Web viewProperty rights, reservations and easements (Rights granted) The free and uninterrupted right at all times during the Term for the Tenant and anyone deriving title

SCHEDULE 1

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SCHEDULE 2

Property rights, reservations and easements

Part I

(Rights granted)

1 The free and uninterrupted right at all times during the Term for the Tenant and anyone deriving title under the Tenant and the servants agents licensees and invitees of any of them for any lawful purpose in connection with the Permitted Use in common with the Landlord and the other tenants of the Facilities and all others authorised by the Landlord and/or such other tenants:

1.1 to pass and repass over and along the roads and footpaths in the Facilities and within the Site and the corridors entrance halls staircases and lifts (if any) in the Facilities in order to gain access to the Premises;

1.2 after reasonable prior written notice by appointment during normal business hours (except in an emergency) to enter so far as necessary upon any other part of the Facilities for the purpose of carrying out any repairs renewals maintenance necessary inspection or authorised alterations to the Premises or any part of the same or to any Conducting Media serving the Premises (but only in so far as such works cannot conveniently be effected without such entry) the Tenant causing as little damage and inconvenience as possible in the exercise of such right and making good any damage so caused;

1.3 during normal business hours to use the forecourt area shown for identification only hatched brown on Plan 1 for the purposes of loading and unloading goods and materials in connection with the Permitted Use provided always that this right shall not be construed so as to give the Tenant any right to store or deposit or suffer to be stored or deposited any goods or materials whatsoever upon such forecourt area;

1.4 to pass and repass in emergency over such parts of the Facilities as are designated from time to time as fire escape routes;

1.5 to use the reception area edged [ ] on Plan 2;

1.6 to use the kitchen and toilet facilities within the parts of the Facilities as are designated for shared use.

2 The right to use the Conducting Media.

3 The right for the Tenant and anyone deriving title under the Tenant and the authorised visitors guests and invitees of any of them to park not more than [ ] motor cars within the spaces edged [ ] on Plan 1.

4 The right of support and shelter by and from the Facilities for the Premises.

5 The right to display a nameplate and sign in the entrance area of the Facilities of size and design to be approved by the Landlord whose approval shall not be unreasonably withheld or delayed.

6 [The right to dispose of waste and clinical waste at the point marked X on Plan [ ]]


7 [The Tenant may need a right to enter the Common Parts in order to clean the Common Parts if there is a multi let building and the Landlord is not responsible for such cleaning.]


SCHEDULE 2

Part II

(Exceptions and Reservations)1

1 The right to use the Conducting Media now or at any time hereafter during the Term in under or upon the Premises and serving any other part of the Facilities or any adjoining or neighbouring property of the Landlord.

2 The right to enter upon the Premises for the purpose of:

2.1 inspecting maintaining repairing or renewing any of the Conducting Media within the Facilities;

2.2 carrying out any repairs maintenance or inspections to any other part of the Facilities or any adjoining or neighbouring property of the Landlord which cannot conveniently be effected without such entry;

2.3 carrying out the Landlord’s obligations under this Lease and leases of other premises at the Facilities in accordance with the provisions of this Lease;

the person exercising such rights remedying any physical damage so caused except in so far as such entry is necessitated by any act or default of the Tenant and anyone deriving title under the Tenant or any servant agent invitee or licensee of any of them

3 The right to pass and repass over and along the corridors and entrances in the Premises in order to gain access to and from any other part of the Facilities in accordance with such reasonable regulations as may be imposed from time to time by the Tenant.

4 All liberties privileges easements quasi-easements rights and advantages whatsoever now held or enjoyed with or appertaining to any other part of the Facilities or any adjoining or neighbouring property of the Landlord.

5 The right to deal in any manner with any other part of the Facilities or any adjoining or neighbouring property of the Landlord and to erect maintain rebuild or alter or suffer to be erected maintained rebuilt or altered thereon any buildings provided such dealing or buildings shall not materially affect or diminish the light or air which may now or at any time in the future be enjoyed for or in respect of the Premises.

6 The right of support and shelter by and from the Premises for the Facilities or any adjoining buildings (whether now in existence or erected during the Term).

7 [Subject to Clause 33 the right to construct install erect use operate repair replace and renew plant machinery aerials fixtures or other structures on into or projecting over the Premises (including without limitation the roof) and the right of support for the same and to lay run maintain renew replace and use electricity cables and other Conducting Media serving the same through or over the Premises together with the right to enter upon the Premises to carry out such works and to exercise such rights the person exercising such rights causing as little damage and inconvenience as possible and remedying any physical damage so caused as soon as reasonably practicable.]

1 Where airspace is excluded from the Premises (which will normally be the case) consideration must be given to further rights that need to be excluded to enable the Landlord to develop and use the remainder of the Site (including the airspace).


SCHEDULE 2

Part III

(Landlord’s Title)


SCHEDULE 3

Tenant’s Requirements

Tenants should complete the standard template for Tenant's Requirements, as published by CHP.


SCHEDULE 4

Landlord’s Proposals


SCHEDULE 5

Design review procedure


SCHEDULE 5

Part I

1 The Landlord shall develop and finalise the design and specification of the Works working closely with the Tenant’s Representative who will provide input, where requested, into the needs and preferences of the Tenant and shall act as an interface between the Landlord and the Tenant. Subject as hereinafter provided the Tenant’s Representative shall only be entitled to comment on any design proposed by the Landlord in accordance with the provisions of this Schedule.

2 The Landlord shall submit to the Tenant’s Representative, in duplicate, Reviewable Design Data in respect of all elements of the Works that relate to the appearance and/or the functionality of the Works for approval by the Tenant’s Representative.

3 The Tenant’s Representative shall, within ten (10) Business Days of the date of receipt of any such Reviewable Design Data (or re-submission or further information requested under paragraph 5 below, as the case may be), return one copy of the relevant Reviewable Design Data to the Landlord endorsed “no comment” or (subject to, and in accordance with, paragraph 7), “comments” (as appropriate).

4 If the Tenant’s Representative fails to return a copy of any Reviewable Design Data duly endorsed in accordance with the preceding paragraph the Tenant’s Representative shall be deemed to have returned the relevant Reviewable Design Data to the Landlord endorsed “no comment”. If the Tenant’s Representative raises comments on any submitted items of Reviewable Design Data in accordance with paragraph 3, he shall state the ground upon which those comments are based and the evidence or other information necessary to substantiate that ground.

5 The Landlord shall provide to the Tenant’s Representative any other information, data and documents that the Tenant’s Representative reasonably requires in order to determine whether he has the basis for raising comments or making objection to any relevant Reviewable Design Data in accordance with this Schedule.

6 If the Landlord fails to submit any such information, data or documents, the Tenant’s

Representative shall be entitled to:

6.1 comment on the relevant Reviewable Design Data on the basis of the information, data and documents that have been provided; or

6.2 object to the relevant Reviewable Design Data on the grounds that insufficient information, data and documents have been provided to enable the Tenant’s Representative to determine whether he has an legitimate basis for commenting or objecting in accordance with this Schedule.

7 References to raising “comments” in this Schedule shall be construed to mean “raising comments or making objections”, unless the contrary appears from the context. The Tenant’s Representative may raise comment in relation to any relevant Reviewable Design Data on the sole grounds that the relevant Reviewable Design Data would (on the balance of probabilities):

7.1 breach any Law;

7.2 breach any Requisite Consents;


7.3 prevent the Works from satisfying the Tenant’s Requirements or meeting the Landlord’s Proposals;

7.4 [adversely affect the Clinical Functionality of the Premises;] or

7.5 could be altered at no additional capital or ongoing operational cost to the Landlord and with no adverse effect on the Project Programme.

8 Any relevant item of Reviewable Design Data which is returned, or deemed to have been returned, by the Tenant’s Representative and endorsed “no comment”, shall be complied with or implemented (as the case may be) by the Landlord.

9 In the case of any relevant Reviewable Design Data returned to the Landlord endorsed with “comments”, the Landlord shall comply with such Reviewable Design Data after amendment in accordance with the endorsed comments unless the Landlord disputes that any such comment is made on a ground set out in paragraph 7, in which case, the Landlord or the Tenant’s Representative may refer the matter for determination in accordance with Schedule 21 (Dispute Resolution Procedure). To avoid doubt, where a matter is so referred for determination, the Landlord may proceed at the Landlord’s risk in relation to the balance of the design of the Works and/or the carrying out of the Works.2

10 The Landlord shall compile and maintain a register of the date and contents of the submission of all relevant Reviewable Design Data to the Tenant’s Representative and of the date of receipt and the content of all Reviewable Design Data that is returned by the Tenant’s Representative.

11 No review, comment or approval by the Tenant or the Tenant’s Representative shall operate to exclude or limit the Landlord’s obligations or liabilities under this Lease (or the Tenant’s rights under this Lease).

2 This is to allow the Landlord to manage the risk of late completion.


SCHEDULE 5

Part II

Reviewable Design Data


SCHEDULE 6

Completion Acceptance Schedule

1 The Facilities are available and ready for occupation and use by the Tenant and other tenants at the Facilities in accordance with the Landlord’s Proposals and meet the Tenant’s Requirements with the exception of any Snagging Matters. 3

2 All the Landlord’s Commissioning has been completed in accordance with this Lease.

3 All Requisite Consents (including all consents relevant to the Works and the Landlord’s Commissioning) have been obtained and complied with and copies of all necessary consents have been supplied to the Tenant.

4 Save as may be necessary to rectify any Snagging Matters, the Premises are free of all temporary or unused materials, plant and equipment used in connection with the Works.

5 All mechanical and electrical installations comprised in the Works have been tested and commissioned in accordance with, and by reference to, the standards contained in the CIBSE commissioning codes and IEE regulations and/or NHS Requirements insofar as the same may be applicable.

6 The Landlord has supplied to the Tenant a copy of the draft documentation required to be supplied by it pursuant to Clause 18. The documentation shall be suitably indexed and collated into stiff backed, loose leaf, multi-ring binders.

7 The draft as-built documentation to be supplied in accordance with Clause 18 shall:

7.1 comprise (insofar as reasonably available at the Actual Completion Date) installed plans, drawings, specifications, manufacturers’ reference and maintenance data indicating any changes and revisions made during construction together with records of inspections and tests carried out to substantiate conformance to required standards. These records shall include records of all Works carried out by subcontractors, manufacturers, suppliers and independent inspecting authorities including test certificates and insurance reports;

7.2 be such as to enable another experienced party to operate and maintain the buildings and engineering services and equipment comprising the Premises without requiring other data sources.

8 The draft operations and maintenance manuals to be supplied in accordance with paragraph 7 shall contain, for each item of equipment, the following details insofar as reasonably available at the Actual Completion Date:

8.1 any manuals and guarantees provided by manufacturers, suppliers and subcontractors;

8.2 technical data, including dimensions, weights and performance data;

8.3 the operating instructions, including normal and emergency measures, warnings and precautions in use;

8.4 technical description presented graphically;3 Additional completion tests may be required for specialist schemes. Where Liftco/Fundco is providing soft FM

Services, the readiness of the soft FM Service Provider should be included in the completion tests.


8.5 installation data, including testing after installation;

8.6 servicing instructions and routines, including lubrication, preventative maintenance procedures, faults diagnosis and replacement;

8.7 parts list, cross references to “exploded” illustration; and;

8.8 recommended spares holdings.

9 The Landlord has supplied to the Tenant the access codes, swipe cards and keys as may be applicable for access to and within the Premises.

10 The Landlord has delivered to the Tenant a copy of the health and safety file in accordance with the CDM Regulations.

11 The certificate of practical completion (or equivalent) under any construction contract entered into by the Landlord has been issued.


SCHEDULE 7

Part I

Project Programme


SCHEUDULE 7

Part II

Outline Commissioning Programme


SCHEDULE 8

Insurance

Limits of Indemnity

The limits of indemnity required by this Schedule shall be increased in multiples of £5,000,000 as follows. If on a renewal date the limits of indemnity figures stated in this Schedule (Indexed) shall exceed the existing limits of indemnity by £3,000,000, then the level of indemnity required by this Schedule shall be increased by £5,000,000. To avoid doubt if on a renewal date the limits of indemnity figures stated in this Schedule (Indexed) shall not exceed the existing limits of indemnity by £3,000,000, then the level of indemnity required by this Schedule shall remain unchanged.

Maximum Deductibles

The maximum deductibles required by this Schedule shall be increased in multiples of £5,000 as follows. If on a renewal date maximum deductibles figures stated in this Schedule (index linked) shall exceed the existing maximum by £3,000, then the maximum deductibles required by this Schedule shall be increased by £5,000. to avoid doubt if on a renewal date the maximum deductibles figures stated in this Schedule (Indexed) shall not exceed the existing limits of indemnity by £3,000, then the maximum deductibles required by this Schedule shall remain unchanged.

Indexation

For the purposes of this Schedule 8 (Insurance) only "Indexed" means the index published in Table 5 (excluding mortgage interest payments) of Business Monitor (MM23) published by the Office for National Statistics, or failing such publication or in the event of a fundamental change to the index, such adjustments to the index or such other index as the parties may agree. Any adjustment or amendment should have the intention of placing the parties in the position that they would have been in had the index not ceased to be published, or the relevant fundamental change not been made. In the event that no such agreement is reached, the necessary amendments to the index, or the use of a relevant alternative index, may be determined in accordance with clause 49 (Dispute Resolution Procedure).


SCHEDULE 8

Part I

Policies to be taken out and maintained by the Landlord from the date of this Lease until the Actual Completion Date

1 CONTRACTORS ALL RISKS

1.1 Cover

All risks of physical loss, destruction or damage to the Facilities from any cause not excluded arising during the Period of Insurance.

1.2 Insured

1.2.1 The Tenant and persons deriving title under it

1.2.2 The Landlord

1.2.3 The Contractor and their sub-contractors of any tier

1.2.4 Funders

1.2.5 Service Providers

1.2.6 Consultants to 1.2.1, 1.2.2 and 1.2.3 above including but not limited to the Landlord’s Agent for his site activities only.

Each for their respective rights and interests

1.3 Interest

1.3.1 All Works undertaken in relation to the Facilities including all designs, drawings, specifications and plans to be provided, all plant, machinery, Equipment, unfixed materials and other goods and all other property excluding constructional plant and equipment and temporary buildings belonging to or the responsibility of the Contractor or its subcontractors, for incorporation or use in connection with or incorporation into the Facilities whether supplied by or on behalf of the Landlord or installed by any insured contractor or sub-contractor or otherwise.

1.3.2 For refurbishments schemes; existing structures and assets

1.4 Period of Insurance

From the date of this Lease to the Actual Completion Date plus twelve (12) months defects liability period.

1.5 Sum Insured

1.5.1 The Construction Contract Sum or the reinstatement value (whichever is greater)

1.5.2 For refurbishment schemes; reinstatement as new value


1.6 Territorial Limits

United Kingdom.

1.7 Maximum Deductibles

[£150,000]4 each and every loss in respect of loss or damage caused by defect in design plan specification materials or workmanship and [£10,000]5 in respect of each and every other loss.

20% in respect of extension 1.8.7 and 1.8.8

1.8 Principal Extensions

1.8.1 72 hour clause.

1.8.2 European Union Local Authorities clause.

1.8.3 12 months guarantee maintenance clause.

1.8.4 Professional fees clause.

1.8.5 Debris removal clause.

1.8.6 Automatic increase clause – limit 115% of sum insured.

1.8.7 Inflation on incomplete works clause – limit £[500,000].

1.8.8 Additional cost of working clause – limit £[500,000].

1.8.9 Plans and documents clause.

1.8.10 Automatic reinstatement clause.

1.8.11 Minimisation of loss clause.

1.8.12 Expediting expenses clause.

1.8.13 Fire Prevention Joint Code compliance clause.

1.8.14 Full value terrorism clause in accordance with insurance market practice.

1.8.15 Free issue materials clause.

1.8.16 Munitions of war clause.

1.8.17 Basis of loss settlement: replacement/reinstatement with a cash option in the event of election not to reinstate.

1.8.18 Inland transit.

4 This figure is to be Indexed for the period from the date of the Strategic Partnering Agreement to the date of the grant of the Lease Plus Agreement.



1.9 Principal Exclusions

1.9.1 Faulty design, workmanship and materials DE5 clause; with DE3 option.

1.9.2 War, invasion, acts of foreign enemies, hostilities, civil war, rebellion, revolution, insurrection of military or usurped power.

1.9.3 Nuclear risk.

1.9.4 Sonic bangs.

1.9.5 Consequential losses not otherwise insured in accordance with this Schedule.

1.9.6 Inventory losses.

1.9.7 Such other exclusions as are generally applied as a matter of current market practice in the relevant insurance market from time to time.

2 THIRD PARTY LIABILITY

2.1 Cover

Legal liability of the Insured for all sums (including claimants’ costs and expenses) arising out of accidental:

2.1.1 death or bodily injury to or illness or disease contracted by any person;

2.1.2 loss or damage to property;

2.1.3 interference to property or any easement, right of air, light, water or way or the enjoyment or use thereof by obstruction, trespass, loss of amenities, nuisance or any like cause,

happening or consequent upon a cause occurring during the Period of Insurance and arising out of or in connection with the Works.

2.2 Insured

As per paragraph 1.2 of this Schedule.


As per paragraph 1.4 of this Schedule.

2.4 Minimum Limit of Indemnity

£[10,000,000]6 (Indexed) any one occurrence.




£[5,000]7 (Indexed) each and every loss (personal injury claims to be paid in full).


2.6.1 Costs in addition to the limit.

2.6.2 Contractual liability clause.

2.6.3 Munitions of war clause.

2.6.4 Worldwide jurisdiction clause [(excluding USA and Canada)].

2.6.5 Corporate Manslaughter and Homicide Act

2.6.6 Cross liabilities clause


2.7.1 Liability of any insured to its own employees.

2.7.2 Fines, penalties, punitive or exemplary damages.

2.7.3 Liquidated damages.

2.7.4 War, invasion, act of foreign enemies, hostilities (whether declared or not), civil war, rebellion, revolution, insurrection of military or usurped power.

2.7.5 Nuclear risks.

2.7.6 Seepage, pollution or contamination unless caused by a sudden, unintended and unexpected happening.

2.7.7 Use of aircraft.

2.7.8 Breach of professional duty provided for a fee, but not excluding personal or bodily injury.

2.7.9 Such other exclusions as are generally applied as a matter of current market practice in the relevant insurance market from time to time.



SCHEDULE 8

Part II

Policies to be taken out prior to the Actual Completion Date and maintained by the Landlord throughout the Operational Phase

1 PROPERTY ALL RISKS

1.1 Cover

All risks of physical loss or damage to the Facilities and Equipment from any cause not excluded arising during the Period of Insurance.

1.2 Insured

1.2.1 The Tenant and those persons deriving title under it.

1.2.2 The Landlord.

1.2.3 Funders.

1.2.4 Service Providers (to the extent required by their contract with the Landlord).

Each for their respective rights and interests

1.3 Sum Insured

An amount sufficient to pay claims in a full reinstatement value basis of the Facilities, and all equipment at any time during the Operational Phase [to include during Commissioning prior to the commencement of the Operational Phase].

1.4 Maximum Deductible

£[10,000] reducing to £[500] in respect of GP tenants (Indexed)8 each and every loss.


From the Actual Completion Date for twelve (12) months or longer periods as agreed and renewable thereafter until the expiry of the Term.


1.6.1 Replacement/reinstatement basis of claims settlement including cash for reinstatement value at option of insured.

1.6.2 Architects’ surveyors’ and engineers’ fees clause.

1.6.3 Debris removal costs clause.

1.6.4 Additional costs of complying with public authority requirements clause.8 This figure is to be Indexed for the period from the date of the Strategic Partnering Agreement to the date of the

grant of the Lease Plus Agreement.


1.6.5 Additional overtime, night work, holiday work, express freight costs and custom duties clause.

1.6.6 Automatic reinstatement of sum insured clause.

1.6.7 VAT to the extent for which the insured is liable.

1.6.8 Full value terrorism clause in accordance with usual market practice insurance.

1.6.9 European Union Local Authorities clause.


1.7.1 War and civil war.

1.7.2 Radioactive contamination.

1.7.3 Unexplained shortages or mysterious disappearance.

1.7.4 The cost of making good wear and tear, gradual deterioration, rust etc., gradually developing defects, flaws, deformation, distortion, cracks or partial fractures, defects in design, materials or workmanship but this shall not exclude subsequent damage resulting from an ensuing cause which is not otherwise excluded.

1.7.5 Consequential (financial) losses, loss of revenue, loss of use etc.

1.7.6 Sonic boom.

1.7.7 Loss of or damage to vehicles licensed for road use, marine vessels or aircraft.

1.7.8 Fidelity losses.

1.7.9 Cyber.

1.7.10 [Such other exclusions as are generally applied as a matter of current market practice in the relevant insurance market from time to time.]

2 OPERATIONAL THIRD PARTY LIABILITY (INCLUDING PRODUCTS LIABILITY)

2.1 Cover

Legal liability of the Insured for all sums (including claimants’ costs and expenses) whether under contract or otherwise in respect of accidental:

2.1.1 death or bodily injury to or illness or disease contracted by any person;

2.1.2 loss of or damage to property; including but not limited to Tenant Assets;

2.1.3 interference to property or any easement, right of air, light, water or way or the enjoyment or use thereof by obstruction, trespass, loss of amenities, nuisance or any like cause,


happening or consequent upon a cause occurring during the Period of Insurance and arising out of the operation and maintenance of the Facilities.

2.2 Insured

2.2.1 The Landlord

2.2.2 Funders

each for their respective rights and interests.


From the Actual Completion Date for twelve (12) months or longer periods as agreed with the Tenant and renewable thereafter until the expiry of the Term.

2.4 Minimum Limit

£[10,000,000]9 (Indexed) and unlimited in the period of insurance but in annual aggregate in respect of pollution and products liability.


£[10,000]10 (Indexed) each and every occurrence of property damage (personal injury claims will be paid in full).


2.6.1 Cross liabilities clause.

2.6.2 Contractual liability clause.

2.6.3 Worldwide jurisdiction [(excluding USA and Canada)].

2.6.4 Corporate Manslaughter and Homicide Act.

2.6.5 Costs in addition to the limit.

2.6.6 Munitions of War.


2.7.1 Liability of any insured to its own employees.

2.7.2 Fines, penalties, punitive or exemplary damages.

2.7.3 Liquidated damages.




2.7.4 War, invasion, acts of foreign enemies, hostilities (whether declared or not), civil war, rebellion, revolution, insurrection of military or usurped power.

2.7.5 Seepage, pollution or contamination unless caused by a sudden, unintended and unexpected happening.

2.7.6 Liability of the Tenant and/or those deriving title under it arising from its clinical negligence.

2.7.7 Nuclear risks.

2.7.8 Cyber.

2.7.9 Terrorism.

2.7.10 [Such other exclusions as are generally applied as a matter of current market practice in the relevant insurance market from time to time].


SCHEDULE 8

Part III

Unless the context otherwise requires defined terms set out in the following endorsements shall have the meaning set out in the Agreement.

1 Endorsement 1 - Cancellation

1.1 This policy shall not be cancelled or terminated before the original expiry date is to take effect except in respect of non-payment of premium.

1.2 The insurer shall by written notice advise the Tenant:

1.2.4 at least [30 days] before any such cancellation or termination is to take effect

1.2.5 at least [30 days] before any reduction in limits or coverage or any increase in deductibles is to take effect; and

1.2.6 of any act or omission or any event of which the insurer has knowledge and which might invalidate or render unenforceable in whole or in part this policy

2 Endorsement 2 - Multiple Insured/Subrogation/Non-Vitiation

2.1 Each of the parties comprising the insured shall for the purpose of this policy be considered a separate co-insured entity, insured on a composite basis, with the words "the insured" applying to each as if they were separately and individually insured provided that the total liability of the insurers under each section of this policy to the insured collectively shall not (unless the policy specifically permits otherwise) exceed the limit of indemnity or amount stated to be insured under that section or policy. Accordingly, the liability of the insurers under this policy to any one insured shall not be conditional upon the due observance and fulfilment by any other insured party of the terms and conditions of this policy or of any duties imposed upon that insured party relating thereto, and shall not be affected by any failure in such observance or fulfilment by any such other insured party.

2.2 It is understood and agreed that any payment or payments by insurers to any one or more of the insureds shall reduce, to the extent of that payment, insurers' liability to all such parties arising from any one event giving rise to a claim under this policy and (if applicable) in the aggregate.

2.3 Insurers shall be entitled to avoid liability to or (as may be appropriate) claim damages from any insured party in circumstances of fraud misrepresentation non-disclosure or material breach of warranty or condition of this policy (each referred to in this clause as a "Vitiating Act") committed by that insured party save where such misrepresentation non-disclosure or breach of warranty or condition was committed innocently and in good faith.

2.4 For the avoidance of doubt it is however agreed that a Vitiating Act committed by one insured party shall not prejudice the right to indemnity of any other insured who has an insurable interest and who has not committed the Vitiating Act.


2.5 Insurers hereby agree to waive all rights of subrogation and/or recourse which they may have or acquire against any insured party (together with their employees and agents) except where the rights of subrogation or recourse are acquired in consequence of a Vitiating Act in which circumstances insurers may enforce such rights against the insured responsible for the Vitiating Act notwithstanding the continuing or former status of the vitiating party as an insured.

2.6 Notwithstanding any other provision of this policy or any other document or any act and/or omission by any insured party insurers agree that:

2.6.4 no party other than the Tenant has any authority to make any warranty, disclosure or representation in connection with this policy on behalf of theTenant;

2.6.5 where any warranty, disclosure or representation is required from the Tenant in connection with this policy insurers will contact the Tenant in writing (in accordance with Endorsement 3) and set out expressly the warranty, disclosure and/or representation required within a reasonable period of time from the Tenant (regarding itself); and

2.6.6 save as set out in a request from insurers to the Tenant in accordance with paragraph 2.6.5 above, the Tenant shall have no duty to disclose any fact or matter to insurers in connection with this policy save to the extent that for the Tenant not to disclose a fact or matter would constitute fraudulent misrepresentation and/or fraudulent non-disclosure.

3 Endorsement 3 - Communications

3.1 All notices or other communications under or in connection with this policy shall be given to each insured (and the Tenant) in writing or by facsimile. Any such notice will be deemed to be given as follows:

3.1.4 if in writing, when delivered

3.1.5 if by facsimile, when transmitted but only if, immediately after transmission, the sender's facsimile machine records a successful transmission has occurred.

3.2 The address and facsimile number of the Tenant for all notices under or in connection with this policy are those notified from time to time by the Tenant for this purpose to the Landlord’s insurance broker at the relevant time. The initial address and facsimile number of the Tenant are as follows:

The Tenant: [ ]Address: [ ]

Facsimile No: [ ]

Attention: [ ]

3.3 It is further agreed that a notice of claim given by Tenant or any other insured shall in the absence of any manifest error be accepted by the insurer as a valid notification of a claim on behalf of all insureds.


4 Endorsement 4 - Loss Payee (applicable only to the Physical Damage Policies)All proceeds of this policy shall be payable without deduction or set-off to the insurance proceeds account as referred to in Clause 37.13 of this Lease.

5 Endorsement 5 - Primary Insurance

It is expressly understood and agreed that this policy provides primary cover for the insured parties and that in the event of loss destruction damage or liability covered by this policy which is covered either in whole or in part under any other policy or policies of insurance effected by or on behalf of any of the insured parties the insurers will indemnify the insured parties as if such other policy or policies of insurance were not in force and the insurers waive their rights of recourse if any against the insurers of such other policy or policies of insurance.

6 Endorsement 6 - Claims Negotiation Rights

Notwithstanding any claim conditions contained herein insurers agree that [where] the Tenant [it] has the right to settle and negotiate any claims received from third parties subject to prior consent of insurers. If the Tenant takes or fails to take any action as a direct result of which insurers' liability is increased then the liability of insurers to provide an indemnity is reduced to such an extent.

7 Endorsement 7 - Ringfencing

The level of any indemnity available to an insured party under this policy in relation to any claim(s) concerning the Project shall not be affected and/or reduced by any claim(s) unrelated to the Project.


SCHEDULE 8

Part IV

Draft of insurance broker’s letter of undertaking to the Tenant

To: The Tenant

Dear Sirs

Agreement dated ["] entered into between [ ] (the "Tenant") and [●] Limited (the "Landlord") (the "Agreement").

1 We refer to the Agreement. Unless the context otherwise requires, terms defined in the Agreement shall have the same meaning in this letter.

2 We act as insurance broker to the Landlord in respect of the insurances detailed in Part [ ] of Schedule 8 (the “Required Insurances”) and in that capacity we confirm that the Required Insurances which are required to be procured pursuant to clause 37 and Schedule 8 of the Agreement:

(a) where appropriate name you and such other persons as are required to be named pursuant to the Agreement for their respective interests;

(b) are, in our reasonable opinion as insurance brokers, as at today's date, in full force and effect in respect of all the matters specified in the Agreement; and that

(c) all premiums due to date in respect of the Required Insurances are paid and the Required Insurances are, to the best of our knowledge and belief, placed with insurers which, as at the time of placement, are reputable and financially sound. We do not, however, make any representations regarding such insurers' current or future solvency or ability to pay claims; and that

(d) the endorsements set out in Part 3 to Schedule 8 of the Agreement are as at today's date in full force and effect in respect of the Required Insurances.

3 We further confirm that the attached cover notes confirm this position.

4 Pursuant to instructions received from the Landlord and in consideration of your approving our appointment [or continuing appointment] as insurance brokers in connection with the Required Insurances, we hereby undertake in respect of the interests of the Tenant in relation to the Required Insurances:

(a) Notification Obligations

(i) to notify you at least 30 (thirty) days prior to the expiry of any of the Required Insurances if we have not received instructions from the Landlord to negotiate renewal and in the event of our receiving instructions to renew, to advise you promptly of the details thereof;


(ii) to notify you at least 30 (thirty) days prior to ceasing to act as insurance brokers to the Landlord unless, due to circumstances beyond our control, we are unable to do so in which case we shall notify you as soon as practicable; and

(iii) to pay into the Joint Insurance Account without set off or deduction of any kind for any reason all payments in respect of claims received by us from insurers in relation to the Required Insurances specified in clause 37.13 of the Agreement.

(b) Advisory Obligations

(i) to notify you promptly of any default in the payment of any premium for any of the Required Insurances;

(ii) to notify you if any insurer cancels or gives notification of cancellation of any of the Required Insurances, at least 30 (thirty) days before such cancellation is to take effect or as soon as reasonably practicable in the event that notification of cancellation takes place less than 30 (thirty) days before it is to take effect;

(iii) to notify you of any act or omission, breach or default of which we have knowledge which in our reasonable opinion may either invalidate or render unenforceable in whole or in part any of the Required Insurances or which may otherwise materially impact on the extent of cover provided under the Required Insurances; and

(iv) to advise the Landlord of its duties of disclosure to insurers and to specifically advise upon:

(A) the facts, circumstances and beliefs that should generally be disclosed to insurers; and

(B) the obligation not to misrepresent any facts, matters or beliefs to insurers.

(c) Disclosure Obligations

(i) to disclose to insurers all information made available to us from any source and any fact, change of circumstances or occurrence made known to us from any source which in our reasonable opinion is material to the risks insured against under the Required Insurances and which properly should be disclosed to insurers as soon as practicable after we become aware of such information, fact, change of circumstance or occurrence whether prior to inception or renewal or otherwise; and

(ii) to treat as confidential all information so marked or otherwise stated to be confidential and supplied to us by or on behalf of the Landlord or the Tenant


and not to disclose such information, without the prior written consent of the supplier, to any third party other than those persons who, in our reasonable opinion have a need to have access to such information from time to time, and for the purpose of disclosure to the insurers or their agents in respect of the Required Insurances in discharge of our obligation set out at clause 4(c)(i) of this letter. Our obligations of confidentiality shall not conflict with our duties owed to the Landlord and shall not apply to disclosure required by an order of a court of competent jurisdiction, or pursuant to any applicable law, governmental or regulatory authority having the force of law or to information which is in the public domain.

(d) Administrative Obligations

(i) to hold copies of all documents relating to or evidencing the Required Insurances, including but without prejudice to the generality of the foregoing, insurance slips, contracts, policies, endorsements and copies of all documents evidencing renewal of the Required Insurances, payment of premiums and presentation and receipt of claims;

(ii) to supply to the Tenant and/or its insurance advisers (or the Tenant's or its insurance advisers' authorised representatives) promptly on written request copies of the documents set out in clause 4(d)(i) of this letter, and to the extent available, to make available to such persons promptly upon the Tenant's request the originals of such documents;

(iii) to administer the payment of premiums due pursuant to the Required Insurances such that, in so far as we hold appropriate funds, all such premiums shall be paid to insurers in accordance with the terms of the Required Insurances;

(iv) to administer the payment of claims from insurers in respect of the Insurances (the "Insurance Claims") including:

(A) negotiating settlement of Insurance Claims presented in respect of the Required Insurances;

(B) collating and presenting all information required by insurers in relation to Insurance Claims presented in respect of the Required Insurances, and

(C) insofar as it is relevant and practicable, liaising with and reporting to the Tenant throughout the settlement, payment and administration of such Insurance Claims.

(v) to advise the Tenant promptly upon receipt of notice of any material changes which we are instructed to make in the terms of the Required Insurances and which, if effected, in our opinion as insurance brokers would result in


any material reduction in limits or coverage or in any increase in deductibles, exclusions or exceptions;

(vi) to advise the Tenant in advance of any change to the terms of, or any lapse, non-renewal and/or cancellation of any policy maintained in respect of the Required Insurances; and

(vii) to use our reasonable endeavours to have endorsed on each and every policy evidencing the Required Insurances (when the same is issued) endorsements substantially in the form set out in Part 3 to Schedule of the Agreement.

5 Notification Details

(a) Our obligations at clause 4 of this letter to notify or inform you shall be discharged by providing the requisite information in hard copy to:

The Tenant:

Address:

6 We shall supply further letters substantially in this form on renewal of each of the Required Insurances and shall supply copies of such letters to those parties identified to us by the Tenant for such purposes.

Yours faithfully

……………………………………………………For and on behalf of the Landlord’s insurance broker


SCHEDULE 9

Part I: Service Specification

The Services

This Schedule 9 Part 1 specifies the Services to be delivered by the Landlord to the Tenant during the Operational Phase to ensure that the Facilities are available for use by the Tenant at all material times to the specified quality standards.11

11 The Tenant should refer to CHP for the most up to date service specifications appropriate to the project.


SCHEDULE 9

Part II

Method Statements


SCHEDULE 10

Payment Mechanism

OPTION A – STANDARD SCHEMES ONLY TO USE THIS DRAFTING. DELETE FOR SPECIALIST SCHEMES

Part A: Interpretation

"Accessibility Condition"means a state or condition of the relevant Functional Area or the means of access to it which allows all persons who are entitled to enter, occupy or use the relevant Functional Area to enter and leave the Functional Area safely and conveniently and using normal access routes;

"Ad-Hoc Services"means services which, in accordance with Schedule 9 (Service Specification)12 the Tenant is entitled to require the Landlord to provide but where the Landlord’s obligation to provide those services does not arise unless and until it is requested to do so by the Tenant;

"Ad-Hoc Service Request"means a request for the provision of Ad-Hoc Services made by the Tenant to the Landlord in accordance with Schedule 9 (Service Specifications);

"Area Weighting Percentage" means the percentage weighting ascribed to the relevant Functional Area for the purpose of calculating Deductions for Unavailability Events as set out in Appendix D to this Schedule;

"Availability Condition"means any of (i) the Accessibility Condition, (ii) the Safety Condition, (iii) the Use Condition and (iv) the Prescribed Health Function Condition or, as appropriate, the Prescribed Operational Function Condition;

"Base Date"13

means the [ ] 20[ ];

"Clinical Waste"means [insert definition from the Service Specification];

"Contract Day"means a 24 hour period commencing at midnight at the start of the relevant day;

"Daily Payment" means, in respect of any day the Lease Payment applicable on that day pursuant to paragraph 1.1 of Part B of this Schedule 10 divided by the number of days in the Contract Year in which that day falls;

"Deduction"means a deduction made from a Lease Payment in accordance with this Schedule 10;

"Employment Costs Adjustment"

12 The Tenant may wish to check that the Schedule 9 definitions are consistent with this provision.13 The Base Date will be a fixed date for the purposes of pricing the Lease Payment.


means any adjustment to Lease Payments made in accordance with the provisions of Clauses 1.12 to 1.15 and 1.27 of Part 1 of Schedule 16 of this Lease (Transfer of Employment and Pensions Matters);

"Fault"means an incident or state of affairs affecting the Premises or Common Parts14 which does not meet or comply with the performance parameters set out in Schedule 9 (Service Specification) and/or results in one or more of the Availability Conditions not being met;

"Functional Area"means an area of the Facility specified as such in Appendix D to this Schedule 10;

"Helpdesk"means the contact point to be established by the Landlord pursuant to Schedule 9 (Service Specification) in respect of the Helpdesk Service for the notification of Ad-Hoc Service Requests, the occurrence of Faults and other day to day matters arising in relation to the provision of Services;

"Insurance Cost"means (subject to paragraph 2.4 of Part I of this Schedule 10) the Tenant’s PT Proportion of the cost of taking out and maintaining the insurances set out in paragraph 1 of Part 2 of Schedule 8 incurred by the Landlord from time to time, after deducting agency or other commission paid or allowed to the Landlord;

"Lease Payment"means the sum in pounds sterling payable by the Tenant to the Landlord for the provision of the Services in accordance with this Lease;

"Minimum Agreed Availability Conditions"means the Accessibility Condition, the Safety Condition and either the Prescribed Health Function Condition or Prescribed Operational Function Condition (as appropriate) together with the Use Condition, as temporarily modified as permitted in accordance with paragraph 9 of Part C of this Schedule 10 for the purposes of a Temporary Repair;

"Minimum Unavailability Deduction"15

means the sum of £3016 which shall be index linked. For the avoidance of doubt, if more than one Functional Area is rendered Unavailable by an Unavailability Event, the amount of the Minimum Unavailability Deduction in respect of that Unavailability Event remains the same;17

"Net Annual Payment"means the sum in pounds sterling calculated in accordance with the provisions set out in Part B paragraph 2 or 2A of this Schedule;

"New Service Provider Start Date"

14 References to Premises and Common Parts can be changed to a reference to a Functional Area if Functional Areas cover all areas for which the Tenant may wish to claim Unavailability or Performance Failures.

15 The minimum unavailability deduction is a figure (in pounds sterling) which represents a minimum amount that should be deducted from the Lease Payment if an Unavailability Event occurs to avoid de minimis deductions.

16 This figure is set at January 2006 values. Tenants may wish to adjust it to reflect inflation between January 2006 and the date of financial close. The calibration of the payment mechanism should be such that the Minimum Unavailability Deduction is likely to apply to a limited number of Functional Units. Refer to CHP for the guidance on the issue of calibration.

17 If the Unavailability Event is not rectified within a further 4 hour period, another Deduction (including the Minimum Unavailability Deduction) becomes possible, since this is treated as a further Unavailability Event.


means in respect of each Service the Relevant Service Transfer Date (as defined in Clause 1.1 of Part 1 of Schedule 16 to this Lease) and, where a Service Provider is replaced by a new Service Provider, either:

(a) (in the case of replacement following a Soft Services Market Testing or a Hard FM Market Testing) the date established in accordance with paragraph 9.5 of Schedule 22; or

(b) in other cases, the date on which the Services commence to be provided by the new Service Provider or, if earlier, the date on which they were first due to be provided by the new Service Provider (unless a Delay Event has prevented the commencement of Service provision);

"Non Clinical Waste"means [insert definition from the Service Specification];

"Operational Hourly Payment Rate"means the amount determined in accordance with the following formula:

Where

(DP x m) / Sh

(DP) is the Daily Payment in respect of each day of the Contract Month in which the relevant period falls;

m is the number of days in that Contract Month; and

Sh is the total number of Operational Hours in that Contract Month (rounded up to the nearest whole number)

"Other Waste"means [insert definition from the Service Specification];

"Pass Through Costs"means the Rating Cost and the Insurance Cost payable for the relevant Contract Month

"Performance Failure"means

(a) where a Fault occurs and a Rectification Time is applicable under the relevant Service Specification, the failure by the Landlord to Rectify the Fault within the specified Rectification Time;

(b) where the Landlord is required by the relevant Service Specification to provide a Service

(including an Ad-Hoc Service) within a specified period, the failure by the Landlord to

provide that Service within the required period; and

(c) in all other cases, a failure to satisfy the requirements of the Service Specifications;

"Performance Monitoring Report"


means the report specified in Schedule 9 (Service Specification) in respect of a Service or a part of a Service which the Landlord has an obligation to prepare for the Tenant in respect of its performance of that Service or the relevant part of it during a specified period;

"Permanent Repair"means Rectification where a Temporary Repair has been permitted and carried out pursuant to paragraph 9 of Part C of this Schedule;

"Prescribed Health Function"means the clinical use or purpose of the relevant Functional Area (if any) as stated in Appendix A Part 1;

"Prescribed Health Function Condition"means a state or condition of the relevant Functional Area which allows the Prescribed Health Function for that Functional Area to be carried on and performed in accordance with any Law and generally accepted clinical practices for such Prescribed Health Function and having regard to the practicalities of carrying on and performing such Prescribed Health Function;

"Prescribed Operational Function"means the use or purpose of the relevant Functional Area where it does not have a Prescribed Health Function as stated in Appendix A Part 2;

"Prescribed Operational Function Condition"means a state or condition of the relevant Functional Area which allows the Prescribed Operational Function for that Functional Area to be carried on and performed having regard to the practicalities of carrying on and performing such Prescribed Operational Function;

"Rating Cost"means the Tenant’s PT Proportion of the cost of complying with clause 20.1.1 of this Lease incurred by the Landlord from time to time;

"Rectification"means, following the occurrence of a Fault, making good the Fault in a way that ensures compliance with this Lease and the Service Specifications. Without prejudice to the generality of the foregoing this shall include (a) restoring all functional capability and (b) ensuring that any Functional Area which has been affected by the relevant Fault complies with the Availability Conditions and “Rectify” shall be construed accordingly;18

"Rectification Time"means the period specified in the relevant Service Specification for Rectification of a Fault, except that where a Fault causes a Functional Area to be Unavailable, that period shall be

(a) Where a Functional Area is Unavailable due to a fault and the Functional Area does not satisfy the Safety Condition, the Rectification Time shall be zero (0) hours;

(b) Where a Functional Area is Unavailable due to a Fault and the Functional Area does satisfy the Safety Condition, the Rectification Time shall be two (2) hours; or

(c) Where a functional Area is Unavailable other than due to a Fault, the Rectification Time shall be four (4) hours

18 The Landlord should be obliged to follow Tenant Policies when carrying out rectification work, but this is a separate requirement (in paragraph 6.7 of Part C of this Schedule 10). A failure by the Landlord to act in accordance with Tenant Policies will be a Performance Failure, and may attract Deductions as such, but this should not form part of the assessment of whether Rectification of the original problem has been achieved. Otherwise the Landlord might be unfairly disadvantaged by way of deductions for Unavailability when a room is in use.


in each case the relevant period shall begin at the time the Fault is reported to the Helpdesk. For the avoidance of doubt, if no period for rectification is specified in Schedule 9 (Service Specification) in respect of the relevant Service requirement, no Rectification Time applies;19

"Return Date"means for the purpose of Temporary Alternative Accommodation the date agreed for the return to the original Functional Area in accordance with paragraph 12.3.4 of Part C of this Schedule;

"Safety Condition"means a state or condition of the relevant Functional Part which allows those persons who it can reasonably be expected may from time to time require to enter, leave, occupy and use such Functional Part to do so safely including but not limited to compliance with the Health and Safety Regime and any other Law or NHS Requirement relating to fire safety or health and safety at work;

"Temporary Alternative Accommodation"means accommodation offered to the Tenant by the Landlord as a substitute for any Unavailable Functional Part pursuant to paragraph 12 of Part C of this Schedule 10;

"Temporary Repair"means, where a Fault occurs under the Service Specification for Estates Services, works of a temporary nature that do not constitute Rectification but satisfy the Minimum Agreed Availability Conditions and substantially make good the relevant Fault for the period until a Permanent Repair can be undertaken;

["Total Volume Adjustment"20

means the figure expressed in pounds sterling (whether positive or negative) which shall be calculated in accordance with the provisions set out in paragraph 1 of Part F of this Schedule;]

"Unavailable and Unavailability"means in relation to a Functional Area that such Functional Area is in a state or condition which does not comply with any one or more of the Availability Conditions;

"Unavailability Event"means either:

(a) a Functional Area is Unavailable due to a Fault and the relevant Fault has been notified to the Helpdesk and has not been rectified within the relevant Rectification Time; or

(b) a Functional Area is Unavailable due to an act, omission or the negligence or default of the Landlord or a Landlord Party or due to a breach by the Landlord of this Lease where such act, omission negligence or default does not constitute a Fault and the Unavailability of that Functional Area has not been rectified by the Rectification Time;

"Use Condition"means a state or condition of the relevant Functional Area which satisfies the Use Parameters for that Functional Area;

19 Some matters do not attract a Rectification Time, for example Performance Failures that do not directly affect the condition of the Facilities. Also, where there is a request for an Ad-Hoc Service, the service requirement must be met within the time prescribed in the service specification. If it is not, then a Performance Failure will have occurred – there is no additional rectification time.

20 Where applicable, e.g. the disposal of Clinical Waste.


"Use Parameters"means the range of functional requirements for the proper use and enjoyment of a Functional Area for its particular purpose relating to (i) temperature; (ii) humidity; (iii) air-flow; (iv) lighting; (v) power (essential and non-essential); (vi) safe water (relating to availability, temperature, quality and safe sewerage system); (vii) nurse call system; (viii) medical and other equipment; (ix) medical gases; (x) [ ]21 as the same are specified on the Room Data Sheets for the relevant Functional Area as set out in Schedule [ ];22

"Utilities"means [Energy]23 (and any other services or amenities of a like nature) telecoms, water, sewerage and drainage;

"Utilities Cost"means the Tenant’s U Proportion of the cost of complying with clause 20.1.2 of this Lease incurred by the Landlord24 from time to time;

21 Tenant to add other items such as switchboard, security, data communications, etc. as appropriate.22 Tenant will need to ensure that relevant details of use parameters are included in the room data sheets and will

need to amend this definition to ensure that appropriate use parameters for the Facilities are included.23 The Landlord should not be required to provide Energy (gas, electricity, oil or other fossil fuels) where better value

for money can be obtained by the Tenant and where it is feasible for the Tenant to contract for its own supply. This may not be the case for multi-tenanted Facilities. If this is changed please note that other changes will be required e.g. in Clause 20.1.2 of the LPA.

24 See footnote previous.


SCHEDULE 10

Part B: Calculation of Lease Payments

1 THE LEASE PAYMENT

1.1 The Lease Payment payable in respect of any Contract Month shall be calculated in accordance with the following formula:

LP = (NAPn/12) + PTC + UC [+TVA25] - D

where:

1.1.1 LP is the Lease Payment for the Contract Month for which the formula is to be applied;

1.1.2 NAPn is the Net Annual Payment for the relevant Contract Year;

1.1.3 PTC is the Pass Through Costs for the Contract Month;

1.1.4 UC is the Utilities Cost for the Contract Month;

1.1.5 [TVA is the total volume adjustment calculated in respect of the relevant Contract Month;]

1.1.6 D is the sum of Deductions in respect of the relevant Contract Month in relation to Unavailability Events and Tenant's Self Help Costs calculated in accordance with the provisions set out in Part C of this Schedule;

1.2 In the Contract Month in which the Payment Commencement Date falls and in the last Contract Month of the Project Term a pro rata adjustment shall be made to reflect the actual number of days in the relevant Contract Month from and including the Payment Commencement Date (for the first month) and up to and including the last day of the Project Term (for the last month).

2 NET ANNUAL PAYMENT

2.1 The Net Annual Payment for any Contract Year shall be calculated in accordance with the following formula:

NAPn = NAPo x (1-PSI) + NAPo x PSI x (RPIn / RPIo)

Where:

2.2 NAPn is the Net Annual Payment for the relevant Contract Year;

2.3 NAPo is £[ ], being the Net Annual Payment at the Base Date as adjusted from time to time in accordance with paragraph[s 3 and] 26 4 below;

25 Where applicable e.g. the disposal of Clinical Waste.26 Delete if paragraph 3 not used.


2.4 RPIn is the value of the Retail Prices Index published or determined with respect to the month of [ ]27 which most recently precedes the relevant Contract Year;

2.5 RPIo is the value of the Retail Prices Index published or determined with respect to the month in which the Base Date falls; and.

2.6 PSI is [ ]%, being the proportion of the Net Annual Payment which, at the date of carrying out the relevant calculation, is subject to indexation28.

[2A NET ANNUAL PAYMENT (without Capital Works Payment)

2A.1 The Net Annual Payment for any Contract Year shall be calculated in accordance with the following formula:


Where:

2A.2 NAPn is the Net Annual Payment for the relevant Contract Year;

2A.3 NAPo is £[ ], being the Net Annual Payment at the Base Date as adjusted from time to time in accordance with paragraph[s 3 and] 4 below;

2A.4 RPIn is the value of the Retail Prices Index published or determined with respect to the month of [ ] which most recently precedes the relevant Contract Year;

2A.5 RPIo is the value of the Retail Prices Index published or determined with respect to the month in which the Base Date falls; and.

2A.6 PSI is [ ]%, being the proportion of the Net Annual Payment which, at the date of carrying out the relevant calculation, is subject to indexation.]29

3 EFFECT OF VALUE TESTING ON NET ANNUAL PAYMENT

3.1 The Net Annual Payment shall with effect from the date established in accordance with [paragraph 9.5 of Schedule 22 (Soft Services Market Testing) or] with paragraph 6 of Schedule 25 (Services Review) be the sum calculated in accordance with the following formula:

NAPo(new) = NAPo(previous) +/- RVTA

where:

3.1.1 NAPo(new) is the Net Annual Payment revised to reflect any change to the costs of any of the [Market Tested Soft Services following a Soft Services Market Testing or] Market Tested Hard FM Services following

27 Tenant to insert, depending on the date of financial close and taking account of the fact that the Contract Year runs from 1st April until 31st March.

28 In accordance with guidance published by HM Treasury in May 2006 entitled “Interest Rate and Inflation Risk Issues in PFI Contracts”, Tenants will need to consider if value for money may be improved if indexation is not applied to part of the Annual Service Payment.

29 Where the Tenant is making a Capital Works Payment, in paragraph 2 the Net Annual Payment must take into account the the Capital Works Payment. Paragraph 2A should also be included, with the Capital Works Payment being excluded from the amount for Net Annual Payment in paragraph 2A.3. If no Capital Works Payment is being made on a scheme, paragraph 2 should be deleted.


an Services Review and expressed in value of money terms as if it were payable at the Base Date;

3.1.2 NAPo(previous) is the figure in pounds sterling set out in paragraph 2.3 or 2A.3 of this Part B (as applicable) (as adjusted from time to time pursuant to paragraph 4 of this Part B); and

3.1.3 RVTA is the adjustment to the cost of the [Market Tested Soft Services following a Soft Services Market Testing or] Market Tested Hard FM Services following an Services Review (if any and whether up or down) re-based to reflect the value of the amount of the adjustment at the Base Date.

.3.2 For the purposes of paragraph 3.1 of this Part B, RVTA shall be a figure in pounds

sterling (whether positive or negative) calculated in accordance with the formula:

RVTA = (NAP – (OPVT x RPIn/RPIo)) x (RPIo/RPIn)

where:

3.2.1 NAP is the aggregate of the new annual prices for the [Market Tested Soft Services arising from the Soft Services Market Testing or] the Market Tested Hard FM Services arising from a Services Review;

3.2.2 RPIn is the value of the Retail Prices Index published or determined with respect to the month of [ ]30 in the Contract Year in which the Market Testing Date falls;

3.2.3 OPVT is the aggregate of the original annual prices for the [Market Tested Soft Services or] the Market Tested Hard FM Services as set out in the second column of Appendix C of this Schedule; and

3.2.4 RPIo is the value of the Retail Prices Index published or determined with respect to the month in which the Base Date falls.

4 ADJUSTMENTS TO EMPLOYMENT COSTS

4.1 The Net Annual Payment shall be recalculated, from the date from which any Employment Costs Adjustment takes effect, in accordance with the following formula:

NAPo(new) = NAPo(previous) + ECA

Where:-

4.1.1 NAPo(new) is the Net Annual Payment, revised to reflect any Employment Costs Adjustment;

4.1.2 NAPo(previous) is the Net Annual Payment prior to any such adjustment; and

30 See footnote against Schedule 10, Part A "Minimum Unavailability Deduction" £30, above.


4.1.3 ECA is a sum equal to the amount of the Employment Costs Adjustment required re-based to reflect the value of the amount of the adjustment at the Base Date.


SCHEDULE 10

Part C - Deductions from Lease Payments

1 ENTITLEMENT TO MAKE DEDUCTIONS

1.1 If at any time during the Operational Phase an Unavailability Event shall occur the Tenant shall, subject to paragraphs 1.2 and 1.3 below, be entitled to make Deductions from the Lease Payment in respect of that Unavailability Event.

1.2 The maximum aggregate of all Deductions that the Tenant can make from a Lease Payment in respect of any Contract Month shall be the amount that would be calculated for the relevant Contract Month in accordance with the formula set out in paragraph 1.1 of Part B of this Schedule 10 without deducting the sums represented by the symbol ∑D.

1.3 To the extent that an Unavailability Event or a Performance Failure is the result of an Excusing Cause (as defined in clause 36A of this Lease) the Tenant shall not be entitled to make Deductions [or to levy Tenant's Self Help Costs]31.

1.4 In the event that an Unavailability Event shall occur in a Functional Area the Deduction shall be calculated as in paragraph 5 below PROVIDED THAT in the event that an Unavailability Event shall occur in respect of [80%]32 or more of the Functional Areas then all of the Functional Areas shall be deemed to be subject to an Unavailability Event for the purposes of calculating Deductions.

2 NOT USED

3 CLASSIFICATION OF FAULTS

3.1 The classification of a Fault as a potential Performance Failure or Unavailability Event shall be made at the time at which the occurrence of the Fault is reported to the Helpdesk.

A Fault which is incorrectly classified may be re-classified with the approval of the Tenant’s Representative and the Landlord, approval not to be unreasonably withheld. If this happens, the appropriate Deduction (if applicable) shall be made and any Deduction incorrectly applied shall be withdrawn.33

4 NOT USED

5 DEDUCTIONS FOR UNAVAILABILITY EVENTS

5.1 Subject to paragraphs 1.2 and 1.3 above and paragraph 5.2 below, the amount to be deducted from the Lease Payment in respect of any Unavailability Event shall be the higher of

5.1.1 the Minimum Unavailability Deduction34; and

31 Drafting applicable to standard schemes only.32 Percentage to be set on a scheme by scheme basis to reflect the proportion of Functional Areas which are patient areas.33 It should be a function of the Helpdesk service to ensure that those reporting a Fault clarify if Unavailability may

result.34 If more than one unit is affected, the Minimum Unavailability Deduction is the same amount in total (ie there is not a

separate Minimum Unavailability Deduction per Functional Area). However, if the problem remains unrectified at the end of a


5.1.2 the aggregate of amounts calculated in accordance with the following formula in respect of all Functional Areas made Unavailable as a result of the Unavailability Event:

D = Dn x AW x DP [x K]35

where:

5.1.3 D means the amount (in pounds sterling) of the Deduction in respect of the Unavailability Event;

5.1.4 Dn means the total number of hours from when the Unavailability Event commences to the time it has been Rectified which fall within the Operational Hours in that Contract Month. In the event that the total number of hours shall not be a whole number the total shall be rounded up to the nearest whole number;

5.1.5 DP means the Operational Hourly Payment Rate for the relevant Contract Month;

5.1.6 AW means the Area Weighting Percentage attributable to each Functional Area in which the Unavailability Event occurs; [and

5.1.7 K is [ ]].

5.2 Where the relevant Functional Area is Unavailable but the Tenant continues to use it for its Prescribed Health Function (or for a function serving a clinical service similar to the Prescribed Health Function) or, as appropriate, for its Prescribed Operational Function (or for a function serving a clinical service similar to the Prescribed Operational Function) then the Deduction shall be reduced by 50% PROVIDED THAT:

5.2.1 For the avoidance of doubt, where the proviso in paragraph 1.4 of Part C of this Schedule 10 applies the Tenant shall make Deductions for those Functional Areas actually being used (including those which are being deemed to be subject to an Unavailability Event) in accordance with the provisions of this paragraph 5.2; and

5.2.2 If the Unavailability Event is continuing after seven (7) days then (other than where it is caused by Force Majeure or a Relief Event) it will not be treated as being used for the purposes of this paragraph 5.2 and the full Deduction shall apply.

5.3 If an Unavailability Event persists into a second or any subsequent day it shall be treated as a new Unavailability Event on each day during which it persists. For the avoidance of doubt, no further Rectification Time shall apply where such Unavailability Event continues into a second or subsequent day.

6 DEDUCTIONS

further operational day, there is a new Unavailability Event and the same Minimum Availability Deduction can be made again, if applicable.

35 "K" is only relevant to schemes including a Capital Works Payment.


6.1 Where a Rectification Time is specified in Schedule 9 (Service Specification) in respect of a Fault then, subject to paragraph 10 of this Part C, no Performance Failure or Unavailability Event shall occur if the Landlord successfully carries out Rectification within the specified Rectification Time and in such circumstances no Deduction shall be made.

6.2 If Rectification (where applicable) is not successfully carried out by the Landlord within the specified Rectification Time, a Performance Failure or, as the case may be, an Unavailability Event shall occur.

6.3 On the occurrence of an Unavailability Event, the appropriate Deduction shall be made.

6.4 When carrying out Rectification, or works of Temporary Repair pursuant to paragraph 9 below, the Landlord shall at all times act in accordance with Tenant Policies, Good Industry Practice and the Health and Safety Regime. Failure to do so shall be deemed to be a new Minor Performance Failure, unless the failure constitutes a breach of Law or of the Health and Safety Regime, in which case there shall be deemed to be a new Major Performance Failure.

7 RE-COMMISSIONING

7.1 Where a Functional Area needs to be re-commissioned by the Tenant following Rectification, the Tenant’s Representative shall determine, prior to commencement of any re-commissioning activities, that he/she is satisfied that Rectification has been properly carried out. The Tenant’s Representative may delegate this task to any clinical practitioner or the senior nurse in the relevant Functional Area and, if re-commissioning activities commence, it shall be assumed that the necessary determination has been made. If it does not then prove possible successfully to complete the re-commissioning of the relevant Functional Area, the Landlord shall, notwithstanding, still be deemed to have carried out Rectification successfully.

7.2 Paragraph 7.1 shall not affect the right of the Tenant to issue, in accordance with the Service Specification, an Ad-Hoc Service Request for the provision of cleaning or other Services by the Landlord in connection with any re-commissioning activities carried out by the Tenant.

8 NOT USED

8A SELF HELP

8A.1 Where:

8A1.1 a Performance Failure occurs which is not Rectified within the Rectification Time; or

8A1.2 an Unavailability Event occurs which is not Rectified within 7 days;

and in either case is capable of being rectified without material effect on the structure of the Facilities the Tenant may in its absolute discretion take or procure such steps as it considers to be appropriate to ensure performance of the relevant Service or Services or part of such Service or Services including any rectification to the standard required by the Service Specification and this Lease (or as close to


those standards as circumstances permit and in any event in accordance with Good Industry Practice).

8A.2 Where the Tenant considers it necessary or expedient to do so the steps which the Tenant may take pursuant to this paragraph 8A shall include the partial or total suspension of the right and obligation of the Landlord to provide one or more of the Services but only for so long as the need subsists or until such time as the Landlord shall have demonstrated to the reasonable satisfaction of the Tenant that it will perform (and is capable of performing) its obligations in respect of the relevant Service or Services to the required standards.

8A.3 Any cost or expenses which the Tenant reasonably incurs in exercising its rights under this paragraph 8A shall be reimbursed to the Tenant by the Landlord in accordance with Clause 19 and this Schedule 10.

PROVIDED THAT

8A.3.1 Where the Fault was caused by an Excusing Cause the Tenant may still exercise its rights under this paragraph 8A but at its own cost and expense.

8A.3.2 The Tenant’s right to recover its costs and expenses incurred in any Contract Month in exercise of its rights under this paragraph 8A shall in respect of any Fault referred to in paragraph 8A.1.2 of Part C to this Schedule 10, not exceed the aggregate amount of any Deductions made for the Unavailability Event(s) in respect of which these rights are exercised prior to the date that these rights are exercised by the Tenant; and

8A.3.3 following the exercise of its rights pursuant to this paragraph 8A the Tenant shall only be entitled to reimbursement of such costs if he has given the Landlord prior written notice of such costs in a form reasonably acceptable to the Landlord.

8A.4 36[Where the Fault is in respect of the Common Parts the Tenant may exercise its rights pursuant to this paragraph 8A provided it serves written notice of its intention to do so on any other tenants of the Landlord at the Facilities (such notice to state any objection to the Tenant exercising such rights is to be made to the Tenant (copied to the Landlord) in writing within 24 hours of receipt) and has not at that time received such a notice from any such tenant and does not receive any such notification within the period specified. The Tenant may also exercise its rights pursuant to this paragraph 8A where another tenant of the Landlord at the Facilities has previously served notice on the Tenant of its intention to exercise its rights of self help under its lease in respect of the Common Parts but has not done so or has not done so effectively within a reasonable time of such notice. The Tenant shall serve written notice on each of the tenants and the Landlord of its intention to act in such circumstances before so doing. In a case where there are several tenants then each Tenant will be able to exercise its rights under this paragraph 8A in respect of its premises.]

8A.5 Where the Landlord is not in breach of its obligations in respect of the Services but the Tenant considers the circumstances constitute an emergency (which for the purposes of this paragraph means an exceptional situation requiring assistance from the Landlord beyond that contemplated by the Service Specification to enable the Tenant to continue its operations from the Premises), the Tenant may exercise

36 Common Parts will only exist in multiple LPA Facilities – in other circumstances this paragraph may be deleted


its rights under this paragraph 8A but shall indemnify the Landlord against all additional direct reasonable costs, losses or expenses arising from such action and the Tenant shall itself bear the cost of any such action. ]

9 TEMPORARY REPAIRS

9.1 If the Landlord informs the Tenant that it is unable to Rectify a Fault relating to the Service Specification for Estates Services within the specified Rectification Time due to the need for specialised materials or personnel that are not, and cannot reasonably be expected to be, immediately available at the Facility but that a Temporary Repair can be effected:

9.1.1 The Tenant’s Representative shall permit the Landlord. to carry out the Temporary Repair proposed by the Landlord unless the Tenant’s Representative, acting reasonably, considers that, if the Temporary Repair proposed by the Landlord is carried out, the use of the relevant Functional Area will (in the case of a Functional Area which has a Prescribed Health Function) not be in accordance with generally accepted clinical practices or (in the case of a Functional Area which has a Prescribed Operational Function) not be in accordance with Good Industry Practice; and

9.1.2 Where a Temporary Repair is permitted, a deadline by which a Permanent Repair must be made shall be set, giving the Landlord a reasonable period within which to carry out the Permanent Repair (the “Permanent Repair Deadline”). Both the Tenant and the Landlord shall act reasonably in seeking to agree what the deadline should be.

9.2 During any period beginning at the time when a Temporary Repair is permitted and ending at the earlier of (a) the time at which a Permanent Repair is successfully completed and (b) the Permanent Repair Deadline, the Availability Conditions shall be replaced by the Minimum Agreed Availability Conditions for the purposes of assessing if the relevant Functional Area is Unavailable.

9.3 Subject to paragraph 6.7 above, if the agreed Temporary Repair is effected within the specified Rectification Time (as referred to in paragraph 9.1) and the Permanent Repair is effected by no later than the Permanent Repair Deadline no Performance Failure or Unavailability Event will occur, and no Deduction may be made, in respect of the Fault.

9.4 If the Temporary Repair is not carried out within the specified Rectification Time, a Performance Failure or, as the case may be, Unavailability Event shall be deemed to occur and the following provisions shall apply:

9.4.1 There shall be a further period (an “Additional Period”) beginning on the expiry of the Rectification Time and of a duration equal to that of the Rectification Time. The Landlord shall ensure that the Temporary Repair is successfully carried out prior to the expiry of the Additional Period. If the Temporary Repair is not successfully carried out by the Landlord before the expiry of the Additional Period, a further Performance Failure or, as the case may be, Unavailability Event shall occur and a further Additional Period shall commence.

9.4.2 Unless the Temporary Repair has been successfully carried out by the Landlord prior to the expiry of each Additional Period then, subject to


paragraph 9.4.3 below, a further Performance Failure or, as the case may be, Unavailability Event shall occur until such time as the Temporary Repair shall have been successfully completed.

9.4.3 If the Temporary Repair is not successfully carried out by the Landlord prior to the Permanent Repair Deadline, and no Permanent Repair has been successfully carried out, the right for the Landlord to carry out a Temporary Repair pursuant to this paragraph 9 shall cease and paragraph 9.5 below shall apply.

9.5 If the Permanent Repair is not carried out by the Permanent Repair Deadline, a Performance Failure or, as the case may be, an Unavailability Event shall be deemed to occur and the provisions of paragraphs 6.3 and 8 above shall apply.

10 NOT USED

11 EFFECT OF UNAVAILABILITY ON OTHER DEDUCTIONS

Until an Unavailability Event has been Rectified, the Deduction in respect of the Unavailability Event shall be the only Deduction available to be made in respect of any Functional Area in which the Unavailability Event has occurred. PROVIDED THAT where the Tenant continues to use a Functional Area which is affected by an Unavailability Event for the same, or a comparable Prescribed Health Function or Prescribed Operational Function (as appropriate), the Landlord shall be obliged to continue to provide in respect of that Functional Area such of the Services as are normally provided as part of the day to day functioning of that Functional Area37.

12 TEMPORARY ALTERNATIVE ACCOMMODATION

12.1 If an Unavailability Event occurs the Landlord may offer the Tenant Temporary Alternative Accommodation by written notice to the Tenant within [10] Business Days38 from the commencement of the relevant Fault.

12.2 The Temporary Alternative Accommodation shall:-

12.2.1 comply with:

(a) the Accessibility Condition;

(b) the Safety Condition;

(c) the Use Condition;

(d) the Prescribed Health Function Condition;

(e) the Prescribed Operational Function Condition;

applicable to any Functional Area which is affected by the relevant Unavailability Event for which Temporary Alternative Accommodation is offered;

37 This might include, for example, cleaning.38 The Tenant will need to consider what an appropriate period would be. Although the Landlord may wish to be given

time to seek alternatives the Tenant may wish to insist on a short period in view of the need to make alternative arrangements for patient care itself if no proposals are forthcoming from the Landlord.


12.2.2 be a temporary alternative having regard to the facts and the circumstances in existence;

12.2.3 be upon terms which are not materially different from the terms upon which the Tenant occupied the affected Functional Area;

12.2.4 be accommodation for which the Tenant is not already paying within the Lease Payment or other terms of the Lease;

12.2.5 be supplied with the Services to the standards set out in the Service Specifications which the Landlord would under normal circumstances be providing within the Unavailable Functional Area;

12.2.6 not involve the Tenant incurring any additional cost or charges in respect of the Temporary Alternative Accommodation including, without limitation, the reasonable costs of any relocation to and from the Temporary Alternative Accommodation;39 and

12.2.7 be in reasonable proximity to the Facilities for which it is a temporary replacement, shall be reasonably accessible by public and private transport and shall have adequate parking facilities.

12.3 The written notice sent by the Landlord to the Tenant pursuant to paragraph 12.1 above shall:-

12.3.1 describe the Temporary Alternative Accommodation;

12.3.2 invite the Tenant to inspect the Temporary Alternative Accommodation and shall give the Tenant reasonable notice of a time and a date when it may do so;

12.3.3 set out its proposals regarding the timing and co-ordination of relocation to the Temporary Alternative Accommodation;

12.3.4 specify the date (agreed by the Tenant before the submission of the written notice) by which the Landlord. reasonably expects the Tenant to be able to relocate back to the relevant Functional Part (the "Return Date"); and

12.3.5 describe the terms upon which the Tenant shall be entitled to occupy such Temporary Alternative Accommodation including the proposed division of such accommodation into Functional Areas and the proposed weighting to be attributed to them for the purposes of the operation of the Payment Mechanism. The weighting allocated to Temporary Alternative Accommodation shall, taken as a whole, be equivalent to the weighting of the accommodation it replaces40

12.4 If it requires to inspect the Temporary Alternative Accommodation the Tenant shall do so within 5 Business Days of receipt of the notice referred to in paragraph 12.1 above. The Tenant shall notify the Landlord in writing of its acceptance or refusal of

39 For the avoidance of doubt any and all relocation costs shall be borne by the Landlord.40 The weighting for the relevant Functional Area of the Temporary Alternative Accommodation should be as close as

possible to the Functional Area which it replaces and so that the overall weighting for the Temporary Alternative Accommodation is equivalent to the accommodation which it replaces.


the proposed Temporary Alternative Accommodation within 24 hours of its inspection of the same or, if the Tenant has elected not to carry out an inspection, within 5 Business Days of receipt of the notice referred to in paragraph 12.1 above. The Tenant shall act reasonably when deciding to accept or refuse any proposed Temporary Alternative Accommodation.

12.5 If the Tenant accepts the offer of Temporary Alternative Accommodation then, without affecting the Tenant’s remedial rights under clause 36 of this Lease, the Tenant shall not be entitled to vacate the Temporary Alternative Accommodation until the earlier of the Return Date and the date on which the Tenant is entitled and able to return to and use the Functional Area in accordance with the agreed programme for relocation and re-commissioning referred to in paragraph 12.9 below.

12.6 For the avoidance of doubt, the Tenant’s rights under clause 36 (Monitoring of Performance) of this Lease shall not be affected by the acceptance by the Tenant of the Temporary Alternative Accommodation.

12.7 If the Tenant accepts the Landlord’s offer of Temporary Alternative Accommodation, no further Deductions shall be made in respect of a Functional Area vacated by the Tenant while the Temporary Alternative Accommodation replacing that Functional Area is being used by the Tenant.

12.8 The Tenant shall be entitled to make Deductions in respect of any [Performance Failure or] Unavailability Event which occurs in the Temporary Alternative Accommodation as if the Temporary Alternative Accommodation was the Functional Area which it replaced and any Deduction in respect of an Unavailability Event shall be calculated using the weighting attributed pursuant to paragraph 12.3.5 of this Part C.

12.9 When the Landlord has completed the required works to enable the Tenant to return to the Functional Area the Tenant’s Representative shall confirm that the Availability Conditions for the Functional Area are met and the Tenant’s Representative and the Landlord shall agree a relocation programme to return to the Functional Area and any necessary period for re-commissioning.

12.10 Where the Tenant has accepted the proposed Temporary Alternative Accommodation pursuant to paragraph 12.4, in the event that the Landlord fails to complete the works to enable the Tenant to return to the relevant Functional Area on the Return Date the Tenant may, in its absolute discretion, vacate the Temporary Alternative Accommodation at any time after the Return Date or remain in occupation. In such circumstances:

12.10.1 Where the Tenant, in its discretion, remains in occupation of the Temporary Alternative Accommodation following the Return Date the Temporary Alternative Accommodation shall be deemed to be Unavailable with effect from the Return Date and the Tenant shall levy 50% of the Deduction which would have been levied in respect of that Unavailability Event for each Contract Day on which the Tenant occupies the Temporary Alternative Accommodation thereafter until the date on which the Unavailability Event referred to in paragraph 12.2.1 above has been rectified and the Tenant is able to resume its use of the Functional Area.


12.10.2 Where the Tenant, in its discretion, vacates the Temporary Alternative Accommodation following the Return Date, the Temporary Alternative Accommodation shall be deemed to be Unavailable on each Contract Day on which the Tenant is not in occupation of the Temporary Alternative Accommodation until the date on which the Unavailability Event referred to in paragraph 12.2.1 above has been rectified and the Tenant is able to resume its use of the Functional Area.

12.11 The Tenant shall specify a date (“the Long Stop Return Date”), being a date no earlier than the Return Date, by which the Rectification shall be completed and if the Landlord fails to complete the Rectification of the Functional Area for which the Temporary Alternative Accommodation is a replacement by the Long Stop Return Date the following shall apply:

12.11.1 The Tenant may (without prejudice to any express rights of the Tenant under this Lease) take such steps as it considers to be appropriate (either itself or by engaging others to take such steps) to restore any Functional Area for which the Temporary Alternative Accommodation is a replacement to a condition which satisfies in all respects the requirements of the Service Specification.

12.11.2 The Landlord shall reimburse the Tenant for all reasonable costs, losses, expenses or damages incurred by the Tenant in relation to taking the steps, or engaging others to take the steps, referred to in paragraph 12.11.1 above and the Tenant shall be entitled to deduct any such amount from any amounts payable to the Landlord under the provisions of this Lease.


SCHEDULE 10

Part D: Review of Weightings

1 ANNUAL REVIEW

12.12 The identification of Functional Areas, Rectification Times, and Area Weighting Percentages shall be reviewed by the Tenant and the Landlord at any time if requested by either party but in any event shall be reviewed at least once in every Contract Year. The Tenant and the Landlord shall act reasonably and diligently in carrying out the review. For the avoidance of doubt, the parties intend that any changes made as a result of such a review shall not alter the overall risk profile of the relevant Service or the likely magnitude of Deductions. Where proposed changes would result in any such alteration, the matter shall be deemed to be a Service Variation and Schedule 12 shall apply.

12.13 The Tenant and the Landlord may in respect of each matter the subject of the review either:-

12.13.1 agree that the status of the relevant matter shall continue to apply unchanged in the Contract Year immediately following the review; or

12.13.2 agree adjustments to the relevant matter to take effect in the Contract Year immediately following the review.

12.14 Any agreed adjustment pursuant to a review shall be effective from the commencement of the Contract Year immediately following the relevant review carried out in accordance with paragraph 1.1 of this Part D.


SCHEDULE 10

Part E: Failure by the Landlord to Monitor or Report

1 Subject to paragraphs 2 to 5 inclusive of this Part E, the Performance Monitoring Report produced by the Landlord for any Contract Month shall be the source of the factual information regarding the performance of the Services for the relevant Contract Month for the purposes of calculating the relevant Lease Payment.

2 If there shall be any error or omission in the Performance Monitoring Report for any Contract Month the Landlord. and the Tenant shall agree the amendment to the Performance Monitoring Report or, failing agreement within [10 ] days of notification of the error or omission which shall not be made more than 2 calendar months following the relevant Performance Monitoring Report except in the circumstances referred to in paragraph 7 of this Part E either party may refer the matter to the Dispute Resolution Procedure.

3 Not used

4 Where the Landlord fails to monitor or accurately to report a Performance Failure or an Unavailability Event in the circumstances referred to in paragraph 7 of this Part E, the Tenant shall be entitled to require that the Landlord shall make available to the Tenant for inspection such of the records relating to the delivery of the Services as the Tenant may specify.41

5 The Landlord shall upon submission of a valid invoice pay to the Tenant a sum equal to the costs reasonably incurred by the Tenant in carrying out any inspection and investigation of records made available pursuant to paragraph 4 above.

6 In the event that the Tenant’s inspection or investigation of records made available pursuant to paragraph 4 above reveals any further matters of the type referred to in paragraph 2 above, those matters shall be dealt with in accordance with paragraph 2 and the Tenant shall, in addition, be entitled to make Deductions in respect of any Unavailability Events in the manner prescribed in Part C of this Schedule. Any such Deductions shall be made from the Lease Payment payable in respect of the Contract Month in which the relevant matters were revealed by the Tenant’s investigations or, to the extent that the Tenant is unable to make any further deductions from the Lease Payment in respect of that Contract Month by virtue of paragraph 1.2 of Part C of this Schedule, may be carried forward and deducted from Lease Payments due in respect of subsequent Contract Months.42

7 For the purposes of paragraphs 2,[ 3,] and 4 of this Part E the relevant circumstances are:-

7.1 Fraudulent action or inaction; or

7.2 Deliberate misrepresentation; or

7.3 Gross misconduct or incompetence in each case on the part of the Landlord or a Landlord Party.

41 Tenants should ensure that Schedule 9 includes a reference to Performance Monitoring and Helpdesk records which is adequate to permit the Tenant to enforce its rights under this paragraph.

42 The Tenant should not be disadvantaged by the timing of the discovery of omissions by the Landlord.


8 The provisions of this Part E shall be without prejudice to any rights of the Tenant in this Lease pursuant to Clause 36 (Monitoring of Performance) and Clause 39A (Performance and Sub-Contractors).


SCHEDULE 10

Part F: Volume Adjustments43

1 VOLUME ADJUSTMENT

1.1 The Total Volume Adjustment in respect of any Contract Month44 shall be calculated in accordance with the following formula:

TVA = {VAW1 + VAW2 + VAW3}

where:

1.1.1 TVA is the Total Volume Adjustment

1.1.2 VAW1 is the price adjustment (if any) made in respect of the volume of Non Clinical Waste disposed of in accordance with the Service Specification in respect of the [domestics service] calculated in accordance with paragraph 1.2 of this Part F;

1.1.3 VAW2 is the price adjustment (if any) made in respect of the volume of Clinical Waste disposed of in accordance with the Service Specification in respect of the [domestics service] calculated in accordance with paragraph 1.3 of this Part F; and

1.1.4 VAW3 is the price adjustment (if any) made in respect of the volume of Waste other than Clinical Waste and Non Clinical Waste disposed of in accordance with the Service Specification in respect of the [domestics service] calculated in accordance with paragraph 1.4 of this Part F.

1.2 Non-Clinical Waste Price Adjustment

1.2.1 For the purposes of paragraph 1.1.1 the price adjustment in respect of the volume of Non-Clinical Waste disposed of in accordance with the Service Specification for the [domestics service] in any Contract Month ("VAW1") shall be calculated in accordance with the following formula:

NYNM x IWU - AWU x

RPIRPI x IWPVAW

o

n 1

Where:

(a) IWP is the Non-Clinical Waste price per tonne as set out in Appendix E;

(b) IWU is the volume of Non-Clinical Waste for disposal included in the Lease Payment as set out in Appendix E;

43 To be used where the Landlord is required to provide relevant services – eg disposal of Clinical Waste.44 It is assumed that adjustments will be made monthly in arrears. It may be more convenient to make adjustments on

an annual basis, unless this would result in significant cashflow disadvantages for the Landlord.


(c) RPIn is the value of the Retail Prices Index published or determined with respect to the month of [ ] which most recently precedes the relevant Contract Year;

(d) RPIo is the value of the Retail Prices Index published or determined with respect to the month in which the Base Date falls;

(e) AWU is the volume of Non-Clinical Waste disposed of by the Tenant in the relevant Contract Month which met the standard specified in the Service Specification for the [domestics service];

(f) NM is the number of days in the relevant Contract Month; and

(g) NY is the number of days in the relevant Contract Year.

1.2.2 For the purposes of paragraph 1.2.1 in the Contract Month in which the Payment Commencement Date falls and in the last Contract Month of the Term NM shall be the actual number of days in the Contract Month from and including the Payment Commencement Date (for the first month) and (for the last month) up to and including the last day of the Term.

1.3 Clinical Waste Price Adjustment

1.3.1 For the purposes of paragraph 1.1.1 the price adjustment in respect of the volume of Clinical Waste disposed of in accordance with the Service Specification for the [domestic service] in any Contract Month ("VAW2") shall be calculated in accordance with the following formula:

NYNM x IWU - AWU x

RPIRPI x IWPVAW

o

n 2

Where:

(a) IWP is the Clinical Waste price per tonne as set out in Appendix E;

(b) IWU is the volume of Clinical Waste for disposal included in the Lease Payment as set out in Appendix E;


(d) RPIo is [ ] being the value of the Retail Prices Index published or determined with respect to the month in which the Base Date falls;

(e) AWU is the volume of Clinical Waste disposed of by the Tenant in the relevant Contract Month which met the standard specified in the Service Specification for the [domestics service];





1.4 Other Waste Price Adjustment

1.4.1 For the purposes of paragraph 1.1.1 the price adjustment in respect of the volume of Other Waste disposed of in accordance with the Service Specification for the [domestics service] in any Contract Month ("VAW3") shall be calculated in accordance with the following formula:

NYNM x IWU - AWU x

RPIRPI x IWPVAW

o

n 3

Where:

(a) IWP is the Other Waste price per tonne as set out in Appendix E;

(b) IWU is the volume of Other Waste for disposal included in the Lease Payment as set out in Appendix E;



(e) AWU is the volume of Other Waste disposed of by the Trust in the relevant Contract Month which met the standard specified in the Service Specification for the [domestics service];





SCHEDULE 10

Part G: Not used.


SCHEDULE 10

Part H: Energy

1 Supply of Energy

1.1 [The Tenant shall from time to time as required enter into contracts with Energy suppliers for the supply of Energy to the Facilities and shall be responsible for all payments due pursuant to such supply contracts.]45

1.2 The Parties agree that it is important to maintain an appropriate balance between (i) on the one hand, ensuring the efficient use of Energy and minimising the level of emissions of greenhouse gases and harmful substances caused by the use of Energy (regardless of where the Energy is generated)46 and (ii) on the other hand, minimising the monetary cost of Energy usage. There are set out below the agreed proportions for usage of different types of Energy. In managing the usage of Energy at the Facilities the Landlord47 shall wherever practicable ensure that these agreed proportions are followed.

[Insert agreed proportions for usage of different types of Energy]

1.3 Subject to paragraph 1.4 below, if the proportions of different types of Energy actually consumed at the Facilities differ by more than 1% from the agreed proportions referred to above and such increase is the result of any change made by the Landlord to the agreed proportions of usage of Energy referred to in paragraph 1.2 above without the agreement of the Tenant’s Representative, any resultant increase in the cost to the Tenant of purchasing Energy and/or to the Landlord or the Designated Operator in purchasing Allowances (as defined in the Greenhouse Gas Emissions Trading Scheme Regulations 2012) shall be for the Landlord’s account and shall take effect by way of a reduction to Lease Payments.

1.4 Paragraph 1.3 shall not apply to the extent that a change in the proportions of Energy actually consumed results from a Qualifying Variation or from an increase or decrease from time to time in the Tenant’s requirements for usage of a particular type of energy.48

2 Measurement

2.1 Without prejudice to Schedule 9, the Landlord shall measure the amount of Energy consumption for the Facilities in accordance with Clauses 10.2 and 10.3 of this Lease in respect of each calendar month beginning at the start of the Initial Period and ending on the expiry or earlier termination of this Lease.

2.2 Without prejudice to Schedule 9, the Landlord shall provide to the Tenant a summary of Energy Consumption in respect of each type of Energy at the Facilities, at the end of each month, in the form of a certificate. The first such month shall begin on the first day of the Initial Period.

45 Insert for those schemes where the Tenant contracts for energy during the Operational Phase.46 For example, the use of electricity does not result in carbon emissions at the site itself, but, depending on the

process, there may well be emissions at the location where the electricity is generated.47 It is assumed for the purposes of this draft that the Landlord, as opposed to the Tenant, controls the management

of energy. If that is not the case this clause will need to be amended.48 For example because of an increase or decrease in the amount of plugged-in load. This will result in an increase in

the use of electricity which may, in turn, change the overall percentage mix of fuel usage. This is clearly not something for which the Landlord can be responsible.


3 Payment

3.1 [The parties confirm that the Financial Model contains no provision for the cost of purchasing Energy.]


SCHEDULE 10

Part I: Utilities Costs and Pass Through Costs

1 UTILITIES COSTS

1.1 As part of the Lease Payment the Tenant will pay the Utilities Cost to the Landlord in each Contract Month in accordance with the provisions of this paragraph.

1.2 For each Contract Year, the Landlord shall purchase Utilities from the reputable supplier or suppliers which offer the [lowest cost] [best value for money] for such supplies to the Facilities. For the purposes of this paragraph, the price per unit of [Energy,] water, sewerage and telecoms shall be agreed between the Landlord and the Tenant at the beginning of each Contract Year or other period as may be agreed and shall not exceed the price charged to the Landlord by the relevant supplier.

1.3 The Utilities Cost for each Contract Month shall [subject always to the provisions of Part H of this Schedule 10 in respect of Energy] comprise:

1.3.1 the price per unit of the relevant Utility charged to the Landlord multiplied by the number of units of the relevant Utility consumed at the Premises; and

1.3.2 the Tenant’s U Proportion of the cost to the Landlord of the Utilities consumed in the Common Parts; and

1.3.3 the Tenant’s U Proportion of any standing charges relating to any supply of the Utilities to the Facilities; and

1.3.4 any irrecoverable VAT paid by the Landlord in respect of the amounts referred to in paragraphs 1.3.1 – 1.3.3.

1.4 For the avoidance of doubt, the Tenant shall make no payment in respect of Utilities for any part of the Facilities in respect of any period prior to the Payment Commencement Date for [that part of] the Facilities.

1.5 Notwithstanding any provision of this Lease, the Landlord shall provide any records and information in relation to the provisions of this paragraph 1 on a fully transparent basis.

1.6 To the extent that any part of the Utilities Cost is attributable to any failure by the Landlord to comply with any provision of Schedule 9 then the Tenant may deduct such part and shall be obliged only to pay such part not attributable to such failure.

2 PASS THROUGH COSTS

2.1 As part of the Lease Payment the Tenant will pay the Pass Through Costs to the Landlord in each Contract Month in accordance with the provisions of this paragraph 2.

2.2 The Landlord shall notify the Tenant at the start of each Contract Year of:

2.2.1 the projected cost to the Landlord of complying with clause 20.1.1 of this Lease;


2.2.2 the projected cost to the Landlord of taking out the insurances described in paragraph 1 of part 2 of Schedule 8; and

2.2.3 the projected Ratings Cost and Insurance Cost for the forthcoming year taking into account paragraphs 2.4 and 2.5 below if relevant.

2.3 The Landlord shall promptly notify the Tenant in writing on becoming aware that the figures referred to in paragraph 6.2 above will be subject to change over the relevant Contract Year.

2.4 The Tenant shall not be liable for increases in the cost of insurance referred to in paragraph 2.2.2 above to the extent such increases are wholly or directly attributable to the acts or omissions of the Landlord. Where the Tenant believes this to be the case it shall notify the Landlord in writing and the parties shall use reasonable endeavours to agree an appropriate Insurance Cost failing which the matter shall be referred to the Dispute Resolution Procedure.

2.5 Where the Tenant believes the Landlord has not used reasonable endeavours to obtain the best value insurance available pursuant to clause 37.7 it shall notify the Landlord of the same in writing provided that best value insurance shall under no circumstances be insurance that would put the Landlord in breach of the Funding Agreements. The parties shall refer the matter to the Dispute Resolution Procedure and if it is agreed or determined that the Landlord did not act in accordance with clause 37.7 and the relevant insurance could have been procured at a lower cost elsewhere with a reputable insurer of good standing [(whilst complying with the obligation to obtain best value insurance)]49 that lower cost shall form the basis for calculating the Insurance Cost.

2.6 At the Tenant’s request the Landlord shall provide a detailed estimate of its reasonable and proper costs incurred in challenging any rating assessment which appears to be incorrect or excessive. If all the tenants at the Facilities agree, the Tenant may require the Landlord to challenge any such rating assessment and (to the extent there is no material deviation from the estimate which has been previously notified to and approved by the tenants) the Landlord shall be entitled to recover the Tenant’s PT Proportion of its reasonable costs properly incurred in responding to such a request apportioned between the Tenants (both in relation to a request made by the Tenant under this paragraph 2.6 and any request made by another tenant at the Facilities to which the Tenant agrees).

2.7 For the avoidance of doubt, the Tenant shall make no payment in respect of Pass Through Costs for any part of the Facilities in respect of any period prior to the Payment Commencement Date.

2.8 Notwithstanding any other provision of this Lease, the Landlord shall provide any records and information in relation to the provisions of this paragraph 2 on a fully transparent basis.

49 To be consistent with the Tenant’s options at paragraph 2.2 of this Schedule 10, Part I.


SCHEDULE 10

Option B - Complex Payment Schemes

Part A: Interpretation

"Accessibility Condition"means a state or condition of the relevant Functional Part or the means of access to it which allows all persons who are entitled to enter, occupy or use the relevant Functional Part to enter and leave the Functional Part safely and conveniently and using normal access routes;

"Ad-Hoc Services"means services which, in accordance with Schedule 9 [Service Specification]50 the Tenant is entitled to require the Landlord to provide but where the Landlord’s obligation to provide those services does not arise unless and until it is requested to do so by the Tenant;

"Ad-Hoc Service Request"means a request for the provision of Ad-Hoc Services made by the Tenant to the Landlord in accordance with Schedule 9 [Service Specifications];

"Area Weighting Percentage" means the percentage weighting ascribed to the relevant Functional Area for the purpose of calculating Deductions for Unavailability Events as set out in Appendix D to this Schedule;

"Availability Condition"means any of (i) the Accessibility Condition, (ii) the Safety Condition, (iii) the Use Condition and (iv) the Prescribed Health Function Condition or, as appropriate, the Prescribed Operational Function Condition;

"Base Date"51

means the [ ] 20[ ];

"Bedding-In"means a tolerance level for the making of Deductions in respect of Performance Failures allowed for a period of time following a New Service Provider Start Date as more particularly described in Part C paragraph 2 of this Schedule 10;

"Clinical Waste"means [insert definition from the Service Specification];

"Contract Day"means a 24 hour period commencing at midnight at the start of the relevant day;

"Deduction"means a deduction made from a Lease Payment in accordance with this Schedule 10;

"Employment Costs Adjustment"means any adjustment to Lease Payments made in accordance with the provisions of Clauses 1.12 to 1.15 and 1.27 of Part 1 of Schedule 16 of this Lease (Transfer of Employment and Pensions Matters);

"Fault"

50 The Tenant may wish to check that the Schedule 9 definitions are consistent with this provision.51 The Base Date will be a fixed date for the purposes of pricing the Lease Payment.


means an incident or state of affairs affecting the Premises or Common Parts52 which does not meet or comply with the performance parameters set out in Schedule 9 [Service Specification] and/or results in one or more of the Availability Conditions not being met;

"Functional Area"means an area of the Facility specified as such in Appendix D to this Schedule 10 comprising two or more Functional Units;

"Functional Part"means a Functional Unit or a Functional Area according to the context in which it is used;

"Functional Unit"means a room or group of rooms53 or space within a Functional Area which is specified as a Functional Unit in Appendix D to this Schedule 10;

"Helpdesk"means the contact point to be established by the Landlord pursuant to Schedule 9 (Service Specification) in respect of the Helpdesk Service for the notification of Ad-Hoc Service Requests, the occurrence of Faults and other day to day matters arising in relation to the provision of Services;

"Insurance Cost"means (subject to paragraph 2.4 of Part I of this Schedule 10) the Tenant’s PT Proportion of the cost of taking out and maintaining the insurances set out in paragraph 1 of Part 2 of Schedule 8 incurred by the Landlord from time to time, after deducting agency or other commission paid or allowed to the Landlord;

"Lease Payment"means the sum in pounds sterling payable by the Tenant to the Landlord for the provision of the Services in accordance with this Lease;

"Major Performance Failure"means a Performance Failure which has been designated in the Service Specification or in this Schedule 10 as a Major Performance Failure;

"Medium Performance Failure"means a Performance Failure which has been designated in the Service Specification or in this Schedule 10 as a Medium Performance Failure;

"Minor Performance Failure"means a Performance Failure which has been designated in the Service Specification or in this Schedule 10 as a Minor Performance Failure;

"Minimum Agreed Availability Conditions"means the Accessibility Condition, the Safety Condition and either the Prescribed Health Function Condition or Prescribed Operational Function Condition (as appropriate) together with the Use Condition, as temporarily modified as permitted in accordance with paragraph 9 of Part C of this Schedule 10 for the purposes of a Temporary Repair;

"Minimum Unavailability Deduction"54

52 References to Premises and Common Parts can be changed to a reference to a Functional Part if Functional Parts cover all areas for which the Tenant may wish to claim Unavailability or Performance Failures.

53 Calibration exercises using the new payment mechanism suggest that, in order to prevent excessive reliance on the Minimum Deduction, it may be desirable to group together more than one room in a single Functional Unit.


means the sum of £3055 which shall be index linked. For the avoidance of doubt, if more than one Functional Unit or Functional Area is rendered Unavailable by an Unavailability Event, the amount of the Minimum Unavailability Deduction in respect of that Unavailability Event remains the same;56

"Net Annual Payment"means the sum in pounds sterling calculated in accordance with the provisions set out in Part B paragraph 2 of this Schedule;

"New Provider Bedding-In Period"has the meaning set out in Part C paragraph 2.1;

"New Service Provider Start Date"means in respect of each Service the Relevant Service Transfer Date (as defined in Clause 1.1 of Part 1 of Schedule 16 to this Lease) and, where a Service Provider is replaced by a new Service Provider, either:

(a) (in the case of replacement following a Soft Services Market Testing or a Hard FM Market Testing) the date established in accordance with paragraph 9.5 of Schedule 22; or

(b) in other cases, the date on which the Services commence to be provided by the new Service Provider or, if earlier, the date on which they were first due to be provided by the new Service Provider (unless a Delay Event has prevented the commencement of Service provision);

"Non Clinical Waste"means [insert definition from the Service Specification];

"Other Waste"means [insert definition from the Service Specification];

"Pass Through Costs"means the Rating Cost and the Insurance Cost payable for the relevant Contract Month

"Performance Failure"means

(a) where a Fault occurs and a Rectification Time is applicable under the relevant Service Specification, the failure by the Landlord to Rectify the Fault within the specified Rectification Time;

(b) where the Landlord is required by the relevant Service Specification to provide a Service (including an Ad-Hoc Service) within a specified period, the failure by the Landlord to provide that Service within the required period; and

(c) in all other cases, a failure to satisfy the requirements of the Service Specifications;

"Performance Failure Deduction"means a Deduction which may be made in respect of a Performance Failure;

54 The minimum unavailability deduction is a figure (in pounds sterling) which represents a minimum amount that should be deducted from the Lease Payment if an Unavailability Event occurs to avoid de minimis deductions.

55 This figure is set at January 2006 values. Tenants may wish to adjust it to reflect inflation between January 2006 and the date of financial close. The calibration of the payment mechanism should be such that the Minimum Unavailability Deduction is likely to apply to a limited number of Functional Units. Refer to CHP for guidance on the issue of calibration.

56 If the Unavailability Event is not rectified within a further 4 hour period, another Deduction (including the Minimum Unavailability Deduction) becomes possible, since this is treated as a further Unavailability Event.


"Performance Monitoring Report"means the report specified in Schedule 9 (Service Specification) in respect of a Service or a part of a Service which the Landlord has an obligation to prepare for the Tenant in respect of its performance of that Service or the relevant part of it during a specified period;

"Permanent Repair"means Rectification where a Temporary Repair has been permitted and carried out pursuant to paragraph 9 of Part C of this Schedule;

"Prescribed Health Function"means the clinical use or purpose of the relevant Functional Part (if any) as stated in Appendix A Part 1;

"Prescribed Health Function Condition"means a state or condition of the relevant Functional Part which allows the Prescribed Health Function for that Functional Part to be carried on and performed in accordance with any Law and generally accepted clinical practices for such Prescribed Health Function and having regard to the practicalities of carrying on and performing such Prescribed Health Function;

"Prescribed Operational Function"means the use or purpose of the relevant Functional Part where it does not have a Prescribed Health Function as stated in Appendix A Part 2;

"Prescribed Operational Function Condition"means a state or condition of the relevant Functional Part which allows the Prescribed Operational Function for that Functional Part to be carried on and performed having regard to the practicalities of carrying on and performing such Prescribed Operational Function;

"Rating Cost"means the Tenant’s PT Proportion of the cost of complying with clause 20.1.1 of this Lease incurred by the Landlord from time to time;

"Rectification"means, following the occurrence of a Fault, making good the Fault in a way that ensures compliance with this Lease and the Service Specifications. Without prejudice to the generality of the foregoing this shall include (a) restoring all functional capability and (b) ensuring that any Functional Part which has been affected by the relevant Fault complies with the Availability Conditions and “Rectify” shall be construed accordingly;57

"Rectification Time"means the period specified in the relevant Service Specification for Rectification of a Fault, except that where a Fault causes a Functional Part to be Unavailable, that period shall be 4 hours. In each case the relevant period shall begin at the time the Fault is reported to the Helpdesk. For the avoidance of doubt, if no period for rectification is specified in Schedule 9 (Service Specification) in respect of the relevant Service requirement, no Rectification Time applies;58

"Remedial Period"

57 The Landlord should be obliged to follow Tenant Policies when carrying out rectification work, but this is a separate requirement (in paragraph 6.7 of Part C of this Schedule 10). A failure by the Landlord to act in accordance with Tenant Policies will be a Performance Failure, and may attract Deductions as such, but this should not form part of the assessment of whether Rectification of the original problem has been achieved. Otherwise the Landlord might be unfairly disadvantaged by way of deductions for Unavailability when a room is in use.

58 Some matters do not attract a Rectification Time, for example Performance Failures that do not directly affect the condition of the Facilities. Also, where there is a request for an Ad-Hoc Service, the service requirement must be met within the time prescribed in the service specification. If it is not, then a Performance Failure will have occurred – there is no additional rectification time.


has the meaning set out in Part C paragraph 8.159;

"Return Date"means for the purpose of Temporary Alternative Accommodation the date agreed for the return to the original Functional Part in accordance with paragraph 12.3.4 of Part C of this Schedule;

"Safety Condition"means a state or condition of the relevant Functional Part which allows those persons who it can reasonably be expected may from time to time require to enter, leave, occupy and use such Functional Part to do so safely including but not limited to compliance with the Health and Safety Regime and any other Law or NHS Requirement relating to fire safety or health and safety at work;

"Temporary Alternative Accommodation"means accommodation offered to the Tenant by the Landlord as a substitute for any Unavailable Functional Part pursuant to paragraph 12 of Part C of this Schedule 10;

"Temporary Repair"means, where a Fault occurs under the Service Specification for Estates Services, works of a temporary nature that do not constitute Rectification but satisfy the Minimum Agreed Availability Conditions and substantially make good the relevant Fault for the period until a Permanent Repair can be undertaken;

["Total Volume Adjustment"60

means the figure expressed in pounds sterling (whether positive or negative) which shall be calculated in accordance with the provisions set out in paragraph 1 of Part F of this Schedule;]

"Unavailable and Unavailability"means in relation to a Functional Part that such Functional Part is in a state or condition which does not comply with any one or more of the Availability Conditions;

"Unavailability Event"means a Fault which causes a Functional Part to be Unavailable and which has not been Rectified within four (4) hours of the time at which the Fault was reported to the Helpdesk;

"Unit Weighting Percentage"means the percentage weighting ascribed to each Functional Unit for the purpose of calculating Deductions for Unavailability Events as set out in Appendix D to this Schedule 10;

"Use Condition"means a state or condition of the relevant Functional Part which satisfies the Use Parameters for that Functional Part;

"Use Parameters"means the range of functional requirements for the proper use and enjoyment of a Functional Part for its particular purpose relating to (i) temperature; (ii) humidity; (iii) air-flow; (iv) lighting; (v) power (essential and non-essential); (vi) safe water (relating to availability, temperature, quality and safe sewerage system); (vii) nurse call system; (viii) medical and other equipment; (ix) medical gases;

59 The way this works is as follows: when a Performance Failure occurs (in some cases, mostly estates-related faults, there will be a Rectification Period, but in all other cases the Performance Failure is immediate), there is a Deduction. Further Deductions can be made at regular intervals if the problem continues to be unresolved. These intervals are Remedial Periods. They apply to all types of fault (including those formerly described as Failure Events and Quality Failures – that distinction no longer applies.

60 Where applicable, e.g. the disposal of Clinical Waste.


(x) [ ]61 as the same are specified on the Room Data Sheets for the relevant Functional Part as set out in Schedule [ ];62

"Utilities"means [Energy]63 (and any other services or amenities of a like nature) telecoms, water, sewerage and drainage;

"Utilities Cost"means the Tenant’s U Proportion of the cost of complying with clause 20.1.2 of this Lease incurred by the Landlord64 from time to time;

61 Tenant to add other items such as switchboard, security, data communications, etc. as appropriate.62 Tenant will need to ensure that relevant details of use parameters are included in the room data sheets and will

need to amend this definition to ensure that appropriate use parameters for the Facilities are included.63 The Landlord should not be required to provide Energy (gas, electricity, oil or other fossil fuels) where better value

for money can be obtained by the Tenant and where it is feasible for the Tenant to contract for its own supply. This may not be the case for multi-tenanted Facilities. If this is changed please note that other changes will be required e.g. in Clause 20.1.2 of the LPA.

64 See previous footnote.


Part B: Calculation of Lease Payments

1 THE LEASE PAYMENT

1.1 The Lease Payment payable in respect of any Contract Month shall be calculated in accordance with the following formula:

LP = (NAPn/12) + PTC + UC [+TVA65] - D [+ GS – PS]

where:

1.1.1 LP is the Lease Payment for the Contract Month for which the formula is to be applied;

1.1.2 NAPn is the Net Annual Payment for the relevant Contract Year;

1.1.3 PTC is the Pass Through Costs for the Contract Month;

1.1.4 UC is the Utilities Cost for the Contract Month;

1.1.5 TVA is the total volume adjustment calculated in respect of the relevant Contract Month; [and]

1.1.6 D is the sum of Deductions in respect of the relevant Contract Month in relation to Unavailability Events and Performance Failures calculated in accordance with the provisions set out in Part C of this Schedule;

1.1.7 [GS means any Gainshare Adjustment arising pursuant to Part H paragraph 2.3.3; and

1.1.8 PS means any Painshare Adjustment arising pursuant to Part H paragraph 2.3.4.]66

1.2 In the Contract Month in which the Payment Commencement Date falls and in the last Contract Month of the Project Term a pro rata adjustment shall be made to reflect the actual number of days in the relevant Contract Month from and including the Payment Commencement Date (for the first month) and up to and including the last day of the Project Term (for the last month).

2 NET ANNUAL PAYMENT (including any Capital Works Payment)

2.1 The Net Annual Payment for any Contract Year shall be calculated in accordance with the following formula:


Where:

2.2 NAPn is the Net Annual Payment for the relevant Contract Year;

65 Where applicable e.g. the disposal of Clinical Waste.66 The Tenant may include energy painshare and gainshare at its option, see Part H of this Schedule 10


2.3 NAPo is £[ ], being the Net Annual Payment at the Base Date as adjusted from time to time in accordance with paragraph[s 3 and] 67 4 below;

2.4 RPIn is the value of the Retail Prices Index published or determined with respect to the month of [ ]68 which most recently precedes the relevant Contract Year;

2.5 RPIo is the value of the Retail Prices Index published or determined with respect to the month in which the Base Date falls; and.

2.6 PSI is [ ]%, being the proportion of the Net Annual Payment which, at the date of carrying out the relevant calculation, is subject to indexation69.

2A NET ANNUAL PAYMENT (without Capital Works Payment)

2A.1 The Net Annual Payment for any Contract Year shall be calculated in accordance with the following formula:


Where:

2A.2 NAPn is the Net Annual Payment for the relevant Contract Year;

2A.3 NAPo is £[ ], being the Net Annual Payment at the Base Date as adjusted from time to time in accordance with paragraph[s 3 and] 4 below;

2A.4 RPIn is the value of the Retail Prices Index published or determined with respect to the month of [ ] which most recently precedes the relevant Contract Year;

2A.5 RPIo is the value of the Retail Prices Index published or determined with respect to the month in which the Base Date falls; and.

2A.6 PSI is [ ]%, being the proportion of the Net Annual Payment which, at the date of carrying out the relevant calculation, is subject to indexation70.

3 EFFECT OF VALUE TESTING ON NET ANNUAL PAYMENT

3.1 The Net Annual Payment shall with effect from the date established in accordance with [paragraph 9.5 of Schedule 22 Soft Services Market Testing or] paragraph 6 of Schedule 25 (Services Review) be the sum calculated in accordance with the following formula:

NAPo(new) = NAPo(previous) +/- RVTA

where:

67 Delete if paragraph 3 not used.68 Tenant to insert, depending on the date of financial close and taking account of the fact that the Contract Year runs

from 1st April until 31st March.69 In accordance with guidance published by HM Treasury in May 2006 entitled “Interest Rate and Inflation Risk

Issues in PFI Contracts”, Tenants will need to consider if value for money may be improved if indexation is not applied to part of the Annual Service Payment.

70 Where the Tenant is making a Capital Works Payment, in paragraph 2 the Net Annual Payment must take into account the Capital Works Payment. Paragraph 2A should also be included, with the Capital Works Payment being excluded from the amount for Net Annual Payment in paragraph 2A.2. If no Capital Works Payment is being made on a scheme, paragraph 2 should be deleted.


3.1.1 NAPo(new) is the Net Annual Payment revised to reflect any change to the costs of any of the [Market Tested Soft Services following a Soft Services Market Testing or] Market Tested Hard FM Services following a Services Review and expressed in value of money terms as if it were payable at the Base Date;

3.1.2 NAPo(previous) is the figure in pounds sterling set out in paragraph 2.3 or 2A.3 of this Part B (as applicable) (as adjusted from time to time pursuant to paragraph 4 of this Part B); and

3.1.3 RVTA is the adjustment to the cost of the [Market Tested Soft Services following a Soft Services Market Testing or] Market Tested Hard FM Services following a Services Review (if any and whether up or down) re-based to reflect the value of the amount of the adjustment at the Base Date.

.3.2 For the purposes of paragraph 3.1 of this Part B, RVTA shall be a figure in pounds

sterling (whether positive or negative) calculated in accordance with the formula:

RVTA = (NAP – (OPVT x RPIn/RPIo)) x (RPIo/RPIn)

where:

3.2.1 NAP is the aggregate of the new annual prices for the [Market Tested Soft Services arising from the Soft Services Market Testing or] Market Tested Hard FM Services arising from a Services Review;

3.2.2 RPIn is the value of the Retail Prices Index published or determined with respect to the month of [ ]71 in the Contract Year in which the Market Testing Date falls;

3.2.3 OPVT is the aggregate of the original annual prices for the [Market Tested Soft Services or] Market Tested Hard FM Service as set out in the second column of Appendix C of this Schedule; and

3.2.4 RPIo is the value of the Retail Prices Index published or determined with respect to the month in which the Base Date falls.

4 ADJUSTMENTS TO EMPLOYMENT COSTS

4.1 The Net Annual Payment shall be recalculated, from the date from which any Employment Costs Adjustment takes effect, in accordance with the following formula:

NAPo(new) = NAPo(previous) + ECA

Where:-

4.1.1 NAPo(new) is the Net Annual Payment, revised to reflect any Employment Costs Adjustment;

4.1.2 NAPo(previous) is the Net Annual Payment prior to any such adjustment; and

71 See footnote Error: Reference source not found above.


4.1.3 ECA is a sum equal to the amount of the Employment Costs Adjustment required re-based to reflect the value of the amount of the adjustment at the Base Date.


Part C - Deductions from Lease Payments

1 ENTITLEMENT TO MAKE DEDUCTIONS

1.1 If at any time during the Operational Phase an Unavailability Event or a Performance Failure shall occur the Tenant shall, subject to paragraphs 1.2, 1.3 and 4 below, be entitled to make Deductions from the Lease Payment in respect of that Unavailability Event or Performance Failure.

1.2 The maximum aggregate of all Deductions that the Tenant can make from a Lease Payment in respect of any Contract Month shall be the amount that would be calculated for the relevant Contract Month in accordance with the formula set out in paragraph 1.1 of Part B of this Schedule 10 without deducting the sums represented by the symbol ∑D.

1.3 To the extent that an Unavailability Event or a Performance Failure is the result of an Excusing Cause (as defined in clause 36A of this Lease) the Tenant shall not be entitled to make Deductions.

2 BEDDING-IN PERIODS

2.1 In respect of each Service, there shall be a period of 3 months for Bedding-In beginning on each New Service Provider Start Date72. This is referred to as the “New Provider Bedding-In Period”. During the New Provider Bedding-In Period the following provisions shall apply:

2.1.1 During the first month of the New Provider Bedding-In Period, no Deductions may be made in respect of Performance Failures occurring in the provision of the relevant Service;

2.1.2 During the second and third months of the New Provider Bedding-In Period, the amount of any Deductions in respect of Performance Failures occurring in the provision of the relevant Service shall be reduced by 50%.

2.2 There shall be no relief during any period of Bedding-In in respect of Deductions which relate to Unavailability Events.

3 AMOUNT OF DEDUCTIONS FOR PERFORMANCE FAILURES

3.1 Subject to paragraphs 1 and 2 of this Part C, the amount of the Deduction in respect of a Performance Failure shall be as follows:

3.1.1 in the case of a Minor Performance Failure, the sum of £5 , index-linked;

3.1.2 in the case of a Medium Performance Failure, the sum of £15, index-linked; and

3.1.3 in the case of a Major Performance Failure, the sum of £30, index-linked.

72 Relief for Bedding-In is given whenever there is a change of Service Provider, but not whenever a new sub-contract is awarded. No relief is given where the incumbent Service Provider is successful in retaining the service, for example as a result of a soft services or Hard FM market testing.


3.2 The classification of a Fault as a potential Performance Failure or Unavailability Event shall be made at the time at which the occurrence of the Fault is reported to the Helpdesk.

A Fault which is incorrectly classified may be re-classified with the approval of the Tenant’s Representative and the Landlord, approval not to be unreasonably withheld. If this happens, the appropriate Deduction (if applicable) shall be made and any Deduction incorrectly applied shall be withdrawn.73

4 TOLERANCES FOR PERFORMANCE FAILURES

4.1 No Deduction may be made by the Tenant to the Lease Payment for the relevant Contract Month in respect of any Minor or Medium Performance Failure if in respect of the Service in which the relevant Minor or Medium Performance Failure has occurred, the total of all Deductions which (but for this paragraph) the Tenant would have been entitled to make in respect of all Minor and Medium Performance Failures which have occurred in the Contract Month in respect of that Service does not exceed in aggregate a sum calculated in accordance with the following formula:

SD = FMSP x 0.5%

Where:

4.1.1 SD is the maximum tolerance permitted for all Medium and Minor Performance Failures occurring in respect of the relevant Service in the relevant Contract Month; and

4.1.2 FMSP is the monthly cost of providing the relevant Service, being one-twelfth of either the sum set out in Appendix C in respect of that Service, or, as appropriate, any revised sum that may apply in respect of the relevant Service following a Market Testing, and shall be subject to indexation.74

4.2 If the aggregate figure in paragraph 4.1 is exceeded a Deduction shall be made in respect of each and every Minor or Medium Performance Failure which shall have occurred in the relevant Service during that Contract Month.

5 DEDUCTIONS FOR UNAVAILABILITY EVENTS

5.1 Subject to paragraphs 1.2 and 1.3 above, the amount to be deducted from the Lease Payment in respect of any Unavailability Event shall be the higher of

5.1.1 the Minimum Unavailability Deduction75; and

5.1.2 the aggregate of amounts calculated in accordance with the following formula in respect of all Functional Parts made Unavailable as a result of the Unavailability Event:

73 It should be a function of the Helpdesk service to ensure that those reporting a Fault clarify if Unavailability may result.74 The figure should equal 0.5% of the monthly FM service fee for the relevant Service.75 If more than one unit is affected, the Minimum Unavailability Deduction is the same amount in total (ie there is not a

separate Minimum Unavailability Deduction per unit). However, if the problem remains unrectified at the end of a further 4 hours, there is a new Unavailability Event and the same Minimum Availability Deduction can be made again, if applicable. See paragraph 6.5.


D = (NAPn/(Ny x 6)) x AW x UW x DP [x K]76

where:

5.1.3 D means the amount (in pounds sterling) of the Deduction in respect of the Unavailability Event;

5.1.4 NAPn means the Net Annual Payment at the time the relevant Unavailability Event occurs;

5.1.5 Ny means the number of days in the Contract Year (being the year in which the relevant Unavailability Event occurs) provided that, if the first or the final Contract Year is of less than 12 months duration, Ny shall be deemed to be 36577;

5.1.6 AW means the Area Weighting Percentage attributable to each Functional Area in which the Unavailability Event occurs;

5.1.7 UW means the Unit Weighting Percentage attributable to each Functional Unit in which the Unavailability Event occurs as set out in Appendix D; [and]

5.1.8 [K is [ ]] [; and]

5.1.9 DP is 50% and shall apply only where the relevant Functional Part is Unavailable but the Tenant continues to use it for its Prescribed Health Function (or for a function serving a clinical service similar to the Prescribed Health Function) or, as appropriate, for its Prescribed Operational Function (or for a function serving a clinical service similar to the Prescribed Operational Function).

Provided that, where more than one Functional Unit in the same Functional Area is Unavailable as a result of the same Unavailability Event, the maximum Deduction allowable in respect of that Functional Area shall be the amount derived from setting UW at 100%.

6 DEDUCTIONS

6.1 Where a Rectification Time is specified in Schedule 9 (Service Specification) in respect of a Fault then, subject to paragraphs 4 and 10 of this Part C, no Performance Failure or Unavailability Event shall occur if the Landlord successfully carries out Rectification within the specified Rectification Time and in such circumstances no Deduction shall be made.

6.2 If Rectification (where applicable) is not successfully carried out by the Landlord within the specified Rectification Time, a Performance Failure or, as the case may be, an Unavailability Event shall occur.

6.3 On the occurrence of a Performance Failure or an Unavailability Event, the appropriate Deduction shall be made, subject to paragraph 4 above (Tolerances) depending on whether the matter is a Minor, Medium or Major Performance Failure or an Unavailability Event.

76 "K" is only relevant to schemes including a Capital Works Payment.77 The Tenant may replace Ny with 365 days if it wishes, although this disregards leap years.


6.4 When carrying out Rectification, or works of Temporary Repair pursuant to paragraph 9 below, the Landlord shall at all times act in accordance with Tenant Policies, Good Industry Practice and the Health and Safety Regime. Failure to do so shall be deemed to be a new Minor Performance Failure, unless the failure constitutes a breach of Law or of the Health and Safety Regime, in which case there shall be deemed to be a new Major Performance Failure.

7 RE-COMMISSIONING

7.1 Where a Functional Unit needs to be re-commissioned by the Tenant following Rectification, the Tenant’s Representative shall determine, prior to commencement of any re-commissioning activities, that he/she is satisfied that Rectification has been properly carried out. The Tenant’s Representative may delegate this task to any clinical practitioner or the senior nurse in the relevant Functional Unit and, if re-commissioning activities commence, it shall be assumed that the necessary determination has been made. If it does not then prove possible successfully to complete the re-commissioning of the relevant Functional Unit, the Landlord shall, notwithstanding, still be deemed to have carried out Rectification successfully.

7.2 Paragraph 7.1 shall not affect the right of the Tenant to issue, in accordance with the Service Specification, an Ad-Hoc Service Request for the provision of cleaning or other Services by the Landlord in connection with any re-commissioning activities carried out by the Tenant.

8 [REMEDIAL PERIODS

8.1 On the occurrence of a Performance Failure or an Unavailability Event a period shall apply, within which the Landlord shall demonstrate to the reasonable satisfaction of the Tenant’s Representative that it has remedied the Performance Failure or Unavailability Event, or where the period is marked with an asterisk in Schedule 9 (Service Specifications), has taken appropriate steps to prevent the recurrence of the Performance Failure. This period is referred to below as the “Remedial Period”. The length of a Remedial Period shall be:

8.1.1 as stated in Schedule 978 in respect of the relevant Performance Failure;

8.1.2 where no Remedial Period is stated in Schedule 9 in respect of a Fault that has a Rectification Time, the Remedial Period shall be of the same duration as the Rectification Time; and

8.1.3 in the case of an Unavailability Event, the Remedial Period shall be four (4) hours.

8.2 If before the expiry of the Remedial Period the Landlord demonstrates to the reasonable satisfaction of the Tenant’s Representative that it has remedied the Performance Failure or Unavailability Event or, as applicable, has taken appropriate steps to prevent the recurrence of the Performance Failure, no further Deduction shall be made in respect of the Performance Failure or Unavailability Event. Otherwise a further Deduction shall be made of the appropriate amount (as described in paragraph 8.1.1 above) and a further Remedial Period or Periods of equal duration shall apply (and, if appropriate, Deductions shall continue to be made) until such time as either:

78 The Tenant needs to ensure that this is indeed included in Schedule 9.


8.2.1 the Landlord shall have demonstrated to the reasonable satisfaction of the Tenant’s Representative that it has remedied the Performance Failure or Unavailability Event or, as applicable, has taken appropriate steps to prevent the recurrence of the Performance Failure; or

8.2.2 the Tenant’s Representative shall have notified the Landlord that the Tenant no longer requires the relevant Service.

9 TEMPORARY REPAIRS

9.1 If the Landlord informs the Tenant that it is unable to Rectify a Fault relating to the Service Specification for Estates Services within the specified Rectification Time due to the need for specialised materials or personnel that are not, and cannot reasonably be expected to be, immediately available at the Facility but that a Temporary Repair can be effected:

9.1.1 The Tenant’s Representative shall permit the Landlord. to carry out the Temporary Repair proposed by The Landlord unless the Tenant’s Representative, acting reasonably, considers that, if the Temporary Repair proposed by the Landlord is carried out, the use of the relevant Functional Part will (in the case of a Functional Part which has a Prescribed Health Function) not be in accordance with generally accepted clinical practices or (in the case of a Functional Part which has a Prescribed Operational Function) not be in accordance with Good Industry Practice; and

9.1.2 Where a Temporary Repair is permitted, a deadline by which a Permanent Repair must be made shall be set, giving the Landlord a reasonable period within which to carry out the Permanent Repair (the “Permanent Repair Deadline”). Both the Tenant and the Landlord shall act reasonably in seeking to agree what the deadline should be.

9.2 During any period beginning at the time when a Temporary Repair is permitted and ending at the earlier of (a) the time at which a Permanent Repair is successfully completed and (b) the Permanent Repair Deadline, the Availability Conditions shall be replaced by the Minimum Agreed Availability Conditions for the purposes of assessing if the relevant Functional Part is Unavailable.

9.3 Subject to paragraph 6.7 above, if the agreed Temporary Repair is effected within the specified Rectification Time (as referred to in paragraph 9.1) and the Permanent Repair is effected by no later than the Permanent Repair Deadline no Performance Failure or Unavailability Event will occur, and no Deduction may be made, in respect of the Fault.

9.4 If the Temporary Repair is not carried out within the specified Rectification Time, a Performance Failure or, as the case may be, Unavailability Event shall be deemed to occur and the following provisions shall apply:

9.4.1 There shall be a further period (an “Additional Period”) beginning on the expiry of the Rectification Time and of a duration equal to that of the Rectification Time. The Landlord shall ensure that the Temporary Repair is successfully carried out prior to the expiry of the Additional Period. If the Temporary Repair is not successfully carried out by the Landlord before the expiry of the Additional Period, a further Performance Failure


or, as the case may be, Unavailability Event shall occur and a further Additional Period shall commence.

9.4.2 Unless the Temporary Repair has been successfully carried out by the Landlord prior to the expiry of each Additional Period then, subject to paragraph 9.4.3 below, a further Performance Failure or, as the case may be, Unavailability Event shall occur until such time as the Temporary Repair shall have been successfully completed.

9.4.3 If the Temporary Repair is not successfully carried out by the Landlord prior to the Permanent Repair Deadline, and no Permanent Repair has been successfully carried out, the right for the Landlord to carry out a Temporary Repair pursuant to this paragraph 9 shall cease and paragraph 9.5 below shall apply.

9.5 If the Permanent Repair is not carried out by the Permanent Repair Deadline, a Performance Failure or, as the case may be, an Unavailability Event shall be deemed to occur and the provisions of paragraphs 6.3 and 8 above shall apply.

10 REPEATED RECTIFICATION

Notwithstanding that the Landlord completes a Rectification in respect of a Fault within the relevant Rectification Time:-

10.1 There shall be deemed to be a Minor Performance Failure on the occurrence of:

10.1.1 The third such Fault that arises during the Contract Day; and/or

10.1.2 The fourth such Fault which occurs in any consecutive seven day period

PROVIDED THAT:

(a) each such Fault is in connection with the same service standard set out in Schedule 9 (Service Specification) and occurs in the same Functional Area; and

(b) whether the Fault occur in the same Functional Unit or in different Functional Units within the same Functional Area there is good reason to believe that the root cause of each Fault is the same.

10.2 If the same such Fault occurs more than three times in an Contract Day or more than four times in any consecutive seven day period, a Minor Performance Failure shall be deemed to have occurred in respect of each and every Fault which has occurred during the Contract Day or during the consecutive seven day period (as the case may be).

11 EFFECT OF UNAVAILABILITY ON OTHER DEDUCTIONS

Until an Unavailability Event has been Rectified, the Deduction in respect of the Unavailability Event shall be the only Deduction available to be made in respect of any Functional Unit in which the Unavailability Event has occurred. No further Deduction shall be made for any subsequent Performance Failure which may occur in the relevant Functional Unit during the period until Rectification has been completed. PROVIDED THAT where the Tenant continues to use a Functional Unit which is affected by an Unavailability Event for the same, or a comparable Prescribed Health Function or Prescribed Operational


Function (as appropriate), the Landlord shall be obliged to continue to provide in respect of that Functional Unit such of the Services as are normally provided as part of the day to day functioning of that Functional Unit.79

12 TEMPORARY ALTERNATIVE ACCOMMODATION

12.1 If an Unavailability Event occurs the Landlord may offer the Tenant Temporary Alternative Accommodation by written notice to the Tenant within [10] Business Days80 from the commencement of the relevant Fault.

12.2 The Temporary Alternative Accommodation shall:-

12.2.1 comply with:

(a) the Accessibility Condition;

(b) the Safety Condition;

(c) the Use Condition;

(d) the Prescribed Health Function Condition;

(e) the Prescribed Operational Function Condition;

applicable to any Functional Part which is affected by the relevant Unavailability Event for which Temporary Alternative Accommodation is offered;

12.2.2 be a temporary alternative having regard to the facts and the circumstances in existence;

12.2.3 be upon terms which are not materially different from the terms upon which the Tenant occupied the affected Functional Part;

12.2.4 be accommodation for which the Tenant is not already paying within the Lease Payment or other terms of the Lease;

12.2.5 be supplied with the Services to the standards set out in the Service Specifications which the Landlord would under normal circumstances be providing within the Unavailable Functional Part;

12.2.6 not involve the Tenant incurring any additional cost or charges in respect of the Temporary Alternative Accommodation including, without limitation, the reasonable costs of any relocation to and from the Temporary Alternative Accommodation;81 and

12.2.7 be in reasonable proximity to the Facilities for which it is a temporary replacement, shall be reasonably accessible by public and private transport and shall have adequate parking facilities.

79 This might include, for example, cleaning.80 The Tenant will need to consider what an appropriate period would be. Although the Landlord may wish to be given

time to seek alternatives the Tenant may wish to insist on a short period in view of the need to make alternative arrangements for patient care itself if no proposals are forthcoming from the Landlord.

81 For the avoidance of doubt any and all relocation costs shall be borne by the Landlord.


12.3 The written notice sent by the Landlord to the Tenant pursuant to paragraph 12.1 above shall:-

12.3.1 describe the Temporary Alternative Accommodation;

12.3.2 invite the Tenant to inspect the Temporary Alternative Accommodation and shall give the Tenant reasonable notice of a time and a date when it may do so;

12.3.3 set out its proposals regarding the timing and co-ordination of relocation to the Temporary Alternative Accommodation;

12.3.4 specify the date (agreed by the Tenant before the submission of the written notice) by which the Landlord. reasonably expects the Tenant to be able to relocate back to the relevant Functional Part (the "Return Date"); and

12.3.5 describe the terms upon which the Tenant shall be entitled to occupy such Temporary Alternative Accommodation including the proposed division of such accommodation into Functional Units and Functional Areas and the proposed weighting to be attributed to them for the purposes of the operation of the Payment Mechanism. The weighting allocated to Temporary Alternative Accommodation shall, taken as a whole, be equivalent to the weighting of the accommodation it replaces82

12.4 If it requires to inspect the Temporary Alternative Accommodation the Tenant shall do so within 5 Business Days of receipt of the notice referred to in paragraph 12.1 above. The Tenant shall notify the Landlord in writing of its acceptance or refusal of the proposed Temporary Alternative Accommodation within 24 hours of its inspection of the same or, if the Tenant has elected not to carry out an inspection, within 5 Business Days of receipt of the notice referred to in paragraph 12.1 above. The Tenant shall act reasonably when deciding to accept or refuse any proposed Temporary Alternative Accommodation.

12.5 If the Tenant accepts the offer of Temporary Alternative Accommodation then, without affecting the Tenant’s remedial rights under clause 36 of this Lease, the Tenant shall not be entitled to vacate the Temporary Alternative Accommodation until the earlier of the Return Date and the date on which the Tenant is entitled and able to return to and use the Functional Part in accordance with the agreed programme for relocation and re-commissioning referred to in paragraph 12.9 below.

12.6 For the avoidance of doubt, the Tenant’s rights under clause 36 (Monitoring of Performance) of this Lease shall not be affected by the acceptance by the Tenant of the Temporary Alternative Accommodation.

12.7 If the Tenant accepts the Landlord’s offer of Temporary Alternative Accommodation, no further Deductions shall be made in respect of a Functional Part vacated by the Tenant while the Temporary Alternative Accommodation replacing that Functional Part is being used by the Tenant.

82 The weighting for the relevant Functional Part of the Temporary Alternative Accommodation should be as close as possible to the Functional Part which it replaces and so that the overall weighting for the Temporary Alternative Accommodation is equivalent to the accommodation which it replaces.


12.8 The Tenant shall be entitled to make Deductions in respect of any Performance Failure or Unavailability Event which occurs in the Temporary Alternative Accommodation as if the Temporary Alternative Accommodation was the Functional Part which it replaced and any Deduction in respect of an Unavailability Event shall be calculated using the weighting attributed pursuant to paragraph 12.3.5 of this Part C.

12.9 When the Landlord has completed the required works to enable the Tenant to return to the Functional Part the Tenant’s Representative shall confirm that the Availability Conditions for the Functional Part are met and the Tenant’s Representative and the Landlord shall agree a relocation programme to return to the Functional Part and any necessary period for re-commissioning.

12.10 Where the Tenant has accepted the proposed Temporary Alternative Accommodation pursuant to paragraph 12.4, in the event that the Landlord fails to complete the works to enable the Tenant to return to the relevant Functional Part on the Return Date the Tenant may, in its absolute discretion, vacate the Temporary Alternative Accommodation at any time after the Return Date or remain in occupation. In such circumstances:

12.10.1 Where the Tenant, in its discretion, remains in occupation of the Temporary Alternative Accommodation following the Return Date the Temporary Alternative Accommodation shall be deemed to be Unavailable with effect from the Return Date and the Tenant shall levy 50% of the Deduction which would have been levied in respect of that Unavailability Event for each Contract Day on which the Tenant occupies the Temporary Alternative Accommodation thereafter until the date on which the Unavailability Event referred to in paragraph 12.2.1 above has been rectified and the Tenant is able to resume its use of the Functional Part.

12.10.2 Where the Tenant, in its discretion, vacates the Temporary Alternative Accommodation following the Return Date, the Temporary Alternative Accommodation shall be deemed to be Unavailable on each Contract Day on which the Tenant is not in occupation of the Temporary Alternative Accommodation until the date on which the Unavailability Event referred to in paragraph 12.2.1 above has been rectified and the Tenant is able to resume its use of the Functional Part.

12.11 The Tenant shall specify a date (“the Long Stop Return Date”), being a date no earlier than the Return Date, by which the Rectification shall be completed and if the Landlord fails to complete the Rectification of the Functional Part for which the Temporary Alternative Accommodation is a replacement by the Long Stop Return Date the following shall apply:

12.11.1 The Tenant may (without prejudice to any express rights of the Tenant under this Lease) take such steps as it considers to be appropriate (either itself or by engaging others to take such steps) to restore any Functional Part for which the Temporary Alternative Accommodation is a replacement to a condition which satisfies in all respects the requirements of the Service Specification.

12.11.2 The Landlord shall reimburse the Tenant for all reasonable costs, losses, expenses or damages incurred by the Tenant in relation to taking the steps, or engaging others to take the steps, referred to in paragraph


12.11.1 above and the Tenant shall be entitled to deduct any such amount from any amounts payable to the Landlord under the provisions of this Lease.


SCHEDULE 10

Part D: Review of Weightings

1 ANNUAL REVIEW

1.1 The identification of Functional Areas, Functional Units, Rectification Times, Remedial Periods, Area Weighting Percentages, Unit Weighting Percentages and the amount of Deductions for each category of Performance Failure shall be reviewed by the Tenant and the Landlord at any time if requested by either party but in any event shall be reviewed at least once in every Contract Year. The Tenant and the Landlord shall act reasonably and diligently in carrying out the review. For the avoidance of doubt, the parties intend that any changes made as a result of such a review shall not alter the overall risk profile of the relevant Service or the likely magnitude of Deductions. Where proposed changes would result in any such alteration, the matter shall be deemed to be a Service Variation and Schedule 12 shall apply.

1.2 The Tenant and the Landlord may in respect of each matter the subject of the review either:-

1.2.1 agree that the status of the relevant matter shall continue to apply unchanged in the Contract Year immediately following the review; or

1.2.2 agree adjustments to the relevant matter to take effect in the Contract Year immediately following the review.

1.3 Any agreed adjustment pursuant to a review shall be effective from the commencement of the Contract Year immediately following the relevant review carried out in accordance with paragraph 1.1 of this Part D.


SCHEDULE 10

Part E: Failure by the Landlord to Monitor or Report

1 Subject to paragraphs 2 to 5 inclusive of this Part E, the Performance Monitoring Report produced by the Landlord for any Contract Month shall be the source of the factual information regarding the performance of the Services for the relevant Contract Month for the purposes of calculating the relevant Lease Payment and the number of Warning Notices awarded.

2 If there shall be any error or omission in the Performance Monitoring Report for any Contract Month the Landlord. and the Tenant shall agree the amendment to the Performance Monitoring Report or, failing agreement within [10 ] days of notification of the error or omission which shall not be made more than 2 calendar months following the relevant Performance Monitoring Report except in the circumstances referred to in paragraph 7 of this Part E either party may refer the matter to the Dispute Resolution Procedure.

3 If the Landlord. fails to monitor or accurately to report a Fault, a Performance Failure, an Unavailability Event or an Ad-Hoc Service Request83 then, without prejudice to the Deduction to be made in respect of the relevant Performance Failure or Unavailability Event (if any), the failure to monitor or report the Fault, Performance Failure, Unavailability Event or Ad-Hoc Service Request shall be deemed to be a new Minor Performance Failure, unless the circumstances set out in paragraph 7 of this Part E apply, in which case there shall be deemed to be a new Major Performance Failure.

4 Where the Landlord fails to monitor or accurately to report a Performance Failure or an Unavailability Event in the circumstances referred to in paragraph 7 of this Part E, the Tenant shall be entitled to require that the Landlord shall make available to the Tenant for inspection such of the records relating to the delivery of the Services as the Tenant may specify.84

5 The Landlord shall upon submission of a valid invoice pay to the Tenant a sum equal to the costs reasonably incurred by the Tenant in carrying out any inspection and investigation of records made available pursuant to paragraph 4 above.

6 In the event that the Tenant’s inspection or investigation of records made available pursuant to paragraph 4 above reveals any further matters of the type referred to in paragraphs 2 and 3 above, those matters shall be dealt with in accordance with paragraph 2 or 3 as appropriate and the Tenant shall, in addition, be entitled to make Deductions in respect of any Performance Failures or Unavailability Events in the manner prescribed in Part C of this Schedule. Any such Deductions shall be made from the Lease Payment payable in respect of the Contract Month in which the relevant matters were revealed by the Tenant’s investigations or, to the extent that the Tenant is unable to make any further deductions from the Lease Payment in respect of that Contract Month by virtue of paragraph 1.2 of Part C of this Schedule, may be carried forward and deducted from Lease Payments due in respect of subsequent Contract Months.85

7 For the purposes of paragraphs 2, 3, and 4 of this Part E the relevant circumstances are:-

83 Tenants should check that their Service Specifications do in fact contain an obligation to monitor and record Ad-Hoc Service Requests.

84 Tenants should ensure that Schedule 9 includes a reference to Performance Monitoring and Helpdesk records which is adequate to permit the Tenant to enforce its rights under this paragraph.

85 The Tenant should not be disadvantaged by the timing of the discovery of omissions by the Landlord.


7.1 Fraudulent action or inaction; or

7.2 Deliberate misrepresentation; or

7.3 Gross misconduct or incompetence in each case on the part of the Landlord or a Landlord Party.

8 The provisions of this Part E shall be without prejudice to any rights of the Tenant in this Lease pursuant to Clause 36 (Monitoring of Performance) and Clause 39A (Performance and Sub-Contractors).


SCHEDULE 10

Part F: Volume Adjustments86

1 VOLUME ADJUSTMENT

1.1 The Total Volume Adjustment in respect of any Contract Month87 shall be calculated in accordance with the following formula:

TVA = {VAW1 + VAW2 + VAW3}

where:

1.1.1 TVA is the Total Volume Adjustment

1.1.2 VAW1 is the price adjustment (if any) made in respect of the volume of Non Clinical Waste disposed of in accordance with the Service Specification in respect of the [domestics service] calculated in accordance with paragraph 1.2 of this Part F;

1.1.3 VAW2 is the price adjustment (if any) made in respect of the volume of Clinical Waste disposed of in accordance with the Service Specification in respect of the [domestics service] calculated in accordance with paragraph 1.3 of this Part F; and

1.1.4 VAW3 is the price adjustment (if any) made in respect of the volume of Waste other than Clinical Waste and Non Clinical Waste disposed of in accordance with the Service Specification in respect of the [domestics service] calculated in accordance with paragraph 1.4 of this Part F.

1.2 Non-Clinical Waste Price Adjustment

1.2.1 For the purposes of paragraph 1.1.1 the price adjustment in respect of the volume of Non-Clinical Waste disposed of in accordance with the Service Specification for the [domestics service] in any Contract Month ("VAW1") shall be calculated in accordance with the following formula:

NYNM x IWU - AWU x

RPIRPI x IWPVAW

o

n 1

Where:

(a) IWP is the Non-Clinical Waste price per tonne as set out in Appendix E;

(b) IWU is the volume of Non-Clinical Waste for disposal included in the Lease Payment as set out in Appendix E;

86 To be used where the Landlord is required to provide relevant services – eg disposal of Clinical Waste.87 It is assumed that adjustments will be made monthly in arrears. It may be more convenient to make adjustments on

an annual basis, unless this would result in significant cashflow disadvantages for the Landlord.



(d) RPIo is the value of the Retail Prices Index published or determined with respect to the month in which the Base Date falls;

(e) AWU is the volume of Non-Clinical Waste disposed of by the Tenant in the relevant Contract Month which met the standard specified in the Service Specification for the [domestics service];




1.3 Clinical Waste Price Adjustment

1.3.1 For the purposes of paragraph 1.1.1 the price adjustment in respect of the volume of Clinical Waste disposed of in accordance with the Service Specification for the [domestic service] in any Contract Month ("VAW2") shall be calculated in accordance with the following formula:

NYNM x IWU - AWU x

RPIRPI x IWPVAW

o

n 2

Where:

(a) IWP is the Clinical Waste price per tonne as set out in Appendix E;

(b) IWU is the volume of Clinical Waste for disposal included in the Lease Payment as set out in Appendix E;



(e) AWU is the volume of Clinical Waste disposed of by the Tenant in the relevant Contract Month which met the standard specified in the Service Specification for the [domestics service];





1.4 Other Waste Price Adjustment

1.4.1 For the purposes of paragraph 1.1.1 the price adjustment in respect of the volume of Other Waste disposed of in accordance with the Service Specification for the [domestics service] in any Contract Month ("VAW3") shall be calculated in accordance with the following formula:

NYNM x IWU - AWU x

RPIRPI x IWPVAW

o

n 3

Where:

(a) IWP is the Other Waste price per tonne as set out in Appendix E;

(b) IWU is the volume of Other Waste for disposal included in the Lease Payment as set out in Appendix E;



(e) AWU is the volume of Other Waste disposed of by the Trust in the relevant Contract Month which met the standard specified in the Service Specification for the [domestics service];





SCHEDULE 10

Part G: Service Failure PointsNot used.


SCHEDULE 10

Part H: Energy88

1 [INTERPRETATION89

1.1 For the purposes of Part H of this Schedule 10, the following expressions shall have the respective meanings set out below:

Adjusted Annual Energy Target shall have the meaning given to it in paragraph 2.3.1 of Part H of this Schedule 10;

Annual Energy Target means the total amount of Energy which it is expected will be used at the Facilities and is calculated in accordance with paragraph 2.1.7 of Part H, as adjusted in accordance with paragraph 2.2 of Part H;

Annual Review Date means the third and every subsequent anniversary of the commencement of each Initial Period;90

Average Unit Cost means the average cost to the Tenant of each Unit of Energy purchased for the Premises during the relevant Energy Year, calculated in accordance with paragraph 2.3.8 of Part H;

Baseload has in respect of the Facilities the meaning set out in paragraph 2.1.5 of Part H;

Baseload and Slope Review Date means a date on which the Baseload and Slope are to be reviewed pursuant to paragraph 2.2.4 of Part H, being the date which is the fifth anniversary of the expiry of the Initial Period and every fifth anniversary thereafter until the Expiry Date or the Termination Date, as the case may be;

Baseload and Slope Review Period means the 60 calendar months ending on a Baseload and Slope Review Date;

CIBSE means the Chartered Institution of Building Services Engineers;

Energy means electricity, gas, oil, coal and any

88 The commercial principles that have led to the drafting of this part of Schedule 10 are those set out in ENCODE, as revised and published by DH Estates in January 2006. A fuller explanation is contained in the “Energy Principles” paper first published in November 2004. An updated copy of that paper appears on the Department’s website at www.dh.gov.uk/pfi.

89 It shall be for the Tenant to decide whether there are benefits in including the energy painshare gainshare provisions in this Part H on a scheme specific basis.

90 Tenants that are likely to be affected by the carbon emissions requirements of the GGETS Regulations may wish to consider aligning the Annual Review Date with the beginning of the Scheme Year. Tenants should note the definition of Scheme Year is set by the GGETS Regulations.


other fossil-based fuel;

Energy Consumption means the total number of Units of Energy actually consumed at the Facilities during a relevant period;

Energy Thresholds means the thresholds set out in paragraphs 2.3.3 and 2.3.4 of Part H;

Energy Year means the period of 12 months beginning on the day after the expiry of the Initial Period and ending on the first Annual Review Date and each subsequent period of 12 months beginning on the day after an Annual Review Date;91

Gainshare Adjustment means the adjustment made in accordance with paragraphs 2.3.6 and 2.3.8 of Part H of this Schedule;

Gigajoule means the international unit of energy being 1 Joule multiplied by a factor of 10 to the power of 9;

Heating Degree Days means, in respect of each calendar month, the figure published by DH Estates and Facilities showing the extent to which the average outdoor temperature in [insert nearest geographical location where measurement takes place] was less than a mean temperature of +18.5 degrees Celsius;

Initial Period means the period of two years beginning on the first day of the first full calendar month immediately after expiry of the 3 months following the Actual Completion Date;92

Painshare Adjustment means the adjustment made in accordance with paragraphs 2.3.7 and 2.3.7 of Part H of this schedule;

Slope shall have the meaning given to it in paragraph 2.1.6 of Part H of this Schedule;

Unit of Energy means one Gigajoule;

20 Year Average means at the relevant date, the most recently available figure published by DH

91 If the Tenant chooses to adopt an Annual Review Date that reflects the beginning of a Scheme Year, as suggested above, this definition will not be necessary. References can be replaced with references to “Scheme Year”.

92 The timing of the start of the Initial Period is defined in this way to capture a date from which the Facilities are likely to be fully operational. There is not much point collecting data that will be used to set targets for subsequent years unless the data is likely to be representative. The Tenant may amend the definition dependent upon the Tenant’s commissioning programme.


Estates and Facilities showing the number of Heating Degree Days per annum in the [insert details of nearest geographical area] area calculated as an average over the immediately preceding 20 years.

1.2 For the avoidance of doubt, where paragraph 1.1 above incorporates terms defined in the GGETS Regulations, the relevant defined terms in the GGETS Regulations do not use capital letters at the beginning of each word. The meaning is the same when used in parts H of this Schedule, even though capital letters are used for ease of reference.

2 ENERGY PAYMENT93

2.1 Calculation of Annual Energy Target

2.1.1 Both before and during the Initial Period there shall be no Annual Energy Target for the Facilities, but the consumption of Energy during the Initial Period shall be measured in accordance with paragraph 2.5.

2.1.2 In respect of each Energy Year following the expiry of the Initial Period, the remaining provisions of this paragraph 2.1 shall apply for the purposes of calculating the Annual Energy Target applicable to the Facilities.

2.1.3 By no later than 1 month after the expiry of the Initial Period, the Landlord shall provide to the Tenant a certificate showing:

(a) the amount of Energy Consumption in each calendar month during the Initial Period, expressed as a number of Units of Energy and measured in accordance with paragraph 2.5.1; and

(b) the number of Heating Degree Days in respect of each of those calendar months.

2.1.4 The parties shall, in respect of the Facilities, plot a graph using the information referred to in paragraph 2.1.3 in the following manner:

(a) the vertical axis of the graph shall show the total amount of Energy Consumption during the relevant month and the horizontal axis shall show the number of Heating Degree Days in the relevant month;

(b) for each of the 24 months in the Initial Period, a point shall be plotted on the graph for Energy Consumption for that month against the number of Heating Degree Days in that month;

(c) when all points on the graph have been plotted in accordance with paragraph 2.1.4(b), a straight line shall be drawn, which most closely corresponds to each of the points plotted on the graph, using the arithmetical technique of linear regression analysis.

93 The DH Energy Principles Paper provides guidance and background information on this topic.


2.1.5 The straight line referred to in paragraph 2.1.4(c) shall be projected until it crosses the vertical axis on the graph. The number of Units of Energy represented by the point at which the straight line crosses the vertical axis of the graph shall be the "Baseload", that is to say, the number of Units of Energy which is consumed each month at the Facilities, regardless of the number of Heating Degree Days in that month.

2.1.6 The parties shall calculate the slope of the straight line referred to in paragraph 2.1.4(c), expressed in terms of the number of Units of Energy used per Heating Degree Day (“the Slope”). This, together with the Baseload, shall be used to calculate each Annual Energy Target until such time as the Baseload and Slope may be adjusted in accordance with paragraph 2.2.4.

2.1.7 Each Annual Energy Target shall be calculated using the following formula:

Y = MX + C

Where:

(a) Y is the Annual Energy Target;

(b) M is the Slope and is expressed as a number of Units of Energy used per Heating Degree Day, calculated in accordance with paragraph 2.1.6;

(c) X is the number of Heating Degree Days per annum, being the most recently published 20 Year Average as at the date of calculation of the Annual Energy Target; and

(d) C is the Baseload used each month, calculated in accordance with paragraph 2.1.5 above, multiplied by a factor of 12.

2.1.8 The Annual Energy Target calculated in accordance with the provisions of this paragraph 2.1 shall be the target for Energy Consumption for the Facilities during the first Energy Year and each and every subsequent year until expiry or earlier termination of this Lease.

2.1.9 By way of indication only, an example of the graph which the parties intend should be produced in accordance with this paragraph 2 is set out in Appendix F to this Schedule 10.

2.2 Adjustments to the Annual Energy Target

Adjustments at Annual Review Date

2.2.1 Subject to paragraph 2.2.2, with effect from each Annual Review Date the Annual Energy Target shall be recalculated using the formula set out in paragraph 2.1.7, using, for the purposes of X, the most recently published 20 Year Average as at the Annual Review Date.

2.2.2 For the purposes of the recalculation referred to in paragraph 2.2.1 above, C and M will be the figures representing the revised Baseload and


Slope respectively at the time of the relevant Annual Review Date, as reviewed (where appropriate) in accordance with the following provisions of this paragraph 2.2.

Adjustments of Baseload and Slope

2.2.3 By no later than one month after the date on which the figure for Heating Degree Days in respect of the final month of the Baseload and Slope Review Period for the Facilities is published, the Landlord shall provide to the Tenant a certificate showing:

(a) the Energy Consumption in each calendar month during the Baseload and Slope Review Period expressed as a number of Units of Energy and measured in accordance with paragraph 2.5.1; and

(b) the number of Heating Degree Days in respect of each of those calendar months.

2.2.4 Using the data referred to in paragraph 2.2.3 and taking account of such other matters relating to and/or affecting the Baseload and Slope as either party may table and following the same procedure as that set out in paragraphs 2.1.4 to 2.1.6 inclusive, the parties shall re-calculate the Baseload and Slope. The recalculated factors of C and M shall be used for the purposes of calculating the Annual Energy Target, and any revisions to the Annual Energy Target, with effect from the Baseload and Slope Review Date and on each subsequent Annual Review Date until the next Baseload and Slope Review Date.

2.2.5 The Landlord or the Tenant may each, on one occasion only in each five year period before a Baseload and Slope Review Date, refer the Baseload and Slope to an independent expert (being an appropriately qualified representative of CIBSE) for recalculation in accordance with the principles and methodology of this paragraph 2.2 (provided always that the independent expert may also take into account any other factors he considers relevant). In such a case, the commissioning party shall bear the costs of the appointment and the Landlord shall make available such data as reasonably required by the Tenant or independent expert as soon as reasonably practical following such request. Any recalculated Baseload and Slope derived by such expert pursuant to such referral shall be used to recalculate the Annual Energy Target in accordance with paragraph 2.2.1 and such recalculated Baseload and Slope shall apply until the next Baseload and Slope Review Date.

Adjustments for Qualifying Variations

2.2.6 The Annual Energy Target shall also be adjusted, if appropriate, as a result of a Qualifying Variation.

2.3 Comparing Actual Consumption of Energy with Target

2.3.1 By no later than 10 Business Days after either the submission by the Landlord of a certificate referred to in paragraph 2.5.1, in respect of the month in which the Annual Review Date occurs, or the publication of the


Heating Degree Days for the relevant month, whichever is the later to occur, the parties shall:

(a) make an adjustment to the Annual Energy Target (“the Adjusted Annual Energy Target”) to reflect any variance between the number of Heating Degree Days in the Energy Year ending on the Annual Review Date and the 20 Year Average on which the Annual Energy Target for that year was based, and

(b) calculate the amount by which Energy Consumption during the Energy Year ending on the Annual Review Date is greater or less than the Annual Energy Target, as adjusted under paragraph 2.3.1 (a) above.

2.3.2 If Energy Consumption is not less than 97% and not greater than 103% of the Adjusted Annual Energy Target, no adjustment to Lease Payments shall be made.

Subject to paragraph 2.3.9 if Energy Consumption is less than 97% of the Adjusted Annual Energy Target, a Gainshare Adjustment shall become due to Lease Payments, calculated in accordance with Paragraphs 2.3.6 and 2.3.8.

Subject to Clause 2.3.9 if Energy Consumption is greater than 103% of the Adjusted Annual Energy Target, a Painshare Adjustment shall become due to Lease Payments, calculated in accordance with paragraphs 2.3.7 and 2.3.8.

If Energy Consumption is identified at any time as less than 87% or greater than 113% of the Adjusted Annual Energy Target, then the variance shall be regarded as extraordinary and deserving of investigation. An independent expert (being an appropriately qualified representative of CIBSE) shall be commissioned at the joint cost of the Tenant and the Landlord to assess and report on the cause of the variance and assess the responsibility of the Landlord and the Tenant for that element of the energy consumption which is less than 87% or greater than 113% of the Adjusted Annual Energy Target and to apportion (as between the Tenant and the Landlord) the appropriate share which should be borne of any excess costs or savings arising from such variance being less than 87% or greater than 113% of the Adjusted Annual Energy Target. The independent expert may be invited to consider making cost-effective recommendations for improving the efficiency of energy usage. The Tenant and the Landlord shall be bound by the findings of the independent expert pursuant to this paragraph 2.3.5 and shall use reasonable endeavours to implement any additional recommendations that the independent expert may choose to make.

Calculation of Gainshare Adjustment

2.3.3 A Gainshare Adjustment shall be calculated in accordance with the following formula:

GS = 0.5S x AUC

where:


(a) GS is the Gainshare Adjustment;

(b) S is the saving in energy, being the number of Units by which the volume of Energy Consumption is less than 97% of the Adjusted Annual Energy Target; and

(c) AUC is the Average Unit Cost.

Calculation of Painshare Adjustment

2.3.4 A Painshare Adjustment shall be calculated in accordance with the following formula:

PS = 0.5E x AUC

where:

(a) PS is the Painshare Adjustment;

(b) E is the excess energy consumption, being the number of Units by which the volume of Energy Consumption is greater than 103% of the Adjusted Annual Energy Target; and

(c) AUC is the Average Unit Cost.

2.3.5 The Average Unit Cost shall be calculated in accordance with the following formula:

U

USSCAUC

Where:

(a) AUC means the Average Unit Cost

(b) SC means the aggregate of all standing charges, levies, taxes and all other sums invoiced to the Tenant by its suppliers in respect of the supply of Energy during the relevant Energy Year (excluding VAT to the extent it is recoverable by the Tenant), being sums which do not vary solely according to the amount of Units of Energy actually supplied;

(c) US means the aggregate of all sums invoiced to the Tenant by its

suppliers (or charged to the Tenant by the Landlord as Utilities Costs) in respect of the supply of Units of Energy during the relevant Energy Year, being, in respect of each form of Energy, a price per Unit multiplied by the number of Units of that type of Energy actually supplied but excluding VAT to the extent it is recoverable by the Tenant and any sums taken into account in “SC” above; and


(d) U means the aggregate number of Units of Energy actually consumed in respect of the Facilities in the course of the relevant Energy Year.

2.3.6 Where, pursuant to clause 10.4 of this Lease, it is determined that the Facilities94 have not, as a consequence of the design and construction of the Facilities by the Landlord, satisfied the Tenant’s Requirements in respect of thermal and energy efficiency, and the solution determined pursuant to that clause is the payment of compensation by the Landlord in respect of the additional consumption of Energy which is expected to result:

(a) the amount of any such payment; and

(b) the equivalent number of Units of Energy which that payment represents, based on the Average Unit Cost,

shall, to avoid double counting, be disregarded for the purposes of calculating if any Gainshare Adjustment or Painshare Adjustment arises pursuant to this paragraph 2 (but for the avoidance of doubt all Energy Consumption shall be taken into account for the purposes of calculating the Average Unit Cost).

2.3.7 Subject to paragraph 2.3.9, where it is established in accordance with this paragraph 2.3 that a Gainshare Adjustment or a Painshare Adjustment arises pursuant to paragraphs 2.3.6 and 2.3.7, the relevant adjustment shall be given effect by way of (in the case of a Gainshare Adjustment) an increase to a Lease Payment equal to the amount of the Gainshare Adjustment or (in the case of a Painshare Adjustment) by way of a decrease to a Lease Payment equal to the amount of the Painshare Adjustment. In each case the relevant Lease Payment to be adjusted shall be that which is due in respect of the Contract Month in which it is established that the relevant adjustment is required. In the event that a relevant adjustment arises in respect of the final Contract Year, the adjustment shall be made to the final Lease Payment.95

2.3.8 The making of any Gainshare Adjustment or Painshare Adjustment shall not affect the Net Annual Payment for the purposes of the application of Indexation pursuant to this Lease.]

2.3.9 [The parties confirm that the Financial Model contains no provision for the cost of purchasing Energy.]

2.4 Supply of Energy

2.4.1 [The Tenant shall from time to time as required enter into contracts with Energy suppliers for the supply of Energy to the Facilities and shall be responsible for all payments due pursuant to such supply contracts.]96

94 It may be necessary to refer to different parts of the Facilities (eg new build/refurbished areas) if there is a different construction energy target for separate elements.

95 The Tenant may need to include provisions in their handback arrangements to ensure that they have a retention against which any adjustment can be set.

96 Insert for those schemes where the Tenant contracts for energy during the Operational Phase.


2.4.2 The Parties agree that it is important to maintain an appropriate balance between (i) on the one hand, ensuring the efficient use of Energy and minimising the level of emissions of greenhouse gases and harmful substances caused by the use of Energy (regardless of where the Energy is generated)97 and (ii) on the other hand, minimising the monetary cost of Energy usage. There are set out below the agreed proportions for usage of different types of Energy. In managing the usage of Energy at the Facilities the Landlord98 shall wherever practicable ensure that these agreed proportions are followed:Insert agreed proportions for usage of different types of energy

2.4.3 Subject to paragraph 2.4.4 below, if the proportions of different types of Energy actually consumed at the Facilities differ by more than 1% from the agreed proportions referred to above and such increase is the result of any change made by the Landlord to the agreed proportions of usage of Energy referred to in paragraph 2.4.2 above without the agreement of the Tenant’s Representative, any resultant increase in the cost to the Tenant of purchasing Energy and/or to the Landlord or the Designated Operator in purchasing Allowances (as defined in the Greenhouse Gas Emissions Trading Scheme Regulations 2012) shall be for the Landlord’s account and shall take effect by way of a reduction to Lease Payments.

2.4.4 Paragraph 2.4.3 shall not apply to the extent that a change in the proportions of Energy actually consumed results from a Qualifying Variation or from an increase or decrease from time to time in the Tenant’s requirements for usage of a particular type of energy.99

2.5 Measurement

2.5.1 Without prejudice to Schedule 9, the Landlord shall measure the amount of Energy consumption for the Facilities in accordance with Clauses 10.2 and 10.3 of this Lease in respect of each calendar month beginning at the start of the Initial Period and ending on the expiry or earlier termination of this Lease.

2.5.2 Without prejudice to Schedule 9 [or paragraph 2.2.3 of this Part H], the Landlord shall provide to the Tenant a summary of Energy Consumption in respect of each type of Energy at the Facilities, at the end of each month, in the form of a certificate. The first such month shall begin on the first day of the Initial Period.

97 For example, the use of electricity does not result in carbon emissions at the site itself, but, depending on the process, there may well be emissions at the location where the electricity is generated.

98 It is assumed for the purposes of this draft that the Landlord, as opposed to the Tenant, controls the management of energy. If that is not the case this clause will need to be amended.

99 For example because of an increase or decrease in the amount of plugged-in load. This will result in an increase in the use of electricity which may, in turn, change the overall percentage mix of fuel usage. This is clearly not something for which the Landlord can be responsible.


SCHEDULE 10

Part I: Utilities Costs and Pass Through Costs

1 UTILITIES COSTS

1.1 As part of the Lease Payment the Tenant will pay the Utilities Cost to the Landlord in each Contract Month in accordance with the provisions of this paragraph.

1.2 For each Contract Year, the Landlord shall purchase Utilities from the reputable supplier or suppliers which offer the [lowest cost] [best value for money] for such supplies to the Facilities. For the purposes of this paragraph, the price per unit of Energy,] water, sewerage and telecoms shall be agreed between the Landlord and the Tenant at the beginning of each Contract Year or other period as may be agreed and shall not exceed the price charged to the Landlord by the relevant supplier.

1.3 The Utilities Cost for each Contract Month shall [subject always to the provisions of Part H of this Schedule 10 in respect of Energy] comprise:

1.3.1 the price per unit of the relevant Utility charged to the Landlord multiplied by the number of units of the relevant Utility consumed at the Premises; and

1.3.2 the Tenant’s U Proportion of the cost to the Landlord of the Utilities consumed in the Common Parts; and

1.3.3 the Tenant’s U Proportion of any standing charges relating to any supply of the Utilities to the Facilities; and

1.3.4 any irrecoverable VAT paid by the Landlord in respect of the amounts referred to in paragraphs 1.3.1 – 1.3.3.

1.4 For the avoidance of doubt, the Tenant shall make no payment in respect of Utilities for any part of the Facilities in respect of any period prior to the Payment Commencement Date for [that part of] the Facilities.

1.5 Notwithstanding any provision of this Lease, the Landlord shall provide any records and information in relation to the provisions of this paragraph 1 on a fully transparent basis.

1.6 To the extent that any part of the Utilities Cost is attributable to any failure by the Landlord to comply with any provision of Schedule 9 then the Tenant may deduct such part and shall be obliged only to pay such part not attributable to such failure.

2 PASS THROUGH COSTS

2.1 As part of the Lease Payment the Tenant will pay the Pass Through Costs to the Landlord in each Contract Month in accordance with the provisions of this paragraph 2.

2.2 The Landlord shall notify the Tenant at the start of each Contract Year of:


2.2.1 the projected cost to the Landlord of complying with clause 20.1.1 of this Lease;

2.2.2 the projected cost to the Landlord of taking out the insurances described in paragraph 1 of part 2 of Schedule 8; and

2.2.3 the projected Ratings Cost and Insurance Cost for the forthcoming year taking into account paragraphs 2.4 and 2.5 below if relevant.

2.3 The Landlord shall promptly notify the Tenant in writing on becoming aware that the figures referred to in paragraph 6.2 above will be subject to change over the relevant Contract Year.

2.4 The Tenant shall not be liable for increases in the cost of insurance referred to in paragraph 2.2.2 above to the extent such increases are wholly or directly attributable to the acts or omissions of the Landlord. Where the Tenant believes this to be the case it shall notify the Landlord in writing and the parties shall use reasonable endeavours to agree an appropriate Insurance Cost failing which the matter shall be referred to the Dispute Resolution Procedure.

2.5 Where the Tenant believes the Landlord has not used reasonable endeavours to obtain the best value insurance available pursuant to clause 37.7 it shall notify the Landlord of the same in writing provided that best value insurance shall under no circumstances be insurance that would put the Landlord in breach of the Funding Agreements. The parties shall refer the matter to the Dispute Resolution Procedure and if it is agreed or determined that the Landlord did not act in accordance with clause 37.7 and the relevant insurance could have been procured at a lower cost elsewhere with a reputable insurer of good standing [(whilst complying with the obligation to obtain best value insurance)]100 that lower cost shall form the basis for calculating the Insurance Cost.

2.6 At the Tenant’s request the Landlord shall provide a detailed estimate of its reasonable and proper costs incurred in challenging any rating assessment which appears to be incorrect or excessive. If all the tenants at the Facilities agree, the Tenant may require the Landlord to challenge any such rating assessment and (to the extent there is no material deviation from the estimate which has been previously notified to and approved by the tenants) the Landlord shall be entitled to recover the Tenant’s PT Proportion of its reasonable costs properly incurred in responding to such a request apportioned between the Tenants (both in relation to a request made by the Tenant under this paragraph 2.6 and any request made by another tenant at the Facilities to which the Tenant agrees).

2.7 For the avoidance of doubt, the Tenant shall make no payment in respect of Pass Through Costs for any part of the Facilities in respect of any period prior to the Payment Commencement Date.

2.8 Notwithstanding any other provision of this Lease, the Landlord shall provide any records and information in relation to the provisions of this paragraph 2 on a fully transparent basis.

100 To be consistent with the Tenant’s options at paragraph 2.2 of this Schedule 10, Part I.


APPENDIX A101

Part 1: Prescribed Health Function

[Set out a description of the Prescribed Health Function of each Functional Unit that has a clinical function.]

Part 2: Prescribed Operational Function

[Set out here a description of the Prescribed Operational Function of each Functional Unit that has a non-clinical function.]

101 The description should be brief. No more than a single line should be necessary.


APPENDIX B – NOT USEDAPPENDIX C

Original Annual Prices for Value Tested Services in Base Date prices

Value Tested Services Total Service Cost £

[Domestics] X

[Security] X

Sub-Total XXX

Non-Value Tested Services

[Hard FM] X

(Tenant to insert Other Services) X

Sub-Total XXX

TOTAL XXX


APPENDIX D

[Tenant to insert a summary of Functional Units and Functional Areas]

Note:

The total Functional Area weightings should not exceed 200%.

The sum of Functional Unit weightings should not exceed 150%,.102

102 Please refer to the PFU guidance note on calibration for further information.


APPENDIX E

Waste at Base Date prices

Initial Annual Price for Non Clinical Waste £ (indexed save in relation to any year when there is an adjustment to the Base Date price in accordance with paragraph 3 of Part B)

Volume of Non Clinical Waste included in the Initial Annual Price

tonnes

Initial Annual Price for Clinical Waste £ (indexed save in relation to any year when there is an adjustment to the Base Date price in accordance with paragraph 3 of Part B)

Volume of Clinical Waste included in the Initial Annual Price

tonnes

Initial Annual Price for Other Waste £ (indexed save in relation to any year when there is an adjustment to the Base Date price in accordance with paragraph 3 of Part B)

Volume of Other Waste included in the Initial Annual Price

tonnes


APPENDIX F

Sample graph as referred to in Part H paragraph 2.1.9


Degree Day Analysis

y = 6.3601x + 2625R2 = 0.9223

0

1000

2000

3000

4000

5000

6000

0 50 100 150 200 250 300 350 400 450

Degree-Days

Gig

aJou

les

APPENDIX A103

Part 1: Prescribed Health Function

[Set out a description of the Prescribed Health Function of each Functional Area that has a clinical function.]

Part 2: Prescribed Operational Function

[Set out here a description of the Prescribed Operational Function of each Functional Area that has a non-clinical function.]

103 The description should be brief. No more than a single line should be necessary.


APPENDIX B

Not used.


APPENDIX C

Original Annual Prices for Value Tested Services in Base Date prices

Value Tested Services Total Service Cost £

[Domestics] X

[Security] X

Sub-Total XXX

Market Tested Hard FM Services

[Hard FM] X

(Tenant to insert Other Services) X

Sub-Total XXX

TOTAL XXX


APPENDIX D

[Tenant to insert a summary of Functional Areas]

Note:

The total Functional Area weightings should not exceed 100% 104

104 Please refer to CHP for guidance on calibration.


APPENDIX E

Waste at Base Date prices

Initial Annual Price for Non Clinical Waste £ (indexed save in relation to any year when there is an adjustment to the Base Date price in accordance with paragraph 3 of Part B)

Volume of Non Clinical Waste included in the Initial Annual Price

tonnes

Initial Annual Price for Clinical Waste £ (indexed save in relation to any year when there is an adjustment to the Base Date price in accordance with paragraph 3 of Part B)

Volume of Clinical Waste included in the Initial Annual Price

tonnes

Initial Annual Price for Other Waste £ (indexed save in relation to any year when there is an adjustment to the Base Date price in accordance with paragraph 3 of Part B)

Volume of Other Waste included in the Initial Annual Price

tonnes


SCHEDULE 11

Draft Form of Independent Tester Appointment


DATED [ ]

(1) [THE TENANT]

(2) [THE LANDLORD]

(3) [INDEPENDENT TESTER]

(4) [FUNDER]

(5) [CONTRACTOR]

[ (6) [EQUIPMENT SERVICES PROVIDER]]

INDEPENDENT TESTER CONTRACT


THIS DEED OF APPOINTMENT dated 20

BETWEEN

(1) [TENANT] whose registered office is at ("the Tenant”)105

(2) [LANDLORD] (registered in England and Wales under company number ) whose registered office is at (“the Landlord”)

(3) [FUNDER] (registered in England and Wales under company number ) whose registered office is at (“the Funder”); and

(4) [INDEPENDENT TESTER] (registered in England and Wales under company number ) whose registered office is at (“the Independent Tester”)

(5) [CONTRACTOR] (registered in England and Wales under company number ) whose registered office is at (“the Contractor”)

WHEREAS

(A) The Landlord [has entered] into a lease plus agreement for [ ] dated [ ] (the “Lease”) with the Tenant for the design, construction, letting and operation of the Premises.

(B) The Landlord has entered into the Construction Contract with the Contractor for the design and construction of the Premises.

(C) The Funder is providing finance in connection with the development at the Premises.

(D) The Tenant and the Landlord have jointly agreed to engage the Independent Tester as an independent certifier to carry out the duties and obligations of the Independent Tester described in the Lease in accordance with this appointment.

IT IS AGREED as follows

3 INTERPRETATION

3.1 Unless the context requires otherwise requires, words and expressions defined in the Lease have the same meanings in this Deed as in the Lease.

3.2 The headings in this Deed do not affect its interpretation

3.3 Unless the context otherwise requires, all references to Clauses and Schedules are references to clauses of and schedules to this Deed.

4 APPOINTMENT

4.1 The Landlord and the Tenant jointly appoint the Independent Tester to perform the obligations and tasks which are ascribed to the Independent Tester under the Lease and which are set out in Schedule 1 upon the terms and conditions set out below. The Contractor [and the Equipment Services Provider] is a party [are parties] to this Deed solely to make the commitments on its part [their respective parts] as expressly made in this Deed and, for the avoidance of doubt, the Independent

105 Where the Landlord is granting several Lease Plus Agreements at the Facilities each Tenant will need to be a party and the deed amended accordingly.


Tester shall have no liability to the Contractor [and the Equipment Services Provider]106.

4.2 The Independent Tester shall provide the services under Clause 2.1 above (the “Services”) independently, fairly and impartially to and as between the Landlord and the Tenant in relation to the Lease at such times and at such locations as the parties shall agree from time to time. In performing the Services, the Independent Tester shall have regard to the interest of the Funders. Whilst the Independent Tester may take account of any representations made by the Landlord and the Tenant and the Contractor (as appropriate) [and the Funder's Technical Adviser] the Independent Tester shall not be bound to comply with any representations made by any of them in connection with any matter on which the Independent Tester is required to exercise his professional judgement.

4.3 Varied Services

4.3.1 The Independent Tester shall carry out and perform any additional and/or varied services required for the implementation of the Project reasonably required by the Tenant and the Landlord which are not included in, or which are omitted from, the Services (the "Varied Services"), subject to prior agreement by the Tenant and the Landlord to the costs thereof.

4.3.2 If the Independent Tester shall at any time be required to perform Varied Services, it shall give to the Tenant and the Landlord a written estimate of the cost thereof (taking into account any reduction in work or other expense which might also occur as a result of the circumstances giving rise to the Varied Services).

4.3.3 Where a change to the Project occurs pursuant to the terms of the Lease (whether by virtue of a Delay Event, Variation, change to the Project Programme or otherwise) which may materially impact on the Services or otherwise on the Independent Tester, the Tenant and the Landlord shall promptly notify the Independent Tester of such change. The Independent Tester shall within [ ] Business Days of receiving such notification, notify the Tenant and the Landlord of the impact of such change, if any, on the Services, including whether such change gives rise to any Varied Services and the provisions of this Clause 2.3 shall apply accordingly.

4.4 The Independent Tester shall promptly and efficiently provide the Services and the Varied Services:

4.4.1 with the reasonable care, skill and diligence to be expected of a properly qualified and competent professional adviser who has held itself out as competent and experienced in rendering such services for projects of a similar size, nature, scope and complexity to the Project; and

4.4.2 in accordance with all applicable Law and NHS Requirements.

106 It has been suggested on some projects that the Contractor should receive the benefit of a duty of care from the Independent Tester (whether under this agreement or through a collateral warranty). The Tenants should consider the implications fully and seek advice from their legal advisers on this point. The Tenants’ interests are likely to be prejudiced as a result. Issues that need to be considered include: whether this would increase the fee, whether the financial liability of the IT would be diluted (eg consider any cap on liability) and whether the IT’s liability to the Tenant may be prejudiced as a result of any claim made by the Contractor, whether there could be any adverse impact on the resources of the IT and whether the Contractor’s remedy should lie against the Landlord in the event of any claim. CHP's position is that it is not appropriate for the IT to provide a duty of care in favour of the Contractor.


4.5 All instructions to the Independent Tester must be given signed and given jointly by the Tenant's Representative or such other person appointed pursuant to Clause 11 of the Lease (Tenant’s Representative) and the Landlord and, for the avoidance of doubt, the Independent Tester shall not act in accordance with any instructions given to him by either the Tenant or the Landlord (or any other person) not given in accordance with the provisions of this Clause 2.5.

4.6 The Independent Tester shall comply with all reasonable instructions given to it by the Landlord and the Tenant pursuant to Clause 2.5 except and to the extent that the Independent Tester reasonably considers that any such instructions vary or might vary the Services or its authority or responsibilities under this Deed or prejudices or might prejudice the exercise by the Independent Tester of its professional judgement in accordance with Clauses 2.2 and 2.4 above. The Independent Tester shall promptly confirm in writing to the Landlord and the Tenant whether or not it shall comply with any such instruction setting out the grounds upon which the decision is made.

4.7 The Tenant, the Landlord[, the Equipment Services Provider] and the Contractor agree to co-operate with and provide reasonable assistance to the Independent Tester to familiarise the Independent Tester with all necessary aspects of the Project to enable the Independent Tester to carry out its obligations under this Deed.

4.8 The Independent Tester shall be deemed to have full knowledge of the provisions of the Lease and the Supply Chain Agreements such as relates to the Services and shall be deemed to be aware of and to have taken full account of all the undertakings and warranties, both expressed and implied, on the part of the Landlord and the Tenant which are set out in the Lease provided always that true and accurate copies have been delivered to the Independent Tester.

4.9 Subject to Clause 2.10, the Independent Tester shall use the following partners, directors or employees: [insert names of individuals] in connection with the performance of the Services and such persons’ services shall be available when necessary and for so long as may be necessary to ensure the proper performance by the Independent Tester of the Services. Such persons shall have full authority to act on behalf of the Independent Tester for all purposes in connection with the Services.

4.10 The Independent Tester may by written notice to the Tenant and the Landlord replace the staff identified in Clause 2.9 taking account the need for liaison, continuity, level of qualification and availability of personnel in respect of the Project. Such replacement shall be subject to approval in writing by the Landlord and the Tenant (not to be unreasonably withheld or delayed).

5 DURATION

5.1 The Services shall commence on the date of this Deed107.

5.2 The Parties hereby agree that this Deed governs all of the Services provided by the Independent Tester in relation to the Project whether before or after the date hereof.

6 FEE108 107 The Tenants to amend according to specific requirements.108 This drafting assumes that the Landlord is responsible for paying the Independent Tester. The Tenants should

consider whether this will be the case and should ensure that LiftCo's are required to price on the appropriate basis. It may


6.1 The Landlord shall pay to the Independent Tester a fee of [ ] for the Services provided in relation to the Project. The fee is exclusive of value added tax and inclusive of disbursements. The Independent Tester shall issue an invoice to the Landlord on a monthly basis in accordance with Schedule 2. The date on which the invoice is received by the Landlord shall constitute the payment due date. The final date for payment by the Landlord shall be thirty (30) days after receipt of the Independent Tester’s invoice. The invoice and supporting documentation (if any) shall specify the sum that the Independent Tester considers to be due to him on the payment due date and the upon which that sum is calculated. If Varied Services are provided then the fee for the Varied Services shall be paid solely by whichever party instructed the Varied Services, unless the Varied Services are agreed by all parties in which case the fee for the Varied Services shall be paid for equally by (1) the Tenant and (2) the Landlord or as otherwise agreed. The provisions of Clauses 4.1 to 4.9 shall apply mutatis mutandis in respect of any fees the Tenant agrees to pay in respect of any Varied Services save that it shall be the Tenant, and not the Landlord, who shall make payment to the Independent Certifier in respect of such Varied Services.

6.2 Not later than five (5) days after the payment due date ascertained in accordance with Clause 4.1, the Landlord shall give written notice to the Independent Tester stating the amount which the Landlord considers to be or to have been due to the Independent Tester at the payment due date and the basis on which that amount is calculated. For the avoidance of doubt, such notice shall be given even if the amount considered to be due is zero.

6.3 Save where the Landlord has served notice under Clause 4.4, the Landlord shall pay the Independent Tester the sum referred to in the Landlord’s notice under Clause 4.2 above (or if the Landlord has not served notice under Clause 4.2 above) the sum referred to in the Independent Tester’s invoice referred to in Clause 4.1 above on or before the final date for payment.

6.4 If the Landlord intends to pay less than the any sum stated as due to the Independent Certifier pursuant to Clause 4.3, the Landlord shall give the Independent Tester a notice (a "Pay Less Notice") not later than five (5) days before the final date for payment (the “Prescribed Period”) of that sum specifying:

6.4.1 the sum that the Landlord considers to be due on the date the Pay Less Notice is served; and

6.4.2 the basis on which that sum is calculated.

For the avoidance of doubt, such notice shall be given even if the amount considered to be due is zero.

6.5 If the Landlord fails to pay the sum due to the Independent Tester in accordance with Clause 4.3 above by the final date for payment and the Landlord has not given the Independent Tester a Pay Less Notice in accordance with Clause 4.4 within the Prescribed Period, the Independent Tester shall be entitled to suspend performance of any or all of his obligations under this Deed. The Independent Tester’s right to suspend all or part of its obligations under this Deed may not be exercised without first giving to the Landlord and the Tenant not less than seven (7) Business Days’ notice in writing of such intention, stating the ground or grounds on which it is

better value for money for the Tenant to pay an element of the fee itself, although the Tenant must ensure that it is able to meet such a commitment.


intended to suspend performance. The right to suspend performance ceases when the Independent Tester receives payment in full of the sum due in accordance with this Deed. Any period of suspension of the Services in accordance with this Clause 4.5 shall be disregarded in computing any contractual time limit to complete work directly or indirectly affected by the exercise of the rights conferred by this Clause 4.5 or as the case may be, the time for completion of such work shall be extended by a period equal to the period of suspension.

6.6 If the Landlord fails to pay a sum, or any part of it, due to the Independent Tester under this Deed by the final date for its payment, the Landlord shall, in addition to any unpaid amount that should properly have been paid, pay the Independent Tester simple interest on that amount at the Default Interest Rate from the final date for payment until payment is made.

6.7 Without prejudice to Clause 2.5, neither the Tenant nor the Landlord shall issue instructions or do anything which does or is reasonably likely materially to increase the fees payable to the Independent Tester without the prior approval of the other (such approval not to be unreasonably withheld or delayed).

6.8 As soon as the Independent Tester becomes aware of the same and before acting on the same the Independent Tester shall inform the Tenant and the Landlord of any instructions given to him pursuant to Clause 2.5 which will or could reasonably be expected to increase the fees payable to the Independent Tester under the terms of this Deed. The Independent Tester shall if requested by either the Landlord or the Tenant provide both the Tenant and the Landlord with as detailed an estimate as is reasonably practicable of the increase to the fees payable to it if it carries out such instructions. The estimate of increased fees shall be based upon the rates contained in Schedule 3.

6.9 The obligations of the Landlord and the Tenant to pay the Independent Tester for any Varied Services shall be several and not joint.

7 LIMITATIONS ON AUTHORITY

The Independent Tester shall not:

7.1 make or purport to make any alteration or addition to or omission from the design of the Facilities (including, without limitation, the setting of performance standards) or issue any instruction or direction to any contractor or professional consultant employed or engaged in connection with the Project; or

7.2 (unless both the Landlord and the Tenant consent in writing) consent or agree to any waiver or release of any obligation of the Landlord or the Tenant under the Lease or of any contractor or professional consultant employed or engaged in connection with the Project.

For the avoidance of doubt, the Independent Tester shall not express an opinion on and shall not interfere with or give any advice, opinion or make any representation in relation to any matters which are beyond its role and responsibilities under this Deed.

8 TERMINATION

8.1 The Landlord and the Tenant may by joint notice in writing (a “Joint Notice”) immediately terminate this Deed if the Independent Tester:


8.1.1 is in breach of any of the terms of this Deed which, in the case of a breach capable of remedy, shall not have been remedied by the Independent Tester within twenty-one (21) days of receipt by the Independent Tester of a Joint Notice specifying the breach and requiring its remedy;

8.1.2 is incompetent, guilty of gross misconduct and/or any material failure, negligence or delay in the provision of the Services and/or its other duties under this Deed;

8.1.3 fails or refuses after written warning to provide the Services and/or its other duties under this Deed reasonably and as properly required of him; or

8.1.4 is subject to an event analogous to any of the events set out in Clause 23.1.10 (LiftCo Events of Default – Insolvency) of the Strategic Partnering Agreement.

8.2 If the Lease is rescinded, terminated or repudiated for any reason and, notwithstanding that the validity of such rescission, termination or repudiation may be disputed, this Deed may be terminated by Joint Notice and with immediate effect.

8.3 Following any termination of this Deed, but subject to any set-off or deductions which the Landlord or the Tenant may be entitled properly to make as a result of any breach of this Deed by the Independent Tester, the Independent Tester shall be entitled to be paid in full and final settlement of any valid claim which the Independent Tester may have in consequence thereof, any fees due under Clause 4 above in respect of the Services carried out in accordance with this Deed prior to the date of termination.

8.4 Termination of this Deed shall be without prejudice to any accrued rights and obligations under this Deed as at the date of termination (including the right of the Landlord and the Tenant to recover damages from the Independent Tester).

8.5 If this Deed is terminated in accordance with Clause 6.1, the Landlord and the Tenant shall use reasonable endeavours to engage an alternative Independent Tester within thirty (30) days, subject to Law and public procurement rules. If within such period the Landlord and the Tenant are unable to procure the appointment of an alternative Independent Tester on reasonable commercial terms, the Independent Tester shall pay to the Landlord and/or the Tenant, as the case may be, any reasonable incremental loss, damage or extra costs suffered by each of them.

8.6 If the Landlord fails to make a payment of any undisputed sum to the Independent Tester within [twenty (20)] Business Days of the expiry of any notice issued pursuant to Clause 4.5 in respect of such sum, the Independent Tester may issue a further written notice to the Tenant and the Landlord specifying that the payment remains outstanding (the “Second Notice”) and if payment is not made within [twenty (20)] Business Days of receipt of the Second Notice the Independent Tester may issue a further written notice terminating this Deed with immediate effect.

8.7 Termination of this Deed shall not affect the continuing rights and obligations of the Landlord, the Tenant and the Independent Tester under Clauses 8 (Confidential Information and Copyright), 9 (Professional Indemnity Insurance), 10 (Limitations on Liability), 18 (Dispute Resolution Procedure) and this Clause or under any other


Clause which is expressed to survive termination or which is required to give effect to such termination or the consequences of such termination.

9 PROHIBITED ACT

9.1 The term "Prohibited Act" means:

9.1.1 offering, giving or agreeing to give the Landlord, the Tenant, the Contractor or any party connected with the Project or any other public body or to any person employed by or on behalf of any such person any gift or consideration of any kind as an inducement or reward:

(i) for doing or not doing (or for having done or not done) any act in relation to the obtaining or performance of this Deed or any other agreement with the Landlord, the Tenant, the Contractor or any party connected with the Project or any other public body; or

(ii) for showing or not showing favour or disfavour to any person in relation to this or any other agreement with the Landlord, the Tenant, the Contractor, or any party connected with the Project or any other public body; or

9.1.2 entering into this Deed or any other agreement with the Landlord, the Tenant, the Contractor or any party connected with the Project or any other public body in connection with which commission has been paid or has been agreed to be paid by the Independent Tester or on their behalf, or to their knowledge, unless before the relevant agreement is entered into particulars of any such commission and of the terms and conditions of any such agreement for the payment of such commission have been disclosed in writing to the Landlord; or

9.1.3 Committing any offence:

(i) under the Bribery Act 2010;

(ii) under any Law creating offences in respect of fraudulent acts or omissions; or

(iii) at common law, in respect of fraudulent acts or omissions in relation to this Deed or any other agreement with the Landlord, the Tenant, the Contractor or any party connected with the Project or any other public body; or

9.1.4 defrauding or attempting to defraud or conspiring to defraud the Landlord, the Tenant, the Contractor, any party connected with the Project or any other public body; or

9.1.5 any act which constitutes a “Prohibited Act” under the Project Agreement.

9.2 The Independent Tester warrants that in entering this Deed it has not committed a Prohibited Act.


9.3 If the Independent Tester (or anyone employed by or acting on behalf of or form them) commits any Prohibited Act, then the Independent Tester shall act in accordance with Clauses 7.3.1 to 7.3.3 (inclusive) below:

9.3.1 If the Prohibited Act is committed by the Independent Tester, (including without limitation any employee that is not acting independently of the Independent Tester), then the Landlord and the Tenant, may within fifteen (15) Business Days of receipt of a notice of that Prohibited Act by joint notice in writing to the Independent Tester, having immediate effect, terminate this Deed;

9.3.2 If the Prohibited Act is committed by a sub-consultant of the Independent Tester, or by an employee of such sub-consultant (whether or not acting independently of that sub-consultant), the Landlord and the Tenant may give joint notice in writing to the Independent Tester of termination and this Deed will terminate, unless within fifteen (15) Business Days from such notice the Independent Tester has procured the termination of the relevant sub-consultant’s appointment and (if necessary) has procured the performance of that sub-consultant’s functions by another person.

9.3.3 Any notice of a Prohibited Act under this Clause 7.3 shall specify:

(i) the nature of the Prohibited Act; and

(ii) the identity of the party who the Landlord and the Tenant believes has committed the Prohibited Act.

9.3.4 Without prejudice to its other rights or remedies under this Clause 7 the Landlord and the Tenant shall be entitled to recover from the Independent Tester:

(i) the amount or value of any such gift, consideration or commission; and

(ii) any other loss sustained in consequence of breach of this Clause 7.

9.4 Nothing contained in this Clause 7 shall prevent the Independent Tester from paying any proper commission or bonus to its employees within the agreed terms of their employment.

9.5 The Independent shall notify the Landlord and the Tenant of the occurrence (and details) of any Prohibited Act promptly on the Independent Tester becoming aware of its occurrence.

10 CONFIDENTIAL INFORMATION AND COPYRIGHT

10.1 The Independent Tester shall treat as secret and confidential and shall not at any time for any reason disclose or permit to be disclosed to any person or otherwise make use of or permit to be made use of any unpublished information relating to the Landlord’s or the Tenant's or the Contractor's (if appropriate) technology or other know-how business plans or finances or any such information relating to a subsidiary, supplier, customer or client of the Landlord or the Tenant or the Contractor (if appropriate) where the information was received during the period of this Deed except as may be reasonably necessary in the performance of the


Services. Upon termination of this Deed for whatever reasons the Independent Tester shall offer to deliver up to the Landlord or the Tenant (as appropriate) all working papers, computer disks and tapes or other material and copies provided to or prepared by him pursuant either to this Deed or to any previous obligation owed to the Landlord or the Tenant provided always that the Independent Tester shall be entitled to retain copies of all such items where such offer is accepted.

10.2 The obligation to maintain confidentiality does not apply to any information or material to the extent that the Independent Tester is compelled to disclose any such information or material by law or any regulatory or Government authority.

10.3 The copyright in all reports, and other documents produced by the Independent Tester in connection with the Project shall remain vested in the Independent Tester but the Independent Tester grants to the Landlord and the Tenant and their nominees with full title guarantee a non-exclusive irrevocable royalty free licence to copy and use such reports, and other documents and to reproduce the information contained in them for any purpose related to the Project including (but without limitation) the construction, completion, maintenance, letting, promotion, advertisement, reinstatement, extension and repair of the Project. Such licence shall include a licence to grant sub-licences and to transfer the same to third parties.

10.4 The Independent Tester shall not be liable for use by any person of the documents, (including reports, details, plans, specifications, schedules, computer programs, software, consents and any other papers, works, reports and inventions produced by the Independent Tester) for any purpose other than that for which the same were prepared by or on behalf of the Independent Tester.

11 PROFESSIONAL INDEMNITY INSURANCE

11.1 Without prejudice to its obligations under this Deed, or otherwise at law, the Independent Tester shall maintain professional indemnity insurance with a limit of indemnity of not less than [ten million pounds (£10,000,000)]109 for any one claim in respect of any neglect, error or omission on the Independent Tester’s part in the performance of its obligations under this Deed for the period commencing on the date of this Deed and expiring twelve (12) years after:

11.1.1 the date of final certification of the Works; or

11.1.2 the termination of this Deed,

whichever is the earlier, provided that such insurance is available in the market place at commercially reasonable rates.

11.2 The Independent Tester shall maintain such insurance with reputable insurers carrying on business in the United Kingdom.

11.3 Any increased or additional premium required by insurers by reason of the Independent Tester's own claims record or other acts, omissions, matters or things particular to the Independent Tester shall be deemed to be within commercially reasonable rates.

11.4 The Independent Tester shall as soon as reasonably practicable inform the Landlord and the Tenant if such insurance ceases to be available at commercially

109 Tenants to take advice from insurance advisers on appropriate level of PII cover for the scheme.


reasonable rates in order that the Independent Tester and the Landlord and the Tenant can discuss means of best protecting the respective positions of the Landlord and the Tenant and the Independent Tester in respect of the Project in the absence of such insurance.

11.5 The Independent Tester shall fully co-operate with any measures reasonably required by the Landlord and the Tenant including (without limitation) completing any proposals for insurance and associated documents, maintaining such insurance at rates above commercially reasonable rates if the Landlord and the Tenant undertake in writing to reimburse the Independent Tester in respect of the net cost of such insurance to the Independent Tester above commercially reasonable rates.

11.6 The Independent Tester shall, prior to commencing the provision of the Services and as soon as reasonably practicable following renewal dates, produce for inspection by the Landlord and the Tenant documentary evidence that such insurance is being properly maintained.

11.7 The above obligations in respect of professional indemnity insurance shall continue notwithstanding termination of this Deed for any reason whatsoever, including (without limitation) breach by the Landlord and the Tenant.

12 LIMITATION OF LIABILITY

12.1 With the exception of liability for death, personal injury and/or any other liability that cannot lawfully be excluded or limited, the Independent Tester’s maximum [aggregate] liability to all parties, under or in connection with this Deed, whether in contract or in tort, or for breach of statutory duty is limited to £[●] million110.

12.2 [Notwithstanding anything to the contrary stated elsewhere in this Deed, the parties hereby expressly agree that the Independent Tester shall have no liability to any party under or in connection with this Deed for any claim or claims related to terrorism, asbestos or toxic mould.]111

12.3 No action or proceedings under or in connection with this Deed shall be commenced against the Independent Tester after the expiry of twelve (12) years from the completion of the Services.

13 NOTICES

All notices or other communications required in connection with this Deed shall be in writing and sent by hand, by first class pre-paid post or by facsimile transmission to the relevant address or facsimile number set out in the Lease or in the case of the Independent Tester to its registered office for the attention of the company secretary or to such other address or facsimile number as a party to this Deed may notify to another party to this Deed in writing.

14 ASSIGNMENT

110 It is suggested that an appropriate cap may depend on the capital value of the scheme, such as:· Up to £10M capital value - £1M cap· Greater than £10m and up to £25M capital value - £2M cap· Greater than £25M and up to £50M capital value - £3M capHowever, the Tenants to consider what it an appropriate cap on liability depending on the project-specific circumstances and should ensure that this is specified prior to asking for tender to provide these Services to ensure that bids are based on the required cap.

111 This may be appropriate where the IT’s insurance cover excludes liability for these occurrences. The Tenants to check.


14.1 The Independent Tester shall not assign or transfer any of its rights or obligations under this Deed or sub-contract the whole or any part of the Services112.

14.2 Neither the Landlord nor the Tenant shall be entitled to assign or transfer any of their respective rights or obligations under this Deed save that the parties hereby consent to any such assignment or transfer which is contemporaneous to the assignment or transfer of the Lease and is made to the same assignee or transferee. In the event that the Lease is novated to a third party, the term “Lease” shall include any replacement contract arising from such novation.

14.3 The Independent Tester shall not be entitled to contend that any person to whom this Deed is assigned in accordance with Clause 12.2 is precluded from recovering under this Deed any loss incurred by such assignee resulting from any breach of this Deed (whenever happening) by reason that such person is an assignee and not a named promisee under this Deed.

15 CUMULATIVE RIGHTS AND ENFORCEMENT

15.1 Any rights and remedies provided for in this Deed whether in favour of the Landlord or the Tenant or the Independent Tester are cumulative and in addition to any further rights or remedies which may otherwise be available to the parties.

15.2 The duties and obligations of the Independent Tester arising under or in connection with this Deed are owed to the Landlord and the Tenant both jointly and severally and the Landlord and the Tenant may accordingly enforce the provisions hereof and pursue their respective rights hereunder in their own name, whether separately or with each other.

15.3 The Landlord and the Tenant covenant with each other that they shall not waive any rights, remedies or entitlements or take any other action under this Deed which would or might reasonably be expected to adversely affect the rights, remedies or entitlements of the other without the other’s prior written consent, such consent not to be unreasonably withheld or delayed.

16 WAIVER

The failure of any party at any one time to enforce any provision of this Deed shall in no way affect its right thereafter to require complete performance by any other party, nor shall the waiver of any breach or any provision be taken or held to be a waiver of any subsequent breach of any provision or be a waiver of the provision itself.

17 SEVERABILITY

In the event that any term, condition or provision contained in this Deed shall be held to be invalid, unlawful or unenforceable to any extent, such term, clause or provision shall, to that extent, be omitted from this Deed and the rest of this Deed shall stand, without affecting the remaining clauses.

18 COUNTERPARTS

112 Where the Independent Tester intends to sub-contract any part of the Services, this should be stated in the bid submitted to the Tenant and additional drafting should be included to identify any such sub-contractors and to ensure that the Independent Tester remains liable for the relevant part of the Services. The Tenant should consider whether it is appropriate to obtain a warranty from such sub-contractors.


This Deed may be executed in any number of counterparts, all of which when taken together shall constitute one and the same instrument.

19 VARIATION

A variation of this Deed is valid only if it is in writing and signed by or on behalf of each party.

20 DISPUTE RESOLUTION PROCEDURE

20.1 All disputes shall be resolved in accordance with terms equivalent (mutatis mutandis) to the Dispute Resolution Procedure as set out in the Lease113.

20.2 The Landlord, the Tenant and the Independent Tester shall co-operate to facilitate the proper, just, economical and expeditious resolution of any and all such disputes which arise under this Deed.

21 GOVERNING LAW AND JURISDICTION

21.1 This Deed shall be considered as a deed made in England and Wales, and this deed and any dispute or claim arising out of or in connection with it or its subject matter or formation (including any non-contractual disputes or claims) shall be subject to the laws of England and Wales.

21.2 Subject to Clause 18 above, the Parties agree that the courts of England and Wales shall have exclusive jurisdiction to hear and settle any dispute or claim arising out of or in connection with this Deed or its subject matter or formation (including non-contractual disputes or claims), and each of them irrevocably submits to the jurisdiction of those courts.

21.3 No action or proceedings may be commenced against the Independent Tester for

any breach of this Deed after the expiry of twelve (12) years following the date of completion of the Services or the termination of this Deed, whichever is the earlier.

22 DELIVERY

This Deed is delivered on the date written at the start of this Deed.

23 THIRD PARTY RIGHTS

Save as expressly set out herein, no provision of this Deed is intended to or does confer upon any third party any benefit or right enforceable at the option of that third party against any party to this Deed.

IN WITNESS WHEREOF the Parties have executed and delivered this Deed on the date first written above.

Schedule 1

Services to be provided by the Independent Certifier

113 The Tenants should consider whether this is appropriate or whether a more specific DRP should be included in this document. This may depend on whether the DRP contained in Schedule 21 is considered to be Construction Act compliant.


Scope of Services114

The Independent Tester shall perform the role of Independent Tester as referred to in the Lease, by providing the following scope of Services:

1 MONTHLY REPORT AND COMPLETION CERTIFICATION

The Independent Tester shall:

1.1 During the Works, provide the Tenant and the Landlord with a monthly report on the activities carried out by the Independent Tester.

1.2 Undertake regular inspections during the Works, as necessary, in accordance with the [periods set out in the tests on completion]115. Report on the completion status of the Project, identifying any work that is not compliant with the Tenant’s Requirements, the Landlord’s Proposals, the Approved Reviewable Design Data (Approved RDD) and/or the tests on completion.

1.3 Not used.

1.4 Certify the Actual Completion Date and issue a Certificate of Practical Completion in accordance with the Lease.

1.5 Within [five (5)] Business Days of issue of the Certificate of Practical Completion, issue a Snagging Notice specifying any Snagging Matters. Monitor and review rectification of such Snagging Matters in accordance with the Lease.

1.6 Review the programme for the rectification of all Snagging Matters to be carried out and advise the Landlord and the Tenant as appropriate.

And in order to enable the Independent Tester to discharge these primary functions which are to be performed independently, fairly and impartially to and as between the Landlord and the Tenant and having regard to the interests of Funders, the Independent Tester shall discharge the further duties described below.

2 GENERAL


2.1 Familiarise itself with the Lease (including the Design Data, the Design Quality Plan, the Construction Quality Plan116 and any Variations issued from time to time and any other relevant documentation or information referred to in the Lease, relevant Service Specifications and Method Statements [, the Equipment Services Contract] and the Construction Contract to the extent necessary to be in a position to carry out the Services in accordance with the terms of the Lease and this Deed.

2.2 Following notification by the Landlord, pursuant to [Clause 12.7]/[Clause 13.10]117of the Lease, inspect and comment as required on the Works as required by the completion process.

3 DESIGN REVIEW114 Tenants to ensure that the scope of services is appropriate.115 Insert periods here if not included in tests on completion.116 Insert reference to equipment list or other document as appropriate.117 Please refer to our footnote against Clause 12.8 and delete reference to Clause 12.7 or 13.10 as appropriate.


3.1 For the avoidance of doubt, nothing in this paragraph 3 or elsewhere in this Deed shall impose any design liability on the Independent Tester, and any design liability shall remain with the parties responsible for such design under the Lease. The Services required under this paragraph 3 shall be supervisory in nature and shall not require the Independent Tester to approve (or otherwise) the suitability of the design under the Lease.

3.2 The Independent Tester shall:

3.2.1 Monitor and report upon the implementation of the Design Quality Plan for the construction, structural and engineering services design for the Project.

3.2.2 Monitor the detailed working drawings and specifications for a sample number and type of rooms which in his professional judgment is appropriate to be selected by the Independent Tester to verify that they comply with the Approved Reviewable Design Data as described in the Lease. The Independent Tester has indicated that in normal circumstances [twenty-five percent (25%)] of rooms should be sampled. If in the professional judgment of the Independent Tester, because of the results of its sample or other circumstances a different sampling percentage is appropriate, he shall provide a detailed report in respect of that and, if so agreed (or determined as between the Landlord and the Tenant by the Dispute Resolution Procedure) any change in the percentage sampling resulting in a change in fees will be borne by the Landlord and the Tenant as they shall agree or as determined by the Dispute Resolution Procedure.

3.2.3 [Review the detailed design information for any approved design or specification variations for compliance with the performance and quality standards of the Lease, [insert reference to equipment services contract and any Equipment performance measures] and quality standards as set out in the [refer to Equipment Service Specification and the Contractor's Quality Plan.]

4 PROCEDURE REVIEW


4.1 Monitor the operation of the quality assurance procedures of the Contractor at regular intervals (maximum [three (3)] months) during the execution of the Works.

4.2 The Independent Tester shall familiarise itself with the proposed procedures and programmes for the testing and commissioning of the [Mechanical and Electrical engineering services] prior to the Tenant's occupation.

4.3 Monitor the procedures for the identification, approval and recording of agreed Variations to the Works in accordance with the Lease.

4.4 Review any samples or mock ups as required by Schedule [●] and check that they have been approved in accordance with the Lease.

5 CONSTRUCTION REVIEW



5.1 Visit the Site and monitor the Works for their compliance with the Tenant’s Requirements, the Landlord’s Proposals and the Approved RDD118. The frequency and timing of the Independent Tester's visits are dependent on the progress of construction on Site. The Contractor shall agree a programme with the Independent Tester for the inspection of key construction processes and the completed Works and shall give the Independent Tester advance notice of these Works being carried out on Site. The Independent Tester shall identify any aspect of the Works which needs to be inspected before being covered over by subsequent activity so that he may satisfy himself that these have been constructed in accordance with the Contractor's Quality Plan without the need for opening up.

5.2 Randomly check that the Works are being undertaken in accordance with the Construction Quality Plan that has been agreed by the Tenant and the Landlord.

5.3 Review the written Mechanical and Electrical engineering services testing and commissioning procedure. Undertake selective witnessing of the Mechanical and Electrical services testing and commissioning. The Independent Tester has indicated that these sampling proportions should amount to approximately [fifty] percent [(50%)]. The Independent Tester shall review [one hundred] percent [(100%)] of all test results. If in the professional judgment of the Independent Tester, because of the results of witnessing (or because of other circumstances) a different sampling percentage is appropriate he shall provide a detailed report in respect of that and any change in the percentage sampling resulting in a change of fees will be borne by the Landlord, the Tenant or the Contractor as they shall agree, failing such agreement, as determined by the Dispute Resolution Procedure.

5.4 Inspect rectification works which have previously prevented the Independent Tester from certifying the Project as complete. Concurrent with the issue of the Certificate of Practical Completion, agree a list of Snagging Matters with the Landlord together with its programme for implementation and issue a Snagging Notice in accordance with Clause 13.13 of the Lease.

5.5 Check the production of the relevant operating manuals, relevant approvals, test results, inspection records and as built drawings and monitor the timely handover of this documentation.

6 PARTICIPATION IN DISPUTE RESOLUTION

As and when required by the Tenant or the Landlord, the Independent Tester shall participate in the Dispute Resolution Procedure of the Lease (as such term is defined in the Lease) to the extent that issues under the Lease which have been referred to the said Dispute Resolution Procedure relate to the Independent Tester's other obligations and tasks as set out in this Schedule 1 and this Deed.

118 Tenant to insert any other relevant documents.


Schedule 2

Schedule of Drawdown of Fees


Schedule 3

Schedule of Daily Rates

[individual rates can be inserted here]


EXECUTED as a deed by COMMUNITY HEALTH )PARTNERSHIPS LIMITED on being signed by )

……………………………………………………………………………………… in the AttorneyPresence of:

Signature of witness:……………………………..Name:……………………………………………….Address …………………………………………………………………………………………………….Occupation:

EXECUTED AS A DEED by )[LANDLORD] acting by: )

Director ……………………………………

[Director/Company Secretary] ……………………………

EXECUTED AS A DEED by )[THE FUNDER] acting by: )

Authorised signatory ……………………………………

Authorised signatory ……………………………………

EXECUTED AS A DEED by )[INDEPENDENT TESTER ] )acting by: )

Director ……………………………………


EXECUTED AS A DEED by )[CONTRACTOR ] )acting by: )

Director ……………………………………


[If the Independent Tester is a partnership, this appointment should be executed by all partners or however many partners are required to bind the partnership in accordance with the relevant Partnership Deed]


SCHEDULE 12

Part I – Variations

1 GENERAL

Subject to receiving the Variation Confirmation issued in accordance with the terms of this Schedule and to any Requisite Consent which must be obtained or modified being so obtained or modified and subject to the other provisions of this Schedule, the Landlord shall be under a duty to implement a Variation. The Landlord will not be entitled to any payment or compensation for or in respect of a Variation save as provided in accordance with this Schedule.

2 VARIATION ENQUIRIES

2.1 A Variation Enquiry shall be a document issued (either before or after the Payment Commencement Date) by the Tenant’s Representative which:

2.1.1 states on its face that it is a Variation Enquiry;

2.1.2 states, in the case of a Minor Structural Alteration or a Major Structural Alteration (an “Alteration”), whether it is the intention of the Tenant that the Tenant will pay a capital sum in respect of the Variation in accordance with paragraph 3 of Part II of this Schedule or whether it is the intention of the Tenant that Landlord should seek to obtain finance in accordance with Part II of this Schedule; and

2.1.3 in the case of an Additional Alteration specifies:

(a) the nature and scope of the relevant Additional Alteration to the same level of detail as set out in Landlord’s Proposals and/or the Tenant’s Requirements; and

(b) the times at or by which the Tenant wishes the work at the Facilities to implement the relevant Additional Alteration to be commenced and completed,

3 LANDLORD RESPONSE TO VARIATION ENQUIRY

Preliminary Indicative Information

3.1 Prior to giving a notice referred to in paragraph 3.2 of this Part I:

3.1.1 the Landlord may at its option within ten (10) Business Days of receipt of a Variation Enquiry give to the Tenant in good faith a preliminary non-binding indication of the estimated cost of implementing the Variation and provide such other information about the Variation as is available to the Landlord and which it believes is useful to the Tenant; and

3A1.1 In the case of an Additional Alteration, such information shall include, in particular, the Landlord’s estimated effect on the date when the Actual Completion Date will occur; and

3.1.2 if the Landlord provides an indication referred to in paragraph 3.1.1, the Tenant shall within a further five (5) Business Days of its receipt confirm


whether or not it wishes the Landlord to proceed to respond to the Variation Enquiry in accordance with provisions of paragraph 3.2; and

3.1.3 in the case of a Variation Enquiry for an Alteration or Additional Alteration where the Tenant has stated an intention that the Landlord should obtain finance, the Landlord will, if so required in the Variation Enquiry, use reasonable endeavours to obtain an initial non-binding response from the Funders as to availability of finance for the Variation in advance of performing its obligations under Part II of this Schedule.

Landlord Response

3.2 Within one (1) month of receipt of a Variation Enquiry or (if the provisions of paragraph 3.1.2 apply) within one (1) month of the Tenant confirming that it wishes the Landlord to proceed with responding to the Variation Enquiry or in either case such longer period as may be agreed by the parties or determined in accordance with Clause 49 as reasonable given the nature of the Variation Enquiry and all other relevant considerations, the Landlord shall either:

3.2.1 give notice to the Tenant that it objects to the Variation Enquiry stating the grounds of the objection. The Landlord may only object to a Variation Enquiry on one or more of the following grounds:119

(a) that implementation of the Variation would materially and adversely affect the health and safety of any person; or

(b) that implementation of the Variation would:

(i) infringe any Law; or

(ii) cause any existing Requisite Consent (which is not reasonably likely, on a balance of probabilities, to be capable of modification) to be revoked; or

(iii) require a new Requisite Consent which will not (using all reasonable endeavours) be obtainable; or

(iv) have a material and adverse effect on the performance of the Lease Operations (except those Lease Operations which have been specified as requiring to be amended in the Variation Enquiry) in a manner not compensated pursuant to this Schedule; or

(v) be a departure from Good Industry Practice; or

(vi) have a material and adverse effect on the Landlord’s ability to comply with its obligations under any other lease of premises at the Facilities in a manner not compensated pursuant to this Schedule; or

(vii) have a material adverse effect on the Residual Value.

(c) Not used

119 Tenants should note that some banks may seek to include their approval as an additional ground for objection.


(d) that the Tenant does not have the legal power or capacity to require the Variation to be implemented or to do anything envisaged by this Schedule in respect of, or in connection with, the Variation; or

(e) in the case of a Variation Enquiry where the Tenant has stated an intention that the Landlord should obtain finance, either that the Landlord has performed its obligations under paragraphs 1.1 and 1.2 of Part II of this Schedule and that finance is not available at the date of such notice to the Landlord to implement the Variation, or that the Landlord has not yet performed such obligations in which case the provisions of paragraph 3.3 of Part I shall apply; or

(f) that the Variation Enquiry does not comply with paragraph 2 of this Part IA; or

(g) in the case of:

(i) an Alteration, that the time specified for commencement and/or completion of the Alteration cannot reasonably be achieved by the Landlord; or

(ii) an Alteration, that the delay to the date on which the Actual Completion Date will occur caused by this Alteration, when taken together with the delays caused by other agreed Alterations, will exceed a period of [ ] months; or

(iii) a Service Variation, that the time (if any) specified for implementation of the Service Variation cannot reasonably be achieved by the Landlord; or

(h) that the information contained in the Variation Enquiry is inadequate to enable the Landlord to respond in accordance with paragraph 3.2.2 below (on the assumption, whether or not the case, that it has no objection under paragraphs 3.2.2(a) – 3.2.2(f));120

or

3.2.2 give notice to the Tenant stating:

(a) the steps which the Landlord proposes to take to implement the Variation giving such level of detail as is reasonable and appropriate in all the circumstances (including an assessment of the costs of the Variation in accordance with Sub-Part 2 of Appendix 1 to this Schedule;

120 Where land is retained by the NHS, funders may raise an objection that a variation is “a change in the essential nature of the Hospital” on the grounds that Funders have lent against a particular risk profile, which could change if the clinical content were to change. This amendment should be resisted, and any private sector requests for such an amendment should be referred to CHP. This should not be an issue where the Funder’s security is against the land not the income stream


(b) the Landlord's estimated out of pocket expenditure or estimated savings in respect of the Variation having regard to all relevant facts and matters, including121:

(i) any costs (including any loss of profit) (by line item) incurred or to be incurred under paragraph 5 of this Part I on an open book basis;

(ii) in the case of an Alteration, the provisions governing the valuation of Variations (however described) in Appendix 1 (Variation Pricing Procedure) and any capitalised interest or other costs which may be incurred by the Landlord as a result of any delay to the Actual Completion Date (the reasons for which should be set out in detail) by reason of such Alteration;

(iii) in the case of a Service Variation, any Capital Expenditure or other lump sum expenditure likely to be incurred in the course of the implementation of the Service Variation [and any increases or decreases in staffing levels which may be required as a direct consequence of the Service Variation]122;

(iv) the estimated Additional Administrative Costs for implementing the Variation or Service Variation; and

(v) any third party costs the Landlord will incur in connection with the Variation or Service Variation (for the avoidance of doubt the Landlord may not charge any profit margin on any external costs and shall make available all information relating to such costs as requested by the Tenant on an open book basis)

(c) any Requisite Consent which must be obtained or amended for the Variation to be implemented and the latest date by which the Landlord must receive a Variation Confirmation and any such Requisite Consent must be obtained or modified for the matters set out in 3.2.2(a) – 3.2.2(c) above to remain valid, such date being a reasonable period of time after service of the notice by the Landlord under this paragraph 3.2.2 to enable the Tenant to consider any matter under paragraph 4.1.3 below;

(d) whether the Landlord considers that a Service Variation, including, in the case of a Variation Enquiry for a Service Variation, another Service Variation (which for the purpose of this paragraph 3.2.2(d), shall include a change in the cost to the Landlord of performing periodic or life cycle maintenance) shall be required as a consequence of the Variation specified in the

121 Tenant to consider (with their financial adviser), in the light of project specifics, whether any additional factors for determining costs should be included such as, for example:• Landlord's right to change a margin/profit on external costs• The basis for valuing a Minor Structural Alteration which falls below the threshold specified in paragraph 8.1 of Part

1 of this Schedule.122 Only applies to soft FM Services.


Variation Enquiry and, if so, stating the matters specified in this paragraph 3.2 in respect of such Service Variation;

(e) such amendments to the provisions of Schedule 10 and other associated provisions of this Lease which are necessary as a consequence of the Variation, the objective of such amendments being to ensure that (save for the obligation of the Tenant to make payments or altered payments in respect of the Variation or any other adverse consequences for the Tenant arising from the Variation itself) the parties to this Lease are in no better and no worse position than they would have been in if such Variation had not been implemented and (for as long only as the Landlord is a wholly owned subsidiary of Liftco) Liftco shall be in no worse and no better position in relation to Clause 23 of the Strategic Partnering Agreement than it would have been if such variation had not been implemented;

(f) whether, in the view of the Landlord, implementing the Service Variation or the Alteration or the Additional Alteration, would cause any Unavailability Events to all or any part of the Functional Areas and/or Performance Failures giving an estimate in each case, of relief required to put the parties in no better and no worse position than they would have been in if such Variation had not been implemented; and

(g) in the case of an Alteration, whether, in the view of the Landlord, implementing the Variation Enquiry would be likely to prevent the Actual Completion Date from occurring at the Completion Date (prior to any adjustment being made to the Completion Date by reason of the implementation or proposed implementation of the Alteration and, if so, giving an estimate of the extension of time likely to be required (subject to any further time required to obtain or amend any Planning Permission).

Finance

3.3 If the Landlord shall give notice pursuant to paragraph 3.2.1(e) that it has not performed its obligations under paragraphs 1.1 and 1.2 of Part II of this Schedule then it shall, as soon as reasonably practicable, perform such obligations. In the case of an Alteration, If the Landlord cannot obtain finance from the sources referred to in paragraph 1 of Part II of this Schedule, the timetable set out in this Part for implementation of the Alteration shall be suspended until the Tenant either instructs the Landlord to proceed with, or withdraws, the Alteration as contemplated in paragraph 1.3 of Part II (funding not available). If the operation of those provisions results in finance being available then, as soon as practical after such finance becomes available, the Landlord shall, unless it has other objections falling within paragraphs 3.2.1(a) – 3.2.1(d) or 3.2.1(f) – 3.2.1(g) (inclusive), give a notice pursuant to paragraph 3.2.2 of this Part and the other provisions of this Part shall come into operation accordingly.

4 RESOLUTION OF DISPUTES AND VARIATION CONFIRMATION

4.1 Within ten (10) Business Days of receipt of the notice referred to in paragraph 3.2 of this Part:


4.1.1 if the Landlord has served a notice under paragraph 3.2.1 but the Tenant does not accept that the Landlord is entitled to object to the Variation Enquiry, the matter may be referred for resolution in accordance with Clause 49 and if the dispute is resolved in favour of the Tenant then the Landlord shall forthwith give the notice referred to in paragraph 3.2.2;

4.1.2 if the contents of the notice under paragraph 3.2.2 shall be to the satisfaction of the Tenant it shall so inform the Landlord and the parties shall proceed to agree or determine all the matters referred to in paragraph 4.3 of this Part; or

4.1.3 if it wishes to consider further any matter, the Tenant may give notice to that effect to the Landlord provided that if no response is given under paragraph 4.1.2 prior to the date referred to in paragraph 3.2.2(c), the Variation Enquiry shall be deemed to have been withdrawn; or

4.1.4 if any aspect of a notice under paragraph 3.2.2 shall not be to the Tenant satisfaction it shall so notify the Landlord and shall specify the alterations to the notice which he would require in order to be so satisfied.

4.2 If the Tenant has given a notice referred to in paragraph 4.1.4 of this Part then, unless agreement has been reached with the Landlord within a further ten (10) Business Days from the date of issue of that notice (in which case the Tenant shall proceed pursuant to paragraph 4.1.2 of this Part) or the Tenant withdraws the Variation Enquiry, the outstanding dispute shall be referred for resolution in accordance with Clause 49 to be determined (if the Tenant so requires it) concurrently with any matter referred to in paragraph 4.3 of this Part. In seeking to reach agreement and/or in so determining a dispute pursuant to this paragraph or to paragraph 4.3, the criterion to be applied to resolve any such dispute (except where another criterion or other criteria are expressly or by implication stated in this Schedule) shall be that the Landlord shall be in no worse position in relation to the Lease Operations (and its obligations pursuant to leases of other premises at the Facilities) after the Variation is implemented than it would have been in had the Variation not been implemented.

4.3 The parties shall meet and seek to agree the matters referred to in paragraphs 4.3.1 and 4.3.2 in relation to the Variation, failing which agreement being reached in a reasonable period of time, either party may refer any matter for resolution in accordance with Clause 49. The matters to be agreed or determined are:

4.3.1 in relation to the terms of the Variation:

(a) the Capital Expenditure required to implement the Variation or saved by such implementation and any costs or expenditure recoverable by the Landlord and/or any out of pocket costs or expenditure all as determined in accordance with the principles set out in Appendix 1 (Variation Pricing Procedure) to be met by the Tenant under this Schedule in connection with or as a consequence of the Variation and the timing and method of payment thereof (including, where applicable, payment pursuant to paragraph 3 of Part II of this Schedule);

(b) the specification of any Service Variation (including any further Service Variation) required in connection with the Variation and


whether the Landlord has any right to object to such Service Variation under the provisions of this Schedule;

(c) any alteration to the Lease Payment pursuant to the provisions of Part III of this Schedule and the other results of the operation of Part III in accordance with the provisions of that Part;

(d) any amendment to the provisions of this Lease which is referred to in paragraph 3.2.2(e);

(e) any relief to be granted to the Landlord in respect of any Unavailability Events and/or Performance Failures as referred to in paragraph 3.2.2(f); and

(f) any change to the Completion Date; and

(g) [any increase or decreases in staffing levels which may be required in any Service;]123

in each case occasioned by the Variation; and

4.3.2 the terms of a supplementary agreement under which:

(a) as required to give effect to the Variation in each case, the Tenant's Requirements and/or the Landlord's Proposals are amended (in respect of any Alteration or Additional Alteration); and/or provision is made for the amendment of the as-built drawings and specifications, drawings, operating and maintenance manuals, the asset register, the health and safety file (all on completion of an Alteration or Additional Alteration); and/or the Method Statements or Service Specifications are amended in respect of any Service Variation; and

(b) the matters referred to in paragraph 4.3 of this Part are fully recorded and given effect as amendments to and/or other variations to the provisions of this Lease and/or such other documentation as is necessary.

Tenant Funding Information

4.4 The Tenant shall upon request from the Landlord provide information to the Landlord to show how the Lease Payments (as altered in accordance with Part III) and any capital sum payable in accordance with paragraph 3 of Part II will be funded by the Tenant, including, to the extent that the Tenant is required to obtain the same in accordance with the procedures applicable to the Tenant or the NHS (or any successor of it):

4.4.1 written approval to the proposed Variation (and the financial consequences for the Tenant) by each of Her Majesty's Treasury and by the Secretary of State and giving satisfactory comfort to the Landlord regarding affordability and the legal capacity of the Tenant to require and implement the Variation, in the manner contemplated by the Variation Enquiry; and

123 Applies to soft FM Services only.


4.4.2 letters from the principal purchasers or commissioners of healthcare services from the Tenant (or their equivalent) confirming how the Variation is to be funded and, where required by such procedures, confirming their approval of the Variation,

and, where so requested, the Landlord's satisfaction (acting reasonably and without delay) with the information referred to in this paragraph 4.4 shall be a condition of the Variation Confirmation becoming effective.

4.5 Upon the agreement or determination of all the matters referred to in paragraph 4.3, and upon any Requisite Consent having been modified or obtained, in accordance with paragraph 5 in terms reasonably satisfactory to the Landlord and the Tenant, and upon the provision by the Landlord to the Tenant of evidence reasonably satisfactory to the Tenant of the availability of committed funding for the Variation, if applicable, (subject only to any condition relating to the issue of the Variation Confirmation pursuant to this paragraph), the Tenant shall, by notice (a "Variation Confirmation") confirm the Variation. Upon the issue of the Variation Confirmation, the parties shall enter into the supplementary agreement referred to in paragraph 4.3, subject to and conditional upon any relevant funding procured by the Landlord becoming unconditionally available for drawdown to the Landlord.

4.6 Upon the Variation Confirmation being issued and the supplementary agreement referred to in paragraph 4.5 becoming unconditional in all respects:

4.6.1 the relevant Variation shall be a Qualifying Variation; and

4.6.2 the rights and liabilities of the parties under this Lease shall be construed accordingly.

4.7 If the Tenant does not issue a Variation Confirmation within twenty (20) Business Days of the agreement or determination of all the matters referred to in paragraph 4.3 then the Variation Enquiry will be deemed to have been withdrawn.

5 CONSENT AND VARIATIONS

5.1 If it shall be necessary to obtain or amend any Requisite Consent124 in respect of any Variation then the Landlord shall use all reasonable endeavours to obtain and, where the co-operation and involvement of both parties is required, the Tenant shall use all reasonable endeavours to assist and co operate in obtaining, such Requisite Consent.

5.2 If it shall not be possible to obtain any such Requisite Consent as is referred to in paragraph 5.1 above by the latest date when a Variation Confirmation could be given with regard to the Variation in question in accordance with the notice by the Landlord pursuant to paragraph 3.2.2 of this Part I, the Variation Enquiry shall be deemed to be withdrawn and the provisions of paragraph 7 of this Part I shall apply accordingly.

6 VALUATION OF VARIATIONS

6.1 Not used

124 Consider whether, for facilities with a capital value of £10m or greater or which include operating theatres or similar clinical facilities, the Tenant will be required to obtain consents, such as for certain medical procedures or categories of research.


Service Variations

6.2 The General Procedure shall be operated in respect of Service Variations so that the variation in the Landlord's costs used to assess the effect of the Qualifying Variation under the General Procedure shall be the actual variation in costs which the Landlord and the relevant Service Provider will incur in order to implement the Service Variation (whilst preserving (but not increasing) any margin charged by the Landlord and the Service Provider on their respective costs). The Landlord shall obtain from the relevant Service Provider and disclose to the Tenant the costs of providing the Service to which the Service Variation relates for the period from and including the last preceding Market Testing Date (if any) or the Payment Commencement Date (as the case may be) together with the Service Provider's computation of the variation in its costs resulting from the Service Variation, taking into account:

6.2.1 existing labour rates applying to providers of services which correspond to the Service to which the Service Variation relates, in the open market;

6.2.2 resulting changes in the Service Provider’s and/or Landlord's workforce including costs and provisions associated with the Transfer Regulations and/or the Directive;

6.2.3 the changes in the Method Statements and Service Specifications and any other Variations to this Lease arising out of the Service Variation;

6.2.4 any change in risk transfer; and

6.2.5 changes in working methods including associated capital investment (and the costs of providing such capital) reasonably required to be made by Landlord or the relevant Service Provider other than Variations in the Premises which fall to be dealt with under Parts I or II of this Schedule 12.

6.3 If the Service Variation will result in any employees of the Landlord and/or the relevant Service Provider becoming redundant, the costs of any redundancy payments which require to be paid to each such employee under the Employment Rights Act 1996 and the terms and conditions of their employment shall be paid by the Tenant to the Landlord in the Contract Month in which redundancy occurs save to the extent that such redundancy payments have been increased by reason of any failure by the relevant employer to act reasonably so as to minimise such payments (including any failure to take reasonable efforts to redeploy such employees within the business of the Landlord and/or the relevant Service Provider).

Alterations

6.4 The General Procedure shall be operated in respect of Alterations so that, subject to the other provisions of this Lease providing for the adjustment of any amount payable under this Lease, the Capital Expenditure used to assess the effect of the Qualifying Variation in respect of the Alteration shall be:

6.4.1 the proposed amount of Capital Expenditure in respect of the Alteration specified in the Landlord’s notice under paragraph 3.2.2. of this Part 1; or


6.4.2 (if that sum was not agreed by the Tenant’s Representative) the corresponding sum in respect of that Alteration which was agreed by the Tenant’s Representative and the Landlord or determined in accordance with Clause 49 (Dispute Resolution).

Additional Alterations

6.5 The General Procedure shall be operated in respect of Additional Alterations, subject to paragraph 8 of this Part 1.

7 WITHDRAWAL

The Tenant may withdraw a Variation Enquiry at any time prior to the issue of a Variation Confirmation, or, in the case of a Variation which requires the obtaining of, or an amendment to any Requisite Consent, the date when the last such Requisite Consent is granted, whichever shall be later. In the case of a withdrawal or deemed withdrawal the Tenant shall pay the Landlord all out of pocket expenses reasonably and properly incurred by the Landlord in connection with the Variation as determined pursuant to Appendix 1 (Variation Pricing Procedure).

8 PARTICULAR PROVISIONS IN RESPECT OF THE IMPLEMENTATION OF ALTERATIONS AND ADDITIONAL ALTERATIONS

8.1 Where the Landlord does not intend to use its own resources to execute any Minor Structural Alteration it shall comply with Good Industry Practice with the objective of ensuring that it obtains good value for money (taking into account all relevant circumstances including, in particular, the requirement that the Landlord should be no worse off as a result of the implementation of the Alteration or Additional Alteration when procuring any work, services, supplies, materials or equipment required for the Alteration or Additional Alteration.

8.2 Where the implementation of any Alteration or Additional Alteration by the Landlord is subject to the CDM Regulations, the following provisions shall apply:

8.2.1 the Landlord shall act as "the client" in relation to the relevant Alteration or Additional Alteration for all the purposes of the CDM Regulations;

8.2.2 the Landlord shall comply with all of the obligations incumbent on the client under the CDM Regulations in relation to the relevant Alteration or Additional Alteration; and

8.2.3 the Landlord shall, as soon as reasonably practicable following the completion of the relevant Alteration or Additional Alteration, issue to the Tenant three copies of either the health and safety file prepared in relation to the relevant Alteration or Additional Alteration (where prior to the implementation of the relevant Alteration or Additional Alteration no health and safety file existed in respect of the structure or structures affected by the relevant Alteration or Additional Alteration) or the relevant page or pages to be added to (or substituted for existing pages in) any existing health and safety file affected by the implementation of such Alteration or Additional Alteration.

9 DEEMED SERVICE VARIATIONS


9.1 Where there is a change of use or occupancy of, or operational hours or activities carried on within the whole or any part of the Facilities by the Tenant or any Tenant Party, either party shall be entitled to advise the other party by notice in writing that it considers that a Service Variation has arisen or will arise by operation of the change provided that it does so within three (3) months of the date when it became aware, or ought reasonably to have become aware, of the relevant change. Any notice so served shall describe in as much detail as practicable the nature of the Service Variation which is likely to be required as a result of the change and the date by which the relevant Service Variation must be implemented.

9.2 The Tenant (in the case of a notice under paragraph 9.1 from the Landlord) or the Landlord (in the case of a notice under paragraph 9.1 from the Tenant) shall within fifteen (15) Business Days of receipt of the notice set out its response to the matters set out in such notice. Any dispute as to the nature of the relevant change or as to its effect shall be referred for resolution in accordance with Schedule 21 (Dispute Resolution Procedure).

9.3 Within fifteen (15) Business Days of agreement or determination pursuant to paragraph 9.2 above that a relevant change has occurred which requires a Service Variation to be implemented, the provisions of this Part shall apply to the definition and implementation of the Service Variation as if it were a Tenant Service Variation and as if the notice referred to in paragraph 6.2 of this Part was a Variation Confirmation given at the end of such period of fifteen (15) Business Days.


SCHEDULE 12

Part II- Finance for Capital Expenditure in respect of Variations

1 GENERAL PRINCIPLE

1.1 The Landlord shall use reasonable endeavours to obtain finance for any Capital Expenditure required in respect of a Qualifying Variation (which term, when used in this Part, shall include reference to a proposed Variation which will be a Qualifying Variation when all matters in respect of it have been agreed or determined pursuant to this Lease) in accordance with the other Parts of this Schedule from any funds specifically available to it for this purpose under the Funding Agreements in force from time to time.

1.2 In particular, the Landlord shall use reasonable endeavours to utilise (subject to their terms) any available stand-by facility or "head room" in the loan facilities (however described) (so far as not committed or reserved to fund cost overruns on the Works or otherwise) which is or becomes available to finance Qualifying Variations.

1.3 In the case of an Alteration, the Landlord shall not be required to take any steps to obtain finance beyond those contemplated in paragraphs 1.1 and 1.2. If within fifteen (15) Business Days (or such longer period as the Landlord may decide which shall not, in any event, exceed [ ] Business Days) of the Landlord initiating discussions with the Funders, confirmation has not been obtained from the Funders that they are prepared to enter into their respective credit processes with a view to obtaining credit approval to finance the Alteration, the Landlord shall notify the Tenant’s Representative reporting on the response received from the Funders.

2 FUNDING SHORTFALLS

2.1 If the Landlord cannot obtain finance for all or any part of Capital Expenditure required in respect of a Qualifying Variation (the "Funding Shortfall") from the sources referred to in paragraph 1, and in the case of an Alteration, within twenty (20) Business Days after receiving notice pursuant to paragraph 1.3 of this Part II, the Tenant shall:

2.1.1 subject to the provisions of Parts II and III (as applicable) of this Schedule instruct the Landlord to proceed with development of the relevant Qualifying Variation on the basis that the Tenant will make payments to the Landlord in respect of the Funding Shortfall in accordance with paragraph 3 of this Part; or

2.1.2 withdraw the requirement for the Landlord to implement the relevant Qualifying Variation in accordance with the provisions of Part I of this Schedule.

3 PAYMENT OF CAPITAL SUM BY THE TENANT

3.1 Where pursuant to any provision of this Schedule the Tenant is to pay a capital sum in respect of a Qualifying Variation:

3.1.1 the Tenant and the Landlord shall agree:


(a) a payment schedule in respect of the payment of such sum reflecting the amount and timing of the costs to be incurred by the Landlord in carrying out the Qualifying Variation to the extent borne by the Tenant; and

(b) where payment for part of the Qualifying Variation reflects the carrying out of, or specific progress towards, an element within the Qualifying Variation, an objective means of providing evidence confirming that the part of the Qualifying Variation corresponding to each occasion when payment is due under the payment schedule appears to have been duly carried out,

(such payment schedule and evidence to be determined in accordance with Clause 49 in the event of the Tenant and the Landlord failing to agree as to its terms) provided that where all or any part of the Qualifying Variation is being carried out by a third party under a contract with the Landlord, subject to the terms of any contract between the Landlord and that third party in relation to the implementation of the Qualifying Variation having been approved by the Tenant (such approval not to be unreasonably withheld), the process under Clause 49 shall not determine a payment schedule or evidence which would not enable the Landlord to be funded by the Tenant in time to make payments to that third party in accordance with its contract with the Landlord;

3.1.2 the Tenant shall make payment to the Landlord within fifteen (15) Business Days of receipt by the Tenant of invoices presented to the Tenant (in all material respects) in accordance with the agreed payment schedule (as the case may be, varied by agreement from time to time) accompanied by the relevant evidence (where applicable) that the relevant part of the Qualifying Variation has been carried out; and

3.1.3 if payment is not made in accordance with sub-paragraph 3.1.2 above, the Tenant shall pay interest to the Landlord on the amount unpaid from the date fifteen (15) Business Days after receipt of the relevant invoice until paid at the Default Interest Rate.


SCHEDULE 12

Part III- General Procedure

4 GENERAL

4.1 The procedure described in this Part ("the General Procedure") shall apply where required to determine the effect on payments of a Qualifying Variation.

5 OBJECTIVE OF THE GENERAL PROCEDURE

5.1 The objective of the General Procedure shall be to place the Landlord in no better or worse position than it would have been in had the relevant Variation not taken place taking into account all relevant matters including:

5.1.1 the provisions contained in the Strategic Partnering Agreement by which Liftco’s obligation to achieve value for money is measured by reference to market testing or benchmarking as appropriate to the costs inherent in performing the Qualifying Variation;

5.1.2 the effect of the Qualifying Variation (including, to avoid doubt, the method of financing the Qualifying Variation, taxation and the commercial income earned by the Landlord through its participation in the Project);

5.1.3 the effect of indexation to date and forecast inflation as it would affect the Project;

5.1.4 when any adjustment to the Lease Payment takes effect,

5.1.5 any effect of the Qualifying Variation on the residual value of the Landlord’s reversionary interest in the Site

so that comparison of the Landlord’s position before such adjustments and changes in costs and after such adjustments and changes in costs shows that the nominal internal rate of return from the expected date of implementation of the Qualifying Variation to the expiry of the Term (as shown in [insert cell reference] of the Financial Model) shall be unchanged before and after modelling the effects of the Qualifying Variation125:

6 FINANCING COSTS WHERE LUMP SUM PAYMENT

If payment is to be made pursuant to paragraph 3 of Part II of this Schedule which fully finances the Qualifying Variation, then no account shall be taken of the need to finance any Capital Expenditure in connection with the Qualifying Variation save to the extent that such financing is actually required between implementation of the Qualifying Variation and the

payment of the lump sum

125 This needs to be the combined sub-debt and equity nominal IRR (post tax).


Appendix 1 – Variation Pricing Procedure

Part 1

The procedure set out below shall be used to produce the costs related to Variations under the Lease but without prejudice to the other provisions of this Schedule 12. The steps set out in this Appendix 1 Part 1 should be followed prior to the issue of the Variation Confirmation.

Sub-Part 1: Initial Assessment

1 A preliminary impact assessment of the Variation shall be completed by the Landlord when a Variation Enquiry is received. This will include a risk assessment and indicative timescale for implementation, an initial assessment of the effects on cost (capex, facilities management, services, lifecycle, insurance (where applicable) and relevant third party costs as set out in Part 2 of this Appendix 1 to Schedule 12), and effects on the construction/operation of other parts of the Facilities. The effects on cost may be a reduction rather than an increase for certain Variations (for example, the removal of part or all of a Service or certain Variations relating to equipment that may reduce the requirement for lifecycling).

2 The risk assessment will be shared with the Tenant's Representative and mitigation measures debated and, if possible, agreed.

3 The Landlord shall prepare and provide to the Tenant an estimate of any additional administration costs to be incurred by the Landlord to implement the Variation (being any administration costs incurred by the Landlord over and above the administration costs the Landlord could reasonably expected to incur to administer the performance of the Works and Services had the relevant Variation not been implemented) (the "Additional Administration Costs"). The Additional Administration Costs estimate shall set out the additional work to be undertaken, the person or persons with the appropriate level of expertise which the Landlord believes will be required, their daily rate or rates (as the case may be) and an estimated number of days for such person or persons.

4 Financing options will be presented and agreed in principle.

5 Initial cost estimates will be indicative only.

Sub-Part 2: Pricing

The Variation will be priced in accordance with the methodology attached in Part 2 of this Appendix. Where the final price materially differs from the initial estimate provided under Sub-Part 1 above, the Tenant may require additional pricing information from the Landlord including an explanation as to why the price has materially increased or decreased from the initial estimate.

1 The Landlord shall procure that all Sub-Contractors and Service Providers shall submit their total costs as far as is reasonably possible and shall confirm and fix them prior to issue of the Variation Confirmation.

2 Competitive bids shall, where required by the Tenant in its absolute discretion, be obtained for all Variations with a capital value in excess of [ten thousand pounds (£10,000)] and/or a revenue impact in excess of [ten thousand pounds (£10,000)] per annum [(other than the Contractor's costs in respect of Alterations prior to the Actual Completion Date)] save to the extent agreed otherwise in writing with the Tenant.


3 There shall be no addition of any margin by the Landlord to any third party or Sub-Contractor costs and the Landlord should make available all information relating to the cost of the Variation as requested by the Tenant on an open book basis.

4 An estimate shall be made of all financial modelling costs (if any additional) and these shall be shown separately.

5 The Landlord shall be reimbursed in respect of its own on-going Additional Administration Costs arising in connection with the estimation, preparation and implementation of a Variation as follows:

5.1 if the Tenant requests that the Landlord prepares a full response to the Variation Enquiry then as part of its response pursuant to paragraph 3 of Part 1 of this Schedule 12, the Landlord shall either confirm or revise the estimated Additional Administration Costs previously provided pursuant to Sub-Part 1 paragraph 3 above. Where the estimate of Additional Administration Costs is revised from the estimate provided in Sub-Part 1 paragraph 3 above, the Landlord shall provide to the Tenant timesheets and other supporting information sufficient to evidence the Additional Administration Costs estimated to be incurred by the Landlord in implementing a Variation; and

5.2 The Landlord's Additional Administration Costs to implement the Variation shall be agreed and fixed upon the issue of a Variation Confirmation pursuant to paragraph 4 of Part 1 of this Schedule 22. The Landlord shall not be entitled to any further Additional Administration Costs following the issue of a Variation Confirmation.

6 The Additional Administration Costs agreed between the Landlord and the Tenant pursuant to paragraph 5 shall be payable in connection with all Variations as a positive value regardless of whether the Variation forms an addition or an omission to the Works and/or the Services to be provided to the Tenant.

7 Where the Landlord includes additional insurance costs, it shall demonstrate to the Tenant that there is no existing insurance cover and no headroom capable of being utilised in the existing cover for such Variation.


Part 2

Pricing Table

Description Cost Basis NotesConstruction CostsSubstructure National Health Service

Capital Planning Newsletter – Building Cost Information Service PUBSEC index

Superstructure National Health Service Capital Planning Newsletter – Building Cost Information Service PUBSEC index

Internal Finishes National Health Service Capital Planning Newsletter – Building Cost Information Service PUBSEC index

Fittings and Furnishings National Health Service Capital Planning Newsletter – Building Cost Information Service PUBSEC index

Services National Health Service Capital Planning Newsletter – Building Cost Information Service PUBSEC index

External Building Works National Health Service Capital Planning Newsletter – Building Cost Information Service PUBSEC index

Inflation National Health Service Capital Planning Newsletter – Building Cost Information Service PUBSEC index

Construction profit A fixed amount should be provided or otherwise a percentage of the Construction Costs.

Hard FM Service Costs The FM cost could increase or decrease depending on the nature of the Variation. The Landlord shall pass back to the Tenant the full benefit of any decrease in the FM costs resulting from the Variation.

Staff RelatedNon-Staff RelatedHard FM profit A fixed amount should be provided

or otherwise a percentage of the Hard FM Service Costs.

[Soft FM Service Costs] [The FM cost could increase or decrease depending on the nature of the Variation. The Landlord shall pass back to the Tenant the


full benefit of any decrease in the FM costs resulting from the Variation.]

[Soft FM profit] [A fixed amount should be provided or otherwise a percentage of the Soft FM Service Costs.]

Lifecycle Costs The lifecycle cost could increase or decrease depending on the nature of the Variation.

Landlord CostsConstruction Insurance Cost (if any)

To take into account any existing headroom in insurance cover.

Operational Insurance Cost (if any)

To take into account any existing headroom in insurance cover.

Technical Adviser FeeIndependent Tester FeeLegal Adviser FeeLifecycle Adviser FeeProject Management FeeFinancial Management FeeLandlord Financing CostsLandlord profit (if appropriate) A fixed amount should be

provided.


SCHEDULE 13

Consent and Approval Procedure

1 REVIEW PROCEDURE

1.1 The provisions of this Schedule shall apply whenever any item, document or course of action is required to be reviewed, approved or otherwise processed in accordance with Schedule 13 (Review Procedure).

1.2 Subject to any express provision of this Lease, the manner, form and timing of any submission to be made by the Landlord to the Tenant’s Representative for review under the Review Procedure shall be a matter for the Landlord to determine. Each submission under the Review Procedure shall be accompanied by a copy of the proposed document to be reviewed (including, where applicable, any Reviewable Design Data) or a statement of the proposed course of action (the entire contents of a submission being referred to in this Schedule as a “Submitted Item”). In relation to each Submitted Item, the following procedure shall apply:

1.2.1 as soon as possible the Tenants’ Representative shall return one copy of the relevant Submitted Item to the Landlord endorsed “no comment” or (subject to and in accordance with paragraph 3 (Grounds for Objection) “comments” as appropriate; and

1.2.2 if the Tenants’ Representative fails to return a copy of any Submitted Item (including any re-submitted Submitted Item) duly endorsed in accordance with paragraph 1.2.1, within ten (10) Business Days (or within such other period as the parties may agree in writing) of the date of its submission to the Tenants’ Representative, then the Tenants’ Representative shall be deemed to have returned the Submitted Item to the Landlord endorsed “no comment”; and

1.3 If the Tenants’ Representative raises comments on any Submitted Item in accordance with paragraph 3 (Grounds of Objection) he shall state the ground upon which such comments are based and the evidence or other information necessary to substantiate that ground. To the extent that the Tenants’ Representative comments on a Submitted Item other than on the basis set out in this Schedule, or fails to comply with the provisions of this paragraph, the Landlord may request written clarification of the basis for such comments and, if clarification is not received within ten (10) Business Days of such request by the Landlord, refer the matter for determination in accordance with the Dispute Resolution Procedure.

2 FURTHER INFORMATION

2.1 The Landlord shall submit any further or other information, data and documents that the Tenants’ Representative reasonably requires in order to determine whether he has a basis for raising comments or making objections to any Submitted Item in accordance with this Schedule. If the Landlord does not submit any such information, data and documents, the Tenants’ Representative shall be entitled to:

2.1.1 comment on the Submitted Item on the basis of the information, data and documents which have been provided; or

2.1.2 object to the Submitted Item on the grounds that insufficient information, data and documents have been provided to enable the Tenants’


Representative to determine whether he has a legitimate basis for commenting or objecting in accordance with this Schedule.

3 GROUNDS OF OBJECTION

3.1 The expression “raise comments” in this paragraph shall be construed to mean “raise comments or make objections” unless the contrary appears from the context. The Tenants’ Representative may raise comments in relation to any Submitted Item on the grounds set out in paragraph 2 above or on the ground that the Submitted Item would (on the balance of probabilities) breach any Law but otherwise may raise comments in relation to a Submitted Item only as follows:

3.1.1 in relation to any Submitted Item if:

(a) the Landlord’s ability to perform its obligations under this Lease would (on the balance of probabilities) be adversely affected by the implementation of the Submitted Item; or

(b) the implementation of the Submitted Item would (on the balance of probabilities) adversely affect any right of the Tenant under this Lease or its ability to enforce any such right;

3.1.2 in relation to the submission of any proposed revision or substitution for the Method Statements or any part of any Method Statement (as the case may be) pursuant to Clause 34.3 (Landlord Services Changes), on the grounds that:

(a) the proposed revision or substitution is not in accordance with Good Industry Practice;

(b) the performance of the Service in accordance with the proposed revision or substitution would (on the balance of probabilities):

(i) be materially different from the performance of the Service in accordance with the Method Statement prior to such proposed revision or substitution; or

(ii) be less likely to achieve compliance with the Service Specification for that Service; or

(iii) have an adverse effect on the operations of the Tenant or on the safety of any users of the Facilities; or

(c) the proposed revision or substitution would (on the balance of probabilities) result in an inferior standard of performance of the relevant Service to the standard of performance in accordance with the Method Statement prior to such proposed revision or substitution; and

3.1.3 in relation to the submission of any Schedule of Programmed Maintenance, any revision to any Schedule of Programmed Maintenance pursuant to Clause 35.1 – 35.5 (Maintenance) or any submission of Unprogrammed Maintenance Works pursuant to Clause 35.8 (Maintenance), on the grounds that:


(a) carrying out the Programmed Maintenance or the Unprogrammed Maintenance Works in the period or at the times suggested would (on the balance of probabilities) interfere with the operations of the Tenant or of any Tenant Party and such interference could be avoided or mitigated by the Landlord rescheduling the Programmed Maintenance or the Unprogrammed Maintenance Works; or

(b) in relation to the Schedule of Programmed Maintenance, the proposed hours for carrying out the Programmed Maintenance are not consistent with the principles set out in paragraph 7 to this Schedule; or

(c) the proposed method of performance of the Programmed Maintenance or the Unprogrammed Maintenance Works would not be in accordance with the Service Specification for that Service; or

(d) the safety of users of the Facilities would (on the balance of probabilities) be adversely affected; or

(e) the period for carrying out the Programmed Maintenance or the Unprogrammed Maintenance Works would (on the balance of probabilities) exceed the period reasonably required for the relevant works.

4 EFFECT OF REVIEW

4.1 Any Submitted Item which is returned or deemed to have been returned by the Tenants’ Representative endorsed “no comment” shall be complied with or implemented (as the case may be) by the Landlord.

4.2 If the Tenant’s Representative returns the Submitted Item to the Landlord endorsed “comments”, the Landlord shall comply with such Submitted Item after amendment in accordance with the comments unless the Landlord disputes that any such comment is on grounds permitted by this Lease, in which case the Landlord or the Tenant’s Representative may refer the matter for determination in accordance with the Dispute Resolution Procedure and the Landlord shall not act on the Submitted Item until such matter is so determined or otherwise agreed.

4.3 The return or deemed return of any Submitted Item endorsed “no comment” shall mean that the relevant Submitted Item may be used or implemented for the purposes for which it is intended but, save to the extent expressly stated in this Lease such return or deemed return of any Submitted Item shall not otherwise relieve the Landlord of its obligations under this Lease nor is it an acknowledgement by the Tenant that the Landlord has complied with such obligations.

5 DOCUMENTATION MANAGEMENT

5.1 The Landlord shall issue four copies of all Submitted Items to the Tenant and compile and maintain a register of the date and contents of the submission of all Submitted Items.

5.2 The Landlord shall compile and maintain a register of the date of receipt and content of all Submitted Items that are returned or deemed to be returned by the Tenant’s


Representative.

5.3 Save to the extent set out elsewhere in this Schedule, no review, comment or approval by the Tenant shall operate to exclude or limit the Landlord’s obligations or liabilities under the Lease (or the Tenant’s rights under this Lease).

6 VARIATIONS

6.1 No approval or comment or any failure to give or make an approval or comment under this Schedule shall constitute a Variation save to the extent provided in this Schedule.

6.2 If, having received comments from the Tenant’s Representative, the Landlord considers that compliance with those comments would amount to a Variation, the Landlord shall, before complying with the comments, notify the Tenant of the same and, if it is agreed by the parties or determined pursuant to the Dispute Resolution Procedure that a Variation would arise if the comments were complied with, the Tenant may, if it wishes, implement the Variation and it shall be dealt with in accordance with Schedule 12 (Variation Procedure). Any failure by the Landlord to notify the Tenant that it considers compliance with any comments of the Tenants’ Representative would amount to a Variation shall constitute an irrevocable acceptance by the Landlord that any compliance with the Tenant’s Representative’s comments shall be without cost to the Tenant and without any extension of time.

7 HOURS OF OPERATION

7.1 The Landlord shall not carry out Programmed Maintenance at the Facilities during the hours of [ ] to [ ] from Monday to Friday (“Normal Working Hours”).126

7.2 The Landlord may, with the consent of the Tenant (which consent shall not be unreasonably withheld) and subject to paragraph 7.3 carry out Maintenance Works (excluding Programmed Maintenance) at the Facilities during the Normal Working Hours provided always that it shall take into account:

7.2.1 the likely disturbance to the Tenant, its subtenants and other occupiers and the staff and patients of any of them within the immediate area where the Maintenance Works are to be undertaken;

7.2.2 the likely disturbance to adjacent areas, the Tenant, its subtenants and other occupiers and the staff and patients of any of them in those adjacent areas that may be affected by the Maintenance Works to be undertaken in the area(s) identified in paragraph 7.2.1 above; and

7.2.3 compliance with the Law.

7.3 Where the Landlord requires access to the Facilities during Normal Working Hours, the Landlord will consult with and obtain the consent of the Tenant concerning dates, times and periods during which Maintenance Works are to be undertaken in those areas so as to minimise disruption to those areas.

126 These are not binding on the Tenant. The sole purpose is to provide a restriction on when the Landlord can carry out maintenance. On a scheme specific basis, the Tenant may agree to permit certain elements of Programmed Maintenance to be carried out within Normal Working Hours, in order to provide a more economic solution and potentially less disruptive solution.


SCHEDULE 14


SCHEDULE 14A127

Tenant’s option to purchase at end of term

1 DEFINITIONS

In this Schedule the following expressions shall where the context so admits have the meanings given in this paragraph 1 of Schedule 14A, and any other defined terms shall have the meaning given to those defined terms in Schedule 1 to the Lease:

"Actual Market Value"the price at which the Site could be sold in the open market at the Pricing Date by a willing seller to a willing buyer assuming:

(a) a reasonable period in which to negotiate the sale taking into account the nature of the Site and the state of the property market;

(b) that values will remain stable throughout the period;

(c) that the Site will be freely exposed to the open market; and

(d) that no account is to be taken of any bid by a special buyer;

and for the avoidance of doubt such sale shall be subject to all subsisting leases and other interests (if any) in the Site at the Pricing Date;

"Adjustment"the amount which is the total of:

(a) 25% of the amount by which the Actual Market Value exceeds the First Level Figure

PLUS

(b) 25% of the amount by which the Actual Market Value exceeds the Second Level Figure.

PLUS

(c) 25% of the amount by which the Actual Market Value exceeds the Third Level Figure

By way of example if the Actual Market Value is £3,500,000 and the Residual Value is £1,000,000 the Adjustment =

£500,000 (25% x (£3,500,000 - £1,500,000)+£375,000 (25% x (£3,500,000 - £2,000,000)+£125,000 (25% x (£3,500,000 - £3,000,000)

= £1,000,000

"Completion Date"127 Where Overage provisions and Adjustments may apply, these will be dealt with on a site specific basis in each part

of Schedule 14.


[the twentieth (20th) Business Day after the determination of the Actual Market Value pursuant to paragraph 3.4;]128

"Contract Rate"for the purposes of the Standard Conditions four per cent above the base rate of HSBC Bank plc from time to time;

"First Level Figure"Residual Value x (150/100);

"Landlord's Solicitors"[ ]or such firm of solicitors practising in England as the Landlord shall notify to the Tenant in writing;

"Option"the option granted by paragraph 3 of this Schedule;

"Option Notice"a notice served by the Tenant in the form of the draft annexed to this Schedule pursuant to the provisions of paragraph 3 of this Schedule;

"Option Period"the period commencing on [the date one year before the expiry of the Term – insert actual date] and expiring on [the date 6 months before expiry of the Term – insert actual date];

"Part 1 Conditions"the conditions in Part 1 of the Standard Conditions and Condition means any one of them;


"Price"subject to Clause 17 the Actual Market Value less the Adjustment;

"Pricing Date"the date of service of the Option Notice;

“Retained Land”means [ ]129

"Second Level Figure"Residual Value x (200/100);

"Standard Conditions"the Standard Commercial Property Conditions of Sale (Second Edition);

"Tenant's Solicitors"[ ] or such firm of solicitors practising in England as the Tenant shall notify the Landlord in writing;

"Third Level Figure"Residual Value x (300/100);

128 The parties can instead agree that the Completion Date will be delayed until the expiry of the Term.129 To be inserted on a project specific basis where paragraph 11 is used.


"Transfer"the transfer to the Tenant executed pursuant to this Schedule.

2 INTERPRETATION

2.1 Obligations undertaken or to be undertaken pursuant to this Schedule by more than a single person shall be made and undertaken jointly and severally

2.2 References to any statute or statutory provision in this Schedule or in the Standard Conditions shall be deemed to refer to any modification or re-enactment thereof for the time being in force whether by statute or directives and regulations (intended to have direct application within the United Kingdom) adopted by the Council of the European Communities

2.3 The headings are inserted for convenience only and shall be ignored in construing the terms and provisions of this Schedule

2.4 References in this Agreement to any clause or sub-clause or schedule without further designation shall be construed as a reference to the clause or sub-clause of or schedule to this Agreement so numbered

2.5 Unless expressly stated to the contrary nothing in this Agreement confers on anyone other than the parties to it any right pursuant to the Contracts (Rights of Third Parties) Act 1999

3 OPTION

3.1 The Landlord hereby grants the Tenant an option to purchase the Site on payment of the Price and otherwise on the terms of this Schedule

3.2 The Tenant shall have the right at any time during the Option Period to exercise the Option by service on the Landlord of an Option Notice

3.3 Service of the Option Notice shall (subject to paragraph 3.5) constitute a binding contract for the sale of the Site to the Tenant at the Price on the terms of this Schedule

3.4 Following service of an Option Notice the parties shall seek to agree the Actual Market Value and in default of agreement within fifteen (15) Business Days of the date of service of the Option Notice then the Actual Market Value shall be determined pursuant to paragraph 15 on the joint application of the Landlord and the Tenant (or if either party fails to join in such application then on the sole application of either party)

3.5 The Tenant shall be entitled to rescind the contract referred to in paragraph 3.3 by service of written notice to that effect upon the Landlord at any time within fifteen (15) Business Days from the date on which the Actual Market Value shall have been determined pursuant to the preceding clause whereupon the agreement contained in this Schedule shall be at an end but without prejudice to the liability of either party to the other in respect of any prior breach of that party’s obligation hereunder

3.6 For the avoidance of doubt the option referred to in this paragraph 3 shall be exercisable only by the Tenant of this Lease


3.7 Conditions 2.2.1 and 2.2.2 of the Standard Conditions do not apply to this Agreement

4 NO DEPOSIT

No deposit shall be payable by the Tenant at any time

5 PREPARATION OF THE TRANSFER

5.1 The Transfer shall be duly executed by the Tenant and delivered in escrow to the Landlord's Solicitors not less than five (5) Business Days prior to the Completion Date conditional upon the Landlord duly executing and delivering the same to the Tenant on actual completion

5.2 The Landlord shall not be obliged to complete the sale otherwise than by a single assurance of the whole of the Site to the Tenant or to such other person or persons as the Tenant may direct the Landlord

5.3 The Tenant shall upon completion provide the Landlord with a properly executed or denoted duplicate Transfer at its own expense

6 COMPLETION

6.1 The purchase of the Site shall be completed at the offices of the Landlord's Solicitors on or before 1.00 p.m. on the Completion Date

6.2 The Landlord shall not be bound to complete other than on a Business Day and if for any reason completion takes place after 1.00 p.m. on a Business Day then for the purpose of the apportionment of income and outgoings and the calculation of interest payable by the Tenant completion shall be deemed to have taken place on the next following Business Day

6.3 The Landlord shall not be bound to complete unless the Tenant either:

6.3.1 tenders at completion the balance of the Price which shall be paid to the Landlord in pounds sterling in the form of a draft issued by a member of CHAPS Clearing Limited or

6.3.2 has by means of a telegraphic or other direct transfer transferred to the Landlord’s Solicitors and the Landlord's Solicitors have received as cleared funds before 1.00 p.m. the balance of the Price at completion to the credit of the Landlord's Solicitors client account details of which shall be notified by the Landlord to the Tenant not less than five (5) Business Days prior to the Completion Date

6.4 If the Tenant elects to complete through the post all deeds and documents sent through the post or by way of a document exchange or other means shall be at the risk of the Tenant

6.5 Conditions 8.1.2 and 8.1.3 of the Standard Conditions are varied by the deletion of 2.00 pm as the stipulated time and the substitution of 1.00pm

6.6 Condition 1.1.3(b) of the Standard Conditions is amended to read, “in the case of the seller, even though a mortgage remains secured on the property, if the amount to be paid on completion enables the property to be transferred freed of all


mortgages, (except those to which the sale is expressly subject) or if the seller produces reasonable evidence that this is the case”

6.7 Condition 8.4 of the Standard Conditions is amended to add, “(d) any other sum which the parties agree under the terms of the contract should be paid or allowed on completion”

7 LANDLORD'S CAPACITY

The Landlord shall sell (subject to any existing leases and subject to paragraphs 10-12 inclusive) with full title guarantee.

8 VACANT POSSESSION AND OCCUPATIONAL INTERESTS

The Site is sold with vacant possession on completion save that:

8.1 the Tenant shall make no objection and be allowed no compensation in respect of any chattels belonging to the Landlord in or about the Site which remain at the Site at completion (although such title as the Landlord has to any such chattels shall vest in the Tenant if the same are not removed within seven (7) days of actual completion);

8.2 the risk in the Site shall remain with the Landlord until completion and the Landlord shall continue to insure in accordance with the provisions of this Lease until completion;

8.3 the Site is sold subject to:

8.3.1 this Lease and any underlease or other interest granted out of it;

8.3.2 any Lease Plus Agreement in substantially the same form as this Lease and any underlease or other interest granted out of it;

8.3.3 the rights of any person exercising his rights to remain in occupation pursuant to the Landlord and Tenant Act 1954 or any legislation having similar effect,

and vacant possession shall not be provided to the extent that the Site is subject to any of the matters referred to above.

8.4 Conditions 7.1.2, 7.1.3 and 7.1 4(b) of the Standard Conditions do not apply to this Agreement.

9 TITLE

9.1 Title to the Site shall commence with official copies of the entries on the register of the Title Number [ ] and the title plan.

9.2 The Landlord having supplied copies of its title to the Tenant or the Tenant's Solicitors prior to the date hereof the Tenant shall be deemed to purchase with full knowledge thereof and no requisitions shall be raised thereon or objection made thereto.

9.3 Conditions 6.1, 6.2, 6.3.1 and 6.4.2 of the Standard Conditions do not apply to this Agreement.


10 INCUMBRANCES EASEMENTS ETC AND OTHER ADVERSE RIGHTS

10.1 The Site is sold subject to and where appropriate with the benefit of:

10.1.1 all matters registered or capable of registration as local land charges and resolutions or proposals by any local or other public authority affecting the Site or any part thereof whether given made or effected before or after the date hereof and all notices and requirements of any local or other public authority whether registered or not

10.1.2 all charges notices orders directions regulations conditions agreements restrictions and other matters whatsoever arising (whether before or after the date hereof) under the Planning Acts and the Tenant shall be deemed to accept the Site with full knowledge thereof and of the authorised use of the Site for the purpose of the Planning Acts and shall not raise any requisition enquiry or objection in respect thereof

10.1.3 all notices served by or on behalf of the owner or occupier of any adjoining or neighbouring property

10.1.4 Any matters which are an unregistered interest which override registered dispositions under Schedule 3 to the Land Registration Act 2002

10.1.5 the matters contained or referred to in the property register and charges register (but excluding any mortgage or financial charge) of Title No [ ].

10.1.6 the easements rights exceptions reservations covenants conditions restrictions stipulations provisions agreements declarations and other matters contained or referred to in the documents listed in Schedule 2, Part 3.

10.2 Conditions 3.1.1, 3.1.2, 3.1.3 and 3.3 of the Standard Conditions do not apply to this Agreement

10.2.1 The Tenant is deemed to have full knowledge of the matters referred to in Clause 10.1 and will not raise any enquiry, objection, requisition or claim in respect of any of them

11 [EXCEPTIONS RESERVATIONS AND EXCLUSIONS

11.1 There shall be excepted and reserved from the Transfer to the Tenant in favour of the Retained Land the following rights and easements for the Landlord and his successors in title the owners and occupiers from time to time of the Retained Land and each and every part thereof and all persons authorised by them at all times hereafter and for all purposes whatsoever including for the avoidance of doubt the development or redevelopment of the Retained Land or any part thereof for any purposes whatsoever:

11.1.1 etc

11.2 There shall be excluded from the sale:


11.2.1 any right to the passage of light or air over the Retained Land which would restrict the Landlord's use of the Retained Land for building development or any other purpose

11.2.2 the benefit of all covenants and stipulations imposed by the Landlord on any past sale of any land and premises for the benefit of the Premises and any other land and premises then retained by the Landlord or any part thereof

11.3 The sale of the Site shall not include or operate as a grant or assurance of any liberty privilege easement quasi-easement right or advantage whatsoever now held or enjoyed with or appertaining or reputed to appertain to the Site or any part thereof save as expressly herein provided and the Transfer shall so provide].

12 [EASEMENTS AND RIGHTS TO BE GRANTED

The Site is sold together with the benefit of the following rights and easements over the Retained Land in favour of the Tenant and its successors in title the owners and occupiers from time to time of the Site and each and every part thereof and for all purposes connected with the use and occupation of the Site in accordance with the covenants contained in paragraph 13 hereof

12.1 etc]

13 [TENANT'S COVENANTS

The Tenant will in the Transfer covenant with the Landlord for the benefit of the Retained Land and each and every part thereof and so as to bind so far as may be the Site and every part thereof into whosoever hands the same may come that the Tenant and the persons deriving title under the Tenant will at all times hereafter observe and perform the covenants stipulations and conditions following:

13.1 etc]

14 MISREPRESENTATION

The Tenant hereby admits that:

14.1 no representation whether oral or written (save in any written reply to preliminary enquiries given by the Landlord's Solicitors) has been made to the Tenant prior to the date hereof by or on behalf of the Landlord concerning the Site which forms part of this Schedule or any agreement collateral herewith or which has influenced induced or persuaded the Tenant to enter into this agreement or any agreement collateral herewith and

14.2 nothing herein contained shall be deemed to constitute any warranty by the Landlord or the Landlord's Solicitors that the use of the Site or any part thereof is authorised under the Planning Acts or otherwise for any specific purpose.

15 DISPUTE

In the event of any dispute between the Tenant and the Landlord (save in respect of interpretation of this Schedule) the matter in dispute shall be referred at the request of either party to the decision of an independent surveyor agreed upon by the parties or in default of such agreement by an independent surveyor nominated by the President or the


next available senior officer for the time being of the Royal Institution of Chartered Surveyors and whose costs shall be paid as he shall direct. The independent surveyor’s decision shall be final and binding (save in the case of manifest error)

16 STANDARD CONDITIONS

16.1 The Part I Conditions are incorporated in this Agreement so far as they:

16.1.1 apply to a sale by private treaty;

16.1.2 relate to freehold property;

16.1.3 are not inconsistent with the other clauses in this Agreement; and

16.1.4 have not been modified or excluded by any of the other clauses in this Agreement

16.2 The Part II Conditions are not incorporated into this Agreement

16.3 In addition to the modification or exclusion of the Standard Conditions in other clauses of this Agreement the Part 1 Conditions are modified or excluded as follows:

16.3.1 Condition 1.1.4(a) of the Standard Conditions does not apply to this Agreement;

16.3.2 Condition 1.3.7(c) of the Standard Conditions shall be amended to refer to the “second working day”;

16.3.3 the time limit of five working days referred to in Condition 6.3.2C of the Standard Conditions shall be extended to ten working days and Condition 6.3.4 of the Standard Conditions shall be construed accordingly;

16.3.4 the words “and disclosed to the buyer before the contract is made” shall be deleted from Condition 6.6.4 of the Standard Conditions;

16.3.5 the latest time under Condition 8.1.2 of the Standard Conditions shall be 1.00 pm; and

16.3.6 references therein to ‘Seller’ and ‘Buyer’ shall be deemed to be references to the Landlord and Tenant respectively


Draft Form of Option Notice

To : [Landlord]

From: [Tenant]

Option Property : [ ]

Lease: [the Lease dated [ ] and made between [ ] and [ ]

We hereby give you notice that we exercise the option to purchase the Option Property contained in Clause [ ] and Schedule 14A of the Lease at the price to be determined in accordance with the provisions of the Lease

Signed by [Tenant] or [(name of agent) the duly authorised agent of the Tenant on its behalf]

Date: ]


SCHEDULE 14B

Tenant’s pre-emption right pursuant to Clause 38(Midway through term)

17 DEFINITIONS

In this Schedule the following expressions shall where the context so admits have the meanings given in this paragraph 1 of Schedule 14B, and any other defined terms shall have the meaning given to those defined terms in Schedule 1 to the Lease:

"Pre-emption Price"the price at which the Landlord has reached agreement (subject to the expiry of the pre-emption right contained in this Schedule) with an independent third party to sell the interest in the Site after having exposed the Site for sale to the open market, and for the avoidance of doubt such sale shall be subject to all subsisting interests (if any) in the Site at the Pricing Date;

"Additional Adjustment"the amount to be calculated in accordance with the following formula: AD=C-(NXMD)WhereAD=the Additional AdjustmentC=the amount of the capital contribution as specified in Schedule 1 of this LeaseN=the month in which the Completion Date occurs (as determined by reference to the number of complete months from the month in which the Payment Commencement Date occurs)MD=C/300, being a monthly discount calculated by taking the Capital Payment and dividing it by the number of months in the Term, i.e. 12 months x25 years

"Adjustment"the amount which is the total of:

(a) 25% of the amount by which the Pre-emption Price exceeds the First Level Figure

PLUS

(b) 25% of the amount by which the Pre-emption Price exceeds the Second Level Figure

PLUS

(c) 25% or the amount by which the Pre-emption Price exceeds the Third Level Figure

By way of example if the Pre-emption Price is £3,500,000 and the Book Value is £1,000,000 the Adjustment =

£500,000 (i.e. 25% x (£3,500,000 - £1,500,000)+£375,000 (i.e. 25% x (£3,500,000 - £2,000,000)+£125,000 (i.e. 25% x (£3,500,000 - £3,000,000)

= £1,000,000

"Book Value"


means the value at which the Site was placed in the Landlord’s accounts as at the date of completion of the Sale Agreement in connection with the Lease plus or minus such revaluations or depreciations to the value to that Site as are shown in the Landlord’s accounts as at the date the Pre-emption Price is determined, excluding for these purposes, any revaluations that occur as a result of the provisions of the second Schedule of the Sale Agreement;

"Completion Date"the twentieth (20th) Business Day after the date upon which the Pre-emption Price Notice is given pursuant to paragraph 3;

"Computer Model"means the Computer Model utilised on or about the date of the Lease Plus Agreement as the method for calculating the Lease Payments under the Lease Plus Agreement;


"First Level Figure"Book Value x (150/100);

"Landlord's Solicitors"[ ] or such firm of solicitors practising in England as the Landlord shall notify to the Tenant in writing;



"Pre-Emption Notice"a notice served by the Tenant in the form of the draft annexed to this Schedule 14B pursuant to the provisions of paragraph 3 of this Schedule;

"Price"subject to Clause 17 the Pre-emption Price less (in instances where the Pre-emption Price is greater than the amount then outstanding (including any breakage costs actually and reasonably incurred which directly relate to the repayment of such facilities but excluding legal and other costs incurred in exercising the right of sale) under facilities made available to the Landlord in respect of this Site by the Funders to the Landlord the Adjustment and the Additional Adjustment but provided that where the disposal triggering the pre-emption right referred to in this Schedule takes place in circumstances where the Funders have either exercised their right of sale or have required the Landlord to sell the Site the Adjustment and the Additional Adjustment shall be deducted from the Pre-emption Price only to the extent that, after such deduction, the Price is not less than the amount then outstanding (including any breakage costs actually and reasonably incurred which directly relate to the repayment of such facilities but excluding legal and other costs incurred in exercising the right of sale) under facilities made available to the Landlord in respect of this Site by Funders to the Landlord;

"Pricing Date"the date on which the Pre-emption Price Notice referred to in paragraph 3 is served;



“Sale Agreement”means [sale agreement by which the Site was transferred to the Landlord]

"Second Level Figure"Book Value x (200/100);



"Third Level Figure"Book Value x (300/100);


18 INTERPRETATION






19 PRE-EMPTION RIGHT

19.1 The Landlord hereby grants the Tenant a pre-emption right to purchase the Site on payment of the Price and otherwise on the terms of this Schedule

19.2 The Landlord shall serve a notice on the Tenant within five (5) Business Days of the commencement of marketing of the Site by the Landlord or its Funders. Such commencement to be deemed to have commenced upon the public advertising of the intention to sell

130 To be inserted on a project specific basis where paragraph 11 is used.


19.3 Immediately upon determination of the Pre-emption Price, the Landlord shall determine the Book Value of the Site and shall seek to agree the Book Value with the Tenant within [five (5)] Business Days of the notification to the Tenant of the Book Value. If the Tenant fails to agree the Book Value within five (5) Business Days, the matter shall be sent to an Expert in accordance with the provision of Clause 49 (Disputes Resolution Procedures) of this Lease who will determine the Book Value within five (5) Business Days of a referral to him of the Issue

19.4 Immediately upon determination of the Book Value, the Landlord shall serve upon the Tenant a written notice (the “Pre-emption Price Notice”) stating the Price at which the Tenant may purchase the Site in accordance with its pre-emption rights hereunder.

19.5 The Tenant shall have fifteen (15) Business Days in which to decide whether it wishes to exercise its pre-emption rights hereunder. Failure to notify the Landlord within that fifteen (15) Business Day period shall be deemed to be a decision that it does not wish to exercise such rights under this Schedule.

19.6 The Tenant shall have the right at any time during the fifteen (15) Business Day period referred to in paragraph 3.5 above to exercise its pre-emption rights by service on the Landlord of a Pre-emption Notice.

19.7 Service of the Pre-emption Notice shall (subject to paragraph 3.5) constitute a binding contract for the sale of the Site to the Tenant at the Price on the terms of this Schedule


20 NO DEPOSIT






22 COMPLETION


22.2 The Landlord shall not be bound to complete other than on a Business Day and if for any reason completion takes place after 1.00 p.m. on a Business Day then for


the purpose of the apportionment of income and outgoings and the calculation of interest payable by the Tenant completion shall be deemed to have taken place on the next following Business Day


22.3.1 tenders at completion the balance of the Price which shall be paid to the Landlord in pounds sterling in the form of a draft issued by a member of CHAPS Clearing Services Limited or




22.6 Condition 1.1.3(b) of the Standard Conditions is amended to read, “in the case of the seller, even though a mortgage remains secured on the property, if the amount to be paid on completion enables the property to be transferred freed of all mortgages, (except those to which the sale is expressly subject) or if the seller produces reasonable evidence that this is the case”



The Landlord shall sell (subject to all subsisting leases and to paragraphs 9-11 below) with full title guarantee



24.1 the Tenant shall make no objection and be allowed no compensation in respect of any chattels belonging to the Landlord in or about the Site which remain at the Site at completion (although such title as the Landlord has to any such chattels shall vest in the Tenant if the same are not removed within seven days of actual completion); and

24.2 the risk in the Site shall remain with the Landlord until completion and the Landlord shall continue to insure in accordance with the provisions of this Lease until completion; and







24.4 Conditions 7.1.2, 7.1.3 and 7.1.4(b) of the Standard Conditions do not apply to this Agreement

25 TITLE

25.1 Title to the Site shall commence with official copies of the entries on the register of the Title Number [ ] and the title plan

25.2 The Landlord having supplied copies of its title to the Tenant or the Tenant's Solicitors prior to the date hereof the Tenant shall be deemed to purchase with full knowledge thereof and no requisitions shall be raised thereon or objection made thereto

25.3 Conditions 6.1, 6.2, 6.3.1 and 6.4.2 of the Standard Conditions do not apply to this Agreement









26.1.6 the easements rights exceptions reservations covenants conditions restrictions stipulations provisions agreements declarations and other matters contained or referred to in the documents listed in Schedule 2, Part III


26.3 The Tenant is deemed to have full knowledge of the matters referred to in Clause 10.1 and will not raise any enquiry, objection, requisition or claim in respect of any of them



27.227.2.1 etc



27.3.2 the benefit of all covenants and stipulations imposed by the Landlord on any past sale of any land and premises for the benefit of the Site and any other land and premises then retained by the Landlord or any part thereof

27.4 The sale of the Site shall not include or operate as a grant or assurance of any liberty privilege easement quasi-easement right or advantage whatsoever now held or enjoyed with or appertaining or reputed to appertain to the Site or any part thereof save as expressly herein provided and the Transfer shall so provide]



28.1 etc]


The Tenant will in the Transfer covenant with the Landlord for the benefit of the Retained Land and each and every part thereof and so as to bind so far as may be the Site and every part thereof into whosoever hands the same may come that the Tenant and the


persons deriving title under the Tenant will at all times hereafter observe and perform the covenants stipulations and conditions following:

29.1 etc]




30.2 nothing herein contained shall be deemed to constitute any warranty by the Landlord or the Landlord's Solicitors that the use of the Site or any part thereof is authorised under the Planning Acts or otherwise for any specific purpose

31 DISPUTE

In the event of any dispute between the Tenant and the Landlord (save in respect of interpretation of this Schedule) the matter in dispute shall be referred at the request of either party to the decision of an independent surveyor agreed upon by the parties or in default of such agreement by an independent surveyor nominated by the President or the next available senior officer for the time being of the Royal Institution of Chartered Surveyors and whose costs shall be paid as he shall direct. The independent surveyor’s decision shall be final and binding ( save in the case of manifest error)


32.1 The Part 1 Conditions are incorporated in this Agreement so far as they:





32.2 The Part 2 Conditions are not incorporated into this Agreement





32.3.3 the time limit of five (5) working days referred to in Condition 6.3.2C of the Standard Conditions shall be extended to ten (10) working days and Condition 6.3.4 of the Standard Conditions shall be construed accordingly;



32.4 references therein to ‘Seller’ and ‘Buyer’ shall be deemed to be references to the Landlord and Tenant respectively


Draft Form of Pre-emption Notice

To: [Landlord]

From: [Tenant]

Option Property: [ ]


We hereby give you notice that we exercise the pre-emption rights to purchase the Property contained in Clause 38 and Schedule 14B of the Lease at the price to be determined in accordance with the provisions of the Lease


Date: ]


SCHEDULE 14C

Tenant’s option to purchase as a result of a forced Sale of Shares

33 DEFINITIONS

In this Schedule defined terms shall have the meaning given to them in Clause 38A.

34 INTERPRETATION






34.6 For the purposes of this Schedule other than paragraph 3.5 Shares and Purchase Price shall mean such proportion of the Shares and of the Purchase Price as is applicable under paragraph 3.2 of this Schedule

35 COMPLETION

35.1 The purchase of the Shares shall be completed at the offices of Liftco’s Solicitors at or before 1.00 p.m. on the date for completion identified in Clause 38A.3

35.2 If more than one tenant shall have properly served a notice of the type described in Clause 38A.2 on the Landlord, then the Tenant shall only be entitled to its portion of the Shares (as calculated in accordance with this paragraph), and shall only become liable for its portion of the Purchase Price (as defined in Clause 38A.1). In this event the Landlord131 shall be obliged to procure that the Tenant or its nominee (as the case may be) receive a portion of the Shares, determined in both instances, by dividing the Purchase Price and the Shares by the number of tenants (including the Tenant) properly serving such notice

35.3 The Landlord shall procure the delivery at completion of duly executed stock

transfer forms transferring the Shares to the Tenant(s) or to such other person as they may nominate in writing

131 All references to Holdco are for a three-tier structure. References to Liftco are for a two-tier structure.


35.4 [Liftco] [Holdco] shall not be bound to complete other than on a Business Day and if for any reason completion takes place after 1.00 p.m. on a Business Day then for the purpose of the apportionment of income and outgoings and the calculation of interest payable by the Tenant completion shall be deemed to have taken place on the next following Business Day

35.5 [Liftco] [Holdco] shall not be bound to complete unless the tenant(s) (including the Tenant) either:

35.5.1 tenders at completion the whole of the Purchase Price which shall be paid to such person as Liftco may specify in pounds sterling in the form of a draft issued by a member of CHAPS Clearing Limited or

35.5.2 has by means of a telegraphic or other direct transfer transferred to Liftco’s Solicitors and Liftco's Solicitors have received as cleared funds before 1.00 p.m. the whole of the Purchase Price at completion to the credit of Liftco's Solicitors client account details of which shall be notified by Liftco to the Tenant not less than five (5) Business Days prior to the Completion Date.

36 CAPACITY TO SELL

The Landlord shall procure that the legal and beneficial interest in the Shares shall be sold free from all encumbrances and security interests

37 FURTHER ASSURANCE

The Tenant shall do and the Landlord shall procure that [Liftco] [Holdco] does all such other acts matters and deeds as may be necessary or desirable to transfer good and marketable title to the Shares to the Tenant(s) or their nominees upon receipt of the Purchase Price in accordance with this Schedule 14C


SCHEDULE 14D

Tenant’s option to purchase following Termination for Cause (Clause 43)

38 DEFINITIONS

In this Schedule the following expressions shall where the context so admits have the meanings given in this paragraph 1 of Schedule 14D, and any other defined terms shall have the meaning given to those defined terms in Schedule 1 to the Lease:

"Adjusted Original Acquisition Price"[£ price at which Landlord acquired the Site] adjusted to take account of the impact on the value of the Site (positive or negative):

(a) of the works carried out prior to service of the Option Notice and pursuant to Clause 43.5; and

(b) assuming that the Landlord has complied with Clause 43.5;

"Completion Date"the twentieth (20th) Business Day after the determination of the Adjusted Original Acquisition Price;





"Option Period"the period commencing on the occurrence of a Landlord Event of Default giving rise to the termination of this Lease and expiring on the date three (3) months after the Tenant becomes aware of such Landlord Event of Default;



"Price"the Adjusted Original Acquisition Price;

"Pricing Date"the date of service of the Option Notice;






39 INTERPRETATION






40 OPTION

40.1 The Landlord hereby grants the Tenant an option to purchase the Premises on payment of the Price and otherwise on the terms of this Schedule

40.2 The Tenant shall have the right at any time during the Option Period to exercise the Option by service on the Landlord of an Option Notice PROVIDED THAT the Tenant simultaneously serves the Option Notice pursuant to the option granted under Clause 10 of the Supplemental Lease


40.4 Following service of an Option Notice the parties shall seek to agree the Adjusted Original Acquisition Price and in default of agreement within fifteen (15) Business Days of the date of service of the Option Notice then the Adjusted Original Acquisition Price shall be determined pursuant to paragraph 15 on the joint



application of the Landlord and the Tenant (or if either party fails to join in such application then on the sole application of either party)

40.5 The Tenant shall be entitled to rescind the contract referred to in paragraph 3.3 by service of written notice to that effect upon the Landlord at any time within fifteen (15) Business Days from the date on which the Adjusted Original Acquisition Price shall have been determined pursuant to the preceding clause paragraph whereupon the agreement contained in this Schedule shall be at an end but without prejudice to the liability of either party to the other in respect of any prior breach of that party’s obligation hereunder

40.6 For the avoidance of doubt the option referred to in paragraph 3 shall only be exercisable by the Tenant of this Lease


41 NO DEPOSIT






43 COMPLETION




43.3.1 tenders at completion the balance of the Price which shall be paid to the Landlord in pounds sterling in the form of a draft issued by a member of CHAPS Clearing Limited; or

43.3.2 has by means of a telegraphic or other direct transfer transferred to the Landlord’s Solicitors and the Landlord's Solicitors have received as cleared funds before 1.00 p.m. the balance of the Price at completion to


the credit of the Landlord's Solicitors client account details of which shall be notified by the Landlord to the Tenant not less than five (5) Business Days prior to the Completion Date;

43.3.3 and (in addition to either Clause 6.3.1 or Clause 6.3.2) the Landlord has complied with Clause 43.5 provided that the Tenant shall be entitled to waive this condition by giving reasonable written notice to the Landlord.133






The Landlord shall sell (subject to any subsisting Leases and to paragraphs 10-12 below) with full title guarantee



45.1 the Tenant shall make no objection and be allowed no compensation in respect of any chattels belonging to the Landlord in or about the Site which remain at the Site at completion (although such title as the Landlord has to any such chattels shall vest in the Tenant if the same are not removed within seven days of actual completion); and



45.3.1 this Lease any underlease or other interest granted out of it;


45.3.3 the rights of any person exercising his rights to remain in occupation pursuant to the Landlord and Tenant Act 1954 or any legislation having

133 If the Tenant chooses to waive them it will want to seek a downwards adjustment to the Adjusted Original Acquisition Price to take account of the Landlord's failure to comply with Clause 43.5.


similar effect,



46 TITLE









47.1.4 any matters which are an unregistered interest which override registered dispositions under Schedule 3 to the Land Registration Act 2002

47.1.5 the matters contained or referred to in the property register and charges register (but excluding any mortgage or financial charge) of Title No

47.1.6 the easements rights exceptions reservations covenants conditions restrictions stipulations provisions agreements declarations and other matters contained or referred to in the documents listed in Schedule 2, Part III






48.248.2.1 etc







49.1 etc]



50.1 etc]






52 DISPUTE

In the event of any dispute between the Tenant and the Landlord (save in respect of interpretation of this Schedule) the matter in dispute shall be referred at the request of either party to the decision of an independent surveyor agreed upon by the parties or in default of such agreement by an independent surveyor nominated by the President or the next available senior officer for the time being of the Royal Institution of Chartered Surveyors and whose costs shall be paid as he shall direct. The independent surveyor’s decision shall be final and binding (save in the case of manifest error)








53.3 In addition to the modification or exclusion of the Conditions in other clauses of this Agreement the Part 1 Conditions are modified or excluded as follows:



53.3.3 the time limit of five (5) working days referred to in Condition 6.3.2C of the Standard Conditions shall be extended to ten working days and Condition 6.3.4 of the Standard Conditions shall be construed accordingly;







To: [Landlord]

From: [Tenant]



We hereby give you notice that we exercise the option to purchase the Option Property contained in Clause [ ] and Schedule 14D of the Lease at the price to be determined in accordance with the provisions of the Lease


Date: ]


SCHEDULE 14E

Tenant’s option to purchase following a Force Majeure Event (Clause 48)

54 DEFINITIONS

In this Schedule the following expressions shall where the context so admits have the meanings given in this paragraph 1 of Schedule 14E, and any other defined terms shall have the meaning given to those defined terms in Schedule 1 to the Lease:

"Actual Market Value"the price at which the Site could be sold in the open market at the Pricing Date by a willing seller to a willing buyer assuming:

(a) a reasonable period in which to negotiate the sale taking into account the nature of the Site and the state of the property market; and

(b) that values will remain stable throughout the period; and



and for the avoidance of doubt such sale shall be subject to all subsisting interests (if any) in the Site at the Pricing Date;

"Additional Adjustment"the amount to be calculated in accordance with the following formula: AD=C-(NXMD)Where

AD=the Additional Adjustment

C=the amount of the capital contribution as specified in Schedule 1 of this Lease

N=the month in which the Completion Date occurs (as determined by reference to the number of complete months from the month in which the Payment Commencement Date occurs)

MD=C/300, being a monthly discount calculated by taking the Capital Payment and dividing it by the number of months in the Term, i.e. 12 months x25 years

"Adjustment"Adjustment the amount which is the total of:

(a) 25% of the amount by which the Actual Market Value exceeds the First Level Figure

PLUS

(b) 25% of the amount by which the Actual Market Value exceeds the Second Level Figure

PLUS


(c) 25% or the amount by which the Actual Market Value exceeds the Third Level Figure

By way of example if the Actual Market Value is £3,500,000 and the Book Value is £1,000,000 the Adjustment =

£500,000 (i.e. 25% x (£3,500,000 - £1,500,000)+£375,000 (i.e. 25% x (£3,500,000 - £2,000,000)+£125,000 (i.e. 25% x (£3,500,000 - £3,000,000)

= £1,000,000

"Book Value"means the value at which the Site was placed in the Landlord’s accounts as at the date of completion of the Sale Agreement in connection with the Lease plus or minus such revaluations or depreciations to the value to that Site as are shown in the Landlord’s accounts as at the date the Actual Market Value is determined;

"Completion Date"the fifteenth (15th) Business Day after the determination of the later of the Book Value and the Actual Market Value pursuant to Clause 3.4;

"Computer Model"means the computer model utilised on or about the date of the Lease Plus Agreement as the method for calculating the Lease Payment under the Lease Plus Agreement;


"First Level Figure"Book Value x (150/100);




"Option Period"the period commencing on the Pricing Date and expiring on the date one (1) month after such date;




"Price"subject to Clause 17 the Actual Market Value less (in instances where the Actual Market Value is greater than the amount then outstanding (including any breakage costs actually and reasonably incurred which directly relate to the repayment of such facilities but excluding legal and other costs incurred in exercising the right of sale) under facilities made available to the Landlord in respect of this Site by the Funders to the Landlord the Adjustment and the Additional Adjustment but provided that where the Sale takes place in circumstances where the Funders have either exercised their right of Sale or have required the Landlord to sell the Site the Adjustment and the Additional Adjustment shall be deducted from the Actual Market Value only to the extent that, after such deduction, the Price is not less than the amount then outstanding (including any breakage costs actually and reasonably incurred which directly relate to the repayment of such facilities but excluding legal and other costs incurred in exercising the right of sale) under facilities made available to the Landlord in respect of this Site by Funders to the Landlord;

"Pricing Date"the date of service of the notice in Clause 48.8;


“Sale Agreement”means [the sale agreement by which the Site was transferred to the Landlord]

"Second Level Figure"Book Value x (200/100);


"Tenant's Solicitors[ ] or such firm of solicitors practising in England as the Tenant shall notify the Landlord in writing;

"Third Level Figure"Book Value x (300/100);


55 INTERPRETATION








56 OPTION


56.2 The Tenant shall have the right at any time during the Option Period to exercise the Option by service on the Landlord of an Option Notice.


56.4 Following service of an Option Notice the parties shall seek to agree the Book Value and the Actual Market Value and in default of agreement within fifteen (15) Business Days of the date of service of the Option Notice then the Book Value and/or the Actual Market Value as the case may be shall be determined pursuant to paragraph 15 on the joint application of the Landlord and the Tenant (or if either party fails to join in such application then on the sole application of either party)

56.5 The Tenant shall be entitled to rescind the contract referred to in paragraph 3.3 by service of written notice to that effect upon the Landlord at any time within fifteen (15) Business Days from the later of the determination of the Book Value and the Actual Market Value pursuant to the preceding clause whereupon the agreement contained in this Schedule shall be at an end but without prejudice to the liability of either party to the other in respect of any prior breach of that party’s obligation hereunder

56.6 For the avoidance of doubt the option referred to in this paragraph 3 shall be exercisable only by the Tenant to this Lease


57 NO DEPOSIT







59 COMPLETION




59.3.1 tenders at completion the balance of the Price which shall be paid to the Landlord in pounds sterling in the form of a draft issued by a member of CHAPS Clearing House Limited or







The Landlord shall sell (subject to all subsisting Leases and to paragraphs 10-12 below) with full title guarantee.




61.1 the Tenant shall make no objection and be allowed no compensation in respect of any chattels belonging to the Landlord in or about the Site which remain at the Site at completion (although such title as the Landlord has to any such chattels shall vest in the Tenant if the same are not removed within seven (7) days of actual completion); and



61.3.1 this Lease any underlease or other interest granted out of it;





62 TITLE



62.3 Standard Conditions 6.1, 6.2, 6.3.1 and 6.4.2 of the Standard Conditions do not apply to this Agreement.




63.1.2 all charges notices orders directions regulations conditions agreements restrictions and other matters whatsoever arising (whether before or after the date hereof) under the Planning Acts and the Tenant shall be


deemed to accept the Site with full knowledge thereof and of the authorised use of the Site for the purpose of the Planning Acts and shall not raise any requisition enquiry or objection in respect thereof


63.1.4 any matters which are an unregistered interest which override registered dispositions under Schedule 3 to the Land Registration Act 2002


63.1.6 the easements rights exceptions reservations covenants conditions restrictions stipulations provisions agreements declarations and other matters contained or referred to in the documents listed in the Schedule 2, Part III.





64.264.2.1 etc








65.1 etc]



66.1 etc]





68 DISPUTE













69.3.3 the time limit of five working days referred to in Condition 6.3.2C of the Standard Conditions shall be extended to ten (10) working days and Condition 6.3.4 of the Standard Conditions shall be construed accordingly;






To: [Landlord]

From: [Tenant]



[We hereby give you notice that we exercise the option to purchase the Option Property contained in Clause [ ] and Schedule 14E of the Lease at the price to be determined in accordance with the provisions of the Lease


Date: ]


SCHEDULE 14F

Tenant’s option to purchase following Termination for wilful breach of refinancing provisions (Clause 43.1.3)

1 DEFINITIONS

In this Schedule the following expressions shall where the context so admits have the meanings given in this paragraph 1 of Schedule 14F, and any other defined terms shall have the meaning given to those defined terms in Schedule 1 to the Lease:

“Actual Market Value”the price at which the Site could be sold in the open market at the Pricing Date by a willing seller to a willing buyer assuming:

(a) a reasonable period in which to negotiate the sale taking into account the nature of the Site and the state of the property market;

(b) that values will remain stable throughout the period;



and for the avoidance of doubt such sale shall be subject to all subsisting leases and other interests (if any) in the Site at the Pricing Date;

"Additional Adjustment"the amount to be calculated in accordance with the following formula: AD=C-(NXMD)WhereAD=the Additional AdjustmentC=the amount of the capital contribution as specified in Schedule 1 of this LeaseN=the month in which the Completion Date occurs (as determined by reference to the number of complete months from the month in which the Payment Commencement Date occurs)MD=C/300, being a monthly discount calculated by taking the Capital Payment and dividing it by the number of months in the Term, i.e. 12 months x25 years

“Adjustment”the amount which is the total of:

(a) 25% of the amount by which the Price exceeds the First Level Figure

PLUS

(b) 25% of the amount by which the Price exceeds the Second Level Figure

PLUS

(c) 25% or the amount by which the Price exceeds the Third Level Figure

By way of example if the Price is £3,500,000 and the Book Value is £1,000,000 the Adjustment =

£500,000 (i.e. 25% x (£3,500,000 - £1,500,000)

+£375,000 (i.e. 25% x (£3,500,000 - £2,000,000)+£125,000 (i.e. 25% x (£3,500,000 - £3,000,000)

= £1,000,000

“Book Value”means the value at which the Site was placed in the Landlord’s accounts as at the date of completion of the Sale Agreement in connection with the Lease plus or minus such revaluations or depreciations to the value to that Site as are shown in the Landlord’s accounts as at the date the Actual Market Value is determined;

“Completion Date”[the twentieth (20th) Business Day after the determination of the Actual Market Value pursuant to paragraph 3.4;]

“Contract Rate”for the purpose of the Standard Conditions four per cent above the base rate of HSBC Bank plc from time to time;

“First Level Figure”Book Value x (150/100);

“Landlord’s Solicitors”[ ] or such firm of solicitors practising in England as the Landlord shall notify to the Tenant in writing;

“Option”the option granted by paragraph 3 of this Schedule;

“Option Notice”a notice served by the Tenant in the form of the draft annexed to this Schedule pursuant to the provisions of paragraph 3 of this Schedule;

“Part 1 Conditions”the conditions in Part 1 of the Standard Conditions and Condition means any one of them;

“Part 2 Conditions”the conditions in Part 2 of the Standard Conditions and Condition means any one of them;

“Price”subject to Clause 17, the Actual Market Value less the Adjustment less the Additional Adjustment less any sum which may be due to the Tenant in accordance with paragraph 2 of Schedule 24 provided that the Additional Adjustment shall only be deducted to the extent that, after taking into account the deduction of the Additional Adjustment, the Price exceeds the amount then outstanding (including any breakage costs actually and reasonably incurred in exercising the right of sale and any [early repayment fee] to be made pursuant to and in accordance with the Facilities Agreement) in the facilities made available to the Landlord in respect of the Premises by Funders;

“Pricing Date”the date of service of the Option Notice;

“Retained Land”

means [ ]135

“Sale Agreement”means [the sale agreement by which the Site was transferred to the Landlord]

“Second Level Figure”Book Value x (200/100);

“Standard Conditions”means the Standard Commercial Property Conditions of Sale (Second Edition);

“Tenant’s Solicitors”[ ] or such firm of solicitors practising in England as the Tenant shall notify the Landlord in writing;

“Third Level Figure”Book Value x (300/100);

“Transfer”the transfer to the Tenant executed pursuant to this Schedule.

2 INTERPRETATION






3 OPTION


3.2 The Tenant shall have the right at any time after the occurrence of the circumstances set out in Clause 43.1.3 to exercise the Option by service on the Landlord of an Option Notice.



3.4 Following service of an Option Notice the parties shall seek to agree the Actual Market Value and in default of agreement within fifteen (15) Business Days of the date of service of the Option Notice then the Actual Market Value shall be determined pursuant to paragraph 15 on the joint application of the Landlord and the Tenant (or if either party fails to join in such application then on the sole application of either party)

3.5 The Tenant shall be entitled to rescind the contract referred to in paragraph 3.3 by service of written notice to that effect upon the Landlord at any time within fifteen (15) Business Days from the date on which the Actual Market Value shall have been determined pursuant to the preceding clause whereupon the agreement contained in this Schedule shall be at an end but without prejudice to the liability of either party to the other in respect of any prior breach of that party’s obligation hereunder

3.6 For the avoidance of doubt the option referred to in this paragraph 3 shall be exercisable only by the Tenant of this Lease


4 NO DEPOSIT






6 COMPLETION




6.3.1 tenders at completion the balance of the Price which shall be paid to the Landlord in pounds sterling in the form of a draft issued by a member of CHAPS Clearing Limited or







The Landlord shall sell (subject to any existing leases and subject to paragraphs 10-12 inclusive) with full title guarantee.



8.1 the Tenant shall make no objection and be allowed no compensation in respect of any chattels belonging to the Landlord in or about the Site which remain at the Site at completion (although such title as the Landlord has to any such chattels shall vest in the Tenant if the same are not removed within seven days of actual completion);

8.2 the risk in the Site shall remain with the Landlord until completion and the Landlord shall continue to insure in accordance with the provisions of this Lease until completion;






8.4 Conditions 7.1.2, 7.1.3 and 7.1 4(b) of the Standard Conditions do not apply to this Agreement.

9 TITLE











10.1.6 the easements rights exceptions reservations covenants conditions restrictions stipulations provisions agreements declarations and other matters contained or referred to in the documents listed in Schedule 2, Part 3.





11.1.1 etc




11.3 The sale of the Site shall not include or operate as a grant or assurance of any liberty privilege easement quasi-easement right or advantage whatsoever now held or enjoyed with or appertaining or reputed to appertain to the Site or any part thereof save as expressly herein provided and the Transfer shall so provide].



12.1 etc]



13.1 etc]




14.2 nothing herein contained shall be deemed to constitute any warranty by the Landlord or the Landlord's Solicitors that the use of the Site or any part thereof is authorised under the Planning Acts or otherwise for any specific purpose.

15 DISPUTE



16.1 The Part I Conditions are incorporated in this Agreement so far as they:





16.2 The Part II Conditions are not incorporated into this Agreement




16.3.3 the time limit of five (5) working days referred to in Condition 6.3.2C of the Standard Conditions shall be extended to ten (10) working days and Condition 6.3.4 of the Standard Conditions shall be construed accordingly;



16.3.6 references therein to ‘Seller’ and ‘Buyer’ shall be deemed to be references to the Landlord and Tenant respectively


To: [Landlord]

From: [Tenant]



We hereby give you notice that we exercise the option to purchase the Option Property contained in Clause [ ] and Schedule 14F of the Lease at the price to be determined in accordance with the provisions of the Lease


Date: ]

SCHEDULE 15

Operational Requirements

1 SITE, SECURITY AND PERSONNEL ISSUES

1.1 The Landlord shall procure that:

1.1.1 there shall at all times be a sufficient number of staff (including all relevant grades of supervisory staff) engaged in the provision of the Lease Operations and with the requisite level of skill and experience. To avoid doubt, this obligation shall include ensuring that there are sufficient staff to cover periods of holiday, sickness, other absence and anticipated and actual peaks in demand for each of the Services; and

1.1.2 all staff receive such training and supervision as is necessary to ensure the proper performance of this Lease and compliance with all health and safety rules, procedures and requirements.

1.2 The Tenant agrees to permit and arrange for prospective Transferring Employees who are employees of the Tenant, prior to the relevant Transfer Date, to receive training and to make familiarisation visits to the Facilities (all as reasonably requested by the Landlord and in such manner as to ensure that there is no material adverse effect on the operations of the Tenant as a result of the same).

1.3 The Tenant shall have the right to refuse admittance to, or order the removal from the Premises of any person employed by (or acting on behalf of) the Landlord whose presence, the Tenant has reasonable grounds to believe, is not a fit and proper person to be in the Premises.

1.4 Any action taken under paragraph 1.3 shall forthwith be confirmed in writing by the Tenant to the Landlord and, to avoid doubt, shall not relieve the Landlord of any of its obligations under this Lease.

2 CONVICTIONS AND DISCIPLINARY ACTION

2.1 Subject to paragraph 2.2 below, before the Landlord or any Supply Chain Member engages or employs any person in the provision of the Lease Operations, or in any activity related to, or connected with, the provision of Lease Operations, (other than Transferring Employees of the Tenant) the Landlord must and must ensure that any Supply Chain Member must, at its own cost comply with (without limitation) the following guidance:

2.1.1 NHS Employment Check Standards; and

2.1.2 other checks as required by the DBS or which are to be undertaken in accordance with current and future national guidelines and policies.

2.2 The Landlord or any Supply Chain Member may engage a person in an Enhanced DBS Position or a Standard DBS Position (as applicable) pending the receipt of the Standard DBS Check or Enhanced DBS Check or Enhanced DBS & Barred List Check (as appropriate) with the agreement of the Tenant and subject to any additional requirement of the Tenant for that engagement pending the receipt of the Standard DBS Check or Enhanced DBS Check or Enhanced DBS & Barred List Check (as appropriate).

2.3 The Landlord shall procure that the Tenant is kept advised at all time of any member of staff who, subsequent to his/her commencement of employment as a member of staff, receives a conviction or whose previous convictions become known to the Landlord (or any employee of a Supply Chain Member involved in the provision of Lease Operations).

2.4 The Tenant's Representative (acting reasonably) may instruct the Landlord to procure that appropriate disciplinary action is taken against any employee of the Landlord or any Supply Chain Member (in accordance with the terms and conditions of employment of the employee concerned) that misconducts himself or is incompetent or negligent in his duties or the Tenant's Representative has reasonable grounds for believing that their presence or conduct on the Site or at work is otherwise considered by the Tenant’s Representative (acting reasonably) undesirable. The Tenant shall co-operate with any such disciplinary proceedings and shall be advised in writing by the Landlord of the outcome.

2.5 The Landlord shall procure that there are set up and maintained, by it and by all Supply Chain Members, personnel policies and procedures covering all relevant matters (including discipline, grievance, equal opportunities and health and safety). The Landlord shall procure that the terms and the implementation of such policies and procedures comply with Law and Good Industry Practice and that they are published in written form and that copies of them (and any revisions and amendments to them) are forthwith issued to the Tenant.

3 LISTS AND RECORDS

3.1 The Landlord shall procure that the Tenant shall at all reasonable times have access to all material details in respect of all employees of the Landlord or any Supply Chain Member engaged in the provision of the Lease Operations including numbers and categories of staff employed to perform the Lease Operations and including in respect of each such employee:

3.1.1 details of qualifications; and

3.1.2 details of training undertaken by the employee.

4 HEALTH REQUIREMENTS

4.1 The Landlord shall establish that all potential employees or persons who may otherwise perform any of the Lease Operations are medically fit for their proposed tasks in the provision of any Lease Operations and that they do not pose at that time any danger to the health of other persons (provided that the Landlord is not required to procure compliance with an obligation which contravenes the Equality Act 2010) and the Landlord shall also procure that all persons employed or engaged in the provision of any Lease Operations shall undergo such medical screening examination or treatment and provide such information during the currency of this Lease when reasonably requested to do so by the Tenant (where the Tenant reasonably believes that such persons pose or may pose a threat to the health of others) as required to ensure that the Tenant is able to comply with relevant legal obligations in respect of the health of the its staff, patients or visitors to the Facilities.

5 TRANSITION/HANDOVER ON EXPIRY

The Landlord will co operate with the Tenant to ensure a smooth transition and handover of the Lease Operations on the expiry or sooner determination of this Lease in accordance with the provisions of Schedule 18.

6 LEVEL OF SERVICE

6.1 The Landlord shall be solely responsible for procuring that the Lease Operations are at all times performed:

6.1.1 in accordance with all Requisite Consents and all Tenant Policies;

6.1.2 in a manner which is not likely to be injurious to health or cause damage to property;

6.1.3 in a manner consistent with the Tenant its subtenants and other occupiers discharging their statutory duties and/or other functions undertaken or operations carried on by them as the same may be notified to the Landlord from time to time;

6.2 The Tenant shall notify the Landlord of any proposed change to the Tenant Policies as soon as practicable (and in any event, prior to such change taking effect) and consult with the Landlord. Subject to paragraph 6.3 of this Schedule 15 below, such change shall take effect as a Service Variation in accordance with Schedule 12 (Variation Procedure).

6.3 The Tenant may, at its sole option, notify the Landlord that the Landlord shall not be obliged to comply with any change to any Tenant Policy and that the Landlord should continue to comply with the relevant Tenant Policy prior to any change in which case such change shall not take effect as a Service Variation in accordance with Schedule 12 (Variation Procedure).

7 STOCKS, CONSUMABLES, MATERIALS AND EQUIPMENT

Standards

7.1 The Landlord shall ensure that all goods, equipment, consumables and materials which are to be used in the provision of the Lease Operations shall be of satisfactory quality.

7.2 Without prejudice to the Landlord’s obligations in Schedule 9 of this Lease the Landlord shall ensure that the goods, equipment, consumables and materials used by it or any Supply Chain Member in connection with the provision of any of the Lease Operations are (each as a distinct and separate obligation):

7.2.1 maintained in a safe, serviceable and clean condition in accordance with Good Industry Practice;

7.2.2 of the type specified in the Tenant’s Requirements Landlord’s Proposals Service Specifications and/or Method Statements; and

7.2.3 in compliance with any relevant rules, regulations, codes of practice and/or British or European Standards;

and shall, as soon as practicable after receiving a request from the Tenant, supply to that Tenant such evidence as is reasonably necessary and which a prudent person carrying out the Landlord's obligations under this Lease would ordinarily maintain in accordance with Good Industry Practice to demonstrate its compliance with this sub-clause.

7.3 The Landlord shall procure that sufficient stocks of goods, consumables, equipment and materials are held in order to comply with its obligations under this Lease

8 HAZARDOUS SUBSTANCES AND MATERIALS

8.1 The Landlord shall not install, keep or use in or on the Site any materials, equipment or apparatus the installation, keeping or use of which is likely to cause (or in fact causes):

8.1.1 material damage to the Facilities;

8.1.2 dust, noise or vibration constituting a nuisance to the owners and/or occupiers of any property adjoining or near to the Facilities; or

8.1.3 the generation, accumulation or migration of any hazardous substance in an unlawful manner whether within or outside the Facilities,

and shall use all reasonable endeavours to ensure (by direction to staff and otherwise) that all materials, equipment or apparatus in or on the Facilities is operated so as to minimise any unlawful generation or migration of any hazardous substance, and noise and vibration likely to cause actionable nuisance (and after the Payment Date)136, annoyance or disturbance137.

8.2 Save for articles or things commonly used or generated in primary healthcare and social care premises from time to time or as otherwise required to carry out the Lease Operations, the Landlord shall not bring in or on to (or keep or maintain in or on) the Facilities any hazardous materials or equipment without the prior written consent of the Tenant and unless it has complied with all relevant Law and Good Industry Practice.

8.3 Without prejudice to the generality of its obligations, the Landlord shall:

8.3.1 procure that all hazardous materials and equipment brought on to the Facilities by the Landlord or a Landlord Party and used or stored on the Facilities shall be kept and used in accordance with Good Industry Practice, properly and securely labelled and stored, under appropriate supervision and used only by appropriately trained and competent staff;

8.3.2 use all practicable and reasonable means to:

(a) prevent or counteract the unlawful emission of any hazardous substance at, on or over a Facility to the satisfaction of the Tenant;

136 These words shall only be included where the Works are being carried out on a self contained site and it is not intended that the site shall be occupied at any point during the carrying out of the Works.

137 These words shall only be included where the Works are being carried out on a self contained site and it is not intended that the site shall be occupied at any point during the carrying out of the Works.

(b) avoid the unlawful discharge into any conducting media serving the Facilities of any hazardous substance;

(c) prevent the unlawful generation, accumulation or migration of any hazardous substance at or from the Facilities; and

(d) prevent any environmental claims arising or any circumstances arising likely to result in any environmental claims, in so far as such hazardous substance is, or should be, under the control of the Landlord pursuant to this Lease Plus Agreement.

Exclusions during the Carrying Out of the Works

8.4 The provisions of paragraphs 2, 3, 4 and 6.1.3 shall only apply after the Payment Commencement Date.138

138 These words shall only be included where the Works are being carried out on self contained site and it is not intended that the site shall be occupied at any point during the carrying out of the Works.

SCHEDULE 16

Part I

Transfer of Employment and Pensions139

1 [NO EMPLOYEE TRANSFERS140

Relevant Transfers

1.1 The Landlord and the Tenant agree that there are no individuals presently employed by the Tenant [or any Existing Service Provider] whose contracts of employment will, by virtue of the transfer to the Landlord of responsibility for provision of (or procuring the provision by Supply Chain Members of) any of the Lease Operations in accordance with this Agreement and in accordance with the Transfer Regulations, have effect after the Relevant Service Transfer Date [DN: THIS WILL NEED TO BE DEFINED] (or at any other time) as if originally made between those persons and the relevant Supply Chain Member.

1.2 If it is subsequently agreed or determined that there are persons presently employed by the Tenant [or any Existing Service Provider] whose contracts of employment do have effect after the Relevant Service Transfer Date as if originally made between those persons and the relevant Supply Chain Member (“Transferring Staff”) then:

1.2.1 the Tenant shall [or shall use its reasonable endeavours to procure that any Existing Service Provider shall] within [seven (7)] Business Days of the date on which it was so agreed or determined have the opportunity to offer a position as an employee of the Tenant to some or all of the Transferring Staff;

1.2.2 the Landlord shall procure that no person to whom the Tenant has offered a position in accordance with paragraph 1.2.1 shall be dismissed by reason of redundancy until the period for acceptance of the Tenant’s [or any Existing Service Provider’s] offer has expired and the person in question has not accepted the Tenant’s [or any Existing Service Provider’s] offer;

1.2.3 Subject to paragraph 1.2.1 and 1.2.2, the Landlord or any Supply Chain Member shall be entitled to dismiss any or all of the Transferring Staff by reason of redundancy provided that the Landlord shall use and shall procure that any Supply Chain Member shall carry out in the required manner any obligation to consult with the Transferring Staff or any of them, or their respective representatives, and shall use all reasonable endeavours to mitigate the amount of any costs payable in respect of the Transferring Staff or their dismissal.

The Tenant shall indemnify the Landlord against any costs referred to in paragraph 1.2.3 reasonably incurred by Project Co (or by a relevant Supply Chain Member and for which the Landlord is responsible).]

139 Given the potential inclusion of soft facilities management services, there is an increased risk of TUPE transfers occurring and this should therefore be reviewed on a scheme-by-scheme basis and these provisions tailored accordingly.140This version of the drafting should be used where no employee transfers are anticipated. The remainder of this Schedule together with the associated definitions and other Schedules can then be deleted.

2 TUPE AND EMPLOYMENT MATTERS141142

Relevant Transfers

2.1 The Landlord and the Tenant agree that the Transfer Regulations apply to the transfer on one or more dates agreed by the Parties (each a “Relevant Service Transfer Date”) to the Landlord of responsibility for provision of (or procuring the provision by Supply Chain Members of) the Lease Operations (save for on termination or expiry of this Lease which shall be covered by the provisions of Schedule 18) in accordance with this Lease and that a Relevant Transfer shall take place on each Relevant Service Transfer Date (or such date as may be determined by Law). The Relevant Service Transfer Date in respect of each of the Lease Operations is specified in part 2 of Schedule 16 (Transfer of Employment and Pensions). For the avoidance of doubt, for the purposes of this Schedule 16, the term “Supply Chain Member” shall be construed as including any contractors or subcontractors engaged by the Landlord or any Supply Chain Member in connection with the delivery of the Lease Operations.

2.2 As a consequence of paragraph 1.1 and in accordance with the Transfer Regulations, the contracts of employment of all Transferring Employees shall (subject to Regulation 4(7) of the Transfer Regulations) have effect after the Relevant Service Transfer Date (or such other date as may be determined by Law) as if originally made between those employees and the Landlord or the relevant Supply Chain Member except insofar as such contracts relate to an occupational pension scheme.

2.3 The Tenant and the Landlord agree and intend and shall take all reasonable steps to procure that there shall be a Relevant Transfer on each occasion on which the identity of the Landlord or a Supply Chain Member changes pursuant to this Lease and that the contracts of employment of all those employees of the Landlord or the relevant Supply Chain Members wholly or mainly engaged in the provision of the Lease Operations immediately before the change of identity of the Landlord or a Supply Chain Member shall have effect (subject to Regulation 4(7) of the Transfer Regulations) thereafter as if originally made between those employees and the new Landlord or a Supply Chain Member except insofar as such contracts relate to an occupational pension scheme and the Landlord shall and shall procure that the former and the new Supply Chain Members shall both comply with their obligations under the Transfer Regulations. The provisions of this paragraph 1.3 do not apply to Hard FM Market Testing which shall be governed by the provisions of Schedule 25 (Services Review) [or to Soft Services Market Testing which shall be governed by the provisions of Schedule 22 (Soft Services Market Testing).143]

2.4 If the Landlord or the relevant Supply Chain Member dismisses by reason of redundancy a Transferring Employee who had he or she been so dismissed before the Relevant Service Transfer Date would have been entitled to a payment pursuant to section 45 or 46 of the general Whitley Agreement (or section 16 of Agenda for Change where the employee in question has been assimilated on to Agenda for Change) then the Landlord shall provide, or shall procure that the relevant Supply Chain Member shall provide, such employee with a payment or other benefit

141 These provisions are drafted on the basis that the employer of the Transferring Employees is a party to the Lease Plus Agreement (i.e. CHP or other employing organisation as the Tenant). In the event that the employer is not a party to the Lease Plus Agreement, then any employees who are to transfer will be considered to be Transferring Non-Tenant Employees for the purposes of these provisions. This will need to be considered further on a case-by-case basis.

142 This version of the drafting should be used where employee transfers are anticipated.143 This drafting will only apply in respect of those LIFT schemes which include Soft Services.

calculated in the same manner as would have been applied on dismissal by reason of redundancy immediately before the Relevant Service Transfer Date. For these purposes a dismissal by reason of redundancy is one so defined in section 139 Employment Rights Act 1996. If the provisions of this paragraph 1.4 and the provisions of paragraph 2.1.5 apply (or would apply but for this provision) to the same circumstances then the provisions of paragraph 2.1.5 shall apply instead of this paragraph 1.4.

2.5 The Tenant shall [or shall use its reasonable endeavours to procure that any Existing Service Provider shall] comply with its obligations under the Transfer Regulations in respect of each Relevant Transfer pursuant to this Lease and the Landlord shall comply and shall procure that each Supply Chain Member shall comply with their obligations (including without limitation the obligation under Regulation 13(4) of the Transfer Regulations) in respect of each Relevant Transfer pursuant to this Lease and each of the Tenant and the Landlord shall indemnify the other against any Direct Losses sustained as a result of any breach of this paragraph 1.5 by the party in default.

Offer of Employment

2.6 If the Transfer Regulations do not apply to any person who is a Transferring Tenant Employee, the Landlord shall offer to or shall procure the offer by the relevant Supply Chain Member to each and every such employee of a new contract of employment commencing on the Relevant Service Transfer Date under which the terms and conditions including full continuity of employment shall not differ from those enjoyed immediately prior to the Relevant Service Transfer Date (except insofar as such terms and conditions relate to an occupational pension scheme) and the offer shall be in writing, shall be open to acceptance for a period of not less than ten (10) Business Days and shall be made:

2.6.1 if it is believed that the Transfer Regulations will not apply to a Transferring Tenant Employee, not less than ten (10) Business Days before the Relevant Service Transfer Date; or

2.6.2 if it is believed that the Transfer Regulations apply to a Transferring Tenant Employee but it is subsequently decided that the Transfer Regulations do not so apply, as soon as is practicable and in any event no later than ten (10) Business Days after that decision is known to the Landlord.

2.7 Where any such offer as referred to in paragraph 1.6 is accepted, the Tenant shall indemnify and keep indemnified in full the Landlord on the same terms and conditions as those set out in paragraphs 1.19, 1.20 and 1.21 of this Schedule 16 as if there had been a Relevant Transfer in respect of each and every Transferring Tenant Employee who has accepted any such offer and the provisions of paragraph 1.12 shall apply in the event of any resulting increase or decrease in the Remuneration Costs and Reorganisation Costs.

2.8 Where any such offer as referred to in paragraph 1.6 is accepted, the Landlord shall act and shall procure that each relevant Supply Chain Member shall act in all respects as if the Transfer Regulations had applied to each and every Transferring Tenant Employee who has accepted any such offer and shall comply with paragraph 2 of this Schedule 16 in respect of each and every such employee who was immediately before the Relevant Service Transfer Date a NHS Tenant Employee.

Provision of Information and Employment Costs

2.9 The Tenant has supplied to the Landlord the information, as at the date of this Lease, which is contained in part 3 of this Schedule 16 (the “First Employee List”) regarding the identity, number, age, sex, length of service, job title, grade and terms and conditions of employment of and other matters144 affecting each of those employees of the Tenant [and of any Existing Service Provider] who it is expected, if they remain in the employment of the Tenant [or of any Existing Service Provider as the case may be] until immediately before the Relevant Service Transfer Date, would be Transferring Employees but the Tenant gives no warranty as to the accuracy or completeness of this information145.

2.10 The Tenant shall supply to the Landlord an update of the First Employee List at three (3) monthly intervals from the date of this Lease and an updated list shall also be provided ten (10) Business Days before each Relevant Service Transfer Date and shall supply to the Landlord within five (5) Business Days after each Relevant Service Transfer Date information, which was correct as at that Relevant Service Transfer Date, in respect of the Transferring Employees on all the same matters as should be provided in the First Employee List. This list is the “Final Employee List” and where there is more than one Relevant Service Transfer Date the “Final Employee List” means each list so prepared in respect of each of the Lease Operations and at each Relevant Service Transfer Date. The Tenant gives and shall give no warranty as to the accuracy or completeness of any information contained in any update of the First Employee List or in the Final Employee List.

2.11 The Landlord has provided to the Tenant, and the Tenant has agreed, the details set out in part 4 of this Schedule 16 (Proposed Workforce Information) which show, in respect of each of the Lease Operations, the following information:

2.11.1 the workforce which the Landlord proposes to establish to provide the Lease Operations (the “Proposed Workforce”) classified by reference to grade, job description, hours worked, shift patterns, pay scales, rates of pay, terms and conditions, and pension scheme contributions;

2.11.2 the monthly costs of employing the Transferring Employees who are expected to be members of the Proposed Workforce. These costs (the

144 The list would normally show:1 Staff ref no2 DoB3 Age4 Job Title5 Start Date6 Continuous Service Date – length of reckonable NHS service7 Contracted hours8 Sex (M/F)9 Site10 Department11 NI letter (A or D)12 Scale and point13 Salary14 Superannuation15 Allow/deduction code.NB: This is not necessarily an exhaustive list

145 The information provided by the Tenant prior to financial close is almost certain to be inaccurate by the time service transfer occurs, if only because there are likely to be changes to the workforce in the meantime, for example because of staff turnover. The document does not, therefore, focus on the giving of warranties in support of the information given. In the circumstances, this is somewhat meaningless. It is more important to ensure that Landlord’s price can be adjusted in a way which reflects the differences between the information about the Tenant’s workforce given to the Landlord when its bid was priced (this can be adjusted prior to financial close to reflect up to date information) and the actual workforce which the Landlord inherits.

“Remuneration Costs”) have been calculated on the basis of (amongst other things) the information contained in the First Employee List146; and

2.11.3 the costs, including any lump sum payments, which the Landlord has allowed for the purposes of any reorganisation which may be required to establish the Proposed Workforce or a workforce which is as close as reasonably practicable to the Proposed Workforce (including but not limited to costs associated with dismissal by reason of redundancy or capability and costs of recruitment). These costs (the “Reorganisation Costs”) have been calculated by the Landlord and the Supply Chain Members on the basis of (amongst other things) the information contained in the First Employee List.147

2.12 If at any time (including, for the avoidance of doubt, after the submission of the Final Employee List) the Remuneration Costs and/or the Reorganisation Costs require to be adjusted on account of any differences between the information contained in the First Employee List and that contained in the Final Employee List or on account of any inaccuracies in or omissions from the information contained in the First Employee List or the Final Employee List then (subject to paragraphs 1.13, 1.14 and 1.15) there shall be a corresponding adjustment to the Lease Payment to compensate for any such difference.

2.13 If the circumstances described in paragraph 1.12 arise:

2.13.1 in circumstances where there are more Transferring Employees than shown on the Final Employee List then the parties shall discuss the implications for the provision of the Lease Operations [and the implementation of the Tenant Policy relating to change]; and

2.13.2 the Landlord and the relevant Supply Chain Members shall take all reasonable steps to mitigate any additional costs and any adjustment to the Lease Payment shall be calculated as if they had done so.

2.14 In calculating any adjustment to be made to the Lease Payment pursuant to paragraph 1.12:

2.14.1 no account shall be taken of a decrease in the Remuneration Costs or Reorganisation Costs to the extent that it arises from a reduction in the number of Transferring Employees or their whole time equivalent such that there are, immediately after the Relevant Service Transfer Date, fewer suitably qualified persons available than are required in order to establish the Proposed Workforce;

2.14.2 to avoid double counting, no account shall be taken of any change to the Remuneration Costs or the Reorganisation Costs to the extent that Landlord has been or will be compensated as a result of any indexation of the Lease Payment under this Lease;

146 In other words, these costs are the allowance made by the Landlord in its bid for continuing payments of salary, NI, pensions contributions, etc to the workforce it proposes to establish to provide the Lease Operations.

147 These costs are the non-recurring costs of establishing the Landlord’s workforce. These might include, for example, possible redundancy costs if the workforce which the Landlord expects to inherit from the Tenant does not match the required profile. NB - it is assumed for the purposes of this document that any re-profiling of the workforce is carried out by the Landlord after the Transfer Date. If it has been agreed that the Tenant will undertake this responsibility, the wording may need review.

2.14.3 to avoid doubt any changes in costs which fall to be dealt with under paragraph 1.12 and which arise from a Change in Law shall be dealt with in accordance with the provisions of paragraph 1.12 and shall not be taken into account for the purposes of Clause 46 (Change of Law and Compliance with Statutory Requirements);

2.14.4 no adjustments under paragraph 1.12 shall be made in respect of overpayments made by the Landlord or a Supply Chain Member to Transferring Employees which arise from reliance on the Final Employee List to the extent that the Landlord or the Supply Chain Member is unable to correct overpayments in respect of continuing employment having taken reasonable steps to do so;

2.14.5 if there are underpayments by the Landlord or a Supply Chain Member to Transferring Employees, whether claimed or established as unlawful deductions from wages or as a breach of contract, which arise from reliance on the Final Employee List, there shall be an immediate increase to the Lease Payment in respect of all such liabilities of the Landlord or the Supply Chain Member for all such underpayments which are retrospective (save that any such liabilities which relate to the period prior to the Relevant Service Transfer Date shall be dealt with in accordance with paragraphs 1.19, 1.20 or 1.21) and an appropriate increase in respect of such liabilities of the Landlord which represent ongoing costs but this provision shall not apply to any underpayment relating to an Equal Pay Ruling (which underpayment shall be dealt with in accordance with paragraphs 1.25 and 1.27); and

2.14.6 in order to prevent duplication, no adjustment shall be made under this paragraph 1.14 if any indemnity given by the Tenant under any other provision of this Lease would apply.

2.15 Either party may propose an adjustment to the Lease Payment pursuant to paragraph 1.12 by giving not less than ten (10) Business Days' notice to the other. Each party will provide or procure the provision to the other, on an open book basis, access to any information or data which the other party reasonably requires for the purpose of calculating or confirming the calculation of any adjustment pursuant to paragraph 1.12.

2.16 The Tenant shall and the Landlord shall and shall procure that each and every Supply Chain Member shall take all reasonable steps, including co-operation with reasonable requests for information, to ensure that each and every Relevant Transfer pursuant to this Lease takes place smoothly with the least possible disruption to the services to the Tenant including the Lease Operations and to the employees who transfer or who are retained by the Tenant.

Union Recognition

2.17 The Tenant shall [and shall procure if it has the contractual or legal powers to do so and shall otherwise use all reasonable endeavours to procure that every relevant Existing Service Provider] shall supply to the Landlord no later than five (5) Business Days prior to the Relevant Service Transfer Date true copies of its Recognition Agreement(s) and the Landlord shall and shall procure that each and every Supply Chain Member shall in accordance with the Transfer Regulations recognise the trade unions representing Transferring Employees (as relevant to the Landlord or its Supply Chain Members) after the transfer to the same extent as they

were recognised by the Tenant or the relevant sub contractor before the Relevant Service Transfer Date.

2.18 The Landlord shall procure that, on each occasion on which the identity of a Supply Chain Member changes pursuant to this Lease, in the event that there is a Relevant Transfer, the new Supply Chain Member shall in accordance with the Transfer Regulations recognise the trade unions representing the employees whose contracts of employment transfer to the new Supply Chain Member to the same extent as they were recognised before the change of identity of the Supply Chain Member in respect of the provision of the Lease Operations at the Tenant’s premises. [The provisions of this paragraph 1.18 do not apply to Soft Services Market Testing which shall be governed by the provisions of Schedule 22 (Soft Services Market Testing).148]

Tenant Indemnities

2.19 The Tenant shall indemnify and keep indemnified in full the Landlord (for itself and for the benefit of each relevant Supply Chain Member) against all emoluments and all other contractual or statutory payments due to any Transferring Tenant Employee or former employee of the Tenant in respect of his or her employment by the Tenant or its termination by the Tenant which relate to any period of employment prior to or on the Relevant Service Transfer Date even if the liability to make any such payment does not arise until on or after the Relevant Service Transfer Date (which shall include any backdated pay award by the Tenant), and against all income tax and pension and national insurance contributions payable thereon.

2.20 Insofar as paragraph 1.19 does not apply, the Tenant shall indemnify and keep indemnified in full the Landlord against all Direct Losses sustained by the Landlord in consequence of any liability which transfers to the Landlord or a Supply Chain Member in accordance with the Transfer Regulations and/or the Directive in relation to any Transferring Tenant Employee or former employee of the Tenant in respect of his or her employment by the Tenant or its termination by the Tenant which arises as a result of any act or omission by the Tenant occurring before or on the Relevant Service Transfer Date. The provisions of this paragraph 1.20 and of paragraph 1.19 shall not apply in respect of any claim that the terms and conditions of employment relating to Pay (as defined in paragraph 1.24) of Transferring Tenant Employees contravene the Legislation (as defined in paragraph 1.24) including but not limited to any claim in respect of an Equal Pay Ruling (as defined in paragraph 1.23).

2.21 Where any liability in relation to any Transferring Tenant Employee, or former employee of the Tenant in respect of his or her employment by the Tenant or its termination which transfers in whole or part in accordance with the Transfer Regulations and/or the Directive arises partly as a result of any act or omission occurring on or before the Relevant Service Transfer Date and partly as a result of any act or omission occurring after the Relevant Service Transfer Date, the Tenant shall indemnify and keep indemnified in full the Landlord against only such part of the Direct Losses sustained by the Landlord or any Supply Chain Member in consequence of the liability as is reasonably attributable to the act or omission occurring before the Relevant Service Transfer Date.

2.22 The indemnities contained in paragraph 1.19 and paragraph 1.20 shall apply as if references in those paragraphs to any Transferring Tenant Employee also included

148 This drafting will only apply in respect of those LIFT schemes which include Soft Services.

a reference to any Transferring Non-Tenant Employee to the extent that the Tenant recovers any sum in respect of the subject matter of those indemnities from any sub-contractor of the Tenant under any indemnity or other legal entitlement it has against such sub-contractor. The Tenant undertakes that it will use all reasonable endeavours to recover any sums under any such entitlement as is mentioned in this paragraph 1.22.

2.23 For the purposes of this paragraph 1:

Equal Pay Ruling means:

(a) a determination by an employment tribunal or court of competent jurisdiction or the settlement or compromise to which the Tenant shall have consented in either case relating to any claim brought by any Transferring Tenant Employee before [insert date falling 4 years after the date of the Relevant Service Transfer Date] against the Tenant or the Landlord or the Supply Chain Member under the Legislation (as defined below) that the terms and conditions of employment relating to Pay (as defined below) of Transferring Tenant Employees, contravene the Legislation; and/or

(b) in relation to any Transferring Tenant Employee (in relation to their period of employment until the Relevant Service Transfer Date) any alteration to salaries and payscales prescribed by the Whitley Agreements in order to settle, address or compromise threatened or extant claims under the Legislation against National Health Service employers (to include without limitation NHS Foundation Trust, NHS Trusts, NHS Commissioning Board and Special Health Authorities) and/or employers engaged as at the date of this Lease or subsequently in the provision of services to National Health Service employers.

2.24 For the purposes of this paragraph 1:

(a) Legislation means all and any anti-discrimination and

equal pay opportunities laws, including but not limited to the Equal Pay Act 1970, the Sex Discrimination Act 1975, the Equal Pay Directive (Council Directive 75/117/EEC), the Equal Treatment Directive (Council Directive 76/207/EEC), Article 141 of the Treaty of Rome, the Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000, the Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002, the Employment Equality (Sexual Orientation) Regulations 2003 and the Employment Equality (Religion or Belief) Regulations 2003; and

(b) Pay means the ordinary basic or minimum wage or salary and any other consideration, whether in cash or in kind, which a Transferring Tenant Employee receives either directly or indirectly in respect of his or her employment, from his/her employer.

2.25 If there is an Equal Pay Ruling relating to Transferring Tenant Employees then in respect of the period up to and including the Relevant Service Transfer Date relating to such employees, the cost of such Equal Pay Ruling shall be borne by the Tenant in the manner set out in paragraph 1.27 and in respect of any subsequent period the cost shall be borne by the Landlord and the relevant Supply Chain Member.

2.26 If there is an Equal Pay Ruling relating to any employee of the Tenant other than one described in paragraph 1.25 then the cost of such Equal Pay Ruling shall be borne by the Tenant even if such Equal Pay Ruling arises from a change to the terms and conditions of an employee of the Landlord or a Supply Chain Member.

2.27 Where the costs of an Equal Pay Ruling are to be borne by the Tenant pursuant to the provisions of paragraphs 1.25 or 1.26 then Lease Payment shall immediately be adjusted in respect of all prospective payments by adding the direct costs of such Equal Pay Ruling to the Lease Payment. In respect of all payments relating to the period before the date of the Equal Pay Ruling the Tenant shall indemnify the Landlord and keep it indemnified against Direct Losses arising out of or in connection with the Equal Pay Ruling.

2.28 To avoid doubt Clause 45.3 (Conduct of Claims) applies to the indemnities under paragraphs 1.5, 1.19, 1.20, 1.21 and 1.27.

2.29 To avoid doubt, nothing in paragraphs 1.5, 1.19, 1.20, 1.21, 1.2 and 1.27 shall impose any liability upon the Tenant for any part of any statutory or contractual redundancy payment to any Transferring Employee which is payable as a result of any termination of employment of a Transferring Employee occurring after the Relevant Service Transfer Date.

Compliance with Legislation and Tenant Policies

2.30 The Landlord shall comply and shall procure that each Supply Chain Member and all persons employed or engaged by a Supply Chain Member in connection with the provision of any Lease Operations shall comply at all times with the Law on health and safety at work and on anti-discrimination and equal opportunities.

2.31 The Landlord shall and shall procure that each Supply Chain Member takes all reasonable steps to procure that all persons including any employed or engaged by a Supply Chain Member in connection with the provision of any Lease Operations and, so far as applicable, comply with the Tenant Policies as regards health and safety at work (including the Tenant Policy regarding smoking) and with those relating to anti-discrimination and equal opportunities (including those relating to harassment) and the Landlord shall take and shall procure that every Supply Chain Member shall take all such steps as the Tenant may reasonably require, which shall include co-operation with action proposed or taken by the Tenant, to ensure that the Tenant complies with its duty under section 3(1) Health and Safety at Work etc. Act 1974 regarding the conduct of the undertaking of the Tenant.

Landlord Indemnities

2.32 The Landlord shall indemnify and keep indemnified in full the Tenant and, at the Tenant’s request, each and every service provider who shall provide any service equivalent to any of the Lease Operations after expiry or earlier termination of this Lease against:

2.32.1 claims in respect of all emoluments and all other contractual or statutory payments unpaid by the Landlord or a Supply Chain Member to any person entitled to such payments from the Landlord or a Supply Chain Member who is or has been employed or engaged by the Landlord or any Supply Chain Member in connection with the provision of any of the Lease Operations which relate to any period of employment or engagement with the Landlord or any Supply Chain Member on or after the Relevant Service Transfer Date but prior to the date of expiry or termination of this Lease, and all income tax and pension and national insurance contributions payable thereon; and

2.32.2 insofar as paragraph 1.32.1 above does not apply, all Direct Losses sustained by the Tenant in respect of any claim against the Tenant incurred as a consequence of the Transfer Regulations or the provision of this paragraph 1, who is or has been employed or engaged by the Landlord or any Supply Chain Member in connection with the provision of any of the Lease Operations which arises as a result of any act or omission of the Landlord or the Supply Chain Member occurring before the expiry or termination of this Lease but after the Relevant Service Transfer Date;

but the indemnities in paragraphs 1.32.1 and 1.32.2 shall not apply:

2.32.3 in respect of any sum for which the Tenant is obliged to indemnify the Landlord or a relevant Supply Chain Member pursuant to paragraphs 1.19, 1.20 or 1.21 or as a result of any adjustment to Lease Payment in accordance with paragraph 1.12; or

2.32.4 to the extent that the claim arises from a wrongful act or omission of the Tenant.

2.33 Clause 45.3 (Conduct of Claims) of this Lease shall apply where any claim is made in respect of the indemnities given by the Landlord under paragraph 1.32.

Staff Records

2.34 The Tenant shall deliver, subject to the requirements of the Law, to the Landlord as soon as reasonably practicable after the Relevant Service Transfer Date all those records relating to the Transferring Employees which were in its possession or under its control at the Relevant Service Transfer Date, which shall include all such records relating to competence, qualifications and training.

2.35 The Tenant gives no warranty as to the accuracy or completeness of any records referred to in paragraph 1.34 except that it warrants that it has maintained all those records relating to the Transferring Employees who were employees of the Tenant which the Tenant itself (but not any sub-contractor, predecessor body or previous employer) is required by Law to maintain to the extent which the Law requires.

2.36 The Landlord shall procure that there shall be provided to each Transferring Employee who was employed by the Tenant immediately before the Relevant Service Transfer Date rights in respect of employment on or after the Relevant Service Transfer Date equivalent to those to which the employee would have been entitled under the NHS (Injury Benefit) Regulations 1995 as amended from time to time had he remained in Tenant employment149.

Principles of Good Employment Practice

2.37 The Landlord shall and shall procure that any relevant Supply Chain Member must apply the Principles of Good Employment Practice (where applicable).

3 PENSION MATTERS

Continued Membership of the NHS Pension Scheme

3.1 In accordance with Fair Deal for Staff Pensions, the Landlord and/or any relevant Supply Chain Member to which the employment of any Eligible Employee compulsorily transfers as a result of the award of this Lease, if not an NHS body or other employer which participates automatically in the NHS Pension Scheme, must on or before the Transfer Date, each secure a Direction Letter to enable the Eligible Employees to retain either continuous active membership of or eligibility for, the NHS Pension Scheme, for so long as they remain employed in connection with the delivery of the Lease Operations under this Lease.

3.2 The Landlord must supply to the Tenant at least [twenty-eight (28) days]150 before the Transfer Date a complete copy of each Direction Letter

3.3 The Landlord (or any Supply Chain Member if relevant) will comply with the terms of the Direction Letter (including any terms which change as a result of changes in legislation) in respect of the Eligible Employees until the day before the Exit Transfer Date for so long as they are employed on the delivery of the Lease Operations.

149 To be reviewed on a scheme-by-scheme basis depending on whether the Tenant employees are entitled to such benefits prior to transfer.

150 Twenty-eight (28) days is a suggested timescale. Please select a timescale which is in accordance with the circumstances of your particular Lease.

3.4 Where any member of Staff omitted from the Direction Letter supplied in accordance with paragraph 2.2 above is subsequently found to be an Eligible Employee, the Landlord (or any Supply Chain Member if relevant) will ensure that that person is treated as an Eligible Employee from the Transfer Date so that their Pension Benefits and Premature Retirement Rights are not adversely affected.

[DRAFTING NOTE: The Paragraph below, paragraph 3.5 (Broadly Comparable Pension Benefits), will not be relevant and may be deleted where the Landlord and/or any relevant Supply Chain Members) either participate automatically in the NHS Pension Scheme or have each secured a Direction Letter in respect of all Eligible Employees by the time the Lease is entered into. If the Landlord is not automatically an employer in the NHS Pension Scheme, it is anticipated that Direction Letter(s) will be secured in the vast majority of cases.]

Broadly Comparable Pension Benefits

3.5 If the Tenant in its sole discretion (having considered the exceptional cases provided for in Fair Deal for Staff Pensions) agrees that the Landlord (or any Supply Chain Member) need not provide the Eligible Employees with access to the NHS Pension Scheme, the Landlord (or any Supply Chain Member) must ensure that, with effect from the Transfer Date until the day before the Exit Transfer Date, the Eligible Employees are offered access to a scheme under which the Pension Benefits are Broadly Comparable to those provided under the NHS Pension Scheme.

3.6 The Landlord must supply to the Tenant details of its (or its Supply Chain Member’s) Broadly Comparable scheme and provide a full copy of the valid certificate of Broad Comparability covering all Eligible Employees, as soon as it is able to do so and in any event no later than [twenty-eight (28)] days151 before the Transfer Date.

Transfer Option

3.7 As soon as reasonably practicable and in any event no later than [twenty (20) Business Days]152 after the Transfer Date, the Landlord must provide the Eligible Employees with the Transfer Option, where the former provider offered, or the Landlord offers, a Broadly Comparable scheme.

Calculation of Transfer Amount153

3.8 The Tenant will use reasonable endeavours to procure that [twenty (20) Business Days]154 after the Transfer Option Deadline, the Transfer Amount is calculated by the former provider’s Actuary155 on the following basis and notified to the Landlord along with any appropriate underlying methodology.

151 Again, twenty-eight (28) days is a suggested timescale. Please select a timescale which is in accordance with the circumstances of your particular Lease.

152 This is a suggested timescale bearing in mind that the whole process for the bulk transfer should take no more than six (6) months.

153 In accordance with B.4 of Fair Deal for Staff Pensions, the terms of the bulk transfer should be determined by the former provider’s Actuary at the outset of the procurement process.

154 This is a suggested timescale. It is not unreasonable if all the data is available and agreed well in advance of the Transfer Date.

155 If the former provider is an NHS Employer within the meaning of the NHS Pension Scheme Regulations, the former provider’s Actuary will be the NHS Pension Scheme Actuary (currently the Government Actuary’s Department).

3.8.1 If the former provider offers a Broadly Comparable scheme to Eligible Employees:

(a) the part of the Transfer Amount which relates to benefits accrued in that Broadly Comparable scheme other than those in sub-paragraph 2.8.1(b) below must be aligned to the funding requirements of that scheme; and

(b) the part of the Transfer Amount which relates to benefits accrued in the NHS Pension Scheme (having been previously bulk transferred into the former provider’s Broadly Comparable scheme), must be aligned to whichever of (a) the funding requirements of the former provider’s Broadly Comparable scheme; or (b) the principles156 under which the former provider’s Broadly Comparable scheme received a bulk transfer payment from the NHS Pension Scheme (together with any shortfall payment)157 , gives the higher figure,

provided that where the principles require the assumptions to be determined as at a particular date, that date will be the Transfer Date.

3.8.2 If the former provider offers the NHS Pension Scheme to Eligible Employees, the Transfer Amount will be calculated by the NHS Pension Scheme’s Actuary on the basis applicable for bulk transfer terms from the NHS Pension Scheme set by the Department of Health from time to time158.

3.9 Each party will promptly provide to any Actuary calculating or verifying the Transfer Amount any documentation and information which that Actuary may reasonably require.

Payment of Transfer Amount

3.10 Subject to:

3.10.1 the period for acceptance of the Transfer Option having expired; and

3.10.2 the Landlord having (and/or having procured that any relevant Supply Chain Member has) provided the trustees or managers of the former provider’s pension scheme (or NHS Business Services Authority, as appropriate) with completed and signed forms of consent in a form acceptable to the former provider’s pension scheme from each Eligible Employee in respect of the Transfer Option; and

3.10.3 if relevant, the issue of a contracting-out certificate in respect of the Landlord’s (or any Supply Chain Member’s) Broadly Comparable scheme which covers the employment of the Eligible Employees; and

156 The principles should be set out in a formal bulk transfer note issued on behalf of the NHS Pension Scheme. Where a shortfall applied, further principles should be set out in a separate note that is subject to the terms of the contract for services with the former provider.

157 B8 to B14 inclusive of Fair Deal for Staff Pensions which deal with price adjustments/shortfall requirements are relevant here and are discussed in Section 2. of Stage 2 of the guidance issued in February 2014 by the Department of Health in respect of the impact of Fair Deal for Staff Pensions on NHS Pension Scheme participation.

158 Commissioners should obtain a signed note from the NHS Pension Scheme Actuary during the procurement specifying the bulk transfer terms that apply.

3.10.4 the calculation of the Transfer Amount in accordance with Paragraph 2.8 (Calculation of Transfer Amount); and

3.10.5 the trustees or managers of the Landlord’s (or any Supply Chain Member’s) Broadly Comparable scheme (or NHS Business Services Authority, as appropriate) having confirmed in writing to the trustees or managers of the former provider’s pension scheme (or NHS Business Services Authority, as appropriate) that they are ready, willing and able to receive the Transfer Amount and the bank details of where the Transfer Amount should be sent, and not having revoked that confirmation,

the Tenant will use reasonable endeavours to procure that the former provider’s pension scheme (or the NHS Pension Scheme, as appropriate) will, on or before the Pension Payment Date, transfer to the Landlord’s (or Supply Chain Member’s) Broadly Comparable scheme (or NHS Pension Scheme) the Transfer Amount in cash, together with any cash or other assets which are referable to additional voluntary contributions (if any) paid by the Eligible Employees which do not give rise to salary-related benefits.

Credit for Transfer Amount

3.11 Subject to prior receipt of the Transfer Amount (and any shortfall payable)159, by the trustees or managers of the Landlord’s (or Supply Chain Member’s) Broadly Comparable scheme (or NHS Business Services, as appropriate), the Landlord must procure that year-for-year day-for-day service credits are granted in the Landlord’s (or Supply Chain Member’s) Broadly Comparable scheme (or NHS Pension Scheme), or an actuarial equivalent agreed by the Commissioners’ Actuary (and NHS Pension Scheme Actuary) in accordance with Fair Deal for Staff Pensions as a suitable reflection of the differences in benefit structure between the NHS Pension Scheme and the Landlord’s (or Supply Chain Member’s) pension scheme.

Premature Retirement Rights

3.12 From the Transfer Date until the day before the Exit Transfer Date, the Landlord must provide (and/or must ensure that any relevant Supply Chain Member must provide) Premature Retirement Rights in respect of the Eligible Employees that are the same as the benefits they would have received had they remained employees of an NHS Body or other employer which participates automatically in the NHS Pension Scheme.

Cancellation of any Direction Letter(s) and Right of Set-Off

3.13 If the Tenant is entitled to terminate this Lease under Clause 43.1.3 (Landlord Event of Default), the Tenant may in its sole discretion instead of exercising its right under Clause 43.1.3 (Landlord Event of Default) permit the Landlord (or the relevant Supply Chain Member, as appropriate) to offer Broadly Comparable Pension Benefits, on such terms as decided by the Tenant.

3.14 If the Tenant is notified by NHS Business Services Authority of any NHS Pension Scheme Arrears, the Tenant will be entitled to deduct all or part of those arrears from any amount due to be paid by that Tenant to the Landlord having given the

159 In terms of shortfalls, please see section 2 of Stage 2 of the guidance issued in February 2014 by the Department of Health in respect of the impact of Fair Deal for Staff Pensions on NHS Pension Scheme participation.

Landlord five (5) Business Days’ notice of its intention to do so, and to pay any sum deducted to NHS Business Services Authority in full or partial settlement of the NHS Pension Scheme Arrears. This set-off right is in addition to and not instead of the Tenant’s right to terminate the Lease under Clause 43.1.3 (Landlord Event of Default).

Compensation

3.15 If the Landlord (or any Supply Chain Member) is unable to provide the Eligible Employees with either:

3.15.1 membership of the NHS Pension Scheme (having used its best endeavours to secure a Direction Letter); or

3.15.2 a Broadly Comparable scheme,

the Tenant may in its sole discretion permit the Landlord to (or procure that the relevant Supply Chain Member) compensate the Eligible Employees in a manner that is Broadly Comparable or equivalent in cash terms, the Landlord (or Supply Chain Member as relevant) having consulted with a view to reaching agreement any recognised trade union or, in the absence of such body, the Eligible Employees. The Landlord must (or must procure that the relevant Supply Chain Member) meets the costs of the Tenant in determining whether the level of compensation offered is reasonable in the circumstances.

3.16 This flexibility for the Tenant to allow compensation in place of Pension Benefits is in addition to and not instead of the Tenant’s right to terminate the Lease under Clause 43.1.3 (Landlord Event of Default).

Landlord Indemnities Regarding Pension Benefits and Premature Retirement Rights

3.17 The Landlord must indemnify and keep indemnified the Tenant and any new provider against all Direct Losses arising out of any claim by any Eligible Employee that the provision of (or failure to provide) Pension Benefits and Premature Retirement Rights from the Transfer Date, or the level of such benefit provided, constitutes a breach of his or her employment rights.

3.18 The Landlord must indemnify and keep indemnified the Tenant, NHS Business Services Authority and any new provider against all Direct Losses arising out of the Landlord (or its Supply Chain Member) allowing anyone who is not an Eligible Employee to join or claim membership of the NHS Pension Scheme at any time during the Lease Term.

3.19 The Landlord must indemnify the Tenant, NHS Business Services Authority and any new provider against all Losses arising out of its breach of this paragraph 2 of Schedule 16 and/or the terms of the Direction Letter.

Supply Chain Members

3.20 If the Landlord enters into a sub-contract it will impose obligations on its Supply Chain Member in the same terms as those imposed on the Landlord in relation to Pension Benefits and Premature Retirement Benefits by this paragraph 2 of Schedule 16, including requiring that:

3.20.1 If the Landlord has secured a Direction Letter, the Supply Chain Member also secures a Direction Letter in respect of the Eligible Employees for

their future service with the Supply Chain Member as a condition of being awarded the sub-contract; or

3.20.2 If the Landlord has offered the Eligible Employees access to a pension scheme under which the benefits are Broadly Comparable to those provided under the NHS Pension Scheme, the Supply Chain Member either secures a Direction Letter in respect of the Eligible Employees or provides Eligible Employees with access to a scheme with Pension Benefits which are Broadly Comparable to those provided under the NHS Pension Scheme and in either case the option for Eligible Employees to transfer their accrued rights in the Landlord’s pension scheme into the Supply Chain Member’s Broadly Comparable scheme (or where a Direction Letter is secured by the Supply Chain Member, the NHS Pension Scheme) on the basis set out in paragraph 2.11 (Credit for Transfer Amount), except that the Landlord or the Supply Chain Member as agreed between them, must make up any shortfall in the transfer amount received from the Landlord’s pension scheme.

Direct Enforceability by the Eligible Employees

3.21 Notwithstanding Clause 58 (No Privity), the provisions of this paragraph 2 of Schedule 16 may be directly enforced by an Eligible Employee against the Landlord and the Parties agree that the Contracts (Rights of Third Parties) Act 1999 will apply to the extent necessary to ensure that any Eligible Employee will have the right to enforce any obligation owed to him or her by the Landlord under this Schedule in his or her own right under section 1(1) of the Contracts (Rights of Third Parties) Act 1999.

3.22 Further, the Landlord must ensure that the Contracts (Rights of Third Parties) Act 1999 will apply to any sub-contract to the extent necessary to ensure that any Eligible Employee will have the right to enforce any obligation owed to them by the Supply Chain Member in his or her own right under section 1(1) of the Contracts (Rights of Third Parties) Act 1999.

Pensions on Transfer of Employment on Exit

3.23 In the event of any termination or expiry or partial termination or expiry of this Lease which results in a transfer of the Eligible Employees, the Landlord must (and if offering a Broadly Comparable scheme, must use all reasonable efforts to procure that the trustees or managers of that pension scheme must):

3.23.1 not adversely affect pension rights accrued by the Eligible Employees in the period ending on the Exit Transfer Date;

3.23.2 within thirty (30) Business Days of being requested to do so by the new provider, (or if the new provider is offering Eligible Employees access to the NHS Pension Scheme, by NHS Business Services Authority), provide a transfer amount calculated in accordance with Paragraph 2.8 (Calculation of the Transfer Amount); and

3.23.3 do all acts and things, and provide all information and access to the Eligible Employees, as may in the reasonable opinion of the Tenant be necessary or desirable and to enable the Tenant and/or the new provider to achieve the objectives of Fair Deal for Staff Pensions.

SCHEDULE 16

Part II

Relevant Service Transfer Dates

[To be inserted on a scheme specific basis]

SCHEDULE 16

Part III

First Employee List


SCHEDULE 16

Part IV

Proposed Workforce Information


SCHEDULE 17

Part I

Corporate Warranties by the Landlord

1 DUE INCORPORATION OF THE LANDLORD AND ITS CAPACITY

1.1 The Landlord is duly incorporated under the law of England and Wales and has the corporate power to own its assets and to carry on its business as it is now being conducted.

1.2 The Landlord:

1.2.1 has the power to enter into and to exercise its rights and perform its obligations under this Lease and the other Project Documents and

1.2.2 has taken all necessary action to authorise the execution of and the performance of its obligations under this Lease and the other Project Documents

1.3 The Landlord is not subject to any other obligation, compliance with which will or is likely to, have a material adverse effect on the ability of the Landlord to perform its obligations under this Lease or any other Project Document.

1.4 This Lease and each other Project Document to which it is a party constitute or will when executed constitute legal, valid, binding and enforceable obligations on the Landlord.

1.5 The copies of each Project Document which the Landlord delivers to the Tenant will be true and complete copies of such documents and there will not be in existence any other agreements or documents replacing or relating to such Project Documents which would materially affect their interpretation or construction.

1.6 Every Consent required by the Landlord in connection with the execution, delivery, validity or enforceability of this Lease or any other Project Document or the performance by the Landlord of its obligations under this Lease or any other Project Documents has been or will be (prior to the request therefore) obtained or made and is in full force and effect and there has been no fault in the observance of the conditions or restrictions (if any) imposed or, in connection with any of the same.

2 NO LITIGATION

2.1 No claim is presently being asserted and no litigation, arbitration or administrative proceeding is presently in progress or, to the best of the knowledge of the Landlord, pending or threatened against the Landlord or any of its assets which will or might have a material adverse effect on the ability of the Landlord to perform its obligations under this Lease and any other Project Document.

3 SOLVENCY OF THE LANDLORD

3.1 No proceedings or other steps have been taken and not discharged (nor, to the best of the knowledge of the Landlord threatened) for its winding-up or dissolution or for the appointment of a receiver, administrative receiver, administrator, liquidator or similar officer in relation to any of its assets or revenues.

3.2 The Landlord undertakes to inform the Tenant as soon as reasonably practicable of any proposed meetings of creditors which relate to the Landlord's business.

SCHEDULE 18

HANDOVER ON EXPIRY AND TERMINATION

Provisions Upon Termination

1.1 On the expiry or earlier termination of this Lease, the Tenant and the Landlord agree that it is their intention that the Transfer Regulations shall apply in respect of the provision thereafter of any service equivalent to a Lease Operation but the position shall be determined in accordance with the Law at the date of expiry or termination as the case may be and this paragraph is without prejudice to such determination. For the avoidance of doubt, for the purposes of this Schedule 18, the term “Supply Chain Member” shall be construed as including any contractors or subcontractors engaged by the Landlord or any Supply Chain Member in connection with the delivery of the Lease Operations.

1.2 On the expiry or earlier termination of this Lease where the Transfer Regulations apply, the contracts of employment of all employees who immediately prior to the Transfer Event are wholly or mainly engaged on the service or services which are the Lease Operations and which are the subject of the Transfer Event (“Assigned Staff”) shall transfer on the basis of the Transfer Regulations and have effect after the Transfer Event as if originally made between the Assigned Staff and the Tenant and/or any new contractor.

1.3 Where the Transfer Regulations apply the relevant parties shall take all reasonable steps to ensure that a smooth transition is effected in respect of the transfer of the contracts of employment of the Assigned Staff from the Transfer Event and the Tenant shall comply and procure that, where appropriate, any new contractors shall comply with their obligations under Regulation 13 of the Transfer Regulations.

1.4 If the Transfer Regulations do not apply on expiry or earlier termination of this Lease, the Tenant shall ensure that each new provider of a service equivalent to a Lease Operation on or after expiry or termination of this Lease (including the Tenant) shall offer employment to the persons employed by the Landlord or a Supply Chain Member in the provision of the Lease Operations immediately before the expiry or termination of this Lease and shall indemnify the Landlord or a Supply Chain Member for Direct Losses any of them suffer or incur as a result of its failure to do so, and for any costs, claims or liabilities for redundancy payments (whether statutory or contractual)160.

1.5 If an offer of employment is made in accordance with paragraph 1.4 above, the employment shall be on the same terms and conditions (except for entitlement to membership of an occupational pension scheme, which shall be dealt with in accordance with paragraph 2 of Schedule 16) as applied immediately before the expiry or earlier termination of this Lease including full continuity of employment, except that the Tenant or other new service provider may at its absolute discretion not offer such terms and conditions if there has been any change to the terms and conditions of the persons concerned in breach of paragraph 1.10 below.

1.6 [For the avoidance of doubt, paragraphs 1.1 to 1.5 do not apply to Soft Services Market Testing which shall be governed by the provisions of Schedule 22 (Soft Services Market Testing).161]

160 Tenant’s should ensure that this obligation is passed on to the new service provider by way of contract.161 This drafting will only apply in respect of those LIFT schemes which include Soft Services.

1.6A For the avoidance of doubt, paragraphs 1.1 to 1.5 do not apply to Hard FM Market Testing which shall be governed by the provisions of Schedule 25 (Service Review).

Landlord Indemnities

1.7 Save where any such Direct Losses are as a result of any act or omission of the Tenant or their subcontractors, the Landlord shall indemnify, and keep indemnified, the Tenant and, at the Tenants request, each and every service provider who shall provide any service equivalent to any of the Lease Operations after a Transfer Event against all Direct Losses sustained by the Tenant arising in connection with:

1.7.1 any act or omission in respect of any of the Assigned Staff by the Landlord or a Supply Chain Member prior to the Transfer Event (including without limitation the employment or termination of the employment of any of the Assigned Staff), and the Landlord or a Supply Chain Member’s obligations under Regulation 13 of the Transfer Regulations but excluding in relation to any occupational pension scheme;

1.7.2 any claim by any person arising from any negligent act or omission of any of the Assigned Staff prior to the Transfer Event;

1.7.3 any claim for personal injury sustained by any of the Assigned Staff the cause of action of which arose during their employment prior to the Transfer Event save that in this respect the indemnity given by the Landlord shall extend only to such sum as is referable to the period of employment with the Landlord or a Supply Chain Member;

1.7.4 any employees or former employees of the Landlord or of any provider of a service or services which are Lease Operations who are not identified to the Tenant as being Assigned Staff prior to the relevant Transfer Event arising out of any claim that their employment or any liability in respect of their employment or its termination has or should have transferred to the Tenant and/or any new contractor pursuant to the Transfer Regulations and/or the arrangements contemplated by the relevant agreement; and

1.7.5 all emoluments and other contractual or statutory payments or parts thereof due to any Assigned Staff member arising before the Transfer Event or which fall due for payment after the Transfer Event but which relate to any period before that date (including, for the avoidance of doubt, any liabilities arising in relation to any equal pay claims relating to the Assigned Staff).

1.8 Clause 45.3 (Conduct of Claims) of this Lease shall apply where any claim is made in respect of the indemnities given by the Landlord under paragraph 1.7.

1.9 For the avoidance of doubt, nothing in paragraph 1.7 shall impose any liability on the Landlord for any part of any statutory or contractual redundancy payment to any Assigned Staff member which is payable as a result of any termination of employment occurring on or after the Transfer Event.

1.10 Subject to its obligations under the Data Protection Act 1998 no less than twelve (12) months prior to a Transfer Event, the Landlord shall supply or shall procure the supply of details of the Assigned Staff to the Tenant and/or at the direction of the

Tenant, to any new contractor, and shall advise the Tenant and any new contractor of any alteration thereto occurring prior to the Transfer Event. These details (being the “Retendering Information”) are to include the names of the Assigned Staff and in respect of each one, the:

1.10.1 terms of employment (including full particulars of emoluments and benefits);

1.10.2 date of commencement of employment;

1.10.3 current job title and details of proportion of time spent working on the Lease Operations;

1.10.4 any professional bodies, trade unions and other bodies of which the Assigned Staff are members and the identity of any representatives of such bodies of which the Landlord and the relevant Supply Chain Member is aware; and

1.10.5 full details of any actions, claims or disputes involving any Assigned Staff of which the Landlord and any of the Supply Chain Members is aware or anticipates.

The Landlord shall inform the Tenant of any changes to the information given pursuant to this paragraph 1.7. The Landlord shall indemnify and keep indemnified in full the Tenant and at the Tenant’s request any new contractor against all Direct Losses arising from any claim by any party as a result of the Landlord or Supply Chain Member failing to provide or promptly to provide the Tenant or at the Tenant’s request any new contractor with any Retendering Information and/or Employee Liability Information or to provide full Retendering Information and/or Employee Liability Information or as a result of any material inaccuracy in or omission from the Retendering Information and/or Employee Liability Information.

1.11 From the later of the period beginning twelve (12) months prior to the Transfer Event or from the date on which notice of termination is served the Landlord shall not and shall procure that any Supply Chain Members shall not:

1.11.1 enter into any negotiation with or make any offer to the Assigned Staff or any of them concerning the terms of their employment other than in the normal course of business without the Tenant’s consent (which shall not be unreasonably withheld). Nothing in this paragraph shall prevent the Landlord or its Supply Chain Members from implementing any statutory requirements or any terms and conditions agreed with the workforce collectively prior to this period;

1.11.2 seek or make any alteration to the numbers of Assigned Staff or those employees identified as Assigned Staff without the Tenant’s consent (which shall not be unreasonably withheld) save in the event of resignation or dismissal for misconduct or poor performance;

1.11.3 transfer any of the Assigned Staff to another part of its business or move other employees from elsewhere in its or their business who have not previously been engaged in providing the Lease Operations to provide the Lease Operations save with the Tenant’s consent (which shall not be unreasonably withheld).

SCHEDULE 19

Funder’s Direct Agreement

[NAME OF SITE]

FUNDER’S DIRECT AGREEMENT

Dated [ ] 20[ ]

BETWEEN

[TENANT]as the Tenant

-and-

[AGENT]as the Agent

-and-

[LEASE PLUS SERVICE PROVIDER]as the Landlord

-and-

[LIFTCO]/[HOLDCO]162

162 It is acknowledged that the Funder's Direct Agreement may require minor tailoring to meet the specific requirements of a particular funder. All such tailoring shall be subject to the specific agreement of the particular Tenant and CHP. In a three tier structure Holdco should be a party to the Agreement. In a two tier structure, Liftco should be a party to the Agreement.

Contents

Clause Page

1. Interpretation [ ]2. Consent to Security [ ]3. No Termination with out Notice [ ]4. Representative [ ]5. Step In Period [ ]6. Step-Out [ ]7. Transfer of Assets and Shares [ ]8. Insurance Proceeds [ ]9. Novation [ ]10. Miscellaneous [ ]11. Assignment [ ]12. Entire Agreement [ ]13. Waiver [ ]14. Severability [ ]15. Confidentiality [ ]16. Counterparts [ ]17. Notices Consents and Approvals [ ]18. Exclusion of Third Party Rights [ ]19. Survivorship [ ]20. Governing Law [ ]

THIS AGREEMENT is made on [ ]

BETWEEN:

(1) [TENANT] (the Tenant);

(2) [AGENT] (the Agent for the Lenders);

(3) [LEASE PLUS SERVICE PROVIDER] (the Landlord); [and]

(4) [Liftco] [Holdco];

IT IS AGREED as follows:

1 INTERPRETATION

In this Agreement, unless the context otherwise requires:

"Appointed Representative"means a Representative that has assumed the Landlord's rights under the Lease Plus Agreement under Clause 4(a)

"Collateral Agreement Counterparty"means one of the parties to the Collateral Agreements (other than the Tenant or the Landlord)

"Enforcement Event"means maturity – see relevant clause of the Funding Agreement/bond trust deed163

"Final Payment Date"means the date upon which all indebtedness of the Landlord under the Funding Agreements (as defined in the Lease Plus Agreement) has been fully and irrevocably paid or discharged and no future indebtedness is capable of becoming outstanding

"Funders"means [insert definition from the Lease Plus Agreement]

"Lease Plus Agreement"means the agreement so named [dated [ ]] between the Landlord and the Tenant in relation to the [insert name of specific site] Site

"Representative"means

(a) the Agent, any Funder or any of their Associated Companies;

(b) an administrative receiver, receiver or receiver and manager of the Landlord appointed under the Security Documents;

(c) an administrator of the Landlord;

(d) a person directly or indirectly owned or controlled by the Agent and/or any Funder(s); or

163 Definition to include not only the occurrence of an event of default under the Credit Agreement but also the taking of action to enforce repayment.

(e) any other person approved by the Tenant (such approval not to be unreasonably withheld or delayed).

"Required Period"means, subject to Clause 4, the period starting on the date of a Termination Notice and:

(a) prior to the Payment Commencement Date, ending [eighty (80)] days later; and

(b) following the Payment Commencement Date, ending [sixty (60)] days later

"Security Documents"[list the security documents forming part of the Funding Agreements]

"Shares"means all of the shares in the share capital of the Landlord

"Site"shall have the meaning given to it in the Lease Plus Agreement

"Step-In Date"means the date on which the Agent gives the Tenant a Step-In Notice

"Step-In Notice"means the notice given by the Landlord to the Tenant pursuant to Clause 4.1 stating that the Agent is exercising the step-in rights under this Agreement and identifying the Appointed Representative

"Step-In Period"means the period from the Step-In Date up to and including the earlier of:

(a) the Step-Out Date;

(b) the date of any transfer of assets or Shares under Clause [7];

(c) the date of any termination for breach under Clause [5]; and

(d) the date of expiry of the Lease Plus Agreement.

"Step-Out Date"means the date falling [twenty (20)] Business Days after the date of a Step-Out Notice

"Step-Out Notice"means a notice from the Agent or Appointed Representative to the Tenant pursuant to Clause 6 (Step Out)

"Tenant’s Collateral Warranties"means any collateral warranty required under the terms of the Lease Plus Agreement to be issued in favour of the Tenant by a third party

"Termination Notice"means a notice given by the Tenant to the Agent under Clause 3.2

"Unsuitable Person"has the meaning given to it in the Lease Plus Agreement

In this Agreement, except where the context otherwise requires:

1.1 Words importing persons shall, where the context so requires or admits, include individuals, firms, partnerships, trusts, corporations, governments, governmental bodies, authorities, agencies, unincorporated bodies of persons or associations and any organisations having legal capacity;

1.2 Where the context so requires words importing the singular only also include the plural and vice versa and words importing the masculine shall be construed as including the feminine or the neuter or vice versa;

1.3 References to any agreement or document include (subject to all relevant approvals and any other provisions of this Agreement concerning amendments to agreements or documents) a reference to that agreement or document as amended, supplemented, substituted, novated or assigned;

1.4 References to any Law are to be construed as references to that Law as from time to time amended or to any Law from time to time replacing, extending, consolidating or amending the same;

1.5 References to a public organisation (other than the Tenant) shall be deemed to include a reference to any successor to such public organisation or any organisation or entity which has taken over either or both the functions and responsibilities of such public organisation. References to other persons (other than the Tenant) shall include their successors and assignees;

1.6 The words in this Agreement shall bear their natural meaning. The parties have had the opportunity to take legal advice on this Agreement and no term shall, therefore, be construed contra proferentem.

1.7 Reference to “parties” means the parties to this Agreement and references to “a party” mean one of the parties to this Agreement.

1.8 In construing this Agreement, the rule known as the ejusdem generis rule shall not apply nor shall any similar rule or approach to the construction of this Agreement and accordingly general words introduced or followed by the word “other” or “including” or “in particular” shall not be given a restrictive meaning because they are followed or preceded (as the case may be) by particular examples intended to fall within the meaning of the general words.

1.9 Where this Agreement states that an obligation shall be performed “no later than” or “within” or “by” a stipulated date or event which is a prescribed number of Business Days after a stipulated date or event, the latest time for performance shall be noon on the last Business Day for performance of the obligations concerned.

1.10 Capitalised terms defined in the Funding Agreement164 have the same meaning in this Agreement.

2 CONSENT TO SECURITY

164 The definition of Funding Agreement(s) is to be amended on a case by case basis.

2.1 The Tenant acknowledges notice of, and consents to, the security interest granted over the Landlord's rights under the Lease Plus Agreement and the Site, each as effected by the Landlord in favour of the Funders under the Security Documents.

2.2 The Tenant confirms that it has not received notice of any other security interest granted over the Landlord's rights under the Lease Plus Agreement or the Site.

2.3 Except as specifically provided for in this Agreement, the Tenant has no obligations (whether express, implied, collateral or otherwise) to the Agent and/or the Funders in connection with this Agreement or the Lease Plus Agreement.

2.4 The Tenant shall not be obliged to make any enquiry as to the authority of the Agent in doing any act or entering into any document or making any agreement under or in connection with this Agreement, and the Tenant shall be entitled to assume that the Agent is duly authorised by each of the Funders to assume the obligations expressed to be assumed by it under this Agreement and to undertake on behalf of each Funder in the terms of this Agreement so as to bind each Funder as if it were a party hereto.

2.5 The rights of the Agent under this Agreement shall be extinguished upon the Final Payment Date.

3 NO TERMINATION WITHOUT NOTICE

3.1 Subject only to Clause 3.2, the Tenant may serve notice terminating the Lease Plus Agreement at any time if it is entitled to do so under the terms of the Lease Plus Agreement.

3.2 The Tenant shall not terminate or give notice terminating the Lease Plus Agreement by reason of a breach by the Landlord of its terms without giving to the Agent:

3.2.1 at least the Required Period of prior written notice (a “Termination Notice”) stating:

(a) that a breach by the Landlord of the terms of the Lease Plus Agreement has occurred and the proposed Termination Date; and

(b) the grounds for termination in reasonable detail; and

3.2.2 not later than the date falling twenty (20) Business Days after the date of a Termination Notice, a notice containing details of any amount owed by the Landlord to the Tenant, and any other liabilities or obligations of the Landlord of which the Tenant is aware (having made proper enquiry) which are:

(a) accrued and outstanding at the time of the Termination Notice or the notification of an Enforcement Event; and/or

(b) which will fall due on or prior to the end of the Required Period, under the Lease Plus Agreement.

3.3 On becoming aware of an Enforcement Event the Agent shall give notice thereof to the Tenant stating that an Enforcement Event has occurred and giving reasonable details thereof (an “Enforcement Event Notice”) whereupon, subject to payment by the Agent of the Tenant’s reasonable costs and expenses in respect thereof (being

such costs and expenses as would not have been incurred in respect of the provision of such information had an Enforcement Event Notice not been served) the provisions of Clause 3.2.2 shall apply as if references therein to a Termination Notice were to an Enforcement Event Notice.

4 REPRESENTATIVE

4.1 Subject to Clause 4.2 and without prejudice to the Agent's rights under the Security Documents, the Agent may give the Tenant a Step-In Notice at any time:

4.1.1 during which a breach by the Landlord of the Lease Plus Agreement terms or an Enforcement Event is subsisting (whether or not a Termination Notice has been served); or

4.1.2 during the Required Period.

4.2 The Agent shall give the Tenant not less than [five (5)] Business Days' prior notice of:

4.2.1 its intention to issue a Step-In Notice; and

4.2.2 the identity of the proposed Appointed Representative.

4.3 On the issue of the Step-In Notice, the Appointed Representative shall assume jointly with the Landlord the rights of the Landlord under the Lease Plus Agreement and thereafter, until the end of the Step-In Period the Tenant shall deal with the Appointed Representative and not the Landlord.

5 STEP IN PERIOD

5.1 Notwithstanding Clause 3 (No Termination Without Notice), the Tenant may terminate the Lease Plus Agreement if:

5.1.1 any amount referred to in Clause 3.2.2(a) above has not been paid to the Tenant on or before the Step-In Date; or

5.1.2 any amount referred to in Clause 3.2.2(b) has not been paid on or before the last day of the Required Period; or

5.1.3 amounts, of which the Tenant was not aware (having made proper enquiry) at the time of the Termination Notice, subsequently become payable and are not discharged on or before the date falling twenty (20) Business Days after the date on which the liability of the Landlord for these amounts is notified to the Agent or if later the Step-In Date; or

5.1.4 grounds arise after the Step-In Date in accordance with the terms of the Lease Plus Agreement

5.2 The Tenant shall not terminate the Lease Plus Agreement during the Step-In Period on grounds:

5.2.1 that the Agent has served a Step-In Notice or enforced any Security Document(s); or

5.2.2 arising prior to the Step-In Date of which the Tenant is aware (having made proper enquiry) and whether or not continuing at the Step-In Date, unless:

(a) the grounds arose prior to the Actual Completion Date, and the Actual Completion Date does not occur on or before the date twelve (12) months after the date on which the Tenant would have been entitled to terminate the Lease Plus Agreement for non completion of the Works under Clause 43.1.1 (Landlord Default) of the Lease Plus Agreement; or

(b) the grounds arose after the Actual Completion Date, and neither the Appointed Representative nor the Landlord is using all reasonable endeavours (including implementation of any remedial programme) to remedy any breach of the Lease Plus Agreement that:

(i) arose prior to the Step-In Date; and

(ii) is continuing (and capable of remedy); and

(iii) would have entitled the Tenant to terminate the Lease Plus Agreement; or

(c) the grounds (whenever they first arose) did not give rise to any right to terminate until after the Step-In Notice; or

5.2.3 arising solely in relation to the Landlord.

6 STEP-OUT

6.1 The Appointed Representative may at any time during the Step-In Period deliver to the Tenant a Step-Out Notice which shall specify the Step-Out Date.

6.2 On expiry of the Step-In Period:

6.2.1 the Appointed Representative will be released from all of its obligations and liabilities to the Tenant under the Lease Plus Agreement arising prior to the Step-Out Date and rights of the Appointed Representative against the Tenant will be cancelled; and

6.2.2 the Tenant shall no longer deal with the Appointed Representative and will deal with the Landlord in connection with the Lease Plus Agreement.

6.3 The Landlord shall continue to be bound by the terms of the Lease Plus Agreement, notwithstanding the occurrence of a Step-In Notice, a Step-In Period, a Step-Out Notice or the Step-Out Date, any action by the Agent or Appointed Representative or the Funders and/or any provision of this Agreement.

7 TRANSFER OF ASSETS AND SHARES

7.1 The Agent acknowledges the requirements of Clauses 38, 38A, 43 and 48.8 to 48.10 of the Lease Plus Agreement and agrees not to exercise any rights to sell the Lease Plus Agreement, the Site or the Shares pursuant to the Security Documents

without first having complied with the terms of the relevant clause referred to above, giving the Tenant the option to purchase the interests described therein.

7.2 On any Sale of Shares referred to in Clause 7.1 becoming effective, any then subsisting ground for termination of the Lease Plus Agreement by the Tenant shall be deemed to have no effect and any subsisting Termination Notice shall be automatically revoked.

7.3 The Agent shall not, in the exercise of any of its rights referred to in Clause 8(a), cause the Lease Plus Agreement, the Site or the Shares to be transferred to any Unsuitable Person without the prior written consent of the Tenant (such consent not to be unreasonably withheld or delayed).

7.4 [Liftco] [Holdco] grants an option to the Tenant to purchase the Shares or proportion of the Shares on the terms expressed at Clause 38A and Schedule 14C of the Lease Plus Agreement.

8 INSURANCE PROCEEDS

8.1 Notwithstanding the other provisions of this Agreement and the terms and conditions of the Funding Agreements, the Agent shall only permit and the Tenant hereby agrees to permit amounts to be released from the joint insurance proceeds account in accordance with the requirements of Clause 37.13 (Application of Proceeds) of the Lease Plus Agreement and the Agent and the Tenant shall not exercise any rights under the Funding Agreements or the Lease Plus Agreement or take any other steps to prevent amounts being released from the joint insurance proceeds account in accordance with Clause 37.13 (Application of Proceeds) of the Lease Plus Agreement.

9 NOVATION

Not used

10 MISCELLANEOUS

10.1 The Tenant shall at the Landlord's expense, take whatever action the Agent, an Appointed Representative or a Representative taking a transfer in accordance with Clause 8 may require for perfecting any transfer or release under Clauses 4 (Representative), 6 (Step-Out), and 7 (Transfer of Assets and Shares) including the execution of any transfer or assignment, and the giving of any notice, order or direction and the making of any registration which, in each case, the Agent, Appointed Representative or Representatives reasonably requires.

10.2 The Tenant shall not take any action to wind up, appoint an administrator or other insolvency practitioner or sanction a voluntary arrangement (or similar) in relation to the Landlord.

10.3 This Agreement shall remain in effect until the earlier of:

10.3.1 the Final Payment Date;

10.3.2 the date that the reversionary interest in the Site is sold to the Tenant in accordance with the terms of the Lease Plus Agreement; and

10.3.3 the date that the Shares are sold to the Tenant or its nominee.

10.4 The Agent shall promptly notify the Tenant of:

10.4.1 any Enforcement Event and any action taken in connection with such Enforcement Event, any decisions to accelerate the maturity of any amounts owing by the Landlord to the Funders under the Funding Agreement and/or any decisions to demand payment; and

10.4.2 the date referred to in paragraph 10.3 above on or before the date falling twenty (20) Business Days after its occurrence.

10.5 The Landlord joins in this Agreement to acknowledge and consent to the arrangements set out and agrees not knowingly to do or omit to do anything that may prevent any party from enforcing its rights under this Agreement.

10.6 For the avoidance of doubt, if there is any conflict or inconsistency between the provisions of this Agreement and the Lease Plus Agreement, the provisions of this Agreement shall prevail.

10.7 Without prejudice to Clause 10.8, the Tenant shall not prior to the Final Payment Date:

10.7.1 claim, recover, retain or receive (or seek to claim, recover, retain or receive) any amount under the Collateral Agreements (and/or the Supply Chain Agreements) from any Collateral Agreement Counterparty;

10.7.2 petition for or otherwise be a party to any proceedings for winding-up any Collateral Agreement Counterparty or any other insolvency proceedings in respect of any Collateral Agreement Counterparty; or

10.7.3 compete with the Agent’s rights on a winding up or other insolvency of any Collateral Agreement Counterparty nor claim to be subrogated to any rights of the Agent or Funder;

the Tenant agrees and undertakes that if it receives any amount in contravention of the provisions of this Clause 10.7 it will immediately turn the same over to the Agent for the account of the Agent and the Funders and pending such payment hold the same on trust for the Agent and the Funders provided that such trust shall not create any registerable security interest over such amount.

10.7A The Landlord shall not be required to accede to any request of the Tenant pursuant to Clause 42 of the Lease Plus Agreement except with the prior written consent of the Funder (such consent not to be unreasonably withheld or delayed).

10.8 Notwithstanding any provision in the Collateral Agreements, the Tenant hereby undertakes that it will not, and it will procure that no permitted successor or assignee of it will exercise any rights it may have under or arising out of any of the Collateral Agreements, except as provided in Clauses 10.8.1 to 10.8.3 inclusive:

10.8.1 Following termination of the Lease Plus Agreement in accordance with this Agreement, the Tenant shall from such date (the “Exercise Date”) be entitled to exercise its rights under the Collateral Agreements to step in to and/or novate the Supply Chain Agreements in accordance with the Collateral Agreements.

10.8.2 Until the Final Payment Date, but following the Exercise Date, the Tenant shall not do anything to prejudice the rights which are not transferred to it pursuant to the Collateral Agreements.

10.8.3 Notwithstanding the terms of the Collateral Agreements and any other provisions of this Clause 10.8, each of the Contractor and the Service Providers (and guarantors thereof) shall remain responsible, and be liable, to the Landlord in respect of all costs, claims, damages, losses and liabilities which shall have arisen out of or in connection with the Supply Chain Agreements in respect of the period prior to the Exercise Date in relation to which the Agent acting on behalf of the Landlord or the Funders shall retain the benefit of all and any rights to all such costs, claims, damage, losses and liabilities.

11 ASSIGNMENT

11.1 No party to this Agreement may assign or transfer any part of its rights or obligations under the Agreement, save that:

11.1.1 the Agent may assign, novate or transfer its rights and obligations under this Agreement and in respect of the Security Documents to a successor Agent in accordance with the Funding Agreements without the consent of the Tenant;

11.1.2 any Funder may assign or transfer its rights under the Funding Agreements in accordance with the terms of the Funding Agreements; and

11.1.3 the Tenant may assign, novate or otherwise transfer its rights and/or obligations under this Agreement to any person that the Tenant assigns, novates or otherwise transfers its rights and/or obligations under the Lease Plus Agreement in accordance with Clause 23.2 (Assignment) of the Lease Plus Agreement, and the Funders shall co-operate with the Tenant in completing the formalities of any transfer or assignment including by executing any additional documents as may be required by the Tenant.

11.2 If paragraph 11.1.1 applies then the Tenant shall enter into a direct agreement with the new Agent on substantially the same terms as this Agreement.

12 ENTIRE AGREEMENT

12.1 Unless otherwise stated in this Agreement, this Agreement constitutes the entire agreement between the parties in connection with its subject matter and supersedes all prior representations, communications, negotiations and understandings concerning the subject matter of this Agreement. No party has relied on any representation except as expressly set out in this Agreement.

13 WAIVER

13.1 The failure of any party to exercise any contractual right or remedy shall not constitute a waiver thereof until communication in writing under Sub-clause 13.2.

13.2 No waiver shall be effective unless it is communicated in writing to the other party.

13.3 A waiver of any right or remedy arising from a breach of contract shall not constitute a waiver of any right or remedy arising from any other breach of this Agreement.

14 SEVERABILITY

14.1 If any term, condition or provision contained in this Agreement shall be held to be invalid, unlawful or unenforceable to any extent, such term, condition or provision shall not affect the validity, legality or enforceability of the remaining parts of this Agreement.

15 COUNTERPARTS

15.1 This Agreement may be executed in any number of counterparts, all of which when taken together will constitute one and the same instrument.

16 CONFIDENTIALITY

16.1 The Agent shall be bound to comply with the obligations of the Landlord contained in Clause 66 (Confidentiality) of the Lease Plus Agreement in relation to all information and matters obtained from any other party under or in connection with the Lease Plus Agreement.

17 NOTICES CONSENTS AND APPROVALS

17.1 Any notice served under or in connection with this Agreement is to be in writing and be treated as properly served if compliance is made with either the provisions of Section 196 of the Law of Property Act 1925 (as amended by the Postal Services Act 2000) or Section 23 of the Landlord and Tenant Act 1927.

17.2 Any notice to be given to the Tenant should be marked for the attention of [ ] or other person as notified in writing to the Agent and delivered to [ ] or such other address as notified in writing to the Agent by the Tenant.

17.3 Any notice to be given to the Agent should be marked for the attention of [ ] or other position as notified in writing to the Tenant and delivered to [ ] or such other address as notified in writing to the Tenant by the Agent.

17.4 Any consent or approval under this Agreement is required to be obtained before the act or event to which it applies is carried out or done and is to be treated as effective only if the consent or approval is given in writing.

17.5 Any notification required pursuant to this Agreement is to be treated as effective only if given in writing.

18 EXCLUSION OF THIRD PARTY RIGHTS

18.1 Except as expressly stated in this Agreement, a person who is not a party to this Agreement may not enforce any of its terms under the Contracts (Rights of Third Parties) Act 1999.

19 SURVIVORSHIP

19.1 Notwithstanding the provisions of Clause 10.3.2 and/or 10.3.3, Clauses 10.7 to 10.8 (inclusive) shall survive termination of this Agreement.

20 GOVERNING LAW

20.1 This Agreement shall be considered as a contract made in England and Wales, and this Agreement and any dispute or claim arising out of or in connection with it or its subject matter or formation (including any non-contractual disputes or claims) shall be subject to the laws of England and Wales.

20.2 The parties agree that the courts of England and Wales shall have exclusive jurisdiction to hear and settle any dispute or claim arising out of or in connection with this Agreement or its subject matter or formation (including non-contractual disputes or claims), and each of them irrevocably submits to the jurisdiction of those courts.

IN WITNESS WHEREOF this Deed has been executed by the parties hereto on the date delivered on the date stated at the beginning of this Agreement.

[Appropriate execution blocks]

SCHEDULE 20

Collateral Agreements165

165 Collateral Warranties should be obtained in respect of the Works and the Services being provided by the Landlord’s sub-contractors.

Dated 20

[CONTRACTOR] LIMITED (1)

[SUB-CONTRACTOR] (2)

[BENEFICIARY] (3)

DUTY OF CARE DEED

relating to Works at

THIS DEED made the day of 20

BETWEEN:

(1) [ ] LIMITED (Company No. ) whose registered office is at [ ] (the "Contractor”);

(2) [ ] (Company No. ) whose registered office is at [ ] (the "Sub-Contractor”); and

(3) [ ] (Company No. ) whose registered office is at [ ] (the "Beneficiary”)

WHEREAS:

(A) The Landlord is the owner of the freehold interest in the Site and intends to carry out the Works at the Site.

(B) Pursuant to the Building Contract the Landlord has appointed the Contractor to design carry out and complete the Works.

(C) Pursuant to the Sub-Contract the Contractor has appointed the Sub-Contractor to design carry out and complete the Sub-Contract Works.

[(D) The Landlord has entered into a Lease Plus Agreement [an agreement for lease/sale agreement] with the Beneficiary for the whole or part of the Works.]

(E) It is a condition of the Sub-Contract that the Sub-Contractor enters into this deed.

NOW THIS DEED WITNESSETH and it is hereby agreed and declared as follows:-

In consideration of the payment of one pound (£1.00) by the Beneficiary to the Sub-Contractor, receipt of which the Sub-Contractor acknowledges:-

1 DEFINITIONS AND INTERPRETATION

1.1 In this Deed the following expressions shall have the following meanings:

"Building Contract"means the construction contract dated [ ] between the Contractor and the Landlord for the carrying out and completion of the Works

"Documents"means all plans, drawings, specifications, calculations, computer software and other documents and information of any kind prepared in the course of preparation or to be prepared by or on behalf of the Sub-Contractor in connection with the Works pursuant to the Sub-Contract including any amendments, alterations or enhancements thereto

"Effective Date"means the date upon which the Beneficiary has acquired the freehold interest in the Site as a result of the exercise of one of the options set out in Schedule 14 to the Lease Plus Agreement

"Landlord"

means [ ]

"Site"means [ ]

"Sub-Contract"means the contract dated 20 between the Contractor and the Sub-Contractor for the design, carrying out and completion of the Sub-Contract Works

"Sub-Contract Works"means [ ]

"Works"means all works of design, construction, testing, commissioning and completion (including temporary works) at the Site

1.2 In this Deed unless the context otherwise requires:

1.2.1 the expression Sub-Contractor includes respectively the persons deriving title under the Sub-Contractor;

1.2.2 the expression Beneficiary shall include its successors in title and/or assigns.

2 DUTY OF CARE

On and from the Effective Date the Sub-Contractor hereby warrants to the Beneficiary that it has exercised and will continue to exercise all the reasonable skill, care and diligence in the performance of its duties under the Sub-Contract to be expected of a competent sub-contractor experienced in carrying out work on projects of a similar size, scope and complexity to the Sub-Contract Works and that it has complied with and will continue to comply with the terms of the Sub-Contract. In particular and without limiting the generality of the foregoing the Sub-Contractor:

2.1 covenants with the Beneficiary that it has carried out [and will carry out and] completed the Sub-Contract Works in accordance with the Sub-Contract and duly observed and performed all its duties and obligations thereunder;

2.2 warrants to the Beneficiary that it has exercised [and will continue to exercise] all reasonable skill, care and diligence in:

2.2.1 the design of the Sub-Contract Works insofar as the Sub-Contract Works any part of it has been or will be designed by or on behalf of the Sub-Contractor; and

2.2.2 the selection of materials and goods for the Sub-Contract Works insofar as such materials and goods have been [and/or will be] selected by the Sub-Contractor; and

2.2.3 the satisfaction of any performance specification or requirement insofar as such performance specification or requirement is included in the Sub-Contract or in any instruction for any variation issued under the Sub-Contract; and

2.2.4 the performance of the works under the Sub-Contract which [will be] carried out timeously and in accordance with any time constraints set out in the Sub-Contract.

2.3 This warranty is subject to the qualifications that the Sub-Contractor shall owe no greater duty or obligation to the Beneficiary than it owes to the Contractor under the Sub-Contract.

3 DELETERIOUS MATERIALS

With effect from the Effective Date the Sub-Contractor warrants to the Beneficiary that it has not used [and shall not] use any goods, materials, substances or products not in accordance with relevant British and European Standards and Codes of Practice CoSHH Regulations or Construction Regulations or otherwise generally known within the construction or engineering industries at the time of use to be deleterious to health and safety or to the durability of the Sub-Contract Works or not in accordance with good building practices current at the time of use.

4 INSURANCE

The Sub-Contractor hereby warrants to the Beneficiary with effect from the Effective Date that:

4.1 during the Sub-Contract Works and for a period of twelve years from the date of the last certificate of practical completion for the Works the Sub-Contractor will maintain professional indemnity insurance for a minimum cover of £[ ] for each and every claim with a reputable insurer carrying on business in the United Kingdom so long as such insurance remains available at commercially reasonable rates;

4.2 at any time after the Effective Date the Sub-Contractor shall immediately inform the Beneficiary if such insurance ceases to be available at commercially reasonable rates and shall discuss with the Beneficiary the means of best protecting their respective positions in the absence of such insurance;

4.3 at any time after the Effective Date the Sub-Contractor shall when reasonably requested by the Beneficiary produce documentary evidence satisfactory to the Beneficiary that such insurance is being maintained and that all premiums have been paid.

5 DOCUMENTS

5.1 The Sub-Contractor hereby grants to the Beneficiary with effect from the Effective Date an irrevocable non-terminable royalty-free non-exclusive and transferable licence to use, copy and reproduce the Documents for all purposes relating to the Works and/or the Site including but without limitation the design, construction, completion, extension, reconstruction, maintenance, modification, repair, reinstatement, use, funding, letting, promotion, sale and advertisement of the Works Provided always that the copyright in the Documents shall remain vested in the Sub-Contractor.

5.2 At any time after the Effective Date, the Beneficiary may assign the said licence or grant a sub-licence or sub-licences within the scope of the said licence to any appointee, purchaser, lessee, mortgagee or other person, firm or company acquiring an interest in all or any part of the Site or the Works from or with the consent of the Beneficiary.

5.3 The Sub-Contractor shall not be liable for any use by the Beneficiary or its appointee of the Documents for any purpose other than that for which the same were prepared by or on behalf of the Sub-Contractor.

6 LIABILITY

The maximum liability of the Sub-Contractor to the Beneficiary hereunder shall be £[ ].166

7 ASSIGNMENT AND FURTHER WARRANTIES

7.1 The benefit of this Deed may be assigned by the Beneficiary without limitation provided that:-

7.1.1 the Deed may be assigned on a maximum of two (2) occasions;

7.1.2 the Sub-Contractor shall be entitled to receive notice of such assignment in writing within a reasonable period of the assignment taking place; and

7.1.3 the Sub-Contractor shall do all things as may be reasonably necessary to effect any such assignment.

7.2 The Sub-Contractor agrees that if required by the Beneficiary the Sub-Contractor will enter into further Deed(s) of Warranty in respect of the Site in the same form as this Deed (with the omission of the Contractor as a party and save for Clause 5 and this sub-clause 7.2) subject only to such amendments as are required to give proper meaning and efficacy to such Deed(s) of Warranty) in favour of the first person(s) to whom the Beneficiary or any appointee sells or lets the Site.

8 NOTICES

Any notice to be given pursuant to this Deed shall be given in writing addressed to the relevant party at the address specified herein or at such other address as a party notifies to the others in writing or at a party’s registered office or last known address or place of business. Any notice to be given shall be deemed to have been received:

8.1 when transmitted (if given by facsimile);

8.2 when left at the address mentioned above; or

8.3 two working days after posting by first class pre-paid postage addressed as required above (if given by letter).

9 LIABILITY PERIOD

No action or proceedings for any breach of this Deed shall be commenced against the Sub-Contractor after the expiry of twelve (12) years from the date of the last certificate of practical completion issued in relation to the Works.

10 LIABILITY INSPECTIONS

The liability of the Sub-Contractor under this Deed shall not be modified, released, diminished or in any way affected by any independent inspection, investigation or enquiry

166 The amount to be inserted should be the same £ amount as the level of PI insurance cover.

into any relevant matter which may be made or carried out by or for the Beneficiary nor by any failure or omission to carry out by or for the Beneficiary any such inspection, investigation or enquiry nor by the Beneficiary of any independent firm, company or party whatsoever to review the progress of or otherwise report to the Beneficiary in respect of the Works nor by any action or omission of any such firm, company or party whether or not such action or omission might give rise to any independent liability of such firm, company or party to the Beneficiary.

11 GOVERNING LAW JURISDICTION AND DISPUTE RESOLUTION

11.1 This Deed shall be considered as a contract made in England and Wales, and this Deed and any dispute or claim arising out of or in connection with it or its subject matter or formation (including any non-contractual disputes or claims) shall be subject to the laws of England and Wales.

11.2 Any disputes arising under or in connection with this deed may be referred by either party to adjudication in accordance with the Technology and Construction Solicitors Association Adjudication Rules. In the absence of agreement between the parties as to the choice of adjudicator, the adjudicator shall be appointed by the Chairman for the time being of the Technology and Construction Solicitors Association or his nominated representative.

11.3 The decision of any adjudicator shall be binding on, and implemented by, both parties pending final determination of the relevant dispute by the English courts.

11.4 Subject to the provisions of sub-clauses 11.2 and 11.3, the parties to this Deed agree that the courts of England and Wales shall have exclusive jurisdiction to hear and settle any dispute or claim arising out of or in connection with this Deed or its subject matter or formation (including non-contractual disputes or claims), and each of them irrevocably submits to the jurisdiction of those courts.


This Deed is enforceable by the original parties to it and by their successors in title and permitted assignees. Any rights of any person to enforce the terms of this Deed pursuant to the Contracts (Rights of Third Parties) Act 1999 are excluded.

IN WITNESS whereof this Deed has been duly executed by the Contractor the Sub-Contractor and the Beneficiary the day and year first before written.

SIGNED AS A DEED by the Contractor acting by a Directorand its Secretary/two Directors:

Director

Director/Secretary

SIGNED AS A DEED by the Sub-Contractor acting by a Directorand its Secretary/two Directors:

Director

Director/Secretary

SIGNED AS A DEED by the Beneficiary acting by a Directorand its Secretary/two Directors:

Director

Director/Secretary

[SCHEDULE

(Full Names and Addresses of the partners of the Consultant)]

Dated 20

[LANDLORD] LIMITED (1)


[BENEFICIARY] (3)

DUTY OF CARE DEED

relating to the Works at


BETWEEN:

(1) [ ] LIMITED (registered in England and Wales under company number ) whose registered office is at [ ] (the "Landlord”);

(1) [ ] LIMITED (registered in England and Wales under company number ) whose registered office is at [ ] (the "Contractor”); and

(1) [ ] LIMITED (Company Number ) whose registered office is at [ ] (the "Beneficiary”)

WHEREAS:


(B) Pursuant to the Building Contract the Landlord has appointed the Contractor to carry out and complete the Works.

(C) The Landlord has entered into a Lease Plus Agreement [an agreement for lease/sale agreement] with the Beneficiary for the whole or part of the Site.

(D) It is a condition of the Building Contract that the Contractor enters into this deed.

NOW THIS DEED WITNESSETH and it is hereby agreed and declared as follows:-

In consideration of the payment of one pound (£1.00) by the Beneficiary to the Contractor, receipt of which the Contractor acknowledges:-



"Building Contract"means the construction contract dated [ ] 20[ ] between the Contractor and the Landlord for the carrying out and completion of the Works

"Documents"means all plans, drawings, specifications, calculations, computer software and other documents and information of any kind prepared in the course of preparation or to be prepared by or on behalf of the Contractor in connection with the Works pursuant to the Building Contract including any amendments, alterations or enhancements thereto


"Landlord"means [ ]

"Site"

means [ ]

"Works"mean all works of design, construction, testing, commissioning and completion (including temporary works) at the Site to be carried out by the Contractor pursuant to the provisions of the Building Contract


1.2.1 the expression Contractor includes respectively the persons deriving title under the Contractor;

1.2.2 the expression Beneficiary shall include its successors in title and/or assigns.

2 DUTY OF CARE

The Contractor hereby warrants to the Beneficiary with effect from the Effective Date that it has exercised [and will continue to exercise] all the reasonable skill, care and diligence in the performance of its duties under the Building Contract to be expected of a competent building contractor experienced in carrying out work on projects of a similar size, scope and complexity to the Works and that it has complied with and will continue to comply with the terms of the Building Contract. In particular and without limiting the generality of the foregoing the Contractor:

2.1 covenants with the Beneficiary with effect from the Effective Date that it has carried [out and will carry out] and completed the Works in accordance with the Building Contract and duly observe and perform all its duties and obligations thereunder;

2.2 warrants to the Beneficiary with effect from the Effective Date that it has exercised [and will continue to exercise] all reasonable skill, care and diligence in:

2.2.1 the design of the development insofar as the Works or any part of it has been or will be designed by or on behalf of the Contractor; and

2.2.2 the selection of materials and goods for the Works insofar as such materials and goods have been [and/or will be] selected by the Contractor; and

2.2.3 the satisfaction of any performance specification or requirement insofar as such performance specification or requirement is included in the Building Contract or in any instruction for any variation issued under the Building Contract; and

2.2.4 the performance of the works under the Building Contract which [will be] carried out timeously and in accordance with any time constraints set out in the Building Contract.

2.3 This warranty is subject to the qualifications that the Contractor shall owe no greater duty or obligation to the Beneficiary than it owes to the Landlord under the Building Contract.


The Contractor warrants to the Beneficiary with effect from the Effective Date that it has not used [and shall not use] any goods, materials, substances or products not in accordance with relevant British and European Standards and Codes of Practice CoSHH Regulations or Construction Regulations or otherwise generally known within the construction or engineering industries at the time of use to be deleterious to health and safety or to the durability of the Works or not in accordance with good building practices current at the time of use.

4 INSURANCE

The Contractor hereby warrants to the Beneficiary with effect from the Effective Date that:

4.1 during the Works and for a period of twelve years from the date of the last certificate of practical completion for the Works the Contractor will maintain professional indemnity insurance for a minimum cover of £[ ] for each and every claim with a reputable insurer carrying on business in the United Kingdom so long as such insurance remains available at commercially reasonable rates;

4.2 at any time after the Effective Date the Contractor shall immediately inform the Beneficiary if such insurance ceases to be available at commercially reasonable rates and shall discuss with the Beneficiary the means of best protecting their respective positions in the absence of such insurance;

4.3 at any time after the Effective Date the Contractor shall when reasonably requested by the Beneficiary produce documentary evidence satisfactory to the Beneficiary that such insurance is being maintained and that all premiums have been paid.

5 DOCUMENTS

5.1 The Contractor hereby grants to the Beneficiary with effect from the Effective Date an irrevocable non-terminable royalty-free non-exclusive and transferable licence to use, copy and reproduce the Documents for all purposes relating to the Works and/or the Site including but without limitation the design, construction, completion, extension, reconstruction, maintenance, modification, repair, reinstatement, use, funding, letting, promotion, sale and advertisement of the Works Provided always that the copyright in the Documents shall remain vested in the Contractor.

5.2 The Contractor shall on request at any time after the Effective Date at any time give the Beneficiary or any person authorised by the Beneficiary access to the material referred to in Clause 5.1 and provide proper copies of the Documents to the Bank or its agent upon payment of its reasonable copying charges.

5.3 The Beneficiary may assign the said licence or grant a sub-licence or sub-licences within the scope of the said licence to any appointee, purchaser, lessee, mortgagee or other person, firm or company acquiring an interest in all or any part of the Site or the Works from or with the consent of the Beneficiary.

5.4 The Contractor shall not be liable for any use by the Beneficiary or its appointee of the Documents for any purpose other than that for which the same were prepared by or on behalf of the Contractor.

6 LIABILITY

The maximum liability of the Contractor to the Beneficiary hereunder shall be £[ ].167


7.1 The benefit of this Deed may be assigned by the Beneficiary without limitation provided that:-


7.1.2 the Contractor shall be entitled to receive notice of such assignment in writing within a reasonable period of the assignment taking place; and

7.1.3 the Contractor shall do all things as may be reasonably necessary to effect any such assignment.

7.2 The Contractor agrees that if required by the Beneficiary the Contractor will enter into further Deed(s) of Warranty in respect of the Site in the same form as this Deed (with the omission of the Landlord as a party and save for Clause 5 and this sub-Clause 7.2) subject only to such amendments as are required to give proper meaning and efficacy to such Deed(s) of Warranty) in favour of the first person(s) to whom the Beneficiary or any appointee sells or lets the Site.

8 NOTICES

Any notice to be given pursuant to this Deed shall be given in writing addressed to the relevant party at the address specified herein or at such other address as a party notifies to the others in writing or at a party’s registered office or last known address or place of business. Any notice to be given shall be deemed to have been received:




9 LIABILITY PERIOD

No action or proceedings for any breach of this Deed shall be commenced against the Contractor after the expiry of 12 years from the date of the last certificate of practical completion issued in relation to the Works.

10 LIABILITY INSPECTION

The liability of the Contractor under this Deed shall not be modified, released, diminished or in any way affected by any independent inspection, investigation or enquiry into any relevant matter which may be made or carried out by or for the Beneficiary nor by any failure or omission to carry out by or for the Beneficiary any such inspection, investigation or enquiry nor by the Beneficiary of any independent firm, company or party whatsoever to review the progress of or otherwise report to the Beneficiary in respect of the Works nor by any action or omission of any such firm, company or party whether or not such action or omission might give rise to any independent liability of such firm, company or party to the Beneficiary.




11.2 Any dispute arising under or in connection with this Deed shall in the first instance be referred to adjudication in accordance with the Part 1 of the Schedule to the Scheme for Construction Contracts (England and Wales) Regulations 1998.

11.3 The Adjudicator’s decision is binding until the dispute is finally determined by the Courts in accordance with Clause 11.4.




IN WITNESS whereof this Deed has been duly executed by the Contractor the Landlord and the Beneficiary the day and year first before written.


Director

Director/Secretary

SIGNED AS A DEED by the Landlord acting by a Directorand its Secretary/two Directors:

Director

Director/Secretary


Director

Director/Secretary

Dated 20

[CONSULTANT] (1)


[BENEFICIARY] (3)

DUTY OF CARE DEED

relating to Works at


BETWEEN:

(1) THE PARTNERS IN [INSERT NAME OF COMPANY] (being the persons listed in the Schedule hereto) whose principal place of business is OR LIMITED/PLC (Company No. ) whose registered office is at (the "Consultant”);

(2) LIMITED (registered in England and Wales under company number ) whose registered office is at (the "Contractor”); and

(3) LIMITED (registered in England and Wales under company number ) whose registered office is at (the "Beneficiary”).

WHEREAS:


(B) Pursuant to the Appointment the Contractor has appointed the Consultant to provide professional services as [ ] in connection with the Works.

[(C) The Landlord has entered into a Lease Plus Agreement [an agreement for lease/sale agreement] with the Beneficiary for the whole or part of the Site.]

(D) It is a condition of the Appointment that the Consultant enters into this deed.

NOW THIS DEED WITNESSETH and it is hereby declared as follows:

In consideration of the payment of one pound (£1.00) by the Beneficiary to the Consultant, receipt of which the Consultant acknowledges:-



"Appointment"means the agreement dated [ ] 20[ ] between the Consultant and the Contractor in respect of the provision of services by the Consultant to the Contractor in respect of the Works

"Documents"means all plans, drawings, specifications, calculations, computer software and other documents and information of any kind prepared in the course of preparation or to be prepared by or on behalf of the Consultant in connection with the Works pursuant to the Appointment including any amendments, alterations or enhancements thereto


"Landlord"

means [ ]

"Site"means [ ]

"Works"means all works of design, construction, testing, commissioning and completion (including any temporary works) at the Site


1.2.1 the expression Consultant includes respectively the persons deriving title under the Consultant;

1.2.2 the expression the Beneficiary shall include its successors in title and/or assigns.

2 DUTY OF CARE

The Consultant hereby warrants to the Beneficiary with effect from the Effective Date that it has exercised and will continue to exercise all the reasonable skill, care and diligence in the performance of its duties under the Appointment to be expected of a properly qualified and competent [ ] experienced in carrying out work similar to the services set out in the Appointment on projects of a similar size, scope and complexity to the Works and that it has complied with and will continue to comply with the terms of the Appointment PROVIDED THAT the Consultant shall owe no greater duty or obligation to the Beneficiary than it owes to the Contractor under the Appointment.


The Consultant warrants to the Beneficiary with effect from the Effective Date that it has not specified for use and shall not specify for use any goods, materials, substances or products not in accordance with relevant British and European Standards and Codes of Practice CoSHH Regulations or Construction Regulations or otherwise generally known within the construction or engineering industries at the time of specification to be deleterious to health and safety or to the durability of the Works or not in accordance with good building practices current at the time of specification.

4 INSURANCE

The Consultant hereby warrants with effect from the Effective Date to the Beneficiary that:

4.1 During the Works and for a period of twelve years from the date of the last certificate of practical completion for the Works the Consultant will maintain professional indemnity insurance for a minimum cover of £[ ] for each and every claim with a reputable insurer carrying on business in the United Kingdom so long as such insurance remains available at commercially reasonable rates;

4.2 At any time after the Effective Date the Consultant shall immediately inform the Beneficiary if such insurance ceases to be available at commercially reasonable rates and shall discuss with the Beneficiary the means of best protecting their respective positions in the absence of such insurance;

4.3 At any time after the Effective Date the Consultant shall when reasonably requested by the Beneficiary produce documentary evidence satisfactory to the Beneficiary that such insurance is being maintained and that all premiums have been paid.

5 DOCUMENTS

5.1 The Consultant hereby grants to the Beneficiary with effect from the Effective Date an irrevocable non-terminable royalty-free non-exclusive and transferable licence to use, copy and reproduce the Documents for all purposes relating to the Works and/or the Site including but without limitation the design, construction, completion, extension, reconstruction, maintenance, modification, repair, reinstatement, use, funding, letting, promotion, sale and advertisement of the Works Provided always that the copyright in the Documents shall remain vested in the Consultant.

5.2 The Consultant shall on request at any time after the Effective Date give the Beneficiary or any person authorised by the Beneficiary access to the material referred to in Clause 5.1 and provide proper copies of the Documents to the Beneficiary or its agent upon payment of its reasonable copying charges.

5.3 The Beneficiary may assign the said licence or grant a sub-licence or sub-licences within the scope of the said licence to any purchaser, lessee, mortgagee or other person, firm or company acquiring an interest in all or any part of the Site or the Works from or with the consent to the Beneficiary.

5.4 The Consultant shall not be liable for any use by the Beneficiary or its appointee of the Documents for any purpose other than that for which the same were prepared by or on behalf of the Consultant.


6.1 The benefit of this Deed may be assigned by the Beneficiary without limitation and without the consent of the Consultant being required provided that:-


6.1.2 the Consultant shall be entitled to receive notice of such assignment in writing within a reasonable period of the assignment taking place; and

6.1.3 the Consultant shall do all things as may be reasonably necessary to effect any such assignment.

6.2 The Consultant agrees that if required by the Beneficiary the Consultant will enter into further Deed(s) of Warranty in respect of the Site in the same form as this Deed (with the omission of the Contractor as a party and save for Clause 5 and this sub-Clause 6.2) subject only to such amendments as are required to give proper meaning and efficacy to such Deed(s) of Warranty) in favour of the first person(s) to whom the Beneficiary sells or lets the Site and each part.

7 LIABILITY

The maximum liability of the Consultant to the Beneficiary hereunder shall be £[ ].168

8 NOTICES


Any notice to be given pursuant to this Deed shall be given in writing addressed to either party (as the case may be) at the address specified herein or at such other address as either notifies the other in writing or at either party’s registered office or last known address or place of business. Any notice to be given shall be deemed to have been received:




9 LIABILITY PERIOD

No action or proceedings for any breach of this Deed shall be commenced against the Consultant after the expiry of 12 years from the date of the last certificate of practical completion issued in relation to the Works.

10 PARTNERSHIP

The Consultant acknowledges that where it is a partnership the Consultant’s rights, obligations and liabilities under this Deed are the joint and several liabilities of each partner and that the term “Consultant” shall be deemed to include any additional partner or partners who may be admitted into the partnership of the Consultant during the currency of this Deed. This Deed shall not automatically terminate upon the death, retirement or resignation of any one or more members of such a partnership.

11 LIABILITY INSPECTION

The liability of the Consultant under this Deed shall not be modified, released, diminished or in any way affected by any independent inspection, investigation or enquiry into any relevant matter which may be made or carried out by or for the Beneficiary nor by any failure or omission to carry out by or for the Beneficiary nor by any failure or omission to carry out any such inspection, investigation or enquiry nor by the appointment by the Beneficiary of any independent firm, company or party whatsoever to review the progress of or otherwise report to the Beneficiary in respect of the Works nor by any action or omission of any such firm, company or party whether or not such action or omission might give rise to any independent liability of such firm, company or party to the Beneficiary.



12.2 Any disputes arising under or in connection with this deed may be referred by either party to adjudication in accordance with the Technology and Construction Solicitors Association Rules. In the absence of agreement between the parties as to the choice of adjudicator, the adjudicator shall be appointed by the Chairman for the time being of the Technology and the Construction Solicitors Association or his nominated representative.

12.3 The Adjudicator’s decision is binding until the dispute is finally determined by the Courts in accordance with Clause 12.4.




IN WITNESS whereof this Deed has been duly executed by the Consultant the Contractor and the Beneficiary the day and year first before written.

SIGNED AS A DEED by ______________________________In the presence of:

Signature:Name (in block capitals): ______________________________Occupation:Address:






Director

Director/Secretary


Director

Director/Secretary

[SCHEDULE

(Full Names and Addresses of the partners of the Consultant)]

SCHEDULE 21

DISPUTE RESOLUTION PROCEDURE

1 The procedure set out in this Schedule (the "Dispute Resolution Procedure") shall apply to any dispute, claim or difference arising out of or relating to this Lease ("Dispute").

2 This Dispute Resolution Procedure shall not impose any pre-condition on any party or otherwise prevent or delay any party from commencing proceedings in any court of competent jurisdiction in relation to any Dispute in which that party requires either:

33.1 an order (whether interlocutory or final) restraining the other party from doing any

act or compelling the other party to do any act; or

3.2 a judgement for a liquidated sum to which there is no arguable defence.

4 Strategic Partnering Board (“SPB”)

4.1 Subject to paragraphs 2 and 3.2 of this Schedule, all Disputes shall first be referred to the SPB for resolution and any decision of the SPB shall be final and binding unless the parties otherwise agree in writing.

4.2 Where a Dispute raises issues which are related to the matters set out in paragraphs 8.1.1 or 8.1.2 and a Supply Chain Member has notified the Landlord of its intention to refer the relevant Construction Contract Dispute or Supply Chain Agreement Dispute (as the case may be and in each case as defined in paragraph 8.1) to adjudication then reference of such Dispute to the SPB shall not be a precondition to the commencement of Adjudication or Arbitration;

4.3 For the avoidance of doubt, where the circumstances in paragraph 3.2 arise but a Dispute has already been referred to the SPB and a final and binding decision of the SPB has already been given, the decision of the SPB in relation to such Dispute remains final and binding.

5 Mediation

5.1 If the parties have been unable to resolve the Dispute within ten (10) Business Days of referral to the SPB, they may (if both parties so agree) refer the Dispute to mediation on such conditions as may be agreed between the parties. Any mediation shall be completed within thirty (30) Business Days of such referral and any decision arising therefrom shall be final and binding unless otherwise agreed by the parties.

5.2 Mediation shall not be a precondition to the commencement of Adjudication or Arbitration.

6 Adjudication

6.1 If (where required) the Dispute has not been resolved within ten (10) Business Days of it being referred to the SPB and/or the parties have chosen not to refer the Dispute to mediation, either party may by notice to the other refer the Dispute to an Adjudicator selected in accordance with paragraph 5.2 below.

6.2 The Adjudicator nominated to consider a Dispute referred to him shall be selected on a strictly rotational basis from the relevant panel of experts appointed in accordance with the following:

6.2.1 there shall be two (2) panels of experts, one in respect of construction matters (Construction Panel) and one in respect of operational and maintenance matters (Operational Panel). All the experts on each panel shall be wholly independent of the Landlord, the Tenant, the relevant Supply Chain Member and any of the major competitors of the Landlord or relevant Supply Chain Member;

6.2.2 the Construction Panel shall be comprised of three (3) experts as identified in paragraph 11 who shall be appointed jointly by the Landlord and the Tenant. Such appointments shall take place within twenty-eight (28) days of the date of this Agreement;

6.2.36.2.4 the Operational Panel shall be comprised of three (3) experts as

identified in paragraph 11 who shall be appointed jointly by the Landlord and the Tenant. Such appointments shall take place on or before the Actual Completion Date;

6.2.5 if any member of a panel resigns during the term of the Lease, a replacement expert shall be appointed by the Landlord and the Tenant as soon as practicable;

6.2.6 if the Landlord and the Tenant are unable to agree on the identity of the experts to be appointed to the panels or any replacement expert, the President for the time being of the Chartered Institute of Arbitrators shall appoint such expert(s) within seven (7) days of any application for such appointment by either party.

6.3 Within seven (7) days of appointment in relation to a particular Dispute, the Adjudicator shall require the parties to submit in writing their respective arguments. The Adjudicator shall in his absolute discretion, consider whether a hearing is necessary in order to resolve the Dispute.

6.4 In any event the Adjudicator shall provide to both parties his written decision on the Dispute within twenty-eight (28) days of appointment (or such other period as the parties may agree after the reference). The Adjudicator may extend the period of 28 days by up to fourteen (14) days with the consent of the party which referred the Dispute. The Adjudicator shall not state any reasons for his decision. Unless and until revised, cancelled or varied by the Arbitrator or by a decision of the court pursuant to paragraph 7 of this Schedule the Adjudicator's decision shall be final and binding on both parties who shall forthwith give effect to the decision.

6.5 The Adjudicator's costs of any reference shall be borne as the Adjudicator shall specify or, in default, equally by the parties. Each party shall bear its own costs arising out of the reference, including legal costs and the costs and expenses of any witnesses.

6.6 The Adjudicator shall be deemed not to be an arbitrator but shall render his decision as an expert and the provisions of the Arbitration Act 1996 and the law relating to arbitration shall not apply to the Adjudicator or his determination or the procedure by which he reached his determination.

6.7 The Adjudicator shall act impartially and may take the initiative in ascertaining the facts and the law. The Adjudicator shall have the power to open up, review and revise any opinion, certificate, instruction, determination or decision of whatever nature given or made under this Lease.

6.8 All information, data or documentation disclosed or delivered by a party to the Adjudicator in consequence of or in connection with his appointment as Adjudicator shall be treated as confidential. The Adjudicator shall not, save as permitted by Clause 66 (Confidentiality), disclose to any person or company any such information, data or documentation and all such information, data or documentation shall remain the property of the party disclosing or delivering the same and all copies of the Adjudicator's work.

6.9 The Adjudicator is not liable for anything done or omitted in the discharge or purported discharge of his functions as Adjudicator unless the act or omission is in bad faith. Any employee or agent of the Adjudicator is similarly protected from liability.

7 Not used.

8 Arbitration

8.1 All Disputes, to the extent not finally resolved pursuant to the procedures set out in the foregoing provisions of this Schedule shall subject to any agreement of the parties to resolve the Dispute by the commencement of legal proceedings be referred to Arbitration pursuant to the following provisions.

8.2 The Arbitration shall be governed by the provisions of the Arbitration Act 1996.

8.3 The party initiating the Arbitration shall give a notice of Arbitration to the other party (the "Notice") stating:

8.3.1 that the Dispute is referred to Arbitration;

8.3.2 details of the issues to be resolved; and

shall invite the other party to concur in the appointment of a sole arbitrator who shall be a solicitor or barrister or arbitrator recognised by the Chartered Institute of Arbitrators of not less than ten (10) years' standing. If the parties are unable within fourteen (14) days to agree the identity of the Arbitrator either party may request the President for the time being of the Chartered Institute of Arbitrators to make the appointment.

8.4 Should the appointed Arbitrator die, resign, refuse to act or become incapable of performing his functions, a replacement arbitrator will be appointed. The identity of the replacement arbitrator will be agreed by the parties or if the parties are unable within fourteen (14) days to agree, either party may request the President for the time being of the Chartered Institute of Arbitrators to make the appointment.

8.5 The Arbitration is to be held in London, in the English language and England shall be the seat of Arbitration.

8.6 Subject to any agreement of the parties to the contrary, the Arbitrator shall have power, inter alia (by reference to the following sections of the Arbitration Act 1996):

8.6.1 rule of its own jurisdiction (section 30);

8.6.2 decide all procedural and evidential matters (section 34);

8.6.3 appoint experts (section 37);

8.6.4 make more than one award, for example, on a preliminary issue (section 47);

8.6.5 make a declaration/order payment of money/restrain certain acts (section 48);

8.6.6 award simple or compound interest (section 49);

8.6.7 correct an award to remove a mistake or error (section 57);

8.6.8 make an award allocating costs of the arbitration between the parties (section 61);

8.6.9 to limit recoverable costs (section 65).

8.7 The parties hereby agree that the Arbitrator shall have power, inter alia to (by reference to the following sections of the Arbitration Act 1996):

8.7.1 consolidate proceedings and have concurrent hearings (section 35);

8.7.2 award security for costs and preserve grounds and evidence (section 38);

8.7.3 power to make provisional awards (section 39);

8.7.4 act in default of the parties (section 41);

8.7.5 make rules applicable to substance of dispute (section 46).

8.8 The Arbitrator shall have the power to open up, review and revise any opinion, certificate, instructions, determination or decision of whatever nature given or made under this Lease and to vary or cancel the decision of the Adjudicator.

8.9 The award of the Arbitrator shall be final and binding subject to section 69 of the Arbitration Act 1996.

8.10 Unless this Lease has already been repudiated or terminated, the parties shall, (notwithstanding that any Dispute is subject to the Dispute Resolution Procedure set out in this Schedule), continue to carry out their obligations in accordance with this Lease.

9 Submissions

9.1 If any Dispute raises issues which relate to:

9.1.1 Any dispute between the Landlord and the Contractor arising under the Construction Contract or otherwise affects the relationship or rights of the Landlord and/or the Contractor under the Construction Contract (the "Construction Contract Dispute"); or

9.1.2 Any dispute between the Landlord and the Service Provider arising under a Supply Chain Agreement other than the Construction Contract or otherwise affects the relationship or rights of the Landlord and/or the Service Provider under a Supply Chain Agreement other than the Construction Contract (the "Supply Chain Agreement")

then the Landlord may include as part of its submissions made to the Adjudicator or to the Arbitrator, where the Dispute is referred to arbitration, submissions made by the Contractor or by the Service Provider as appropriate.

9.2 The Adjudicator or the Arbitrator, as appropriate, shall not have jurisdiction to determine the Construction Contract Dispute or the Supply Chain Agreement Dispute but the decision of the Adjudicator or the Arbitrator shall, subject to paragraph 5.8, be binding on the Landlord and the Contractor insofar as it determines the issues relating to the Construction Contract Dispute and on the Landlord and the Service Provider insofar as it determines the issues relating to the Supply Chain Agreement Dispute.

9.3 Any submissions made by the Supply Chain Member shall:

9.3.1 be made within the time limits applicable to the delivery of submissions by the Landlord; and

9.3.2 concern only those matters which relate to the Dispute between the Tenant and the Landlord.

9.4 Where the Supply Chain Member makes submissions in any reference before:

9.4.1 the Adjudicator, the Adjudicator's costs of such reference shall be borne as the Adjudicator shall specify, or in default, one-third by the Tenant and two-thirds by the Landlord; and

9.4.2 the Arbitrator, the costs of the arbitration shall be in the discretion of the Arbitrator.

9.5 The Tenant shall have no liability to the Supply Chain Member arising out of or in connection with any decision of the Adjudicator or Arbitrator or in respect of the costs of the Supply Chain Member in participating in the resolution of any Dispute under this Lease.

9.6 The Landlord shall not allow the Supply Chain Member access to any document relevant to the issues in dispute between the Tenant and the Landlord save where:

9.6.1 the document is relevant also to the issues relating to the Construction Contract Dispute or the Supply Chain Agreement Dispute as the case may be; and

9.6.2 the Landlord has first delivered to the Tenant a written undertaking from the Supply Chain Member addressed to the Tenant that they shall not use any such document otherwise than for the purpose of the dispute resolution proceedings under this Lease and that they shall not disclose such documents or any information contained therein to any third party other than the Adjudicator or Arbitrator or any professional adviser

engaged by the Supply Chain Member (as appropriate) to advise in connection with the Dispute.

10 Not used.

11 No loss

Where the Tenant would otherwise be expressly liable to make a payment by way of compensation to the Landlord including amounts which, in turn, comprise compensation to any Supply Chain Members payable by the Landlord and/or which will be payable by way of compensation to any Supply Chain Members by the Landlord, the Tenant shall not be entitled to withhold, reduce or avoid any such payment to the Landlord in reliance only on the fact that the amount which is due from the Landlord to the Supply Chain Member or the entitlement of the Supply Chain Member to payment of such amount, as a result of the circumstances giving rise to the Tenant's obligation to pay such compensation, is conditional on the entitlement of, or receipt of payment by the Landlord from the Tenant.

12 Panel Members

The panel members referred to in paragraph 5 are as follows:

Construction Panel:

Operational Panel:

SCHEDULE 22

SOFT SERVICES MARKET TESTING

1 INTRODUCTION

The following defined terms are used in this Schedule:

"Associated Entity"means:

(a) an Associate of any of the Landlord, the Supply Chain Members or the Landlord’s shareholders;

(b) any partner in any partnership or any person who participates in any profit sharing or joint purse arrangement, in each case to which any of the Landlord, the Supply Chain Members or the Landlord’s shareholders or any person mentioned in paragraph (a) is also a party;

(c) any shareholder, director, officer or employee of any of the persons referred to in paragraphs (a) and (b) or any of those persons' spouses, children, step-children or partners; or

(d) any body corporate of which any person referred to in (c) above is a shareholder, director, officer or employee;

"Compliant Tender"means a tender received from a Tenderer which complies with the Tender Requirements

"Draft Proposal"means the proposal described in paragraph 4.1 of this Schedule

"Excluded Person"means the Landlord, any Associated Entity, any sub-contractor of an Associated Entity or any Associated Company of their respective sub-contractors

"Market Tested Soft Services"means those services described in Parts [ ] of Schedule 9 (Service Requirements)169 and any other Service from time to time designated as such by the parties

"Market Testing Date"means [Tenant to specify Market Testing Dates]

"Market Testing Meeting"means a meeting convened in accordance with paragraph 3.1 (Market Testing Programme) of this Schedule

"Market Testing Proposal"means the final version of the Draft Proposal, as agreed by the parties or as determined, in either case, in accordance with this Schedule

"Preferred Tenderer"

169 This applies to cleaning and security (4th and subsequent Wave schemes only)

means, following the soft services market testing of any Market Tested Soft Service, any group of Market Tested Soft Services or any part of any Market Tested Soft Service (as the case may be), the Tenderer selected to provide such services in accordance with the provisions of paragraph 8 of this Schedule

"Prospective Tenderers"means those persons who express an interest in being requested to prepare and submit tenders for each Market Tested Soft Service, group of Market Tested Soft Services or any part of any Market Tested Soft Service (as the case may be)

"Relevant Employees"means all of the employees of the Service Provider who are engaged wholly or mainly in the provision of the Market Tested Soft Services for which those Tenderers are tendering

"Soft Services Market Testing"means the process described in this Schedule and the term "soft services market tested" shall be construed accordingly

"Tenderers"means those of the Prospective Tenderers selected to submit tenders in accordance with paragraph 6 of this Schedule

"Tender Requirements"means the form and requirements of the tender documents to be sent to Tenderers as agreed or determined in accordance with the provisions of this Schedule

"Tender Validity Period"means the period within which tenders from Tenderers must be received if they are to be valid; and

"TUPE Information"means [information relating to the terms and conditions, job title, age, length of service and benefits of the employees of the Service Provider who are engaged wholly or mainly in the provision of the Market Tested Soft Services]

OR

[the information referred to in insert reference to relevant Schedule of employee information]

2 MARKET TESTING DATES

2.1 The Soft Services Market Testing of each Market Tested Soft Service shall, notwithstanding any other provision of this Schedule (including, without limitation, the participation of the Tenant described in paragraph 3), be the responsibility of the Landlord and shall be carried out in accordance with this Schedule so that the Preferred Tenderers shall commence provision of the relevant Market Tested Soft Services on the relevant Market Testing Date.

2.2 To avoid doubt the Hard FM Market Tested Services will not be subject to Soft Services Market Testing pursuant to this Schedule.

3 MARKET TESTING PROGRAMME

3.1 At least twelve (12) months before each Market Testing Date, the parties shall meet together as often as may be necessary in respect of all Market Tested Soft Services to be soft services market tested on that date:

3.1.1 to review the Service Specification and Method Statement for each Market Tested Soft Service and, if required by the Tenant, amend the relevant Service Specifications and Method Statements as appropriate. The Landlord may only object to any change in the requirements of the Tenant on the grounds referred to in paragraph 3.2.1 of Part 1 of Schedule 12 (Variation Procedure). Any such objection must be made by notice in writing to the Tenant within ten (10) Business Days of the relevant Market Testing Meeting;

3.1.2 to discuss and seek to agree (subject to the provisions of paragraph 4 (Grouping of Services) below) any grouping or groupings of Market Tested Soft Services or any division of any Market Tested Soft Service into separate parts which will optimise the opportunity for the Tenant to obtain best value for money;

3.1.3 to discuss and seek to agree the appropriate media for advertising the Market Tested Soft Services and identifying the Prospective Tenderers ;

3.1.4 to discuss and seek to agree the basis on which the Tenderers shall be selected by the Landlord from among the Prospective Tenderers;

3.1.5 to discuss and seek to agree the Tender Requirements which shall be in sufficient detail to allow the Landlord to determine the Preferred Tenderer and shall include, without limitation:

(a) a statement of the Tender Validity Period;

(b) requirements in respect of the possible grouping or groupings of Market Tested Soft Services and any division of any Market Tested Soft Service into separate parts;

(c) details of the tender evaluation criteria;

(d) in relation to the first Soft Services Market Test, a statement that Tenderers shall (where the Transfer Regulations do not otherwise apply) be required to offer employment to all Relevant Employees on terms and conditions as favourable as those they enjoy with that Service Provider as if the Transfer Regulations do apply;

(e) the Tenant's requirements in relation to the following, which shall be decided (in the Tenant's discretion) on the basis of its consideration of what represents best value for money for the Tenant:

(i) the basis on which Tenderers are to be required to bid at the subsequent Soft Services Market Test if the Transfer Regulations were not to apply at that time; and

(ii) whether (and on what terms) the then incumbent Service Provider would be given any protection by the Tenant in the event that it was not awarded a contract following any

subsequent Soft Services Market Test for the relevant Service in relation to any liabilities reasonably incurred by such unsuccessful incumbent Service Provider in terminating the employment of any Relevant Employee that would not transfer to a successful Preferred Tenderer because the Transfer Regulations did not apply at that time;

(f) the TUPE Information; and

(g) the information Tenderers are required to provide; and

(h) an explanation of the requirement for Tenderers to comply with the provisions of Schedule[s] [15 and] 16; and

(i) where the Relevant Employees include any NHS Tenant Employee who is a member of the existing Service Provider’s pension scheme, the terms offered for calculating the valuation of any bulk transfers from the existing Service Provider’s pension scheme, being terms which comply with the requirements of paragraph 7 of Part 5 of Schedule 16.

3.2 The time, place and agenda for the first Market Testing Meeting shall be advised by the Landlord to the Tenant at least one (1) month in advance of the meeting. Thereafter, each subsequent meeting shall be convened on not less than ten (10) Business Days' notice (identifying the agenda items to be discussed at the meeting) provided that in emergencies a meeting may be called at any time on such notice as may be reasonable in the circumstances.

3.3 To avoid doubt, any tender evaluation criteria agreed between the Landlord and the Tenant and made available to the Tenderers as part of the Tender Requirements must be objective and impartial.

3.4 Not used

4 GROUPING OF SERVICES

Unless the Landlord can demonstrate to the Tenant that it will optimise its ability to obtain best value for money for the Tenant if Market Tested Soft Services are tendered separately or in particular groupings, or if any Market Tested Soft Service is divided into separate parts, the grouping of any Market Tested Soft Services shall be left to the discretion of Tenderers on the basis that the Tender Requirements shall specify that:

4.1 Tenderers may submit tenders for all or any of the Market Tested Soft Services; and

4.2 where a Tenderer submits a tender for a group or groups of Market Tested Soft Services, it may be required to provide all or any of the services in such group or groups and shall, in any event, provide separate pricing for each service in such group or groups.

5 MARKET TESTING PROPOSAL

5.1 Notwithstanding any failure of the parties to agree any matter referred to in paragraph 3.1, the Landlord shall prepare and deliver to the Tenant no later than ten (10) months before the relevant Market Testing Date a draft proposal for the Soft

Services Market Testing (the "Draft Proposal") describing in detail the Landlord’s proposals for the Soft Services Market Testing of each Market Tested Soft Service. The Market Testing Proposal shall describe all of the matters referred to in, and agreed pursuant to, paragraph 3.1 and, if appropriate, the form of contract which the Preferred Tenderer will be required to accept.

5.2 The Landlord shall procure that, in respect of any Soft Services Market Testing, the existing Service Provider conducts its business and provides information for inclusion in the Tender Requirements to allow:

5.2.1 the consequences of the Transfer Regulations or compliance with the requirements relating to employees referred to in paragraph 3.1.5 (Employment no less favourable) above on any change of Service Provider to be assessed; and

5.2.2 so far as practicable, the cost of such change to the Tenant to be minimised.

5.3 If the Landlord and the Tenant are unable to agree on any matter relating to the Draft Proposal within [ ] Business Days of the Tenant's receipt of the Draft Proposal, either party may refer the matter for resolution in accordance with Schedule 21 (Dispute Resolution Procedure).

5.4 It shall be a principle of the Market Testing Proposal that, unless otherwise agreed by the parties, the allocation of risk to the Preferred Tenderer, if appointed to act as a Service Provider, shall not be materially greater than such allocation to the Service Provider whom the Preferred Tenderer is to replace.

5.5 The Service Specifications, Tender Requirements and form of contracts set out in the Market Testing Proposal shall be used for the Soft Services Market Testing.

6 SELECTION OF TENDERERS

6.1 The Landlord shall be responsible for compiling the list of Prospective Tenderers.

6.2 The Landlord shall be responsible for selecting the Tenderers from the list of Prospective Tenderers on the basis of the following criteria:

6.2.1 the financial standing of the Prospective Tenderers; and

6.2.2 the technical, managerial and other relevant experience and ability of the Prospective Tenderers (taking into account any relevant customer references).

6.3 The Tenant shall have a right to object to the selection of any person as a Prospective Tenderer if such person does not (or could not reasonably be considered to) comply with any of the criteria referred to in paragraph 6.2 above.

6.4 To avoid doubt, an Excluded Person shall not be disqualified from selection as a Tenderer merely by virtue of the existence of the contractual relationship reflected in the Project Documents, subject to:

6.4.1 compliance with all Laws; and

6.4.2 the establishment of, and compliance with, arrangements reasonably satisfactory to the Tenant to avoid any conflict of interest or unfair advantage. Failure by the Landlord to comply with any such arrangements shall automatically lead to the disqualification of the Excluded Person and the provisions of paragraph 12 shall apply.

6.5 The Tenant shall, in its absolute discretion, have the right to veto the selection of any person as a Tenderer on the grounds that the Prospective Tenderer has committed a Prohibited Act.

6.6 The Landlord shall (after consultation with the Tenant) provide any Prospective Tenderer which is unsuccessful in being selected as a Tenderer with an appropriate explanation of the reasons behind its non-selection, if so requested by the person in question.

6.7 Where, in respect of any Market Tested Soft Service or group of Market Tested Soft Services or any part of any Market Tested Soft Service, there is only one Prospective Tenderer (or the Landlord intends to select only one of the Prospective Tenderers as Tenderer), the Landlord shall not be entitled to proceed with the Soft Services Market Testing of the same without the prior written consent of the Tenant.

7 TENDERING PROCESS

7.1 The Landlord shall be responsible for managing and co-ordinating the Soft Services Market Testing in an efficient and fair manner in accordance with the Market Testing Proposal (and in particular, but without limitation, the Tender Requirements) and shall procure that only Tenderers selected in accordance with this Schedule are invited to submit tenders. The Landlord shall ensure that the principle of equality of information to, and treatment of, Tenderers shall apply at all times. Without affecting the generality of the foregoing the Landlord shall, when evaluating the submissions of Tenderers, ensure that the existing Service Provider is not given an unfair competitive advantage because it does not have to make provision for Bulk Transfers.

7.2 The Landlord shall send all necessary documents and information to Tenderers (including, without limitation, the Tender Requirements) in a timely manner.

7.3 Tenders must be assessed for compliance with the Tender Requirements.

7.4 The Landlord shall bear all costs, fees and expenses associated with Soft Services Market Testing.

8 PREFERRED TENDERERS

8.1 Following expiry of the Tender Validity Period, the Landlord shall (subject to the provisions of this paragraph) determine which Tenderer (the "Preferred Tenderer") offers the Compliant Tender in respect of any Market Tested Soft Service, group of Market Tested Soft Services or individual part of any Market Tested Soft Service, that represents (as the case may be) the best value for money for the Tenant.

8.2 Immediately upon making the determination referred to in paragraph 8.1, the Landlord shall supply to the Tenant a copy of its tender evaluation, together with sufficient supporting information concerning the tender evaluation to enable the Tenant to analyse and understand the basis for the Landlord's determination.

8.3 If the Tenant does not agree with the Landlord's determination in the case of any Compliant Tender, the Tenant may, within fifteen (15) Business Days of being provided with the tender evaluation pursuant to paragraph 8.2 above, dispute such determination and, if the parties do not resolve such dispute within a further fifteen (15) Business Days, the dispute shall be referred for resolution in accordance with Schedule 21 (Dispute Resolution Procedure).

9 APPOINTMENT

9.1 The Landlord shall procure that all Preferred Tenderers (as agreed or determined in accordance with paragraph 8 above) are appointed to provide the relevant Market Tested Soft Service or group of Market Tested Soft Services or individual parts of any Market Tested Soft Service (as the case may be) on the basis set out in their Compliant Tender.

9.2 Without prejudice to paragraph 6.7, where the Landlord believes that only one Compliant Tender is likely to be submitted, or where only one Compliant Tender is in fact submitted, the Landlord shall not be entitled to proceed further with the Soft Services Market Testing or (as the case may be) to appoint a Preferred Tenderer without the prior written approval of the Tenant.

9.3 The Landlord shall (after consultation with the Tenant) provide any Tenderer which is unsuccessful in being selected as a Preferred Tenderer with an appropriate explanation of the reasons behind its non-selection, if so requested by the party in question.

9.4 Not used.

9.5 With effect from the Market Testing Date (or, if later, the date on which the Preferred Tenderer begins to perform the relevant Market Tested Soft Services) the "Relevant Service Provider" in respect of the Market Tested Soft Services shall be deemed to be the Preferred Tenderer to the exclusion of the outgoing Service Provider.

10 LEASE PAYMENT ADJUSTMENTS

10.1 On the appointment of any Preferred Tenderer, the Lease Payments shall be altered in accordance with Schedule 10 (Payment Mechanism).

10.2 Any alteration to the Lease Payments shall take effect from the Market Testing Date to which the Soft Services Market Testing related or (if later) the date on which the Preferred Tenderer begins to perform the relevant Market Tested Soft Services.

11 INFORMATION REQUIREMENTS

Without prejudice to any of the Landlord’s general obligations under this Lease, the Landlord shall:

11.1 maintain a full record and audit trail of each Soft Services Market Testing and make all such records (including details of all tenders received) available for inspection by the Tenant and its authorised representatives (including, without limitation, the National Audit Office) on reasonable notice from the Tenant;

11.2 provide to the Tenant, in a comprehensive and accurate manner, all information necessary to enable the Tenant to review and assess all matters relating to the Soft Services Market Testing;

11.3 certify to the Tenant within twenty (20) Business Days of expiry of the Tender Validity Period that:

11.3.1 no Excluded Person intends to or will obtain any direct or indirect financial or other benefit from such appointment (other than the benefit of the contract itself);

11.3.2 no Excluded Person has colluded in connection with the Soft Services Market Testing; and

11.3.3 there has been full compliance with all requirements relating to ensuring equality of information provided to, and treatment of, Tenderers.

12 INDEMNITIES

The Landlord shall indemnify and keep the Tenant fully indemnified at all times for and against all claims, demands or notices which may be brought or alleged or threatened against the Tenant and from and against all Direct Losses or fines which the Tenant may suffer or incur in relation to any such claims, demands or notices which occur as a result of or in connection with:

12.1 the implementation of this Schedule;

12.2 any breach of the provisions of this Schedule; and

12.3 any claim made by any person (including any Prospective Tenderer, Tenderer or Preferred Tenderer) that is not awarded a contract,

save to the extent that any such breach or claim results from any failure of the Tenant to comply with the express provisions of this Schedule.

13 IRREGULARITY IN AWARD OF CONTRACTS

Acceptance by the Landlord

13.1 Where the Landlord is required by this Lease to carry out Soft Services Market Testing, for the purposes of Clause 62 of the Lease (Corrupt Gifts) it shall be an additional Prohibited Act for the Landlord or any Associated Entity (or anyone acting on its behalf) to:

13.2 accept or agree to accept any gift or consideration of any kind as an inducement or reward:

13.2.1 for doing or not doing (or for having done or not having done) any act in relation to the obtaining or performance of any sub-contract to the Lease; or

13.2.2 for showing or not showing favour or disfavour to any person in relation to any sub-contract to the Lease; or

13.2.3 enter into any sub-contract relating to the Lease in connection with which commission has been paid or has been agreed to be paid unless, before the sub-contract is made, particulars of any such commission and of the terms and conditions of any such agreement for the payment of such

commission have been disclosed in writing to the Tenant and the Tenant has consented to the same (in its absolute discretion),

and the provisions of Clause 62 (Corrupt Gifts) (changed according to context) shall apply and be construed accordingly.

Offer by Tenderer

13.3 Where the Landlord is required by this Lease to carry out Soft Services Market Testing and any Prospective Tenderer or Tenderer (or anyone acting on its or their behalf or any of its or their directors, officers or employees) offers or agrees to give to the Landlord or any Associated Entity any gift or consideration of any kind as inducement or reward:


13.3.2 for showing or not showing favour or disfavour to any person in relation to any sub-contract to the Lease,

the Tenant may (without prejudice to any of its other rights) by notice to the Landlord require the Landlord to procure, as soon as practicable, the termination of that person's involvement in the Soft Services Market Testing or, if discovered after the award of the relevant contract, the termination of the relevant sub-contract (and the provisions of Clause 62 (Corrupt Gifts) shall apply and be construed accordingly).

13.4 The Landlord shall notify the Tenant of the occurrence (and details) of any Prohibited Act promptly on the Landlord becoming aware of its occurrence.

14 MARKET TESTING OF SERVICE CONTRACTS AND SUB-CONTRACTS

14.1 The Tenant in considering exercising its option under Clause 39A (Replacement of non Performing Sub-contractor) (in circumstances where Clause 39A applies) will require the Landlord to carry out or procure the carrying out of a Soft Services Market Testing of the relevant Supply Chain Agreement in line with this Schedule save that the Lease Payment shall not be adjusted following such Soft Services Market Testing. The Landlord shall be entitled to reflect the provisions of paragraph 14.2 in any Sub-Contract it enters into pursuant to this paragraph.

14.2 If, following the Soft Services Market Testing carried out pursuant to paragraph 14.1 above, the Landlord can demonstrate to the Tenant's reasonable satisfaction that the circumstances contemplated in Clause 39A are reasonably likely to recur (notwithstanding the exercise of Good Industry Practice and the good financial standing of the new service provider), the parties shall negotiate in good faith such amendments to the Performance Monitoring System in respect of the relevant Service so as to make it fair and reasonable and to the extent that any such amendments reduce the risk profile in respect of that Service the Tenant shall be entitled to a corresponding price reduction in respect of that reduced risk profile. In the absence of agreement on amendments to the Performance Monitoring System and any corresponding price reduction the matter may be referred by either party for resolution in accordance with Schedule 21 (Dispute Resolution Procedure).

SCHEDULE 23

CONFIDENTIAL INFORMATION

Part 1 Commercially Sensitive Information

Column 1 Column 2Commercially sensitive contract provisions For the period ending on the

date below.

Part 2

Column 1 Column 2Commercially sensitive material For the period ending on the

date below

SCHEDULE 24

REFINANCING

1 The Landlord shall obtain the Tenant's prior written consent to any Qualifying Refinancing and both the Tenant and the Landlord shall at all times act in good faith with respect to (a) any Refinancing or (b) any potential or proposed Refinancing under paragraph 9.

2 The Tenant shall be entitled to receive170:

2.1 a [17]% share of any Refinancing Gain arising from a Qualifying Refinancing, in respect of any Refinancing Gain up to (when considered in aggregate with all previous Qualifying Refinancings) a Refinancing Gain of £1 million;

2.2 a [33]% share of any further Refinancing Gain arising from a Qualifying Refinancing, in respect of any Refinancing Gain up to (when considered in aggregate with all previous Qualifying Refinancings) a Refinancing Gain of £3 million; and also

2.3 a [50]% share of any other Refinancing Gain arising from a Qualifying Refinancing.

3 The Tenant shall not withhold or delay its consent to a Qualifying Refinancing to obtain a greater share of the Refinancing Gain than that specified in paragraph 2.

4 The Landlord shall promptly provide the Tenant with full details of any proposed Qualifying Refinancing, including a copy of the proposed financial model relating to it (if any) and the basis for the assumptions used in the proposed financial model. The Tenant shall (before, during and at any time after any Refinancing) have unrestricted rights of audit over any financial model and documentation (including any aspect of the calculation of the Refinancing Gain) used in connection with the Refinancing whether that Refinancing is a Qualifying Refinancing or not).

5 The Tenant shall have the right to elect to receive its share of any Refinancing Gain as:

5.1 a single payment in an amount less than or equal to any Distribution made on or about the date of the Refinancing;

5.2 a reduction in the Lease Payment over the remaining term of this Lease; or

5.3 a combination of any of the above.

6 The Tenant and the Landlord will negotiate in good faith to agree the basis and method of calculation of the Refinancing Gain and payment of the Tenant's share of the Refinancing Gain (taking into account how the Tenant has elected to receive its share of the Refinancing Gain under paragraph 5 above). If the parties fail to agree the basis and method of calculation of the Refinancing Gain or the payment of the Tenant's share, the dispute shall be determined in accordance with Schedule 21 (Dispute Resolution Procedure).

7 The Refinancing Gain shall be calculated after taking into account the reasonable and proper professional costs that each party directly incurs in relation to the Qualifying

170 The percentages assume that CHP is the Tenant, and therefore the total received by CHP under paragraphs 2.1, 2.2 and 2.3 in its capacity as Tenant and 40% shareholder in LiftCo is 50%, 60% and 70% respectively.

Refinancing and on the basis that all reasonable and proper professional costs incurred by the Tenant will be paid to the Tenant by the Landlord within twenty-eight (28) days of any Qualifying Refinancing

8 Without prejudice to the other provisions of this Schedule 29, Project Co shall (a) notify the Tenant of all Notifiable Financings on becoming aware of the same and again when they are entered into and provide full details of the same and (b) include a provision in the Funding Agreements whereby it is entitled to be informed o any proposal which the Senior Lenders may have to refinance the Funding Agreements.

9 The Tenant right to request refinancing

9.1 If the Tenant (acting reasonably) considers the funding terms generally available in the market to be more favourable than those reflected in the Funding Agreements, the Tenant may, by notice in writing to Project Co, require Project Co to request potential funders to provide terms for a potential Refinancing (a "Refinancing Notice").

9.2 The Refinancing Notice shall set out in reasonable detail the grounds upon which the tenant believes such funding terms to be available. Project Co and the Tenant shall meet to discuss the Refinancing Notice within 28 days. Such a meeting will consider the evidence available to both parties about the availability of funding terms for a potential Refinancing. The Tenant shall be entitled to withdraw the Refinancing Notice at or before such a meeting, or within ten days following the meeting.

9.3 If the Tenant serves a Refinancing Notice which is not withdraw pursuant to paragraph 9.2, then Project Co shall:

9.3.1 act promptly, diligently and in good faith with respect to the potential Refinancing;

9.3.2 use all reasonable endeavours to obtain the most favourable available terms from existing and/or new lenders for any potential Refinancing (provided that Project Co shall not be required to propose refinancing in a manner which a prudent board of directors of a company operating in the same business in the United Kingdom to that operated by Project Co, in similar circumstances, would not approve), for the avoidance of doubt also being terms which are likely to generate a positive Refinancing Gain after the deduction of costs in accordance with the provisions of paragraph 7; and

9.3.3 either:

(a) as soon as reasonably practicable after receipt of the Refinancing Notice, provide to the Tenant (i) full details of the proposed Refinancing, including a financial model and the basis for the assumptions used in the financial model and evidence to the reasonable satisfaction of the Tenant that these assumptions represent the most favourable available terms for the potential Refinancing on the basis set out in paragraph 9.3.2 above and (ii) initial drafts of any changes to this Contract including in relation to potential compensation on termination which might eb required to give effect to the proposed Refinancing; or

(b) if Project Co (acting reasonably) believes that it is not possible to obtain funding terms which are more favourable than those reflected in accordance with the requirements of paragraph 9.3.2, provide evidence to the reasonable satisfaction of the Tenant for such belief and evidence to the reasonable satisfaction fo the Tenant that Project Co has complied with its obligations in paragraphs 9.3.1 and 9.3.2.

9.4 Following receipt of the information referred to in paragraph 9.3.3(a), the Tenant shall (in its absolute discretion) either:

9.4.1 Instruct Project Co to implement the proposed Refinancing; or

9.4.2 Instruct Project Co to discontinue the proposed Refinancing

provided that if the Tenant reasonably considers that the requirements of paragraph 9.3.3(a) have not been satisfied, the Tenant may require Project Co to satisfy its obligations under paragraph 9.3.3(a) whereupon the provisions of paragraphs 9.3 and 9.4 shall apply as if the Tenant had served a Refinancing Notice.

9.5 If the Tenant instructs Project Co to implement the proposed Refinancing:

9.5.1 Project Co shall, as soon as reasonably practicable, use all reasonable endeavours to procure that such proposed Refinancing is implemented;

9.5.2 such proposed Refinancing shall be deemed to be a Qualifying Refinancing; and

9.5.3 the provisions of paragraphs 1 to 8 shall apply.

9.6 If:

9.6.1 The Tenant instructs Project Co to discontinue the potential Refinancing pursuant to paragraph 9.4.2; or

9.6.2 The requirements of paragraph 9.3.3(b) are satisfied

then, the Tenant shall reimburse Project Co for the reasonable and proper professional costs incurred by Project Co in relation to the potential Refinancing, such costs to be paid to Project Co by the Tenant within 28 days after receipt of a valid invoice in respect of such amount. Such costs shall not include any internal management costs incurred by Project Co except insofar as (a) it can be demonstrated to the reasonable satisfaction of the Tenant that such costs have been incurred in place of professional costs which would in the normal course of such business have been paid to third parties and (b) the Tenant has, by prior written agreement, approved the use of such internal management resources.

9.7 The Tenant shall be entitled to issue a Refinancing Notice under paragraph 9.1 at any time but not more than once in any two-year period. For the avoidance of doubt, a Refinancing Notice that has been withdrawn under paragraph 9.2 has been issued for the purpose of this paragraph 9.7.

10 In this Schedule 24 (Refinancing), the following defined terms are used:

"Contingent Funding Liabilities"

[insert any contingent liabilities of the shareholders in respect of financial obligations owed to the Landlord and/or Funders under the Funding Agreements which are triggered as a result of or in relation to events of default under the LPA [SPA], e.g. guarantees or letters of credit in respect of deferred equity]

"Distribution"means: (a) whether in cash or in kind, any:

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

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

(iii) payments under the Subordinated Funding 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;

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

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

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

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

"Exempt Refinancing" means:

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

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

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

(i) breach of representations and warranties or undertakings;

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

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

(iv) amendments to sub-contracts;

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

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

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

(viii) failure by the Landlord to obtain any consent by statutory bodies required by the Senior Funders Agreements; or

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

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

(e) any sale of shares in the Landlord by the shareholders or securitisation of the existing rights and/or interests attaching to shares in the Landlord;

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

(g) any Qualifying Bank Transaction.

"Financial Model" means the computer spreadsheet model for the Project incorporating statements of the Landlord's cashflows including all expenditure, revenues, financing and taxation of the Project Operations together with the profit and loss accounts and balance sheets for the Landlord throughout the Term accompanied by details of all assumptions, calculations and methodology used in their compilation and any other documentation necessary or desirable to operate the model.

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

"Net Present Value"means the aggregate of the discounted values, calculated as of the estimated dates of the Refinancing of each of the relevant projected Distributions, in each case discounted using the Threshold Equity IRR

"Pre-Refinancing Equity IRR"means the nominal post-tax Equity IRR calculated immediately prior to the Refinancing.

"Qualifying Bank Transaction"means:

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

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

(i) any other Senior Funder;

(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 2001/12/EC relating to the taking up and pursuit of the business of credit institutions or which is otherwise permitted to accept deposits in the United Kingdom or any other EU member state;

(iii) a local authority or public authority;

(iv) a trustee of charitable trust which has (or has had at any time during the previous two (2) 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 Tenant has (or has had at any time during the previous two (2) years) at least fifty (50) members and assets under management of at least £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 Tenant has been given;

(c) the grant by a Senior Funder of any other form of benefit or interest in either the Senior Funders Agreement or the revenues or assets of the Landlord, whether by way of security or otherwise, in favour of:

(i) any other Senior Funder;

(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 Tenant has been given.

"Qualifying Institution"means [ ]

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

"Refinancing"means:

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

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

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

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

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

A = the Net Present Value of the Distributions projected immediately prior to the Refinancing (taking into account the effect of the Refinancing using the Financial Model 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 this Lease 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 Financial Model 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 this Lease following the Refinancing; and

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

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

"Relevant Person"means a Shareholder and any of its Associated Companies;

"Senior Funder Agreements"means [ ] as at the date of this Lease;

"Shareholder"means any person from time to time holding share capital in the Landlord or [Hold Co];

"Subordinated Funder"means a person providing finance under a Subordinated Funding Agreement;

"Subordinated Funding Agreements"means [ ] as at the date of this Lease;

"Threshold Equity IRR"means [ ]%.

SCHEDULE 25

SERVICES REVIEW

1 Services Review

1.1 The Tenant shall provide written notification to the Landlord’s Representative, within three (3) months following the expiry of each fifth Contract Year following the Actual Completion Date or on the fifth anniversary of the last service review (whichever is the later) if it wishes to undertake a review (a "Service Review") of the hard facilities management services as set out in [insert reference to relevant sub part]) of the Service Requirements (the "Hard FM Services").

1.2 The purpose and objectives of the independent performance review shall be to provide an assessment of the delivery of the Hard FM Services and shall benchmark the Hard FM Services performance and cost data (where possible) from independent comparator schemes in order to determine whether the Tenant is receiving best value for the Hard FM Services.

1.3 At the commencement and throughout the Services Review, the Landlord shall make available all information and documentation and access to Landlord staff reasonably required by the Tenant.

2 Services report

2.1 The outcome of the Services Review shall be a report that sets out the key findings of the review and recommendations for improving efficiency and best value in the Hard FM Services. The report shall set out reasonable timescales for the implementation of each recommendation by the Landlord and the benefits that the recommendations shall deliver to both the Landlord and the Tenant.

2.2 The Landlord shall be required to consider in full the implementation of all recommendations and prepare a report for the Tenant within twenty (20) Business Days setting out all action to be taken by the Landlord in response to the report.

2.3 In the event that the Tenant deems any recommendations to necessitate a Variation, the Tenant shall issue a Variation in accordance with the Variations Procedure (Schedule 12).

2.4 It is also expected that recommendations from the Services review shall also be used to form the basis of any new Continuous Improvement Indicators to be implemented for each Service Level Specification.

3 Market Testing

3.1 Tenant may require the Landlord to market test some or all of the Hard FM Services (the "Hard FM Market Tested Services") following the Service Review in accordance with the process set out in Appendix 1 to this Schedule 25 (Services Review). 171

171 This clause gives the Tenant the right to require a market testing of the Hard FM Services. It does not preclude the Landlord and Tenant agreeing to conduct a hard FM market test where there is concern about the performance of the incumbent hard FM Service Provider.

Appendix 1 to Schedule 25

HARD FM SERVICES MARKET TESTING

1 INTRODUCTION

The following defined terms are used in this Appendix 1 to Schedule 25:

"Associated Entity"means:

(a) an Associate of any of the Landlord, the Supply Chain Members or the Landlord’s shareholders;

(b) any partner in any partnership or any person who participates in any profit sharing or joint purse arrangement, in each case to which any of the Landlord, the Supply Chain Members or the Landlord’s shareholders or any person mentioned in paragraph (a) is also a party;

(c) any shareholder, director, officer or employee of any of the persons referred to in paragraphs (a) and (b) or any of those persons' spouses, children, step-children or partners; or

(d) any body corporate of which any person referred to in (c) above is a shareholder, director, officer or employee;

"Compliant Tender"means a tender received from a Tenderer which complies with the Tender Requirements

"Draft Proposal"means the proposal described in paragraph 4.1 of this Appendix 1 to Schedule 25

"Excluded Person"means the Landlord, any Associated Entity, any sub-contractor of an Associated Entity or any Associated Company of their respective sub-contractors

"Hard FM Market Tested Services"means those services described in Parts [ ] of Schedule 9 (Service Requirements) and any other Service from time to time designated as such by the parties

"Market Testing Meeting"means a meeting convened in accordance with paragraph 3.1 (Market Testing Programme) of this Schedule

"Market Testing Proposal"means the final version of the Draft Proposal, as agreed by the parties or as determined, in either case, in accordance with this Schedule

"Preferred Tenderer"means, following the market testing of any Hard FM Market Tested Service, any group of Hard FM Market Tested Services or any part of any Hard FM Market Tested Service (as the case may be), the Tenderer selected to provide such services in accordance with the provisions of paragraph 8 of this Appendix

"Prospective Tenderers"

means those persons who express an interest in being requested to prepare and submit tenders for each Hard FM Market Tested Service, group of Hard FM Market Tested Services or any part of any Hard FM Market Tested Service (as the case may be)

"Relevant Employees"means all of the employees of the Service Provider who are engaged wholly or mainly in the provision of the Hard FM Market Tested Services for which those Tenderers are tendering

"Hard FM Services Market Testing"means the process described in this Appendix and the term "hard FM services market tested" shall be construed accordingly

"Tenderers"means those of the Prospective Tenderers selected to submit tenders in accordance with paragraph 6 of this Schedule

"Tender Requirements"means the form and requirements of the tender documents to be sent to Tenderers as agreed or determined in accordance with the provisions of this Schedule

"Tender Validity Period"means the period within which tenders from Tenderers must be received if they are to be valid

"TUPE Information"means [information relating to the terms and conditions, job title, age, length of service and benefits of the employees of the Service Provider who are engaged wholly or mainly in the provision of the Hard FM Market Tested Services]

OR

[the information referred to in insert reference to relevant Schedule of employee information]

2 MARKET TESTING PROGRAMME

2.1 Within [15] Business Days of the Tenant electing to require a market test pursuant to paragraph 12 of Schedule 25,

2.1.1 to review the Service Specification and Method Statement for each Hard FM Market Tested Service and, if required by the Tenant, amend the relevant Service Specifications and Method Statements as appropriate. The Landlord may only object to any change in the requirements of the Tenant on the grounds referred to in paragraph 3.2.1 of Part 1 of Schedule 12 (Variation Procedure). Any such objection must be made by notice in writing to the Tenant within ten (10) Business Days of the relevant Market Testing Meeting;

2.1.2 to discuss and seek to agree (subject to the provisions of paragraph 4 (Grouping of Services) below) any grouping or groupings of Market Tested Services or any division of any Hard FM Market Tested Hard FM Service into separate parts which will optimise the opportunity for the Tenant to obtain best value for money;

2.1.3 to discuss and seek to agree the appropriate media for advertising the Hard FM Market Tested Services and identifying the Prospective Tenderers;

2.1.4 to discuss and seek to agree the basis on which the Tenderers shall be selected by the Landlord from among the Prospective Tenderers;

2.1.5 to discuss and seek to agree the Tender Requirements which shall be in sufficient detail to allow the Landlord to determine the Preferred Tenderer and shall include, without limitation:

(a) a statement of the Tender Validity Period;

(b) requirements in respect of the possible grouping or groupings of Hard FM Market Tested Services and any division of any Hard FM Market Tested Service into separate parts;

(c) details of the tender evaluation criteria;

(d) in relation to the first Hard FM Services Market Testing, a statement that Tenderers shall (where the Transfer Regulations do not otherwise apply) be required to offer employment to all Relevant Employees on terms and conditions as favourable as those they enjoy with that Service Provider as if the Transfer Regulations do apply;

(e) the Tenant's requirements in relation to the following, which shall be decided (in the Tenant's discretion) on the basis of its consideration of what represents best value for money for the Tenant:

(i) the basis on which Tenderers are to be required to bid at the subsequent Hard FM Services Market Test if the Transfer Regulations were not to apply at that time; and

(ii) whether (and on what terms) the then incumbent Service Provider would be given any protection by the Tenant in the event that it was not awarded a contract following any subsequent Hard FM Services Market Test for the relevant Service in relation to any liabilities reasonably incurred by such unsuccessful incumbent Service Provider in terminating the employment of any Relevant Employee that would not transfer to a successful Preferred Tenderer because the Transfer Regulations did not apply at that time;

(f) the TUPE Information; and

(g) the information Tenderers are required to provide; and

(h) an explanation of the requirement for Tenderers to comply with the provisions of Schedule[s] [15 and] 16; and

(i) where the Relevant Employees include any NHS Tenant Employee who is a member of the existing Service Provider’s

pension scheme, the terms offered for calculating the valuation of any bulk transfers from the existing Service Provider’s pension scheme, being terms which comply with the requirements of paragraph 7 of Part 5 of Schedule 16.

2.2 To avoid doubt, any tender evaluation criteria agreed between the Landlord and the Tenant and made available to the Tenderers as part of the Tender Requirements must be objective and impartial.

3 GROUPING OF SERVICES

Unless the Landlord can demonstrate to the Tenant that it will optimise its ability to obtain best value for money for the Tenant if Hard FM Market Tested Services are tendered separately or in particular groupings, or if any Hard FM Market Tested Service is divided into separate parts, the grouping of any Hard FM Market Tested Services shall be left to the discretion of Tenderers on the basis that the Tender Requirements shall specify that:

3.1 Tenderers may submit tenders for all or any of the Hard FM Market Tested Services; and

3.2 where a Tenderer submits a tender for a group or groups of Hard FM Market Tested Services, it may be required to provide all or any of the services in such group or groups and shall, in any event, provide separate pricing for each service in such group or groups.

4 MARKET TESTING PROPOSAL

4.1 Notwithstanding any failure of the parties to agree any matter referred to in paragraph 3.1, the Landlord shall prepare and deliver to the within [30] Business Days of the Market Testing Meeting a draft proposal for the Hard FM Services Market Testing (the "Draft Proposal") describing in detail the Landlord’s proposals for the Hard FM Services Market Testing of each Hard FM Market Tested Service. The Market Testing Proposal shall describe all of the matters referred to in, and agreed pursuant to, paragraph 3.1 and, if appropriate, the form of contract which the Preferred Tenderer will be required to accept.

4.2 The Landlord shall procure that, in respect of any Hard FM Services Market Testing, the existing Service Provider conducts its business and provides information for inclusion in the Tender Requirements to allow:

4.2.1 the consequences of the Transfer Regulations or compliance with the requirements relating to employees referred to in paragraph 3.1.5 (Employment no less favourable) above on any change of Service Provider to be assessed; and

4.2.2 so far as practicable, the cost of such change to the Tenant to be minimised.

4.3 If the Landlord and the Tenant are unable to agree on any matter relating to the Draft Proposal within [ ] Business Days of the Tenant's receipt of the Draft Proposal, either party may refer the matter for resolution in accordance with Schedule 21 (Dispute Resolution Procedure).

4.4 It shall be a principle of the Market Testing Proposal that, unless otherwise agreed by the parties, the allocation of risk to the Preferred Tenderer, if appointed to act as

a Service Provider, shall not be materially greater than such allocation to the Service Provider whom the Preferred Tenderer is to replace.

4.5 The Service Specifications, Tender Requirements and form of contracts set out in the Market Testing Proposal shall be used for the Hard FM Services Market Testing.

5 SELECTION OF TENDERERS

5.1 The Landlord shall be responsible for compiling the list of Prospective Tenderers.

5.2 The Landlord shall be responsible for selecting the Tenderers from the list of Prospective Tenderers on the basis of the following criteria:

5.2.1 the financial standing of the Prospective Tenderers; and

5.2.2 the technical, managerial and other relevant experience and ability of the Prospective Tenderers (taking into account any relevant customer references).

5.3 The Tenant shall have a right to object to the selection of any person as a Prospective Tenderer if such person does not (or could not reasonably be considered to) comply with any of the criteria referred to in paragraph 6.2 above.

5.4 To avoid doubt, an Excluded Person shall not be disqualified from selection as a Tenderer merely by virtue of the existence of the contractual relationship reflected in the Project Documents, subject to:

5.4.1 compliance with all Laws; and

5.4.2 the establishment of, and compliance with, arrangements reasonably satisfactory to the Tenant to avoid any conflict of interest or unfair advantage. Failure by the Landlord to comply with any such arrangements shall automatically lead to the disqualification of the Excluded Person and the provisions of paragraph 12 shall apply.

5.5 The Tenant shall, in its absolute discretion, have the right to veto the selection of any person as a Tenderer on the grounds that the Prospective Tenderer has committed a Prohibited Act.

5.6 The Landlord shall (after consultation with the Tenant) provide any Prospective Tenderer which is unsuccessful in being selected as a Tenderer with an appropriate explanation of the reasons behind its non-selection, if so requested by the person in question.

5.7 Where, in respect of any Market Tested Soft Service or group of Hard FM Market Tested Services or any part of any Hard FM Market Tested Service, there is only one Prospective Tenderer (or the Landlord intends to select only one of the Prospective Tenderers as Tenderer), the Landlord shall not be entitled to proceed with the Hard FM Services Market Testing of the same without the prior written consent of the Tenant.

6 TENDERING PROCESS

6.1 The Landlord shall be responsible for managing and co-ordinating the Hard FM Services Market Testing in an efficient and fair manner in accordance with the Hard

FM Market Testing Proposal (and in particular, but without limitation, the Tender Requirements) and shall procure that only Tenderers selected in accordance with this Schedule are invited to submit tenders. The Landlord shall ensure that the principle of equality of information to, and treatment of, Tenderers shall apply at all times. Without affecting the generality of the foregoing the Landlord shall, when evaluating the submissions of Tenderers, ensure that the existing Service Provider is not given an unfair competitive advantage because it does not have to make provision for Bulk Transfers.

6.2 The Landlord shall send all necessary documents and information to Tenderers (including, without limitation, the Tender Requirements) in a timely manner.

6.3 Tenders must be assessed for compliance with the Tender Requirements.

6.4 The Landlord shall bear all costs, fees and expenses associated with Hard FM Services Market Testing.

7 PREFERRED TENDERERS

7.1 Following expiry of the Tender Validity Period, the Landlord shall (subject to the provisions of this paragraph) determine which Tenderer (the "Preferred Tenderer") offers the Compliant Tender in respect of any Market Tested Service, group of Hrad FM Market Tested Services or individual part of any Hard FM Market Tested Service, that represents (as the case may be) the best value for money for the Tenant.

7.2 Immediately upon making the determination referred to in paragraph 8.1, the Landlord shall supply to the Tenant a copy of its tender evaluation, together with sufficient supporting information concerning the tender evaluation to enable the Tenant to analyse and understand the basis for the Landlord's determination.

7.3 If the Tenant does not agree with the Landlord's determination in the case of any Compliant Tender, the Tenant may, within fifteen (15) Business Days of being provided with the tender evaluation pursuant to paragraph 8.2 above, dispute such determination and, if the parties do not resolve such dispute within a further fifteen (15) Business Days, the dispute shall be referred for resolution in accordance with Schedule 21 (Dispute Resolution Procedure).

8 APPOINTMENT

8.1 The Landlord shall procure that all Preferred Tenderers (as agreed or determined in accordance with paragraph 8 above) are appointed to provide the relevant Hard FM Market Tested Service or group of Hard FM Market Tested Services or individual parts of any Hard FM Market Tested Service (as the case may be) on the basis set out in their Compliant Tender.

8.2 Without prejudice to paragraph 6.7, where the Landlord believes that only one Compliant Tender is likely to be submitted, or where only one Compliant Tender is in fact submitted, the Landlord shall not be entitled to proceed further with the Hard FM Services Market Testing or (as the case may be) to appoint a Preferred Tenderer without the prior written approval of the Tenant.

8.3 The Landlord shall (after consultation with the Tenant) provide any Tenderer which is unsuccessful in being selected as a Preferred Tenderer with an appropriate

explanation of the reasons behind its non-selection, if so requested by the party in question.

8.4 With effect from the Market Testing Date (or, if later, the date on which the Preferred Tenderer begins to perform the relevant Hard FM Market Tested Services) the "Relevant Service Provider" in respect of the Hard FM Market Tested Services shall be deemed to be the Preferred Tenderer to the exclusion of the outgoing Service Provider.

9 LEASE PAYMENT ADJUSTMENTS

9.1 On the appointment of any Preferred Tenderer, the Lease Payments shall be altered in accordance with Schedule 10 (Payment Mechanism).

9.2 Any alteration to the Lease Payments shall take effect from the Market Testing Date to which the Hard FM Services Market Testing related or (if later) the date on which the Preferred Tenderer begins to perform the relevant Hard FM Market Tested Services.

10 INFORMATION REQUIREMENTS

Without prejudice to any of the Landlord’s general obligations under this Lease, the Landlord shall:

10.1 maintain a full record and audit trail of each Hard FM Services Market Testing and make all such records (including details of all tenders received) available for inspection by the Tenant and its authorised representatives (including, without limitation, the National Audit Office) on reasonable notice from the Tenant;

10.2 provide to the Tenant, in a comprehensive and accurate manner, all information necessary to enable the Tenant to review and assess all matters relating to the Hard FM Services Market Testing;

10.3 certify to the Tenant within twenty (20) Business Days of expiry of the Tender Validity Period that:

10.3.1 no Excluded Person intends to or will obtain any direct or indirect financial or other benefit from such appointment (other than the benefit of the contract itself);

10.3.2 no Excluded Person has colluded in connection with the Hard FM Services Market Testing; and

10.3.3 there has been full compliance with all requirements relating to ensuring equality of information provided to, and treatment of, Tenderers.

11 INDEMNITIES

The Landlord shall indemnify and keep the Tenant fully indemnified at all times for and against all claims, demands or notices which may be brought or alleged or threatened against the Tenant and from and against all Direct Losses or fines which the Tenant may suffer or incur in relation to any such claims, demands or notices which occur as a result of or in connection with:

11.1 the implementation of this Appendix;

11.2 any breach of the provisions of this Appendix; and

11.3 any claim made by any person (including any Prospective Tenderer, Tenderer or Preferred Tenderer) that is not awarded a contract,

save to the extent that any such breach or claim results from any failure of the Tenant to comply with the express provisions of this Schedule.

12 IRREGULARITY IN AWARD OF CONTRACTS

Acceptance by the Landlord

12.1 Where the Landlord is required by this Lease to carry out Hard FM Services Market Testing, for the purposes of Clause 62 of the Lease (Corrupt Gifts) it shall be an additional Prohibited Act for the Landlord or any Associated Entity (or anyone acting on its behalf) to:

12.2 accept or agree to accept any gift or consideration of any kind as an inducement or reward:


12.2.2 for showing or not showing favour or disfavour to any person in relation to any sub-contract to the Lease; or

12.2.3 enter into any sub-contract relating to the Lease in connection with which commission has been paid or has been agreed to be paid unless, before the sub-contract is made, particulars of any such commission and of the terms and conditions of any such agreement for the payment of such commission have been disclosed in writing to the Tenant and the Tenant has consented to the same (in its absolute discretion),

and the provisions of Clause 62 (Corrupt Gifts) (changed according to context) shall apply and be construed accordingly.

Offer by Tenderer

12.3 Where the Landlord is required by this Lease to carry out Hard FM Services Market Testing and any Prospective Tenderer or Tenderer (or anyone acting on its or their behalf or any of its or their directors, officers or employees) offers or agrees to give to the Landlord or any Associated Entity any gift or consideration of any kind as inducement or reward:


12.3.2 for showing or not showing favour or disfavour to any person in relation to any sub-contract to the Lease,

the Tenant may (without prejudice to any of its other rights) by notice to the Landlord require the Landlord to procure, as soon as practicable, the termination of

that person's involvement in the Hard FM Services Market Testing or, if discovered after the award of the relevant contract, the termination of the relevant sub-contract (and the provisions of Clause 62 (Corrupt Gifts) shall apply and be construed accordingly).

12.4 The Landlord shall notify the Tenant of the occurrence (and details) of any Prohibited Act promptly on the Landlord becoming aware of its occurrence.

13 MARKET TESTING OF SERVICE CONTRACTS AND SUB-CONTRACTS

13.1 The Tenant in considering exercising its option under Clause 39A (Replacement of non Performing Sub-contractor) (in circumstances where Clause 39A applies) will require the Landlord to carry out or procure the carrying out of a Hard FM Services Market Testing of the relevant Supply Chain Agreement in line with this Appendix save that the Lease Payment shall not be adjusted following such Hard FM Services Market Testing. The Landlord shall be entitled to reflect the provisions of paragraph 14.2 in any Sub-Contract it enters into pursuant to this paragraph.

13.2 If, following the Hard FM Services Market Testing carried out pursuant to paragraph 14.1 above, the Landlord can demonstrate to the Tenant's reasonable satisfaction that the circumstances contemplated in Clause 39A are reasonably likely to recur (notwithstanding the exercise of Good Industry Practice and the good financial standing of the new service provider), the parties shall negotiate in good faith such amendments to the Performance Monitoring System in respect of the relevant Service so as to make it fair and reasonable and to the extent that any such amendments reduce the risk profile in respect of that Service the Tenant shall be entitled to a corresponding price reduction in respect of that reduced risk profile. In the absence of agreement on amendments to the Performance Monitoring System and any corresponding price reduction the matter may be referred by either party for resolution in accordance with Schedule 21 (Dispute Resolution Procedure).

13.3 The Landlord shall reimburse the Tenant for all reasonable costs, losses, expenses or damages incurred by it in relation to taking the steps or engaging others to take the steps referred to in paragraph 14.3 of this Appendix and the Tenant shall be entitled to deduct any such amount from any amount payable to the Landlord under the provisions of this Lease.