N.B. Definitions which are "required drafting" (see further Section 2.1.1 (Application and Implementation)) are marked with an asterisk.
* "Abandon'' Chapter 23
means, not to carry out any Works contemplated by the [Construction Programme] at the Site for twenty (20) consecutive Business Days or during sixty (60) Business Days (whether consecutive or not) in any twelve (12) month period
* "Actual Relevant Insurance Cost" Chapter 17
means the aggregate of the annual insurance premiums reasonably incurred by the Contractor to maintain the Relevant Insurance during the Insurance Review Period but excluding insurance premium tax and all broker's fees and commissions
* "Additional Permitted Borrowing"
means on any date, the amount equal to any amount of principal outstanding under the Senior Financing Agreements (as the same may from time to time be amended, whether or not with the approval of the Authority) in excess of the amount of principal scheduled under the Senior Financing Agreements at Financial Close to be outstanding at that date,
but only to the extent that:
(a) this amount is less than or equal to the Additional Permitted Borrowings Limit; and
(b)inrespect of any Additional Permitted Borrowing the Agent is not in material breach of its obligations under Clause 11(d)(iii) of the Funders' Direct Agreement as it applies to such Additional Permitted Borrowing
and provided further that any such excess amount of principal which is: (i) invested as part of any Qualifying Variation or (ii) outstanding from time to time as a result of any drawing under the Senior Financing Agreements as entered into at the date of this Contract, disregarding any subsequent amendment or (iii) outstanding from time to time as a result of any amendment to the Senior Financing Agreements in respect of which the Authority has agreed that its liabilities on a termination may be increased pursuant to Clause 12.2(a), shall not be counted as Additional Permitted Borrowing
* "Additional Permitted Borrowings Limit"
means an amount equal to:
(a) 10% of the Original Senior Commitment for any Additional Permitted Borrowing subsisting in the period from the date of Financial Close to the date on which the amount outstanding under the Senior Financing Agreements is reduced to 50% or less of the Original Senior Commitment, and thereafter;
(b) the higher of:
(i) 5% of the Original Senior Commitment; and
(ii) the amount of any Additional Permitted Borrowing outstanding on the last day of the period referred to in (a)
* "Adjusted Estimated Fair Value of the Contract" Chapter 23
means the Estimated Fair Value of the Contract, less an amount equal to the aggregate of:
(a) where relevant any Post Termination Service Amounts 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 22 (Set-off ),
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 (and which the Contractor is entitled to retain), to the extent not included in (i); 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 calculating the Estimated Fair Value of the Contract; and
(B) the Authority has received such amounts in accordance with the Contract or such amounts are standing to the credit of the Joint Insurance Account
* "Adjusted Highest Compliant Tender Price" Chapter 23
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 22 (Set-off ),
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); 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
means any interests, rights, covenants, restrictions, stipulations, easements, customary or public rights, local land charges, mining or mineral rights, franchise, manorial rights and any other rights or interests in or over land, in each case whether or not registered that would, if exercised, prevent or disrupt the carrying out of the Works and/or the provision of the Services
* "Affiliate"
means in relation to any person, any Holding Company or subsidiary of that person or any subsidiary of such holding company and "holding company" and "subsidiary" shall have the meaning given to them in Section 1159 of the Companies Act, save that for the purposes of determining whether one entity is an Affiliate of another any transfer of shares by way of security or to a nominee of the transferor shall be disregarded
means [ ] in its capacity as agent for the Senior Lenders under the Senior Financing Agreements
"Annual Contract Review" Chapter 7
shall have the meaning given to it in Clause 7.18.1.1 (Annual Contract Review)
"Annual Review Reports" Chapter 7
shall have the meaning given to it in Clause 7.18.1.2 (Annual Contract Review)
means a report to be prepared each year identifying and setting out a plan for improvement in the delivery of Services to be implermented during the forthcoming year
* "APB Distribution"
means, for the period during which the Additional Permitted Borrowing subsists, an amount equal to the aggregate of all Distributions made during that period up to an amount equal to the principal of the Additional Permitted Borrowing on the first day of that period
means all assets and rights to enable the Authority or a successor contractor to own, operate and maintain the Project in accordance with this Contract, including:
(a) any land or buildings;
(b) any equipment;
(c) any books and records (including operating and maintenance manuals, health and safety manuals and other know-how);
(d) any spare parts, tools and other assets (together with any warranties in respect of assets being transferred);
(e) any revenues and any other contractual rights; and
(f) any intellectual property rights,
but excluding any assets and rights in respect of which the Authority is full legal and beneficial owner
means in respect of a relevant company, a company which is a subsidiary, a Holding Company or a company that is a subsidiary of the ultimate Holding Company of that relevant company, and in the case of the Contractor shall include [Holdco and] each of the Shareholders, save that for the purposes of determining whether one entity is an Associated Company of another any transfer of shares by way of security or to a nominee of the transferor shall be disregarded
"Authority Services Excusing Cause"
means:
(a) any breach of any express provision of this Contract [and/or the Interface Protocol] by the Authority or any Authority Service Provider (unless, and to the extent, caused or contributed to by the Contractor or any Contractor Related Party);
(b) any deliberate act or omission of the Authority or of any Authority Service Provider or any failure by the Authority or Authority Service Provider (having regard always to the interactive nature of the activities of the Authority and of the Contractor) to take reasonable steps to carry out its activities in a manner which does not impede the Contractor in the performance of the Services, save where (and to the extent):
(i) caused or contributed to by the Contractor or any Contractor Related Party;
(i) the Authority or Authority Service Provider is acting in accordance with a recommendation or instruction of the Contractor or any Contractor Related Party;
(ii) any such act or omission giving rise to such failure was within the contemplation of the parties or was otherwise provided for in this Contract ; or
(iii) the consequences of any such deliberate act or omission or other acts or omissions giving rise to such failure would have been prevented by the proper performance of the Contractor's obligations under this Contract; or
the carrying out of planned maintenance in accordance with the agreed Schedule of Planned Maintenance.
"Authority Break Point Date" Chapter 23
means [ ]
"Authority Maintenance Obligations" Chapter 7
means those Minor Maintenance Obligations which the Authority has at any time decided to carry out itself or procure their provision by an Authority Related Party, as permitted by the Contract
"Authority Related Party" Chapter 14
means an officer, agent, contractor, employee or sub-contractor (of any tier) of the Authority acting in the course of his office or employment or appointment (as appropriate) [ and [ ]] but excluding in each case the Contractor and any Contractor Related Party
"Authority Service Provider" Chapter 7
means an Authority Related Party appointed by the Authority from time to time to undertake all or any part of the Authority Services
"Authority Services" Chapter 7
means
(a) the services described as soft services in Part [ ] and listed as soft services in Part [ ] of Schedule 3 ( Services Output Specification)
(b) the Authority Maintenance Obligations; and
(c) the Elective Services (except to the extent that the Authority has at any time elected that the Contractor shall carry out such services as permitted by the Contract)
"Authority Services Training Plan" Chapter 7
means the plan relating to the training of staff responsible for delivering the Authority Services as agreed between the Authority and the Contractor
* "Base Case"
means the financial model agreed between the parties prior to the date of this Contract (as updated from time to time in accordance with the terms of this Contract)18 for the purpose of, amongst other things, calculating the Unitary Charge
* "Base Case Equity IRR" Chapter 23
means [•]%
* "Base Cost" Chapter 17
means £ [ ] being the amount as agreed at the Bid Date and set out in the financial model which represents the insurance costs (which excludes amounts in respect of insurance premium tax and all brokers' fees and commissions) which are proposed to be incurred to maintain the Relevant Insurance in each year following the Services Commencement Date, expressed in real terms as at the Bid Date
* "Base Relevant Insurance Cost" Chapter 17
means, the aggregate of the Base Costs which were (at Bid Date) projected to be incurred to maintain the Relevant Insurance during the Insurance Review Period indexed by actual RPI from the Bid Date up to the dates on which the Relevant Insurance was placed or renewed either immediately before or during the Insurance Review Period (as applicable in respect of the year in question) less any Base Relevant Insurance Reduction
* "Base Relevant Insurance Reduction" Chapter 17
means the reduction to be made to the Base Relevant Insurance Cost in respect of a risk which has become Uninsurable or a term or condition which is no longer available and shall be an amount that is either:
(a) the amount by which the Base Relevant Insurance Cost would have been a lesser amount had such a risk been Uninsurable or such a term or condition been unavailable at the Bid Date (which amount, for the avoidance of doubt, can be £0); or
(b) if it is impossible to determine an amount pursuant to paragraph (a) above, an amount that is reasonable to be deducted from the Base Relevant Insurance Cost having due regard to:
(i) the amount by which the Actual Relevant Insurance Cost is less than it would have been as a result of the risk becoming Uninsurable, or the term or condition becoming unavailable (the "Actual Reduction");
(ii) the size of the Actual Reduction as a percentage of the Actual Relevant Insurance Cost immediately prior to the risk becoming Uninsurable, or the term or condition becoming unavailable; and
(iii) the effects of RPI since the Bid Date
* "Base Senior Debt Termination Amount"
means, subject to Clause 12.2 (No Increased Liability from Changes to Project Documents or Financing Agreements):
(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 in respect of Permitted Borrowing19 (other than in respect of Additional Permitted Borrowing); and
(b) all amounts including costs of early termination of interest rate hedging arrangements and other breakage costs,20 payable by the Contractor to the Senior Lenders21 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 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 Base Senior Debt Termination Amount or the amounts below):
(i) all credit balances22 on any bank accounts (but excluding the Joint Insurance Account)23 held by or on behalf of the Contractor24 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 outstanding25 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 Contract; 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
* "Business Day"
means a day (other than a Saturday or Sunday) on which banks are open for domestic business in the City of London
* "Business Interruption Cover" Chapter 17
shall bear the meaning ascribed to it in Schedule [ ] (Required Insurance Schedule)
means any expenditure which falls to be treated as capital expenditure in accordance with generally accepted accounting principles in the United Kingdom from time to time26
means the coming into effect after the date of this Contract of:
(a) Legislation, other than any Legislation which on the date of this Contract has been published:
(i) in a draft Bill as part of a Government Departmental Consultation Paper;
(ii) in a Bill;
(iii) in a draft statutory instrument; or
(iv) as a proposal in the Official Journal of the European Union;
(b) any Guidance; or
(c) any applicable judgment of a relevant court of law which changes a binding precedent
* "Change of Ownership" Chapter 6
means
(a) any sale, transfer or disposal of any legal, beneficial or equitable interest in any or all of the shares in the Contractor and/or [Holdco] [and/or [ ]] (including the control over exercise of voting rights conferred on those shares, control over the right to appoint or remove directors or the rights to dividends); and/or
(b) any other arrangements that have or may have or which result in the same effect as paragraph (a) above
* "Commercially Sensitive Information" Chapter 31
means [the sub-set of Confidential Information listed in column 1 of Part 1 (Commercially Sensitive Contractual Provisions) and column 1 of Part 2 (Commercially Sensitive Material) of Schedule [ ] (Commercially Sensitive Information) in each case for the period specified in column 2 of Parts 1 and 2 of Schedule [ ]]
* "Committed Standby Facility"
means a standby facility committed by the Senior Lenders at or at a date later than the date of this Contract or, without prejudice to clause 12.2(a), as the same may be amended as allowed by clause 12.1.3 for the purposes of funding any unforeseen cost overrun, increased expenses or loss of revenues to be incurred by the Contractor
* "Compensation Date" Chapter 23
means either:
(a) if Clause 23.2.8 (Retendering Procedure) 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 Clause 23.2.9 (No Retendering Procedure) applies, the date that the Adjusted Estimated Fair Value of the Contract has been agreed or determined
* "Compensation Event" Chapter 15
means a breach by the Authority of any of its obligations or of any warranty under this Contract
* "Compliant Tender" Chapter 23
means any tender submitted by a Compliant Tenderer that meets the qualification criteria notified under Clause 23.2.8(c)
* "Compliant Tenderer" Chapter 23
means a tenderer who is a Suitable Substitute Contractor
* "Confidential Information" Chapter 31
means:
(a) information that ought to be considered as confidential (however it is conveyed or on whatever media it is stored) and may include information whose disclosure would, or would be likely to, prejudice the commercial interests of any person, trade secrets, Intellectual Property Rights and know-how of either party and all personal data and sensitive personal data within the meaning of the Data Protection Act 1988; and
(b) Commercially Sensitive Information
* "Consents"
means all permissions, consents, approvals, certificates, permits, licenses and authorisations of a Relevant Authority required for the performance of any of the Contractor's obligations under this Contract27
* "Construction Period Insurance" Chapter 17
means the Required Insurance in respect of the period from the date of this Contract to the Service Commencement Date
"Construction Proposals" Chapter 7
means the proposals for the provision of the Facilities to satisfy the Facilities Output Requirements, as set out in Schedule [ ] and as amended pursuant to the terms of this Contract
* "Construction Sub-Contractor"
means the [person performing the construction or development obligations]28
* "Contingent Funding Liabilities"
means29 the contingent or future liabilities to subscribe for equity or subordinated debt (if any) at the relevant time of :
(a) the Shareholders; and/or
(b) the Subordinated Lenders; and/or
(c) any other parties providing equity or subordinated debt
(in each case excluding any liability of the Authority any Authority Related Party) to subscribe for equity or subordinated debt owed under any of the Financing Agreements to the Contractor, Holdco and/or the Senior Lenders together with, without double counting, any security (by way of letter of credit, guarantee or otherwise) for those liabilities
"Contract Efficiency Review" Chapter 7
means the contract efficiency review referred to in Clause 7.19.2.1
"Contract Improvement Report" Chapter 7
means the report referred to in Clause 7.19.2.3
* "Contract Period" Chapter 17
means the period from and including the date of this Contract to the Expiry Date, or if earlier, the Termination Date
"Contract Review Date" Chapter 7
means each Contract review date as referred to in Clause 7.19.1.2
"Contractor's Annual Service Report" Chapter 20
means a report to be prepared by the Contractor each year reporting on service delivery incluyding any performance failures and deductions incurred in the previous year
* "Contractor Default" Chapter 23
means one of the following events:
(a) a breach by the Contractor of any of its warranties or obligations under this Contract which materially and adversely affects the performance of the Service;
(b) a Persistent Breach occurs;
(c) a court makes an order that the Contractor [or Holdco] be wound up or a resolution for a voluntary winding-up of the Contractor [or Holdco] is passed;
(d) any receiver or manager in respect of the Contractor [or Holdco] is appointed or possession is taken by or on behalf of any creditor of any property of the Contractor [or Holdco] that is the subject of a charge;
(e) any voluntary arrangement is made for a composition of debts or a scheme of arrangement is approved under the Insolvency Act 1986 or the Companies Act 2006 in respect of the Contractor [or Holdco];
(f) an administration order is made, or an administrator is appointed in respect of the Contractor [or Holdco];
(g) [a breach by the Contractor of Clause 7.26 (Replacement of Sub-Contractors) occurs;]
(h) [a breach by the Contractor of its obligations in Clause 32 (Assignment) occurs;]
(i) [a breach of Clause 6 (Change of Ownership) occurs;]
(j) the Contractor Abandons the Works at any time;
(k) a failure to achieve the Service Commencement Date by the Longstop Date;
(l) a failure to provide [ ] Available [places/areas] [availability for use] for [x] period;
(m) the accumulation of [ ] or more [performance points] in any [Quarter/Year];
(n) failure to provide [ ] Available [places/areas] for [ ] period [and accumulation of [ ] [performance points] in respect of the same period]; or
(p) subject to Clause 17.9 (Risks that become Uninsurable), a breach by the Contractor of its obligation to take out and maintain Required Insurances
* "Contractor Related Party" Chapter 17
means the Contractor's agents and contractors (including without limitation the Construction Sub-Contractor and the Operating Sub-Contractor) and its or their sub-contractors of any tier and its or their directors, officers, employees and workmen in relation to the Project and any person on or at any of the [sites] at the express or implied invitation of the Contractor (other than the Authority or any [Authority related party])
"Customer Satisfaction Survey" Chapter 20
has the meaning given to it in Clause 20.7 (Customer Satisfaction Survey)
"Customer Satisfaction Survey Date" Chapter 20
means [INSERT DATE OF FIRST SURVEY] and each anniversary thereof during the Contract Period
* "Deemed New Contract" Chapter 23
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 Service Commencement Date, then the Service Commencement Date and/or Planned Handover Date shall be extended by a period to allow a New Contractor to achieve Service Commencement and/or Handover;
(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; and
(c) the term of such agreement shall be for a period equal to the term from the Termination Date to the Expiry Date.
* "Default Interest"
means any increased margin that is payable to the Senior Lenders or which accrues as a result of any payment due to the Senior Lenders not being made on the date on which it is due
means all drawings, reports, documents, plans, software, formulae, calculations and other data relating to the design, construction, testing or operation of the Facilities
* "Discriminatory Change in Law" Chapter 16
means a Change in Law, the terms of which apply expressly to:
(a) the Project and not to similar projects;
(b) the Contractor and not to other persons; and/or
(c) PPP Contractors and not to other persons
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
means the Data Protection Act 1998
* "EEA" Chapter 28
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
* "Effective Date"
means [the date on which any conditions precedent have been satisfied]30
means those services described as such in Part 2 and listed as such in Part 4 of Schedule 3 (Services Output Specification) any of which, under the terms of the Contract, the Authority may elect from time to time, either (a) that the Contractor performs as part of the Services or (b) that the Authority retains as part of the Authority Maintenance Obligations
* "Emergency" Chapter 18
means an event causing or, in the reasonable opinion of the Authority, threatening to cause death or injury to any individual, or serious disruption to the lives of a number of people or extensive damage to property, or contamination of the environment, in each case which prevents:
(a) (the normal operation of the [facility]; and/or
(b) the Service operating under normal circumstances;
and, in each case, which requires the mobilisation and organisation of the emergency service
"Employment and Skills Method Statement" Chapter 7
means the method statement produced by the Contractor and forming part of the Construction Proposals and which sets out in detail how the Contractor shall implement the Employment and Skills Plan
"Employment and Skills Plan" Chapter 7
means the employment and skills plan produced by the Contractor and forming part of the Construction Proposals to be complied with and implemented by the Contractor in order to execute the Employment and Skills Strategy
"Employment and Skills Strategy" Chapter 7
means the Authority's Employment and Skills Strategy as set out in the Facilities Output Specification
"Environmental Information Regulations" Chapter 31
means the Environmental Information Regulations 2004 together with any guidance and/or codes of practice issued by the Information Commissioner or relevant Government Department in relation to such regulations
"Equalities Legislation" Chapter 7
means the Racial and Religious Hatred Act 2006, the Civil Partnership Act 2004, the Gender Recognition Act 2004 and the Equality Act 2010
* "Equity IRR" Chapter 28
means the projected blended rate of return to the Relevant Persons over the full term of the Contract, having regard to Distributions made and projected to be made
* "Estimated Change in Project Costs"
means in relation to Clause 15.2 (Delays in Service Commencement due to a Compensation Event), and Clause 16.6 (Qualifying Change in Law), the aggregate of any estimated increase in construction costs, operating costs and financing costs less the aggregate of any estimated reduction in construction costs, operating costs and financing costs
* "Estimated Fair Value of the Contract" Chapter 23
means the amount determined in accordance with Clause 23.2.9 (No Retendering Procedure) that a third party would pay to the Authority as the market value of the Deemed New Contract
* "Exceptional Cost" Chapter 17
means, for an Insurance Review Period, the extent to which there is an Insurance Cost Increase which exceeds in amount [5% - 30%] of the Base Relevant Insurance Cost for that Insurance Review Period
* "Exceptional Saving" Chapter 17
means, for an Insurance Review Period, the extent to which there is an Insurance Cost Decrease which exceeds in amount [5%-30%] of the Base Relevant Insurance Cost for that Insurance Review Period
* "Exempt Refinancing" Chapter 28
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;
(x) movement of monies between the Project Accounts in accordance with the terms of the Senior Financing Agreements;
(xi) late or non-provision of information, consents or licences;
(xii) amendments to Sub-Contracts;
(xiii) approval of revised technical and economic assumptions for financial model runs (to the extent required for forecasts under the Senior Financing Agreements);
(xiv) restrictions imposed by the Senior Lenders on the dates at which the Senior Debt can be advanced to the Contractor 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 Contractor to ensure that the construction work is performed in accordance with the agreed construction programme and which are notified in writing by the Contractor or the Senior Lenders to the Authority prior to being given;
(xv) changes to milestones for drawdown and/or amounts released from the [Escrow Account] during the [Initial Availability Period ] set out in the Senior Financing Agreements and which are given as a result of any failure by the Contractor to ensure that construction work is performed in accordance with the agreed construction programme and which are notified in writing by the Contractor or the Senior Lenders to the Authority prior to being given;
(xvi) failure by the Contractor to obtain any consent by statutory bodies required by the Senior Financing Agreements; or
(xvii) 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 Agreement;
(e) any sale of shares in the Contractor [or Holdco] by the shareholders or securitisation of the existing rights and/or interests attaching to shares in the Contractor [or Holdco provided that this paragraph (e) shall, in respect of shares in Holdco, only apply for so long as Holdco holds 100% of the issued share capital of the Contractor];
(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
* "Expiry Date"
means the [xth] anniversary of [the Effective Date] [the date of this Contract]
means the buildings and other facilities to be provided, maintained, and serviced in accordance with this Contract, located at the Site
"Facilities Output Specification" Chapter 7
means the Facilities Output Specification of the Authority contained in Schedule [ ] (Facility Output Specification)
* "Fair Value" Chapter 23
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
* "Fees Regulations" Chapter 31
means the Freedom of Information and Data Protection (Appropriate Limit and Fees) Regulations 2004
means the survey carried out pursuant to Clause10.5 (Surveys on Expiry)
* "Financial Close"
has the meaning given to it in the Senior Credit Agreement as at the date of this Contract
means all or any of the agreements or instruments entered into or to be entered into by the Contractor or any of its Associated Companies relating to the financing of the Project (including the Initial Financing Agreements and any agreements or instruments to be entered into by the Contractor or any of its Associated Companies relating to the rescheduling of their indebtedness or any Refinancing)
* "First Insurance Review Date" Chapter 17
means the first Business Day following the first anniversary of the Relevant Insurance Inception Date
* "FOIA" Chapter 31
means the Freedom of Information Act 2000 and any subordinate legislation (as defined in section 84 of the Freedom of Information Act 2000) made under the Freedom of Information Act 2000 from time to time together with any guidance and/or codes of practice issued by the Information Commissioner or relevant Government Department in relation to such Act
* "Force Majeure Event" Chapter 15
means the occurrence after the date of Contract of:
(a) war, civil war, armed conflict or terrorism; or
(b) nuclear, chemical or biological contamination unless the source or the cause of the contamination is the result of the actions of or breach by the Contractor or its sub-contractors; or
(c) pressure waves caused by devices travelling at supersonic speeds,
which directly causes either party (the "Affected Party") to be unable to comply with all or a material part of its obligations under this Contract
*"Funders' Direct Agreement"32
meansthe funders' direct agreement dated on or about the date of this Contract and made between the Authority, the Contractor and the Agent
* "General Change in Law" Chapter 16
means a Change in Law which is not a Discriminatory Change in Law or a Specific Change in Law
* "Good Industry Practice" Chapter 18
means that degree of skill, care, prudence and foresight and operating practice which would reasonably and ordinarily be expected from time to time of a skilled and experienced operator (engaged in the same type of undertaking as that of the Contractor or, in the case of the Soft Services, the relevant Authority Related Party) or facilities management contractor or building contractor or any sub-contractor under the same or similar circumstances
* "Guidance"
means any applicable guidance or directions with which the Contractor is bound to comply33
means satisfaction of the Handover Requirements
"Handover Acceptance Certificate" Chapter 7
means a certificate issued by the Independent Certifier confirming that the Handover Requirements have been met
means the date determined in accordance with Clause 7.8.2 (Dates on which Handover may occur)
means the period commencing on the Handover Date and ending on the Services Commencement Date
"Handover Requirements" Chapter 7
means the requirements set out in [ ] (Completion Requirements)
* "Highest Compliant Tender Price" Chapter 23
means the price offered by the Compliant Tenderer (if any) with the highest tender price and, if no Compliant Tenders are received, zero
* "Holding Company"
has the meaning given to it in Section 1159 of the Companies Act 2006, save that for the purposes of determining whether one entity is a Holding Company of another any transfer of shares by way of security or to a nominee of the transferor shall be disregarded
"Holdco"
means [insert details of the Contractor's 100% holding company if any]34
"Independent Certifier" Chapter 7
means the person appointed jointly by the Authority, the Contractor [and the Senior Lenders] to act as independent certifier to the Project in accordance with the Independent Certifier's Deed of Appointment
"Independent Certifier's Deed of Appointment" Chapter 7
means the deed of appointment of the Independent Certifier in the Agreed Form
"indexed" - see Section 19.11.6
has the meaning given under section 84 of the Freedom of Information Act 2000
* "Information Breach" Chapter 23
means a breach of the [Information Service]
* "Initial Financing Agreements"
means the Financing Agreements put in place upon signature of this as follows:
[ ]
copies of which have been initialled by the parties for the purposes of identification
* "Insurance Cost Decrease" Chapter 17
means the Insurance Cost Differential if the value thereof is less than zero, multiplied by minus one
* "Insurance Cost Differential" Chapter 17
shall, subject to the Insurance Review Procedure, be determined as follows:
Insurance Cost Differential = (ARIC - BRIC) - (PIC)
where:
ARIC is the Actual Relevant Insurance Cost
BRIC is the Base Relevant Insurance Cost
PIC is any Project Insurance Change
* "Insurance Cost Increase" Chapter 17
means the Insurance Cost Differential if the value thereof is greater than zero
* "Insurance Cost Index" Chapter 17
means any index introduced by the United Kingdom Government or the Office of National Statistics after the date of this Contract and which is anticipated to be published annually to provide an independent and objective measure of changes in prevailing market insurance costs
* "Insurance Review Date" Chapter 17
means the First Insurance Review Date and, thereafter, each date falling on the second anniversary of the previous Insurance Review Date, except where such date lies beyond the end of the Contract Period, in which case the Insurance Review Date shall be the last renewal date of the Relevant Insurance prior to the end of the Contract Period
* "Insurance Review Procedure" Chapter 17
means the procedure set out in paragraph 2 of this Schedule [A]
* "Insurance Review Period" Chapter 17
means a two year period from the Relevant Insurance Inception Date and each subsequent two year period commencing on the second anniversary of the Relevant Insurance Inception Date except where the end of such period lies beyond the end of the Contract Period, in which case the Insurance Review Period shall be the period from the end of the penultimate Insurance Review Period to the last day of the Contract Period
means any terms and/or conditions required to be included in a policy of insurance by Clause 17.2 and/or Schedule [ ] (Required Insurance Schedule) but excluding any risk
* "Interface Protocol" Chapter 7
means the protocol as agreed between the Authority, the Authority Service Provider (s) and the Contractor and/or a Contractor Related Party from time to time regarding co-operation, liaison and access between the Authority Service Provider(s) and the Contractor and/or Contractor Related Parties
means the joint bank account in the names of the Authority and the Contractor, having account number [ ] and held with [ ]
* "Joint Insurance Cost Report" Chapter 17
shall bear the meaning ascribed to it in paragraph 2.2 of this Schedule [A]
* "Junior Debt"
means all amounts outstanding at the Termination Date under the Subordinated Financing Agreements
means any Act of Parliament or subordinate legislation within the meaning of Section 21(1) of the Interpretation Act 1978, any exercise of the Royal Prerogative, and any enforceable EU right within the meaning of Section 2 of the European Communities Act 1972 (as amended), in each case in the United Kingdom.
means each item of building fabric, plant and machinery, furniture, fittings and equipment (but excluding any Authority Equipment) to be renewed or replaced during the [Services Period] as identified in the Lifecycle Schedule or as may be identified by the Parties applying Good Industry Practice
"Lifecycle Efficiencies Plan" Chapter 9
means the plan for Lifecycle Efficiencies set out in the Contractor's Proposals
means the period between Lifecycle Review Dates
means the amounts profiled to be spent by the Contractor on the replacement or renewal of Lifecycle Assets as shown in the Base Case [in row [ ]] from the Service Commencement Date onwards
means the report prepared by the Contractor pursuant to Clause 9.2.10
"Lifecycle Review Date" Chapter 9
means the 5th, 10th, 15th and 20th anniversaries of the Service Commencement Date, and the Final Survey Date
"Lifecycle Schedule" Chapter 9
means the detailed annual lifecycle schedule showing when the Lifecycle Assets will be renewed or replaced, and forming part of the Schedule of Planned Maintenance
means the actual amount spent by the Contractor on the replacement or renewal of Lifecycle Assets
means, at any time, the Lifecycle Profile less the Lifecycle Spend, taking into account all previous such surpluses or deficits already accumulated pursuant to 9.2.8.(d)(vii) and (viii) provided always that if, at the date of payment of any surplus between the Parties, the result is a negative number, the Lifecycle Surplus shall be deemed to be zero
means that there are sufficient willing parties (being at least two parties, each of whom is capable of being a Suitable Substitute Contractor) in the market for PFI/PF2 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
* "Losses" Chapter 23
means all damages, losses, liabilities, costs, expenses (including legal and other professional charges and expenses), and charges whether arising under statute, contract or at common law or in connection with judgments, proceedings, internal costs or demands
* "Margin" Chapter 28
has the meaning given to it in the Senior Financing Agreements as at the date immediately prior to the relevant Qualifying Refinancing
means an amount equal to the lower of:
(c) the Refinancing Gain; and
(d) the higher of:
i) Zero; and
ii) D - E
Where:
D = the Net Present Value of the Distributions projected immediately prior to the Refinancing (taking into account the effect of the change to the Margin only in relation to the Refinancing and the senior debt repayment profile immediately prior to the Qualifying 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 save that, where the replacement finance is a bond, for the purpose of calculating the effect of the change to the Margin, the margin on the bond shall be the rate of interest on the bond less the yield on the relevant reference gilt in place on issue of the bond;
E = 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;
* "Market Value Availability Deduction Amount" Chapter 23
means for any month or part of a month, an amount equal to the availability deduction that was made to the Unitary Charge under [see Section 9 (Price and Payment, Availability and Performance Mechanism)] in the month immediately preceding the Termination Date, less an amount equal to any availability deduction that was made for an [available place] which was unavailable at the Termination Date but which has subsequently become available whether as a result of the Authority incurring Rectification Costs or otherwise.
* "Maximum Unitary Charge" Chapter 23
means, in respect of a month, the unitary charge payable in respect of that month before any deductions under [see Section 9 (Price and Payment, Availability and Performance Mechanism)] but allowing for indexation under the indexation provisions [see Section 19.11 (Indexation)].
"Minor Maintenance Obligations" Chapter 7
means those services listed as such in Part 2 [ ] (Minor Maintenance Obligations) of Schedule 3 (Services Output Specification)
* "Net Present Value" Chapter 28
means the aggregate of the discounted values, calculated as of the estimated date of the Refinancing, of each of the relevant projected Distributions, in each case discounted using the Threshold Equity IRR
means an agreement on the same terms and conditions as this Contract at the Termination Date, but with the following amendments:
(a) if this Contract is terminated prior to the Service Commencement Date, then the Service Commencement Date shall be extended by a period to allow a New Contractor to achieve Service Commencement;
(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;
(c) the term of such agreement shall be equal to the term from the [Termination Date] until the Expiry Date; and
(d) any other amendments which do not adversely affect the Contractor
means the person who has entered or who will enter into the New Contract with the Authority
* "nominal pre-tax Project IRR" Chapter 30
means [•]%
means the later of the Termination Date and (if applicable) the date that the Adjusted Estimated Fair Value of the Contract is agreed between the parties pursuant to [Clause 21.2.9] (No Retendering Procedure)
*"Notifiable Financings"Chapter 28
means 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 Contractor's or any Contractor's Associated Company's ability to carry out any such refinancing or other arrangements that would have a similar effect
means [the person performing obligations to provide the Service during the Service Period]35
* "Original Senior Commitment"
means the amount committed under the Senior Financing Agreements as at Financial Close (as adjusted to take into account any Qualifying Variation)
* "Outstanding Principal" Chapter 24
means the principal amount outstanding at the Termination Date of each borrowing (other than any borrowing under any equity bridge facility) under the Senior Credit Agreement
means, without double-counting, any:
(a) advance to the Contractor under the Senior Financing Agreements36 (disregarding any amendments that have not been approved for the purposes of clause 22.3(a)), provided that such advance is not made under any Committed Standby Facility;
(b) Additional Permitted Borrowing;
(c) advance to the Contractor under any Committed Standby Facility which is made solely for the purpose of funding any cost overruns, increased expenses or loss of revenue which the Contractor incurs, provided that such funds are not used in substitution for other sources of committed funding designated for those purposes; and37
(d) interest on the above amounts and (disregarding any amendments that have not been approved for the purposes of clause 12.2(a)) other amounts38 accrued or payable under the terms of Senior Financing Agreements,
except where the amount referred to in paragraphs (a) to (d) above is or is being used to fund a payment of Default Interest on any Additional Permitted Borrowing
* "Persistent Breach" Chapter 23
means a breach for which a final warning notice (referred to in paragraph (b) of Clause 23.2.3 (Persistent Breach)) has been issued, which has continued for more than [ ] days or recurred in [ ] or more months within the [six] month period after the date on which such final warning notice is served on the Contractor
means personal data as defined in the DPA which is supplied to the Contractor by the Authority or obtained by the Contractor in the course of performing the Service
"PF2"
means the Government's successor policy to the PFI for the delivery of infrastructure and services through public private partnerships
"PFI"
means the previous Government's Private Finance Initiative programme
"Planned Handover Date" Chapter 7
means the date shown as the Planned Handover Date in Schedule [ ] or such later date as may be allowed in accordance with the terms of this Agreement
"Planned Maintenance" Chapter 9
means the planned maintenance to be carried out by the Contractor or a Contractor Party at the Facility in accordance with the Schedule of Planned Maintenance
* "Planned Service Commencement Date"39
means [fixed date by [on] which Service Commencement is planned to occur] or such other date as the parties may agree
* "Portfolio Cost Saving" Chapter 17
means any insurance cost saving which arises from the Contractor changing the placement of the Required Insurances from being on a stand-alone project-specific basis assumed at Financial Close and reflected in the Base Cost, to being on the basis of a policy (or policies) also covering risks on other projects or other matters which are outside the scope of the Project so as to benefit from portfolio savings. A Portfolio Cost Saving is defined to be a positive sum and cannot be less than zero;
* "Post Termination Service Amount" Chapter 23
means for the purposes of Clause 23.2.8 (Retendering Procedure), 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 the Contract had the 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; and
(c) (where relevant), the amount by which the Post Termination Service Amount for the previous month was less than zero.
* "Pre-Refinancing Equity IRR" Chapter 28
means the nominal post-tax (i.e. post-tax with respect to the Contractor, pre-tax with respect to Shareholders) Equity IRR calculated immediately prior to the Refinancing;
means
(a) offering giving or agreeing to give to [any servant of the Crown] any gift or consideration of any kind as an inducement or reward:
(i) for doing or not doing (or for having done or not having done) any act in relation to the obtaining or performance of this Contract or any other contract with the Crown; or
(ii) for showing or not showing favour or disfavour to any person in relation to this Contract or any other contract with the Crown;
(b) entering into this Contract or any other contract with the Crown in connection with which commission has been paid or has been agreed to be paid by the Contractor or on its behalf, or to its knowledge, unless before the relevant contract is entered into particulars of any such commission and of the terms and conditions of any such contract for the payment thereof have been disclosed in writing to the Authority;
(c) committing any offence:
(i) under the Bribery Act 2010;
(ii) under Legislation creating offences in respect of fraudulent acts, or
(iii) at common law in respect of fraudulent acts in relation to this Contract or any other contract with the Crown; or
(d) defrauding or attempting to defraud or conspiring to defraud the Crown.
* "Project"
means [ ];40
* "Project Accounts" Chapter 28
means accounts referred to in and required to be established under the Senior Financing Agreements;
"Project Data" Chapter 31 means:
(a) all Design Data; and
(b) any other materials, documents or data acquired or brought into existence or used in relation to the Works, the Services or this Contract
in each case that is used or created by the Contractor or any Contractor Related Party for the purpose of the provision of the Works or Services or otherwise for this Contract
means the agreements entered into by the Contractor for the performance of the obligations under this Contract which are listed in [ ] copies of which have been initialled by the parties for the purposes of identification;41
* "Project Insurance Change" Chapter 17
means any net increase (which shall be expressed as a positive number) or net decrease (which shall be expressed as a negative number) in the Actual Relevant Insurance Cost relative to the Base Relevant Insurance Cost, arising from:
(a) the claims history or re-rating of the Contractor or any Contractor Related Party;
(b) the effect of any change in deductible unless the following applies:-
(i) such change is attributable to circumstances generally prevailing in the Relevant Insurance Market; and
(ii) the deductible, further to such change, is either greater than or equal to themaximum in Schedule [ ] (Required Insurance Schedule),
(c) any other issue or factor other than circumstances generally prevailing in the Relevant Insurance Market, except for any Portfolio Cost Saving,
For the purpose of determining the Insurance Cost Differential, in the event that there is a net increase, the Project Insurance Change shall have a positive value. In the event that there is a net decrease the Project Insurance Change shall have a negative value;
* "Qualifying Bank Transaction" Chapter 28
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 2006/48EC 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 years) assets of at least £10 million (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 years) at least 50 members and assets under management of at least £10 million (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 Contractor [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 (vii) above (iii) any Qualifying Institution or (iv) any other institution in respect of which the prior written consent of the Authority has been given
* "Qualifying Change in Law" Chapter 16
means:
(a) a Discriminatory Change in Law;
(b) a Specific Change in Law; and/or
(c) a General Change in Law which comes into effect during the Service Period and which involves Capital Expenditure,
which was not foreseeable at the date of this Contract
* ["Qualifying Institution"] Chapter 28
means:
[ ];
* "Qualifying Refinancing" Chapter 28
means any Refinancing that will give rise to a Refinancing Gain greater than zero that is not an Exempt Refinancing
means,
either:
(a) a change in [the Works and/or]43 the Service in respect of which either an [Authority Notice of Change] or a [Contractor Notice of Change] has been served and, in the case of
(i) an [Authority Notice of Change], the Authority has confirmed the [Estimate] and, where the Contractor is not funding all or part of the required Capital Expenditure, the Authority has agreed to meet all or the remaining part (as appropriate) of such Capital Expenditure; and
(ii) a [Contractor Notice of Change], the change has been accepted by the Authority; or
(b) a Qualifying Change in Law
and in respect of which any documents or amendments to the Project Documents which are required to give effect to such change in [the Works and/or] Service or Qualifying Change in Law have become unconditional in all respects
* "Rectification Costs" Chapter 23
means, for the purposes of any Termination Date that occurs during the Service Period, an amount equal to the reasonable and proper costs incurred by the Authority in a particular month or part of a month in ensuring that the Service is available.
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 Contractor whether by way of security or otherwise; or
(d) any other arrangement put in place by the Contractor or another person which has an effect which is similar to any of (a)-(c) above or which has the effect of limiting the Contractor's or any Associated Company's ability to carry out any of (a)-(c) above
* "Refinancing Gain" Chapter 28
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 (without double counting) 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 (without double counting) 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
* "Regulated Collective Investment Scheme" Chapter 28
has the meaning given in the rules from time to time of the Financial Services Authority
* "Relevant Assumptions" Chapter 23
means the assumptions that the sale of the Contractor is on the basis that there is no default by the Authority, that the sale is on a going concern basis, that no restrictions exist on the transfer of share capital, that 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 but that otherwise the actual state of affairs of the Contractor and the Project is taken into account
* "Relevant Person" Chapter 28
means a Shareholder and any of its Affiliates;
means any court with the relevant jurisdiction and any local, national or supra-national agency, authority, inspectorate, minister, ministry, official or public or statutory person of the government of the United Kingdom or of the European Union;
* "Relevant Insurance" Chapter 17
means the Required Insurance and any other insurances as may be required by law other than:
(a) Construction Period Insurance;
(b) Business Interruption Cover except to the extent that it relates to Unavoidable Fixed Costs; and
(c) [any ancillary insurances]
* "Relevant Insurance Inception Date" Chapter 17
means the date on which the Relevant Insurance is first providing active insurance cover to the Contractor, being a date no earlier than the Service Commencement Date;
* "Relevant Insurance Market" Chapter 17
means the insurance market which insures the majority of all PPP projects across all of the PPP sectors (as determined by the number of PPP projects). At the date of this Contract, the Relevant Insurance Market is in the [United Kingdom];
means:
(a) fire, explosion, lightning, storm, tempest, flood, bursting or overflowing of water tanks, apparatus or pipes, ionising radiation (to the extent it does not constitute a Force Majeure Event), earthquakes, riot and civil commotion;
(b) failure by any statutory undertaker, utility company, local authority or other like body to carry out works or provide services;
(c) any accidental loss or damage [to the development or any roads servicing it];
(d) any failure or shortage of power, fuel or transport;
(e) any blockade or embargo which does not constitute a Force Majeure Event, and
(f) any:
(i) official or unofficial strike;
(ii) lockout;
(iii) go-slow; or
(iv) other dispute,
generally affecting the [ ] industry or a significant sector of it,
unless any of the events listed in paragraphs (a) to (f) inclusive arises (directly or indirectly) as a result of any wilful default or wilful act of the Contractor or any Contractor Related Parties
* "Requests for Information" Chapter 31
shall have the meaning set out in the FOIA or the Environmental Information Regulations as relevant (where the meaning set out for the term "request" shall apply)
* "Required Insurance" Chapter 17
shall bear the meaning ascribed to it in the Contract
* "Revised Senior Debt Termination Amount"
means, subject to Clause 12.2 (No increased Liability from Changes to Project Documents or Financing Agreements):
(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; and
(b) all amounts including costs of early termination of interest rate hedging arrangements and other breakage costs,44 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 Contractor45 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) all APB Distributions;
"Schedule of Planned Maintenance" Chapter 9
means the annual schedule of planned maintenance as agreed between the Contractor and the Authority
* "Senior Credit Agreement" Chapter 24
means [ ] as at the date of this Contract or as amended with the prior written approval of the Authority pursuant to Clause 12.2 (No increased Liability from Changes Project Documents or Financing Agreements)
"Senior Credit Agreement Financial Model" Chapter 31
means the [Financial Model] as defined in the Senior Credit Agreement as the same may be updated from time to time in accordance with the provisions of the Senior Credit Agreement (provided always that such model shall continue on eth same basis after Senior Debt have been repaid until the end of the [Term]
* "Senior Debt"
means the financing provided by the Senior Lenders under the Senior Financing Agreements;
means the non-default interest rate as defined by the Senior Financing Agreements or such lower rate as the Parties may agree
* "Senior Financing Agreements"
means [ ]46 as at the date of this Contract or, without prejudice to Clause 12.2 (No Increased Liability from Changes to Project Documents or Financing Agreements), as amended as allowed by Clause 12.1.3 (Changes tom Financing Agreements)47
* "Senior Lender"
means a person providing finance to the Contractor under the Senior Financing Agreements;48
means the services required to satisfy the Services Output Specification including, without limitation, any (a) Elective Services which the Contractor is required to provide from time to time under the Contract and (b) any Minor Maintenance Obligation which the Authority has not retained as an Authority Maintenance Obligation
"Service Commencement" Chapter 7
means the commencement of the Services
"Service Commencement Date" Chapter 7
means the date on which Service Commencement occurs in accordance with [Section 7 (Services and Service Commencement)]
"Services Output Specification" Chapter 7
means the Services output specification of the Authority contained in Schedule 3 (Services Output Specification)
* "Service Period"
means the period specified in Clause 3(b);49
* "Shareholders"
means any person from time to time holding share capital in the Contractor or its Holding Company
means the area edged [red] on the Site Plan together with the Facility and the service ducts and media and all conducting media appliances and apparatus for all utilities servicing the Facility
means the plan of the Site in the Agreed Form
means minor defects, differences or omissions which do not prevent the Independent Certifier from issuing a Handover Acceptance Certificate or an Acceptance Certificate as the case may be
means the list of relevant Snagging Items as referred to in Clause 7.8.8 (Snagging Items)
* "Specific Change in Law" Chapter 16
means any Change in Law which specifically refers to the provision of [services the same as or similar to the Service] or to the holding of shares in companies whose main business is providing [services the same as or similar to the Service]
* "Sub-Contractor Breakage Costs" Chapter 23
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 the completion of Works, including:
(i) any materials or goods ordered or Sub-Contracts 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; 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 [and [ ]]; and
(d) the Contractor and the relevant Sub-Contractor has each used its reasonable endeavours to mitigate the Losses;
* "Sub-Contractors"
means each of the counterparties of the Contractor to the Project Documents or any person engaged by the Contractor from time to time as may be permitted by this Contract to procure the provision of the Works and/or Services (or any of them). References to sub-contractors means (except where used in the definition of Contractor Related Party) sub-contractors (of any tier) of the Contractor
* "Sub-Contracts"
means the contracts entered into between the Contractor and the Sub-Contractors
* "Subordinated Financing Agreements"
means [ ]50 as at the date of this Contract or as amended with the prior written approval of the Authority
means a person providing finance under a Subordinated Financing Agreement
* "Suitable Substitute Contractor"
means a person approved by the Authority (such approval not to be unreasonably withheld or delayed) as:
(a) having the legal capacity, power and authority to become a party to and perform the obligations of the Contractor under the Contract; and
(b) employing persons having the appropriate qualifications, experience and technical competence and having the resources available to it (including committed financial resources and sub-contracts) which are sufficient to enable it to perform the obligations of the Contractor under the Contract
* "Tax"
means any kind of tax, duty, levy or other charge (other than VAT) whether or not similar to any in force at the date of the Contract and imposed by a Relevant Authority
"Technical Adviser" Chapter 31
means any adviser appointed by the Senior Lenders for the purposes of providing technical support or reports
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
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 Clause 23.2.8 (Retendering Procedure)
* "Tender Process Monitor" Chapter 23
means a third party appointed by the Contractor under Clause 23.2.8(e)
* "Termination Date"
means any date of early termination of this Contract in accordance with [Section 23 (Early Termination)]
* "Termination Date Discount Rate" Chapter 23
means a discount rate expressed as [(1+ real base case project IRR + Gilt B - Gilt A)* (1+i) - 1]
where:
"real base case project IRR" is the real pre-tax Project IRR as set out in the Base Case;
"i" is the agreed assumed forecast rate of increase in the index([here specify the actual index, eg RPIX]) (as set out in the Base Case) for the remaining term of the Contract;
"Gilt A" is the real yield to maturity as at Financial Close on a benchmark government Gilt instrument of the same maturity as the average life, as determined from the Base Case as at Financial Close, of the Senior Debt; and
"Gilt B" is the real yield to maturity as at the Termination Date 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" Chapter 24
means any compensation payable by the Authority to the Contractor on an early termination of the Contract under [Section 23 (Early Termination)] (excluding the Adjusted Highest Compliant Tender Price)
* "Threshold Equity IRR" Chapter 28
means [•]%;
* "Unitary Charge"
means the payment calculated in accordance with [Section 19 (Price and Payment, Availability and Performance Mechanism)]
* "VAT"
means any value added taxes
"Works"
means all of the works (including design and works necessary for obtaining access to the Site) to be undertaken in accordance with this Contract to satisfy the Facilities Output Specification
__________________________________________________________________
16 In the context of a bond financing, this definition may be substituted by a definition of "Credit Provider" (or similar), being the finance party that controls the rights of the financiers.
17 The precise nature of the assets involved and any exclusions will depend on the project concerned.
18 For example, following a benchmarking or market testing exercise, a Qualifying Change in Law or an Authority Change. The model should cover payments in respect of the Contractor and any other relevant company (e.g. Holdco).
19 This assumes a check has been made by the Authority's advisers that the provisions of the Senior Financing Agreements do not include unusual provisions that could artificially inflate amounts beyond those provisions that are market standard (such as specific pre-payment fees). A judgement will have to be made, for example, on whether prepayment fees (in excess of market standard breakage costs) should be included. In most cases it is recommended that they should not be. See Chapter 27 (Due Diligence over Sub-Contracts and Financing Documents) and see also footnote 25 below.
20 This is intended to cover net breakage costs if the compensation is not paid on an interest payment date. Authorities may consider whether they should exclude any future profit element from the calculation of costs of early termination of interest hedging arrangements where the termination is for force majeure, breach of refinancing, corrupt gifts and uninsurability. See also HMT Guidance "Interest rate and Inflation risks in PFI Transactions" of April 2006 http://www.hm-treasury.gov.uk/.
21 This assumes the Senior Lenders are the only parties to any interest rate hedging agreements (this will not necessarily be the case) and are compliant with the agreed hedging policy. See also footnote 34 below.
22 Such references should also cover such credit balances whether they are held as cash (as with revenue accounts) or in the form of investments (as with reserve accounts) and should extend to letters of credit of other instruments if these are used instead of cash.
23 Any proceeds standing to the credit of the Joint Insurance Account will continue to be used for reinstatement after the Termination Date. See Section 17.5.4 (Reinstatement and Change of Requirement after Insured Event).
24 This recognises that these balances will, in the ordinary course, be charged to the Senior Lenders as security and so on a termination can be set off by them against outstandings. It is sensible, therefore, not to pay such amounts, rather than to pay and subsequently recover such amounts. To the extent any such accounts are not charged to Senior Lenders, they may be excluded from (i). If a Holdco is used and the Senior Lenders have security over Holdco's bank accounts, then Holdco should also be referenced here.
25 See footnote 25.
26 For "composite trader" projects this definition may be amended to read "Works Expenditure" or "Relevant Expenditure". See Section 4.5 (Composite Trader).
27 These will include, for example, planning consents.
28 In transactions that do not involve construction work (for example, some defence contracts) other terminology will be required.
29These will be any contingent liabilities of the shareholders in respect of financial obligations owed to the Contractor and/or lenders under the Financing Agreements in relation to the Project which are triggered as a result of or in relation to the termination of the Contract (see Chapter 27 (Due Diligence over Sub-Contracts and Financing Agreements). For example, guarantees or letters of credit in respect of deferred equity, subordinated debt or equity bridge loans or obligations to fund reserve accounts. This will not include any guarantees or letters of credit issued in support of the Sub-Contractors'obligations under the relevant Sub-Contracts.
30 Conditions precedent will often not be necessary in a Contract. They can be used as a checklist of what needs to be delivered on or prior to signing (e.g. the Senior Financing Agreements). Such issues can be dealt with in separate ways, for example, by having a checklist of tasks that must be completed or documents signed prior to the Contract being signed. Conditions precedent are strictly only needed if they relate to things which must be done after signing. One example would be planning consents in projects in which it is necessary to have a signed document prior to a planning application being made. See also Clause 3(a) (Duration of Contract).
31Thisdefinition assumes that the project is being financed using Senior Debt and equity and would cover subordinated debt and any mezzanine debt. This definition is used in Section 12.2 (No increased Liability from Changes to Project Documemnts or Financing Agreements) and 12.1.3 (Changes to Financing Agreements) and Section 28 (Refinancing)). This guidance does not deal specifically with the provision of mezzanine debt to a project and its treatment (e.g. in terms of the compensation payable on termination for Authority Default, refinancing and force majeure), although this has been used in some PFI projects. How mezzanine financing is treated is an issue for specific projects, although this will naturally depend upon the particular funding structure, the rate of return on the mezzanine and the nature of the project concerned. Where mezzanine finance is used, it should be determined whether it has more the nature of senior debt or equity and treated accordingly, and advice should be sought from departmental Private Finance Units and/or HMT to ensure that it is classified correctly.
32Theform of funders'direct agreement that should be used is set out in Chapter 26 (Funders' Direct Agreement).
33 Whether this definition is needed will depend on the sector (i.e. whether the introduction of Guidance can have the same effect as a change in law (see Chapter 16 (Change in Law)).
34 If there is no 100% holding company used as part of the project structure then this definition should not be used and reference to Holdco in the definition of the Associated Company or elsewhere should be deleted. References to "Holding Company" however, must remain.
35 In the absence of a single Service provider assuming all such obligations, this definition should be amended to refer to persons contracting directly with the Contractor to provide the constituent elements of the Service.
36 If the Senior Lenders are not committing a Committed Standby Facility at Financial Close, the Authority should conduct due diligence over the sizing of the facilities that are committed, so as to ensure that they have not been inflated in such a way that the effect is to create a facility which by its very nature, also acts as a "Committed Standby Facility".
37 This will need to be defined and will be any standby facility that is committed by the Senior Lenders at Financial Close for the purposes of funding any unforeseen cost overruns, increased expenses or loss of revenues incurred by the Contractor, and the Authority should conduct due diligence over the size and terms of the facility prior to Financial Close to evaluate its potential liability under Clause 12.2 (No Increased Liability from Changes to Project Documents or Financing Agreements). The protection given to the Contractor under Clause 12.2 (Changes to Financing Agreements and Project Documents) should only take effect if the purpose of the advance under the Committed Standby facility is to fund genuine unforeseen costs and not, for example, to prepay amounts owed by the Contractor under the Subordinated Financing Agreements.
38 It is vital that the Authority's advisers satisfy themselves as to the appropriateness of the senior finance terms (especially any possibly unusual fees or indemnities) in the light of this potential liability. If the Authority is not so satisfied, it should either ask the Senior Lenders to revise their terms or alternatively restrict the Authority's exposure under Sub-Clause (d) of Permitted Borrowings above to those fees which it is willing to pay on a relevant termination.
39 Whether this concept (and definition) is required will depend on:
(a) the attitude taken to early Service Commencement (see Sections 8.1.6 (Late Service Commencement) and 8.6 (Bonus Payments for Early Service Commencement)); and
(b) whether any dates need to refer to the date on which the Service is due to commence (for example, a default long-stop date or liquidated damages for failure to complete on time).
40 This term should be defined on a project-specific basis.
41 These will usually be listed in a schedule and include contracts the Contractor has with its main Sub-Contractors, usually:
(a) the Construction Sub-Contractor; and
(b)theOperating Sub-Contractor.
The definition should not, however, be extended to include contracts between the main Sub-Contractors and their sub-contractors (i.e. those without a direct contractual relationship with the Contractor) or Finance Documents.
42 See definition of Original Senior Commitment.
43 References to Works should only be included if variations in the build phase are to be allowed and an appropriate definition should be used. Definitions of "Authority Notice of Change", "Contractor Notice of Change" and "Estimate" should all relate to the relevant drafting in the Change Protocol developed pursuant to Section 13 (Change in Service).
44 See footnote 25 above.
45 See footnote 11 above.
46 These are all documents relating to the Senior Debt and may include:
(a) a credit agreement;
(b) interest rate hedging agreements; and
(c) security documents.
Where bond financing is used the definition will include the bond trust deed, the terms and conditions of the bond, as well as security documents. Although less prevalent after the financial crisis of 2008, a monoline insured deal will also include reference to the monoline's Policy and Endorsement and its Insurance and Indemnity Agreement (each of which will be defined in the Contract). See Section 29 (Bond Finance) Other financing structures will require reference to other documents. See Chapter 30 (Corporate Finance). As regards mezzanine finance, see footnote 18 above.
The Authority should place limits on hedging agreements to allow only those agreements that comply with an agreed hedging policy and details of which have been notified to and acknowledged by the Authority to be included in the definition of Senior Debt (Base Senior Debt Termination Amount or Revised Senior Debt Termination Amount, as appropriate). The hedging policy may, or course, change over time, which the parties should agree to as necessary.
47 Where referred to in the Contract, Senior Financing Agreements should mean those agreements as at the date of the Contract as they may be amended with the approval of the Authority pursuant to Clause 12.2(a) (No Increased Liability from Changes to Project Documents or Financing Agreements). This is particularly important if Senior Debt is paid on early termination of the Contract. On signature of the Contract, the Authority has an assumed exposure to termination liabilities (based on the financing structure in place at financial close); the Authority should therefore have the right to approve any amendments to its termination liability (see Section 24.3 (Certainty of Compensation Payment Amounts and Changes to Financing Agreements)). If the Contractor makes changes to the Senior Financing Agreements which have not been approved by the Authority for the purposes of Clause 12.2 (No increased Liability from Change to Project Documents or Financing Agreements) they will be disregarded for the purposes of calculating termination sums unless they qualify as Additional Permitted Borrowing.
48 Reference may be made to approved hedge counter-parties if relevant. This and related definitions will need to be carefully reviewed for projects whose financial structures include a mixture of Senior Debt and mezzanine debt in addition to subordinated debt and equity.
49 That is the period from the Service Commencement Date to the Expiry Date, unless the Contract is terminated early (see Chapters 3 (Duration of Contract) and 23 (Early Termination)).
50 These are the debt financing documents signed at Financial Close, through which the equity investors will often invest 'equity' in the Project in the form of subordinated debt.