Common use of FINANCIAL DISTRESS Clause in Contracts

FINANCIAL DISTRESS. 41.1 The Supplier acknowledges and agrees that the financial stability and solvency of the Supplier and its key Sub‐Contractors is critical to the successful delivery of the Services and that any deterioration or potential deterioration of their financial position may have an adverse effect on the performance of the Contract The Supplier shall monitor its own financial standing and that of its key Sub‐ Contractors on a regular basis throughout the term using a Financial Monitoring Plan and shall report on this to DFID. 41.2 The Financial Monitoring Plan shall be designed by the Supplier to ensure that DFID has an early and clear warning indicator of any financial distress of the Supplier and key Sub‐Contractors which may affect the Services; such design to be proportionate for the circumstances; taking into account the nature of the Services and the identity of the suppliers. 41.3 Except where DFID has agreed otherwise, the Supplier shall within four (4) weeks of the Commencement Date, prepare and submit via the Project Officer for Approval by DFID, a Financial Monitoring Plan which shall set out the Supplier’s proposals for the monitoring and reporting of its financial stability, and the financial stability of its key Sub‐Contractors to DFID on a regular basis throughout the Term. 41.4 The Financial Monitoring Plan may include (but shall not be limited to): 41.4.1 A summary of the Supplier’s and key Sub‐Contractors’ financial positions at the date of submission of the Financial Distress Plan and on a regular basis thereafter to DFID (including credit ratings, financial ratios, details of current liabilities, value of marketable securities, cash in hand and bank, account receivables etc.); 41.4.2 An objective means of measuring the Supplier and key Sub‐Contractor’s financial standing on a regular basis throughout the Term against historical financial standing to show trend (including use of credit ratings, financial ratios and/or other financial indicators); 41.4.3 The Supplier’s proposals for reporting financial standing to DFID (including the template reporting forms which the Supplier intends to use); 41.4.4 The frequency of monitoring and reporting activity; 41.4.5 Provision of reporting lines for the supply chain to notify DFID of incidents of non‐payment of valid and undisputed invoices; 41.4.6 Any other provisions which in the reasonable opinion of the Supplier may be required by DFID to assess current financial standing of the Supplier and key Sub‐Contractors and which enable quick and easy assessment of any movement in financial standing. 41.5 The Supplier shall make any reasonable amendments to the Financial Monitoring Plan as may be requested by DFID and shall resubmit it for Approval. If Approved by DFID, the Supplier shall promptly implement the Financial Monitoring Plan throughout the Term. 41.6 In addition to its obligations under the Financial Monitoring Plan, the Supplier shall promptly notify DFID in writing if any of the following “Financial Distress Events” occurs in respect of the Supplier or a key Sub‐Contractor: 41.6.1 there is a material deterioration of its financial standing; 41.6.2 the appointment of an administrator or receiver; 41.6.3 late filing of statutory accounts with Companies House; 41.6.4 it issues a profits warning or other similar public announcement about a deterioration in its finances or prospects; 41.6.5 it is being publicly investigated for improper financial accounting and reporting, fraud or any other financial impropriety; 41.6.6 it commits a material breach of covenant to its lenders; 41.6.7 a key Sub‐Contractor not being paid any sums properly due under a specified invoice that is not subject to a genuine dispute; 41.6.8 it is subject to any claims, litigation, investigations, actions or decisions in respect of financial indebtedness. 41.7 In the event of a Financial Distress Event occurring, then the Supplier shall and shall procure that any affected key Sub‐Contractor shall, as soon as reasonably practicable review the effect of the Financial Distress Event on the continued performance of the Services under this Contract and provide a report to DFID. Where DFID reasonably believes that the Financial Distress Event is likely to adversely impact on the performance of the Services, the Supplier shall submit to DFID for Approval a Financial Distress Service Continuity Plan as soon as is reasonably practicable and shall provide any further financial information as DFID may reasonably require to assess financial standing and risks. 41.8 If DFID acting reasonably considers that the Financial Distress Service Continuity Plan is insufficient to remedy the effects of the Financial Distress Event on the Service, then it may require the Supplier (and/or key Sub‐Contractor) to redraft and resubmit an improved and updated plan or may require the issue to be escalated via the Dispute Resolution Procedure. 41.9 If DFID Approves the Financial Distress Service Continuity Plan, then the Supplier shall execute and continue to review the plan (with submissions to DFID for Approval where it is updated). 41.10 Where the Parties agree that the Financial Distress Event no longer adversely affects the delivery of the Services, the Supplier shall be relieved of its obligations in respect of the current Financial Distress Service Continuity Plan. 41.11 DFID shall be entitled to terminate this Contract for material Default if: 41.11.1 The Supplier fails to notify DFID of a Financial Distress Event in accordance with Clause 41.6; 41.11.2 DFID and the Supplier fail to agree a Financial Distress Service Continuity Plan or any updates to a plan within a reasonable timescale (taking into account the effects of the Financial Distress Event on the Services); 41.11.3 The Supplier fails to comply with the terms of the Financial Distress Service Continuity Plan or any updates to the plan.

FINANCIAL DISTRESS. 41.1 The Supplier acknowledges and agrees that the financial stability and solvency of the Supplier and its key Sub‐Contractors Sub-Contractors is critical to the successful delivery of the Services and that any deterioration or potential deterioration of their financial position may have an adverse effect on the performance of the Contract The Supplier shall monitor its own financial standing and that of its key Sub‐ Sub- Contractors on a regular basis throughout the term using a Financial Monitoring Plan and shall report on this to DFIDthe Authority. 41.2 The Financial Monitoring Plan shall be designed by the Supplier to ensure that DFID the Authority has an early and clear warning indicator of any financial distress of the Supplier and key Sub‐Contractors Sub-Contractors which may affect the Services; such design to be proportionate for the circumstances; taking into account the nature of the Services and the identity of the suppliers. 41.3 Except where DFID the Authority has agreed otherwise, the Supplier shall within four (4) weeks of the Commencement Date, prepare and submit via the Project Officer for Approval by DFIDthe Authority, a Financial Monitoring Plan which shall set out the Supplier’s proposals for the monitoring and reporting of its financial stability, and the financial stability of its key Sub‐Contractors Sub-Contractors to DFID the Authority on a regular basis throughout the Term. 41.4 The Financial Monitoring Plan may include (but shall not be limited to): 41.4.1 A summary of the Supplier’s and key Sub‐ContractorsSub-Contractors’ financial positions at the date of submission of the Financial Distress Plan and on a regular basis thereafter to DFID the Authority (including credit ratings, financial ratios, details of current liabilities, value of marketable securities, cash in hand and bank, account receivables etc.); 41.4.2 An objective means of measuring the Supplier and key Sub‐ContractorSub-Contractor’s financial standing on a regular basis throughout the Term against historical financial standing to show trend (including use of credit ratings, financial ratios and/or other financial indicators); 41.4.3 The Supplier’s proposals for reporting financial standing to DFID the Authority (including the template reporting forms which the Supplier intends to use); 41.4.4 The frequency of monitoring and reporting activity; 41.4.5 Provision of reporting lines for the supply chain to notify DFID the Authority of incidents of non‐payment non-payment of valid and undisputed invoices; 41.4.6 Any other provisions which in the reasonable opinion of the Supplier may be required by DFID the Authority to assess current financial standing of the Supplier and key Sub‐Contractors Sub-Contractors and which enable quick and easy assessment of any movement in financial standing. 41.5 The Supplier shall make any reasonable amendments to the Financial Monitoring Plan as may be requested by DFID the Authority and shall resubmit it for Approval. If Approved by DFIDthe Authority, the Supplier shall promptly implement the Financial Monitoring Plan throughout the Term. 41.6 In addition to its obligations under the Financial Monitoring Plan, the Supplier shall promptly notify DFID the Authority in writing if any of the following “Financial Distress Events” occurs in respect of the Supplier or a key Sub‐ContractorSub-Contractor: 41.6.1 there is a material deterioration of its financial standing; 41.6.2 the appointment of an administrator or receiver; 41.6.3 late filing of statutory accounts with Companies House; 41.6.4 it issues a profits warning or other similar public announcement about a deterioration in its finances or prospects; 41.6.5 it is being publicly investigated for improper financial accounting and reporting, fraud or any other financial impropriety; 41.6.6 it commits a material breach of covenant to its lenders; 41.6.7 a key Sub‐Contractor Sub-Contractor not being paid any sums properly due under a specified invoice that is not subject to a genuine dispute; 41.6.8 it is subject to any claims, litigation, investigations, actions or decisions in respect of financial indebtedness.; 41.7 In the event of a Financial Distress Event occurring, then the Supplier shall and shall procure that any affected key Sub‐Contractor Sub-Contractor shall, as soon as reasonably practicable review the effect of the Financial Distress Event on the continued performance of the Services under this Contract and provide a report to DFIDthe Authority. Where DFID the Authority reasonably believes that the Financial Distress Event is likely to adversely impact on the performance of the Services, the Supplier shall submit to DFID the Authority for Approval a Financial Distress Service Continuity Plan as soon as is reasonably practicable and shall provide any further financial information as DFID the Authority may reasonably require to assess financial standing and risks. 41.8 If DFID the Authority acting reasonably considers that the Financial Distress Service Continuity Plan is insufficient to remedy the effects of the Financial Distress Event on the Service, then it may require the Supplier (and/or key Sub‐ContractorSub-Contractor) to redraft and resubmit an improved and updated plan or may require the issue to be escalated via the Dispute Resolution Procedure. 41.9 If DFID the Authority Approves the Financial Distress Service Continuity Plan, then the Supplier shall execute and continue to review the plan (with submissions to DFID the Authority for Approval where it is updated). 41.10 Where the Parties agree that the Financial Distress Event no longer adversely affects the delivery of the Services, the Supplier shall be relieved of its obligations in respect of the current Financial Distress Service Continuity Plan. 41.11 DFID the Authority shall be entitled to terminate this Contract for material Default if: 41.11.1 The Supplier fails to notify DFID the Authority of a Financial Distress Event in accordance with Clause 41.6; 41.11.2 DFID the Authority and the Supplier fail to agree a Financial Distress Service Continuity Plan or any updates to a plan within a reasonable timescale (taking into account the effects of the Financial Distress Event on the Services); 41.11.3 The Supplier fails to comply with the terms of the Financial Distress Service Continuity Plan or any updates to the plan.