1.  AMOUNT

1.1.  On termination of this Contract pursuant to:

1.1.1.  Clause 57.3.1(a) or 57.3.1(b); or

1.1.2.  Clause 69 (Termination on Force Majeure),

the Authority shall pay116 to the Contractor the Force Majeure Termination Sum in accordance with this Part 5 (Compensation on Termination for Force Majeure or Uninsurability).

1.2.  Subject to paragraphs 1.4 to 1.6 below the Force Majeure Termination Sum shall be an amount equal to the aggregate of:

1.2.1.  the Base Senior Debt Termination Amount;

1.2.2.  the Junior Debt less an amount equal to the aggregate of payments of interest made by the Contractor under the Subordinated Financing Agreements;117

1.2.3.  all amounts paid to the Contractor by way of subscription for shares in the capital of the Contractor less dividends and other distributions paid to the shareholders of the Contractor (save to the extent deducted under paragraph 1.2.2 above); and118

1.2.4.  redundancy payments for employees of the Contractor that have been or will be reasonably incurred by the Contractor as a direct result of termination of this Contract and any Sub-Contractor Breakage Costs.

1.3.  If the amounts referred to in paragraphs 1.2.2 and/or 1.2.3 are less than zero, then, for the purposes of the calculation in paragraph 1 they shall be deemed to be zero.

1.4.  If the aggregate of the amounts referred to in paragraphs 1.2.1, 1.2.2 and 1.2.3 is less than the Revised Senior Debt Termination Amount, then the Force Majeure Termination Sum shall be increased so that it is equal to the aggregate of the Revised Senior Debt Termination Amount and the amount referred to in paragraph 1.2.4 provided always that:

1.4.1.  the amount referred to in paragraph 1.2.4 shall only be paid to the extent that the Contractor has demonstrated to the reasonable satisfaction of the Authority that the amount will not be paid in payment (in whole or in part) of any Distribution; and

1.4.2.  if, at the time of termination, there are any Additional Permitted Borrowings outstanding, no Sub-Contractor Breakage Costs shall be paid in respect of any Sub-Contract in circumstances where there is an event of default under such Sub-Contract which would entitle the Contractor to terminate such Sub-Contract.

1.5.  If a Distribution is made whilst any Additional Permitted Borrowing is outstanding and the Contractor has wilfully, or through gross negligence, failed to comply with its obligations under paragraph 11.4.4 (a) of the Direct Agreement then in addition to the deduction of the Distribution referred to in paragraph (v) of the definition of Revised Senior Debt Termination Amount, the Authority shall be entitled to set off the value of that Distribution a second time against the Force Majeure Termination Sum, provided that the amount of the Force Majeure Termination Sum will never be less than the Revised Senior Debt Termination Amount.

1.6.  If the Contractor has wilfully or through gross negligence failed to comply with its obligations under paragraph 11.4.4 (b) of the Direct Agreement and there has been an overstatement of the cash balances by the Contractor as at that date which has caused the Authority to reasonably believe that it would be required to pay a lesser sum at the Termination Date than it actually is required to pay under the terms of this Part 5 (Compensation on Termination for Force Majeure or Uninsurability), then the Force Majeure Termination Sum shall be reduced by the amount of such overstatement (to the extent such overstatement is still applicable at the Termination Date), provided that the amount of the Force Majeure Termination Sum will never be less than the Revised Senior Debt Termination Amount.

1.7.  If a Force Majeure Termination occurs as a result of the operation of clause 3.5 of Schedule 26 (Planning) than for the purposes of clauses 1.2 above:

1.7.1.  The Base Senior Debt Termination Amount shall be no higher than [£      ] (excluding the breakage of any hedging arrangements which shall be calculated to reflect the date of Termination);

1.7.2.  The amounts under paragraphs 1.2.2 and 1.2.3 (Junior Debt and subscription in equity shall be no higher than [£      ]; and

1.7.3.  The amounts under paragraph 1.2.4 shall be no higher than [£         ]119

and paragraph 1.4 shall not apply.

1.8.  If a Force Majeure Termination occurs as a result of the operation of clause 3.5 of Schedule 27 (Approach to Permit Risk) than for the purposes of clauses 1.2 above:

1.8.1.  The Base Senior Debt Termination Amount shall be no higher than [£         ] (excluding the breakage of any hedging arrangements which shall be calculated to reflect the date of Termination);

1.8.2.  The amounts under paragraphs 1.2.2 and 1.2.3 (Junior Debt and subscription in equity shall be no higher than [£         ]; and

1.8.3.  The amounts under 1.2.4 shall be no higher than [£             ] and

and paragraph 1.4 shall not apply.

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116  See Section 22 (Calculation and Payment of Early Termination Payment) of SoPC4 for the rights of set-off against such payments.

117  The Junior Debt documentation should be checked to ensure that interest accrued, but not paid, will not come within the definition of Junior Debt. If it does, paragraph 1.2.2 should be amended, to provide for its deduction.

118  The effect of this paragraph is to ensure that there are no circumstances in which a refund to the Authority is required.

119  The Bidders ought to be able to fix these costs at Final Tender stage so that Authorities may evaluate. The extent to which the sponsors are prepared to share planning risk by absorbing some of the bid and development costs equally is for evaluation. In each case, the compensation for failure to obtain a Satisfactory Permit for which the Authority is liable should be set at a different (lower) threshold than that for failure to obtain a Satisfactory Planning Permission.  This is as per WIDP Guidance in the Direction of Travel paper (December 2009).