SCHEDULE 23
COMPENSATION ON TERMINATION
1.1
Definitions
The following terms shall have the following meanings:
(a)
“Adjusted Estimated Fair Value” means the Estimated Fair Value adjusted as follows:
(i)
where, in respect of any Payment Period or part of a Payment Period from the
Termination Date to the Compensation Date, the Post Termination Service
Amount is a negative number, the aggregate amount by which all such negative
Post Termination Service Amounts are negative shall be set off against and shall
reduce the Estimated Fair Value (whether or not such amounts have been set off
by HMQ pursuant to Section 3.3(f) of this Schedule 23);
(ii)
the aggregate of the following amounts shall be deducted, without duplication,
from the Estimated Fair Value;
(A)
the Post Termination Service Amounts actually paid by HMQ to Project
Co prior to the Compensation Date;
(B)
the Tender Costs; and
(C)
amounts that HMQ is entitled to set off or deduct; and
(iii)
the aggregate of the following amounts shall be added, without duplication, to the
Estimated Fair Value:
(A)
all credit balances on any bank accounts held by or on behalf of Project Co
on the date that the Estimated Fair Value is calculated; and
(B)
any insurance proceeds and other amounts owing to Project Co (and which
Project Co is entitled to retain), to the extent not included in Section
(a)(iii)(A) of this Schedule 23,
to the extent that:
directly taken into account in calculating the Estimated Fair Value; and
(D)
HMQ has received such amounts in accordance with this Project
Agreement.
(b)
“Adjusted Highest Qualifying Tender Price” means the price offered by the Qualifying
Tenderer (if any) with the highest tender price, adjusted as follows:
(i)
where, in respect of any Payment Period or part of a Payment Period from the
Termination Date to the Compensation Date, the Post Termination Service
Amount is a negative number, the aggregate amount by which all such negative
Post Termination Service Amounts are negative shall be set off against and shall
reduce such highest tender price (whether or not such amounts have been set off
by HMQ pursuant to Section 3.3(f) of this Schedule 23);
(ii)
the aggregate of the following amounts shall be deducted, without duplication,
from such highest tender price:
(A)
the Post Termination Service Amounts actually paid by HMQ to Project
Co prior to the Compensation Date;
(B)
the Tender Costs; and
(C)
amounts that HMQ is entitled to set off or deduct; and
(iii)
the aggregate of the following amounts shall be added, without duplication, to
such highest tender price:
(A)
all credit balances on any bank accounts held by or on behalf of Project Co
on the date that the highest priced Qualifying Tender is received; and
(B)
any insurance proceeds and other amounts owing to Project Co (and which
Project Co is entitled to retain), to the extent not included in Section
(b)(iii)(A) of this Schedule 23,
to the extent that:
directly taken into account in that Qualifying Tender; and
(D)
HMQ has received such amounts in accordance with this Project
Agreement.
(c)
“Compensation Date” means either:
(i)
if Section 3.3 of this Schedule 23 applies, the earlier of:
(A)
the date that the New Agreement is entered into; and
(B)
the date on which HMQ pays the Adjusted Highest Qualifying Tender
Price to Project Co; or
(ii)
if Section 3.4 of this Schedule 23 applies, the date that the Adjusted Estimated
Fair Value has been agreed or determined.
(d)
“Discount Rate” means a rate equal to ((A + B) / C) + D, where:
A = the product of the outstanding principal amount of debt funded under the Lending
Agreements on the date of calculation and the rate of interest applicable to such amount
as shown in the Financial Model at Financial Close.
B = the product of the Equity Capital as at Financial Close and the Base Case Equity
IRR.
C = the sum of the outstanding principal amount of debt funded under the Lending
Agreements on the date of calculation and the Equity Capital as at Financial Close.
D = the yield to maturity on a benchmark Government of Canada bond of the same
maturity as the average life of the outstanding principal amount of debt funded under the
Lending Agreements on the date of calculation, minus the yield to maturity on a
benchmark Government of Canada bond of the same maturity as the average life of the
outstanding principal amount of debt funded under the Lending Agreements as shown in
the Financial Model at Financial Close.
(e)
“Employee Termination Payments” means termination payments which are required
under Applicable Law to be made to employees of Project Co or any Project Co Party as
a direct result of terminating this Project Agreement (provided that Project Co or the
relevant Project Co Party shall take commercially reasonable steps to mitigate its loss)
and provided that, in calculating such amount, no account should be taken of any
liabilities and obligations of Project Co or the relevant Project Co Party arising out of:
(i)
contracts of employment or other agreements or arrangements entered into by
Project Co or the relevant Project Co Party to the extent that such contracts of
employment, agreements or arrangements were not entered into in connection
with the Project; or
(ii)
contracts of employment or other agreements or arrangements entered into by
Project Co or the relevant Project Co Party other than in the ordinary course of
business and on commercial arm’s length terms, save to the extent that amounts
would have arisen if such contracts or other agreements or arrangements had been
entered into in the ordinary course of business and on commercial arm’s length
terms.
(f)
“Estimated Fair Value” means the amount determined in accordance with Section 3.4 of
this Schedule 23.
(g)
“HMQ Default Termination Sum” has the meaning given in Section 2.1(b) of this
Schedule 23.
(h)
“Invoice Date” means the date that is the later of:
(i)
the date on which HMQ receives an invoice from Project Co for the relevant
termination sum; and
(ii)
the date on which HMQ receives the supporting evidence required pursuant to
Section 8.1(a) of this Schedule 23.
(i)
“Junior Debt Amount” means, at any time, the then outstanding principal amount of
debt funded under the terms of the Lending Agreements by the Junior Lenders to Project
Co, together with all interest accrued thereon at that time. For greater certainty, the
Junior Debt Amount includes any amount funded under the terms of the Lending
Agreements which has a fixed return without equity participation, step-up rights or rights
to share in Project Co’s excess cash flow and a coupon equal to or less than
[REDACTED]% of the coupon payable to the Senior Lenders and excludes the Junior
Debt Makewhole.
(j)
“Junior Debt Makewhole” means, at any time, any amount (other than the Junior Debt
Amount) then due and payable to the Junior Lenders under the Lending Agreements,
including any “make whole” payments, breakage fees (less any breakage benefits) and all
other fees, costs and expenses reasonably and properly incurred which Project Co is
obligated to pay to the Junior Lenders pursuant to the Lending Agreements.
(k)
“Lending Agreements” means any or all of the agreements or instruments to be entered
into by Project Co or any of its Affiliates relating to the financing of the Project
Operations, including, for greater certainty, the Senior Credit Agreement, the Junior
Credit Agreement, the Security Documents and any agreements or instruments to be
entered into by Project Co or any of its Affiliates relating to the rescheduling of their
indebtedness in respect of the financing of the Project Operations or the refinancing of
the Project Operations.
(l)
“Liquid Market” means that there are 2 or more willing parties (each of whom is
capable of being a Suitable Substitute and of meeting the Qualification Criteria) in the
market for agreements in Canada for the provision of operation, maintenance and
rehabilitation services (and if the Termination Date occurs prior to Substantial
Completion, design and construction services) to highways under an alternative financing
and procurement or similar model (where such agreements are the same as or similar to
this Project Agreement) such that the retendering process in Section 3.3 of this Schedule
23 can reasonably be expected to result in a highest Qualifying Tender price broadly in
the range of values that would reasonably be expected to be achieved calculating the
Estimated Fair Value under Section 3.4 of this Schedule 23.
(m)
“Market Value Availability Deduction Amount” means for any Payment Period or part
of a Payment Period, an amount equal to the Deductions for Availability Failures that
were made from the Monthly OM&R Payment under the Payment Mechanism in the
Payment Period immediately preceding the Termination Date, less an amount equal to
Deductions for Availability Failures that were made for Highway Sections (as defined in
Schedule 20 – Payment Mechanism) which were unavailable at the Termination Date but
which have subsequently become available, whether as a result of HMQ incurring
Rectification Costs or otherwise.
(n)
“Maximum OM&R Payment” means the Monthly OM&R Payments payable at any
time before any Deductions under the Payment Mechanism but allowing for indexation
under the Payment Mechanism.
(o)
“New Agreement” means an agreement on substantially the same terms and conditions
as this Project Agreement as at the Termination Date, but with the following
amendments:
(i)
if this Project Agreement is terminated prior to the Substantial Completion Date,
then the Longstop Date shall be extended by a period to allow a New Project Co
to achieve Substantial Completion prior to such extended Longstop Date;
(ii)
any accrued Failure Points shall be cancelled;
(iii)
the term of such agreement shall be equal to the term from the Termination Date
until the Expiry Date; and
(iv)
any other amendments which do not adversely affect Project Co.
(p)
“New Project Co” means the person who has entered or who will enter into the New
Agreement with HMQ.
(q)
“Non-Default Termination Sum” has the meaning given in Section 4.1(b) of this
Schedule 23.
(r)
“Post Termination Service Amount” means, for the purposes of Section 3.3 of this
Schedule 23, for the whole or any part of a Payment Period for the period from the
Termination Date to the Compensation Date, an amount equal to the Maximum OM&R
Payment which would have been payable under this Project Agreement had this Project
Agreement not been terminated, less an amount equal to the aggregate (without double
counting) of:
(i)
the Market Value Availability Deduction Amount for that Payment Period; and
(ii)
the Rectification Costs incurred by HMQ in that Payment Period.
(s)
“Prohibited Acts Termination Sum” has the meaning given to it in Section 5.1(b) of
this Schedule 23.
(t)
“Qualification Criteria” means the criteria that HMQ requires tenderers to meet as part
of the Tender Process, which (subject to compliance with Applicable Law) shall include
the following:
(i)
that the tenders confirm acceptance of the New Agreement terms;
(ii)
that the tenderers have, and are able to demonstrate on an indicative basis on
request, the financial ability to pay the lump sum tendered;
(iii)
that tenderers may only bid on the basis of a single lump sum payment to be paid
by the tenderer;
(iv)
that the tenderer is experienced in performing the OM&R Work or similar
services;
(v)
that the technical solution proposed by the tenderers is capable of delivery and the
tenderer is technically capable of delivery of the Project Operations; and
(vi)
any other tender criteria established by HMQ, acting reasonably.
(u)
“Qualifying Tender” means a tender that meets all of the Qualification Criteria.
(v)
“Qualifying Tenderer” means a tenderer who submits a Qualifying Tender.
(w)
“Rectification Costs” means, for the purposes of any Termination Date that occurs after
the Phase Substantial Completion Date of Phase One, an amount equal to the reasonable
and proper costs incurred by HMQ in a particular Payment Period or part of a Payment
Period in ensuring that the OM&R Work is carried out.
(x)
“Senior Debt Amount” means, at any time, the then outstanding principal amount of
debt funded under the terms of the Lending Agreements by the Senior Lenders to Project
Co, together with all interest accrued thereon at that time. For greater certainty, the
Senior Debt Amount excludes the Senior Debt Makewhole.
(y)
“Senior Debt Makewhole” means, at any time, any amount (other than the Senior Debt
Amount) then due and payable to the Senior Lenders under the Lending Agreements,
including any “make whole” payments, breakage fees (less any breakage benefits) and all
other fees, costs and expenses reasonably and properly incurred which Project Co is
obligated to pay to the Senior Lenders pursuant to the Lending Agreements.
(z)
“Subcontractor Losses” means, subject to Project Co’s obligations under this Project
Agreement to limit any compensation to Subcontractors:
(i)
the amount reasonably and properly payable by Project Co to the Construction
Contractor under the terms of the Construction Contract as a direct result of the
termination of this Project Agreement (including any reasonable commercial
breakage fee), provided that such amount shall be reduced to the extent that
Project Co or the Subcontractors fail to take commercially reasonable steps to
mitigate such amount; and
(ii)
if applicable, the amount reasonably and properly payable by Project Co to the
OM&R Provider under the terms of the OM&R Contract as a direct result of the
termination of this Project Agreement (including any reasonable commercial
breakage fee), provided that such amount shall be reduced to the extent that
Project Co or the Subcontractors fail to take commercially reasonable steps to
mitigate such amount,
provided that, in both cases, no account should be taken of any liabilities and obligations
of Project Co to the Subcontractors arising out of:
(iii)
any loss of overhead or profit of such Subcontractor relating to any period or costs
after the Termination Date (save to the extent the same are properly included in
any reasonable commercial breakage fee set out in any of the Ancillary
Documents);
(iv)
agreements or arrangements entered into by Project Co or the Subcontractors to
the extent that such agreements or arrangements were not entered into in
connection with those parties’ obligations in relation to the Project; or
(v)
(agreements or arrangements entered into by Project Co or the Subcontractors
other than in the ordinary course of business and on commercial arm’s length
terms, save to the extent that amounts would have arisen if such agreements or
arrangements had been entered into in the ordinary course of business and on
commercial arm’s length terms.
“Tender Costs” means the reasonable and proper costs of HMQ incurred in carrying out
the Tender Process or in connection with any calculation of the Estimated Fair Value.
“Tender Process” means the process by which HMQ requests tenders from any parties
interested in entering into a New Agreement, evaluates the responses from those
interested parties and enters into a New Agreement with a new Project Co, in accordance
with Section 3.3 of this Schedule 23.
“Tender Process Monitor” has the meaning given in Section 3.3(g) of this Schedule 23.
CONVENIENCE
(a)
If Project Co terminates this Project Agreement pursuant to Section 46 of this Project
Agreement or HMQ terminates this Project Agreement pursuant to Section 47.3 of this
Project Agreement, HMQ shall pay to Project Co the HMQ Default Termination Sum.
(b)
The “HMQ Default Termination Sum” shall be an amount equal to the aggregate of:
(i)
the Senior Debt Amount and the Senior Debt Makewhole;
(ii)
the Junior Debt Amount and the Junior Debt Makewhole;
(iii)
any amount payable by HMQ to Project Co in accordance with Sections 43.2(b)
and 44.2(b) of this Project Agreement;
(iv)
the Employee Termination Payments and the Subcontractor Losses;
(v)
any reasonable costs properly incurred by Project Co to wind up its operations;
and
(vi)
an amount which, if paid on the Termination Date and taken together with all
dividends and other Distributions paid on or made in respect of the Equity Capital
on or before the Termination Date and taking account of the actual timing of all
such payments, but, in any event, excluding all amounts (whether for costs,
overhead, profit or otherwise) after the Termination Date, gives a nominal internal
rate of return to the Termination Date equal to the Base Case Equity IRR on the
amount paid for the Equity Capital (to the extent that such Equity Capital has
been applied by Project Co for the purposes of the Project);
LESS, the aggregate (without double counting) of the following, to the extent it is a
positive amount:
(vii)
all credit balances on any bank accounts held by or on behalf of Project Co on the
Termination Date and the value of any insurance proceeds due to Project Co or to
which Project Co would have been entitled had insurance been maintained in
accordance with the requirements of this Project Agreement (save where such
insurance proceeds are to be applied in reinstatement, restoration or replacement,
or, in the case of third party legal liability, in satisfaction of the claim, demand,
proceeding or liability or where HMQ is required to procure insurances and to
make proceeds available to Project Co under this Project Agreement and it has
failed to do so) or sums due and payable from third parties other than sums
wholly unrelated to the Project Operations, the Project and this Project Agreement
(but only when received from third parties) but excluding any claims under any
Subcontracts or claims against other third parties which have not been determined
or have been determined but not yet paid, provided that, in such case, Project Co
shall assign any such rights and claims under the Subcontracts or claims against
other third parties (other than claims against other third parties wholly unrelated
to the Project Operations, the Project and this Project Agreement) to HMQ and, at
no additional cost to Project Co, give HMQ reasonable assistance in prosecuting
such claims;
(viii)
to the extent realized before the Invoice Date, the market value of any other assets
and rights of Project Co (other than those transferred to HMQ pursuant to this
Project Agreement) less liabilities of Project Co properly incurred in carrying out
its obligations under this Project Agreement as at the Termination Date, provided
that no account should be taken of any liabilities and obligations of Project Co
arising out of:
(A)
agreements or arrangements entered into by Project Co to the extent that
such agreements or arrangements were not entered into in connection with
Project Co’s obligations in relation to the Project; or
(B)
agreements or arrangements entered into by Project Co other than in the
ordinary course of business and on commercial arm’s length terms, save to
the extent that liabilities and obligations would have arisen if such
agreements or arrangements had been entered into in the ordinary course
of business and on commercial arm’s length terms; and
(ix)
amounts which HMQ is entitled to set off pursuant to Section 34.13(a)(i) of this
Project Agreement,
provided that the HMQ Default Termination Sum shall never be less than the aggregate
of the Senior Debt Amount, the Senior Debt Makewhole, the Junior Debt Amount and the
Junior Debt Makewhole.
(c)
To the extent that such assets and rights referred to in Section 2.1(b)(viii) of this Schedule
23 are not realized and applied pursuant thereto, Project Co shall, on payment of the
HMQ Default Termination Sum, assign such assets and rights to HMQ.
(d)
HMQ shall pay the HMQ Default Termination Sum in accordance with Section 8 of this
Schedule 23.
3.
COMPENSATION FOR PROJECT CO DEFAULT
(a)
Save and except where Sections 5 or 6 of this Schedule 23 apply, if HMQ terminates this
Project Agreement pursuant to Section 45 of this Project Agreement, HMQ shall pay to
Project Co either the Adjusted Highest Qualifying Tender Price according to the
retendering procedure set out in Section 3.3 of this Schedule 23 or the Adjusted
Estimated Fair Value according to the no retendering procedure set out in Section 3.4 of
this Schedule 23, as applicable.
(a)
HMQ shall be entitled to retender the provision of the Project Operations in accordance
with Section 3.3 of this Schedule 23 and the provisions thereof shall apply if:
(i)
HMQ notifies Project Co on or before the date falling 30 days after the
Termination Date; and
(ii)
there is a Liquid Market,
but, otherwise, HMQ shall require a determination in accordance with the no retendering
procedure set out in Section 3.4 of this Schedule 23 and the provisions thereof shall
apply.
(b)
Until it is determined that the basis for determining the compensation to Project Co will
be the no retendering procedure set out in Section 3.4 of this Schedule 23, Project Co
shall continue to perform the OM&R Work and HMQ shall pay Project Co in accordance
with Section 3.3(e) of this Schedule 23.
3.3
Retendering Procedure
(a)
The objective of the Tender Process shall be to enter into a New Agreement with a
Qualifying Tenderer.
(b)
HMQ shall commence the Tender Process promptly after delivering the notice pursuant
to Section 3.2(a) of this Schedule 23 and use commercially reasonable efforts to complete
the Tender Process as soon as practicable.
(c)
HMQ shall, as soon as reasonably practicable, notify Project Co of the Qualification
Criteria and the other requirements and terms of the Tender Process, including the timing
of the Tender Process and shall act reasonably in setting such requirements and terms.
(d)
Project Co authorizes the release of any information by HMQ under the Tender Process
which would otherwise be prevented under Section 52 of this Project Agreement that is
reasonably required as part of the Tender Process.
(e)
Project Co shall continue to perform the OM&R Work, and, for all or any part of a
Payment Period falling within the period from the Termination Date to the Compensation
Date, HMQ shall pay to Project Co:
(i)
the Post Termination Service Amount for each completed Payment Period, on or
before the date falling 20 Business Days after the end of that Payment Period; and
(ii)
the Post Termination Service Amount for the period from the end of the last
completed Payment Period until the Compensation Date, on or before the date
falling 30 days after the Compensation Date.
(f)
If any Post Termination Service Amount is negative, then the amount by which the Post
Termination Service Amount is negative shall be carried forward and may be set off
against any future positive Post Termination Service Amounts.
(g)
Project Co may, at its own cost, appoint a person (the “Tender Process Monitor”) to
monitor the Tender Process for the purpose of monitoring and reporting to Project Co and
the Lenders on HMQ’s compliance with the Tender Process. The Tender Process
Monitor shall enter into a confidentiality agreement with HMQ in a form acceptable to
HMQ and shall be entitled to attend all meetings relating to the Tender Process, inspect
copies of all the tender documentation and bids and make representations to HMQ as to
compliance with the Tender Process. HMQ shall not be bound to consider or act upon
such representations. The Tender Process Monitor will not disclose confidential
information to Project Co or the Lenders but shall be entitled to advise Project Co and the
Lenders on whether it considers that HMQ has acted in accordance with the Tender
Process and correctly determined the Adjusted Highest Qualifying Tender Price.
(h)
As soon as practicable after tenders have been received, HMQ shall, acting reasonably,
review and assess the Qualifying Tenders and shall notify Project Co of the Adjusted
Highest Qualifying Tender Price.
(i)
If Project Co refers a Dispute relating to the Adjusted Highest Qualifying Tender Price to
dispute resolution in accordance with Schedule 27 - Dispute Resolution Procedure, HMQ
shall, irrespective of such Dispute, be entitled to enter into a New Agreement.
(j)
HMQ shall pay the Adjusted Highest Qualifying Tender Price in accordance with Section
8 of this Schedule 23.
(k)
HMQ may elect, by notice to Project Co at any time prior to HMQ ascertaining the
Adjusted Highest Qualifying Tender Price, to follow the no retendering procedure set out
in Section 3.4 of this Schedule 23. In addition, HMQ shall follow such no retendering
procedure if:
(i)
only one Qualifying Tender is received; or
(ii)
a New Agreement has not been entered into and compensation paid under Section
8.2
on or before the date falling 18 months after the Termination Date.
(l)
Project Co may give written notice to HMQ at any time after the Termination Date and
prior to the date for receipt of Qualifying Tenders that a Liquid Market does not exist (or
shall not exist on the date for receipt of Qualifying Tenders). If HMQ is in agreement
with such notice, the provisions of Section 3.4 of this Schedule 23 shall apply. If HMQ
provides a written response within 10 Business Days of receipt of such notice stating that
it is in disagreement with that notice or if no written response is provided by HMQ within
such 10 Business Day period, the matter shall be referred for determination in accordance
with Schedule 27 - Dispute Resolution Procedure.
3.4
No Retendering Procedure
(a)
Subject to Section 3.4(b) of this Schedule 23, if the provisions of this Section 3.4 apply,
Project Co shall not be entitled to receive any Post Termination Service Amount.
(b)
If HMQ elects to require a determination in accordance with this Section 3.4 after it has
elected to follow the procedure set out in Section 3.3 of this Schedule 23, then HMQ shall
continue to pay to Project Co each Post Termination Service Amount until the
Compensation Date in accordance with Section 3.3 of this Schedule 23.
(c)
In determining the Estimated Fair Value, the Parties shall be obliged to follow the
principles set out below:
(i)
All forecast amounts should be calculated in nominal terms as at the Termination
Date. Where relevant, adjustments for forecast inflation between the date of
calculation and the forecast payment date(s), as set out in this Project Agreement,
will be made and, if made, will use an assumed inflation rate of [REDACTED]%
per annum.
(ii)
The Estimated Fair Value shall be calculated using the following formula
(without double counting):
(A - B - C) – D
Where:
A = the present value of the following payments to the extent that, as at the
Termination Date, such payments have not yet been paid and are forecast to be
made from the Termination Date to the Expiry Date, assuming that no Deductions
will be made over that period, discounted at the Discount Rate: the Monthly
OM&R Payments, the Phase One Phase Substantial Completion Payment, the
Phase Two Phase Substantial Completion Payment and the Substantial
Completion Payment
B = a contingency amount based on a reasonable risk assessment of any cost
overruns that may reasonably arise (including in respect of any matter referred to
in this Section 3.4(c)(ii) of this Schedule 23) whether or not forecast in the
relevant base case and represented in the Financial Model as of the date of
Financial Close, discounted at the Discount Rate
C = the present value of the costs of obtaining or performing the OM&R Work
reasonably forecast to be incurred by HMQ from the Termination Date to the
Expiry Date to the standard required, discounted at the Discount Rate
D = any rectification costs (including Rectification Costs) reasonably required to
deliver the Project Operations to the standard required, including, if applicable, to
complete the Initial Works, any costs reasonably forecast to be incurred by HMQ
for up-front finance fees and related costs (excluding principal and interest
payments) that would not arise at the time or in the future had the termination not
occurred, and any other additional operating costs required to restore operating
services standards less (to the extent that such sums are included in any
calculation of rectification costs (including Rectification Costs) for the purposes
of this item D), the aggregate of:
(A)
any insurance proceeds received or which will be received pursuant to
policies maintained in accordance with Schedule 25 - Insurance and
Performance Security Requirements; and
(B)
amounts payable by HMQ in respect of Capital Expenditures under this
Project Agreement which have not been paid,
discounted at the Discount Rate.
(iii)
The amount of (A – B – C) as defined in Section 3.4(c)(ii) of this Schedule 23
shall be no greater than the Non-Default Termination Sum.
(iv)
All costs referred to in Section 3.4(c)(ii) of this Schedule 23 are to be forecast at a
level that will deliver the OM&R Work and other Project Operations to the
standards required by this Project Agreement and to achieve the full Monthly
OM&R Payments (without Deductions).
(v)
The calculation will take into consideration the obligations of the Parties with
respect to allowances and payments under this Project Agreement.
(d)
If the Parties cannot agree on the Estimated Fair Value, then the Estimated Fair Value
shall be determined in accordance with Schedule 27 - Dispute Resolution Procedure.
(e)
HMQ shall pay the Adjusted Estimated Fair Value in accordance with Section 8 of this
Schedule 23.
4.
CONSEQUENCES OF NON-DEFAULT TERMINATION AND TERMINATION
BY HMQ FOR RELIEF EVENT
(a)
If HMQ terminates this Project Agreement pursuant to Section 47.1 of this Project
Agreement or if either Party terminates this Project Agreement pursuant to Section 47.2
of this Project Agreement, HMQ shall pay to Project Co the Non-Default Termination
Sum.
(b)
The “Non-Default Termination Sum” shall be an amount equal to the aggregate of:
(i)
the Senior Debt Amount and the Senior Debt Makewhole;
(ii)
the Junior Debt Amount;
(iii)
any amount payable by HMQ to Project Co in accordance with Sections 43.2(b)
and 44.2(b) of this Project Agreement;
(iv)
the Employee Termination Payments and the Subcontractor Losses (but excluding
therefrom any claims for loss of profit); and
(v)
an amount equal to the Equity Capital as at Financial Close, less all dividends and
other Distributions paid on or made in respect of the Equity Capital on or before
the Termination Date, provided that where such amount is negative, it shall be
deemed instead to be zero;
LESS, the aggregate (without double counting) of the following, to the extent it is a
positive amount:
(vi)
all credit balances on any bank accounts held by or on behalf of Project Co on the
Termination Date and the value of any insurance proceeds due to Project Co or to
which Project Co would have been entitled had insurance been maintained in
accordance with the requirements of this Project Agreement (save where such
insurance proceeds are to be applied in reinstatement, restoration or replacement,
or, in the case of third party legal liability, in satisfaction of the claim, demand,
proceeding or liability or where HMQ is required to procure insurances and to
make proceeds available to Project Co under this Project Agreement and it has
failed to do so) or sums due and payable from third parties other than sums
wholly unrelated to the Project Operations, the Project and this Project Agreement
(but only when received from third parties) but excluding any claims under any
Subcontracts or claims against other third parties which have not been determined
or have been determined but not yet paid, provided that, in such case, Project Co
shall assign any such rights and claims under the Subcontracts or claims against
other third parties (other than claims against other third parties wholly unrelated
to the Project Operations, the Project and this Project Agreement) to HMQ and, at
no additional cost to Project Co, give HMQ reasonable assistance in prosecuting
such claims; and
(vii)
to the extent realized before the Invoice Date, the market value of any other assets
and rights of Project Co (other than those transferred to HMQ pursuant to this
Project Agreement) less liabilities of Project Co properly incurred in carrying out
its obligations under this Project Agreement as at the Termination Date, provided
that no account should be taken of any liabilities and obligations of Project Co
arising out of:
(A)
agreements or arrangements entered into by Project Co to the extent that
such agreements or arrangements were not entered into in connection with
Project Co’s obligations in relation to the Project; or
(B)
agreements or arrangements entered into by Project Co other than in the
ordinary course of business and on commercial arm’s length terms, save to
the extent that liabilities and obligations would have arisen if such
agreements or arrangements had been entered into in the ordinary course
of business and on commercial arm’s length terms; and
(viii)
amounts which HMQ is entitled to set off pursuant to Section 34.13(a)(i) of this
Project Agreement,
provided that the Non-Default Termination Sum shall never be less than the aggregate of
the Senior Debt Amount, the Senior Debt Makewhole and the Junior Debt Amount.
(c)
To the extent that such assets and rights referred to in Section 4.1(b)(vii) of this Schedule
23 are not realized and applied pursuant thereto, Project Co shall, on payment of the NonDefault Termination Sum, assign such assets and rights to HMQ.
(d)
HMQ shall pay the Non-Default Termination Sum in accordance with Section 8 of this
Schedule 23.
5.
CONSEQUENCES OF TERMINATION FOR PROHIBITED ACTS
(a)
If HMQ terminates this Project Agreement as a result of a Project Co Event of Default for
failing to comply with Section 60 of this Project Agreement, HMQ shall pay to Project
Co the Prohibited Acts Termination Sum.
(b)
The “Prohibited Acts Termination Sum” shall be an amount equal to the aggregate of:
(i)
the Senior Debt Amount and the Senior Debt Makewhole;
(ii)
any amount payable by HMQ to Project Co in accordance with Sections 43.2(b)
and 44.2(b) of this Project Agreement; and
(iii)
the following amounts calculated in respect of the Construction Contractor, if the
Construction Contractor is not responsible for a Prohibited Act, and, if applicable,
the OM&R Provider, if the OM&R Provider is not responsible for a Prohibited
Act, and which Project Co can demonstrate will be paid directly to such persons:
(A)
the Employee Termination Payments; and
(B)
as applicable, the Construction Contractor’s and OM&R Provider’s outof-pocket costs incurred as a direct result of termination of this Project
Agreement (excluding any breakage fees and overhead and profit of the
Construction Contractor and OM&R Provider, as applicable);
LESS, the aggregate (without double counting) of the following, to the extent it is a
positive amount:
(iv)
all credit balances on any bank accounts held by or on behalf of Project Co on the
Termination Date and the value of any insurance proceeds due to Project Co or to
which Project Co would have been entitled had insurance been maintained in
accordance with the requirements of this Project Agreement (save where such
insurance proceeds are to be applied in reinstatement, restoration or replacement,
or, in the case of third party legal liability, in satisfaction of the claim, demand,
proceeding or liability or where HMQ is required to procure insurances and to
make proceeds available to Project Co under this Project Agreement and it has
failed to do so) or sums due and payable from third parties other than sums
wholly unrelated to the Project Operations, the Project and this Project Agreement
(but only when received from third parties) but excluding any claims under any
Subcontracts or claims against other third parties which have not been determined
or have been determined but not yet paid, provided that, in such case, Project Co
shall assign any such rights and claims under the Subcontracts or claims against
other third parties (other than claims against other third parties wholly unrelated
to the Project Operations, the Project and this Project Agreement) to HMQ and, at
no additional cost to Project Co, give HMQ reasonable assistance in prosecuting
such claims;
(v)
to the extent realized before the Invoice Date, the market value of any other assets
and rights of Project Co (other than those transferred to HMQ pursuant to this
Project Agreement) less liabilities of Project Co properly incurred in carrying out
its obligations under this Project Agreement as at the Termination Date, provided
that no account should be taken of any liabilities and obligations of Project Co
arising out of:
(A)
agreements or arrangements entered into by Project Co to the extent that
such agreements or arrangements were not entered into in connection with
Project Co’s obligations in relation to the Project; or
(B)
agreements or arrangements entered into by Project Co other than in the
ordinary course of business and on commercial arm’s length terms, save to
the extent that liabilities and obligations would have arisen if such
agreements or arrangements had been entered into in the ordinary course
of business and on commercial arm’s length terms; and
(vi)
amounts which HMQ is entitled to set off pursuant to Section 34.13(a)(i) of this
Project Agreement, provided that HMQ shall only set off amounts which are due
to HMQ by Project Co pursuant to the terms of this Project Agreement if and to
the extent the Prohibited Acts Termination Sum exceeds the Senior Debt Amount.
(c)
To the extent that such assets and rights referred to in Section 5.1(b)(v) of this Schedule
23 are not realized and applied pursuant thereto, Project Co shall, on payment of the
Prohibited Acts Termination Sum, assign such assets and rights to HMQ.
(d)
HMQ shall pay the Prohibited Acts Termination Sum in accordance with Section 8 of this
Schedule 23.
6.
CONSEQUENCES OF TERMINATION FOR BREACH OF REFINANCING
(a)
If HMQ terminates this Project Agreement as a result of a Project Co Event of Default for
failing to comply with Section 7.3 of this Project Agreement or Schedule 28 –
Refinancing or the Lender assigns, transfers or otherwise disposes of any right, title or
interest it may have in, or obligations it may have pursuant to, the Security Documents in
breach of the Lenders’ Direct Agreement, HMQ shall pay to Project Co a termination
sum equivalent to, and calculated in accordance with Sections 5.1(b)(i), (ii), (iii), (iv) and
(v) of this Schedule 23, less amounts which HMQ is entitled to set off pursuant to Section
34.13(a)(i) of this Project Agreement.
(b)
HMQ shall pay such termination sum in accordance with Section 8 of this Schedule 23.
7.
CONSEQUENCES OF TERMINATION BY PROJECT CO FOR RELIEF EVENT
(a)
If Project Co terminates this Project Agreement pursuant to Section 47.1 of this Project
Agreement, HMQ shall pay to Project Co a termination sum equivalent to the greater of
an amount calculated and payable in accordance with, the Prohibited Acts Termination
Sum; and (ii) the Adjusted Estimated Fair Value calculated in accordance with this
Schedule 23.
(b)
HMQ shall pay such termination sum in accordance with Section 8.1 or 8.3 of this
Schedule 23, as applicable.
8.1
Payment and Interest Following Non-Project Co Default Termination
(a)
In respect of the termination payments to be made pursuant to any of Sections 2, 4, 5, 6
or 7 of this Schedule 23, as soon as practicable after, and, in any event, within 30 days
after, the Termination Date, Project Co shall give to HMQ an invoice for the relevant
termination sum and sufficient supporting evidence, reasonably satisfactory to HMQ,
justifying the amount of the relevant termination sum including a detailed breakdown of
each of the individual items comprising such sum.
(b)
HMQ shall pay to Project Co:
(i)
the relevant termination sum within 60 days after the Invoice Date; and
(ii)
HMQ shall indemnify Project Co as provided in Section 56.2(c) of this Project
Agreement in respect of any damages suffered or incurred as a result of the
relevant termination sum (or any part of such sum that remains outstanding) not
being received on the Termination Date:
(A)
in an amount equivalent to the No Default Payment Compensation
Amount for the period from (but excluding) the Termination Date to (and
including) the date which is 60 days after the Invoice Date; and
(B)
thereafter, in an amount equivalent to the Payment Compensation Amount
until the date of payment.
(c)
In respect of the termination payments to be made pursuant to any of Sections 4, 5, 6 or 7
of this Schedule 23, if the applicable termination sum is negative, HMQ shall have no
obligation to make any payment to Project Co and Project Co shall also thereafter
indemnify HMQ as provided in Section 56.1(e) of this Project Agreement in respect of
any damages suffered or incurred on such amount on the basis that the due date for the
payment of the negative termination sum amount was the date 60 days after the Invoice
Date until the date of payment in an amount equivalent to the Payment Compensation
Amount.
8.2
Payment and Interest Following Project Co Default - Retendering Procedure
(a)
Following the retendering procedure set out in Section 3.3 of this Schedule 23, HMQ
shall pay to Project Co the Adjusted Highest Qualifying Tender Price no later than the
date falling 30 days after the later of:
(i)
the date on which HMQ enters into the New Agreement with the New Project Co;
and
(ii)
if Project Co has, pursuant to Section 3.3(i) of this Schedule 23, referred a
Dispute relating to the Adjusted Highest Qualifying Tender Price to be resolved in
accordance with Schedule 27 - Dispute Resolution Procedure, the date on which
the Dispute is finally determined, provided that HMQ shall pay the undisputed
amount on the date referred to in Section 8.2(a)(i) of this Schedule 23,
and HMQ shall indemnify Project Co as provided in Section 56.2(c) of this Project
Agreement on the Adjusted Highest Qualifying Tender Price on the basis that the due
date for the payment of the Adjusted Highest Qualifying Tender Price was the date on
which HMQ enters into the New Agreement with the New Project Co:
(i)
in an amount equivalent to the No Default Payment Compensation Amount from
the due date up to (and including) the date following 30 days from after the later
of the dates determined under Section 8.2(a)(i) and (ii) above (and for clarity, on
such portions of the Adjusted Highest Qualifying Tender Price in the
circumstance described in paragraph (ii) above); and
(ii)
thereafter, in an amount equivalent to the Payment Compensation Amount until
the date of payment.
(b)
If the Adjusted Highest Qualifying Tender Price is negative, HMQ shall have no
obligation to make any payment to Project Co and Project Co shall, on the date of the
New Agreement, pay HMQ the amount by which such termination sum is negative,
failing which Project Co shall also thereafter indemnify HMQ as provided in Section
56.1(e) of this Project Agreement in respect of any damages suffered or incurred on such
amount on the basis that the due date for the payment of the negative termination sum
amount was the date of the New Agreement in an amount equivalent to the Payment
Compensation Amount until the date of payment.
8.3
Payment and Interest Following Project Co Default - No Retendering Procedure
(a)
If HMQ follows the no retendering procedure set out in Section 3.4 of this Schedule 23,
HMQ shall pay to Project Co the Adjusted Estimated Fair Value no later than the date
falling 60 days after the date on which the Adjusted Estimated Fair Value has been
agreed or determined in accordance with Section 3.4 of this Schedule 23, together with
interest on such amount calculated in accordance with Section 8.1(b)(ii) of this Schedule
(b)
If the Adjusted Estimated Fair Value is negative, HMQ shall have no obligation to make
any payment to Project Co and Project Co shall, on the Compensation Date, pay HMQ
the amount by which the Adjusted Estimated Fair Value is negative, failing which Project
Co shall also thereafter indemnify HMQ as provided in Section 56.1(e) of this Project
Agreement in respect of any damages suffered or incurred on such amount on the basis
that the due date for payment of the negative Adjusted Estimated Fair Value was the date
of the New Agreement in an amount equivalent to the Payment Compensation Amount
until the date of payment.
(a)
The costs and expenses to be taken into account in the calculation of all termination sums
due pursuant to this Schedule 23 shall only be such costs and expenses to the extent that
they are reasonable and proper in quantum and shall have been or will be reasonably and
properly incurred.
(a)
If the calculation of any termination amount is disputed then any undisputed amount shall
be paid in accordance with this Section 8 of this Schedule 23 and the disputed amount
shall be dealt with in accordance with Schedule 27 - Dispute Resolution Procedure.
8.6
Outstanding Debt Amounts
(a)
HMQ shall be entitled to rely on a certificate of the Lenders’ Agent as conclusive as to
the Senior Debt Amount, the Senior Debt Makewhole, the Junior Debt Amount and the
Junior Debt Makewhole, as applicable, outstanding or payable at any relevant time.
(b)
If a receipt or other acknowledgement is given by the Lenders’ Agent acknowledging or
otherwise confirming receipt of payment or payments in respect of the Senior Debt
Amount, the Senior Debt Makewhole, the Junior Debt Amount and the Junior Debt
Makewhole, as applicable, such receipt or other acknowledgement shall discharge
HMQ’s obligation to pay such portion of compensation due to Project Co that is equal to
the amount acknowledged or confirmed.