3. Commencement and Duration of Agreement 64

DATED 17 August 2018

(1) COUNCIL OF THE CITY OF SUNDERLAND

(2) SUNDERLAND CLC SCHOOL SERVICES LIMITED

AGREEMENT for provision of a Community Learning Centre encompassing School, Library and other facilities and support services through the PFI

EVERSHEDS Cloth Hall Court Infirmary Street Leeds LS1 2JB Tel: 0113 243 0391 Fax: 0113 245 6188

DILLONM / Brooksa / 13 September 2001 LDS_003 / 262924-1 CONTENTS

Clause Page

PART I - PRELIMINARY...... 2 1. DEFINITIONS...... 2 2. INTERPRETATION...... 63 3. COMMENCEMENT AND DURATION OF AGREEMENT...... 64 5. WARRANTIES...... 70 PART II - WORKS AND SERVICES OBLIGATIONS...... 73 6. PRINCIPAL OBLIGATIONS...... 73 7. THE SITE...... 74 8. CDM REGULATIONS...... 76 9. VARIATIONS TO THE WORKS...... 77 10. DELAYS IN SERVICE COMMENCEMENT DUE TO A COMPENSATION EVENT...... 77 11. DELAYS DUE TO A RELIEF EVENT...... 80 12. RELIEF EVENTS, COMPENSATION EVENTS AND FORCE MAJEURE EVENTS...... 82 PART III - THE SERVICES...... 84 13. COMMISSIONING OF SERVICES...... 84 14. PRINCIPAL OBLIGATIONS...... 84 15. MAINTENANCE...... 87 16. REPRESENTATIVES AND LIAISON...... 90 PART IV - CHANGES TO THE WORKS OR SERVICES...... 94 17. CHANGES TO THE WORKS OR SERVICES...... 94 18. CHANGE IN LAW...... 100 PART V - PAYMENT PROVISIONS...... 104 19. THE UNITARY CHARGE...... 104 20. VAT...... 104 20A1 CATERING...... 105 21. REPORT AND INVOICING...... 108 22. INDEXATION...... 111 23. BENCHMARKING, MARKET TESTING AND BEST VALUE...... 112 24. ADDITIONAL INCOME...... 122 PART VI - PERFORMANCE AND MONITORING...... 124 25. PERFORMANCE MONITORING...... 124 26. AUDIT ACCESS...... 125 27. INSURANCE...... 126 28. SECURITY...... 137 29. HEALTH AND SAFETY AND OTHER LEGAL REQUIREMENTS.....138 30. INTELLECTUAL PROPERTY...... 139 31. OPERATING MANUAL...... 140 32. CONTRACTOR’S RECORDS...... 141 33. INFORMATION TO BE SUBMITTED TO THIRD PARTIES...... 143 34. REGULAR MEETINGS OF THE AUTHORITY AND CONTRACTOR ...... 144 35. DATA PROTECTION...... 144 36. AUTHORITY STEP-IN...... 145 PART VII - EMPLOYEES AND FAIR EMPLOYMENT...... 151 37. TUPE AND PENSIONS...... 151 38. EMPLOYEES...... 156 39. EQUAL OPPORTUNITY...... 160 PART VIII - TERMINATION...... 165 40. SENIOR LENDER’S DIRECT AGREEMENT...... 165 41. TERMINATION ON AUTHORITY DEFAULT...... 165 42. COMPENSATION ON AUTHORITY DEFAULT...... 165 43. TERMINATION OF A SUB-CONTRACT...... 166 44. TERMINATION OF WHOLE AGREEMENT ON CONTRACTOR DEFAULT OR INSOLVENCY DEFAULT...... 167 45. TERMINATION ON FORCE MAJEURE...... 170 46. COMPENSATION ON TERMINATION FOR FORCE MAJEURE...... 172 47. TERMINATION FOR CORRUPT GIFTS AND FRAUD...... 172 48. COMPENSATION ON TERMINATION FOR CORRUPT GIFTS AND FRAUD...... 174 49. VOLUNTARY TERMINATION BY THE AUTHORITY...... 174 50. COMPENSATION ON VOLUNTARY TERMINATION...... 174 50A. TRANSFER OF ASSETS ON EARLY TERMINATION...... 175 51. CALCULATION AND PAYMENT OF EARLY TERMINATION PAYMENTS...... 175 52. TERMINATION ON EXPIRY OF SERVICE PERIOD...... 178 PART IX - GENERAL...... 183 53. GOVERNORS AGREEMENT...... 183 54. INDEMNITY...... 183 55. CONDUCT AND CONTROL OF CLAIMS...... 186 56. SET OFF AND INTEREST ON LATE PAYMENTS...... 188 57. CHANGE IN OWNERSHIP OF THE CONTRACTOR AND PROPOSED SHARE TRANSFERS TO A RESTRICTED PERSON...... 188 58. REFINANCING...... 189 59. ASSIGNMENT AND SUB-CONTRACTING...... 192 60. STATUTORY RESPONSIBILITIES...... 194 61. INFORMATION AND CONFIDENTIALITY...... 194 62. PUBLIC RELATIONS AND PUBLICITY...... 196 63. DISPUTE RESOLUTION...... 197 64. WAIVER...... 204 65. SEVERABILITY...... 204 66. COUNTERPARTS...... 205 67. SUCCESSORS...... 205 68. IP OF PARTIES...... 205 69. NOTICES...... 205 70. ENTIRE AGREEMENT...... 206 71. RELEVANT DISCHARGE TERMS...... 206 72. AMENDMENTS...... 207 73. MALADMINISTRATION...... 207 74. EMU CONTINUITY OF CONTRACT...... 207 75. NATIONAL NON-DOMESTIC RATES...... 208 76. LOCAL GOVERNMENT (CONTRACTS) ACT 1997...... 208 THIS CONTRACT is made on 17 August 2018

BETWEEN

(3) Council of the City of Sunderland of Civic Centre, Sunderland, SR2 7DN (“the Authority”); and

(4) Sunderland CLC School Services Limited (Company registration number 4153442) whose registered office is at Frogmore Hall, Frogmore Park, Watton-at-Stone, Hertford SG14 3RU (“the Contractor”).

BACKGROUND

(A) The Authority wishes to obtain new secondary school premises and services in respect of those Facilities to assist the Authority in the provision by it of secondary school education in accordance with its responsibilities under section 14 of the Education Act 1996.

(B) The Authority also wishes to obtain new library premises relocating from its Grindon Library premises and services in respect of those premises to assist the Authority in the provision by it of library services in accordance with section 7 of the Public Libraries Museums Act 1964.

(C) The Authority also wishes to obtain new Community and Youth Centre facilities and services in respect of those premises to assist the Authority in provision by it of adequate facilities for further education and recreation of facilities in accordance with section 15 of the Education Act 1996 and section 19 of the Local Government (Miscellaneous Provisions) Act 1976 respectively.

(D) The Authority also wishes to obtain a new Electronic Village Hall and services in respect of those premises to assist the Authority in provision it of an Electronic Village Hall in accordance with section 15 of the Education Act 1996.

(E) The Authority also wishes to obtain LEA Facilities in furtherance of its general responsibilities under the Education Act 1996.

(F) By means of a notice placed in the Official Journal of the European Communities in August 2000 the Authority indicated its intention to stage a regulated procurement and through a process of competitive tender the Contractor has indicated its willingness, and has been selected by the Authority, to provide the required facilities and services.

1 (G) It is intended that this Agreement will, in accordance with the provisions of the Government’s Private Finance Initiative, establish a basis for a combination of public and private finance within a contractual structure which allocates responsibility for the management of risk to that party best able to manage it.

(H) The Contractor’s obligations to the Authority under the terms of this Agreement will be carried out in respect of the Facilities in two stages, the first stage being the Development Period and the second stage being the Service Period. During the Development Period the Contractor shall construct or procure the construction of the new Facilities. When the Facilities are completed in accordance with the terms of this Agreement and become available the Service Period shall commence and the Unitary Charge shall be paid subject to deductions for unavailability and sub- standard performance in respect of it. During the Service Period the Contractor shall provide or procure the provision the Services referred to in this Agreement in respect of the Facilities.

(I) This Agreement is to be a certified contract within the meaning of section 2 of the Local Government (Contracts) Act 1997 and the certification requirements (within the meaning of section 3 of that Act) are intended to be satisfied by the Authority before the end of the period of six weeks beginning with the day the Authority entered into this Agreement. The Contractor confirms its consent to the issue of the Certificates in a manner effective under the 1997 Act.

(J) The Relevant Discharge Terms agreed between the Authority and the Contractor are contained in this Agreement.

(K) The Authority wishes to dispose of the Broadway Site and will enter into an agreement on the date hereof for the sale of the Broadway Site upon the terms set out in the Forward Sale Agreement.

OPERATIVE PROVISIONS

PART I - PRELIMINARY

1. DEFINITIONS1

1.1 In this Agreement and in any other documentation relating to the Project which so provide the following words and expressions shall have the following meanings:

“Abandonment” other than due to circumstances beyond the reasonable control of the Contractor, the

2 Contractor wholly or substantially failing to carry out the Works and failing to resume or procure the resumption of the Works within 20 Business Days of the Authority notifying the Contractor of such failure and the Authority having demonstrated that the failure of the Contractor is such that it is impracticable for the Contractor to achieve the Service Commencement Date by the Deadline Date

“Academic Year” the period beginning on 1 September in any Year and ending on 31 August in the following Year

“Acceptance Certificate” the certificate in or substantially in the form attached at Schedule 3 (Form of Acceptance Certificate) to be issued by the Employer’s Agent in respect of each of the Phase 1 Construction Works and the Phase 2 Construction Works save in each case for Snagging Matters pursuant to paragraph 6 of Schedule 1 (Issue of Acceptance Certificate) when the Facilities comprising the Phase I Construction Works and Phase II Construction Works respectively have reached Practical Completion

“Acquired Rights Directive” EU Directive 77/187

“Actuary” means a Fellow of the Institute or Faculty of Actuaries or a body making available the advice of such a Fellow

“Adjoining Owners” all owners and occupiers of any Adjoining Property

“Adjoining Property” any land and/or property adjoining the Site and each and every part thereof including all Conduits, roads, footpaths, walls, fences, buildings and other erections and all service

3 media and other apparatus on, under or within such land and/or property

“Adjudicator” the expert appointed in accordance with clause 63

“Admission Agreement” an agreement to be made between the South Tyneside Metropolitan Borough Council, the Authority and the Contractor or a Sub- Contractor concerning admission to the LGPS

“Adverse Rights” all (if any) rights of light and air and any other rights and easements whatever (including any rights and easements in respect of Conduits) and all (if any) other Restrictions enjoyed over the Site respectively by any Adjoining Property or Adjoining Owners

“Affiliate” in relation to any person means (where that person is a corporation) a holding company of that person or a subsidiary of that or its holding company, or a person (whether or not a corporation and if it is a corporation any holding company or subsidiary of that person) which beneficially owns at least 20% of the issued share capital of that person

“Agreed Form” in respect of any document, that it has been initialled by or on behalf of each of the Parties for the purpose of identification and in the Agreed Form shall be construed accordingly

“Agreement” this Agreement including the Schedules and any annexures expressed to form part of the agreement

“Agreements for Lease” the wholly separate agreements for Lease and Underlease of even date between (1) the

4 Authority and (2) the Contractor in respect of the Lease and the Contractor (1) and the Authority (2) in respect of the Underlease

“Agreement Period” the duration of this Agreement as set out in clause 3.1 (Duration of Agreement)

“Applicable Period” each five year period during the Service Period to which a Benchmarking Exercise relates

“Appropriation” any appropriation of part or parts of the Recreational Area from use as school playing fields to use for educational facilities undertaken by the Authority pursuant to its powers under section 122 of the Local Government Act 1972

“Approvals” all approvals, consents, permissions and licences and authorisations of a Relevant Authority required for the Works or operation of the Services or for the performance of any of the Contractor’s other obligations under this Agreement

“Approved Design Data” any Reviewable Design Data in respect of which the Authority delivers a No Comments Statement or is deemed to have delivered a No Comments Statement to the Contractor pursuant to Schedule 1A (Works)

“Area” a distinct area, space, facility or category of accommodation comprising two or more units and identifiable by reference to Part IX of Schedule 4

“Assets” all assets and rights relevant to the Community Learning Centre to enable the Contractor or a successor contractor to own, operate and maintain the Community Learning Centre in accordance with this

5 Agreement including:

(a) any land or buildings;

(b) any equipment;

(c) any books and records (including operating and maintenance manuals, health and safety manuals and other know-how);

(d) any spare parts, tools and other assets (together with any warranties in respect of assets being transferred);

(e) any anticipated or future revenues which may be earned from third parties after the expiry or termination of this Agreement and any other contractual rights arising after termination of this Agreement and which are in either case not assigned or novated pursuant to any other Project Document;

(f) any Intellectual Property Right

to which the Authority is entitled to have continuing access under any express term of this Agreement

“Associated Company” any company which is in relation to another its parent undertaking, its subsidiary undertaking or a subsidiary undertaking of the other company’s parent undertaking and “parent undertaking” and “subsidiary undertaking” shall have the meanings attributed thereto in sections 258 and 259 of the Companies Act 1985

“Authorised Officer” the officer approved by the Authority from time to time and notified to the Contractor

6 pursuant to paragraph 8 of Schedule 1A (Works)

“Authority Approval” any Approval or Consent which, by its nature, or in the circumstances for the time being, only the Authority has legal standing to request or obtain

“Authority Change” a change in Works or Services by the Authority which the Contractor is obliged to implement under clause 17 (Authority Change in Works or Services)

“Authority Default” one of the following events:

(a) any expropriation, sequestration or requisition of a material part of the Assets and/or shares of the Contractor by the Authority or other Relevant Authority;

(b) a failure by the Authority to make payment of:

(i) an Invoiced Sum by the due date for payment as provided by clause 21 of this Agreement; or

(ii) any other sum or sums in aggregate of £25,000 or more due to the Contractor provided that the Contractor shall first have served upon the Authority a formal written demand specifying the amount of any such sum payable and (where necessary) the basis of such calculation (copied to the Chief Executive

7 Officer of the Authority) and clearly stating that failure to pay may lead to termination of this Agreement under Part VIII of this Agreement and the Authority fails to pay such amount within 15 days from the formal written demand

(c) a breach by the Authority of its obligations under this Agreement which substantially frustrates or renders it impossible for the Contractor to perform its obligations under this Agreement for a continuous period of three months or two or more periods of time within any six month period which in aggregate amounts to a period of three months;

(d) a Discriminatory Change in Law or a Specific Change in Law occurs which substantially frustrates or renders it impossible or unlawful for the Contractor to comply with any of its obligations under this Agreement for a continuous period in excess of two months;

(e) a breach by the Authority of clause 59.1 (Assignment and Sub-contracting)

“Authority Notice of Change” a notice to be served by the Authority on the Contractor requesting a change in the Works or Services in accordance with

8 clause 17 (Authority Change in Works or Services)

“Authority Party” any of the Authority’s agents, contractors or sub-contractors of any tier or other authorised representatives and its or their directors, officers and employees, teachers (regardless of who such persons may be employed or otherwise engaged by) and other members of the staff of the Authority or of any Governors, co-opted members of any committee of Governors and Relevant Users of Facilities but excluding the Contractor and any Contractor Party and statutory undertakers and utilities and “Authority Parties” shall be construed accordingly

“Authority Policy” such policies of the Authority as at the date of this Agreement are set out in one or more of the publications listed in Schedule 16 and an Authority Policy shall be one or more of them

“Authority’s Authorised the representative approved by the Representative” Authority from time to time and notified to the Contractor pursuant to clause 16.10 (Project Director’s Power to Delegate)

“Authority’s Share” the amount of Cumulative Capital Expenditure in excess of £450,000

“Availability Criteria and the criteria and standards respectively as Performance Standards” detailed in Schedule 4 (Payment Mechanism)

“Available” is detailed in the Output Specification (and “Availability” and “Unavailability” shall be construed accordingly)

“Background Information” all and any written, printed or electronically held materials, documents, drawings, plans

9 or other information relating in any way to the Project made available by the Authority or its agents in connection with the negotiation and preparation of this Agreement and during the process of competitive tender which preceded such negotiation and preparation, including all such materials, documents, drawings, plans, models or other information provided in connection with pre-qualification for that process

“Benchmark Date” the date from which the Benchmarked Price becomes an element of the Unitary Charge in the manner provided for by clause 23 (Benchmarking, Market Testing and Best Value)

“Benchmark Process the date falling six months prior to the Commencement Date” commencement of the relevant Applicable Period

“Benchmarked Price” the price agreed or determined for certain elements of the Services as a result of a benchmarking exercise under clause 23 (Benchmarking, Market Testing and Best Value)

“Broadway Sale Proceeds” The sum of £4,900,000 (sterling)

“Broadway Site” the land identified in blue on plan PA-01 and attached at Annex 4

“Business Day” a day (other than a Saturday or Sunday) on which banks are open for domestic business in the City of London

“Capital Contribution VAT Date” the later of the date VAT payable pursuant to clause 4.5.1 is demanded by the Contractor or the date which is 3 Business Days before the date upon which the Contractor is due to account to HM

10 Customs and Excise for the VAT payable pursuant to clause 4.5.1

“Capital Expenditure” any expenditure which falls to be treated as capital expenditure in accordance with generally accepted accounting principles in the United Kingdom from time to time

“Caretaker Properties” the properties situate within the boundaries of the Site highlighted in red on the plans PA-01 attached at Annex 4B

“Catering Service” the provision of school meals (including the provision of free school meals) Third Party meals and the provision of operating of vending machines in accordance with clause 20A and Schedule 4 of this Agreement

“CEDR” Centre for Dispute Resolution Limited, a company registered in England with number 2422813, that company with whatever registered name, any company (whether or not a subsidiary, parent or subsidiary of a parent of that company), or other entity which has, after the date of this Agreement succeeded to that company’s business of providing alternative dispute resolution services

“Centre Functionality” (a) the following matters as shown on the 1:500 scale External Works Landscape and Layout plan:

(i) the points of access to and within the Site and points of access to the Facilities;

(ii) the relationship between one or more buildings that comprise the Facilities;

(iii) the location of and

11 adjacencies between and the size (in metres) of the sports areas and pitches

(b) the following matters as shown on the 1:200 scale general arrangement plans

(i) the points of access to and within the Facilities;

(ii) the relationship between one or more buildings;

(iii) the location of and adjacencies between different user group areas;

(iv) the adjacencies between rooms within the user group areas; and

(v) the quantity, description and areas (in square metres) of the rooms and spaces shown

(c) the location and relationship of fixed equipment, fixed furniture and fittings as shown on the 1:50 loaded room plans in respect of:

(i) room layouts;

(ii) internal room elevations; and

(iii) reflected ceiling plan layouts

“Certificates” the certificates issued by the Authority pursuant to the Local Government (Contracts) Act 1997 in respect of each of this Agreement and the Senior Lender’s

12 Direct Agreement

“Certification Requirements” means the certification requirements within the meaning of section 3 of the Local Government (Contracts) Act 1997

“Change in Law” the coming into effect after the date of this Agreement of:

(a) Legislation applicable in England, other than any Legislation which on the date of this Agreement has been published:

(i) in a draft Bill as part of a Government Departmental Consultation Paper;

(ii) in a Bill;

(iii) in a draft statutory instrument; or

(iv) published as a proposal in the Official Journal of the European Communities

(b) any Guidance; or

(c) any applicable judgement of a relevant court of law which changes a binding precedent

(d) provided that in the case of legislation which has been published in any of the circumstances described at paragraph (i) to (iv) above the legislation is enacted in substantially the same form and detail referred to in the relevant Bill, statutory instrument or proposal

“Collateral Warranty” a collateral warranty between the Authority

13 and either (as the case may be) the Construction Contractor or a member of the Professional Team or the M & E Sub- Contractor in the relevant form set out in Annex 10 (Collateral Warranty) and “Collateral Warranties” shall be construed accordingly

“Comments Statement” a statement made under paragraph 3.2.8 of Schedule 1A (Works)

“Community Learning Centre” shall be taken to be a composite reference to the School (including any playing fields and other areas within the Site accessible for the benefit of the School), the Community and Youth Centre Facilities and the LEA Facilities all as located on the Site

“Community and Youth Centre that part of the facilities to be provided and Facilities” to which Services are to be delivered by or on behalf of the Contractor outlined in green identified on plan PA-02(L(02))211 Rev E) and comprising a public library, community and youth centre and an electronic village hall

“Compensation Event” (a) a breach by the Authority of any of its obligations under this Agreement or any Project Document to which the Authority is a party (and which shall be deemed to include (without limiting the generality of the foregoing) any breach occasioned by any act or omission of an Authority Party which has the effect of materially preventing the Contractor from performing the Works or providing the Services in accordance with this Agreement);

14 (b) a refusal of the Authority to grant access to the Contractor to the Site or any part of the Site or any other act or omission by the Authority which hinders the Contractor in taking advantage of such rights of access as have been granted;

(c) an Authority Change;

(d) a Qualifying Change of Law;

(e) without prejudice to the generality of clause (a) above any breach by the Authority of its obligations in paragraph 9.1.1 of Schedule 1A (Works) or any opening up of the Works required by the Authority under paragraph 9.1.2 of Schedule 1A (Works) if the opening up shows no failure by the Contractor to comply with its obligations under this Agreement;

(i) any official or unofficial strike, lock out or go slow engaged in by employees of the Authority or an Authority Party; or

(ii) any other dispute engaged in or by employees of the Authority or an Authority Party

to the extent that such matter has an affect upon the performance of the Works or Services by the

15 Contractor or (on the Contractor’s behalf) any Contractor Party

(g) the occurrence of Planning Proceedings;

(h) the revocation of any Approvals or Consents or following the Service Commencement Date, any delay in grant of or change in the terms or, any Approvals or Consents to the extent that the cause of any such revocation, delay or change is not due to any act or omission of the Contractor or a Contractor Party; or

(i) any Emergency to the extent only as provided for by clause 14.3

“Compensation Regulations” the Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) Regulations 2000 and the Local Government (Discretionary Payments) Regulations 1996 (as from time to time amended, modified, extended, replaced or consolidated)

“Completion Criteria” (a) the structural external and internal elements of the Phase are physically present, weathertight and permit occupation in compliance with relevant Legislation in respect of health and safety;

(b) the New Equipment specified in the relevant room data sheet forming part of the Approved Design Data is present and is in

16 operable order;

(c) there is vehicular access and pedestrian access to that Phase in accordance with the Output Specification;

(d) there is power supply (including electricity and gas) available in accordance with the requirements of the Output Specification;

(e) the lighting, heating and ventilation provided procure satisfaction of the requirements of the Output Specification save in respect of matters which constitute Snagging Matters;

(f) outdoor areas (where in accordance with the Output Specification the Contractor has carried out or procured the carrying out of drainage work) are adequately drained;

(g) waste has not accumulated to such a degree that it represents a hazard to health or safety of occupiers of the Phase;

(h) it is sufficiently clean such that it does not present a hazard to the health or safety of occupiers of the Phase

(i) it has a functioning fire alarm or fire prevention system and security system (to the extent that such features are included in the Output Specification) and fire exits are operational;

17 (j) it is not occupied by any Contractor Parties except for the purpose of completing and attending to Snagging Matters in accordance with this Agreement;

(k) all documents expressly required to be delivered to the Authority prior to Practical Completion in accordance with this Agreement and the Output Specification (including the Health and Safety File and the Operating Manual and a duplicate thereof) have been provided;

(l) the Phase is clear of all temporary structures, rubbish and all building and surplus materials and equipment;

(m) all testing and commissioning (save for that which is the responsibility of the Authority) in respect of the Phase has been satisfactorily completed in accordance with the Output Specification and/or Works Delivery Plan.

“Conduits” all pipes, sewers, drains, mains, ducts, conduits, gutters, water courses, wires, cables, meters, switches, channels, flues and all other conducting media appliances and apparatus including any fixtures, louvres, cowls and other ancillary apparatus

“Consent” in relation to any Adverse Right which would or might be interfered with by the carrying out of the Works, the consent, in writing of all Adjoining Owners entitled to or interested in the Adverse Right in

18 question to either:

(a) the removal or diversion (whether temporarily or permanently) of the subject matter of the Adverse Right in question; or

(b) the carrying out of the Works notwithstanding such interference, such consent (in any such case) to be on terms previously approved in writing by the Authority (such approval not to be unreasonably withheld or delayed)

“Construction Agreement” the construction agreement between the Contractor and the Construction Contractor relating to all of the Works in the Agreed Form

“Construction Contractor” Jarvis Construction (UK) Limited or such other construction contractor as the Contractor may appoint to carry out the Construction Agreement

“Construction Documents” the plans, drawings, designs, details and specifications relating to the Works contained in the Works Delivery Plan and any variations thereto pursuant to clause 9 or paragraph 3 or paragraph 4.7 of Schedule 1A (Works)

“Contractor Change” a change proposed by the Contractor pursuant to clause 17.2

“Contractor Default” any of the following:

(a) subject to clause 5.5 a breach by the Contractor of its obligations under this Agreement (other than any breach which leads to any deduction under Schedule 4 (Payment Mechanism) or any of

19 the indemnity or payment provisions of this Agreement) which materially and adversely affects the performance of the Services;

(b) a Persistent Breach (subject to the provisions of clause 5.5);

(c) any unreasonable refusal or persistent failure by or on behalf of the Contractor to remove any person whom the Authority deems to be unsuitable and requires to be removed in accordance in accordance with clause 38.8 (Employees);

(d) a breach by the Contractor of its obligations in clause 57.2.1 and 57.2.3 in respect of a sale, transfer or other disposal of shares;

(e) Abandonment of the Works by or on behalf of the Contractor;

(f) a failure to achieve the Service Commencement Date by the Deadline Date;

(g) accumulation of Unavailability Deductions (and Repetition Deductions for Unavailability) as defined in Schedule 4 (Payment Mechanism) which amount to 20% or more of the GBMP (as defined in Schedule 4 (Payment Mechanism)) in respect of;

(i) each of 4 consecutive Months; or

(ii) each of 5 Months in any

20 Year

(h) accumulation of Service Performance Shortfall Deductions (and Repetition Deductions for Service Performance Shortfall Deductions) as defined in Schedule 4 (Payment Mechanism) which amount to 12.5% or more of the GBMP in respect of:

(i) each of 4 consecutive Months; or

(ii) each of 5 Months in any Year

(i) accumulation of Unavailability Deductions and Service Performance Shortfall Deductions and Repetition Deductions for Service Performance Shortfall Deductions) as defined in Schedule 4 (Payment Mechanism) which amount to 25% or more of the GBMP in respect of:

(i) each of 4 consecutive Months in a Year; or

(ii) each of any 5 Months in any Year;

(j) any material breach by the Contractor of its obligations to take out and maintain the Required Insurances which material breach shall continue and shall not have been remedied by the Contractor within a reasonable period (in any

21 event not being more than 10 Business Days) after due notice by the Authority in accordance with clause 27, except in respect of and to the extent that at any time a risk is dealt with under clause 27 as Uninsurable;

(k) the occurrence of an event of Insolvency Default

“Contractor Party” the Construction Contractor, Operating Contractor and any other Sub-Contractors (of any tier) and its or their directors, officers and employees in relation to the Project and “Contractor Parties” shall be construed accordingly

“Contractor’s Share” the amount of Cumulative Capital Expenditure less than or equal to £450,000

“Credit Agreement” means the credit agreement relating to project finance facilities entered into between (1) Sunderland CLC School Services Limited and (2) NIB Capital Bank N.V.

“Cumulative Capital Expenditure” at the relevant time the aggregate of:

(a) all reasonable Capital Expenditure that has been incurred as a result of each General Change in Law that has come into effect during the period of this Agreement; and

(b) the amount of Capital Expenditure that is agreed, or determined to be required and which has yet to be committed in respect of the Project, as a result of a General Change in Law under clause 18.1 (Qualifying Change in Law)

22 “Day” each period of 24 hours from midnight to midnight

“Deadline Date” the date 12 months after the Planned Service Commencement Date as such date may be extended in accordance with clause 10 or clause 11

“Debt Obligation Period” the period remaining following the Termination Date over which the Contractor is contracted to pay the Term Loan Advances (as defined in the Credit Agreement)

“Decant Plan” the plan relating to the decanting of equipment and other items from the Existing School to the new School agreed or otherwise determined pursuant to paragraph 3.6.3 or 3.6.4 of Schedule 1A (Works) (as the case may be)

“Defects Liability Period” in respect of each Phase the period of one year commencing on the date of issue of the Acceptance Certificate in respect of such Phase

“Defects Notice” has the meaning given to in paragraph 9.2 of Schedule 1A (Works)

“Design Documents” all drawings, reports, plans, software, formulae calculations and other data including Reviewable Design Data relating to the design, construction, completion testing and/or operation of the Works

“Designated Personnel” any staff, employees or agents of the Authority in possession of an identification and access card or any other person whom the Authority’s Authorised Representative so notifies to the Contractor

“Development Period” the period set out in clause 3.3 (Development Period and Service Period)

23 “DfES Letter” the letter from the Department for Education and Skills setting out the Secretary of State for Education’s intention to provide a notional credit approval of £17,744,000 (Seventeen million seven hundred and forty four thousand pounds) as that term is defined in Part IV of the Local Government and Housing Act 1989 and the Local Authority (Capital Finance) Regulations 1997

“Discriminatory Change in Law” a Change in Law, the terms of which apply expressly to:

(a) the Project and not to similar projects procured under the PFI;

(b) the Contractor and not to other persons; and/or

(c) PFI Contractors and not to other persons

“Disputes Resolution Procedure” the procedure for the resolution of disputes set out in clause 63 (Dispute Resolution)

“DPA” the Data Protection Act 1998

“Effective Date” the date on which the Credit Agreement becomes effective all conditions precedent thereunder having been satisfied or in accordance with its terms compliance with such conditions waived, other than the coming into effect of this Agreement

“Electronic Village Hall” that part of the Facilities to be provided and to which Services are to be delivered by or on behalf of the Contractor in yellow identified in plan PA-02(L(02))211 Rev E)

“Emergency” any circumstances in which the Authority or the Headteacher declare by notice to the Contractor or a Contractor Party that a circumstance has arisen or a state of affairs

24 exists under which the Authority may require the scope of the Services to be extended or the quantity in which the Services are provided be increased for such period as the Authority considers such circumstances to continue or state of affairs to exist

“Employee Information” terms and conditions of employment, job description, working arrangements, remuneration, pay increase, holiday entitlement (including accrued holiday entitlement), length of service, notice period, pension entitlement, warnings and other disciplinary procedures, details of absences from work in excess of or likely to be in excess of 4 continuous weeks, whether or not notice of termination has been issued, details of trade union membership and recognition and collective agreements and details of labour disputes or any other claims by or in respect of any employees during the previous three years

“Employer’s Agent” E C Harris whose principal office is situate at Lynton House, 7-12 Tavistock Square, London or such other person as may be appointed by the Contractor to act as Employer’s Agent for the purposes of the Construction Agreement with the prior written consent of the Authority (such consent not to be unreasonably withheld or delayed)

“Employment Claims” includes but is not limited to any claim for salaries, wages, taxes, insurances, benefits and claims for wrongful dismissal, unfair dismissal, redundancy, claims under regulation 11 of TUPE and claims for personal injury

25 “Equipment” the New Equipment

“Equity” the aggregate Sterling amount of the issued share capital of the Contractor subscribed for on the date of this Agreement

“Estimated Revised Project Costs” in relation to clause 10 (Delays in Service Commencement due to a Compensation Event), clause 17 (Changes to the Works or Services) and clause 18 (Change in Law), the aggregate of any estimated increased construction costs, operating costs, financing costs less the aggregate of any estimated reduced construction costs, operating costs and financing costs and the losses of the Contractor the Construction Contractor the Operating Contractor, and the Sub-Contractors (if relevant) from the non receipt within the relevant period of revenues (including receipts from third parties) from the Project

“Excess Employee” any employee or former employee of the Authority who is not a Relevant Employee or any sub contractor of the Authority which was engaged in providing the Services (or any services equivalent to the Services) prior to the Services Commencement Date who is not a Relevant Employee

“Excluded Person” any person who is the subject of a notice in writing from the Authority to the Contractor issued pursuant to clause 14.6 until such time as details of that person are removed from the list in accordance with clause 14.7

“Existing School” the existing Sandhill View Community School which is in plan ref in solid green coloured in plan ref PA-03

26 “Expert” an expert appointed as provided in clause 63

“Expiry Date” the 25th anniversary of the Planned Service Commencement Date

“Facility” the facilities comprising the Community Learning Centre or any of the component Zones (as defined in the Payment Mechanism) comprising the Facility

“Fair Value” the amount at which an asset or liability would be exchanged in an arms length transaction between informed and willing parties, other than in a forced or liquidation sale

“Financial Model” the financial model prepared on behalf of the Contractor and annexed to this Agreement as Annex 1, such model setting out the basis on which the financing of the Project and of the revenue predicted to arise from this Agreement have been calculated by the Contractor (including the assumptions used, the cell logic network for the Financial Model software and any accompanying documentation necessary to operate such Financial Model) as the same may be amended by the Parties as agreed from time to time

“Financing Agreements” the documents specified in Annex 6 (Financing Agreements) by virtue of which the Senior Lender is providing finance to the Contractor in respect of its obligations hereunder and (subject to clause 58 (Refinancing)) any amendment, variation, novation, restatement or replacement entered into from time to time (including for the purposes of rescheduling or refinancing any of the Contractor’s obligations under the Financing Agreements) and also

27 including for the avoidance of doubt each Hedging Agreement or replacement Senior Lender’s Direct Agreement

“Force Majeure Event” the occurrence of:

(a) war, civil war, armed conflict or terrorism;

(b) nuclear, chemical or biological contamination unless the source or cause of the contamination is the result of actions of the Contractor; or

(c) pressure waves caused by devices travelling at supersonic speeds,

which directly causes either party (“the Affected Party”) to be unable to comply with all or a material part of its obligations under this Agreement

“Forward Sale Agreement” the Agreement of even date between the Authority (1) Contractor (2) Bellway Homes Ltd (3) the Senior Lender (4) Bellway PLC (5) Jarvis Properties Ltd (6) and Jarvis PLC (7) relating to the disposal of the Broadway Centre, Springwell Road, Sunderland

“General Change in Law” a Change in Law which is not a Qualifying Change in Law

“Good Industry Practice” the exercise of that degree of skill, diligence, prudence and foresight and operating practice which would reasonably and ordinarily be expected from a skilled and experienced person engaged in the same type of undertaking as that of the Contractor or a Contractor Party under the same or similar circumstances

“Governing Body” the governing body of the School

28 constituted in accordance with section 36(1) and Schedule 9 of the School Standards and Framework Act 1998

“Governors Agreement” the agreement between the Authority and the Governing Body of the School in Agreed Form dated 12 July 2001

“Ground Conditions” the nature, location and condition of the land (including hydrological, geological, geotechnical and sub-surface conditions) archaeological finds, areas of archaeological, scientific or natural interest and the quality of existing structures

“Gross Income” any amount calculated as gross income under the terms of clause 24.1

“Guaranteed Sum” £40,770

“Guidance” the Authority’s Policies and any applicable guidance or directions issued by a Relevant Authority with which in accordance with any term of this Agreement the Contractor is bound to comply

“Headteacher” the headteacher or other nominated representative of the School appointed by the Governing Body to fulfil the role of headteacher at the School

“Hedging Agreement” any agreement for hedging interest rates or retail prices indices

“Help Desk” the help desk to be provided by or on behalf of the Contractor in accordance with the Output Specification and the Service Delivery Plan

“Incoming Sub-Contractor” the Sub-Contractor of the Operating Contractor who replaces the Outgoing Sub- Contractor under clause 23.17 in providing any of the Market Tested Services

29 (as defined in clause 23.6)

“Incoming Sub-Contractor Price” the consideration payable for the provision of those parts of the Market Tested Services which are to be the responsibility of the Incoming Sub-Contractor (net of VAT) disregarding any Deductions (as defined in Part 1 of Schedule 4 (Payment Mechanism)) that may fall to be deducted from such consideration payable under the terms of any contract agreed with that other party

“Indexation Formula” the formula set out in clause 22.3 (Indexation Formula) which shall be used in calculating the amount by which the Unitary Charge shall be adjusted on each Services Review Date

“Indexed” an increase by reference to the Office of National Statistics or in the event that such index ceases to be published any reasonable substitute index that may be agreed between the parties or determined under the procedures, provided for at clause 63

“Indirect Loss” any loss of profits, loss of use, loss of production, loss of business opportunity or any consequential loss or indirect loss of any nature suffered or allegedly suffered by either party

“Insolvency Default” any of the following:

(a) a court makes an order that the Contractor be wound up or a resolution for a voluntary winding- up of the Contractor is passed, other than a voluntary winding up solely for the purposes of amalgamation or reconstruction, the terms of which have previously

30 been notified to and approved in writing by the Authority such approval not to be unreasonably withheld or delayed;

(b) any receiver or manager in respect of the Contractor is appointed or possession is taken by or on behalf of any creditor of any property of the Contractor that is the subject of a charge; or

(c) an administration order in respect of the Contractor is made

“Insurance Proceeds Account” subject to the requirements of the Senior Lender’s Direct Agreement which shall prevail over any contrary requirement in clause 27 an account in the name of the Contractor opened and maintained in accordance with the Financing Agreements

“Insured Claim” any claim arising under an indemnity relating to an Insured Event

“Insured Claim Limit” in respect of any Insured Claim arising under a Contractor indemnity the maximum amount realisable under any subsisting insurance policy relevant to the claim at the time the Insured Event arises which policy is a Required Insurance

“Insured Event” the occurrence of any event which is of a type which is required or would (but for the provisions of clause 27 relating to Project Insured Risks which are Uninsurable) be required to be insured against under the Required Insurances

“Intellectual Property Rights” any and all patents, trade marks, service marks, copyright, moral rights, rights in a design, know-how, confidential information and all or any other intellectual or industrial

31 property rights whether or not registered or capable of registration and whether subsisting in the United Kingdom or any other part of the world together with save in respect of any right which is represented by a licence only and not legal and beneficial ownership all or any goodwill relating or attached thereto

“Investors’ Annual Return” the aggregate of all repayments of Junior Debt and dividend payments attributable to any Year in the Financial Model

“Invoiced Sum” the amount (including VAT and any other taxes or levies) which is due and payable in respect of a Payment Period as represented by the Contractor’s invoice in respect of the relevant Payment Period and which falls due and payable by the Authority to the Contractor disregarding only any amount comprised within the said invoice which the Authority has disputed in accordance with the provisions of clause 21.3 of this Agreement

“IRR” internal rate of return for the project as set out in the Financial Model

“Junior Debt” all amounts outstanding at the date of termination of the Agreement, under the Subordinated Finance Documents

“Key Manager” any person identifiable by reference to the functions specified in Schedule 18

“Latent Defects” in connection with each of the Caretaker Properties only a defect or flaw generally in a structure or product itself which could not be discovered by any known or customary test and which did not manifest itself on or prior to the Effective Date

“LEA Facilities” that part of the Facilities to be provided and

32 to which Services are to be delivered by or on behalf of the Contractor which shall be occupied by the Authority for purposes associated with the discharge of the local education authority functions

“Lease” a lease to be entered into between the Authority (1) and the Contractor (2) pursuant to the Agreement for Lease in the form attached in Schedule 7 Part 4

“Legal Requirements” subject to the requirements of clause 18 the requirements of any Legislation

“Legislation” any Act of Parliament or subordinate legislation within the meaning of section 21(1) of the Interpretation Act 1978, any exercise of the Royal Prerogative, and any enforceable community right within the meaning of section 2 of the European Communities Act 1972, in each case in the United Kingdom including any Guidance or Circulars of the Department for Education and Skills or any successor body that the Authority have been directed to comply with in relation to the Community Learning Centre

“LGPS” the Local Government Pension Scheme established pursuant to regulations made by the Secretary of State in exercise of powers under sections 7 and 12 of the Superannuation Act 1972 as from time to time amended

“LGPS Regulations” The Local Government Pension Scheme Regulations 1997 (as from time to time amended, modified, extended, replaced or consolidated)

“LIBOR” Shall have the meaning given to such expression in the Credit Agreement

33 “Liquid Market” that there are sufficient willing bidders who would meet any reasonably set pre- qualification criteria in the market for PFI or similar contracts within the United Kingdom for local authority schools PFI or similar contracts (in each case the same as or similar to the Project) for the price that is likely to be achieved through a tender to be a reliable indicator of Fair Value

“Local Education Authority Meal the price of a free school meal set by the Price” Authority

“Loss” any loss, damage, cost or expense directly sustained by a party to this Agreement and “Losses” shall be construed accordingly

“M & E Sub-Contractor” the sub-contractor to be appointed by the Construction Contractor for the provision of design and construction services and works in relation to mechanical and electrical works for the Project

“Maintenance Compliance Report” a report prepared or procured by the Contractor commenting on whether the Facilities have been maintained in accordance with clause 15.1 to 15.4 and (if the report determines that such have not been so maintained) a description of works which are necessary to rectify such non- compliance;

“Malicious Damage” damage to or destruction of property (other than accidental damage or destruction)

“Malicious Damage Limit” £30,000 indexed

“Market Testing Adjustment” means the adjustment to be made to the Unitary Charge under clause 23.18.1

“Market Testing Margin” 0%

“Market Test Price” the price determined to be applicable to the Relevant Services (as defined in

34 clause 23) following a market testing exercise under clause 23

“Material Effect” in relation to any proposed variation or amendment to any existing Authority Policy or the proposed implementation by the Authority of any document having the same effect as an Authority Policy the likelihood that (taking account also of any savings that may arise) any requirement pursuant to this Agreement for the Contractor or any Sub-Contractor to comply with or complete the Works or provide the Services in a manner consistent with such Authority Policy or new policy will cause the net effect for the Contractor to be a material financial cost whether on its own account or including any obligation to meet additional charges from Sub-Contractors or to indemnify any Sub-Contractor

“Miscellaneous Equipment” small items of loose equipment (including but not limited to workshop, laboratory, home economics, design technology items of loose equipment) and the Kardex file retrieval system or alternative system (at the discretion of the Authority) to be provided by the Contractor pursuant to Paragraph 5.9 - 5.12 of Schedule 1A (Works)

“Month” a calendar month

“Monthly Charge” in respect of any month the amount payable to the Contractor calculated in accordance with clause 19 and Part II of Schedule 4 (Payment Mechanism)

“New Contractor” any replacement contractor of the Contractor or Operating Contractor (including the Authority) or successor for any part of the Services following

35 termination or expiry of this Agreement

“New Equipment” the equipment and any other items specified in the Output Specification and the Works Delivery Plans to be provided and/or maintained by or on behalf of the Contractor in accordance with the terms of this Agreement

“New Prices” the Benchmarked Prices agreed or determined pursuant to clause 23

“No Comments Statement” a statement made under paragraph 3.2.8 of Schedule 1A (Works)

“Operating Agreement” the agreement of even date under which the Operating Contractor is to provide the Services to the Contractor

“Operating Contractor” Jarvis Workspace (FM) Ltd or such other replacement operating contractor as the Contractor may appoint to carry out the Operating Agreement from time to time

“Operations Manager” the manager appointed by or on behalf of the Contractor to act as the Contractor’s agent in connection with the provision of the Services pursuant to clause 16

“Optional Finishes” the selection of finishes which shall be available for the Facilities and which are detailed in the School Design Proposals

“Other Employees” those persons employed by the Services Contractor in the provisions of the Services or any part of them who are not Relevant Employees

“Outgoing Sub-Contractor” the Sub-Contractor of the Operating Contractor who provided the Market Tested Services whose engagement is to be terminated in consequence of the appointment of an Incoming Sub-Contractor under clause 23.17, or in the event that

36 the Services were provided by the Operating Contractor shall mean subject to clause 23.17 the Operating Contractor in respect of that element of the Services.

“Outgoing Sub-Contractor Price” the consideration payable prior to the transfer to the Incoming Sub-Contractor for the provision of those parts of the Market Tested Services which are to be the responsibility of the Incoming Sub- Contractor (net of VAT) disregarding any Deductions (as defined in Part 1 of Schedule 4 (Payment Mechanism) that may fall to be deducted from such consideration payable under the terms of any contract agreed with that other party

“Output Specification” the specification of the Works and Services in respect of the Community Learning Centre attached at Schedule 2 (Output Specification) and any modifications or addition thereto as may from time to time be agreed in accordance with the provisions of clauses 17 (Change to the Works or Services) and clause 18 (Change in Law)

“Parent Company Guarantee” the performance guarantees to be granted on the date hereof by Jarvis PLC in favour of the Contractor in respect of the Construction Contractor’s obligations under the Construction Agreement and in respect of the Operating Contractor’s obligations under the Operating Agreement

“Parties” the Authority and the Contractor and “Party” shall mean either of them

“Payment Period” a Month falling during the Service Period and (including any incomplete Month at the beginning or end of the Service Period)

“Performance Monitoring System” the systems and procedures for monitoring

37 the performance of the Contractor’s or Operating Contractor’s obligations in respect of this Agreement and the Output Specification as set out in Schedule 4 Part VI and Part VII (Performance and Monitoring) and the Output Specification

“Performance Standards” the standards of performance of the Services in compliance with the Output Specification and the Service Delivery Plans

“Persistent Breach” a breach of this Agreement which has material and adverse effect upon the Authority’s fulfilment of its statutory functions and which has continued or recurred frequently within six months after the date a final warning notice is served on the Contractor in accordance with the following procedure

(a) if a breach occurs more than once in any six month period then the Authority may serve a notice on the Contractor:

(i) specifying that it is a formal warning notice;

(ii) giving reasonable details of the breach; and

(iii) stating that such breach is a breach which, if it recurs or continues, may result in a termination of this Agreement

(b) if, following service of such a warning notice, the breach specified has continued or recurred frequently after the date falling 30 days after the date of service, then the Authority may serve

38 another notice on the Contractor:

(i) specifying that it is a final warning notice;

(ii) stating that the breach specified has been the subject of a warning notice served within the 12 month period prior to the date of service of the final warning notice (which must have been the case and which must have been validly served and not subsequently withdrawn or deemed to have been withdrawn under the Dispute Resolution Procedure); and

(iii) stating that if such failure continues or recurs frequently within the six month period after the date of service of the final warning notice, the Agreement may be terminated

a warning notice may not be served in respect of any breach in respect of which a separate warning notice has already been served until a period of nine months has elapsed since the date of service of the previous warning notice

“Personal Data” personal data as defined in the DPA which is supplied to the Contractor by the Authority or obtained by the Contractor in

39 the course of performing the Services

“PFI” the Government’s Private Finance Initiative or any similar or replacement initiative

“PFI Contractor” a person that has contracted with the Government, a local authority or other public or statutory body to provide services under the PFI

“Phase” the Phase I Construction Works or the Phase 2 Construction Works as the case may be

“Phase 1 Construction Site” that part of the Site outlined in purple/green on plan ref no PA-04

“Phase 2 Construction Site” that part of the Site outlined in purple/blue on plan ref no PA-05

“Phase 1 Construction Works” the Works described in the Works Delivery Plan save for the Phase 2 Construction Works

“Phase 1 Construction Works The date upon which the Phase 1 Construction Works reached Practical Completion Date” Completion as set out in the Acceptance Certificate issued in respect of the relevant part of the Works

“Phase 2 Construction Works” that part of the Works comprising demolition of the Existing School and construction of sports pitches and areas and associated works

“Phase 2 Works Completion Date” the date upon which the Phase 2 Construction Works reached Practical Completion as set out in the Acceptance Certificate issued in respect of the Phase 2 Construction Works as such date may be extended in accordance with clauses 10 or 11

40 “Planned Phase 2 Works seven months after Service Commencement Completion Date” Date as such date may be extended in accordance with clauses 10 or 11

“Planned Maintenance” the planned maintenance requirements described in clause 15 (Maintenance) and Schedule 17 (Planned Maintenance) and the Output Specification as varied from time to time in accordance with this Agreement

“Planned Maintenance the annual programme for Planned Programme” Maintenance prepared in accordance with Schedule 17

“Planned Service Commencement the date upon which Service Date” Commencement is planned to occur being 16 September 2002 as such date may be extended in accordance with clause 10 or clause 11

“Planned Works Commencement the date upon which the Phase 1 Date” Construction Works are planned to commence being 2 Business Days after the date hereof

“Planning Permission” the Planning Permission set out in Annex 5

“Planning Proceedings” any of:

(a) Judicial review of a planning permission;

(b) revocations modifications or discontinuance under sections 97,100, 102 or 104 of the Town and Country Planning Act 1990

“Policy” any of the documents published by the Authority or an Authority Party set out in Schedule 16

“Practical Completion” a state in which a Phase is complete in all respects and free from apparent defects,

41 save for any Snagging Matters the existence, completion or rectification of which in the opinion of the Employer’s Agent would not prevent or interfere with the provision of the Services to be provided in respect of the relevant Phase provided in accordance with the Output Specification that a Phase shall not be considered to be practically completed unless the Completion Criteria in respect of such Phase have been satisfied

“Prescribed Rate” means interest payable on the basis and at the rate set out in clause 56.3

“Price” as defined in the Forward Sale Agreement

“Professional Team” any or all of the professional consultants including the Employer’s Agent employed by the Contractor and the Construction Contractor as the case may be in connection with the Works in accordance with paragraph 4.4 (Construction Contractor and Professional Team) of Schedule 1A or any replacement professional consultants so employed

“Prohibited Act” offering giving or agreeing to give any servant of the Authority any gift or consideration of any kind as an inducement or reward:

(a) for doing or not doing (or for having done or not having done) any act in relation to the obtaining or performance of this Agreement or any other Agreement with the Authority; or

(b) for showing or not showing favour or disfavour to any person in relation to this Agreement or any

42 other Agreement with the Authority

entering into this Agreement or any other Agreement with the Authority in connection with which commission has been paid or has been agreed to be paid by the Contractor or on its behalf, or to its knowledge, unless before the relevant Agreement is entered into particulars of any such commission and of the terms and conditions of any such Agreement for the payment thereof have been disclosed in writing to and approved by the Authority

committing any offence:

(i) under the Public Bodies Corrupt Practices Act 1889 or Prevention of Corruption Acts 1906 and 1916;

(ii) under any other Legislation creating offences in respect of fraudulent acts;

(iii) at common law in respect of fraudulent acts in relation to this Agreement or any other Agreement with the Authority; or

(iv) defrauding or attempting to defraud or conspiring to defraud the Authority

(v) but for the avoidance of doubt excluding routine hospitality in the course of normal day to day business dealings between the Parties relating to the

43 Project

“Project” the project for the provision of the Community Learning Centre serviced accommodation at the Site by the Contractor as contemplated by this Agreement including the carrying out of the Works and thereafter for the duration of this Agreement the provision of the Services

“Projected Contribution” £50,000 (indexed)

“Project Director” the representative appointed by the Authority pursuant to Schedule 1A (Works)

“Project Documents” the agreements entered into by the Contractor for the performance of certain obligations specified or referred to therein which are listed in at Annex 3

“Project Event” shall be any:

(a) Compensation Event;

(b) Relief Event;

(c) Force Majeure Event

“Project Insured Risk” any risk or element or component of a risk required to be insured by the Contractor under the Required Insurances

“Project Plan” the agreed dates and timescales within which the Contractor shall perform its obligations under the Agreement as set out in Schedule 1B Works Delivery Plan

“Property Agreements” the agreements as listed in Schedule 7 (Property Agreements)

“Qualifying Change in Law” (a) a Discriminatory Change in Law; and/or

(b) a Specific Change in Law;

44 (c) a General Change of Law to the extent that it results in Cumulative Capital Expenditure exceeding the Contractor’s Share

“Ratios” means:

(i) the Loan Life Cover Ratio;

(ii) the Average Loan Life Cover Ratio

each as defined in the Credit Agreement

“Recreational Area” that part of the Site which is not subject to the Lease and Underlease

“Refinancing” any and every refinancing or restructuring other than a Rescue Financing (whether with the existing Senior Lenders or Replacement Financiers) of the indebtedness of the Contractor which increases the Shareholder Return of the Contractor over and above that stated in the original base case Financial Model that applied upon the inception of this Agreement

“Regearing” a Refinancing which has the effect of increasing the Senior Debt compared to that prevailing at the time of the Refinancing

“Related Claim” means any claims which have arisen in respect of the Relevant Policy and which are claims that the insurer has taken into account in establishing an increased premium

“Release Date” the date upon which the Forward Sale Agreement shall be terminated pursuant to paragraph 6.8 of Part 2 of the Schedule

45 thereof by reason of the failure of Jarvis Plc (the Second Guarantor as defined in the Forward Sale Agreement) to comply with its obligation to complete or procure the completion of the sale and purchase of the Property (as defined in the Forward Sale Agreement) in accordance with the terms of the Forward Sale Agreement

“Relevant Authority” any court within the relevant jurisdiction and any local, national or supra-national agency, inspectorate, minister, ministry, official or public or statutory person having any power conferred upon it by the government of the United Kingdom or of the European Union

“Relevant Discharge Terms” the terms referred to in clause 71 (Relevant Discharge Terms) and set out in Part 3 of Schedule 11 (Compensation)

“Relevant Employees” those persons listed in Annex 11 and such others as are notified in writing to the Contractor by the Authority in accordance with clause 37.7 before the Services Commencement Date

“Relevant Event” any circumstances in which under the terms of this Agreement recourse is had to the terms of Schedule 14 to the Agreement for the purpose of making adjustments to the Financial Model

Relevant Termination Amount” subject to clause 51.6, any compensation payable by the Authority pursuant to a termination of this Agreement under clause 42 (Compensation on Authority Default), clause 50 (Voluntary Termination by Authority), clause 46 (Compensation on Termination for Force Majeure), clause 48 (Compensation on Termination for Corrupt Gifts and Fraud)

46 clause 27.13 (Uninsurable Risks) or clause 71 (Relevant Discharge Terms)

“Relevant Transfer” means a transfer of an undertaking as defined in TUPE, regardless of whether TUPE applies at law

“Relevant User” the users of any particular Zone within the Facility as specified in Part XIV of Schedule 4

“Relief Event” (a) fire, explosion, lightning, storm, tempest, flood, bursting or overflowing of water tanks, apparatus or pipes, ionising radiation (to the extent it does not constitute a Force Majeure Event), earthquakes, riot and civil commotion;

(b) failure by any statutory undertaker, utility company, local authority or other like body to carry out works or provide services;

(c) any accidental loss or damage to any Asset or the Site or any roads servicing the Site;

(d) any failure or shortage of power, fuel or transport;

(e) any blockage or embargo which does not constitute a Force Majeure Event;

(f) any official or unofficial strike, lockout, go slow or other dispute generally affecting the building industry (in the case of the Works) or any industry to which the Operating Contractor or any Sub- Contractor of the Operating

47 Contractor belongs (in the case of the Services) or a significant part of either of them but not including industrial action specific to the Site or industrial action which affects only the employees of the Contractor, the Operating Contractor or the Sub-Contractor;

(g) the discovery of archaeological remains or human remains or unexploded ammunition;

(h) the occurrence of any Force Majeure Event;

(i) a Variation; or

(j) disease or epidemic affecting humans or the discovery of any hazardous substances causing any part of the site to be subject to access restrictions of any kind

(k) unless any of the events listed in paragraphs (a)-(j) (save for paragraph (i)) inclusive arises (directly or indirectly) as a result of any wilful act or default of the Contractor

“Repayment Interest Rate” in respect of:

(a) Senior Debt and the Adjusted Estimated Fair Value of the Contract it shall mean the rate of interest payable after the Service Commencement Date by the Borrower in relation to the Senior Debt as set out in the Credit Agreement

(b) Junior Debt it shall mean the

48 coupon rate on Junior Debt; and

(c) shareholders equity it shall mean the equity IRR for the Project

“Replacement Financier” the party or parties who will provide Refinancing to the Contractor in replacement in part or in whole to the previous Senior Lenders

“Required Insurances” the insurances so defined in clause 27.1

“Rescue Refinancing” a refinancing involving the Senior Lender undertaken at a time when there has occurred either:

(a) an Event of Default (as defined in the Credit Agreement) under on one more of the Financing Agreements; or

(b) an event or circumstance such that with the giving of notice or the lapse of time or the occurrence of any other event there would be likely, in the opinion of the Senior Lender, to occur an Event of Default (as that term is defined in the Credit Agreement)

“Reviewable Design Data” (a) 1:500 (External Works Landscape and Layout) 1:200 (general arrangement plans) and 1:50 (loaded room plans) together with elevations of the buildings and layouts of building services;

(b) detailed Works Programme;

(c) specific room data sheets for different types of rooms including but not limited to the architectural aspects of such rooms, (which shall further include but not be limited to

49 provision of storage cupboards and room layouts generally) environmental aspects (such as positioning of radiators, cooling air grills, lighting layouts, switches and room configuration generally) and fixtures fittings and equipment

(as such may be amended from time to time in accordance with the provisions of Schedule 1A (Works))

“School” The Sandhill View Community School being part of the Community Learning Centre in light green on plan PA-07A

“School Day” each period from 8.00 am to 5.00 pm for Monday to Friday inclusive

“School Design Proposals” the documents forming the Works Delivery Plan but excluding (for the avoidance of doubt) the Room Data Sheets contained in Schedule 2 as such may be amended from time to time in accordance with the provisions of Schedule 1A (Works)

“Selection Criteria” the criteria to be used by the Contractor in selecting tenderers pursuant to clause 23 which shall include: economic and financial standing, ability to meet the standards set out in the relevant section of the Output Specification, including technical standards, skills, efficiency experience and reliability, the educational, vocational and professional qualifications of the prospective tenderer, including measures for ensuring customer satisfaction and on-going improvement in the quality and cost effectiveness of the Services and whether the prospective tenderer is able to provide any certification of conformity with quality assurance standards based on the ISO 9002 series or

50 equivalent quality assurance standards

“Senior Debt” (a) all amounts outstanding at the Termination Date, including interest (including default interest) accrued but not paid as at that date, from the Contractor to the Senior Lender under the Financing Agreements; and

(b) all amounts, including (but not limited to) costs of early termination of the Hedging Agreements and other breakage costs, payable by the Contractor to the Senior Lender as a result of a prepayment or acceleration under the Financing Agreements, subject to the Contractor and the Senior Lender mitigating all such costs to the extent reasonably possible

(i) all credit balances on any bank accounts held by or on behalf of the Contractor on the date of termination of this Agreement to the extent that such credit balances are charged in favour of the Senior Lender to discharge the Senior Debt and are freely available to be applied to discharge items (a) or (b) above; and

(ii) all amounts, including costs of early termination of interest rate hedging arrangements and other

51 breakage costs, payable by the Senior Lender to the Contractor as a result of a prepayment or acceleration of amounts outstanding under the Financing Agreements

(iii) to the extent that the amount under paragraph (a) above includes any amount by way of principal outstanding where the intention of the Parties is that such amount outstanding will be discharged by the application of sums received under clause 4 by way of payment of the Capital Contribution to the extent not deducted by virtue of paragraph (i) above such amount of the Capital Contribution (if any) as shall have been paid to such bank account in accordance with and as required by the terms of clause 4 and/or Senior Lender’s Direct Agreement

“Senior Lender” means NIB Capital Bank N.V. and each person who is an assignee or transferee of any rights and/or obligations under any of the Financing Agreements, any other person providing finance to the Contractor under any of the Financing Agreements and any agent, trustee or similar person appointed to

52 act for any of them;

“Senior Lender’s Direct the agreement dated on or prior to the date Agreement” of this Agreement between (1) the Authority (2) the Senior Lender in or substantially in the form attached at Annex 7 (Senior Lender’s Direct Agreement)

“Service(s)” the operating obligations undertaken by or on behalf of the Contractor (more particularly described in the Output Specification and the Service Delivery Plans) and in the provisions of this Agreement

“Service Commencement” the commencement of the Services save in respect of Services associated with that part of the Works which are specified as the Phase 2 Construction Works at the Community Learning Centre

“Service Commencement Date” the date on which Service Commencement occurs at the Community Learning Centre which shall be the day after the Phase 1 Construction Works Completion Date and Service Commencement shall occur at 00.01 on that date

“Services Contractor” the Operating Contractor or any other Sub- Contractor appointed to carry out the Services

“Service Delivery Plan(s)” the method of performing the Services in respect of the Facility to the standards laid down in the Output Specification as set out in Part B of Schedule 2

“Service Performance Shortfall the deductions from the monthly charge Deductions” defined in Schedule 4

“Service Period” in respect of the Community Learning Centre the period from the Service

53 Commencement Date to the Expiry Date

“Services Review Date” the date of each anniversary of the Service Commencement

“Shareholders” those persons owning shares of any class in the Contractor and a “Shareholding” is in the interest that a Shareholder derives from such shares

“Shareholder Return” the post tax nominal blended rate of return to the holders of equity and subordinated debt of the Contractor as identified in the summary sheet of the Financial Model as the blended nominal IRR

“Shortfall” on any date on which liability of the Authority to pay sums towards the Capital Contribution shall arise in accordance with clause 4.6 the amount by which the Capital Contribution (less any sums previously paid to the Contractor towards satisfaction of the Capital Contribution by the Authority under clause 4 at that date) exceeds the sum of money (if any) held in the Designated Account on that date which sum was paid into the Designated Account by way of payment of the Price (as defined under the Forward Sale Agreement)

“Sinking Fund” the fund to be maintained pursuant to clause 15.3 (Sinking Fund)

“Site” the area shown edged red on the plans and attached hereto as Annex 4A including all buildings and structures from time to time situated thereon

“Snagging Matters” any minor item of the Works which has not been completed at the date of issue of an Acceptance Certificate

“Specific Change in Law” any Change in Law which specifically

54 applies to the provision of a service or facility the same as or similar to the Services (including the provision of the Facilities) and which shall include any individual service or facilities provided within the Services to the Authority under the terms of this Agreement or to educational or community facilities of the kind to be provided under this Agreement or to the holding of shares in companies whose main business is providing a service the same as or similar to the Services

“Staff” those employees of the Contractor or of any Services Contractor who are engaged directly in performing the Services

“Sub-Contractors” the sub-contractors of any tier of the Contractor including the Construction Contractor, or Operating Contractor and their sub-contractors of any tier as the case may be

“Swimming Pool Contribution the date 15 Business Days after the Services Date” Commencement Date

“Swimming Pool Contribution” £189,197

“Target Ratio Levels” (i) the Loan Life Cover Ratio (as defined in the Credit Agreement) of 1.20 to 1; and

(ii) the Average Loan Life Cover Ratio (as defined in the Credit Agreement) of 1.25 to 1

“Target Service Commencement 2 September 2002 Date for the School” “Tax” any kind of tax, duty, levy or other charge (other than VAT) whether or not similar to any in force at the date of this Agreement and whether imposed by a local,

55 governmental or other Relevant Authority in the United Kingdom or elsewhere

“Term” the terms determined and published by the Authority for each Academic Year (including days set aside for teacher training) as advised to the Contractor by the Authority and notified to the Contractor before the last day of the final term for the preceding Academic Year

“Termination Date” any date on which this Agreement terminates or expires

“Termination Employees” those persons employed by the Contractor or any Services Contractor under a contract of employment wholly or substantially in the provision of the Services at the date of termination or expiry of this Agreement (or who would have been so employed had they not been dismissed during the Termination Period)

“Termination Notice” a notice served under clauses 41, 44, 45 47, or 49

“Termination Period” the period starting on the date:

(a) when a Termination Notice is given for any reason; or

(b) twelve months before the Expiry Date

whichever is the earlier and ending on the Expiry Date or if earlier the Termination Date

“Third Party Income” Revenues derived by and to be retained by the Contractor subject to the provisions of clause 24.1

“Third Party Use” Any party making use of the Facilities or the Site more generally as provided for

56 under clause 24 and for the avoidance of doubt this shall include the Authority in the circumstances provided for at clause 24.6

“Third Parties” any party other than:

(a) the Authority (but not in the circumstances provided for in clause 24.6)

(b) an Authority Party (but not during Core Hours)

(c) the Contractor or a Contractor Party

“Transferred Equipment” In respect of the Community Learning Centre the Equipment transferred by the Contractor prior to the Service Commencement Date

“Transferring Employees” those persons employed by the Contractor or Services Contractor under a contract of employment in the provision of all or part of the Services which is the subject of a Relevant Transfer

“TUPE” The Transfer of Undertakings (Protection of Employment) Regulations 1981 and all amendments thereto

“Underlease” an underlease to be entered into between the Contractor (1) and the Authority (2) in the form attached at Schedule 7

“Uninsurable” in relation to a Project Insured Risk, either that:

(d) Insurance is not available or at any time ceases to be available in respect of a Project Insured Risk in

(i) the European Union insurance market from

57 insurers of good repute; or

(ii) the insurance market of the United States of America following reasonable investigation (limited to carriers having a rating under Standard & Poors or AM Best (or their successors) of not less than AAA) established in accordance with the requirements of clause 27.13.3

(e) the premium payable or other terms required for insuring a Project Insured Risk from any insurer as provided for at (a) of this definition is at or at any time reaches such a level that the risk is not generally being insured against by PFI contractors undertaking projects of similar size, character and complexity as the Project

“Uninsured Claim” any claim arising under an indemnity which does not relate to an Insured Event

“Uninsured Claim Limit” in respect of an Uninsured Claim the sum of £750,000 (indexed) for each 12 month period starting on the date of this Agreement and thereafter on the anniversary of such date save that in the event that the period from the final anniversary of the date of this Agreement to the Termination Date shall be shorter than 12 months the Uninsured Claim Limit shall be reduced on a pro rata basis to reflect the number of months that such period is less

58 than 12 months

“Unitary Charge” the amount referred to in the Project Summary of the Financial Model being initially £2,131,934 per annum as varied from time to time in accordance with this Agreement

“Utilities” connecting gas, electricity and water supplied to the Facilities in accordance with the Output Specification and Schedule 4 Appendix D and utility shall be construed accordingly

“Variation” Any variation to the Works or Services proposed or in the case of a Change of Law required to be implemented in accordance with either clause 17 or clause 18 as appropriate

“VAT” any value added tax

“Works” the works (including works necessary for obtaining access to the Site) to be undertaken by or on behalf of the Contractor to construct, the Community Learning Centre in accordance with the Works Delivery Plans, the Output Specification and this Agreement and which are to be undertaken in two consecutive phases designated as the Phase 1 Construction Works and the Phase 2 Construction Works

“Works Commencement Date” the date on which the Phase 1 Construction Works commence

“Works Delivery Plan” the agreed construction works in respect of the Community Learning Centre, the dates and times during which such construction and development shall be undertaken and the method by which such construction and development shall be undertaken attached at

59 Schedule 1B (Work Delivery Plan). The Works Delivery Plan includes but is not limited to the Works Programme, the Construction Documents and other documents relating to the Works

“Works Programme” the agreed dates and timescales within which the Contractor shall provide the Works and prepare the design of the same attached at Schedule 1B (Works Delivery Plan)

“Works Manager” the manager to be appointed by or on behalf of the Contractor to act as the Contractor’s agent in connection with the carrying out of the Works pursuant to paragraph 7 (Representatives and Liaison) of Schedule 1A (Works)

“Year” the 12 month period from and including a day to (but not including) the day bearing the same number in the same month of the following year (or, in the case only of a period commencing on 29 February, ending on the next following 28 February).

2. INTERPRETATION2

2.1 In this Agreement, except where the context otherwise requires:

2.1.1 the masculine includes the feminine and the neuter and vice versa;

2.1.2 the singular includes the plural and vice versa;

2.1.3 a reference in this Agreement to any clause, paragraph, Schedule or Annex is except where it is expressly stated to the contrary, a reference to such clause, paragraph, Schedule or Annex of this Agreement;

2.1.4 any reference to this Agreement or to any other document shall include any permitted variation, amendment or supplement to such document;

2.1.5 a reference to a person includes firms and corporations and their successors and permitted assignees or transferees;

60 2.1.6 headings are for convenience of reference only;

2.1.7 without prejudice to the provisions of this Agreement regarding Change in Law references to any statute or statutory provisions (including any EU Instrument) shall, unless the context otherwise requires, be construed as including references to any subsequent statute directly or indirectly amending, consolidating, extending, replacing or re-enacting the same, and will include any orders, regulations, instruments, or other subordinate legislation made under the relevant statute or statutory provisions;

2.1.8 words preceding “include”, “includes”, “including” and “included” shall be construed without limitation by the words which follow those words unless inconsistent with the context, and the rule of interpretation known as eijusdem generis shall not apply;

2.1.9 the list of contents and the headings to the clauses and parts of this Agreement and to the paragraphs of the Schedules are for the ease of reference only and shall not affect the construction of this Agreement;

2.1.10 the Schedules form part of this Agreement and will have the same force and effect as if expressly set out in the body of this Agreement; and

2.1.11 this Agreement is entered into under the PFI. This Agreement is excluded from Part II of the Housing Grants, Construction and Regeneration Act 1996 (“the Construction Act”) by operation of clause 4 of the Construction Contracts (England and Wales) Exclusion Order 1998. The Contractor acknowledges that the operation of the Construction Act upon any Project Document shall not affect the Parties’ rights or obligations under this Agreement.

2.2 References to “indexation” and “indexed” are references to the adjustment of the amount to be indexed by reference to the measure contained in clause 22.3 of this Agreement.

2.3 In the event of any inconsistency between the provisions of clauses 1 to 76 of this Agreement and the Schedules, the conflict will be resolved according to the following order of priority:

2.3.1 clauses 1 to 76; and Schedules 1, 2, 4, 5 and 11;

2.3.2 the other Schedules in equal priority.

61 3. COMMENCEMENT AND DURATION OF AGREEMENT3

3.1 Duration of Agreement

This Agreement and the rights and obligations of the Parties to this Agreement shall take effect from the Effective Date and subject to clause 3.2 (Continuation of Obligations) shall end on the Expiry Date unless terminated earlier in accordance with the terms of this Agreement.

3.2 Continuation of Obligations

Subject to clauses 5.5 and 51.4 the termination of this Agreement shall be without prejudice to the rights, duties and the liabilities of either of the Parties accrued prior to termination. The clauses in this Agreement which expressly or impliedly have effect after termination shall continue to be enforceable notwithstanding termination.

3.3 Development Period and Service Period

3.3.1 The Contractor’s obligations under this Agreement shall be carried out in two stages namely the Development Period (which shall continue until the Phase 2 Works Completion Date) and the Service Period.

3.3.2 The Development Period shall accordingly commence on the Works Commencement Date and end on:

3.3.2.1 the Phase 2 Works Completion Date; or

3.3.2.2 any earlier Termination Date;

whichever is earlier.

3.3.3 The Service Period will commence on the Service Commencement Date and terminate on:

3.3.3.1 the Expiry Date;

3.3.3.2 any earlier Termination Date.

3.3.4 During the Development Period the Contractor shall procure the commencement of and completion of the Works.

62 3.3.5 Upon the Phase I Construction Works Completion Date:

3.3.5.1 the Acceptance Certificate shall be issued in accordance with paragraph 6 of Schedule 1A (Practical Completion and Acceptance of each Phase);

3.3.5.2 the Contractor shall procure the provision of the Services save in respect of that part of the Services as are referable to any part of the Site which is comprised within the Phase 2 Construction Works; and

3.3.5.3 the Contractor shall be paid the Monthly Charge subject to any deduction for the Unavailability (as defined in Schedule 4) and Service Performance Shortfalls (as defined in Schedule 4) in accordance with clause 19.3 (Deductions in the Unitary Charge).

3.3.6 The Contractor shall use all reasonable endeavours to achieve Services Commencement Date by the Target Service Commencement Date for the School. For the avoidance of doubt, breach of this clause 3.3.6 shall not be capable of giving rise to termination of this Agreement including without limitation under paragraph (a) of the definition of Contractor Default.

3.4 Local Government (Contracts) Act 1997 Certification

The Authority undertakes that it shall within the period of six weeks beginning with the date of this Agreement (being the certification period for the purposes of the Local Government (Contracts) Act 1997) deliver to the Contractor the original versions of the Certificates (certified facsimile copies of which have been prior to the entering into of this Agreement delivered to the Contractor) and in the event that the Authority shall be in default in the performance of its obligations under this clause 3.4 the Contractor shall be entitled to thereupon serve notice of termination of this Agreement upon the Authority and this Agreement shall thereupon terminate as if such termination had arisen in circumstances of Force Majeure with compensation payable to the Contractor in accordance with the provisions of clause 46 of this Agreement

4. CAPITAL CONTRIBUTIONS

4.1 Subject to clause 4.3, the Authority agrees (except in the circumstances set out in clause 4.6.5) to pay to the Contractor a capital contribution of £4,900,000 (“the

63 Capital Contribution”) towards capital expenditure to be incurred by the Contractor on works which are listed in clause 4.8 (“the Relevant Works”).

4.2 The Authority further agrees to pay to the Contractor the Swimming Pool Contribution being a capital contribution provided by the Authority which is also to be utilised towards the Relevant Works, and the due date for payment shall be as set out in clause 4.4.

4.3 The obligation of the Authority (if any) to pay the Capital Contribution and the timing of the occurrence of such obligation shall be determined in accordance with clause 4.6.

4.4 The liability of the Authority to make the Swimming Pool Contribution shall arise on the Swimming Pool Contribution Date.

4.5.1 The amount of the Capital Contribution is exclusive of VAT, and the Authority shall pay to the Contractor on the Capital Contribution VAT Date an amount equal to the VAT in respect of the Capital Contribution against the Contractor’s VAT invoice for the Capital Contribution and VAT thereon

4.5.2 The amount of the Swimming Pool Contribution is exclusive of VAT and the Authority shall pay to the Contractor on the Swimming Pool Contribution Date an amount equal to the VAT in respect of the Swimming Pool Contribution against the Contractor’s VAT invoice for the Swimming Pool Contribution and VAT thereon.

4.6.1 Subject to the other provisions of this clause 4.6 on or immediately after the date which is 28 days after the Service Commencement Date (the “First Date”) the Authority shall be liable to pay to the Contractor (and the Contractor shall be entitled to appropriate) any sums paid (on or prior to that date) into the Designated Account (if any) by way of payment of the Price (as defined under the Forward Sale Agreement) towards satisfaction of the Capital Contribution.

4.6.2 If and to the extent that there is any Shortfall on the First Date (including for the avoidance of doubt due to the Forward Sale Agreement or any part thereof being declared ultra vires following a determination or order pursuant to an application for a judicial review or audit review (as defined in

64 section 8 of the Local Government (Contracts) Act 1997) (an “Ultra Vires Finding”) ), the Authority shall pay to the Contractor on that date an amount equal to the Shortfall PROVIDED THAT subject to clause 4.6.4 the Authority shall not be obliged to pay any element of the Shortfall on the First Date to the extent that such element of the Shortfall arises due to the circumstances set out in clause 4.6.3;

4.6.3 The circumstances referred to in clause 4.6.2 are as follows:

4.6.3.1 any breach of the Forward Sale Agreement by Bellway Homes Limited or Bellway PLC; or

4.6.3.2 any breach of the Forward Sale Agreement by Jarvis Properties Limited or Jarvis Plc; or

4.6.3.3 any breach of the Forward Sale Agreement by the Contractor or the Senior Lender.

4.6.4 In the event that there is any Shortfall on the First Date due to the circumstances referred to in clause 4.6.3 then the following provisions shall apply:

4.6.4.1 In the event that the sale of the Property (as defined in the Forward Sale Agreement) shall complete in accordance with the terms of the Forward Sale Agreement at any time after the First Date, the Authority shall be liable to pay to the Contractor (and the Contractor shall be entitled to appropriate) any sums paid in respect of such completion into the Designated Account by way of payment of the Price (as defined under the Forward Sale Agreement) towards satisfaction of the Capital Contribution or by way of interest paid in respect of late payment of such Price towards its financing costs resulting from late payment of such sum and the Authority shall (without prejudice to any right or claim which the Authority has against any party pursuant to the Forward Sale Agreement) be liable on that date to pay any Shortfall existing on the date of such completion save to the extent that such Shortfall arises as a consequence of the circumstances set out in clause 4.6.3

4.6.4.2 In the event that the Forward Sale Agreement shall at any time after the First Date be found to be unenforceable or terminate for

65 any reason (including for the avoidance of doubt by way of recission under paragraph 6.11 of Part 2 of the Schedule to the Forward Sale Agreement) other than the circumstances set out in clause 4.6.3 or shall be the subject of an Ultra Vires Finding then the Authority shall within 5 Business Days of such occurrence be liable to pay any Shortfall existing on the date of such occurrence;

4.6.4.3 For the avoidance of doubt, no payment made into the Designated Account by way of interest shall be in satisfaction of the obligation of the Authority (subject to the terms of this clause 4) to pay the principal amount of the Capital Contribution

4.6.4.4 Any appropriation of monies from the Designated Account by way of principal (rather than interest) towards the Capital Contribution at any time shall be applied in accordance with clause 4.8

4.6.4.5 Title to any sums held in the Designated Account on the First Date or at any date thereafter shall pass forthwith to the Contractor;

4.6.5 Without prejudice to any antecedent liability of the Authority to pay to the Contractor the Capital Contribution or any element thereof that may have arisen prior to the Release Date, no further liability of the Authority shall arise to pay the Capital Contribution or any element thereof after the Release Date

4.7 For the avoidance of doubt, neither the Capital Contribution nor the Swimming Pool Contribution shall be indexed, but interest shall be payable by the Authority in respect of late payment of either sum (or any part thereof) at the Prescribed Rate.

4.8 The Capital Contribution and the Swimming Pool Contribution shall be applied by the Contractor to meet the cost of the following works:

4.8.1 superstructure (including frame, roof, stairs, external walls, fenestration, external doors) but excluding mechanical and electrical services, expenditure on fire safety, security and all such related expenditure qualifying for capital allowances within the Capital Allowances Act 2001;

66 4.8.2 substructure and external works (including foundations, ground floor slab alterations and drainage); and

4.8.3 floor finishings.

4.9 All sums payable by the Authority to the Contractor pursuant to this clause 4 shall be paid free and clear of all deductions or withholdings whatsoever save only as may be required by law.

4.10 If the Authority is required by law (or any subsequent change of law) to make any deduction or withholding from any payment made in respect of any amount due from the Authority hereunder, the amount so due shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Contractor receives, on the due date for such payment, a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made.

5. WARRANTIES5

5.1 Status of Warranties

Subject to clause 5.5 (Sole Remedy) all warranties, representations, undertakings, indemnities and other obligations be made, given or undertaken by the Contractor or by the Authority in this Agreement are cumulative and none shall be given a limited construction by reference to any other.

5.2 Contractor warranties

The Contractor warrants and undertakes to the Authority that:

5.2.1 there are no material facts or circumstances in relation to the financial position or statutory constitution of the Contractor which have not been fully and fairly disclosed to the Authority and which if disclosed might reasonably have been expected to affect the decision of the Authority to enter into this Agreement;

5.2.2 in entering this Agreement it has not committed any Prohibited Act.

5.3 No Authority warranties

5.3.1 Save to the extent otherwise provided in this clause 5.3 the Contractor shall be deemed to have satisfied itself as to the Background Information and as to the Assets to which it will acquire rights and the nature and extent

67 of the risks assumed by it in relation to the Project and shall be deemed to have gathered all information necessary to perform its obligations under this Agreement, including Ground Conditions.

5.3.2 Not used.

5.3.3 Not used.

5.3.4 Save to the extent provided in clause 37 (to the extent that the background Information relates to Transferring Employees) the Authority does not give any warranty or undertaking or make any representation (either express or implied) as to the completeness, accuracy or fitness for any purpose of any of the Background Information.

5.3.5 Neither the Authority nor any of its agents or servants shall be liable to the Contractor in contract, tort (including negligence or breach of statutory duty), statute or otherwise as a result of any of the Background Information.

5.3.6 The Contractor shall not in any way be relieved from any obligation under this Agreement nor shall it be entitled to claim against the Authority on grounds that any information, whether obtained from the Authority or otherwise (including information made available by the Authority) is incorrect, insufficient and/or misleading.

5.4 Nothing in this clause 5 (Warranties) shall exclude any liability which the Authority or any of its agents or servants would otherwise have to the Contractor in respect of any statements made fraudulently prior to the date of this Agreement or in respect of any death or personal injury caused by the Authority’s negligence.

5.5 Sole Remedy

5.5.1 This Agreement contains express provisions in relation to termination of this Agreement and also in relation to the calculation and payment of amounts due as a consequence of such termination. The Parties acknowledge and agree that the express rights provided in this Agreement in relation to termination and the calculation and payment of amounts due as a consequence of such termination are exclusive and are in place of (and not cumulative with) any other rights or remedies which might arise as a consequence of termination. The Parties hereby waive all other rights and/or remedies arising from termination whether express or implied, arising by common law (including without limitation, any rights in tort,

68 which shall include, without limitation, actions brought and negligence and/or nuisance) in equity, by statute or otherwise howsoever.

5.5.2 The rights of the Contractor with respect to Project Events, the compensation due following the occurrence of such Project Events and the effect of such Project Events as provided for in clauses 10, 11 and 12 are exclusive and in place of (and not cumulative with) any other right or remedies in respect of such events. The Contractor hereby waives all other rights of relief or payment consequential thereon in respect of such events. The provisions of this clause 5.5.2 are without prejudice to the other provisions of this clause 5.5 insofar as they relate to Project Events and to any other indemnities, rights or remedies conferred by the express provisions of this Agreement.

5.5.3 This Agreement contains express provisions in relation to the provision or procurement of the Services and also in relation to Unavailability. The Parties acknowledge and agree that the indemnities, rights and remedies conferred by the express provisions of this Agreement are exclusive in relation to any failure to provide or procure the Services and in relation to Unavailability and are in place of (and not cumulative with) any other rights or remedies. The Authority hereby waives all other rights or remedies in respect of any failure to provide or procure the Services and in relation to Unavailability in either case whether arising by common law (including, without limitation, any rights in tort, which shall include, without limitation, actions brought in negligence and/or nuisance), in equity, by statute or otherwise howsoever. Accordingly, the Authority hereby agrees that the Contractor and all Contractor Parties shall be deemed to be released to the fullest extent possible from all duties, liabilities, responsibilities or obligations arising in relation to the failure to provide or procure the Services and/or in relation to Unavailability.

5.5.4 Notwithstanding any other provision of this Agreement, neither Party shall be entitled to recover compensation or to make a claim under this Agreement in respect of any Losses which it has incurred to the extent that it has already been compensated in respect of that Loss, whether pursuant to this Agreement or otherwise.

5.5.5 Subject to clause 44 (Termination of Whole Agreement on Contractor Default and Insolvency Default) and clause 36.A.1 (step-in in relation to Phase 2 Construction Works), which shall be the sole respective remedies of

69 the Authority, the Contractor shall have no liability to the Authority hereunder in respect of any delay in attainment of the Phase 1 Construction Works Completion Date and/or Phase 2 Construction Works Completion Date.

70 PART II - WORKS AND SERVICES OBLIGATIONS

6. PRINCIPAL OBLIGATIONS 6

6.1 Subject to and in accordance with the provisions of this Agreement the Contractor undertakes to the Authority that it shall:

6.1.1 procure the design, construct, fit out and commission the Facilities in compliance with the requirements of Schedule 1A (Works);

6.1.2 Not used;

6.1.3 procure performance of the Services in accordance with:

6.1.3.1 the Output Specification to the extent expressly referable to the Services;

6.1.3.2 the Service Delivery Plans;

6.1.3.3 Good Industry Practice;

6.1.3.4 the terms of the Agreement; and

6.1.3.5 Legal Requirements

6.1.4 procure the supply and installation, free from any third party encumbrance, (save as expressly provided for in the Financing Agreement) or other third party interests (other than items in respect of unpaid purchase price or any rights in respect of the Site) subsisting at the time of installation or intended to have effect at any time thereafter, of the New Equipment.

6.1.5 the Contractor will subject to paragraph 2.1 of Schedule 1A obtain and comply at all times with all Consents and Approvals (other than those required due to a Change in Law, which shall be dealt with in accordance with clause 18 (Change in Law));

6.2 Subject to clause 6.3 the Contractor shall take the Site in its state and condition as at the Effective Date in all respects as at the date of this Agreement and accepts entire responsibility for and for dealing with ascertainment of Ground Conditions affecting the Facilities and Latent Defects.

6.3 The Contractor’s agreement at clause 6.2 is given subject (in relation only to the Caretaker Properties) that fair wear and tear is excepted and having regard to the

71 agreement of the Contractor to accept the maintenance responsibility for such properties the Caretaker Properties shall at the Service Commencement Date be in a condition substantially in keeping with the condition at the date hereof.

6.4 The Authority undertakes to the Contractor, subject to the provisions of this Agreement, to comply with (and to procure that all Authority Parties comply with) all Legal Requirements applicable to it which relate to the Project.

6.5 Save to the extent expressly permitted by this Agreement, the Authority shall not (and shall procure that any Authority Party shall not) (whether by act or omission) obstruct, hinder or prevent the Contractor or any Sub-Contractor or their respective employees, agents or sub-contractors from carrying out any of the Contractor’s obligations under this Agreement or from rectifying any Unavailability (as defined in Part 1 of Schedule 4) of any Area or Areas.

7. THE SITE7

7.1 Access and Property Agreements

The Authority will:

7.1.1 with effect from the Planned Works Commencement Date provide access to the Phase I Construction Site in accordance with the terms and conditions of this Agreement and the Property Agreements. If at any time the Contractor requires access to or any interest in any land which does not form part of the Phase 1 Construction Site or any additional rights beyond those which the Contractor has in relation to any part of the Phase 1 Construction Site, the responsibility and cost of securing or acquiring such access or interest shall be entirely the responsibility of the Contractor;

7.1.2 with effect from the Phase 1 Works Completion Date provide access to the Phase 2 Construction Site in accordance with the terms and conditions of this Agreement and the Property Agreements upon the same terms as are set out at clause 7.1.1.

72 7.2 Condition of the Site

7.2.1 The Contractor is deemed:

7.2.1.1 to have satisfied itself in relation to:

(a) means of access to and through the Site, the possibility of interference by any person with such access and the times and methods of working necessary to prevent any nuisance whether public or private to any third party;

(b) the boundaries of the Site;

(c) the rights exercisable in relation to the Site; and

(d) the extent and nature of work and materials necessary for conducting and completing the Works;

7.2.1.2 in general to have obtained for itself all necessary information as to risks, contingencies and all other circumstances which may influence or affect the Works on the Site.

7.3 Licence for Phase 1 Construction Site

The Authority hereby grants to the Contractor and any Contractor Party (subject to the matters contained or referred to in Schedule 7) an exclusive licence to go on to the Phase 1 Construction Site for the specific purpose of carrying out and completing the Works in accordance with and subject to the provisions of this Agreement and the Output Specification for the period from the Works Commencement Date until the date that the Lease is entered into.

7.4 Licence for Remainder of Site

Until the date that the Lease (attached at Annex 7, Part 4) is entered into the Contractor and any Contractor Party shall have a non-exclusive licence to enter and remain on the remainder of the Site other than the Phase 1 Construction Site for the carrying out and completion of the Works.

7.4A For the avoidance of doubt, in the event that the Agreement is terminated prior to the Service Commencement Date the Contractor shall provide to the Authority and/or Authority Party (as may be required by the Authority) vacant possession of the Site on or before the Termination Date.

73 7.5 Licence for Recreational Area

The Authority hereby grants to the Contractor and any Contractor Party (subject to matters contained or referred to in Schedule 7) a non-exclusive licence to enter and remain on the Recreational Area for the specific purpose of carrying out the Services including any variation and the provision and the use of any conduits which shall be in common with the Authority and others so entitled in accordance with the provisions of this Agreement such licence to subsist for the duration of the Service Period until the termination of this Agreement.

7.6 No warranty

Nothing in this Agreement or otherwise shall constitute or imply a warranty, undertaking or representation by or on the part of the Authority as to the fitness and suitability of the Site or any part thereof for the Works or for any other purpose.

8. CDM REGULATIONS8

8.1 Compliance with CDM Regulations

Without prejudice to the generality of clause 29 (Health and Safety) to the extent that any of the Works or Services to be undertaken or provided respectively by the Contractor come within the scope of the Construction (Design Management) Regulations 1994 (“CDM Regulations”) then the Contractor shall and shall oblige the Construction Contractor and the Operating Contractor to comply with their respective obligations under the CDM Regulations.

8.2 Contractor as Client

The Authority hereby appoints the Contractor to act as the only client in respect of the Project. Accordingly within ten Business Days of the Effective Date the Contractor shall make and serve on the Authority a declaration in accordance with paragraph (4) of Regulation 4 of the CDM Regulations. The Contractor shall as soon as possible provide to the Authority a copy of the notice which it receives pursuant to paragraph (5) of Regulation 4 of the CDM Regulations. The Contractor shall ensure that the Construction Contractor and Operating Contractor (as appropriate) is aware of the terms of such declaration and shall not subject to clause 8.3 during the Development Period seek to withdraw, terminate or in any manner derogate from such declaration.

74 8.3 Client’s Agent

To the extent that the Services to be provided by the Operating Contractor come within the scope of the CDM Regulations, the Authority agrees that the Contractor may procure the appointment of the Operating Contractor as client’s agent for the purposes of paragraph (1) of Regulation 4 of the CDM Regulations.

8.4 Authority’s Assistance

The Authority shall provide such information about the Site and such assistance as the Contractor may reasonably request on its own behalf subject to clause 7 or on behalf of any person appointed as client’s agent pursuant to clause 8 in furtherance of the performance of the duties of the client under the CDM Regulations.

9. VARIATIONS TO THE WORKS9

The provisions of clause 17 (Change to the Works or Services) and clause 18 (Change in Law) shall apply to any changes proposed in respect of the Works.

10. DELAYS IN SERVICE COMMENCEMENT DUE TO A COMPENSATION EVENT 10

10.1 If, on or before the Service Commencement Date in respect of the Phase 1 Construction Works or on or before the Phase 2 Works Completion Date in respect of the Phase 2 Construction Works, as a direct result of the occurrence of a Compensation Event notwithstanding the making of reasonable endeavours on the part of the Contractor:

10.1.1 the Contractor is unable to achieve Service Commencement on or before the Planned Service Commencement Date or the Deadline Date; and/or

10.1.2 the Contractor is unable to achieve the Phase 2 Works Completion Date on or before the Planned Phase 2 Works Completion Date; and/or

10.1.3 the Contractor is otherwise unable to comply with its obligations under this Agreement; and/or

10.1.4 the Contractor incurs costs or loses revenue,

then the Contractor shall be entitled to claim relief from its obligations and/or claim compensation under this Agreement and (where relevant) the Planned Service Commencement Date and the Planned Phase 2 Works Completion Date and the Deadline Date shall each be extended by such a period as is equivalent to the period

75 for which the Compensation Event circumstances apply as provided for in this clause 10.

10.2 To obtain relief and/or claim compensation the Contractor must:

10.2.1 as soon as practicable, and in any event within 21 days after it became aware that the Compensation Event has caused or is likely to cause delay and/or breach of an obligation, under this Agreement and/or the Contractor is to incur costs or lose revenue give to the Authority a notice of its claim for an extension of time, payment of compensation and/or relief from its obligations under the Agreement;

10.2.2 within 14 days of receipt of the notice referred to in clause 10.2.1 (Delays in Service Commencement due to a Compensation Event) above, give full details of the Compensation Event and the extension and/or any Estimated Revised Project Costs claimed; and

10.2.3 demonstrate to the reasonable satisfaction of the Authority that:

10.2.3.1 the Compensation Event was the direct cause of the Estimated Revised Project Costs and in respect of Compensation Events occurring prior to the Service Commencement Date any delay in the achievement of the Planned Service Commencement Date and/or in respect of Compensation Events occurring prior to the Phase 2 Works Completion Date any delay in the achievement of the Planned Phase 2 Works Completion Date; and

10.2.3.2 the Estimated Revised Project Costs, time lost, and/or relief from the obligations under this Agreement claimed, could not reasonably be expected to be avoided or recovered by the Contractor acting in accordance with Good Industry Practice.

10.3 In the event that the Contractor has complied with its obligations under this clause 10 (Delays in Service Commencement due to a Compensation Event) above, then:

10.3.1 the Planned Service Commencement Date and/or the Planned Phase 2 Works Completion Date and/or the Deadline Date (as the case may be) shall be postponed by such time as shall be reasonable for such a Compensation Event, taking into account the likely effect of delay;

76 10.3.2 in the case of any additional cost being incurred or any revenue being lost by the Contractor:

10.3.2.1 on or before the Service Commencement Date and/or the Phase 2 Works Completion Date (as the case may be) or if the effect of the Compensation Event is such as to thereafter lead to the incurring of increased costs or revenue being lost; or

10.3.2.2 as a result of Capital Expenditure or increased costs being incurred or revenue being lost by the Contractor as a direct result of the Compensation Event at any time,

the Authority shall compensate the Contractor for the relevant Estimated Revised Project Costs referred to in clause 10.2.2 (Delays in Service Commencement due to a Compensation Event) above within 30 days of its receipt of a written demand by the Contractor supported by all relevant information;

10.3.3 in the case of a payment of compensation for the relevant Estimated Revised Project Costs that results in increased costs being incurred or revenue being lost by the Contractor referred to in clause 10 (Delays in Service Commencement due to a Compensation Event) above but which reflects a change in the costs or loss of revenues being incurred by the Contractor after the Service Commencement Date, the Authority shall compensate the Contractor in accordance with clause 10.6 (Delays in Service Commencement due to a Compensation Event) by an adjustment to the Unitary Charge or at the Authority’s option a lump sum payment within 30 days of such election; and/or

10.3.4 the Authority shall give the Contractor such relief from its obligations under the Agreement, as is reasonable for such a Compensation Event.

10.3.4A For the avoidance of doubt any loss of revenue claimed by the Contractor pursuant to clauses 10.3.2 and/or 10.3.3 above shall not include any revenue derived from proposed Third Party Income prior to the Service Commencement Date.

10.4 In the event that information is provided after the dates referred to in clause 10.2 (Delays in Service Commencement due to a Compensation Event), then the Contractor shall not be entitled to any extension of time, payment, or relief from its

77 obligations under the Agreement in respect of the period for which the information is delayed.

10.5 If the Parties cannot agree the extent of any compensation, delay incurred, relief from the Contractor’s obligations under the Agreement, or the Authority disagrees that a Compensation Event has occurred (or as to its consequences), or that the Contractor is entitled to any relief under this clause, the Parties shall resolve the matter in accordance with clause 63 (Dispute Resolution).

10.6 Any payment of compensation referred to in clauses 10.3 and 12.3 shall be calculated in accordance with Schedule 14 (Estimated Revised Project Costs) below.

11. DELAYS DUE TO A RELIEF EVENT11

11.1 If and to the extent that a Relief Event:

11.1.1 is the direct cause of a delay so that the Contractor is unable to achieve Service Commencement on or before the Planned Service Commencement Date or the Deadline Date and/or achieve the Phase 2 Works Completion Date on or before the Planned Phase 2 Works Completion Date; and/or

11.1.2 adversely affects the ability of the Contractor to perform its other obligations under this Agreement

then the Contractor is entitled to apply for relief from any rights of the Authority arising under clause 44 (Termination of Whole Agreement on Contractor Default) and neither shall the Authority exercise any step-in rights otherwise available to the Authority without the prior agreement in writing of the Contractor

11.2 To obtain relief, the Contractor must:

11.2.1 as soon as practicable, and in any event within 14 days after it becomes aware that the Relief Event has caused or is likely to cause delay and/or adversely affect the ability of the Contractor to perform its other obligations under this Agreement give to the Authority a notice of its claim for relief from its obligations under this Agreement, including full details of the nature of the Relief Event, the date of occurrence, its likely duration and whether the Contractor considers that the circumstance give effect to the provisions of this Agreement relating to Compensation Events;

78 11.2.2 within seven days of receipt by the Authority of after the notice referred to in clause 11.2.1 (Delays due to a Relief Event) above, give so far as practicable full details of the relief claimed; and

11.2.3 demonstrate to the reasonable satisfaction of the Authority that:

11.2.3.1 the Contractor and its Sub-Contractors could not have avoided such occurrence or consequences by steps which they might reasonably be expected to have taken, without incurring material expenditure;

11.2.3.2 the Relief Event directly caused the delay to the achievement of the Planned Service Commencement Date and/or the Planned Phase 2 Works Completion Date or the Deadline Date (as the case may be) or that relief from other obligations under the Agreement is necessary;

11.2.3.3 the time lost and/or relief from the obligations under this Agreement claimed could not reasonably be expected to be avoided or recovered by the Contractor acting in accordance with Good Industry Practice within a period of time which forms the subject of the claim without incurring material expenditure which the Authority is not willing to reimburse.

11.2.3.4 the Contractor is using reasonable endeavours to perform its obligations under the Agreement.

11.3 Effect prior to Planned Service Commencement Date

11.3.1 In the event that the Contractor has complied with its obligations under clause 11.2.3 above, then:

11.3.2 the Planned Service Commencement Date and/or the Planned Phase 2 Works Completion Date and the Deadline Date (as the case may be) shall be postponed by such time as shall be reasonable for such a Relief Event, taking into account the likely effect of delay; and/or

11.3.3 the Authority shall not be entitled to exercise its rights to terminate the Agreement under clause 44 (Termination of Whole Agreement on Contractor Default) or without other cause permitted by this Agreement exercise any step-in rights or claims and, subject to clause 11.4 below, shall give such other relief as has been requested by the Contractor.

79 11.4 Events after Planned Service Commencement Date

Nothing in clause 11.3 above shall affect any entitlement to make deductions or any deductions made under Schedule 4 (the Payment Mechanism) during the period in which the Relief Event is subsisting.

11.5 In the event that information required by clause 11.2 (Delays due to a Relief Event) above is provided after the dates referred to, then the Contractor shall not be entitled to any relief in respect of the period for which the information is delayed.

11.6 The Contractor shall notify the Authority if at any time it receives or becomes aware of any further information relating to the Relief Event, giving details of that information to the extent that such information is new or renders information previously submitted materially inaccurate or misleading.

11.7 If the Parties cannot agree the extent of the relief required, or the Authority disagrees that a Relief Event has occurred or that the Contractor is entitled to any extension of the Planned Service Commencement Date and/or Planned Phase 2 Works Completion Date or Deadline Date (as the case may be) and/or relief under this clause, the Parties shall resolve the matter in accordance with clause 63 (Dispute Resolution).

12. RELIEF EVENTS, COMPENSATION EVENTS AND FORCE MAJEURE EVENTS12

12.1 Relief Events

In the event that the Contractor is prevented from carrying out its obligations at any time during the Development Period or the Service Period by a Relief Event the provisions of clause 11 (Delays due to a Relief Event) shall apply and the Contractor shall not be treated as being in breach of its obligations under this Agreement but the Authority shall be entitled to make deductions from the Unitary Charge for Unavailability and non-compliance with the Performance Standards.

12.2 Force Majeure Event

In the event that the Contractor is prevented from carrying out its obligations by a Force Majeure Event, the provisions of clause 45 (Termination on Force Majeure) shall apply.

80 12.3 Compensation Event

In the event of a Compensation Event occurring after the Service Commencement Date, the provisions of clause 10 (to the extent appropriate) shall apply and the Contractor shall not be treated as being in breach of its obligations under this Agreement. The Authority shall not be entitled to make deductions from the Unitary Charge for Unavailability and non-compliance with the Performance Standards to the extent that any such Unavailability or non-compliance is caused or contributed to by such Compensation Event.

81 PART III - THE SERVICES

13. COMMISSIONING OF SERVICES13

13.1 At least three months before the Planned Service Commencement Date or such later date as is anticipated to be the Services Commencement Date the Contractor shall deliver to the Authority a draft programme that describes in detail what the Contractor must do to ensure that the Services become operational by the Planned Service Commencement Date and to ensure that the same accord with the Output Specification and the Service Delivery Plan and shall deliver the Operating Manuals to the Authority.

13.2 Without prejudice to any of the obligations of the Contractor under this Agreement (including, without limitation, clause 6 (Principal Obligation)) the Parties shall liaise together to seek to agree within ten Business Days of the delivery to the Authority of the draft programme the terms of the draft programme and upon delivery of the draft programme the Parties shall endeavour to agree its terms or in default of agreement or determination the matter shall be determined in accordance with clause 63 (Dispute Resolution).

14. PRINCIPAL OBLIGATIONS14

14.1 Provision of Services

The Contractor will procure the undertaking and performance of the provision of the Services in accordance with clause 6.1.3.

14.2 Standard of Performance

The Services will, at all times, be performed in accordance with Good Industry Practice.

14.3 Emergencies

14.3.1 If an Emergency arises during the Agreement Period (and whether or not an Emergency has arisen shall be determined in the case of any dispute by the Authority acting reasonably) which cannot be dealt with by performance of the Services, the Authority may (at the Authority’s cost and expense) instruct the Contractor to use its best endeavours to procure that such additional or alternative services are undertaken so far as practicable by or on behalf of the Contractor as and when required by the Authority to ensure

82 that the Emergency is dealt with and normal operation of the Facility resumes as soon as is reasonably practicable.

14.3.2 As soon as reasonably practicable following each occasion on which the Authority exercises its rights pursuant to clause 14.3.1 (Emergencies) the Parties shall liaise and seek to agree upon the additional charge (if any) to the Authority of provision by or on behalf of the Contractor of any such additional or alternative services or loss of revenue suffered by the Contractor. The Parties agree hereby that the basis of assessment of any additional charge shall be receipted invoices provided to the Authority by the Contractor in respect of the additional or alternative service or reasonable evidence of revenue foregone. If such charges or lost revenue are not agreed or determined by the Parties the matter shall be referred on the application of either party for resolution under the Disputes Resolution Procedure (clause 63).

14.4 Use of Hazardous Materials

The Contractor shall ensure or shall procure that any hazardous materials or equipment used or intended to be used in the provision of the Services are kept under control and in safe keeping in accordance with all relevant Legal Requirements, and shall ensure that all such materials are properly and clearly labelled on their containers and shall promptly inform the Authority of all such materials being used or stored on the Facilities and shall comply with any other reasonable requirement of the Authority in respect thereof.

The Authority shall ensure that any hazardous materials or equipment used or intended to be used by the Authority in the course of the operation of the Facility are kept under the control of the Authority and shall use its best endeavours to procure that any such materials or equipment used or intended to be used by an Authority Party are kept under the Control of that Authority Party. The Authority shall ensure (and with case of hazardous material or equipment used or intended to be used by an Authority Party shall use its best endeavours to procure that the Authority Party), keeps the hazardous materials and equipment in safe keeping in accordance with all relevant Legal Requirements, with clear labelling on the containers and shall promptly inform the Contractor of all such materials being used or stored on the Facilities and shall have regard to all reasonable observations of the Contractor as to the manner of keeping of such materials where this may have an effect upon the performance of the Services.

83 14.5 Environmental policy

The Contractor shall ensure that the minimum possible use is made of hazardous substances in the delivery of the Services and shall use its reasonable endeavours to use less harmful substances where practicable. The Contractor shall ensure that all such products are used at no greater concentration than is required and that used containers are disposed of so as not to cause any danger or damage to the environment, in accordance with the Authority’s environmental policy from time to time. In any event the Contractor shall comply at all times with any Authority Policy having this effect.

14.6 Facility Security

The Contractor shall operate a suitable security system so as to ensure that any Excluded Persons are refused admission to the Facilities provided that in every case the Authority shall have supplied the Contractor prior to any circumstance requiring the exclusion of an Excluded Person with (in respect of each such Excluded Person)

14.6.1 reasons for the exclusion; and

14.6.2 such reasonable particulars of the Excluded Person as shall be reasonably sufficient for the Contractor or any Sub Contractor to identify the individual concerned as an Excluded Person so as to take appropriate action in relation to the person concerned.

14.7 List of Excluded Persons

The Authority shall from time to time review the list of Excluded Persons advising the Contractor of any person or persons who should be removed from that list and shall advise the Contractor with effect from the day following the date of any notification in writing to the effect that an individual has been removed from the list that person shall cease to be an Excluded Person.

14.8 Security Breaches

If an Excluded Person shall notwithstanding the provisions of clause 14.6 gain admission to any of the Facilities it shall be the responsibility of the Contractor to secure the removal of that person from the Facilities and in respect of any damage to the Facilities caused by that Excluded Person following his admission to the Facilities as an Excluded Person to undertake any remediation or reinstatement required.

84 15. MAINTENANCE15

15.1 Maintenance

The Contractor shall ensure that on a continuing basis that at all times, its maintenance and operating procedures are sufficient to ensure that:

15.1.1 the Service is continuously available;

15.1.2 the Services can be delivered throughout the Service Period in accordance with the Output Specification;

15.1.3 the Assets (as defined in paragraph (a) of the definition of Assets) are handed back to the Authority on the Expiry Date in a condition complying in all material respects with the requirements of paragraph 2.12 (life expectancy of Building Elements) of the Output Specification.

15.2 Planned maintenance

The Contractor shall procure that the Planned Maintenance shall be carried out at the Facility by or on behalf of the Contractor at the dates and times set out in Schedule 17 (Planned Maintenance) and in accordance with the provisions of clause 15 (Maintenance) and the other provisions of Schedule 17 (Planned Maintenance).

15.3 Sinking fund

The Contractor shall procure the maintenance of a fund in a separate interest bearing account for the purpose of funding periodic Planned Maintenance of the Facilities, and the replacement, as necessary, of the New Equipment.

15.4 Use of Sinking Fund during Service Period

The Contractor shall not use or cause the Sinking Fund to be available to any Contractor Party during the Service Period for any purpose other than carrying out the maintenance requirements specified in Schedule 17 (Planned Maintenance), or replacing Equipment.

15.5 Planned Maintenance and Deductions to the Unitary Charge

No deductions shall be made from the Unitary Charge for any period during which the Facilities are Unavailable or for non-compliance with the Performance Standards if such Unavailability or sub-standard performance is because the Contractor is

85 performing its obligations relating to Planned Maintenance during the dates and at the times agreed for Planned Maintenance as set out in Schedule 17 (Planned Maintenance).

15.6 Surveys

15.6.1 If the Authority reasonably believes that the Contractor is in breach of its obligations under clauses 15.1 to 15.4 (Maintenance) in respect of any part of the Facilities or the Site generally then it may at its own cost carry out (or procure) a survey of the relevant parts of the Facilities or the Site more generally to assess whether they or any of them have been and are being maintained by or on behalf of the Contractor in accordance with its obligations under clauses 15.1 to 15.4 (Maintenance). This right may not be exercised more often than once every three years.

15.6.2 If the Authority wishes to exercise its right to carry out or procure a survey under clause 15.6.1 it promptly shall notify the Contractor of its intention to do, and within 20 Business Days of receiving such notification, the Contractor shall have the right to submit a Maintenance Compliance Report to the Authority.

15.6.3 Within 10 Working Days from receipt of the Maintenance Compliance Report, the Authority shall notify the Contractor whether it accepts (or does not accept) the Maintenance Compliance Report.

15.6.4 If, in the reasonable opinion of the Authority, the Authority considers that any works described in any Maintenance Compliance Report are inadequate to rectify the failure to maintain the relevant Services in accordance with clause 15.1 to 15.4, the Authority may continue to carry out (or procure) a survey of the relevant part or parts of the Facilities

15.6.5 The Authority shall notify the Contractor in writing a minimum of 14 days in advance of the date it wishes to carry out the survey and provide details of all individuals, firms or companies that the Authority has retained to assist the Authority in the undertaking of the survey. The Authority shall consider in good faith any reasonable request by the Contractor for the survey to be carried out on a different date if such request is made at least seven days prior to the notified date and the Contractor (acting reasonably) is able to demonstrate that carrying out the survey on the notified date would materially prejudice the Contractor’s ability to provide the Service

86 15.6.6 When carrying out any Survey, the Authority shall use reasonable endeavours to minimise any disruption caused to the provision of the Service by the Contractor. No deductions shall be made from the Unitary Charge for any reason caused by any such disruptions. The cost of the survey shall be borne by the Authority. The Contractor shall give the Authority or shall procure that the Authority is given (free of charge) any reasonable assistance required by the Authority during the carrying out of any survey.

15.6.7 If, the survey shows that the Contractor has not complied or is not complying with its obligations under clauses 15.1.1 to 15.1.4 (Maintenance), to a material degree which has an effect upon the provision of the Services, the Authority shall:

15.6.7.1 notify the Contractor of want of repair;

15.6.7.2 specify a reasonable period within which the Contractor must carry out such work;

15.6.7.3 be entitled to be reimbursed by the Contractor for the reasonable Cost of the Survey.

15.6.8 The Contractor shall carry out any urgent rectification and/or maintenance work within the period specified or otherwise in accordance with its planned maintenance and any costs it incurs in carrying out such rectification and/or maintenance work shall be at its own expense.

15.6.9 If the Authority notifies the Contractor of its acceptance of the Maintenance Compliance Report the Contractor shall carry out the works described in the Maintenance Compliance Report at its own expense within a period of time to be agreed between the Parties, acting reasonably provided that the Contractor may in any event carry out the works described in the Maintenance Compliance Report (or any part thereof) prior to such notification or (as the case may be) agreement or determination.

15.6.10 In the event that the Contractor fails to implement the Maintenance Compliance Report within a period of time to be agreed between the Parties acting reasonably, the Authority may (on a minimum of 3 Business Days notice in writing to the Contractor) carry out (or procure the carrying out) of any remaining works described in the Maintenance Compliance Report. Any costs incurred by the Authority in carrying out such Works should be

87 reasonably incurred and should be effected with regard to considerations of value for money. The costs of the Authority in carrying out such works shall be recoverable from the Contractor by way of deduction from the Unitary Charge.

16. REPRESENTATIVES AND LIAISON16

16.1 Operations Manager

The Contractor shall or shall procure to employ throughout the Service Period an Operations Manager to act as the Contractor’s agent in connection with the provision of the Services and in connection with this Agreement.

16.2 Authority of Operations Manager

Subject to clause 16.13 the Operations Manager shall have full authority to act on behalf of the Contractor during the Service Period for all purposes of this Agreement. The Authority shall be entitled to treat any act of the Operations Manager in connection with this Agreement during the Service Period as being expressly authorised by the Contractor (save for acts undertaken after the Contractor has notified the Authority in accordance with clause16.3 (Replacement of Operations Manager) that such authority has been revoked) and the Authority shall not be required to determine whether any express authority has in fact been given.

16.3 Replacement of Operations Manager

The Contractor or the Operating Contractor may remove or replace the Operations Manager from time to time and must give within 5 Business Days of so doing written notice to the Project Director specifying the reasons for the removal or replacement.

16.4 Where the Contractor or the Operating Contractor removes or replaces the Operations Manager in the manner contemplated at clause 16.3 the Contractor shall advise the Authority at the earliest practicable date of:

16.4.1 The interim arrangements that it may propose to make pending the appointment of any replacement Operations Manager including any role and/or authority of such person; and/or

16.4.2 The identity of the replacement Operations Manager as soon as the Contractor has identified the relevant person

16.5 Absence of Appointment of Operations Manager

88 If at any time the Project Director shall:

16.5.1 not have received notification from the Contractor or the Operating Contractor of the identity of the Operations Manager;

16.5.2 have received notification from the Contractor or the Operating Contractor that the Operations Manager has been removed and does not immediately receive notification of the replacement of such person by the appointment of a new Operations Manager (as appropriate),or of the interim arrangements to apply the Contractor shall be deemed to have appointed and properly notified the Project Director of the appointment of the Managing Director of the Contractor and in default of appointment of a Managing Director of the Contractor any director of the Contractor until such time as the Contractor properly notifies the Project Director of an appointment under clause 16.1 (Operations Manager).

16.6 Project Director

The Authority shall appoint throughout the Service Period a Project Director to liaise with the Operations Manager during the Service Period and shall keep the Contractor informed of the identity from time to time of the Project Director. The identity of the Project Director shall in the absence of notice in writing to the contrary served before the Service Commencement Date be deemed to be the Project Director identified as such for the period of the Works

16.7 Removal of Project Director

The Authority may remove or replace the Project Director from time to time and must give written notice to the Contractor within five Business Days of so doing.

16.8 Absence of Appointment of the Project Director

If at any time the Contractor shall:

16.8.1 not have received notification from the Authority of the identity of the Project Director; or

16.8.2 have received notification from the Authority that the Project Director has been removed and does not receive notification immediately of the replacement of such person by the appointment of a new Project Director,

89 the Authority shall be deemed to have appointed and properly notified the Contractor of the appointment as Project Director of George Blyth to be the Project Director until such time as the Authority properly notifies the Contractor of an appointment under clause 16.6.

16.9 Authority of Project Director

The Project Director shall have such authority and power to act on behalf of the Authority in connection with this Agreement as set out from time to time in written notice to the Contractor from the Authority.

16.10 Project Director’s Power to Delegate

The Project Director may from time to time delegate to an Authority’s Authorised Representative any of his authority and/or powers he is entitled to exercise pursuant to any written notice issued in accordance with clause 16.9 with the exception of:

16.10.1 any power to vary this Agreement;

16.10.2 any power to waive any rights of the Authority in respect of this Agreement; or

16.10.3 any power to serve a notice of Contractor Default on the Contractor under clause 44 (Termination of Whole Agreement on Contractor Default or Insolvency Default).

16.11 Project Director To Give Notice of Appointment of Authority’s Authorised Representative

The Project Director shall give notice in writing to the Contractor of the appointment of any Authority’s Authorised Representative (as defined in Schedule 4 (Payment Mechanism)) specifying the extent of the powers of the Project Director which the Project Director is delegating to the Authority’s Authorised Representative and if no extent or limit of powers are specified in the notice then the Authority’s Authorised Representative will be entitled to exercise all of the powers which the Project Director is able to delegate pursuant to clause 16.10 (Power to Delegate).

16.12 Reliance on Notice of Appointment

The Contractor will be entitled to treat any notice given pursuant to clause 16.11 (Project Director to give notice of Appointment of Authority’s Authorised Representative) as evidence of the lawful appointment of such Authority’s

90 Authorised Representative until such time as the Project Director gives notice to the Contractor of the revocation of such appointment and the Contractor shall be entitled to treat any act of the Authority’s Authorised Representative prior to receipt of such notice of revocation as being expressly authorised by the Project Director and further the Contractor shall not be required to determine whether any such authority has in fact or in law been given.

16.13 No Authority to Amend this Agreement

The Parties agree that no person referred to in this clause 16 shall be considered to have or under any circumstances be represented to have authority to make any amendment, variation or waiver of any terms or conditions of this Agreement which shall in all cases require an express authorisation in writing by an officer or other representative of the party concerned duly appointed to make such amendment variation or waiver.

91 PART IV - CHANGES TO THE WORKS OR SERVICES

17. CHANGES TO THE WORKS OR SERVICES17

17.1 Authority Change in Works or Service

17.1.1 The Authority has the right subject to clause 17.1.12 and to paragraph 3.2.22 of Schedule 1A to propose changes in Works or Service in accordance with this clause and to implement changes to and introduce new Authority Policies which may alter the nature or cost of the Works or Services required by it. If the Authority requires a change in the Works or Service, or desires to introduce any variation to an Authority Policy (which for the avoidance of doubt in the case only of a variation to an Authority Policy as regards the Contractor or any Contractor Party is likely to have a Material Effect) it must serve an Authority Notice of Change on the Contractor.

17.1.2 The Authority Notice of Change shall:

17.1.2.1 set out the change in Service or Works or Authority Policy required in sufficient detail to enable the Contractor to calculate and provide the Estimate in accordance with clause 17.1.3 (Authority Change in Works or Services) below;

17.1.2.2 request the Contractor to provide the Authority within 21 days or such longer period as the Contractor reasonably requires of receipt of the Authority Notice of Change with the Estimated Increased Project Costs or decrease in such costs (“the Estimate”).

17.1.3 As soon as practicable and in any event within 21 days after having received the Authority Notice of Change, the Contractor shall deliver to the Authority the Estimate. The Estimate shall include the opinion of the Contractor on:

17.1.3.1 any impact (if relevant) on the Planned Service Commencement Date and/or on the Planned Phase 2 Works Completion Date;

17.1.3.2 any impact on the provision of the Works (if relevant) or Service;

92 17.1.3.3 any amendment required to this Agreement and/or any Project Document as a result of the change in Works or Service;

17.1.3.4 any Estimated Revised Project Costs that result from the change in Works or Service, detailing any Estimated Revised Project Costs and any decrease in such costs;

17.1.3.5 any Capital Expenditure that is required or no longer required as a result of the change in Works or Services;

17.1.3.6 the proposed method of certification of any construction or operational aspects of the Service required by the change in the Works (if relevant) or Service if not covered by the procedures specified in clause 6 in Schedule 1 (Works);

17.1.3.7 any consents that maybe required to implement the change in Works (if relevant) or the Services and the ability of the Contractor to assume risks arising in respect of such requirements; and

17.1.3.8 any Appropriation that may be required under clause 17.3 (Variations requiring an Appropriation).

17.1.4 As soon as practicable after the Authority receives the Estimate, the Parties shall discuss and agree the issues set out in the Estimate. In such discussions the Authority may modify the Authority Notice of Change, in which case the Contractor shall, as soon as practicable, and in any event not more than 14 days after receipt of such modification, notify the Authority of any consequential changes to the Estimate.

17.1.5 If the Parties cannot agree on the contents of the Estimate then the disputed issues will be determined in accordance with clause 63 (Dispute Resolution).

17.1.6 As soon as practicable after the issues referred to in clause 17.1.5 (Authority Change in Works or Services) above are agreed or have been determined pursuant to clause 17.1.5, the Authority shall:

17.1.6.1 confirm the Estimate (as modified); or

17.1.6.2 withdraw the Authority Notice of Change.

93 17.1.7 If the Authority does not confirm the Estimate (as modified) within 30 days of the contents of the Estimate having been agreed in accordance with clause 17.1.4 above or determined pursuant to clause 17.1.5 above, then the Authority Notice of Change shall be deemed to have been withdrawn. In such circumstances, or where the Authority serves a notice on the Contractor withdrawing the Notice of Change, the Authority shall fully reimburse the Contractor for any reasonable costs incurred by the Contractor in estimating the cost of the proposed change which are additional to the Contractor’s internal administrative costs the latter of which will not be reimbursed.

17.1.8 In the event that the Estimate (as modified) involves estimated Capital Expenditure then the Contractor shall use its reasonable endeavours to obtain funding for the whole of the estimated Capital Expenditure, on terms reasonably satisfactory to it and the Senior Lender.

17.1.9 If the Contractor has used its reasonable endeavours to obtain financing for the whole of the Estimated Capital Expenditure, but has been unable to do so within 40 Business Days of the date that the Authority confirmed the Estimate, then the Contractor shall have no obligation to carry out the change in Works or Service, unless the Authority agrees to pay the cost involved.

17.1.10 The Authority may, at any time following the date on which the Estimate is confirmed, agree to meet all or, to the extent the Contractor has obtained finance for part of the Capital Expenditure, the remaining part of the estimated Capital Expenditure.

17.1.11 In the event that the Estimate has been confirmed by the Authority, then the adjustment to the Unitary Charge shall be as in clause 10.6 (Calculation of Compensation) above.

17.1.12 Limits on Variations

17.1.12.1 Notwithstanding the provisions of clauses 17.1.1 to 17.1.11 the Contractor may refuse to comply with any Authority’s Notice of Change which:

(a) requires the Works or any of the Services to be provided or to be carried out in a way which contravenes any Legislation or which is inconsistent with Good Industry Practice or the Contractor is

94 able to demonstrate is not technically feasible (and not merely more expensive);

(b) would cause any Approval or Consent to be revoked or breached or to be unobtainable;

(c) would, if implemented:

(i) cause either of the Ratios to fall below the Target Ratio Levels;

(ii) cause any other material breach of the Financing Agreements;

(iii) adversely affect the risk profile or the real rate of return demonstrated within the Financial Model in relation to the provision of Equity and Junior Debt, an adverse effect upon the real rate of return being a reduction equal to or in excess of and an adverse effect on the risk profile being any reduction in the Investor’s Annual Return which is

(a) in the two years immediately following the date of service of the Authority Notice of Change equal to or in excess of or

(b) at any time thereafter equal to or in excess of

(d) materially or adversely affect the Contractor’s ability to comply with its obligations under this Agreement in a way that cannot be adequately compensated for by a financial payment; or

(e) result in:

(i) an increased relative susceptibility to deductions from the Unitary Charge in comparison to the susceptibility to deductions from the Unitary Charge pertaining prior to implementation of the Variation;

(ii) an increased relative susceptibility to termination of this Agreement or any other Project Document in comparison to the susceptibility to

95 termination pertaining prior to implementation of the Variation; or

(iii) the Contractor being in breach of any of its obligations under the Project Documents;

unless the Parties agree an appropriate consequential change to this Agreement in order to fully relieve the Contractor from that risk;

(f) is served while any relevant dispute under clause 63 is outstanding.

17.1.12.2 if the Contractor validly refuses to comply with any Authority’s Notice of Change on any of the grounds set out in this clause 17.1.12, the Authority’s Notice of Change shall be deemed to have been withdrawn, with any dispute between the Parties as to whether or not a refusal is valid being referred to clause 63 (Dispute Resolution).

17.2 Contractor Changes in Works or Service

If the Contractor wishes to introduce a change in the Works or Service, it must serve a Contractor Notice of Change on the Authority.

17.2.1 The Contractor Notice of Change must:

17.2.1.1 set out the proposed change in the Works or Services in sufficient detail to enable the Authority to evaluate it in full;

17.2.1.2 specify the Contractor’s reasons for proposing the change in the Works or Services;

17.2.1.3 request the Authority to consult with the Contractor with a view to deciding whether to agree to the change in the Works or Service and, if so, what consequential changes the Authority requires as a result;

17.2.1.4 indicate any implications of the change in the Works or Services;

96 17.2.1.5 indicate, in particular, whether a variation to the Unitary Charge is proposed (and, if so, give a detailed cost estimate of the proposed change); and

17.2.1.6 indicate if there are any dates by which a decision by the Authority is critical.

17.2.2 The Authority shall evaluate the Contractor’s proposed change in Works or Service in good faith, taking into account all relevant issues, including whether:

17.2.2.1 a change in the Unitary Charge will occur;

17.2.2.2 the change affects the quality of the Works or Services or the likelihood of successful delivery of the Services;

17.2.2.3 the change will interfere with the relationship of the Authority with any Authority Party;

17.2.2.4 the financial strength of the Contractor is sufficient to perform the changed Works or Services;

17.2.2.5 the change materially affects the liabilities risks or costs to which the Authority is exposed.

17.2.3 As soon as practicable after receiving the Contractor Notice of Change (but in any event within five Business Days), the Parties shall meet and discuss the matter referred to in it. During their discussions the Authority may propose reasonable modifications or accept or reject the Contractor Notice of Change.

17.2.4 If the Authority accepts the Contractor Notice of Change (with or without modification), the relevant change in the Works or Services shall be implemented within 30 days of the Authority’s acceptance. Within this period, the Parties shall consult and agree the remaining details as soon as practicable and shall enter into any documents to amend this Agreement or any relevant Project Document which are necessary to give effect to the change in Works or Services.

17.2.5 If the Authority rejects the Contractor Notice of Change, it shall also give its reasons for such a rejection.

97 17.2.6 Unless the Authority’s acceptance specifically agrees to an increase in the Unitary Charge, or the Authority is under any express terms of this Agreement obliged to meet the costs or to make any contribution to the costs and it is agreed that the contribution shall be made by an adjustment to the Unitary Charge, as a result of a change in Works or Services proposed by the Contractor, there shall be no increase in the Unitary Charge.

17.2.7 If a change in the Works or Services proposed by the Contractor leading to any change to the Output Specification has the effect of causing the costs of the Contractor or the costs of a Sub-Contractor to decrease there shall be agreed between the Authority and the Contractor a reduction in the Unitary Charge which is reasonable having regard to the circumstances and taking into account not only the reduction in costs arising but any capital investment required (and the financing of such capital investment) and any increased operating risk that may be assumed by the Contractor or the relevant Sub-Contractor in respect of the implementation and subsequent operation of the change.

17.2.8 The Authority cannot reject a change in Works or Services which is required in order to conform to a Change in Law. The costs of introducing a change in Works or Services resulting from a Qualifying Change in Law (including any resulting variation in the Unitary Charge) shall be dealt with in accordance with clause 18 (Change in Law) and to the extent not dealt with shall be borne by the Contractor.

17.3 Variation requiring an Appropriation

If an Estimate delivered to the Authority by the Contractor under clause 17.1.3 identifies the need for an Appropriation, the Authority shall reasonably use its reasonable endeavours to effect an Appropriation. Until such time as the Appropriation is completed the Contractor shall be under no obligation to implement the Authority Notice of Change in respect of which the Estimate was delivered.

18. CHANGE IN LAW18

18.1 Qualifying Change in Law

18.1.1 If any Change in Law occurs or is shortly to occur, then either Party may write to the other to express an opinion on its likely effects, giving details of its opinion of:

98 18.1.1.1 any necessary change in the Works or the Services;

18.1.1.2 whether any changes are required to the terms of this Agreement to deal with the Change in Law to the extent that it is a Qualifying Change in Law;

18.1.1.3 whether relief from compliance with obligations are required, including the obligation of the Contractor to complete or procure the completion of the Phase 1 Construction Works by the Planned Service Commencement Date and/or to complete or procure the completion of the Phase 2 Construction Works by the Planned Phase 2 Completion Date;

18.1.1.4 any Estimated Revised Project Costs that directly result from the Change in Law to the extent that it is a Qualifying Change in Law; and

18.1.1.5 any Capital Expenditure that is required as a result of a Change in Law to the extent that it is a Qualifying Change in Law,

in each case giving full details of the procedure for implementing the change in the Works or the Services. Responsibility for costs of implementation (and any resulting variation to the Unitary Charge) shall be dealt with in accordance with clauses 18.1.2 to 18.1.5 below.

18.1.2 As soon as practicable after receipt of any notice from either party under clause 18.1.1 above the Parties shall discuss and agree the issues referred to in clause 18.1.1 and any ways in which where the Change in Law is a Qualifying Change in Law the Contractor can mitigate the effect of the Qualifying Change of Law, including:

18.1.2.1 providing evidence that the Contractor has used or will use reasonable endeavours to oblige its Sub-Contractors to minimise any increase in costs and maximise any reduction in costs;

18.1.2.2 demonstrating how any Capital Expenditure to be incurred or avoided is being measured in a cost effective manner including showing that when such expenditure is incurred or would have been incurred foreseeable Changes in Law at that time have been taken into account by the Contractor;

99 18.1.2.3 giving evidence (so far as practicable) as to how Qualifying Change in Law has affected prices charged by any similar businesses to the Project, including similar businesses in which the shareholders or their Affiliates carry on business; and

18.1.2.4 demonstrating that any expenditure that has been avoided, which was anticipated to be incurred to replace or maintain assets that have been affected by the Qualifying Change in Law concerned, has been taken into account in the amount claimed under clause 18.1.1.4 and 18.1.1.5 above.

If the parties cannot agree any matters in clause 18.1.2.1 - 18.1.2.4, the Parties shall resolve the matter in accordance with clause 63 (Dispute Resolution)

18.1.3 If the Parties agree to a change in Service or in the Works, or a change in Service or in the Works is determined to be needed (if necessary as determined under clause 63 (Dispute Resolution)) because of a Qualifying Change in Law and if the change in the Works or the Services requires the Contractor to incur additional Capital Expenditure (excluding the Contractor’s Share of any Capital Expenditure agreed or determined to be required as a result of a General Change in Law), then the Contractor shall use its reasonable endeavours to obtain funding for such Capital Expenditure on terms reasonably satisfactory to it and the Senior Lender.

18.1.4 If the Contractor has used reasonable endeavours to obtain financing for such Capital Expenditure, but has been unable to do so within 60 days of the date that the agreement or determination in clause 18.1.3 occurred, or has failed to do so on terms reasonably satisfactory to itself or to the Senior Lender then the Authority shall pay to the Contractor by lump sum an amount equal to that Capital Expenditure on or before the date falling 30 days after the Capital Expenditure has been incurred.

18.1.5 Any compensation payable under this clause 18.1 by means of an adjustment to or reduction in the Unitary Charge shall be calculated by reference to Schedule 14 (Finance Adjustment).

18.2 VAT

If, following a Change in Law, a Relevant Authority determines that supplies to be made by the Contractor to the Authority under this Agreement are exempt from VAT

100 and that as a consequence of and to the extent of that determination input tax incurred and attributable to such supplies (“Attributable VAT”) is not recoverable by the Contractor, then compensation shall be paid to the Contractor in accordance with clause 18.3.

18.3 Subject to clauses 18.4 the compensation to be paid in respect of any Month under clause 18.2 of this Agreement shall be:

18.3.1 the amount of Attributable VAT incurred by the Contractor on supplies of goods and services no later than the final Business Day of the Month preceding that for which the next monthly report is due to be provided in accordance with clause 21.1; and

18.3.2 which has not previously been paid in respect of any month either as compensation under this clause or by any other means to the Contractor by the Authority; and

18.3.3 which the Contractor cannot reclaim from HM Customs & Excise because it is directly attributable to exempt supplies made by the Contractor to the Authority.

18.4 If the Contractor has been paid compensation in accordance with clause 18.3 of this agreement and upon carrying out the adjustment of attribution required by Regulation 107 Value Added Tax Regulations 1995 (“the Regulations”), the Contractor is repaid by HM Customs & Excise any part of the input tax previously treated under the Regulations as irrecoverable exempt input tax, the Contractor shall repay to the Authority an amount equal to the amount so repaid to the Contractor by HM Customs & Excise, such repayment to be made by the Contractor to the Authority within 14 Business Days of receipt of such amount from HM Customs & Excise.

101 PART V - PAYMENT PROVISIONS

19. THE UNITARY CHARGE19

19.1 Payment of the Unitary Charge during the Service Period

Unless otherwise stated within this Agreement, during the Service Period the Authority shall be obliged to pay to the Contractor the Unitary Charge in respect of each Payment Period, (subject to a pro rata adjustment in respect of any incomplete Payment Period at the beginning or end of the Service Period) adjusted in accordance with the provisions of this Agreement and subject to compliance by the Contractor with the provisions of clause 21 (Report and Invoicing).

19.2 Amount of the Unitary Charge

The amount of the Unitary Charge shall be subject to those clauses of this Agreement which expressly provide for variations to the amount of the Unitary Charge (including the provisions of Part IV (Changes to the Works or Services) and clause 22 (Indexation) and clause 23 (Benchmarking, Market Testing and Best Value).

19.3 Deductions to the Unitary Charge

Subject to the terms of this Agreement the Authority shall in respect of each Payment Period be entitled to make reductions to the Unitary Charge for non-compliance with the Availability and Performance Standards (including during the period in which a Relief Event is subsisting) in accordance with Schedule 4 (Payment Mechanism).

20. VAT20

20.1 All amounts due under this Agreement are exclusive of VAT.

20.2 If any supply made or referred to in this Agreement is or becomes chargeable to VAT then the person receiving the supply (“the Recipient”) shall in addition pay the person making the supply (“the Supplier”) the amount of that VAT against receipt by the Recipient from the Supplier of a proper VAT invoice in respect of that supply.

Where under this Agreement any amount is calculated by reference to any sum which has or may be incurred by any person, the amount shall include any VAT in respect of that amount only to the extent that such VAT is not recoverable as input tax by that person (or a member of the same VAT group), whether by set off or repayment).

102 The Contractor shall provide the Authority with any information reasonably requested by the Authority in relation to the amount of VAT chargeable in accordance with the Agreement and payable by the Authority to the Contractor.

20A1 CATERING

20A1.1 Catering

The Contractor shall:

20A.1.1.1 provide or procure the provision of the Catering Service in accordance with paragraph 3.6 of the Output Specifications and all Legal Requirements laid down from time to time;

20A.1.1.2 collect all payments made by consumers for the provision of school meals;

20A.1.1.3 be exclusively entitled to install and operate vending machines within the Facilities; and

20A.1.1.4 act as the agent of the Authority in providing registered pupils with prepared food and collecting the appropriate charges pursuant to the Authority’s responsibility under section 512 of the Education Act 1996.

Income arising from the provision of the Catering Service shall be dealt with in accordance with Part 8 (Catering) of Schedule 4 (Payment Mechanism).

20A.1.2 Principal and Agent relationship for meals

20A.1.2.1 For the purpose of this Agreement, the Contractor shall be deemed to be the Authority’s agent in the serving of prepared food and refreshment to registered pupils and in the charging for and collection of payments from paying consumers in respect of such supplies. The Contractor shall be entitled to delegate such agency to the Operating Contractor with power to such Operating Contractor to further delegate to any Sub-Contractor. Notwithstanding such agency all monies received by the Contractor or the Operating Contractor or any Sub-Contractor for such supplies of food and refreshments shall vest in or on behalf of the Contractor immediately upon receipt of such monies as payment for the Contractor (or Operating Contractor or any Sub-Contractor) carrying out such agency management service on

103 behalf of the Authority and the Authority shall have no title or claim to such monies after the receipt of such monies.

20A.1.2.2 For the purpose of this Agreement the Contractor shall be deemed to be the principal in purchasing food and drink stocks and other materials and commodities used in the provision of the Catering Service and providing meals, food and other refreshments to Consumers other than registered pupils (which for the avoidance of doubt shall include the teachers, governors and visitors to the School).

20A.1.2.3 It is agreed as follows (save where the contrary is required by law or any direction, determination or ruling by the Commissioners for HM Customs and Excise):

(a) meals supplied to those pupils at the School who pay for meals and/or refreshments (the “Category A Consumers”) and those pupils who have been notified to the Contractor as being entitled to free meals (the “Category B Consumers”) are treated as non business activity for VAT purposes.

(b) school meals supplied to persons other than registered pupils and Category C Consumers as defined below (the “Category D Consumers”) are treated as business activity and therefore taxable supplies for VAT purposes. The Contractor shall include the appropriate rate of VAT in the prices charged for such meals and refreshments and supply output statistics and the value of VAT output tax to the Authority within a timetable specified by the Authority which has been agreed with HM Customs & Excise; and

(c) meals supplied to members of staff of the School and visitors who have been notified to the Contractor as being entitled to a free meal (the “Category C Consumers”) are to be supplied free of charge by the Authority to the consumer.

20A.1.2.4 For VAT purposes the transfer of ownership of consumables from the Contractor the Operating Contractor or any Sub- Contractor to the Authority takes place when preparation has been completed and the food is ready for supply to the final consumer.

20A.1.2.5 The Contractor and the Operating Contractor shall include the appropriate rate of VAT in the prices charged for taxable

104 supplies sold to consumers who do not fall into any of Categories A, B or C Consumers.

20A.1.3 Free School Meals

20A.1.3.1 The Authority has a duty to provide free school meals to those pupils at the School who fall into Category B Consumers. Members of staff and visitors of the School who are Category C Consumers are also entitled to a free meal paid for by the Authority or School.

20A.1.3.2 The Contractor will supply to all Category B Consumers and Category C Consumers a card (the “Smart Card”) in a design to be agreed from time to time by the Authority and the Contractor, but including the person’s name, photograph and the name of the School, which shall be credited with cash equivalent to the number of free school meals that person is entitled to in that Month.

20A.1.3.3 The Authority will (or will procure that the School will), using its own data and confidential information on free meals, prior to the commencement of each Month issue a list to the Contractor of the number of persons entitled to free school meals.

20A.1.3.4 Subject to 20A.1.3.5 below the Contractor will invoice the Authority on the last day of each month for the number of free school meals supplied to Category B consumers at prices up to the Local Education Authority Meal Price.

20A.1.3.5 If the Meal of the Day Price (as defined in Schedule 4 (Payment Mechanism)) is higher than the Local Education Authority Meal Price the Contractor will invoice the Authority on the last day of each Month for the number of free school meal supplied to Category B consumers at prices up to the Meal of the Day Price.

20A.1.3.6 The Contractor will invoice the Authority on the last day of each Month for the number of free school meals supplied to Category C Consumers at the value of the food and/or refreshments they order together with VAT if applicable.

20A.1.3.7 In addition to clauses 20A.1.3.4, 20A.1.3.5 and 20A.1.3.6 the Contractor will invoice the Authority on the last day of

105 each Month for any function, hospitality or visitors’ meals supplied together with VAT if applicable.

20A.1.3.8 The Contractor in its capacity as agent for the Authority (or the Sub Contractor acting on behalf of the Contractor) will provide:

20A.1.3.8.1 to each Category B Consumer bearing a Smart Card, a meal to the value of the Local Education Authority Meal Price; and

20A1.3.8.2 to each Category C Consumer bearing a Smart Card, a meal to the value of the food they order.

20A.1.3.9 If the price of a meal chosen by a Category B Consumer exceeds the Local Education Authority Meal Price or Meal of the Day Price (as the case may be), the bearer shall be responsible for crediting its card with the excess via the dining room tills and the Authority shall have no liability in respect of the excess.

21. REPORT AND INVOICING21

21.1 Submission of Report

At or following the end of each Payment Period the Contractor shall submit to the Authority:

21.1.1 a report in the form agreed between the parties detailing the amount which the Contractor has calculated that it is entitled to be paid by the Authority in respect of the relevant Payment Period pursuant to this Agreement and the amount (if any) which the Contractor has calculated that the Authority is entitled to deduct from the Unitary Charge in respect of the previous Payment Period pursuant to this Agreement and if the report is that for the Month of September in any Academic Year the report shall detail any credit due to the Authority in respect of the previous Academic Year and/or any payment due by the Authority to the Contractor in respect of the previous Academic Year in either case where such credit or payment is due because of errors in calculating the deductions to be made from the Unitary Charge in respect of the previous Payment Period; and

21.1.2 a VAT invoice for the net amount.

106 21.2 Payment of Invoices

Subject to the provisions of clause 21.3 (Income and Amount Claimed) the Authority shall pay the amount of any invoice submitted by the Contractor pursuant to clause 21.1.2 within 30 days of the date on which the Authority receives the later of the invoice and the report relating to that invoice required pursuant to clause 21.1.1.

21.3 Income and Amount Claimed

If the Authority believes that the amount claimed by the Contractor pursuant to clause 21.1 in respect of any Payment Period is greater than that to which the Contractor is entitled under this Agreement the Authority:

21.3.1 shall notify the Contractor in writing within 10 days of the Payment Report being received by the Authority from the Contractor of the amount (insofar as at the time of such notice the Authority is reasonably able to quantify it) by which the Authority believes the amount claimed exceeds that to which the Contractor is entitled and shall at the same time submit to the Contractor such supporting evidence as the Authority may have available to it at that time; and

21.3.2 shall be entitled (but shall not be obliged) to withhold from any payment due pursuant to clause 21.2 (Payment of Invoices) such amount as in the reasonable opinion of the Authority is appropriate to reflect the amount by which the Authority believes the claim to have been in error.

21.4 Response to Authority Notice

Within ten Business Days following receipt by the Contractor of any notice served by the Authority pursuant to clause 21.3.1 (Income and Amount Claimed) the Contractor shall respond by notifying the Authority as to whether or not it agrees with the statements made in that notice. If the Contractor indicates that it does agree, or if the Contractor fails to make such a response within that time limit, the Authority shall be entitled: (Subject to clause 21.5)

21.4.1 to retain on a permanent basis any amounts withheld pursuant to clause 21.3.2 (Income and amount claimed);

21.4.2 to the extent that it has not withheld payment under clause 21.3.2 above reclaim from the Contractor the amount of any over payment which may have been made to the Contractor together with interest on any such amount

107 at the Prescribed Rate from the date on which the overpayment was made until that amount has been paid in full and whether before or after judgement and;

21.4.3 to obtain a credit note from the Contractor in respect of the amount withheld pursuant to clause 21.3.2 (income and amount claimed) and/or the amount of any over-payment which may have been made to the Contractor (and the Contractor shall issue such a credit note).

21.5 Dispute

If the Contractor responds (pursuant to clause 21.4 (Response to Authority Notice)) that it does not agree with all or any of the statements made in any notice served by the Authority pursuant to clause 21.3.1 (Income and Amount Claimed) the matter or matters in question shall be determined under the Disputes Resolution Procedure.

21.6 Determination of Dispute

If the determination of any dispute conducted pursuant to clause 21.4 (Response to Authority Notice) shows that:

21.6.1 the Authority has withheld any amount which the Contractor was entitled to be paid; or

21.6.2 the Contractor has claimed and has been paid by the Authority under clause 21.1 (Reporting and Invoicing) any amount which it was not entitled to be paid,

the Authority shall pay such amount to the Contractor or the Contractor shall repay such amount to the Authority with interest in each case on that amount at the Prescribed Rate calculated from the date on which payment should have been made (in the case of failure to pay by the Authority) or from the date on which over payment was made (in the case of excessive claims by the Contractor) until all relevant monies have been paid in full and whether before or after judgement.

108 22. INDEXATION22

22.1 Indexation

On each Review Date, the Unitary Charge shall be adjusted for the Year commencing on that Review Date by applying the Indexation Formula in clause 22.3 (“Indexation Formula”) to it.

22.2 Successive years

On each occasion that the Unitary Charge is to be adjusted in accordance with clause 22.1 (“Indexation”), the Indexation Formula shall be applied to the Unitary Charge applicable immediately before the relevant Review Date (ignoring any deduction made pursuant to clause 19 (“Unitary Charge”) or Schedule 4 (“Payment Mechanism”).

22.3 Indexation formula

For the purposes of the calculating indexation pursuant to clause 22.2 above the following definitions shall apply:

“Indexation Formula” Shall mean the product of the calculation

“Review Date” 1 October 2002 and each succeeding 1 October thereafter

“UC” the Unitary Charge

“FE” the fixed element of the UC Equal to

“VE”

“a” the value of the Retail Prices Index as at the Period Start Date

“b” the value of the Retail Prices Index at the Period End Date

UC(n-1) UC at each Month preceding the Review Date in accordance with clause 22.2

“Retail Prices Index” the index published under that name

109 by the Central Office of Information or where such index is discontinued any replacement or alternative index which is a broad based measure of inflation, having similar characteristics and nature, used for such purposes in accordance with good accountancy practice in the United Kingdom

“Period Start Date” August 2001 and each succeeding August thereafter

“Period End Date” August 2002 and each succeeding August thereafter

23. BENCHMARKING, MARKET TESTING AND BEST VALUE23

23.1 With effect from the Benchmark Process Commencement Date occurring prior to the fifth anniversary of the Service Commencement Date and every five years thereafter during the Agreement Period the Contractor will carry out a benchmarking exercise to establish the revised price in respect of each relevant Service (“Benchmarked Price”) in respect of each Applicable Period for each of the following elements of the Services:

23.1.1 maximum price of a “Free School Meal” or a “Meal of the Day” as defined under the catering specification;

23.1.2 Cleaning;

23.1.3 Security;

23.1.4 Grounds Maintenance;

23.1.5 Waste Management and disposal;

in each case as defined in the relevant sections of Schedule 2 (Output Specification and Equipment) Part 3 (Services Output Specification)

110 23.2 The benchmarking process will commence on the Benchmark Process Commencement Date and shall consist of the Contractor establishing each Benchmarked Price in respect of each Applicable Period by reference to:

23.2.1 the existing labour, plant and material rates applying to Sub-Contractors providing the relevant services or utilities on the basis that the obligations undertaken by such Sub-Contractors with respect to TUPE are the same as those undertaken by the Contractor and the relevant Sub-Contractor pursuant to this Agreement;

23.2.2 the Output Specification and the terms of this Agreement;

23.2.3 risk transfer achieved under this Agreement by the Authority;

23.2.4 the effects of any Legislation introduced and enacted since the last benchmarking was conducted and the effects of any reasonably foreseeable Changes in Law affecting the provision of the relevant Service; and

23.2.5 any other criteria which any of the Parties consider and agree to be relevant.

23.3 Not used.

23.4 The Contractor shall prepare and provide to the Project Director the Benchmarked Prices together with such supporting evidence as is required pursuant to clause 23.2 and is available within 60 Business Days of the Benchmark Process Commencement Date. The Authority shall have a period of 15 Business Days to agree (acting reasonably) the Benchmarked Prices or to object providing a statement setting out in reasonable detail the reasons for such objection. If the Authority agrees the Benchmarked Prices or does not respond within such period, then the Benchmarked Prices will be deemed to have been accepted by the Authority as the Benchmarked Prices for the purposes of this Agreement and shall be final, conclusive and binding on the Parties and the Unitary Charges shall be adjusted with effect from the Benchmark Date. If the Authority accepts the Benchmarked Prices the Benchmarked Prices shall be the New Prices for the relevant elements of the Relevant Services and the Unitary Charge shall be adjusted to reflect the New Prices with effect from the Benchmark Date. If the Authority agrees or is deemed to accept the Benchmark Prices the Benchmark Prices shall be the New Prices for the relevant elements of the Relevant Services and the Unitary Charge shall be adjusted to reflect the New Prices with effect from the Benchmark Date. If the Authority objects the matter shall be referred to the Disputes Resolution Procedure (clause 63).

111 23.5 The Contractor shall be obliged to carry out Market Testing of any particular service in accordance with clauses 23.6 to 23.18 in the following circumstances:

23.5.1 where a Sub-Contractor of the Operating Contractor’s appointment is to be terminated by the Operating Contractor under a Sub-Contract; or

23.5.2 where the Parties have been unable to agree the Benchmarked Price in accordance with clause 23.4 .

23.5A With effect from the decision to Market Test in accordance with clause 23.5, the Parties shall meet together as often as may be necessary in respect of all Services to be benchmarked or market tested on that date:

23.5A.1 to consider any changes required to the relevant Services;

23.5A.2 to discuss and seek to agree the appropriate manner of market testing (including advertising the Services and means of identifying prospective tenderers);

23.5A.3 to discuss and seek to agree the Selection Criteria and tender requirements which must include:

23.5A.3.1 a statement of the tender validity period;

23.5A.3.2 details of the tender evaluation criteria;

23.5A.3.3 information relating to employees and their conditions of employment;

23.5A.3.4 the information that tenderers are required to provide; and

23.5A.3.5 how many tenders are required for any market testing to be valid.

23.6 The Contractor shall advertise as appropriate the requirement for the relevant Services which are the subject of the market testing exercise (“the Market-tested Services”) at its own cost but the Authority shall be required to meet the cost of such market testing if the Market Test Price is equal to or less then the Benchmarked Price.

23.7 The Contractor shall short-list the candidates which express an interest in performing the services (which may include the Operating Contractor) in accordance with its normal tendering procedures save that the selection criteria shall be prior determined

112 and prior disclosed and that where the relevant Service would trigger a requirement to comply with the EC Public Procurement regime if the contracting authority were the Authority, then the Contractor shall adopt the procedures, criteria and time limits for short-listing laid down in that regime.

23.8 The Authority will have the right to receive the short list of tenderers at least five Business Days before it is disclosed to any Third Party (other than the Senior Lender) and within three Business Days of receipt of such short list have the right acting reasonably to veto the short list of tenderers subject to providing reasonable objections. Provided always that in exercising its veto of the short list of tenderers the Authority shall only take into account:

23.8.1 the financial standing of the tenderer;

23.8.2 the technical and managerial experience and ability of the tenderer in providing like services to the Services;

23.8.3 such other reasonable factors as would normally exclude a tenderer from being able to tender to the Authority.

23.9 The Authority shall have a right to object to the selection of any person as a prospective tenderer if it reasonably believes that such person does not (or could not reasonable be considered to) comply with any of the criteria referred to in clause 23.8 above.

23.10 The Authority shall, in its absolute discretion, have the right to veto the selection of any person as a tenderer on the grounds that the prospective tenderer has committed a Prohibited Act within the period five years from the Benchmark Process Commencement Date.

23.11 Following the short listings process, the Contractor shall issue an invitation to tender to a minimum of three sub-contractors (to contract with the Operating Contractor as Sub-Contractors under the Operating Agreement) which meet the selection criteria for the relevant Service (or such lesser number as meet the criteria) including, if the Authority so requires (and it is lawful for the Authority to so require) any business unit of the Authority and any Sub-Contractor suggested by the Authority. For the avoidance of doubt, save in the circumstances set out in clause 23.8.1 and unless the previous Sub-Contractor has been terminated by the operation of clause 43 the existing Operating Contractor or Sub-Contractor (and any business unit of the Authority) may tender to provide the Service. The invitation to tender document shall comply with all Legislation and shall specify at least:

113 23.11.1 the terms of the tenderer’s appointment which will be substantially the same as those for the existing Sub-Contractor, or where there is no existing Sub- Contractor, the previous Sub-Contractor or where the Services are provided by the Operating Contractor the terms of the Operating Agreement insofar as these relate to the relevant services but taking into account any changes considered pursuant to clause 23.5A.1;

23.11.2 the requirement to submit a Revised Price;

23.11.3 the Specification to be complied with;

23.11.4 the circumstances relating to the transfer of employees to any new Sub-Contractor so that the new Sub-Contractor is required to price the cost of performing the relevant Service on the basis that it will indemnify the Contractor and the Sub-Contractor in the terms set out in clause 37.3 (Employees);

23.11.5 the tender evaluation criteria.

23.12 Unless the Contractor can demonstrate to the Authority that best value for money will be achieved for the Contractor if Market Tested Services are tendered separately or in particular groupings, or if any Market Tested Service is divided into separate parts, the grouping of any Market Tested Services shall be left to the discretion of tenderers on the basis that the tender requirements shall specify that:

23.12.1 tenderers may submit tenders for all or any of the market tested services; and

23.12.2 if a tenderer submits a tender for a group or groups of market tested services then it may be required to provide all or any of the Services in such group or groups.

23.13 The Contractor shall provide any prospective tenderer which is unsuccessful in being selected with an explanation of the reasons behind its non-selection, save in the circumstances described in clauses 23.9 and 23.10 where such explanation shall be provided by the Authority.

23.14 The Contractor shall determine which compliant tender in respect of any market tested Services represents the most economically advantageous tender.

23.15 On making this determination, the Contractor shall supply to the Authority a copy of its tender evaluation, together with sufficient supporting information concerning the

114 tender evaluation to enable the Authority to analyse and understand the basis for the Contractor’s determination.

23.16 Upon receipt of the responses to an invitation to tender document, the Contractor shall evaluate the responses and identify the tender that the Contractor considers (having regard to the tender evaluation criteria) the most economically advantageous tender which it shall notify to the Authority promptly. The Authority shall be entitled to dispute the selection of a replacement Sub-Contractor to the existing Sub- Contractor so notified within 15 Business Days if (and only if), in the Authority’s reasonable opinion (which must be set out in reasonable detail) the most economically advantageous tender has not been selected having regard to the tender evaluation criteria. In circumstances where the market testing is conducted under clauses 23.5.2, the Contractor and the Authority shall use all reasonable endeavours to ensure that the Benchmarked Price is not revealed to short-listed tenderers other than the Operating Contractor or the Authority.

23.17 Upon selection by the Contractor of the tender, which represents the most economically advantageous tender subject to receiving the Authority approval, the Contractor shall replace the Outgoing Sub-Contractors in the event that the Outgoing Sub-Contractor was a Sub-Contractor of the Operating Contractor or shall procure that the Operating Contractor (where the relevant Services were provided by the Operating Contractor) will appoint the Incoming Sub-Contractor as its Sub Contractor under the Operating Agreement with the most economically advantageous tender in respect of the Market-tested Services as soon as reasonably practicable having regard to the terms of the Agreement.

23.18 Adjustments to the Unitary Charge

23.18.1 Where in accordance with clause 23.17 the Operating Contractor procures the appointment of an Incoming Sub-Contractor for the purpose of providing any of the Market Tested Services the Parties agree that the Market Testing Adjustment shall be the aggregate of:

23.18.1.1 the Incoming Sub-Contractor Price plus

23.18.1.2 the Market Testing Margin

and with effect from the Payment Period in respect of which the Incoming Sub-Contractor commences to provide in full that part of the Market Tested Services in respect of which its

115 appointment has been made the Unitary Charge shall be adjusted by the addition of the Market Testing Adjustment.

23.18.2 If the first Payment Period in which the Incoming Sub-Contractor provides the Services is less than a full Month the Incoming Sub-Contractor Price shall be calculated for a period pro-rata for the number of days in respect of which the Market Tested Services are provided to the aggregate number of days in the Month.

23.18.3 If the Outgoing Sub-Contractor provides the Market Tested Services in respect of the last Payment Period in respect of which it is engaged to provide any of the Market Tested Services for a period of less than a full Month the Outgoing Sub-Contractor Price shall be calculated for that period only pro-rata for the number of days in respect of which the Services are provided to the aggregate number of days in the Month.

23.18.4 Any adjustment made to the Unitary Charge pursuant to the provision of this clause 23.18 shall be deemed to be an adjustment to the Variable Element of the Charge for the purpose of any calculations to be made thereafter under the provisions of clause 22.

23.19 Best Value Customer Satisfaction Survey

The Contractor shall provide the Authority with such assistance as the Authority shall from time to time deem necessary to enable the commission of a regular customer satisfaction survey (“the Customer Satisfaction Survey”).

The Scope and frequency of the Customer Satisfaction Survey shall be determined from time to time by the Authority but:

23.19.1 the first Customer Satisfaction Survey shall be undertaken within the period ending nine months from the Service Commencement Date;

23.19.2 thereafter Customer Satisfaction Surveys shall be undertaken at least once every 12 months throughout the Contract Period;

23.19.3 the Survey shall test a sample of customers opinion by using a written questionnaire covering those matters set out in Schedule 12 or as otherwise agreed between the Authority and the Contractor;

23.19.4 the Authority shall provide the Contractor with a summary of the results of each Customer Satisfaction Survey;

116 23.19.5 subject to clause 23.20.8 if the Customer Satisfaction Survey discloses that overall satisfaction levels are not satisfactory, or that the overall quality of the Services has not improved since the last survey, then the Contractor and the Authority shall meet in good faith to agree on how to improve customer satisfaction;

23.19.6 for the avoidance of doubt customer in this clause 23.19 shall mean users of any of the facilities comprising the Community Learning Centre.

23.20 Best Value - Annual Service Improvement Plan

23.20.1 An annual service improvement plan (“the Annual Service Improvement Plan”) shall be submitted to the Authority on an annual basis following the Commencement Date the first to be submitted within the period ending 12 months from the Service Commencement Date and thereafter annually. The Annual Service Improvement Plan shall be in written form, covering those matters set out in Schedule 12 or otherwise agreed between the Parties. The Annual Service Improvement Plan, as set out in Schedule 12 will include:

23.20.1.1 a review of the performance and delivery of the Services for the previous period;

23.20.1.2 proposals to improve the provision and/or performance, having regard to:

(a) Best Value Duty;

(b) Best Value Performance Plan;

(c) Results of Customer Satisfaction Survey;

(d) Customer Complaints;

(e) Performance Targets of Authority;

(f) Performance Indicators of Authority;

(g) National PI;

(h) Local PI;

(i) Performance Standards.

117 23.20.2 The overall objective of the Annual Service Improvement Plan is to provide a review of the past performance of Services and to address how future improvements can be made. The aim will be to improve the way each of the Services is delivered having regard to a combination of economy, efficiency and effectiveness.

23.20.3 The Contractor shall provide to the Authority within 14 days of a written request, such written evidence or other supporting information which the Authority may reasonably require to verify the information contained in the Annual Service Improvement Plan.

23.20.4 If the Annual Service Improvement Plan discloses that the overall quality of the Services has not improved since the previous year’s Annual Service Improvement Plan (as measured by the factors set out in Schedule 12) or that the Services are not being provided economically or that the Services are not providing comparative value to other Services of a similar nature being provided to the Authority or other similar Authority’s, then the Contractor (at its own cost) and the Authority shall meet in good faith to agree on how to improve the Service.

23.20.5 The Contractor shall prepare the Annual Service Improvement Plan and other measures referred to in this clause 23.20.2 at its own cost.

23.20.6 Both Parties shall use reasonable endeavours to ensure that any outcomes agreed as a result of any meetings held under clause 23.20.4 above, entail measures which do not lead to any increase in the Unitary Charge, or the costs incurred by the Contractor and which wherever possible result in identification of cost savings which lead to an agreed reduction in the Unitary Charge.

23.20.7 In formulating the Annual Service Improvement Plan, both Parties shall work together and will take into account any orders or relevant Statutory Guidance issued by the Secretary of State under Part 1 of Local Government Act 1999.

23.20.8 If in the Authority’s reasonable opinion, the Annual Service Improvement Plan or the Customer Satisfaction Survey disclosed that the performance of the Services (or any part of them) may be improved having regard to the Best Value Duty and the results of the Customer Satisfaction Survey, then the Authority may serve a notice (“Service Improvement Notice”) upon the Contractor stating the nature of the improvements to the provision of the

118 Services (or the relevant parts) which the Authority desires. The Contractor shall within 21 days of the receipt of the Service Improvement Notice, provide the Authority with a written statement (“Improvement Plan Statement”) containing the Contractor’s proposals to achieve the improvement of the Services (or the relevant parts thereof) in accordance with the Service Improvement Notice.

For the avoidance of doubt, the Contractor shall not be obliged to implement any improvements identified by the Annual Service Improvement Plan unless such improvements are:

23.20.8.1 to remedy a breach by the Contractor of the Services Output Specification contained in Schedule 2, Part 3 of this Agreement; or

23.20.8.2 instructed by the Authority to be carried out by the Contractor in accordance with clause 17.1 of this Agreement;

23.20.8.3 required by a Change in Law in accordance with clause 18 of this Agreement

23.20.9 If the Parties cannot agree on the contents of the Annual Service Improvement Plan or the Improvement Plan Statement, then the dispute shall be determined in accordance with clause 63 (Dispute Resolution).

23.20.10The Contractor shall comply with any reasonable request by the Authority for assistance in preparing its best value performance plans under section 6 of the Local Government Act 1999, and shall co-operate with any reasonable request for information or assistance so as to facilitate the inspection of the Authority’s compliance with Best Value pursuant to section 17 of the Local Government Act 1999.

23.20.11For the avoidance of doubt, all information that is passed from the Contractor to the Authority under this clause 23.20 may be published by the Authority as part of its Best Value procedures.

24. ADDITIONAL INCOME24

24.1 Use of the Facilities

The Parties shall co-operate with each other in order to earn, so far as reasonably practicable, Third Party Income. Such use shall be compatible with the use of the

119 Site by the Relevant Users. The Contractor shall be entitled to charge to, and be paid by, each such Third Party a fee determined by the Contractor for the use made of the Site. The aggregate amount of such fees (exclusive of VAT and any other taxes or levys) received in each Academic Year shall constitute the Gross Income.

24.2 Supervision

The Contractor shall be responsible for the general supervision and management of the Site during Third Party Use.

24.3 Net Income

From the Gross Income the Contractor shall deduct the amount of any costs and expenses incurred by the Contractor in making available any part of the Facilities to Third Parties which are over and above the costs which the Contractor would have otherwise incurred in providing the Services (including, without limitation, the cost of additional staff and equipment) and the remaining sum, to the extent that such sum exceeds the Guaranteed Sum, shall constitute the “Net Income”.

24.4 Payment to Authority

In the Month following the end of each Academic Year and by way of deduction from the Monthly Charge for that Month the Contractor shall pay the Authority half of the Net Income.

24.5 Additional Facilities

If the Contractor wishes to make alterations to any part of the Site for the purposes of providing additional services to a Third Party, the Contractor shall prepare a business case and submit it for the approval of the Authority. The business case shall describe the way in which the additional services will be managed, marketed and priced, how any profits will be established and the respective shares of any such profits which it is proposed should be taken by the Authority and the Contractor. If the Authority is satisfied that implementation of the proposal will not adversely affect the operation of the Site and subject to the Authority having obtained the prior consent of each User Group to the extent necessary, the Parties will discuss how any necessary capital investment will be provided by each of the Parties and the income shared.

24.6 Authority Use

24.6.1 Should the Authority wish to use the Site at any time outside the Core Sessions as set out in Part XI of Schedule 4 (Payment Mechanism), it

120 shall be treated as a Third Party for the purposes of this clause 24 and the Contractor shall be entitled to charge a fee for such use in accordance with clause 24.1.

24.6.2 The Authority shall not be entitled to use the Site for anything other than uses booked in accordance with Schedule 4 (Payment Mechanism).

24.7 Not Used

24.8 Authority Equipment

The Contractor shall not be permitted to use Authority Equipment without the approval of the Headteacher or the Authority’s Designated Representative. The Authority shall have the right to levy a reasonable charge on the Contractor for this use, such charges to be notified to the Contractor in advance. The Contractor shall be responsible for any loss or damage to Authority Equipment caused during the Third Party Use.

24.9 Losses

The Contractor will not be required to make the Facilities and/or Sites available to third parties or to continue to make the Facilities and/or Sites available to Third Parties if to do so is likely to lead to the incurring of losses by the Contractor.

24.10 Advertisements

The Contractor shall not exhibit or attach or permit to be exhibited or attached to any part of the Facilities any notice or advertisement without the prior written permission of the Project Director save where otherwise required to comply with Legal Requirements.

121 PART VI - PERFORMANCE AND MONITORING

25. PERFORMANCE MONITORING25

25.1 Contractor responsibility

The Contractor acknowledges and agrees that, notwithstanding any provision of this Agreement which contemplates that the Authority will or may from time to time:

25.1.1 inspect any part of the Works Facilities or Site;

25.1.2 check compliance by the Contractor with its obligations;

25.1.3 confirm or indicate approval of or non-objection to proposals made by the Contractor;

25.1.4 request the Contractor to make a change to the Service; or

25.1.5 otherwise seek to influence the manner in which the Project is conducted by the Contractor

it will always be fully the responsibility of the Contractor, and not the responsibility of the Authority, to ensure that the Services are provided in all respects in accordance with the Contractor’s obligations under this Agreement, and no such action by or on behalf of the Authority provided that it is carried out in accordance with the terms of the Agreement will in any way limit or affect such obligations.

25.2 Contractor monitoring

The Contractor shall diligently carry out a monthly performance monitoring exercise in accordance with the procedure set out in Schedule 4.

25.3 Authority monitoring

The Authority may elect to undertake its own performance monitoring exercise at any stage during the Period of this Agreement as defined in clause 3 (Commencement and Duration of Agreement) for any purpose including in order to ensure that the Facilities and all other parts of the Services are being provided in accordance with this Agreement. In that respect the Authority shall have the right to audit the Contractor’s quality management systems (for example ISO9000 or equivalent standard) including examining and inspecting works or activities on or off Site to establish the adequacy or accuracy of the quality management system

122 documentation. The Contractor will use its reasonable endeavours to assist the Authority in such an exercise.

25.4 Monitoring of Sub-Contractors

Where the monitoring undertaken pursuant to clause 25.2 establishes that the performance of any Sub-Contractor is likely to lead to further performance failures the Contractor shall:

25.4.1 initiate such additional monitoring of the performance of that Sub-Contractor as shall be calculated to secure the Sub-Contractor’s compliance with the performance standards required of that Sub-Contractor;

25.4.2 advise the Authority of the action taken to provide such additional information as the Authority reasonably requires.

25.5 Cost of Performance Monitoring

Each party shall bear its own costs of performance monitoring.

25.6 Legal requirements

Without prejudice to the generality of clause 25.1 (Contractor Responsibility), no such actions by or on behalf of the Authority will in any way lessen the Contractor’s responsibility for ensuring that the Project is at all times conducted in a manner which complies with all applicable Legal Requirements.

26. AUDIT ACCESS26

The Contractor shall co-operate fully and in a timely manner with any request from time to time of any auditor (whether internal or external) of the Authority (including any Official of the Best Value Inspectorate, OFSTED or other Statutory Inspectorate) to provide documents, or to procure the provision of documents, relating to the Project, and to provide, or to procure the provision of, any oral or written information or explanation relating to the same where such a request of the Contractor is a lawful request with which the Contractor is obliged to comply. In particular, the Authority or any auditor whether internal or external shall be permitted access to any and all documentation to which he is legally entitled relating to the provision of the Services in the possession, custody or control of the Contractor (who shall procure that any person acting on its behalf who has such documents and/or other information shall also provide such access). For the avoidance of doubt this right will include the power to interview staff, have access to and take copies of any and all documentation

123 and have access to and take copies of any computer data held for the purposes of the Project.

27. INSURANCE27

27.1 The Contractor shall during the Agreement Period take out and maintain or procure the maintenance of the insurances described in Schedule 5 (the “Required Insurances”) and any other insurances as may be required by law (provided that its cover is required to be effective in each case not later than the date on which it is required and from the date on which the relevant risk commences) provided that nothing in this clause shall oblige the Contractor to take out or at any time thereafter maintain insurance in respect of a risk or containing any term for the underwriting of any such risk which is Uninsurable.

27.2 Neither party to this Agreement shall take or fail to take any reasonable action, or (insofar as it is reasonably within its power) permit anything to occur in relation to it, which would entitle any insurer to refuse to pay any claim or any part thereof under any of the Required Insurances. The Contractor shall procure that the Sub- Contractors undertake compliance with this clause 27.2 and with such of the other sub- clauses of this clause 27 as are relevant.

27.3 The Required Insurances shall:

27.3.1 name the Contractor and the Authority each as co-insureds for their respective rights and interests with any other party maintaining the insurance;

27.3.2 contain a clause waiving the insurer’s subrogation rights against the Authority and the Governing Body, their employees and agents but only to such extent as such waiver relates to the act or omission of any employee or agent in the ordinary conduct of that person’s affairs for or on behalf of the Authority or the Governing Body.

27.3.3 provide for 30 days prior written notice of their cancellation, non-renewal or any material amendment to be given to the Authority; and

27.3.4 provide for payment of any proceeds to be made by insurers in accordance with clause 27.12 (Reinstatement).

27.3.5 contain a clause whereby the insurances shall apply to each of the insureds as if a separate policy had been issued to each of them, other than in the event of exhaustion of the sum insured.

124 27.3.6 contain a provision that notice of a claim given by any insured party shall be acceptable by the receiving party as valid notification of a claim in respect of the interest of all insured parties

always provided that in the event that the Contractor is unable to secure the issue of a policy of insurance or to maintain an existing policy of insurance in terms that comply with the provisions of this clause 27.3 the Contractor may request a waiver of the requirement or the agreement of the Authority to a modification to the relevant requirement of this clause 27.3.

27.4 The Contractor undertakes in relation to any insurance effected hereunder, and in so far as any requirement pursuant to this clause relates to their responsibilities in respect of the Community Learning Centre:

27.4.1 to comply with all proper requirements of insurers

27.4.2 without prejudice to the requirements of this Agreement in relation to any Change in Law to comply with all proper requirements of any fire authority as to fire precautions in respect of the Services.

27.4.3 to give notice to the Authority as soon as reasonably practicable after the Contractor or the Construction Contractor or the Operating Contractor becomes aware of the happening of any event which might adversely affect any renewal or continuation of a Required Insurance in accordance with this clause 27.

27.5 The Contractor shall provide to the Authority:

27.5.1 certified copies on request of all insurance policies relating to the Required Insurances and the Authority shall be entitled to inspect the original such documents during any Business Day;

27.5.2 in relation to any other insurance the Contractor as a consequence of entering into this agreement, is required to procure by law, reasonable evidence that such policies are in effect in the required terms (including all documents evidencing any amendments, extensions or variations to such insurances); and

27.5.3 when requested by the Authority evidence that the premiums payable under all insurance policies have been paid and that the insurances are in full force and effect.

125 27.6 Renewal certificates in relation to insurances referred to in clause 27.1 shall be obtained as and when necessary and copies (certified in a manner acceptable to the Authority) shall be forwarded to the Authority as soon as possible but in any event at least ten Business Days before the relevant renewal date.

27.7 Breach

If the Contractor is in breach of clause 27, the Authority may pay any premiums required to keep such insurance in force or itself procure such insurance in substantially the same terms. In either case the Authority may recover such premiums from the Contractor together with all administrative expenses reasonably incurred in procuring such insurance. The Authority will serve on the Contractor written confirmation of the sums recoverable and shall provide such other information regarding such renewals and the costs incurred as the Contractor may reasonably request and will deduct the same from the Unitary Charge.

27.8 The Contractor shall:

27.8.1 give the Authority notification as soon as reasonably practicable and in any event within 30 days after any claim or loss that the Contractor has become aware of in excess of for which any of the insurance policies referred to in this clause 27 may respond and (if required by the Authority) full details of the incident giving rise to the claim as it is reasonably practicable for the Contractor to give.

27.8.2 give the Authority notification of all claims being pursued for which the Required Insurances may respond or fall within the applicable uninsured policy excess together with brief details of the value and nature of all such claims at such intervals and with such detail as may from time to time be agreed by the Contractor and the Authority Provided Always that

27.8.2.1 such information shall be supplied by the Contractor no less frequently than once every 3 months; and

27.8.2.2 shall be of sufficient detail so as to enable the Authority to consider which claims it shall consult with insurers in relation to pursuant to the claims consultation rights at clause 27.14.2.

27.8.3 keep the Authority fully informed as to subsequent actions and developments in respect of any matter subject to this clause 27.8.

126 27.9 Neither failure to comply nor full compliance with the insurance provisions of this Agreement shall limit or relieve the Contractor of its liabilities and obligations under this Agreement.

27.10 Save where otherwise provided by this Agreement the insurance premiums and all excess payments applicable to all insurances procured pursuant to clause 27.1 shall at all times be the responsibility of the Contractor provided always that the Contractor’s responsibility and liability for any excess pursuant to this Agreement for Malicious Damage shall not exceed the Malicious Damage Limit in each Year from the Service Commencement Date. The Authority shall be responsible for all excesses incurred by the Contractor over the Malicious Damage Limit in each Year from the Service Commencement Date and shall pay the same to the Contractor as a debt due and accordingly:

27.10.1 The Authority shall reimburse the Contractor for the reasonable costs of the Contractor incurred arising from the undertaking of all remedial work required and which is the liability under the foregoing provisions of the Authority.

27.10.2 The Contractor shall be entitled to invoice sums due by the Authority pursuant to this clause 27.10 following completion of the remedial works required and such amount shall fall due for payment 20 Business Days following the date of the Contractor’s invoice.

27.11 Quality of Insurance

27.11.1 The insurances procured pursuant to clause 27.1 shall at all times be effected with insurers:

27.11.1.1 of good repute; and

27.11.1.2 approved by the Authority, such approval not to be unreasonably withheld or delayed.

27.12 Reinstatement

Subject to the provisions of the Senior Lender’s Direct Agreement

27.12.1 All insurance proceeds received under any policy referred to in Section 1 of Part 1 (Contract Works) and Section 1 of Part 2 (Material Damage) (each a “Physical Damage Policy”) of Schedule 5 shall be applied to repair, reinstate, and replace each part or parts of the Works,

127 Facility and all New Equipment in respect of which the proceeds were received.

All insurance proceeds paid under any Physical Damage Policy shall be paid to the Insurance Proceeds Account.

27.12.2 Where a claim is made or proceeds of insurance are received or are receivable under any Physical Damage Policy in respect of a single event (or a series of related events) (“the Relevant Incident”) and where the rectification works in respect of the same will, in the reasonable opinion of the Contractor take more than four calendar months from the date of the Relevant Incident to complete and/or shall be in an amount in excess of £100,000 (indexed):

27.12.2.1 the Contractor shall deliver as soon as practicable and in any event within 28 days after the Relevant Incident a plan (“the Reinstatement Plan”) prepared by the Contractor for the carrying out of the works necessary to repair, reinstate or replace the Works, Facilities and New Equipment (in accordance with the Output Specification, Good Industry Practice, the terms of this Agreement and Legal Requirements), the subject of the relevant claim or claims (“the Reinstatement Works”). The Reinstatement Plan shall set out:

(a) the identity of the person proposed to effect the Reinstatement Works, (which, shall be subject to the prior written approval of the Authority, such approval not to be unreasonably withheld or delayed);

(b) the proposed terms and timetable upon which the Reinstatement Works are to be effected (including the date that the Facility will become fully operational), the final terms of which shall be subject to the prior written approval of the Authority not to be unreasonably withheld or delayed; and

27.12.3 provided that the Authority approves (such approval not to be unreasonably withheld or delayed and the degree of expedition afforded to such matters by the Authority shall reflect the obligations arising under any relevant policy of insurance which may respond to the claim) the Reinstatement Plan within a reasonable timescale then the following provisions shall apply:

128 (a) the Reinstatement Plan will be adopted;

(b) the Contractor shall enter into contractual arrangements to effect the Reinstatement Works in accordance with the Reinstatement Plan;

(c) any proceeds received under any Physical Damage Policy and paid into the Insurance Proceeds Account in respect of the Relevant Incident (“the Relevant Proceeds”) (together with any interest accrued) may be withdrawn by the Contractor from the Insurance Proceeds Account as required to enable it to make payments in accordance with the terms of the contractual arrangements, referred to in clause 27.12.3(b) above, and to meet any other costs and expenses of the Contractor for the sole purposes of financing the Reinstatement Works PROVIDED ALWAYS that such payments and costs are the subject of the indemnity under a Physical Damage Policy (including any relevant extensions) arising from the Relevant Incident;

(d) the Authority agrees and undertakes that, subject to compliance by the Contractor with its obligations under this clause, and provided that the Contractor procures that the Reinstatement Works are carried out and completed in accordance with the contractual arrangements referred to in clause 27.12.3(b) of this clause, it shall not exercise any right which it might otherwise have to terminate this Agreement by virtue of the event which gave rise to the claim for the Relevant Proceeds;

(e) the Authority undertakes to use all reasonable endeavours to assist the Contractor in the carrying out of the Reinstatement Plan but will incur costs in doing so only on the basis that such costs are recoverable from and agreed by the Contractor (whose agreement to any such arrangement shall only be valid in respect of any material costs when confirmed in writing by the Contractor); and

(f) after the Reinstatement Plan has been implemented to the reasonable satisfaction of the Authority the Authority shall not object to withdrawal by the Contractor of any Relevant Proceeds then held in the account referred to in clause 27.12.3 above

129 that have not been paid under clauses 27.12.3(c) above, in respect of the Relevant Incident, together with any interest accrued.

27.12.4 Subject to clause 27.2 if the Authority does not approve the Reinstatement Plan in accordance with clause 27.12.3 the Contractor may amend and resubmit the Reinstatement Plan to the Authority for its reconsideration (such approval not to be unreasonably withheld or delayed and the degree of expedition afforded to such agreement by the Authority shall reflect the obligations arising under any relevant policy of insurance that may respond to the claim)

27.12.5 The Contractor and the Authority shall consult as is reasonably necessary to facilitate early notification by the Authority to the Contractor of any Authority Change which it may wish to incorporate into the Reinstatement Works provided that any Authority Change would always be carried out in accordance with clause 17 of this Agreement (and any delay (to the extent that this adversely affects the delay in start-up or business interruption cover under the Required Insurances) resulting from the consideration of a proposed Authority Change whether or not it is implemented shall be treated as a Compensation Event in accordance with the provisions of this Agreement).

27.12.6 Where paragraph 6 of the Schedule to the Senior Lender’s Direct Agreement applies with the effect that the Agent (as defined in the Senior Lender’s Direct Agreement) is entitled to apply sums standing to the credit of the Insurance Proceeds Account in accordance with the terms of the Finance Documents, then if either party shall within 28 days of such right occurring serve upon the other notice of termination such notice shall be deemed to be a notice of termination as if circumstances of Force Majeure apply and this Agreement shall terminate with effect from the date of such notice.

27.13 Uninsurable Risks

27.13.1 If the Contractor considers that any Project Insured Risk usually covered by any of the Required Insurances becomes Uninsurable then:

27.13.1.1 the Contractor shall notify the Authority immediately upon becoming aware that the relevant Project Insured Risk may become or has become Uninsurable; and

130 27.13.1.2 if both Parties agree, or it is determined in accordance with clause 63 (Dispute Resolution) that the relevant risk is Uninsurable and that the Project Insured Risk being Uninsurable is not caused by the actions of the Contractor or a Sub- Contractor;

then the Parties shall meet to discuss the means by which the risk should be managed (including considering the issue of self-insurance by either Party).

27.13.2 Where the provisions of clause 27.12.1 apply the Contractor’s obligation to insure against any Project Insured Risk which has become Uninsurable shall cease with immediate effect the relevant Project Insured Risk being deemed to be Uninsurable and the provisions of clause 27.13.4 thereupon applying. In the event of any requirement to consult or of any dispute arising as to whether a Project Insured Risk is Uninsurable the Contractor shall not be considered to be in default of its obligation to insure the relevant risk during the period such consultation or dispute continues and for a reasonable period thereafter if it is determined that insurance is available to enable the Contractor to bring into effect such insurances as it may thereupon be required to obtain.

27.13.3 For the purpose of determining whether any Project Insured Risk would otherwise be considered to be Uninsurable under the terms of this Agreement the requirement upon the Contractor to satisfy the requirements of (a)(ii) of the definition of Uninsurable shall be satisfied by the Contractor producing a report prepared by or on behalf of an advisor retained by the Contractor to prepare such report (“the Report”) on a professionally retained basis confirming that such investigations has been undertaken and confirming that:

27.13.3.1 proposals to underwrite such insurance have been sought from companies carrying a AAA rating in a manner that complies with clause 27.13.3.2.

27.13.3.2 reasonable endeavours have been applied to securing the offer of terms for any such policy of insurance (and reasonable endeavours shall be construed as involving the application of the procedure at clause 27.13.3.3 and involving expenditure of reasonable costs and time to the making of such enquiries with there being no obligations upon the Contractor to secure

131 responses to any enquiries made) but shall not be satisfied unless the risk has been broked in accordance with clause 27.13.3.3 to all such insurers that may reasonably underwrite or contemplate underwriting risks of a similar nature.

27.13.3.3 In seeking proposals to underwrite such insurance the Contractor shall:

(a) request from each company to which clause 27.13.3.1 has regard at the date of the Contractor’s instructions commissioning the Report expressions of willingness to consider a proposal on behalf of the Contractor addressed to that company for the underwriting of the relevant Project Insured Risk and containing information which may be reasonably required by that company to form an opinion as to its willingness to receive a proposal.

(b) on receiving each and every expression of interest of willingness to consider a proposal submit to the company such particulars as are reasonably required by that company to consider the terms and conditions (including premium payable) basis upon which a policy of insurance would be underwritten by that company.

27.13.4 If the requirements of clause 27.12.1 are satisfied but the Parties cannot agree as to how to manage the risk which has become Uninsurable, then the Contract shall continue but with the Unitary Charge being adjusted to deduct an amount equal to the premium that was payable for such risk immediately prior to it becoming Uninsurable and with the Contractor relieved of the obligation to insure the relevant Project Insured Risk. On the occurrence of the risk the Authority shall (at the Authority’s option) either pay to the Contractor an amount equal to the insurance proceeds that would have been payable had the relevant insurance continued to be available and the Contract would continue, or an amount equal to the amount set out in clause 46 (Compensation on Termination for Force Majeure) and the Contract will terminate.

27.13.5 Increase in insured amounts

The limits of indemnity to be insured under Schedule 5 and the Insured’s Retained Liability specified in Schedule 5 shall be indexed by reference to the increase (if any) in the retail prices index as published by the Office of

132 National Statistics or in the event that such index ceases to be published any reasonable substitute index that may be agreed between the parties or determined under the procedures provided for at clause 63 established in relation to the 12 Month period calculated from the Effective Date and each anniversary of the Effective Date thereafter provided such limits of indemnity shall only be increased on each occasion that the limit as indexed becomes equal to or exceeds the next whole insurable amount available in the insurance market

27.14 Claims Handling

27.14.1 The Contractor shall promptly deal with all claims received relating to the Required Insurances. This shall include, but not be limited to, providing a written acknowledgement in response to a claim from any third party within ten Business Days of receipt of any such claim.

27.14.2 There may be litigation arising out of an insured event which could have financial and/or public policy implications for the Authority in circumstances where the Authority will wish to be closely involved in the conduct of the litigation. The Contractor will where practicable following selection of the relevant insurer endeavour to procure an endorsement upon such of the Required Insurances procured pursuant to Part 2 Section 3 of Schedule 5 to this Agreement relating to public liability cover obliging insurers to consult with the Authority in relation to all claims which the Authority requests such a consultation.

27.15 Not Used

27.16 Adjustment to Insurance Premiums

27.16.1 If and to the extent that the Contractor is able to demonstrate that:

27.16.1.1 At any time in the three years following the Service Commencement Date any increase in premium of at least 100% of the premium paid for the equivalent insurance for the previous policy year arises and is attributable to a reappraisal by insurers of the claims history of the Sandhill View Community School in respect of malicious damage prior to the Effective Dates;

133 then such additional insurance premiums and tax to the extent it is not recoverable by the Contractor arising thereon shall be satisfied by the Authority through an adjustment to the Unitary Charge as a Qualifying Change in accordance with Schedule 14 having regard to the following procedure provided always:

27.16.2 For the Contractor to establish the right to require an adjustment to the Unitary Charge it shall deliver to the Authority, as soon as practicable, a report prepared by the Contractor’s insurance adviser setting out the following:

27.16.2.1 the renewal premium payable at any time in respect of the relevant period of insurance including the amount of the increase in such premium or any over the previous premium payable;

27.16.2.2 to the extent that the same is demonstrable an attribution of the reasons for the premium increase including those arising from:

(a) changes to the insurance market generally;

(b) changes in the scope and limits of liability of the policy;

(c) claims made under the policy whether or not Related Claims;

(d) other causes.

27.16.2.3 the increase in premium which is reasonably and equitably attributable to the reappraisal of claims history undertaken pursuant to clause 27.16.1;

27.16.2.4 confirmation from a senior underwriter at the insurer proposed as the carrier of such Relevant Policy detailing the reasons why the premium has increased and quantifying the increase attributable to each such reason; and

27.16.2.5 the independent opinions of two senior underwriters of no less than two other insurers of good repute experienced in underwriting such issues in projects of a similar character, size and complexity specifying:

134 (a) the premium payable for insuring such projects on substantially similar terms in light of prevailing insurance market conditions;

(b) other material terms required to be accepted by parties insured under such policies of insurance;

(c) the underwriting criteria applied to calculate such premium.

27.16.3 The Authority shall within 10 Business Days after receipt of the report referred to in clause 37.15.1 notify the Contractor of any matters in such report with which it does not agree. Where the parties fail to agree such matters within 15 Business Days of the Contractor delivering the report to the Authority, the same shall be referred to the Disputes Resolution.

27.17 Contractor to provide Projected Contribution to Authority

The Contractor shall no later than 6 months prior to the expiry of this Agreement by effluxion of time only provide to the Authority the Projected Contribution. If upon expiry of this Agreement by effluxion of time the Contractor shall fail to provide such sum by the due date then the Authority shall be entitled to thereupon make withholdings by way of set-off against the Monthly Charge of five consecutive equal instalments of the amount falling due for payment the final such payment falling due to be deducted from the final Monthly Charge.

28. SECURITY28

28.1 Not Used

28.2 Investigations

The Contractor shall co-operate with any investigation relating to security which is carried out by or on behalf of the Authority and:

28.2.1 shall use it best endeavours to make any staff identified by the Authority available to be interviewed by the Authority for the purposes of the investigation; and

28.2.2 shall, subject to any legal restriction on their disclosure, provide all documents, records or other material of any kind which may reasonably be required by the Authority for the purposes of the investigation. The Authority shall have the right to retain any such material for use in

135 connection with the investigation and shall provide the Contractor with a copy of any material retained.

28.3 Security information

The Authority shall, in so far as is practical consult with the Contractor in respect of any proposals for and inform the Contractor of any specific or general security information which would reasonably be expected to affect the provision of the Services or the security of the Contractor, its staff or property.

29. HEALTH AND SAFETY AND OTHER LEGAL REQUIREMENTS29

29.1 Contractor responsibility

Without prejudice to the Contractor’s obligations under clause 32 (Contractor’s Records) the Contractor shall be responsible for the observance by itself, its staff and Sub-Contractors of all Legal Requirements relating to health and safety for all aspects of the Project, and shall take all precautions necessary for the protection of itself, its staff, Sub-Contractors and any other persons invited onto or visiting the Facilities.

29.2 Accidents

The Contractor shall immediately report to the Authority any accidents to the Contractor’s or Sub-Contractors’ employees or agents which ordinarily require reporting in accordance with the Health and Safety at Work etc Act 1974.

30. INTELLECTUAL PROPERTY30

30.1 Make data available

The Contractor shall to the extent that it is entitled so to do and subject also to these obligations not extending to commercially sensitive information or information that is subject to legal professional privilege:

30.1.1 make available to the Authority without charge all data, materials and documents of any nature acquired or brought into existence in any manner whatsoever by the Contractor for the purposes of the Project and which might reasonably be required by the Authority for the purposes of exercising its rights or performing its obligations or statutory duty; and

136 30.1.2 make available to the Authority all such data, materials and documents acquired or brought into existence by third parties as may reasonably be required for such purposes.

30.2 Contractor licence

The Contractor:

30.2.1 hereby grants to the Authority a perpetual, transferable, non-exclusive royalty-free licence (carrying the right to grant sublicenses) to use all and any Intellectual Property Rights which are or which become vested in the Contractor for any purpose relating to the carrying out of the Project; and

30.2.2 shall procure that where any Intellectual Property Rights relating to the Project, the Works or the Facilities are vested in any third party the Contractor shall use its reasonable endeavours to procure the grant of a like licence to the Authority for the purposes referred to in clause 30.2.1.

30.3 Indemnity

The Contractor shall subject to clauses 54 and 55 indemnify the Authority and keep the Authority indemnified in full from and against all Losses which relate to or arise out of anything relating to the Project and derived from the Contractor infringing or being alleged to infringe the Intellectual Property Rights of any third party.

30.4 Authority licence

The Authority hereby grants to the Contractor a non-transferrable (save otherwise than by way of security to the Senior Lender or the Junior Lender) non-exclusive royalty free licence (carrying the right to grant sublicenses) to use for the duration of this Agreement only and only for purposes relating to the Project any Intellectual Property Rights relating to the Project which are or which become vested in the Authority.

30.5 Indemnity

The Authority shall subject to clauses 54 and 55 indemnify the Contractor and keep the Contractor indemnified in full from and against all Losses which relate to or arise out of anything relating to the Project and derived from the Authority infringing or being alleged to infringe the Intellectual Property Rights of any third party.

137 30.6 Execute documents

Each party undertakes at the request of the other to execute all documents and to do all acts which may be necessary to bring into effect the provisions of this clause 30.

31. OPERATING MANUAL31

31.1 At least seven days before Service Commencement Date the Contractor shall deliver to the Authority two copies of an operating and maintenance manual in both electronic format and “hard copy” setting out the procedures for providing the Services which if complied with would constitute compliance by the Contractor with its obligations in respect of the Services (“the Operating Manual”).

31.2 The Contractor shall throughout the Service Period maintain and update the Operating Manual.

31.3 Access to Manual

The Contractor shall at the request of the Authority provide the Authority with an updated copy of the Operating Manual and access to the Operating Manual in order to demonstrate that the Contractor has complied with its obligation to maintain and update the Operating Manual under clause 32 (Contractors Records).

31.4 Copy on Termination

On termination of this Agreement (howsoever arising including expiry) the Contractor shall within 30 Business Days provide a copy of the Operating Manual to the Authority.

32. CONTRACTOR’S RECORDS32

32.1 Subject to 30.2.2 the Contractor shall:

32.1.1 at all times maintain a full record of particulars of the costs incurred by the Contractor of performing the Services, including those relating to the design, construction, maintenance, operation and finance;

32.1.2 at all times when reasonably required by the Authority, provide a summary of any of the costs referred to in clause 32.1.1 including details of any funds held by the Contractor specifically to cover such costs in such form and detail as the Authority may reasonably require to enable the Authority to monitor the performance by the Contractor of its obligations under this Agreement;

138 32.1.3 at all times provide such facilities as the Authority may reasonably require for its representatives to visit any place where the records are held and examine the records maintained under this clause; and

32.1.4 following effective service of notice of termination of this Agreement at the request of the Authority, provide to the Authority any information supplied by it to the Senior Lender associated with such termination and which the Authority reasonably requires in the exercise of its rights associated with such termination.

32.2 Compliance with the above shall require the Contractor to keep (and where appropriate shall procure that (the Construction Contractor and the Operating Contractor) shall keep books of account in accordance with good accountancy practice with respect to the provision of the Services showing in detail:

32.2.1 administrative overheads;

32.2.2 payments made to Sub-Contractors;

32.2.3 capital and revenue expenditure;

32.2.4 any balances in any account or fund held for the purpose of servicing any debts relating to this Project; and

32.2.5 such other items as the Authority may reasonably require to conduct cost audits for verification of cost expenditure or estimated expenditure, for the purpose of clauses 10 (Delays due to Compensation Events), 17.1 (Authority Change in Works and Services), 18.1 (Qualifying Change in Law), 32 (Benchmarking) Market Testing and Best Value).

and the Contractor shall have (and procure that to the extent expressly agreed the Sub-Contractors shall have) the books of account evidencing the items listed in clauses 32.2.1 to 32.2.5 available for inspection by the Authority (and any Expert) upon reasonable notice, and shall submit a report of these to the Authority as and when requested.

32.3 The Contractor shall maintain or procure that the following are maintained:

32.3.1 a full record of all incidents relating to health, safety and security which occur during the term of the Agreement; and

139 32.3.2 in accordance with Good Industry Practice full records relating to maintenance procedures carried out in respect of the Site during the term of the Agreement.

and the Contractor shall have the items referred to in clauses 32.3.1 and 32.3.2 above available for inspection by the Authority upon reasonable notice, and shall present a report of them to the Authority as and when requested.

32.4 The Contractor shall permit records referred to in this clause to be examined and copied (at the Authority’s expense) by an auditor of the Authority and other representatives of the Authority.

32.5 The records referred to in this clause shall be retained for a period of at least ten years after the Contractor’s obligations under the Agreement have come to an end and retention of such records in electronically retrievable form shall be sufficient compliance with this obligation.

32.6 Upon termination of the Agreement, and in the event that the Authority wishes to enter into another agreement for the operation and management of the Project or any part of it the Contractor shall (and shall use all reasonable endeavours to procure that the Sub-Contractors will) comply with all reasonable requests of the Authority to provide information relating to the Contractor’s costs of operating and maintaining the Project.

32.7 All information referred to in this clause 32 is subject to the obligations set out in clause 61 (Information and Confidentiality).

33. INFORMATION TO BE SUBMITTED TO THIRD PARTIES33

33.1 The Contractor recognises that the Authority has obligations to third parties to provide information concerning the proper performance of its functions and these obligations require the supply of information to those third parties (whether directly or indirectly). By way of an example, but without limitation, during the Agreement Period, the Authority may be required, or may consider it advisable to respond to enquires, both written and oral, concerning the Project from its District Auditor, from its Monitoring Officer, government agencies, from democratically elected representatives of the public, from the Audit Commission, CIPFA, the Equal Opportunities Commission and the Commission for Racial Equality, and under the provision of a Citizen’s Charter Mark or ISO9000 accreditation and from other groupings (recognised by the Authority) with an interest in the Authority’s affairs (for example, the press, residents’ groups and members of the public).

140 33.2 Notwithstanding the foregoing the Authority is entitled to have regard to the commercial interests of parties with whom it enters into dealings and is entitled to agree and to subsequently comply with undertakings necessary or desirable to protect the commercial interests of such a third party.

33.3 The Contractor shall subject to the Authority complying with its obligations under the Freedom of Information Act 2000 and clause 61 ensure that any request made to the Contractor for information related to the provision of the Services or the conduct of the Works by a third party (and to which it is obliged by law to respond to) is reported as soon as is reasonably practicable to the Project Director and that written notification (together with copies of relevant correspondence) is sent as soon as reasonably practicable to the Project Director.

33.4 The Authority shall supply the Contractor with the substance of any complaint or of any requests for information received by it from a third party in relation to the Project to which the Authority considers a response is required Provided that such complaint or request is not confidential. The Authority shall notify the Contractor where it intends to respond to such request or complaint and before so responding it shall consider any comments of the Contractor in respect of such request or complaint and any response by the Contractor provided the Contractor has responded in a timely manner save where in the reasonable opinion of the Authority concerned a response prior to such time is desirable in the public interest or in the interest of maintaining good relations with the public in respect of any aspect of the Project.

33.5 The Contractor shall co-operate fully with the Authority in any matters that fall to be dealt with under this clause 33 insofar as it is legally able to do so. In particular, the Contractor shall ensure that the Staff make no oral or written response without the prior consent of the Project Director to any enquiry which is critical of the Authority and could reasonably be expected to lead to claims or other similar action against the Authority and that all responses to oral inquiries are recorded in writing and copied immediately to the Project Director.

34. REGULAR MEETINGS OF THE AUTHORITY AND CONTRACTOR34

34.1 The Contractor shall ensure that appropriate members of Staff attend those meetings agreed as part of any Service Delivery Plan, together with such other meetings as are reasonably required by the Project Director in relation to the performance by the Contractor, its employees or its Sub-Contractors of their respective obligations in respect of the Project.

141 34.2 Should the most appropriate member of the Contractor’s staff be unable to attend the meeting, then a suitable replacement shall be fully briefed and shall attend on his behalf or the meeting shall be rearranged.

34.3 If requested, the Contractor shall nominate a suitable representative to attend meetings of the Authority or any committee thereof to report to members of the Authority concerning the Project.

35. DATA PROTECTION 35

35.1 In relation to all Personal Data, the Contractor shall at all times comply with the DPA as a data controller if necessary, including maintaining a valid and up to date registration or notification under the DPA covering the data processing to be performed in connection with the Services.

35.2 The Contractor and any Sub-Contractor shall only undertake processing of Personal Data reasonably required in connection with the Services and shall not transfer any Personal Data to any country or territory outside the geographic area of the EEC.

35.3 The Contractor shall not disclose Personal Data to any third parties other than:

35.3.1 to employees and Sub-Contractors to whom such disclosure is reasonably necessary in order for the Contractor to carry out the Services; or

35.3.2 to the extent required under a court order or by virtue of a Legal Requirement.

provided that disclosure under clause 35.3.1 is made subject to written terms substantially the same as, and no less stringent than, the terms contained in this clause 35.2 and that the Contractor shall give notice in writing to the Authority of any disclosure of Personal Data it or a Sub-Contractor is required to make under clause 35.3.2 immediately it is aware of such a requirement.

35.4 The Contractor shall bring into effect and maintain all technical and organisational measures to prevent unauthorised or unlawful processing of Personal Data and accidental loss or destruction of, or damage to, Personal Data including but not limited to take reasonable steps to ensure the reliability of staff having access to the Personal Data.

35.5 The Authority may, at reasonable intervals, request a written description of the technical and organisational methods employed by the Contractor or the Sub-Contractors referred to in clause 35.4. Within 30 days of such a request, the

142 Contractor shall supply written particulars of all such measures detailed to a reasonable level such that the Authority can determine whether or not, in connection with the Personal Data, it is compliant with the DPA.

35.6 The Contractor shall indemnify and keep indemnified the Authority against all Losses incurred by it in respect of any breach of this clause 35 by the Contractor and/or any act or omission of the Construction Contractor or the Operating Contractor to the extent expressly referred to in this clause 35.

36. AUTHORITY STEP-IN36

36.1 If the Authority reasonably believes that it needs to take action in connection with the Service:

36.1.1 because a serious risk exists to the health or safety of persons or property or to the environment; and/or

36.1.2 to discharge a statutory duty,

then the Authority shall be entitled to take action in accordance with clauses 36.2 to 36.5 below.

36.2 If clause 36.1 applies and the Authority wishes to take action, the Authority shall notify the Contractor in writing of the following:

36.2.1 the circumstances giving rise to the notice and whether the Authority considers that the Contractor is in breach of this Agreement;

36.2.2 the action it wishes to take;

36.2.3 the reason for such action;

36.2.4 the date it wishes to commence such action;

36.2.5 the time period which it believes will be necessary for such action; and

36.2.6 to the extent practicable, the effect on the Contractor and its obligation to provide the Services during the period such action is being taken.

36.3 Following service of such notice, the Authority shall take such action as notified under clause 36.2 above and any consequential additional action as it reasonably believes is necessary (together, the “Required Action”) and the Contractor shall

143 give all reasonable assistance to the Authority while it is taking such the Required Action.

36.4 Step-in without Contractor Breach

36.4.1 If the Authority has exercised the right to step-in without the cause being a breach of the Contractor’s obligations entitling the Authority to so act then for so long as and to the extent that the Required Action is taken, and this prevents the Contractor from providing any part of the Services or materially increases the Contractor’s costs of so doing:

36.4.1.1 the Contractor shall be relieved from its obligations to provide such part of the Services; and

36.4.1.2 in respect of the period in which the Authority is taking the Required Action, and provided that the Contractor provides the Authority with reasonable assistance (such assistance to be at the expense of the Authority to the extent incremental costs are incurred) the Unitary Charge due from the Authority to the Contractor shall equal the amount the Contractor would receive if it were satisfying all its obligations and providing the Services affected by the Required Action in full over that period and the Authority shall indemnify the Contractor against all Losses made against the Contractor which arise in consequence of the Authority’s actions.

36.5 Step-in on Contractor Breach

36.5.1 If the Required Action is taken as a result of a breach of the obligations of the Contractor under the Agreement, then:

36.5.1.1 the Contractor shall be relieved of its obligations to provide or procuring the provision of any part of the Services which have become the subject of the exercise of the Step-in;

36.5.1.2 in respect of the period in which the Authority is taking Required Action, the Unitary Charge due from the Authority to the Contractor shall equal the amount the Contractor would receive if it were satisfying all its obligations and providing or procuring the provision of the Services affected by the Required

144 Action in full over that period, less an amount equal to the Authority’s reasonable costs in taking the Required Action.

36.6 Performance of Services under Step-In

If the Authority has exercised its right of step-in pursuant to this clause 36, the Authority shall use all reasonable endeavours to achieve the standards required of the Contractor and relevant Subcontractor in relation to the Services as soon as is practicable and provided that the Contractor provides the Authority with reasonable assistance (such assistance to be at the expense of the Authority to the extent incremental costs are incurred).

36.7 Rights of access

36.7.1 The Authority or a representative of the Authority may at all times enter upon any property used by the Contractor to perform the Service, to inspect the construction, operation and maintenance of the Project and to monitor compliance by the Contractor with its obligations.

36.7.2 The Authority and a representative of the Authority may at all times enter upon any property used by the Contractor as training or workshop facilities and places where work is being prepared or materials being obtained for the Project.

36.7.3 The Contractor shall procure that satisfactory facilities are made available to the Authority and any representative of the Authority and that reasonable assistance is given for the purpose of clauses 36.7.1 and 36.7.2 above, subject to the Contractor’s and Sub-Contractors’ construction or operational requirements not being adversely affected and to reimbursement of any reasonable costs or expenses of the Contractor.

36.7.4 If the Authority is or becomes aware of a breach by the Contractor of its obligations under clause 15 (Maintenance) then having served due notice upon the Contractor and provided the Contractor with a suitable period to undertake remedial actions the Authority may exercise its right of access and remedy such breach and shall be entitled to recover any costs or expenses incurred from the Contractor as a debt.

36.7.5 The Authority and its representative shall at all times comply with any health and safety requirements when exercising its rights under this clause.

145 36.7.6 If the Authority or its representative causes material damage to any Asset in exercising any right under this clause 36.7 then the Authority shall be liable to the Contractor for the reasonable costs directly caused by such damage and the Authority shall indemnify the Contractor against all losses costs expenses and claims made against the Contractor as a result of such action.

36.7.7 Step-in for Phase 2 Construction Works

36.7.7.1 If at any time during the period of two months from the New Playing Fields Completion Date (as defined in Schedule 4 (Payment Mechanism)) the Authority reasonably believes that it needs to take action to complete the construction of the New Playing Fields (as defined in Schedule 4 (Payment Mechanism)) the Authority shall notify the Contractor in writing of the following:

(a) the circumstances giving rise to the notice and the reasons why the Authority believes that the Contractor has failed to complete the construction of the New Playing Fields;

(b) the action it wishes to take;

(c) the date it wishes to commence such action;

(d) the time period which it believes will be necessary for such action; and

(e) to the extent practicable, the effect on the Contractor and its obligation to provide the services during the period such action is being taken.

(f) The identity of any contractor it intends to appoint to complete the construction of the New Playing Fields (“the Replacement Contractor”)

36.7.7.2 If the Authority exercises its right to step-in under clause 36.7.7.1:

(a) subject to clause 36.7.7.2(b), (c) and (d) the Authority shall use all reasonable endeavours to construct or procure the construction of the New Playing Fields to the standards required

146 of the Contractor or Construction Contractor in relation to the construction of the New Playing Fields and shall be entitled to recover any reasonable costs or expenses in so doing incurred by the Authority from the Contractor as a debt.

(b) the Contractor shall be relieved of its obligations to start or complete the construction (or procure the start or completion) of any part of the New Playing Fields which have become the subject of the exercise of the Authority’s step-in under this clause 36.7.7;

(c) in respect of the period in which the Authority is exercising its rights under this clause, the Unitary Charge due from the Authority to the Contractor shall equal the amount the Contractor would receive if it were satisfying all of its obligations relating to the Availability of the New Playing Fields; and

(d) in relation to the Grassed Playing Fields (as defined in Schedule 4 (Payment Mechanism)), the Authority shall be obliged to:

(a) use the appropriate grass seeds, as advised by the Contractor, to sow the areas which will become the Grassed Playing Fields; and

(b) sow the areas under 36.A.2.4(a) above within the first practicable Seeding Season (as defined in Schedule 4 (Payment Mechanism)).

(e) The Contractor shall be entitled to submit a written request to the Authority for and the Authority shall be obliged to provide the following:

(a) details of the insurances which the Replacement Contractor has effected in connection with the construction of the New Playing Fields

(b) such other details of the Replacement Contractor as the Contractor reasonably requires

(f) If the Contractor is not satisfied with :

147 (a) the adequacy of the insurances detailed in accordance with clause 36.7.7.2(e)(a) and/or

(b) the level of detail provided in accordance with clause 36.7.7.2(e)(b) the Contractor shall be entitled to request in writing that the Authority does not appoint the Replacement Contractor and upon receipt of such request the Authority shall not appoint the Replacement Contractor until the Contractor’s reasonable concerns have been satisfied

148 PART VII - EMPLOYEES AND FAIR EMPLOYMENT

37. TUPE AND PENSIONS37

37.1 Relevant Transfers

With effect from the Service Commencement Date the contracts of employment of the Relevant Employees shall be transferred from the Authority to a Services Contractor in accordance with the provisions of TUPE; or the Parties will procure that such transfer shall occur and shall have the effect of a Relevant Transfer.

37.2 Where the identity of a Services Contractor (including on termination or expiry of this agreement) changes pursuant to this Agreement then the change in the identity of such Services Contractor shall constitute and have the effect of a Relevant Transfer.

37.3 On the occasion of each Relevant Transfer which arises as a result of the change in the identity of a Services Contractor the Contractor shall procure that the new Services Contractor of the relevant Service will comply with all of its obligations under TUPE in respect of any persons employed by the Services Contractor who are wholly or substantially employed in the provision of the Services immediately before the date of such Relevant Transfer, and will comply with its other obligations imposed by this clause 37.

37.4 Contractor Responsibilities

The Contractor shall procure that each Services Contractor shall with effect from the date of any Relevant Transfer on which such Services Contractor becomes the transferee:

37.4.1 become responsible for all salaries and other benefits incurred in connection with the employment of (in the case of a Relevant Transfer from the Authority) the Relevant Employees or (in the case of any other Relevant Transfer) the Transferring Employees on and following their transfer;

37.4.2 Not used.

37.4.3 subject to clause 54 indemnify the Authority and keep the Authority indemnified in full from and against all direct, indirect or consequential liability, loss, damages, injury, claims, costs and expenses (including legal expenses) awarded against or incurred or paid by the Authority as a result of or in connection with:

149 37.4.3.1 any Employment Claims which result from the employment or termination of employment of the Transferring Employees who transfer to such new Services Contractor on or after the date of such Relevant Transfer where the cause of action arose on or after the date of the Relevant Transfer but before the termination or expiry of this Agreement except to the extent that such Employment Claims are attributable to the default or failure to comply on the part of the Authority; or

37.4.3.2 the breach by the Contractor or Services Contractor of any of its obligations under the provisions of this clause 37 including pursuant to Regulation10 of TUPE and Article 6 of the Acquired Rights Directive in respect of (in the case of a Relevant Transfer from the Authority) the Relevant Employees and (in the case of any other Relevant Transfer) the Transferring Employees, except to the extent that such breach is attributable to the default or failure to comply on the part of the Authority.

37.5 Provision of Details and Indemnity

The Contractor shall upon request by the Authority provide to the Authority details of any measures which the Contractor or any Services Contractor envisages it or they will take in relation to the Relevant Employees in connection with the Relevant Transfer from the Authority.

37.6 Authority Indemnity

The Authority will indemnify the Contractor and Services Contractor and keep the Contractor and any Services Contractor indemnified in full from and against all direct, indirect or consequential liability, loss, damages, injury, claims costs and expenses (including legal expenses) awarded against or incurred or paid by the Contractor or Services Contractor in relation to any Employment Claims made against the Contractor and/or against a Services Contractor by or on behalf of:

37.6.1 any Relevant Employee where the cause of action arose prior to the Services Commencement Date; and

37.6.2 any Termination Employee where the cause of action arose on/or after the date of the termination or expiry of this Agreement;

150 save to the extent that any such Employment Claims are attributable to its default or failure to comply on the part of the Contractor or Services Contractor.

37.7 The Authority shall prior to the date of this Agreement disclose to the Contractor the Employee Information in respect of each Relevant Employee and shall inform the Contractor in writing of any changes which occur to such information within seven days of becoming aware of the change but in any event before the Services Commencement Date. To the extent that the Contractor is not compensated under clause 37.8 below, the Authority shall indemnify and keep indemnified the Contractor and the Services Contractor against any loss caused to the Contractor or Services Contractor by any inaccuracy or incompleteness in such information or by any changes in the information which have not been communicated to the Contractor (whether relating to the number, identity or details of the Relevant Employees) which occur prior to the Service Commencement Date.

37.8.1 The parties acknowledge and agree that the Contractor has procured the provision of the Services in consideration of the payment of the Unitary Charge at the level provided for within this Agreement by reference to the following costs which shall be (as required in consequence of a Relevant Transfer or other requirement to engage employees to secure the provision of the Services) a liability of the Sub-Contractors in accordance with their obligations to provide the Services:

37.8.1.1 in respect of Relevant Employees per annum (“Relevant Employees Costs”)

37.8.1.2 in respect of Other Employees per annum (“Other Employee Costs”).

37.8.2 If the cost to the Sub-Contractors of employing the Relevant Employees and Other Employees at the Services Commencement Date shall be more or less than the costs set out in clause 37.8.1 and the reason for such difference in costs shall be either:

37.8.2.1 in consequence of the identity or numbers of the Relevant Employees having altered from those whose particulars are set out in Annex 11 leading to an alteration in Relevant Employee Costs; and/or

151 37.8.2.2 the change or additions in the remuneration or benefits or employer pension contributions or terms and conditions of the Relevant Employees:

compared to the information which the Authority made available to the Contractor and which is attached to this Agreement as Annex 11 then there shall be with effect from the Service Commencement Date an adjustment to the Unitary Charge to reflect the said increase or decrease taking into account in such adjustment any costs or saving which (in overall terms) the Sub-Contractor shall incur or enjoy in employing the Relevant Employees together with more or fewer Other Employees in relation to the Project.

37.9 On or before the Service Commencement Date, the Authority will pay to each of the Relevant Employees all remuneration (including all emoluments, benefits, benefits in kind, bonuses and incentive payments) due or accrued at the date of such Relevant Transfer. The Authority will pay to the Contractor on demand on or after the Services Commencement Date a sum equal to the cost to the Contractor (or any Services Contractor of providing all holiday entitlements and holiday remuneration accrued to each of the Relevant Employees up to the Services Commencement Date.

37.10 Excess Employees

If any Excess Employee claims that his contract of employment takes effect as if originally made by the Contractor or any Services Contractor as a result of the application of TUPE, then:

37.10.1 the Contractor or Services Contractor may within 14 Business Days of becoming aware of the application of TUPE to any such contract, or within 14 business days of agreeing with the Authority in writing that TUPE applies to such contract, serve notice to terminate such contract; and

37.10.2 provided notice of termination of employment is served within the period stipulated in clause 37.10.1 the Authority shall indemnify the Contractor and Services Contractor against all sums paid by the Contractor or any Services Contractor to such Excess Employees in connection with their contracts of employment that transfer under TUPE (or which it is agreed in writing between the Authority and the Contractor transfer under TUPE) and against every cost, claim, expense, demand and other liability incurred by the Contractor or any Services Contractor arising out of the termination of any such contract of employment by the Contractor or any Services Contractor.

152 37.10.3 The Authority shall indemnify the Contractor and keep the Contractor indemnified in full against all costs and expenses awarded against or incurred or paid by the Contractor or any Services Contractor in opposing, resisting or defending any such claim by an Excess Employee.

37.11 Restricted Acts

The Authority will not during the period between the date of this Agreement and the Services Commencement Date carry out a Restricted Act (as defined below).

37.12 The Restricted Acts for the purposes of clause 37.11 above are:

37.12.1 the alteration or change in any way of any terms and conditions of employment of any of the Relevant Employees (whether with or without consent of the Relevant Employees) other than changes agreed in the normal course of the Authority’s business and in good faith prior to the date of this Agreement or wage or salary awards which are in line with those offered generally for similar status individuals within the Authority’s workforce or as is required by law; and

37.12.2 the recruitment of any new employees to be wholly or substantially assigned to the Services other than in accordance with the Authority’s existing policies and procedures; and

37.12.3 the relocation or assignment to new duties other than at the written request of a Relevant Employee (except within the Services) of any of the Relevant Employees without the prior written consent of the Contractor.

153 38. EMPLOYEES38

38.1 Conduct of Staff

Whilst engaged within the Facility the Contractor shall procure that each Services Contractor shall comply with such rules, regulations and requirements relating to the conduct of Staff (including those in respect of security arrangements) as are provided by the Authority to the Contractor prior to the date of this Agreement and shall ensure that its employees, servants, agents and subcontractors do likewise. The Contractor shall take and/or procure appropriate disciplinary action against any person employed by the Contractor and/or any Services Contractor who transgresses any such rules, regulations and requirements (which may at the Contractor’s discretion include the removal of such person from the Facilities or from carrying out any work in connection with the Works or Services).

38.2 Contractor’s Employees

Other than as expressly provided in this Agreement, the Contractor shall be entirely responsible for the employment and conditions of service of the Contractor’s employees and shall use reasonable endeavours to secure that any Services Contractor is likewise responsible for its employees. The Contractor shall use reasonable endeavours to secure that all staff are in possession of appropriate entry clearance if they are non-EEA nationals.

38.3 Admission to the Facilities

The Contractor shall at least fifteen Business Days before the date on which the Contractor first provides any of the Services provide the Authority with a written list of the names and addresses and any other information reasonably requested by the Authority, of all employees or other persons other than the Relevant Employees who it expects may require admission to the Facilities in connection with the performance of the Services specifying the capacities in which those employees or other persons are concerned with the Services and giving such other particulars as the Authority may reasonably require. The Contractor shall update this information as and when any such individuals are replaced or complemented by others, where reasonably practicable not less than two Business Days before their inclusion.

38.4 Refusal of Admission

The Authority reserves the right to refuse to admit to the Facilities any person, employed or engaged by the Contractor or Services Contractor including those

154 identified in accordance with clause 38.3, who is in the reasonable opinion of the Authority not a fit and proper person to be in the Facilities.

38.5 Decision to Refuse Admission

The decision of the Authority as to whether any person is to be refused admission to the Facilities pursuant to clauses 38.3 or 38.4 shall be supported by further details of the reasons for its decision. The Authority shall indemnify the Contractor and Services Contractor against any loss caused to it or them as a result of the Authority unreasonably refusing admission to the Facilities to any person.

38.6 In any circumstance in which the Authority exercises the right not to give such reasons or does not provide sufficient detail of its reasons for the Contractor or, if relevant, any Services Contractor to defend any Legal Proceedings the Authority shall subject to clause 54 indemnify the Contractor and Services Contractor against all Losses incurred by the Contractor or Services Contractor and arising from such Legal Proceedings.

38.7 Additional Security

The Contractor recognises that performance of its obligations under this Agreement will require some Staff to work on duties involving access to children and young persons, vulnerable persons or other members of the public, towards whom the Authority owes a special duty of care. The Contractor is to have primary responsibility for ensuring that such checks as the Authority requires, including criminal record checks, are carried out. On request, the Contractor will supply the Authority with a list of all persons within such categories as the Authority shall from time to time inform the Contractor and who are utilised or proposed to be utilised on the Agreement, giving such information (e.g. without limitation name, address, date of birth, place of birth, National Insurance No.) as the Authority may reasonably require to facilitate a police check for criminal convictions or a check with the records held by the Department of Health and the Department for Education and Employment. The Contractor shall ensure that all Staff other than Relevant Employees have given their written permission for such a check to be made and that they are aware that any spent convictions and matters falling short of criminal convictions that may render them unfit to work with children, young persons, vulnerable persons or other members of the public to whom the Authority owes a special duty of care will be disclosed on such a check.

38.8 Any person whom the Authority deems to be unsuitable, either as a result of the check or by virtue of a lack of co-operation in facilitating the check, shall

155 immediately be removed from the Facilities and replaced in accordance with clause 38.4. The right contained within this clause shall not be exercised arbitrarily, vexatiously or capriciously by the Authority.

38.9 The Contractor shall be entitled to have access to any police report obtained by the Authority and to make further inquiries as to the reason for the Authority’s decision.

38.10 The Contractor shall ensure that all Staff shall take full account of the sensibilities of children, young persons and other vulnerable persons when performing the Works and/or Services. In recognition of these sensibilities, extra care shall be taken by staff in their behaviour, dress and speech so as to avoid any disruption. The Contractor shall ensure that all consultation is undertaken with the head teacher, principal or other Authority officer responsible for those persons before and during the performance of any such Services.

38.11 The Contractor shall provide a means of identification to its staff, in a form approved by the Authority in writing and in advance, and shall require its staff to wear and keep visible such identification at all times whilst on the premises. All staff used by the Contractor shall carry such identification at all times and make it available for inspection on request by any officer(s) of the Authority who similarly discloses their identity. Entry to the Facilities may be refused if the correct identification is not displayed. In this event, the Contractor shall be fully responsible for resultant delays or difficulties in the provision of the Works and/or Services.

38.12 Termination

The Authority and the Contractor agree that any transfer of responsibility for the Services (or any of the Services) to any New Contractor which occurs upon termination or expiry of this Agreement shall constitute a Relevant Transfer.

38.13 The following provisions of this clause shall apply in relation to termination or expiry of this Agreement.

38.14 The Contractor will not and will use reasonable endeavours to procure that all Services Contractors will not during the Termination Period carry out a Restricted Act (as defined below).

38.15 The Restricted Acts for the purposes of clause 38.14 above are:

38.15.1 the termination of the employment of any of the Termination Employees for any reason whatsoever save where, in the reasonable opinion of the employer of such Termination Employees, termination is justified by reason

156 of redundancy or for cause due to the actions or omissions of any such of the Termination Employees;

38.15.2 the alteration or change in any way of any terms and conditions of employment of any of the Termination Employees (whether with or without consent of the Termination Employees) other than changes agreed in the normal course of the employer’s business and in good faith prior to the start of the Termination Period or wage or salary awards which are in line with those offered generally for similar status individuals within the workforce of the employer of such Termination Employees or as is required by law; and

38.15.3 the recruitment (except as a replacement for any employee whose employment is terminated and where the replacement is being recruited on terms which are not materially better than the terms of the employee being replaced) of any of the Termination Employees except where the Authority’s prior written consent has been given such consent not to be unreasonably withheld or delayed; and

38.15.4 the relocation or assignment to new duties other than at the written request of a Termination Employee (except within the Services) of any of the Termination Employees without the prior written consent of the Authority.

38.16 During the Termination Period, the Contractor shall and shall procure that each Services Contractor shall within seven days of a written request by the Authority, subject to the terms of the Data Protection Act 1998, give to the Authority the Employee Information in respect of each Termination Employee. Subject to clause 54 the Contractor shall and shall procure that the Services Contractor shall indemnify and keep indemnified the Authority against any loss caused to the Authority by any inaccuracy or incompleteness in such information or by any changes in the information which have not been communicated to the Authority (whether relating to the number, identity or details of the Termination Employees) which occur prior to the Termination Date.

38.17 The Contractor warrants that reasonable care will be used in the preparation of all information provided under clause 38.16, and that reasonable efforts will be taken to ensure that it will be complete (insofar as it is reasonable for the Authority to require such information to be provided) and accurate in all respects as at the date the information is provided.

38.18 The Authority shall upon request by the Contractor provide to the Contractor details of any measures which any New Contractors envisage they will take in relation to the

157 Termination Employees in connection with the termination or expiry of this Agreement and shall indemnify the Contractor against all injury, claims, costs and expenses (including legal expenses) and/or damages resulting from any failure by the Authority to comply with this obligation.

38.19 In recognition of:

38.19.1 the key positions held by such persons and their anticipated respective contributions to the success of the project; and

38.19.2 the professional standing of the individuals concerned

it is agreed that in relation to any Key Manager or any proposal on the part of the Authority to require the exclusion of that person from the Site such exclusions shall not be effected without prior consultations with the Contractor.

39. EQUAL OPPORTUNITY39

39.1 The Contractor shall comply with and maintain policies to ensure that both it and its Services Contractor comply with both their own and the Authority’s statutory obligations under the Equal Pay Act 1970, Sex Discrimination Act 1975, Race Relations Act 1976, Disability Discrimination Act 1995 and, accordingly, will not and shall take all reasonable steps to secure that all servants, employees, or agents of the Contractor and all Services Contractors do not discriminate against any person because of their sex, marital status, colour, race, nationality (including citizenship), national or ethnic origin, or on the grounds of their disability in decisions to recruit, train, promote, discipline or dismiss employees.

39.2 The Contractor and the Services Contractor shall observe, as far as is reasonably practicable, the Equal Opportunities Commission’s Codes of Practice on sex discrimination and equal pay as approved by Parliament in 1985 and 1997 respectively, the Commission for Racial Equality’s Code of Practice for the elimination of racial discrimination as approved by Parliament in 1983, and the Department for Education and Employment’s Code of Practice for the elimination of discrimination against disabled persons as approved by Parliament in 1996 or any codes which replace these.

39.3 In the event of any finding of unlawful sex, racial or disability discrimination being made against the Contractor or the Services Contractor during the Contract Period by any court or employment tribunal, or of an adverse finding in any formal investigation (in the case of sex and racial discrimination only) by the Equal

158 Opportunities Commission or the Commission for Racial Equality over the same period, the Contractor shall inform the Authority of this finding and shall take appropriate steps to the reasonable satisfaction of the Authority to prevent repetition of the unlawful discrimination.

39.4 The Contractor shall, on request, provide the Authority with details of any steps taken under clause 39.3 above.

39.5 The Contractor’s equal opportunities policy shall be set out in any instructions circulated to those members of the Contractor’s staff and the Services Contractor’s staff concerned with recruitment, training and promotion; in relevant documentation available to its staff and others; and in its recruitment advertisements and other relevant literature.

39.6 The Contractor shall provide such information as the Authority may reasonably request for the purpose of assessing the Contractor’s compliance with the above conditions, including, if requested, examples of any instructions, recruitment advertisements or other literature, and details of monitoring applicants and employees.

39.7 Performance of the Contractor’s obligations by the Services Contractor

The Authority will accept performance of any obligation (other than an obligation to pay money to the Authority) of the Contractor under clause 38 and this clause 39 from any Services Contractor provided that the standard of performance of the relevant obligation of the Contractor is not compromised by the fact that it is being performed by someone other than the Contractor.

39A PENSIONS

39A.1 The Contractor shall use its best endeavours to procure that at all times up to and including the Expiry Date any Transferring Employees employed by the Services Contractor or any Sub-Contractor (and in the case of seeking admission body status who are active members of the LGPS at Service Commencement Date) are offered pension benefits with effect from the Service Commencement Date which are broadly comparable for each Employee to the benefits provided under the LGPS. The Contractor shall use its best endeavours to procure that the Services Contractor and any relevant Sub-Contractor shall either:

159 39A.1.1 seek admission body status under the LGPS by entering into the Admission Agreement with effect on and from the Service Commencement Date and complying with its terms and conditions; or

39A.1.2 provide an occupational pension scheme which has been certified by the Government Actuary’s Department at the date of admission to that scheme (and subsequently as and when such certification expires) as providing relevant benefits (as defined in section 612 of the Income and Corporation Taxes Act 1988) which are for future service at least broadly comparable to the benefits which would have accrued in respect of the Transferring Employees had they been or continued to be members of the LGPS.

Where the Services Contractor or a Sub-Contractor is an admission body in the LGPS, the Contractor shall use its best endeavours to procure that it shall exercise its discretions under the LGPS Regulations in a way which is no less favourable than the manner in which the Authority exercises those same discretions in accordance with its written policy in relation to those discretions in place at the time the discretions are exercised (which the Authority will provide upon request).

39A.2 In respect of any occupational pension scheme under clause 39A.1.2 the Contractor shall use its best endeavours to ensure that:

39A.2.1 the Authority is provided with a copy of the Government Actuary’s Department Certificate and copies of subsequent renewals or new certificates;

39A.2.2 the Authority is provided with such information as refers to the Transferring Employees relating to the scheme as the Authority shall from time to time reasonably request, including but not limited to, the provisions governing the scheme, the latest actuarial valuation report, scheme literature issued to members and names of members;

39A.2.3 such scheme is capable of accepting a bulk transfer from the LGPS. The Contractor shall use its best endeavours to procure that the Services Contractor and any relevant Sub-Contractor shall use its best endeavours to procure that the trustee(s) of the scheme accepts a bulk transfer from the LGPS (where a bulk transfer is made available from the LGPS) and uses it to provide a day for day past service credits in the scheme (or an equivalent recommended by the Government Actuary’s Department or an Actuary appointed by the Authority). The

160 bulk transfer shall be agreed by an Actuary appointed by South Tyneside Metropolitan Borough Council and an Actuary appointed by the managers of the scheme in accordance with Regulation 119 of the LGPS Regulations; and

39A.2.4 so far as is permissible under Inland Revenue practice, such scheme provides benefits on redundancy (as defined in the LGPS Regulations) which are equivalent to those which the Transferring Employees would have received had they been made redundant whilst members of the LGPS. Where this is not possible the Contractor shall compensate the Transferring Employees in a manner which is broadly comparable or equivalent in cash terms, as agreed by an Actuary approved by the Authority and an Actuary appointed by the Services Contractor or a Sub-contractor

39A.3 In respect of any occupational pension scheme under clause 39A.1.2 the Authority shall supply to the Contractor such information as it may reasonably request in relation to the LGPS to enable the Services Contractor or a Sub-Contractor to submit a proposal to the Government Actuary’s Department to assess the comparability of the scheme.

39A.4 All costs incurred in obtaining the necessary certification of comparability in accordance with clause 39A.1.2 shall be borne by the Contractor.

39A.5 The Contractor shall use its best endeavours to ensure that:

39A.5.1 where the Services Contractor or a Sub-Contractor is an admission body in the LGPS, it shall (where permitted) award benefits to the Transferring Employees under the Compensation Regulations in circumstances where the Transferring Employees would have received such benefits had they still been employed by the Authority; and

39A.5.2 where the award of benefits in clause 39A.5.1 is not permitted under the Compensation Regulations or the Services Contractor or a relevant Sub-Contractor is not an admission body in the LGPS, the Services Contractor and relevant Sub-Contractor shall award benefits to the Transferring Employees which are no less valuable to the benefits the Transferring Employees would have received under the Compensation Regulations in circumstances where the Transferring Employees would have received such benefits had they still been employed by the Authority.

161 In either case, where such benefits are of a discretionary nature, they shall be awarded on the basis of the Authority’s written policy in relation to such benefits at the time the discretion is exercised (which the Authority will provide upon request). Where the payment of such benefits is not, for whatever reason, possible, the Contractor shall use its best endeavours to procure that the Service Contractor and any relevant Sub-Contractor shall compensate the Employees in a manner which is broadly comparable or equivalent in cash terms (as agreed by an Actuary appointed by the Authority and an Actuary appointed by the Services Contractor or Sub- Contractor).

39A.6 The Contractor will indemnify the Authority and keep the Authority indemnified in full from and against all direct, indirect or consequential liability, loss, damages, injury, claims, costs and expenses (including legal expenses) awarded against or incurred or paid by the Authority as a result of or in connection with

(a) a breach by the Contractor of any of the provisions of this clause 39A; or

(b) any liability imposed on the Council under Regulation 78(2A) of the LGPS Regulations (or any amendment, modification, extension, replacement or consolidation thereof) which relates to any period of employment with the Services Contractor or any Sub-Contractor.

39A.7 Notwithstanding any other provisions of this Agreement, the Authority shall (having given one month’s written notice) have a right to set off against any payments due to the Contractor under this Agreement an amount equal to any overdue employer and employee contributions and other payments (and interest payable under the LGPS Regulations) due from the Services Contractor or a Sub-Contractor in its capacity as an employing authority in the LGPS. Upon receipt the Authority will credit the LGPS as soon as possible with a sum equivalent to the amount set off.

162 PART VIII - TERMINATION

40. SENIOR LENDER’S DIRECT AGREEMENT40

The provisions of clauses 40 to 51 of this Agreement are subject to the Direct Agreement.

41. TERMINATION ON AUTHORITY DEFAULT41

41.1 The Contractor shall be entitled to terminate this Agreement in accordance with this clause 41 if an Authority Default has occurred. If an Authority Default has occurred and the Contractor wishes to terminate the Agreement it must serve a Termination Notice on the Authority within 45 days of becoming aware of the Authority Default.

41.2 The Termination Notice must specify the type of Authority Default which has occurred entitling the Contractor to terminate together (in the case of a breach under paragraphs (a), (c) or (d) of the definition of Authority Default) with reasonable details thereof.

41.3 The Agreement will terminate on the day falling 45 days after the date the Authority receives the Termination Notice, unless the Authority rectifies the Authority Default within 30 days of receipt of the Termination Notice provided that in relation to any non payment of monies due and payable the Agreement will terminate on the day falling 10 days after receipt of Termination Notice.

42. COMPENSATION ON AUTHORITY DEFAULT42

42.1 On termination of the Agreement under clause 41 (Termination on Authority Default) the Authority shall pay the Contractor in accordance with clause 51 (Calculation and Payment of Early Termination Payments) an amount equal to the aggregate of:

42.1.1 the Senior Debt;

42.1.2 redundancy payments for employees of the Contractor that have been or will be incurred by the Contractor as a direct result of the termination of this Agreement and amounts payable to the Sub-Contractors under the Project Documents as a direct result of such termination; and

42.1.3 all amounts shown in the Financial Model as payable by the Contractor from the Termination Date, either in dividends or other distributions on the

163 share capital of the Contractor or as payments of interest or repayments of principal on the Junior Debt, each amount discounted back at the post tax nominal project IRR.

42.1.4 the reasonable cost of legal and other professional assistance reasonably incurred by the Contractor in connection with the termination.

42.1.5 any other valid claim, demand proceeding or action made or brought against the Contractor in connection with the termination.

43. TERMINATION OF A SUB-CONTRACT43

43.1 The Authority shall be entitled to instruct the Contractor to terminate the Operating Agreement made between the Contractor and the Operating Contractor under which that Operating Contractor provides part of the Services if:

43.1.1 there is an accumulation of Unavailability Deductions (as defined in Schedule 4 (Payment Mechanism)) which amounts to 20% or more of the GBMP (as defined in Schedule 4 (Payment Mechanism)) in respect of:

43.1.1.1 each of 3 consecutive Months; or

43.1.1.2 each of 4 Months in any Year, or

43.1.2 there is an accumulation of Service Performance Shortfall Deductions (as defined in Schedule 4 (Payment Mechanism)) which amount to 12.5% or more of the GBMP (as defined in Schedule 4 (Payment Mechanism)) in respect of:

43.1.2.2 each of 4 Months in any Year, or

43.1.3 there is an accumulation of Unavailability Deductions and Service Performance Shortfall Deductions (as defined in Schedule 4 (Payment Mechanism)) which amount in aggregate to 25% or more of the GBMP (as defined in Schedule 4 (Payment Mechanism)) in respect of:

43.1.3.2 each of 4 Months in any Year.

164 43.2 Consequences of termination of sub-contract

If the Authority instructs the Contractor to terminate any Agreement made between the Contractor and the Operating Contractor (under which the Operating Contractor provides the Service) pursuant to clause 43.1 the Contractor shall:

43.2.1 either provide itself, or procure the provision of, the Services so as to ensure that there is no interruption or interference with the provision of the Services as a whole;

43.2.2 not make any adjustment to the Unitary Charge as a result of the termination and reprovision of the Services in question; and

43.3 Upon replacement of the Operating Contractor (including by the Contractor if the Contractor undertakes to perform the relevant Service itself):

43.3.1.1 no Service Performance Shortfall Deductions shall accrue in respect of the Services during that period which commences on the date of such replacement and ends on the last day of the first month following such replacement;

43.3.1.2 the Services shall commence with zero accumulated Deductions as defined in Schedule 4 (Payment Mechanism) in respect of that Service.

44. TERMINATION OF WHOLE AGREEMENT ON CONTRACTOR DEFAULT OR INSOLVENCY DEFAULT44

44.1 Right to Termination on Contractor Default

If a Contractor Default occurs, then, subject to the terms of the Senior Lender’s Direct Agreement if the Authority wishes to terminate the Agreement it must serve a Termination Notice on the Contractor in accordance with clause 44.3 (but the Authority may not serve a Termination Notice to the extent that the event of Contractor Default has been brought about by a Relief Event or an event of Force Majeure or Compensation Event). Any Termination Notice must be served by the Authority or the Contractor within 45 days of the Authority becoming aware of the Contractor Default.

165 44.2 Right to Termination on Insolvency Default

If an Insolvency Default occurs then, subject to the terms of the Senior Lender’s Direct Agreement, the Authority may terminate the Agreement forthwith by giving written notice to the Contractor.

44.3 Rectification

44.3.1 If a Contractor Default has occurred and the Authority wishes to terminate the Agreement, it must serve a Termination Notice on the Contractor.

44.3.2 The Termination Notice must specify:

44.3.2.1 the type and nature of Contractor Default that has occurred giving full details; and

44.3.2.2 that the Agreement will terminate on the day falling 60 days after the date the Contractor receives the Termination Notice, unless the Contractor puts forward a rectification programme which is acceptable to the Authority such acceptance not to be unreasonably withheld or delayed within 30 days, or unless the Contractor rectifies the Contractor Default where it is capable of remedy within 60 days or the provisions of the Senior Lender’s Direct Agreement apply to prevent termination. For the purposes of this clause 44.3.2.2 where a breach would otherwise be treated as irremediable by reason only of the fact that it has occurred and the breach constitutes the occurrence of a particular default or series of defaults, such breach shall be deemed to be capable of remedy and to have been remedied if within the period of 60 days or (if longer) the period set out in the rectification program in each case referred to above:

(a) the matter or matters giving rise to and the effects of the default or defaults have been duly corrected (to the extent appropriate in respect of the default in question); and

(b) all reasonable steps have been taken to prevent a recurrence of the default or defaults;

and where the default is a failure or omission to carry out a particular act, the carrying out of that act during such period, in

166 addition to compliance with clauses (a) and (b) above shall be deemed to be a remedy for the failure.

44.3.3 If the Contractor either rectifies the Contractor Default within the time period specified in the rectification programme or such time period as agreed with the Authority or implements the rectification programme in accordance with the terms of the rectification programme, the Termination Notice will be deemed to be revoked and the Agreement will continue.

44.3.4 Subject to the clause 44.3.5, if no rectification programme is agreed and if the Contractor fails to rectify the Contractor Default within the 60 day period specified in the Termination Notice, the Agreement will, subject to the terms of the Senior Lender’s Direct Agreement, terminate on the day falling 60 days after the date of receipt of the Termination Notice.

44.3.5 If a rectification programme is agreed and the Contractor fails to implement any rectification programme in accordance with its terms, the Agreement will, subject to the terms of the Senior Lender’s Direct Agreement, terminate on the date falling 60 days after the date of notification to the Contractor that a Default Event should have been rectified under the timescale set out in the rectification programme and has not been so rectified.

44.4 Subject to clause 44.6, the Authority shall be entitled either to:

44.4.1 retender the provision of the Service in accordance with paragraph 1 of Schedule 11 (Retendering Procedure) and pay the Adjusted Highest Compliant Tender Price to the Contractor; or

44.4.2 require an expert determination in accordance with paragraph 2 of Schedule 11 (No Retendering Procedure) and pay the Adjusted Estimated Fair Value of the Agreement to the Contractor.

44.5 Subject to paragraph 44.6, the Authority shall notify the Contractor of its election on or before the date falling 30 days after the Termination Date.

44.6 The Authority shall not be entitled to elect to retender the provision of the Service in accordance with paragraph 1 of Schedule 11 (Retendering Procedure) if:

44.6.1 the Senior Lender has executed its rights to step-in under clause 5 of the Senior Lender’s Direct Agreement

167 44.6.2 the Contractor or Senior Lender have demonstrated to the Authority that the Senior Lender have used all reasonable efforts to procure the transfer of the Contractor’s rights and liabilities under the Agreement to a Suitable Substitute Contractor as defined under the Senior Lender Direct Agreement but have not done so;

44.6.3 the Contractor or Senior Lender have served on the Authority a notice to the effect that the reason for the failure to transfer the Contractor’s rights and liabilities under this Agreement is that there is no Liquid Market; and

44.6.4 either the Authority agrees within ten Business Days of such notice given under clause 44.6.3 or it is determined in accordance with clause 63 (Dispute Resolution) that no Liquid Market exists; or

44.6.5 fewer than three Compliant Tenders are received.

45. TERMINATION ON FORCE MAJEURE45

45.1 Neither Party shall be entitled to bring a claim for a breach of obligations under this Agreement by the other Party nor shall either Party incur any liability to the other Party for any losses or damages incurred by that other Party to the extent that a Force Majeure Event occurs and it is prevented from carrying out obligations by the occurrence of that Force Majeure Event.

45.2 Nothing in clause 45.1 above shall affect any entitlement to make deductions or any deductions made as a result of clause 19.3 Deductions to the Unitary Charge in the period during which the Force Majeure Event is subsisting.

45.3 On the occurrence of a Force Majeure Event, the affected party shall notify the other party as soon as practicable. The notification shall include details of the Force Majeure Event, including evidence of its effect on the obligations of the affected party and any action proposed to mitigate its effect.

45.4 As soon as practicable following such notification, the Parties shall consult with each other in good faith and use all reasonable endeavours to agree appropriate terms to mitigate the effects of the Force Majeure Event and facilitate the continued performance of the Agreement.

45.5 If no such terms are agreed on or before the date falling 120 days after the date of commencement of the Force Majeure Event and such Force Majeure Event is continuing or its consequence remains such that the affected party is unable to comply with its obligations under this Agreement for a period of more than 180 days,

168 then, subject to clause 45.6 below, either Party may terminate the Agreement by giving 30 days’ written notice to the other Party.

45.6 If the Agreement is terminated under clause 45.5 above or 45.7 below:

45.6.1 compensation shall be payable by the Authority in accordance with clause 46 (Compensation for Termination on Force Majeure); and

45.6.2 the Authority may require the Contractor to transfer its title, interest and rights in and to any Assets to the Authority.

45.7 If the Contractor gives notice to the Authority under clause 45.5 above that it wishes to terminate the Agreement, then the Authority has the option either to accept such notice or to respond in writing on or before the date falling ten days after the date of its receipt stating that it requires the Agreement to continue. If the Authority gives the Contractor such notice, then:

45.7.1 the Authority shall pay to the Contractor the Unitary Charge from the date after the date the Agreement would have terminated under clause 45.5 as if the Services were being fully provided;

45.7.2 the Agreement will not terminate until expiry of written notice (of at least 30 days) from the Authority to the Contractor that it wishes the Agreement to terminate;

45.7.3 the Parties shall at all times following the occurrence of a Force Majeure Event use all reasonable endeavours to prevent and mitigate the effects of any delay or other non performance of this Agreement and the Contractor shall at all times during which a Force Majeure Event is subsisting take all steps in accordance with Good Industry Practice to overcome or minimise the consequences of the Force Majeure Event; and

45.7.4 the affected Party shall notify the other Party as soon as practicable after the Force Majeure Event ceases or no longer causes the affected Party to be unable to comply with its obligations under this Agreement. Following such notification the Agreement shall continue to be performed on the terms existing immediately prior to the occurrence of the Force Majeure Event.

169 46. COMPENSATION ON TERMINATION FOR FORCE MAJEURE46

46.1 On termination of the Agreement under clause 45 (Termination on Force Majeure), the Authority shall pay to the Contractor in accordance with clause 51 (Calculation and Payment on termination) and clause 46.2 below, the aggregate of:

46.1.1 an amount equal to the Senior Debt;

46.1.2 an amount equal to the Junior Debt less an amount equal to the aggregate of payments of interest on the Junior Debt;

46.1.3 an amount equal to all amounts paid to the Contractor by way of subscription for shares in the capital of the Contractor less dividends and other distributions paid by the Contractor to the shareholders of the Contractor; and

46.1.4 redundancy payments for employees of the Contractor that have been or will be reasonably incurred by the Contractor as a direct result of termination of the Agreement and amounts payable to the Sub-Contractors under the Project Documents as a direct result of such termination.

46.2 If the amounts referred to in clause 46.1.2 and/or 46.1.3 are less than zero, then, for the purposes of the calculation in clause 46.1 they shall be deemed to be zero.

46.3 Such amount shall be determined and paid in accordance with clause 51 (Calculation and Payment of Early Termination Payments).

47. TERMINATION FOR CORRUPT GIFTS AND FRAUD47

47.1 If the Contractor or any Sub-Contractor (or anyone employed by or acting on behalf of any of them) or any of its or their agents or shareholders commits any Prohibited Act, then the Authority shall be entitled to act in accordance with this clause 47.

47.1.1 if a Prohibited Act is committed by the Contractor or by an employee not acting independently of the Contractor, then the Authority may terminate the Agreement by giving notice to the Contractor;

47.1.2 if the Prohibited Act is committed by an employee of the Contractor acting independently of the Contractor, then the Authority may give notice to the Contractor of termination and the Agreement will terminate, unless within 30 days of receipt of such notice the Contractor terminates the employee’s

170 employment and (if necessary) procures the performance of such part of the Service by another person;

47.1.3 if the Prohibited Act is committed by a Sub-Contractor or by an employee of that Sub-Contractor not acting independently of that Sub-Contractor, then the Authority may give notice to the Contractor of termination and the Agreement will terminate, unless within 30 days of receipt of such notice the Contractor terminates the relevant Project Document and procures the performance of such part of the Service by another person;

47.1.4 if the Prohibited Act is committed by an employee of a Sub-Contractor acting independently of that Sub-Contractor, then the Authority may give notice to the Contractor of termination and the Agreement will terminate, unless within 30 days of receipt of such notice the Sub-Contractor terminates the employee’s employment and (if necessary) procures the performance of such part of the Service by another person;

47.1.5 if the Prohibited Act is committed by any other person not specified in clause 47.1.2 to 47.1.4 above, then the Authority may give notice to the Contractor of termination and the Agreement will terminate unless within 30 days of receipt of such notice, the Contractor procures the termination of such person’s employment and of their employer (where not employed by the Contractor) or the Sub-Contractors) and, if necessary, the performance of the relevant part of the Service by another person;

47.1.6 any notice of termination under this clause 47 shall specify:

47.1.6.1 full details of the nature of the Prohibited Act;

47.1.6.2 the identify of the party whom the Authority believes has committed the Prohibited Act; and

47.1.6.3 the date on which the Agreement will terminate, in accordance with the applicable provision of this clause 47.

48. COMPENSATION ON TERMINATION FOR CORRUPT GIFTS AND FRAUD48

48.1 On termination of the Agreement under clause 47 (Termination on corrupt Gifts and Fraud) then the Authority shall pay the Contractor an amount equal to Senior Debt outstanding on the date of termination of the Agreement.

171 48.2 If termination occurs then the Authority may require the Contractor to transfer its rights, title and interest in and to the Assets to the Authority.

49. VOLUNTARY TERMINATION BY THE AUTHORITY49

49.1 The Authority may terminate the Agreement at any time on or before its Expiry Date by complying with its obligations under clauses 49.2 to 49.4 below.

49.2 If the Authority wishes to terminate the Agreement under this clause, it must give notice to the Contractor stating:

49.2.1 that the Authority is terminating the Agreement under this clause 49 (Voluntary Termination by Authority);

49.2.2 that the Agreement will terminate on the date falling 60 days after the date of receipt of the notice;

49.2.3 whether the Authority has chosen to exercise its option under clause 49.3.

49.3 On termination, the Authority shall have the option to require the Contractor to transfer to the Authority all of its right, title and interest in and to the Assets.

49.4 The Agreement will terminate on the date falling 60 days after the date of receipt of the notice referred to in clause 49.2 above.

50. COMPENSATION ON VOLUNTARY TERMINATION50

On termination under clause 49.4 above the Authority shall pay the Contractor an amount equal to the amount payable under clause 42 (Compensation on Authority Default) in accordance with clause 51 (Calculation and Payment on Termination).

50A. TRANSFER OF ASSETS ON EARLY TERMINATION

50A.1 On the Termination Date of this Agreement, the Lease will terminate automatically subject always to the Senior Lender’s Direct Agreement, the Authority shall have the option to require the Contractor to transfer at no cost to the Authority all of its rights, title and interest in and to all or any of the Assets free from all encumbrances (including for the avoidance of doubt the Community Learning Centre) to the Authority or as otherwise directed by the Authority.

172 51. CALCULATION AND PAYMENT OF EARLY TERMINATION PAYMENTS 51

51.1 Gross Up of Termination Payments

If any amount of compensation payable by the Authority under clauses 42 (Compensation on Authority Default), 46 (Compensation on Termination for Force Majeure) (including for the avoidance of doubt under clauses 27.12.6 and 27.13.4 and paragraph 2.8 of Schedule 1), 48 (Compensation for Termination for Corrupt Gifts and Fraud) or 50 (Compensation or Voluntary Termination) and under the Relevant Discharge Terms is subject to Tax payable to a Relevant Authority in the United Kingdom, then the Authority shall pay to the Contractor or at its discretion to the Senior Lender on behalf of the Contractor such additional amount as will put the Contractor in the same after Tax position as it would have been had the payment not been subject to Tax, taking account of any relief, allowances deduction, setting off or credit in respect of Tax (whether available by choice or not) which is available to the Contractor and which is derived from a payment made by the Contractor under or pursuant to this Agreement to reduce the Tax to which the payment is subject.

51.2 Set Off on Termination

Except where expressly stated otherwise, the Authority is not entitled to set off any amount against any payment of termination compensation under clauses 42 (Compensation on Authority Default), 46 (Compensation on Termination for Force Majeure) (including for the avoidance of doubt under clauses 27.12.6 and 27.13.4 and paragraph 2.8 of Schedule 1), clauses 48 (Compensation or Termination for corrupt gifts or fraud) or 50 (Compensation on Voluntary Termination) and under the Relevant Discharge Terms, save to the extent that after such an amount has been set off, the termination payment made would be in an amount greater than or equal to the Senior Debt at that time.

51.3 The Authority shall be entitled to rely on the certification of the Senior Lender as conclusive as to the amount of the Senior Debt outstanding at any relevant time. The receipt of the Senior Lender shall discharge the Authority’s obligation to pay any element of compensation due to the Contractor that is equal to Senior Debt.

51.4 Without prejudice to clause 5.5 any payment of compensation shall be in full satisfaction of any claim of either Party in relation to termination of this Agreement or any Project Document. Accordingly, the compensation payable under clauses 46 (Compensation on Termination for Force Majeure), 48 (Compensation

173 for Termination for Corrupt Gifts and Fraud) 44.7 and 49 (Compensation on Voluntary termination by the Authority) shall be the sole remedy of each Party in connection with the termination of the Project Agreement or any Project Document. Nothing in this clause shall affect any antecedent liability of the Authority or the Contractor which arose prior to the Termination Date and does not relate to the termination of this Agreement.

51.5 Except as provided for in Paragraph 1 of Part 1 of Schedule 11 (in which case the compensation shall be payable as set out in Paragraph 1 of Part 1 of Schedule 11) and subject to clause 51.6 the Relevant Termination Amount or Adjusted Estimated Fair Value of the Agreement (as the case may be) shall be paid:

51.5.1 in a lump sum on the expiry of 6 months from the Termination Date including interest at the appropriate Repayment Interest Rate from the Termination Date (so far as any such interest has not already taken into account or already paid); or

51.5.2 (unless the event giving rise to such payment was a breach of this Agreement under paragraph (b), (c) or (e) of the definition of Authority Default (and in the case of paragraphs (c) or (e) the event was in the control of the Authority (positive or negative),) provided that the assumption by the Authority of the Contractor’s rights and obligations under the Hedging Agreements or the other arrangements for the hedging of interest being put in place are to the satisfaction of the Senior Lender (acting reasonably) at the option of the Authority;

51.5.2.1 by way of monthly instalments in accordance with clause 51.7;

51.5.2.2 as a combination of a lump sum pursuant to clause 51.5.1 and instalments subject to such instalments being not less than an aggregate of per annum pursuant to clause 51.7.

51.6 For the avoidance of doubt, any element of the Relevant Termination Amount relating to redundancy payments for employees of the Contractor and amounts payable to Sub-Contractors under the Project Documents shall be payable in a lump sum on the Termination Date.

51.7 Where the Authority elects to pay any Relevant Termination Amount in instalments pursuant to clause 51.5 above:

174 51.7.1 the Authority shall serve a notice on the Contractor and the Senior Lender within 5 Business Days of the issue of the termination notice (served by the Authority or the Contractor as the case may be) indicating the same; and

51.7.2 the Contractor and (in relation to the Senior Debt only) Senior Lender shall by notice reply (to such notice under clause 51.7.1) indicating to the Authority within 5 Business Days of such election the amount of Junior Debt and of the Senior Debt with and without projected breakage costs of the Hedging Agreements; or

Where the Authority elects to pay the Adjusted Estimated Fair Value of the Agreement in instalments pursuant to clause 51.5 above:

51.7.3 the Authority shall serve a notice on the Contractor and the Senior Lender within 5 Business Days of the issue of the Termination Notice indicating the same; and

51.7.4 the Contractor and Senior Lender shall by notice reply (to such notice under clause 51.7.3) within 5 Business Days of such election indicating to the Authority the Repayment Interest Rate and relevant monthly instalments.

51.8 Not Used

51.9 Upon receipt of a notice issued in accordance with clause 51.7.2 or 51.7.4 above the Authority will on the dates on which the Contractor would have been required to repay principal and pay interest on the Senior Debt pay the Relevant Termination Amount in equal monthly instalments and pay interest thereon at the Repayment Interest Rate over the Debt Obligation Period.

51.10 Where the Authority:

51.10.1 has failed to pay in full any instalment due pursuant to the operation of clause 51.5 to clause 51.9 within 9 Business Days of receipt of a notice of failure to pay any instalment following the due date for payment thereof (as determined in accordance with the Financing Agreements);

51.10.2 has become the subject of any form of insolvency proceedings;

51.10.3 suffers any material adverse change in its financial condition or prospects such as in the reasonable opinion of the Senior Lender it might be reasonably expected not to be able to meet its payment obligations in their due dates;

175 51.10.4 is otherwise in material breach of its obligations to make payment of sums hereunder;

51.10.5 has served written notice on the Contractor and the Senior Lender electing to pay such compensation by way of lump sum

in each case the whole of the sums due by way of compensation and then unpaid shall become immediately due and payable together with all other reasonable and proper costs and expenses.

51.11 Interest will accrue on all sums payable under the clause 51 which are not paid on their due date at the Prescribed Rate.

52. TERMINATION ON EXPIRY OF SERVICE PERIOD52

52.1 On or before a date falling no later than 12 months prior to the Expiry Date, the Authority shall notify the Contractor in writing whether it wishes:

52.1.1 to retender the provision of the Services;

52.1.2 the Contractor to transfer all of its rights, title and interest in and to the Assets to the Authority or such other person or body as the Authority directs; or

52.2 If the Authority wishes to re-tender the provision of the Services then:

52.2.1 the retendering shall be carried out on the basis that the Authority will contract with a successor contractor to provide the new service on and from the Expiry Date; and

52.2.2 the Contractor shall do all necessary acts reasonably required of it (including entering into any contracts) to ensure that the successor contractor has obtained all of its rights, title and interest in and to the Assets with effect on and from the Expiry Date.

52.2.3 the Contractor shall take all reasonable steps and co-operate fully with the Authority and any successor contractor so that any continuation in the Service is achieved with the minimum of disruption and so as to prevent or mitigate any inconvenience or risk to health or safety of the employment of the Authority and members of public. The provisions of clauses 52.3 and 52.4 shall also apply in respect of the Contractor’s obligations set out in this clause 52.2.3.

176 52.3 Duty to Co-operate

During the final 12 months of the Agreement Period (where this expires by effluxion of time) or during the period of any notice of termination of this Agreement or of any of the Services, and in either case for a period of six months thereafter, the Contractor shall co-operate fully with the transfer of responsibility for the Services (or any of the Services) to any new contractor of such Services (“New Contractor”), and for the purposes of this clause 52.3 the meaning of the term “co-operate” shall include:

52.3.1 liaising with the Authority and/or any New Contractor, and providing reasonable assistance and advice concerning the Services and their transfer to the Authority or to such New Contractor;

52.3.2 allowing any such New Contractor access (at reasonable times and on reasonable notice) to the Facilities but not so as to interfere with or impede the provision of the Services; and

52.3.3 providing to the Authority and/or to any new Contractor all and any information concerning the Facilities and the Services which is required for the efficient transfer of responsibility for their performance.

52.4 Transfer of Responsibility

The Contractor shall use all reasonable endeavours so as to facilitate the smooth transfer of responsibility for the Services to the New Contractor or to the Authority, as the case may be, and the Contractor shall take no action at any time during the Service Period or thereafter which is calculated or intended, directly or indirectly, to prejudice or frustrate or make more difficult such transfer.

52.5 Surveys on termination

52.5.1 24 months prior to the Expiry Date, the Authority shall be entitled to carry out a survey of the Facility to assess whether it has been and is being maintained by or on behalf of the Contractor in accordance with its obligations under clause 15 (Maintenance).

52.5.2 The Authority shall notify the Contractor in writing a minimum of seven days in advance of the date it wishes to carry out the survey and provide details of all individuals, firms or companies that the Authority has retained to assist the Authority in the undertaking of the survey. The Authority shall consider in good faith any reasonable request by the Contractor for the

177 survey to be carried out on a different date if such request is made at least two days prior to the notified date and the Contractor (acting reasonably) is able to demonstrate that carrying out the survey on the notified date would materially prejudice the Contractor’s ability to provide the Services.

52.5.3 When carrying out the survey, the Authority shall use reasonable endeavours to minimise any disruption caused to the provision of the Services by or on behalf of the Contractor. The Contractor shall afford the Authority (free of charge) any reasonable assistance required by the Authority during the carrying out of the final survey. The cost of the final survey shall be borne by the Authority.

52.5.4 If the survey shows that the Contractor has not complied with or is not complying with its obligations under clause 15 (Maintenance), the Authority shall:

52.5.4.1 notify the Contractor of the rectification and/or maintenance work which is required to bring the condition of the Facility to the standard they would have been in if the Contractor had complied or was complying with its obligations under clause 15 (Maintenance); and

52.5.4.2 require the Contractor to carry out such work by no later than the date 12 months before the Expiry Date.

52.5.5 If and to the extent that the Contractor fails to carry out the necessary rectification and/or maintenance work under clause 52.5.4.2 above to the Authority’s reasonable satisfaction within the required period, the Authority shall:

52.5.5.1 notify the Contractor of its failure; and

52.5.5.2 shall deduct 20% from each payment of the Unitary Charge and pay such amount into an interest bearing account held in the name of the Authority (“the Retention Fund Account”).

52.5.6 If the Authority is not satisfied that the Contractor has complied with its obligations pursuant to clause 52.5.4.2 then not earlier than 12 months but not later than 6 months prior to the Expiry Date the Authority may carry out a further survey and the provisions of clauses 52.5.1 to 52.5.4 shall apply mutatis mutandis to such survey for the avoidance of doubt the time periods

178 referred to in clauses 52.5.1 to 52.5.4 for carrying out such surveys shall be halved.

52.5.7 If and to the extent that the Contractor carries out the necessary rectification and/or maintenance work to the Authority’s reasonable satisfaction within the specified period, the Authority shall reimburse the Contractor’s costs of so doing.

52.5.8 If, within 6 months of the notification referred to in clause 52.5.4.1 above, the Contractor has failed to carry out the necessary further rectification and/or maintenance work to the Authority’s reasonable satisfaction, the Authority shall be entitled to carry out itself, or procure, such rectification and/or maintenance work at the Contractor’s expense and shall be entitled to make withdrawals from the Retention Fund Account to pay for such work such withdrawals being subject to the issue of an appropriate VAT invoice to the Contractor and constituting reimbursement to the Authority for the cost of the works undertaken.

52.5.9 If:

52.5.9.1 all the rectification and/or maintenance work identified by the Authority has been carried out to the Authority’s reasonable satisfaction; and

52.5.9.2 all such work has been paid for by the Contractor

then the Authority shall pay any credit balance to the Contractor on the Retention Fund Account

179 PART IX - GENERAL

53. GOVERNORS AGREEMENT53

The Authority shall enter into a Governor’s Agreement in respect of arrangements for dealing with the delegated budget of the Community Learning Centre and the arrangements for use of the Community Learning Centre outside the School Day.

54. INDEMNITY54

54.1 The Contractor shall, subject to clauses 54.2, 54.7, 54.8 and 54.10 and be responsible for, indemnify and keep indemnified the Authority and any Authority Party on demand from and against, all liability for:

54.1.1 death or personal injury;

54.1.2 loss of or damage to property (other than the Facilities or the Equipment) (including property belonging to the Authority or for which it is responsible); and

54.1.3 third party actions, claims, demands, costs, charges and expenses (including the reasonable legal expenses),

which arises out of, or in consequence of, any wilful or negligent act or default relating to the design, construction, operation or the performance or non-performance by the Contractor of its obligations under this Agreement or any wilful or negligent act connected with the fulfilment of the Contractor’s obligations on the part of Operating Contractor or the Construction Contractor or any employee or agent of them.

Provided always that this indemnity is conditional on the Authority complying with the requirements of clause 55 below.

54.2 The Contractor shall not be obliged to indemnify the Authority pursuant to clause 30.3 or 54.1 nor shall the Contractor be obliged to indemnify the Authority under paragraphs 2.1.4 and 4.3.4 of Schedule 1A for:

54.2.1 any liability, injury, loss, damage, action, claim, demand, charge, cost and expense to the extent that the said liability, injury, loss, damage, action, claim, demand, charge, cost or expense is caused or contributed to by the negligence, wilful misconduct or default of the Authority or any Authority Party or by the breach by the Authority or any Authority Party of the

180 Authority’s obligations under any of the Project Documents to which the Authority is a party or by any Project Insured Risk or by any event which would have been a Project Insured Risk but which has become uninsurable;

54.2.2 any claim or claims in excess of:

54.2.2.1 in the case of an Insured Claim the Insured Claim Limit;

54.2.2.2 in the case of an Uninsured Claim the Uninsured Claim Limit

provided that the Insured Claim Limit and the Uninsured Claim Limit shall each apply in respect of an aggregation of all claims arising for indemnity in any 12 month period the first such period commencing on the date of this Agreement.

54.2.3 Any Indirect Loss

54.2.4 any loss, liability or claim not provided for under the terms of clause 54.1

54.2.5 any liability referred to in clauses 54.1.1 to 54.1.3 above which arises as a direct result of the Contractor acting on the instructions of the Authority;

54.2.6 any liability referred to in clauses 54.1.1 to 54.1.3 above arising out of the exercise of the Authority’s rights under clause 36 (Authority Step-in) other than where expressly borne by the Contractor under that clause.

54.3 The Authority shall, subject to clause 54.5, clause 54.9 and clause 54.10 be responsible for, and shall indemnify and keep indemnified the Contractor and any Contractor Party on demand from and against, all liability (including any excesses required to be satisfied by the Contractor in consequence of the terms of any policy of insurance) for:

54.3.1 death or personal injury;

54.3.2 loss or damage to property belonging to the Contractor or a Contractor Party including damage to the Facilities or the New Equipment arising within any period which is (for the relevant Zone) the subject of a Core Session at the time the damage occurs; and

54.3.3 third party actions, claims, demands, costs, charges and expenses (including the reasonable legal expenses),

181 which may arise out of or in consequence of any wilful or negligent act or default arising in connection with the performance or non-performance by the Authority of its obligations under this Agreement or in consequence of the wilful or negligent act or default of any Authority Party

54.4 Provided always that this indemnity is conditional on the Contractor complying with the requirements of clause 55 below.

54.5 The Authority shall not be responsible or be obliged to indemnify the Contractor pursuant to clause 54.3 for:

54.5.1 any liability, injury, loss, damage, action, claim, demand, charge, cost or expense to the extent that the said liability, injury, loss, damage, action, claim, demand, charge, cost or expense is caused or contributed to by the negligence, wilful misconduct or default of the Contractor or any Contractor Party or subject to clauses 14.6 and 14.8 by any person having at the relevant time the status of an Excluded Person; and

54.5.2 any Indirect Loss.

54.6 The Authority acknowledges that for the purposes of clause 54.5.2 only, the term “Indirect Loss” shall be deemed to exclude any deductibles or excesses applying to any policy of insurance maintained by the Contractor and/or any Contractor Party. Consequently, the indemnity given by the Authority pursuant to clause 54.3 will be deemed to be sufficiently broad so as to encompass any claims in respect of such insurance deductibles or excesses.

55.6A The Authority agrees that, notwithstanding the foregoing, any losses of the Contractor arising under the Construction Agreement and/or the Operating Agreement as originally executed or as amended in accordance with this Agreement which are not Indirect Losses shall not be excluded from such a claim solely by reason of this definition by reason of the definition of Indirect Loss

54.7 The Authority acknowledges and agrees that the Contractor shall be entitled to appropriate relief under the terms of this Agreement to the extent that it is unable to perform any of its obligations as a consequence of the financial limit in respect of any single claim specified in clause 54.2.2. In such circumstances, the Contractor shall be deemed to have performed the relevant obligation and the Authority shall not be entitled to exercise any remedies pursuant to the terms of this Agreement or otherwise as a consequence of such non-performance.

182 54.8 An indemnity by either Party under any provision of this Agreement shall be without limitation to any indemnity by that Party under any other provision of this Agreement.

54.9 General Duty to Mitigate

Notwithstanding the provisions of this clause 54 both Parties shall be under a general duty to mitigate all injury, losses, damage, actions, claims, demands, costs, charges or expenses which arise out of or in connection with the performance or non- performance of that party’s obligations under this Agreement in respect of which that party claims any indemnity under this clause 54.

54.10 [NOT USED]

54.11 The Contractor and/or the Operating Contractor shall be entitled to clear each Zone of Relevant Users outside Core Sessions (as defined in Schedule 4 (Payment Mechanism)) unless such persons are Designated Personnel (as defined in Schedule 4 (Payment Mechanism)).

55. CONDUCT AND CONTROL OF CLAIMS55

55.1 In this clause 55:

“Beneficiary” means, in relation to an indemnity, the person receiving the benefit of the indemnity;

“ Claim” includes a claim by any person (including a trade union or Relevant Authority); and

“ Covenantor” means in relation to an indemnity, warranty, representation or undertaking given in this Agreement the person giving the indemnity, to the Beneficiary.

55.2 If the Beneficiary becomes aware of any matter which might give rise to a claim for an indemnity, from the Covenantor, subject to the requirements of the insurers the following provisions shall apply:

55.2.1 the Beneficiary shall as soon as reasonably practicable give written notice to the Covenantor of the matter in respect of which the indemnity, is being claimed (stating in reasonable detail the nature of the matter and, so far as practicable, the amount claimed) and shall consult with the Covenantor with respect to the matter. If the matter has become the subject of any

183 proceedings the Beneficiary shall (so far as it is able) give the notice within sufficient time to enable the Covenantor to contest the proceedings before any first instance judgement in respect of such proceedings is given;

55.2.2 the Beneficiary shall:

55.2.2.1 take such action and institute such proceedings and give such information and assistance, as the Covenantor or its insurers may reasonably request to dispute, resist, appeal, compromise, defend, remedy or mitigate the matter or enforce against any person (other than the Covenantor) the rights of the Beneficiary or its insurers in relation to the matter; or

55.2.2.2 in connection with any proceedings related to the matter (other than against the Covenantor) use professional advisers nominated by the Covenantor or its insurers and, if the Covenantor or its insurers so request, allow the Covenantor or its insurers the exclusive conduct of the proceedings in each case on the basis that the Covenantor shall fully consult with the Beneficiary and keep the Beneficiary fully informed and the Covenantor shall fully indemnify the Beneficiary for all costs incurred as a result of any such request or nomination by the Covenantor or its insurers; and

55.2.2.3 not admit liability in respect of or settle the matter without the prior written consent of the Covenantor, such consent not to be unreasonably withheld or delayed.

55.2.3 If the Covenantor has notice of any actual or potential Claim it shall inform the Beneficiary and in the Contractor’s conduct of any litigation and negotiations in connection with a Claim, the Covenantor shall promptly take all proper action to deal with the Claim so as not, by any act or omission in connection with the Claim to cause the Beneficiary’s interests to be materially prejudiced.

55.2.4 If the Covenantor does not elect to have conduct of any litigation and negotiations in connection with a Claim by notice in writing to the Beneficiary within seven days of the Beneficiary giving notice of the matter which might give rise to a Claim for an indemnity the Beneficiary shall be at liberty to take such action in relation to that matter as it considers expedient.

184 56. SET OFF AND INTEREST ON LATE PAYMENTS56

56.1 Subject to clause 51.2 (Set-Off on Termination) the Contractor shall not be entitled to retain or set off any amount due to the Authority by it, but the Authority may retain or set off any amount owed to it by the Contractor under this Agreement which has fallen due and payable against any amount due to the Contractor under this Agreement.

56.2 If the payment or deduction of any amount referred to in clause 56.1 above is disputed then any undisputed element of that amount shall be paid and the disputed element shall be dealt with in accordance with clause 63 (Dispute Resolution).

56.3 The Parties will pay interest on any amount payable under this Agreement not paid on the due date, from the period from that date to the date of payment at a rate equal to 4% above the base lending rate of the Royal Bank of Scotland as varied from time to time calculated on a daily basis and compounded quarterly (the “Prescribed Rate”).

56.4 Interest Rate.

For the avoidance of doubt, the Parties agree that this right to interest together with the rights of termination of this Agreement by the Contractor in the event of non- payment by the Authority together with the consequent rights to compensation constitute a substantial remedy for late payment by the Authority which is fair and reasonable in all the circumstances.

57. CHANGE IN OWNERSHIP OF THE CONTRACTOR AND PROPOSED SHARE TRANSFERS TO A RESTRICTED PERSON 57

57.1 The Contractor warrants to the Authority that the direct legal interest in the issued share capital of the Contractor at the Commencement Date is held as set out in Schedule 9.

57.2 Change of Ownership

57.2.1 Up to 6 months following the Phase 2 Construction Works Completion Date the Contractor shall not effect any change in the direct legal ownership of the Contractor (save for any creation, transfer or enforcement of the Senior Lenders’ security) without the prior written consent of the Authority; and

185 57.2.2 at any time during the term of this Agreement the Contractor shall notify the Authority at least 10 Business Days in advance of any proposed change in the direct legal ownership and any such notification shall include any information which the Authority may reasonably require (and which the Contractor is reasonably able to provide) relating to any person who from time to time proposes to acquire a direct legal interest in the Contractor;

57.2.3 notwithstanding any other provision in this clause 57 any such changes in the legal or beneficial ownership of the Contractor shall be prohibited if the person who proposes to acquire the legal or beneficial interest is a Restricted Person.

57.3 For the purposes of clause 57.1.2 above:

57.3.1 in the event that the Contractor is listed on the full list of the London Stock Exchange or any other recognised investment exchange any change in the beneficial or legal ownership of any shares of the Contractor arising from any subscription, placing, rights issue, open offer, (vendor placing), capitalisation, issue for cash, bond issue or intermediaries offer transfer by way of sale, gift or transmission on death or bankruptcy; or

57.3.2 any change in the beneficial or legal ownership of the Contractor within or between the Senior Lenders, the shareholders of the Contractor or any Associated Company of the shareholders of the Contractor or pursuant to the exercise of the rights of the Senior Lender in respect of shares in the Contractor granted in any document conferring security over any shares in the Contractor;

shall be disregarded.

58. REFINANCING58

58.1 There shall be no restriction on the ability of the Contractor to terminate, amend, waive or exercise its rights under the Financing Agreements in order to carry out a Rescue Refinancing.

58.2 Not less than 20 Business Days prior to entering into any proposed Refinancing the Contractor shall serve notice of such Refinancing on the Authority and shall provide information, material to the Authority, relating to the proposed Refinancing. The Contractor must obtain the consent of the Authority (not to be unreasonably withheld or delayed) to any proposed Refinancing that increases Senior Debt to more than

186 110% of Senior Debt shown in the Financial Model at the date of the proposed Refinancing. No such consent is required for increases below 110%.

58.3 The information referred to in clause 58.2 shall include a forecast of the financial effect of the Refinancing. Such forecast shall be included within a revised financial model, which will contain the revised financial arrangement for the Contractor, the resultant IRR results and all anticipated costs resulting from the Refinancing (“Post Refinancing Model”). There will be no revisions in the Post Refinancing Model not directly caused by the Refinancing.

The following information shall be included within the Post Refinancing Model:

58.3.1 the costs of refinancing including swap breakages, taxes and other financing costs;

58.3.2 the costs of undertaking the Refinancing including due diligence, legal, advisory, and other associated fees, together with the estimated costs of the Authority;

58.3.3 new base case assumptions as to the future debt repayment terms inclusive of interest;

58.3.4 historic payments and receipts of Junior Debt and equity inclusive of interest and dividends paid up to the date of the proposed Refinancing;

58.3.5 anticipated future cash flows to the Shareholders;

58.3.6 the forecast IRRs, as set out in the same form on the summary page of the Financial Model and as calculated therein expressed as returns over the full Contract Period including the pre and post refinancing periods.

58.4 The contractor shall submit the Post Refinancing Model to the Authority together with any replacement Direct Agreement to be entered into by the Authority and the Replacement Financier. Such replacement Direct Agreement shall unless otherwise agreed by the Authority be on the same terms mutatis mutandis as those contained in the Direct Agreement.

58.5 Whether or not the Refinancing is completed, the Contractor shall reimburse to the Authority all external advisory costs and expenses properly and reasonably incurred by the Authority to the extent that the Contractor has previously approved estimates of such costs and expenses (such approval not to be unreasonably withheld or delayed).

187 58.6 The Post Refinancing Model will be used as a base from which to calculate any financial benefits which may arise form the Refinancing. The benefits therein will be expressed as the difference in the projected cash payments of return that are assumed to be paid to the Shareholders in the Post Refinancing Model (and reflected by the revised Shareholder Return shown) as opposed to those which would have arisen in the Financial Model prior to Refinancing (the “Pre-Refinancing Model”), this stream of projected cash payment differences being defined as the “Assumed Refinancing Benefit”.

58.7 The analysis provided by the Contractor under clause 58.6 will either show the Assumed Refinancing Benefit as an increased payment assumed to be paid to the Shareholders within 10 Business Days following completion of the Refinancing or alternatively as an additional assumed distribution payment assumed to be paid on a semi annual or annual basis during the remaining term of the Agreement. The former will apply in the case of a refinancing by way of Regearing.

58.8 Whilst the Post Refinancing Financial Model will show all post refinancing equity returns as payable to the Shareholders and the analysis provided by the Contractor under clause 58.6 will show the amounts of the Assumed Refinancing Benefit, this Assumed Refinancing Benefit (if any) is to be apportioned by the Contractor between the Authority and the Shareholders so as to provide the following amounts for the Authority, subject to clause 58.10:

58.8.1 25% of the Assumed Refinancing Benefit up to the amount of Assumed Refinancing Benefit that would generate a Shareholder Return of up to 50%; and

58.8.2 50% of the Assumed Refinancing Benefit that generates a Shareholder Return greater than 50%.

58.9 Upon completion of the Refinancing the Contractor will provide final confirmation of any matters referred to in clause 58.3.

58.10 Upon or immediately following completion of the Refinancing the Contractor will finalise refinancing benefits payable to the Authority and the Shareholders in the proportions noted in clause 58.8. The Assumed Refinancing Benefit as calculated in accordance with clause 58.6 will be shown and adjusted, if required annually, to an amount(s) expressed to be to be the actual refinancing benefit (the “Actual Refinancing Benefit”) which will be calculated and paid by the Contractor to take into account:

188 58.10.1 the final terms of the Refinancing concluded in accordance with clauses 58.3 and 58.9 and in particular the reimbursement to the Authority and to the Shareholders of all costs and expenses actually incurred in accordance with clause 58.3 and 58.5;

58.10.2 all taxes payable, which will be retained by the Contractor until due; and

58.10.3 the actual and confirmed receipt of funds arising as a result of the Refinancing;

The Contractor shall apportion those sums as noted in clause 58.8 and pay the Actual Refinancing Benefits to the Authority and the Shareholders in this ratio on the basis set out in clause 58.7.

58.11 The parties shall have the right to refer any dispute arising under this clause to the Dispute Resolution Procedure set out in clause 63.

59. ASSIGNMENT AND SUB-CONTRACTING59

59.1 Restriction on the Authority

Save as provided in the Senior Lender’s Direct Agreement and as required for the purpose of implementing any proposal by the Contractor to refinance all or any part of the Senior Debt or the Junior Debt the Authority shall not give, bargain, sell, assign, underlet or charge this Agreement or the benefits or obligations arising under or in respect of it without the prior consent in writing of the Contractor (but nothing in this Agreement shall restrict any assignment or delegation of this Agreement by the Authority which may result from any statutory scheme for reorganisation of local government).

59.2 Restriction on the Contractor

Save as provided in the Senior Lender’s Direct Agreement and as regard for the purposes of implementing any proposal by the Contractor to refinance all or any part of the Senior Debt or the Junior Debt the Contractor shall not give, bargain, sell, assign, underlet, charge, or otherwise deal in any way with the benefit of this Agreement in whole or in part except with the prior written consent of the Authority (which the Authority may in its absolute discretion refuse).

189 59.3 Exceptions

59.3.1 The Contractor may assign by way of security or charge the benefit of this Agreement to any Senior Lender and/or to any agent or trustee of any Senior Lender and upon completion of such assignment or charge the Contractor shall supply free of charge a true and certified complete copy thereof to the Authority.

59.3.2 Subject to Paragraph 4.5 of Schedule 1A (Collateral Warranty) nothing in this Agreement shall prohibit the Contractor from providing or procuring the provision of the Works or the Services from a new Sub-Contractor of sound financial standing, technical ability and good repute and whose identity has been notified to the Authority by the Contractor and approved by the Authority in writing prior to the appointment of such new Sub-Contractor (such approval not to be unreasonably withheld or delayed) provided also that the Contractor shall remain primarily liable for the Contractor’s obligations under this Agreement. The Authority shall have the right to require the Contractor to submit such information as the Authority shall reasonably require concerning the financial standing, technical ability and good repute of the Sub-Contractor.

59.4 Contractor’s obligations

The Contractor shall perform its obligations under and observe all the terms of any subcontract.

59.5 Subcontractors

Nothing in this Agreement shall prohibit or prevent any Sub-Contractor employed by the Contractor from being employed by the Authority at any establishments of the Authority.

60. STATUTORY RESPONSIBILITIES60

Notwithstanding anything apparently to the contrary in this Agreement:

60.1 in carrying out its statutory duties (including without limitation, planning authority and highways authority), the powers, duties rights and obligations of the Authority shall not be fettered or otherwise affected by the terms of this Agreement;

190 60.2 nothing in this Agreement shall relieve the Contractor from the necessity of obtaining any Approval or Consent from the Authority acting in any of its statutory capacities.

61. INFORMATION AND CONFIDENTIALITY61

The Parties shall keep confidential all matters relating to this Agreement and Project Documents and shall use all reasonable endeavours to prevent their employees and agents from making any disclosure to any person of any matter relating to this Assignment.

61.1 clause 61. shall not apply to:

61.1.1 any disclosure of information that is reasonably required by persons engaged in the performance of its obligations under the Agreement;

61.1.2 any matter which a party can demonstrate is already generally available and in the public domain otherwise than as a result of a breach of this clause;

61.1.3 any disclosure to enable a determination to be made under clause 63 (Dispute Resolution);

61.1.4 any disclosure which is required by any law (including any order of a court of competent jurisdiction) or the rules of any stock exchange or governmental or regulatory authority having the force of law;

61.1.5 any disclosure of information which is already lawfully in the possession of the receiving party, prior to its disclosure by the disclosing party;

61.1.6 any disclosure of information to the Senior Lender or the Senior Lender professional advisers or insurance advisers or other duly appointed advisers, where it is proposed that a person should or may provide funds or other financial benefit (whether directly or indirectly and whether by loan, equity participation or otherwise) to the Contractor to enable it to carry out its obligations under the Agreement, to that person but only to the extent reasonably necessary to enable a decision to be taken on the proposal;

61.1.7 any disclosure by the Authority of information relating to the design, construction, operation and maintenance of the Project and such other information as may be reasonably required for the purpose of conducting a due diligence exercise to:

191 61.1.7.1 any proposed new contractor, its advisers and Lender, should the Authority decide to retender the Contract; or

61.1.7.2 any person in connection with clause 23 (Benchmarking and Market Testing).

61.1.8 any registration or recording of the Consents and property registration required;

61.1.9 any disclosure of information by the Authority to any other department, office or agency of the Government;

61.1.10 any disclosure by the Authority of any document or part thereof related to the Agreement to which it is a party and which the Contractor (acting reasonably) has agreed with the Authority contains no Commercially Sensitive Information; and

61.1.11 any disclosure for the purpose of:

61.1.11.1 the examination and certification of the Authority’s or the Contractor’s accounts; or

61.1.11.2 any examination pursuant to section 6(1) of the National Audit Act 1983 of the economy, efficiency and effectiveness with which the Authority has used its resources.

61.2 Where disclosure is permitted under clause 61.2, other than clause 61.4, 61.6, 61.8, 61.10 and 61.11 the recipient of the information shall be subject to the same obligation of confidentiality as that contained in this Agreement.

61.3 For the purposes of the Audit Commission Act 1998, the Authority’s Auditor may examine such documents as he may reasonably require which are owned, held or otherwise within the control of the Contractor and any Sub-Contractor and may require the Contractor and any Sub-Contractor to produce such oral or written explanations as he considers necessary. For the avoidance of doubt it is hereby declared that the carrying out of an examination under Audit Commission Act 1998 and all relevant legislation thereto in relation to the Contractor is not a function exercisable under this Agreement.

61.4 The provisions and obligations set out in this clause shall survive and remain in force upon and following the termination of this Agreement.

192 61.5 The Contractor shall not make use of the Agreement or any information issued or provided by or on behalf of the Authority in connection with the Agreement otherwise than for the purpose of the Agreement, except with the written consent of the Authority, such consent not to be unreasonably withheld.

61.6 Where the Contractor, in carrying out its obligations under the Agreement, is provided with information from or by a third party, the Contractor shall not disclose or make use of any such information otherwise than for the purpose for which it was provided, unless the Contractor has sought the prior written consent of that third party, and has obtained the prior written consent of the Authority, such consent not to be unreasonably withheld.

61.7 On or before the Expiry Date, the Contractor shall ensure that all documents or computer records in its possession, custody or control, which contain information relating to Staff and/or Relevant Users including any documents in the possession, custody or control of a Sub-Contractor, are delivered up to the Authority, and the Authority is entitled to make such reasonable checks and enquiries as are necessary to ensure that all records have been so delivered up.

62. PUBLIC RELATIONS AND PUBLICITY62

62.1 The Contractor shall not by itself, its employees or agents and procure that its Sub-Contractors shall not communicate with representatives of the press, television, radio or other communications media on any matter concerning the Agreement without the prior written approval of the Authority, such consent not to be unreasonably withheld.

62.2 No facilities to photograph or film in or upon any property used in relation to the Project shall be given or permitted by the Contractor unless the Authority has given its prior written approval, such consent not to be unreasonably withheld.

63. DISPUTE RESOLUTION 63

63.1 All claims and disputes arising out of or in connection with this Agreement (“a Dispute”) shall be resolved in accordance with this clause.

63.2 Resolution of Disputes by bona fide discussion

63.2.1 The Parties shall each use reasonable endeavours to resolve any Dispute by means of prompt, bona fide discussion at a managerial level appropriate to the Dispute in question.

193 63.2.2 If within five working days of written notice from either party to the other requiring negotiation under this clause the dispute has not been resolved, either party may by written notice to the other require the dispute to be referred to mediation or adjudication.

63.2.3 Discussion under this clause shall not be a pre-condition to the commencement of any other dispute resolution procedure (including litigation) (a “Dispute Procedure”).

63.2.4 No Dispute shall be finally resolved by operation of this clause until the settlement terms have been reduced into writing and signed by a duly authorised representative of each party

63.3 Alternative Dispute Resolution

63.3.1 Mediation

63.3.1.1 Subject to clause 63.3.2, the parties may (whether or not they have applied the provisions of clause 63.2) refer any Dispute to mediation under the supervision of CEDR* in accordance with this clause 63.3 (“Mediation”).

63.3.1.2 Mediation shall commence by either Party serving on the other written notice to mediate pursuant to this clause 63.3.1 (a “Notice to Mediate”) which notice shall set out in summary form the dispute which it seeks to refer to Mediation.

63.3.1.3 Mediation shall be conducted using a sole mediator (the “Mediator”) (such expression not to exclude the presence of a pupil or co-mediator at no additional fee) in or substantially in accordance with CEDR’s Model Mediation Procedure for the time being in use. The Mediator shall be a CEDR registered mediator agreed between the Parties, or in default of agreement within ten (10) Working Days of the date of Notice to Mediate served pursuant to clause 63.3.1.2, appointed by CEDR.

63.3.1.4 The Parties agree to co-operate fully, promptly and in good faith with CEDR and the Mediator in the performance of their obligations under this clause 63.3.1 including the doing of all such acts and the signing of such mediation agreement and all

194 such other documents as CEDR or the Mediator may reasonably require to give effect hereto.

63.3.1.5 Unless agreed otherwise in any Mediation each Party shall pay an equal proportion of the fees and expenses of CEDR and the mediator, and shall otherwise bear its own costs of such Mediation.

63.3.1.6 If and to the extent that the Parties do not resolve any Dispute or any issue therein following the application of this clause 63.3.1 either Party shall be at liberty to commence any other Dispute Procedure in respect thereof subject to the terms of this clause 63.

63.3.2 Exceptions to Mediation

63.3.2.1 The following Disputes shall not be referred to mediation, namely those:

(a) which under any term of clause 63.4 of this Agreement the Parties are obliged to refer to Adjudication;

(b) which under the terms of this Agreement or any rule of law the Parties must refer to any court or arbitral or other tribunal;

(c) in which either party, acting in good faith, either:

(A) claims the payment of a specified sum (but only if and so long as there is no arguable defence to the making of such payment) or (B) seeks the grant of an interim or final injunction.

63.4 Adjudication

63.4.1 This clause 63.4 applies to Construction Disputes. A “Construction Dispute” is any Dispute which:

63.4.1.1 the parties or either of them have a right or are obliged to refer to adjudication, whether:

(a) under any term of this Agreement; or

195 (b) under the Housing Grants, Construction and Regeneration Act 1996 section 108 (“the Construction Act”); or

(c) under any other rule of law; or

63.4.1.2 but for the Construction Contracts (England and Wales) Exclusion Order 1998 would be a Dispute to which the Construction Act applied; or

63.4.1.3 involves any dispute between any sub-contractor to the Contractor which is amenable to adjudication under the Construction Act.

The Parties or either of them shall have the notice right to give at any time of their intention to refer a Construction Dispute to Adjudication. All Construction Disputes shall be referred to adjudication by a single Adjudicator on the following terms of this clause.

63.4.2 The Adjudicator shall be appointed on a strictly rotational basis from a panel of adjudicators appointed in accordance with the following:

63.4.2.1 All the adjudicators on the panel shall be wholly independent of the Contractor, the Authority, the relevant Sub-Contractor and any of the major competitors of the Contractor or relevant Sub- Contractor;

63.4.2.2 There shall be five adjudicators all of whom shall be appointed jointly by the Contractor and the Authority. Such appointments shall take place within 28 days of the date of this Agreement;

63.4.2.3 If any member of a panel resigns during the term of this Agreement, a replacement adjudicator shall be appointed by the Contractor and the Authority as soon as practicable;

63.4.2.4 If the Authority and the Contractor are unable to agree on the identity of any adjudicator at any time the President for the time being of the Chartered Institute of Arbitrators shall appoint the same within 14 days of any application for such appointment by either party;

63.4.3 the following procedure shall govern all adjudications pursuant to this Agreement:

196 63.4.3.1 the Adjudicator shall be appointed and the dispute shall be referred to him within 7 days of the giving of the notice to refer a Construction Dispute to Arbitration.

63.4.3.2 Within 7 days of appointment in relation to a particular dispute, the Adjudicator shall require the parties to submit in writing their respective arguments. The Adjudicator shall, in his absolute discretion, consider whether a hearing is necessary in order to resolve the Dispute.

63.4.3.3 In any event, the Adjudicator shall provide to all parties his written decision on the Dispute, within 28 days of appointment (or such other period as the parties may agree after the reference, or 42 days from the date of reference if the party which referred the dispute agrees). The Adjudicator shall state the reasons for his decision. Unless and until revised, cancelled or varied by the Court pursuant to clause 63.4.7, the Adjudicator’s decision shall be binding on both parties who shall forthwith give effect to the decision. The Adjudicator shall, at the same time as providing his written decision to the parties, give to any party which was initially joined in the adjudication but was subsequently released from it written notice that he has provided his decision to the continuing parties.

63.4.3.4 The Adjudicator’s costs of any reference shall be borne as the Adjudicator shall specify or, in default, equally by the parties. Each party shall bear its own costs arising out of the reference, including legal costs and the costs and expenses of any witnesses save that if the Adjudicator decides that any party either:

(a) should not have been joined as a party to the adjudication at all; or

(b) was properly joined, but should in all the circumstances which happened have been released before the publication of the Adjudicator’s decision;

the Adjudicator shall have power to decide whether or not all or a part of that party’s own costs should be paid by any other party or parties. Any party or former party to an adjudication

197 shall have the right to make written application to the Adjudicator for an award of costs at any time before the expiry of 28 days from the date that the Adjudicator provided his decision or notice of his decision pursuant to clause 63.4.3.2. The adjudication will proceed as if it had been an original adjudication of a Dispute under this clause 63.4. and the Adjudicator shall have the power to decide:

(a) whether any costs are to be paid, and if so, whether the whole of any costs or a proportion thereof;

(b) by which party or parties to which other party or parties, and where more than one, in what proportions;

(c) the amount of any such costs.

Any decision of the Adjudicator in relation to the costs of a former party pursuant to this clause shall be final and binding.

63.4.3.5 The Adjudicator shall act as adjudicator and not as arbitrator or expert and the provisions of the Arbitration Act 1996 and the law relating to arbitration, and the law relating to expert determination shall not apply to the Adjudicator or his decision or the procedure by which he reached his decision.

63.4.3.6 The Adjudicator shall act impartially and may take the initiative in ascertaining the facts and the law. The Adjudicator shall have the power to open up, review and revise any opinion, certificate, instruction, determination or decision of whatever nature previously given or made under this Agreement.

63.4.4 Without prejudice to any rule of law or procedure requiring the subsequent disclosure of any document or information in any proceedings before any court or arbitrator, all information, data and documentation disclosed or delivered by a party to the Adjudicator in consequence of or in connection with his appointment as Adjudicator shall be treated as confidential. The Adjudicator shall not, save as permitted by clause 61.1.3 (Confidential Information) disclose to any person or company any such information, data or documentation and all such information, data or documentation shall remain the property of the party disclosing or delivering the same and all

198 copies shall be returned to such party on completion of the Adjudicator’s work.

63.4.5 The Adjudicator is not liable for anything done or omitted in the discharge or purported discharge of his functions as Adjudicator unless the act or omission is in bad faith. Any employee or agent of the Adjudicator is similarly protected from liability;

63.4.6 If and to the extent that any adjudication conducted under this clause is an adjudication brought in reliance upon clause 63.4.1.2 and if and to the extent that the adjudication procedure set out in this clause 63.4 fails to comply with the Construction Act and the Adjudication Scheme made under the Construction Act (“the Scheme”) the said adjudication procedure shall be amended so as to comply with the Construction Act and the Scheme.

63.4.7 Any decision of an Adjudicator shall be enforceable forthwith upon publication. No Adjudicator’s decision shall become final until the expiry of 56 days after its publication. Any party which is dissatisfied with or otherwise wishes to challenge the Adjudicator’s decision may within 56 days of publication commence court proceedings in relation to the Dispute.

63.5 The Parties shall continue to comply with, observe and perform all their obligations hereunder regardless of the nature of the Dispute and notwithstanding the referral of the dispute for resolution under this clause 63 and shall give effect forthwith to every decision of the Adjudicator and the court delivered under this clause.

63.6 If any Dispute raises issues which relate to:

63.6.1 Any dispute between the Contractor and the Construction Contractor arising under the Construction Contract or which otherwise affects the relationship or rights of the Contractor and/or the Construction Contractor and/or any subcontractor to the Construction Contractor under the Construction Contract (“the Construction Contract Dispute”); or

63.6.2 Any dispute between the Contractor and the Operating Contractor arising under the Operating Contract or otherwise affects the relationship or rights of the Contractor and/or the Operating Contractor and/or any subcontractor to the Operating Contractor under the Operating Contract (“the Operating Contract Dispute”);

199 then the Construction Contractor or the Operating Contractor and any sub-contractor to the Construction Contractor or the Operating Contractor as appropriate may be joined as a party to any negotiations, mediation, adjudication or proceedings under this clause.

63.7 The Contractor undertakes to contract with the Construction Contractor and the Operating Contractor in like terms (mutatis mutandis) to this clause 63 and to require the Construction Contractor and the Operating Contractor to contract in like terms to this clause 63 (mutatis mutandis) with any sub-contractor

63.8 Any time limits applicable to the Contractor shall apply equally to the Construction Contractor and the Operating Contractor and their sub contractors or shall be as near thereto as the parties may agree or any mediator, adjudicator or court may determine so as to be consistent with fairness, proportionality, economy and the needs of justice.

63.9 Where the Construction Contractor or the Operating Contractor or any sub-contractor to either of them makes submissions in any reference before any Adjudicator or Mediator the Adjudicator or Mediator’s costs of such reference shall be borne equally unless the parties otherwise agree or, in the case of an Adjudication, the Adjudicator otherwise directs.

63.10 The Contractor shall not allow the Construction Contractor or the Operating Contractor access to any document relevant to the issues in dispute between the Authority and the Contractor save where:

63.10.1 The document is relevant also to the issues relating to the Construction Contract Dispute or the Operating Contract Dispute as the case may be; and

63.10.2 The Contractor has first delivered to the Authority a written undertaking from the Construction Contractor and/or the Operating Contractor (as appropriate) addressed to the Authority that they shall not use any such document otherwise than for the purpose of the dispute resolution proceedings under this Agreement and that they shall not disclose such documents or any information contained therein to any third party other than the Mediator or Adjudicator or any professional adviser engaged by the Construction Contractor or the Operating Contractor (as appropriate) to advise in connection with the Dispute.

200 64. WAIVER64

64.1 No condition, term or other provisions of this Agreement shall be considered as waived by either Party to this Agreement unless a waiver is expressly given in writing by that Party.

64.2 No waiver under clause 64.1 shall be a waiver of a past or future default or breach, nor shall it amend, delete or add to the terms, conditions or provisions of this Agreement unless (and then only to the extent) expressly stated in that waiver.

65. SEVERABILITY65

If at any time any clause or part of this Agreement is found by any court, tribunal or administrative body of competent jurisdiction to be wholly or partly illegal, invalid or unenforceable in any respect:

65.1 that shall not affect or impair the legality, validity or enforceability of any other provision of this Agreement except where it deprives one of the Parties of a substantial part of the benefit intended to be derived by it from this Agreement without providing any corresponding benefit;

65.2 the Parties shall in good faith amend this Agreement to reflect as nearly as possible the spirit and intention behind that illegal, invalid or unenforceable provision to the extent that such spirit and intention is consistent with the laws of that jurisdiction and so that the amended clause complies with the laws of that jurisdiction; and

65.3 if the Parties cannot agree upon the terms of any amendment or novation within six months of the date upon which a clause or any part of a clause was determined to be wholly or partly illegal, invalid or unenforceable by any court, tribunal or administrative body then the dispute will be determined in accordance with clause 63 (Dispute Resolution).

66. COUNTERPARTS66

This Agreement may be executed in any number of counterparts, all of which when taken together shall constitute one and the same instrument.

67. SUCCESSORS67

This Agreement shall be binding upon and shall enure to the benefit of each Party’s permitted successors and assigns.

201 68. RELATIONSHIP OF PARTIES68

Each of the Parties is an independent contractor and nothing contained in this Agreement shall be construed to imply that there is any relationship between the Parties of partnership or (except as expressly provided in this Agreement) of principal/agent or of employer/employee nor are the Parties engaging in a joint venture through participation in the Project. The Contractor shall not have any right or authority to act on behalf of the Authority nor to bind the Authority by contract or otherwise, and the Authority shall not have any right or authority to act on behalf of the Contractor nor save to the effect contemplated in this Agreement to bind the Contractor by contract or otherwise.

69. NOTICES69

69.1 Form of Notice

Any demand, notice or other communication given in connection with or required by this Agreement shall be made in writing (entirely in the English language) and shall be delivered to, or sent by pre-paid first class post to, the recipient at its registered office or its address stated in this Agreement (or such other address as may be notified in writing from time to time) or sent by facsimile transmission to the recipient, in the case of the Authority to facsimile 0191 553 1033 and in the case of the Contractor to facsimile number 01920 832 832 (or such other number as may be notified in writing from time to time) and unless otherwise expressly stated in this Agreement marked for the attention of the Project Director in the case of the Authority, and the Company Secretary in the case of the Contractor.

69.2 Service

Any such demand, notice or communication shall be deemed to have been duly served:

69.2.1 if delivered by hand, when left at the proper address for service;

69.2.2 if given or made by prepaid first class post, two Business Days after being posted; or

69.2.3 if sent by facsimile, upon Completion of the day of transmission provided that a confirmatory copy is on the same day that the facsimile is transmitted, sent by pre-paid first class post in the manner provided for in this clause 69.2.2;

202 provided in each case that if the time of such deemed service is either after 4.00 pm on a Business Day or on a day other than a Business Day service shall be deemed to occur instead at 10.00 am on the next following Business Day.

70. ENTIRE AGREEMENT70

This Agreement and all documents referred to herein set forth the entire agreement between the Parties with respect to the subject matter covered by them and supersede and replace all prior communications, representations (other than fraudulent representations), warranties, stipulations, undertakings and agreements whether oral or written between the Parties. Save as expressly provided herein each party acknowledges that it does not enter into this Agreement in reliance on any warranty, representation or undertaking other than those contained or referred to in this Agreement, and that its only remedies are subject always to the provisions of clause 5.5 for breach of contract provided that this shall not exclude any liability which either party would otherwise have to the other party in respect of any statements made fraudulently by or on behalf of the other party prior to the date of this Agreement.

71. RELEVANT DISCHARGE TERMS71

The Relevant Discharge Terms set out in Part 2 of Schedule 11 (Relevant Discharge Terms) shall apply in the circumstances set out therein.

72. AMENDMENTS72

No amendment to or modification of this Agreement shall be valid or binding on any Party unless it is made by deed, refers expressly to this Agreement and is executed by the Party concerned or its duly authorised representative.

73. MALADMINISTRATION73

By virtue of the Local Government Act 1974, a Local Ombudsman (as defined in that Act) may investigate a complaint made by or on behalf of a member of the public who claims to have sustained injustice in consequence of maladministration in connection with action taken by or on behalf of the Authority. By virtue of section 5 of the Local Government and Housing Act 1989, the Authority have a duty to designate one of their officers as “monitoring officer” to advise the Authority on illegality and maladministration. The Contractor shall co-operate fully with both the Local Ombudsman and the monitoring officer in the investigation of a complaint concerning any act or omission by the contractor on behalf of the Authority. The

203 Contractor shall bear the cost of any payment to any individual whom the Local Ombudsman or the monitoring officer considers has sustained injustice as a result of maladministration by the Contractor when acting on the Authority’s behalf, if the Authority decides to accept the decision of the Local Ombudsman or if the Local Ombudsman has indicated that he/she is prepared to accept a local settlement of the Complaint.

73.1 CONTRACTS (Rights OF Third Parties) Act 1999

Save as provided in the Financing Agreements a person who is not a Party to this Agreement has no rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Agreement but this does not affect any right or remedy of a third party which exists or is available apart from such Act.

73.2 Law OF Contract and Jurisdiction

The Agreement shall be governed by the laws of England and Wales and subject to clause 63 (Dispute Resolution), the Parties submit to the exclusive jurisdiction of the courts of England and Wales.

74. EMU CONTINUITY OF CONTRACT74

74.1 The Parties to this Agreement confirm that the occurrence or non-occurrence of an event associated with economic and monetary union in the European Union will not have the effect of altering any term of, or discharging or excusing performance under this Agreement or any transaction, or give a party the right unilaterally to alter or terminate the Agreement or any transaction. The words “an event associated with economic and monetary union in the European Union” shall include without limitation each and any combination of the following:

74.1.1 the introduction of, changeover to or operation of a single or unified European currency (whether known as the Euro or otherwise);

74.1.2 the fixing of conversion rates between a member state’s currency and the new currency or between the currencies of member states;

74.1.3 the substitution of that new currency for the ECU as the unit of account of the European Union;

74.1.4 the introduction of that new currency as lawful currency in a member state;

204 74.1.5 the withdrawal from legal tender of any currency which, before the introduction of the new currency, was lawful currency in one of the member states;

74.1.6 the disappearance or replacement of a relevant rate option or other price source for the ECU or the national currency of any member state, or the failure of the agreed sponsor (or successor sponsor) to publish or display a relevant rate, index, price, page or screen; or

74.1.7 the withdrawal of any member state from a single or unified European currency.

75. NATIONAL NON-DOMESTIC RATES75

The Contractor shall not be responsible for the payment of national non-domestic rates in respect of the Facilities.

76. LOCAL GOVERNMENT (CONTRACTS) ACT 199776

75.1 The Certification Requirements have been satisfied by the Authority with respect to this Agreement and the Senior Lender’s Direct Agreement on or before the date of this Agreement.

75.2 In the event that the Parties agree to vary the terms of this Agreement it is agreed that such varied terms shall be the subject of a certificate under the Local Government (Contracts) Act 1997 or any substitute procedure that provides benefits similar to those provided by the Local Government (Contracts) Act 1997.

75.3 The Contractor hereby consents to the issue by the Authority of Certificates under section 3 of the Local Government (Contracts) Act 1997 in respect of this Agreement and the Senior Lender’s Direct Agreement.