Part 1 - Definitions

The definitions of the terms used in this Schedule shall have the meaning given to them in clause 1 of the Agreement and otherwise shall have the meaning provided below:

Adjustment Amount means either

(a) where paragraph 1.5 of Part 2 of the Schedule applies the amount by which the Unitary Charge should be decreased to take account of the fact that Leisure Operator Income in the relevant Income Benchmarking Period has increased as measured against the net income projection in the Leisure Operators Base Trading Account; or

(b) where paragraph 1.4 of Part 2 of this Schedule applies the amount by which the Unitary Charge should be increased to take account of the fact that Leisure Operator Income in the relevant Income Benchmarking Period has reduced (after making an adjustment for any reduction in Related Operator Costs that ought reasonably to have been generated from the lower usage of the Facilities having regard to the Contractor's obligations under this Agreement and to the duty to mitigate as set out in Clause 28.4 (Third Party Income) as measured against the net income projection in the Leisure Operator's Base Trading Account and which reflects the projected Leisure Operator Income in the period up to the next Income Benchmarking Date

Authority Sponsored Facility means [♦]

Benchmark Consultant means an expert appointed by agreement between the Parties (subject to paragraph 2.7.1 of Part 2 of this Schedule) who:

(a) possesses at least five (5) years' experience of operating in, or as a consultant to, the leisure and facilities management industries;

(b) possesses at least five (5) years' experience of valuing services provided in the leisure and facilities management industries; and

(c) is engaged or employed by a reputable independent leisure organisation which is independent of the Parties and of any other leisure operator,

or in the absence of any such agreement:

(i) the President of ILAM; or where such person is unwilling or unable to act;

(ii) such person as the President of ILAM may nominate within ILAM; or where such person is unwilling or unable to act;

(iii) a person appointed by such other mutually agreed professional body; or where the Parties cannot agree on such person;

(iv) such other competent person who is appointed by an Adjudicator;

provided that the person appointed is independent of the Parties and satisfies the criteria set out in (a) to (c) of this definition

Bidding Requirements means the requirements that each such bidder:

(a) is capable of performing the Market Tested Service;

(b) has the legal capacity to enter into relevant documents and accept the obligations and liabilities imposed on the existing Leisure Operator under the Leisure Contract and the other agreements to which it is a party in relation to the Project;

Comparable Market means local authority leisure facilities operated under PFI or other forms of PPP including Private Finance Transactions as defined in Regulation 16 of the Local Authorities (Capital Finance) Regulations 1997 (as amended) provided that where there are less than five (5) such facilities of similar content or less than three (3) contractors operating such contracts the Comparable Market shall be the market for operation of local authority leisure facilities by a private sector leisure operator

Competing Facility means a new Authority Sponsored Facility within a one and a half (1.5) mile radius of the Facility:

(a) which offers:

(i) services similar to the Leisure Services in competition with the Facility; and

(ii) accommodation of a standard similar to the Facility; and

(iii) costs to Users which are similar to those charged at the Facility; and

(b) was not under active consideration and known to the Contractor as at the date of this Agreement

Income Benchmarking Date means [♦]1 and each [♦] in anniversary of such date

Income Benchmarking Report means the report to be produced by the Benchmark Consultant pursuant to Part 2 of this Schedule

Income Benchmarking Period means the period of [♦]2 years immediately preceding an Income Benchmarking Date

Income Benchmarking Process means the procedure set out in Part 2 of this Schedule

Income Notice has the meaning given to it in paragraph 5.1 of Part 2 of this Schedule

Income Proposal has the meaning given to it in paragraph 2.1 of Part 2 of this Schedule

Leisure Operator's Base Trading Account or LOBTA means the financial model of the Leisure Operator set out as a worksheet in the Financial Model as at the Commencement Date which (for the purposes of this Schedule) shall not be changed or varied other than for Authority Changes, Contractor Change (but only where the Authority expressly agrees to amendment of the LOBTA), Qualifying Change in Law or on a Income Benchmarking Process pursuant to this Schedule

Leisure Operator Income means the total of:

(a) the income received by the Leisure Operator from Users of the Facility;

(b) payment by third parties for use of the Facility for events such as conferences, parties and the like;

(d) any income generated from advertising, product placement and the like, including a notional credit for any sponsorships or product placement which reduces the Leisure Provider's costs of providing the Services; and

(e) any other income earned as a result of use of the Facility.

Leisure Operators Profit means the amount of profit the Leisure Operator has assumed as set out in the LOBTA being ♦%3

Market Test means a competitive tendering exercise pursuant to which reputable organisations of good financial standing (taking account of the need and ability to comply with the obligations in Part 3 of this Schedule) each with at least three (3) years' experience of providing the Market Tested Service to local authorities, are invited to submit a tender for all of the Market Tested Service provided that nothing herein shall prevent the Leisure Operator from participating in such Market Test

Market Test Date means [to be inserted on project specific basis]4

Market Tested Service means the Leisure Services

Related Operating Costs means all operational costs and management costs incurred by the Leisure Operator in generating Leisure Operator Income but excluding the Leisure Operators Profit

Successful Tenderer has the meaning given to it in paragraph 2.7 of Part 3 of this Schedule

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1 The date should allow time for the Income Benchmarking Process and the Market Test to be completed before the Market Test Date. It should be a bid back item, reflect the pricing of risk in the Project by the Contractor and should not be before 5 years after the [final] Services Availability Date.

2 Will reflect the Income Benchmarking Dates.

3 To be bid back.

4 The Authority may require Bidders to bid back this date. It must allow sufficient time for the Benchmarking exercise to be carried out.