1  Definitions

1.1  In each of part of this Schedule 23 the following expressions (in addition to those specified in Schedule 1 (Definitions, Interpretations and Construction)) shall, save where the context or the express provisions of this Contract otherwise requires or admits, have the following meanings:

Distribution means:

(a)  whether in cash or in kind, any:

(i)  dividend or other distribution in respect of share capital;

(ii)  reduction of capital, redemption or purchase of shares or any other reorganisation or variation to share capital;

(iii)  payments under the Subordinated Financing Agreements (whether of principal, interest, breakage costs or otherwise);

(iv)  payment, loan, contractual arrangement or transfer of assets or rights to the extent (in each case) it was put in place after Financial Close and was neither in the ordinary course of business nor on reasonable commercial terms; or

(v)  the receipt of any other benefit which is not received in the ordinary course of business and on reasonable commercial terms; or

(b)  the early release of any Contingent Funding Liabilities, the amount of such release being deemed to be a gain for the purposes of any calculation of Refinancing Gain

EEA means from time to time the European Economic Area as created by The Agreement on the European Economic Area 1992 or any successor or replacement body, association, entity or organisation which has assumed either or both the function and responsibilities of the European Economic Area

Equity IRR means the projected blended rate of return to the Relevant Persons over the full term of this Contract, having regard to Distributions made and projected to be made

Exempt Refinancing means:

(a)  any Refinancing that was fully taken into account in the calculation of the Unitary Charge;

(b)  a change in taxation or change in accounting treatment;

(c)  the exercise of rights, waivers, consents and similar actions which relate to day to day administrative and supervisory matters, and which are in respect of:

(i)  breach of representations and warranties or undertakings;

(ii)  movement of monies between the Project Accounts in accordance with the terms of the Senior Financing Agreements as at Financial Close;

(iii)  late or non-provision of information, consents or licences;

(iv)  amendments to Sub-Contracts;

(v)  approval of revised technical and economic assumptions for financial model runs (to the extent required for forecasts under the Financing Agreements);

(vi)  restrictions imposed by the Senior Lenders on the dates at which the Senior Debt can be advanced to the Service Provider under the Senior Financing Agreements and/or amounts released from the [Escrow Account] during [the Initial Availability Period] (each as defined in the Senior Financing Agreements) and which are given as a result of any failure by the Service Provider to ensure that the construction and installation works are performed in accordance with the agreed construction and installation programme and which are notified in writing by the Service Provider or the Senior Lenders to the Authority prior to being given;

(vii)  changes to milestones for drawdown and/or amounts released from the [Escrow Account] during [the Initial Availability Period] (as set out in the Senior Financing Agreements) and which are given as a result of any failure by the Service Provider to ensure that construction and installation works are performed in accordance with the agreed construction and installation programme and which is notified in writing by the Service Provider or the Senior Lenders to the Authority prior to being given;

(viii)  failure by the Service Provider to obtain any consent by statutory bodies required by the Senior Financing Agreements; or

(ix)  voting by the Senior Lenders and the voting arrangements between the Senior Lenders in respect of the levels of approval required by them under the Senior Financing Agreements;

(d)  any amendment, variation or supplement of any agreement approved by the Authority as part of any Qualifying Variation under this Contract;

(e)  any sale of shares in the Service Provider [or Holdco] by the shareholders or securitisation of the existing rights and/or interests attaching to shares in the Service Provider [or Holdco provided that this paragraph (e) shall, in respect of shares in Holdco, only apply for so long as Holdco holds one hundred per cent (100%) of the issued share capital of the Service Provider];

(f)  any sale or transfer of the Subordinated Lenders' existing rights and/or interests under the Subordinated Financing Agreements or securitisation of the Subordinated Lenders' existing rights and/or interests under the Subordinated Financing Agreements; or

(g)  any Qualifying Bank Transaction

Financial Close shall have the meaning given to it in the Senior Financing Agreements

Insurance Undertaking has the meaning given in the rules from time to time of the Financial Services Authority

Notifiable Financings shall mean any Refinancing described in paragraph (a) or (c) of the definition of Refinancing and any other arrangement which has or would have a similar effect or which has or would have the effect of limiting the Service Provider's or any Associated Company's ability to carry out any such arrangement

Pre-Refinancing Equity IRR means the nominal post-tax (i.e. post-tax with respect to the Service Provider, pre-tax with respect to the Shareholders) Equity IRR calculated immediately prior to the Refinancing

Project Accounts means accounts referred to in and required to be established under the Senior Financing Agreements

Qualifying Bank Transaction means:

(a)  the syndication by a Senior Lender, in the ordinary course of its business, of any of its rights or interests in the Senior Financing Agreements;

(b)  the grant by a Senior Lender of any rights of participation, or the disposition by a Senior Lender of any of its rights or interests (other than as specified in paragraph (a) above), in respect of the Senior Financing Agreements in favour of:

(i)  any other Senior Lender;

(ii)  any institution which is recognised or permitted under the law of any member state of the EEA to carry on the business of a credit institution pursuant to Council Directive 2000/12/EC relating to the taking up and pursuit of the business of credit institutions or which is otherwise permitted to accept deposits in the United Kingdom or any other EEA member state;

(iii)  a local authority or public authority;

(iv)  a trustee of a charitable trust which has (or has had at any time during the previous two (2) years) assets of at least ten million pounds (£10,000,000) (or its equivalent in any other currency at the relevant time);

(v)  a trustee of an occupational pension scheme or stakeholder pension scheme where the trust has (or has had at any time during the previous two (2) years) at least fifty (50) members and assets under management of at least ten million pounds (£10,000,000) (or its equivalent in any other currency at the relevant time);

(vi)  an EEA or Swiss Insurance Undertaking;

(vii)  a Regulated Collective Investment Scheme;

(viii)  any Qualifying Institution; or

(ix)  any other institution in respect of which the prior written consent of the Authority has been given; and/or

(c)  the grant by a Senior Lender of any other form of benefit or interest in either the Senior Financing Agreements or the revenues or assets of the Service Provider [or Holdco], whether by way of security or otherwise, in favour of:

(i)  any other Senior Lender;

(ii)  any institution specified in paragraphs (b)(ii) to (b)(vii);

(iii)  any Qualifying Institution; or

(iv)  any other institution in respect of which the prior written consent of the Authority has been given

Qualifying Institution means [Bidders to propose if required and any proposals must detail specific parties/institutions]

Qualifying Refinancing means any Refinancing that will give rise to a Refinancing Gain greater than zero that is not an Exempt Refinancing

Refinancing means:

(a)  any amendment, variation, novation, supplement or replacement of any Financing Agreement (other than any Subordinated Financing Agreement);

(b)  the exercise of any right, or the grant of any waiver or consent, under any Financing Agreement (other than any Subordinated Financing Agreement);

(c)  the disposition of any rights or interests in, or the creation of any rights of participation in respect of, the Financing Agreements (other than the Subordinated Financing Agreements) or the creation or granting of any other form of benefit or interest in either the Financing Agreements (other than the Subordinated Financing Agreements) or the contracts, revenues or assets of the Service Provider whether by way of security or otherwise; or

(d)  any other arrangement put in place by the Service Provider or another person which has an effect which is similar to any of (a) - (c) above or which has the effect of limiting the Service Provider's or any Associated Company's ability to carry out any of (a) - (c) above

Refinancing Gain means an amount equal to the greater of zero and [(A-B) - C], where:

A =  the Net Present Value of the Distributions projected immediately prior to the Refinancing (taking into account the effect of the Refinancing and using the Base Case as updated (including as to the performance of the Project) so as to be current immediately prior to the Refinancing) to be made to each Relevant Person over the remaining term of the Contract following the Refinancing;

B =  the Net Present Value of the Distributions projected immediately prior to the Refinancing (but without taking into account the effect of the Refinancing and using the Base Case as updated (including as to the performance of the Project) so as to be current immediately prior to the Refinancing) to be made to each Relevant Person over the remaining term of the Contract following the Refinancing; and

C =  any adjustment required to raise the Pre-Refinancing Equity IRR to the Threshold Equity IRR

Refinancing Notice has the meaning given in paragraph 4.1 of this Schedule 23

Regulated Collective Investment Scheme has the meaning given in the rules from time to time of the Financial Services Authority

Relevant Person means a Shareholder and any of its Affiliates

Shareholder means any person from time to time holding share capital in the Service Provider or [HoldCo1]

Threshold Equity IRR means [¨] per cent per annum

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1 If the Contractor is not a company incorporated under the Companies Acts the definition should be revised to include all equity investors; for example to include the general and limited partners in a limited partnership.