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Franchise Agreement


Docklands Light Railway Limited
and

Serco Limited




relating to the Docklands Light Railway

7 March 2006
                                                          CONTENTS

CLAUSE                                                                                                                       PAGE

1.       DEFINITIONS/INTERPRETATION............................................................................... 2
         1.1        Definitions ................................................................................................ 2
         1.2        Interpretation .......................................................................................... 26
         1.3        Operations .............................................................................................. 26
2.       CONSENTS.......................................................................................................... 26
         2.1        Consents in writing................................................................................... 26
         2.2        Consents reasonably withheld or delayed..................................................... 26
PART II .......................................................................................................................... 26
3.       GRANT OF THE FRANCHISE ................................................................................... 26
         3.1        Appointment of Franchisee ........................................................................ 26
         3.2        Franchisee's general obligations ................................................................. 26
         3.3        Franchisee's due diligence ......................................................................... 26
         3.4        Disclosed Data......................................................................................... 26
         3.5        No liability for review and approval ............................................................. 26
         3.6        DLR Limited's general obligations ............................................................... 26
         3.7        Interim Period ......................................................................................... 26
4.       FRANCHISE COMMENCEMENT ................................................................................ 26
         4.1        Entry into Effect....................................................................................... 26
         4.2        Conditions Precedent ................................................................................ 26
         4.3        Certificate of Franchise Commencement ...................................................... 26
         4.4        Consequences of non-fulfilment.................................................................. 26
5.       DURATION OF FRANCHISE .................................................................................... 26
         5.1        Termination on expiry of Franchise Term ..................................................... 26
         5.2        Extension of the Franchise Term................................................................. 26
         5.3        Financial arrangements ............................................................................. 26
6.       REPRESENTATIVES .............................................................................................. 26
7.       FRANCHISEE'S WARRANTIES/COVENANTS .............................................................. 26
         7.1        Franchisee's warranties ............................................................................. 26
         7.2        Updating of warranties.............................................................................. 26
         7.3        Exceptions .............................................................................................. 26
         7.4        Franchisee's Covenants ............................................................................. 26
8.       DLR LIMITED'S WARRANTIES................................................................................. 26
PART III ......................................................................................................................... 26
THE FRANCHISE .............................................................................................................. 26
9.       PASSENGER SERVICES ......................................................................................... 26
         9.1        Provision of Passenger Services.................................................................. 26
         9.2        Base Service Requirements ....................................................................... 26
         9.3        Operations Functions ................................................................................ 26
         9.4        Operations Support Functions .................................................................... 26
         9.5        Preparation of Annual Service Plan ............................................................. 26
         9.6        Service Quality Standards ......................................................................... 26
         9.7        Extensions .............................................................................................. 26
         9.8        Operating Rules/Procedures etc.................................................................. 26
         9.9        Base Services Changes ............................................................................. 26
10.      TICKETS AND TICKETING SCHEMES ....................................................................... 26
         10.1       Tickets ................................................................................................... 26
         10.2       Ticketing Schemes ................................................................................... 26
11.      MAINTENANCE OF FRANCHISE ASSETS ................................................................... 26
         11.1       General obligation to maintain ................................................................... 26
         11.2       Scope of Franchisee's maintenance obligations ............................................. 26
         11.3       Capital Replacement ................................................................................. 26
         11.4       Asset Management Regime, Asset Management Strategy and Maintenance
                    Procedures .............................................................................................. 26
         11.5       Preparation of Annual Maintenance Plan ...................................................... 26
      11.6   Consultation on Annual Maintenance Plan .................................................... 26
      11.7   Required revisions.................................................................................... 26
      11.8   Annual Maintenance Plan to take effect ....................................................... 26
      11.9   Asset Management System........................................................................ 26
      11.10 Audits .................................................................................................... 26
      11.11 Maintenance Manager ............................................................................... 26
      11.12 Maintenance Functions.............................................................................. 26
      11.13 Maintenance of Stocks .............................................................................. 26
      11.14 Mandated Maintenance Works .................................................................... 26
      11.15 Inspection of Structures ............................................................................ 26
      11.16 Discrepancies in Maintenance Documents .................................................... 26
      11.17 DLR Maintenance Standards ...................................................................... 26
12.   CAPITAL PROJECTS AND COMMITTED OBLIGATIONS................................................. 26
      12.1   DLR Project Requirements ......................................................................... 26
      12.2   Preparation of Annual Capital Projects Plan .................................................. 26
      12.3   Contents of Annual Capital Projects Plan...................................................... 26
      12.4   Consultation on Annual Capital Projects Plan ................................................ 26
      12.5   Required revisions.................................................................................... 26
      12.6   Annual Capital Projects Plan to take effect ................................................... 26
      12.7   Compliance with Annual Capital Projects Plan ............................................... 26
      12.8   Extant DLR Projects.................................................................................. 26
      12.9   Mandated Franchisee Projects .................................................................... 26
      12.10 Possessions ............................................................................................. 26
      12.11 Resources ............................................................................................... 26
      12.12 DLR Works Changes ................................................................................. 26
      12.13 Additional Projects ................................................................................... 26
      12.14 Committed Obligations.............................................................................. 26
13.   MARKETING ........................................................................................................ 26
      13.1   Responsibility for marketing ...................................................................... 26
      13.2   Preparation of Annual Marketing Plan .......................................................... 26
      13.3   Consultation on Annual Marketing Plan ........................................................ 26
      13.4   Required revisions.................................................................................... 26
      13.5   Annual Marketing Plan to take effect ........................................................... 26
      13.6   Net revenue maximisation ......................................................................... 26
      13.7   DLR Limited's right to object ...................................................................... 26
      13.8   Use of DLR Limited's logo/corporate image .................................................. 26
      13.9   Pre-Handback Period ................................................................................ 26
      13.10 Description of Railway............................................................................... 26
      13.11 DLR Limited's livery .................................................................................. 26
      13.12 Rights to new livery.................................................................................. 26
      13.13 Promotional literature ............................................................................... 26
14.   PROPERTY MANAGEMENT SERVICES, PERMITTED COMMERCIAL ACTIVITIES AND
      PROPERTY MATTERS............................................................................................. 26
      14.1   Property Management Services .................................................................. 26
      14.2   Permitted Commercial Activities ................................................................. 26
      14.3   Leases.................................................................................................... 26
15.   PERSONNEL ........................................................................................................ 26
      15.1   Franchisee's responsibility ......................................................................... 26
      15.2   Qualified personnel................................................................................... 26
      15.3   Safety critical work................................................................................... 26
      15.4   Training .................................................................................................. 26
      15.5   Key Posts................................................................................................ 26
16.   PENSIONS .......................................................................................................... 26
      16.1   Participation in the DLR Pension Scheme ..................................................... 26
      16.2   New Employees ....................................................................................... 26
      16.3   Variations to the DLR Pension Scheme ........................................................ 26
      16.4   Franchisee's nominee ............................................................................... 26
        16.5       Pensions Indemnity .................................................................................. 26
        16.6       Consultation ............................................................................................ 26
17.     AGENCY AUTHORITY/FUNCTIONS ........................................................................... 26
        17.1       No holding out ......................................................................................... 26
        17.2       Authorised Functions ................................................................................ 26
        17.3       DLR Contracts/Undertakings ...................................................................... 26
        17.4       Indemnity by Franchisee ........................................................................... 26
18.     QUALITY ASSURANCE ........................................................................................... 26
        18.1       Management of quality assurance............................................................... 26
        18.2       Effectiveness of contractors' quality systems ................................................ 26
        18.3       Quality Procedures ................................................................................... 26
19.     SAFETY .............................................................................................................. 26
        19.1       Safety Management.................................................................................. 26
        19.2       Applicable Requirements ........................................................................... 26
        19.3       DLR Railway Safety Case........................................................................... 26
        19.4       Safety Regime ......................................................................................... 26
20.     ENVIRONMENT .................................................................................................... 26
        20.1       Noise...................................................................................................... 26
        20.2       Pollution ................................................................................................. 26
        20.3       Environmental Law ................................................................................... 26
21.     OTHER REGULATORY ............................................................................................ 26
        21.1       Franchisee to obtain consents, licences etc. ................................................. 26
        21.2       Franchisee's obligation to give notices, pay fees, etc. .................................... 26
        21.3       Prevention of nuisance etc......................................................................... 26
22.     CHANGE PROCEDURES ......................................................................................... 26
        22.1       Franchisee to comply with Change Procedures.............................................. 26
        22.2       Implementation ....................................................................................... 26
        22.3       Franchisee's safety objection ..................................................................... 26
        22.4       Provision of copies ................................................................................... 26
23.     PROVISION OF INFORMATION ............................................................................... 26
        23.1       Franchisee reporting obligations ................................................................. 26
        23.2       Provision of Accounts................................................................................ 26
        23.3       Provision of registered details .................................................................... 26
        23.4       Inspection of books and records ................................................................. 26
        23.5       Access to third parties and employees ......................................................... 26
        23.6       Right of audit .......................................................................................... 26
        23.7       Performance reviews ................................................................................ 26
        23.8       Comptroller and Auditor General ................................................................ 26
24.     MONITORING OF PERFORMANCE ............................................................................ 26
        24.1       Remedial action ....................................................................................... 26
        24.2       Warning Notices....................................................................................... 26
        24.3       Increased monitoring................................................................................ 26
PART IV.......................................................................................................................... 26
FINANCE ........................................................................................................................ 26
25.     FEES AND PAYMENTS ........................................................................................... 26
        25.1       Fees....................................................................................................... 26
        25.2       Adjustment Payments ............................................................................... 26
        25.3       Fee Additions or Fee Deductions ................................................................. 26
        25.4       CSI Fee Additions or CSI Fee Deductions ..................................................... 26
        25.5       Resource Payments .................................................................................. 26
        25.6       Project Payments ..................................................................................... 26
        25.7       Variation Payments .................................................................................. 26
        25.8       Ancillary Commercial Revenue ................................................................... 26
        25.9       Capital Replacement Contribution ............................................................... 26
        25.10 Service Change Adjustment ....................................................................... 26
26.     ADMINISTRATION OF PAYMENTS............................................................................ 26
        26.1       Delivery of certificate................................................................................ 26
      26.2   Delivery of statement ............................................................................... 26
      26.3   Estimates by DLR Limited .......................................................................... 26
      26.4   Approval of calculations ............................................................................ 26
      26.5   Invoicing for Franchise Payments ............................................................... 26
      26.6   Method of payment .................................................................................. 26
      26.7   Time for payment and interest ................................................................... 26
      26.8   Set off .................................................................................................... 26
      26.9   Ticket Sales Revenue................................................................................ 26
27.   DISPUTED PAYMENTS ........................................................................................... 26
      27.1   Disputes ................................................................................................. 26
      27.2   Payment following Dispute resolution .......................................................... 26
28.   FINANCIAL COVENANTS........................................................................................ 26
      28.1   Performance Bonds and Guarantee ............................................................. 26
      28.2   Finance Agreements ................................................................................. 26
      28.3   Other Financial Covenants ......................................................................... 26
29.   FRANCHISEE INDEMNITIES ................................................................................... 26
      29.1   Indemnity by Franchisee ........................................................................... 26
      29.2   Criminal Liability ...................................................................................... 26
      29.3   Savings .................................................................................................. 26
      29.4   Conduct of Claims .................................................................................... 26
      29.5   Mitigation................................................................................................ 26
      29.6   Environmental and Industrial Disease Indemnities Covenant .......................... 26
      29.7   Limitations on Franchisee Environmental and Industrial Disease Indemnities
             Covenant ................................................................................................ 26
      29.8   Remedial Action ....................................................................................... 26
      29.9   Prior Receipt............................................................................................ 26
      29.10 Double Claims ......................................................................................... 26
      29.11 Time of Payment...................................................................................... 26
30.   DLR LIMITED INDEMNITY AND DISCLAIMER............................................................. 26
      30.1   DLR Environmental and Industrial Disease Indemnities Covenant .................... 26
      30.2   Limitations on DLR Environmental and Industrial Disease Indemnities Covenant 26
      30.3   Conduct of Claims under Clause 30.1 .......................................................... 26
      30.4   Mitigation................................................................................................ 26
      30.5   Franchisee Environmental Covenants .......................................................... 26
      30.6   Remedial Action ....................................................................................... 26
      30.7   Hazardous Matter..................................................................................... 26
      30.8   Disclaimer............................................................................................... 26
      30.9   Agreement on Liabilities ............................................................................ 26
31.   INSURANCE ........................................................................................................ 26
      31.1   Insurance obligations................................................................................ 26
      31.2   DLR Limited's insurance – additional property and interests............................ 26
      31.3   Terms of insurances to be approved............................................................ 26
      31.4   Insurances to be in joint names and maintenance of insurance ....................... 26
      31.5   Evidence of Insurance............................................................................... 26
      31.6   Compliance with Requirements of Insurers................................................... 26
      31.7   Right to insure......................................................................................... 26
      31.8   Notification of claims - Franchisee to DLR Limited ......................................... 26
      31.9   Insurance claims - presentation and mutual assistance .................................. 26
      31.10 Application of proceeds ............................................................................. 26
      31.11 Reinstatement ......................................................................................... 26
      31.12 Uninsurable Risks..................................................................................... 26
      31.13 Proposal for dealing with Uninsurable Risks.................................................. 26
      31.14 Deductibles ............................................................................................. 26
      31.15 Change in Cost of Insurance ...................................................................... 26
      31.16 Saving provision ...................................................................................... 26
      31.17 DLR Limited Indemnity ............................................................................. 26
32.   FUNDING THE FRANCHISE .................................................................................... 26
         32.1       Responsibility of Franchisee ....................................................................... 26
         32.2       No responsibility for DLR Limited ................................................................ 26
         32.3       Changes to Funding Agreements ................................................................ 26
PART V ........................................................................................................................... 26
FORCE MAJEURE/RELIEF EVENTS/TERMINATION .................................................................. 26
33.      FORCE MAJEURE .................................................................................................. 26
         33.1       Meaning of Force Majeure.......................................................................... 26
         33.2       Notification of Force Majeure event ............................................................. 26
         33.3       Notice of cessation of Force Majeure event................................................... 26
         33.4       Disputing notice of Force Majeure ............................................................... 26
         33.5       Relief from liability ................................................................................... 26
         33.6       Payments................................................................................................ 26
         33.7       Rectification of damage to Franchise Assets ................................................. 26
         33.8       Termination for Force Majeure ................................................................... 26
         33.9       Extension of Franchise Term ...................................................................... 26
34.      RELIEF EVENTS ................................................................................................... 26
         34.1       Occurrence of a Relief Event ...................................................................... 26
         34.2       Requirements for Obtaining Relief............................................................... 26
         34.3       Relief ..................................................................................................... 26
35.      FRANCHISEE DEFAULT.......................................................................................... 26
         35.1       Franchisee Default ................................................................................... 26
         35.2       Notification of Franchisee Default ............................................................... 26
         35.3       Remedies................................................................................................ 26
         35.4       Suspension of payments ........................................................................... 26
         35.5       Suspension of performance........................................................................ 26
         35.6       Retendering ............................................................................................ 26
         35.7       Savings .................................................................................................. 26
36.      DLR LIMITED DEFAULT ......................................................................................... 26
         36.1       DLR Limited Default.................................................................................. 26
         36.2       Termination by Franchisee......................................................................... 26
37.      NON-DEFAULT TERMINATION ................................................................................ 26
         37.1       Expiry of Franchise Term........................................................................... 26
         37.2       Termination for Force Majeure ................................................................... 26
         37.3       Termination for Change of Law................................................................... 26
         37.4       Termination for expropriation..................................................................... 26
         37.5       Termination following Dispute .................................................................... 26
         37.6       Termination following Uninsurability............................................................ 26
38.      EFFECT OF TERMINATION ..................................................................................... 26
         38.1       Step-in rights .......................................................................................... 26
         38.2       Financing Agreements............................................................................... 26
         38.3       Savings .................................................................................................. 26
39.      COMPENSATION ON TERMINATION......................................................................... 26
         39.1       Termination Payment................................................................................ 26
         39.2       Set off .................................................................................................... 26
         39.3       Limitation of Liability ................................................................................ 26
PART VI.......................................................................................................................... 26
REQUIREMENTS FOR HANDBACK ....................................................................................... 26
40.      HANDBACK OF FRANCHISE.................................................................................... 26
         40.1       Franchisee acknowledgement..................................................................... 26
         40.2       Handback Procedures ............................................................................... 26
41.      MAINTENANCE OF FRANCHISE ............................................................................... 26
         41.1       Maintenance as going concern.................................................................... 26
         41.2       Handback information ............................................................................... 26
         41.3       Preparation for retendering........................................................................ 26
         41.4       Non-frustration of transfer......................................................................... 26
         41.5       Arrangements with Affiliates ...................................................................... 26
         41.6       Pre-Handback Period ................................................................................ 26
42.     RESTRICTIONS ON ACTIVITIES.............................................................................. 26
43.     KEY CONTRACTS.................................................................................................. 26
        43.1       Direct Agreement ..................................................................................... 26
        43.2       Amendment/termination ........................................................................... 26
        43.3       Designation ............................................................................................. 26
        43.4       Notification of categories of Key Contracts ................................................... 26
        43.5       Designation of existing Contracts................................................................ 26
        43.6       Emergencies............................................................................................ 26
44.     SUB-CONTRACTING ............................................................................................. 26
        44.1       Permitted sub-contracting ......................................................................... 26
        44.2       Franchisee to remain responsible................................................................ 26
        44.3       Competitive Tenders................................................................................. 26
        44.4       Sub-contracting requirements .................................................................... 26
        44.5       Safety and Maintenance ............................................................................ 26
45.     FRANCHISE EMPLOYEES ....................................................................................... 26
        45.1       Variation of terms .................................................................................... 26
        45.2       Terms of employment of new employees ..................................................... 26
        45.3       Changes in numbers and total cost of employees .......................................... 26
        45.4       Provision of TUPE Information .................................................................... 26
46.     TICKETS AND TICKETING SCHEMES ....................................................................... 26
        46.1       Ticket sales ............................................................................................. 26
        46.2       Revenue Collection ................................................................................... 26
        46.3       Ticketing Schemes ................................................................................... 26
47.     ASSET CONDITION REQUIREMENTS ....................................................................... 26
        47.1       Franchisees' Obligations ............................................................................ 26
        47.2       End-Franchise Audit ................................................................................. 26
        47.3       Franchisee's obligation to remedy defects/failures......................................... 26
        47.4       DLR Limited's right to carry out works ......................................................... 26
48.     STOCKS ............................................................................................................. 26
        48.1       Maintenance of Stocks .............................................................................. 26
        48.2       Joint stock take ....................................................................................... 26
        48.3       Key Stocks .............................................................................................. 26
        48.4       Conditions of Stocks ................................................................................. 26
49.     INTELLECTUAL PROPERTY ..................................................................................... 26
        49.1       Handback of intellectual property and software............................................. 26
        49.2       Designation of intellectual property............................................................. 26
        49.3       Maintenance of intellectual property............................................................ 26
50.     OTHER ASSETS ................................................................................................... 26
        50.1       Designation of Other Assets....................................................................... 26
        50.2       Maintenance of Other Assets...................................................................... 26
51.     TERMINATION TRANSFER AGREEMENT.................................................................... 26
52.     OTHER OBLIGATIONS UPON TERMINATION ............................................................. 26
        52.1       Assistance in securing continuity ................................................................ 26
        52.2       Access .................................................................................................... 26
        52.3       Key Contracts .......................................................................................... 26
        52.4       Intellectual property ................................................................................. 26
        52.5       DLR Pension Scheme ................................................................................ 26
        52.6       Continuance of activities ........................................................................... 26
        52.7       Ancillary Agreements ................................................................................ 26
        52.8       Continued technical support....................................................................... 26
        52.9       Capital Projects........................................................................................ 26
PART VII ........................................................................................................................ 26
MISCELLANEOUS ............................................................................................................. 26
53.     PAYMENT AND FRANCHISEE'S LIMIT OF LIABILITY.................................................... 26
        53.1       Time for payment and interest ................................................................... 26
        53.2       Value Added Tax ...................................................................................... 26
        53.3       Set off .................................................................................................... 26
      53.4   Franchisee's Limit of Liability ..................................................................... 26
54.   CONFIDENTIALITY ............................................................................................... 26
      54.1   Franchisee confidentiality undertaking......................................................... 26
      54.2   DLR Limited confidentiality undertaking ....................................................... 26
      54.3   Disclosure of confidential information .......................................................... 26
      54.4   Publication by DLR Limited ........................................................................ 26
      54.5   Return of Confidential Information .............................................................. 26
      54.6   Continuing obligation following termination of Franchise ................................ 26
      54.7   Freedom of Information ............................................................................ 26
      54.8   Protection of Personal Data........................................................................ 26
55.   DOCUMENTS, DUTIES AND FEES............................................................................ 26
      55.1   Supply of documents ................................................................................ 26
      55.2   Stamp duty and other costs ....................................................................... 26
56.   NOTICES ............................................................................................................ 26
      56.1   Service of notices..................................................................................... 26
      56.2   Time of service ........................................................................................ 26
57.   GENERAL PROVISIONS ......................................................................................... 26
      57.1   Entire Agreement ..................................................................................... 26
      57.2   Waiver and variation ................................................................................ 26
      57.3   Assignment ............................................................................................. 26
      57.4   Partial invalidity ....................................................................................... 26
      57.5   [Not Used] .............................................................................................. 26
      57.6   No partnership or agency .......................................................................... 26
      57.7   Further assurance .................................................................................... 26
      57.8   Restrictions ............................................................................................. 26
      57.9   Costs...................................................................................................... 26
      57.10 Counterparts ........................................................................................... 26
      57.11 Language of Agreement ............................................................................ 26
      57.12 Settlement of Disputes.............................................................................. 26
      57.13 Contracts (Rights of Third Parties) Act and Privity of Contracts........................ 26
      57.14 Proper law .............................................................................................. 26
58.   EQUALITY AND DIVERSITY REQUIREMENTS ............................................................. 26
      58.1   Compliance ............................................................................................. 26
      58.2   Equality Policy ......................................................................................... 26
      58.3   Diversity Training..................................................................................... 26
      58.4   Supplier Diversity..................................................................................... 26
      58.5   Local Community Relations........................................................................ 26
      58.6   Monitoring and Reporting .......................................................................... 26
      58.7   Diversity Infractions ................................................................................. 26
      58.8   Equality and Diversity Audit....................................................................... 26
SCHEDULES

SCHEDULE 1
GRANT OF FRANCHISE
      PART 1 – [NOT USED]
      PART 2 – DLR CONTRACTS/UNDERTAKING
      PART 3 – BUSINESS PLAN

SCHEDULE 2
PASSENGER SERVICES
      PART 1 – BASE SERVICE REQUIREMENTS
      APPENDIX TO PART 1 – BASE SERVICE PLAN
      PART 2 – SERVICE SUPPORT FUNCTIONS
      PART 3 – ANNUAL SERVICE PLAN
      PART 4 – SERVICE QUALITY STANDARDS
      APPENDIX TO PART 4 – FEE ADDITIONS/DEDUCTIONS
      PART 5 – EXTENSIONS
      PART 6 – BASE SERVICE CHANGES

SCHEDULE 3
TICKETS/TICKETING SCHEMES
      DEFINITIONS
      PART 1 – TICKET SALES
      PART 2 – REVENUE COLLECTION AND PROTECTION
      PART 3 – TICKETING SCHEMES
      PART 4 – TICKET MACHINES

SCHEDULE 4
MAINTENANCE OF FRANCHISE ASSETS
      PART 1 – ASSET MANAGEMENT REGIME
      PART 2 – ASSET MANAGEMENT STRATEGY
      PART 3 – ANNUAL MAINTENANCE PLAN
      PART 4 – CONFIGURATION MANAGEMENT PROCEDURES
      PART 5 – MAINTENANCE PROCEDURES
      PART 6 – STRUCTURES ROLLING PROGRAMME
      PART 7 – ASSET MANAGEMENT SYSTEM
      PART 8 – ROLLING STOCK WORKS
      PART 9 – DRAFT FIRST ANNUAL MAINTENANCE PLAN

SCHEDULE 5
CAPITAL PROJECTS
       PART 1 – INTERPRETATION
       PART 2 – ANNUAL CAPITAL PROJECTS PLAN
       PART 3 – PROVISIONS RELATING TO PROJECTS
       PART 4 – PROJECT PAYMENTS
       PART 5 – [NOT USED]
       PART 6 – RESOURCES CHARGES
       PART 7 – MANAGEMENT FEE
       PART 8 – MANDATED FRANCHISEE PROJECTS
       PART 9 – EXTANT DLR PROJECTS
       PART 10 – POSSIBLE FUTURE PROJECTS
       PART 11 – TECHNICAL SCHEDULES
       PART 12 – DRAFT FIRST CAPITAL PROJECTS PLAN

SCHEDULE 6
GENERAL/REGULATORY
      PART 1 – ANCILLARY COMMERCIAL BUSINESS
      PART   2   –   KEY POSTS
      PART   3   –   AUTHORISED FUNCTIONS
      PART   4   –   QUALITY PROCEDURES
      PART   5   –   SAFETY MANAGEMENT
      PART   6   –   [NOT USED]
      PART   7   –   SAFETY REGIME
      PART   8   –   ENVIRONMENTAL/REGULATORY
      PART   9   –   CHANGE PROCEDURES

SCHEDULE 7
PROVISION OF INFORMATION

SCHEDULE 8
REMUNERATION
      PART 1 –       FEES
      PART 2 –       ADJUSTMENT PAYMENTS
      PART 3 –       COMPENSATION EVENTS
      PART 4 –       VARIATION PROCEDURE
      PART 5 –       CAPITAL REPLACEMENT CONTRIBUTION
      PART 6 –       CONTENTS OF CERTIFICATE

SCHEDULE 9
FINANCIAL REQUIREMENTS
      PART 1 – PERFORMANCE BONDS AND GUARANTEE
      PART 2 – OTHER FINANCIAL COVENANTS
      PART 3 – INSURANCE

SCHEDULE 10
HANDBACK OF FRANCHISE
      PART 1 – HANDBACK INFORMATION
      PART 2 – KEY CONTRACTS
      PART 3 – ASSET CONDITION REQUIREMENTS
      PART 4 – TERMINATION TRANSFER AGREEMENT
      PART 5 – HANDBACK PROCEDURES
      PART 6 – KEY STOCK REQUIREMENTS

SCHEDULE 11
DISPUTE RESOLUTION PROCEDURE

SCHEDULE 12
DOCUMENTS

SCHEDULE 13
FRANCHISEE CONFIDENTIAL INFORMATION

SCHEDULE 14
MATRICES

SCHEDULE 15
FINANCIAL MODEL

SCHEDULE 16
COMMITTED OBLIGATIONS

SCHEDULE 17
AGREED POLICIES/PLANS
      PART 1 – AGREED EQUALITY PLAN
      PART 2 – AGREED TRAINING PLAN
      PART 3 – AGREED SUPPLIER DIVERSITY PLAN
PART 4 – AGREED COMMUNICATIONS PLAN
THIS AGREEMENT is made as a Deed this 7 day of March 2006

BETWEEN:

(1)     DOCKLANDS LIGHT RAILWAY LIMITED (Company number: 2052677) with its
        registered office at Operations and Maintenance Centre, PO Box 154, Castor Lane, Poplar,
        London E14 0DX ("DLR Limited"); and

(2)     SERCO LIMITED (Company number: 00242246) with its registered office at Serco
        House, 16 Bartley Wood Business Park, Bartley Way, Hook, Hampshire RG27 9UY ("the
        Franchisee").

WHEREAS

(A)     DLR Limited is the owner of the Existing Railway and operator of the Railway.

(B)     On 7 October 2004 DLR Limited commenced a competition for the award of the Franchise.

(C)     As a result of the competition referred to in Recital (B) the Franchisee was awarded the
        right to operate the Franchise.

NOW IT IS HEREBY AGREED as follows:




                                                1
LONDON\LZM\3476316.31
                                             PART I

                                         DEFINITIONS

1.      DEFINITIONS/INTERPRETATION

1.1     Definitions

        In this Agreement (including the recitals, schedules and appendices), except where the
        context otherwise requires, the following words and expressions shall have the meanings
        given to them below:

        "Additional DLR Contract" means         any contract (which is not either in a category of
        agreements already treated as DLR       Contracts or a replacement for or renewal of an
        existing DLR Contract on the same       or substantially similar terms) which DLR Limited
        requires the Franchisee to treat as a   DLR Contract pursuant to paragraph 7 of part 3 of
        schedule 6;

        "Additional DLR Project" means any Project in respect of which DLR Limited will enter
        contracts directly with third party contractors or will carry out the works directly and in
        respect of which a Commencement Certificate has been issued under paragraph 7.7 of
        part 3 of schedule 5 (Capital Projects);

        "Additional DLR Project Notice" means an Additional DLR Project Notice served by DLR
        Limited under clause 7.5 of part 3 of schedule 5;

        "Additional Franchisee Project" means any Project proposed either by DLR Limited or
        the Franchisee for which the Franchisee has prepared a proposal in accordance with
        clause 7.3 of part 3 of Schedule 5 and for which a Commencement Certificate has been
        issued and countersigned under paragraph 7.3(e) of part 3 of schedule 5 (Capital
        Projects);

        "Additional Projects" means any of the Additional DLR Projects and Additional
        Franchisee Projects;

        "Additional Franchisee Project Notice" means an Additional Franchisee Project Notice
        as referred to in paragraph 7.1 of part 3 of schedule 5 (Capital Projects);

        "Additional Franchisee Project Proposal" means a proposal prepared by the
        Franchisee pursuant to paragraph 7.3 of part 3 of schedule 5;

        "Adjustment Payment" means an amount determined as such in accordance with Part 2
        of schedule 8 (Remuneration);

        "Affiliate" means, in respect of any person, the person by which that person is
        Controlled or which is Controlled by that person, or any person which is Controlled by any
        other Affiliate of that person, including (in the case of the Franchisee) the Shareholders;

        "Agreement" means this agreement, as amended from time to time;

        "Agreement for Lease" means the agreement for lease made between DLR Limited and
        the Franchisee and dated on or about the date of this Agreement;

        "Alcatel End to End Journey Time" means the journey time specified by Alcatel as the
        normal journey time assumed by the signalling system for specified origin and destination
        pairs for new routes and extensions to the Railway;

        "Alcatel System" means the automatic train control and signalling system for the
        Railway including any vehicle control, computer hardware and software whether located in

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        the Control Centre, trackside or on vehicles and including all substitutions,
        reinstatements, replacements and renewals thereof and modifications or additions
        thereto;

        "All Risks Property Insurance" means the insurances described in paragraph 2.1 of
        part 3 of schedule 9 (Financial Requirements);

        "Ancillary Agreements" means the Existing Railway Lease Agreement (together with
        the Railway Lease referred to therein and any Supplemental Railway Leases), Rolling
        Stock Lease, Moveable Equipment Lease, Intellectual Property Licence, Handover Transfer
        Agreement (together with the Deed of Assignment and Deed of Adherence referred to
        therein), Software Licence, Stocks Charge, Termination Transfer Agreement (together
        with the Deed of Assignment, Deed of Release and Deed of Novation referred to therein);

        "Ancillary Commercial Revenue" means in respect of any Fee Period any revenue
        recovered by DLR Limited or the Franchisee in respect of the Retained Estate in respect of
        that Fee Period;

        "Annual Capital Projects Plan" means the annual capital projects plan referred to in
        clause 4.2.1(f) (Conditions Precedent) and any other annual capital projects plan prepared
        by the Franchisee in accordance with clause 12.2 (Preparation of Annual Capital Projects
        Plan);

        "Annual Maintenance Plan" means the annual maintenance plan referred to in clause
        4.2.1(f) (Conditions Precedent) and any other annual maintenance plan prepared by the
        Franchisee pursuant to clause 11.5 (Preparation of Annual Maintenance Plan);

        "Annual Marketing Plan" means the annual marketing plan referred to in clause
        4.2.1(f) (Conditions Precedent) and any other annual marketing plan prepared by the
        Franchisee pursuant to clause 13.2 (Preparation of Annual Marketing Plan);

        "Annual Plans" means the Annual Safety Plan, Annual Service Plan, Annual Maintenance
        Plan, Annual Capital Projects Plan, Annual Marketing Plan and Annual Revenue Protection
        Plan;

        "Annual Revenue Protection Plan" means the annual revenue protection plan referred
        to in clause 4.2.1(f) (Conditions Precedent) and any subsequent annual revenue
        protection plan prepared by the Franchisee in accordance with paragraph 16 of part 2 of
        schedule 2 (Passenger Services);

        "Annual Safety Plan" means the annual safety plan referred to in clause 4.2.1(f)
        (Conditions Precedent) and any subsequent annual safety plan prepared by the Franchisee
        in accordance with the Safety Regime;

        "Annual Service Plan" means the annual service plan referred to in clause 4.2.1(f)
        (Conditions Precedent) and any subsequent annual service plan prepared by the
        Franchisee pursuant to clause 9.5 (Preparation of Annual Service Plan);

        "Applicable Requirements" means the mandatory requirements of any existing or
        future Law, or of any licence, consent, permit, authorisation or agreement issued or
        entered into under any of the foregoing or of any local authority, statutory undertaker,
        court or other competent body or authority which has relevant jurisdiction, in each case to
        the extent that the same comprise legally enforceable obligations and are applicable to
        the Services, Franchise, Franchise Assets, Railway and/or Stocks;

        "Asset" means a physical component of a facility which has a distinct and quantifiable
        business function or service and which includes plant, machinery, property, holdings,



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        vehicles and other items and related systems including all those assets listed in column 1
        of the Asset Condition Requirements;

        "Asset Condition Requirements" means the asset condition requirements contained at
        part 3 of schedule 10 (Handback of Franchise);

        "Asset Damage Disruption" means suspension of Train Services or closure of Stations
        resulting from an Asset Damage Incident and which renders the Franchisee incapable of
        performing the Minimum Train Kilometres for three consecutive Service Days, provided
        always that events or circumstances shall not be treated as Asset Damage Disruption if:

        (a)    they would not have occurred but for a breach by the Franchisee of the terms of
               any of the Franchise Agreements;

        (b)    they could have been prevented through the exercise of proper foresight and due
               diligence of the Franchisee Parties; or

        (c)    their occurrence could reasonably have been anticipated and appropriate
               anticipatory mitigation measures could reasonably have been undertaken;

        "Asset Damage Incident" means an incident of material damage to or loss of one of the
        Identified Assets between the date of this Agreement and the Franchise Commencement
        Date, provided always that an incident of material damage to or loss of any of the
        Identified Assets shall not be treated as an Asset Damage Incident if:

        (a)    it would not have occurred but for a breach by the Franchisee of the terms of any
               of the Franchise Agreements;

        (b)    it could have been prevented through the exercise of proper foresight and due
               diligence of the Franchisee Parties; or

        (c)    its occurrence could reasonably have been anticipated and appropriate anticipatory
               mitigation measures could reasonably have been undertaken;

        "Asset Management Regime" means the asset management policy and principles for
        the Railway contained at part 1 of schedule 4 (Asset Management Regime);

        "Asset Management Strategy" means the Franchisee's strategy for the implementation
        of the Asset Management Regime including Planned Maintenance Activities which is
        contained at part 2 of schedule 4 (Maintenance of Franchise Assets) and in column 5 of
        the Asset Condition Requirements (including the Mandated Maintenance Works);

        "Asset Management System" means the system to be provided by the Franchisee in
        accordance with clause 11.9 (Asset Management System);

        "Asseted Spares" means the Rolling Stock Asseted Spares (as defined in the Rolling
        Stock Lease) and the Railway Asseted Spares and Other Asseted Spares (as defined in the
        Moveable Equipment Lease);

        "Assumed Employees" has the meaning ascribed thereto in the Handover Transfer
        Agreement;

        "ATC System" means the automatic train control and signalling system for the Existing
        Railway including any vehicle control computer hardware (but excluding any computer
        software) and including all substitutions, reinstatements, replacements, renewals thereof
        and Modifications thereto;

        "Authorised Functions" means the functions for which the Franchisee is authorised to
        act as DLR Limited's agent under clause 17.2 (Authorised Functions);
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        "Average Earnings Index" means the average earnings index for the whole economy as
        published from time to time by the Office of National Statistics or, if such index shall
        cease to be published or if there is a material change in the basis of the index, such other
        average earnings index as DLR Limited may, after consultation with the Franchisee,
        determine (acting reasonably) to be appropriate in the circumstances;

        "Base Line" means any of the routes between Terminal Stations identified in the first
        column of the Base Service Plan (as construed in accordance with paragraph 1 of the
        appendix to part 1 of schedule 2 (Passenger Services)), including any new routes or
        amendments to existing routes in accordance with paragraph 1 of the appendix to part 1
        of schedule 2 (Passenger Services);

        "Base Service Change" means a variation of, or amendment to, the Base Service
        Requirements (either temporary or permanent and whether by increase, decrease,
        introduction or removal of any specification or requirement or otherwise);

        "Base Service Departure Percentage" has the meaning ascribed to that expression in
        paragraph 1.6 of part 4 of schedule 2 (Passenger Services);

        "Base Service Departure Standard" means the standard and requirements contained
        in paragraphs 1.1 and 1.2 of part 4 of schedule 2 (Passenger Services) (as the same may
        be varied in accordance with the terms of this Agreement);

        "Base Service Hours" means the periods of time specified in paragraph 3 of part 1 of
        schedule 2 (Passenger Services) as the minimum requirements for the Train Service
        Hours of any day (as amended from time to time by a Base Service Change or otherwise
        by agreement between the Franchisee and DLR Limited);

        "Base Service Plan" means the service plan (being one of Base Service Plans A - F as
        are notified in accordance with the appendix to paragraph 1 of schedule 2 (Passenger
        Services) as amended from time to time by a Base Service Change or otherwise by
        agreement between the Franchisee and DLR Limited and subject, in particular, to any
        Waiver currently in force) which is in effect pursuant to the provisions of the appendix to
        part 1 of schedule 2 (Passenger Services);

        "Base Service Plan A – F" means the maximum Interval requirements for each Base
        Line set out in the tables headed A - F set out in paragraph 2 of the appendix to part 1 of
        schedule 2 (Passenger Services);

        "Base Service Requirements" means the specifications and requirements contained in
        Parts 1 and 5 of schedule 2 (Passenger Services) including the appendix to part 1 of
        schedule 2 (Passenger Services), as the same may be varied in accordance with the terms
        of this Agreement and subject, in particular, to any Waivers currently in force;

        "Base Time Period" means any of the time periods set out in, and identified by
        reference to, the tables in paragraph 2 of the appendix to part 1 of schedule 2 (Passenger
        Services);

        "BMR" means the business management review of DLR Limited's performance which
        includes a review of safety performance;

        "Beckton/Stratford Developments" means the works to be carried out at Stratford
        Regional Station and works relating to the development of the depot at Beckton;

        "Business Action Plan" means a plan requested by DLR Limited in accordance with
        paragraph 2.3(c) of Schedule 7 (General Information);




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        "Business Interruption Insurance" means the insurance described in paragraph 2.3 of
        part 3 of schedule 9 (Financial Requirements);

        "Business Plan" means a plan describing the Franchisee's planned activities for each Fee
        Year during the Franchise Term, which shall include:

        (a)    a description as to how the Franchisee will be able to meet its obligations under
               this Agreement for the Franchise Term, supported by operational plans
               demonstrating this;

        (b)    details of any investments proposed to be made or procured by the Franchisee in
               relation to the Franchise Services during the Franchise Term;

        (c)    a summary of the Franchisee's plans for marketing and developing the Franchise
               Services;

        (d)    a Financial Model, operational models and Record of Assumptions in the agreed
               form; and

        (e)    a profit and loss forecast, cash flow forecast and forecast balance sheet for each of
               the first 13 Fee Periods following the Franchise Commencement Date, together with
               a list of assumptions on the basis of which each such forecast has been prepared;

        The First Business Plan is contained at part 3 of schedule 1 (Grant of Franchise);

        "Capital Replacement" means replacement with new or the overhaul of major
        infrastructure and/or major equipment:

        (a)    on the Existing Railway (including any Identified Works to the extent that such
               works require such replacement or overhaul of major infrastructure and/or major
               equipment); or

        (b)    in respect of Rolling Stock; or

        (c)    in respect of the Retained Estate.

        "Capital Replacement Contribution" means the payment(s) to be made by the
        Franchisee as a contribution to the cost of Capital Replacement for which DLR Limited is
        otherwise responsible pursuant to clause 11.3.1 as calculated in accordance with part 5 of
        schedule 8 (Remuneration);

        "Capital Expenditure" means expenditure which is treated as capital expenditure in
        accordance with generally accepted accounting principles in the United Kingdom from time
        to time;

        "Capital Works Costs" shall mean the cost of the physical works for any Capital
        Replacement undertaken as an Additional Project and which for the avoidance of doubt
        shall not include internal costs of the Franchisee or project management costs of the
        Franchisee in respect of the Additional Project or in respect of Resources;

        "CDM Regulations" means the Construction (Design and Management) Regulations
        1994;

        "Certificate of Franchise Commencement" means the certificate issued by DLR
        Limited pursuant to clause 4.3 (Certificate of Franchise Commencement);

        "Change Certificate" means the certificate prepared by DLR Limited pursuant to
        paragraph 8.3 of part 3 of schedule 5 (Capital Projects) containing details of a DLR Works
        Change to be implemented;

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        "Change in Property Charges" means

        (a)    a change in charges for access, rent, outgoings and other specified charges under
               the terms of the draft leases listed at schedule 3 to the Agreement for Lease,
               except to the extent such cost has been identified as a cost item in the Financial
               Model;

        (b)    a change in the level of maintenance charges payable under the terms of the lease
               of Bank Station from that identified in the Financial Model which shall include any
               alternative throughput fee levied in accordance with clause 3(3)A of that lease;

        which in any case does not result from any default, act or omission of the Franchisee
        Parties;

        "Change Proposal" has the meaning given to it in paragraph 2 of part 9 of schedule 6
        (General/Regulatory);

        "Change of Law" means the coming into effect of:

        (a)     any Legislation enacted after the date of execution of this Agreement;

        (b)     any modification of any existing Legislation (where such modification comes into
                force after the date of execution of this Agreement); or

        (c)     any applicable judgment of a relevant court of law which changes a binding
                precedent,

        which Legislation, modification or judgment is binding on the Franchisee (but excluding in
        either such case any lawful requirement of any local authority, statutory undertaker or
        other competent body or authority which has relevant jurisdiction and with which the
        Franchisee is obliged to comply, any change in the interpretation of any Legislation and
        any Legislation which has been published prior to 1 April 2006 );

        "Change Procedures" means the change procedures set out in part 9 of schedule 6
        (General/ Regulatory);

        "Charter Standard Statement" means the standard and requirements set out in
        paragraphs 5.1 and 5.2 of part 4 of schedule 2 (Passenger Services) as such are amended
        from time to time;

        "City Airport Extension" means the permanent works constituting the extension to the
        Railway leaving the existing branch south of Canning Town to King George V (with
        intermediate stations at Thames Wharf (initially passive provision and to be subsequently
        constructed), West Silvertown, Pontoon Dock and London City Airport) designed,
        constructed, integrated, commissioned, tested and completed in accordance with the City
        Airport Concession Agreement;

        "City Airport Concessionaire" means City Airport Rail Enterprises PLC;

        "City Airport Concession Agreement" means the agreement dated 25 February 2003
        and made between DLR Limited and the City Airport Concessionaire together with the
        Project Documents as defined therein;

        "City Airport Extension Project" means the project for the construction and
        maintenance of the City Airport Extension under the City Airport Concession Agreement;

        "City Airport Extension Matrix" means the matrix of the obligations and rights of the
        Franchisee relating to the Concession Agreement contained at Schedule 14 (Matrices);


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        "City Airport Extension Operating Date" means 2 December 2005;

        "Claim" means any claim, demand, proceedings, penalty or fine;

        "Cleaning Index" means the Customer Satisfaction Index for the "cleanliness of Trains
        and Stations" topic as determined in accordance with paragraph 4 of part 4 of schedule 2
        (Passenger Services);

        "Commencement Certificate" means any certificate issued pursuant to paragraphs
        7.3(e) or 7.7 of part 3 of schedule 5 (Capital Projects);

        "Committed Obligations" means the Franchisee's obligations listed in schedule 16
        (Committed Obligations);

        "Committed Project" means any of the Extant DLR Projects, Mandated Franchisee
        Projects or Additional Projects;

        "Communications System" means all communications equipment used in connection
        with the Existing Railway including, without limitation, all equipment used by the station
        public address system, the station closed circuit television system, the train radio
        communication system, the internal telephone network, the passenger information display
        system, the supervisory control and data acquisition system (SCADA) and the fire
        detection and alarm system and including all substitutions, reinstatements, replacements,
        renewals thereof and Modifications thereto;

        "Compensation Events" has the meaning ascribed thereto in part 3 of schedule 8
        (Remuneration);

        "Competent Authority" shall mean any legal person (including any governmental
        department or governmental agency) having regulatory authority under Environmental
        Laws and/or any court of law or tribunal;

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

        "Concession Agreement" means any or all of the Lewisham Concession Agreement, the
        City Airport Concession Agreement, the Woolwich Extension Concession Agreement and
        any other concession agreement which DLR Limited enters into and notifies to the
        Franchisee;

        "Concessionaire" means any or all of the Lewisham Concessionaire, the City Airport
        Concessionaire and the Woolwich Concessionaire;

        "Configuration Management Procedures" means the configuration management
        procedures contained at part 4 of schedule 4 (Maintenance of Franchise Assets) as
        amended or modified from time to time in accordance with the Change Procedures;

        "Confirmation" means a confirmation whereby the Franchisee confirms that it will make
        available to DLR Limited or to any of the DLR Limited Parties a Resource;

        "Consent" means       any   consent,   notice,   endorsement,   approval,   certificate   or
        determination;

        "Contracting Affiliate" means an Affiliate which is or becomes a party to a Key
        Contract;

        "Control" means in respect of one person by another, that other 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):
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        (a)    having 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; or

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

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

        (d)    possessing or being, or being 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; or

               (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 in fact 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 available for distribution,

        and, for these purposes, there shall be attributed to any person the rights or powers of
        any nominee of his and the rights and powers of any one or more persons which he, or he
        and associates of his, Controls and of any one or more associates of his (and for these
        purposes an associate of a person shall mean a relative of his (as defined in section
        417(4) of the Income and Corporation Taxes Act 1988), a partner of his or a trustee of a
        settlement (as defined in section 660(G) of the Income and Corporation Taxes Act 1988)
        of which he is a beneficiary) and cognate expressions of Control shall be construed
        accordingly;

        "Control Centre" means the central control and signalling facility for the Railway located
        at the Poplar depot;

        "CSI Fee Addition" means, in relation to any quarter, the amount determined as such in
        accordance with paragraph 6.5 of part 4 of schedule 2 (Passenger Services);

        "CSI Fee Deduction" means, in relation to any quarter, the amount determined as such
        in accordance with paragraph 6.5 of part 4 of schedule 2 (Passenger Services);

        "Current Procedures" has the meaning given to it in part 9 of schedule 6
        (General/Regulatory);

        "Customer Charter Target" means the targets expressed in the Charter Standard
        Statement as agreed by DLR Limited;

        "Customer Satisfaction Index" means the customer satisfaction index in respect of any
        of the five topics set out in paragraph 4.2 of part 4 of schedule 2 (Passenger Services);

        "Customer Satisfaction Standard" means the standard and requirement set out in
        paragraphs 4.1 and 4.2 of part 4 of schedule 2 (Passenger Services);

        "Daily Base Service Departure Percentage" has the meaning ascribed to that
        expression in paragraph 1.6 of part 4 of schedule 2 (Passenger Services);


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        "Daily Escalator Availability Percentage" has the meaning ascribed to that expression
        in paragraph 3.4(c) of part 4 of schedule 2 (Passenger Services);

        "Daily Journey Time Percentage" has the meaning ascribed to that expression in
        paragraph 2A.3 of part 4 of schedule 2 (Passenger Services);

        "Daily Lift Availability Percentage" has the meaning ascribed to that expression in
        paragraph 3.4(b) of part 2 of schedule 2 (Passenger Services);

        "Daily PID Availability Percentage" has the meaning ascribed to that expression in
        paragraph 3.4(d) of part 4 of schedule 2 (Passenger Services);

        "Daily Service Reliability Percentage" has the meaning ascribed to that expression in
        paragraph 2.6(b) of part 4 of schedule 2 (Passenger Services);

        "Daily TVM Availability Percentage" has the meaning ascribed to that expression in
        paragraph 3.4(a) of part 4 of schedule 2 (Passenger Services);

        "Data Room Documents" the documents contained in or referred to in the document
        contained at schedule 12 (Documents);

        "Detailed Designs" means all calculations, designs, design information, specifications,
        plans, drawings, sketches, models and other materials of a similar nature prepared or to
        be prepared by or on behalf of the Franchisee or its contractors and consultants in relation
        to a Franchisee Project;

        "Direct Agreements" means the direct agreements referred to in clause 43.1 (Direct
        Agreement);

        "Disclosed Data" means the materials, documents and data made available by DLR
        Limited to the Franchisee prior to the date hereof in relation to the Railway, and operation
        and maintenance of the Railway, and other matters which are or may be relevant to the
        Franchise and the obligations undertaken by the Franchisee under the Franchise
        Agreements, including the documents listed in the index of Data Room Documents
        contained at schedule 12 (Documents);

        "Discriminatory Change in Law" means any Change of Law which discriminates
        against or in favour of:

        (a)    the Railway in relation to other railways or rail networks; or

        (b)    the Franchisee in relation to other companies,

        provided that a Change of Law which also affects railways or rail networks other than the
        Railway or companies other than the Franchisee in the same terms shall not be deemed to
        be discriminatory on the grounds that the effect upon the Railway or the Franchisee is
        greater than that upon such other railways or rail networks or other companies unless it
        can be established that the purpose of Change of Law is to discriminate on the basis set
        out in paragraphs (a) or (b) above;

        "Dispatch" means departure of a Train available for passengers from a Station;

        "Dispute" means a dispute or difference of whatsoever nature between DLR Limited and
        the Franchisee in relation to the operation or interpretation of, or otherwise in connection
        with or arising out of, the Franchise Agreements;

        "Dispute Resolution Procedure" means the procedure set out in schedule 11 (Dispute
        Resolution Procedure);


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        "DLR Base Service Change" means a Base Service Change required by DLR Limited
        pursuant to paragraph 1.1 of part 6 of schedule 2 (Passenger Services);

        "DLR Contracts" means contracts to which DLR Limited is or may become party in
        respect of which the Franchisee is required under the terms of the Franchise Agreements
        to undertake, perform or discharge liabilities, obligations and/or other responsibilities on
        behalf of DLR Limited in relation to the Franchise Period, the most significant of which are
        listed in part 2 of schedule 1 (Grant of Franchise) including any replacement for or
        renewal of such contracts;

        "DLR Environmental Losses" means any Environmental Losses arising from or relating
        to: (i) any Hazardous Matter introduced to or on the Railway as a result of the acts or
        omissions of any or all of the Franchisee Parties or Predecessor Franchisee Parties; (ii)
        any Hazardous Matter (including for the avoidance of doubt Pre-Existing Hazardous
        Matter) to the extent the Environmental Losses are caused by or arise from or relate to
        any breach of obligations under the Franchise Agreements or Predecessor Franchise
        Agreements by any or all of the Franchisee Parties or Predecessor Franchisee Parties
        respectively; (iii) any Hazardous Matter (including for the avoidance of doubt Pre-Existing
        Hazardous Matter) to the extent the Environmental Losses are caused by or arise from or
        relate to the activities carried out by any or all of the Franchisee Parties or Predecessor
        Franchisee Parties at any time (including the provision of the Services) and where any or
        all of the Franchisee Parties or Predecessor Franchisee Parties knew or ought reasonably
        to have known that such Hazardous Matter could give rise to such Environmental Losses
        and failed to prevent, reduce, limit or mitigate such Environmental Losses; and (iv) any
        claim by any third party for personal injury or property damage or nuisance or trespass to
        the extent caused by a Franchisee Relevant Event in the course of the operation of
        passenger train services by the Franchisee under the Franchise Agreement or by the
        Predecessor Franchisee under the Predecessor Franchise Agreement;

        "DLR Limited Default" means any of the defaults listed in clause 36.1 (DLR Limited
        Default);

        "DLR Limited Party" and "DLR Limited Parties" means DLR Limited and its servants,
        agents, officers, employees, contractors and sub-contractors of any tier, but excluding the
        Franchisee Parties;

        "DLR Maintenance Standards" means the documents referred to as such and contained
        in the Data Room Documents as such documents are amended from time to time;

        "DLR Marginal Base Service Change" means the meaning ascribed thereto in
        paragraph 1.2 of part 6 of schedule 2 (Passenger Services);

        "DLR Project Contract" means a contract between DLR Limited and a contractor or
        consultant contracted to carry out the whole or any part of a DLR Project including
        (without limitation) the Lewisham Concession Agreement, the City Airport Concession
        Agreement, the Woolwich Extension Concession Agreement, the Refurbishment Contract
        and the New Rolling Stock Contract;

        "DLR Pension Scheme" means the Docklands Light Railway Pension Scheme;

        "DLR Project" means any Extant DLR Project or Additional DLR Project;

        "DLR Project Requirements" means indicative statements of DLR Limited's
        requirements for implementation of Extant DLR Projects and Additional DLR Projects
        during the relevant Fee Year, including estimated requirements as to Possessions and
        Resources;




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        "DLR Proposed Additional Franchisee Project" has the meaning given to that term in
        clause 7.1 of part 3 of Schedule 5 (Capital Projects);

        "DLR Railway Safety Case" means the safety case for the Railway for the time being
        accepted by the HSE in accordance with the Railway (Safety Case) Regulations 2000 as
        amended by the Railway (Safety Case) Amendments Regulations 2003 or such other
        Applicable Requirements as are relevant to the same;

        "DLR Relevant Event" means any act or omission occurring prior to the Franchise
        Commencement Date by DLR Limited or its employees or persons acting on behalf of or at
        the direction of DLR Limited other than the Predecessor Franchisee Parties;

        "DLR Representative" means any representative of DLR Limited appointed pursuant to
        clause 6 (Representatives);

        "DLR Special Service Requirement" has the meaning given to it in paragraph 15 of
        part 1 of schedule 2 (Passenger Service);

        "DLR Ticketing Schemes" means the Travelcard Agreement, the Through Ticketing
        Agreement and the London Boroughs Concessionary Travel Scheme Agreement including
        any updated versions of such agreements to reflect the inclusion of Oyster and pre-pay
        ticketing arrangements and any other agreements relating to the provision of Passenger
        Services notified by DLR Limited pursuant to paragraph 7 of part 3 of schedule 6
        (General/Regulatory);

        "DLR Undertakings" means undertakings to which DLR Limited remains subject upon
        commencement of the Franchise as listed in part 2 of schedule 1 (Grant of Franchise);

        "DLR Works Change" means a Works Change notified by DLR Limited under paragraph
        8.1 of part 3 of schedule 5 (Capital Projects);

        "DPA" means the Data Protection Act 1998 (as amended from time to time);

        "Early Warning" has the meaning given in paragraph 2.5 of part 3 of schedule 5;

        "Emergency Response Plan" has the meaning given to it in paragraph 19 of part 2 of
        schedule 2 (Passenger Services);

        "Emergency Service Agreements" means any arrangements with the emergency
        services applicable to the Railway;

        "Employer's Liability Insurance" means the insurances described in paragraph 4 of
        part 3 of schedule 9 (Financial Requirements);

        "Environment" means all gases, air, vapours, liquids, water (whether above or below
        surface and including controlled waters as defined in the Water Resources Act 1991
        section 104(1) and within drains and sewers), land, property, surface and sub-surface
        soils, rock, flora, fauna and all other living organisms supported by such media including
        man, wetlands, ecosystems and all other natural resources or part thereof including
        artificial or manmade buildings, structures or enclosures and electricity and human
        health;

        "Environmental Condition" means the presence prior to the Franchise Commencement
        Date of any Hazardous Matter in or on soil or subsoil of the Existing Railway or in any
        surface water or ground water on, in or under the Existing Railway;

        "Environmental Damage" has the meaning ascribed thereto in paragraph 3.2 of part 8
        of schedule 6 (General/Regulatory);


                                               12
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        "Environmental Law" means any Applicable Requirement which relates to or is for the
        purpose of protecting the Environment or a part of the Environment or which relates to
        health and safety matters;

        "Environmental Liability" means any liability of the Franchisee or DLR as the case may
        be under Environmental Laws for the Environmental Condition (including, without
        limitation, liability under Environmental Laws to undertake Remedial Action);

        "Environmental Losses" means any losses, damages, liabilities, costs and expenses
        (including fines, penalties, the reasonable cost of Remedial Action, legal and other
        professional fees) arising from or relating to (i) any liability under Environmental Laws
        and (ii) any reasonable action taken to prevent, reduce, limit or mitigate any such
        liability;

        "Escalator Availability Percentage" has the meaning ascribed to that expression in
        paragraph 3.4(c) of part 4 of schedule 2 (Passenger Services);

        "Existing Railway" has the meaning ascribed thereto in the Existing Railway Lease
        Agreement;

        "Existing Railway Lease Agreement" means the agreement for lease of the Existing
        Railway made between DLR Limited and the Franchisee on or about the date of this
        Agreement as amended from time to time;

        "Expert" means a Queen's Counsel of not less than ten years' calling appointed by
        agreement between the parties or, in default of agreement on such appointment being
        reached within 30 days of either party's request to concur in such appointment, on the
        application of either party by the President for the time being of the Law Society for
        England and Wales or his duly appointed deputy;

        "Extant DLR Project" means any of the Projects to be carried out by DLR Limited or by
        a third party contractor procured by DLR Limited which are listed in part 9 of schedule 5
        (Capital Projects) and described in the Technical Schedules referred to in part 3 of
        schedule 5 (Capital Projects);

        "Extensions" means any or all of the Lewisham Extension, the City Airport Extension and
        the Woolwich Extension and any other extension to the Railway (including the Stratford
        International Extension);

        "Extension Project" means any or all of the Lewisham Extension Project, the City
        Airport Extension Project and the Woolwich Extension Project or any other project for the
        provision of an extension to the Railway (including the Stratford International Extension
        Project);

        "Failure Management Plan" has the meaning give to it in paragraph 18 of part 2 of
        schedule 2 (Passenger Services);

        "Fee Addition" means in relation to any Fee Period, the amount determined as such in
        accordance with paragraph 6.1 of part 4 of schedule 2 (Passenger Services);

        "Fee Deduction" means in relation to any Fee Period, the amount determined as such in
        accordance with paragraph 6.2 of part 4 of schedule 2 (Passenger Services);

        "Fee Period" means a period of 28 days during the Franchise Period, provided that:

        (a)    the first such period shall commence on the Franchise Commencement Date and
               expire on such date as DLR Limited shall after consultation with the Franchisee
               notify to the Franchisee;


                                               13
LONDON\LZM\3476316.31
        (b)    each such period shall thereafter start on the day following the last day of the
               preceding such period;

        (c)    the first and last such period in any Fee Year may be varied by up to 7 days by
               notice from DLR Limited to the Franchisee;

        (d)    the last such period shall end on the expiry of the Franchise Period;

        "Fee Year" means a period comprising 13 consecutive Fee Periods commencing on 1st
        April in a calendar year which commences and/or expires during the Franchise Period,
        provided that:

        (a)    the first such period shall commence on the Franchise Commencement Date;

        (b)    the last such period shall end on the expiry of the Franchise Period;

        "Fees" means the Fixed Fee and the Revenue Fee;

        "Financial Model" means the financial model and Record of Assumptions from which the
        Business Plan for each Fee Period will be derived and which at the date of this Agreement
        is shown on the CD attached at part 2 of schedule 15 and which includes the summary
        profit and loss account contained at part 1 of schedule 15; and

        "Financing Agreements" means the Performance Bond, Stocks Charge and the
        Guarantee;

        "First Train(s)" means, in respect of any Station on a Line, the first train or trains
        available for passengers to depart from that Station in each direction (as applicable);

        "Fixed Fee" means, in relation to any Fee Period, the amount determined as such in
        accordance with paragraph 1 of part 1 of schedule 8 (Remuneration) for such Fee Period;

        "Force Majeure" has the meaning ascribed thereto in clause 33.1 (Meaning of Force
        Majeure);

        "Franchise" means the undertaking comprising the provision of the Services (excluding
        the Permitted Commercial Activities), in each case pursuant to, and subject to the terms
        and conditions of, the Franchise Agreements;

        "Franchise Agreements" means this Agreement and the Ancillary Agreements;

        "Franchise Assets" means the Intellectual Property, Moveable Equipment, Existing
        Railway, Rolling Stock, Software including in each case any Other Assets;

        "Franchise Commencement" means commencement of the Franchise in accordance
        with clause 4 (Franchise Commencement);

        "Franchise Commencement Date" means the date and, where relevant, the time for
        commencement of the Franchise as stated in the Certificate of Franchise Commencement;

        "Franchise Employees" means the employees of the Franchisee from time to time and
        any other person employed by the Franchisee or any of its Affiliates or any sub-contractor
        or delegate engaged in the performance of any of the Services in each case whose
        contract of employment may be transferred to a Successor Franchisee following the expiry
        of the Franchise Period by virtue of the operation of Law (including the TUPE Regulations
        as amended, replaced or substituted from time to time) or in respect of whom liabilities
        arising from the contract of employment or employment relationship may be transferred
        as described above;


                                                14
LONDON\LZM\3476316.31
        "Franchise Obligations" means all or any of the Franchisee's duties, obligations and
        liabilities from time to time under the Franchise Agreements;

        "Franchise Payment" means Fixed Fee, Revenue Fee, Capital Replacement
        Contribution, Adjustment Payment, Fee Addition or Deduction and/or CSI Fee Addition or
        Deduction, Ancillary Commercial Revenue, Resource Payments, Project Payment and
        Variation Payment;

        "Franchise Period" means the period commencing on the Franchise Commencement
        Date and ending on the Franchise Termination Date;

        "Franchise Term" means the period determined as such under clauses 5.1 and 5.2
        (Franchise Term);

        "Franchise Termination Date" means the date of termination of this Agreement (for
        whatever reason);

        "Franchisee Base Service Change" means a Base Service Change requested by the
        Franchisee pursuant to paragraph 9 of part 6 of schedule 2 (Passenger Services);

        "Franchisee Default" has the meaning ascribed thereto in clause 35.1 (Franchisee
        Default);

        "Franchisee Environmental Losses" means any Environmental Losses arising from or
        relating to (i) Pre-Existing Hazardous Matter to the extent that such Environmental Losses
        result from the activities carried out by DLR Limited, its employees or persons acting on
        behalf of or at its direction or its predecessors in title (excluding the Predecessor
        Franchisee Parties) prior to the Franchise Commencement Date; (ii) any valid Claim by
        any third party for personal injury or property damage or nuisance or trespass to the
        extent caused by a DLR Relevant Event occurring in the course of the operation of
        passenger train services by DLR Limited (but excluding the operation of passenger train
        services) by the Predecessor Franchisee) and (iii) any Hazardous Matter (including for the
        avoidance of doubt Pre-Existing Hazardous Matter) to the extent the Environmental
        Losses are caused by or arise from or relate to the activities carried out by any or all of
        DLR Limited, its employees or persons acting on its behalf at any time (excluding for the
        avoidance of doubt the Franchisee Parties and the Predecessor Franchisee Parties) and
        where such persons knew or ought reasonably have known that such Hazardous Matter
        could give rise to such Environmental Losses and failed to prevent, reduce, limit or
        mitigate such Environmental Losses;

        "Franchisee Parties" means the Franchisee and its servants, agents, officers,
        employees, contractors and sub-contractors of any tier;

        "Franchisee Project" means any Mandated Franchisee Project or Additional Franchisee
        Project;

        "Franchisee Project Completion Certificate" means a certificate issued by the
        Franchisee evidencing final completion of the Franchisee Project to which the certificate
        relates (or where the Franchisee Project involves a series of separate Franchisee Project
        Contracts, the certificate evidencing final completion of each such contract);

        "Franchisee Project Contract" means any contract between the Franchisee and a
        contractor or consultant contracted to carry out the whole or any part of a Franchisee
        Project;

        "Franchisee Proposed Additional Franchisee Project" means a Project proposed by
        the Franchisee for agreement by DLR Limited pursuant to paragraph 7.2 of part 3 of
        schedule 5 (Capital Projects);

                                                15
LONDON\LZM\3476316.31
        "Franchisee Relevant Event" means any act or omission occurring following the
        Franchise Commencement Date by the Franchisee or its employees or persons acting on
        behalf of or at the direction of the Franchisee or following the Predecessor Franchise
        Commencement Date by the Predecessor Franchisee or its employees or persons acting
        on behalf or at the direction of the Predecessor Franchisee;

        "Franchisee Representative" means the managing Director of Serco Docklands or such
        other representative of the Franchisee appointed pursuant to clause 6 (Representatives);

        "Franchisee Staff" means all employees of the Franchisee who are not Project Staff but
        whose employment specification and day-to-day activities relate to the Franchise;

        "Franchisee Ticketing Schemes" means the Rail and River Rover agreement and the
        Third Party Vending Outlet Agreements and any other arrangements entered into by DLR
        Limited at the Franchisee's request pursuant to paragraph 2 of part 3 of schedule 3
        (Tickets/Ticketing schemes);

        "Friday Night Possession" means a Possession from 0130 to 0430 on Saturday
        morning;

        "Full Extended Possession" means a Possession from 0130 Saturday morning to 0430
        Monday morning;

        "Funding Agreements" means the agreement providing working capital or other funding
        for the Franchisee for the Franchise and any other arrangements for working capital or
        other funding which the Franchisee has from time to time for the Franchise;

        "GLA" means the Greater London Authority, the body set up under the Greater London
        Authority Act 1999 and any body or bodies which succeed to its statutory powers;

        "Good Industry Practice" means the exercise of that degree of skill, diligence,
        prudence, foresight and practice which would reasonably and ordinarily be expected from
        a skilled and experienced person engaged in the railway industry;

        "Gross Fare Revenue" in respect of any Fee Period shall mean Ticket Sales Revenue,
        Travelcard Revenue, Through Ticketing Revenue and Other Fare Revenue;

        "Guarantee" means the guarantee to be provided to DLR Limited in the form set out in
        appendix 1 to part 1 of schedule 9 (Financial Requirements);

        "Guarantor" means any person or persons who may provide or be an obligor under the
        Performance Bond or the Guarantee (as the context requires) from time to time;

        "Guidance" means Circular 02/2000 dated 20 March 2000 issued by the Department of
        the Environment Transport and the Regions entitled "Contaminated Land –
        Implementation of Part IIA of the Environmental Protection Act 1990";

        "Handback Information" means the information required to be maintained and kept up
        to date in two sets pursuant to clause 41.2 (Handback Information) and Part 1 of schedule
        10 (Handback of Franchise);

        "Handback Procedures" means the outline description of handback procedures set out
        in part 5 of schedule 10 (Handback of Franchise);

        "Handover Notice" means a notice issued to the Franchisee by DLR Limited after the
        Franchisee has been given the opportunity to inspect the relevant works pursuant to
        paragraph 3.3 of part 3 of schedule 5, which states on the face of the notice that it is a
        handover notice as envisaged by paragraph 3.3(d) of part 3 of schedule 5 and which gives


                                               16
LONDON\LZM\3476316.31
        notice that the assets which are the subject of the relevant Project will from the date
        specified become part of the Franchise Assets;

        "Handover Procedures" means the procedures for handover of the Franchise set out in
        part 1 of schedule 1 (Grant of Franchise);

        "Handover Transfer Agreement" means the agreement for transfer to the Franchisee
        of the undertaking comprised in the Franchise made between DLR Limited and the
        Franchisee and dated on or about the date of this Agreement as amended from time to
        time;

        "Hazardous Matter" means all or any natural or artificial substance, pollutant or
        contaminant (whether in solid, semi-solid or liquid form or a gas or vapour), any chemical
        or industrial, radioactive, dangerous, toxic or hazardous substance, waste or residue and
        including genetically modified organisms;

        "HMRI" means Her Majesty's Railways Inspectorate;

        "HSE" means the Health and Safety Executive (including Her Majesty's Railways
        Inspectorate) and any body or bodies which succeed to its statutory functions;

        "Identified Assets" means any of the assets leased or otherwise made available to the
        Franchisee pursuant to the Existing Railway Lease Agreement, Rolling Stock Lease and
        Moveable Equipment Lease;

        "Identified Defect" means any defect in any Structure identified by an inspection
        carried out pursuant to clause 11.15 (Inspection of Structures);

        "Identified Occurrence" has the meaning ascribed thereto in paragraph 1 of part 8 of
        schedule 6 (General/Regulatory);

        "Identified Works" means the works required to rectify any Identified Defect;

        "Industrial Disease" means any of pneumoconiosis (including but not limited to
        asbestosis), mesothelioma, hand-arm vibration syndrome (HAVS) (including vibratory
        white finger), deafness (including any form of hearing impairment), and any other
        disease, damage or condition, including any injury or trauma attributable to a single event
        or incident suffered or contracted by an employee while acting in the course of his
        employment with DLR Limited and/or the Predecessor Franchisee Parties and/or the
        Franchisee Parties;

        "Immediately Effective Clauses" means clauses 1-8, clauses 28, 29, 30, 53-57;

        "Industrial All Risks Form" has the meaning ascribed thereto in part 3 of schedule 9
        (Financial Requirements);

        "Information Index" means the Customer Satisfaction Index in respect of the "clarity
        and usefulness of Service Information" topic as determined in accordance with
        paragraph 4 of part 4 of schedule 2 (Passenger Services);

        "Insurance Requirement Event" means a notice from DLR Limited in accordance with
        clause 31.1.3 stating that DLR Limited does not intend to maintain any or all of the
        insurances;

        "Insured Assets" has the meaning ascribed thereto in paragraph 2 of part 3 of schedule
        9 (Financial Requirements);

        "Insured Revenue" has the meaning given to it in paragraph 2.3 of part 3 of schedule 9
        (Financial Requirements);
                                                17
LONDON\LZM\3476316.31
        "Integrated Systems" means the Communications System, the Power Supply System,
        the Control Centre and the ATC System;

        "Intellectual Property" means the Intellectual Property Rights licensed by DLR Limited
        to the Franchisee pursuant to the Intellectual Property Licence;

        "Intellectual Property Licence" means the licence to use the Intellectual Property
        made between DLR Limited and the Franchisee on or about the date of this Agreement as
        amended from time to time;

         "Intellectual Property Rights" has the meaning given to it in the Intellectual Property
         Licence;

        "Interested Groups" means London Travelwatch and any other groups designated as
        such by DLR Limited from time to time;

        "Interface Events" means the various events involving interfaces between the activities
        of DLR Limited and its contractors and consultants and the activities of the Franchisee and
        its contractors and consultants described in the Technical Schedules;

        "Internal Franchisee Resources" means Resources available to the Franchisee (in the
        case of personnel) from staff engaged in undertaking the Franchise Obligations or from
        existing contract labour and (in the case of materials and equipment) from Franchise
        Assets;

        "Internet Site" means the internet site to be provided in accordance with paragraph 25
        of part 2 of schedule 2 (Passenger Services);

        "Interval" means the time interval between Trains available for passengers departing
        from any Station travelling in the same direction on the same Line;

        "Invitation to Tender" means the Invitation to Tender issued by DLR Limited on 9
        March 2005 as part of the competition referred to in Recital (B);

        "Journey Time Standard" means the standard and requirements set out in paragraphs
        2A.1 and 2A.2 of part 4 of schedule 2 (Passenger Services);

        "Key Contracts" means the agreements and contracts listed in part 2 of schedule 10
        (Handback of Franchise) and any other agreement, contract, licence or other arrangement
        (whether in written, oral or other form) to which the Franchisee may be party or under
        which the Franchisee may be the beneficiary from time to time and which is designated as
        such pursuant to clause 43.3 (Designation);

        "Key Posts" means the posts identified in part 2 of schedule 6 (General/ Regulatory);

        "Key Stocks" has the meaning ascribed thereto in the Key Stocks Requirements;

        "Key Stocks Requirements" means the requirements set out in part 6 of schedule 10
        (Handback of Franchise);

        "Last Train(s)" means, in respect of any Station on a Line, the last Train or Trains
        available for passengers, to depart from that Station in each direction (as applicable);

        "Law" means any applicable law, statute, proclamation, byelaw, directive, decision,
        regulation, rule, order, notice, rule of court or delegate or subordinate legislation;

        "Legislation" means legislation or subordinate legislation (including any order made
        pursuant to such legislation or subordinate legislation) in force in England enacted or


                                                18
LONDON\LZM\3476316.31
        made by the Parliament of the United Kingdom of Great Britain and Northern Ireland or
        European Community legislation to the extent that it is in force in England;

        "Legs" means any of the following sections of the Railway:

        (a)    BAN/TOG - WES;

        (b)    WIQ- LEW;

        (c)    STR - POP;

        (d)    BEC - POP;

        (e)    CAT-KGV;

        (f)    following the Woolwich Extension Operating Date KGV – WOA;

        (g)    following the Stratford International Extension Operating Date CAT-STI;

        "Lending Bank" means the bank or other person from time to time providing working
        capital or other funding to the Franchisee under the Funding Agreements;

        "Lessor Supply Contract" means the lessor supply contract made between Bombardier
        Transportation UK Limited, Docklands Light Railway Limited and Pitville Leasing Limited;

        "Lewisham Concession Agreement" means the agreement dated 1st October 1996
        and made between DLR Limited and the Lewisham Concessionaire, together with the
        Project Documents as defined therein;

        "Lewisham Concessionaire" means City Greenwich Lewisham Rail Link plc;

        "Lewisham Extension" means the permanent works constituting the extension of the
        Existing Railway from the Isle of Dogs, in the docklands area of East London, under the
        River Thames to Greenwich and Lewisham, designed, constructed, integrated,
        commissioned, tested and completed in accordance with the Lewisham Concession
        Agreement;

        "Lewisham Extension Matrix" means the matrix of obligations of the Franchisee
        relating to the Lewisham Concession Agreement contained at schedule 14 of this
        Agreement;

        "Lewisham Extension Project" means the Project for construction of the Lewisham
        Extension under the Lewisham Concession Agreement;

        "Lift Availability Percentage" has the meaning ascribed to that expression in
        paragraph 3.4(b) of part 4 of schedule 2 (Passenger Services);

        "Limited Extended Possession" means a Possession from 0130 Sunday morning to
        0430 Monday morning;

        "Line" means any of the Base Lines and any additional routes between Terminal Stations
        established by the Franchisee as part of its scheduled Train Services or (as the context
        requires) Published Train Services;

        "Local Authorities" means the London Boroughs of Tower Hamlets, Newham, Greenwich
        and Lewisham and the Corporation of the City of London;

        "London Boroughs Concessionary Travel Scheme" means the agreements (Annual
        and Framework) dated 22 December 2004 between TTL and the Association of London

                                               19
LONDON\LZM\3476316.31
        Government Transport and Environment Committee (ALGTEC) relating to the provision of
        concessionary travel for elderly and disabled London residents, including any
        modifications, renewals or replacements thereof from time to time;

        "London Passenger Information Net" means the travel information service provided
        by TfL to the public and media on behalf of certain public transport operators in London;

        "Long Stop Date" means 30 June 2006 (or such later date as DLR Limited and the
        Franchisee may agree);

        "Loss" means any Claim, loss, liability, damage, cost or expense (including legal fees),
        but excluding loss of profit, consequential loss and tax;

        "LRT" means London Regional Transport and any body or bodies which succeed to its
        statutory powers;

        "LTIG" means London Transport Insurance (Guernsey) Limited;

        "LUL" means London Underground Limited;

        "LUL Services" means the scheduled railway passenger services of LUL (or any
        successor thereto) from time to time;

        "Maintenance Documents" means the DLR Maintenance Standards, the Asset
        Management Strategy (including the Planned Maintenance Activities), the Asset
        Management Regime, the Asset Condition Requirements (including the Mandated
        Maintenance Works) and the Configuration Management Procedures;

        "Maintenance Procedures" means the Franchisee's maintenance procedures for the
        Existing Railway (and, to the extent applicable, the Extensions) contained at part 5 to
        schedule 4 (Maintenance of Franchise Assets) as amended from time to time in
        accordance with the Change Procedures;

        "Maintenance Services" means any of the Franchise Obligations relating to
        maintenance of the Franchise Assets, including the Franchisee's obligations under clause
        11 (Maintenance of Franchise Assets);

        "Management Fee" means a fee calculated as follows:

        (a)    in the case of each Mandated Franchisee Project the fixed amounts included for
               each Milestone Payment Event in the Technical Schedule applicable to such project;

        (b)    in the case of each Additional Project and of each Project in respect of which a DLR
               Works Change is required by DLR Limited amounts determined in accordance with
               part 7 of schedule 5;

        "Mandated Franchisee Project" means any of the Projects to be carried out by the
        Franchisee or by a third party contractor procured by the Franchisee which are listed in
        part 8 of Schedule 5 (Capital Projects) described in the Technical Schedules;

        "Mandated Maintenance Works" means any mandated maintenance works set out in
        column 5 of the Asset Condition Requirements;

        "Mandatory Comment" means a comment made by DLR Limited in accordance with
        paragraph 4.5(c) of part 3 of schedule 5 which concerns:

        (a)     the control and safe operation of the railway infrastructure, train operations and
                station operations;


                                                20
LONDON\LZM\3476316.31
        (b)     compliance or otherwise by the Franchisee with the duty to ensure that the
                Franchise Assets are capable of proper maintenance in accordance with the
                requirements of this Agreement and are safe;

        (c)     any aspect of a Franchisee Project which would or might with the passage of time
                result in the requirements of the Handback Procedures not being satisfied;

        (d)     an Interface Event;

        "Mandatory Modification" means a modification or addition to the Franchise Assets (or
        any of them) which is required to be made as a result of a Change of Law with respect to
        safety;

        "Matrices" means the Lewisham Extension Matrix, the City Airport Extension Matrix,
        Woolwich Extension Matrix, the Refurbishment Contract Matrix and the New Rolling Stock
        Matrix;

        "Maximum Foreseeable Loss" has the meaning given to it in paragraph 2.6.1 of part 3
        of schedule 9 (Financial Requirements);

        "Milestone Payment Event" means each event described as such in a Technical
        Schedule or Additional Franchisee Project Proposal, as applicable;

        "Minimum Departure Percentage" has the meaning ascribed thereto in paragraph 1.2
        of part 4 of schedule 2 (Passenger Services);

        "Minimum Dwell" means the minimum time during which a Train must wait at a Station
        for passengers to board or alight from the Train and measured as the time between the
        doors being enabled (to allow passengers to open the doors) and the Train receiving the
        "ready to depart" signal (as specified in paragraph 1.4 of the appendix to part 1 of
        schedule 2 (Passenger Services));

        "Minimum Reliability Percentage" has the meaning ascribed thereto in paragraph 2.2
        of part 4 of schedule 2 (Passenger Services);

        "Minimum Train Kilometres" means in respect of the relevant period, the aggregate
        sum of the kilometres that would be scheduled to be operated by all Trains on all Lines
        under a schedule specifically constructed to provide the minimum practicable Train
        Services required to comply with all aspects of the Base Service Requirement and the
        Base Service Plan currently in force;

        "Modification" means any modification, alteration or addition including any such
        modification or addition made pursuant to a Committed Project;

        "Motor Vehicle Insurance" means the insurances described in paragraph 6 of part 3 of
        schedule 9 (Financial Requirements);

        "Moveable Equipment" has the meaning ascribed thereto in the Moveable Equipment
        Lease;

        "Moveable Equipment Lease" means the lease of the Moveable Equipment made
        between DLR Limited and the Franchise on or about the date of this Agreement as
        amended from time to time;

        "New Hilton Building" has the meaning given to it in the Agreement for Lease;

        "New Rolling Stock" means the rolling stock procured by DLR Limited pursuant to the
        New Rolling Stock Contract;


                                               21
LONDON\LZM\3476316.31
        "New Rolling Stock Contract" means the contract for the purchase of new vehicles
        made between DLR Limited and Bombardier Transportation UK Limited and dated 27 April
        2005 ;

        "New Rolling Stock Lease" means the lease agreement made between DLR Limited and
        Pitville Leasing Limited in respect of the New Rolling Stock;

        "New Rolling Stock Matrix" means the matrix of obligations and rights of the
        Franchisee relating to the New Rolling Stock Contract and otherwise relating to the New
        Rolling Stock and contained at schedule 14 to this Agreement;

        "Night Possession" means a Weekday Night, Friday Night, Saturday Night or Sunday
        Night Possession;

        "Normal Loss Expectancy" has the meaning given to it in paragraph 2.6.2 of part 3 of
        schedule 9 (Financial Requirements);

        "North Quay Junction" means the section of the Railway between WIQ, WES and POP
        Stations;

        "Notional Taxes" means the amount of corporation tax calculated annually that DLR
        Limited and the Franchise (acting reasonably) agree would be payable if the Franchise
        was being undertaken by a separate corporate entity and business comprising the
        Franchise was the sole commercial enterprise of such entity;

        "Operating Manuals" means the operating manuals referred to in the Data Room
        Documents, as amended from time to time in accordance with the Change Procedures;

        "Operating Obligations" means all DLR Limited's obligations arising under the DLR
        Ticketing Schemes, other than those expressly reserved to DLR Limited under paragraph
        1 of part 3 of schedule 3 (Tickets/Ticketing Schemes);

        "Operating Rules/Procedures" means the operating rules, procedures and instructions
        referred to in Data Room Documents as amended from time to time in accordance with
        the Change Procedures;

        "Operations Functions" means the operating duties in connection with delivery of the
        Passenger Services to the public, as further described in paragraph 11 of part 2 of
        schedule 2 (Passenger Services);

        "Operations Support Functions" means the operating duties in connection with
        provision of any or all personnel, supplies, materials and facilities necessary to support
        delivery of the Passenger Services to the public, as further described in paragraph 12 of
        part 2 of schedule 2 (Passenger Services);

        "Ordinary Ticket" means a Ticket valid only for one single or one single and one return
        journey;

        "Other Assets" means any assets/rights arising from or used in connection with the
        Franchise which are, prior to designation pursuant to clause 49 and/or 50, not Franchise
        Assets or Stocks and which DLR Limited reasonably considers to be material for the
        continuing operation of the Railway and/or the undertaking comprised in the Franchise
        and which DLR Limited designates as Other Assets pursuant to clause 49 (Intellectual
        Property) and/or clause 50 (Other Assets);

        "Other Fare Revenue" in respect of any Fee Period shall mean revenue received by DLR
        Limited for concessionary travel or staff travel arrangements;



                                               22
LONDON\LZM\3476316.31
        "Overall Service Index" means the Customer Satisfaction Index in respect of the
        "overall service" topic as determined in accordance with paragraph 4 of part 4 of
        schedule 2 (Passenger Services);

        "Parts" means all consumable appliances parts instruments appurtenances accessories
        furnishings and other equipment or components of whatever nature (other than any
        Railway Asseted Spares) which are from time to time incorporated or installed in or
        attached to the Existing Railway;

        "Passenger Services" means the Train Services and any other services provided to the
        public (including passengers on the Railway) by the Franchisee in accordance with and
        pursuant to schedule 2 (Passenger Services);

        "Peak Period" means 0630-1000 and 1600-1930 on any Weekday;

        "Peak Period Reliability Percentage" has the meaning ascribed to that expression in
        paragraph 2.6(c) of part 4 of schedule 2 (Passenger Services);

        "Penalty Fare" means a penalty fare issued in accordance with schedule 17 of the
        Greater London Authority Act 1999 or such other regulation, order or instrument issued
        by TfL, the Mayor or any other Relevant Authority;

        "Performance Bond" means the performance bond to be provided to DLR Limited in the
        form set out in appendix 2 to part 1 of schedule 9 (Financial Requirements), as replaced
        or amended from time to time;

        "Period for Completion" in relation to each Franchisee Project means the period agreed
        between the Franchisee and DLR Limited for completion of the works and activities
        comprised in such project, as the same may be extended by agreement between the
        parties;

        "Permit" means a permit whereby the Franchisee authorises DLR Limited or a DLR
        Limited Party to have access to so much of the Existing Railway as shall be required from
        time to time for the carrying out of works or activities on or in connection with DLR
        Projects;

        "Permitted Closure" means a closure of the Railway which is permitted under the terms
        of paragraph 14 of part 1 of schedule 2 (Passenger Services);

        "Permitted Commercial Activities" means the activities of the Franchisee permitted
        under clause 14.2 (Permitted Commercial Activities);

        "Permitted Liens" means Permitted Liens as defined in the Ancillary Agreements;

        "Personal Data" has the meaning given to it by section 1(1) of the DPA;

        "PID Availability Percentage" has the meaning ascribed to that expression in
        paragraph 3.4(d) of part 4 of schedule 2 (Passenger Services);

        "Planned Maintenance Activities" means each of the planned maintenance activities
        contained at part B of part 2 of schedule 4 (Maintenance of Franchise Assets);

        "Possession" means possession of any part of the Railway which prevents, impairs or
        otherwise affects the ability of Train Services to operate on all or part of the Railway;

        "Possession Procedures" means the procedures for granting Possessions of the Railway
        being at the date hereof the possession procedures included in the Operating
        Rules/Procedures, and such further procedures as may be established in accordance with
        the Change Procedures;
                                               23
LONDON\LZM\3476316.31
        "Post Implementation Review" a review of the project undertaken by DLR Limited
        following completion of any Project;

        "Power of Attorney" means the power of attorney of the Franchisee relating to the
        execution of the Termination Transfer Agreement;

        "Power Supply System" means the connection, transmission and conduction equipment
        installed for the purpose of supplying electricity to the Existing Railway and including all
        substitutions reinstatements replacements renewals thereof and Modifications thereto;

        "Predecessor Franchisee" means each of Serco Docklands Limited and Docklands
        Railway Management Limited;

        "Predecessor Franchise Agreement" means the franchise agreement made between
        Docklands Railway Management Limited and DLR Limited and dated 10 March 1997 and
        the extension to the franchise agreement made between Serco Docklands Limited and
        DLR Limited and dated 22 April 2002;

        "Predecessor Franchise Commencement Date" means 6 April 1997;

        "Predecessor Franchisee Parties" means the Predecessor Franchisee and its servants,
        agents, officers, employees, contactors and sub-contractors of any tier;

        "Pre-Existing Hazardous Matter" means Hazardous Matter in, on, at or under the
        Existing Railway prior to or on the Predecessor Franchise Commencement Date;

        "Pre-Handback Period" has the meaning ascribed thereto in clause 41.6 (Pre-Handback
        Period);

        "Prescribed Rate" means the rate of 1 per cent. above the base rate of Barclays Bank
        plc or, in the absence of such base rate, such other base rate as DLR Limited may, after
        consultation with the Franchisee, reasonably determine to be appropriate in the
        circumstances;

        "Procedure" means any procedure, manual, rule, standard or instruction relating to the
        Services, Franchise, Franchise Assets, Railway and/or Stocks, including the DLR Railway
        Safety Case, Safety Policy and Procedures, Operating Rules/Procedures, Operating
        Manuals, Asset Management Regime, Asset Management Strategy, Maintenance
        Procedures, Configuration Management Procedures and Quality Procedures;

        "Processing" has the meaning given to it by section 1(1) of the DPA and "Process" and
        "Processed" will be construed accordingly;

        "Project" means any works in relation to the Railway and/or the Rolling Stock which do
        not fall to be carried out by the Franchisee as part of the Maintenance Services (subject as
        provided in clause 11.2.2);

        "Project Claim" has the meaning given to it in paragraph 3.4A of part 3 of schedule 5
        (Capital Projects);

        "Project Close Out Report" means a report prepared following the completion of a
        Project and containing as a minimum the information detailed in paragraph 2.1 (e) of part
        3 of schedule 5;

        "Project Payments" means an amount determined as such under the provisions of part
        4 of schedule 5 (Capital Projects);

        "Project Programme" means a detailed programme prepared by the Franchisee for
        each Franchisee Project which shall be based on and include at least the activities referred
                                                24
LONDON\LZM\3476316.31
        to in the Technical Schedule applicable thereto, or if not so described as DLR Limited may
        reasonably require;

        "Project Services" means those Services which relate to the carrying out and
        completion of DLR Projects;

        "Project Staff" any employee of the Franchisee whose employment specification states
        that the employee is to manage Projects and who spends more than 90 per cent. of their
        time managing Projects, based on a monthly review of the employee's man-hours;

        "Properly Completed Dispatch" means a Dispatch which is fully compliant with
        paragraphs 1.3 and 2.3 of part 4 of schedule 2 (Passenger Services);

        "Property Management Services" means the services to be provided by the Franchisee
        under clause 14.1 (Property Management Services);

        "Property Related Contracts" means the agreements referred to in schedule 5
        (Superior Leases) of the Railway Lease, schedule 6 (Documents) of the Railway Lease and
        schedule 3 (Current Transactions) of the Existing Railway Lease Agreement, any sub lease
        or other agreements for use of the Retained Estate from time to time and any other
        agreements relating to DLR Limited's property interest in the Railway, including in any
        such case any modifications, renewals or replacements thereof from time to time;

        "Published Train Services" means the Train Services published by the Franchisee in
        accordance with the requirements of paragraph 16 of part 1 of schedule 2 (Passenger
        Services);

        "Quality Exclusion" means any event which constitutes a Quality Exclusion under the
        terms of paragraph 7 of part 4 of schedule 2 (Passenger Services);

        "Quality Procedures" means the quality procedures set out in part 4 of schedule 6
        (General/ Regulatory);

        "Rail and River Rover" means a ticket allowing travel on both DLR services and Thames
        river services under arrangements agreed between the Franchisee and City Cruises
        Limited;

        "Railway" means the Existing Railway, the Lewisham Extension, the City Airport
        Extension, the Woolwich Extension upon the Woolwich Extension Operating Date, the
        Stratford International Extension on the Stratford International Extension Operating Date
        and any other extension, enhancement or modification on the date of its completion;

        "Railway Asseted Spare" means each of the spares and sub-assemblies of the Existing
        Railway which are from time to time incorporated or installed in or attached to the
        Existing Railway including any replacement spares or sub-assemblies and any Other
        Assets which are designated by DLR as Railway Asseted Spares pursuant to clause 50.2 of
        the Franchise Agreement and including all Parts incorporated or installed or attached to
        such spares or sub-assemblies and any Technical Records relating to such spares and sub-
        assemblies and including all Modifications thereto;

        "Railway Lease" has the meaning ascribed thereto in the Existing Railway Lease
        Agreement;

        "Record of Assumptions" means a document prepared by the Franchisee providing:

        (a)    detailed assumptions, explanations of assumptions and parameters underlying the
               Financial Model supporting the Business Plan or updated Business Plan;



                                               25
LONDON\LZM\3476316.31
        (b)    details of how Fees have been calculated (including by reference to a defined
               annual profit margin);

        (c)    a description of the functionality, operation and structure of the Financial Model;
               and

        (d)    a description of each input cell, its requirements and its inter-relationship with the
               Financial Model;

        "Refurbishment Contract" means the contract for the refurbishment of DLR Limited's
        rolling stock made between DLR Limited and Alstom Transport and dated 24 September
        2002;

        "Refurbishment Contract Matrix" means the matrix of obligations and rights of the
        Franchisee relating to the Refurbishment Contract contained at schedule 14 of this
        Agreement;

        "Relevant Authorities" means those public and private sector bodies and authorities
        whose authority, consent or agreement is or may be required for the carrying out of all or
        any part of a Franchisee Project;

        "Relevant Extension Matrix" means the Lewisham Extension Matrix and/or the City
        Airport Extension Matrix and/or the Woolwich Extension Matrix;

        "Relief Event" means:

        (a)    fire, explosion, lightning, storm, tempest, flood, bursting or overflowing of water
               tanks, apparatus or pipes, ionising radiation, earthquakes, riot and civil commotion
               or protest (to the extent that it does not constitute a Force Majeure Event);

        (b)    any accidental loss or damage to any assets comprised in the Railway necessary
               for the provision of the Services;

        (c)    any blockade or embargo;

        (d)    any official or unofficial strike, lockout, go-slow or other dispute in each case
               affecting the railway industry or the public transport industry generally or a
               significant sector of either of them;

        (e)    the HSE withdrawing its acceptance of the DLR Railway Safety Case or suspending
               or preventing the operation of the Railway due to the acts or omissions of DLR
               Limited or the Concessionaires, their employees or persons acting on their behalf
               or at their direction;

        (f)    a failure by a contractor to comply with its obligations under a DLR Project Contract
               which materially affects the Franchisee's ability to comply with its obligations under
               the Franchise Agreements,

        unless any of the events listed above arises (directly or indirectly) as a result of any act,
        omission or default of the Franchisee, its employees or persons acting on its behalf or at
        its direction;

        "Remedial Action" means any steps reasonably necessary for limiting, removing,
        remedying, cleaning up, abating, containing, preventing or ameliorating damage to the
        Environment or carrying out such investigative work as is reasonably required in relation
        thereto;

        "Remedial Period" means the period specified in any notice issued by DLR Limited
        pursuant to clause 24.1 (Remedial action);
                                                 26
LONDON\LZM\3476316.31
        "Representative"     means    each   of   the   DLR   Representative   and   the   Franchisee
        Representative;

        "Resource" means any plant or equipment of the Franchisee or Franchisee Staff which
        DLR Limited or a DLR Limited Party may require to use in connection with DLR Projects,
        including any Specified Resource but excluding any Project Staff;

        "Resource Payment" means a payment due from DLR Limited to the Franchisee in
        accordance with paragraph 6.3 of part 3 of schedule 5;

        "Resource Procedures" means the procedures for the use of Resources agreed from
        time to time between DLR Limited and the Franchisee, as amended or modified from time
        to time in accordance with the Change Procedures;

        "Retail Prices Index" means the retail prices index for all items as published from time
        to time by the Office of National Statistics or, if such index shall cease to be published or
        there is a material change in the basis of the index or if, at any relevant time, there is a
        delay in the publication of the index, such other retail prices index as DLR Limited may,
        after consultation with the Franchisee, determine to be appropriate in the circumstances;

        "Retained Employees" has the meaning ascribed thereto in the Handover Transfer
        Agreement;

        "Retained Estate" has the meaning ascribed thereto in the Railway Lease;

        "Revenue Collection IT" means the hardware, processes and technology within the APC
        and/or TVM systems and associated interfaces including communications links within the
        control of the Franchisee;

        "Revenue Fee" means the amount calculated as such in accordance with paragraph 2 of
        part 1 of schedule 8 (Remuneration);

        "Ritz Building" has the meaning given to it in the Agreement for Lease;

        "Rolling Stock" has the meaning ascribed thereto in the Rolling Stock Lease;

        "Rolling Stock Lease" means the lease of the Rolling Stock made between DLR Limited
        and the Franchisee on or about the date of this Agreement;

        "Rolling Stock Vehicle" has the meaning given thereto in the Rolling Stock Lease;

        "Rolling Stock Works" has the meaning given to it in part 8 of schedule 4
        (Maintenance);

        "ROTs Regulations" means the Railways and Other Transport Systems (Approval of
        Works, Plant and Equipment) Regulations 1994 (as amended);

        "RPI" means the quotient of the Retail Prices Index for March which immediately
        precedes the commencement of the relevant Fee Year divided by the Retail Prices Index
        for April 2006;

        "RPI Indexed" means indexed by a factor of RPI;

        "Safety Index" means the Customer Satisfaction Index in respect of the "safety and
        security" topic as determined in accordance with paragraph 4 of part 4 of schedule 2
        (Passenger Services);

        "Safety Policy and Procedures" means the policies and procedures referred to in part 5
        schedule 6 (General/Regulatory);

                                                  27
LONDON\LZM\3476316.31
        "Safety Regime" means the safety regime set out in part 7 of schedule 6 (General/
        Regulatory);

        "Saturday" means any Saturday, excluding Christmas Day;

        "Saturday Night Possession" means a Possession from 0130 on Sunday morning to
        0600 on Sunday morning;

        "Scheduled Train Services" means the Train Services scheduled by the Franchisee in
        accordance with the requirements of part 1 of schedule 2 (Passenger Services);

        "Section 12 Regulations" means any regulations from time to time under Section 12 of
        the Fire Precautions Act 1971;

        "Security Interest" means any mortgage, charge (whether fixed or floating),
        encumbrance, pledge, lien, trust arrangement or other third party right or interest (legal
        or equitable) over or in respect of the relevant asset, security or right;

        "Serco Docklands" means the division of the Franchisee which undertakes the Franchise
        Obligations and which operates under the brand of Serco Docklands;

        "Service Day" means the period commencing at the earliest opening of any Station to
        the public on a day and ending at the latest closing of any Station to the public on that
        day (or, as applicable, the early hours of the next day);

        "Service Information" means the information on the Passenger Services required to be
        published by the Franchisee under paragraph 16 of part 1 of schedule 2 (Passenger
        Services);

        "Service Quality Standards" means the standards, specifications and requirements
        contained in part 4 of schedule 2 (Passenger Services), as the same may be varied in
        accordance with the terms of this Agreement;

        "Service Reliability Percentage" has the meaning ascribed to that expression in
        paragraph 2.6(a) of part 4 of schedule 2 (Passenger Services);

        "Service Reliability Standard" means the standard and requirements set out in
        paragraphs 2.1 and 2.2 of part 4 of schedule 2 (Passenger Services);

        "Service Time Periods" means the Base Time Periods as extended by the Franchisee in
        accordance with paragraph 3 of part 1 of schedule 2 (Passenger Services) in preparation
        of its scheduled Train Services or (as the context requires) Published Train Services;

        "Services" means any services, works and/or other activities to be provided, carried out
        and/or undertaken by the Franchisee under or pursuant to the Franchise Agreements;

        "Shareholders" means the shareholders of the Franchisee from time to time;

        "SHEC" means the safety health and environment committee of TfL which overviews the
        safety performance of TfL subsidiary companies including DLR Limited;

        "Software" has the meaning ascribed thereto in the Software Licence;

        "Software Licence" means the Licence to use the Software made between DLR Limited
        and the Franchisee on or about the date of this Agreement as amended from time to time;

        "Special Services Compensation Event" means a Special Service Requirement or a
        DLR Special Service Requirement (as the case may be) which if implemented would


                                               28
LONDON\LZM\3476316.31
        require more Train Services to be scheduled and operated in the morning Peak Period on
        the Railway than would be the case in the then subsisting Base Service Requirement;

        "Special Service Requirement" has the meaning given to it in paragraph 15 of Part 1
        of Schedule 2 (Passenger Services);

        "Specified Resource" means any of the plant, equipment or Franchisee Staff set out in
        the Technical Schedules, but excluding any Project Staff;

        "Staff Index" means the Customer Satisfaction Index in respect of the "helpfulness
        and friendliness of staff" topic as determined in accordance with paragraph 4 of part 4
        of schedule 2 (Passenger Services);

        "Station" means any of the stations on the Railway;

        "Station Block" means:

        (a)    checking all passengers entering or leaving a particular Station to ensure that all
               passengers hold a valid Ticket for travel on the Railway; and

        (b)    taking appropriate action against passengers not holding a valid ticket including
               issuing Penalty Fares or processing for prosecution or other actions as applicable;

        "Station Equipment Availability Percentages" means any or all of the TVM
        Availability Percentage, the Lift Availability Percentage, the Escalator Availability
        Percentage and the PID Availability Percentage;

        "Station Equipment Availability Standard" means the standard and requirements set
        out in paragraphs 3.1 and 3.2 of part 4 of schedule 2 (Passenger Services);

        "Station Opening Hours" means, in respect of any Station on any day, the time period
        specified in paragraph 6 of part 1 of schedule 2 (Passenger Services) during which that
        Station is to be open for customers;

        "Stocks" means stocks, consumables and small tools and equipment, including spares
        (other than Asseted Spares) and Key Stocks;

        "Stocks Charge" means the charge referred to in paragraph 4 of part 2 of schedule 9
        (Financial Requirements);

        "Stratford International Contractor(s)" means the contractor(s) undertaking the
        Stratford International Extension Project;

        "Stratford International Extension" means the permanent works constituting the
        extension of the Railway from Canning Town to Stratford International to be constructed
        by the Stratford International Contractor(s);

        "Stratford International Extension Operating Date" means the date which DLR
        Limited notifies to the Franchisee as being the date when the Stratford International
        Extension will become operational;

        "Stratford International Extension Project" means the project for the construction of
        the Stratford International Extension;

        "Structure" has the meaning ascribed to that term in the Structures Rolling Programme
        set out in part 6 of schedule 4 (Maintenance of Franchise Assets);

        "Structures Rolling Programme" means the programme contained at part 6 of
        schedule 4 (Maintenance of Assets) as amended in accordance with clause 4;

                                               29
LONDON\LZM\3476316.31
        "Substitute Services" means substitute services provided when some or all of the Train
        Services are unavailable to the public by a properly licensed carrier or a combination of
        such carriers to transport passengers between the Stations of the Railway approximately
        following the Lines of the Published Train Services;

        "Successor Franchisees" means any persons succeeding, either directly or indirectly,
        the Franchisee in the provision of all or any of the Services, including DLR Limited in the
        event that it resumes the undertaking comprised in the Franchise;

        "Sunday" means any Sunday, and any bank holidays but excluding Christmas Day;

        "Sunday Night Possession" means a Possession from 0030 on Monday morning to
        0430 on Monday morning;

        "Superior Lease" has the meaning given to it in the Lease;

        "Supplemental Railway Lease" has the meaning ascribed thereto in the Existing
        Railway Lease Agreement;

        "Target Base Service Departure Percentage" has the meaning ascribed thereto in
        paragraph 1.2 of part 4 of schedule 2 (Passenger Services);

        "Target Service Reliability Percentage" has the meaning ascribed thereto in
        paragraph 2.2 of part 4 of schedule 2 (Passenger Services);

        "Technical Records" means the documents data and records relating to the Integrated
        Systems and all additions and revisions to them from time to time and all entries on any
        database relating to such Integrated Systems;

        "Technical Schedules" means the descriptive schedules in part 11 of schedule 5
        describing the Extant DLR Projects and Mandated Franchisee Projects and such further
        schedules as may be produced from time to time in accordance with part 3 of schedule 5
        in respect of Additional DLR Projects and Additional Franchisee Projects, in each case as
        amended or modified by agreement between the parties or pursuant to a DLR Works
        Change;

        "Terminal Station" means any of the first or last Stations of any Line;

        "Terminating Station" means the Station at which any Train Service is advertised to
        terminate;

        "Termination Payment" means the amount calculated as such in accordance with
        clause 39 (Compensation on Termination);

        "Termination Transfer Agreement" means the agreement for transfer to DLR Limited
        of the undertaking comprised in the Franchise upon termination of this Agreement in the
        agreed form referred to in part 4 of schedule 10 (Handback of Franchise);

        "Terms and Conditions" means the general terms and conditions known as "conditions
        of carriage" applying to all Tickets entitling passengers to use Train Services in the agreed
        form from time to time;




                                                 30
LONDON\LZM\3476316.31
        "TfL" means Transport for London, the statutory body set up under the Greater London
        Authority Act 1999 which is responsible to the Mayor of London for the provision of
        transport services in London and any body or bodies which succeed to its statutory
        powers;

        "Third Party Disruption" means any of the following events or circumstances:

        (a)    suspension of Train Services or closure of Stations caused by intrusions or
               encroachments by third parties into the Railway, but excluding interruptions caused
               by passengers, trespassers or Franchisee Parties;

        (b)    suspension of Train Services or closures of Stations required or directly caused by
               third parties under the terms of any of the DLR Contracts or DLR Undertakings,

        which (in any such case) renders the Franchisee incapable of performing the Minimum
        Train Kilometres for two consecutive Service Days following the Service Day when the
        event or circumstances first occurred and requires the provision of Substitute Services,
        provided always that events or circumstances shall not be treated as Third Party
        Disruptions if:

        (a)    they would not have occurred but for a breach by the Franchisee of the terms of
               any of the Franchise Agreements;

        (b)    they could have been prevented through the exercise of proper foresight and due
               diligence of the Franchisee Parties;

        (c)    their occurrence could reasonably have been anticipated and appropriate
               anticipatory mitigation measures could reasonably have been undertaken; or

        (d)    they give rise to, arise from or constitute another of the Compensation Events
               listed in paragraph 1 of part 3 of schedule 8 (Remuneration);

        "Third Party Liability Insurance" means the insurances described in paragraph 4 of
        part 3 of schedule 9 (Financial Requirements);

        "Third Party Vending Outlet Agreements" means the agreements between DLR
        Limited and third parties (including the agreement between DLR Limited and Ticket Stops
        for sales by selected Ticket Stop Agents) entered into at the request of the Franchisee,
        including in any such case any modifications, renewals or replacements thereof from time
        to time;

        "Third Party Warranty" means any warranty, representation, condition or guarantee
        (including without limitation any guarantee or performance or service life policy) express
        or implied relating to the design, manufacture, condition, performance, merchantability or
        fitness for any use or purpose of any Parts or any Railway Asseted Spares made by its
        manufacturer or any relevant seller supplier sub-contractor maintenance performer or
        repairer other than DLR Limited;

        "Three Car Project" means the project to facilitate the operation of Trains formed of
        three Vehicles on the Railway;

        "Threshold Amount" means, in relation to any Fee Period, the amount calculated as
        such in accordance with paragraph 6.4 of part 4 of schedule 2 (Passenger Services);

        "Through Ticketing Agreement" means the agreement between TTL and DLR Limited
        relating to arrangements for sale, use and reimbursement of through tickets, including
        any modifications, renewals or replacements thereof from time to time;



                                               31
LONDON\LZM\3476316.31
        "Through Ticketing Revenue" in respect of any Fee Period shall mean the
        apportionment of fare revenue received by DLR Limited in respect of that Fee Period
        under the Through Ticketing Agreement;

        "Ticket" means any ticket, permit or Travelcard including Oyster and pre-pay versions of
        the same which may be issued by or on behalf of DLR Limited or accepted by DLR Limited
        from time to time;

        "Ticket Sales Revenue" in respect of any Fee Period shall mean the aggregate of the
        fares received during that Fee Period by DLR Limited from sale of Tickets by Franchisee
        Parties including ticket vending machines receipts (net of commission), third party
        vending outlets receipts (net of commission) but not including any money collected by
        way of penalty fares;

        "Ticketing Agreements" means the Travelcard Agreement and Through Ticketing
        Agreement including any updated version of such agreements to reflect the inclusion of
        Oyster and pre-pay ticketing arrangements;

        "Ticketing Schemes" means the Travelcard Agreement, the TTL/TOC Ticketing
        Agreements, the Through Ticketing Agreement, the London Boroughs Concessionary
        Travel Scheme, the Rail and River Rover and the Third Party Vending Outlet Agreements
        including any updated versions of such agreements to reflect the inclusion of Oyster and
        pre-pay ticketing arrangements and any other agreements relating to the provision of
        Passenger Services entered into pursuant to part 1.4 of part 3 of schedule 3
        (Tickets/Ticketing Schemes) or notified by DLR Limited pursuant to paragraph 7 of part 3
        of schedule 6 (General/Regulatory);

        "Timetable" means the timetable required to be published under paragraph 16.5 of part
        1 of schedule 2 (Passenger Services) which provides passengers with information on the
        times of Dispatch of Trains for the Published Train Services;

        "TOC" means any passenger train operating company operating on Network Rail
        infrastructure or the Channel Tunnel Rail Link;

        "Train" means one or more Vehicles used in the provision of Train Services on the
        Railway;

        "Train Service Hours" means, in respect of any day, the period of time commencing on
        that day by reference to which the Franchisee establishes the Scheduled Train Services or
        (as the context requires) the Published Train Services;

        "Train Services" means the carriage of passengers by Trains pursuant to part 1 of
        schedule 2 (Passenger Services), excluding Substitute Services;

        "Travelcard" means a multi modal ticket issued for varying lengths of time, available for
        travel in specified zones and used for travel on DLR Services in the relevant zones;

        "Travelcard Agreement" means the agreement between TTL and DLR Limited relating
        to arrangements for sale, use and reimbursement of travelcards, including any
        modifications, renewals or replacements thereof from time to time;

        "Travelcard Revenue" in respect of any Fee Period shall mean the apportionment of
        fare revenue received by DLR Limited in respect of that Fee Period under the Travelcard
        Agreement;

        "TTL" means Transport Trading Limited, (a wholly owned subsidiary of TfL) which has
        amongst its wholly owned subsidiaries DLR Limited and any body or bodies which succeed
        to Transport Trading Limited's functions;

                                               32
LONDON\LZM\3476316.31
        "TTL/TOC Ticketing Agreements" means the agreement between TTL and certain of
        the TOCs relating to arrangements for providing and marketing combined tickets which
        are valid on certain railway services provided by those TOCs and on certain railway
        services provided by TfL;

        "TUPE Information" means the information in relation to the Franchise Employees
        specified in paragraph 7 of part 1 of schedule 10 (Handback of Franchise);

        "TUPE Regulations" means the Transfer of Undertakings (Protection of Employment)
        Regulations 1981 and the Acquired Rights Directive (EC 77/187);

        "TVM Availability Percentage" has the meaning ascribed to that expression in
        paragraph 3.4(a) of part 4 of schedule 2 (Passenger Services);

        "Uninsurable" means in relation to a risk:

        (a)    that in respect of that risk insurance is not available from insurers of good repute
               and standing in the leading insurance markets worldwide; or

        (b)    the premium levels, deductibles, limits of indemnities and/or scope of cover are at
               levels that the risk is not generally being insured against in the leading insurance
               markets worldwide by prudent contractors in the rail industry,

        provided that for the purposes of this definition the parties agree that LTIG is an insurer
        of good repute and standing.

        "Updated Business Plan" means the business plan updated in accordance with
        paragraph 2.1 of schedule 7;

        "Variation" means an Additional DLR Contract, Compensation Event, DLR Base Service
        Change, DLR Marginal Base Service Change, Identified Defect, Identified Occurrence, DLR
        Works Change, Additional Project or Change to Required Insurances;

        "Variation Payment" means an amount determined as such in accordance with Part 4 of
        schedule 8 (Remuneration) or otherwise agreed between the parties;

        "Variation Procedure" means the provisions set out in part 4 of schedule 8
        (Remuneration);

        "VAT" or "Value Added Tax" means value added tax as provided for in the Value Added
        Tax 1994 and legislation (whether delegated or otherwise) supplemental to it or in any
        primary or secondary legislation promulgated by the European Community or any official
        body or agency of the European Community and any similar sales, consumption or
        turnover Tax replacing or introduced in addition to the foregoing.

        "Vehicle" means a Rolling Stock Vehicle constructed for the carriage of passengers;

        "Waiver" means a written notice of waiver issued by DLR Limited pursuant to paragraph
        20 of part 1 of schedule 2 (Passenger Services);

        "Warning Notice" means any notice issued by DLR Limited pursuant to clause 24.2
        (Warning Notices) or paragraph 10 of part 4 of schedule 2 (Passenger Services);

        "Weekday" means any day of the week, excluding Saturdays, Sundays, bank holidays
        and Christmas Day;

        "Weekday Night Possession" means a Possession from 0130 to 0430 on any weekday
        morning (excluding Saturday, Sunday and Monday morning);


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        "Wilful Misconduct" means fraud (including fraudulent misrepresentation), wilful default
        or an intentional disregard of any material provision of this Agreement;

        "Woolwich Concessionaire" means Woolwich Arsenal Rail Enterprises Limited;

        "Woolwich Extension" means the permanent work consisting of an extension of the
        Docklands Light Railway from King George V Station under the River Thames to Woolwich
        Arsenal to be designed, constructed, integrated, commissioned and completed in
        accordance with the Woolwich Extension Concession Agreement;

        "Woolwich Extension Concession Agreement" means the Agreement entered into
        between DLR Limited and the Woolwich Concessionaire dated 31 May 2005 together with
        the Project Documents as defined therein;

        "Woolwich Extension Matrix" means the matrix of the obligations and rights of the
        Franchisee relating to the Woolwich Extension Concession Agreement contained at
        Schedule 14 (Matrices);

        "Woolwich Extension Operating Date" has the meaning ascribed to the "Operating
        Date" under the Woolwich Extension Concession Agreement;

        "Woolwich Extension Project" means the project for the construction and maintenance
        of the Woolwich Extension under the Woolwich Extension Concession Agreement;

        "Works Change" means a variation in the design, quality or quantity of the works
        comprised in a Committed Project, including additions, omissions, substitutions,
        alterations in design and variation in the Works Specification;

        "Works Specification" means the specification for a Committed Project (including those
        parts of the Technical Schedules relating thereto) as amended from time to time under
        paragraph 8.1 of part 3 of schedule 5 (Capital Projects) or as otherwise amended by
        agreement between the parties.

1.2     Interpretation

        In this Agreement (including the recitals, schedules and appendices), except where the
        context otherwise requires:

        1.2.1           references to a "clause" or "clauses", a "sub-clause" or "sub-clauses", a
                        "schedule" or "schedules" and an "appendix" or "appendices" are to a clause
                        or clauses, a sub-clause or sub-clauses, a schedule or schedules or an
                        appendix or appendices to this Agreement;

        1.2.2           the headings to clauses, sub-clauses, schedules and appendices are for
                        convenience only and shall not affect the interpretation of this Agreement;

        1.2.3           reference to a statutory provision shall include a reference to:

                        (a)    the statutory provision as modified or re-enacted or consolidated
                               from time to time whether before or after the date of this Agreement;
                               and

                        (b)    any subordinate legislation made under the statutory provision
                               whether before or after the date of this Agreement;

        1.2.4           reference to a "person" or "persons" includes bodies corporate,
                        unincorporated associations and partnerships and that person's or those
                        persons' legal personal representatives, successors and permitted assigns;


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        1.2.5           reference to this Agreement or any other agreement or document includes
                        this Agreement or, as the case may be, such other agreement or document
                        as the same may from time to time be amended, supplemented or replaced;

        1.2.6           a reference to an agreement or other document "in the agreed form" is to
                        that agreement or document in the form which has been accepted by DLR
                        Limited and initialled on its behalf and on behalf of the Franchisee for the
                        purposes of identification;

        1.2.7           words importing the singular number only shall include the plural number
                        and vice versa;

        1.2.8           words importing one gender shall include any other gender;

        1.2.9           any obligation on the Franchisee to do or not to do any thing shall be
                        deemed to include an obligation to procure or not to permit or suffer such
                        things to be done by the Franchisee's agents, servants and contractors or
                        sub-contractors of any tier;

        1.2.10          the words "include" and "including" are to be construed without limitation;

        1.2.11          references to any period of 7 days or less shall exclude any days which are
                        not business days falling within any such period;

        1.2.12          references to "business day" shall mean any day (excluding Saturday or
                        Sunday) when banks are generally open for business in the City of London;

        1.2.13          references to materials, information, data or other records shall be to
                        materials, information, data or other records whether stored in electronic,
                        written or other form;

        1.2.14          the words "subsidiary", "holding company", "wholly owned subsidiary" and
                        "parent undertaking" shall have the same meaning in this Agreement as in
                        sections 258 and 736 of the Companies Act 1985;

        1.2.15          references to this Agreement include the recitals, schedules and appendices
                        hereto;

        1.2.16          references to due diligence by the Franchisee and/or the Franchisee Parties
                        shall include due diligence on behalf of the Franchisee by the Franchisee
                        Parties and the Shareholders.

1.3     Operations

        In this Agreement, except where the context otherwise requires:

        1.3.1           Each of the following Stations may be identified by the three letter
                        abbreviation following its name:

                        Bank (BAN), Island Gardens (ISG), Lewisham (LEW), Tower Gateway (TOG),
                        Crossharbour (CRO), Stratford (STR), Westferry (WES), West India Quay
                        (WIQ), Poplar (POP), Blackwall (BLA), Canary Wharf (CAW), Canning Town
                        (CAT), London City Airport (LCA), King George V (KGV), Woolwich Arsenal
                        (WOA), Prince Regent (PRR), All Saints (ALS), Beckton (BEC), Beckton
                        Depot (BED), Beckton Park (BEP), Bow Church (BOC), Custom House (CUH),
                        Cutty Sark (CUS), Cyprus (CYP), Deptford Bridge (DEB), Devons Road
                        (DER), East India (EAI), Elverson Road (ELR), Gallions Reach (GAR),
                        Greenwich (GRE), Heron Quays (HEQ), Limehouse (LIM), Mudchute (MUD),
                        Operations & Maintenance Centre, Poplar (OMC), Poplar Depot (POD),
                                                  35
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                        Pudding Mill Lane (PML), Royal Albert (ROA), Royal Victoria (ROV), Shadwell
                        (SHA), South Quay (SOQ), West Silvertown (WST), Pontoon Dock (PDK) and
                        Stratford International (STI).

        1.3.2           Times of the day are expressed in "0000" format on the basis of a 24 hour
                        clock.

        1.3.3           A Train or Vehicle shall be "accepted into service" by the Franchisee if the
                        Franchisee permits the Train or Vehicle to be used in the provision of Train
                        Services and the expression "in service", "during service" and "from service"
                        shall be construed accordingly.

        1.3.4           A Train "operates" to a Terminating Station if, in the case of Base Lines, it
                        stops for at least the Minimum Dwell at all Stations on the Line up to and
                        including that Terminating Station or, in the case of other Lines, it stops for
                        at least the Minimum Dwell at all Stations which are published stops on the
                        Line up to and including the Terminating Station.

2.      CONSENTS

2.1     Consents in writing

        Wherever in this Agreement provision is made for the giving or issue of any Consent by
        any person, unless otherwise specified such Consent shall be in writing and the words
        "consent", "notify", "endorse", "approve", "certify" or "determine" shall be construed
        accordingly.

2.2     Consents reasonably withheld or delayed

        Where this Agreement expressly states that any Consent is not to be unreasonably
        withheld or delayed the Franchisee agrees that the Consent shall be treated as being
        reasonably withheld or delayed where a similar Consent is required to be obtained by DLR
        Limited under the terms of the Concession Agreements or any of the DLR Contracts or
        DLR Undertakings before DLR Limited may prudently and properly give its consent under
        the terms of this Agreement and such Consent has been withheld or delayed for any
        reason whatsoever unless directly attributable to the negligence or default of DLR Limited
        and provided that DLR Limited has used reasonable endeavours to obtain such Consent.




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                                              PART II

                                      GRANT OF FRANCHISE

3.      GRANT OF THE FRANCHISE

3.1     Appointment of Franchisee

        DLR Limited hereby appoints the Franchisee with effect from the Franchise
        Commencement Date to provide to DLR Limited the Services comprised in the Franchise,
        including:

        3.1.1           provision of the Passenger Services;

        3.1.2           maintenance of the Franchise Assets;

        3.1.3           observance and performance of its obligations in relation to Committed
                        Projects;

        3.1.4           observance and     performance   of    its   obligations   under   the   Ancillary
                        Agreements;

        3.1.5           handback of the Franchise upon termination of this Agreement; and

        3.1.6           provision of the Committed Obligations,

        in each case in accordance with and subject to the terms and conditions of the Franchise
        Agreements and the Franchisee hereby accepts such appointment.

3.2     Franchisee's general obligations

        In performing and carrying out the Services the Franchisee shall at all times observe and
        comply with:

        3.2.1           Good Industry Practice;

        3.2.2           the DLR Railway Safety Case;

        3.2.3           all Applicable Requirements;

        3.2.4           obligations of DLR Limited under the Concession Agreements (as set out in
                        the Matrices), DLR Contracts and/or DLR Undertakings

        and if at any time the Franchisee becomes aware of any divergence between any of the
        above and the activities of the Franchisee, it shall immediately give DLR Limited notice
        specifying the divergence and shall as soon as reasonably practicable notify DLR Limited
        of the Franchisee's proposals for overcoming the same. The Franchisee shall also perform
        its obligations under the Franchise Agreements in a manner that facilitates DLR Limited's
        compliance with its obligations and duties, and the exercise of its rights, functions and
        powers under all Applicable Requirements, the Concession Agreements, DLR Contracts
        and/or DLR Undertakings. The Franchisee hereby acknowledges that the construction,
        bringing into Passenger Service and operation of the Woolwich Extension and the
        Stratford International Extension, the Three Car Project, the Beckton/Stratford
        Developments and the bringing into operation of the New Rolling Stock are key elements
        of the Existing Railway's development and agrees to use its best endeavours to assist DLR
        Limited with the successful implementation of these Projects.




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3.3     Franchisee's due diligence

        The Franchisee shall perform and carry out the Services hereunder entirely at its own cost
        and risk in consideration of the receipt of the fees and/or other payments expressly
        specified in this Agreement. The Franchisee hereby warrants that it has carried out all
        necessary due diligence on the Franchise Assets and has generally obtained for itself all
        necessary information so as to assess to its own satisfaction:

        3.3.1           the risks, contingencies and all other circumstances which may influence or
                        affect its obligation to carry out the Services; and

        3.3.2           any other factors which would affect its decision to enter into this
                        Agreement or the terms on which it would do so.

3.4     Disclosed Data

        Without prejudice to clause 30.8 (Disclaimer) and save in the case of fraudulent
        misrepresentation or as expressly provided in clause 8 (DLR Limited's warranties), DLR
        Limited shall not be liable to any of the Franchisee Parties (whether in contract, tort or
        otherwise howsoever and whether or not arising out of any negligence on the part of any
        of the DLR Limited Parties) in respect of any inaccuracy, error, unfitness for purpose,
        defect or inadequacy of any kind whatsoever in the Disclosed Data or any omission from
        the Disclosed Data.

3.5     No liability for review and approval

        The Franchisee acknowledges that it must rely entirely on its own skill and judgement in
        the performance of its duties and obligations under the Franchise Agreements.
        Accordingly, subject as expressly provided in this Agreement and save in the case of
        Wilful Misconduct or death or personal injury caused by negligence:

        3.5.1           the duties, obligations and liabilities of the Franchisee shall not be released,
                        diminished or in any other way affected by any instruction, direction,
                        admission,     consent,   approval,      confirmation,   comment,      sanction,
                        acknowledgement or advice made or given by or on behalf of DLR Limited or
                        by any independent enquiry into any relevant matter which may be made or
                        carried out by or on behalf of DLR Limited nor by any act or omission of any
                        person carrying out such enquiry, whether or not such act or omission might
                        give rise to an independent liability of such person to DLR Limited; and

        3.5.2           the Franchisee shall not be entitled to make any claim against DLR Limited
                        or to seek any relief or remedy of any nature by reason of any such action
                        by or on behalf of DLR Limited.

3.6     DLR Limited's general obligations

        DLR Limited shall (at the request of the Franchisee) use reasonable endeavours to assist
        the Franchisee in the performance of the Services comprised in the Franchise, subject
        always to DLR Limited giving priority to the performance of its own duties, obligations and
        functions and provided always that nothing in this clause shall be treated as restricting or
        limiting the exercise by DLR Limited of its rights, powers or functions under the Franchise
        Agreements or otherwise.

3.7     Interim Period

        If there occurs an Asset Damage Incident to one of the Identified Assets, then to the
        extent that the relevant Identified Asset has not been repaired or replaced (as applicable)



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        prior to the Franchise Commencement Date then the provisions of paragraph 7 of part 4
        of schedule 8 (Remuneration) shall apply.

4.      FRANCHISE COMMENCEMENT

4.1     Entry into Effect

        The provisions of the Immediately Effective Clauses shall take effect and be binding upon
        DLR Limited and the Franchisee immediately upon signature of this Agreement. The
        provisions of this Agreement (other than the Immediately Effective Clauses) shall enter
        into effect and become binding upon DLR Limited and the Franchisee on the Franchise
        Commencement Date.

4.2     Conditions Precedent

        4.2.1           Following signature    of   this   Agreement   and   the   Handover   Transfer
                        Agreement:

                        (a)   the Franchisee shall use all reasonable endeavours (with the
                              reasonable assistance of DLR Limited) to procure the satisfaction as
                              soon as reasonably practicable of the following conditions precedent:

                              (i)   receipt by DLR Limited of evidence to its reasonable satisfaction
                                    that the HSE has agreed that the Franchisee shall become duty
                                    holder in respect of the DLR Railway Safety Case as successor to
                                    Serco Docklands Limited upon the Franchise Commencement
                                    Date without further reference to or approval from HSE.

                              (ii) the execution and delivery of the Power of Attorney by the
                                   Franchisee;

                              (iii) receipt by DLR Limited of evidence, satisfactory to it in form and
                                    substance, that the Handover Procedures have been complied
                                    with by the Franchisee;

                              (iv) receipt by DLR Limited of evidence, satisfactory to it in form and
                                   substance, as to the identity of the persons who Control the
                                   Franchisee;

                              (v) receipt by DLR Limited of the Stocks Charge duly executed and
                                  delivered by the Franchisee;

                              (vi) receipt by DLR Limited of the Annual Plans in respect of the first
                                   Fee Year satisfactory to it in form and substance (and the parties
                                   acknowledge that the working drafts (as at the date of this
                                   Agreement) of the first Annual Capital Project Plan and first
                                   Annual Maintenance Plan are contained at Part 12 of schedule 5
                                   (Capital Projects) and Part 9 of schedule 4 (Maintenance of
                                   Franchise Assets) respectively;

                              (vii) receipt by DLR Limited of evidence, satisfactory to it in form and
                                    substance, that the provisions of schedule 9 (Financial
                                    Requirements) have been complied with, including evidence that
                                    the Franchisee has entered into the Funding Agreements and
                                    satisfied all conditions thereof and evidence that such Funding
                                    Agreements will provide the Franchisee with sufficient working
                                    capital in respect of its obligations under the Franchise



                                                    39
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                                    Agreements for not less than the first 13 Fee Periods of the
                                    Franchise Term;

                              (viii)        DLR Limited being satisfied that no event or matter has
                                    occurred or arisen which is or ought to be notified to DLR Limited
                                    under clause 7 (Franchisee's Warranties/Covenants) and which, if
                                    it had been known to DLR Limited before the signature of this
                                    Agreement, would, in its reasonable opinion, have resulted in it
                                    not entering into this Agreement with the Franchisee or in it
                                    entering into this Agreement on materially different terms
                                    (including, for the avoidance of doubt, any litigation or potential
                                    litigation or a change in the identity of any one person, or two or
                                    more persons acting by agreement, who may Control the
                                    Franchisee between the date of this Agreement and the Franchise
                                    Commencement Date other than as agreed with DLR Limited,
                                    prior to the date of this Agreement);

                              (ix) provision of information/documents required to be produced
                                   on/before the Franchise Commencement Date under paragraph
                                   1.1(a) and 1.1(c) of schedule 7;

                              (x) provision of the Business Plan for the first Fee Year provided that
                                  DLR Limited accepts that the information required under limb (e)
                                  of the definition of Business Plan may not be included in the
                                  Business Plan delivered prior to the Franchise Commencement
                                  Date. If that is the case, the Franchisee shall, by the end of the
                                  fourth Fee Period following the Franchise Commencement Date,
                                  update the initial Business Plan so that it contains the
                                  information required by limb (e). The Franchisee shall keep DLR
                                  Limited advised as regards this updating and shall promptly
                                  supply DLR Limited with a copy of the updated Business Plan;

                              (xi) provision of an executed Power of Attorney in a form acceptable
                                   to DLR Limited; and

                              (xii) provision of either a letter from the Directors of the Franchisee
                                    waiving the five day notice period required under Article 96 of       Initials
                                    the Franchisee's Articles of Association or a letter confirming       of both
                                    such notice was given in form and substance satisfactory to DLR       parties
                                    Limited.

                        (b)   DLR Limited shall use all reasonable endeavours (with the reasonable
                              assistance of the Franchisee) to procure the satisfaction as soon as
                              reasonably practicable of the following conditions precedent:

                              (i)   DLR Limited shall cease to be the employer of any persons who
                                    are active members of the DLR Pension Scheme; and

                              (ii) the DLR Pension Scheme shall be amended so that any person
                                   who is currently eligible, or may in the future become eligible, to
                                   become an active member of the DLR Limited Pension Scheme,
                                   because he is an employee of DLR Limited, shall cease to be
                                   eligible to become an active member of the DLR Pension
                                   Scheme,

                                    in such manner as shall procure insofar as reasonably practicable
                                    that the DLR Pension Scheme shall become a single employer
                                    scheme.

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                        (c)   Each party shall use reasonable endeavours and co-operate in good
                              faith to amend the Structures Rolling Programme to remove those
                              structures which the Franchisee is not required to inspect and to
                              clarify any other material errors within the document.

        4.2.2           Where agreements or deeds are required to be entered into or executed and
                        delivered or any steps required to be taken under this clause 4 (Conditions
                        Precedent) by the Franchisee or the Guarantor, DLR Limited may require, to
                        the extent appropriate and as an additional condition precedent, such
                        evidence (including a legal opinion) of the power and authorisation of the
                        relevant person to enter into, execute or deliver any such agreement or
                        deed or take any such steps and the Franchisee shall supply such additional
                        evidence.

4.3     Certificate of Franchise Commencement

        As soon as:

        (a)     DLR Limited is satisfied that each of the conditions precedent in clause 4.2(a) and
                (c) (Conditions Precedent) have been satisfied (except to the extent waived by DLR
                Limited or, where relevant, by DLR Limited and the Franchisee);

        (b)     the conditions precedent in 4.2(b) has been satisfied,

        then DLR Limited shall issue to the Franchisee a Certificate of Franchise Commencement,
        which shall state the Franchise Commencement Date. If any conditions precedent set out
        in clause 4.2(a) have not been so satisfied before the issue of the Certificate of Franchise
        Commencement, the Franchisee shall procure their satisfaction immediately thereafter
        notwithstanding any waiver by DLR Limited for the purposes of issue of the Certificate of
        Franchise Commencement.

4.4     Consequences of non-fulfilment

        4.4.1           DLR Limited may give notice to the Franchisee terminating this Agreement if
                        the Certificate of Franchise Commencement has not been issued on or
                        before the Long Stop Date. If such notice is given, this Agreement shall
                        terminate, subject to clause 54 (Confidentiality), on the date specified in
                        such notice.

        4.4.2           On termination of this Agreement under this clause 4.4 (Consequences of
                        non-fulfilment), no party shall have any liability to the other party to this
                        Agreement save only in respect of its obligations under clause 54
                        (Confidentiality) and in respect of any antecedent breach of its obligations
                        under this Agreement.

5.      DURATION OF FRANCHISE

5.1     Termination on expiry of Franchise Term

        This Agreement shall terminate automatically upon the expiry of the Franchise Term
        unless it shall have previously been terminated in accordance with the provisions of this
        Agreement. The Franchise Term shall be the period expiring at 0300 hours on 1 April
        2013.

5.2     Extension of the Franchise Term

        5.2.1           If DLR Limited gives notice to the Franchisee not less than three months
                        before the date on which the Franchise Term would have otherwise expired


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                        in accordance with clause 5.1 (Termination on Expiry of Franchise Term),
                        the Franchise Term shall, subject to clauses 35 (Franchisee Default), 36
                        (DLR Limited Default) and 37 (Non-Default Termination), expire at 0300
                        hours on such date as may be specified by DLR Limited in such notice. The
                        date specified in such notice shall be not less than one and not more than
                        twenty six Fee Periods after the date on which the Franchise Term would
                        have otherwise expired in accordance with clause 5.1 (Termination on
                        Expiry of Franchise Term).

        5.2.2           DLR Limited may serve a subsequent notice not less than three months
                        before the date on which the extended Franchise Term would have
                        otherwise expired in accordance with clause 5.2.1, further extending the
                        extended Franchise Term. The date specified in such subsequent notice
                        shall be not less than one and not more than seven Fee Periods after the
                        date on which the Franchise Term would have otherwise expired in
                        accordance with clause 5.2.1 and subject to Clauses 35 (Franchisee
                        Default), 36 (DLR Limited Default) and 37 (Non-Default Termination), the
                        Franchise Term shall expire at 0300 hours on the date specified in such
                        subsequent notice.

        5.2.3           The Franchisee and DLR Limited may agree to an extension of the Franchise
                        Term pursuant to clause 33.9 (Extension of Franchise Term) subject to such
                        conditions as they may consider to be appropriate at the time.

5.3     Financial arrangements

        Unless otherwise agreed by the parties, in respect of any period of extension pursuant to
        clause 5.2.1 or 5.2.2, schedule 8 (Remuneration) will continue to apply in respect of
        payment for such extended period.

6.      REPRESENTATIVES

        Each of DLR Limited and the Franchisee shall appoint a representative with full authority
        to act on its behalf, to perform its functions under this Agreement.         Each such
        representative may from time to time be replaced or alternates appointed, upon
        notification to the other party.

7.      FRANCHISEE'S WARRANTIES/COVENANTS

7.1     Franchisee's warranties

        The Franchisee warrants to DLR Limited that:

        7.1.1           the Franchisee or its Affiliates have not acted in breach of any of the terms
                        of the confidentiality undertakings signed by any one of them as part of the
                        pre-qualification for the Franchise and/or as part of the competition for
                        award of the Franchise;

        7.1.2           all of the information, representations and other matters of fact
                        communicated in writing to DLR Limited and/or its advisers by the
                        Franchisee, or its Affiliates or the directors, officers, employees, servants or
                        agents of the Franchisee or its Affiliates in connection with or arising out of
                        the Franchisee's application to pre-qualify or the Franchisee's formal tender
                        for the Franchise were (at the dates submitted to DLR Limited) and remain,
                        in all material respects, true, accurate and not misleading;

        7.1.3           the Franchisee is a corporation duly organised and validly existing under the
                        laws of England and Wales and has the corporate power to own its assets

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                        and carry on its business as it is being conducted and has obtained all
                        necessary   licences,   consents,    approvals,    permits, authorisations,
                        exemptions and certifications required for that purpose;

        7.1.4           the Franchisee has the corporate power to enter into and perform, and has
                        taken all necessary corporate and other action to authorise the entry into
                        and performance and delivery of, the Franchise Agreements and the
                        transactions contemplated by the Franchise Agreements;

        7.1.5           the Franchise Agreements constitute its legal, valid and binding obligations;

        7.1.6           the entry into, and performance by the Franchisee of its obligations under
                        the Franchise Agreements, do not and will not conflict with its Memorandum
                        and Articles of Association or conflict with or result in default under any
                        document which is binding upon it or any of its assets nor result in the
                        creation of any Security Interest over it or any of its assets.

7.2     Updating of warranties

        The Franchisee further undertakes to DLR Limited, subject to clause 7.3 (Exceptions),
        that:

        7.2.1           the representations and warranties contained in clause 7.1 (Franchisee's
                        warranties) will be fulfilled down to, and will be true and accurate in all
                        material respects and not misleading in any material respect at the
                        Franchise Commencement Date, as if they had been entered into afresh at
                        the Franchise Commencement Date;

        7.2.2           if after the signing of this Agreement and before the Franchise
                        Commencement Date any event shall occur or matter arise which results or
                        may result in any of the warranties in clause 7.1 (Franchisee's warranties)
                        being unfulfilled, untrue, misleading or incorrect in any material respect at
                        the Franchise Commencement Date the Franchisee shall immediately notify
                        DLR Limited in writing thereof and the Franchisee shall provide such
                        information concerning the event or matter as DLR Limited may require.

7.3     Exceptions

        Without prejudice to clause 4.2.1(h), no right to damages or compensation shall arise in
        favour of DLR Limited under clause 7.2 (Updating of warranties) in consequence only of
        an event occurring or matter arising after the signing of this Agreement but before the
        Franchise Commencement Date which constitutes a breach or non-fulfilment of any of the
        warranties in clause 7.1 (Franchisee's warranties) (whether or not this Agreement is
        terminated in consequence thereof) if:

        7.3.1           the event or matter could not reasonably have been avoided or prevented
                        by the Franchisee or any of its Affiliates; and

        7.3.2           the event or matter was duly notified to DLR Limited in accordance with
                        clause 7.2 (Updating of warranties).

7.4     Franchisee's Covenants

        Without prejudice to its other obligations under the Franchise Agreements, the Franchisee
        covenants with DLR Limited that from the Franchise Commencement Date until
        termination of this Agreement:




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        7.4.1           it will maintain in full force and effect (and will ensure that its Affiliates will
                        do likewise) all relevant authorisations (governmental and otherwise)
                        necessary and will promptly obtain any further authorisation which may
                        become necessary to enable it to perform any of the transactions
                        contemplated by the Franchise Agreements or carry on its business;

        7.4.2           it will not sell, transfer, lease, lend or otherwise dispose of or cease to
                        exercise direct control over the Franchise including any assets or revenues
                        and whether by one or a series of transactions whether related or not, save
                        that the restriction contained in this clause 7.4.2 shall not apply:

                        (a)    to the disposal of stock-in-trade in the ordinary course of trading;

                        (b)    to the application of cash in the purchase or acquisition of goods and
                               services in the ordinary course of trading;

                        (c)    to the exchange of assets for other assets of a similar nature and
                               value, or the sale of assets on normal commercial terms for cash
                               which is payable in full on the completion of the sale and is to be, and
                               is, applied in or towards the purchase of similar assets within six
                               months;

                        (d)    to the creation of Permitted Liens; or

                        (e)    to the payment of cash dividends to the Shareholders.

        7.4.3           it will notify DLR Limited forthwith upon the occurrence of any event which
                        could reasonably be expected materially and adversely to affect its ability to
                        perform its obligations under the Franchise Agreements, the Financing
                        Agreements and/or the Funding Agreements;

        7.4.4           it will not allot, issue or purchase, or register any transfer of any of its share
                        capital in favour of any person, firm or company which would result in a
                        Franchisee Default under clause 35.1.2 (Franchise Default);

        7.4.5           it will (promptly upon becoming aware that the same is threatened or
                        pending and in any case immediately after the commencement thereof) give
                        to DLR Limited notice in writing of any litigation, arbitration or
                        administrative proceedings or any dispute affecting the Franchisee or any of
                        its assets, rights or revenues which if determined against it might have a
                        material adverse effect on the ability of the Franchisee duly to perform and
                        observe its obligations under the Franchise Agreements;

        7.4.6           it will promptly pay all taxes, imposts or other duties to which it may
                        become subject during the Franchise, subject to the right of the Franchisee
                        reasonably and properly to dispute the amount or applications to the
                        Franchisee of any such taxes, imposts or other duties.

8.      DLR LIMITED'S WARRANTIES

        DLR Limited warrants to the Franchisee that:

8.1     it is a corporation duly organised and validly existing under the laws of England and Wales
        and has the corporate power to enter into and perform, and has taken all necessary
        corporate and other action to authorise the entry into, performance and delivery of, the
        Franchise Agreements and the transactions contemplated by the Franchise Agreements;

8.2     the Franchise Agreements constitute its legal, valid and binding obligations;


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8.3     the entry into, and performance by it of its obligations under, the Franchise Agreements,
        do not and will not conflict with its Memorandum and Articles of Association;

8.4     it has the corporate power to enter into and perform, and has taken all necessary
        corporate and other action to authorise the entry into performance and delivery of the
        Franchise Agreements and the transactions contemplated by the Franchise Agreements.




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                                            PART III

                                        THE FRANCHISE

9.      PASSENGER SERVICES

9.1     Provision of Passenger Services

        The Franchisee shall provide the Passenger Services on behalf of DLR Limited subject to
        and in accordance with the terms and conditions of this Agreement.

9.2     Base Service Requirements

        In providing the Passenger Services, the Franchisee shall comply with, or at the
        Franchisee's discretion exceed, its obligations under the Base Service Requirements set
        out in parts 1 and 5 of schedule 2 (Passenger Services) and its obligations under part 2 of
        schedule 2 (Passenger Services).

9.3     Operations Functions

        The Franchisee shall provide the Operations Functions set out in paragraph 11 of part 2 of
        schedule 2 (Passenger Services) through the service of its direct employees employed
        solely for the Franchise and shall not sub-contract any of the Operations Functions.

9.4     Operations Support Functions

        The Franchisee shall provide the Operations Support Functions set out in paragraph 12 of
        part 2 of schedule 2 (Passenger Services) either through the service of its direct
        employees or through sub-contractors.

9.5     Preparation of Annual Service Plan

        The Franchisee shall prepare and comply with the Annual Service Plan in accordance with
        its obligations under Part 3 of schedule 2 (Passenger Services).

9.6     Service Quality Standards

        The Franchisee shall use its best endeavours to comply with the Service Quality Standards
        set out in part 4 of schedule 2 (Passenger Services).

9.7     Extensions

        The Franchisee shall comply with its obligations under part 5 of schedule 2 (Passenger
        Services).

9.8     Operating Rules/Procedures etc

        The Franchisee shall at all times comply with the Operating Rules/Procedures and
        Operating Manuals and shall comply with clause 22 (Change Procedures) in respect of any
        change thereto.

9.9     Base Services Changes

        The Franchisee shall comply with its obligations under Part 6 of schedule 2 (Passenger
        Services).




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10.     TICKETS AND TICKETING SCHEMES

10.1    Tickets

        The Franchisee shall comply with its obligations in relation to ticket sales and revenue
        collection, as set out in of Parts 1 and 2 of schedule 3 (Tickets/Ticketing Schemes).

10.2    Ticketing Schemes

        The Franchisee shall comply with its obligations in relation to the Ticketing Schemes, as
        set out in part 3 of schedule 3 and in relation to ticket machines set out in part 4 of
        schedule 3 (Tickets/Ticketing Schemes).

11.     MAINTENANCE OF FRANCHISE ASSETS

11.1    General obligation to maintain

        In undertaking its obligations under this clause 11, the Franchisee shall maintain,
        preserve and protect (or, subject to clause 44 (Sub-contracting), procure the maintenance
        of) the Franchise Assets in such condition and to such standards of condition as are
        necessary for the purposes of compliance with the following:

        11.1.1          the Franchisee's obligations to provide Passenger Services in accordance
                        with clause 9 (Passenger Services);

        11.1.2          Good Industry Practice;

        11.1.3          the Franchisee's duties in relation to safety, (including the DLR Railway
                        Safety Case) and in relation to Environmental Damage (including its
                        obligations under Part 8 of schedule 6 (General/Regulatory);

        11.1.4          all Applicable Requirements;

        11.1.5          handback of the Franchise Assets to DLR Limited upon termination of this
                        Agreement in materially the same condition as upon Franchise
                        Commencement (fair wear and tear excepted) and, without prejudice to the
                        generality of the foregoing, in accordance with the condition specified in
                        column 3 of the Asset Condition Requirements and so as to enable the
                        Railway to be operated for the provision of passenger services in accordance
                        with the provisions of this Agreement and with minimal disruption;

        11.1.6          optimisation of the life of the Franchise Assets and their associated whole
                        life costs and the principles of Asset Management Regime;

        11.1.7          DLR Maintenance Standards and the Maintenance Procedures;

        11.1.8          DLR Limited's obligations under the Property Related Contracts, DLR
                        Contracts and DLR Undertakings; and

        11.1.9          the Asset Management Regime and the Asset Management Strategy.

11.2    Scope of Franchisee's maintenance obligations

        11.2.1          Subject to clauses 11.2.2 and 11.3, the Franchisee shall:

                        (a)   take promptly all necessary action required to maintain the Franchise
                              Assets in such condition and to such standards as are required by this
                              Agreement (including the repair and/or rectification of all failures or
                              defects in or damages to the Franchise Assets howsoever arising) and

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                              the replacement and/or reinstatement of any (or any part of the)
                              Franchise Assets which are destroyed or lost for any reason
                              whatsoever. For the avoidance of doubt, and without limitation to
                              the generality of the foregoing, this obligation shall include all such
                              necessary action arising as a result of any:

                              (i)   defects in Franchise Assets including any Identified Works;

                              (ii) modifications to the Franchise Assets required by Applicable
                                   Requirements including Mandatory Modification; and/or

                              (iii) any damage to or loss of any of (or any part of) the Franchise
                                    Assets, howsoever caused;

                        (b)   carry out all maintenance, repair, rectification of failures or defects or
                              damage, or replacement or reinstatement to the Franchise Assets set
                              out in the current Annual Maintenance Plan (or which should have
                              been included in the Annual Maintenance Plan in accordance with
                              clause 11.5) including all routine and planned maintenance which is
                              contained in the Asset Management Strategy.

                        The obligations on the Franchisee in this clause 11.2 shall be without
                        prejudice to any of the Franchisee's rights to Variation Payments under the
                        Variation Procedure subject as provided in clause 11.2.2.

        11.2.2          If works in relation to the Franchise Assets which the Franchisee is to carry
                        out under the Franchise Agreements are the subject of a Variation Payment
                        or Payments or the subject of insurances under clause 31 (Insurance) then
                        DLR Limited shall be entitled to serve an Additional DLR Project Notice and
                        upon countersignature of a Commencement Certificate in respect of such
                        works, the works shall be completed as an Additional Project and the
                        provisions of paragraph 1.3 of part 4 of schedule 8 shall apply.

        11.2.3          The Franchisee shall comply with its obligations and be entitled to exercise
                        its rights in respect of maintenance pursuant to the Matrices.

11.3    Capital Replacement

        11.3.1          Subject to clauses 11.3.2, 11.3.5, 11.3.7 and 11.8.3 and schedule 5 (Capital
                        Projects) and schedule 8 (Remuneration), DLR Limited shall be responsible
                        for:

                        (a)   the carrying out (or procuring the same) and the cost of any
                              individual item (or series of items which are linked and which
                              objectively and reasonably comprise a single project) of Capital
                              Replacement which is contained within the current Annual
                              Maintenance Plan (or which in the case of an Identified Defect only
                              has been identified in accordance with clause 11.15 or which is not in
                              the Annual Maintenance Plan and is required by a licensor or lessor
                              under any of the agreements in schedule 3 of the Agreement to Lease
                              or schedules 5 or 6 of the Lease and the Franchisee could not
                              reasonably have anticipated the need to include such requirement in
                              the Annual Maintenance Plan) where the cost of the physical works
                              (which for the avoidance of doubt, does not include internal costs of
                              the Franchisee or project management costs of the Franchisee or
                              Resources) of such Capital Replacement is for an amount in excess of
                              £20,000); and


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                        (b)   the full cost of Capital Replacement in respect of the replacement of
                              lifts and escalators required pursuant to the lease of Canning Town
                              Station from LUL or the lease of Bank Station from LUL,

                              provided always that the Franchisee (and not DLR Limited) shall be
                              responsible for the cost of any Capital Replacement required under
                              this clause 11.3.1 if and to the extent that such cost has arisen as a
                              consequence of any breach or failure by the Franchisee to comply
                              with its obligations under this Agreement.

        11.3.2          The Franchisee shall be responsible for:

                        (a)   Capital Replacement which is not the responsibility of DLR Limited
                              pursuant to clause 11.3.1;

                        (b)   any Capital Replacement which is expressly and specifically provided
                              to be the responsibility of the Franchisee under the other provisions
                              of the Agreement including any Mandated Maintenance Works, the
                              Asset Management Regime, the Asset Management Strategy and the
                              requirement to hand back the Assets in accordance with clause
                              11.1.5;

                        (c)   the carrying out and cost of any individual item (or series of items
                              which are linked and which objectively and reasonably comprise a
                              single project) of Capital Replacement where the amount in respect
                              of the physical works of such Capital Replacement is less than
                              £20,000 (and for the avoidance of doubt such sum shall not include
                              internal costs of the Franchisee or project management costs of the
                              Franchisee);

                        (d)   the carrying out of and cost of all Capital Replacement which is
                              necessary because of a fault caused by, or manifest in, any asset or
                              part thereof procured, obtained, specified or delivered by the
                              Franchisee save to the extent that:

                              (i)        such asset was procured, obtained, specified or delivered
                                         by DLR Limited or a third party as part of a DLR Project;

                              (ii)       the Franchisee could not or should not have prevented
                                         such defect having regard to its obligations in respect of
                                         such DLR Project; and

                              (iii)      the fault has not arisen or been exacerbated as a
                                         consequence of any breach or failure by the Franchisee to
                                         comply with its obligations under the Franchise Agreement;

                        (e)   all Capital Replacement required as a consequence of accidental
                              damage or for which insurance proceeds are recoverable under the
                              insurances required to be taken out under this Agreement or which
                              would have been recoverable but for any act, omission or default of
                              the Franchisee; and

                        (f)   the Capital Replacement Contribution.

        11.3.3          The Franchisee shall provide DLR Limited with details of any Capital
                        Replacement which is required to be carried out indicating whether it
                        believes that DLR Limited or the Franchisee is responsible for carrying out
                        such Capital Replacement.

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        11.3.4          Any notices of required Capital Replacement served by the Franchisee
                        pursuant to clause 11.3.3 shall set out the following details:

                        (a)   the details of the Capital Replacement required;

                        (b)   an estimate of the cost of the Capital Replacement;

                        (c)   a preferred programme for the implementation of the Capital
                              Replacement taking account of any Committed Projects and any other
                              activities of the Franchisee and DLR Limited which may be affected by
                              the Capital Replacement;

                        (d)   an explanation of any potential implications or impact of the Capital
                              Replacement on the Franchisee's other obligations under the
                              Franchise Agreements (including its ability to comply with the Service
                              Quality Standards); and

                        (e)   an explanation of how such Capital Replacement complies with the
                              Annual Maintenance Plan and the criteria set out in clause 11.5.1.

        11.3.5          If the parties agree (or it is determined by the Dispute Resolution
                        Procedure) that the Capital Replacement is the responsibility of DLR Limited
                        pursuant to clause 11.3.1 then DLR Limited may, subject to clause 11.8.3
                        either undertake the Capital Replacement as a DLR Project or require the
                        Franchisee to undertake the Project and in such case DLR Limited will serve
                        an Additional Franchisee Project Notice and the provisions of schedule 5 and
                        part 5 of schedule 8 will apply.

        11.3.6          On the Franchise Termination Date, the Franchisee shall hand over to DLR
                        Limited as part of the Handback Information comprehensive details of all
                        Capital Replacement undertaken during the Franchise Period including all
                        reports, recommendations and details of actions taken and work done.

        11.3.7 (a)      The parties acknowledge and agree that the Rolling Stock Works referred to
                        in part 8 of schedule 4 (Maintenance) shall be treated as Capital
                        Replacement for the purposes of this Agreement save that such work shall
                        not be treated as Capital Replacement for which DLR Limited is responsible
                        if and to the extent that the cost of such works is in excess of the cap set
                        out in that schedule.

                 (b)    The provisions of part 8 of schedule 4 (Maintenance) will apply in respect of
                        the development and specification of such Rolling Stock Works in order that
                        they may be included within the relevant Annual Maintenance Plan and
                        undertaken in accordance with this clause 11.

11.4    Asset Management Regime, Asset Management Strategy and Maintenance
        Procedures

        The Franchisee shall at all times comply with the Asset Management Regime, Asset
        Management Strategy, Maintenance Procedures and Configuration Management
        Procedures and shall comply with clause 22 (Change Procedures) in respect of any
        changes thereto.

11.5    Preparation of Annual Maintenance Plan

        Not later than 90 days before the beginning of each Fee Year, the Franchisee shall prepare
        and submit to DLR Limited its proposed Annual Maintenance Plan for the following Fee
        Year.

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        11.5.1          Each Annual Maintenance Plan shall be prepared so as to comply with the
                        Franchisee's obligations in respect of maintenance under the provisions of
                        this Agreement and without prejudice to such obligations each Annual
                        Maintenance Plan shall comply with and be consistent with:

                        (a)   the Asset Management Regime, Asset Management Strategy
                              (including any Mandated Maintenance Works) and Maintenance
                              Procedures;

                        (b)   the DLR Railway Safety Case, Safety Policy and Procedures;

                        (c)   the Asset Condition Requirements;

                        (d)   the Annual Safety Plan, Annual Service Plan and Annual Capital
                              Projects Plan in effect for the Fee Year and which that Annual
                              Maintenance Plan supports;

                        (e)   the Business Plan;

                        (f)   the Quality Procedures;

                        (g)   the terms and conditions of the Franchise Agreements;

                        (h)   Good Industry Practice;

                        (i)   the requirements of the Concession Agreements; and

                        (j)   the requirements of the DLR Contracts and DLR Undertakings.

        11.5.2          The Annual Maintenance Plan will also provide the information required by
                        Part 3 of Schedule 4 (Maintenance of Franchise Assets).

        11.5.3          Each Annual Maintenance Plan shall set out the matters in clauses 11.5.1
                        and 11.5.2 above in such detail as shall reasonably satisfy DLR Limited that
                        the Franchisee has understood its obligations under this Agreement and will
                        be in a position to satisfy such obligations.

11.6    Consultation on Annual Maintenance Plan

        The Franchisee and DLR Limited shall consult with each other on the contents of the
        Annual Maintenance Plan for a period of 30 days from receipt thereof by DLR Limited or, if
        later, receipt by DLR Limited of any revised version of that Annual Maintenance Plan
        pursuant to clause 11.7 (Required revisions). The Franchisee shall have due regard for
        any comments on the Annual Maintenance Plan by DLR Limited and shall comply with any
        reasonable requirements of DLR Limited under clause 11.7 (Required revisions). DLR
        Limited may, at its sole discretion, reduce the required period for consultation by notice in
        writing to the Franchisee.

11.7    Required revisions

        During the period of consultation under clause 11.6 (Consultation on Annual Maintenance
        Plan) DLR Limited may by notice to the Franchisee pursuant to this clause require that the
        Franchisee revise the Annual Maintenance Plan if DLR Limited considers that it does not
        comply with any of the following:

        11.7.1          the requirements of clause 12 (Capital Projects and Committed Obligations)
                        or part 3 of schedule 5 (Capital Projects);



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        11.7.2          the requirements of clause 11.5 (Preparation of Annual Maintenance Plan);
                        or

        11.7.3          the requirement of any notice served by DLR Limited under clause 24.1
                        (Remedial action) of this Agreement,

        and, following service of any such notice by DLR Limited, the Franchisee shall address the
        issues raised by DLR Limited in such notice and submit a revised version of the Annual
        Maintenance Plan to DLR Limited.

11.8    Annual Maintenance Plan to take effect

        11.8.1          (a)   The Annual Maintenance Plan referred to in clause 4.2 (Conditions
                              Precedent) shall take effect on the Franchise Commencement Date.
                              Any subsequent Annual Maintenance Plan shall not take effect until
                              the beginning of the Fee Year to which it relates or if later, the end of
                              the consultation period under clause 11.6 (Consultation on Annual
                              Maintenance Plan). Any planned changes to the Asset Management
                              Regime, Asset Management Strategy, Maintenance Procedures or
                              Configuration Management Procedures which are set out in the
                              Annual Maintenance Plan shall not take effect until the Franchisee has
                              complied with the requirements of clause 22 (Change Procedures).

                        (b)   The Franchisee shall ensure that all parts of the Annual Maintenance
                              Plan that are relevant to Projects including Capital Replacement as
                              contemplated by clause 11.3.5 shall be incorporated within the
                              Annual Capital Projects Plan

        11.8.2          The Franchisee shall implement the Maintenance Services in accordance
                        with the Annual Maintenance Plan and shall at all times comply with the
                        Annual Maintenance Plan which is in effect pursuant to this clause 11.8.

        11.8.3          If DLR Limited is responsible for the cost of any Capital Replacement
                        contained in an Annual Maintenance Plan in accordance with clause 11.3 the
                        parties agree that DLR Limited may in its absolute discretion determine that
                        such Capital Replacement will not be carried out in accordance with the
                        relevant Annual Maintenance Plan and, if DLR Limited makes such
                        determination it shall not be obliged (as contemplated by clause 11.3.5)
                        either to undertake the Capital Replacement as a DLR Project or require the
                        Franchisee to undertake the project as an Additional Franchisee Project.

        11.8.4          In the event that DLR Limited makes a determination under the provisions
                        of clause 11.8.3 not to undertake the Capital Replacement as a DLR Project
                        or require the Franchisee to undertake the Capital Replacement as an
                        Additional Franchisee Project and a failure to undertake the Capital
                        Replacement in accordance with the Annual Maintenance Plan will result in:

                        (a)   non-compliance with an Applicable Requirement; or

                        (b)   excessive additional maintenance costs for the Franchisee; or

                        (c)   material degradation in the performance of the Railway;

                        then provided that:

                              (i)   such effects were set out in detail in the Annual Maintenance Plan
                                    in accordance with the requirements of part 3 of schedule 4
                                    (Maintenance of Franchise Assets); and

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                              (ii) the Franchisee has complied with all its maintenance obligations
                                   contained in this Agreement relating to the relevant asset,
                                   including complying with the Maintenance Procedures and any
                                   applicable manufacturer's manuals and has demonstrated such
                                   compliance to DLR Limited's reasonable satisfaction; and

                              (iii)   the Franchisee can provide detailed analysis to DLR Limited's
                                      reasonable satisfaction of:

                                      (A)   the condition of the relevant asset or assets;

                                      (B)   the causes of the degradation that warrants the need
                                            for Capital Replacement; and

                                      (C)   the likely future effects of a failure to carry out the
                                            Capital Replacement,

                 DLR Limited and the Franchisee shall consult with each other in good faith using
                 best efforts to agree a resolution, temporary or otherwise, which is satisfactory to
                 both parties (acting reasonably) and which will overcome, alleviate or otherwise
                 deal with the potential consequences outlined in (a) to (c) above.

11.9    Asset Management System

        11.9.1          The Franchisee shall within 12 months of the Franchise Commencement
                        Date provide a substantially complete Asset Management System in a
                        format approved by DLR Limited which contains a comprehensive list of all
                        Assets (excluding Software and Intellectual Property) on the Existing
                        Railway in order that DLR Limited and the Franchisee can access detailed
                        information on all the Franchise Assets (excluding Software and Intellectual
                        Property).

        11.9.2          The Asset Management System shall comply with the requirements of part 7
                        of schedule 4.

        11.9.3          The Franchisee shall ensure that from the date which is 18 months after the
                        Franchise Commencement Date the Asset Management System is complete.

        11.9.4          The Asset Management System shall be updated as appropriate throughout
                        the term including in respect of any new Franchise Assets (excluding
                        Software and Intellectual Property) including those on the Stratford
                        International Extension.

11.10   Audits

        11.10.1         Without prejudice to clause 23.6 (Right of audit), DLR Limited or its
                        representatives may carry out audits of compliance by the Franchisee with
                        its obligations in relation to maintenance of the Franchisee Assets during the
                        Franchise Term including but not limited to:

                        (a)   clause 11.4 (Asset Management Regime, Asset Management Strategy
                              and Maintenance Procedures);

                        (b)   clauses 11.1 (General obligation to maintain) and 11.2 (Scope of
                              Franchisee's maintenance obligations).

                        Any such audit may involve the examination, inspection or testing of works,
                        activities or Assets on or off the Railway.


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        11.10.2         DLR Limited shall notify the Franchisee at least 30 days prior to
                        commencement of any audit.

        11.10.3         The Franchisee shall procure that the representatives of DLR Limited
                        conducting such an audit shall be provided with all such assistance and
                        access to facilities, records and Assets (including the provision of copies of
                        documents) and personnel as they may reasonably require in order to
                        discharge their audit function in a proper and reasonable manner.

        11.10.4         Without prejudice to the generality of clause 11.10.3 at the request of DLR
                        Limited, the Franchisee shall provide DLR Limited with reasonable evidence
                        that it has a satisfactory programme for, and will be capable of, compliance
                        with clauses 11.1 (General obligation to maintain) and 11.2 (Scope of
                        Franchisee's maintenance obligations) during the remainder of the Franchise
                        Period, including compliance with the Asset Management Strategy and the
                        Asset Condition Requirements.

        11.10.5         DLR Limited shall, in planning and implementing such an audit, have regard
                        to the obligations of the Franchisee in operating the Railway and providing
                        the Services.

11.11   Maintenance Manager

        The Franchisee shall assign a qualified and experienced person as the maintenance
        manager who shall be directly employed by the Franchisee, to be responsible for general
        supervision and direction of Maintenance Services.

11.12   Maintenance Functions

        The Franchisee shall maintain the Franchise Assets in accordance with the provisions of
        this Agreement either through the service of its direct employees or through contractors,
        subject as provided in clause 43 (Key Contracts).

11.13   Maintenance of Stocks

        The Franchisee shall ensure that its inventory of Stocks is maintained at normal levels
        appropriate to the continuation of the Maintenance Services and, without prejudice to that
        obligation, the Franchisee shall only change the levels and inventory of Stock in
        accordance with the Maintenance Procedures.

11.14   Mandated Maintenance Works

        The Franchisee shall carry out and complete the Mandated Maintenance Works contained
        in column 5 of the Asset Condition Requirements.

11.15   Inspection of Structures

        11.15.1         The Franchisee shall provide DLR Limited with details of, and procure that
                        there is carried out, a rolling programme of inspections of all the Structures
                        in accordance with DLR Maintenance Standards and Good Industry Practice.
                        The Franchisee agrees that such rolling programme of inspections shall be
                        consistent with the programme set out in the Structures Rolling Programme
                        in part 6 of schedule 4 (Maintenance of Franchise Assets).

        11.15.2         The Franchisee shall report the results of any inspection carried out
                        pursuant to clause 11.15.1 to DLR Limited and provide notice in writing to
                        DLR Limited of any Identified Defects within 28 days of such inspection.



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        11.15.3         On the Franchise Termination Date, the Franchisee shall hand over to DLR
                        Limited as part of the Handback Information details of the rolling
                        programme of inspections for each Structure together with a comprehensive
                        database containing all reports, recommendations and details of actions
                        taken and work done during the Franchise Period.

11.16   Discrepancies in Maintenance Documents

        11.16.1         The Franchisee confirms that it has studied in detail the Maintenance
                        Documents and each document comprised therein and has satisfied itself
                        that no discrepancies, contradictions or errors ("Discrepancies") exist
                        within or between each such document. The Franchisee acknowledges that
                        it accepts all risks arising from Discrepancies that subsequently appear
                        within or between such documents and that it shall not be entitled to make
                        any claim against DLR Limited for any payment, relief or otherwise in
                        respect of any Discrepancies.

        11.16.2         (a)   The Franchisee agrees that where there appears a Discrepancy within
                              or between the Maintenance Documents the Franchisee shall provide
                              DLR Limited with a notice of such Discrepancy and with such notice,
                              or as soon as practicable thereafter the Franchisee will provide an
                              explanation of the manner in which the Franchisee believes the
                              Discrepancy can be resolved.       Unless, within 14 days of the
                              Franchisee's notice, DLR Limited notifies the Franchisee to resolve the
                              Discrepancy in a different manner, the Franchisee shall resolve the
                              Discrepancy in the manner proposed by it (subject always to that
                              manner of resolving the Discrepancy being in compliance with the
                              Applicable Requirements). Where DLR Limited notifies the Franchisee
                              that the Discrepancy should be resolved in a different manner the
                              Franchisee shall implement the method recommended by DLR
                              Limited.

                        (b)   DLR Limited may notify the Franchisee upon becoming aware of any
                              Discrepancy within or between the Maintenance Documents and
                              within such notice, or as soon as practicable thereafter, DLR Limited
                              will either:

                              (i)   provide instructions on the manner in which the Discrepancy will
                                    be resolved (subject always to that manner of resolving the
                                    Discrepancy    being in     compliance with     the Applicable
                                    Requirements); or

                              (ii) require that the Franchisee provides DLR Limited with advice as
                                   to the manner in which the Franchisee believes the Discrepancy
                                   can be resolved, such advice to be provided within 10 business
                                   days.

                        (c)   Without prejudice to clause 11.6 above, whenever a Discrepancy
                              appears within or between the Maintenance Documents, the parties
                              shall endeavour to consult with each other over the manner in which
                              the Discrepancy should be resolved.

11.17   DLR Maintenance Standards

        11.17.1         DLR Limited is entitled to amend the DLR Maintenance Standards at any
                        time in accordance with this clause 11.17.




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        11.17.2         If DLR Limited wishes to amend any of the Maintenance Standards it shall
                        provide draft proposed amendments to the Franchisee and if such changes:

                        (a)   Would:

                              (i)   have a material and adverse impact on the Franchisee's
                                    maintenance costs; and

                              (ii) represent obligations of the Franchisee which are more onerous
                                   than the Franchisee's other obligations under the Agreement
                                   including the requirement to undertake maintenance in
                                   accordance with Good Industry Practice, Applicable Requirements
                                   and the other provisions of clause 11; or

                        (b)   would in the reasonable opinion of the Franchisee be unacceptable to
                              the HSE,

                        then the Franchisee may within 14 business days of receipt of the proposed
                        amendments give a notice in writing to DLR Limited setting out in detail why
                        it considers that the effects or circumstances set out in clauses 11.17.2(a)
                        or (b) above would apply.

        11.17.3         Following receipt of such notice DLR Limited may either:

                        (a)   confirm (except where clause 11.17.2(b) applies) that it would like
                              the DLR Maintenance Standards to be amended as drafted and the
                              Franchisee shall submit such amended DLR Maintenance Standard to
                              the HSE for approval; or

                        (b)   make further amendments to the DLR Maintenance Standards (which
                              may include amendments suggested by the Franchisee) and provide
                              such further amendments to the Franchisee (and clause 11.7.2 shall
                              apply).

        11.17.4         If no notice is received under clause 11.17.2 then DLR Limited may require
                        the Franchisee to submit the amended DLR Maintenance Standard to the
                        HSE for approval and following such approval the DLR Maintenance
                        Standards will be changed as proposed by DLR Limited.

        11.17.5         If DLR Limited confirms that it wishes the amendments to the DLR
                        Maintenance     Standards     in  accordance    with    clause   11.17.3(a)
                        notwithstanding the Franchisee's objections and the Franchisee can
                        demonstrate that clause 11.17.2(a) (i) and (ii) apply then DLR Limited and
                        the Franchisee shall consult with each other in good faith and use best
                        efforts to agree a resolution, temporary or otherwise, which is satisfactory
                        to both parties (acting reasonably) and which will overcome, alleviate or
                        otherwise deal with the consequence outlined in clause 11.17.2(a)(i) and
                        (ii).

        11.17.6         No DLR Maintenance Standard shall be changed unless, to the extent it is
                        required, HSE approval has been obtained. The Franchisee shall use best
                        endeavours to ensure that HSE approves the amended DLR Maintenance
                        Standards.




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12.     CAPITAL PROJECTS AND COMMITTED OBLIGATIONS

12.1    DLR Project Requirements

        Not later than six months before the beginning of each Fee Year, DLR Limited shall
        prepare and submit to the Franchisee the DLR Project Requirements for that Fee Year.
        DLR Limited shall, in planning and implementing the DLR Project Requirements, have
        regard to the obligations of the Franchisee in operating the Railway and providing the
        Services. The DLR Project Requirements shall be indicative only and shall not (save as
        expressly stated therein) constitute formal notice of any such requirements pursuant to
        schedule 5 (Capital Projects).

12.2    Preparation of Annual Capital Projects Plan

        Not later than 30 days after receipt by the Franchisee of the DLR Limited Project
        Requirements for the relevant Fee Year, the Franchisee shall prepare and submit to DLR
        Limited its proposed Annual Capital Projects Plan for that Fee Year. Each Annual Capital
        Projects Plan shall

        12.2.1          be prepared so as to comply and be consistent with:

                        (a)   the DLR Railway Safety Case and the Safety Policy and Procedures;

                        (b)   Parts 2 to 7 of schedule 5 (Capital Projects);

                        (c)   the DLR Project Requirements;

                        (d)   the Annual Safety Plan, Annual Service Plan and Annual Maintenance
                              Plan in effect for the Fee Year to which that Annual Capital Projects
                              Plan relates;

                        (e)   the Business Plan;

                        (f)   the Quality Procedures;

                        (g)   the terms and conditions of the Franchise Agreements;

                        (h)   Good Industry Practice;

                        (i)   the requirements of the Concession Agreements, and

                        (j)   the requirements of the DLR Contracts and DLR Undertakings; and

        12.2.2          contain all relevant parts of the Annual Maintenance Plan including any
                        required Capital Replacement.




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12.3    Contents of Annual Capital Projects Plan

        Each Annual Capital Projects Plan shall set out the capital projects plan in respect of the
        Fee Year to which it relates and a Project Programme for each Franchisee Project, both in
        such details as shall reasonably satisfy DLR Limited that the Franchisee has understood its
        obligations under this Agreement and will be in a position to satisfy such obligations and,
        without prejudice to the generality of the foregoing, shall show in such detail as is
        reasonably practicable and in relation to the Fee Year to which it relates the information
        required in respect of that Annual Capital Projects Plan under the provisions of part 2 of
        schedule 5 (Capital Projects). Each Annual Capital Projects Plan shall also contain outline
        details of the impact of each Project on the Annual Maintenance Plans for all subsequent
        Fee Years up to the end of the Franchise Period to the extent then known to the
        Franchisee.

12.4    Consultation on Annual Capital Projects Plan

        The Franchisee and DLR Limited shall consult with each other on the contents of the
        Annual Capital Projects Plan for a period of 30 days from receipt thereof by DLR Limited
        (or, if later, receipt by DLR Limited of any revised versions of that Annual Capital Projects
        Plan pursuant to clause 12.5 (Required revisions). The Franchisee shall have due regard
        to any comments on the Annual Capital Projects Plan made by DLR Limited and shall
        comply with any requirements of DLR Limited under clause 12.5 (Required revisions).
        DLR Limited may, at its sole discretion, change the required period for consultation by
        notice in writing to the Franchisee.

12.5    Required revisions

        During the period of consultation under clause 12.4 (Consultation on Annual Capital
        Projects Plan) DLR Limited may by notice to the Franchisee pursuant to this clause require
        the Franchisee to revise the Annual Capital Projects Plan if DLR Limited considers (acting
        reasonably) that it does not comply with any of the following:

        12.5.1          the DLR Project Requirements;

        12.5.2          the requirements of schedule 5 (Capital Projects);

        12.5.3          the requirements of clauses 12.2.1(a) to (j);

        12.5.4          the requirements of clause 12.3 (Contents of Annual Capital Projects Plan);

        12.5.5          the requirements of any notice served by DLR Limited under clause 24.1
                        (Remedial action);

        12.5.6          any agreed Annual Maintenance Plan or the Franchisee's maintenance
                        obligations under this Agreement,

        and, following service of any such notice by DLR Limited, the Franchisee shall address the
        issues raised by DLR Limited in such notice and resubmit a revised version of the Annual
        Capital Projects Plan to DLR Limited.

12.6    Annual Capital Projects Plan to take effect

        The Annual Capital Projects Plan referred to in clause 4.2 (Conditions Precedent) shall
        take effect on the Franchise Commencement Date provided that such plan shall not (save
        as expressly stated therein) constitute formal notice of any Additional Project or the terms
        of such Additional Project such notice or terms to be provided and/or agreed in
        accordance with schedule 5 (Capital Projects). Any subsequent Annual Capital Projects
        Plan shall not take effect until the beginning of the Fee Year to which it relates or if later,


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        the end of the consultation period under clause 12.4 (Consultation on Annual Capital
        Projects Plan) provided that such plan shall not (save as expressly stated therein)
        constitute formal notice of any Additional Project or the terms of such Additional Project
        such notice or terms to be provided and/or agreed in accordance with schedule 5 (Capital
        Projects).

12.7    Compliance with Annual Capital Projects Plan

        The Franchisee shall comply with the Annual Capital Projects Plan which is in effect
        pursuant to clause 12.6 (Annual Capital Projects Plan to take effect), as updated from
        time to time to reflect amendments, modifications or supplements arising from paragraph
        8.1 of part 3 of schedule 5 (Capital Projects).

12.8    Extant DLR Projects

        The Franchisee shall comply with all its obligations in relation to the Extant DLR Projects
        as set out in the Matrices, the Technical Schedules and parts 3 to 7 of schedule 5 (Capital
        Projects).

12.9    Mandated Franchisee Projects

        The Franchisee shall comply with its obligations in relation to Mandated Franchise Projects
        as set out in the Technical Schedules and parts 3 and 7 of schedule 5 (Capital Projects).

12.10   Possessions

        The Franchisee shall comply with its obligations in relation to Possessions as set out in
        parts 3 and 5 of schedule 5 (Capital Projects).

12.11   Resources

        The Franchisee shall comply with its obligations in relation to Resources as set out in parts
        3 and 6 of schedule 5 (Capital Projects).

12.12   DLR Works Changes

        The Franchisee shall comply with its obligations in relation to DLR Works Changes as set
        out in part 3 of schedule 5 (Capital Projects).

12.13   Additional Projects

        The Franchisee shall comply with its obligations in relation to Additional Projects as set
        out in part 3 of schedule 5 (Capital Projects).

12.14   Committed Obligations

        The Franchisee shall deliver the Committed Obligations set out in schedule 16 (Committed
        Obligations) in accordance with the terms of that schedule.

13.     MARKETING

13.1    Responsibility for marketing

        13.1.1          The Franchisee shall be responsible for marketing the Railway and the
                        Passenger Services throughout the Franchise Period and acknowledges that
                        DLR Limited shall also market the Railway.




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        13.1.2          The Franchisee shall spend on marketing in each Fee Year not less than the
                        amount set out in the Business Plan (which shall not be less than the
                        amount set out in the Financial Model) for that Fee Year.

        13.1.3          Subject to clause 13.1.4, DLR Limited shall spend on marketing not less
                        than the minimum amount that the Franchisee is required to spend pursuant
                        to clause 13.1.2.

        13.1.4          In the event that DLR Limited determines not to spend the amount required
                        under clause 13.1.3, then if and to the extent that the Franchisee will be
                        materially and adversely affected by such action, then DLR Limited and the
                        Franchisee shall consult with each other in good faith using best efforts to
                        agree a solution, temporary or otherwise which is satisfactory to both
                        parties (acting reasonably) and which will overcome, alleviate or otherwise
                        deal with any such material and adverse consequence.

13.2    Preparation of Annual Marketing Plan

        Not later than 90 days before the beginning of each Fee Year, the Franchisee shall prepare
        and submit to DLR Limited its proposed Annual Marketing Plan for the following Fee Year.

        13.2.1          Each Annual Marketing Plan shall be prepared so as to comply with the
                        Franchisee's obligations in respect of marketing under the provisions of this
                        Agreement and to set out proposals for marketing the Railway and
                        Passenger Services in the forthcoming year and without prejudice to such
                        obligations each Annual Marketing Plan shall also be prepared so as to:

                        (a)   take account of DLR Limited's and TfL's corporate image and the
                              marketing strategy of these organisations;

                        (b)   comply with the Annual Service Plan and the Annual Capital Projects
                              Plan in effect for the Fee Year and which that Annual Marketing Plan
                              supports;

                        (c)   comply with the Business Plan including demonstrating how the
                              Franchisee's proposal for marketing spend for that Fee Year will be
                              not less than the amount set out in the Business Plan which shall not
                              be less than the amount set out in the Financial Model for that Fee
                              Year (and for the avoidance of doubt such amount shall be for
                              matters relating to marketing which are in addition to the obligations
                              specifically set out in other parts of this Agreement including in
                              relation to publicity of Passenger Services and the other provisions of
                              schedule 2 (Passenger Services));

                        (d)   comply with the terms and conditions of the Franchise Agreements;

                        (e)   comply with Good Industry Practice;

                        (f)   take account of the fact that the Docklands Light Railway is part of an
                              integrated transport system;

                        (g)   maximise net revenue across the whole Railway including the
                              Extensions.

        13.2.2          Each Annual Marketing Plan shall set out the matters in 13.2.1 above in
                        such detail as shall reasonably satisfy DLR Limited that the Franchisee has
                        understood its obligations under this Agreement and will be in a position to
                        satisfy such obligations.

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13.3    Consultation on Annual Marketing Plan

        The Franchisee and DLR Limited shall consult with each other on the contents of the
        Annual Marketing Plan for a period of 30 days from receipt thereof by DLR Limited or, if
        later, receipt by DLR Limited of any revised version of that Annual Marketing Plan
        pursuant to clause 13.4 (Required revisions). The Franchisee shall have due regard to
        any comments on the Annual Marketing Plan made by DLR Limited and shall comply with
        any requirements of DLR Limited under clause 13.4 (Required revisions). DLR Limited
        may, at its sole discretion, reduce the required period for consultation by notice in writing
        to the Franchisee.

13.4    Required revisions

        During the period of consultation under clause 13.3 (Consultation on Annual Marketing
        Plan) DLR Limited may by notice to the Franchisee pursuant to this clause require that the
        Franchisee revise the Annual Marketing Plan if DLR Limited considers that it does not
        comply with any of the following:

        13.4.1          the requirements of clause 13.2 (Preparation of Annual Marketing Plan);

        13.4.2          the requirement of any notice served by DLR Limited under clause 24.1
                        (Remedial action) of this Agreement,

        and, following service of any such notice by DLR Limited, the Franchisee shall address the
        issues raised by DLR Limited in such notice and resubmit a revised version of the Annual
        Marketing Plan to DLR Limited.

13.5    Annual Marketing Plan to take effect

        13.5.1          The Annual Marketing Plan referred to in clause 4.2 (Conditions Precedent)
                        shall take effect on the Franchise Commencement Date. Any subsequent
                        Annual Marketing Plan shall not take effect until the beginning of the Fee
                        Year to which it relates or if later, the end of the consultation period under
                        clause 13.3 (Consultation on Annual Marketing Plan).

        13.5.2          The Franchisee shall at all times comply with the Annual Marketing Plan
                        which is in effect pursuant to clause 13.5.1.

13.6    Net revenue maximisation

        The Franchisee shall market the Railway and the Passenger Services in such a manner so
        as to ensure that net revenue is maximised across the whole Railway.

13.7    DLR Limited's right to object

        The Franchisee shall not, in relation to the Franchise, issue any posters, flyers, adverts,
        press announcements or any other marketing materials to the public or undertake any
        material element of publicity or marketing without first obtaining DLR Limited's approval,
        which shall not be unreasonably withheld or delayed.

        DLR Limited shall have the right to prevent the Franchisee undertaking any publicity or
        marketing or to require the Franchisee immediately to cease any publicity or marketing
        which is, in DLR Limited's reasonable opinion:

        13.7.1          inconsistent   with   the   Advertising   Standards   Authority's   then   current
                        standards;

        13.7.2          damaging to DLR Limited's or TfL's business or reputation; or


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        13.7.3          offensive to the public or likely to endanger public safety.

13.8    Use of DLR Limited's logo/corporate image

        Subject to the terms of the Intellectual Property Licence, the Franchisee shall be entitled
        to the use of DLR Limited's current logo and corporate image including use of the name
        "Docklands Light Rail" or "Docklands Light Railway" or "DLR" free of charge but:

        13.8.1          shall only use the name in a manner which does not suggest, or lead people
                        to believe, that it is DLR Limited; and

        13.8.2          shall consult with DLR Limited in relation to, and obtain DLR Limited's prior
                        approval for, the use in any manner of the name, logos and corporate image
                        of DLR Limited.

13.9    Pre-Handback Period

        The Franchisee shall not lessen the marketing effort in the Pre-Handback Period.

13.10   Description of Railway

        The Franchisee shall continue to use the name "Docklands Light Railway" and "DLR" to
        describe the Railway to customers on the Railway and in any other promotional or
        publicity material.

13.11   DLR Limited's livery

        13.11.1         The Franchisee shall use DLR Limited's current livery and corporate image
                        for Trains, Stations and otherwise carry out its obligations under this
                        Agreement in a manner which is consistent with DLR Limited's corporate
                        image and the Franchisee shall not make any change to Train or Station
                        liveries without DLR Limited's express written approval.

        13.11.2         The Franchisee shall ensure that any staff uniforms design are consistent
                        with DLR Limited's corporate image and the Franchisee shall ensure that any
                        uniforms designs are approved by DLR Limited prior to being issued to staff.

        13.11.3         The Franchisee shall be entitled to commercially livery Vehicles provided
                        always there shall not at any one time be more than 24 Vehicles which are
                        commercially liveried and that the Franchisee shall not be entitled to livery
                        any Vehicle:

                        (a)    until any materials to be used in the livery on the Vehicle have been
                               approved in writing by the relevant fire and/or safety authorities and
                               the proposed livery has been approved in writing by DLR Limited;

                        (b)    in a manner which is inconsistent with the Advertising Standard
                               Authority's then current standards or which DLR Limited considers
                               (acting reasonably) to be inappropriate or otherwise offensive; or

                        (c)    in circumstances where any commercial agreement with any third
                               party for the provision of a livery for such third party's benefit has
                               terminated, expired or no longer has effect.

                        The Franchisee shall at DLR Limited's request, promptly (having due regard
                        to operational requirements but in any case within 28 days) remove any
                        livery and return the Vehicle to its previous corporate image if any of the
                        circumstances in clause 13.11.3 persist.


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                        For the purposes of this clause 13.11, any Vehicles which are liveried as a
                        consequence of a request by DLR Limited shall not be included in the
                        calculation of the number of Vehicles which the Franchise may commercially
                        wrap.

13.12   Rights to new livery

        Subject to the Intellectual Property Licence, if the Franchisee modifies, introduces or
        replaces Train or Station liveries or corporate image or uniform or logos (other than those
        specific to the Franchisee and unconnected with the Franchise) or other advertising,
        promotional or marketing devices in each case as permitted by this Agreement (or agreed
        by DLR Limited), the Successor Franchisee will be entitled on termination of the Franchise
        to use and have assigned to it (to the extent such assignment has not already occurred)
        any necessary rights (in either case free of charge) for the continuing use of the new
        liveries, image, uniforms, logos or other advertising or marketing devices by any future
        operator of the Railway.

13.13   Promotional literature

        If DLR Limited is to be referred to in any promotional literature to be published by the
        Franchisee in relation to the Railway any such references shall not be published unless
        approved in writing by DLR Limited (such approval not to be unreasonably withheld or
        delayed).

14.     PROPERTY MANAGEMENT SERVICES, PERMITTED COMMERCIAL ACTIVITIES AND
        PROPERTY MATTERS

14.1    Property Management Services

        The Franchisee shall comply with its obligations under the provisions of paragraph 1 of
        part 1 of schedule 6 (General/Regulatory).

14.2    Permitted Commercial Activities

        In respect of the Franchise, the Franchisee shall be permitted to engage in the other
        permitted activities set out in paragraph 2 of part 1 of schedule 6 (General/Regulatory).
        Other commercial activities may take place on the Railway, and the Franchise Assets may
        be used for any other commercial activities, with the prior written consent of DLR Limited
        (not to be unreasonably withheld) and on such terms and conditions as the parties may
        agree, provided that the obligations of the Franchisee in respect of the Franchise shall not
        be released, diminished or in any other way affected by such consent.

14.3    Leases

        The Franchisee shall comply with its obligations under the Existing Railway Lease
        Agreement and the Railway Lease.

15.     PERSONNEL

15.1    Franchisee's responsibility

        The Franchisee shall be responsible for employing at its own cost all personnel required
        for the purposes of the Services and shall be responsible for all benefit and pension
        entitlements of such personnel. The Franchisee shall be responsible for the selection,
        hiring, assigning and supervising of its personnel (including the obtaining, maintaining
        and, where necessary, renewing of work permits and any other necessary permissions,
        registrations, authorizations, licences and permits in relation to such personnel).



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15.2    Qualified personnel

        The Franchisee shall employ and shall ensure that its contractors and their sub-
        contractors of any tier employ only such persons as are properly qualified, experienced
        and competent to perform the work assigned to them and, where appropriate, duly
        licensed. If so requested by DLR Limited, the Franchisee shall provide to DLR Limited
        evidence of the competency of such persons.

15.3    Safety critical work

        Without prejudice to the generality of clause 15.2 (Qualified Personnel), clause 19
        (Safety) and the provisions of schedule 6 (General/Regulatory) the Franchisee shall
        ensure compliance with the requirements of the Railways (Safety Critical Works)
        Regulations 1994 and any replacement thereof in respect of the provision of the Services.
        If so requested by DLR Limited the Franchisee shall provide to DLR Limited evidence that
        persons have been properly assessed as competent to perform their safety critical duties.

15.4    Training

        15.4.1          The Franchisee shall undertake regularly to train and assess all staff. The
                        training shall include such training as is necessary for initial qualification and
                        assessment of new staff and for periodic re-assessment of proficiency for
                        current staff. The training courses shall cover all tasks which are required to
                        perform duties assigned to staff and appropriate actions in any emergency
                        that may be encountered while performing such duties.

        15.4.2          The Franchisee shall adopt and maintain a scheme for documenting and
                        recording the training status and proficiency of all staff in accordance with
                        any Applicable Requirements (including the DLR Railway Safety Case).

15.5    Key Posts

        15.5.1          The Franchisee shall, except to the extent DLR Limited otherwise agrees,
                        procure that during the Franchise Period each of the Key Posts is assigned to
                        a person employed directly by the Franchisee for the Franchise and that
                        such person is primarily based at the Franchisee's offices in Poplar and
                        spends not less than 35 hours per week performing his duties set out in part
                        2 of schedule 6 (General/Regulatory) (other than as a result of illness or
                        holidays in the ordinary course of employment).

        15.5.2          The Franchisee shall promptly notify DLR Limited of any changes of any
                        person assigned to a Key Post or in circumstances where any person
                        assigned to a Key Post is not available in the normal course of his
                        employment.

        15.5.3          The Franchisee shall not appoint the Managing Director or Safety Manager
                        without the prior written approval of DLR Limited (such approval not to be
                        unreasonably withheld or delayed).

16.     PENSIONS

16.1    Participation in the DLR Pension Scheme

        The Franchisee shall throughout the Franchise Period participate in the DLR Pension
        Scheme for the benefit of the Assumed Employees and other persons employed by the
        Franchisee solely for the purposes of the Franchise during the Franchise Period and to
        whom the Franchisee elects to offer pension benefits under the DLR Pension Scheme and
        shall observe and perform all such provisions of the DLR Pension Scheme as are relevant

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        to it as a participating employer including (without prejudice to the foregoing generality)
        the punctual payment of employer's contributions as required under the rules of the DLR
        Pension Scheme and as directed by the actuary of the DLR Pension Scheme from time to
        time.

16.2    New Employees

        The Franchisee may, subject to the terms of the DLR Pension Scheme, elect to offer any
        other persons employed by the Franchisee for the purposes of the Franchise during the
        Franchise Period pension benefits under the DLR Pension Scheme. If it does not so elect,
        any other pension benefits which the Franchisee offers to such persons shall be no more
        favourable than the pension benefits under the DLR Pension Scheme.

16.3    Variations to the DLR Pension Scheme

        Save as may be required by law, DLR Limited shall not during the Franchise Period
        consent to any change to the terms of the DLR Pension Scheme applicable to the Assumed
        Employees and other persons employed by the Franchisee for the purposes of the
        Franchise during the Franchise Period to whom the Franchisee elects to offer pension
        benefits under the DLR Pension Scheme without the prior agreement of the Franchisee
        (which shall not be unreasonably withheld or delayed).

16.4    Franchisee's nominee

        The Franchisee shall be entitled to nominate one individual to be a trustee of the DLR
        Pension Scheme during the Franchise Period and to request the removal and/or
        replacement of such nominee. The appointment of any such nominee shall be on terms
        that such nominee (including any replacement) ceases to be a trustee on the termination
        of the Franchise for whatever reason. Any such nominee must be acceptable to the other
        trustees of the DLR Pension Scheme and, subject to such acceptability, DLR Limited will
        use all reasonable endeavours to procure that any such nominee shall be appointed as
        trustee of the DLR Pension Scheme.

16.5    Pensions Indemnity

        16.5.1          DLR Limited shall indemnify and keep indemnified the Franchisee against
                        any or all liability to make payments to the DLR Pension Scheme on or
                        following cessation of participation of the Franchisee in the DLR Pension
                        Scheme under the contribution notice or financial support direction
                        provisions of the Pensions Act 2004, provided that DLR Limited shall not be
                        responsible or obliged to indemnify the Franchisee if and to the extent any
                        such liability arises as a consequence of any negligence, wilful misconduct or
                        breach of this Agreement by the Franchisee.

        16.5.2          DLR Limited shall indemnify and keep indemnified the Franchisee against
                        any or all liability to make payments to the DLR Pension Scheme on or
                        following:

                        (a)   the expiration of the period of a notice given by DLR Limited under
                              the provisions of clause 6(A) of the Interim Deed dated 20 March
                              1995 (the "Interim Deed") to cease to pay contributions otherwise
                              than in the circumstances referred to in clause 18 of the Interim
                              Deed; or

                        (b)   DLR Limited selling its undertaking or going into liquidation and no
                              company being substituted for DLR Limited under the provisions of
                              clause 18 of the Interim Deed,



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                        provided that DLR Limited shall not be responsible for or obliged to
                        indemnify the Franchisee if and to the extent that any such liability arises as
                        a consequence of any negligence, wilful misconduct or breach of this
                        Agreement by the Franchisee.

16.6    Consultation

        DLR Limited undertakes with the Franchisee to consult with the Franchisee in connection
        with the determination of employers' contributions to the DLR Pension Scheme (presently
        under Clause 6(A)(i) of the Interim Deed) and in connection with the determination of any
        steps to be taken to remedy a deficit (presently under Clause 11(d) of the Interim Deed).

17.     AGENCY AUTHORITY/FUNCTIONS

17.1    No holding out

        Save as expressly permitted in the Franchise Agreements, the Franchisee shall not in any
        circumstances hold itself out as being the servant or agent of DLR Limited or as being
        authorised to enter into any contract on behalf of DLR Limited or in any other way to bind
        DLR Limited to the performance, variation, release or discharge of any obligations.

17.2    Authorised Functions

        Save as expressly permitted in the Franchise Agreements, the Franchisee shall only be
        authorised to act as DLR Limited's agent for the functions set out in part 3 of schedule 6
        (General/Regulatory) (and then only subject as provided therein).

17.3    DLR Contracts/Undertakings

        Without prejudice to the generality of clause 3.2 (Franchisee's General Obligations), the
        Franchisee shall comply with its obligations in respect of DLR Contracts/Undertakings set
        out in part 3 of schedule 6 (General/Regulatory).

17.4    Indemnity by Franchisee

        Without prejudice to the generality of clause 29 (Franchisee Indemnities), the Franchisee
        shall be responsible for, and shall indemnify DLR Limited, its servants, agents, officers,
        employees, contractors and sub-contractors from and against all liabilities, losses, costs
        and expenses suffered or incurred by such persons arising from any acts or omissions of
        the Franchisee acting as agent for DLR Limited pursuant to clauses 17.2 or 17.3.

18.     QUALITY ASSURANCE

18.1    Management of quality assurance

        The Franchisee shall procure that all aspects of the Services are the subject of quality
        management systems in accordance with Good Industry Practice.

18.2    Effectiveness of contractors' quality systems

        The Franchisee shall monitor its contractors and their sub-contractors' quality systems
        and use all reasonable endeavours to ensure that they operate quality management
        systems in accordance with Good Industry Practice. The Franchisee shall be responsible
        for monitoring the performance of and ensuring (to the extent reasonably practicable)
        compliance by such persons with the requirements of their respective quality systems. For
        the avoidance of doubt, nothing in this clause shall be treated as relieving the Franchisee
        in any way whatsoever from its obligations under clause 44 (Sub-contracting).



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18.3    Quality Procedures

        The Franchisee shall at all times comply with the Quality Procedures and shall comply with
        clause 22 (Change Procedures) in respect of any changes thereto. Without prejudice to
        that obligation, the Franchisee shall provide at the end of each Fee Period a report of any
        failures to comply with the Quality Procedures during that Fee Period and proposed
        corrective action.

19.     SAFETY

19.1    Safety Management

        The Franchisee, its directors, management and staff shall be wholly responsible and
        accountable for the following:

        19.1.1          the control and safe operation of the railway infrastructure, train operations
                        and station operations under the Franchise;

        19.1.2          the provision and carrying out of safe Services;

        19.1.3          ensuring that the Franchise Assets are maintained and safe;

        19.1.4          the preparing of revisions to the DLR Railway Safety Case (as required) and
                        gaining and maintaining of the HSE acceptance of the DLR Railway Safety
                        Case pursuant to the Railways (Safety Case) Regulations 2000 as amended
                        by the Railway (Safety Case) Amendments Regulations 2003;

        19.1.5          developing and operating an effective safety management system which
                        shall include properly qualified, trained and experienced persons to be
                        responsible for all such safety matters including without limitation the
                        responsibilities set out in part 5 of schedule 6 (General/Regulatory) and/or
                        required by the DLR Railway Safety Case;

        19.1.6          employing suitably qualified, trained and experienced personnel to ensure
                        the safe operation of the Railway; and

        19.1.7          discharging the Franchisee's statutory health and safety duties and
                        obligations.

19.2    Applicable Requirements

        Save as expressly set out in this Agreement, the Franchisee shall implement at its own
        cost all alterations and improvements to the Services and the Franchise Assets and/or
        Stocks which are required by any Applicable Requirements relating to safety and shall
        revise the DLR Railway Safety Case as required at its own cost.

19.3    DLR Railway Safety Case

        19.3.1          The Franchisee shall be responsible under clause 4.2 (Conditions Precedent)
                        for preparation and gaining acceptance from the HSE of a safety case for the
                        whole DLR railway infrastructure, train operations and station operations
                        pursuant to the Railway (Safety Case) Regulations 2000 as amended by the
                        Railway (Safety Case) Amendments Regulations 2003 or such other
                        Applicable Requirements as shall be relevant.

        19.3.2          The Franchisee shall comply with the accepted DLR Railway Safety Case in
                        performing all tasks and obligations under this Agreement. The Franchisee
                        shall revise the DLR Railway Safety Case as required for the performance of
                        the Services at its own cost and shall notify DLR Limited at least 14 days in
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                        advance of the introduction of any proposed change to the DLR Railway
                        Safety Case. Such change shall only be implemented in accordance with the
                        Change Procedures.

19.4    Safety Regime

        19.4.1          The Safety Regime establishes a mechanism so that DLR Limited can satisfy
                        itself in so far as it is reasonably able that the Franchisee is complying with
                        safety obligations under the Franchise and is discharging all its statutory
                        safety duties and obligations.

        19.4.2          The relationship between DLR Limited and the Franchisee in connection with
                        safety under the Franchise and safety responsibilities, duties and obligations
                        of the Franchisee are set out in this clause and the Safety Regime.

        19.4.3          The Franchisee shall comply without limitation with all of its safety
                        responsibilities, duties and obligations under the Safety Regime.

20.     ENVIRONMENT

20.1    Noise

        The Franchisee shall comply with its obligations under paragraph 1 of part 8 of schedule 6
        (General/Regulatory).

20.2    Pollution

        The Franchisee shall comply with its obligations under paragraph 2 of part 8 of schedule 6
        (General/Regulatory).

20.3    Environmental Law

        Without prejudice to the generality of clause 3.2 (Franchisee's general obligations), the
        Franchisee shall comply with its obligations under Environmental Law in relation to the
        Franchise. Without prejudice to that obligation, the Franchisee shall provide DLR Limited
        with prompt notification of any failure to comply with Environmental Law and of any
        notices, claims or other communication from regulatory authorities or other authorities
        with relevant jurisdiction in relation to environmental matters (including noise and
        pollution).

21.     OTHER REGULATORY

21.1    Franchisee to obtain consents, licences etc.

        Except as expressly provided in paragraph 4 of part 8 of schedule 6 (General/Regulatory),
        the Franchisee shall be responsible at its own expense for obtaining in a timely fashion
        and maintaining in full force and effect all necessary or appropriate consents, licences,
        approvals and permissions required for provision of the Services and operation of the
        Franchise. Where such consents, licences, approvals and permissions are required by DLR
        Limited for the performance of its functions under this Agreement or by a Successor
        Franchisee for continuing operation of the Franchise, the Franchisee shall use all
        reasonable endeavours to ensure that such items are obtained on a basis that will ensure
        that DLR Limited and (as appropriate) Successor Franchisees enjoy the benefits thereof
        for such purposes, provided that this obligation on the part of the Franchisee shall not
        apply in respect of those items which, in accordance with Applicable Requirements, can
        only be granted to the Franchisee on a personal basis.

21.2    Franchisee's obligation to give notices, pay fees, etc.


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        Save as otherwise provided in the Franchise Agreements, the Franchisee shall, in
        undertaking the Franchise, give all notices, pay all fees, expenses, compensation and
        other outgoings and do all other acts or things which are or may be required to be given,
        paid or done under the Applicable Requirements.

21.3    Prevention of nuisance etc.

        In performing its obligations under the Franchise Agreements, the Franchisee shall at all
        times use all reasonable endeavours to prevent any unlawful nuisance (including noisy
        working operations), obstruction, trespass, interference with any right of light, way, air or
        water, or other interference with the rights of any adjoining landowners, tenants or
        occupiers or any statutory undertaker and the Franchisee shall indemnify DLR Limited
        from and against any and all liabilities, losses and costs and expenses suffered by DLR
        Limited as a result of claims or demands from third parties arising from a failure by the
        Franchisee to comply with its obligations under this clause.

22.     CHANGE PROCEDURES

22.1    Franchisee to comply with Change Procedures

        The Franchisee may change (and, if required by any of the terms of the Franchise
        Agreements, shall change) any of the Current Procedures provided that the Franchisee
        has complied with the Change Procedures. The Franchisee shall comply with the Change
        Procedures and the Change Procedures may only be altered by the Franchisee with the
        prior written consent of DLR Limited.

22.2    Implementation

        The Franchisee shall not implement any Change Proposal unless it is accepted by DLR
        Limited in accordance with part 9 of schedule 6 (General/Regulatory).

22.3    Franchisee's safety objection

        22.3.1          If DLR Limited serves notice of non-satisfaction under part 9 of schedule 6
                        (General/Regulatory) the Franchisee may serve notice that the proposed
                        change is required on the grounds of safety and that there is no other
                        practicable means of addressing the safety issue in question. In its notice
                        the Franchisee shall give details of the reasonable grounds for such safety
                        objection (including preliminary safety assessments). The Franchisee shall,
                        at the request of and at no cost to DLR Limited, provide such further
                        assessments or calculations as DLR Limited may reasonably require to
                        determine whether the Franchisee's safety objection is reasonable.

        22.3.2          If DLR Limited is unable to accept the Franchisee's safety objection and no
                        agreement is reached with the Franchisee in relation to the safety objection
                        within 14 days of service by the Franchisee of its notice under clause 22.3.1,
                        then either party may refer the safety objection to the Dispute Resolution
                        Procedure.

        22.3.3          In the event that the Franchisee's safety objection is upheld by the Dispute
                        Resolution Procedure then DLR Limited's notice of non-satisfaction shall be
                        deemed to be withdrawn.

        22.3.4          In the event that the Franchisee's safety objection is not upheld by the
                        Dispute Resolution Procedure and the Franchisee notifies DLR Limited within
                        7 days of resolution of the Dispute that it is willing to withdraw its safety
                        objection, DLR Limited's notice of non-satisfaction shall stand (unless and
                        until withdrawn by DLR Limited). If the Franchisee fails to provide such

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                        notification within 7 days of resolution of the Dispute, DLR Limited may
                        serve a written notice on the Franchisee requiring provision of the
                        notification within 3 business days. If the Franchisee does not provide the
                        said notification within such period, DLR Limited shall be entitled to serve
                        notice of termination under clause 37.5.2 (Termination following Dispute).

22.4    Provision of copies

        The Franchisee shall at the reasonable request of DLR Limited and at no cost to DLR
        Limited provide (on each such request) up to three copies of each of the DLR Railway
        Safety Case, Safety Policy and Procedures, Operating Rules/Procedures, Operating
        Manuals, Asset Management Strategy, Asset Management Regime, current Annual
        Maintenance Plan and Maintenance Procedures, including any updated material relating
        thereto and all versions thereof. All such documents and information shall be held by DLR
        Limited subject to the provisions of clause 54 (Confidentiality).

23.     PROVISION OF INFORMATION

23.1    Franchisee reporting obligations

        23.1.1          The Franchisee shall maintain records and provide information in accordance
                        with the requirements set out in schedule 7 (Provision of Information) as
                        such requirements may reasonably be amended by DLR Limited.

        23.1.2          The Franchisee shall make available, and if requested by DLR Limited,
                        provide copies of, on reasonable notice by DLR Limited and at reasonable
                        times, the records and accounts referred to in schedule 7 for inspection by
                        DLR Limited. DLR Limited shall be entitled to appoint one or more suitable
                        representatives to check, verify and take copies of any such records and
                        accounts.

        23.1.3          All records and accounts required to be maintained in accordance with this
                        clause 23.1 for any period shall be held until twenty four months or as
                        required by Law (whichever is the later) after the expiry of the Franchise
                        Period.

23.2    Provision of Accounts

        The Franchisee shall prepare and deliver any financial and accounting information in
        accordance with the requirements set out in paragraphs 2 and 3 of part 1 of schedule 7.

23.3    Provision of registered details

        The Franchisee shall provide the registered details and other notices, circulars or other
        documents in accordance with the requirements set out in paragraph 1.1 of part 3 of
        schedule 7.

23.4    Inspection of books and records

        Without prejudice to the provisions of clauses 23.1 (Franchisee reporting obligations) and
        23.2 (Provision of Accounts) DLR Limited and its representatives shall be permitted to
        inspect at any reasonable time the books, records and other material kept by or on behalf
        of the Franchisee in order to check or audit any information supplied to it under this
        Agreement, to monitor compliance with the Franchisee's obligations under this Agreement
        or to prepare DLR Limited's accounts (including statutory accounts). The Franchisee shall
        make available to DLR Limited and its representatives such information (including copies
        of documents) and grant such access or procure the grant of such access (including to or
        from third parties) as they shall reasonably require in connection therewith. In the event

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        that any such inspection reveals that information previously supplied to DLR Limited was
        in any material respect inaccurate on the basis of information available to the Franchisee
        at the time, the cost incurred by DLR Limited in respect of any such inspection shall be
        borne by the Franchisee.

23.5    Access to third parties and employees

        The Franchisee shall, where so requested by DLR Limited, use all reasonable endeavours
        to ensure that DLR Limited may have direct access to:

        23.5.1          such information, data or records relating to the Franchisee which is
                        maintained by third parties and which DLR Limited is entitled to have access
                        to, or have copies of, from the Franchisee under this Agreement; and

        23.5.2          Franchise Employees and/or other personnel employed or engaged in the
                        operation of the Railway to assist it in connection with its residual
                        obligations in relation to the Railway and in particular in relation to DLR
                        Projects.

23.6    Right of audit

        DLR Limited or its representatives shall be entitled to audit compliance with any of the
        provisions of this Agreement on a random basis without notice to the Franchisee. Any
        such audit may involve the examination, inspection or testing of works, activities or
        assets on or off the Railway. DLR Limited shall use reasonable endeavours to implement
        any such audit in such a way that the ability of the Franchisee to operate the Railway and
        provide the Services is not materially and adversely affected. The Franchisee shall
        procure that the representatives of DLR Limited conducting such an audit shall be
        provided with all such assistance and access to facilities, records and assets (including the
        provision of copies of documents) as they may reasonably require in order to discharge
        their audit function in a proper manner.

23.7    Performance reviews

        The Franchisee, if so requested by DLR Limited, shall from time to time attend meetings
        with DLR Limited or its representatives for the purpose of enabling DLR Limited to conduct
        periodic reviews of the financial and operational performance of the Franchisee and the
        performance of its obligations under this Agreement. Such meetings shall be held at
        reasonable times and no more frequently than at quarterly intervals unless DLR Limited
        otherwise reasonably requests. The persons attending such meetings on behalf of the
        Franchisee shall be of appropriate seniority and responsibility and shall include such
        directors or senior management of the Franchisee as DLR Limited may reasonably require.
        The Franchisee shall prepare and present reports at such meetings in respect of such
        aspects of its performance as DLR Limited may reasonably request.

23.8    Comptroller and Auditor General

        The Franchisee hereby acknowledges and agrees with DLR Limited that for the purpose of:

        23.8.1          the examination and certification of DLR Limited's accounts;

        23.8.2          any examination pursuant to Section 6(1) of the National Audit Act 1983 or
                        any re-enactment thereof of the economy, efficiency and effectiveness with
                        which DLR Limited has used its resources;

        23.8.3          the Local Government Finance Act 1982 (and any other legislation relating
                        to the inspection, examination and auditing of the Authority's accounts);
                        and

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        23.8.4          any examination pursuant to the Local Government Act 1999,

        the District Auditor, Audit Commissioner, Comptroller and Auditor General (as applicable)
        may examine such documents relating to the Franchise as he may reasonably require
        which are owned, held or otherwise within the control of the Franchisee and may require
        the Franchisee to produce such oral or written explanations as he considers necessary.

        For the avoidance of doubt it is hereby declared that the carrying out of an examination
        under Section 6(3)(d) of the National Audit Act 1983 or any re-enactment thereof in
        relation to the Franchisee is not a function exercisable under this Agreement.

24.     MONITORING OF PERFORMANCE

24.1    Remedial action

        Without prejudice to any other right or remedy available to DLR Limited:

        24.1.1          if at any time DLR Limited is of the reasonable opinion that the Franchisee
                        has failed to perform any of its obligations under the Franchise Agreements
                        and such failure is capable of remedy, then DLR Limited may serve a notice
                        on the Franchisee requiring the Franchisee (at its own cost and expense) to
                        remedy such failure (and any damage resulting from such failure) and for
                        the avoidance of doubt a failure to perform shall include a failure to remedy
                        as required by this clause 24.1. Any such notice shall state on its face that
                        it is a "Remedial Notice" and shall be signed by or on behalf of DLR Limited;
                        and

        24.1.2          within 14 days of receipt of a Remedial Notice the Franchisee shall put
                        forward to DLR Limited a reasonable and appropriate programme for the
                        remedying of such failure, such programme to specify in reasonable detail
                        the manner in which such failure is proposed to be remedied and the latest
                        date by which it is proposed that such failure shall be remedied. If the
                        parties fail to agree the programme within 7 days, the Dispute may be
                        referred by either party for resolution under the Disputes Resolution
                        Procedure.

24.2    Warning Notices

        Without prejudice to any other right or remedy available to DLR Limited, if at any time
        DLR Limited is of the reasonable opinion that the Franchisee has failed to comply with a
        programme agreed or determined under clause 24.1, then DLR Limited may give written
        notice to the Franchisee setting out in general terms the matter or matters giving rise to
        such notice and containing a reminder to the Franchisee of the implications of such notice.
        Any such notice shall state on its face that it is a "Warning Notice" and shall be signed by
        or on behalf of DLR Limited.

24.3    Increased monitoring

        In the event of the Franchisee receiving any Warning Notices DLR Limited may (without
        prejudice to any other right or remedy available to DLR Limited) by notice to the
        Franchisee increase the level of its monitoring of the Franchisee in a manner that is
        proportionate to the nature and extent of the Franchisee's breaches until such time as the
        Franchisee shall have demonstrated to the reasonable satisfaction of DLR Limited that it
        will perform and is capable of performing its obligations under the Franchise Agreements.
        The notice to the Franchisee shall specify the additional measures to be taken by DLR
        Limited in monitoring the Franchisee in response to the matters which led to such
        Warning Notice being sent. The Franchisee shall cooperate with and provide assistance in
        relation to such increased level of monitoring and shall compensate DLR Limited for all

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        additional costs properly incurred by DLR Limited as a result of such increased level of
        monitoring.




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                                              PART IV

                                             FINANCE

25.     FEES AND PAYMENTS

25.1    Fees

        With effect from the Franchise Commencement Date, in consideration for the provision of
        the Services DLR Limited shall pay to the Franchisee:

        25.1.1          in respect of each Fee Period a Fixed Fee calculated in accordance with the
                        provisions of paragraph 1 of part 1 of schedule 8 (Remuneration).

        25.1.2          in respect of each Fee Period the Revenue Fee in accordance with the
                        provisions of paragraph 2 of part 1 of schedule 8 (Remuneration).

25.2    Adjustment Payments

        The Franchisee shall pay to DLR Limited, or (as appropriate) DLR Limited shall pay to the
        Franchisee by way of adjustment of the Fees any Adjustment Payment calculated in
        accordance with the provisions of part 2 of schedule 8 (Remuneration).

25.3    Fee Additions or Fee Deductions

        The Franchisee shall pay to DLR Limited or (as appropriate) DLR Limited shall pay to the
        Franchisee by way of adjustment of the Fees any Fee Additions or Fee Deductions
        calculated in accordance with the provisions of part 4 of schedule 2 (Passenger Services).

25.4    CSI Fee Additions or CSI Fee Deductions

        The Franchisee shall pay to DLR Limited or (as appropriate) DLR Limited shall pay to the
        Franchisee by way of adjustment of the Fees any CSI Fee Additions or CSI Fee Deductions
        calculated in accordance with the provisions of part 4 of schedule 2 (Passenger Services).

25.5    Resource Payments

        DLR Limited shall pay to the Franchisee, or (as appropriate) the Franchisee shall pay to
        DLR Limited by way of adjustment of the Fees any Resource Payments payable under
        parts 3 and 6 of schedule 5.

25.6    Project Payments

        DLR Limited shall pay to the Franchisee, or (as appropriate) the Franchisee shall pay to
        DLR Limited by way of adjustment of the Fees, any Project Payments payable under Part
        4 of schedule 5.

25.7    Variation Payments

        DLR Limited shall pay to the Franchisee, or (as appropriate) the Franchisee shall pay to
        DLR Limited by way of adjustment of the Fees, any Variation Payments payable under the
        Variation Procedure.

25.8    Ancillary Commercial Revenue

        The Franchisee shall be entitled to all Ancillary Commercial Revenue and DLR Limited shall
        pay to the Franchisee any Ancillary Commercial Revenue received by it during any Fee
        Period.


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25.9    Capital Replacement Contribution

        The Franchisee shall pay to DLR Limited by way of adjustment to the Fees any Capital
        Replacement Contribution in accordance with part 5 of schedule 8 (Remuneration).

25.10   Service Change Adjustment

        The Franchisee shall pay to DLR Limited by way of adjustment to the Fees any Service
        Change Adjustment in accordance with paragraph 1.9 of part 1 of the Appendix to part 1
        of schedule 2 (Passenger Services).

26.     ADMINISTRATION OF PAYMENTS

26.1    Delivery of certificate

        Within 5 days following the end of each Fee Period the Franchisee shall deliver to DLR
        Limited a certificate providing the information set out in part 6 of schedule 8
        (Remuneration) (to the extent it can be reasonably determined at such time) in relation to
        that Fee Period. Any such information which cannot be reasonably determined by the
        Franchisee at such time shall be delivered to DLR Limited by the Franchisee as soon as
        reasonably practicable thereafter.

26.2    Delivery of statement

        Within 7 days following receipt by DLR Limited of the certificate in respect of the
        preceding Fee Period under clause 26.1 (Delivery of certificate), DLR Limited shall deliver
        to the Franchisee a statement showing details of any of the proposed payments set out in
        clause 25.1 in respect of such Fee Period and shall supply with such statement full details
        of the calculations used to ascertain such sums together with all relevant supporting
        information on which such calculations have been based, along with details of any
        amounts proposed to be withheld and the grounds for withholding payment. If there is
        more than one ground for withholding payment, each ground and the withheld sum
        attributable to it will be set out in the statement.

26.3    Estimates by DLR Limited

        If any of the information or data required for the purpose of calculation of the Fees and/or
        Fee Additions/Deductions and/or CSI Fee Additions/Deductions (or any elements thereof)
        is not available to DLR Limited, DLR Limited shall, in its absolute discretion, estimate such
        information or data for the purposes of calculation of the Fees and/or Fee
        Additions/Deductions and/or CSI Fee Additions/Deductions to be included in such
        statement.     Any Fees and/or Fee Additions/Deductions and/or CSI Fee Additions/
        Deductions calculated on the basis of information or data so estimated shall be the
        subject of an Adjustment Payment in accordance with Part 2 of schedule 8
        (Remuneration). The Franchisee shall not be entitled to raise any disagreement or
        dispute in connection with any information or data so estimated, save by reference to any
        Adjustment Payment payable in relation thereto in accordance with Part 2 of schedule 8
        (Remuneration).

26.4    Approval of calculations

        Subject to clause 26.3 (Estimates by DLR Limited), within 7 days of receipt of any
        statement prepared in accordance with clause 26.2 (Delivery of statement), the
        Franchisee shall notify DLR Limited whether or not it agrees with the calculations
        contained in the statement. Subject to clause 26.3 (Estimates by DLR Limited), if the
        Franchisee disagrees with anything contained in the statement it shall with its notice give
        reasons for such disagreement and state what it considers to be the correct amount of
        any Franchise Payment. If there is a dispute as to the amount of a Franchise Payment,

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        the parties shall use all reasonable endeavours to resolve such dispute within 28 days
        following the date of the Franchisee's notification under this clause. If any such dispute
        cannot be resolved within such 28 day period, then subject to clause 26.3 (Estimates by
        DLR Limited), clause 27 (Disputed Payments) shall apply to any dispute as to the amount
        of any Franchise Payment.

26.5    Invoicing for Franchise Payments

        At any time after service of a statement pursuant to clause 26.2 (Delivery of statement)
        the Franchisee and/or DLR Limited (as appropriate) shall submit an invoice for the
        Franchise Payments set out in such statement (or such other sum as may have been
        agreed between the parties prior to submission of such invoice) notwithstanding any
        dispute as to the amount of any such Franchise Payment.

26.6    Method of payment

        Any payment of a Franchise Payment shall be made by automatic electronic funds transfer
        in pounds sterling to such bank account in the United Kingdom as the payee of such
        payment may have previously specified to the payer in writing and shall be made so that
        cleared funds are received in that account on or before the date such payment becomes
        payable under this Agreement.

26.7    Time for payment and interest

        26.7.1          All amounts properly included in an invoice submitted pursuant to clause
                        26.5 (Invoicing of Franchise Payments) shall be paid within 15 days of
                        receipt by the paying party of the relevant invoice, notwithstanding any
                        dispute as to the amount of any such Franchise Payment. The end of such
                        15 day period shall constitute the final date for payment for the purposes of
                        the Housing Grants, Construction and Regeneration Act 1996.

        26.7.2          Subject as provided in clause 26.7.3, any amount properly due from one
                        party to the other pursuant to this Agreement and which shall remain
                        unpaid after the date when payment becomes due shall bear interest at the
                        Prescribed Rate, such interest to accrue from day to day and be
                        compounded monthly from and including the date when payment was due
                        up to but excluding the date of actual payment.

        26.7.3          Interest at the Prescribed Rate shall accrue in respect of amounts invoiced
                        following a decision in accordance with clause 27 (Disputed Payments) from
                        the due date of the original underpayment or overpayment as the case may
                        be.

26.8    Set off

        DLR Limited shall be entitled to set off against any Franchise Payments payable by it any
        Franchise Payments payable or due to it and any other amount payable to or due to it
        under the Franchise Agreements or otherwise howsoever arising.

26.9    Ticket Sales Revenue

        Ticket Sales Revenue collected by the Franchisee in accordance with Part 2 of schedule 3
        (Tickets/Ticketing Schemes) shall be paid by the Franchisee as soon as reasonably
        practicable into an account nominated by DLR Limited.




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27.     DISPUTED PAYMENTS

27.1    Disputes

        In the event that there is a dispute as to the amount of a Franchise Payment (which, if
        applicable, is not resolved pursuant to clause 26.4 (Approval of calculations)), such
        dispute shall be resolved in accordance with the Dispute Resolution Procedure but shall
        not affect the obligation of any party to pay any Franchise Payment for which invoices
        have been submitted in accordance with clause 26.2 (Delivery of statement). Without
        prejudice to part 2 of schedule 8 (Remuneration) the amount of any Franchise Payment
        may not be disputed by the Franchisee unless it has notified DLR Limited of such dispute
        within 28 days of notification of the proposed amount of the Franchise Payment under
        clause 26.2 (Delivery of statement).

27.2    Payment following Dispute resolution

        If following resolution of a dispute as to the amount of a Franchise Payment under the
        Dispute Resolution Procedure, any amounts are required to be paid by any party, such
        amounts shall become payable on the next day a Franchise Payment becomes payable
        under this clause which falls no less than 30 days after such resolution or, if there is no
        such day, 14 days after the date of such resolution. Where the resolved dispute related to
        a withholding of a Franchise Payment, any amounts required to be paid by any party shall
        become payable on the final date for payment of the disputed Franchise Payment (as set
        out in clause 26.7.1 or 7 days after the date of such resolution, whichever is the later.

28.     FINANCIAL COVENANTS

28.1    Performance Bonds and Guarantee

        The Franchisee shall maintain the continuing validity and effectiveness of the Performance
        Bond (including any replacement thereof) and the Guarantee:

        28.1.1          from the date of this Agreement for the period of the Franchise Term (as
                        extended, if applicable) or (if relevant) the Franchise Period; and

        28.1.2          following the end of the Franchise Term or (if relevant) the Franchise Period
                        for the period that obligations or liabilities of the Franchisee remain
                        outstanding and/or underperformed provided that, in the case of the
                        Performance Bond such period shall, subject to clause 5.2 (Extension of the
                        Franchise term), expire one year after the expiry of the Franchise Term (as
                        extended, if applicable) or (if relevant) the Franchise Period.

28.2    Finance Agreements

        28.2.1          In the event that:

                        (a)   the Franchise Term is extended pursuant to clause 5.2 (Extension of
                              the Franchise Term), and the Franchisee does not replace or extend
                              the Performance Bond in accordance with its obligations under clause
                              28.1 above, so that there is no valid and effective Performance Bond
                              for the period of any extension or further extension of the Franchise
                              Term; or

                        (b)   28 days before the Expiry Date (as such term is defined in the
                              Performance Bond) no replacement Performance Bond has been
                              provided to DLR Limited,




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                         DLR Limited may make a demand upon the full amount (or permitted
                         balance thereof if a demand or demands have already been made) of the
                         Performance Bond and, on receipt thereof into the account specified in
                         such demand DLR Limited's rights in relation to the amount in such
                         account shall be held in trust for DLR Limited and the Franchisee as
                         security for the performance of the Franchisee's obligations under this
                         Agreement with any interest accruing on such account being for the benefit
                         of DLR Limited and the Franchisee. The amount held in trust pursuant to
                         this clause shall be released to the Franchisee upon delivery by the
                         Franchisee of a replacement Performance Bond in accordance with its
                         obligations under clause 28.1 above save to the extent that an amount has
                         been released from such trust to cure a default in the performance of the
                         Franchisee's obligations under this Agreement. The perpetuity period
                         applicable to any trust created by this agreement is eighty years.

        28.2.2          DLR Limited may at any time during or after the Franchise Term issue a
                        demand notice or take any other action permitted by the Financing
                        Agreements.

        28.2.3          For the avoidance of doubt any reference in this Agreement or the Ancillary
                        Agreements to circumstances in which DLR Limited may issue a demand
                        notice or take any other action under the Financing Agreement shall be
                        without prejudice to the generality of clause 28.2.2.

28.3    Other Financial Covenants

        The Franchisee shall comply with its obligations in part 2 of schedule 9 (Financial
        Requirements).

29.     FRANCHISEE INDEMNITIES

29.1    Indemnity by Franchisee

        The Franchisee shall be responsible for, and shall indemnify DLR Limited (for itself and as
        trustee for the DLR Limited Parties) from and against all Losses (whether caused by
        negligence or otherwise) which may arise out of, or in connection with, the Services or the
        performance or failure to perform any of the Franchise Obligations, including without
        limitation to the generality of the foregoing:

        29.1.1          all Losses suffered or incurred by the DLR Limited Parties as a result of:

                        (a)    claims by passengers or other third parties; or

                        (b)    damage to persons employed by or property owned or used by the
                               DLR Limited Parties

                        arising from the performance of or failure to perform the Franchise
                        Obligations;

        29.1.2          all Losses suffered or incurred by the DLR Limited Parties as a result of the
                        failure to perform the Franchise Obligations; and

        29.1.3          all Losses suffered or incurred by the DLR Limited Parties as a result of any
                        services, works and/or activities provided, carried out and/or undertaken by
                        the Franchisee under or pursuant to the Franchise Agreements which, for
                        the avoidance of doubt, shall not include Losses suffered by DLR Limited
                        Parties under a DLR Project in circumstances where the Franchisee's role in
                        the DLR Project is related to project management only and such Losses have

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                        not arisen as a result of a failure by the Franchisee in respect of such project
                        management role or otherwise arisen from the performance of or failure to
                        perform the Franchise Obligations by the Franchisee.

        The Franchisee shall not be liable under this clause 29 for any Losses if and to the extent
        that such Losses were caused by the negligence or wilful misconduct of DLR Limited or
        any DLR Limited Party except in any such case to the extent that such Losses are
        recoverable under the insurance policies to be taken out in accordance with this
        agreement.

29.2    Criminal Liability

        Where the act, omission or default of the Franchisee, or of its agents or contractors,
        causes DLR Limited to commit an offence the Franchisee shall immediately take any
        measure necessary to ensure that that act, omission or default no longer causes DLR
        Limited to commit that offence. Where DLR Limited reasonably suspects that such an act,
        omission or default is about to take place and it reasonably believes that this will result in
        DLR Limited committing an offence DLR Limited may issue an instruction to the
        Franchisee to remedy the act, omission or default forthwith and the Franchisee shall
        immediately comply with the said instruction.

29.3    Savings

        29.3.1          The Franchisee's liability to DLR Limited arising under any indemnity in this
                        Agreement shall be without prejudice to any other right or remedy available
                        to DLR Limited and in particular shall not prejudice in any way the ability of
                        DLR Limited to enforce any bond, guarantee or other security given
                        pursuant to clause 28 (Financial Covenants) at any time and in any manner
                        whatsoever.

        29.3.2          The indemnity by the Franchisee under any provision of the Franchise
                        Agreements shall be without limitation to any indemnity by the Franchisee
                        under any other provision of the Franchise Agreements.

29.4    Conduct of Claims

        29.4.1          If DLR Limited receives any notice, demand, letter or other document
                        concerning any Claim from which it appears that DLR Limited is or may
                        become entitled to indemnification under the Franchise Agreements, DLR
                        Limited shall give notice in writing to the Franchisee as soon as reasonably
                        practicable.

        29.4.2          Subject to clauses 29.4.3, 29.4.4, 29.4.5 and 29.4.7 on the giving of a
                        notice pursuant to clause 29.4.1 the Franchisee shall be entitled to resist
                        the Claim in the name of DLR Limited at the Franchisee's own expense and
                        shall, if it so elects, have the conduct of any defence, dispute, compromise
                        or appeal of the Claim and of any incidental negotiations, and DLR Limited
                        will (at the Franchisee's cost and expense) give the Franchisee all
                        reasonable cooperation, access and assistance for the purposes of
                        considering and resisting such Claim.

        29.4.3          With respect of any Claim subject to clause 29.4.2 of this clause in respect
                        of which the Franchisee has exercised its right to resist in the name of DLR
                        Limited:

                        (a)    the Franchisee shall keep DLR Limited fully informed and consult with
                               it about the conduct of the Claim and DLR Limited shall not be
                               required (and the Franchisee shall not be entitled) to take any steps

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                              in relation thereto which DLR Limited reasonably considers to have a
                              material detrimental effect on the business or reputation of DLR
                              Limited;

                        (b)   to the extent that DLR Limited is not entitled to be indemnified by the
                              Franchisee for all of the liability arising out of the act or omission
                              which is the subject of the Claim, no action shall be taken pursuant to
                              clause 29.4.2 (without the consent of DLR Limited which consent
                              shall not be unreasonably withheld or delayed) which shall increase
                              the amount of any payment to be made by DLR Limited in respect of
                              that part of the Claim which is not covered by the indemnity from the
                              Franchisee; and

                        (c)   the Franchisee shall not pay or settle such Claim without the consent
                              of DLR Limited, such consent not to be unreasonably withheld or
                              delayed.

        29.4.4          DLR Limited shall be free to pay or settle any Claim on such terms as it may
                        in its absolute discretion think fit and without prejudice to its rights and
                        remedies under the Franchise Agreements if:

                        (a)   within 28 days of receipt by the Franchisee of the notice from DLR
                              Limited under clause 29.4.1 or such shorter period as DLR Limited
                              shall have reasonably specified in such notice having regard to the
                              nature and circumstances of the Claim, the Franchisee fails to notify
                              DLR Limited of its intention to dispute the Claim; or

                        (b)   the Franchisee fails to comply in any material respect with the
                              provisions of clause 29.4.3.

        29.4.5          DLR Limited shall be free at any time to give notice to the Franchisee that it
                        is taking over the conduct of any defence, dispute, compromise or appeal of
                        any Claim subject to clause 29.4.2 and of any incidental negotiations. Upon
                        receipt of such notice in writing:

                        (a)   the Franchisee shall promptly take all steps necessary to transfer the
                              conduct of such Claim to DLR Limited and shall provide to DLR
                              Limited all reasonable cooperation, access and assistance for the
                              purposes of considering and resisting such Claim; and

                        (b)   the Franchisee shall be released from its indemnity in respect of such
                              Claim (including the costs of DLR Limited in relation to such Claim
                              and any such defence, dispute, compromise, appeal or incidental
                              negotiations), without prejudice to the right of DLR Limited to be
                              indemnified by the Franchisee for all costs and expenses accrued
                              during the period up to the date of such notice.

        29.4.6          Subject to clause 29.4.7, where DLR Limited is at any time entitled to
                        recover against any third party a sum in respect of any Losses in relation to
                        which DLR Limited claims indemnification under the Franchise Agreements:

                        (a)   DLR Limited shall at the time of claiming indemnification in respect of
                              such Losses give written notice to the Franchisee of any such rights
                              of recovery against such other person of which it is aware;

                        (b)   the Franchisee shall have the right at its own expense to take over
                              the conduct of any Claim for such recovery against such other person
                              and to use the name of DLR Limited in connection therewith and DLR

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                              Limited shall cooperate with and provide all reasonable assistance to
                              the Franchisee in pursuing such recovery, subject only to:

                              (i)   keeping DLR Limited fully informed and consulted with about the
                                    conduct of the Claim;

                              (ii) DLR Limited not being required (and the Franchisee not being
                                   entitled) to take any steps in relation thereto which DLR Limited
                                   reasonably considers to have a material detrimental effect on the
                                   business or reputation of DLR Limited;

                              (iii) notifying DLR Limited of the outcome of such Claim; and

                              (iv) indemnifying DLR Limited against all costs and expenses incurred
                                   by DLR Limited arising from the Franchisee conducting such
                                   Claim to the extent that such costs and expenses are not paid to
                                   DLR Limited by the other party to the Claim;

                        (c)   in the event that the Franchisee elects not to take over the conduct of
                              the Claim for recovery against such other person, DLR Limited shall
                              take all reasonable steps to pursue such recovery whether or not the
                              Franchisee has already paid to DLR Limited an amount in respect of
                              the relevant Losses; and

                        (d)   to the extent that the Franchisee has fully indemnified DLR Limited in
                              respect of the relevant Losses before any recovery is made from such
                              other person, the Franchisee shall be entitled to reimbursement from
                              any amounts subsequently recovered from such other person,

                        provided that the possibility of recovery against such other person shall not
                        afford an excuse to the Franchisee to delay or withhold payment to DLR
                        Limited by way of indemnification under the Franchise Agreements.

        29.4.7          The other provisions of this clause 29.4 shall be subject as provided in part
                        3 of schedule 5 in relation to DLR Project Contracts and shall be subject to
                        the requirements of insurers under the insurances effected pursuant to
                        clause 31 (Insurance) and other insurances of the parties from time to time.

29.5    Mitigation

        Without prejudice to the specific obligations imposed on DLR Limited under clause 29.4
        (Conduct of Claims), DLR Limited shall, subject to the provisions of clause 29 use
        reasonable endeavours to mitigate Losses from which it appears that DLR Limited is or
        may become entitled to indemnification under the Franchise Agreements.




29.6    Environmental and Industrial Disease Indemnities Covenant

        Subject to clause 29.7 (Limitations on Franchisee Environmental and Industrial Disease
        Indemnities Covenant), the Franchisee shall indemnify DLR Limited and keep it so
        indemnified against any or all:

        29.6.1          DLR Environmental Losses incurred or suffered by any of the DLR Limited
                        Parties during or after the Predecessor Franchise Period (including for the
                        avoidance of doubt during or after the Franchise Period; and

        29.6.2          Losses suffered or incurred by DLR Limited Parties in respect of any
                        Industrial Disease to the extent that such Industrial Disease is caused
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                        following the Predecessor Franchise Commencement Date by a Franchisee
                        Relevant Event,

        together "Clause 29.6 Losses".

29.7    Limitations on Franchisee Environmental and Industrial Disease Indemnities
        Covenant

        The Franchisee shall not be liable under any indemnities set out in clause 29.6:

        29.7.1          in respect of Clause 29.6 Losses unless the Franchisee is notified of the
                        Clause 29.6 Losses in writing not later than the sixth anniversary of the end
                        of the Franchise Period setting out the reasonable grounds upon which the
                        claim under this Agreement is based;

        29.7.2          in respect of any individual claim in relation to any particular Clause 29.6
                        Losses to the extent that the particular Clause 29.6 Losses do not in respect
                        of that individual claim exceed £10,000;

        29.7.3          to the extent that any of the Clause 29.6 Losses are recovered by DLR
                        Limited Parties from any third party or DLR Limited fails to use all
                        reasonable endeavours to exercise a right to recover from any third party
                        (excluding the Predecessor Franchisee) such Clause 29.6 Losses;

        29.7.4          in relation to Clause 29.6 Losses to the extent they arise or are increased by
                        any act, omission or transaction (including without limitation disclosure of
                        information) of DLR Limited, or its respective tenants, licensees or others for
                        whom it is responsible (excluding the Franchisee and the Predecessor
                        Franchisee) after the Franchise Period other than in compliance with the
                        valid request of a Competent Authority under Environmental Law save that
                        nothing shall hereby impose any positive obligation on DLR Limited to take
                        any action in respect of any Pre-Existing Hazardous Matter during the
                        Franchise Period;

        29.7.5          in relation to DLR Environmental Losses to the extent that those DLR
                        Environmental Losses are increased by the Franchisee not being provided
                        with the opportunity in accordance with clause 29.8 (Remedial Action) to
                        exercise its rights to take Remedial Action in respect of any Hazardous
                        Matter at, on, in or within the Railway which could or does give rise to DLR
                        Environmental Losses;

        29.7.6          to the extent that any Clause 29.6 Losses:

                        (a)    are recovered by or paid to DLR Limited or DLR Limited Parties under
                               a policy of insurance required by this Agreement; or

                        (b)    would have been so recoverable had such policy been maintained
                               beyond the date of this Agreement (provided that such policy remains
                               reasonably available in the relevant insurance market on commercial
                               terms including terms as to premium);

        29.7.7          in respect of DLR Environmental Losses to the extent that such relate to loss
                        of revenue or any other consequential loss suffered by DLR Limited Parties;

        29.7.8          in respect of any liability which is contingent unless and until such
                        contingent liability becomes an actual liability within the time period
                        specified in clause 29.7.1 and is due and payable; and



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        29.7.9          to the extent that the claim arises or is increased as the consequence of
                        fraud by DLR Limited,

        provided that none of the limitations contained in this clause 29.7 shall apply to any
        Clause 29.6 Losses to the extent that such Clause 29.6 Losses arise or are increased as
        the consequence of fraud by the Franchisee or the Predecessor Franchisee.

29.8    Remedial Action

        The Franchisee shall be entitled to undertake remedial action in respect of DLR
        Environmental Losses on the basis set out in clause 30.6 (Remedial Action) substituting
        "DLR Limited" for "Franchisee" and "Franchisee" for "DLR Limited" and references to
        clause 30.3 (Conduct of Claims under clause 30.1) shall instead read clause 29.4 and
        references to clause 30.1 shall instead read clause 29.6.

29.9    Prior Receipt

        If the Franchisee pays an amount in discharge of any Claim under this Agreement and
        DLR Limited subsequently recovers from a third party a sum which is referable to the
        subject matter of the Claim and which would not otherwise have been received by DLR
        Limited, DLR Limited shall pay to the Franchisee an amount equal to:

        29.9.1          the sum recovered from the third party less any reasonable costs and
                        expenses incurred in obtaining such recovery; or

        29.9.2          if less, the amount previously paid by the Franchisee to DLR Limited.

29.10   Double Claims

        DLR Limited shall not be entitled to recover from the Franchisee under this Agreement or
        any other Franchise Agreement more than once in respect of the same damage suffered,
        and accordingly the Franchisee shall not be liable hereunder if and to the extent that any
        such losses and damages have been paid in a claim under the warranties, undertakings or
        other provisions in any other of the Franchise Agreements.

29.11   Time of Payment

        In any case where the Franchisee does not have conduct of the Claim and does not make
        any payment directly to the claimant or its agent the Franchisee hereby covenants to
        make all payments due under this Agreement to DLR Limited in good time for DLR Limited
        to satisfy the terms of any judgment (unless that judgment has been appealed against in
        accordance with the terms of this Agreement) or any agreed settlement of any such Claim
        in accordance with the terms for timing of payment of such settlement.

30.     DLR LIMITED INDEMNITY AND DISCLAIMER

30.1    DLR Environmental and Industrial Disease Indemnities Covenant

        Subject to clause 30.2 (Limitations on DLR Environmental and Industrial Disease
        Indemnities Covenant), DLR Limited shall indemnify the Franchisee and keep it so
        indemnified against any or all:

        30.1.1          Franchisee Environmental Losses suffered by the Franchisee; and

        30.1.2          Losses in respect of any Industrial Disease to the extent that such Industrial
                        Disease is caused prior to the Franchise Commencement Date by a DLR
                        Relevant Event,

        together "Clause 30.1 Losses".

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30.2    Limitations on DLR Environmental and Industrial Disease Indemnities Covenant

        DLR Limited shall not be liable under any indemnities set out in clause 30.1 (DLR
        Environmental and Industrial Disease Indemnities Covenant)

        30.2.1          in respect of any Clause 30.1 Losses unless DLR Limited is notified of the
                        Clause 30.1 Losses in writing prior to the expiry of the Franchise Period
                        setting out the reasonable grounds upon which the claim under clause 30.1
                        (DLR Environmental and Industrial Disease Indemnities Covenant) is based;

        30.2.2          in respect of any particular individual claim in relation to any Clause 30.1
                        Losses to the extent that the particular Clause 30.1 Losses do not in any
                        respect of that individual claim exceed £10,000;

        30.2.3          to the extent that the Clause 30.1 Losses are recovered by the Franchisee or
                        the Franchisee fails to use all reasonable endeavours to exercise any right of
                        recovery from any third party in respect of such Clause 30.1 Losses;

        30.2.4          in respect of Clause 30.1 Losses to the extent they arise or are increased by
                        any act, omission or transaction (including without limitation disclosure of
                        information) of the Franchisee or of the Predecessor Franchisee, or their
                        respective tenants, licensees or others for whom any of them are
                        responsible done or omitted after the Franchise Commencement Date other
                        than in compliance with the valid request of a Competent Authority under
                        Environmental Law;

        30.2.5          in respect of Franchisee Environmental Losses to the extent that those
                        Franchisee Environmental Losses are increased by DLR Limited not being
                        provided with the opportunity in accordance with clause 30.6 (Remedial
                        Action) to exercise its rights to take Remedial Action in respect of any
                        Hazardous Matter (including for the avoidance of doubt Pre-Existing
                        Hazardous Matter)) which could or does give rise to Franchisee
                        Environmental Losses;

        30.2.6          to the extent that such Clause 30.1 Losses:

                        (a)   are recoverable under a policy of insurance required by this
                              Agreement; or

                        (b)   would have been so recoverable had such policy been maintained by
                              the Franchisee beyond the date of this Agreement (provided that
                              such policy remains reasonably available in the relevant insurance
                              market on commercial terms including terms as to premium);

        30.2.7          in respect of Franchisee Environmental Losses to the extent that such
                        Franchisee Environmental Losses relate to loss of revenue or any other
                        consequential loss suffered by the Franchisee;

        30.2.8          in respect of any liability which is contingent unless and until such
                        contingent liability becomes an actual liability within the time period
                        specified in clause 30.2.1 and is due and payable;

        30.2.9          to the extent that the claim arises or is increased as the consequence of
                        fraud by the Franchisee; and

        30.2.10         to the extent that the Clause 30.1 Losses arise or result from or are
                        increased by the Franchisee's failure to comply with the terms of this
                        Agreement (including the terms of clause 30.4),

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        provided that none of the limitations contained in this clause 30.2 (Limitations on DLR
        Environmental and Industrial Disease Indemnities Covenant) shall apply to any Clause
        30.1 Losses to the extent that such Clause 30.1 Losses arise or are increased as the
        consequence of fraud by DLR Limited.

30.3    Conduct of Claims under Clause 30.1

        30.3.1          If:

                        (a)   the Franchisee receives any notice, demand, letter or other document
                              concerning any Claim from which it appears that the Franchisee is or
                              may become entitled to indemnification under clause 30.1 of this
                              Agreement; or

                        (b)   the Franchisee becomes aware that Hazardous Matter (including for
                              the avoidance of doubt Pre-Existing Hazardous Matter) exists which
                              the Franchisee considers or ought reasonably to consider could give
                              rise to Environmental Losses or Losses in respect of any Industrial
                              Disease,

                        the Franchisee shall give notice in writing to DLR Limited as soon as
                        reasonably practicable giving all reasonable detail of such Claim or
                        Hazardous Matter (including for the avoidance of doubt Pre-Existing
                        Hazardous Matter) and in the latter case details of any proposed Remedial
                        Action.

        DLR Conduct

        30.3.2          Subject to clauses 30.3.3, 30.3.4, 30.3.5 and 30.3.7, on the receipt of a
                        notice pursuant to clause 30.3.1 DLR Limited shall be entitled to have
                        conduct of and to resist the Claim in the name of the Franchisee at DLR
                        Limited's own expense and, if it so elects, to have the conduct of any
                        defence, dispute, compromise or appeal of the Claim and of any incidental
                        negotiations, and the Franchisee will (at DLR Limited's cost and expense)
                        give DLR Limited all reasonable cooperation, access and assistance for the
                        purposes of considering and resisting such Claim.

        30.3.3          With respect of any Claim in respect of which DLR Limited has taken conduct
                        in the name of the Franchisee:

                        (a)   DLR Limited shall keep the Franchisee fully informed and consult with
                              it about the conduct of the Claim save that the Franchisee shall not
                              be required (and DLR Limited shall not be entitled) to take any steps
                              in relation thereto which the Franchisee reasonably considers are
                              likely to have a material detrimental effect on the business or
                              reputation of the Franchisee;

                        (b)   to the extent that the Franchisee is not entitled to be indemnified by
                              DLR Limited for all of the liability arising in relation to the Claim, DLR
                              shall not take any action (without the consent of the Franchisee
                              which consent shall not be unreasonably withheld or delayed) which
                              shall increase the amount of any payment to be made to a third party
                              by the Franchisee in respect of that part of the Claim which is not
                              recoverable under the indemnity at clause 30.1 save that this
                              restriction of DLR Limited's ability to conduct any Claim shall ignore
                              clause 30.2 and any other relevant limitations; and




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                        (c)    DLR Limited shall not pay or settle such Claim without the consent of
                               the Franchisee, such consent not to be unreasonably withheld or
                               delayed.

        30.3.4          The Franchisee shall be free to pay or settle the Claim on such terms as it
                        may in its absolute discretion think fit and without prejudice to its rights and
                        remedies under the Franchise Agreements if:

                        (a)    within 28 days of receipt by DLR Limited of the notice from the
                               Franchisee under clause 30.3.1 or such shorter period as the
                               Franchisee shall have reasonably specified in such notice having
                               regard to the nature and circumstances of the Claim, DLR Limited
                               fails to notify the Franchisee of its intention to have conduct of and
                               resist the Claim under clause 30.3.2; or

                        (b)    on giving prior reasonable notice in writing to DLR Limited that DLR
                               Limited has failed to comply in any material respect with the
                               provisions of clause 30.3.3 and DLR Limited fails after a reasonable
                               time thereafter to rectify its position.

        Franchisee Conduct

        30.3.5          The Franchisee shall be free at any time to give notice in writing to DLR
                        Limited that it is taking over the conduct of any defence, dispute,
                        compromise or appeal of any Claim in respect of which DLR Limited has
                        taken conduct and of any incidental negotiations. Upon receipt of such
                        notice in writing:

                        (a)    DLR Limited shall promptly take all steps necessary to transfer the
                               conduct of such Claim to the Franchisee and shall provide to the
                               Franchisee all reasonable cooperation, access and assistance for the
                               purposes of considering and resisting such Claim; and

                        (b)    DLR Limited shall be released from its indemnity in respect of such
                               Claim (including the costs of the Franchisee in relation to such Claim
                               and any such defence, dispute, compromise, appeal and incidental
                               negotiations), without prejudice to the right of the Franchisee to be
                               indemnified by DLR Limited for all costs and expenses accrued with
                               the consent of DLR Limited prior to the date of such notice.

        Third Party Recovery

        30.3.6          30.3.6 Subject to clause 30.3.7, where the Franchisee is at any time
                        entitled to recover a sum against any third party in respect of any Losses or
                        Franchisee Environmental Losses in relation to which the Franchisee claims
                        indemnification under the Franchise Agreements:

                        (a)    the Franchisee shall at the time of claiming indemnification in respect
                               of such Losses or Franchisee Environmental Losses give written
                               notice to DLR Limited of any such rights of recovery against such
                               other person of which it is aware;

                        (b)    DLR Limited shall have the right at its own expense to take over the
                               conduct of any Claim for such recovery against such other person and
                               to use the name of the Franchisee in connection therewith and the
                               Franchisee shall cooperate with and provide all reasonable assistance
                               to DLR Limited in pursuing such recovery, subject only to (i) keeping
                               the Franchisee fully informed and consulted about the conduct of the

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                              Claim; (ii) the Franchisee not being required (and DLR Limited not
                              being entitled) to take any steps in relation thereto which DLR
                              Limited reasonably considers to have a material detrimental effect on
                              the business or reputation of the Franchisee; (iii) notifying the
                              Franchisee of the outcome of such Claim; and (iv) indemnifying the
                              Franchisee against all reasonable costs and expenses incurred by the
                              Franchisee arising from DLR Limited conducting such Claim to the
                              extent such costs and expenses are not recovered from such other
                              person;

                        (c)   in the event that DLR Limited elects not to take over the conduct of
                              the Claim for recovery against such other person, the Franchisee shall
                              take all reasonable steps to pursue such recovery whether or not DLR
                              Limited has already paid to the Franchisee an amount in respect of
                              the relevant Losses or Franchisee Environmental Losses; and

                        (d)   to the extent that DLR Limited has fully indemnified the Franchisee in
                              respect of the relevant Losses or Franchisee Environmental Losses
                              before any recovery is made from such other person, DLR Limited
                              shall be entitled to full reimbursement from any amounts
                              subsequently recovered from such other person,

                        provided that the possibility of recovery against such other person shall not
                        afford an excuse to DLR Limited to delay or withhold payment to the
                        Franchisee by way of indemnification under the Franchise Agreements.

        30.3.7          The provisions of this clause 30.3 shall be subject to part 3 of schedule 5
                        (Capital Projects) in relation to DLR Project Contracts and subject to the
                        requirements of insurers under the insurances effected pursuant to clause
                        31 (Insurance) and other insurances of the parties from time to time.

        30.3.8          The provisions of clauses 29.9 to 29.11 shall apply equally to this clause 30
                        substituting "Franchisee" for "DLR Limited" and "DLR Limited" for
                        "Franchisee" and "DLR Environmental Losses" for "Franchisee Environmental
                        Losses".

30.4    Mitigation

        Without prejudice to the specific obligations imposed on the Franchisee under clause 30.3
        (Conduct of Claims), the Franchisee shall, subject to the provisions of this clause 30, use
        reasonable endeavours to mitigate Losses or Franchisee Environmental Losses from which
        it appears that the Franchisee is or may become entitled to indemnification under the
        Franchise Agreement.

30.5    Franchisee Environmental Covenants

        The Franchisee shall use its reasonable endeavours:

        30.5.1          (save to the extent the same shall be handed over to DLR Limited or any
                        Successor Franchisee pursuant to the Franchise Agreements) to retain
                        within its custody, possession or control for a reasonable period after the
                        Franchise Period copies of all records, documents and information connected
                        directly or indirectly with any Clause 29.6 Losses or Clause 30.1 Losses and
                        any event which may lead to any claim under clause 29.6 or clause 30.1 so
                        far as any of such records, documents and information are in the custody,
                        possession or control of the Franchisee at the Franchise Commencement
                        Date or come into its custody, possession or control thereafter;


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        30.5.2          to allow DLR Limited, its environmental experts and its professional advisers
                        to investigate the matter or circumstance alleged to give or which may give
                        rise to any claim under clause 30.1 (DLR Environmental and Industrial
                        Disease Indemnities Covenant) and whether and to what extent any amount
                        is payable in respect of such claim and for such purpose the Franchisee shall
                        give, subject to it being paid all reasonable costs and expenses, all such
                        information and assistance, including, access to the Railway and the right to
                        examine and copy or photograph any assets, accounts, documents and
                        records as DLR Limited, its environmental experts or its professional
                        advisers may reasonably and on prior written notice request (save where
                        disclosure would involve a breach of confidentiality owed to a third party or
                        waiver of legal privilege). Where any such information is confidential, DLR
                        Limited shall not, without the consent of the Franchisee, disclose it to any
                        third party or use it for any other purpose than the prospective defence to,
                        or avoidance of, any Claim, judgment, order, notice, direction or injunction;
                        and

        30.5.3          not to take any action which the Franchisee knows or ought reasonably to
                        know could increase Environmental Losses or could prejudice the defence of
                        any Claim, judgment, order, notice, direction or injunction brought by a
                        Competent Authority or other party or could increase the cost of any
                        Remedial Action provided that this paragraph will not extend to an action
                        which the Franchisee is lawfully required to take by any such Competent
                        Authority in order to comply with Environmental Laws.

30.6    Remedial Action

        Remedial Action by DLR Limited

        30.6.1          Upon receiving notification from the Franchisee under clause 30.3 (Conduct
                        of Claims) relating to Franchisee Environmental Losses DLR Limited shall
                        have a right at any time, but not the obligation, to carry out any Remedial
                        Action on the following terms:

                        (a)   where DLR Limited receives notification from the Franchisee pursuant
                              to clause 30.3 (Conduct of Claims) of any Remedial Action proposed
                              by the Franchisee DLR Limited shall either:

                              (i)   consent to the action proposed (such consent not to be
                                    unreasonably withheld or delayed); or

                              (ii) where DLR Limited does not consent to the action proposed by
                                   the Franchisee, it shall notify the Franchisee as soon as
                                   reasonably practicable of the reasons for withholding consent
                                   which reasons for the avoidance of doubt, may include the
                                   necessity for, scope, costs or extent of the proposed action; or

                              (iii) elect to act pursuant to clause 30.6.1(b);

                        (b)   where DLR Limited elects to carry out any Remedial Action on the
                              Railway (whether or not as proposed by the Franchisee) DLR Limited
                              shall communicate such election to the Franchisee within fifteen
                              business days of notification by the Franchisee under clause 30.3.1
                              (Conduct of Claims) provided that, where DLR Limited elects to take
                              action or carry out any works, no such works shall be commenced
                              without the Franchisee's prior written consent (such consent not to be
                              unreasonably withheld or delayed) having in particular regard to any
                              business disruption which is likely to occur as a result of DLR

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                               Limited's proposals. DLR Limited shall use reasonable endeavours to
                               keep the extent and duration of any disruption of activities at the
                               relevant Railway to a minimum and shall keep the Franchisee
                               informed of the action being taken but:

                               (i)   in the event that the cost of such works is increased with the
                                     object of reducing the extent and/or duration of such business
                                     disruption in order to achieve the Franchisee's consent, such
                                     increase should be minimised where reasonably possible and
                                     shall be borne by the Franchisee; and

                               (ii) if any delay in the carrying out of such works caused by the
                                    Franchisee unreasonably withholding its consent results in an
                                    increase in the amount of DLR Limited's liability under clause
                                    30.1 (DLR Environmental and Industrial Disease Indemnities
                                    Covenant) (or would result in such an increase but for this
                                    paragraph), such increase shall be excluded from DLR Limited's
                                    liability to indemnify the Franchisee under clause 30.1 (DLR
                                    Environmental and Industrial Disease Indemnities Covenant);

                        (c)    where DLR Limited elects to carry out any Remedial Action it shall
                               provide the Franchisee with prior written notice of the action which it
                               proposes to take, including details of the action proposed and the
                               reasons for it. At the request of the Franchisee, DLR Limited shall
                               also provide to the Franchisee details of the person it is proposed will
                               carry out any such action, the estimated costs of the action, and
                               copies of all relevant data, reports, records, advice, statements,
                               opinions, correspondence or any other relevant documentation.

        Remedial Action by the Franchisee

        30.6.2          Without prejudice to clauses 30.3.1 and 30.6.1, if the Franchisee reasonably
                        considers that immediate action or intervention is necessary:

                        (a)    in order to mitigate the extent of any liability under Environmental
                               Law for Hazardous Matter (including for the avoidance of doubt Pre-
                               Existing Hazardous Matter);

                        (b)    in case of emergency to prevent or limit damage to the Environment
                               by the Hazardous Matter (including for the avoidance of doubt Pre-
                               Existing Hazardous Matter); or

                        (c)    to comply with any notice or order of any Competent Authority in
                               respect of the Hazardous Matter (including for the avoidance of doubt
                               Pre-Existing Hazardous Matter),

                        the Franchisee shall take such action as it reasonably considers or ought to
                        consider necessary subject to giving prior notification to DLR Limited save in
                        an emergency. Where such action has been taken in any emergency, the
                        Franchisee shall inform DLR Limited of any such action as soon as possible
                        thereafter.

        30.6.3          Where the Franchisee considers it necessary or appropriate to carry out
                        Remedial Action at the Railway in circumstances other than those set out in
                        clauses 30.6.1 and 30.6.2 above, the Franchisee shall provide DLR Limited
                        with prior written notice of the action which it proposes to take including
                        reasonable details of the action proposed and the reasons for it, the persons
                        it is proposed will carry out any such action, the estimated cost of the action

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                        and copies of all relevant data, reports, records, advice, statements,
                        opinions, correspondence or any other relevant documentation.           The
                        Franchisee shall not commence any such action or enter into any binding
                        arrangements to do so until the consent of DLR Limited has been given
                        pursuant to clause 30.6.1(a) or DLR Limited has made an election pursuant
                        to clause 30.6.1(b) to carry out the work itself, provided always where DLR
                        Limited withholds the consent, DLR Limited or the Franchisee shall be
                        entitled to refer the question of the reasonableness of such withholding of
                        consent for determination pursuant to clause 30.6.4.

        30.6.4          In the event of a dispute between the parties as to the reasonableness of
                        the scope, nature and/or cost of any Remedial Action undertaken the matter
                        may be referred for final determination at the request of either party to an
                        independent environmental consultant having relevant experience as agreed
                        between the parties or in default of such agreement, an independent
                        environmental consultant with relevant experience shall be nominated at the
                        request of any party by or on behalf of the President for the time being of
                        the Institute of Chartered Civil Engineers. Such independent environmental
                        consultant shall act as an expert and save in the case of manifest error his
                        determination shall be final. He shall be entitled to seek legal advice or any
                        such other professional advice he considers appropriate and the cost of this
                        shall be a cost of the expert determination. In each case, his fee and costs
                        shall be borne as he shall direct.

30.7    Hazardous Matter

        The Franchisee shall, prior to commencing any development, building construction or site
        set up work on the Railway, carry out tests and do all things which a prudent occupier of
        industrial property would do in order to detect the presence of any Hazardous Matter and
        shall use reasonable endeavours to avoid unnecessarily disturbing any Hazardous Matter
        during any development or works on those parts (if any) of the said Railway beneath or
        within which any Hazardous Matter is detected and the Franchisee shall have regard at all
        times to the information relating to Hazardous Matter supplied to them by DLR Limited at
        any time.

30.8    Disclaimer

        The Franchise Agreements are exhaustive as to the duties, obligations and liabilities of
        DLR Limited to the Franchisee and neither DLR Limited nor any of its officers, employees
        or agents shall be liable to the Franchisee whether in contract, tort or otherwise except as
        expressly provided in the Franchise Agreements or for Wilful Misconduct or death or
        personal injury caused by negligence.

30.9    Agreement on Liabilities

        DLR Limited and the Franchisee agree that any liability under Part IIA of the
        Environmental Protection Act 1990 in respect of Franchisee Environmental Losses and DLR
        Environmental Losses shall be apportioned in accordance with clauses 29.6 and 30.1 of
        this Agreement to DLR Limited and the Franchisee respectively pursuant to paragraph
        9.48 of the Guidance and that neither party shall challenge the application of such
        agreement as to the allocation of responsibility for Hazardous Matter between DLR Limited
        and the Franchisee.




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31.     INSURANCE

31.1    Insurance obligations

        31.1.1          Subject to clause 31.1.3, DLR Limited shall take out and maintain the
                        insurances set out in paragraphs 2 and 3 of part 3 of schedule 9 (Financial
                        Requirements) in accordance with the provisions set out therein.

        31.1.2          The Franchisee shall take out and maintain or shall cause to be taken out
                        and maintained the insurances set out in paragraphs 4 and 5 of part 3 of
                        Schedule 9 (Financial Requirements) in accordance with the provisions set
                        out therein.

        31.1.3          If DLR Limited gives the Franchisee not less than 90 (ninety) days notice
                        before the expiry of any of the insurances required to be taken out by DLR
                        Limited in accordance with clause 31.1.1 of its intention not to maintain any
                        or all of such insurances then:

                        (a)   the Franchisee shall take out and maintain such insurances from their
                              expiry date(s) under the same obligations to DLR Limited as DLR
                              Limited would have had to the Franchisee under clause 31 had it
                              taken out or maintained these insurances;

                        (b)   the Franchisee may within 14 days of such notice serve a notice of
                              Variation on DLR Limited under the Variation Procedure;

                        (c)   DLR Limited's right under clause 31.2 (DLR Limited's insurance –
                              additional property and interests) shall cease and the inclusion as a
                              joint and several insured of any party described in clause
                              31.4.2(a)(ii) shall discontinue and thereafter not be permitted; and

                        (d)   any policy evidencing the insurances required pursuant to paragraphs
                              2 and 3 of part 3 of schedule 9 shall contain a provision whereby
                              insurance continues in force after termination of this Agreement for
                              the remainder of the period of insurance, but not less than sixty (60)
                              days, for the benefit of either party retaining an insurable interest,
                              provided that the premium for continuation of cover for the balance
                              of the said sixty (60) days remaining after the policy renewal date
                              shall be for the account of DLR Limited.

31.2    DLR Limited's insurance – additional property and interests

        DLR Limited reserves the right to incorporate in the insurances taken out and maintained
        in accordance with Clause 31.1.1 additional property and insurable interests arising out of
        any current or future Concession Agreement.

31.3    Terms of insurances to be approved

        All insurances required by clause 31.1 (Insurance obligations) shall be with insurance
        companies of good repute and standing for the amounts and subject to the deductibles
        and/or waiting periods set out in part 3 of schedule 9 (Financial Requirements) or as
        agreed by DLR Limited and the Franchisee from time to time and for the purposes of this
        Agreement the parties agree that LTIG shall be an insurer of good repute and standing.

31.4    Insurances to be in joint names and maintenance of insurance

        31.4.1          Each insurance taken out and maintained or procured to be taken out and
                        maintained pursuant to clause 31.1.2 and more specifically described in


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                        paragraph 4 of part 3 of schedule 9 (Financial Requirements) shall include in
                        the definition of the Insured any principal in its capacity as such to the
                        extent that liability arises out of the work performed for or on behalf of such
                        principal by the Insured and define a principal as any party (other than a
                        director, partner or employee of the Insured) with whom the Insured has
                        entered into a contract or a licence or a concession agreement in the course
                        of business.

        31.4.2          Each insurance taken out and maintained and more specifically described in
                        paragraphs 2 and 3 of part 3 of schedule 9 (Financial Requirements) shall:

                        (a)    include as a joint and several Insured no other party except the
                               following:

                               (i)   any party with whom the Franchisee (qua Franchisee) has
                                     entered into a contract or agreement in respect of the Franchise
                                     under which the Franchisee is required to indemnify or hold
                                     harmless or provide or procure the provision of insurance, but
                                     only to the extent required by the said contract or agreement;

                               (ii) any Concessionaire, which term for this purpose shall extend to
                                    include any counter-party to DLR Limited under any future
                                    Concession Agreement with DLR Limited;

                               (iii) any party with whom DLR Limited has entered into a contract or
                                     agreement under which it is required to indemnify or hold
                                     harmless or provide or procure the provision of insurance, but
                                     only to the extent required by the said contract or agreement; or

                               (iv) such other party or entity as DLR Limited and the Franchisee
                                    shall from time to time agree.

                        (b)    name DLR Limited and the Franchisee as joint and several insureds,
                               and notwithstanding such severability shall contain provisions
                               whereby the insurers waive rights of recourse or subrogation against
                               DLR Limited and the Franchisee and whereby the insurers may not
                               avoid liability on the grounds of breach of any term or condition of
                               the policy in respect of the party not in breach;

                        (c)    indemnify the directors, servants and agents of DLR Limited and the
                               Franchisee as though insured;

                        (d)    provide that:

                               (i)   claims notified to claims handling agents appointed by insurers
                                     shall be deemed to have been notified to insurers; and

                               (ii) any requirement of the claims handling agent that the insured
                                    parties, or any one of them, do and concur such as is, in its
                                    opinion, necessary for the proper control and conduct of claims
                                    shall be deemed to be a requirement of the insurers; and

                               (iii) the due observance of a requirement under sub-paragraph (ii) of
                                     this paragraph (d) shall not, in circumstances where the
                                     judgement of the claims handling agent is subsequently
                                     questioned, be deemed to be a breach of policy conditions.




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                        (e)   not entitle the insurers to cancel without having given ninety (90)
                              days notice to both the Franchisee and DLR Limited by recorded or
                              special delivery at the last known address of each of them.

31.5    Evidence of Insurance

        31.5.1          DLR Limited shall (unless clause 31.1.3 applies) produce to the Franchisee:

                        (a)   at the Franchise Commencement Date documentary evidence in
                              sufficient detail and of appropriate provenance to satisfy the
                              Franchisee, acting reasonably, that the insurances required by
                              Clause 31.1.1 and more specifically referred to in paragraphs 2 and 3
                              of part 3 of schedule 9 (Financial Requirements) have been taken
                              out;

                        (b)   within a reasonable time before any renewal date and provided DLR
                              Limited is aware of the same notice of material changes from each of
                              the expiry year insurances. DLR Limited shall consider in good faith
                              any comments made by the Franchisee in respect of such changes
                              having regard to the risk profile of the Franchisee;

                        (c)   not more than 90 days after the Franchise Commencement Date and
                              each anniversary of thereof (or such other date subsequently agreed
                              by DLR Limited and the Franchisee) copies of signed policy
                              documents;

                        (d)   at each anniversary of the Franchise Commencement Date (or such
                              other date subsequently agreed by DLR Limited and the Franchisee)
                              independent documentary evidence of maintenance in force of the
                              said insurances for a period, unless otherwise agreed by the
                              Franchisee and DLR Limited, of not less than twelve months together
                              with advice of any material changes from the expiring year
                              insurances.

        31.5.2          The Franchisee shall produce to DLR Limited:

                        (a)   documentary evidence in sufficient detail and of appropriate
                              provenance to satisfy DLR Limited, acting reasonably, that the
                              insurances required by clause 31.1.2 and more specifically referred to
                              in paragraphs 4 and 5 of part 3 of schedule 9 (Financial
                              Requirements) (and if relevant, the insurances required by
                              clause 31.1.3) have been taken out;

                        (b)   within 60 days thereafter suitable documentary evidence such as
                              detailed cover notes or confirmatory letter issued by an international
                              firm of insurance brokers;

                        (c)   at each anniversary of the Franchise or as otherwise agreed between
                              DLR Limited and the Franchisee independent documentary evidence
                              of maintenance in force of the said insurances for a period, unless
                              otherwise agreed by the Franchisee and DLR Limited, of not less than
                              twelve months together with advice of any material changes from the
                              expiring year insurances.

31.6    Compliance with Requirements of Insurers

        The Franchisee and DLR Limited shall comply or use their respective best endeavours to
        procure compliance with all requirements of the insurers subscribing to the insurances

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        taken out and maintained or caused to be taken out and maintained in accordance with
        clauses 31.1 (Insurance obligations) and shall not do or permit anything which might
        render void or voidable such insurance or as a result of which payment of insurance
        monies might be withheld in whole or in part.

31.7    Right to insure

        31.7.1          If:

                        (a)    DLR Limited, having not given notice of its intention not to maintain
                               any or all of the insurances set out in paragraphs 2 and 3 of part 3 of
                               schedule 9 (Financial Requirements) in accordance with clause
                               31.1.3; or

                        (b)    the Franchisee having been given notice under clause 31.1.3.

                        (in each case the "Insuring Party") fails or refuses for any reason to take
                        out and maintain any insurance required by clause 31.1 or, upon request,
                        fails or refuses for any reason to provide the other party with the evidence
                        required under clause 31.5 (Evidence of Insurance) then the other party
                        shall have the right to arrange alternative insurances, such right to be
                        without prejudice to any other rights under or pursuant to this Agreement.
                        The Insuring Party shall indemnify the other party against all premiums and
                        other third party costs payable by the other in exercising its rights under
                        this clause, interest at the Prescribed Rate from the date on which
                        premiums are paid or other costs incurred until the date of payment.

31.8    Notification of claims - Franchisee to DLR Limited

        On the occurrence of an event likely to give rise to a claim under any of the insurances
        taken out or maintained under clause 31.1 the Franchisee shall as follows:

        31.8.1          immediately inform the insurers subscribing to the relevant policy or policies
                        or their appointed claims handling agents and shall do and concur such as
                        shall be required of them by insurers or on their behalf by the said claims
                        handling agents in their conduct and control of any subsequent claim;

        31.8.2          immediately inform DLR Limited upon the occurrence of:

                        (a)    any event resulting in injury or death of any person not being an
                               employee of the Franchisee;

                        (b)    or of loss of or damage to the Insured Assets for which, on
                               reasonable estimation, the cost of repair or replacement will exceed
                               £25,000;

        31.8.3          within seven days after the occurrence of any loss of or damage to the
                        Insured Assets, whether or not such is required to be notified under sub-
                        clause 31.8 inform DLR Limited of any consequent interruption of business
                        or likely inability of the Franchisee to maintain the Service Quality Standards
                        that may reasonably be expected; and

        31.8.4          at three-monthly intervals report to DLR Limited giving date nature and
                        current status of claim in respect of all other events.

31.9    Insurance claims - presentation and mutual assistance




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        Each party shall afford the other such assistance as may be reasonably required for the
        preparation presentation and negotiation of insurance claims and shall pursue such with
        all due diligence.

31.10   Application of proceeds

        All insurances maintained or required under clause 31.1 shall provide that claim proceeds,
        whether interim or final:

        31.10.1         in respect of loss or damage to the Franchise Assets shall be applied in
                        accordance with clause 31.11;

        31.10.2         in respect of insurance against loss of or damage to other property, shall be
                        paid to the Franchisee, DLR Limited and, subject to the prior approval of
                        DLR Limited, other parties, the proceeds being released to the Franchisee
                        against its application to reinstate such loss or damage with such supporting
                        information as DLR Limited may reasonably require;

        31.10.3         in respect of insurances against liabilities to third parties, shall be paid to
                        the aggrieved party against a discharge in full and final settlement of all
                        claims against the insured parties or, where the insured parties have
                        properly discharged their liabilities to such aggrieved party, as in clause
                        31.10.2 above;

        31.10.4         in respect of Business Interruption Insurance shall be paid so as to
                        compensate each of the Franchisee and DLR Limited for their respective
                        losses.

31.11   Reinstatement

        31.11.1         Unless otherwise agreed by DLR Limited and subject to clause 11.2.2 (Scope
                        of Franchisee's Maintenance Obligations), on each and every occasion when
                        any part or the whole of any Franchise Asset is destroyed or damaged) (the
                        "Relevant Incident"):

                        (a)    the Franchisee and DLR Limited shall (and shall procure that the sub-
                               contractors shall) pay all proceeds in respect of loss or damage to the
                               Franchise Assets relating to the Relevant Incident received under any
                               insurance maintained or required under clause 31.1 (the "Relevant
                               Proceeds"), into an account in the joint names of DLR Limited and
                               the Franchisee at a bank to be nominated by DLR Limited (and
                               advised to the insurers accordingly), and such proceeds to be
                               released as required to enable the Franchisee to make payments and
                               to meet any other reasonable costs and expenses of the Franchisee
                               (provided that such costs and expenses are recoverable or have been
                               recovered from insurers) for the sole purpose of funding the
                               Reinstatement Works. The Franchisee shall provide to DLR Limited
                               from time to time such information as it may reasonably require in
                               relation to the release of funds pursuant to this clause 31.11.1(a);

                        (b)    in any case where the Relevant Proceeds are, or are likely to be,
                               greater than £100,000, the Franchisee shall deliver as soon as
                               practicable a plan prepared by the Franchisee for the carrying out of
                               the works necessary (the "Reinstatement Works") to repair,
                               reinstate or replace the assets which are the subject of the relevant
                               claim or claims in accordance with clause 31.11.2 (the
                               "Reinstatement Plan"). The Reinstatement Plan shall set out:


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                               (i)   the identity of the person proposed to effect the Reinstatement
                                     Works, which shall be subject to the prior written approval of
                                     DLR Limited (such approval not to be unreasonably withheld or
                                     delayed); and

                               (ii) the proposed terms and timetable upon which the Reinstatement
                                    Works are to be effected, the final terms of which shall be
                                    subject to the prior written approval of DLR Limited (such
                                    approval not to be unreasonably withheld or delayed);

                        (c)    provided that DLR Limited is satisfied (acting reasonably) with the
                               Reinstatement Plan:

                               (i)   the Reinstatement Plan will be adopted;

                               (ii) the Franchisee shall enter into contractual arrangements to effect
                                    the Reinstatement Works with the person identified in the
                                    approved Reinstatement Plan approved by DLR Limited;

                               (iii) DLR Limited undertakes to use reasonable endeavours to assist
                                     the Franchisee in the carrying out of the Reinstatement Plan; and

                               (iv) after the Reinstatement Plan has been implemented to the
                                    reasonable satisfaction of DLR Limited and in accordance with
                                    clause 31.11.2 DLR Limited shall permit withdrawal by the
                                    Franchisee of any Relevant Proceeds then held in the account
                                    referred to in clause 31.11.1(a) above that have not been paid
                                    under that paragraph in respect of the Relevant Incident,
                                    together with any interest accrued.

        31.11.2         Where insurance proceeds are to be used, in accordance with this
                        Agreement, to repair, reinstate or replace the Franchise Assets, the
                        Franchisee shall carry out the work in a good and workmanlike manner to
                        the reasonable satisfaction of DLR Limited.

31.12   Uninsurable Risks

        31.12.1         If a risk covered by the insurances required under paragraphs 2 and 3 of
                        part 3 of schedule 9 (Financial Requirements) evidenced by the policy
                        wordings agreed before the Franchise Commencement Date (or
                        subsequently in accordance with this clause 31) becomes Uninsurable after
                        the date of this Agreement then:

                        (a)    each party will notify the other within three business days of it
                               becoming aware of the risk becoming Uninsurable; and

                        (b)    if both parties agree, or it is determined in accordance with the
                               Dispute Resolution Procedure that the risk is Uninsurable and that the
                               risk being Uninsurable is not caused by the actions of the Franchisee
                               and/or its sub-contractors,

                        then the provisions of clause 31.13 shall have effect.

31.13   Proposal for dealing with Uninsurable Risks

        If the requirements of clause 31.12 are satisfied:

        31.13.1         neither party shall be required to take out any insurance to the extent that
                        the insurance covers a risk which is Uninsurable;
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        31.13.2         in circumstances where the Franchisee is pursuant to clause 31.1.3
                        responsible for taking out and maintaining such insurances, the Franchisee
                        shall within three business days of notification pursuant to clause 31.12
                        make written proposals to DLR Limited as to an appropriate basis for the
                        mitigation, management and control of the relevant risk(s), which may
                        include measures to share the risks and costs associated with the absence of
                        insurance;

        31.13.3         if the proposals of the Franchisee referred to in Clause 31.13.2 above are to
                        assume the relevant risk(s) itself for the period for which insurance is
                        unavailable on the terms and conditions for which it was available
                        immediately prior to it becoming unavailable, DLR Limited will within five
                        business days of receipt of the proposals notify the Franchisee whether or
                        not in DLR Limited's reasonable opinion such proposals are acceptable. If
                        DLR Limited notifies the Franchisee that such proposals are acceptable the
                        Franchisee shall thereafter settle any claims relating to the relevant risk(s)
                        in accordance with the terms and conditions on which the insurance was
                        available immediately prior to it becoming unavailable;

        31.13.4         if the proposals of the Franchisee referred to in clause 31.13.2 above are not
                        of the nature referred to in clause 31.13.3, or if they are of such nature,
                        they are not in DLR Limited's reasonable opinion acceptable, DLR Limited
                        will be entitled within five business days of receipt of the proposals pursuant
                        to clause 31.13.2 to notify the Franchisee that it elects to reduce the Fees
                        by an amount equivalent to the annual cost previously incurred by the
                        Franchisee in maintaining insurance against the relevant risk, and to assume
                        the relevant risk(s) itself, in which case the Franchisee shall be relieved of
                        the obligation to comply with the provisions of clauses 31.1 in respect of the
                        relevant insurances provided that if the risk which has become Uninsurable
                        is that set out in paragraph 3 of part 3 of schedule 9, DLR Limited is obliged
                        to elect within such five business days period either to:

                        (a)    to reduce the Fees and assume the risk in accordance with this clause
                               31.13.4; or

                        (b)    to terminate this Agreement with immediate effect;

        31.13.5         if DLR Limited fails to notify the Franchisee within the time periods set out in
                        clause 31.13.3 or 31.13.4 then DLR Limited shall be deemed to have
                        notified the Franchisee pursuant to clause 31.13.4(a);

        31.13.6         the Franchisee shall remain liable for any Losses which may arise as a result
                        of unavailability of insurance until such time as DLR Limited notifies or is
                        deemed to notify its position to the Franchisee pursuant to Clauses 31.13.3
                        – 31.13.5;

        31.13.7         where DLR Limited elects to assume the risk(s) itself pursuant to clause
                        31.13.4 or 31.13.8 and the Franchisee subsequently suffers loss or damage
                        as a result of the relevant risk for which it would have previously been
                        insured, the Franchisee will give prompt written notification to DLR Limited
                        giving details of the occurrence of the relevant damage and as soon as
                        practical thereafter shall provide all other such information regarding the
                        extent and nature of such loss or damage as DLR Limited may reasonably
                        require. DLR Limited will be entitled within twenty business days of receipt
                        of such notice either:

                        (a)    to elect to reinstate the relevant damage or otherwise compensate
                               the Franchisee for its loss at its own cost on the same basis and in

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                              the same manner as if the insurance for the relevant risk remained in
                              place and DLR Limited were the insurer; or

                        (b)   to elect to terminate this Agreement on thirty days' notice,

                        provided that when such notice relates to a risk set out in paragraph 3 of
                        part 3 of Schedule 9 then DLR Limited shall compensate the Franchisee in
                        accordance with clause 31.13.7(a) whether or not it elects to terminate the
                        Agreement in accordance with Clause 31.13.7(b);

        31.13.8         in circumstances where DLR Limited is responsible for taking out and
                        maintaining insurances pursuant to clause 31.1 then DLR Limited may elect
                        to:

                        (a)   assume the risk itself; or

                        (b)   to terminate the Agreement with immediate effect.

31.14   Deductibles

        31.14.1         The deductibles applicable to each of the insurances set out in paragraphs 2,
                        and 3 of part 3 of schedule 9 (Financial Covenants) shall be as stated in
                        Paragraphs 2.2, 2.4 and 3.2 of that schedule.

        31.14.2         Subject to clause 31.17, notwithstanding which party is responsible for
                        taking out and maintaining insurances but without prejudice to the other
                        provisions of the Agreement, amounts unpaid by insurers by reason of the
                        application of the deductibles will be for the account of the Franchisee.

        31.14.3         Any increase in the amount or duration of the deductibles after the
                        Franchise Commencement Date shall be for the account of the Franchisee to
                        the extent that it has been caused by the poor claims record of the
                        Franchisee in respect of the Franchise.

31.15   Change in Cost of Insurance

        31.15.1         Any change in the rate of premium for any of the insurances specified in
                        Paragraphs 2 and 3 of Part 3 of Schedule 9 (Financial Requirements) shall
                        be for the account of the Franchisee, if and to the extent that it has been
                        caused by the poor claims record of the Franchisee in respect of the
                        Franchise.

        31.15.2         Any change in the rate of premium for any of the insurances specified in
                        Paragraphs 4 and 5 of Part 3 of Schedule 9 (Financial Requirements) shall
                        be for the account of the Franchisee.

31.16   Saving provision

        Neither failure to comply nor full compliance with the insurance provisions of this
        Agreement shall limit or relieve either party of its liabilities and obligations under this
        Agreement.

31.17   DLR Limited Indemnity

        DLR Limited shall be responsible for and shall indemnify the Franchisee from and against:

        (a)    any amount unpaid by insurers by reason of the application of the deductibles
               referred to in clause 31.14.1 ("Deductible Amount") suffered or incurred by the
               Franchisee as a result of damage to persons or property resulting from default or

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               the negligent acts or omissions of any DLR Limited Party or a licensee or tenant of
               DLR Limited (other than the Franchisee), save where there is a Project Claim
               relating to such Deductible Amount;

        (b)    any proceeds which would have been payable by LTIG under any insurances taken
               out pursuant to clause 31.1.1 but which have not been paid as a consequence of
               the occurrence of any act of insolvency in respect of LTIG provided that DLR
               Limited shall not be required to indemnify the Franchisee under this clause
               31.17(b) unless and until the Franchisee has used all reasonable endeavours to
               recover any such proceeds from the reinsurers of LTIG (provided that the parties
               acknowledge that the Franchisee shall not be required to seek to recover such
               proceeds from reinsurers in respect of a claim relating to terrorism).

32.     FUNDING THE FRANCHISE

32.1    Responsibility of Franchisee

        Save as expressly provided in this Agreement, the Franchisee shall be responsible for
        raising all funding required for the Franchise.

32.2    No responsibility for DLR Limited

        Save as expressly provided in this Agreement, DLR Limited shall have no responsibility for
        raising or providing funding for the Franchise.

32.3    Changes to Funding Agreements

        The Franchisee shall notify DLR Limited of any changes to the Funding Agreements.




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                                                PART V

                        FORCE MAJEURE/RELIEF EVENTS/TERMINATION

33.     FORCE MAJEURE

33.1    Meaning of Force Majeure

        In this Agreement "Force Majeure" shall mean the occurrence after the Franchise
        Commencement Date of:

        33.1.1          war, civil war, armed conflict or terrorism; or

        33.1.2          nuclear, chemical or biological contamination unless the source or cause of
                        the contamination is the result of the act or omission of the Franchisee; or

        33.1.3          pressure waves caused by devices travelling at supersonic speeds,

        which directly cause either party to be unable to comply with all or a material part of its
        obligations under the Franchise Agreements.

33.2    Notification of Force Majeure event

        If either party is prevented from performing or is hindered in the performance of one or
        more of its obligations under the Franchise Agreements by an event or circumstance
        which the party so prevented or hindered considers to be an event of Force Majeure it
        shall as soon as reasonably practicable but in any event not later than 21 days after the
        date when such event became known to it give notice to the other party identifying:

        33.2.1          the event of Force Majeure or (if more than one) each such event that has
                        occurred;

        33.2.2          the date from which the event has prevented or hindered the party affected
                        in the performance of its obligations;

        33.2.3          the obligations affected; and

        33.2.4          its best estimate of the date or dates upon which it will be able to resume
                        the performance of each of its obligations so affected.

        Thereafter, until resumption of the performance of its obligations, the party affected by
        the event of Force Majeure shall keep the other party fully informed of all developments
        and the steps taken to mitigate or remove the effects of the event of Force Majeure.

33.3    Notice of cessation of Force Majeure event

        A party who is prevented from performing or is hindered in the performance of its
        obligations under the Franchise Agreements by an event of Force Majeure shall give notice
        to the other party forthwith upon the event ending or being removed or its existence no
        longer preventing performance of an obligation and the party affected by the event shall
        resume the full performance of those of its obligations no longer affected as soon as
        possible thereafter.

33.4    Disputing notice of Force Majeure

        If the recipient of a notice given under clause 33.2 (Notification of Force Majeure event)
        disputes that an event of Force Majeure has occurred or the effect of such event of Force
        Majeure, it shall give written notice to the party claiming Force Majeure within 28 days of
        the notice given under clause 33.2 (Notification of Force Majeure event) stating the

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        grounds on which it disputes such claim and, if neither the notice under clause 33.2
        (Notification of Force Majeure event) nor the notice of dispute under this clause
        33.4 (Disputing notice of Force Majeure) has been withdrawn within 28 days of the date of
        the notice under this clause 33.4 (Disputing notice of Force Majeure), the parties shall
        deal with the matter as a Dispute in accordance with the Dispute Resolution Procedure.

33.5    Relief from liability

        Where a party is affected by an event which is (or which that party considers to be) an
        event of Force Majeure, it shall take all reasonable steps not to be in breach of its
        obligations under the Franchise Agreements and shall take all reasonable steps to mitigate
        or remove the effects of such event. A party shall not be in breach of its obligations
        under the Franchise Agreements and, subject to clause 33.6, shall have no liability to pay
        damages or other compensation (subject as provided in paragraph 7 of part 4 of schedule
        2 (Passenger Services)) under the Franchise Agreements to the extent that it is prevented
        from complying with its obligations hereunder by reason of an event of Force Majeure
        affecting that party.

33.6    Payments

        Nothing in clause 33.5 above shall affect any entitlement that DLR Limited may have to
        make any deductions from the Fixed Fee in accordance with the terms of this Agreement
        in the period whilst the event of Force Majeure is subsisting.

33.7    Rectification of damage to Franchise Assets

        Subject as provided in clause 11 (Maintenance of Franchise Assets), it shall be the
        responsibility of the Franchisee to undertake all repairs, replacements and rectification
        works required to make good any damage to any Franchise Assets resulting from a Force
        Majeure Event, such obligations being without prejudice to any rights the Franchisee may
        have under the provisions of this Agreement for Variation Payments in respect of such
        works.

33.8    Termination for Force Majeure

        33.8.1          As soon as practicable following notification, in accordance with clause 33.2,
                        the parties shall consult with each other in good faith and use all reasonable
                        endeavours to agree appropriate terms to mitigate the effects of the Force
                        Majeure event and facilitate the continued performance of the Agreement.

        33.8.2          If no such terms are agreed on or before the date falling 120 days after the
                        date of the commencement of the Force Majeure event and such Force
                        Majeure event is continuing or its consequence remains such that the
                        affected party is unable to a material extent to comply with its obligations
                        under this Agreement for a period of more than 180 days, then, subject to
                        paragraph 33.8.3 below, either party may terminate the Agreement
                        pursuant to clause 37.2.1.

        33.8.3          If the Franchisee gives notice to DLR Limited under clause 33.8.2 that it
                        wishes to terminate this Agreement, then DLR Limited has the option either
                        to accept such notice or to respond in writing on or before the date falling
                        ten business days after the date of its receipt stating that it requires this
                        Agreement to continue (a "Continuation Notice"). If DLR Limited gives
                        the Franchisee a Continuation Notice then:

                        (a)   DLR Limited shall for so long as the Force Majeure Event (or its
                              consequences) continues pay to the Franchisee the Fixed Fee
                              together with a reasonable amount representing Revenue Fee

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                               foregone from the date on which this Agreement would have
                               terminated under clause 33.8.1 as if the Franchisee was complying in
                               full with its obligations under this Agreement less an amount equal to
                               those costs saved by the Franchisee, or which the Franchisee should
                               be able to mitigate (using all reasonable endeavours to do so), as a
                               result of the Franchisee being prevented from carrying out its
                               obligations by the Force Majeure event and/or its consequences; and

                        (b)    this Agreement will not terminate until the earlier of:

                               (i)   expiry of written notice (of at least 20 (twenty) business days)
                                     from DLR Limited to the Franchisee served at any time whilst the
                                     Force Majeure event (or its consequences) are continuing that it
                                     wishes this Agreement to terminate;

                               (ii) the second anniversary of the occurrence of the relevant Force
                                    Majeure event provided such Force Majeure event (or its
                                    consequences) are continuing as at such date; or

                               (iii) this Agreement is terminated in accordance with the other
                                     provisions of this Agreement.

                        (c)    If DLR Limited fails to respond to the notice given by the Franchisee
                               pursuant to clause 33.8.3(a) within the specified ten business day
                               period then DLR Limited shall be deemed to have served notice
                               requiring the Agreement to continue.

33.9    Extension of Franchise Term

        In any case where a right to terminate has arisen under clause 33.8 (Termination for
        Force Majeure) but has not been exercised, the Franchise Term may be extended by
        agreement between the parties.

34.     RELIEF EVENTS

34.1    Occurrence of a Relief Event

        If and to the extent that a Relief Event adversely affects the ability of the Franchisee to
        perform any of its obligations under this Agreement, then the Franchisee is entitled to
        apply for relief from any rights of DLR Limited arising under clause 35.1 (Franchisee
        Default) in accordance with this clause 34.

34.2    Requirements for Obtaining Relief

        To obtain relief, the Franchisee must:

        34.2.1          as soon as practicable, and in any event within 14 days after it became
                        aware that the Relief Event has adversely affected the ability of the
                        Franchisee to perform its obligations give to DLR Limited a notice of its claim
                        for relief, including full details of the nature of the Relief Event, the date of
                        occurrence and its likely duration;

        34.2.2          within 7 days of receipt by DLR Limited of the notice referred to in clause
                        34.2.1 above, give full details of the relief claimed; and

        34.2.3          demonstrate to the reasonable satisfaction of DLR Limited that:




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                        (a)   the Franchisee and its sub-contractors could not have avoided such
                              occurrence or consequences by steps which they might reasonably be
                              expected to have taken, without incurring material expenditure;

                        (b)   the Relief Event directly caused the need for relief under the
                              Agreement;

                        (c)   the relief from the obligations under the Agreement claimed could not
                              reasonably be expected to be mitigated or recovered by the
                              Franchisee acting in accordance with Good Industry Practice without
                              incurring material expenditure; and

                        (d)   the Franchisee is using reasonable endeavours to perform its
                              obligations under the Agreement.

34.3    Relief

        34.3.1          In the event that the Franchisee has complied with its obligations under
                        clause 34.2 above, then DLR Limited shall not be entitled to exercise its
                        rights to terminate the Agreement under clause 35.1 and, subject to clause
                        34.3.2 below, shall give such other reasonable relief as has been requested
                        by the Franchisee.

        34.3.2          Nothing in clause 34.3.1 above shall affect any entitlement of DLR Limited
                        to make deductions pursuant to schedule 2 (Passenger Services) during the
                        period in which the Relief Event is subsisting.

        34.3.3          In the event that information required by clause 34.2 above is provided
                        after the dates referred to in that clause, then the Franchisee shall not be
                        entitled to any relief during the period for which the information is delayed.

        34.3.4          The Franchisee shall notify DLR Limited if at any time it receives or becomes
                        aware of any further information relating to the Relief Event, giving details
                        of that information to the extent that such information is new or renders
                        information previously submitted materially inaccurate or misleading.

35.     FRANCHISEE DEFAULT

35.1    Franchisee Default

        Any of the following shall be a Franchisee Default:

        35.1.1          the occurrence of any act of insolvency in respect of the Franchisee or any
                        of its Affiliates or the Guarantors, including:

                        (a)   any meeting of creditors of the person in question being convened or
                              held with a view to the general readjustment or re-scheduling of the
                              Franchisee's indebtedness or any arrangement or composition with or
                              for the benefit of its creditors (including any voluntary arrangements
                              as defined in the Insolvency Act 1986) being proposed or entered into
                              by or in relation to the person in question;

                        (b)   a supervisor, receiver, administrator, administrative receiver or
                              encumbrancer taking possession of or being appointed over, or any
                              distress, execution or other process being levied or enforced upon
                              (and in any such case (other than in the case of an administrator for
                              which no grace period shall be permitted) not being discharged within



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                               7 days) the whole or any part (which part is material in the context of
                               the Franchise Obligations) of the assets of the person in question;

                        (c)    the person in question ceasing or threatening to cease to carry on
                               business, or being or becoming unable to pay its debts as they fall
                               due within the meaning of Section 123(1) of the Insolvency Act 1986
                               (without the need to prove the fact or matter to the satisfaction of
                               the court except that in the interpretation of this clause, section
                               123(1)(a) of the Insolvency Act shall have effect as if for "£750"
                               there was substituted "£10,000");

                        (d)    a petition being presented (and (other than in the case of an
                               administration petition for which no grace period shall be permitted)
                               not being dismissed within 5 days of presentation thereof) or
                               circumstances existing for a petition being presented, or a meeting
                               being convened for the purpose of considering a resolution, for the
                               making of an administration order or the winding-up, bankruptcy or
                               dissolution of the person in question; or

                        (e)    if the person in question shall suffer any event analogous to any of
                               the foregoing in any jurisdiction in which it is incorporated or
                               resident,

                        but in the case of any of the foregoing affecting an Affiliate of the Franchisee
                        or any of the Guarantors, only if the occurrence has had or will have (in the
                        reasonable opinion of DLR Limited) a material effect on the ability of the
                        Franchisee to perform the Franchise Obligations or the Guarantor affected (if
                        any) is not replaced by an equivalent replacement guarantor approved by
                        DLR Limited in its absolute discretion within 28 days of such occurrence;

        35.1.2          the Franchisee being Controlled by a person or persons other than Serco
                        Group plc;

        35.1.3          the Franchisee or any of its Contracting Affiliates sells, transfers, leases or
                        otherwise disposes of the whole or any part (which is material in the context
                        of the performance of the Franchise Obligations) of its undertakings,
                        properties or assets by a single transaction or a number of transactions
                        (whether related or not and whether at the same time or over a period of
                        time) without prior consent of DLR Limited, but in the case of a Contracting
                        Affiliate, only if the disposal would have, in the reasonable opinion of DLR
                        Limited, a material effect on the ability of the Franchisee to perform the
                        Franchise Obligations;

        35.1.4          the occurrence of an Event of Default under any of the Ancillary
                        Agreements;

        35.1.5          Wilful Misconduct on the part of the Franchisee;

        35.1.6          it becoming unlawful (other than as a direct result of a Change of Law) for
                        the Franchisee to provide all or a material part of the Franchise Obligations;

        35.1.7          the HSE withdrawing its acceptance of the DLR Railway Safety Case or
                        suspending or preventing the operation of the Railway for any reason, save
                        where such withdrawal suspension or prevention has resulted from material
                        breach of the Franchise Agreements by DLR Limited or as a direct result of
                        the acts or omissions of a Concessionaire and in either case the Franchisee
                        has used its best efforts for a period of at least 3 months to reinstate the


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                        DLR Railway Safety Case and/or ensure the continuation of the operation of
                        the Railway but has been unable to do so;

        35.1.8          the Franchisee receiving a total number of (INFORMATION EXEMPT FROM
                        DISCLOSURE UNDER SECTION 43(2) OF THE FREEDOM OF INFORMATION
                        ACT) or more Warning Notices in any (INFORMATION EXEMPT FROM
                        DISCLOSURE UNDER SECTION 43(2) OF THE FREEDOM OF INFORMATION
                        ACT) consecutive Fee Periods;

        35.1.9          the Franchisee committing a material breach of the Franchise Obligations,
                        including material breach of the terms of any of the Franchise Agreements;

        35.1.10         any of the warranties in clause 7 (Franchisee Warranties/Covenants) proving
                        to be materially untrue or incorrect;

        35.1.11         (INFORMATION EXEMPT FROM DISCLOSURE UNDER SECTION 43(2) OF THE
                        FREEDOM OF INFORMATION ACT)

        35.1.12         any of the Financing Agreements ceasing to be a legal, valid and binding
                        obligation on the Franchisee or relevant Guarantor (other than in accordance
                        with their terms) or it otherwise becoming unlawful or impossible for the
                        Franchisee or the relevant Guarantor to perform their respective obligations
                        thereunder;

        35.1.13         the Franchisee failing to pay any sum due to DLR Limited under the
                        Franchise Agreements (which sum is not in dispute) and such failure
                        continuing for 30 days after the Franchisee has been notified in writing by
                        DLR Limited that such sum has not been received;

        35.1.14         the Performance Bond provided by the Franchisee is terminated, expires
                        (other than in accordance with its terms) or otherwise ceases to have full
                        force and effect or the rating of the bondsman falls below (INFORMATION
                        EXEMPT FROM DISCLOSURE UNDER SECTION 43(2) OF THE FREEDOM OF
                        INFORMATION ACT) – as issued by Standard and Poor's Rating Service and
                        within 28 Days of DLR Limited's written notice to the Franchisee of the
                        occurrence of such event, the Performance Bond has not been replaced to
                        the reasonable satisfaction of DLR Limited; or

        35.1.15         [Not used];

        35.1.16         the liabilities of the Franchisee which are subject to the maximum aggregate
                        liability (as detailed in clause 53.4) (the "Maximum Aggregate Liability")
                        exceed 70% of such Maximum Aggregate Liability,

                        provided that if the Franchisee has notified DLR Limited in writing within 10
                        days of such liabilities reaching 70% of the Maximum Aggregate Liability,
                        that the Franchisee proposes to increase the Maximum Aggregate Liability
                        and the amount of such proposed increase, then the following provisions of
                        this clause 35.1.16 shall apply:

                        (a)   the Maximum Aggregate Liability shall be increased by such amount
                              as the Franchisee has specified (the "Cap Extension"); and

                        (b)   an Event of Default shall not arise pursuant to this clause 35.1.16
                              (but without prejudice to the other Events of Default which may arise
                              pursuant to this clause 35.1) unless:




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                              (i)   the liabilities of the Franchisee which are subject to the Maximum
                                    Aggregate Liability increase to more than the sum of 70% of the
                                    Maximum Aggregate Liability as so increased; and

                              (ii) the Franchisee does not elect to increase further the Maximum
                                   Aggregate Liability in accordance with this clause 35.1.16.

        35.1.17         where, following receipt of a notice given pursuant to clause 58.7.1(a) or
                        (b), the Franchisee fails to remedy a Diversity Infraction to the satisfaction
                        of DLR Limited or in the case of clause 58.7.1(b) fails to terminate the
                        engagement of its direct sub-contractor under its contract with a defaulting
                        sub-contractor and procure performance by another person on the terms
                        specified in clause 58.7.1(b).

35.2    Notification of Franchisee Default

        As soon as reasonably practicable on, and, in any event, within two days of it becoming
        aware of the occurrence of a Franchisee Default or an event which is likely to result in the
        occurrence of a Franchisee Default, the Franchisee shall notify DLR Limited of such
        Franchisee Default or potential Franchisee Default and will provide DLR Limited with full
        details of any steps which it is taking, or is considering taking, in order to remedy or
        mitigate the effect of such Franchisee Default or potential Franchisee Default or otherwise
        in connection therewith. The Franchisee shall take such action or steps as DLR Limited
        may reasonably require in order to remedy or mitigate the effect of any Franchisee
        Default or potential Franchisee Default.

35.3    Remedies

        Upon the occurrence of a Franchisee Default, DLR Limited may at its option and without
        prejudice to any of its other rights or remedies and to any rights of action which shall
        accrue or shall have already accrued to DLR Limited and following service of notice of
        such default on the Franchisee do any or all of the following:

        35.3.1          subject to clause 35. 4 (Suspension of payments) suspend payment of the
                        Franchise Payments and any other payments otherwise due from DLR
                        Limited to the Franchisee under the Franchise Agreements or otherwise
                        howsoever arising;

        35.3.2          without determining this Agreement, by notice in writing having immediate
                        effect, suspend performance by the Franchisee of part only of the functions
                        to be performed by it under the Franchise Agreements until such time as the
                        Franchisee shall have demonstrated to the reasonable satisfaction of DLR
                        Limited that it will perform and is capable of performing the Franchise
                        Obligations and thereafter itself perform or procure a third party to perform
                        such part of the functions for such period, and in such event the provisions
                        of clause 35.5 (Suspension of performance) shall apply;

        35.3.3          in the case of the Franchisee Defaults referred to in clauses 35.1.1 to 35.1.8
                        (inclusive) and 35.1.17 terminate this Agreement in its entirety by notice in
                        writing having immediate effect;

        35.3.4          in the case of the Franchisee Defaults referred to in clauses 35.1.9 to
                        35.1.15 (inclusive), if the relevant Franchisee Default is not in the
                        reasonable opinion of DLR Limited capable of remedy, terminate this
                        Agreement in its entirety by notice in writing having immediate effect; and

        35.3.5          in the case of any Franchisee Defaults referred to in clauses 35.1.9 to
                        35.1.15 (inclusive), if the relevant Franchisee Default is in the reasonable

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                        opinion of DLR Limited capable of remedy, serve notice of default on the
                        Franchisee requiring the Franchisee to remedy the breach or breaches
                        referred to in such notice of default within 28 days of receipt of such notice
                        (or such longer period as may be agreed by DLR Limited in its absolute
                        discretion) and, if the Franchisee fails to remedy such breach or breaches
                        with the period specified in such notice, terminate this Agreement in its
                        entirety by notice in writing have immediate effect.

35.4    Suspension of payments

        35.4.1          The right of DLR Limited under clause 35.3.1 to suspend payment of the
                        Franchise Payments and any other payment which would have been due and
                        payable to the Franchisee but for the exercise by DLR Limited of its rights
                        under clause 35.3.1 (the "Relevant Payments") shall, subject to the
                        provisions of this clause 35.4 (Suspension of payments), be exercisable
                        upon the occurrence of a Franchisee Default.

        35.4.2          If and for so long as the Franchisee fails to perform all of the Franchise
                        Obligations following the occurrence of a Franchisee Default, DLR Limited
                        may suspend the Relevant Payments in full.

        35.4.3          If and for so long as the Franchisee performs all of the Franchise Obligations
                        in full and continuously and at all times following the occurrence of the
                        Franchisee Default, DLR Limited shall make payment of the Relevant
                        Payments in full subject to:

                        (a)   the prior deduction of any costs of DLR Limited reasonably and
                              properly arising from and in connection with such Franchisee Default
                              including without limitation all costs reasonably and properly incurred
                              by it in performing or engaging others to perform the functions of the
                              Franchisee and all reasonable and proper administrative expenses of
                              DLR Limited including general staff overheads (the "Relevant
                              Costs"); and

                        (b)   there being no other continuing Franchisee Default or other material
                              unperformed obligation under the Franchise Agreements or any
                              outstanding liability owing by the Franchisee to DLR Limited as a
                              consequence of a Franchisee Default.

        35.4.4          If and for so long as the Franchisee performs some but not all of the
                        Franchise Obligations, DLR Limited shall pay to the Franchisee an amount
                        equal to such proportion of the Relevant Payments as equates to the
                        proportion (as determined by DLR Limited acting reasonably and in good
                        faith) which the actual amount of the Franchise Obligations performed by
                        the Franchisee bears to the full amount of the Franchise Obligations falling
                        due to be performed by it during such period, subject to prior deduction of
                        the Relevant Costs.

35.5    Suspension of performance

        In the case of a partial suspension of the performance by the Franchisee under the
        Franchise Agreements in accordance with clause 35.3.3, the Franchisee shall reimburse
        DLR Limited for all costs properly incurred by DLR Limited in performing or engaging
        others to perform the functions of the Franchisee which are suspended (including, without
        limitation, the relevant proper administrative expenses of DLR Limited, including an
        appropriate sum in respect of general staff costs and overheads).

35.6    Retendering

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        35.6.1          Subject to 35.6.2, upon termination of this Agreement by DLR Limited
                        pursuant to this clause 35, the Franchisee shall be liable for any retendering
                        costs incurred by DLR Limited in retendering the Franchise together with the
                        increased costs of a Successor Franchisee providing the services required
                        under the Agreement following termination until the end of the Franchise
                        Term, such liabilities not to exceed (INFORMATION EXEMPT FROM
                        DISCLOSURE UNDER SECTION 43(2) OF THE FREEDOM OF INFORMATION
                        ACT). For the avoidance of doubt DLR Limited shall be entitled to issue a
                        demand notice to the Guarantor under the Performance Bond referred to in
                        part 1 of schedule 9 (Financial Requirements) for such amount and to apply
                        monies received from the relevant Guarantor pursuant to such demand
                        notice in satisfaction of such amount.

        35.6.2          If the terms and conditions of any new franchise offered by DLR Limited in
                        the retendering process (including the basis upon which payment is made)
                        are materially different from the terms and conditions contained in the
                        Franchise Agreements then an adjustment shall be made to the amount
                        calculated in accordance with clause 35.6.1 which reasonably reflects how
                        the increased costs of a Successor Franchisee would have been different
                        (whether greater or lesser) had the new franchise been let on substantially
                        the same terms and conditions.

35.7    Savings

        The rights of DLR Limited under this clause 35 are in addition and without prejudice to
        any other right DLR Limited may have to obtain redress or relief available at law (whether
        by way of damages, specific performance or otherwise) on account of the acts or
        omissions of the Franchisee, whether pursuant to any of the Franchise Agreements or
        Financing Agreements or otherwise.

36.     DLR LIMITED DEFAULT

36.1    DLR Limited Default

        Any of the following shall be a DLR Limited Default:

        36.1.1          an order being made or an effective resolution being passed for the winding
                        up of DLR Limited;

        36.1.2          DLR Limited consolidating or amalgamating with, or merging with or into, or
                        transferring all or substantially all its assets to, another entity or entities
                        where, at the time of such consolidation, amalgamation, merger or transfer
                        the resulting, surviving or transferee entity or entities fail to assume
                        substantially all the obligations of DLR Limited under the Franchise
                        Agreements to which it or its predecessor was a party by operation of law or
                        pursuant to an agreement reasonably satisfactory to the Franchisee,
                        provided always that a transfer of all or any of the shares in DLR Limited
                        shall not be a DLR Limited Default;

        36.1.3          DLR Limited failing to pay any sum or sums due to the Franchisee hereunder
                        (which sum is not in dispute) and which either singly or in aggregate
                        exceeds £3,000,000 (RPI Indexed) and such failure continuing for 30 days
                        after DLR Limited has been notified in writing by the Franchisee that such
                        sum has not been received.




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36.2    Termination by Franchisee

        36.2.1          Upon the occurrence of a DLR Limited Default and so long as such DLR
                        Limited Default is subsisting, the Franchisee may at its option serve notice
                        on DLR Limited of the occurrence of such DLR Limited Default. If the
                        relevant matter or circumstance has not been rectified or remedied by DLR
                        Limited or otherwise within 30 days of such notice, the Franchisee may
                        serve a further notice on DLR Limited terminating this Agreement with
                        immediate effect.

        36.2.2          Upon a termination of this Agreement pursuant to clause 36.2.1, the
                        Franchisee shall be entitled to compensation in accordance with clause 39
                        (Compensation on Termination).

        36.2.3          The Franchisee may give notice to DLR Limited terminating this Agreement
                        only in accordance with the provisions of this clause 36.2 and clause 37
                        (Non-default Termination) (other than clause 37.1 (Expiry of Franchise
                        Term)).

37.     NON-DEFAULT TERMINATION

37.1    Expiry of Franchise Term

        37.1.1          This Agreement shall terminate automatically upon the expiry of the
                        Franchise Term unless it shall have previously been terminated in
                        accordance with the provisions of this Agreement.

        37.1.2          In the event of automatic termination of this Agreement upon expiry of the
                        Franchise Term, the Franchisee shall not be entitled to any compensation in
                        respect of termination of this Agreement.

37.2    Termination for Force Majeure

        37.2.1          Subject to clause 33.8.3 in the circumstances referred to in clause 33.8
                        (Termination for Force Majeure) and so long as such circumstances
                        continue, either DLR Limited or the Franchisee may terminate this
                        Agreement by giving 30 days written notice to the other.

        37.2.2          In the event of any termination pursuant to clause 37.2.1, the Franchisee
                        shall not be entitled to compensation in accordance with clause 39
                        (Compensation on Termination).

37.3    Termination for Change of Law

        37.3.1          If a Change of Law comes into effect which renders illegal or impossible (but
                        not merely more expensive) performance of all or substantially all of the
                        Franchisee's obligations then, following consultation to reach a solution
                        acceptable to both parties of not less than 90 days, either party may
                        terminate this Agreement by notice to the other having immediate effect.

        37.3.2          In the event of any termination pursuant to clause 37.3.1 the Franchisee
                        shall be entitled to compensation in accordance with clause 39
                        (Compensation on Termination).

37.4    Termination for expropriation

        37.4.1          If Her Majesty's Government sequesters, requisitions, expropriates or
                        otherwise seizes the Railway or any material part thereof then either party


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                        may terminate this Agreement by notice to the other having immediate
                        effect.

        37.4.2          In the event of any termination pursuant to clause 37.4.1, the Franchisee
                        shall be entitled to compensation in accordance with clause 39
                        (Compensation on Termination).

37.5    Termination following Dispute

        37.5.1          If a Dispute concerning any Additional DLR Project has been referred to the
                        Dispute Resolution Procedure and an Adjudicator has made a decision in
                        respect of such Dispute then the Franchisee shall notify DLR Limited within 7
                        days after the decision that the Franchisee agrees to be bound by the
                        decision. If the Franchisee fails to provide such notification within such 7
                        day period then DLR Limited may serve a written notice on the Franchisee
                        requiring provision of the notification within three business days. If the
                        Franchisee does not provide the said notification in accordance with DLR
                        Limited's written notice or indicates that it will not be bound by the decision
                        or intends to take further steps under the Dispute Resolution Procedure, DLR
                        Limited may terminate this Agreement by notice in writing to the Franchisee
                        having immediate effect.

        37.5.2          In the circumstances described in clause 22.3.4, paragraph 4.4 of part 6 of
                        schedule 2 (Passenger Services) and paragraphs 3.3A, 7.8 and/or 8.4 of
                        part 3 of schedule 5 (Capital Project), DLR Limited may terminate this
                        Agreement by notice in writing to the Franchisee having immediate effect.

        37.5.3          In the event of any termination pursuant to clauses 37.5.1 and 37.5.2 the
                        Franchisee shall not be entitled to compensation in accordance with clause
                        39 (Compensation on Termination).

37.6    Termination following Uninsurability

        37.6.1          In the circumstances referred to in clause 31.13.4(b), clause 31.13.7(b) or
                        31.13.8, DLR Limited may terminate this Agreement by notice in accordance
                        with those clauses.

        37.6.2          In the event of any termination pursuant to clause 37.6.1 the Franchisee
                        shall not be entitled to compensation in accordance with clause 39
                        (Compensation on Termination).

38.     EFFECT OF TERMINATION

38.1    Step-in rights

        38.1.1          In the event that DLR Limited has given notice of default or notice of
                        termination under clause 35 (Franchisee Default) or clause 37 (Non-default
                        Termination), or the Franchisee has given notice of termination under clause
                        36.2 (Termination by Franchisee) and members of the public shall be unable
                        to use the Railway or any material part thereof either safely, without undue
                        delay or at all then:

                        (a)    DLR Limited may by 7 days' notice to the Franchisee expel the
                               Franchisee from the Railway without thereby avoiding this Agreement
                               or releasing the Franchisee from any of its obligations or liability
                               under this Agreement; and




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                        (b)    whether or not it exercises the right under clause 38.1.1(a), DLR
                               Limited may take, or employ others to take, such steps in relation to
                               the operation and maintenance of the Railway as it may think fit to
                               protect the position of such members of the public, and where DLR
                               Limited has given notice of default under clause 35 (Franchisee
                               Default) DLR Limited may recover all proper costs of so doing
                               (including, without limitation, the relevant proper administrative
                               expenses of DLR Limited, including an appropriate sum in respect of
                               general staff costs and overheads) from the Franchisee.

        38.1.2          For the avoidance of doubt, subject to the exercise by DLR Limited of any
                        right under clause 38.1.1, the parties shall continue to perform their
                        obligations under this Agreement notwithstanding the giving of any notice of
                        default or notice of termination until the termination of this Agreement
                        becomes final in accordance with this Agreement.

38.2    Financing Agreements

        DLR Limited may issue a demand notice or take other action permitted under the
        Financing Agreements.

38.3    Savings

        38.3.1          Save as otherwise expressly provided in the Franchise Agreements:

                        (a)    termination of this Agreement shall be without prejudice to any
                               accrued rights and obligations under this Agreement as at the date of
                               termination; and

                        (b)    termination of this Agreement shall not affect the continuing rights
                               and obligations of the Franchisee and DLR Limited under clauses 1,
                               16.5, 17.4, 23, 28, 29, 38.2, 38.3, 39, 41.2, 41.3, 41.4, 41.6, 47.2,
                               47.3, 47.4, 52, 54.6, 56, 57.12 and 57.14 or under any other clause
                               which is expressed to survive termination or which is required to give
                               effect to such termination or the consequences of such termination,
                               including the obligation to enter into and complete the Termination
                               Transfer Agreement.

                        Save as provided in this clause 38.3, all rights and obligations of DLR
                        Limited and the Franchisee under this Agreement shall cease and be of no
                        further force and effect upon termination of this Agreement.

        38.3.2          Notwithstanding any breach of this Agreement by either party and without
                        prejudice to any other rights which the other party may have in relation
                        thereto, the other party may elect to continue to treat this Agreement as in
                        full force and effect and to enforce its rights hereunder, and failure of either
                        party to exercise any right hereunder including any right to terminate this
                        Agreement and any right to claim damages shall not be deemed a waiver of
                        such right for any continuing or subsequent breach.

        38.3.3          Save as expressly provided in clause 39 (Compensation on Termination),
                        the Franchisee shall have no claim for compensation or otherwise as a result
                        of termination of this Agreement in accordance with the provisions of this
                        Part V.

39.     COMPENSATION ON TERMINATION

39.1    Termination Payment

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        39.1.1          For the purpose of this clause, the following terms shall have the following
                        meanings:

                        "Cash Generated from Operations" means, in respect of any Fee Period,
                        the figure set out against that Fee Period in the line entitled "Cash
                        Generated from Operations" in the Business Plan or the Updated Business
                        Plan (as appropriate);

                        "Interest Paid" means, in respect of any Fee Period, the figure set out
                        against that Fee Period in the line entitled "Interest Paid" in the Business
                        Plan or the Updated Business Plan (as appropriate);

                        "Tax Paid" means, in respect of any Fee Period, the figure set out against
                        that Fee Period in the line entitled "Tax Paid" in the Business Plan or the
                        Updated Business Plan (as appropriate);

                        "Investment in Fixed Assets" means, in respect of any Fee Period, the
                        figure set out against that Fee Period in the line entitled "Investment in
                        Fixed Assets" in the Business Plan or the Updated Business Plan (as
                        appropriate);

                        "Net Cashflow" means, in respect of any Fee Period, the Cash Generated
                        from Operations less the aggregate of Interest Paid, Tax Paid and
                        Investment in Fixed Assets;

                        "Notional Period" means the period commencing at the beginning of the
                        first Fee Period shown in the Business Plan or the Updated Business Plan (as
                        appropriate) which commences after the Franchise Termination Date and
                        ending on the earlier of the expiry of the Franchise Term and the end of the
                        thirteenth Fee Period shown in the Business Plan or the Business Plan
                        Supplement (as appropriate) following the Franchise Termination Date
                        (counting from the first Fee Period shown in the Business Plan or the
                        Business Plan Supplement (as appropriate) which commences after the
                        Franchise Termination Date);

                        "Termination Payment" means the Net Cashflow in respect of the Notional
                        Period.

        39.1.2          Following termination of this Agreement in accordance with clauses 36.2.1,
                        or 37.4.1 the Termination Payment shall be payable by DLR Limited to the
                        Franchisee.

        39.1.3          The parties shall use all reasonable endeavours to agree the amount of the
                        Termination Payment in circumstances where it is payable under clause
                        39.1.2 and, failing agreement within 28 days, either party may refer the
                        Dispute for resolution under the Dispute Resolution Procedure.

        39.1.4          Within 28 days of agreement or determination of the Termination Payment
                        in accordance with clause 39.1.3, DLR Limited shall pay to the Franchisee
                        the amount of the Termination Payment, together with any interest payable
                        pursuant to clause 53.1 (Time for payment and interest).

39.2    Set off

        DLR Limited shall be entitled to set off against any Termination Payment payable by it
        under clause 39.1 (Termination Payment) any Franchise Payments payable or due to it
        and any other amount payable to or due to it under the Franchise Agreements or
        otherwise howsoever arising.

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39.3    Limitation of Liability

        Subject as provided below, any agreement or determination pursuant to clause 39.1
        (Termination Payment) as to the amount and form of any Termination Payment payable
        by DLR Limited shall represent the sole entitlement of the Franchisee to compensation in
        relation to the relevant termination of this Agreement and, save as provided below, the
        Franchisee shall have no other rights or remedies and DLR Limited shall have no other
        liability to the Franchisee, whether under this Agreement or at law, in respect of such
        termination. This clause 39.3 shall not preclude the Franchisee from seeking redress at
        law for any failure by DLR Limited to pay any amount agreed or determined to be due and
        payable by DLR Limited to the Franchisee under clauses 39.1 (Termination Payment). The
        Franchisee shall have no right to make any further claims for compensation ensuing from
        the relevant termination of this Agreement pursuant to clause 39.1 (Termination
        Payment).




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                                              PART VI

                                REQUIREMENTS FOR HANDBACK

40.     HANDBACK OF FRANCHISE

40.1    Franchisee acknowledgement

        The Franchisee acknowledges that DLR Limited may wish, at or before the expiry of the
        Franchise Period, to invite persons, who may include the Franchisee, to tender for the
        right to provide or operate all or part of the Franchise.      The Franchisee further
        acknowledges that DLR Limited may wish, upon expiry of the Franchise Period, itself to
        resume the undertaking comprised in the Franchise. The Franchisee accordingly accepts
        and agrees to the restrictions and obligations imposed on it under this Part VI of this
        Agreement.

40.2    Handback Procedures

        At least 18 months, but not more than 24 months, prior to the expiry of the Franchise
        Term, or, in the event of termination of this Agreement otherwise than as a result of
        expiry of the Franchise Term, at the beginning of the Pre-Handback Period, DLR Limited
        and the Franchisee shall establish a committee comprising two appropriately qualified and
        experienced representatives of each party who shall be responsible for agreeing
        procedures and programmes to ensure that the Franchise is handed over to the Successor
        Franchisee in accordance with the requirements of this Agreement with the least
        inconvenience and disruption to Train Services. The procedures and programmes for
        handing the Franchise over to DLR Limited shall include as a minimum the following
        activities:

        40.2.1          examination of the Handback Information by DLR Limited;

        40.2.2          the carrying out of an audit by DLR Limited pursuant to clause 47.2 (End-
                        Franchise Audit);

        40.2.3          remedy of defects by the Franchisee pursuant to clause 47.3 (Franchisee's
                        obligation to remedy defects);

        40.2.4          audit by DLR Limited of the Franchisee's compliance with clause 47.3
                        (Franchisee's obligation to remedy defects/failures);

        40.2.5          audit by DLR Limited of the Franchisee's compliance with clause 48
                        (Stocks);

        40.2.6          activities required for compliance with the Termination Transfer Agreement;
                        and

        40.2.7          any other matters referred to in the Handback Procedures.

41.     MAINTENANCE OF FRANCHISE

41.1    Maintenance as going concern

        41.1.1          The Franchisee shall maintain and manage the Franchise with the intent that
                        a Successor Franchisee would be able to take over the Franchise
                        immediately at any time.       The Franchisee shall use all reasonable
                        endeavours to ensure that such Successor Franchisee would have immediate
                        access to all Franchise Employees, Franchise Assets and Stocks for such
                        purpose.


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        41.1.2          The Franchisee shall maintain and manage the Franchise on the basis that,
                        to the extent possible and practicable, such Franchise will be transferred, in
                        the manner contemplated under this Agreement, as a going concern at the
                        end of the Franchise Period to, and continued immediately thereafter by, a
                        Successor Franchisee. The Franchisee shall accordingly use all reasonable
                        endeavours to ensure that an appropriate number of employees (having
                        sufficient skills, qualifications and experience) will transfer by operation of
                        Law (or otherwise under the terms of the Termination Transfer Agreement)
                        to any Successor Franchisee following the expiry of the Franchise Period.

41.2    Handback information

        41.2.1          For the purposes of facilitating the transfer of the Franchise to any
                        Successor Franchisee on the expiry of the Franchise Period, the Franchisee
                        shall maintain and keep up to date two sets of information, each of which
                        shall contain the information set out in part 1 of schedule 10 (Handback of
                        Franchise) and such other information as DLR Limited may reasonably
                        specify from time to time.

        41.2.2          The Franchisee shall ensure that any Successor Franchisee will have
                        immediate access to such package on the expiry of the Franchise Period and
                        shall accordingly agree with DLR Limited from time to time two separate
                        locations at which such sets of information should be kept.

        41.2.3          If so requested by DLR Limited (but no more than once in each Fee Year),
                        the Franchisee shall provide a report from its auditors addressed to DLR
                        Limited which confirms that the sets of information maintained by the
                        Franchisee pursuant to clause 41.2.1 contain the information required
                        thereunder. The Franchisee shall make such sets of information available
                        for inspection to DLR Limited or its representative whenever so reasonably
                        requested.

41.3    Preparation for retendering

        The Franchisee, if and to the extent so requested by DLR Limited, shall provide DLR
        Limited and its representatives and advisers with reasonable access to the employees of
        the Franchisee or its sub-contractors of any tier and the books, records and other material
        kept by or on behalf of the Franchisee or its sub-contractors of any tier in connection with
        the Franchise for the purpose of such representatives and advisers preparing any reports
        or other documents in connection with any invitation to potential Successor Franchisees to
        tender for the right and obligation to provide or operate all or part of the Franchise. The
        Franchisee shall make available to DLR Limited and its representatives and advisers such
        information, and shall assist in the verification of such information (including the provision
        of answers to verification questions), as they shall reasonably require in connection with
        such exercise.     The Franchisee shall also provide access for DLR Limited and its
        representatives and advisers and for any potential Successor Franchisees to one of the
        sets of information referred to under clause 41.2 (Handback Information) (as updated
        from time to time) and such access shall be under the control of DLR Limited. In addition,
        the Franchisee shall cooperate with any potential Successor Franchisees and allow them
        reasonable access to the Railway for the purposes of due diligence.

41.4    Non-frustration of transfer

        The Franchisee shall take no action or steps which is or are designed, directly or
        indirectly, to prejudice or frustrate the transfer as a going concern of the Franchise at the
        end of the Franchise Period to a Successor Franchisee. In particular the Franchisee shall
        not take or omit to take any action which act or omission is designed, directly or
        indirectly, to avoid, frustrate or circumvent any provision of this Agreement which is

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        included in whole or in part for the purpose of preventing any such prejudicial or
        frustrating acts or omissions (including those contained in this Part VI of this Agreement).
        Subject to such restrictions and the other provisions of this Agreement, the Franchisee
        shall be entitled to take such action as it may require for the purposes of bidding to
        become, or becoming, such a Successor Franchisee.

41.5    Arrangements with Affiliates

        41.5.1          The Franchisee shall ensure that every contract or other arrangement or
                        transaction to which it may be party with any Affiliate for the supply of
                        goods, the provision of services (including the licensing of any Intellectual
                        Property) or otherwise, is on arm's length terms.

        41.5.2          For the avoidance of doubt, in the event that any such arrangement is a Key
                        Contract and is not on arm's length terms, DLR Limited may require the
                        Franchisee to procure a substitute Key Contract in accordance with clause
                        43 (Key Contracts) and to terminate (at the Franchisee's own cost) such
                        arrangement and the Franchisee shall comply with any such requirement.

41.6    Pre-Handback Period

        Where reference is made in this Part VI of this Agreement to the Pre-Handback Period,
        such period shall be deemed to commence on the earlier of the following dates:

        41.6.1          the date which is a year prior to the date of expiry of the Franchise Term
                        under clause 5.1 (Termination on expiry of the Franchise Term) assuming
                        that DLR Limited does not elect to give notice of extension under clause 5.2
                        (Extension of the Franchise Term) or, if DLR Limited does so elect, the date
                        which is a year prior to the date of the expiry of the Franchise Term as so
                        extended;

        41.6.2          the date any notice of termination is given by the Franchisee under clause
                        36 (DLR Limited Default) or clause 37 (Non-default Termination); and

        41.6.3          the date on which DLR Limited notifies the Franchisee that the Pre-Handback
                        Period shall be deemed to commence, provided that DLR Limited has
                        become aware of a Franchisee Default or any other event or circumstance
                        which gives rise to a right to terminate under this Agreement.

        Any such period (which may be longer or shorter than a year, as the case may be) shall
        expire on the date of termination of this Agreement or, if earlier, in the case of periods
        commencing under clause 41.6.3, the date falling a year after the date of any notice
        under clause 41.6.3 or, in each case, such earlier date as DLR Limited may determine.

42.     RESTRICTIONS ON ACTIVITIES

        The Franchisee shall not, without the prior written consent of DLR Limited, permit the
        Franchise Employees to carry on any business or activity other than the provision of the
        Franchise and/or the Permitted Commercial Activities.

43.     KEY CONTRACTS

43.1    Direct Agreement

        Save in respect of any contract to which the Franchisee may be party on the Franchise
        Commencement Date, the Franchisee shall not enter into, be party to or be beneficiary
        under any Key Contract, unless DLR Limited has previously consented (such consent not
        to be unreasonably withheld or delayed) to such Key Contract and its terms and entered


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        into a Direct Agreement in respect of such Key Contract with the relevant counterparty on
        terms attached at part 3 of schedule 1 or otherwise acceptable to DLR Limited for the
        purposes of ensuring that, in the event of breach or termination of such Key Contract or
        termination of this Agreement, the Services may continue to be provided and that the
        Franchise may continue to be operated.

43.2    Amendment/termination

        43.2.1          The Franchisee shall not without the prior written consent of DLR Limited
                        (which shall not be unreasonably withheld or delayed) vary, or purport to
                        vary, the terms or conditions of any Key Contract.

        43.2.2          Without prejudice to the provisions of clause 43.1 (Direct Agreement), if a
                        Key Contract terminates or the Franchisee becomes aware that
                        circumstances have arisen which might give rise to early termination for any
                        reason whatsoever, the Franchisee shall notify DLR Limited and, if DLR
                        Limited so requires or the Franchisee so determines, the Franchisee shall
                        forthwith enter into a Key Contract or Key Contracts in respect of the same
                        subject matter as the Key Contract which so terminated so as to ensure
                        continuation of supply of the relevant goods or services and the provisions
                        of clause 43.1 (Direct Agreement) shall apply to such new Key Contract(s).

43.3    Designation

        DLR Limited may, subject to clause 43.4 (Notification of categories of Key Contracts),
        designate at any time as a Key Contract any agreement, contract, licence or other
        arrangement (whether in written, oral or other form) which the Franchisee is party to or
        beneficiary under or which it may propose to be party to or beneficiary under, where DLR
        Limited considers that such designation is reasonably necessary for securing that the
        Franchise may continue to be provided or operated by a Successor Franchisee on the
        expiry of the Franchise Period or otherwise facilitating the transfer of the Franchise at
        such time. For the avoidance of doubt such arrangements may include any informal or
        formal arrangement that the Franchisee may have with any other person from time to
        time (including an Affiliate).

43.4    Notification of categories of Key Contracts

        DLR Limited shall from time to time notify the Franchisee of those types or categories of
        contracts or arrangements which it reasonably considers may be Key Contracts and those
        which it does not. The Franchisee shall be entitled to rely on such notifications until
        amended or revoked on reasonable notice. The Franchisee shall inform DLR Limited from
        time to time of any arrangements which it may be intending to enter into which it believes
        DLR Limited may reasonably wish to designate under clause 43.3 (Designation).

43.5    Designation of existing Contracts

        If DLR Limited designates as a Key Contract any contract or arrangement to which the
        Franchisee may already be party and which DLR Limited has previously notified the
        Franchisee would not be considered to be a Key Contract under clause 43.4 (Notification
        of categories of Key Contracts) (and in respect of which such notice has not been
        revoked), the Franchisee shall be deemed not to be in breach of its obligations under
        clause 43.1 (Direct Agreement) but shall, where so reasonably requested by DLR Limited,
        use its reasonable endeavours to procure that DLR Limited may enter into a Direct
        Agreement on the terms attached at part 3 of schedule 1 (or otherwise acceptable to DLR
        Limited) with the relevant counterparty as soon as practicable.




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43.6    Emergencies

        Nothing in this clause 43 shall prevent the Franchisee from entering into on a short term
        basis such contracts or arrangements as it may consider necessary or appropriate to deal
        with any emergency which may arise in connection with the provision and operation of the
        Franchise nor shall it be required to procure that DLR Limited enters into a Direct
        Agreement in respect of such contracts.

44.     SUB-CONTRACTING

44.1    Permitted sub-contracting

        Save as provided in clauses 9.3 (Operations Functions), 15.5 (Key Posts) and 44.5 (Safety
        and Maintenance), the Franchisee shall be entitled to sub-contract or delegate all or part
        of the Franchise, provided that any sub-contracting or delegation by the Franchisee shall
        not relieve the Franchisee from any of its obligations in respect of such Services under
        this Agreement nor result in the Franchisee undertaking its obligations in a less efficient
        manner or taking longer to provide any information or carry out any obligation under this
        Agreement than would be the case were the Franchisee undertaking the relevant
        obligation by its own staff.

44.2    Franchisee to remain responsible

        The Franchisee shall retain full responsibility and liability for the work of sub-contractors.
        The Franchisee shall ensure that all sub-contractors' personnel are suitably qualified,
        trained and experienced and have been fully familiarised with the Franchisee's working
        methods and safety procedures. The requirements of clause 15 (Personnel) apply equally
        to sub-contractor's staff.

44.3    Competitive Tenders

        If any work for which DLR Limited is obliged to reimburse the Franchisee pursuant to this
        Agreement shall be in respect of goods, equipment or services to be provided by a third
        party supplier or contractor, the Franchisee shall obtain competitive tenders (using
        appropriate European Union procurement procedures) wherever practicable in respect
        thereof in accordance with any procedures with which DLR Limited is required by TfL to
        comply as notified to the Franchisee from time to time and shall provide DLR Limited with
        copies of any bid documentation and evidence that competitive tenders have been
        requested.

44.4    Sub-contracting requirements

        The Franchisee shall ensure, with respect to each contract or sub-contract for the
        procurement of goods and services hereunder, that:

        44.4.1          the contract or sub-contract is capable of being freely assigned to any
                        Successor Franchisee;

        44.4.2          the Franchisee is entitled to recover on behalf of DLR Limited the full
                        amount of:

                        (a)   any loss, damage, injury or expense caused to the Successor
                              Franchisee by any tort of or breach of such contract or sub-contract
                              by the third parties thereto; and

                        (b)   any right of indemnity contained therein,

                        subject to the express defences, limitations and exclusions of liability
                        applicable to the relevant contract or sub-contract; and
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        44.4.3          the contract or sub-contract is entered by the Franchisee as principal and
                        DLR Limited has no obligations pursuant thereto.

44.5    Safety and Maintenance

        Serco Docklands shall not without the prior written approval of DLR Limited sub-contract
        any obligation which DLR Limited considers (acting reasonably) relates (in whole or part)
        to safety or safety related maintenance save that, in the case of an emergency, the
        Franchisee shall not be required to obtain prior written approval where it would be
        impractical or impossible to obtain the same but the Franchisee shall use all reasonable
        endeavours to ensure that any subcontractor so appointed is of good standing and repute.

45.     FRANCHISE EMPLOYEES

45.1    Variation of terms

        The Franchisee shall not, and shall secure that each other relevant employer shall not,
        without the prior consent of DLR Limited (which shall not be unreasonably withheld), vary,
        or purport or promise to vary, the terms or conditions (as amended from time to time) of
        employment of any Franchise Employee (including any promise to make any additional
        payment or provide any additional benefit) where such variation or addition:

        45.1.1          takes effect in the Pre-Handback Period unless it is in the ordinary course of
                        business and, when aggregated with any other variation or addition which
                        takes effect during such period, represents an increase in the remuneration
                        of the Franchise Employee of no more than the percentage increase in the
                        level of the Average Earnings Index between the month for which such
                        index was last published at the time the variation or addition is made or
                        proposed and the month falling twelve months before such month;

        45.1.2          all or part of it first takes effect after the end of the Franchise Period; or

        45.1.3          results in any such employment not being terminable by the employer
                        within six months of the expiry of the Franchise Period;

        45.1.4          relates to a payment or the provision of a benefit triggered by termination of
                        employment or termination of this Agreement;

        45.1.5          relates to the provision of a benefit (but excluding base salary) which any
                        such employee will or may have a contractual right to receive after the
                        expiry of the Franchise Period; or

        45.1.6          prevents, restricts or hinders any such employee from working for a
                        Successor Franchisee or from performing the duties such employee
                        performed for the Franchisee.

45.2    Terms of employment of new employees

        During the Pre-Handback Period the Franchisee shall not, and shall secure that each other
        relevant employer shall not, without the prior consent of DLR Limited (which shall not be
        unreasonably withheld), create or grant, or promise to create or grant, terms or
        conditions of employment for any Franchise Employee where such employment by the
        Franchisee or such other relevant employer may commence during the last twelve months
        of the Franchise Period or on or after the Franchise Termination Date if and to the extent
        that:




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        45.2.1          such terms or conditions are materially different to the terms or conditions
                        of employment of equivalent or nearest equivalent Franchise Employees at
                        the date of commencement of employment of such new Franchise
                        Employee; and

        45.2.2          if such terms or conditions were granted to such equivalent Franchise
                        Employees already employed by the Franchisee by way of variation to their
                        terms or conditions of employment, the Franchisee would be in breach of
                        clause 45.1 (Variation in terms).

45.3    Changes in numbers and total cost of employees

        Subject to and excluding any increase in the remuneration of Franchise Employees
        permitted under clause 45.1 (Variations in terms), the Franchisee shall not, and shall
        secure that each other relevant employer shall not, without the prior consent of DLR
        Limited (which shall not be unreasonably withheld) increase or decrease in the Pre-
        Handback Period the number of Franchise Employees either such that the total number of
        Franchise Employees or the total cost per annum to the Franchisee and each other
        relevant employer employing all Franchise Employees is increased or such that the total
        number of Franchise Employees is decreased, in each case, by more than 5 per cent.
        during the Pre-Handback Period.

45.4    Provision of TUPE Information

        The Franchisee shall at the request of DLR Limited in the Pre-Handback Period provide the
        TUPE Information (to the extent permitted as a matter of law) within 28 days of such
        request and thereafter update such information in accordance with the reasonable
        requests of DLR Limited.

46.     TICKETS AND TICKETING SCHEMES

46.1    Ticket sales

        The Franchisee shall comply with its obligations in relation to sale of Tickets during the
        Pre-Handback Period as set out in part 1 of schedule 3 (Tickets/Ticketing Schemes).

46.2    Revenue Collection

        The Franchisee shall comply with its obligations in relation to revenue collection during
        the Pre-Handback Period as set out in part 2 of schedule 3 (Tickets/Ticketing Schemes).

46.3    Ticketing Schemes

        The Franchisee shall comply with its obligations in relation to Ticketing Schemes during
        the Pre-Handback Period as set out in part 3 of schedule 3 (Tickets/Ticketing Schemes).

47.     ASSET CONDITION REQUIREMENTS

47.1    Franchisees' Obligations

        The Franchisee shall comply with all its obligations under the Asset Condition
        Requirements.

47.2    End-Franchise Audit

        47.2.1          DLR Limited or its representatives shall carry out an audit of compliance by
                        the Franchisee with its obligations under the Franchise Agreements in
                        relation to maintenance, preservation and protection of the Franchisee
                        Assets and/or Stocks within the last 18 months of the Franchise Term, or, in

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                        the event of termination of this Agreement otherwise than as a result of
                        expiry of the Franchise Term, within 12 months of the Franchise Termination
                        Date, including but not limited to:

                        (a)   clause 11 (Maintenance of Franchise Assets);

                        (b)   clauses 48 (Stocks), 49 (Intellectual Property) and 50 (Other Assets);

                        (c)   the Software Licence and Intellectual Property Licence,

                        and any such audit may involve the examination, inspection or testing of
                        works, activities, records or assets on or off the Railway.

        47.2.2          In the case of termination as a result of expiry of the Franchise Term, DLR
                        Limited shall notify the Franchisee at least 30 days prior to commencement
                        of the audit.

        47.2.3          The Franchisee shall procure that the representatives of DLR Limited
                        conducting such an audit shall be provided with all such assistance and
                        access to facilities, records and assets (including the provision of copies of
                        documents) and personnel as they may reasonably require in order to
                        discharge their audit function in a proper manner.

        47.2.4          DLR Limited shall, in planning and implementing such an audit, have regard
                        to the obligations of the Franchisee in operating the Railway and providing
                        the Services.

        47.2.5          The audit activities described in Column 4 of the Asset Condition
                        Requirements are indicative only and shall not restrict or limit in any way
                        DLR Limited's rights of audit.

47.3    Franchisee's obligation to remedy defects/failures

        47.3.1          Where the audit by DLR Limited referred to in clause 47.2 (End-Franchise
                        Audit) reveals any defects in the Franchise Assets and/or Stocks such that
                        the Franchise Assets and/or Stocks cannot be handed over to DLR Limited in
                        the condition specified in clause 11 (Maintenance of Franchise Assets)
                        and/or the Asset Condition Requirements or reveals any other failure by the
                        Franchisee to comply with its obligations under the Franchise Agreement in
                        relation to the maintenance, protection and preservation of the Franchise
                        Assets and/or Stocks, DLR Limited will provide to the Franchisee details of
                        the relevant defects and failures. The Franchisee shall, so that such matters
                        are completed prior to the Franchise Termination Date, at its own cost
                        remedy all such defects and failures and undertake all such repairs or other
                        works as are required to ensure that the Franchise Assets can be handed
                        over on the Franchise Termination Date in a condition which meets the
                        requirements of this Agreement.

        47.3.2          If this Agreement terminates otherwise than as a result of expiry of the
                        Franchise Term, the Franchisee shall (regardless of whether the audit
                        referred to in clause 47.2 (End-Franchise Audit) has commenced and
                        whether the Franchisee has been provided with details of any defects and
                        failures) at its own cost remedy any defects and failures of which it is aware
                        and undertake all such repairs or other works as it is reasonably able before
                        the Franchise Termination Date to hand over the Franchise Assets on the
                        Franchise Termination Date in a condition which meets the requirements of
                        this Agreement.



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        47.3.3          In the event of any dispute regarding the provisions of clauses 47.3.1 or
                        47.3.2, either party shall, for the avoidance of doubt, be entitled to refer the
                        matter for resolution under the Dispute Resolution Procedure.

47.4    DLR Limited's right to carry out works

        If at the Franchise Termination Date the Franchise Assets are not handed over in a
        condition which meets the requirements of this Agreement, DLR Limited shall be entitled,
        without prejudice to any of its other rights or remedies, to perform itself, and all such
        repairs or other works as are required to put the Franchise Assets into such condition the
        Franchisee shall reimburse DLR Limited for any cost it incurs in doing so.

48.     STOCKS

48.1    Maintenance of Stocks

        The Franchisee shall ensure that its inventory of Stocks is maintained at normal levels
        appropriate to the continuation of the Maintenance Services. On Handback pursuant to
        the Termination Transfer Agreement the Franchisee will return to DLR Limited all Stocks
        used to support the maintenance and running of the Railway. The level and type of
        Stocks must be consistent with that required to meet the service requirements,
        equipment failure trends, re-supply and repair times.

48.2    Joint stock take

        The parties agree to carry out a joint stock take for the purposes of (and in accordance
        with) the Termination Transfer Agreement.

48.3    Key Stocks

        The Franchisee shall comply with its obligations under the Key Stocks Requirements.

48.4    Conditions of Stocks

        The Franchisee shall ensure that the Stocks are in good operating condition consistent
        with the continuation of the Franchise.

49.     INTELLECTUAL PROPERTY

49.1    Handback of intellectual property and software

        The rights of DLR Limited to use intellectual property used or arising in connection with
        the Franchise following termination of the Franchise shall be determined in accordance
        with the Intellectual Property Licence and the Software Licence.

49.2    Designation of intellectual property

        DLR Limited shall be entitled by notice in writing to the Franchisee at any time to
        designate as an Other Asset any intellectual property used or arising in connection with
        the Franchise which is not the subject of the Software Licence or Intellectual Property
        Licence and which DLR Limited reasonably considers to be material for the continuing
        operation of the Railway and/or the undertaking comprised in the Franchise.

49.3    Maintenance of intellectual property

        The Franchisee shall procure, forthwith upon any Intellectual Property Right being
        designated as an Other Asset, that it shall be dealt with as follows:



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         (a)    title to such Intellectual Property Right as is owned by the Franchisee, and used
                exclusively in connection with the Franchise, shall, forthwith upon designation as
                an Other Asset, be vested in DLR Limited and thereafter be deemed Intellectual
                Property for the purposes of the Intellectual Property Licence;

         (b)    where such Intellectual Property Right is owned by the Franchisee but not used
                exclusively in the connection with the Franchise, the Franchisee will grant to DLR
                Limited a royalty-free, non-exclusive, sub-licensable, irrevocable, perpetual,
                freely-assignable licence to use such Intellectual Property Right in the business of
                the Franchise, including in providing, after the termination of the Franchise,
                services in the nature of the Services;

         (c)    where such Intellectual Property Right is owned by a third party, the Franchisee
                will use its best endeavours to procure, at DLR Limited’s cost and subject to DLR
                Limited's prior approval of such cost, a licence equivalent to that described in
                clause 49.3(b), in favour of DLR Limited and on such reasonable commercial terms
                as may be appropriate, having regard to the nature of such Intellectual Property
                Right.

50.     OTHER ASSETS

50.1    Designation of Other Assets

        DLR Limited shall be entitled by notice in writing to the Franchisee at any time to
        designate as Other Assets any assets arising from or used in connection with the
        Franchise which are not prior to such designation Franchise Assets or Stocks and which
        DLR Limited reasonably considers to be material for the continuing operation of the
        Railway and/or the undertaking comprised in the Franchise. In such notice DLR Limited
        shall specify to which category of Rolling Stock or Moveable Equipment the relevant Other
        Assets shall thenceforth be treated as belonging and shall specify any amendments to the
        Asset Condition Requirements in respect of such Other Asset. The parties acknowledge
        and agree that the New Rolling Stock shall be designated as Other Assets falling within
        the category of Rolling Stock from the time of delivery to the Franchisee following the
        issue of a Taking Over Certificate (as such term is defined in the New Rolling Stock
        Contract) in respect of each Vehicle to the Franchisee, and that in respect of such New
        Rolling Stock DLR Limited shall not be required to give notice in writing to the Franchisee.

50.2    Maintenance of Other Assets

        The Franchisee shall procure that forthwith upon designation of any asset as an Other
        Asset it shall be maintained as a Franchise Asset in accordance with the provisions of this
        Agreement as to maintenance and repair, including the provisions of clause 11
        (Maintenance of Franchise Assets). Title to any assets shall vest in DLR Limited without
        further act forthwith upon designation as an Other Asset and such assets shall thenceforth
        be subject to the terms of the Rolling Stock Lease or Moveable Equipment Lease (as
        applicable) save that the parties acknowledge that title in the New Rolling Stock shall vest
        in the counterparty to the Rolling Stock Lease.

51.     TERMINATION TRANSFER AGREEMENT

        The Franchisee shall at the commencement of the Pre-Handback Period enter into and
        complete an agreement substantially in the form of the Termination Transfer Agreement
        in respect of the handback of the undertaking comprised in the Franchise.




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52.     OTHER OBLIGATIONS UPON TERMINATION

52.1    Assistance in securing continuity

        Subject to the Franchisee's obligations in clause 40, in order to facilitate the continuity of
        the Franchise on expiry of the Franchise Period the Franchisee shall take such steps (at
        DLR Limited's cost and expense), both before and after the expiry of the Franchise Period,
        as DLR Limited may reasonably require to assist and advise any Successor Franchisee in
        providing and operating the Franchise. In particular, the Franchisee shall use reasonable
        endeavours to provide any Successor Franchisee with such records and information
        relating to or connected with the Franchise as DLR Limited may reasonably request (other
        than confidential financial information but including all relevant records relating to the
        Franchise Employees).

52.2    Access

        The Franchisee hereby authorises DLR Limited and its representatives to have such access
        as it may reasonably request on the expiry of the Franchise Period to such property as it
        may own, lease or operate at such time, for the purpose of facilitating the continuity of
        the Franchise.

52.3    Key Contracts

        The Franchisee shall provide such assistance to any Successor Franchisee as DLR Limited
        may reasonably require in ensuring that pursuant to any Direct Agreements any such
        Successor Franchisee may enter into (or enjoy the benefit of) contracts equivalent to the
        relevant Key Contracts with the relevant counterparties.

52.4    Intellectual property

        The Franchisee shall cease to use any trade marks or other intellectual property relating
        to the Franchise forthwith upon expiry of the Franchise Period and shall take all necessary
        steps to change any company name which incorporates any such marks as soon as
        practicable.

52.5    DLR Pension Scheme

        On the expiry of the Franchise Period the Franchisee shall cease to participate in the DLR
        Pension Scheme and shall give due notice thereof to the trustees of the DLR Pension
        Scheme, and shall execute a Deed of Cessation substantially in the agreed form and such
        other documents as DLR Limited may reasonably require in connection with such
        cessation, which shall be without prejudice to any obligations of the Franchisee in respect
        of the DLR Pension Scheme which relate to the Franchise Period or any part of it.

52.6    Continuance of activities

        The Franchisee shall continue to perform its activities under this Agreement as normal up
        to the Franchise Termination Date as though it were responsible for continuing such
        activities thereafter, unless other phased handback procedures are agreed between the
        parties prior to Handback. The Franchisee shall also give full cooperation to DLR Limited
        to ensure a smooth and trouble free transition of such activities with no degradation of
        the standard of performance of such activities.

52.7    Ancillary Agreements

        The Franchisee shall, prior to the Franchise Termination Date, complete all outstanding
        activities under the Ancillary Agreements, failing which the Franchisee shall indemnify DLR



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        Limited against any liability or cost which DLR Limited may incur as a result of the non or
        partial performance of such activities by the Franchisee.

52.8    Continued technical support

        For a period of two years after the Franchise Termination Date the Franchisee shall, to the
        extent that it lies within the Franchisee's power to do so, provide the Successor
        Franchisee, at the Successor Franchisee's cost, with such access as it may reasonably
        require to persons having the appropriate knowledge and experience of the history of the
        Franchise and associated technical matters for the following purposes:

        52.8.1          general technical advice on subjects for which the Franchisee was
                        responsible during the Franchise Period; and

        52.8.2          interpretation of maintenance    history   data,   drawing   modifications,
                        regulations and the like.

52.9    Capital Projects

        The Franchisee shall comply with the provisions of part 3 of schedule 5 (Capital Projects)
        in relation to handback of Projects.




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                                              PART VII

                                          MISCELLANEOUS

53.     PAYMENT AND FRANCHISEE'S LIMIT OF LIABILITY

53.1    Time for payment and interest

        In the event of an entitlement to payment arising under the terms of this Agreement, the
        following provisions shall apply in the absence of any express provision or written
        agreement to the contrary:

        53.1.1          the person entitled to payment ("payee") shall deliver an invoice setting out
                        adequate details of the payment required or the cost, expense or liability
                        incurred or assumed (and any value added tax applicable thereto) and
                        identifying the clause or other basis upon which entitlement to such
                        payment is claimed;

        53.1.2          the person receiving the invoice ("payer") shall settle the said invoice or
                        any undisputed part within 28 days of the date of receipt thereof and the
                        balance (if any) upon resolution of the Dispute;

        53.1.3          without prejudice to the payee's right to receive payment on the due date,
                        interest shall accrue on any sum due and owing to the payee at the
                        Prescribed Rate calculated on a daily basis and on the basis of a 365 day
                        year if and to the extent that payment is not received on the due date
                        unless the payee failed to supply an invoice in accordance with clause 53.1.1
                        in which case interest at the Prescribed Rate calculated as aforesaid will
                        accrue from 28 days after the date such information is made available; and

        53.1.4          where a payment falls to be made on a day which is not a business day, it
                        shall be paid on the next business day.

53.2    Value Added Tax

        Save where otherwise stated or where the context otherwise requires:

        53.2.1          subject to 53.2.2, all references to amounts payable in this Agreement are
                        expressed exclusive of any Value Added Tax which may be properly
                        chargeable thereon. Each party shall pay to the other party any Value
                        Added Tax properly chargeable in respect of any supply made to it under
                        this Agreement provided that it shall first have received from the other party
                        a valid Value Added Tax invoice in respect of that supply which complies
                        with part III of The Value Added Tax Regulations 1995;

        53.2.2          where any cost expense or disbursement is to be indemnified or to be
                        deducted in any computation the amount to be indemnified or deducted
                        shall be taken for that purpose to include any Value Added Tax which may
                        be properly chargeable on such cost expense or disbursement to the extent
                        that the recipient is not entitled to any credit or repayment from the
                        relevant tax authority in respect of the Value Added Tax on the same.

53.3    Set off

        53.3.1          All sums payable by any party under this Agreement shall be paid free and
                        clear of any deductions, withholdings, set-offs or counter-claims, save only
                        as may be required by law or as expressly permitted or required under this
                        Agreement.


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        53.3.2          Whenever any definite and ascertained sum of money shall be due and
                        payable by the Franchisee to DLR Limited under this Agreement, such sum
                        may be deducted from or reduced by the amount of any sum then due and
                        payable or which at any time thereafter may become due and payable by
                        DLR Limited to the Franchisee under this Agreement.

53.4    Franchisee's Limit of Liability

        53.4.1          Subject to clauses 53.4.2, 53.4.3 and 53.4.4, the Franchisee's liability to
                        DLR Limited under the Franchise Agreements shall not exceed a sum equal
                        to £20,000,000.

        53.4.2          Exclusions

                        The limitation of liability referred to in clause 53.4.1 shall not apply to any
                        liability of the Franchisee to DLR Limited arising:

                        (a)    as a result of or in connection with fraud by the Franchisee; or

                        (b)    out of death or personal injury caused by negligence of the
                               Franchisee; or

                        (c)    out of the wilful default or abandonment of the Franchise Obligations
                               by the Franchisee; or

                        (d)    under any indemnity in the Franchise Agreements if and to the extent
                               it relates to claims made by third parties against DLR Limited; or

                        (e)    from any deductions from the Fixed Fee under schedule 2 (Passenger
                               Services).

        53.4.3          Calculation of Liability

                        Any assessment of whether the limitations of liability referred to in clause
                        53.4.1 have been exceeded shall not take into account:

                        (a)    any liability of the Franchisee to the extent that such liability is met
                               by insurance proceeds from insurances (or which would have been
                               met by insurance proceeds but for any act or omission of the
                               Franchisee);

                        (b)    any liability of the Franchisee to the extent that the Franchisee is
                               entitled to recover amounts in respect of that liability from a third
                               party (including any sub-contractors).

        53.4.4          Costs of Performance

                        For the avoidance of doubt there shall be no limitation on the liability of the
                        Franchisee in relation to the costs associated with the carrying out of the
                        Franchisee Obligations.

54.     CONFIDENTIALITY

54.1    Franchisee confidentiality undertaking

        Subject to the provisions of clause 54.3 (Disclosure of confidential information), the
        Franchisee shall hold in confidence the terms of the Franchise Agreements and all
        documents, materials and other information, whether technical or commercial, supplied
        by or on behalf of DLR Limited (including without limitation all documents and information

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        supplied in the course of proceedings under the Dispute Resolution Procedure) and shall
        not, except with DLR Limited's written authority, publish or otherwise disclose the same
        otherwise than as expressly provided for in this Agreement unless or until the Franchisee
        can reasonably demonstrate that any such document, material or information is in the
        public domain through no fault of the Franchisee and through no breach of this
        Agreement, whereupon to the extent that it is in the public domain this obligation shall
        cease.

54.2    DLR Limited confidentiality undertaking

        Subject to clause 54.3, 54.4 and as provided below, DLR Limited shall have the same
        obligations as those imposed on the Franchisee under clause 54.1 in respect of those
        categories of confidential information set out in schedule 13 ("Franchisee Confidential
        Information"). In addition to the permitted disclosures under clause 54.3 DLR Limited
        may:

        54.2.1          disclose the Franchisee Confidential Information where DLR Limited
                        considers that it is obliged to do so under any of the FOI Legislation;

        54.2.2          use the Franchisee Confidential Information to the extent necessary to
                        obtain the benefit of the Franchisee's performance under this Agreement;

        54.2.3          disclose the Franchisee Confidential Information to any member of the group
                        of companies formed by DLR Limited and its subsidiary companies (as such
                        term is defined in the s258 of the Companies Act 1985); and

        54.2.4          disclose such Franchisee Confidential Information as may be required to be
                        published in the Official Journal of the European Union.

54.3    Disclosure of confidential information

        A party shall be entitled to disclose any data or information acquired by it under or
        pursuant to this Agreement or information relating to a dispute arising under this
        Agreement without the prior written consent of any other party if such disclosure is made
        in good faith:

        54.3.1          to any Affiliate of such party upon obtaining from such Affiliate an
                        undertaking of confidentiality equivalent to that contained in clause 54.1
                        (Confidentiality undertaking);

        54.3.2          to any outside consultants or advisers engaged by or on behalf of such party
                        and acting in that capacity upon obtaining from such consultants or advisers
                        an undertaking of confidentiality equivalent to that contained in clause 54.1
                        (Confidentiality undertaking);

        54.3.3          to any lenders, security trustee, bank or other financial institution (and their
                        advisers) from which such party is seeking or obtaining finance, upon
                        obtaining from any such person an undertaking of confidentiality equivalent
                        to that contained in clause 54.1 (Confidentiality undertaking);

        54.3.4          to the extent required by Law or pursuant to an order of any court, authority
                        or regulatory person of competent jurisdiction or under the Dispute
                        Resolution Procedure or the rules of a recognised stock exchange or a formal
                        or informal request of any taxation authority;

        54.3.5          to any insurer upon obtaining from such insurer an undertaking of
                        confidentiality equivalent to that contained in clause 54.1 (Confidentiality
                        undertaking); or

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        54.3.6          to directors, employees and officers of such party, to the extent necessary
                        to enable such party to perform its obligations under the Franchise
                        Agreements or to protect or enforce its rights under the Franchise
                        Agreements.

54.4    Publication by DLR Limited

        Nothing in this clause 54 shall be deemed to prohibit, prevent or hinder, or render DLR
        Limited liable for, the disclosure of any information by DLR Limited to a Minister of the
        Crown or any department or agency of the government of the United Kingdom, TfL, GLA,
        the National Audit Office or any agency of the Parliament of the United Kingdom.

54.5    Return of Confidential Information

        Save to the extent that the same may reasonably be required in respect of any current or
        anticipated litigation, on termination of this Agreement howsoever occurring, the
        Franchisee shall promptly, at the request of DLR Limited, return to DLR Limited or (if so
        requested) destroy any information (including all copies thereof) which are for the time
        being the subject of the Franchisee's confidentiality undertaking under clause 54.1
        (Confidentiality undertaking).

54.6    Continuing obligation following termination of Franchise

        This clause 54 (and any other clauses necessary to give effect thereto) shall survive the
        termination of this Agreement irrespective of the reason for termination.

54.7    Freedom of Information

        54.7.1          For the purposes of this clause 54.7:

                 "FOI Legislation" means the Freedom of Information Act 2000, all regulations
                 made under it and the Environmental Information Regulations 2004 and any
                 amendment or re-enactment of any of them; and any guidance issued by the
                 Information Commissioner, the Department for Constitutional Affairs, or the
                 Department for Environment Food and Rural Affairs in relation to such legislation;

                 "Information" means information recorded in any form held by DLR Limited or
                 held by the Franchisee on behalf of DLR Limited; and

                 "Information Request" means a request for Information under the FOI
                 Legislation.

        54.7.2          The Franchisee acknowledges that DLR Limited is subject to the FOI
                        Legislation and agrees to assist and co-operate with DLR Limited to enable
                        DLR Limited to comply with its obligations under the FOI Legislation.

        54.7.3          Without prejudice to the generality of clause 54.7.2, the Franchisee shall
                        and shall procure that its sub-contractors shall:

                        (a)   transfer to the Company Secretary of DLR Limited (or such other
                              person as may be notified by DLR Limited to the Franchisee) all
                              Information Requests that they receive as soon as practicable and in
                              any event within 2 Weekdays of receiving an Information Request;
                              and

                        (b)   in relation to Information held by the Franchisee on behalf of DLR
                              Limited, provide DLR Limited with details about and/or a copy of all
                              such Information that DLR Limited requests and such Information
                              shall be provided within 5 Weekdays of a request from DLR Limited
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                              (or such other period as DLR Limited may reasonably specify), and in
                              such form as DLR Limited may reasonably specify.

        54.7.4          DLR Limited shall be responsible for determining whether Information is
                        exempt information under the FOI Legislation and for determining what
                        Information will be disclosed in response to an Information Request in
                        accordance with the FOI Legislation. The Franchisee shall not itself respond
                        to any person making an Information Request, save to acknowledge receipt,
                        unless expressly authorised to do so by DLR Limited.

        54.7.5          The Franchisee acknowledges that DLR Limited may be obliged under the
                        FOI Legislation to disclose Information without consulting or obtaining
                        consent from the Franchisee.

54.8    Protection of Personal Data

        The Franchisee shall comply with all of its obligations under the DPA and when Processing
        Personal Data on behalf of DLR Limited shall only carry out such Processing for the
        purposes of providing the Services in accordance with the Agreement and shall act in
        accordance with instructions from DLR Limited in respect of the same.

55.     DOCUMENTS, DUTIES AND FEES

55.1    Supply of documents

        The following provisions shall apply where the Franchisee is obliged under the Franchise
        Agreements to supply documents and drawings to DLR Limited:

        55.1.1          all paper based documents and drawings shall be of a suitable quality for
                        reproduction, microfilming or scanning into electronic databases;

        55.1.2          documents and drawings may be supplied on suitable electronic media
                        provided such media are in a format which is compatible with the relevant
                        DLR Limited systems; and

        55.1.3          the Franchisee shall ensure that secure back-ups or archive copies of
                        originals and revisions are maintained in respect of all data, information and
                        records required to be kept under the Franchise Agreements.

55.2    Stamp duty and other costs

        The Franchisee shall be responsible for and shall forthwith discharge (and shall fully
        indemnify DLR Limited against) all stamp duties and land registration fees on or for the
        registration of the Franchise Agreements or any of them and any deed or document to
        which DLR Limited and the Franchisee or the Franchisee shall be a party following
        exchange of this Agreement which relates to the Franchise.

56.     NOTICES

56.1    Service of notices

        Save as otherwise expressly provided in this Agreement any notice, notification or other
        communication under or in connection with this Agreement shall be in writing and shall be
        delivered by hand or sent by prepaid first class post or by facsimile transmission to the
        party to be served at or to that party's address or to its facsimile number given below or
        to such other address or numbers in England as the party to be served may from time to
        time select by prior notice to the other party:

        DLR Limited
                                                  130
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        Address:                 Operations and Maintenance Centre,
                                 Castor Lane, Poplar, London E14 0DX
        Facsimile No:            0207 363 9708
        Attention:               David Keep
                                 Company Secretary
                                 Docklands Light Railway Limited

        Franchisee
        Address:                 Operations and Maintenance Centre, Castor Lane, Poplar,
                                 London E14 0DX
        Facsimile No:            0207 363 9532
        Attention:               Managing Director
                                 Serco Docklands

56.2    Time of service

        Any such notice or other communication shall be deemed to have been received by the
        party to whom it is addressed as follows:

        56.2.1          if delivered by hand, at the time when the notice is left at the address of the
                        party to be served;

        56.2.2          if sent by prepaid first class post, from and to any place within the United
                        Kingdom, on the business day next following the day of posting or, if the
                        day of posting was not a business day, the business day next following the
                        business day after the day of posting; and

        56.2.3          if sent by facsimile transmission, at the time of transmission,

        and in proving service it will be sufficient to prove, if sent by prepaid first class post, that
        the envelope containing the notice or other communication was properly stamped or
        franked with the appropriate first class postage, addressed to the recipient and placed in
        the post and, if sent by facsimile transmission, a printed record is given of all pages of the
        transmission having been received at the correct number.

57.     GENERAL PROVISIONS

57.1    Entire Agreement

        57.1.1          The Franchisee on behalf of itself and as agent for each of its Affiliates
                        acknowledges and agrees that the Franchise Agreements and any
                        agreements, deeds and other documents to be entered into pursuant to the
                        terms of any of the Franchise Agreements contain the entire agreement
                        between the parties in relation to the subject matter thereof and supersede
                        all prior agreements and arrangements other than such confidentiality
                        agreements or undertakings as the Franchisee may have entered into in
                        connection with tendering for the Franchise.

        57.1.2          The Franchisee hereby acknowledges on behalf of itself and as agent for
                        each of its Affiliates that it is not entering into the Franchise Agreements in
                        reliance on any warranties, representations, statement, assurance,
                        covenant, agreement, indemnity, undertakings or commitment of any
                        nature howsoever or to whomsoever made.                 The Franchisee hereby
                        acknowledges and agrees with DLR Limited (for itself and as trustee for each
                        of the other persons referred to therein) to the disclaimer of liability which is
                        contained in the section entitled 'Important Notice' contained in the
                        Invitation to Tender.


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        57.1.3          Save in the case of any fraudulent misrepresentation, the Franchisee agrees
                        that the Franchisee or its Affiliates will have no remedy against any of the
                        DLR Limited Parties, and none of the DLR Limited Parties shall have any
                        liability of whatsoever nature to the Franchisee, in respect of any statement
                        of fact or opinion whatsoever, including any untrue or misleading statement,
                        warranty or representation, express or implied, made to any of the
                        Franchisee Parties upon which the Franchisee relied or may have relied in
                        entering into the Franchise Agreements.

        57.1.4          The Franchisee agrees that, save in the case of fraudulent misrepresentation
                        or as expressly set out in the Franchise Agreements, the Franchisee shall
                        have no right to rescind or terminate any of the Franchise Agreements after
                        the Franchise Commencement Date for breach of any of the terms of the
                        Franchise Agreements or under the provisions of the Misrepresentation Act
                        1967 or for any other reason whatsoever.

57.2    Waiver and variation

        57.2.1          There shall be no waiver of any term, provision or condition of the Franchise
                        Agreements unless such waiver is evidenced in writing and signed by the
                        waiving party and then only in the instance and for the purpose for which it
                        is given.

        57.2.2          No omission or delay on the part of either party hereto in exercising any
                        right, power or privilege hereunder shall operate as a waiver thereof, nor
                        shall any single or partial exercise of any such right, power or privilege
                        preclude any other or further exercise thereof or of any other right, power or
                        privilege. The rights and remedies herein provided are cumulative with and,
                        save as expressly provided to the contrary in the Franchise Agreements, not
                        exclusive of any rights or remedies provided by law.

        57.2.3          No variation to the Franchise Agreements shall be effective unless made in
                        writing and signed by all the parties.

        57.2.4          No breach of any provision of the Franchise Agreements shall be waived or
                        discharged except with the express written consent of the parties.

57.3    Assignment

        The Franchisee shall not without the prior written consent of DLR Limited transfer, assign,
        declare a trust of, or grant a Security Interest in or over, the Franchise Agreements or
        any part thereof or any benefit or interest or rights therein or thereunder.

57.4    Partial invalidity

        If any provision of the Franchise Agreements shall be held to be void or declared illegal,
        invalid or unenforceable for any reason whatsoever, such provision shall be divisible from
        the Franchise Agreements and shall be deemed to be deleted from the Franchise
        Agreements and the validity of the remaining provisions shall not be affected. In the
        event that any such deletion materially affects the interpretation of the Franchise
        Agreements then the parties shall negotiate in good faith with a view to agreeing a
        substitute provision which as closely as possible reflects the commercial intention of the
        parties. If the parties fail to agree a substitute provision within 30 days of commencing
        negotiations, the matter shall be referred to the Dispute Resolution Procedure for
        resolution.




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57.5    [Not Used]




57.6    No partnership or agency

        Nothing in this Agreement and no action taken by the parties pursuant to the Franchise
        Agreements shall constitute, or be deemed to constitute, a partnership, unincorporated
        association or other co-operative entity. Save as expressly provided in the Franchise
        Agreements, the Franchisee shall not be or be deemed to be the agent of DLR Limited and
        the Franchisee shall not hold itself out as having authority or power to bind DLR Limited in
        any way.

57.7    Further assurance

        Each party agrees that it shall now or at any time during the subsistence of the Franchise
        Agreements do or procure the doing of all such acts and/or execute or procure the
        execution of all such documents in a form satisfactory to the other party as the other
        party may reasonably require for giving full effect to and obtaining the full benefit of the
        rights powers and remedies conferred upon such other party by this Agreement.

57.8    Restrictions

        57.8.1          Each party to the Franchise Agreements will use its respective reasonable
                        endeavours in co-operating with the other parties in assessing whether the
                        relevant Franchise Agreements infringe or may infringe any applicable
                        competition law provisions, and in particular the Chapter 1 Prohibition
                        contained in the Competition Act 1998 and/or Article 81(1) of the EC Treaty.
                        In the event that the parties are unable to reach agreement on such an
                        assessment, such co-operation may take the form of independent legal
                        advice, the costs and expenses of which will be jointly funded by each party
                        to the relevant agreement.

        57.8.2          If any provision of the Franchise Agreements is deemed unenforceable by
                        operation of Article 81(1) of the EC Treaty, Chapter I of the Competition Act
                        1998, or any other applicable competition law prohibition, then the parties
                        shall in good faith consult with each other to agree an alternative provision
                        which achieves a result as similar as possible to the result which would have
                        been achieved by the provision deemed unenforceable.

57.9    Costs

        Save as expressly otherwise provided in the Franchise Agreements each of the parties
        hereto shall bear its own legal, accountancy and other costs, charges and expenses
        connected with the negotiation, preparation and implementation of this Agreement and
        any other agreement incidental to or referred to in the Franchise Agreements.

57.10   Counterparts

        The Franchise Agreements may be executed in any number of counterparts and by the
        several parties hereto on separate counterparts, each of which when so executed and
        delivered shall be an original, but all the counterparts shall together constitute one and
        the same instrument. This agreement shall not take effect until it has been executed by
        all parties.

57.11   Language of Agreement




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        The language of the Franchise Agreements is the English language and any notice given
        hereunder shall be in English.

57.12   Settlement of Disputes

        Except where expressly provided to the contrary any Dispute shall be resolved in
        accordance with the Dispute Resolution Procedure.

57.13   Contracts (Rights of Third Parties) Act and Privity of Contracts

        The Contracts (Rights of Third Parties) Act 1999 shall not apply to this Agreement and no
        rights or benefits expressly or impliedly conferred by it shall be enforceable under that Act
        against the parties to it by any other person.

57.14   Proper law

        The Franchise Agreements are subject to English law and, subject to the provisions of
        clause 57.12 (Settlement of Disputes), to the exclusive jurisdiction of the Courts of
        England and Wales.

58.     EQUALITY AND DIVERSITY REQUIREMENTS

58.1    Compliance

        58.1.1     Without limiting the generality of any other provisions of this Agreement, the
                   Franchisee in the performance of the Agreement:

                   (a)     shall not unlawfully discriminate;

                   (b)     shall procure that its personnel do not unlawfully discriminate; and

                   (c)     shall use reasonable endeavours to procure that those of its sub-
                           contractors whose contracts have a material impact on the overall
                           provision of the Services and predominantly involve the supply of
                           labour (but excluding the British Transport Police) (a "Relevant Sub-
                           contractor") do not unlawfully discriminate in relation to the provision
                           of the Services,

                    within the meaning and scope of the Sex Discrimination Act 1975, Race
                    Relations Act 1976, the Disability Discrimination Act 1995, Employment
                    Equality (Sexual Orientation) Regulations 2003, Employment Equality (Religion
                    or Belief) Regulations 2003 and any other relevant enactments in force from
                    time to time relating to discrimination in employment.

        58.1.2     The Franchisee acknowledges that DLR Limited is under a duty under section
                   71 of the Race Relations Act 1976 to have due regard to the need to eliminate
                   unlawful racial discrimination and to promote equality of opportunity and good
                   relations between persons of different racial groups. In the performance of the
                   Agreement, the Franchisee shall and shall use reasonable endeavours to
                   procure that its Relevant Sub-contractors assist and cooperate with DLR
                   Limited where possible in satisfying this duty.

        58.1.3     The Franchisee acknowledges that DLR Limited, as a wholly owned subsidiary
                   of TfL, is under a duty by virtue of a Mayor's direction under section 155 of the
                   Greater London Authority Act 1999 (in respect of the Greater London
                   Authority's duty under section 404(2) of the Greater London Authority Act
                   1999) to have due regard to the need to:



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                     (a)    promote equality of opportunity for all persons irrespective of their
                            race, gender, disability, age, sexual orientation or religion;

                     (b)    eliminate unlawful discrimination; and

                     (c)    promote good relations between persons of different racial groups,
                            religious beliefs and sexual orientation,

                     and in the performance of the Agreement, the Franchisee shall and shall use
                     reasonable endeavours to procure that its Relevant Sub-contractors assist and
                     co-operate with DLR Limited where possible to enable DLR Limited to satisfy its
                     duty.

        58.1.4       TfL's workplace harassment policy ("Policy") as up-dated from time to time
                     (copies of which are available on request from DLR Limited) requires DLR
                     Limited's own staff and those of its contractors to comply fully with the Policy
                     to eradicate harassment in the workplace. The Franchisee shall:

                     (a)    ensure that its staff, and those of its Relevant Sub-contractors are fully
                            conversant with the requirements of the Policy;

                     (b)    fully investigate allegations of workplace harassment in accordance
                            with the Policy; and

                     (c)    ensure that appropriate, effective action is taken where harassment is
                            found to have occurred.

58.2    Equality Policy

        58.2.1       In the performance of this Agreement and for the duration of this Agreement,
                     the Franchisee:

                     (a)    shall comply with the Agreed Equality Policy;

                     (b)    shall procure that each of its Relevant Sub-contractors, adopt and
                            implement an equality and diversity policy in respect of its employees
                            engaged in the performance of the Agreement which is at least as
                            extensive in scope as the Agreed Equality Policy;

                 For the purposes of this Agreement the expression "Agreed Equality Policy" means
                 the equality and diversity policy set out in part 1 of schedule 17 to this Agreement.

        58.2.2       Where a Relevant Sub-contractor has, pursuant to clause 58.2.1 or otherwise,
                     adopted an equality and diversity policy, the Franchisee shall use reasonable
                     endeavours to procure that a copy of such policy (and any amendments
                     thereto) is provided to DLR Limited as soon as reasonably practicable.

58.3    Diversity Training

        58.3.1       For the duration of this Agreement the Franchisee shall comply with the Agreed
                     Training Plan in relation to all of its employees engaged in the performance of
                     the Agreement. For the purposes of this Agreement the expression "Agreed
                     Training Plan" means the diversity training plan set out in part 2 of schedule
                     17 to this Agreement. The Franchisee shall procure that each of its Relevant
                     Sub-contractors adopt a similar diversity training plan in respect of sub-
                     contractor employees engaged in the performance of the Agreement.

        58.3.2       Where a sub-contractor has, pursuant to clause 58.3.1 or otherwise, adopted a
                     diversity training plan, the Franchisee shall use reasonable endeavours to
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                   procure that a copy of such policy (and any amendments thereto) is provided
                   to DLR Limited as soon as reasonably practicable.

58.4    Supplier Diversity

        58.4.1     In the performance of this Agreement the Franchisee shall at all times comply
                   with the Agreed Supplier Diversity Plan. For the purposes of this Agreement
                   the expression "Agreed Supplier Diversity Plan" means the supplier diversity
                   plan set out in part 3 of schedule 17 to this Agreement. The Franchisee shall
                   procure that each of its Relevant Sub-contractors, adopt a similar supplier
                   diversity plan in respect of sub-contractor employees engaged in the
                   performance of the Agreement.

        58.4.2     Where a sub-contractor has, pursuant to clause 58.4.1 or otherwise, adopted a
                   supplier diversity plan, the Franchisee shall use reasonable endeavours to
                   procure that a copy of such policy (and any amendments thereto) is provided
                   to DLR Limited as soon as reasonably practicable.

58.5    Local Community Relations

        In the performance of this Agreement and in all dealings with the Local Community, the
        Franchisee shall comply with the Agreed Communications Plan. For the purposes of this
        Agreement the expression "Agreed Communications Plan" means the communications
        plan set out in part 4 of schedule 17 to this Agreement and the expression "Local
        Community" means those areas of London within 5 miles of the route of the Railway.

58.6    Monitoring and Reporting

        58.6.1     Subject to clause 58.6.2 the Franchisee shall use reasonable endeavours to
                   provide DLR Limited on the date of this Agreement and subsequently every 12
                   months from the date of this Agreement with the following information:

                   (a)    the proportion of its employees and to the extent reasonably possible,
                          the employees of its Relevant Sub-contractors engaged in the
                          performance of the Agreement who are:

                          (i)      female;

                          (ii)     non-white;

                          (iii)    non-white British;

                          (iv)     from the Local Community;

                          (v)      disabled.

                   (b)    the proportion of its Relevant Sub-contractors that are Small and
                          Medium Enterprises and/or Black and Minority Ethnic Business or other
                          Diverse Suppliers, as defined in TfL's Procurement Supplier Diversity
                          Programme as amended from time to time.

        58.6.2     The Franchisee shall ensure at all times that it complies with the requirements
                   of the Data Protection Act 1998 (as may be amended) in the collection and
                   reporting of the information to DLR Limited pursuant to clause 58.6.1.

58.7    Diversity Infractions

        58.7.1     If the Franchisee or any of its Relevant Sub-contractors commits a Diversity
                   Infraction, DLR Limited shall be entitled (but not obliged) to act as follows:

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                   (a)    if a Diversity Infraction is committed by the Franchisee then DLR
                          Limited may serve written notice upon the Franchisee identifying in
                          reasonable detail the nature of the Diversity Infraction, and the
                          Franchisee shall cease committing and remedy, at its own cost, the
                          Diversity Infraction, within 30 days of receipt of such notice (or such
                          longer period as may be specified in the notice); or

                   (b)    if the Diversity Infraction is committed by a Relevant Sub-contractor of
                          the Franchisee, DLR Limited may serve written notice upon the
                          Franchisee identifying in reasonable detail the nature of the Diversity
                          Infraction, and the Franchisee shall use reasonable endeavours to
                          procure that the Relevant Sub-contractor ceases committing and
                          remedies, at its own cost, the Diversity Infraction within 60 days of
                          receipt by the Franchisee of such notice (or such longer period as may
                          be specified in the notice). If the Franchisee fails to procure the remedy
                          of the Diversity Infraction, DLR Limited may serve a further written
                          notice upon the Franchisee and within 30 days of receipt of such further
                          notice (or such longer period as may be specified in the notice), the
                          Franchisee shall terminate, at its own cost, the engagement of its direct
                          Relevant Sub-contractor under the relevant Agreement with its direct
                          Relevant Sub-contractor and procure performance of the affected works
                          or services by another person which also complies with the obligations
                          specified in clauses 58.1 to 58.6 of this Agreement.

        58.7.2     For the purposes of this clause 58.7 "Diversity Infraction" means any
                   breach by the Franchisee of its obligations specified in clauses 58.1 to 58.6 of
                   this Agreement and/or any failure by a Relevant Sub-contractor to adopt and
                   implement an equality and diversity plan, a diversity training plan and/or a
                   supplier diversity plan as described in clauses 58.2 to 58.4 of this Agreement.

58.8    Equality and Diversity Audit

        58.8.1     DLR Limited or its nominee may from time to time undertake any audit or
                   check of any and all information regarding the Franchisee's compliance with
                   clauses 58.1 to 58.6. DLR Limited's rights pursuant to this clause shall include
                   relevant documents and records of the Franchisee and its Relevant Sub-
                   contractors and shall include the Minimum Records.

        58.8.2     The Franchisee shall, and shall use reasonable endeavours to procure that
                   each of its Relevant Sub-contractors shall, maintain and retain the Minimum
                   Records for a minimum of six years with respect to all matters in respect of the
                   performance of clauses 58.1 to 58.6. The Franchisee shall procure that each
                   sub-contract between it and its Relevant Sub-contractors shall contain rights of
                   audit in favour of and enforceable by DLR Limited substantially equivalent to
                   those granted by the Franchisee pursuant to clause 58.8.1.

        58.8.3     DLR Limited shall use reasonable endeavours to co-ordinate its audits and to
                   manage the number, scope, timing and method of undertaking audits so as to
                   ensure that the Franchisee and each Relevant Sub-contractor is not, without
                   due cause, disrupted or delayed in the performance of its obligations under the
                   Agreement and/or relevant sub-contract (as the case may be).




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        58.8.4     The Franchisee shall promptly provide, and use reasonable endeavours to
                   procure that its Relevant Sub-contractors promptly provide all reasonable co-
                   operation in relation to any audit or check including, to the extent reasonably
                   possible in each particular circumstance:

                   (a)    granting or procuring the grant of access to any premises used in the
                          Franchisee's performance of the Agreement or in the Relevant Sub-
                          contractor's performance of its sub-contract, whether the Franchisee's
                          own premises or otherwise;

                   (b)    granting or procuring the grant of access to any equipment (including
                          all computer hardware and software and databases) used (whether
                          exclusively or non-exclusively) in the performance of the Franchisee's
                          or the Relevant Sub-contractor's obligations specified in clauses 58.1 to
                          58.6, wherever situated and whether the Franchisee's own equipment
                          or otherwise; and

                   (c)    complying with DLR Limited's reasonable requests for access to senior
                          personnel engaged in the Franchisee's performance of the Agreement
                          or the Relevant Sub-contractor's performance of its sub-contract.

        58.8.5     For the purposes of this clause 58.8 the expression "Minimum Records" means
                   all information relating to the Franchisee's performance of clauses 58.1 to 58.6
                   and the adoption and implementation of an equality and diversity plan, a
                   diversity training plan and a supplier diversity plan by each Relevant Sub-
                   contractor of the Franchisee."

IN WITNESS whereof the parties hereto have executed this Agreement as a deed the day and
year first before written.




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Executed as a deed by Guy Leach as                  )   Guy Leach
Attorney for Serco Limited in the presence          )
of:                                                 )   O P Byrne


Name: Oliver Byrne

Address: Ashurst, 5 Appold Street, EC2A 2HA




Occupation: Trainee Solicitor




Executed as a deed by                               )
DOCKLANDS LIGHT RAILWAY                             )
LIMITED acting by:                                  )


Director                                                Howard Smith




Director/Secretary                                      David Keep




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LONDON\LZM\3476316.31

				
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