franchise agreement – south eastern · 3. london & south eastern railway limited (company number...

VERSION 10.0x FOIA 2000 Public Register Copy

Dated: 10 September 2014

(1) The Secretary of State for Transport

(2) London & South Eastern Railway Limited

FRANCHISE AGREEMENT – SOUTH EASTERN

RAIL PUBLIC REGISTER COPY

REDACTED IN ACCORDANCE WITH FOIA 2000


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CONTENTS

Clause Page

1 INTERPRETATION ..................................................................................... 7 2 DEFINITIONS ......................................................................................... 10 3 COMMENCEMENT ...................................................................................104 4 TERM ...................................................................................................104 5 GENERAL OBLIGATIONS .........................................................................105 7 RELATIONSHIP WITH PREVIOUS FRANCHISE AGREEMENT ...........................105 7 COMPLIANCE WITH LAWS .......................................................................105 8 ENTIRE AGREEMENT ..............................................................................105 9 GOVERNING LAW ..................................................................................106 Schedules 1 Passenger Service Obligations .................................................................108

SCHEDULE 1.1 ......................................................................................109 Service Development .............................................................................109 APPENDIX TO SCHEDULE 1.1 ..................................................................127 Service Development Additional Factors ....................................................127 SCHEDULE 1.2 ......................................................................................129 Operating Obligations .............................................................................129 SCHEDULE 1.3 ......................................................................................138 Not Used ..............................................................................................138 SCHEDULE 1.4 ......................................................................................139 Passenger Facing Obligations ...................................................................139 SCHEDULE 1.5 ......................................................................................147 Information about Passengers .................................................................147 SCHEDULE 1.6 ......................................................................................153 Franchise Services .................................................................................153 APPENDIX TO SCHEDULE 1.6 ..................................................................159 Franchise Services .................................................................................159 SCHEDULE 1.7 ......................................................................................161 The Train Fleet ......................................................................................161

2 Assets, Leases, Third Parties, Other Franchise Operations and Schemes ........167 SCHEDULE 2.1 ......................................................................................168 Asset Vesting and Transfer ......................................................................168 SCHEDULE 2.2 ......................................................................................169 Security of Access Agreements, Rolling Stock Leases, Station and Depot Leases .................................................................................................169 SCHEDULE 2.3 ......................................................................................176 Third Party Delivery of Passenger Services and Other Franchisees ................176 SCHEDULE 2.4 ......................................................................................178 Other Franchise Operations .....................................................................178 SCHEDULE 2.5 ......................................................................................180 Transport, Travel and Other Schemes .......................................................180

3 Priced Options .......................................................................................183 4 Persons with Disabilities and Disability Discrimination .................................197


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APPENDIX 1 TO SCHEDULE 4 ..................................................................204 Minor Works .........................................................................................204 APPENDIX 2 TO SCHEDULE 4 ..................................................................205 Alternative Transport .............................................................................205

5 Fares ...................................................................................................206 SCHEDULE 5.1 ......................................................................................207 Purpose, Structure and Construction .........................................................207 SCHEDULE 5.2 ......................................................................................211 Franchisee's Obligation to Create Fares .....................................................211 SCHEDULE 5.3 ......................................................................................212 Allocation of Fares to Fares Baskets ..........................................................212 SCHEDULE 5.4 ......................................................................................214 Regulation of Fares Basket Values ............................................................214 SCHEDULE 5.5 ......................................................................................217 Regulation of Individual Fares ..................................................................217 SCHEDULE 5.6 ......................................................................................220 Exceeding the Regulated Value, Regulated Price or Regulated Child Price .......220 SCHEDULE 5.7 ......................................................................................222 Changes to Fares and Fares Regulation .....................................................222 SCHEDULE 5.8 ......................................................................................227 Fares Regulation Information and Monitoring .............................................227 SCHEDULE 5.9 ......................................................................................228 ITSO Certified Smartmedia .....................................................................228

6 Committed Obligations and Franchise Specific Obligations ...........................247 SCHEDULE 6.1 ......................................................................................248 Committed Obligations and Related Provisions ...........................................248 SCHEDULE 6.2 ......................................................................................317 South Eastern Franchise Specific Provisions ...............................................317 APPENDIX TO SCHEDULE 6.2 ..................................................................330 Crossrail Business Transfer Agreement .....................................................330

7 Performance Benchmarks .......................................................................331 SCHEDULE 7.1 ......................................................................................332 Performance Benchmarks .......................................................................332 APPENDIX 1 TO SCHEDULE 7.1 ................................................................350 Cancellations Benchmarks and Annual Cancellations Benchmarks Table .........350 APPENDIX 2 TO SCHEDULE 7.1 ................................................................355 Capacity Benchmark Table ......................................................................355 APPENDIX 3 TO SCHEDULE 7.1 ................................................................358 TOC Minute Delay Benchmarks and Annual TOC Minute Delay Benchmarks ..........................................................................................358 TOC Minute Delay Benchmark table .....................................................358 SCHEDULE 7.2 ......................................................................................363 National Rail Passenger Surveys ..............................................................363 APPENDIX 1 TO SCHEDULE 7.2 ................................................................368 NRPS Benchmark Table ..........................................................................368

8 Payments .............................................................................................369


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SCHEDULE 8.1 ......................................................................................370 Franchise Payments ...............................................................................370 APPENDIX 1 TO SCHEDULE 8.1 ................................................................391 Profit Share Thresholds...........................................................................391 APPENDIX 2 TO SCHEDULE 8.1 ................................................................393 Components of AFA and DFR ...................................................................393 SCHEDULE 8.2 ......................................................................................398 Annual Franchise Payments .....................................................................398 APPENDIX TO SCHEDULE 8.2 ..................................................................399 Figures for Calculation of Annual Franchise Payments .................................399 SCHEDULE 8.3 ......................................................................................400 Miscellaneous Payment Provisions ............................................................400 SCHEDULE 8.4 ......................................................................................401 Track Access Adjustments and Station Charge Adjustments .........................401 SCHEDULE 8.5 ......................................................................................405

9 Changes ...............................................................................................421 SCHEDULE 9.1 ......................................................................................422 Financial and Other Consequences of Change ............................................422 APPENDIX 1 TO SCHEDULE 9.1 ................................................................431 Summary Flow Chart ..............................................................................431 APPENDIX 2 TO SCHEDULE 9.1 ................................................................433 Agreement or Determination of Revised Inputs ..........................................433 ANNEX TO APPENDIX 2 TO SCHEDULE 9.1 ................................................438 Incentivising Long Term Investment .........................................................438 Schedule 9.2 .........................................................................................440 Identity of the Financial Model etc. ...........................................................440 Schedule 9.3 .........................................................................................444 Schedule 9.4 .......................................................................................445 Component of FAT: Definition of Threshold Amount ....................................445 Schedule 9.5 .........................................................................................446 Variations and Incentivising Beneficial Changes ..........................................446

10 Remedies, Termination and Expiry ...........................................................450 SCHEDULE 10.1 .....................................................................................451 Remedial Plans and Remedial Agreements .................................................451 SCHEDULE 10.2 .....................................................................................453 Termination and Expiry ...........................................................................453 SCHEDULE 10.3 .....................................................................................455 Events of Default and Termination Event ...................................................455 SCHEDULE 10.4 .....................................................................................462 Force Majeure .......................................................................................462 SCHEDULE 10.5 .....................................................................................467 Liability ................................................................................................467

11 Agreement Management Provisions ..........................................................469 12 Financial Obligations and Covenants .........................................................472

APPENDIX 1 TO SCHEDULE 12 .................................................................483 Form of Performance Bond ......................................................................483


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APPENDIX 2 TO SCHEDULE 12 .................................................................491 Form of Season Ticket Bond ....................................................................491

13 Information and Industry Initiatives .........................................................497 APPENDIX 1 TO SCHEDULE 13 .................................................................513 Environmental impact monitoring dataset ..................................................513 APPENDIX 2 TO SCHEDULE 13 .................................................................516 Key Assets ............................................................................................516 APPENDIX 3 TO SCHEDULE 13 .................................................................517 Operational Information ..........................................................................517

14 Preservation of Assets ............................................................................522 SCHEDULE 14.1 .....................................................................................523 Maintenance of Franchise ........................................................................523 SCHEDULE 14.2 .....................................................................................525 Maintenance of Operating Assets .............................................................525 SCHEDULE 14.3 .....................................................................................528 Key Contracts .......................................................................................528 APPENDIX TO SCHEDULE 14.3 .................................................................532 List of Key Contracts ..............................................................................532 SCHEDULE 14.4 .....................................................................................534 Designation of Franchise Assets ...............................................................534 APPENDIX TO SCHEDULE 14.4 .................................................................543 List of Primary Franchise Assets ...............................................................429 SCHEDULE 14.5 .....................................................................................550 Dealing with Franchise Assets ..................................................................550

15 Obligations Associated with Termination ....................................................552 SCHEDULE 15.1 .....................................................................................553 Reletting Provisions ................................................................................553 SCHEDULE 15.2 .....................................................................................560 Last 12 or 13 Months of Franchise Period and other conduct of business provisions .............................................................................................560 SCHEDULE 15.3 .....................................................................................566 Handover Package .................................................................................566 APPENDIX TO SCHEDULE 15.3 .................................................................567 Form of Handover Package ......................................................................567 SCHEDULE 15.4 .....................................................................................568 Provisions Applying on and after Termination .............................................568 APPENDIX 1 TO SCHEDULE 15.4 ..............................................................577 Form of Transfer Scheme ........................................................................577 TRANSFER SCHEME ...............................................................................578 SCHEDULE TO THE TRANSFER SCHEME ....................................................580 APPENDIX 2 TO SCHEDULE 15.4 ..............................................................581 Form of Supplemental Agreement ............................................................581 SCHEDULE TO THE SUPPLEMENTAL AGREEMENT ........................................594 Net Asset Statement ..............................................................................594

16 Pensions ...............................................................................................600 17 Confidentiality and Freedom of Information ...............................................604


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18 Additional Reporting Periods ....................................................................610 19 Other Provisions ....................................................................................611


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THIS AGREEMENT is dated 2014

BETWEEN

2. THE SECRETARY OF STATE FOR TRANSPORT, whose principal address is at 33 Horseferry Road, London SW1P 4DR (the "Secretary of State"); and

3. LONDON & SOUTH EASTERN RAILWAY LIMITED (Company Number 04860660), whose registered office is at 3rd Floor, 41-51 Grey Street, Newcastle-upon-Tyne, Tyne and Wear NE1 6EE trading as Southeastern (the "Franchisee").

WHEREAS (A) The Secretary of State wishes to appoint a franchisee to provide railway

passenger services within the Franchise and expects his franchisee, on the terms of the Franchise Agreement, actively to seek, in all reasonable business ways, greatly improved performance over the Franchise Term from its employees, its Train Fleet and other assets, and from the Infrastructure Manager and its other suppliers, so as to deliver to the passenger the best railway passenger service that can be obtained from the resources that are available to it.

(B) The Franchisee wishes to be appointed as the Secretary of State's franchisee for the Franchise and intends, on the terms of this Agreement, actively to seek, in all reasonable business ways, greatly improved performance over the Franchise Term from its employees, its Train Fleet and other assets, and from the Infrastructure Manager and its other suppliers, so as to deliver to the passenger the best railway passenger service that can be obtained from the resources that are available to it.

(C) 1 2The Franchise Agreement has been amended pursuant to contract change letter agreements dated 4 December 2014, 9 December 2014, 18 December 2014, 1 January 2015, 19 February 2015, 3 June 2015, 29 June 2015, 30 September 2015, 4 December 2015, 1 January 2016, 26 February 2016, 16 March 2016, 28 July 2016, 7 September 2016, 9 December 2016, 16 March 2017, 11 April 2017, 21 June 2017, 29 June 2017, 23 November 2017, 13 December 2017, deeds of amendment dated 8 December 2016, 9 December 2016, 8 September 2017, 18 September 2017, 6 December 2017 and 23 March 2018, contract change letter agreements dated 19 December 2018 and 14 March 2019 and most recently a deed of amendment dated 13 June 2019 to extend the Franchise Term and to effect various other consequential and related amendments.

1. INTERPRETATION

1.1 In the Franchise Agreement, except to the extent the context otherwise requires:

(a) words and expressions defined in Part I of the Act have the same meanings when used therein provided that, except to the extent expressly stated, "railway" shall not have the wider meaning attributed to it by Section 81(2) of the Act;

1 23 March 2018 (Date of DOA) – Contract insertion agreed by the Secretary of State and Franchisee. 2 13 June 2019 (Date of DOA) – Contract variation agreed by the Secretary of State and Franchisee.


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(b) words and expressions defined in the Interpretation Act 1978 have the same meanings when used in the Franchise Agreement;

(c) the words "include", "including" and "in particular" are to be construed without limitation;

(d) references to any person include its successors, transferees or assignees;

(e) the words "subsidiary", "subsidiary undertaking", and "parent undertaking" each have the same meaning in the Franchise Agreement as in Section 1162 of the Companies Act 2006;

(f) references to documents "in the agreed terms" are references to documents initialled by or on behalf of the Secretary of State and the Franchisee. As at the date of this Agreement the documents "in the agreed terms" are as follows:

(i) CFD Commuter Fares Document; (ii) CSES Customer and Stakeholder Engagement

Strategy; (iii) DL Depot Lease; (iv) FF Financial Formats; (v) FM23 Financial Model; (vi) MOIRA MOIRA; (vii) OM Operational Model; (viii) PC Passenger's Charter; (ix) PFD Protected Fares Document; (x) POA Power of Attorney; (xi) ROA24 Record of Assumptions 2; (xii) SL Station Lease; (xiii) SLC1-5 Service Level Commitment; (xiv) STNRCS STNR Costs Schedule5 (xv) STNRP STNR Programme6 (xvi) STNRRR STNR Reporting Requirements7 (xvii) STNRSOW STNR Scope of Work8 (xviii) TP Train Plan,

(g) references in any of the agreements comprising the Franchise

Agreement to Recitals, clauses, Schedules, Parts, paragraphs and Appendices are to Recitals, clauses, Schedules, Parts of Schedules, paragraphs of Schedules and Appendices of Schedules of that agreement, unless expressly specified to the contrary, and the Schedules and Appendices form part of the agreement in which they appear;

(h) references in any Schedule in any of the agreements comprising the Franchise Agreement to a Part, paragraph or Appendix are references to a Part, paragraph or Appendix of that Schedule (or

3 13 June 2019 (Date of DOA) – Contract variation agreed by the Secretary of State and Franchisee. 4 13 June 2019 (Date of DOA) – Contract variation agreed by the Secretary of State and Franchisee. 5 06/12/2017 (Date of DOA) – Contract insertion agreed by the Secretary of State and Franchisee. 6 06/12/2017 (Date of DOA) – Contract insertion agreed by the Secretary of State and Franchisee. 7 06/12/2017 (Date of DOA) – Contract insertion agreed by the Secretary of State and Franchisee. 8 06/12/2017 (Date of DOA) – Contract insertion agreed by the Secretary of State and Franchisee.


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the relevant Part of a Schedule), unless expressly specified to the contrary;

(i) headings and references to headings shall be disregarded in construing this Franchise Agreement;

(j) references to any enactment include any subordinate legislation made from time to time under such enactment and are to be construed as references to that enactment as for the time being amended or modified or to any enactment for the time being replacing or amending it and references to any subordinate legislation are to be construed as references to that legislation as for the time being amended or modified or to any legislation for the time being replacing or amending it;

(k) references to an agreement or any other document shall be construed as referring to that agreement or document as from time to time supplemented, varied, replaced, amended, assigned or novated;

(l) references to any particular provisions of any agreement or any other document shall be construed to include any other provisions of, or incorporated in, that agreement or other document which the Secretary of State reasonably considers have an equivalent effect or are intended to fulfil the same function;

(m) words importing the masculine gender include the feminine and vice-versa, and words in the singular include the plural and vice-versa;

(n) wherever provision is made for the giving or issuing of any notice, endorsement, consent, approval, waiver, certificate or determination by any person, unless otherwise specified, such notice, endorsement, consent, approval, waiver, certificate or determination shall be in writing and the words "notify", "endorse", "consent", "approve", "waive", "certify" or "determine" and other cognate expressions shall be construed accordingly;

(o) references to materials, information, data and other records shall be to materials, information, data and other records whether stored in electronic, written or other form;

(p) references to the Franchisee bidding for Train Slots or a Timetable shall mean the final action incumbent on the Franchisee under the Network Code to confirm to the Infrastructure Manager its interests in the Train Slots to which that confirmation relates, and "bid" shall be construed accordingly;

(q) references to the period of validity of any Fare are references to its period of validity excluding any rights of any purchaser thereof to extend such period under the Passenger's Charter, any equivalent document, or the terms and conditions attaching to such Fare (including any applicable conditions of carriage) in the event of the cancellation or delay of any of the railway passenger services for which such Fare is valid;


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(r) references to stations at which any train calls include stations at which such train commences or terminates its journey;

(s) references to "railway passenger services" are to be construed subject to Section 40 of the Railways Act 2005;

(t) references to the provision of railway passenger services include the organisation of the relevant train movements and making the necessary arrangements with the Infrastructure Manager or any other relevant Facility Owner;

(u) references in lower case letters to terms defined in clause 2 shall be construed, where relevant, as being references to the terms defined as such in the franchise agreement or relevant agreement made under Section 30 of the Act or Section 6 of the Railways Act 2005 with any other Train Operator;

(v) amendments to or variations of contracts or arrangements include assignments, novations or other transfers of rights and/or obligations (in whole or in part) under such contracts or arrangements;

(w) references to sums of money being expended by the Franchisee shall be to such sums exclusive of Value Added Tax;

(x) the words "shall not be liable" are to be construed as meaning that no contravention of the Franchise Agreement and no Event of Default shall arise as a result of the occurrence of the matter to which such words relate;

(y) references to a "contravention of the Franchise Agreement" (and cognate expressions) are to be construed as meaning a breach of this Franchise Agreement; and

(z) wherever provision is made for the Franchisee to "procure" or "ensure" the delivery of an obligation under the Franchise Agreement, unless otherwise specified, that provision shall be construed as a primary obligation on the Franchisee to deliver that obligation.

1.2 This Agreement and the Conditions Precedent Agreement together constitute a single agreement which is a "franchise agreement" for the purposes of the Act.

2. DEFINITIONS

2.3 In the Franchise Agreement, except to the extent the context otherwise requires, the following words and expressions have the following meanings:

"16 to 25 Railcard" means a Discount Card issued under the Discount Fare Scheme referred to in paragraph (a)(ii) of the definition of Discount Card Fare Scheme;

"2013 Nominal Ticket Sales" has the meaning given to it in paragraph 3 of Schedule 5.4 (Regulation of Fares Basket


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Values);

"2013 Ticket Revenue" has the meaning given to it in paragraph 4.1 of Schedule 5.4 (Regulation of Fares Basket Values);

"2017 Capacity Enhancement Deed of Amendment”9

means the Deed of Amendment to the Franchise Agreement dated 7 September 2017 entitled "Deed of Amendment in relation to Class 377 capacity enhancements" made between the parties;

"2017 Cascade"10

means in relation to each Class 377 (2017 Capacity Enhancement) Unit, its delivery from the TSGN Operator to the Franchisee under the Class 377 (2017 Capacity Enhancement) Sub-Lease and "Cascaded" and "2017 Cascaded Unit" shall be construed accordingly;

"Access Agreement" has the meaning given to the term "access agreement" in Section 83(1) of the Act;

"Act" means the Railways Act 1993 and any regulations or orders made thereunder;

"Actual Operating Costs" means:

(a) the Franchisee's total operating expenses for the period being reviewed as stated in its profit and loss account, including any of the following operating expenses that are payable during that period:

(i) amounts payable to the Secretary of State and the Infrastructure Manager;

(ii) taxation;

(iii) shareholder distributions including dividends;

(iv) interest;

(v) capital expenditure (net of grants received); and

(vi) lease payments in relation to on-balance sheet leased assets,

but excluding any of the following expenses 9 08/09/2017 (Date of DOA) – Contract insertion agreed by the Secretary of State and Franchisee. 10 08/09/2017 (Date of DOA) – Contract insertion agreed by the Secretary of State and Franchisee.


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that are payable in that period:

(A) interest relating to on-balance sheet leased assets;

(B) depreciation;

(C) amortisation; and

(D) bad debt provisions; and

either:

(b) plus any reduction in the total amount owing by the Franchisee to creditors over that period; or

(c) less any increase in the total amount owing by the Franchisee to creditors over that period,

where creditors:

(A) include any persons owed amounts by the Franchisee in respect of operating expenses, including the types of expenses set out in paragraphs (a)(i) to (iv) inclusive, provisions and deferred income balances; but

(B) exclude persons owed amounts by the Franchisee in respect of season ticket liabilities, lease liabilities in relation to on-balance sheet leased assets and liabilities in relation to grants received for the purchase of fixed assets;

"Actual Passenger Demand" has the meaning given to it in paragraph 1 of Error! Not a valid result for table. (Information about Passengers);

"Actuary" has the meaning given to it in the Pension Trust;

"Additional Expenditure" has the meaning given to it in paragraph 2.8 of Schedule 7.2 (National Rail Passenger Surveys);

"Additional Passenger Services"

means such of the Passenger Services as the Franchisee is neither required to secure in the Timetable for purposes of complying with the Service Level Commitment nor required to operate pursuant to paragraph 6.1(a) of


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Schedule 1.2 (Operating Obligations);

"Additional Timetable Development Rights"

means any Timetable Development Rights that the Franchisee does not require for purposes of securing a Timetable that complies with the Service Level Commitment and to operate the services contemplated thereby;

"Administration Fee" has the meaning given to it in paragraph 4.3 of Schedule 10.3 (Events of Default and Termination Event);

"Advance Purchase Train-specific Fares

has the meaning given to it under the Ticketing and Settlement Agreement;

"Affiliate"11 means,

((a) in respect of any person (“A”):

(i) any person which A Controls or which Controls A; or

(ii) any person which is Controlled by any other Affiliate of A; and

(b) for the purposes of paragraph 3 of Schedule 8.1 (Franchise Payments) only, any person which directly or indirectly (including as a shareholder in any immediate parent undertaking):

(i) holds any share capital in the Franchisee;

(ii) in the event of the winding-up or other analogous event in respect of the Franchisee would be entitled to any share or receive any assets of the Franchisee which are available for distribution; or

(iii) has any voting power in the Franchisee,

and for the purpose of this definition none of Network Rail or HS2 Limited shall be construed as being an affiliate of the Secretary of State;

“[REDACTED12]”13 means the licence granted to the Franchisee [REDACTED14] in respect of the

11 13 June 2019 (Date of DOA) – Contract variation agreed by the Secretary of State and Franchisee. 12 29/01/2018 (Date of Redactions Approval) – Where text has been omitted from the document this is

because the Director General Rail or Secretary of State has decided to exclude the text in accordance with the provisions within the Freedom of Information Act 2000.

13 06/12/2017 (Date of DOA) – Contract insertion agreed by the Secretary of State and Franchisee.


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[REDACTED15] (as amended and supplemented from time to time);

"Aggregated Qualifying Change"

means two or more Changes which:

(a) are notified or agreed (in the case of a Change which is a Variation pursuant to paragraph 1.1 of Schedule 9.5 (Variations and Incentivising Beneficial Changes) or

(b) a party has become aware of (in the case of any other kind of Change)

in a Franchisee Year (the "Aggregation Year") which individually do not exceed the Threshold Amount for the Aggregation Year taken alone but do exceed it when taken together. For the avoidance of doubt, where the Changes arise in different Franchisee Years, for the purposes of determining whether in aggregate they exceed the Threshold Amount:

(c) the net present value of the adjustment in Franchise Payments which would result from a Run of the Financial Model in respect of each Change shall be calculated in accordance with the process described in the definition of Qualifying Change; and:

(d) there will be an Aggregated Qualifying Change where the aggregate of the net present values of those Changes exceeds the Threshold Amount for the Aggregation Year;

"Alliance Agreement" has the meaning given to such term in paragraph 11.2 of Schedule 13 (Information and Industry Initiatives);

"Alternative NRPS" has the meaning given to such term in paragraph 1.4 of Schedule 7.2 (National Rail Passenger Surveys);

"Alternative SLC" has the meaning given to such term in paragraph 1.2 of Schedule 1.1 (Service development);

"Ancillary Service" means any service specified in paragraph 5 of Error! Not a valid result for table.

14 29/01/2018 (Date of Redactions Approval) – Where text has been omitted from the document this is

because the Director General Rail or Secretary of State has decided to exclude the text in accordance with the provisions within the Freedom of Information Act 2000.

15 29/01/2018 (Date of Redactions Approval) – Where text has been omitted from the document this is because the Director General Rail or Secretary of State has decided to exclude the text in accordance with the provisions within the Freedom of Information Act 2000.


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(Franchise Services);

"Annual Audited Accounts" means the accounts of the Franchisee which:

(a) comply with paragraph 3.11 of Schedule 13 (Information and Industry Initiatives); and

(b) are delivered to the Secretary of State by the Franchisee in accordance with paragraph 3.9 of Schedule 13 (Information and Industry Initiatives) and certified by the Franchisee's auditors as true and fair;

"Annual Benchmark" means either the Annual Cancellations Benchmark or the Annual TOC Minute Delay Benchmark;

"Annual Benchmark Table" means in relation to:

(a) any Annual Cancellations Benchmark, the Annual Cancellations benchmark Table; and

(b) any Annual TOC Minute Delay Benchmark, the Annual TOC Minute Delay Benchmark Table;

"Annual Business Plan" means the plan to be provided by the Franchisee to the Secretary of State in accordance with paragraph 2.3 of Schedule 13 (Information and Industry Initiatives);

"Annual Cancellations Benchmark"

means for each Performance Calculation Year, each of the benchmarks specified in the Annual Cancellations Benchmark Table for that Performance Calculation Year provided that where a Performance Calculation Year is shorter than 13 Reporting Periods then the Annual Cancellations Benchmark for that Performance Calculation Year shall be as determined pursuant to paragraph 5.1(a) of Schedule 7.1 (Performance Benchmarks);

"Annual Cancellations Benchmark Table"

means the table set out in Part 2 (Annual Cancellations Benchmark Table) of Appendix 1 (Cancellations Benchmarks and Annual Cancellations Benchmarks) of Schedule 7.1 (Performance Benchmarks);

"Annual Cap Performance Level"

means, in relation to an Annual Benchmark for any Performance Calculation Year, the number set out in column 2 of the Annual Benchmark Table relating to that Annual Benchmark and in the row of that table for that Performance


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Calculation Year;

[Deleted] 16

"Annual Floor Performance Level"

means, in relation to an Annual Benchmark for any Performance Calculation Year, the number set out in column 4 of the Annual Benchmark Table relating to that Annual Benchmark and in the row of that table for that Performance Calculation Year;

"Annual Franchise Payment" means, in relation to any Franchisee Year, the amount determined in accordance with Schedule 8.2 (Annual Franchise Payments);

"Annual Franchise Payment Components"

means the values of "FXD", "VCRPI", "VCAWE", "PRPI" and "RRPI" specified for each Franchisee Year in the table set out in the Appendix (Figures for Calculation of Annual Franchise Payments) to Schedule 8.2 (Annual Franchise Payments);

"Annual Management Accounts"

means the management accounts of the Franchisee which:

(a) comply with paragraph 3.11 of Schedule 13 (Information and Industry Initiatives); and

(b) are delivered to the Secretary of State by the Franchisee in accordance with paragraph 3.7 of Schedule 13 (Information and Industry Initiatives);

"Annual Season Ticket" means a Season Ticket Fare which is valid in Standard Class Accommodation from (and including) the day on which it first comes into effect until (but excluding) the day which falls 12 months after such day;

"Annual Target Performance Level"

means, in relation to an Annual Benchmark for any Performance Calculation Year, the number set out in column 3 of the Annual Benchmark Table relating to that Annual Benchmark and in the row of that table for that Performance Calculation Year;

"Annual TOC Minute Delay Benchmark"

means for each Performance Calculation Year, each of the benchmarks specified in the Annual TOC Minute Delay Benchmark Table for the that Performance Calculation Year provided that where a Performance Calculation Year is shorter than 13 Reporting Periods then the Annual TOC Minute Delay Benchmark for that Performance Calculation Year shall be as

16 Date of deletion 16/03/2016


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determined pursuant to paragraph 5.1(b) of Schedule 7.1 (Performance Benchmarks);

"Annual TOC Minute Delay Benchmark Table"

means the table set out in Part 2 (Annual TOC Minute Delay Benchmark Table) of Appendix 3 (TOC Minute Delay Benchmark and Annual TOC Minute Delay Benchmark) of Schedule 7.1 (Performance Benchmarks);

"Asset Condition Survey" shall have the meaning given to such term in paragraph 6.5 of Schedule 6.1 (Committed Obligations);

"Assisted Passenger Reservation System"

means the system known as the Assisted Passenger Reservation System as described in the Code of Practice as published in September 2010 (version 2 – valid from 1 September 2010);

"ATOC"17 means the Association of Train Operating Companies whose functions are discharged by RDG from 24 October 2016;

"Automatic Ticket Gate

Consents"

shall have the meaning given to such term in paragraph 9.6 of Part 1 of Schedule 6.1 (Committed Obligations);

"Average Driver Number Per Reporting Period"

shall have the meaning given to such term in paragraph 14.1 of Part 1 of Schedule 6.1 (Committed Obligations);

"Average Weekly Earnings" means the United Kingdom average weekly earnings measure excluding bonuses as published from time to time by the Office for National Statistics or, if such measure shall cease to be published or if, in the reasonable opinion of the Secretary of State, there is a material change in the basis of such measure, such other alternative index as the Secretary of State may, after consultation with the Franchisee, determine to be appropriate in the circumstances;

"Back Fill Rolling Stock Head-Lease"

shall have the meaning given to such term paragraph 5.10(a) of Schedule 6.2 (South Eastern Franchise Specific Provisions);

"Back Fill Rolling Stock Sub-Lease"

shall have the meaning given to such term paragraph 5.10(b) of Schedule 6.2 (South Eastern Franchise Specific Provisions);

"Back Fill Rolling Stock Period"

shall have the meaning given to such term paragraph 5.10 of Schedule 6.2 (South Eastern Franchise Specific Provisions);

17 23 March 2018 (Date of DOA) – Contract variation agreed by the Secretary of State and Franchisee


Page 18 of 618

"Back Fill Rolling Stock Head-Lease Payments"

shall have the meaning given to such term paragraph 8.1(b) of Schedule 8.5 (London Bridge and Other Potential Payment Adjustments);

"Back Fill Rolling Stock Sub-Lease Payments"

shall have the meaning given to such term paragraph 8.1(a) of Schedule 8.5 (London Bridge and Other Potential Payment Adjustments);

"Bank" means a person which has a permission under Part 4A of the Financial Services and Markets Act 2000 to carry on the regulated activity of accepting deposits thereunder and which is reasonably acceptable to the Secretary of State;

"Bank Holiday" means any day other than a Saturday or Sunday on which banks in the City of London are not open for business;

"Benchmark" means any of the Cancellations Benchmark, Capacity Benchmark and TOC Minute Delay Benchmark;

"Benchmark Table" means, in relation to:

(a) any Cancellations Benchmark, the Cancellations Benchmark Table;

(b) any Capacity Benchmark, the Capacity Benchmark Table; and

(c) any TOC Minute Delay Benchmark, the TOC Minute Delay Benchmark Table;

"Bid Profit Stream" means the estimated total operating profit of the Franchisee from the date that the Change of Control (pursuant to paragraph 2.3 of Schedule 10.3 (Events of Default and Termination Sum) is to occur until the Expiry Date as shown in the profit and loss forecast in the Initial Business Plan (without taking into account any Annual Business Plan) calculated in real terms as at the date of the Change of Control and applying the prevailing discount rate per annum (in real terms) stated in HM Treasury's "Green Book Appraisal Guidelines" (such rate being 3.5 per cent per annum (in real terms) as at the date of the Franchise Agreement);

"Bond Provider" means any person or persons who may provide or be an obligor under a Performance Bond or Season Ticket Bond from time to time and who shall, unless the Secretary of State otherwise


Page 19 of 618

agrees, be a Bank;

"Bond Year" means the period beginning on the Start Date and ending on the 31 March 2015 and any subsequent period of 13 Reporting Periods beginning on the day after the end of the preceding Bond Year provided that:

(a) the Franchisee and the Secretary of State may agree to vary the Reporting Period in which a Bond Year ends from time to time; and

(b) the last Bond Year shall expire on the expiry of the Franchise Period and may be a period of less than 13 Reporting Periods;

"Brand Licence" means a licence between the Secretary of State (or any company wholly owned by the Secretary of State) and the Franchisee in respect of any registered or unregistered trade marks;

"Breach Performance Level" means, in relation to a Benchmark for any Reporting Period, the number set out in column 4 of the Benchmark Table relating to that Benchmark and in the row of that table for that Reporting Period;

"British Transport Police" means the British Transport Police created pursuant to Section 18 of the Railways and Transport Safety Act 2003 (or any successor or successors to its statutory policing functions);

"Business Action Plan" means an action plan produced by the Franchisee in relation to the delivery of any aspect of the Franchise Services (including in respect of any outcome anticipated by its Business Plan, in accordance with paragraph 2.7 of Schedule 13 (Information and Industry Initiatives));

"Business Continuity Plan" and "BCP"

means a business continuity and disaster recovery plan (including a Force Majeure Events recovery plan) required to be produced, maintained and implemented by the Franchisee in accordance with paragraph 3.3 of Schedule 10.4 (Force Majeure);


Page 20 of 618

"Business Plan" means the Initial Business Plan or any Annual Business Plan, as the context requires, to be delivered in accordance with paragraphs 2.1 and 2.3 of Schedule 13 (Information and Industry Initiatives);

"Cancellation" means a Passenger Service:

(a) which is included in the Enforcement Plan of the Day and which is cancelled and attributed to the Franchisee pursuant to its Track Access Agreement; or

(b) which is included in the Enforcement Plan of the Day and which operates less than 50 per cent of its scheduled mileage (as prescribed in the Enforcement Plan of the Day) for reasons attributed to the Franchisee pursuant to its Track Access Agreement;

"Cancellations Benchmark" means any of the performance levels in respect of Cancellations and Partial Cancellations set out in the Cancellations Benchmark Table;

"Cancellations Benchmark Table"

means the table set out in Appendix 1 (Cancellations Benchmark Table) of Schedule 7.1 (Performance Benchmarks);

"Cancellations Performance Sum"

means an amount determined in accordance with paragraph 3.2 of Schedule 7.1 (Performance Benchmarks);

"Capacity Benchmark" means any of the performance levels in respect of the capacity operated in delivering the Passenger Services in the Peak set out in the Capacity Benchmark Table;

"Capacity Benchmark Table" means the table set out in Appendix 2 (Capacity Benchmark Table) to Schedule 7.1 (Performance Benchmarks);

"Capacity Mitigation Plan" has the meaning given to it in paragraph 7.1(a) of Schedule 1.1 (Service Development);

"Capital Expenditure" has the meaning given to it in paragraph 2.4 of Schedule 9.5 (Variations and Incentivising Beneficial Changes);

"Cascaded Rolling Stock" has the meaning given to it in paragraph 2.5 of Schedule 2.2 (Security of Access Agreements, Rolling Stock Leases, Station and Depot Leases);


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"Certificate of Commencement"

means the certificate to be issued by the Secretary of State pursuant to the Conditions Precedent Agreement;

"Change" means if and whenever any of the following occurs:

(a) an event set out in Schedule 9.3 (Secretary of State Risk Assumptions);

(b) the Secretary of State and the Franchisee agree or the Secretary of State serves written notice on the Franchisee, exercising the Secretary of State's right to call any Priced Option:

(i) on different terms from those specified in respect of that Priced Option in Part 2 (List of Priced Options) of Schedule 3 (Priced Options); and/or

(ii) at any time after the last date for exercise of such Priced Option,

in each case, only to the extent of the difference from the price quoted in Part 3 (Price in respect of the Priced Option) to Schedule 3 (Priced Options) caused by the difference in terms and/or the late timing of the agreement or call;

(c) a Charge Variation;

(d) a Change of Law (excluding any Change of Law to the extent that it results in an adjustment to the Franchise Payments pursuant to Schedule 8.4 (Track Access Adjustments and Station Charge Adjustments));

(e) a change to the Service Level Commitment previously in force pursuant to the issue of an amended or new Service Level Commitment in accordance with paragraph 4.12 of Schedule 1.1 (Service Development);

(f) the exercise by the Secretary of State of his rights pursuant to paragraph 19.2 of Schedule 13 (Information and Industry Initiatives);

(g) the Franchisee is required to take any


Page 22 of 618

action pursuant to paragraph 13.2 (a) and/or paragraph 13.2 (b) of Schedule 1.1 (Service Development);

(h) a change effected pursuant to paragraph 6.1 of Schedule 1.2 (Operating Obligations), including as a result of any action that the Franchisee is required to take pursuant to paragraph 8.1(b) of Schedule 1.2 in respect of any Strategy or plan referred to in paragraph 8.1(b) of Schedule 1.2 published, endorsed or varied by the Secretary of State after the Start Date, except where that change is effected pursuant to paragraph 6.2 of Schedule 1.2 in respect of any Additional Passenger Services;

(i) a change to the Secretary of State's standards in respect of alternative transport arrangements, as referred to in paragraph 8.2(a) of Schedule 1.2, from the Secretary of State's standards which are current as at the date of the Franchise Agreement;

(j) not used;

(k) not used;

(l) not used;

(m) not used;

(n) not used;

(o) the Secretary of State effects an amendment to a Discount Fare Scheme, introduces a new Discount Fare Scheme or ceases to approve a Discount Fare Scheme for the purposes of Section 28 of the Act;

(p) the Secretary of State approves an amendment or proposed amendment to an Inter-Operator Scheme, as referred to in paragraph (a) of the definition of Inter-Operator Scheme to the extent and only to the extent that the Franchisee makes a saving as a consequence of such amendment or proposed amendment;

(q) the imposition, subject to the provisions of paragraph 2.6 of


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Schedule 4 (Persons with Disabilities and Disability Discrimination), of any increased access charges in respect of EA Requirements at Franchisee Access Stations;

(r) the Secretary of State exercises his power pursuant to paragraph 5 of Schedule 5.7 (Changes to Fares and Fares Regulation) to alter the obligations of and restrictions on the Franchisee under Schedule 5 (Fares);

(s) the Franchisee is obliged to charge Value Added Tax on a Fare or there is an increase or decrease in the rate of Value Added Tax which it must charge on such Fare, in either case due to a change in the Value Added Tax treatment of the provision of Passenger Services;

(t) not used;

(u) the issue of any SLC (TDR) Amendments pursuant to paragraph 9.7 of Schedule 1.1 (Service Development) or, subject to paragraph 9.10(b) of Schedule 1.1, any SLC (TDR) Amendments ceasing to have effect in accordance with paragraph 9.9 of Schedule 1.1;

(v) the circumstances set out in paragraph 2.6 of Schedule 2.2 (Security of Access, Rolling Stock, Leases, Station and Depot Leases) occur;

(w) a Variation to the terms of the Franchise Agreement pursuant to paragraph 1 of Schedule 9.5 (Variations and Incentivising Beneficial Changes);

(x) the exercise by the Secretary of State of his rights pursuant to paragraph 1.6 of Schedule 7.1 (Performance Benchmarks);

(y) the Start Date is a date that is later than 0200 on 12 October 2014 for reasons solely attributable to any act or omission by the Secretary of State except where:

(i) the Secretary of State exercises


Page 24 of 618

his rights pursuant to Clauses 4.2 or 4.3 of the Conditions Precedent Agreement to alter such Start Date; or

(ii) the relevant acts or omissions of the Secretary of State arise as a result of or in connection with any failure by the Franchisee to satisfy any of the conditions precedent set out in the Conditions Precedent Agreement;

(z) the Secretary of State does not, during the Franchise Term, require a successor operator to the TSGN Operator to become a party to a Thameslink KO0 Trading Agreement in place of the TSGN Operator or to enter into a new agreement with the Franchisee on substantially the same terms as such Thameslink KO0 Trading Agreement as a condition of and upon that successor operator becoming the successor operator of the TSGN Franchisee;

(aa) the Secretary of State directs the Franchisee to agree and implement an amendment to, or terminate any Thameslink KO0 Trading Agreement pursuant to paragraphs 5.9 (b) or 5.9 (c) of Schedule 6.2 (South Eastern Franchise Specific Provisions);

(bb) the Secretary of State exercises his right under paragraph 5.6 of Schedule 6.2 (South Eastern Franchise Specific Provisions) to require the Franchisee to surrender, novate or assign the Thameslink Station Lease (as the case may be) on a date that is earlier or later than the Thameslink Transfer Date;

(cc) any two or more of the foregoing that the Secretary of State groups together in accordance with any procedures issued by him pursuant to paragraph 1.4 of Schedule 9.5 (Variations and Incentivising Beneficial Changes);

"Change of Control" has the meaning given to it in paragraph 2.3 of Schedule 10.3 (Events of Default and


Page 25 of 618

Termination Event);

"Change of Law" means the coming into effect after the date of the Franchise Agreement of:

(a) Legislation; or

(b) any applicable judgment of a court of Law which changes a binding precedent,

the terms of which apply only to the railway industry, a particular section of the railway industry or the provision of services to the railway industry and not to other transport modes or to industries other than the railway industry, and without limitation:

(i) excluding any changes in Taxation;

(ii) excluding any changes which were foreseeable at the date of the Franchise Agreement, and for this purpose, but without limitation, there shall be regarded as foreseeable any Legislation which on the date of the Franchise Agreement has been published:

(A) in a draft parliamentary bill as part of a government departmental consultation paper;

(B) in a parliamentary bill;

(C) in a draft statutory instrument; or

(D) as a proposal in the Official Journal of the European Communities except to the extent that such proposal is intended to apply solely within member states other than the United Kingdom,

to the extent that the same is subsequently enacted in substantially the same form as the form in which it was previously so published. In relation to the application of this sub paragraph (ii), each TSI shall be


Page 26 of 618

considered separately.

Change of Law (1) includes any Legislation, which only applies to the railway industry, which is made under the Health and Safety at Work etc. Act 1974 and which is not excluded under (i) and (ii) (a Specifically Included Change of Law), but (2) excludes any Legislation (other than a Specifically Included Change of Law) which is made with the intention or effect of specifically applying to (or disapplying in relation to) the railway industry any other Legislation which does not apply only to the railway industry;

"Charge Variation" means a variation:

(a) to a Relevant Agreement; and

(b) which is effected as a result of a Charging Review (including any variation in connection with an Incremental Output Statement Charge);

"Charging Review" means:

(a) the exercise by the ORR of its powers under:

(i) Part 7 of Schedule 7 of the Track Access Agreement to which the Franchisee is a party on the Start Date or any Replacement Agreement which is or is deemed to be a Relevant Agreement in accordance with the definition of that term;

(ii) Condition F11.5 of the Station Access Conditions in relation to any station which is not an Independent Station or a Station; or

(iii) Condition 42.5 of the Independent Station Access Conditions in relation to any station which is an Independent Station;

(b) the following by the ORR of the procedure in Schedule 4A of the Act;

(c) the exercise by the ORR of any of its powers or the following of any other procedure, which, in the Secretary of


Page 27 of 618

State's reasonable opinion:

(i) has an equivalent effect to; or

(ii) is intended to fulfil the same function as,

any of the powers referred to in paragraphs (a) or (b) in relation to any Relevant Agreement provided that, without limitation, the exercise by ORR of any of its approval rights under Condition F12 of the Station Access Conditions shall not be considered to have an equivalent effect to or fulfil the same function as any of the powers referred to in paragraphs (a) or (b). For this purpose, Relevant Agreement includes any Relevant Agreement which is not the subject of any previous Charging Review; or

(d) any amendment to a Relevant Agreement, or entry into a new Relevant Agreement which is approved by the ORR to the extent that it relates to an Incremental Output Statement Charge or a scheme to which that charge relates;

"Charter Service" means a railway passenger service, whether operated on the same routes as the Passenger Services or not:

(a) which is not reflected in the Timetable;

(b) which does not conform to the pattern of railway passenger services normally provided by the Franchisee;

(c) for which the advance booking or booking arrangements for seats on the relevant service are, in the reasonable opinion of the Secretary of State, materially different from those generally applicable to the Passenger Services;

(d) for which tickets are available on a restricted basis or on terms and conditions which, in the reasonable opinion of the Secretary of State, are materially different from those generally applicable to the Passenger Services; and/or

(e) for which the departure time, journey time and calling pattern are, in the reasonable opinion of the Secretary of


Page 28 of 618

State, materially different from those of the Passenger Services,

and which, in the opinion of the Secretary of State, is not a railway passenger service provided by the Franchisee as part of the Passenger Services;

"Child Price" means, in relation to any Fare, the amount charged or chargeable to a person under the age of 16 in respect of such Fare;

"CL377LA"

shall have the meaning given to such term in paragraph 8.1 of Schedule 8.5 (London Bridge and Other Potential Payment Adjustments);

“CL377(RS)LA”18 shall have the meaning given to such term in paragraph 8.2 of Schedule 8.5 (London Bridge and Other Potential Payment Adjustments);

"Class 377 (2017 Capacity Enhancement) Sub-Lease" 19

means the sub-lease for the Class 377 (2017 Capacity Enhancement) Units between the TSGN Operator and the Franchisee dated 7 September 2017;

"Class 377 (2017 Capacity Enhancement) Units" 20

means the 17 x 4-car units of Class 377 rolling stock (being unit numbers 377509 to 377523 and 377163 to 377164 that are, or are due to be, sublet by the TSGN Operator to the Franchisee pursuant to the Class 377 (Capacity Enhancement) Sub-Lease, and "Class 377 (Capacity Enhancement) Unit" shall mean any one of the Class 377 (Capacity Enhancement) Units;

"Class 377 Lease Payment" shall have the meaning given to such term in paragraph 8.1 of Schedule 8.5 (London Bridge and Other Potential Payment Adjustments);

"Class 377 OHA"

shall have the meaning given to such term paragraph 5.10(c) of Schedule 6.2 (South Eastern Franchise Specific Provisions);

“Class 377 (Revised Solution) OHA”21

means the operating hire agreement for Class 377 passenger rolling stock dated 19 December 2014 between the TSGN Operator and the Franchisee as amended and restated on or around 9 December

18 Date of contract insertion 09/12/2016 – Agreed by the Secretary of State and Franchisee. 19 08/09/2017 (Date of DOA) – Contract insertion agreed by the Secretary of State and Franchisee. 20 08/09/2017 (Date of DOA) – Contract insertion agreed by the Secretary of State and Franchisee. 21 Date of contract insertion 09/12/2016 – Agreed by the Secretary of State and Franchisee.


Page 29 of 618

2016;

“Class 377 (Revised Solution) Units”22

means the units of Class 377 rolling stock that are let by the TSGN Operator to the Franchisee pursuant to the Class 377 (Revised Solution) OHA, and “Class 377 (Revised Solution) Unit” shall mean any one of the Class 377 (Revised Solution) Units;

"Closed Scheme Employees" has the meaning given to it in paragraph 2.2 of Schedule 16 (Pensions);

"Closure" means a discontinuance or closure under Part 4 of the Railways Act 2005 of any of the Passenger Services or of any network on which the Passenger Services may be operated or of any of the Stations or of any part of such network or Station;

"Code of Practice" means the code of practice for protecting the interests of users of railway passenger services or station services who have disabilities, as prepared, revised from time to time and published by the Secretary of State pursuant to Section 71B of the Act;

"Collateral Agreement" means an agreement which is required to be entered into by the Franchisee with Network Rail, HS1 Limited or any other franchisee as a condition to any Access Agreement of which the Franchisee is the beneficiary;

"Committed Obligations" means any of the Franchisee's obligations listed in Part 1 (Committed Obligations and Related Provisions) to Schedule 6.1 (Committed Obligations and Related Provisions);

"Community Rail Partnership"

means any not-for-profit organisation of the same name that has an interest in the development of responsive and good quality railway passenger services;

"Community Rail Route" means any Route in respect of which the Secretary of State determines that any relevant Community Rail Partnership has an interest;

"Commuter Fare" means any:

(a) Weekly Season Ticket, Monthly Season Ticket, Quarterly Season Ticket and Annual Season Ticket (and their equivalent ITSO products)

22 Date of contract insertion 09/12/2016 – Agreed by the Secretary of State and Franchisee.


Page 30 of 618

between each London Station and any other such station or other station;

(b) unrestricted Single Fare and unrestricted Return Fare (and their equivalent ITSO products) between each London Station; and

(c) unrestricted Single Fare and unrestricted Return Fare (and their equivalent ITSO products) from each Suburban Station to each London Station (but not in the other direction); and

(d) PAYG Peak Fare or PAYG Off-Peak Fare (and their equivalent ITSO products) between each London Station and any other such station, (and, if and when CPAY is introduced, the CPAY equivalent Peak and Off-Peak fares); and

(e) Any Flexi Season Ticket that may be offered for unlimited travel between each London Station and any other such station or other station but which has restrictions on the permitted times of use or the volume of travel allowed. These restrictions may include permitting travel only on fewer than five days a week or outside Peak Hours,

for which the Franchisee is entitled to be allocated all or part of the revenue therefrom pursuant to the Ticketing and Settlement Agreement;

"Commuter Fares Basket" means the grouping of Commuter Fares:

(a) determined by the Secretary of State pursuant to Schedule 5.3 (Allocation of Fares to Fares Baskets);

(b) for the purposes of regulating aggregate Prices or Child Prices, as the case may be, in accordance with Schedule 5.4 (Regulation of Fares Basket Values);

(c) amended by the Secretary of State from time to time in accordance with Schedule 5.7 (Changes to Fares and Fares Regulation); and

(d) set out in the Commuter Fares


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Document;

"Commuter Fares Document"

means the document in the agreed terms marked CFD as the same may be amended from time to time in accordance with Schedule 5.7 (Changes to Fares and Fares Regulation);

"Completion of 2017 Cascade Milestone"23

means the date that the Franchisee (acting reasonably) notifies the Secretary of State that:

(a) the 2017 Cascade of all the Class 377 (2017 Capacity Enhancement) Units has been duly completed; and

(b) that the Class 377 (2017 Capacity Enhancement) Units are deployed in service in accordance with the Updated Train Plan;

"Compulsory Inter-available Flow"

has the meaning given to it in the Ticketing and Settlement Agreement;

"Computer System" means computer hardware and computer software, including licensed third party software and data protocols;

"Conditions Precedent Agreement"

means the agreement between the Secretary of State and Franchisee of even date herewith specifying certain conditions to be satisfied or waived by the Secretary of State prior to the issue of a Certificate of Commencement;

"Confidential Information" has the meaning given to it in paragraph 1 of Schedule 17 (Confidentiality and Freedom of Information);

"Connection" means a connection (however described) between any of the Passenger Services provided by the Franchisee and any other railway passenger service provided by it or any other Train Operator or any bus, ferry or shipping service and cognate phrases shall be construed accordingly;

"Connection Agreement" means any agreement entered into by the Franchisee and Network Rail or HS1 Limited on or before the Start Date relating to the connection of a Depot to the relevant part of the network;

"Contingency Plan" has the meaning given to it in paragraph 1(a)(iv) of Schedule 10.4 (Force



Page 32 of 618

Majeure);

"Contract Manager" means a person appointed from time to time by the Franchisee to fulfil certain duties including to manage the Franchise Agreement on behalf of the Franchisee and to facilitate the performance by the Franchisee of its obligations under the Franchise Agreement;

"Control" means, in respect of a person, that another person (whether alone or with others and whether directly or indirectly and whether by the ownership of share capital, the possession of voting power, contract or otherwise):

(a) has the power to appoint and/or remove all or the majority of the members of the board of directors or other governing body of that person or of any other person which Controls that person;

(b) controls or has the power to control the affairs and policies of that person or of any other person which Controls that person;

(c) is the parent undertaking of that person or of any other person which Controls that person; or

(d) possesses or is, or will be at a future date, entitled to acquire:

(i) 30 per cent or more of the share capital or issued share capital of, or of the voting power in, that person or any other person which Controls that person;

(ii) such part of the issued share capital of that person or any other person which controls that person as would, if the whole of the income of such person were distributed, entitle him to receive 30 per cent or more of the amount so distributed; or

(iii) such rights as would, in the event of the winding-up of that person or any other person which controls that person or in any other circumstances, entitle him to receive 30 per cent or more of the assets of such person which would then be


Page 33 of 618

available for distribution;

"CPAY" means an arrangement operated by TfL under which contactless payment cards can be used by passengers to obtain access to the public transport services in London without the requirement for purchase of a separate ticket or permission to travel;

"Creating" has the meaning given to it in the Ticketing and Settlement Agreement and cognate expressions shall be construed accordingly;

"CRM Data"24 means Personal Data (including any or all of name, address, e-mail address, full IP address and ticket purchasing history, credit and debit card details) collected by or on behalf of the Franchisee relating to persons travelling on or purchasing tickets for travel on the Passenger Services or other services for the carriage of passengers by railway including On-Train Wi-Fi Services and shall for the avoidance of doubt include such Personal Data that is collected, input, processed by or on behalf of the Franchisee and/or held on the On-Train Wi-Fi Solution and/or via the provision of the On-Train Wi-Fi Services;

"CRM Data Processor" means any Data Processor who, from time to time, is processing or has processed CRM Data on behalf of the Franchisee;

"CRM System" means any system (whether a Computer System or otherwise) for the collection of CRM Data and/or onto which CRM Data is input, processed and/or held as such system may be amended or altered from time to time;

"Crossrail Business Transfer Agreement"

means a business transfer agreement between the Franchisee and the Crossrail Operator to be entered into pursuant to the obligations of the Franchisee under paragraph 1.5(a) of Schedule 6.2 (South Eastern Franchise Specific Provisions) being substantially in the form of the Appendix (Form of Business Transfer Agreement) to Schedule 6.2 (South Eastern Franchise Specific Provisions), but subject to such amendments as the Secretary of State may reasonably make thereto as a result of any change of circumstances (including any Change of Law) affecting such business transfer agreement between the date of the Franchise Agreement and the date on which the Franchisee is required to enter into the

24 08/12/2016 (Date of DOA) – Contract variation agreed by the Secretary of Sate and Franchisee.


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Crossrail Business Transfer Agreement;

"Crossrail Operator" means any person who is appointed to provide railway passenger services on the railway transport system to be constructed and maintained as specified in the Crossrail Act 2008;

"Crossrail Programme" means the programme of planning, preparatory, construction, tunnelling, station building, rebuilding and enhancement and engineering activities and works and the procurement of rolling stock and other assets and equipment being undertaken for the purposes of building the east west cross London railway system specified in the Crossrail Act 2008;

"Crossrail Transfer Arrangements"

means the Crossrail Business Transfer Agreement and other agreements and documents ancillary thereto or reasonably required for the purpose of transferring Abbey Wood Station to the Crossrail Operator;

"Crossrail Transfer Date" 10 December 2017 (or such other date as the Secretary of State shall specify);

"Current Franchisee Accounting Year"

has the meaning given to it in paragraph 3.4 of Schedule 8.1 (Franchise Payments);

"Customer and Stakeholder Engagement Strategy"

means the Customer and Stakeholder Engagement Strategy in the agreed terms marked “CSES” and any replacement Customer and Stakeholder Engagement Strategy revised in accordance with paragraph 8.4 of Schedule 6.2 (South Eastern Franchise Specifics);

"Customer Report" means a report in the format and providing the information specified in the Customer and Stakeholder Engagement Strategy published in accordance with paragraph 8.3 of Schedule 6.2 (South Eastern Franchise Specifics);

"Customer Service and Information NRPS Measure"

means each of the following factors measured by the Passengers' Council as part of the National Rail Passenger Survey (or such other factors as the Secretary of State and/or the Passengers' Council may determine from time to time):

(a) "C1 Station - Provision of information about train times/platforms";

(b) "C4 Station - Overall satisfaction with how request to station staff was


Page 35 of 618

handled";

(c) "C5 Train - Provision of information during the journey";

(d) "C6 Train - The helpfulness and attitude of the staff on the train";

(e) "C8 Train - How well train company dealt with delays",

each separately a "Customer Service and Information NRPS Measure Factor";

"Customer Service and Information NRPS Measure Factor"

shall have the meaning given to such term in the definition of "Customer Service and Information NRPS Measure";

“DAC3 Assets”25 means: (a) any assets purchased by the

Franchisee as a result of fit out of the New Head Office up to the aggregate capital sum of [REDACTED26] specified for Fit-Out in Table 63 of the Record of Assumptions 2; and

(b) any assets purchased by the

Franchisee as a result of server virtualisation up to the aggregate capital sum of [REDACTED27] specified for Fit-Out in Table 63 of the Record of Assumptions;

"Data Controller" has the same meaning as in the Data Protection Act;

"Data Processor" has the same meaning as in the Data Protection Act;

"Data Protection Act" means the Data Protection Act 1998 and any guidance issued from time to time by the Information Commissioner's Office;

"Data Site Information" has the meaning given to it in paragraph 2.2(e)

25 13 June 2019 (Date of DOA) - Contract insertion agreed by the Secretary of State and Franchisee. 26 5 August 2019 (Date of Redactions Approval) – Where text has been omitted from the document this

is because the Secretary of State has decided to exclude the text in accordance with the provisions within the Freedom of Information Act 2000.

27 5 August 2019 (Date of Redactions Approval) – Where text has been omitted from the document this is because the Secretary of State has decided to exclude the text in accordance with the provisions within the Freedom of Information Act 2000.


Page 36 of 618

of Schedule 15.1 (Reletting Provisions);

"Data Subject" has the same meaning as in the Data Protection Act;

"Dataset" means Appendix 1 (Environmental Impact Monitoring Dataset) to Schedule 13 (Information and Industry Initiatives) as the same may be amended from time to time by the Secretary of State (acting reasonably);

"Deep Clean" shall have the meaning given to such term in paragraph 6.2 of Part 1 of Schedule 6.1 (Committed Obligations);

"Default Performance Level" means, in relation to a Benchmark for any Reporting Period, the numbers set out in the relevant column of the Benchmark Table relating to that Benchmark and in the row of that table for that Reporting Period;

"Delayed Cascade Mitigation Plan"

has the meaning given to it in paragraph 2.7(c) of Schedule 2.2 (Security of Access Agreements, Rolling Stock Leases, Station and Depot Leases);

"Departure Station" has the meaning given to it in paragraph 2(b) of Appendix 2 (Alternative Transport) to Schedule 4 (Persons with Disabilities and Disability Discrimination);

"Depot" means a depot in respect of which the Franchisee has entered into a Depot Lease;

"Depot Lease" means:

(a) any lease of a depot to which the Franchisee is a party as at the Start Date; or

(b) any other lease of a depot in relation to which the Franchisee becomes the Facility Owner at any time during the Franchise Period;

"Designated Employer" has the meaning given to it in the Pension Trust;

"Destination Station" has the meaning given to it in paragraph 2(b) of Appendix 2 (Alternative Transport) to Schedule 4 (Persons with Disabilities and Disability Discrimination);

“Digital Signage” 28 means an operational information system screen used to provide enhanced customer

28 Date of change: 04/12/2014


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information including station safety messages, planned engineering works and disruption information;

"Direct Agreement" means any agreement made, or to be made, from time to time between the Secretary of State and the counterparty of a Key Contract in relation to such Key Contract, including any agreement entered into by the Secretary of State under Schedule 14.3 (Key Contracts);

"Disabled People's Protection Policy"

means the Franchisee's policy for the protection of persons with disabilities which the Franchisee is required to establish and review from time to time in accordance with the conditions of its Licences in respect of the operation of railway passenger services and/or stations;

"Disabled Person" is a reference to a person who has a disability in the EA;

"Disaster" means, other than those specified in paragraph 1(a) and 1(b) of Schedule 10.4 (Force Majeure), any unplanned interruption or event which significantly prevents or impairs the ability of the Franchisee to provide the Franchise Services (in part or in whole) or the ability of the Franchisee to operate systems or equipment relevant to the provision of the Franchise Services (in part or in whole);

"Discount Card" has the meaning given to it in the Ticketing and Settlement Agreement;

"Discount Fare Scheme" means:

(a) each of the following discount fare schemes:

(i) ATOC Disabled Persons Railcard Scheme dated 23 July 1993 between the participants therein;

(ii) ATOC Young Persons Railcard Scheme dated 23 July 1993 between the participants therein; and

(iii) ATOC Senior Railcard Scheme dated 23 July 1993 between the participants therein; or

(b) any other discount fare scheme approved from time to time by the Secretary of State for the purposes of


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Section 28 of the Act,

in each case until such time as it may cease to be approved by the Secretary of State for the purposes of Section 28 of the Act;

"Dispute Resolution Rules" means the procedures for the resolution of disputes known as "The Railway Industry Dispute Resolution Rules", as amended from time to time in accordance with the terms thereof;

"Disputed Cancellation" means a Passenger Service:

(a) which is included in the Enforcement Plan of the Day and which is cancelled; or

(b) which is included in the Enforcement Plan of the Day and which operates less than 50 per cent. of its scheduled mileage (as prescribed in the Enforcement Plan of the Day),

in either case, in circumstances where attribution of responsibility for the same is, at the relevant time, in dispute between the relevant Infrastructure Manager and the Franchisee pursuant to the Track Access Agreement;

“Disputed Partial Cancellation”

means a Passenger Service which is included in the Enforcement Plan of the Day and which:

(a) misses a stop;

(b) completes 50 per cent. or more, but less than 100 per cent. of its scheduled journey as prescribed in the Enforcement Plan of the Day; or

(c) arrives at its final destination scheduled in the Enforcement Plan of the Day more than 120 minutes late,

in circumstances where attribution of responsibility for the same is, at the relevant time, in dispute between the relevant Infrastructure Manager and the Franchisee pursuant to the Track Access Agreement;

"Disputes Secretary" means the person appointed as Disputes Secretary from time to time in accordance with the Dispute Resolution Rules;

"Driver Employment Commitment Period"

shall have the meaning given to such term in paragraph 14.1 of Part 1 of Schedule 6.1


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(Committed Obligations);

"Driver Inputs" means the rows with the setting out the values in respect of the following headings in the worksheet titled “Inputs A4” of the Financial Model:

Area Numbers Drivers

Trainees

Pay Drivers

Trainees

Overtime etc Drivers

Trainees

Pension Contributions Drivers

Trainees

"Driver Number Target" shall have the meaning given to such term in paragraph 14.1 of Part 1 of Schedule 6.1 (Committed Obligations);

"EA" means the Equality Act 2010;

"EA Claim" has the meaning given to it in paragraph 3.1 of Schedule 4 (Persons with Disabilities and Disability Discrimination);

"EA Requirements" means the duties of a provider of services under Sections 20(3), 20(5) and Sections 20(9)(a) and 20(9)(b) in relation to Section 20(4), of the EA;

"eCMS" shall have the meaning given to such term in paragraph 17.1 of Part 1 of Schedule 6.1 (Committed Obligations);

"Emergency Event" has the meaning given to it in paragraph 1.2(e) of Schedule 10.4 (Force Majeure);

"EMV" means contactless payment cards that conform to the international standards issued by EMV Co (owned by American Express, Discover, JCB, MasterCard, UnionPay and Visa) which manages, maintains and enhances the EMV 1 integrated circuit card specifications;

"Enforcement Plan of the Day"

means the Plan of the Day excluding any:

(a) additions to such Plan of the Day of any railway passenger services which are not included in the Timetable;

(b) omissions from such Plan of the Day of any Passenger Services included in the Timetable; and/or


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(c) rescheduling in such Plan of the Day of any Passenger Services from their scheduling in the Timetable,

in each case:

(i) as proposed by the Franchisee in breach of its obligations in paragraph 5 of Schedule 1.2 (Operating Obligations); or

(ii) as agreed by the Franchisee in breach of its obligations in paragraph 4 of Schedule 1.2 (Operating Obligations);

"Enhanced Compensation" means (at the passenger’s choice) either, two free journeys anywhere on the Franchise valid for not less than 12 months or national rail travel vouchers to the value of a Single Fare for a journey between the Stations for which the relevant passenger’s Season Ticket Fare is valid;

"Environmental Data Implementation Plan"

has the meaning given in paragraph 19.1(c) of Schedule 13 (Information and Industry Initiatives);

"Environmental Information Regulations"

means the Environmental Information Regulations 2004;

"Environmental Scheme" shall have the meaning given to such term in paragraph 11.1 of Part 1 of Schedule 6.1 (Committed Obligations);

"Equivalent Fare" has the meaning given to it in paragraph 6.1 of Schedule 5.7 (Changes to Fares and Fares Regulation);

"Equivalent Flow" has the meaning given to it in paragraph 6.1(b) of Schedule 5.7 (Changes to Fares and Fares Regulation);

"Escrow Documents" means those documents and other items referred to in paragraphs 1.1 and 1.2 of Schedule 9.2 (Identity of the Financial Model etc.);

"Estimated One-Off Cost Amount"29

means for each One-Off Cost Item the amount as specified in Column 4 of the table at Appendix 3 to Schedule 8.5 Schedule 8.5 (London Bridge and Other Potential Payment Adjustments) of the Franchise Agreement;



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"Estimated Profit Stream" means estimated total operating profit of the Franchisee from the date that the Change of Control (pursuant to paragraph 2.3 of Schedule 10.3 (Events of Default and Termination Sum) is to occur until the Expiry D