12.1.1 The Contractor will want to retain flexibility in case its sub-contracting or financing arrangements need updating, but the Authority will want to ensure that this does not prejudice the Project, and that the Project Documents and Financing Agreements reviewed by it prior to Financial Close, as part of its due diligence, are not simply rewritten. The Authority will accordingly want some oversight provision for this made in the Contract. Authorities should not however use this as a device to micro-manage delivery of the Service. The Authority will also wish to ensure that its own exposure to liability on termination of the Contract is not increased without its consent, despite any changes being made to the Project Documents or Financing Agreements. Section 28 (Refinancing) contains further explanation relating to the amendment of Financing Agreements due to a refinancing.
Required drafting is as follows:
12.1.1 Delivery of Project Documents and Initial Financing Agreements
(a) The Contractor has provided to the Authority copies of the Project Documents1 [(as listed in Part 1 of Schedule [ ])] and of the Initial Financing Agreements [(as listed in Part 2 of Schedule [ ])].
(b) Without prejudice to the provisions of Clauses 12.1.2 or 12.1.3, or to the definition of Senior Financing Agreements in Clause 1, if at any time an amendment is made to any Project Document or Financing Agreement, or the Contractor enters into a new Project Document or Financing Agreement (or any agreement which affects the interpretation or application of any Project Document or Financing Agreement), the Contractor shall deliver to the Authority a conformed copy of each such amendment or agreement within ten (10) Business Days of the date of its execution or creation (as the case may be), certified as a true copy by an officer of the Contractor.
12.1.2 Changes to Project Documents
The Contractor shall perform its obligations under, and observe all of the provisions of, the Project Documents and shall not:
(a) terminate or agree to the termination of all or part of any Project Document;
(b) make or agree to any material variation of any Project Document;
(c) in any material respect depart from its obligations, (or waive or allow to lapse any rights it may have in a material respect), or procure that any counterparty to a Project Document in any material respect departs from its obligations (or waives or allows to lapse any rights they may have in a material respect), under any Project Document; or
(d) enter into (or permit the entry into by any other person of) any agreement replacing all or part of (or otherwise materially and adversely affecting the interpretation of) any Project Document,
unless the proposed course of action (and any relevant documentation) has been submitted to the Authority for review and there has been no objection made by the Authority within [ ] Business Days of receipt by the Authority of such submission, or such shorter period as may be agreed by the parties, [and provided, in the circumstances specified in Clause 12.1.2 (a), that the Contractor has complied with the provisions of Section 12 (Changes to Documents).2 The Authority may only make objection on the following reasonable grounds [ ].3
12.1.3 Changes to Financing Agreements
Without prejudice to the provisions of Clauses 12.1.1 (Delivery of Project Documents and Initial Financing Agreements), 12.1.2 (Changes to Project Documents), 12.1.3 (Changes to Financing Agreements), and 28 (Refinancing), the Contractor shall not, without the prior written consent of the Authority, enter into new Financing Agreement or terminate, amend, waive its rights or otherwise deal with its Financing Agreement if the same may reasonably be expected to have a material adverse effect on the ability of the Contractor to perform its obligations under the Project Documents or this Agreement.
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1 If there are any key second tier sub-contracts (beneath the main construction Sub-Contract or operating Sub-Contract) these could also be listed here and additionally referenced, as appropriate, in Clauses 12.1.1(b) and 12.1.2.
2 Reference to control over Sub-Contractors is only relevant if the Authority has decided to take approval rights as described in Section 7.25 (Control Over Sub-Contractors and Employees). If so, the relevant clause should be cross referenced.
3 The Authority should list out its possible grounds of objection, which may be based around any adverse consequences to the Contractor, the Authority or the Services. For example, reasonable grounds may be that the Authority feels the Contractor's ability to perform its obligations would be adversely affected; or the Authority's ability to carry out any of its statutory functions may be adversely affected; or the proposed change would be likely to result in an increase to the Authority's liabilities or potential contingent liabilities.