PPP Contracts

SCHEDULE 3.1 - Asset Management Regime

Objective

1. The objective of the provisions in this Schedule is to: (a) ensure that Infraco, in carrying out the Services ( in particular its performance obligations and its obligations as asset steward ) improves asset condition generally so as to minimise, both during the Contract Period and for a reasonable time thereafter, the risk to safety and of service loss;

(b) ensure that in so doing, Infraco adopts efficient and economic whole-life asset management as established by reference to Good Industry Practice;

(c) ensure that Infraco over time brings the Assets to an overall state of good condition;

(d) provide LUL with assurance in relation to the above;

(e) assist LUL and Infraco with the efficient co-ordination of their respective activities on the Underground Network and the Infraco Network;

(f) promote confidence between the parties as to the way they will discharge their respective obligations in relation to the Delivery into Service of new Assets and Facilities.

Asset Management Obligations

2.1 Infraco shall adopt and demonstrate an efficient and economic whole-life cost approach to decisions regarding the balance between maintenance, renewal and enhancement of Assets, regardless of when in the Contract Period such decisions fall to be made which approach shall be established by reference to Good Industry Practice.

2.2 Infraco shall manage the Assets so as to comply with the obligations set out in Schedule 3.2 ( Reasonable Life Expectancy, Condition Benchmarks and Residual Life Benchmarks ).

2.3 Infraco shall develop and improve in accordance with Good Industry Practice: (a) its knowledge and understanding of the Assets;

(b) its asset management processes;

(c) its understanding of the link between asset health and asset performance and the demonstration of this within its asset information management systems, taking account of changes to technology, industry practice and engineering practice.

2.4 Infraco shall maintain, renew and enhance:

(a) all Assets which comprise, either wholly or partly, Commercial Property forming part of the Premises so that the (i) structure and external envelope of the buildings, (ii) utilities and building services ( including any relevant lifts ), ( iii ) lighting of common parts and (iv) maintenance of access and common parts ( in each case ) forming part of such Asset; and

(b) all Assets which comprise rafts or other structures supporting Commercial Property responsibility for maintenance and repair of which has been passed to Infraco by virtue of paragraph 1.4(c) of Schedule 1.5 so that such rafts or other structures, shall, as a minimum, comply at all times with all applicable statutory requirements and Laws and permit continued beneficial use of the Commercial Property for the relevant commercial purposes.

2.4.1 To the extent not covered by paragraphs 2.1 and 2.2 above, Infraco shall maintain, renew, and enhance all Assets comprising any land and buildings which form part of the Premises so as to ensure that they meet, as a minimum, the Residual Property Maintenance Standard.

2.4.2 Residual Property Maintenance Standard means that the Assets referred to in 2.4.1 above: (a) comply with all applicable statutory requirements and Laws;

(b) are in a safe, secure, wind protected and watertight condition;

(c) are maintained to such levels of condition and to such specifications as are consistent with principles of good estate management applied to the Premises as a whole; and

(d) are maintained in a manner which prevents deterioration of any part thereof.

Asset Management Regime

3.1 Infraco shall develop a regime ( the Asset Management Regime ), which shall be documented and further developed in accordance with this Schedule, such as will enable it to comply with the obligations set out in paragraph 2 above and to achieve the objectives set out in paragraph 1 above.

3.2 During the Contract Period, Infraco shall act in accordance with paragraphs 5 to 7 below and otherwise so as to ensure that the Asset Management Regime is and remains suitable and effective for complying with the obligations set out in paragraph 2 above and to achieving the objectives set out in paragraph 1 above.

Joint Working Groups

4.1 The parties shall work together in joint groups, where appropriate with the other Infracos and other contractors, to improve knowledge of the Assets and the required performance and condition contributions that they must, or could, make towards the desired improvements in the quantity and quality of services delivered to Customers ( the Joint Working Groups ).

4.2 Joint Working Groups shall initially include: (a) Asset Performance Review Meetings, details of which are included in paragraph 1 of Appendix 1 to this Schedule; and

(b) System Knowledge Development Forums, details of which are included in paragraph 2 of Appendix 1 to this Schedule.

Asset Management Strategy

5.1 Infraco shall develop, document and keep current a description of its Asset Management Regime at a level of detail sufficient to enable LUL to understand and comment on its suitability as such ( the Asset Management Strategy ).

5.2 The Asset Management Strategy shall demonstrate that Infraco's processes and procedures for management of the Assets are Controlled Processes.

5.3 On the Transfer Date, Infraco shall submit to LUL its provisional Asset Management Strategy, and shall, by a date to be agreed but in any event within six (6) months of the Transfer Date submit to LUL its revised and updated Asset Management Strategy.

5.3A Infraco shall submit to LUL subsequent material changes to its Asset Management Strategy.

5.4 The parties shall work together during the first Contract Year to develop and agree the elements that are required to be contained in an Asset Management Strategy. Until the parties so agree, the Asset Management Strategy shall include, as a minimum, the elements referred to in Appendix 2 to this Schedule 3.1. Infraco and LUL shall agree any subsequent amendments to the elements that are required to be contained in an Asset Management Strategy following consideration at an engineering partnership meeting in accordance with paragraph 6.2(a) of Schedule 3.3 ( Assurance ).

5.4A Infraco shall use best endeavours to have in place an asset catalogue that complies with the requirements set out in paragraph 4 of Appendix 2 to this Schedule 3.1, within two (2) years of the Transfer Date and shall, in any event, have in place such asset catalogue within four (4) years of the Transfer Date unless the parties otherwise agree.

5.5 Infraco's proposed Asset Management Strategy ( and any amendments thereto proposed subsequently ) shall not become final until approved by LUL. LUL may withhold such approval only to the extent that it has reasonable grounds for believing that it will result in Infraco failing to meet the obligations set out in paragraph 2 above and to achieve the objectives set out in paragraph 1 above.

5.5A LUL will have reasonable grounds for believing that compliance with the revised and updated Asset Management Strategy referred to in paragraph 5.3 will not meet the obligations set out in paragraph 2 above or achieve the objectives set out in paragraph 1 above if ( and only if ): (a) it is not substantially in the form of the provisional Asset Management Strategy agreed ( subject to conditions or otherwise ) and initialled by LUL and Infraco prior to the date of the Sale and Purchase Agreement; and/or

(b) amendments are required to the Asset Management Strategy to fulfil, or pursuant to, conditions which were attached to the provisional Asset Management Strategy referred to in paragraph (a) and such amendments have not been made; and/or

(c) in accordance with Good Industry Practice the Asset Management Strategy requires updating to take into account relevant information which has come to the attention of LUL after the approval of the provisional Asset Management Strategy.

5.6 If LUL withholds approval of the Asset Management Strategy or approves it subject to conditions or amendments, Infraco may either: (a) accept the Asset Management Strategy with such conditions and amendments, in which case it shall adopt and comply with the Asset Management Strategy as amended as if such conditions and amendments had been proposed by Infraco itself; or

(b) dispute LUL's withholding of approval or its conditions or amendments on the basis that LUL has no reasonable grounds for believing that it will result in Infraco failing to meet the obligations set out in paragraph 2 above and to achieve the objectives set out in paragraph 1 above. In the case of (b) the provisions of clause 49 ( Dispute Resolution ) of the Contract shall apply. Pending the resolution of any such dispute, the Asset Management Strategy shall be deemed to be approved save in relation to the matters in dispute, and the provisions of the last approved Asset Management Strategy shall, so far as is reasonably applicable, continue to apply in relation to such matters.

5.7 Infraco shall comply with its approved Asset Management Strategy.

Annual Asset Management Plan

6.1 Infraco shall prepare and submit to LUL once in every Contract Year an Annual Asset Management Plan whose purpose is: (a) to review the overall performance of Infraco in complying with the obligations set out in paragraph 2 above and to achieving the objectives set out in paragraph 1 above;

(b) to review Infraco's compliance with, and the continued suitability of, its Asset Management Strategy;

(c) to describe Infraco's detailed plans and proposals in relation to the above for the forthcoming nine (9) years based upon the then current requirements under the Contract;

(d) to review Infraco's progress against the objectives and proposals contained in its immediately preceding Annual Asset Management Plan; and

(e) to set out a Work Package Plan projection ( the Work Package Plan Projection ) for the relevant Contract Year containing the details set out in paragraph 6 of Appendix 3 to this Schedule 3.1.

6.2 In preparing the Annual Asset Management Plan
(a) Infraco shall have regard to: (i) the plans and programmes of LUL, other Infracos, PFI Contractors and other third parties, as set out in the Master Projects Database;

(ii) the resources that LUL may reasonably be expected to have available to manage the operational consequences of its plans and proposals;

( iii ) the resources that LUL may reasonably be expected to have available to provide any assistance required by Infraco pursuant to clauses 13.2 and 13.3 of the Contract; and

(iv) any other input it may receive from LUL in the process; and (b) Infraco shall set out the steps which it will take with the objective of: (i) mitigating any adverse impact on LUL's secondary revenue to the extent reasonably practicable;

(ii) mitigating any hindrance, obstruction or interference with LUL's operation of the Underground Network or the exercise by LUL of any rights under and in accordance with the Contract or the other Transaction Documents to the extent reasonably practicable;

( iii ) enhancing LUL's ability to achieve its passenger information and marketing objectives in stations and trains to the extent reasonably practicable in the light of information supplied to Infraco by LUL in respect of those matters; and

(iv) mitigating any potential overall increase of LUL's Cost Base, including having regard to information provided to Infraco with regard to any such potential effect pursuant to clause 16.4B of the Contract.

6.3 The parties shall consult and confer together in relation to Infraco's proposed Annual Asset Management Plan for a reasonable period ( not less than six (6) weeks ) after its delivery to LUL by Infraco. These discussions shall have as their purpose promoting the achievement of the optimum work programme throughout the Underground Network and shall include, where appropriate, making revisions to the Annual Asset Management Plan. Within six (6) weeks thereafter, LUL may give notice to Infraco requesting any changes it wishes Infraco to make to its Annual Asset Management Plan or any elements thereof ( such notice shall be in writing and shall include an explanation of why such changes are proposed ).

6.4 If LUL requests changes to the Annual Asset Management Plan pursuant to paragraph 6.3: (a) Infraco may, but is under no obligation to, make those amendments to its Annual Asset Management Plan, which it shall in any event re-submit within six (6) weeks to LUL in final form for approval indicating changes made; and

(b) where Infraco does not make any changes requested by LUL, Infraco must write to LUL within six (6) weeks of the date on which Infraco received LUL's request for changes pursuant to paragraph 6.3 explaining why LUL's changes were not made and how the objectives of this Schedule 3.1 can be achieved in the absence of such changes.

6.5 The Annual Asset Management Plan shall not become final until approved by LUL. LUL may withhold such approval only to the extent that it has reasonable grounds for believing that it is inconsistent with Infraco's Asset Management Strategy or to the extent that Infraco fails to show that reasonable steps have been taken ( as applicable ): (x) to minimise the adverse effect on LUL of those matters referred to in paragraph 6.2(b)(i)(ii) or (iv); or (y) to enhance LUL's ability to meet its objectives in relation to paragraph 6.2(b)( iii ), provided that nothing in this paragraph 6.5 shall entitle LUL to withhold its approval to an Annual Asset Management Plan: (a) where ( having due regard for safety and the performance of the Services in accordance with Good Industry Practice and otherwise in accordance with Infraco's obligations under the Contract ) there is no reasonably practical alternative to the way in which Infraco proposes to implement the Annual Asset Management Plan;

(b) to the extent that an increase in LUL's Cost Base is reasonably attributable to any increase in the Services or change in the Services at the request of LUL being provided by Infraco, disregarding the matters set out in clause 16.4 of the Contract;

(c) to the extent that any increase in LUL's Cost Base was as a result of Infraco, exercising Good Industry Practice, adopting changes in technology or engineering practice;

(d) to the extent that any adverse effect on LUL could be reasonably avoided:
(i) by LUL taking reasonable steps to mitigate the consequences of the Annual Asset Management Plan without increasing its operating costs; or

(ii) by Infraco agreeing to reimburse LUL for the adverse consequences which it may suffer, or, as the case may be, for any increase in its operating costs provided that Infraco takes the reasonable steps referred to in the first paragraph of paragraph 6.5.

6.6 If LUL withholds approval of the Annual Asset Management Plan or approves it subject to conditions or amendments, Infraco may either: (a) accept the Annual Asset Management Plan with such conditions and amendments, in which case it shall adopt and comply with the Annual Asset Management Plan as amended as if such conditions and amendments had been proposed by Infraco itself; or

(b) dispute LUL's withholding of approval or its conditions or amendments on the basis that LUL has no reasonable grounds for believing that the plans and proposals set out in it are not consistent with Infraco's Asset Management Strategy. In the case of (b) the provisions of clause 49 ( Dispute Resolution ) of the Contract shall apply. Pending the resolution of any such dispute, the Annual Asset Management Plan shall be deemed to be approved save in relation to the matters in dispute, and the provisions of the last approved Annual Asset Management Plan shall, so far as is reasonably applicable, continue to apply in relation to such matters.

6.7 The parties shall work together during the first Contract Year to develop and agree the elements that are required to be contained in an Annual Asset Management Plan. Until the parties so agree, the Annual Asset Management Plan shall include, as a minimum, the elements referred to in Appendix 3 to this Schedule 3.1. Infraco and LUL shall agree any subsequent amendments to the elements that are required to be contained in an Annual Asset Management Plan following consideration at an engineering partnership meeting in accordance with paragraph 6.2(a) of Schedule 3.3 ( Assurance ).

6.8 The parties shall determine the basis and procedures for the submitting, consulting on and finalising each year's Annual Asset Management Plan in accordance with Schedule 5.1 ( Contract Management ), Schedule 5.2 ( Planning ) and this Schedule 3.1.

Milestones

6.9 If Infraco fails to meet a Milestone specified in its Annual Asset Management Plan, or it becomes clear that Infraco will not meet a Milestone, Infraco shall: (a) immediately give notice to LUL:
(i) when Infraco becomes aware that it will not meet a Milestone; or

(ii) when Infraco can foresee that it will not meet a Milestone; and
(b) if LUL so requires, provide LUL for approval full details of a revised programme for remedying as soon as possible its failure to meet the Milestone and a programme for ensuring that later milestones are met ( together being the Recovery Plan ).

6.10 Infraco shall then comply with the Recovery Plan in accordance with its terms.

6.11 If Infraco fails to meet the Recovery Plan and LUL can demonstrate that it is more likely than not that the Latest Implementation Date for that Specified Line Upgrade will not be met, then Infraco shall be in breach of the Contract and a Corrective Action Notice may be served in which case the provisions of clause 22 of the Contract ( other than clause 22.1(a)) shall apply.

Work Package Plans

7.1 Work Package Planning means the process which facilitates the dialogue between the parties about the planning, implementation and delivery of Infraco's detailed work packages. Work Package Plan means a plan prepared in accordance with this paragraph 7.

7.2 Infraco shall submit to LUL a Work Package Plan in relation to every work package: (a) which may impact the operations or activities of LUL, a PFI Contractor or other party to a Third Party Contract, or which may reduce the services or facilities available to Customers;

(b) where Infraco seeks assistance from LUL pursuant to clause 13 of the Contract;

(c) where LUL may be requested to express an opinion on any matter under clause 13 of the Contract;

(d) which may present the opportunity for cost saving proposals in accordance with clause 16.2 of the Contract;

(e) which may present the opportunity for LUL to enhance the value delivered to it by incorporation of assets or facilities that may be more economically incorporated along with the works concerned than on a stand alone basis;

(f) which involve the Delivery into Service of new Assets and Facilities; and/or

(g) which comprises works required to comply with obligations pursuant to Appendices 7, 8, 14, 15, 16 or 17 of Schedule 2.1.

7.3 The contents of each Work Package Plan shall be at the discretion of Infraco save that a Work Package Plan shall comply with the provisions of Appendix 4 of this Schedule 3.1 and shall provide LUL with such level of detail on the nature and timing of its proposals as LUL reasonably requires, having regard to the scope and stage of development of the relevant work package.

7.4 Infraco shall update each Work Package Plan as appropriate having regard to the scope and stage of development of the work package.

7.5 In preparing a Work Package Plan:

(a) Infraco shall have regard to: (i) the plans and programmes of LUL, other Infracos, PFI Contractors and other third parties, as set out in the Master Projects Database;

(ii) the resources that LUL may reasonably be expected to have available to manage the operational consequences of its plans and proposals;

( iii ) the resources that LUL may reasonably be expected to have available to provide any assistance required by Infraco pursuant to clauses 13.2 and 13.3 of the Contract; and

(iv) any other input it may receive from LUL in the process; and (b) Infraco shall set out the steps which it will take with the objective of: (i) mitigating any adverse impact on LUL's secondary revenue to the extent reasonably practicable;

(ii) mitigating any hindrance, obstruction or interference with LUL's operation of the Underground Network or the exercise by LUL of any rights under and in accordance with the Contract or the other Transaction Documents to the extent reasonably practicable;

( iii ) enhancing LUL's ability to achieve its passenger information and marketing objectives in stations and trains to the extent reasonably practicable in the light of information supplied to Infraco by LUL in respect of those matters; and

(iv) mitigating any potential overall increase of LUL's Cost Base, including having regard to information provided to Infraco with regard to any such potential effect pursuant to clause 16.4B of the Contract.

7.6

(a) Infraco shall prepare and submit to LUL once every three (3) months an updated version of the Work Package Plan Projection that was contained in its Annual Asset Management Plan pursuant to paragraph 6.1(e).

(b) In line with the Work Package Plan Projection ( as updated in accordance with paragraph 7.6(a) above ), Infraco shall deliver to LUL the Work Package Plans ( or any updates of Work Package Plans previously submitted ( Work Package Plan Update ) ) as they fall due in accordance with such Work Package Plan Projection. If Infraco becomes aware that the dates on which it intends to submit a Work Package Plan ( or Work Package Plan Update ) may change for any reason, it shall as soon as reasonably practicable inform LUL.

(c) The parties shall consult and confer together at the four-weekly contract management meetings ( convened in accordance with paragraph 2.3 of Schedule 5.1 ( Contract Management ) ) in relation to each of Infraco's Work Package Plans ( or Work Package Plan Update ) that Infraco has delivered to LUL. The purpose of these discussions shall be to further the objective set out at paragraph 1(e) above but shall not include any proposals to revise the elements required to be contained in Work Package Plans referred to in Appendix 4 to this Schedule 3.1 which shall be considered at an engineering partnership meeting pursuant to paragraph 7.10 below.

(d) Within ten (10) Business Days of the delivery of a Work Package Plan ( or Work Package Plan Update ) to LUL, LUL shall make reasonable endeavours to provide written notice to Infraco if the Work Package Plan ( or Work Package Plan Update ) in question does not contain sufficient information for LUL to give the approvals required by it pursuant to this clause 7.6.

(e) On a date not later than six (6) weeks after the delivery of a Work Package Plan ( or Work Package Plan Update ) to LUL or, where six (6) weeks is not reasonably practicable ( taking into account the level of detail and the size, scope and stage of development of the work package ) such later date as the parties shall agree is reasonable at the four weekly contract management meeting, LUL shall issue to Infraco the relevant approval required by the Work Package Plan or shall give Infraco written notice that such approval will not be forthcoming.

(f) LUL shall assist Infraco in obtaining any approvals relating to Work Package Plans from third parties including HMRI, National Network Parties and the London Fire Emergency Planning Authority, but shall incur no liability if such approvals are not forthcoming.

(g) If LUL does not give the relevant approval required by a Work Package Plan ( or Work Package Plan Update ) it shall set out the reasons why such approval is not given ( which shall only be for a reason specified in paragraph 7.8 below ) and shall also set out any changes LUL considers Infraco needs to make to the Work Package Plan ( or Work Package Plan Update ) or any elements thereof so that the Work Package Plan ( or Work Package Plan Update ) will meet the requirements of paragraph 7.8 below.

7.6A Where, in relation to: (a) any Work Package Plan ( or Work Package Plan Update ) for Specified Line Upgrades; or

(b) any other Work Package Plan ( or Work Package Plan Update ) where delay in agreeing any approval dates will result in:
(i) in relation to a single delay, a loss of revenue to Infraco of £200,000 per Payment Period; or

(ii) in relation to a single delay or series of delays in relation to the same Work Package Plan ( or Work Package Plan Update ) have an aggregate loss of revenue to Infraco of £500,000, Infraco gives reasonable notice to LUL of the date by which it requires approval of such Work Package Plan ( or Work Package Plan Update ) and the parties are unable to agree a reasonable date by which LUL shall give its approval in accordance with paragraph 7.6(e) above, such disagreement shall be referred for resolution in accordance with clauses 4.15 to 4.27 of the Dispute Resolution Agreement ( Accelerated Adjudication ).

7.7 If LUL requests changes to the Work Package Plan ( or Work Package Plan Update ) pursuant to paragraph 7.6(g): (a) Infraco may, but is under no obligation to, make those amendments to its Work Package Plan( or Work Package Plan Update ), which it shall in any event re-submit within two (2) weeks to LUL in final form for approval indicating changes made; and

(b) where Infraco does not make any changes requested by LUL, Infraco must write to LUL within two (2) weeks of the date on which Infraco received LUL's request for changes pursuant to paragraph 7.6(g) explaining why LUL's changes were not made and how the objectives of this Schedule 3.1 can be achieved in the absence of such changes.

7.8 In relation to the matters set out in paragraph 7.5, a Work Package Plan ( or any parts thereof ) shall not become final until approved by LUL. LUL may withhold such approval only:

(a) to the extent that LUL has reasonable grounds for believing that the methods and/or means of fulfilling Infraco's obligations set out in the Work Package Plan do not fulfil Infraco's obligations in relation to Appendices 7, 8, 14, 15, 16 and 17 of Schedule 2.1; and/or

(b) to the extent that Infraco fails to show that reasonable steps have been taken ( as applicable ): (x) to minimise the adverse effect on LUL of those matters referred to in paragraph 7.5(b)(i)(ii) or (iv); or (y) to enhance LUL's ability to meet its objectives in relation to paragraph 7.5(b)( iii ), provided that nothing in this paragraph 7.8(b) shall entitle LUL to withhold its approval to a Work Package Plan:
(i) where ( having due regard for safety and the performance of the Services in accordance with Good Industry Practice and otherwise in accordance with Infraco's obligations under the Contract ) there is no reasonably practical alternative to the way in which Infraco proposes to implement the Work Package Plan;

(ii) to the extent that an increase in LUL's Cost Base is reasonably attributable to any increase in the Services or change in the Services at the request of LUL being provided by Infraco, disregarding the matters set out in clause 16.4;

( iii ) to the extent that any increase in LUL's Cost Base was as a result of Infraco, exercising Good Industry Practice, adopting changes in technology or engineering practice; and

(iv) to the extent that any adverse effect on LUL could be reasonably avoided:
(A)by LUL taking reasonable steps to mitigate the consequences of the Work Package Plan without increasing its operating costs; or

(B) by Infraco agreeing to reimburse LUL for the adverse consequences which it may suffer, or, as the case may be, for any increase in its operating costs, provided that Infraco takes the reasonable steps referred to in this paragraph 7.8(b); and

(c) to the extent that a Work Package Plan is not complete but having regard to the level of detail and the size, scope and stage of development of the work package.

7.9 If LUL withholds approval of a Work Package Plan ( or any parts thereof ) or approves it subject to conditions or amendments, Infraco may either: (a) accept the Work Package Plan with such conditions and amendments, in which case, in relation to those elements specified in paragraph 7.5, it shall adopt and comply with the Work Package Plan as amended as if such conditions and amendments had been proposed by Infraco itself; or

(b) dispute LUL's withholding of approval or its conditions or amendments on the basis that LUL does not have reasonable grounds for believing that any of the situations in paragraphs 7.8(a) or (b) subsist. In the case of (b) the provisions of clause 49 ( Dispute Resolution ) of the Contract shall apply. Pending the resolution of any such dispute, Infraco shall comply with the undisputed elements of Work Package Plan and may comply with any disputed elements of the Work Package.

7.9A (a)Where LUL fails to approve or give notice to Infraco that it is withholding its approval by the date determined in accordance with paragraph 7.6(e) and the response from LUL was on the critical path of the work forming the Work Package Plan in question; or

(b) LUL withholds approval for any reason other than those specified in paragraph 7.8, this shall be inter alia a Delay Event and clause 20 ( Delays ) of the Contract shall apply accordingly.

7.10 The parties shall work together during the first Contract Year to develop and agree the elements that are required to be contained in a Work Package Plan. Until the parties so agree, a Work Package Plan shall include, as a minimum, the elements referred to in Appendix 4 to this Schedule 3.1. Infraco and LUL shall agree any subsequent amendments to the elements that are required to be contained in Work Package Plans following consideration at an engineering partnership meeting in accordance with paragraph 6.2(a) of Schedule 3.3 ( Assurance ).

Changes to Plans and Programmes

8 Infraco shall notify LUL in circumstances where Infraco proposes to deviate from or make any material changes to the plans and programmes set out in its Annual Asset Management Plan or any Work Package Plan and shall consult with LUL in relation to the consequences for the parties of such deviation or change taking account of LUL's feedback in such process.

Access and Safety

9.1 The parties acknowledge that, to the extent that any aspect of planning of works requires the booking of access by Infraco, Infraco shall comply with the terms of the Access Code in relation to those aspects.

9.2 The parties acknowledge that the provisions of this Schedule 3.1 are without prejudice and subject to the provisions of the Safety Agreement and that Infraco must comply with the terms of the Contract including, inter alia, those relating to access.

9.3 The parties acknowledge that nothing in this Schedule 3.1 ( including, without limitation, any formal or informal approval of any plan or programme ) shall restrict LUL's right to exercise any of its rights under the Transaction Documents including, for the avoidance of doubt, its rights as Infrastructure Controller under the Safety Case.

APPENDIX 1 - Joint Working Groups

Asset Performance Review Meetings

1.1 Infraco shall chair a meeting not less than once each month in order to review asset performance for each of the Asset Categories and shall invite relevant LUL engineers, and any other invitees as appropriate, ( Asset Performance Review Meetings ) with reasonable advance notice of the meeting and reasonable advance copies of the agenda and papers.

1.2 The purpose of Asset Performance Review Meetings is to review: (a) performance, condition and plans for each group of Assets;

(b) the progress of Infraco towards Specified Line Upgrade Milestones;

(c) at least once each year, technology strategies;

(d) at least once each year, the contribution of the Assets to the delivery of the Services;

(e) annual asset condition assessments and certificates;

(f) plans and progress against key safety and environmental risks;

(g) proposed changes to Asset specific Standards;

(h) temporary approved non-compliances; and

(i) during the first Review Period, the progress in identifying the condition category of Grey Assets.

System Knowledge Development Forums

2.1 LUL shall chair a meeting not less than once every six (6) months in order to review development of knowledge in Assets at a system level ( in each of the areas of Trains ( including the Rolling Stock, signalling and control systems Asset Categories ), Stations ( including the Stations, lifts and escalators, communications and other associated stations equipment Asset Categories ), Infrastructure ( including the civil infrastructure, track and associated power equipment Asset Categories ) and Information ) and shall invite relevant Infraco personnel and any other invitees as appropriate ( System Knowledge Development Forums ) with reasonable advance notice of the meeting and reasonable advance copies of the agenda and papers.

2.2 The purpose of System Knowledge Development Forums within their respective areas is to: (a) develop the understanding of whole-life cycle requirements and predictive modelling of the relationship between condition and performance;

(b) further understand the contribution of Assets to the achievement of the Services;

(c) promote and exchange ideas on joint or collaborative research and technology development initiatives;

(d) consider the case for improving and/or removing Condition Benchmarks, Residual Life Benchmarks and performance monitoring from the assurance element of the Asset Management Regime; and

(e) contribute to LUL's technology vision, strategies and operational philosophies.

APPENDIX 2 - Asset Management Strategy
The Asset Management Strategy shall cover:

Policies and Strategies

1. A general statement of Infraco's proposed policies and mechanisms for complying with the obligations set out in paragraph 2 of Schedule 3.1 and for achieving the objectives set out in paragraph 1 of Schedule 3.1.

2. Infraco's policies and strategies relating to Assets showing, for each main Asset Category: (a) approach to asset management and to meeting the objectives of the Asset Management Regime;

(b) upgrade, renewal and maintenance philosophies; and

(c) short, medium and long term technology strategies to show that Infraco is taking account of Good Industry Practice and technology opportunities and also the need to phase out outmoded technologies.

Management Processes

3. Infraco's processes and methodologies in relation to: (a) compliance, assurance and audit;

(b) condition monitoring, assessment and targeting;

(c) development, maintenance, control and audit of Standards;

(d) Information and knowledge management;

(e) Asset catalogue change control arrangements; and

(f) technology management, research and development.

Asset Catalogue

4. Infraco's plans and proposals for developing ( so that it is in place within four (4) years of the Transfer Date as required by paragraph 5.4A of Schedule 3.1 ), and thereafter, maintaining, controlling and keeping current a comprehensive register of all Infraco Assets, compliant with the requirements of the applicable Information Standards and showing: (a) lists of Assets grouped by type;

(b) Modern Equivalent Asset Value of each Asset;

(c) status of ownership of each type of Asset ( including, in the case of Alien Assets, the Owner Infraco and the User Infraco );

(d) date upon which the Asset was brought into service;

(e) operational status of the Assets; and

(f) the system classification of each Asset. Such asset catalogue shall be compiled and maintained to such level of detail and accuracy that would be compiled and maintained by an efficient and economic Infraco acting in accordance with Good Industry Practice.

APPENDIX 3 - Annual Asset Management Plan

Commentary on Asset Management Regime and Asset Management Strategy

1. The Annual Asset Management Plan shall include Infraco's assessment of the continued suitability of its Asset Management Regime, such report to include a commentary on all the elements of Infraco's Asset Management Strategy, and to the extent not already covered by the above: (a) an assessment of progress against Condition Benchmarks and Residual Life Benchmarks, including a plan for the management of concerns identified in the annual asset condition assessment ( Category 1 Standard E1501 );

(b) an assessment of compliance with the Residual Property Maintenance Standard;

(c) information on, and an assessment of, how asset knowledge is improving, and how this has developed the approach to future asset management;

(d) any surveys or studies in relation to Assets proposed;

(e) research and development plans in relation to Assets; and

(f) to the extent that Infraco's asset management arrangements rely on the activities of sub-contractors, that those activities are consistent with Infraco's Asset Management Regime and are managed by Controlled Processes.

Commentary on previous Annual Asset Management Plan

2. Infraco shall provide: (a) a review of activities undertaken and objectives achieved pursuant to the previous Annual Asset Management Plan and otherwise including an explanation of any variances between what was expected to be achieved from the previous Annual Asset Management Plan and what was actually undertaken and achieved; and

(b) an explanation of any changes to, additions to or deletions from the previous year's Annual Asset Management Plan and the reasons for them.

Future Plans and Programmes

3. Infraco shall provide plans and programmes detailing: (a) asset life cycle strategic plan;

(b) summary maintenance and renewal plans by type of Asset and also, as appropriate, by Line with relevant costs, targets and key priorities for action ( including how Infraco intends to deal with Grey Assets );

(c) plans for addressing any concerns raised by the annual asset condition assessment;

(d) the impact on the plans referred to above of major works programmes, including line upgrades and major station enhancement projects and Infraco's strategy for dealing with such impacts;

(e) in relation to Specified Line Upgrades, suitable project Milestones for each of the Specified Line Upgrades showing a projected date by which each Milestone is expected to be achieved; and

(f) the manner in which it will have regard to the matters referred to in paragraph 6.2(a) of Schedule 3.1 and the steps it will take to meet the objectives in paragraph 6.2(b) of Schedule 3.1. In describing future plans and programmes, Infraco shall demonstrate that these are consistent with its Asset Management Regime.

Co-ordination with LUL

4. Infraco shall provide LUL with all relevant information which it reasonably requires for the purposes of co-ordinating its activities with Infraco's proposed plans and programmes as set out in its Annual Asset Management Plan. Such information should enable LUL to: (a) assess the operational and other consequences of Infraco's proposed works, and establish the appropriate response;

(b) establish any operational constraints on Infraco's proposed works;

(c) establish what assistance ( if any ) Infraco requires of LUL pursuant to clauses 13.2 and 13.3 of the Contract; and

(d) establish any constraints on Infraco's proposed works which may arise from the availability of LUL resources.

Estate Plan

5. In describing its plans and programmes, Infraco shall identify where appropriate any related plans or proposals contained in the LUL Estate Plan.

Work Package Plan Projection

6. Infraco shall submit to LUL a Work Package Plan Projection which shall show a projection of all approvals required for Work Package Plans for the following year, the dates on which Infraco intends to submit such Work Package Plans ( or any updates of Work Package Plans previously submitted ) for such approvals and the relevant dates on which Infraco expects LUL to give such approvals.

Joint Working

7. Infraco shall demonstrate its arrangements for: (a) sharing knowledge information proposals; and

(b) joint working on research, with LUL and the other Infracos.

APPENDIX 4 - Work Package Plan

1 A Work Package Plan shall, in relation to each work package: (a) identify its objectives including the performance requirements of Schedule 2.1 which it is intended to deliver and the manner in which Infraco intends to fulfil those objectives;

(b) in respect of Work Package Plans relating to Infraco's obligations set out in the Appendices 7, 8, 14, 15, 16 and 17 of Schedule 2.1, identify the methods and/or means of fulfilling those obligations;

(c) identify the manner in which Infraco will have regard to the matters referred to in paragraph 7.5(a) of Schedule 3.1 and the steps Infraco will take to meet the objectives in paragraph 7.5(b) of Schedule 3.1;

(d) identify the nature of any assistance which Infraco intends to seek from LUL pursuant to clause 13 of the Contract;

(e) identify any matters on which LUL may be requested to express an opinion under clause 13 of the Contract;

(f) identify the manner in which Infraco intends to satisfy the Assurance requirements of Schedule 3.3 to the Contract;

(g) identify the manner in which Infraco intends to satisfy the training requirements of Schedule 5.5 to the Contract;

(h) identify the manner in which Infraco intends to satisfy the requirements of paragraph 6 of the Safety Agreement in relation to the CDM Regulations;

(i) identify the manner in which Infraco intends to meet the requirements of Appendix 9 of Schedule 2.1 to the Contract in relation to the Delivery into Service of new and enhanced Facilities, including, where applicable, listing the requirements of LUL which have been previously agreed by Infraco including any acceptance criteria in relation to the works to be carried out under the Work Package Plan;

(j) identify the manner in which Infraco intends to satisfy the requirements of paragraph 7 of the Safety Agreement in relation to the WPE Regulations;

(k) identify related Access Bookings;

(l) identify any associated applications for planning permissions, building consents or conservation area consents which Infraco intends to make; and

(m) where applicable, identify its proposals pursuant to the requirements of paragraph 1.9 of Appendix 15 of Schedule 2.1 to the Contract.

APPENDIX 5 - Specified Line Upgrade Milestones

Specified Line Upgrade Milestones Appendix 5

PPP Contracts

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