PPP Contracts

Risk Management and Insurance Code (Amended and Restated)

Introduction

1.1 To the extent applicable, the provisions of this Code shall be interpreted in accordance with clause 1.2 of the Master Definitions Agreement between LUL, BCV, JNP and SSL ( the MDA ).

1.2 Words and expressions defined in this Code shall, to the extent applicable and unless otherwise defined or the context otherwise requires, have the meaning assigned to them in Schedule 2 of the MDA.

Purpose of the Code

2.1 The purpose of this Code is to regulate: (a) the processes for going to the insurance market;

(b) the administration of the risk management committee;

(c) the exchange of information relating to claims and the provision of information in relation to the placing of insurance;

(d) claims handling and the settlement of claims under the Insurances;

(e) any involvement of the independent risk adviser and the loss adjuster if required; and

(f) the processes for changing the Code.

The Insurance Market

Procurement of Insurance

3.1 The criteria by which insurers qualify for selection shall be as agreed between LUL and the Infracos and failing such agreement shall be the criteria as may be reasonably determined by LUL.

3.2 Each Infraco shall as soon as practicable provide to LUL all information reasonably required by LUL for the purpose of obtaining the Insurances.

3.3 In the event that LUL receives information from an Infraco, or an Infraco receives information from LUL, for the purpose of the procurement of insurance or for the maintenance or renewal of insurance including the Insurances it shall keep such information confidential, and shall not disclose such information ( without the other party's prior consent in writing ) to any other person save for: (a) information which is disclosed for the purpose of procuring insurance;

(b) such information which is already in the public domain other than by breach of this paragraph 3.3;

(c) information which is disclosed to professional advisers;

(d) any information which is required to be disclosed by applicable Law, the regulations of any recognised stock exchange or by an order of a court or other tribunal of a competent jurisdiction; or

(e) information concerning claims which forms part of the process of risk management.

3.4 All records of the procurement process for the obtaining of the Insurances shall be kept in safe custody by LUL.

Administration

Establishment of the Risk Management Committee

4.1 A risk management committee ( the Committee ) shall be established upon the terms and subject to the conditions of this Code, whose powers, duties and responsibilities shall include, without limitation: (a) the recommendation of a risk and insurance strategy;

(b) the recommendation of annual objectives with respect to risk and insurance;

(c) the monitoring of the insurance programme including its renewal and maintenance;

(d) consultation with LUL as to the appointment criteria and the appointment of the third party service suppliers;

(e) consultation with LUL as to the selection of insurers;

(f) the monitoring and review of the loss experiences for the purpose of risk management; and

(g) the monitoring of insurance arranged by Infracos in accordance with the provisions of the Insurance Agreement and Schedule 5.19 ( Insurance ) of the PPP Contract.

4.2 The members of the Committee shall be LUL and each Infraco. LUL shall have the right to appoint three representatives to the Committee ( one of which may be a representative of Tf L if and insofar as Tf L agrees to give the indemnity in paragraph 4.10 of this Code ) and each Infraco shall have the right to appoint one representative. One of LUL's representatives shall also act as chairman of the Committee. LUL and each Infraco shall have the right to appoint an alternate representative.

4.3 Each party is entitled to object to any representative proposed by another party if it is of the reasonable opinion that the representative concerned will be obstructive and detrimental to the business carried out by the Committee and such nominee shall be removed subject to the consent of the chairman of the Committee in favour of another nominee selected by the member. In the event that the second nominee is objected to by the member who objected to the first nominee, such objection shall be resolved in accordance with the Dispute Resolution Agreement.

4.4 Meetings of the Committee shall be held at least four times a year which shall be convened by the chairman upon giving to the members of the Committee at least five Business Days' notice of the place, the day and hour of the meeting where reasonably practicable to do so.

4.5 Any notice given under paragraph 4.4 shall be accompanied if reasonably practicable by an agenda of the matters to be considered at the relevant meeting together with any supporting documents and papers. Any member may advise of additional matters which he or she wishes to be considered at such meeting by notice to the chairman who shall include such items in the agenda for the meeting.

Conduct of Committee Members

4.6 No business shall be transacted at a meeting of the Committee unless a quorum is present at the time the meeting proceeds to business. A representative from one Infraco and a representative of LUL present in person shall constitute a quorum.

4.7 If, within half an hour from the time appointed for holding any meeting of the Committee, a quorum is not present, the meeting shall be adjourned to the same day in the next week at the same time and place and if at the adjourned meeting a quorum is not present within half an hour from the time appointed for holding the meeting, those present shall constitute a quorum.

Voting

4.8 Any question or matter arising at a meeting of the Committee shall be decided by a simple majority of the votes cast at the meeting by representatives of the members. On any such question or matter, each member shall be entitled to one vote. In the event of an equality of votes on any resolution put to the Committee the chairman shall have the casting vote.

Costs and Expenses

4.9 In the event that the Committee considers that costs should be incurred in a particular project which the Committee considers to be necessary to enable it to discharge its duties, powers and responsibilities, the Committee shall produce a detailed costing of the project and shall produce detailed recommendations as to the source of the funding of the project.

Indemnity

4.10 Each of LUL, the Infracos and Tf L shall indemnify and keep indemnified their respective representative from and against all costs ( including legal costs ), charges, expenses, damages or other liabilities properly incurred or suffered by a representative in relation to his office as a representative on the Committee and all claims, demands or proceedings arising out of or in connection with the same except any such costs, charges, expenses, damages or other liabilities which are suffered or incurred or occasioned by the wilful act or omission by such representative or from his negligence.

Information

5.1 LUL shall procure that all placing slips, certificates, cover notices, renewal receipts, and/or confirmation of renewals, correspondence with brokers, independent risk advisers, underwriters or insurance companies and policies with regard to any Insurances required to be effected by the Insurance Agreement which are in, or shall come into, the possession or control of LUL are retained in safe custody and, subject to paragraph 3.3 upon written request shall permit each Infraco ( or their duly authorised representatives ) to inspect the same and, upon the written request of Infraco, shall promptly deliver certified copies thereof to each Infraco provided that if any information to be inspected or delivered to each Infraco contains information which is confidential to another party the prior written consent of that party shall be required.

5.2 Except as otherwise set out in clause 4.4, all notices and documents shall be served in accordance with the procedure set out in clause 55 of the applicable PPP Contract.

5.3 Any notice or document to be sent pursuant to the provisions of this Code or the Insurance Agreement shall be sent to the party who is to receive such notice or document at its registered office or at such other address as it may have notified to the other parties in writing.

5.4 Each Infraco shall procure that all placing slips, certificates, cover notices, renewal receipts, and/or confirmation of renewals, correspondence with brokers, independent risk advisers, underwriters or insurance companies and policies with regard to any insurances required to be, or are otherwise, effected by that Infraco pursuant to the Insurance Agreement and/or Schedule 5.19 ( Insurance ) of the PPP Contract which are in, or shall come into, the possession or control of that Infraco are retained in safe custody and, subject to paragraph 3.3 upon written request shall permit LUL ( or its duly authorised representatives ) to inspect the same and, upon the written request of LUL, shall promptly deliver certified copies thereof to LUL provided that if any information to be inspected or delivered to LUL contains information which is confidential to another party the prior written consent of that party shall be required.

5.5 Each Infraco shall procure that all cover notices, renewal receipts, and/or confirmation of renewals with regard to any insurances required to be, or are otherwise, effected by that Infraco pursuant to the Insurance Agreement and/or Schedule 5.19 ( Insurance ) of the PPP Contract which are in, or shall come into, the possession or control of that Infraco are retained in safe custody and, subject to paragraph 3.3 upon written request shall permit each other Infraco ( or their duly authorised representatives ) to inspect the same and, upon the written request of any other Infraco, shall promptly deliver certified copies thereof to such other Infraco provided that if any information to be inspected or delivered to such other Infraco contains information which is confidential to another party the prior written consent of that party shall be required.

Commercial Exploitation

5.6 Any information in claims reports concerning commercial exploitation activities which are not related to an Infraco or to LUL shall not be available for perusal by the parties not carrying on such commercial exploitation activity.

Independent Risk Adviser

6.1 LUL may appoint an independent risk adviser in consultation with the Committee. The terms of appointment of an independent risk adviser shall include a duty of care to the Insured Parties.

6.2 LUL shall be responsible for the remuneration of the independent risk adviser. In respect of any other services of the independent risk adviser requested by an Infraco, the remuneration of the independent risk adviser shall be payable by the Infraco requesting such additional services.

Claims Handling Process for the Insurances

Reporting of Incidents

7.1 Each Infraco shall promptly give written notice to LUL as soon as it is aware of any incidents of loss or damage to the Insured Assets which may give rise to a claim under the Asset Damage Insurance and loss suffered by third parties which may give rise to a claim under the Third Party Liability Insurance and shall also be responsible for giving written notice to LUL on behalf of any person who had been notified by Infraco to LUL as a person to be included as an Insured Party. Such written notice should include detailed information of the incident.

7.1A Subject to clause 7.1B, in respect of claims under the Third Party Liability Insurance, LUL shall promptly instruct claims handling agents and no admission of liability, offer of settlement, promise of any kind, payment or indemnity in respect of such loss by third parties shall be made or given by Infraco without the prior written consent of LUL. In respect of claims under the Asset Damage Insurance, LUL shall, if it considers it necessary, promptly advise insurers and instruct a loss adjuster and shall not agree the settlement of the claim ( unless the claim relates to LUL's Premises for which Infraco is not responsible under clause 26.1 of the PPP Contract ) without the prior written consent of Infraco, such agreement not to be unreasonably withheld.

7.1B If Third Party Liability Insurance insurers or LUL's claims handling agents have denied that the cover under the Third Party Liability Insurance extends to liability in respect of the claim and this is not accepted by the third party or by the Infraco, then LUL shall not agree the settlement of that issue with those insurers without the prior written consent of Infraco, such consent not to be unreasonably withheld or delayed. Without prejudice to the generality of this provision, it shall be reasonable for an Infraco to withhold its consent to the settlement of the issue of whether cover under Third Party Liability Insurance extends to liability in respect of a claim if, in relation to that claim: (a) LUL has failed to comply with its obligations under clause 7.2A in any material respect; or

(b) Infraco has obtained an opinion from leading Counsel ( or such other independent expert as may be agreed between Infraco and LUL at the time ) to the effect that there is a reasonable likelihood that continuing to pursue the claim with the insurers or LUL's claims handling agents will result in the issue of liability of the insurers being resolved in favour of that Infraco.

7.2 If, as a result of LUL's failure in accordance with the terms of the policy to advise or its delay in advising insurers of an incident of loss or destruction of, or damage to the Insured Assets or loss suffered by third parties, an Infraco or a relevant Insured Party incurs or suffers Losses, LUL shall indemnify that Infraco ( on its own behalf and/or as agent for the relevant Insured Party ) against any such Losses, such indemnity not to exceed the amount of insurance proceeds that would have been received by Infraco had LUL notified the insurers of such incident.

7.2A During the conduct of any claim under the Insurances where it is determined under the Insurance Agreement that an Infraco is required to pay the Third Party Mandatory Deductible or the Asset Damage Mandatory Deductible ( as the case may be ), LUL shall ( and shall procure that all LUL Parties shall ) keep that Infraco reasonably informed as to progress of the claim, consult with that Infraco at such times and in such manner as may be reasonable in the circumstances, and promptly respond to any reasonable enquiry made by any Insured Party, and promptly comply with any reasonable request for consultation with such Insured Party, on any aspect of that claim.

Investigation Costs

7.2B Investigation costs which are not recoverable under the Insurances shall be borne by the party incurring such costs.

Claims Agent

7.3 All claims made under the Third Party Liability Insurance shall be handled by a third party claims handling agent ( the Claims Agent ) who shall be appointed by LUL in consultation with the Committee. The terms of appointment of a Claims Agent shall include a duty of care to the Insured Parties.

7.3A LUL shall procure that the terms of appointment of any Claims Agent shall also include an obligation promptly to respond to any reasonable enquiry made by any Insured Party and to consult with such Insured Party on any aspect of a claim. LUL shall take all reasonable steps reasonably requested by any other Insured Party to ensure that the Claims Agent complies with the obligations required by this paragraph.

7.4 LUL shall bear the costs and expenses of the Claims Agent.

7.5 If LUL determines that any potential conflict of interest arises with respect to the Claims Agent then LUL shall take such action as is necessary to resolve such conflict.

Loss Adjuster

7.6 In connection with the Insurances, LUL has the right to appoint a loss adjuster in consultation with the Committee. The terms of appointment of a loss adjuster shall include a duty of care to the Insured Parties.

7.6A LUL shall procure that the terms of appointment of any loss adjuster shall also include an obligation promptly to respond to any reasonable enquiry made by any Insured Party and to consult with such Insured Party on any aspect of a claim. LUL shall take all reasonable steps reasonably requested by any other Insured Party to ensure that the loss adjuster complies with the obligations required by this paragraph.

7.7 LUL shall bear the costs and expenses of the loss adjuster.

7.8 If LUL determines that any potential conflict of interest arises with respect to the loss adjuster then LUL shall take such action as is necessary to resolve such conflict.

Changes to This Code

8.1 This section sets out the process by which LUL or an Infraco can promote the change of this Code.

Responsibilities of the Parties

8.2 LUL carries the principal responsibility for the operation of the change process for this Code. When asked, each Infraco shall participate in the following roles: (a) ensuring that any proposed change to this Code is adequately reviewed by its organisation and that comments are sent within the appropriate time scale; and

(b) ensuring that any proposed change to this Code is brought to the attention of those organisations under its control which need to comply with the change for their review and comment.

LUL Authorisation and Control

8.3 Where LUL determines that the change of this Code meets the Objective Requirements ( as if this Code were a Category 1 Standard ) LUL shall: (a) in the case of a change which is safety related authorise its change;

(b) in the case of a change which is not safety related authorise its change to take effect no less than 14 days after the date of its authorisation subject to the right of LUL or any one or more of the Infracos which considers that the change of this Code would cause an increase in cost incurred by it in performing its PPP Contract or ( in the case of LUL ) in the operation of the Underground Network ( in this Code an increase in costs ) so to notify the other parties within 14 days; and

(c) in any case where a notice has been given under paragraph 8.3(b) inform each of the Infracos that LUL's authorisation of the change of this Code shall not become effective except with the written agreement of all parties who have given notice under paragraph 8.3(b) or where it is determined in accordance with the Dispute Resolution Agreement that such change would not cause an increase in costs. Upon such written agreement or determination LUL shall confirm its authorisation is effective.

8.4 There shall be an appropriate and effective rapid response procedure, to cater for changes that require to be progressed, for safety or other reasons, in advance of the completion of the full procedures set out in this Code. The rapid response procedure shall not be an alternative to such full procedures, and shall require LUL authorisation and control in accordance with paragraph 8.3 of this Code.

8.5 LUL's authorisation, confirmation or refusal to authorise a change to this Code shall be final and binding on LUL and the Infracos and shall not be challenged nor referred to dispute resolution under the Dispute Resolution Agreement or otherwise except upon the grounds that: (a) the procedures of this Code have not been followed; or

(b) the Objective Requirements ( as apply to this Code ) have not been applied; or

(c) it would result in an increase in costs in circumstances where such change is not safety related and a notice has been given under paragraph 8.3(b) of this Code and authorisation has not been agreed in writing by all of the parties who gave such notice and it has not been determined in accordance with the Dispute Resolution Agreement that such change would not cause an increase in costs.

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