance with this Constitution if the Company does so in accordance with clauses 20.2 or 20.3 except that no liquidator needs to be appointed and references to the liquidator in that clause will be construed as references to the Shareholders acting by an Ordinary Resolution.

21. Change of Company name A Director may apply to the Registrar of Companies to change the name of the Company if: (a)

the Board has approved the Director doing so; and

(b)

the Shareholders have approved the change of name.

22. Change of registered office or address for service Whenever the Board gives notice to the Registrar of Companies of a change in the registered office or the address for service of the Company, the Board must at the same time give written notice of the change to the Shareholders.

23. Whole of government directions The Company is required to give effect to any whole of government direction that applies to the Company by virtue of the Public Finance Act and the Crown Entities Act.

24. Crown’s shareholdings 24.1 Ministers of the Crown Shares in the Company held by the Crown acting by and through a person described as the holder of a specified Ministerial portfolio will be held by the Crown acting by and through the person for the time being holding that portfolio. A Minister of the Crown by and through whom the Crown acts as holder of Shares in the Company will be entitled to exercise all rights and powers in relation or attaching to those Shares, on behalf of the Crown, as if that Minister was the person registered in the Company’s Register as the holder of those Shares and, to the extent that provisions of the Crown Entities Act apply to the Company, either under the Public Finance Act Minter Ellison Rudd Watts 17947714_2

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or by virtue of this Constitution, any such Minister will have all the powers of a responsible Minister under those provisions in relation to the Company, as if the Company was a crown entity company under the Crown Entities Act.

24.2 Change of Ministerial portfolio The Prime Minister may at any time or times, by written notice to the address for service of the Company which specifies the existing Ministerial portfolio and the new Ministerial portfolio, change the Ministerial portfolio by and through which the Crown acts in relation to any Shares in the Company and any such change will have effect from the date specified in the notice (or, if no date is specified, from the date on which the notice is received by the Company).

24.3 No transfer of Shares required It will not be necessary to complete or register a transfer of Shares in the Company consequent upon a change in the person holding a Ministerial portfolio as contemplated by clause 24.1 or upon a change in a Ministerial portfolio as contemplated by clause 24.2 and the new person or holder of the new Ministerial portfolio may, on behalf of the Crown, act in relation to the Shares as if the person or holder was registered in the Company’s Register as the person by and through whom the Crown acts in relation to the Shares. Regardless of this provision, the Board may, on receiving evidence that such a change to Ministerial responsibilities has occurred, enter in to the Register the name and other details of such person who has assumed such responsibility.

24.4 Appointment of representative A Shareholding Minister of the Crown may at any time or times, by written notice to the address for service of the Company, authorise (on such terms and conditions as are specified in the notice) any such person the Shareholding Minister thinks fit to act as the Crown’s representative at any or all of the meetings of Shareholders of the Company, and any person so authorised will be entitled to exercise at the meeting or meetings the same powers as the Crown acting by and through that Shareholding Minister could exercise if present in person at the meeting or meetings.

25. Council Representative The Council has the right to appoint a Council Representative as its proxy to attend and vote at meetings of Shareholders on its behalf. Any Council Representative so appointed is entitled to attend and be heard at such meetings and to demand or join in demanding a poll, as if that Council Representative was the Council.

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Schedule 1 – Issue of Class B Shares 1.

Definitions Capitalised terms in the Schedule which are not otherwise defined have the meaning given to those terms in the Project Delivery Agreement.

2.

Requirements and procedure for issue of Class B Shares (a)

(b)

3.

Subject to receipt of: (i)

the Crown Requested Funding as specified in a Funding Request, the Company shall issue Class B Shares (having the rights, privileges and limitations (including any restrictions on transfer) attached to Class B Shares as set out in this Constitution) to the Shareholding Ministers upon the issue date set out in the Funding Request and in accordance with the amounts and proportions of Class B Shares set out in such request; and

(ii)

the Council Requested Funding as specified in a Funding Request, the Company shall issue Class B Shares (having the rights, privileges and limitations (including any restrictions on transfer) attached to Class B Shares as set out in this Constitution) to the Council upon the issue date set out in the Funding Request and in accordance with the amounts and proportions of Class B Shares set out in such request.

If a Non-Defaulting Sponsor pays an NDS Payment Amount, the Company shall issue Class B Shares (having the rights, privileges and limitations (including any restrictions on transfer) attached to Class B Shares as set out in this Constitution) to the Non-Defaulting Sponsor pursuant to clause 5(d) of Schedule 10 to the PDA.

Issue of New Shares (a)

CRLL must update the Register of the Company to record each issue of new Class B Shares; and

(b)

CRLL must update the Companies Office regarding the issue of new Shares within 10 working days (as that term is defined in the Companies Act) of such issue.

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