2. VARIATION OF THE PROJECT AGREEMENT

2.1 This Deed is supplemental to the Project Agreement.

2.2 The Authority and the Contractor agree that the Authority may, from time to time, issue a notice to the Contractor in the form set out in schedule 2 stating that a School is (or a number of Schools are) proposing to close and re-open as an Academy ("Academy Conversion Notice"). An Academy Conversion Notice may name up to [] () Predecessor Schools, provided that each such Predecessor School to which the Academy Conversion Notice relates shall have the same Academy Effective Date. Any Academy Conversion Notice shall contain the following information in respect of each Predecessor School referred to in it:

2.2.1 the name of the Predecessor School;

2.2.2 the name and registered company number of the relevant Academy Trust (if available to the Authority at the time of issue of the Academy Conversion Notice); and

2.2.3 the date on which it is expected that the Predecessor School will open as an Academy.

2.3 Within ten (10) Business Days following the issue of an Academy Conversion Notice, the Contractor shall, subject to clause 2.4, issue a notice (the "Confirmation Notice") to the Authority confirming that the Predecessor School(s) referred to in the Academy Conversion Notice shall be regarded for the purposes of the Project Agreement as an Academy with effect from the relevant Academy Effective Date and, accordingly, the provisions of clause 2.7 shall apply.

2.4 The Contractor shall not be obliged to issue a Confirmation Notice to the extent that the proposed conversion would have a material adverse effect on the risk profile of the Project for the Contractor and/or the Senior Lenders. The Contractor shall notify the Authority within ten (10) Business Days of receipt of the Academy Conversion Notice if it reasonably considers that there is such a material adverse effect and thereafter the Contractor and the Authority shall meet as soon as reasonably practical to discuss in good faith a solution that satisfies the Authority, the Contractor and the Senior Lenders, each acting reasonably. Upon a solution being agreed between the Authority and the Contractor, the Contractor shall promptly issue a Confirmation Notice.

2.5 If the Contractor issues a Confirmation Notice, the Authority shall thereafter give to the Contractor at least five (5) Business Days' prior written notice of the relevant Academy Effective Date (if different from the date notified under clause 2.2.3), together with details of the name and registered company number of the relevant Academy Trust (if not previously provided in the relevant Academy Conversion Notice).

2.6 From and including the date of this Deed, the Project Agreement shall be read and construed as varied by the provisions set out in this Deed. The Project Agreement shall remain in full force and effect as expressly varied by this Deed.

2.7 The Authority and the Contractor acknowledge that:

2.7.1 either3:

2.7.1.1 the Authority shall be entitled, on or around the relevant Academy Effective Date, to grant a lease of the Relevant Site to the Academy Trust subject always to the rights of access granted to the Contractor under clause [8] of the Project Agreement, and the Contractor agrees that such grant shall not, of itself, constitute a breach by the Authority of the Project Agreement and that such grant is permitted under the Project Agreement; or

2.7.1.2 the freehold of the Relevant Site has been or will be, on or around the relevant Academy Effective Date, transferred to the Academy Trust, subject always to the rights of access granted to the Contractor under clause [8] of the Project Agreement, and the Contractor agrees that such transfer shall not, of itself, constitute a breach by the Authority of the Project Agreement and that such transfer is permitted under the Project Agreement; and

2.7.2 the Academy Trust shall from midnight on the relevant Academy Effective Date, be included as a co-insured party on the relevant insurance policies procured by the Contractor to meet the requirements of the Property Damage Insurance set out in paragraph [X of Part] of Schedule [] of the Project Agreement and the Third Party Public Liability Insurance set out in paragraph [X of Part of Schedule ] of the Project Agreement together with the benefit of non-vitiation protection in respect of any claim made by the Academy Trust and the benefit of a waiver of the insurer's subrogation rights against the Academy Trust, its employees and agents in accordance with clause [X] of the Project Agreement; and

2.7.3 closure of a Predecessor School and opening of an Academy shall not constitute a breach of the Project Agreement, nor an Authority Default.

2.8 The Authority shall be deemed to have issued an Academy Conversion Notice in respect of the Predecessor Schools listed in the table below, and the Contractor hereby agrees that each of the Predecessor Schools listed in the table below shall be regarded for the purposes of the Project Agreement as an Academy with effect from the relevant Academy Effective Date as though a Confirmation Notice had been issued by the Contractor in respect of such Predecessor Schools and, accordingly, the provisions of clause 2.7 shall apply.

2.9 In the event of any conflict between the provisions of this Deed and the Project Agreement, the provisions of this Deed shall prevail.

2.10 Promptly following completion of this Deed both the Authority and the Contractor shall endorse a memorandum of variation upon the Project Agreement in the following terms "The Project Agreement has been varied by a Deed of Variation dated [date] and made between the Authority and the Contractor".

2.11 The Authority hereby approves the amendments made to the Sub-Contracts [(as notified to it by the Contractor)] that are consequential upon the amendments to the Project Agreement set out in this Deed, and waives the obligation pursuant to clause ([Ancillary Documents]) of the Project Agreement for such amendments to be submitted for review under the Review Procedure.

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3 Subject to ongoing consideration regarding the property structure for the pfi assets.