36.18 All insurance proceeds received by Project Co under the insurances referred to in [ ] of Part 1 and [ ] of Part 2125 and of Part 21 of the Schedule (Insurance Requirements) shall be paid into the Insurance Proceeds Account and shall be applied in accordance with this Agreement and in accordance with the Insurance Proceeds Accounts Agreement.
36.19 Subject to the provisions of the Senior Funders' Direct Agreement and Clause 36.22 (Reinstatement), Project Co shall apply any proceeds of any policies of Insurance:
(a) in the case of third party legal liability or employers' liability insurance, in satisfaction of the claim, demand, proceeding or liability in respect of which such proceeds are payable; and
(b) in the case of any other insurance, so as to ensure the performance by Project Co of its obligations under this Agreement, including where necessary the reinstatement, restoration or replacement of the facilities, assets, materials or goods affected by the event giving rise to the insurance claim and consequent payment of proceeds.
36.20 Where reinstatement monies are required to be released from the Insurance Proceeds Account Project Co shall obtain the Board's consent in accordance with the Insurance Proceeds Account Agreement. The Board shall give its consent to the release of monies from the Insurance Proceeds Account within one (1) Business Day of a request from Project Co (such consent not to be unreasonably withheld).
36.21 If the proceeds of any insurance claim are insufficient to cover the settlement of such claims, Project Co will make good any deficiency forthwith.
36.22 Reinstatement
(a) [Subject to Clause [36.23] (Economic Test)], all insurance proceeds received under any Physical Damage Policy126 shall be applied to repair, reinstate and replace each part or parts of the Facilities in respect of which the proceeds were received.
(b) All insurance proceeds paid under any Physical Damage Policy in respect of a single event (or a series of related events) in an amount in excess of £ [minimum level] (index-linked) shall be paid into the Joint Insurance Account.127
(c) [Subject to Clause [36.23] (Economic Test)], where a claim is made or proceeds of insurance are received or are receivable under any Physical Damage Policy in respect of a single event (or a series of related events) (the ("Relevant Incident") in an amount in excess of £ [] (index-linked):
(i) Project Co shall deliver as soon as practicable and in any event within [28] days after the making of the claim a plan prepared by Project Co for the carrying out of the works necessary (the "Reinstatement Works") to repair, reinstate or replace (the "Reinstatement Plan") the assets which are the subject of the relevant claim or claims in accordance with paragraph (d) below. The Reinstatement Plan shall set out:
(aa) if not the Contractor, the identity of the person proposed to effect the Reinstatement Works, which shall be subject to the prior written approval of the Board; and
(bb) the proposed terms and timetable upon which the Reinstatement Works are to be effected (including the date that the Project will become fully operational), the final terms of which shall be subject to the prior written approval of the Board, which approval shall not be unreasonably delayed;
(ii) provided that the Board is satisfied that the Reinstatement Plan will enable Project Co to comply with paragraph (d) below within a reasonable timescale:
(aa) the Reinstatement Plan will be adopted;
(bb) Project Co shall enter into contractual arrangements to effect the Reinstatement Works with the person identified in the Reinstatement Plan approved by the Board;
(cc) prior to the earlier to occur of the Termination Date or the Expiry Date, any amounts standing to the credit of the Joint Insurance Account (the "Relevant Proceeds") (together with any interest accrued) may be withdrawn by Project Co from the Joint Insurance Account as required to enable it to make payments in accordance with the terms of the contractual arrangements referred to in paragraph (ii)(bb) above, and to meet any other reasonable costs and expenses of Project Co for the sole purposes of funding the Reinstatement Works and the parties shall operate the signatory requirements of the Joint Insurance Account in order to give effect to such payments. Following the earlier to occur of the Termination Date and the Expiry Date, the Board may withdraw amounts standing to the credit of the Joint Insurance Account for the purposes of funding any Reinstatement Works;
(dd) the Board agrees and undertakes that, subject to compliance by Project Co with its obligations under this Clause, and provided that Project Co procures that the Reinstatement Works are carried out and completed in accordance with the contractual arrangements referred to in Clause 36.22(c)(ii)(bb), it shall not exercise any right which it might otherwise have to terminate this Agreement by virtue of the event which gave rise to the claim for the Relevant Proceeds;
(ee) the Board undertakes to use reasonable endeavours to assist Project Co in the carrying out of the Reinstatement Plan; and
(ff) after the Reinstatement Plan has been implemented to the reasonable satisfaction of the Board and in accordance with Clause 36.22(c)(ii)(dd) below the Board shall permit withdrawal by Project Co of any Relevant Proceeds then held in the Joint Insurance Account that have not been paid under Clause 36.22(c)(ii)(cc) above, in respect of the Relevant Incident, together with any interest accrued.
(gg) subject to the provisions of Clause 8.1 (Project Co Indemnity) Project Co shall be solely responsible for the payment of any deficiency.
(d) Where insurance proceeds are to be used, in accordance with this Agreement, to repair, reinstate or replace any Facility, Project Co shall carry out the work in accordance with the Board's Construction Requirements so that on completion of the work, the provisions of the Agreement are complied with.
36.23 Economic Test
(a) If all of the Facilities are destroyed or substantially destroyed in a single event and the insurance proceeds (when taken together with any other funds available to Project Co) are equal to or greater than the amount required to repair or reinstate the Facilities, then Project Co shall calculate the senior debt loan life cover ratio as used in the Financial Model as at Financial Close (on the assumption that the Facilities are repaired or reinstated in accordance with Clause 36.22(c)).
(b) If the calculation referred to in paragraph (a) above shows that the [senior debt loan life cover ratio] is greater than or equal to [event of default level] then Project Co shall be subject to the procedure set out in Clause 36.22 (Reinstatement).
(c) If the calculation referred to in paragraph (a) above shows that the [senior debt loan life cover ratio] is less than [event of default level] then an amount equal to the lesser of:
(i) the insurance proceeds; and
(ii) the Base Senior Debt Amount, or, if any Additional Permitted Borrowing has been advanced, the Revised Senior Debt Termination Amount,
(d) shall be released from the Joint Insurance Account to Project Co.128
(e) If, pursuant to paragraph (c) above, insurance proceeds are released from the Joint Insurance Account Project Co shall be in breach of its obligations under this Contract and shall not, pursuant to Clause 42 (Relief Events), be relieved of its obligations unless it can demonstrate, to the satisfaction of the Authority, that it can carry out the works necessary to repair, reinstate or replace the assets which are subject to the relevant claims in accordance with Clause 36.22(d) (Reinstatement) and within a reasonable timescale.
36.24 Project Co shall take all reasonable steps to mitigate the effects of any risks or claims covered by this Clause 36 (including without limitation minimising the amount of any costs and expenses which might result).
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125 To refer to only such insurances, the proceeds of which are to be paid into the Insurance Proceeds Account.
126 This will not include, for example, third party liability, employers' liability, business interruption or advance loss of profits insurance.
127 See Section 1.8 (Interpretation) for definition.
128 This will mean the amounts are released to the accounts secured to Senior Lenders and the Senior Lenders will apply such amounts as a prepayment against Senior Debt.