Example: Contract Modification Provisions

37. Modifications

37.1 Request for information by State

The State may request from each Concessionaire information as to revenue and cost impacts on, respectively, each Concessionaire's Works, Temporary Works, Facilities, Construction Activities or Operation Activities and other matters specified in the request in relation to a proposed Modification of the Works, the Temporary Works, the Facilities or the obligations in the Project Documents which relate to the Construction Activities or the Operation Activities.

37.2 Details of Modification

If the State proposes to request a Modification, it will provide the Concessionaires with details of the proposed Modification and consult with the Concessionaires concerning the proposed Modification at least 30 Business Days prior to issuing the request under clause 37.1 (Request for information by State).

37.3 Concessionaires' Modification Notice

As soon as practicable after receipt of a request from the State under clause 37.1 (Request for information by State), the Concessionaires must provide the State with a notice (Concessionaires' Modification Notice) setting out detailed particulars of:

(a) Costs

their estimate of the costs (with no allowance for profit margin to either Concessionaire, reasonable allowance for risk to a Contractor or Relevant Entity on goods or services procured by the Contractor or Relevant Entity from a third party (which is disclosed to the State in accordance with the notification requirements of this clause 37.3 (Concessionaires' Modification Notice) (and, in respect of goods or services, provided by the Contractor or Relevant Entity itself, a reasonable allowance for profit margin)), of carrying out the proposed Modification, including:

(i) all direct design, construction, commissioning, operation, maintenance or repair costs;

(ii) all indirect or consequential design, construction, commissioning, operation, maintenance or repair costs (including deferments and delay costs);

(iii) any costs savings; and

(iv) any change in the amount or timing of Taxes payable by a Concessionaire relating to the proposed Modification (including any costs relating to the proposed Modification not being an allowable deduction under the Income Tax Assessment Act 1936 (Cth)) noting that each Concessionaire must use reasonable endeavours to reduce any adverse impact and maximise the positive impact, on the timing or payment of Taxes as far as practicable, which may, for example, entail adopting an alternative structure for having the Modification implemented;

(b) Revenues

their estimate of the positive or negative revenue impact of carrying out the proposed Modification;

(c) Time impacts

if the request is made prior to the last Date of Close-Out:

(i) the effect (if any) of the proposed Modification on the:

(A) achievement of (as applicable) the Relevant Milestone Dates, each Planned Date for Freeway Section Completion, each Late Completion Date, Tolling Completion for each Section and Close- Out for each Section;

(B) Design and Construction Program; and

(C) Project Plans; and

(ii) the extension of time (if any) required to the relevant Planned Date for Freeway Section Completion or the Late Completion Date (as applicable) for each Section or the relevant Late Completion Date (as the case may be) affected by the proposed Modification, with details of the basis for this extension (including evidence demonstrating compliance with clauses 20.4(f)(ii) and 20.4(f)(iii) (Condition precedent));

(d) Facilities impacts

the effects (if any) of the proposed Modification on:

(i) the workmanship or durability of any part of the Works, Temporary Works or the Facilities (including any items of plant or equipment forming part of the Facilities and any warranties with respect to the Works, the Temporary Works or the Facilities);

(ii) the provision of the Facilities for use by the general public for the safe, efficient and continuous passage of vehicles;

(iii) traffic flow on, onto and off the Freeway during the Concession Period;

(iv) the Construction Activities or the Operation Activities;

(v) the ability to handover the Facilities in accordance with the terms of this Deed;

(vi) the performance of any other of the Concessionaires' obligations under the Transaction Documents; and

(vii) any relevant information related to carrying out the proposed Modification.

(e) Concessionaire funding

if funding is required and the Modifications were to be funded other than by the State, the amount, timing, cost, terms and other consequences of such funding;

(f) State funding

if funding is required and the Modifications were to be funded by the State, the amount, timing, cost, terms and other consequences of any such State funding;

(g) Implementation

the time within, and the manner in which, the relevant Concessionaire or Concessionaires propose to implement the Modification;

(h) Relevant effect

any effect which is both material and detrimental on:

(i) the ability of FinCo to pay or repay the Actual Debt on the due dates for payment (without regard to any acceleration of the obligations to pay or repay); or

(ii) the Equity Returns,

that will, or is likely to, result as a consequence of the proposed Modification (including supporting evidence) together with details of a commercially appropriate and reasonable method by which the relevant Concessionaire or Concessionaires propose that this material and detrimental effect will be addressed which takes into account the level of risk to the relevant Concessionaire or Concessionaires inherent in undertaking the Modification determined first, assuming the case where the Concessionaire funds the proposed Modification and secondly, assuming the case where the State funds the proposed Modification;

(i) Material enhancement

any material enhancement to:

(i) the ability of FinCo to pay or repay the Actual Debt on the due dates for payment (without regard to any acceleration of the obligations to pay or repay); or

(ii) Equity Returns,

that will, or is likely to, result as a consequence of the proposed Modification (including, in the case where the Modification involves any omission or deletion from the Construction Activities, the Works, the Temporary Works, the Operation Activities or the Facilities, any material enhancement resulting from a reduction in costs incurred or to be incurred by the Concessionaires, the ability, earlier than anticipated, to pay, repay or provide a return of, or reduce the required amount of, Actual Debt or Equity Funding or any resulting increase in forecast revenue) together with details of a commercially appropriate and reasonable method by which the Trustee will return to the State (or, at the State's election, Concessionaire will return to users of the Freeway) the proportion of that benefit which is in excess of any part of that benefit which it is necessary for the Concessionaires to retain in order for the Concessionaires to be able to give relevant Equity Returns to the Equity Investors which takes into account the level of risk to the Concessionaires inherent in undertaking the Modification determined first, assuming the case where the Concessionaires fund the proposed Modification and secondly, assuming the case where the State funds the proposed Modification;

(j) Project Documents

the minimum changes required to the Project Documents to accommodate the proposed Modification and the associated arrangements, including as to funding, land use, the method of addressing any material and detrimental effect and the method for returning a proportion of the benefit of any material enhancement to give effect to the Modification; and

(k) Other relevant information

any other relevant information related to carrying out the proposed Modification.

37.4 Commercially appropriate and reasonable methods

The commercially reasonable and appropriate method or methods by which a material and detrimental effect will be addressed, as contemplated by clause 37.3(h) (Relevant effect) or a proportion of a benefit of any material enhancement returned as contemplated by clause 37.3(i) (Material enhancement) may involve one or more of the following:

(a) varying the Project Documents;

(b) varying the Concession Period and the term of the relevant Freeway Lease;

(c) varying the financial or other contributions or returns of the parties (or providing for new financial or other contributions or returns);

(d) requesting that the Financiers restructure the Project financing arrangements;

(e) varying the Toll Calculation Schedule; or

(f) taking any other action which is appropriate and reasonable.