Adjusted Estimated Fair Value of the Contract

means the Estimated Fair Value of the Contract, less an amount equal to the aggregate of:

(a)  [where relevant any Post Termination Service Amounts74 paid to the Contractor (if a positive number);]

(b)  the Tender Costs; and

(c)  amounts that the Authority is entitled to set off or deduct under Clause 46 (Set Off)75

plus an amount equal to the aggregate of:

(i)  all credit balances on any bank accounts held by or on behalf of the Contractor on the date that the Estimated Fair Value of the Contract is calculated;

(ii)  any insurance proceeds and other amounts owing to the Contractor to the extent not included in (i) above; and

(iii)  the Post Termination Service Amounts (if a negative number),76

to the extent that:

(A)  (i), (ii) and (iii) have not been directly taken into account in calculating the Estimated Fair Value of the Contract; and

(B)  the Authority has received such amounts in accordance with this Contract or such amounts are standing to the credit of the Joint Insurance Account;

Adjusted Highest Compliant Tender Price77

means the Highest Compliant Tender Price less the aggregate of:

(a)  any Post Termination Service Amounts paid to the Contractor to date;

(b)  the Tender Costs; and

(c)  amounts that the Authority is entitled to set off or deduct under Clause 46 (Set Off)78

plus an amount equal to the aggregate of:

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

(ii)  any insurance proceeds and other amounts owing to the Contractor to the extent not included in (i) above; and

(iii)  the Post Termination Service Amounts (if a negative number),

to the extent that:

(A)  (i), (ii) and (iii) have not been directly taken into account in that Compliant Tender; and

(B)  the Authority has received such amounts in accordance with the Contract;

Agent

means [             ] in its capacity as agent for the Senior Lenders under the Senior Financing Agreements;

Base Case Equity IRR

means [             ]%;79

Base Senior Debt Termination Amount

means, subject to Clause 7.4.2 (Changes to Financing Agreements and Ancilliary Documents):

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

except that where this sub-paragraph (a) applies following termination of this Contract pursuant to paragraph 3.5 of Schedule 26 (Planning) [and/or paragraph 11.1.5 of Schedule 27 (Approach to Permit Risk)] the amount payable by the Authority under this sub-paragraph shall be no greater than [             ]80;and

(b)  all amounts including costs of early termination of interest rate hedging arrangements and other breakage costs, payable by the Contractor to the Senior Lenders as a result of a prepayment in respect of Permitted Borrowing (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 Contract81, subject to the Contractor and the Senior Lenders 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)  all credit balances on any bank accounts (but excluding the Joint Insurance Account) held by or on behalf of the Contractor 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 Lenders to the Contractor as a result of prepayment of amounts outstanding in respect of Permitted Borrowing (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 Contract82; and

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

Compensation Date

means either:

(a)  if paragraph 2 (Retendering Procedure) of Part 3 (Compensation on Termination for Contractor Default) applies, the earlier of:

(i)  the date that the New Contract is entered into; and

(ii)  the date on which the Authority pays the Adjusted Highest Compliant Tender Price to the Contractor; or

(b)  if paragraph 3 (No Retendering Procedure) of Part 3 (Compensation on Termination for Contractor Default) applies, the date on which the Adjusted Estimated Fair Value of the Contract has been agreed or determined;-

Compliant Tender

means any tender submitted by a Compliant Tenderer that meets the Qualification Criteria notified under paragraph 2.3 of Part 3 (Compensation on Termination for Contractor Default);

Compliant Tenderer

means a tenderer who is a Suitable Substitute Contractor;

Deemed New Contract

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

(a)  if this Contract is terminated prior to the Services Commencement Date, then the Services Commencement Date shall be extended by such period as would have been granted to allow a New Contractor83 to achieve the issue of the Acceptance Certificate;

(b)  any accrued [performance points 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;84

(c)  the term of such agreement shall be for a period equal to the term from the Termination Date85 to the Expiry Date; and

(d)  in the event that any New Contractor Rectification Works are required (in relation to a Facility that has, at the Termination Date, had an Acceptance Test Certificate issued) to enable the New Contractor to provide the Services to the full specification and standards required by this Contract then provided that the New Contractor complies with the New Contractor Rectification Plan the Authority shall not exercise its rights to terminate the Contract under Clause 67 (Termination for Contractor Default) by reason of any failure to achieve some or all of the specification and/or standards required by this Contract during the New Contractor Rectification Period solely as a consequence of the New Contractor Rectification Works being required.  Such provision shall for the avoidance of doubt not affect the Authority's entitlement to make adjustments and/or deductions in accordance with Schedule 4 (Payment Mechanism) as a result of failure to achieve the specification and/or standards required by this Contract during the New Contractor Rectification Period.86

Estimated Fair Value of the Contract

means the amount determined in accordance with paragraph 3 (No Retendering Procedure) of Part 3 (Compensation on Termination for Contractor Default) that a third party would pay to the Authority as the market value of the Deemed New Contract;

Fair Value

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

Force Majeure Termination Sum

means the sum calculated in accordance with paragraph 1.2 of Part 5 (Compensation on Termination for Force Majeure or Uninsurability) of this Schedule 17 (Compensation on Termination) as the same may be adjusted in accordance with paragraph 1.4 to 1.6 (inclusive) of Part 5 (Compensation on Termination for a Force Majeure Event or Uninsurability) of this Schedule 17 (Compensation on Termination);

Highest Compliant Tender Price

means the price offered by the Compliant Tenderer (if any) with the highest tender price87 and if no Compliant Tenders are received, [to include period when Contractor Default no Compliant Tenders derogation applies] zero;88

Instalment Dates

has the meaning given to it in paragraph 4.2.1(a) of Part 7 (General)

Junior Debt

means all amounts outstanding at the Termination Date under the Subordinated Financing Agreements;

Liquid Market

means there are sufficient willing parties (being at least two (2) parties, each of whom is capable of being a Suitable Substitute Contractor) in the market for PFI contracts or similar contracts for the provision of services (in each case the same as or similar to the Contract) 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 Lenders specifically for the purposes of this Project and to which this Contract 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 Deductions [specify] that were made to the Unitary Charge under Schedule 4 (Payment Mechanism) in the Month immediately preceding the Termination Date, less an amount equal to [specify deduction] that was made for a Facility where Contract Waste was not Accepted at the Termination Date but where subsequently Contract Waste is able to be Accepted whether as a result of the Authority incurring Rectification Costs or otherwise;89

Maximum Unitary Charge

means in respect of a Month, the Base Payment payable during that Month as adjusted in accordance with paragraph [             ] of Schedule 4 (Payment Mechanism) [and (specify pass through costs subject to the applicable caps)] and allowing for indexation in accordance with Schedule 4 (Payment Mechanism);

New Contract

means an agreement on the same terms and conditions90 as this Contract91 at the Termination Date, but with the following amendments:

(a)  if this Contract is terminated prior to the Services Commencement Date, then the Planned Services Commencement Date shall be extended by a period to allow a New Contractor92 to achieve the issue of the Acceptance Certificate;

(b)  [any accrued [performance points and/or warning notices] shall for the purposes of termination only, and without prejudice to the rights of the Authority to make financial deductions, shall be cancelled;]93

(c)  the term of such agreement shall be equal to the term from the Termination Date94 to the Expiry Date;

(d)  the inclusion of a provision confirming that in the event that any New Contractor Rectification Works are required (in relation to a Facility that has, at the Termination Date, had an Acceptance Test Certificate issued) to enable the New Contractor to achieve the full specification and standards required by this Contract then provided the New Contractor complies with the New Contractor Rectification Plan for the New Contractor Rectification Period the Authority shall not exercise its rights to terminate the Contract under Clause 67 (Termination for Contractor Default) by reason of any failure to achieve some or all of the specification and/or standards required by this Contract during the New Contractor Rectification Period solely as a consequence of the New Contractor Rectification Works being required.  Such provision shall for the avoidance of doubt not affect the Authority's entitlement to make adjustments and/or deductions in accordance with Schedule 4 (Payment Mechanism) as a result of failure to achieve the specification and/or standards required by this Contract during the New Contract Rectification Period; and

(e)  any other amendments which do not adversely affect the Contractor;

New Contractor

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

Notice Date

means the later of the Termination Date and (if applicable) the date that the Adjusted Estimated Fair Value is agreed between the Parties pursuant to paragraph 3 (No Retendering Procedure) of Part 3 (Compensation on Termination for Contractor Default);

Outstanding Principal

means the principal amount outstanding at the Termination Date of each borrowing (other than any borrowing under any equity bridge facility) under the Senior Financing Agreements;

Prohibited Act Termination Amount

shall bear the meaning ascribed to it in Part 4 (Compensation following Corrupt Gifts and Fraud) in this Schedule 17 (Compensation on Termination);

Post Termination Service Amount95

means for the purposes of paragraph 2 (Retendering Procedure) of Part 3 (Compensation on Termination for Contractor Default), 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 Unitary Charge which would have been payable in that Month under this Contract including any Third Party Income actually received by the Authority less any costs (and depreciation and other charges) incurred in generating such Third Party Income had this Contract not been terminated, less an amount equal to the aggregate of:

(a)  the Market Value Availability Deduction Amount for that Month;

(b)  the Rectification Costs incurred by the Authority in that Month;

(c)  the Authority share of any Third Party Income in that month; and

(d)  (where relevant) the amount by which the Post Termination Service Amount for the previous Month was less than zero;9697

Prohibited Act Termination Amount

shall bear the meaning ascribed to it in Part 4 (Compensation following Corrupt Gifts and Fraud) in this Schedule 17 (Compensation on Termination);

Rectification Costs

means for the purposes of any Termination Date that occurs during the Services Period, an amount equal to the reasonable and proper costs incurred by the Authority in a particular Month or part of a Month in providing the Services including Landfill, pre and post treatment or other disposal costs to the extent necessary;

Relevant Assumptions

means the assumptions that:

(i)  the sale of the Contractor is on the basis that there is no default by the Authority; and

(ii)  the sale is on a going concern basis, that no restrictions exist on the transfer of share capital; and

(iii)  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; and

(iv)  Third Party Income is assumed to be no higher than the lower of

(1)  the average Third Party Income received by the Contractor on a monthly basis in the twenty four (24) month period immediately prior to the month in which the Termination Date occurs (or where there have been more than six months but less than twenty four months from the Services Commencement Date the average of such Third Party Income in the months during the Service Period or where the Termination Date is sooner than sixth months from the Services Commencement Date limb 2 below shall apply) and

(2)  the amount relating to Third Party Income set out in the original Base Case,98

but that otherwise the actual state of affairs of the Contractor and the Project is taken into account;

Revised Senior Debt Termination Amount

means subject to Clause 7.4.2 (Changes to Financing Agreements and Ancilliary Documents):

(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 the Contractor to the Senior Lenders in respect of Permitted Borrowing;

(b)  all amounts including costs of early termination of interest rate hedging arrangements and other breakage costs, payable by the Contractor to the Senior Lenders 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 Contract, subject to the Contractor and the Senior Lenders 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 Joint Insurance Account held by or on behalf of the Contractor) 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 Lenders to the Contractor 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 Contract

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

(v)  APB Distributions;

Senior Debt Rate

means [incorporate the non default interest rate as defined in the Senior Financing Agreements] or such other lower rate as the Parties may agree;

Sub-Contractor Breakage Costs

means Losses that have been or will be reasonably and properly incurred by the Contractor as a direct result of the termination of this Contract, but only to the extent that:

(a)  the Losses are incurred in connection with the Project and in respect of the provision of services or completion of works, including:

(i)  any materials or goods ordered or Sub-Contracts99, placed that cannot be cancelled without such Losses being incurred;

(ii)  any expenditure incurred in anticipation of the provision of services or the completion of works in the future;

(iii)  the cost of demobilisation including the cost of any relocation of equipment used in connection with the Project; and

(iv)  redundancy payments

[except that where this definition applies following termination of this Contract pursuant to paragraph 3.5 of Schedule 26 (Planning) the Authority's liability to compensate the Contractor for Losses arising under paragraph (a) above shall be no greater than [£[             ]100]; and

(b)  the Losses are incurred under arrangements and/or agreements that are consistent with terms that have been entered into in the ordinary course of business and on reasonable commercial terms;101 and

(c)  the Contractor and the relevant Sub-Contractor, Off-Take contractor or Third Party Waste contractor has each used its reasonable endeavours to mitigate the Losses;

Losses as referred to in this definition may, without prejudice to the generality of the other provisions of this definition, include Losses which relate to the breakage or cancellation of Off-Take Contracts or Third Party Waste Contracts but only to the extent that the terms of such Off-Take or Third Party Waste Contracts are in compliance with clause 51102 of the Contract and such contracts cannot be cancelled without incurring such Losses;

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 Contract;

Tender Process

means the process by which the Authority requests tenders from any parties interested in entering into a New Contract, evaluates the responses from those interested parties and enters into a New Contract with a new service provider, in accordance with paragraph 2 (Retendering Procedure) of Part 3 (Compensation on Termination for Contractor Default);

Tender Process Monitor

means a third party appointed by the Contractor pursuant to paragraph 2 (Retendering Procedure) of Part 3 (Compensation on Termination for Contractor Default);

Termination Date Discount Rate

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

(a)  "real base case project IRR" is the real pre-tax Project IRR as set out in the Base Case103;

(b)  "i" is the agreed assumed forecast rate of increase in the Index set out in the Contract for the remaining term of the Contract;

(c)  "Gilt A" is the real yield to maturity on a benchmark government Gilt instrument of the same maturity as the average life as determined from the Base Case at Financial Close of the Senior Debt; and

(d)  "Gilt B" is the real yield to maturity on a benchmark government Gilt instrument of the same maturity as the average life as determined from the Base Case as at the Termination Date, of the Senior Debt outstanding on that date

Termination Sum

means any compensation payable by the Authority to the Contractor on an early termination of this Contract under Clauses 66 (Compensation on Termination for Authority Default), 68 (Compensation on Termination for Contractor Default), 70 (Compensation on Termination for Force Majeure), 72 (Compensation on Termination for Corrupt Gifts and Fraud), 74 (Compensation on Voluntary Termination by the Authority), 74B (Compensation on Termination on an Authority Break Point Date) and 76 (Compensation on Termination for Breach of the Refinancing Provisions) (excluding the Adjusted Highest Compliant Tender Price);104 105