"Adjusted Estimated Fair Value of the Agreement"

means, subject to paragraph 4.6 of Section 2 (Compensation for Project Co Default) of this Schedule Part 17 (Compensation on Termination), the Estimated Fair Value of the Agreement adjusted as follows:

(a)  where in respect of any month or part of a month from the Termination Date to the Compensation Date the Post Termination Service Amount is a negative number, the aggregate of all such negative Post Termination Service Amounts shall be set against and shall reduce the Estimated Fair Value of the Agreement (whether or not such amounts have been set-off by the Authority pursuant to paragraph 3.8 of Section 2 (Compensation for Project Co Default) of this Schedule Part 17 (Compensation on Termination));

and the aggregate of the following amounts shall be deducted from the Estimated Fair Value of the Agreement:

(b)  the Post Termination Service Amounts actually paid by the Authority to Project Co prior to the Compensation Date;

(c)  the Tender Costs; and

(d)  amounts that the Authority is entitled to set off or deduct;

and the aggregate of the following amounts shall be added to the Estimated Fair Value of the Agreement:

(e)  all credit balances on any bank accounts held by or on behalf of Project Co on the date that the Estimated Fair Value of the Agreement is calculated; and

(f)  any insurance proceeds and other amounts owing to Project Co (and which Project Co is entitled to retain), to the extent not included in (e); 

to the extent that:

(i)  (e) and (f) have not been directly taken into account in calculating the Estimated Fair Value of the Agreement; and

(ii)  the Authority has received such amounts in accordance with this Agreement or such amounts are standing to the credit of the Insurance Proceeds Account;

"Adjusted Highest Compliant Tender Price"

means, subject to paragraph 3.15 of Section 2 (Compensation for Project Co Default) of this Schedule Part 17 (Compensation on Termination), the Highest Compliant Tender Price adjusted as follows:

(a)  where in respect of any month or part of a month from the Termination Date to the Compensation Date the Post Termination Service Amount is a negative number, the aggregate of all such negative Post Termination Service Amounts shall be set against and shall reduce such highest tender price (whether or not such amounts have been set-off by the Authority pursuant to paragraph 3.8 of Section 2 (Compensation for Project Co Default) of this Schedule Part 17 (Compensation on Termination));

and the aggregate of the following amounts shall be deducted from the Highest Compliant Tender Price:  

(b)  the Forecast Surpluses;

(c)  the Post Termination Service Amounts actually paid by the Authority to Project Co prior to the Compensation Date;

(d)  the Tender Costs; and

(e)  amounts that the Authority is entitled to set off or deduct,

and the aggregate of the following amounts shall be added to such highest tender price:

(f)  all credit balances on any bank accounts held by or on behalf of Project Co on the date that the highest priced Compliant Tender is received; and

(g)  any insurance proceeds and other amounts owing to Project Co (and which Project Co is entitled to retain), to the extent not included in (d);

to the extent that:

(i)  (f) and (g) have not been directly taken into account in that Compliant Tender; and

(ii)  the Authority has received such amounts in accordance with this Agreement;

"APB Distribution"

means, for the period during which the Additional Permitted Borrowing subsists, an amount equal to the aggregate of all Distributions made during that period up to an amount equal to the principal of the Additional Permitted Borrowing on the first day of that period; 

"Base Senior Debt Termination Amount"

means, subject to Clause 4.3:

(a)  all amounts outstanding at the Termination Date, including interest and Default Interest accrued as at that date, from Project Co to the Senior Funders in respect of Permitted Borrowings (other than in respect of Additional Permitted Borrowing); and

(b)  all amounts including costs of early termination of interest rate hedging arrangements and other breakage costs, payable by Project Co to the Senior Funders as a result of a prepayment in respect of Permitted Borrowings (other than in respect of Additional Permitted Borrowing), or, in the case of early termination of interest rate hedging arrangements only, as a result of termination of this Agreement, subject to Project Co and the Senior Funders mitigating all such costs to the extent reasonably possible;

less, to the extent it is a positive amount the aggregate of (without double counting in relation to the calculation of the Base Senior Debt Termination Amount or the amounts below)

i.  any amounts claimable on or after the Termination Date in respect of Contingent Funding Liabilities; 

ii.  all amounts including costs of early termination of interest rate hedging arrangements and other breakage costs, payable by the Senior Funders to Project Co as a result of prepayment of amounts outstanding in respect of Permitted Borrowings (other than in respect of Additional Permitted Borrowing), or, in the case of early termination of interest rate hedging arrangements only, as a result of termination of this Agreement;

iii.  all other amounts received by the Senior Funders on or after the Termination Date and before the date on which any compensation is payable by the Authority to Project Co as a result of enforcing any other rights they may have; and

iv.  all credit balances on any bank accounts (but excluding the Insurance Proceeds Account) held by or on behalf of Project Co on the Termination Date;

"Compensation Date"

means either: 

(a)  if paragraph 3 (Retendering Procedure) of Section 2 (Compensation for Project Co Default) of this Schedule Part 17 (Compensation on Termination) applies, the earlier of: 

i.  the date that the New Agreement is entered into; and

ii.  the date on which the Authority pays the Adjusted Highest Compliant Tender Price to Project Co; or

(b)  if paragraph 4 (No Retendering Procedure) of Section 2 (Compensation for Project Co Default) of this Schedule Part 17 (Compensation on Termination) applies, the date that the Adjusted Estimated Fair Value of the Agreement has been agreed or determined; 

"Compliant Tender"

means a tender that meets all of the Qualification Criteria;

"Compliant Tenderer"

means a Suitable Substitute Contractor who submits a Compliant Tender;

["Contingent Funding Liabilities"

[insert any contingent liabilities of the shareholders in respect of financial obligations owed to the Contractor and/or Funders under the Funding Agreements which are triggered as a result of or in relation to the termination of the Agreement, e.g. guarantees or letters of credit in respect of deferred equity];

"Deemed New Agreement"

means an agreement on the same terms and conditions as this Agreement, as at the Termination Date, but with the following amendments: 

a)  if this Agreement is terminated prior to the Actual Completion Date [a Phase Actual Completion Date], then the Longstop Date [relevant Longstop Date(s)] shall be extended by a period to allow a New Project Co (had one been appointed) to achieve the Actual Completion Date [relevant Phase Actual Completion Date(s)] prior to the Longstop Date [relevant Longstop Date(s)];

b)  any accrued Deductions and/or Warning Notices shall, for the purposes of termination only, and without prejudice to the rights of the Authority to make financial deductions, be cancelled; and

c)  the term of such agreement shall be for a period equal to the term from the Termination Date to the Expiry Date; 

"Discount Rate"

means a discount rate expressed as [(1+ real base case project IRR + Gilt B - Gilt A)* (1 + i) -1]

where:

"real base case project IRR" is the real pre-tax [Project IRR] as set out in the Financial Model at Financial Close;

"i" is the agreed assumed forecast rate of increase in RPI set out in the Agreement, for the remaining term of the Agreement;

"Gilt A" is the real yield to maturity on a benchmark government Gilt instrument of the same maturity as the average life of the outstanding Senior Debt as shown in the Financial Model at Financial Close; and

"Gilt B" is the real yield to maturity on a benchmark government Gilt instrument of the same maturity as the average life of the outstanding Senior Debt as shown in the Financial Model as on the Termination Date;

"Distribution"

has the meaning given in Schedule Part 23 (Refinancing);

"Estimated Fair Value of the Agreement"

means the amount determined in accordance with paragraph 4 (No Retendering Procedure) of Section 2 (Compensation for Project Co Default) of this Schedule Part 17 (Compensation on Termination) that a third party would pay to the Authority as the market value of the Deemed New Agreement;

"Fair Value"

means the amount at which an asset or liability could be exchanged in an arms length transaction between informed and willing parties, other than in a forced or liquidated sale;

"Forecast Surpluses"

means the Net Present Value of the Surplus Payments projected to be made by the Compliant Tenderer, as adjusted by the Authority to take account of the Authority's assessment of the likelihood of such Surpluses arising;

"Highest Compliant Tender Price"

means the price offered by the Compliant Tenderer (if any) with the highest tender price, being the sum of: 

(a)  the capital sum offered by such Compliant Tenderer; and

(b)  the Forecast Surpluses;

and, if no Compliant Tenders are received, means zero;

"Invoice Date"

means, in respect of the Authority Default Termination Sum, the Force Majeure Termination Sum or the Corrupt Gifts Termination Sum (as appropriate), the date that is the later of:

(a)  the date on which the Authority receives an invoice from Project Co for the relevant termination sum; and

(b)  the date on which the Authority receives the supporting evidence required pursuant to paragraph [●] of Section 5 (General) of this Schedule Part 17 (Compensation on Termination); 

"Liquid Market"

means that there are sufficient willing parties (being at least two parties, each of whom is capable of being a Suitable Substitute Contractor) in the market for design, build, finance and maintain contracts or similar contracts for the provision of services (in each case the same as or similar to this Agreement) for the price that is likely to be achieved through a tender to be a reliable indicator of Fair Value provided always that any vehicle controlled and established by the Senior Funders specifically for the purposes of the Project and to which this Agreement may be novated shall be discounted in assessing whether there are sufficient willing parties in the market for such purposes; 

["Market Value Availability Deduction Amount"

means for any month or part of a month, an amount equal to the availability deduction that was made to the Monthly Service Payment under paragraph [    ] of Schedule Part 14 (Payment Mechanism) in the month immediately preceding the Termination Date, less an amount equal to any availability deduction that was made for a Functional Area which was unavailable at the Termination Date but which has subsequently become available whether as a result of the Authority incurring Rectification Costs or otherwise];

"Maximum Service Payment"

means one twelfth of the Annual Service Payment payable at any time before any deductions under paragraph [    ] of Schedule Part 14 (Payment Mechanism) but allowing for indexation under the [indexation provisions];

"Maximum Termination Amount"

means either an amount equal to the aggregate of:

(a)  the Base Senior Debt Termination Amount; and

(b)  the principal amount of the Subordinated Debt outstanding; and

(c)  Redundancy Payments and Sub-Contractor Losses; 

OR, if the aggregate of the amounts referred to in (a) and (b) above is less than the Revised Senior Debt Termination Amount then an amount equal to the aggregate of:

(d)  the Revised Senior Debt Termination Amount; and

(e)  Redundancy Payments;

"New Agreement"

means an agreement on the same terms and conditions as this Agreement at the Termination Date, but with the following amendments:

(a)  if this Agreement is terminated prior to the Actual Completion Date [a Phase Actual Completion Date], then the Longstop Date [relevant Longstop Date(s)] shall be extended by a period to allow a New Project Co to achieve the Actual Completion Date [relevant Phase Actual Completion Date(s)] prior to the Longstop Date [relevant Longstop Date(s)];

(b)  any accrued Deductions and/or Warning Notices shall, for the purposes of termination only, and without prejudice to the rights of the Authority to make financial deductions, be cancelled;

(c)  the term of such agreement shall be equal to the term from the [Termination Date]  until the Expiry Date; and

(d)  any other amendments which do not adversely affect the Project Co;

"New Project Co"

means the person who has entered or who will enter into the New Agreement with the Authority;

"No Default Interest Rate"

means [incorporate the non-default interest rate definition in the Senior Funding Agreements];

"Post Termination Service Amount"

means for the purposes of paragraph 3 (Retendering Process) of Section 2 (Compensation for Project Co Default) of this Schedule Part 17 (Compensation on Termination), for the whole or any part of a month for the period from the Termination Date to the Compensation Date, an amount equal to the Maximum Service Payment (pro rata for part of a month) which would have been payable under this Agreement had this Agreement not been terminated, less an amount equal to the aggregate of (without double counting):

(a)  (where relevant) the amount by which the Post Termination Service Amounts for the previous month was less than zero;

(b)  the [Market Value Availability Deduction Amount] for that month; and

(c)  the Rectification Costs incurred by the Authority in that month; 

"Qualification Criteria"

means the criteria that the Authority requires tenderers to meet as part of the Tender Process, which (subject to compliance with procurement regulations) shall be:

(a)  the New Agreement terms;

(b)  tenderers should have the financial ability to pay the capital sum tendered for the New Agreement and the financial ability to deliver the Works and/or the Services (as appropriate) for the price tendered;

(c)  the tenderers may only bid on the basis of a single capital payment to be made on the date of the New Agreement;

(d)  the tenderer is experienced in providing the Services or similar services;

(e)  the technical solution proposed by the tenderers is capable of delivery and the tenderer is technically capable of delivery of the Services; and

(f)  any other tender criteria agreed by the Authority and the Project Co; 

"Rectification Costs"

means, for the purposes of any Termination Date that occurs after the Actual Completion Date [a Phase Actual Completion Date], an amount equal to the reasonable and proper costs incurred by the Authority in a particular month or part of a month in ensuring that the Services are available;

"Redundancy Payments"

means redundancy payments and other termination payments which are required under Law to be made to employees of Project Co reasonably and properly incurred by Project Co arising as a direct result of terminating this Agreement (provided that Project Co shall use all reasonable endeavours to mitigate its loss) and provided that in calculating such amount no account should be taken of any liabilities and obligations of Project Co arising out of:

(a)  contracts of employment or other agreements or arrangements entered into by Project Co to the extent that such contracts of employment agreements or arrangements were not entered into in connection with the Project; and/or

(b)  contracts of employment or other agreements or arrangements entered into by Project Co to the extent that such contracts of employment agreements or arrangements were not entered into in the ordinary course of business and on commercial arm's length terms;

"Relevant Assumptions"

means the assumptions that the sale of Project Co is on the basis that there is no default by the Authority, that the sale is on a going concern basis, that no restrictions exist on the transfer of share capital, that no Additional Permitted Borrowing has taken place and therefore that the effect of the Additional Permitted Borrowing on the calculation of such amount is disregarded but that otherwise the actual state of affairs of Project Co and the Project is taken into account;

"Revised Senior Debt Termination Amount"

means, subject to Clause 4.3 and Refinancing:

(a)  all amounts outstanding at the Termination Date, including interest and (other than in respect of Additional Permitted Borrowing) Default Interest accrued as at that date, from Project Co to the Senior Funders in respect of Permitted Borrowing;  and

(b)  all amounts including costs of early termination of interest rate hedging arrangements and other breakage costs, payable by Project Co to the Senior Funders as a result of a prepayment in respect of Permitted Borrowing, or, in the case of early termination or interest rate hedging arrangements only, as a result of termination of this Agreement subject to Project Co and the Senior Funders mitigating all such costs to the extent reasonably possible;

less, to the extent it is a positive amount, the aggregate of (without double counting in relation to the calculation of the Revised Senior Debt Termination Amount or the amounts below):

i.  all credit balances on any bank accounts (but excluding the Insurance Proceeds Account) held by or on behalf of Project Co on the Termination Date;

ii.  any amounts claimable on or after the Termination Date in respect of Contingent Funding Liabilities;

iii.  all amounts, including costs of early termination of interest rate hedging arrangements and other breakage costs, payable by the Senior Funders to Project Co as a result of prepayment of amounts outstanding in respect of Permitted Borrowing, or, in the case of early termination of interest rate hedging arrangements only, as a result of termination of this Agreement;

iv.  all other amounts received by the Senior Funders on or after the Termination Date and before the date on which any compensation is payable by the Authority to Project Co as a result of enforcing any other rights they may have; and

v.  all APB Distributions;

"Senior Debt"

means the financing provided by the Senior Funders under the Senior Funding Agreements;

"Senior Funding Agreements"  

has the meaning given in Schedule Part 1 (Definitions and Interpretation);

"Sub-Contractor Losses"

means: 

(a)  the amount reasonably and properly payable by Project Co to the Contractor under the terms of the Construction Contract as a direct result of the termination of this Agreement provided that such amount shall be reduced to the extent that Project Co fails to use all reasonable endeavours to mitigate such amount; and

(b)  the amount reasonably and properly payable by Project Co to the Service Providers [under their respective contracts with Project Co] (as the case may be) as a direct result of the termination of this Agreement provided that such amount shall be reduced to the extent that Project Co fails to use all reasonable endeavours to mitigate such amount;

provided that in both cases no account should be taken of any liabilities and obligation of Project Co to the Sub-Contractors arising out of:

i.  agreements or arrangements entered into by Project Co and/or the Sub-Contractors to the extent that such agreements or arrangements were not entered into in connection with those parties obligations in relation to the Project; and/or

ii.  agreements or arrangements entered into by Project Co and/or the Sub-Contractors to the extent that such agreements or arrangements were not entered into in the ordinary course of business and on commercial arm's length terms;

"Suitable Substitute Contractor"

has the meaning given in the Funders' Direct Agreement;

"Subordinated Debt"

means [    ];

"Tender Costs"

means the reasonable and proper costs of the Authority incurred in carrying out the Tender Process and/or in connection with any calculation of the Estimated Fair Value of the Agreement;

"Tender Process"

means the process by which the Authority requests tenders from any parties interested in entering into a New Agreement, evaluates the responses from those interested parties and enters into a New Agreement with a new service provider, in accordance with paragraph 3 (Retendering Process) of Section 2 (Compensation for Project Co Default) of this Schedule Part 17 (Compensation on Termination); 

"Tender Process Monitor"

means the person appointed under paragraph 3.6 of Section 2 (Compensation for Project Co Default) of this Schedule Part 17 (Compensation on Termination);

"Termination Sum"

has the meaning given in paragraph 1.3 of Section 5 (General) of this Schedule Part 17 (Compensation on Termination).