1. Calculation of Payment

1.1 On termination of this Agreement pursuant to:

(a) clause 55.1 or clause 55.2 (Voluntary Termination and Termination on Authority Break Point Date) of this Agreement; or

(b) clause 56 (Termination on Authority Default) of this Agreement; or

the Authority shall pay to the Service Provider the Termination Sum for Authority Default on the Termination Date, in accordance with this Part 2.

1.2 On termination of this Agreement pursuant to clause 55.2 (Termination on an Authority Break Point Date), the Authority shall pay, in accordance with this Part 2, to the Service Provider the Termination Sum for Authority Default on the Termination Date, save that in calculating such amount, the amount specified in paragraph 1.3(c) shall be substituted by:

[(A) in the case of termination on the first Authority Break Point Date,] £[ ]; [or]

(B) [in the case of termination on the second Authority Break Point Date, £[ ];]

1.3 Subject to paragraphs 1.4 to 1.6 (inclusive), the Termination Sum for Authority Default shall be an amount equal to the aggregate of:

(a) the Base Senior Debt Termination Amount;

(b) redundancy payments for employees of the Service Provider that have been, or will be, reasonably incurred by the Service Provider as a direct result of termination of this Agreement and any Sub-Contractor Breakage Costs; and

(A) dividends (or other distributions) paid by the Service Provider on its share capital on or before the Termination Date;

(B) interest paid and principal repaid by the Service Provider under the Subordinated Financing Agreements on or before the Termination Date,

taking account of the actual timing of all such payments, gives a real internal rate of return on the share capital subscribed and amounts advanced under the Subordinated Financing Agreements equal to the Base Case Equity IRR; or]

(c) [the aggregate amount for which the share capital of the Service Provider and the amounts outstanding under the Subordinated Financing Agreements could have been sold on an open market basis based on the Relevant Assumptions; or]

(c) [all amounts shown in the Base Case as payable by the Service Provider from the Termination Date, either in dividends or other distributions on the share capital of the Service Provider or as payments of interest or repayments of principal made by the Service Provider under the Subordinated Financing Agreements, each amount discounted back at the Base Case Equity IRR from the date on which it is shown to be payable in the Base Case to the Termination Date.]

1.4 If the aggregate of the amounts referred to in paragraphs 1.3(a) and 1.3(c) is less than the Revised Senior Debt Termination Amount, then the Termination Sum for Authority Default 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 1.3(b) provided always that:

(a) the amount referred to in paragraph 1.3(b) shall only be paid to the extent that the Service Provider 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

(b) 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 Service Provider to terminate such Sub-Contract.

1.5 If a Distribution is made whilst any Additional Permitted Borrowing is outstanding and the Service Provider has wilfully, or through gross negligence, failed to comply with its obligations under clause [10.5(d)(i)] of the Senior Lender's 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 Termination Sum for Authority Default, provided that the amount of the Termination Sum for Authority Default will never be less than the Revised Senior Debt Termination Amount.

1.6 If the Service Provider has wilfully or through gross negligence failed to comply with its obligations under clause [9.4(d)] of the Senior Lender's Direct Agreement and there has been an overstatement of the cash balances by the Service Provider 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 paragraph 1, then the Termination Sum for Authority Default, 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 Termination Sum for Authority Default will never be less than the Revised Senior Debt Termination Amount.