PPP Contracts

SCHEDULE 5.4 - Sub-Contracts

Competitive Tendering

1A.1 Subject to sub-paragraphs 1A.2 to 1A.4 below, Infraco shall ensure that all contracts with third parties are competitively tendered in an objective, fair and transparent manner calculated to produce the most economically advantageous terms for the Infraco and for any successor to Infraco ( including a Successor Infraco or LUL ) as party to that contract.

1A.2 Sub-paragraph 1A.1 above shall not apply to any contract: (a) where:
(i) that contract relates to Infraco Obligations which fall to be performed by Infraco wholly within the first Review Period; and

(ii) Infraco is not entitled to reimbursement thereof from LUL ( whether by adjustment of the ISC or otherwise ) to reflect the actual cost to it of that contract; or
(b) where the value of such contract does not exceed £3 million and the contract does not form part of a series of related contracts the total value of which exceeds £3 million.

1A.3 LUL may, at the written request of Infraco in respect of a contract, waive the requirement in paragraph 1A.1 above for competitive tendering in respect of that contract. In waiving that requirement in respect of a contract LUL may attach such conditions to the waiver as it sees fit.

1A.4 A contract shall not fall within the exemption set out in paragraph 1A.2(a) above if the legal or economic effect of the contract is to bind Infraco, any Successor Infraco or LUL to procure further goods or services from the same sub-contractor ( or any Affiliate of such sub-contractor ) in subsequent Review Periods whether this is a legal obligation, results from constraints on the validity of warranties or other after sales service arrangements or arises in any other manner.

Register of Sub-Contracts

1.1 Infraco shall prepare, submit to LUL and maintain a list of all contracts entered into by Infraco for the purposes of performing its obligations under the Contract ( the Contract Register ).

1.2 Infraco shall ensure that: (a) all documents listed on the Contract Register shall be kept in good order and shall be available for inspection by LUL in accordance with paragraph 1.3 and Infraco shall use reasonable endeavours to make available to LUL such items of clarification or substantiation as may reasonably be required by LUL in relation thereto; and

(b) Infraco and any contractor shall provide to LUL within thirty (30) days of LUL's request pursuant to an audit performed in accordance with clause 15 ( Audit ) of the Contract a copy of such part of the documents referred to in the Contract Register which LUL reasonably requires for auditing Infraco's compliance with the Contract and upon payment by LUL of reasonable copying charges for the same.

1.3 Infraco shall retain all documents referred to in the Contract Register for a period of not less than eight (8) years after the expiry date of the relevant contract or shall deliver up such records upon earlier expiry of the Contract. LUL shall have the right to audit any and all such registers and records in accordance with clause 15 ( Audit ) of the Contract and Schedule 5.12 ( Audit ) of the Contract.

Information in Contract Register

2 Infraco shall ensure that the Contract Register contains the following information as a minimum in relation to each contract: (a) details of the aspects of the Services which are contracted;

(b) the name of each contractor or supplier;

(c) the date the contract was awarded; and

(d) the current status of the contract ( e.g. whether the contract is in progress or completed or otherwise ).

3 The Contract Register shall set out the contracts so as to distinguish the following: (a) those contracts which are for the provision of assets by a third party which have been designated as Key System Assets under a Direct Agreement;

(b) Key Sub-Contracts with a Direct Agreement in place;

(c) Key Sub-Contracts without a Direct Agreement in place; and

(d) those contracts which fall into none of the above categories; and shall comply with the provisions of paragraph 9.3 below.

Notification to LUL

4 The parties shall develop a process for notifying the Contract Manager for LUL in compliance with the requirements of clause 30 ( Direct Agreements ) of the Contract regarding the appointment of Key Sub-Contractors and the entering into of Direct Agreements.

5 Infraco shall use a standard form for notifying the Contract Manager for LUL of proposed Key Sub-Contracts under clause 30 ( Direct Agreements ) of the Contract and the entering into of Direct Agreements which will include the following details: (a) the name of the proposed Key Sub-Contractor;

(b) a description of the work package to be contracted;

(c) whether Infraco believes that the entering into of a Direct Agreement is required;

(d) whether Infraco believes that the contract is for the provision of assets which would be Primary Assets if owned by Infraco;

(e) the target date for execution of the Key Sub-Contract; and

(f) such other information as will be reasonably necessary to assist LUL.

6 The parties shall review and update the Contract Register if required at least quarterly during the Contract Period.

7 Infraco shall use its reasonable endeavours to prepare and submit the first version of the Contract Register to LUL within one hundred and twenty ( 120 ) Business Days of the Start Date.

8 Insofar as a Key Sub-Contract is also a Key System Asset, Infraco shall notify LUL and provide LUL with sufficient information to enable it to make the appropriate entry in or otherwise update the Key System Assets Register.

Step-In Rights

9.1 Infraco shall use all reasonable endeavours to include provisions in the terms of all contracts ( other than those relating to funding arrangements entered into by it ) whereby the contractor acknowledges LUL's Step-in Rights under the Contract and that in such circumstances, upon receiving written notice from LUL ( which shall be conclusive proof for the contractor of LUL's entitlement to step-in ): (a) the contractor shall accept the instructions of LUL or its appointee in respect of the performance of the Services under the contract;

(b) the contractor shall not be in breach of the contract by complying with the instructions of LUL;

(c) subject to paragraph (d) below, Infraco shall at all times remain liable for payment of all amounts payable to the contractor under the contract and for performance of Infraco's obligations under the contract, notwithstanding the service by LUL of such notice and compliance by the contractor with the instructions of LUL;

(d) subject to paragraph (e) below, if LUL serves notice on the contractor requiring the contractor to accept instructions from LUL or its appointee in respect of carrying out and completion of the Services then:
(i) the contractor shall accept that all amounts due and payable to the contractor or which may subsequently become due to the contractor under the contract without right of retention or set-off in respect of any prior breach of the contract ( and which have not been discharged by Infraco or any other person ) shall be paid by LUL or its appointee ( as the case may be ); and

(ii) the amount of any payment made by LUL or its appointee to the contractor may be deducted by LUL from the ISC then payable to Infraco; and
(e) if LUL serves notice on the contractor that LUL has exercised its right to give a Step-out Notice to Infraco, the contractor shall, if so required by such notice, from the relevant date specified in the notice accept the instructions of Infraco in respect of the performance of the Services upon the terms and conditions of the contract.

9.2 Infraco shall use all reasonable endeavours to procure that the terms of all contracts which contain the provisions set out in paragraph 9.1 above shall not contain any other provisions which would deprive LUL of the ability to exercise fully, or otherwise hinder, its Step-in Rights.

9.3 Infraco shall include in the Contract Register, for each contract, an indication of whether, and to what extent, that contract contains provisions in compliance with paragraph 9.1 above.

PPP Contracts

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