Content Headings

Key Issues

Example clauses

Notes and References

Concessionaire Events of Default

Alternative 1

For the purposes of this Agreement, Concessionaire Events of Default means any of the following events or circumstances:

Insolvency

(a) the occurrence of any of the following events in respect of Concessionaire, namely:

(i)  any arrangement or composition with or for the benefit of creditors (including any voluntary arrangement as defined in the [Insolvency Act 1986]) being entered into by or in relation to Concessionaire;

(ii)   a receiver, administrator, administrative receiver or other encumbrancer taking possession of or being appointed over, or any distress, execution or other process being levied or enforced (and not being discharged within ten (10) Business Days) upon, the whole or any material part of the assets of Concessionaire;

(iii)  Concessionaire ceasing to carry on business; or

(iv) a petition being presented (and not being discharged within twenty (20) Business Days), or a resolution being passed or an order being made for the administration or the winding-up, bankruptcy or dissolution of Concessionaire; or

(v)  if Concessionaire shall suffer any event analogous to the events set out in Clauses 00-0 in any jurisdiction in which it is incorporated or resident;

Long stop

(b)   Concessionaire failing to achieve the Actual Completion Date within a period of [length] after the Completion Date;

Default

(c)   Either:

(I)  Concessionaire committing a material breach of its obligations under this Agreement which has a material and adverse effect on the delivery of Clinical Services or any other services at the Hospital for which Concessionaire is not responsible (other than as a consequence of a breach by the Authority of its obligations under this Agreement); or

(ii)  Concessionaire wilfully breaches Schedule [Refinancing];  

(d)   Concessionaire abandoning the Works (other than as a consequence of a breach by the Authority of its obligations under this Agreement);

(e) Concessionaire ceasing to provide all or a substantial part of the Services to the Authority in accordance with this Agreement (other than as a consequence of a breach b he Authority of its obligations under this Agreement and/or a Retained Staff Agreement);

Health and safety

(f) At any time after the Actual Completion Date Concessionaire committing a material breach of its obligations under this Agreement (other than as a consequence of a breach by the Authority of its obligations under this Agreement) which results in the criminal investigation, prosecution and conviction of Concessionaire or any Concessionaire Party or the Authority under the Health and Safety Regime (an "H&S Conviction") provided that an H&S Conviction of a Concessionaire Party or the Authority shall not constitute a Concessionaire Event of Default if, within ninety (90) Business Days from the date of the H&S Conviction (whether or not the H&S Conviction is subject to an appeal or any further judicial process), the involvement in the Project Operations of each relevant Concessionaire Party (which in the case of an individual director, officer or employee shall be deemed to include the Concessionaire Party of which that person is a director, officer or employee) is terminated and a replacement is appointed by Concessionaire in accordance with Clause [Sub-contracting];

In determining whether to exercise any right of termination or right to require the termination of the engagement of a Concessionaire Party pursuant to this Clause, the Authority shall:

(i)  act in a reasonable and proportionate manner having regard to such matters as the gravity of any offence and the identity of the person committing it; and

(ii) give all due consideration, where appropriate, to action other than termination of this Agreement; 

Change in Control

(g)  the occurrence of any Change in Control which is prohibited by Clause [Assignment, sub-contracting and Changes in Control];

Assignment

(h)  Concessionaire failing to comply with the provisions of Clauses [Assignment, sub-contracting and Changes in Control];

Service Failure Points

(i) Concessionaire being awarded a total of [period] or more Service Failure Points in any  [period] rolling period; or

Payment

(j)  Concessionaire failing to pay any sum or sums due to the Authority under this Agreement (which sums are not in dispute) which, either singly or in aggregate, exceed(s) [amount] (index linked) and such failure continues for sixty (60) Business Days from receipt by Concessionaire of a notice of non payment from the Authority.

Notification

Concessionaire shall notify the Authority of the occurrence, and details, of any Concessionaire Event of Default and of any event or circumstance which is likely, with the passage of time or otherwise, to constitute or give rise to a Concessionaire Event of Default, in either case promptly on Concessionaire becoming aware of its occurrence.

The Authority's options

On the occurrence of a Concessionaire Event of Default, or within a reasonable time after the Authority becomes aware of the same, and while the same is subsisting, the Authority may:

(a)  in the case of the Concessionaire Events of Default referred to in Clauses [see above], terminate this Agreement in its entirety by notice in writing having immediate effect;

(b)  in the case of any Concessionaire Event of Default referred to in Clause [see above], serve notice of default on Concessionaire requiring Concessionaire at Concessionaire's option either:

(i)  to remedy the Concessionaire Event of Default referred to in such notice of default (if the same is continuing) within twenty (20) Business Days of such notice of default; or

(ii)  to put forward within twenty (20) Business Days of such notice of default a reasonable programme (set out, if appropriate, in stages) for remedying the Concessionaire Event of Default.  The programme shall specify in reasonable detail the manner in, and the latest date by, which such Concessionaire Event of Default is proposed to be remedied (Concessionaire shall only have the option of putting forward a programme in accordance with this Clause [ref] if it first notifies the Authority within ten (10) Business Days of such notice of default that it proposes to do so); and

(c)  in the case of any Concessionaire Event of Default referred to in Clause [Service Failure Points], if Concessionaire is awarded [amount] or more further (Service Failure Points) (Warning Notices) in the following [amount] month period, terminate this Agreement in its entirety by notice in writing having immediate effect.

Remedy provisions

Where Concessionaire puts forward a programme in accordance with Clause [ref], the Authority shall have twenty (20) Business Days from receipt of the same within which to notify Concessionaire (acting reasonably) that it does not accept the programme, failing which the Authority shall be deemed to have accepted the programme.  Where the Authority notifies Concessionaire that it does not accept the programme as being reasonable, the parties shall endeavour within the following five (5) Business Days to agree any necessary amendments to the programme put forward.  In the absence of agreement within five (5) Business Days, the question of whether the programme (as the same may have been amended by agreement) will remedy the Concessionaire Event of Default in a reasonable manner and within a reasonable time period (and, if not, what would be a reasonable programme) may be referred by either party for resolution in accordance with Schedule [Dispute Resolution Procedure].

If:

(a)  the Concessionaire Event of Default notified in a notice of default served under Clause [ref] is not remedied before the expiry of the period referred to in Clause  [ref]; or

(b)  where Concessionaire puts forward a programme pursuant to Clause  [ref] which has been accepted by the Authority or has been determined to be reasonable and Concessionaire fails to achieve any element of the programme or the end date for the programme (as the case may be); or

(c)  any programme put forward by Concessionaire pursuant to Clause  [ref] is rejected by the Authority as not being reasonable, and the Dispute Resolution Procedure does not find against that rejection,

then the Authority may terminate this Agreement in its entirety by written notice to Concessionaire with immediate effect.  Provided that for the purposes of Clause [ref] if Concessionaire's performance of the programme is adversely affected by the occurrence of Force Majeure, a Relief Event or an Excusing Cause then, subject to Concessionaire complying with the mitigation and other requirements in this Agreement concerning Force Majeure, a Relief Event or an Excusing Cause (as the case may be), the time for performance of the programme or any relevant element of it shall be deemed to be extended by a period equal to the delay caused by Force Majeure, the Relief Event or the Excusing Cause (as the case may be) which is agreed by the parties or determined in accordance with Schedule [Dispute Resolution Procedure].

Replacement of a non-performing Sub-Contractor

The Authority may, in its discretion, require Concessionaire by written notice to terminate the provision of any Service pursuant to any relevant Service Contract or procure the termination of the provision of any Service pursuant to any relevant Sub-Contract (as the case may be) in respect of any relevant Market Tested Service and procure that a replacement Sub-Contractor is appointed in accordance with Clause [Assignment, sub-contracting and Change in Control] to provide all those parts of the Services which were performed pursuant to the previous Sub-Contract:

(a)  within sixty (60) Business Days, as an alternative to termination of this Agreement or part thereof pursuant to the provisions of Clause in any circumstance in which the Authority could exercise such power; or

(b)  within the period required to operate the procedures of Schedule [Marke esting Procedure], if Concessionaire receives more than the number of Service Failure Points listed against that Service in [specify where] a rolling [period] month period.

If the Authority exercises its rights under Clause  [ref], Concessionaire shall forthwith put forward proposals for the interim management or provision of the relevant Service to the Authority until such time as an alternative Service Provider or Sub-Contractor can be engaged by Concessionaire.  If Concessionaire fails to do so (or its proposals if implemented are not reasonably likely to give adequate provision of the relevant Services) then without prejudice to the other rights of the Authority in this Clause, the Authority may perform, or procure a third party to perform, such Services itself and the provisions of Clause  [Monitoring of Performance] shall apply, changed according to context (save that the Authority shall not be entitled to use the Retained Staff Members to perform such services without the prior written consent of Concessionaire), to such Service in those circumstances.

In the event that a replacement Sub-Contractor is appointed pursuant to Clause [ref], the Authority and Concessionaire shall procure that (if relevant) the provisions of the Retained Staff Agreement apply in respect of the replacement Sub-Contractor.

If Concessionaire fails to terminate the relevant Service (or procure the termination of the relevant Service) and to procure a replacement Sub-Contractor is appointed in accordance with the provisions of Clause  [ref] the Authority shall be entitled at its option to exercise its rights in accordance with the provisions of Clause  [ref].

The Authority's costs

Concessionaire shall reimburse the Authority for all reasonable costs incurred by the Authority in exercising any of its rights (including, without limitation, any relevant increased administrative expenses).  The Authority shall take reasonable steps to mitigate such costs.

The Authority shall not exercise, or purport to exercise, any right to terminate this Agreement except as expressly set out in this Agreement.  The rights of the Authority (to terminate or otherwise) under this Clause are in addition (and without prejudice) to any other right which the Authority may have to claim the amount of loss or damage suffered by the Authority on account of the acts or omissions of Concessionaire (or to take any action other than termination of this Agreement).

Alternative 1 adapted from Department of Health (UK), Standard Form Project Agreement Index reference A1 Folder 1.

Alternative 2

Any of the following events shall constitute an event of default by the Concessionaire ("Concessionaire Event of Default") unless such event has occurred as a result of one or more reasons set out in clause [supervening events];

(a)  The Concessionaire has failed to achieve Financial Close withi onths from the date hereof. 

(b)  The Concessionaire has failed to adhere to the Construction Requirements and in the reasonable estimation of the Independent Engineer, such failure is likely to delay achievement of COD beyond 120 days of the Scheduled Project Completion Date. 

(c)  The Concessionaire has failed to achieve COD within 120 days from the Scheduled Project Completion Date. 

(d)  The Concessionaire is in Material Breach of O&M Requirements. 

(e)  Any representation made or warranties given by the Concessionaire under this Agreement is found to be false or misleading. 

(f)  The Concessionaire has created any Encumbrance on the Project Site/ Project Facility in favour of any Person save as otherwise expressly permitted under this Agreement. 

(g)  The Concessionaire has failed to ensure minimum shareholding requirements specified in clause [ref]. 

(h)  A resolution has been passed by the shareholders of the Concessionaire for the voluntary winding up of the Concessionaire. 

(i)  Any petition for winding up of the Concessionaire has been admitted and liquidator or provisional liquidator has been appointed or the Concessionaire has been ordered to be wound up by Court of competent jurisdiction except for the purpose of amalgamation or reconstruction with the prior consent of Agency, provided that, as part of such amalgamation or reconstruction, the property, assets and undertaking of the Concessionaire are transferred to the amalgamated or reconstructed entity and that the amalgamated or reconstructed entity has unconditionally assumed the obligations of the Concessionaire under this Agreement and the Project Agreements, and provided further that: 

(i)  the amalgamated or reconstructed entity has the technical capability and operating experience necessary for the performance of its obligations under this Agreement and the Project Agreements; 

(ii)  the amalgamated or reconstructed entity has the financial standing to perform its obligations under this Agreement and the Project Agreements and has a credit worthiness at least as good as that of the Concessionaire as at Commencement Date; and

(iii)  each of the Project Agreements remains in full force and effect. 

(j)  A default has occurred under any of the Financing Documents and any of the Lender(s) has recalled its financial assistance and demanded payment of the amounts outstanding under the Financing Documents or any of them as applicable. 

(k)  The Concessionaire has abandoned the Project Facility. 

(l)  The Concessionaire has repudiated this Agreement or has otherwise expressed an intention not to be bound by this Agreement. 

(m)  The Concessionaire has suffered an attachment levied on any of the assets located or comprised in the Project Site/Project Facility, causing a Material Adverse Affect on the Project and such attachment has continued for a period exceeding 90 days. 

(n)  The Concessionaire has delayed any payment that has fallen due under this Agreement for 90 days or more. 

(o)  The Concessionaire has otherwise been in Material Breach of any of its other obligations under this Agreement.

Alternative 2 adapted from Concession Agreement for Colombo Kathunayake Expressway Project (note confidential), index reference A2, folder 1.