NOTICE OF PROPOSAL FOR CHANGE: A MEMBERS AND STAKEHOLDERS CONSULTATION ON

Transcription

1 NOTICE OF PROPOSAL FOR CHANGE: A MEMBERS AND STAKEHOLDERS CONSULTATION ON Constitution Agreement Articles of Association Memorandum of Association RSSB 5 year Strategic Business Plan and 2014/2015 Members Budget 14 November 2013 NOTICE OF PROPOSAL FOR CHANGE 1 of 11

2 Contents Foreword 3 1 Background 4 Review of arrangements Procedure for change 2 Notice of Proposal for Change Notice under paragraph 1.3 of schedule 5 to the Constitution Agreement 6 3 Explanatory notes 8 Annexes A Revised Constitution Agreement B Revised Articles of Association and Memorandum of Association C RSSB 5 year Strategic Business Plan D E Proposed budget for member funding Response Form NOTICE OF PROPOSAL FOR CHANGE 2 of 11

3 Foreword By the Deputy Chief Executive of RSSB The RSSB Strategic Review was established to ensure that RSSB has a clear purpose and is fit to support the industry for the five year period from 1 April In late 2012 and earlier this year RSSB consulted members and stakeholders to obtain views on proposed changes to the RSSB Constitution Agreement, a new 5 year Strategic Business Plan and a funding arrangement that is intended to be fixed for the same period. We are now at the stage where the board has unanimously approved the way forward and the package that is set out in this communication represents the final stage of consultation with members. Provided there are no material objections, the governance arrangements as set out in the Constitution Agreement and Articles of Association will be revised, the new Business Plan will guide the company, and the funding mechanism will provide greater certainty for members and RSSB over the next five years. The consultation and its proposals were unanimously approved and are recommended to you by the board of directors, who are drawn from all parts of the membership, the company, and the independent non-executive directors. ORR and DfT were members of the board sub committee that undertook the Strategic Review and observers at the board meeting that approved the package. The board believe that making the proposed changes to RSSBs governance arrangements, the means by which RSSB is funded, and following them through with organisational changes to match the tasks ahead will enhance the relationship between RSSB and its members, and support improvements in the rail industry s overall performance, as well as providing RSSB with a challenging and constructive role for the future. We commend the package to you, and hope that you will be able to support all the changes that are proposed. Anson Jack Deputy Chief Executive, on behalf of the RSSB Board RSSB NOTICE OF PROPOSAL FOR CHANGE 3 of 11

4 1. Background 1.1 Review of Corporate Governance arrangements, development of a Strategic Business Plan and proposed budget for 2014/15 by RSSBs Board and the ORR Late last year and earlier this year members and stakeholders were consulted on a set of proposed changes to the Constitution Agreement and a 5 year Strategic Business Plan for the period All responses to that consultation have been considered and after extensive discussions with both members and key stakeholders, your board have unanimously approved changes to the following documents together with a budget for 2014/15 for formal consultation: (a) the constitution agreement entered into between Network Rail Infrastructure Limited (1) Rail Safety and Standards Board Limited (2) and others (3) dated 1 April 2003 ( the Constitution Agreement); and as amended by Approval of the members obtained at general meetings of the members on 14 December 2005, 29 June 2006, 10 December 2010 and 11 November (b) (c) (d) RSSB s articles of association ( the Articles of Association ) as amended by Approval of the members obtained at general meetings of the members on 14 December 2005 and 10 December 2010 RSSBs memorandum of association ( the Memorandum of Association ) The RSSB 5-year Strategic Business Plan ( The Plan ) The documents are presented by the Board of RSSB as a package and if members are content with the package there is one box to fill in on the response form. If there are specific comments that you wish to make about the documents, the form also provides the opportunity to make them. Where necessary, the Articles of Association have been amended to reflect the proposed changes to the Constitution Agreement. Under the Companies Act 2006, the provisions formerly contained within RSSB s Memorandum of Association are now deemed to be part of its Articles of Association, so the two documents have now been combined formally. This supporting combined document is also presented for consultation and will be brought forward for vote at a general meeting. Additionally this package includes the proposed budget for members funded activity for 2014/15 which will form the baseline for the five year fixed funding arrangement that has been agreed. NOTICE OF PROPOSAL FOR CHANGE 4 of 11

5 Procedure for change 1.2 The arrangements for changing the Constitution Agreement and Articles of Association are set out in Schedule 5 of the Constitution Agreement. Within 7 days of RSSB s board of directors resolving to put forward any proposal for change, RSSB is required to give notice of such proposal to each Member, the ORR and the DfT (the Notice of Proposal for Change ) and commence a period of consultation of no less than 30 days. Although formally required to consult with members on the constitutional documentation changes alone, the RSSB board have determined that as the proposed governance changes go hand in hand with the strategic business plan, a revised funding arrangement, and a baseline budget for 2014/15, all documents listed in section 1.1 which form part of the consultation. 1.3 This document contains the formal Notice of Proposal for Change at section 2. It also contains: a) explanatory notes setting out the changes proposed to RSSB s corporate governance, - section 3; b) the revised Constitution Agreement incorporating the amendments proposed in this document showing deletions in blue and insertions in red Annex A; c) the revised Articles of Association incorporating the amendments proposed in this document showing deletions in blue and insertions in red Annex B; d) Proposed RSSB 5 year Strategic business Plan Annex C e) Proposed Members funded Budget for 2014/15 Annex D f) a consultation response form Annex E 1.4 Consultation will close at 16.00hrs on Monday 16 December 2013 and any representations made will be considered by the Board at its meeting in January Provided there are no material changes proposed by members, RSSB will then give notice to convene a general meeting of RSSB at which approval of the proposals for change will be sought 1.5 A Proposal for Change requires 80% of RSSB s Members to support it at the general meeting. Once approved by members, it will be submitted to ORR for final approval. 1.6 Once the changes have been approved by the ORR, RSSB will notify members of the date upon which changes are to take effect. It is currently planned that all these documents will come into effect on 1 April NOTICE OF PROPOSAL FOR CHANGE 5 of 11

6 2. Notice under paragraph 1.3 of Schedule 6 to the Constitution Agreement 2.1 This part of the document constitutes a notice of Proposal for Change pursuant to paragraph 1.3 of Schedule 5 to the Constitution Agreement entered into between Network Rail Infrastructure (1) Rail Safety and Standards Board Limited (2) and others (3) dated 1 April 2003 ( the Constitution Agreement ). Rail Safety and Standards Board Limited ( RSSB ) hereby gives notice that it proposes: a) to amend the Constitution Agreement, so as to incorporate those amendments identified in red text (insertions) and blue text (deletions) in Annex A of the document Changes to Rail Safety and Standards Board s Constitution: Notice of Proposal for Change; and b) to modify RSSB s articles of association, so as to incorporate those amendments identified in red text (insertions) and blue text (deletions) in Annex B of the document Changes to Rail Safety and Standards Board s Constitution: Notice of Proposal for Change. (the Proposal for Change ) 2.2 The reasons why RSSB proposes to make the Proposal for Change and its effects are set out in sections 3 and Annex A to D of the document Changes to Rail Safety and Standards Board s Constitution: Notice of Proposal for Change of which this notice forms part. 2.3 RSSB has chosen to carry out this consultation by electronic mail due to the amount of documentation involved. Notice will therefore be deemed to have been given on delivery of the electronic mail. The consultation will also be available on the RSSB website. 2.4 RSSB invites the submission to it of written representations, including electronic submissions, in respect of the Proposal for Change. It would assist if consultees could use the consultation form set out at Annex E of the document Changes to Rail Safety and Standards Board s Constitution Notice of Proposal for Change, of which this notice forms part. If you support all of the changes, there is only one part of the response form that needs to be filled in. Any representations should be made in writing as soon as possible, but in any event before the close of consultation at 16.00hrs on Monday 16 December Please address responses to: Company Secretary RSSB Block 2 Angel Square 1 Torrens Street, London EC1V1NY 2.5 It would be helpful if responses could also be ed to comp.sec@rssb.co.uk NOTICE OF PROPOSAL FOR CHANGE 6 of 11

7 2.6 Respondents should note that RSSB is obliged to supply any representations to each Member. If any are received this will be done by placing them on the website and advising all members by Following the close of the consultation period at 16.00hrs on Monday 16 th December 2013 RSSB will consider any representations and objections received by then. Subject to its consideration of any representations and objections, and provided it obtains the necessary approval of its members in general meeting, RSSB will proceed with the Proposal for Change. 2.8 Copies of this notice will be published on RSSB s website ( Elizabeth Fleming Company Secretary 14 November 2013 NOTICE OF PROPOSAL FOR CHANGE 7 of 11

8 3. Explanatory Notes 3.1 Explanatory notes for Constitution Agreement and Articles of Association Constitution Agreement: Clause 2 Primary Objective, Principles of Operation and Functions The primary objective has been amended in two ways to emphasise that RSSB s role is to support the industry in the achievement of its objectives and the scope has been clarified as including both safety and other business improvement. The principles of operation have dropped a number of the ORR Section 4 Duties and added in principles confirming the relationship between RSSB activity and members and other stakeholders, including the Rail Delivery Group. The functions of RSSB have been updated and include a distinction between functions that RSSB shall do (which would require a Constitution change to alter) and those which RSSB may do, which would require board approval to change. It also introduces the concept of products and services, which RSSB provide to the industry to support the primary objective and in fulfilment of the Functions, all of which are governed by the board and the various cross industry groups set up under the authority of the board. Clause 3 Membership including change of Franchise Introduces the potential to have associates subject to the board agreeing relevant terms. The mechanism for the change of franchises is amended to deal with the new funding mechanism. Clause 4 Board There are a few areas where the ORR is no longer required to approve, and the audit committee gets involved instead. The requirements to dismiss a director are amended to reflect the deletion of the ORR approval. Clause 6 Funding Under the present Constitution, the mechanism for funding RSSB is that an agreed budget is developed and the full cost of that budget (less any grant from DfT and other income etc) is set as the aggregate membership fee. It is then allocated across the membership starting with NOTICE OF PROPOSAL FOR CHANGE 8 of 11

9 members in the categories of Freight Operating Companies, non Franchised passenger operators, Infrastructure Contractors, ROSCOs and Suppliers, according to a schedule of turnover related fees. This yields less than 1m in total. The balance of the fees is then divided equally between Network Rail (who pay one half) and Franchised Passenger Operators (who pay the other half between them, with each TOC s share being set according to their previous year s turnover). This system guarantees RSSB that it will recover all of its costs, but also means that even in a stable year, individual fees from TOCs or Network Rail could change significantly, in a way that is unrelated to the fee payer s activity. The new funding mechanism is based on a five year settlement and creates a baseline for the first year calculated in the same way as under the current Constitution. Once each member s levy is determined under the current mechanism, it becomes their base levy for year one and is subject only to RPI-1 adjustment for each of the four years that follow. This mechanism enables members to plan for their RSSB levies with a greater degree of certainty, creates an efficiency incentive for RSSB and also means that if RSSB gains or loses voluntary members in the supplier categories within the plan period, its income will change to reflect that thus creating an incentive to encourage new members and to retain existing ones. Because the new mechanism effectively sets the funding stream for RSSB for five years, there is a need for a mechanism to enable the company to deal with a financial shock whether it is positive or negative, and a mechanism is provided whereby if the directors wish to produce a budget with a loss or profit forecast at 1.5m or more, then they can re-open the membership levies and adjust them. This is set out in Clause In addition, under the 2014/5 budget proposal, RSSB will begin to accumulate a modest contingency reserve to enable it to manage below the 1.5m threshold with a degree of flexibility. The contingency reserve will only be used with directors approval. Apart from the re-opener described above, each year the directors will review the company budget and priorities and adjust/approve it, but as membership levies will not change as a result, there will be no member-wide consultation. Each category of member is represented by at least one director, and the resolution to approve the budget has to be a unanimous one. Clause 7 Annual Report and Accounts This section is simplified to reflect current practice, and permit members to request information. Clause 8 Deletion of all reference to the Advisory Committee which was abolished in Clause 10 Deletion of section on failure to achieve a majority at a general meeting as it does not include any powers. NOTICE OF PROPOSAL FOR CHANGE 9 of 11

10 Clause 13 Insurance This section is much simplified as a number of provisions designed for the first years of RSSB operation are no longer valid. It now simply states the obligation of the directors to secure insurance that meets legal requirements and such other insurance as they deem appropriate. Articles of Association General - All statutory references have been updated to refer to the relevant provisions Companies Act 2006 where they previously referred to the Companies Act The Memorandum of Association has been incorporated into the Articles of Association at Schedule 1 to reflect the fact that the provisions of the Memorandum are now treated as provisions of the Articles. - The amendments to the Primary Objective and Functions have been incorporated into the Articles of Association. Definitions - The definition of Group has been updated to preserve the originally intended position following case law that has affected the interpretation of holding company and subsidiary. Article 8 - The additional Board powers to admit parties as associates of the company has been incorporated to match that in the Constitution Agreement Article 13 - Amendments to the method of calculating a Successor Member s levy have been incorporated to match the Constitution Agreement Article 14 - This article has been redrafted to match the change to the wording of the Constitution Agreement regarding the ability of members to vote on resolutions relating to periods commencing after cessation of membership Article 38 - The changes made to clause 5.3 in the Constitution Agreement regarding majorities required to make decisions in a meeting of the Members have been applied to this Article. Article 62 - The amended power to remove directors by Reserved Resolution without seeking ORR approval has been inserted to match the Constitution Agreement Articles The updated role of the Audit Committee as described in the Constitution Agreement has been reflected. NOTICE OF PROPOSAL FOR CHANGE 10 of 11

11 Articles The revised wording and figures in this article reflect analogous amendments in the Constitution Agreement 3.2 Explanatory Notes for 5 year Strategic Business Plan and Members budget for A draft of the strategic business plan was consulted with members and stakeholders in the summer of The strategic business plan sets out at high level the company s vision, purpose and objectives for the period commencing 1 April 2014, together with the funding arrangements and mechanisms by which activities or functions are changed. In addition it summarises the relationship between RSSB activities and industry objectives and explains how the revised governance that is introduced by the new constitution will work. Summaries are provided of existing activities, and governance groups and their relationship to industry objectives. The detail of what RSSB does and how it will change over time will be established through an annual plan that is approved by the board in March each year. All products and services that RSSB provides in support of its members will be listed by function and published on the RSSB web site. NOTICE OF PROPOSAL FOR CHANGE 11 of 11

12 Dated 1st1 April 2003 NETWORK RAIL INFRASTRUCTURE LIMITED (1) RAIL SAFETY AND STANDARDS BOARD LIMITED (2) AS AMENDED BY APPROVAL OF THE MEMBERS OBTAINED AT GENERAL MEETINGS OF THE MEMBERS ON 14 DECEMBER 2005, 29 JUNE 2006, 10 DECEMBER 2010, 10 NOVEMBER 2011 AND 10 NOVEMBER 2011 [ 2014] (TO TAKE EFFECT FROM 29 MARCH 2012[ 2014] ) Constitution Agreement relating to Rail Safety and Standards Board Limited ANNEX A: REVISED CONSTITUTION AGREEMENT Page 1 of 67

13 Clause Contents Page 1 DEFINITIONS AND INTERPRETATION Definitions Interpretation PRIMARY OBJECTIVE, PRINCIPLES OF OPERATION AND FUNCTIONS OF THE COMPANY Primary Objective Principles of Operation Pursuing the Primary Objective Carrying out the Company s functions Functions of the Company The Code The Code and Railway Group Standards Information Other activities Publication of activities MEMBERSHIP Admission to membership General Conditions to admission to membership Designation and categorisation of membership General Categorisation based on Annual Turnover Review of categorisation Provision of financial information Confidentiality Failure to provide information required Election of review period Cessation and transferability of membership Cessation of membership of holders of licences under section 8 of the Act Cessation of membership of other Members Voting and cessation of membership Transferability of membership Train Operators and Franchise Agreements Suppliers BOARD OF DIRECTORS Constitution of the Board Appointment of Directors Appointment of Directors Industry Directors Appointment of Directors at general meetings Term of appointment Disqualifying Interest Proceedings of Directors General Quorum Involvement of the ORR and the DfT Majority vote Chairman Reserved Resolutions Audit Committee, Remuneration Committee and Appointments Committee General Audit Committee Remuneration Committee Appointments Committee MEMBERS MEETINGS AND POWERS General Involvement of the ORR and the DfT Reserved Matters...32 ANNEX A: REVISED CONSTITUTION AGREEMENT Page 2 of 67

14 5.4 Network Rail FUNDING The Budget Preparation of Budget Provision of information Failure to approve Budget Levies in respect of Financial Year Aggregate amount of levies Cap on levies Payment of levies Apportionment of levies amongst certain categories of Members Annual Turnover Provision of financial information Confidentiality Failure to provide information required Schemes apportioning amounts payable New Members Failure to make payments Value Added Tax Borrowings Guarantees Members contribution ANNUAL REPORT AND BUDGET Accounts Approval of Budget Accounting and financial records Reports Information regarding activities ADVISORY COMMITTEE Cessation DIVIDEND POLICY FAILURE TO ACHIEVE REQUISITE MAJORITY CONFIDENTIALITY General Categorisation of information provided Restricted Information Information in the public domain Disclosure and use of information provided Disclosure of derivative work Disclosure in compliance with mandatory legal obligations Railway Group Standards Effect of confidentiality provisions INTELLECTUAL PROPERTY Licence granted to Members Licence granted to the Company In Confidence and Restricted Information No right of recourse Fees REVIEW AND AMENDMENT General Approval of the ORR COMPLIANCE WITH LICENCES INSURANCE Proposal to take out insurance Unavailability of insurance Insurance Proposal Duty to mitigate NOTICES Form of notice Delivery of notice...51 ANNEX A: REVISED CONSTITUTION AGREEMENT Page 3 of 67

15 General Proof of delivery MISCELLANEOUS Successors and assigns Assignment No partnership Agreement to prevail over Articles Remedies Payment of costs Severability Counterparts Effect of Agreement Contracts (Rights of Third Parties) Act Governing law DISPUTE RESOLUTION General Disputes regarding unpaid sums Failure to resolve disputes Provisional relief DEFINITIONS AND INTERPRETATION Definitions Interpretation PRIMARY OBJECTIVE, PRINCIPLES OF OPERATION AND FUNCTIONS OF THE COMPANY Primary Objective Principles of Operation Functions of the Company Changes in Functions Publication of activities MEMBERSHIP Admission to membership Designation and categorisation of membership Cessation and transferability of membership Train Operators and Franchise Agreements Suppliers BOARD OF DIRECTORS Constitution of the Board Appointment of Directors Disqualifying Interest Proceedings of Directors Audit Committee, Remuneration Committee and Appointments Committee MEMBERS MEETINGS AND POWERS General Involvement of the ORR and the DfT Reserved Matters Network Rail FUNDING Funding and budget arrangements Failure to make payments Value Added Tax Borrowings Guarantees Members contribution Review and Changes ANNUAL REPORT AND ACCOUNTS Accounts Accounting and financial records Reports Information regarding activities DIVIDEND POLICY CONFIDENTIALITY...44 ANNEX A: REVISED CONSTITUTION AGREEMENT Page 4 of 67

16 9.1 General Categorisation of information provided Restricted Information Information in the public domain Disclosure and use of information provided Disclosure of derivative work Disclosure in compliance with mandatory legal obligations Railway Group Standards Effect of confidentiality provisions INTELLECTUAL PROPERTY Licence granted to Members Licence granted to the Company In Confidence and Restricted Information No right of recourse Fees REVIEW AND AMENDMENT General Approval of the ORR COMPLIANCE WITH LICENCES INSURANCE Responsibility to take out insurance NOTICES Form of notice Delivery of notice MISCELLANEOUS Successors and assigns Assignment No partnership Agreement to prevail over Articles Remedies Payment of costs Severability Counterparts Effect of Agreement Contracts (Rights of Third Parties) Act Governing law DISPUTE RESOLUTION General Disputes regarding unpaid sums Failure to resolve disputes Provisional relief...54 Schedule 1 The FIRST Member...56 Schedule 2 Application Form...57 Schedule 3 Accession Agreement...58 Schedule 4 Reserved Matters...60 Schedule 5 Changes to this Agreement, the Articles or the Memorandum of Association...61 Schedule Schedule 1 The First Member...43 Schedule 2 Application Form...44 Schedule 3 Accession Agreement...45 Schedule 4 Reserved Matters...47 Schedule 5 Changes to this Agreement, the Articles or the Memorandum of Association...48 Appendix 1 The Code Appendix 2 The Licence Conditions ANNEX A: REVISED CONSTITUTION AGREEMENT Page 5 of 67

17 THIS AGREEMENT is dated 1 April 2003 and made BETWEEN: (1) THE PERSON whose name and address is set out in schedule 1;Schedule 1; and (2) RAIL SAFETY AND STANDARDS BOARD LIMITED (No ) whose registered office is at Block 2 Angel Square, 1 Torrens Street, London EC1V 1NY (the Company ). WHEREAS: (A) The Company is a company limited by guarantee and not having a share capital incorporated in England on 4 February 2003 under the Companies Act 1985 (the Companies Act ). (B) The Company has been established to give effect to the Primary Objective and the Principles of Operation. (C) This Agreement regulates the operation and management of the Company and the relationship amongst the Members. (D) The Company consulted its Members on various changes to this Agreement and following their approval at general meetings of the Members on 14 December 2005, 29 June 2006, 10 December 2010 and, 10 November 2011 and [xx Month 2014] has amended this Agreement in accordance with the provisions set out at schedule 5Schedule 5 of this Agreement. NOW IT IS HEREBY AGREED AS FOLLOWS: 1 DEFINITIONS AND INTERPRETATION 1.1 Definitions In this Agreement, unless the context otherwise requires, the following terms shall have the following meanings: Act means the Railways Act 1993; Affected Member has the meaning ascribed to it in clause 3.4; Annual Review Period means each successive period of one year, the first of which shall commence on 1 April 2003; Annual Turnover means in respect of a Member: (a) subject to clause 3.4(c), such part of that Member s annual turnover (including subsidies) as is derived from rail-related business activities in Great Britain (excluding turnover relating to any network which is not a Rail Network); or ANNEX A: REVISED CONSTITUTION AGREEMENT Page 6 of 67

18 (b) (other than in respect of a Member falling within any of the categories described in clauses 3.2.1(a)-(c))3.2.1(a)-(c)) if that Member is part of a Group, such part of the annual turnover of that Group (including subsidies) as is derived from rail-related business activities in Great Britain (excluding turnover relating to any network which is not a Rail Network) provided that if that Group includes more than one Member, then such turnover shall be divided by the number of Members in that Group; Approved Budget means in respect of any Financial Year, a Budget prepared in accordance with clause 6.1 and either approved by a Reserved Resolution in accordance with clause or by the Members in accordance with clause ; Articles means the Articles of Association of the Company as amended from time to time; Board means the board of directors of the Company for the time being; Budget means an annual budget prepared pursuant to clause 6.1 comprising a monthly projected income statement and cashflow prepared in accordance with generally accepted accounting principles and the Company s accounting policies and which identifies a projected funding requirement to be funded by levies to be paid pursuant to clause 6;; Business Day means a day (other than a Saturday or a Sunday) on which banks are ordinarily open for the transaction of normal banking business in London; Certificate means a certificate for the purposes of clauses or (as the case may be) regarding the Annual Turnover of a Member (broken down, if provided pursuant to clause 3.2.4, by reference to the categories of activities respectively set out in clauses 3.2.1(a)(a)-(f))-(f)) from the finance director or auditors of a Member and which, if the certificate is provided by the finance director of a Member, sets out the amount which the finance director certifies to be a bona fide estimate of the Annual Turnover (and, if applicable, the breakdown of it) of the Member or, if provided by the auditors of a Member, sets out the amount which is in the opinion of the auditors a bona fide estimate of the Annual Turnover (and, if applicable, the breakdown of it) of the Member; Code means the Railway Group Standards Code as approved by the ORR and published by the Company in (Issue 3 4) (as amended from time to time) and whose objectives are set out in clause 2.4, compliance with which by each holder of a licence under section 8 of the Act whose licences include the Licence Conditions and by the Company is mandatory;); Company s Intellectual Property means the Intellectual Property which the Company has a right to license to Members without giving rise to an obligation of the Company to pay a royalty to any other person; ANNEX A: REVISED CONSTITUTION AGREEMENT Page 7 of 67

19 the Department for Transport or DfT means the Secretary of State for Transport; Director means a director for the time being of the Company; Disqualifying Interest means an interest in any benefit which concerns or is determined by reference to the commercial activities or affairs of any person engaged in or likely to be engaged in the provision of services relating to the Railway Industry but shall not include an entitlement to participate in an all-employee share scheme established by any such person and for the purposes of this definition, all-employee share scheme means any Inland Revenue approved employee share scheme established by a company under which it is a condition of such approval that participation is offered generally to all employees of the company and its participating subsidiariessubsidiary undertakings or to all such employees fulfilling conditions as to length of service; benefit includes any payment, profit, gain or advantage however expressed, established, given or made; and interest in relation to a benefit, includes the possession, receipt or expectation of or entitlement to an interest; Excluded Services has the meaning ascribed to it in clause 3.4; Financial Year means a period of 12 months commencing on 1 April in any year; Franchise Agreement has the meaning ascribed to it by the Act; Functions means the functions of the Company set out in clauses 2.3, 2.5, 2.6 and 2.8 and such other functions as may be approved in accordance with clause 2.7clause 2; Funder means the DfT, each Passenger Transport Executive and any local, national or supra-national authority or agency (whether of the United Kingdom or the European Union) or other person who provides money by way of grant or loan with the primary purpose of securing the provision of services relating to railways in respect of the Rail Network; Group means, in respect of a companyan entity, that companyentity and any companyentity which is a holding companyparent undertaking or subsidiary undertaking of that company and any subsidiary undertaking of any such holding companyparent undertaking; and for the purposes of this Agreement subsidiary subsidiary undertaking and holding company parent undertaking have the meanings ascribed to them by section 1159 Companies 1162 of the Act 2006; In Confidence Information has the meaning ascribed to it by clause 9.2(b); Index Linked means, in relation to amounts payable by way of levy pursuant to clause 6.1.5(a), that each amount set out in column two of the table contained in clause 6.1.5(a)(i) or 6.1.5(a)(ii) (as appropriate) shall be increased or, as the case may be, reduced to a sum ANNEX A: REVISED CONSTITUTION AGREEMENT Page 8 of 67

20 determined by multiplying the relevant amount by the percentage resulting from the application of the following formula: A x 100 B where: A is, in respect of any Financial Year, an aggregate amount equal to the projected funding requirement of the Company as shown in the Approved Budget for that Financial Year (such Approved Budget to include revenue attributable to health and safety-related research and development to be undertaken by the Company to the extent that such health and safetyrelated research and development will be funded directly by the DfT or some other person); and B is 20 million Industry Directors means a non-executive Director as referred to in clause 4.1(c); Infrastructure Manager has the meaning ascribed to it by European Union Directive 91/440/EEC of 29 July 1991 on the development of the Community s railways; Insurance Proposal has the meaning ascribed to it by clause 15.2(c)(i); Intellectual Property means patents, trademarks, service marks, trade names, design rights, copyrights, Internet domain names, database rights, rights in computer software, inventions and Know-How, and other similar proprietary rights which may subsist in any part of the world, whether registered or not, including where such rights are obtained or enhanced by registration, any registration of such rights and applications and rights to apply for such registrations; Know-How means drawings, formulae, test results, reports, project reports and testing procedures, instruction and training manuals, tables of operating conditions, specifications, quotations, tables, technical literature and brochures and any other technical, industrial and commercial information and techniques in any tangible form (including, but not limited to paper, electronically stored data, magnetic media, film and microfilm); Licence Conditions means the conditions which form part of certain licences granted under section 8 of the Act in the forms respectively set out in Appendix 2 to this Agreement (as amended from time to time); ANNEX A: REVISED CONSTITUTION AGREEMENT Page 9 of 67

21 Members means the members of the Company for the time being, the Members on the date of this Agreement being those listed in schedule 1,Schedule 1, and any Member means any of them; Network Rail means Network Rail Infrastructure Limited, a company incorporated in England and Wales under number ; Non-Industry Director means a non-executive Director as referred to in clause 4.1(b); Open Information has the meaning ascribed to it by clause 11.2(a)9.2(a); ORR means the Office of Rail Regulation established under section 15 of the Railways and Transport Safety Act 2003; ORR s Appeal Procedures means appeal procedures expressed to apply to this Agreement and published by the ORR (as amended from time to time); Previous Constitution Agreement means the constitution agreement as entered into between the Company, Network Rail Infrastructure Ltd and others first dated 1 April 2003 and last amended by the approval of members in general meeting on 10 November 2011; Primary Objective means the primary objective of the Company as set out in clause 2.1; Principles of Operation means the principles of operation of the Company as set out in clause 2.2, which principles (wherever referred to in this Agreement) are those to be followed by the Company in pursuing the Primary Objective; Proposal for Change means any proposal to change this Agreement or the Memorandum of Association of the Company or the Articles, together with any modification of that proposal as referred to in paragraph 1.5 of schedule 5;1.5 of Schedule 5; publishpublish in relation to any document or instrument, includes placing that document or instrument on the website of the Company in a position and with links which enable visitors to that site to locate it quickly and without difficulty, and cognate expressions shall be construed accordingly; Rail Delivery Group means Rail Delivery Group Limited, a company incorporated in England and Wales with registered number ; Rail Network means: (a) the network of which Network Rail or any successor organisation or organisations is the Infrastructure Manager; and ANNEX A: REVISED CONSTITUTION AGREEMENT Page 10 of 67

22 (b) the network of which any other Infrastructure Manager which is for the time being a member of the Company in accordance with clause 3.1.1(d) is the Infrastructure Manager; Railway Group means: (a) Network Rail or any successor organisation and any Train Operator or Station Operator which has a safety management system under the Railways and Other Guided Transport Systems (Safety) Regulations 2006 for operation on or in relation to infrastructure managed by Network Rail or any successor organisation; and (b) (c) any other Infrastructure Manager which is a member of the Company and any other Train Operator or Station Operator which has a safety management system under the Railways and Other Guided Transport Systems (Safety) Regulations 2006 for operation on or in relation to infrastructure managed by that Infrastructure Manager; and the Company; Railway Group Safety Plan means a plan setting out the collective health and safety performance and objectives of Railway Group members and the activities planned to deliver those objectives, focusing in particular on the encouragement and facilitation of good practice and on co-operation; Railway Group Standards has the meaning ascribed to it in the Code; Railway Industry means members of the Railway Group and Suppliers; Railway Industry Party means a person who is: (a) a member of the Railway Group; or (b) a Supplier; Relevant Amount ORR s Appeal Procedures means appeal procedures expressed to apply to this Agreement and published by the ORR (as amended from time to time); relevant amount has the meaning ascribed to it in clause 3.4; Relevant Employee means: (a) every director of the Company and every other person who has decisive authority in respect of any aspect of the Company s activities (whether or not an employee of the Company); and ANNEX A: REVISED CONSTITUTION AGREEMENT Page 11 of 67

23 (b) the spouse, partner and dependent children of any such person; Reserved Resolution has the meaning ascribed to it by clause 4.4.6; Restricted Information has the meaning ascribed to it by clause 9.2(c); RIDRR means the Railway Industry Dispute Resolution Rules dated 1 st 1 May 2003 (as amended from time to time); RPI means the Retail Prices Index for All Items published by the Office for National Statistics; Stakeholder means: (c) any member of the Railway GroupMember and any person who notifies the Company of its intention to become a member of the Railway Group; (a) any Supplier and any person who notifies the Company of its intention to become a SupplierMember; (b) (c) any Funder; any body representing rail users; (d) any trade union, any of whose members are employed by any persons falling within (a) and (b) above; and (e) any statutory body whose functions include the investigation of railway accidents and incidents; (f) the Rail Delivery Group; and (e)(g) such other persons as the Company reasonably considers are appropriate in order to help to meet the Primary Objective; Strategic Business Plan means a strategic business plan prepared by the Company s chief executive and approved by the Board following consultation with Members (as amended or updated from time to time in accordance with this Agreement) which, unless agreed otherwise by the Board shall be for a period of 5 years commencing on 1 April 2014 and every fifth anniversary of that date thereafter, and which shall set out how the Company will deliver its Primary Objective including the products and services to be delivered and the resources, funding and general management arrangements required by the Company for the applicable period; ANNEX A: REVISED CONSTITUTION AGREEMENT Page 12 of 67

24 Station Operator means any person holding a licence under section 8 of the Act or a railway safety case under the Railways (Safety Case) Regulations 2000 in respect of the operation of a station on the Rail Network; Successor Member has the meaning ascribed to it in clause 3.4; Supplier means: (a) any person other than a Train Operator or Infrastructure Manager whose business activities or any goods which he manufactures or owns must comply, directly or indirectly, with Railway Group Standards or TSIs; and (b) any person other than a Train Operator or Infrastructure Manager who supplies goods or services to the Railway Industry and whose business activities are, in the opinion of the Board acting reasonably, pertinent to the achievement of the Primary Objective; Train Operator means any person holding a licence under section 8 of the Act or a railway safety case under the Railways (Safety Case) Regulations 2000 in respect of the operation of trains on the Rail Network; bound by the Statement of National Regulatory Provisions; Triennial Review Period means each successive period of three years, the first of which shall commence on 1 April 2003; Trigger Date means, for the purposes of clause 3.3.3, the date on which (i) a Member gives the Company notice under clause 3.3.2(a) of its intention to cease to be a member of the Company, or (ii) a Member ceases to fall within any of the categories of members described in clauses 3.1.1(a)(a)-(d)-(d) subject to clause 3.4, or (iii) the Board resolves that a Member shall cease to be a member of the Company pursuant to clause 3.3.2(c); TSIs means Technical Specifications for Interoperability under Directives 96/48/EC and 2001/16/EC of the European Parliament and of the Council and under any other Directives adopted by either the Council or the European Parliament and the Council or any Decisions adopted by the European Commission which from time to time relate to technical specifications for interoperability of trans-european rail systems. ANNEX A: REVISED CONSTITUTION AGREEMENT Page 13 of 67

25 1.2 Interpretation In this Agreement, unless the context otherwise requires: (a) any reference to a statute or statutory provision, European Union legislative provision or any subordinate legislation includes that statute, provision or subordinate legislation as from time to time modified, re-enacted or consolidated whether before or after the date of this Agreement; (b) terms and expressions defined in the Act shall, unless the contrary intention appears, have the same meaning in this Agreement; (c) references to this Agreement include the schedules to it and references to clauses and schedules are to clauses of and schedules to this Agreement; (d) where, under this Agreement, reference is made to a requirement to obtain the approval of the ORR, that approval shall not be regarded as having been obtained unless it is given in writing; and (e) where reference is made to the approval of the ORR or a determination of the ORR or a requirement or direction of the ORR under clauses 2.3(b)(i)-(iii), 2.4 (first paragraph), 2.7, 3.1.1(d) and 13.2 ofin this Agreement, this Agreement shall be read and construed so that such approval, determination, requirement or direction may be given or, as the case may be, made only after consultation with the DfT.; and (e)(f) general words shall not be given a restrictive meaning by reason of their being preceded or followed by words indicating a particular class of acts, matters or things or by examples falling with the general words. Any phrase introduced by the terms other, including, in particular and focus or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms. 2 PRIMARY OBJECTIVE, PRINCIPLES OF OPERATION AND FUNCTIONS OF THE COMPANY 2.1 Primary Objective The Company s primary objective shall be to lead and facilitate support its members (the Railway Industry s workrail industry) to achieve continuous improvement in the health and their objectives of improving safety and performance of the railways in Great Britain and thus to facilitate the reduction of and value for money across the industry, with a focus on: (a) reducing safety risk to passengers, employees and the affected public so far as is reasonably practicable, so aiding compliance by providers of railway ; ANNEX A: REVISED CONSTITUTION AGREEMENT Page 14 of 67

26 (b) increasing capacity (where appropriate); (c) improving operating performance and customer satisfaction (where appropriate). The company will fulfil its Primary Objective through the delivery of functions and services with their obligations under healthin accordance with the Principles of Operation and safety lawas set out in Strategic Business Plan. 2.2 Principles of Operation Pursuing the Primary Objective In pursuing the Primary Objective, the Company shall: (a) exercise its functionsfunctions in a manner best calculated to achieve an appropriate balance between the need: (i) to protect the interests of users of railway services; (ii) to promote the use of the Rail Network in Great Britain for the carriage of passengers and goods, and the development of the Rail Network, to the greatest extent economically practicable; (iii)(ii) to promote efficiency and economy on the part of persons providing railway services; (iv)(iii) to enable persons providing railway services to plan the future of their businesses with a reasonable degree of assurance; (iv) to facilitate the furtherance by the DfTdemonstrate leadership and efficiency in the development and management of anyits support Functions; (v) to take account of relevant strategies whichthat are promoted or endorsed by the Rail Delivery Group; (vi) to be accountable to its members for identified elements of industry process; (vii) to lead for the whole industry in areas where a) by virtue of the Functions it has formulatedholds industry leading competence, or b) requested by the industry through its Board; (v)(viii) to maintain the independence of the company, and, where appropriate, to challenge or act as a conscience for the industry with respect to its purposes including by having due regard to the appraisal criteria, expenditure priorities and budgets which form part of those strategies; and the functions it fulfils; ANNEX A: REVISED CONSTITUTION AGREEMENT Page 15 of 67

27 (ix) to contribute to provide an industry audit trail for the development of an integratedindustry decisions it facilitates; and (vi)(x) to promote solutions that recognise the railway as a system of transport of passengers and goods; and the respective interests of different Railway Industry Parties; (b) where it is necessary to impose restrictions on Railway Industry Parties, to do so to the extent proportionate to the achievement of the Primary Objective and having regard to the criteria set out in clauses 2.2.1(a)(i)-(x)-(vi) Carrying out the Company s functionsfunctions The Company shall carry out its functionsfunctions in a transparent and non-discriminatory way, and where appropriate shall encourage and foster co-operation between Railway Industry Parties to achieve the Primary Objective. 2.3 Functions of the Company The Company shall carry out In respect of the following functionsfunctions: (a) the Company shall: (i) in consultation with its Members, representatives of other Stakeholders and the DfT, develop and publish the Railway Group Safety Plan; (i) administer the Code and the processes set out in the Code and comply with the provisions of the Code; (ii) monitor and report on the Railway Industry s health and safety performance and facilitate the collection and flow of information on health and safety matters in the Railway Industry; (ii)(iii) in relation to its Functions, respond appropriately to recommendations and enquiries that are directed to the Company by accident investigation or other statutory investigatory bodies; (iii) maintain a current record of: (A) recommendations of accident investigations and formal inquiries; (iv) the responses of all the organisations to which the respective recommendations are directed; and ANNEX A: REVISED CONSTITUTION AGREEMENT Page 16 of 67

28 (A) the state of progress towards implementation within timescales recommended or prescribed by such investigations or formal inquiries; (v) disseminate and encourage adoption of good practice and encourage and facilitate co-operation in each case on health and safety matters in the Railway Industry; (iv) in consultation with its Members, facilitatemaintain a capability to undertake Research, Development and Innovation programmes; (v) manage its interest in Railway Documentation and Drawing Services; (b) without prejudice to the generality of the Articles, the Company may engage in the following Functions: (i) cross-industry research, development and innovation programmes to support Functions and industry objectives; (ii) facilitation of industry responses and actions to address cross -industry problems and opportunities; (iii) the facilitation of system co-ordination and co-operation to support optimisation of the rail industry as a whole; (iv) the provision of support cross-industry programmes and other cross-industry groups for particular purposes; (v) the provision, maintenance, development and management of information systems, databases and models; (vi) the dissemination of good practice, building of industry knowledge, awareness and competence through providing training, horizon scanning, guidance and learning from experience; (vi)(vii) the facilitation of the effective representation of the Railway Industry (including direct representation by the Company of one or more Railway Industry Parties if so agreed with those parties) in subject areas relevant to the Primary Objective in discussions with other industries, other railway companies and organisations, public bodies and European Union institutions; and (vii) in consultation with its Members, representatives of other Stakeholders and the DfT and within the constraints imposed by funding available from the DfT or other sources for this purpose, develop and implement a programme of health and safety related research and development. ANNEX A: REVISED CONSTITUTION AGREEMENT Page 17 of 67

29 (viii) the the provision of products and services in support of all Functions listed in this clause 2; and (ix) subject to the passing of a Reserved Resolution, the carrying on of activities other than its Primary Objective for the purpose of making additional income available and/or broadening the Company s knowledge, skills or expertise if, in the opinion of the Directors, the carrying on of such other activities: (A) is of benefit to; and (B) does not in any material way prejudice; the carrying on of the Primary Objective. 2.4 Changes in Functions For the avoidance of doubt, the Company shall carry on the Functions referred to at clause 2.3(a) until such time as this Agreement is amended in accordance with clause 11 and Schedule 5 to exclude such Functions The Company may, subject to the passing of a Reserved Resolution, cease to undertake any of the Functions set out in clauses 2.3(b)(i)-(ix) or add to the Functions set out in clauses 2.3(b)(i)-(ix) Changes, additions or subtractions to products and services provided pursuant to clause 2.3(b)(iii) can be made by the relevant cross industry group (established under the authority of the Board) that supervises the activity, provided that if such changes will have a material effect on the Company s resources or Approved Budget, such changes shall be subject to the approval of the Board. Company: is responsible for establishing the Code and the document set out in Appendix 1 to this Agreement which has been approved or determined by the ORR shall be the Code; shall comply with the provisions of the Code (as revised from time to time with the prior approval of the Directors as a Reserved Resolution in accordance with clause or its Members in general meeting and the ORR); shall from time to time or when so directed by its Members in general meeting or the ORR review in consultation with its Members and representatives of other Stakeholders the provisions of the Code and its implementation and propose revisions to the Code so as better to give effect to the Licence Conditions; ANNEX A: REVISED CONSTITUTION AGREEMENT Page 18 of 67

30 The Code The Code shall be a code whose objectives promote the Primary Objective and the Principles of Operation (subject to such transitional provisions as may be approved or determined by the ORR in respect of Railway Group Standards in the course of preparation when the Code is established) and which: establishes procedures for the review and monitoring of the effectiveness of Railway Group Standards; establishes procedures for the creation of new Railway Group Standards, and the modification or abolition of existing Railway Group Standards, which are such as to: provide for a fair and balanced representation and participation in such procedures by experienced and competent persons from all classes of Stakeholders likely to be materially affected; provide for proposals for the creation, modification or abolition of Railway Group Standards to be fully and fairly considered (other than any which are trivial or vexatious), and for full and proper consultation with the ORR and DfT; provide for Railway Group Standards to be consistent with European Technical Specifications for Interoperability in force for the time being; provide an accelerated procedure for the creation, modification or abolition of Railway Group Standards in specified circumstances to remedy material non-compliance with the Primary Objective; provide for any Stakeholder aggrieved in any material respect by a decision in respect of the creation, modification or abolition of a Railway Group Standard to have the matter reviewed by the Board and thereafter, if dissatisfied with the results of such review, to have the matter referred to the ORR for determination; requires the Company, where there are reasonable grounds for considering that the creation, modification or abolition of a Railway Group Standard is necessary or expedient having regard to the Primary Objective of the Company, to propose such action and pursue it in accordance with the procedures referred to in clause 2.4(b); and authorises the Railway Group Standards in force from time to time. The Code and Railway Group Standards The Company shall: ANNEX A: REVISED CONSTITUTION AGREEMENT Page 19 of 67

31 publish the Code and any modifications to it in such form or manner and with such frequency as the ORR may require; provide a copy of the Code and any modification to it to each holder of a licence under section 8 of the Act, other Members, the DfT and the ORR; publish a catalogue of current Railway Group Standards; and 2.4 provide a copy of the Code and any Railway Group Standard or proposed Railway Group Standard and of the catalogue referred to in clause 2.5(c) to any person requesting a copy (and the Company may charge for the provision of copies under this clause Publication of activities provided that such charge shall not exceed an amount which in the opinion of the ORR is reasonable). 2.5 Information 2.6 The Company may publish from time to time such information as may be necessary or expedient to facilitate the comprehension and efficient and economic application of standards (including TSIs) falling within the scope of the Primary Objective. 2.7 Other activities 2.8 The Company may, subject to the passing of a Reserved Resolution or the approval of Members in general meeting and the prior approval of the ORR, propose and implement arrangements for it to carry out activities (in addition to those set out in clauses 2.3 to 2.6 of this Agreement) related to the Primary Objective and the Principles of Operation or which facilitate improvements in the safety, efficiency or performance of railways in the United Kingdom Publication of activities The Company shall maintain and publish a list on its website of those activitiesits Functions and of all the associated products and services it carries out or delivers pursuant to clause 2. 3 MEMBERSHIP 3.1 Admission to membership General The Board shall admit to membership of the Company: (a) Network Rail and each holder of a licence under section 8 of the Act if such persons are required to become members of the Company under the terms of their respective licences; ANNEX A: REVISED CONSTITUTION AGREEMENT Page 20 of 67

32 (b) any Supplier which is not required by the terms of any licence held by it under section 8 of the Act to become a member of the Company; (c) any Train Operator which is not required by the terms of any licence held by it under section 8 of the Act to become a member of the Company; and (d) any Infrastructure Manager (other than Network Rail), subject to the prior approval of the ORR having been obtained; Additionally, the Board may admit as associates, on terms it approves, any party other than those falling into 3.1.1(a)-(d) if it considers that an affiliation with that party would be conducive to the pursuit or attainment of the Primary Objective, which may include parties from other industries or countries, but such associates shall not be Members for the purpose of this Agreement Conditions to admission to membership It shall be a condition of the Board admitting a person to membership of the Company that such person: (a) undertakes to the parties to this Agreement for the time being to observe and be bound by the terms of this Agreement by executing an accession agreement in the form set out in schedule 3,Schedule 3, such accession agreement being entered into between the prospective new Member and the Company (acting on its own behalf and as agent for all the Members, for which purpose each Member hereby authorises the Company to act as its agent); (b) signs an application for membership in the form set out in schedule 2Schedule 2 and submits such application for membership to the Company; and (c) provides to the Company information of the kind specified in clauses 3.2.2, and (if applicable) clauses and by no later than 30 days from the date of such person becoming a member of the Company. 3.2 Designation and categorisation of membership General On admission to membership of the Company, each Member shall be designated by the Board as falling within one only of the following categories of membership: (a) passenger Train Operators; ANNEX A: REVISED CONSTITUTION AGREEMENT Page 21 of 67

33 (b) non-passenger Train Operators (excluding any party which operates non-passenger trains wholly or mainly in connection with its role as an infrastructure contractor); (c) Network Rail and other Infrastructure Managers; (d) rolling stock owners (including rolling stock leasing companies); (e) infrastructure contractors that fulfil either or both of the following criteria: (i) the infrastructure contractor in question is a party to one or more infrastructure renewals contract with Network Rail or any successor organisation or any other Infrastructure Manager which is a member of the Company or any other contract which the Board reasonably considers to be a successor to or the equivalent of any of those forms of contract; (ii) the infrastructure contractor in question holds a non-passenger operating licence to operate trains on the Rail Network of which Network Rail or any successor organisation, or any other Infrastructure Manager which is a member of the Company, is the Infrastructure Manager and operates such trains wholly or mainly in connection with its role as an infrastructure contractor; and (f) Suppliers (including rolling stock manufacturers) Categorisation based on Annual Turnover If a Member s activities fall within more than one of the categories set out in clauses 3.2.1(a)(a)-(f),-(f), that Member shall be designated by the Board as falling within the category from which it (or, as the case may be, its Group) derives the greatest part of its Annual Turnover as at its admission to membership of the Company (if appropriate, determined by reference to its most recently published audited accounts) Review of categorisation The Board shall: (a) prior to the end of each Triennial Review Period review a breakdown of the Annual Turnover of each Member falling within the categories described in clauses 3.2.1(a), 3.2.1(b) and 3.2.1(c); and (b) prior to the end of each Annual Review Period review a breakdown of the Annual Turnover of each Member falling within the categories described in clauses 3.2.1(d), 3.2.1(e) and 3.2.1(f), ANNEX A: REVISED CONSTITUTION AGREEMENT Page 22 of 67

34 for the purpose of determining whether any change needs to be made to the category of membership to which it is then allocated having regard to the Annual Turnover of that Member amongst the categories of activities respectively set out in clauses 3.2.1(a)-(f)-(f) at that time (if appropriate, determined by reference to its audited accounts published immediately prior to such review) Provision of financial information If a Member is not able to provide audited accounts as required by clause or or or if those audited accounts do not contain the requisite information, the Board shall be entitled to require such Member to provide a Certificate regarding the Annual Turnover of such Member. Each Member undertakes to provide such information as the Company may reasonably require for this purpose Confidentiality The Company shall keep confidential all information provided by each Member pursuant to clause 3.2.2, or and such information shall be treated as Restricted Information (unless the Member supplying such information agrees otherwise) in accordance with the provisions of clause Failure to provide information required If a Member fails to provide the information required by the Company pursuant to clause 3.2.2, or within 20 Business Days of the date on which it is requested by the Company, the Board shall estimate the Annual Turnover of such Member (or, as the case may be, the breakdown of such Annual Turnover) and (pending receipt of the information of that Member) such estimate shall be treated for the purposes of this Agreement as the Annual Turnover (or, as the case may be, the breakdown of such Annual Turnover) of that Member Election of review period Notwithstanding clause 3.2.3(b), the Members falling within the categories described in clauses 3.2.1(d), 3.2.1(e) and 3.2.1(f) shall each be entitled to elect to have the words Annual Review Period in clause 3.2.1(b) read and construed as if that expression were a reference to Triennial Review Period. Such election shall be subject to the consent in writing of the holders of more than one-half of the voting rights of the members falling within the categories described in clauses 3.2.1(d), 3.2.1(e) or 3.2.1(f) (as the case may be) or with the sanction of an ordinary resolution passed at a separate general meeting of the categories described in clauses 3.2.1(d), 3.2.1(e) or 3.2.1(f) (as the case may be). ANNEX A: REVISED CONSTITUTION AGREEMENT Page 23 of 67

35 3.3 Cessation and transferability of membership Cessation of membership of holders of licences under section 8 of the Act A Member of the description set out in clause 3.1.1(a) may only serve notice on the Company to cease to be a Member in accordance with the Articles if the prior written approval of the ORR has been obtained Cessation of membership of other Members Membership shall cease in the following circumstances: (a) if a Member (other than a Member of the description set out in clause 3.1.1(a), save where such cessation is agreed by the ORR to be in accordance with his duties under section 4 of the Act) gives to the Company not less than 6 months notice of its intention to cease to be a member of the Company to expire on the accounting reference date of the Company next following, in which case that Member shall cease to be a member of the Company on the accounting reference date of the Company next following; (b) subject to the provisions of clause 3.4, if a Member ceases to fall within any of the descriptions set out in clauses 3.1.1(a)-(d),-(d), in which case that Member shall cease to be a member of the Company on the accounting reference date of the Company next following; and (c) if a Member (other than a Member of the description set out in clause 3.1.1(a))3.1.1(a)) shall default in the payment of any sum due to the Company under this Agreement and shall fail to remedy such default within 30 days of being required so to do by the Company, in which case that Member shall cease to be a member at such time as the Board may in its absolute discretion determine Voting and cessation of membership Nothing in clause shall preclude any Member from exercising its rights as a member to vote at any general meeting of the Company for so long as the Member continues to be a member of the Company, except that a Member shall, from the Trigger Date, not be entitled to vote in respect of any resolution to:relating to a period commencing after the cessation of membership. (a) approve the Company s annual Budget for a financial year which will commence after that Member will have ceased to be a member of the Company; or (b) approve the Railway Group Safety Plan applicable to a financial year which will commence after that Member will have ceased to be a member of the Company. ANNEX A: REVISED CONSTITUTION AGREEMENT Page 24 of 67

36 3.3.4 Transferability of membership Membership shall not be transferable. 3.4 Train Operators and Franchise Agreements This clause 3.4 applies in relation to any Member (an Affected Member ) which is a Train Operator which operates services for the carriage of passengers by railway in the capacity of a franchise operator under a Franchise Agreement as follows: (a) if the Franchise Agreement relevant to an Affected Member is terminated without being replaced and the Affected Member does not continue to operate services for the carriage of passengers by railway, the Affected Member shall (unless otherwise obliged to continue to be a member of the Company under the terms of any licence held by it under section 8 of the Act) cease to be a Member when the Train Operator which takes over responsibility for the services previously operated by the Affected Member under the Franchise Agreement: (i) becomes a Member (unless already a Member); and (ii) assumes all the undischarged obligations which would otherwise be owed to the Company by the Affected Member under this Agreement for the period from the date from which such assumption is effective until the end of the financial year of the Company then current; (b) if a Franchise Agreement relevant to an Affected Member is amended so as to exclude some (but not all) of the services previously provided by that Affected Member ( Excluded Services ): (i) the Affected Member shall continue to be a Member; (ii) if and to the extent that the Excluded Services are assumed by another (new or existing) Member (the Successor Member ) in succession to the Affected Member, then the Successor Member shall, in respect of the period from the date on which the Excluded Services are assumed until the end of the financial year of the Company then current, assume (in place of the Affected Member) the Affected Member s obligation to pay part of the levy which the Affected Member would have been obliged to pay to the Company under clause 6 but for the amendment of the relevant Franchise Agreement to exclude the Excluded Services; ANNEX A: REVISED CONSTITUTION AGREEMENT Page 25 of 67

37 (iii) the amount of the levy which the Successor Member shall assume an obligation to pay in place of the Affected Member shall be calculated by reference to the following formula: A = B x C 12 C A B 365 Where: A is equal to the amount of the levy to be assumed by the Successor Member; B is equal to the levy payable by the Affected Member for the then current year to the extent that such levy is attributable to turnover in respect of the provision of the Excluded Services; and C is equal to the number of whole unexpired monthsdays between the date on which the Successor Member assumes the obligation to pay part of the levy and the end of the financial year of the Company then current; and (iv) the Affected Member shall provide the Company with a certificate from its finance director containing a bona fide estimate of the amount of B (as referred to in clause 3.4(b)(iii)) and if the Affected Member fails to provide that certificate within 20 Business Days of the date on which it is requested by the Company, the Board shall be entitled to estimate such amount and (pending receipt of the certificate from the Affected Member) such estimate shall be treated for the purposes of this Agreement as the amount of B. The Company shall keep confidential all information provided by the Affected Member pursuant to this clause 3.4(b)(iv) and such information shall be treated as Restricted Information (unless the Affected Member agrees otherwise) in accordance with the provisions of clause 119; (c) if clauses 3.4(a) or 3.4(b) apply in respect of an Affected Member, then until such time as the relevant Successor Member or other Train Operator taking over responsibility for the services previously operated by that Affected Member is able to produce Annual Turnover information dealing with the provision of the services which it takes over for a complete period of one year, the Annual Turnover in respect of that Successor Member or other Train Operator shall, in respect of such period for which its Annual Turnover would not otherwise include the provision of those services be deemed to include an amount (the relevant amount ) equal to the Annual Turnover which would have been ANNEX A: REVISED CONSTITUTION AGREEMENT Page 26 of 67

38 reported by the Affected Member as being referable to those services and the period in question had the services continued in its operation; (d) if any relevant amount is included in the Annual Turnover of a Successor Member or other Train Operator under clause 3.4(c), it shall be disregarded in calculating the Annual Turnover of the Affected Member which has ceased to operate the services in question; (e) if the relevant Annual Turnover information is not available from the Affected Member in relation to the services being assumed and (where clause 3.4(b)3.4(b) applies) no apportionment is otherwise agreed between the Members concerned, then the relevant amount shall be estimated by the Board following consultation with the Members concerned and having regard to the Annual Turnover last reported to the Company by the Affected Member for the purposes of this Agreement. 3.5 Suppliers The Company shall use all reasonable endeavours to encourage Suppliers to become members of the Company. 4 BOARD OF DIRECTORS 4.1 Constitution of the Board The Board shall comprise not less than 10 but not more than 15 Directors of whom: (a) not more than 3 shall be executive Directors; (b) not more than 3 (including any person appointed to be both a Director and chairman of the Board in accordance with clauses and 4.4.5) nor fewer than 2 (unless otherwise approved by the ORR) shall be non-executive Directors who have satisfied the criteria set out in Article 6465 of the Articles; and (c) not more than 8 shall be non-executive Directors who have relevant experience of the Railway Industry, who shall be appointed pursuant to clause Appointment of Directors Appointment of Directors Subject to clause 4.2.2, the Directors shall have power at any time, and from time to time, to appoint any person to be a Director either to fill a casual vacancy or as an addition to the Directors, provided that the total number of Directors shall not at any time exceed the ANNEX A: REVISED CONSTITUTION AGREEMENT Page 27 of 67

39 number set out at clause 4.1. Any Director so appointed shall hold office only until the next following general meeting of the Company and shall then be eligible for re-election. ANNEX A: REVISED CONSTITUTION AGREEMENT Page 28 of 67

40 4.2.2 Industry Directors Each of the categories of members described: (a) in clauses 3.2.1(b) and (d)3.2.1(d) to (f)3.2.1(f) shall have the right to appoint and maintain in office one non-executive Director; (b) in clauses 3.2.1(a) and (c)3.2.1(c) shall have the right to appoint and maintain in office two non-executive Directors, provided that any person appointed and maintained in office by the category of members described at clause 3.2.1(a) shall at all times occupy a post with responsibility for operational activities within the Railway Industry. (as referred to in clause 4.1(c)) and shall have the right to remove any Director respectively nominated by them and appoint another Director in his place, in each case by giving notice in writing (evidenced by a written consent or a print of an ordinary resolution of the category of members in question as referred to in Article 58 of the Articles) to the Secretary of the Company at its registered office. Any decision in respect of any such appointment or removal shall be made in accordance with Article 58 of the Articles Appointment of Directors at general meetings Except as set out in clauses and 4.2.2, Directors shall be appointed by the Members in general meeting in accordance with clause Term of appointment Directors (other than executive Directors) shall be appointed for a term of not less than 2 years and not exceeding 3 years and, except in the case of Directors appointed pursuant to clauses and 4.2.2, Directors shall only be removed with the prior approval of the ORR. through the passing of a Reserved Resolution or otherwise in accordance with this Agreement. 4.3 Disqualifying Interest Without limiting Articles of the Articles, the Company shall ensure that no Relevant Employee of the Company shall have a Disqualifying Interest except: (a) with the prior approval of the ORRAudit Committee and no person shall be nominated for appointment or remain in office as a Director if he has or acquires a Disqualifying Interest unless the prior approval of the ORRAudit Committee has been given in respect of that person s appointment and/or continuation in office as a Director; or (b) to the extent that the Relevant Employee is an Industry Director and the Disqualifying Interest arises solely from their employment in the Railway Industry. ANNEX A: REVISED CONSTITUTION AGREEMENT Page 29 of 67

41 4.4 Proceedings of Directors General Unless otherwise agreed by the Directors, meetings of the Board shall be held at least once every 4 weeks2 months and otherwise as circumstances require. At least five Business Days notice of a Board Meeting shall be given to each Director specifying, where appropriate, that the business to be conducted includes consideration of a Reserved Resolution. An agenda identifying in reasonable detail the issues to be considered by the Directors at any such meeting and copies of any relevant papers to be discussed at the meeting shall be distributed in advance of the meeting to all members of the Board Quorum (a) Thethe quorum for the transaction of business (excluding that relating to a Reserved Resolution) at any Board meeting shall be seven including at least four non-executive Directors at least one of whom shall be a Non-Industry Director; (b) Thethe quorum for the transaction of business relating to a Reserved Resolution shall be seven and shall include at least one non-executive Director appointed by each category of member described in clause pursuant to clause and one Non- Industry Director Involvement of the ORR and the DfT The Members agree that the ORR and the DfT shall each be entitled to appoint a representative to receive notice of, attend and speak at each meeting of the Board. The Company shall send the agenda for each meeting of the Board to the ORR and the DfT (together with copies of all other papers distributed to Directors in preparation for that meeting) at the same time as they are distributed to members of the Board and shall send the minutes of meetings to them at the same time as they are distributed to the Directors Majority vote Subject to clauses and 5.3, no resolution of the Directors shall be effective unless carried by a majority of the Directors Chairman The Directors shall appoint any one of their number to be the Chairman of the Board from among the non-executive Directors and may at any time remove him from that office. ANNEX A: REVISED CONSTITUTION AGREEMENT Page 30 of 67

42 4.4.6 Reserved Resolutions (a) The Directors may : (i) transact any of the matters described in Part A, Part B and paragraphs 2 and 3Schedule 4; (ii) (iii) approve the Company s annual Budget, or any material departure from or any material amendment to it; transact activities pursuant to clause 2.3(b)(ix); (iv) add to, subtract from, or otherwise vary the list of Part Cactivities referred to at clause 2.3(b)(i) to (ix) of Schedule 4this Agreement; in either case by the passing of a unanimous resolution by those Directors entitled to vote in the matter pursuant to the Articles (a Reserved Resolution ); (a)(b) the Company shall supply each Member with a print of a Reserved Resolution within 14 days of the meeting of the Board at which it was passed. 4.5 Audit Committee, Remuneration Committee and Appointments Committee General The Board shall appoint and maintain an audit committee, a remuneration committee and an appointments committee having the membership and duties set out in clauses 4.5.2, and respectively Audit Committee The membership of the audit committee shall consist solely of non-executive Directors of the Company and shall consist of not less than three non-executive Directors. The Audit Committee shall review the accounting policies and procedures of the Company, its internal financial control systems and its compliance with statutory requirements and shall consider any matter raised by the Company s external and internal auditors Remuneration Committee The membership of the remuneration committee shall consist solely of non-executive Directors of the Company and shall consist of not less than three non-executive Directors (a majority of whom shall be Non-Industry Directors). The chief executive of the Company shall on the committee s request prepare and deliver a report and recommendation on remuneration. The remuneration committee shall consider and make recommendations to the Board on the remuneration and benefits of all executive Directors of the Company and all ANNEX A: REVISED CONSTITUTION AGREEMENT Page 31 of 67

43 senior employees of the Company who are not Directors andidentified by the Board from time to time and including any employee whose annual base salary (excluding employer pension contributions, bonuses, travel expenses, car allowances and other benefits in kind) is in excess of ,000 per annum or such higher amount as may be proposed by the appointments committee and approved by the Board from time to time Appointments Committee The membership of the appointments committee shall consist solely of non-executive Directors of the Company, at least two of whom shall be Non-Industry Directors. The appointments committee shall consist of not less than three non-executive Directors. The appointments committee shall consider and make recommendations to the Board on the appointment of all Directors of the Company (other than those appointed pursuant to clauses and 4.2.2) and all senior employees of the Company who will not be Directors andidentified by the Board from time to time and including any employee whose annual base salary (excluding employer pension contributions, bonuses, travel expenses, car allowances and other benefits in kind) will be in excess of ,000 per annum or such higher amount as may be proposed by the appointments committee and approved by the Board from time to time. 5 MEMBERS MEETINGS AND POWERS 5.1 General The Company shall convene general meetings of the Members at least once a year. The rights of the Members in respect of voting at general meetings of the Company are set out in the Articles. 5.2 Involvement of the ORR and the DfT The Members agree that the ORR and the DfT shall each be entitled to appoint a representative who shall be entitled to receive notice of, attend and speak at each general meeting of the Members. 5.3 Reserved Matters Except where the Directors have passed a Reserved Resolution, the power of the Company to: (a) transact any of the matters described in Part A of schedule 4or Part B of Schedule 4 (Reserved Matters) shall be reserved to the Members and shall be subject to approval by Members holding eighty per cent. or more of the total voting rights exercised in respect of the resolution in question on a poll at a general meeting of the Company; ANNEX A: REVISED CONSTITUTION AGREEMENT Page 32 of 67

44 (b) transact the matter described in Part B of schedule 4 (Reserved Matters) shall be reserved to Members and shall be subject to approval by Members holding eighty per cent. or more of: (i) the total voting rights exercised in respect of the resolution in question on a poll at a general meeting of the Company; and (ii) the total voting rights exercised on a poll in respect of the resolution in question by the categories of members described in clauses 3.2.1(a)-(c) and 3.2.1(e) (to the extent that the Members within this category also form part of the Railway Group); and (c)(b) transact any of the matters described in Part C of schedule 4Schedule 4 (Reserved Matters) shall be reserved to the Members and shall be subject to approval by Members holding sixty five per cent. or more of the total voting rights exercised in respect of the resolution in question on a poll at a general meeting of the Company. The power of the Board to manage the business of the Company shall be circumscribed accordingly. Except as required by this clause 5.3, the memorandum of association of the Company, the Articles and the Companies Act , the business of the Company shall be managed by the Directors who may exercise all the powers of the Company. Nothing in this clause 5.3 shall preclude the Board from taking any step which it considers appropriate to put the Company into liquidation or administration. 5.4 Network Rail If, at the time appointed for a general meeting as referred to in clause 5.3, Network Rail is not present by proxy or by a duly authorised representative, the general meeting shall be adjourned to such time and place as the chairman of the meeting shall determine and which shall be notified to all Members. Network Rail shall use all reasonable endeavours to procure that it is present by proxy or by a duly authorised representative at the time and place appointed for every general meeting of the Members. 6 FUNDING 6.1 The Budget Preparation of Budget 6.1 Funding and budget arrangements Funding Arrangements ANNEX A: REVISED CONSTITUTION AGREEMENT Page 33 of 67

45 The Company shall preparebe funded on a Budgetfive year cycle commencing 1 April 2014, whereby levies will be fixed in respect of each Financial Year and shall submit ityear one of that cycle by reference to itsthose levies payable by Members for consultation not later than 3 months priorpursuant to the Financial Year in question and for approval (Previous Constitution Agreement, with or without amendment following such consultation) by the Directors as a Reserved Resolutionannual adjustments then made in accordance with this Agreement. The Company s funding will include levies paid by Members in accordance with clause 6 or by the Members in accordance with clause, grants received from the Department for Transport and other funders for specific purposes, payments from Members and other parties for specific services and such other income as the Company may receive through its operations. Toward the end of each five year period the Board will initiate a review of the levies as set out in 6.7. In the event that the Members do not agree any changes to the levies through the review, the funding provisions set out in this Agreement will continue Board review of Budget The Company s chief executive shall prepare an income and expenditure Budget in respect of each Financial Year, taking account of the expected revenues from all sources and the planned activities of the Company and the Strategic Business Plan. Such Budget will aim to neither make a profit or a loss over a period defined by the Board but this shall not prevent the Budget aiming to produce such surplus as the Board reasonably considers prudent by way of contingency, whether to build reserves or for other purposes. The Budget shall be submitted to the Directors for consideration and approval pursuant to clause of this Agreement, whereupon it will become the Approved Budget. The review and approval by Directors will consider the proposed priorities and resource allocation put forward by the Company s chief executive and will be finalised in a manner that the Directors consider best achieves the Primary Objective and the Principles of Operation, taking account of the available funding Provision of information The Company shall promptly provide any Member with such information as it may reasonably request in respect of any Budget submitted to Members for consultation or approval Failure to approve Budget If for any reason (other than the Company having been put into liquidation or administration) a Budget in respect of a Financial Year shall not have been approved Circumstances under which Directors may revise the membership fees ANNEX A: REVISED CONSTITUTION AGREEMENT Page 34 of 67

46 The Directors may by a Reserved Resolution in accordance withrevise the levies provided for in this clause if it appears to them that the balance between income attributable to Member-funded activity, and the costs of that same activity for any year is likely to involve a deficit or a surplus of more than 1.5m (at 1 April 2014 price level) but they are under no obligation to do so if they consider that the deficit or surplus can be corrected within a reasonable period of time. Before revising such levies the Directors shall consult with Members and shall provide at least 30 days written notice of any intention to revise the levies. If, following consultation, the Directors decide by Reserved Resolution to revise the levies they shall be entitled to do so up to a maximum of 150% of the levies that would otherwise apply in the relevant Financial Year, do so in a manner that is equitable as between all Members and shall use all reasonable endeavours to return levies to the levels anticipated by this Agreement at the earliest opportunity. or by the Members in accordance with clause 5.3 before the commencement of the Financial Year to which that Budget relates, then (until a budget is approved by a Reserved Resolution or in accordance with clause 5.3 in respect of that Financial Year) the Approved Budget in respect of the immediately preceding period of 12 months shall be deemed to be the Approved Budget for that Financial Year also Levies in respect of Financial Year During each Financial Year, the Members shall pay to the Company as a levy (in accordance with clauses to ) an aggregate amount equal to the projected funding requirement of the Company less the amount of any projected cash revenue of the Company as shown in the Approved Budget for that Financial Year (such Approved Budget to take into account revenue attributable to health and safety-related research and development to be undertaken by the Company to the extent that such health and safety-related research and development will be funded directly by the DfT or some other person). Levies paid by Members to the Company shall not be refundable or repayable by the Company in any circumstances Aggregate amount of levies In respect of any Financial Year, the aggregate amount of annual levies payable pursuant to clause shall be apportioned amongst the categories of Members as follows: (a) Levies in respect of the Financial Year commencing 1 April 2014 For the Financial Year commencing 1 April 2014, the Members shall pay to the Company as a levy the following amounts: ANNEX A: REVISED CONSTITUTION AGREEMENT Page 35 of 67

47 (b)(a) each Member designated by the Board as falling within any of the categories described in clauses 3.2.1(b) and 3.2.1(d)-(e)-3.2.1(e) and those Members falling within the category described in clause 3.2.1(a) which do not operate services pursuant to a Franchise Agreement shall pay the amount (Index-Linked) set out in column two of the table set out below in this clause which is applicable to its Annual Turnover during its most recently completed financial year: ANNEX A: REVISED CONSTITUTION AGREEMENT Page 36 of 67

48 (1) (2) Annual Turnover Amount of levy payable (Index Linked)in the Financial Year commencing 1 April 2014 Less than 10 million 5, million or more but less than 100 million 20, million or more 60,000 (c)(b) each Member designated by the Board as falling within the category described in clause 3.2.1(f) shall pay the amount (Index Linked) set out in column two of the table set out below in this clause 6.1.4(b)(ii) which is applicable to its Annual Turnover during its most recently completed financial year: (1) (2) Annual Turnover Amount of levy payable (Index Linked)in the Financial Year commencing 1 April 2014 Less than 3.33 million 1, million or more but less than 100 million A sum determined by multiplying the Member s Annual Turnover by and rounding the resulting figure up or down (as appropriate) to the nearest 1, million or more 30,000 (c) Members falling into the category 3.2.1(a) (other than Passenger Train Operators which do not operate services pursuant to a Franchise Agreement) and 3.2.1(c) shall pay the levies set out in Schedule 6 to this agreement Levies in respect of the Financial Years commencing 1 April 2015, 1 April 2016, 1 April 2017 and 1 April ANNEX A: REVISED CONSTITUTION AGREEMENT Page 37 of 67

49 For the Financial Years commencing 1 April 2015, 1 April 2016, 1 April 2017 and 1 April 2018, the Members shall pay to the Company as a levy the following amount. Levy payable in the relevant Financial Year = B C A A C Where: A is the levy payable by the relevant Member under clause above; B is the value for RPI in the July immediately prior to the commencement of the relevant Financial Year; and C is the value for RPI in July The Company shall notify Members of the Index-Linked amounts payable pursuant to this clause in respect of any Financial Year not less than 30 days prior to that Financial Year (or, if later, not later than 7 days after the passing of a relevant Reserved Resolution or approval by the Members of the Budget for that Financial Year pursuant to clause or clause 5.3 respectively). one half of the balance of the aggregate amount of annual levies payable pursuant to clause in respectthe commencement of that Financial Year, after deducting the aggregate amount of levies payable by Members pursuant to clause 6.1.5(a), shall be payable by Members (other than passenger Train Operators which do not operate services pursuant to a Franchise Agreement) designated by the Board as falling within the category described in clause 3.1.1(a); and one halfpayment of the balance of the aggregate amount of annual levies (d) Levies payable by Members in respect of a Financial Year (including any variation to them resolved by the Board pursuant to clause in respect of that Financial Year, after deducting the aggregate amount of levies payable by Members pursuant to clause 6.1.5(a), shall be payable by Members designated by the Board as falling within the category described in clause 3.2.1(c) Cap on levies The amount of the annual levy which any Member shall be obliged to pay in respect of any Financial Year shall not exceed an amount equal to 150 per cent. of the annual levy which that Member was obliged to pay in respect of the immediately preceding Financial Year of the Company, unless and to the extent that it is attributable to an increase in the Annual Turnover of that Member. If that Member was not for any reason obliged to pay a levy in ANNEX A: REVISED CONSTITUTION AGREEMENT Page 38 of 67

50 respect of the immediately preceding Financial Year of the Company, the 150 per cent. threshold shall be calculated by reference to the annual levy which that Member would have been obliged to pay if clause had applied to it in respect of that financial year Payment of levies Levies payable by Members in respect of a Financial Year) shall be payable by four equal payments on 1 April, 1 July, 1 October and 1 January during that Financial Year, unless the annual amount of a levy payable by a Member is less than 50,000, in which case the whole amount of that levy shall be payable on 1 April in that Financial Year. Levies paid by Members to the Company shall not be refundable or repayable by the Company in any circumstances Apportionment of levies amongst certain categories of Members Unless, not less than one month prior to the commencement of any Financial Year, the Company receives a notice in accordance with clause 6.1.9, the aggregate annual levies payable by the categories of members described in clauses 3.2.1(a) and 3.2.1(c) (calculated in accordance with clauses 6.1.5(b)-(c) respectively) shall be apportioned amongst Members (other than passenger Train Operators which do not operate services pursuant to a Franchise Agreement) designated by the Board as falling within the relevant category by reference to the following formula: A = B C Where: A is equal to the proportion of the aggregate annual levies attributable by that category of Members (except for, in the case of the category of members described in clause 3.2.1(a), passenger Train Operators which do not operate services pursuant to a Franchise Agreement) which is to be payable by a Member; B is equal to the amount of the Annual Turnover of the relevant Member during its most recently completed financial year; C is equal to the aggregate amount of the Annual Turnover of all Members designated by the Board as falling within the category of Members in question (but, in the case of the category of members described in clause 3.2.1(a), excluding passenger Train Operators which do not operate services pursuant to a Franchise Agreement) during their respective most recently completed financial years Annual Turnover ANNEX A: REVISED CONSTITUTION AGREEMENT Page 39 of 67

51 Not later than 2 months prior to the commencement of any Financial Year, each Member except for those categories of Member whose levies are calculated by reference to Schedule 6 shall provide to the Company the amount of its Annual Turnover during its most recently completed financial year (if appropriate, determined by reference to its most recently published audited accounts) Provision of financial information If the Member is unable to provide audited accounts as required by clause or if those audited accounts do not contain the requisite information, the Board shall be entitled to require such Member to provide a Certificate regarding the Annual Turnover of such Member. Each Member undertakes to provide such other information as the Company may reasonably require to verify such amount Confidentiality The Company shall keep confidential all information provided by each Member pursuant to clauses and and such information shall be treated as Restricted Information (unless the Member supplying such information agrees otherwise) in accordance with the provisions of clause Failure to provide information required If a Member fails to provide the information required by the Company pursuant to clauses and within 20 Business Days of the date on which it is requested by the Company, the Board shall be entitled to estimate the Annual Turnover of such Member and (pending receipt of the information from the Member) such estimate shall be treated for the purposes of this Agreement as the Annual Turnover of that Member Schemes apportioning amounts payable Notwithstanding clause 6.1.8, Members designated by the Board as falling within any of the categories of members described in clauses 3.2.1(a) (other than passenger Train Operators which do not operate services pursuant to a Franchise Agreement) and 3.2.1(c) shall, amongst themselves, be entitled to apportion the aggregate amount payable by that category pursuant to clause in a manner different from that prescribed by clause if: (a) a scheme which allocates the aggregate amount payable by the relevant category of members amongst Members designated by the Board as falling within the relevant category is approved in writing by not less than 75 per cent. in number of Members designated by the Board as falling within that category; ANNEX A: REVISED CONSTITUTION AGREEMENT Page 40 of 67

52 (b) the scheme is approved by the ORR, after consultation with the DfT; and (c) the scheme (following approval by the requisite percentage of Members and by the ORR in accordance with (a) and (b) above) is notified in writing to the Company not less than two months prior to the commencement of the Financial Year during which it is intended to have effect New Members Any new MemberNew Members (a) Any new Member, other than a new member who is a Train Operator providing services pursuant to a Franchise Agreement admitted to membership of the Company during a Financial Year shall pay a levy for that Financial Year calculated as follows: D = E X F 12 D E F 365 Where: D is equal to the amount of the levy payable; for that Financial Year in accordance with clause 6; E is equal to the number of whole monthsdays which will elapse between the date of admission to membership of that Member and the end of the Financial Year which is current at the date of that Member s admission to membership; and F is equal to the annual levy which that Member would have been obliged to pay if it had been a Member at the beginning of that Financial Year (but disregarding any change in the number of Members designated by the Board as falling within the relevant category of Members following the beginning of that Financial Year). (b) Any new Member which is a Train Operator providing services pursuant to a Franchise Agreement admitted to membership of the Company during a Financial Year shall pay a levy for that Financial Year calculated in accordance with the provisions of clause 3.4. unless there has been a remapping of franchises and it is not, in the reasonable opinion of the Company, possible to calculate the levies in accordance with that clause. Where this situation applies, the levy that the new member will pay will be as follows ANNEX A: REVISED CONSTITUTION AGREEMENT Page 41 of 67

53 P Q Where: R 365 P is equal to the levy payable for that Financial Year by the new Member in accordance with clause 6; Q is equal to the number of whole days which will elapse between the date of admission to membership of that Member and the end of the Financial Year which is current at the date of that Member s admission to membership; and R is equal to 0.1% of relevant annual turnover (and this 0.1% shall be reduced by 1% each year commencing 2015 so as to equate to 0.099% of relevant turnover in 2015/16, 0.098% in 2016/17, % in 2017/18 and so on). The sum determined by P will be inserted into Schedule 6 and shall in subsequent years of membership be the subject of the annual indexation. (b)(c) The admission of new Members after the commencement of a Financial Year shall not entitle any other Member to have adjusted the amount of the levies payable by it in respect of that Financial Year. 6.2 Failure to make payments If any sum payable by a Member under or pursuant to this Agreement is not paid on its due date, that Member shall pay interest on such sum from its due date for payment until payment is actually received by the Company at the rate of 3 per cent. per annum above the base rate of Barclays Bank PLC from time to time. 6.3 Value Added Tax The amount of any levy calculated in accordance with this clause 6 is exclusive of value added tax, which shall (if applicable) be payable by the Member or Members by whom the levy is payable on the amount of such levy at the applicable rate for the time being. 6.4 Borrowings Subject to the passing of a Reserved Resolution in accordance with clause or the Company obtaining the approval of Members in accordance with clause 5.3, the Company may borrow money and enter into other financing facilities and create security to secure its obligations in respect of such borrowings and other financing facilities. 6.5 Guarantees ANNEX A: REVISED CONSTITUTION AGREEMENT Page 42 of 67

54 No Member shall be obliged to give any guarantee or provide any other security in respect of the obligations or liabilities of the Company. 6.6 Members contribution Except as set out in this clause 6 and except for each Member s obligation to contribute up to 100 to the assets of the Company if the Company is wound up while it is a Member or within one year after it ceases to be a Member, no Member shall (unless otherwise agreed) have any other obligation to provide funds to the Company. 6.7 Review and Changes Commencing in the fourth year of any five year funding cycle, the Directors will initiate a review of the arrangements for funding, the adequacy of such funding, and any lessons learned, in the current period, and if they consider that adjustments are appropriate and will require a change to this Constitution Agreement will initiate changes to these arrangements in accordance with Schedule 5. 7 ANNUAL REPORT AND BUDGETACCOUNTS 7.1 Accounts The Company shall supply each Member with the following information: (a) within three months of the end of the Financial Year, the draftpublish its annual accounts of the Company for thateach Financial Year; (b) monthly management accounts where a Member elects (by notice in writing to the Company) to receive such accounts. 7.2 Approval of Budget Except where the Budget has been approved by the passing of a Reserved Resolutionits Members in accordance with clause 4.4.6, the Companythe Articles and the Companies Act 2006 and shall convene a general meeting of, to the Membersextent it is lawfully able to be held on or before 28 February in each year at which the Budget will be laid before the, make available to Members for their approval in accordance with clause 5.3.such information as they may reasonably request by notice in writing to the Company) Accounting and financial records The Company shall maintain accurate and complete accounting and financial records Reports ANNEX A: REVISED CONSTITUTION AGREEMENT Page 43 of 67

55 The Company shall, as soon as practicable after the end of each period of 12 months ending on 31 DecemberMarch, or such other date determined by the ORR, produce to the ORR and publish (in such form and manner determined by the ORR): a report on its activities in respect of its functionsfunctions during that period, including a general survey of developments during that period in relation to health and safety on the Rail Network; and. (a) a report for that period in respect of the matters specified in clause 2.3(a)(iii) Information regarding activities The Company shall provide to the ORR such information relating to its activities as the ORR may reasonably require for the purpose of carrying out any of his functionsits Functions under Part I of the Act other than any information which it could not be compelled to produce or to give in evidence in civil proceedings in any court. 8 ADVISORY COMMITTEE 8.1 Cessation On 8 March 2011 the Company s obligations with respect to the advisory committee originally established and operated pursuant to clause 8 of earlier versions of this Agreement shall cease and be of no further effect. 98 DIVIDEND POLICY The Company shall not declare, pay or make any dividend or other distribution. 10 FAILURE TO ACHIEVE REQUISITE MAJORITY If, at any general meeting of the Company, a resolution shall not be carried by the requisite majority (as set out in clause 5.3), the Board (in consultation with Members) shall (unless the matter in question is of the type described in paragraph 3 of Part A of schedule 4) reconsider such matter and, if appropriate, propose another resolution to Members in general meeting as soon as practicable thereafter. The Company and the Members shall act in good faith with a view to resolving the matter in question. 119 CONFIDENTIALITY General The Company shall carry out its functionsfunctions in a transparent and non-discriminatory way having regard to the requirements for consultation provided for in this Agreement as between itself and its Members and as between itself and the Stakeholders and having ANNEX A: REVISED CONSTITUTION AGREEMENT Page 44 of 67

56 regard to the commercial interests of the Members and their need for the maintenance of confidentiality Categorisation of information provided Subject to clause 9.8, information provided by the Company to any Member or by any Member to the Company shall be categorised by the provider of such information either as: (a) Open Information, which shall mean information which may be reproduced and disclosed in any form to any third party (including to Members and the public); (b) In Confidence Information, which shall mean information which may be reproduced and disclosed and/or copied or reproduced only as properly and reasonably necessary or desirable (in the opinion of the provider of such information) for the internal use of the recipient and its professional and technical advisers (but, except in accordance with clause 9.6, not to the Members) and in any event on such terms as do not result in it being made public and which maintain its confidentiality; or (c) Restricted Information, which shall mean information which may be disclosed only as properly and reasonably necessary or desirable (in the opinion of the provider of such information) within the entity receiving such information and in any event on such terms as do not result in it being made public and which maintain its confidentiality. Restricted Information may not be disclosed to any third party (including the receiving entity s professional and technical advisers (other than legal advisers) or the Company s Members) or copied or reproduced by the recipient other than with the express written consent of the provider of such information. Where the provider of such information has expressly categorised that information as Restricted Information and has expressly specified a purpose for which it has been disclosed, then it may not be used by the recipient except in connection with the express purpose Restricted Information Subject to clause 9.8, all information provided to the Company by Members, by the Company to Members or between Members in connection with the activities of the Company shall be treated as Restricted Information unless otherwise specified to be In Confidence Information or Open Information by the provider of such information. The confidentiality terms of this Agreement shall not apply in relation to any information sourced directly from third parties lawfully in possession of such information and who are not restricted from disclosing it Information in the public domain ANNEX A: REVISED CONSTITUTION AGREEMENT Page 45 of 67

57 Any information that is lawfully in the public domain at the time it is provided by or to the Company or which subsequently enters into the public domain (other than by reason of the breach of this Agreement or any other obligation of confidence between the Company and the Members or otherwise unlawfully) shall be treated as Open Information Disclosure and use of information provided The Company and the Members will use reasonable efforts to prevent the unauthorised disclosure of any information categorised as In Confidence Information or Restricted Information and belonging to the Company or any Member. Nothing in this clause 119 shall be construed as granting authority for the receiving party to make use of disclosed information for any commercial purpose other than that expressly stated by the provider of such information, nor (subject to the provisions of clause 10) providing any licence of any right or intellectual property owned by or licensed to the provider of such information connected to the disclosed information Disclosure of derivative work Subject to the Company obtaining the prior written consent of the provider of such information, the Company shall be entitled to prepare and disclose a derivative work based upon any In Confidence Information or Restricted Information received by the Company in a manner which: (a) does not enable the provider of such information to be identified from the information so provided; (b) does not affect the provider of such information s business and financial standing; and (c) presents such information from an industry-wide perspective rather than a Memberspecific perspective Disclosure in compliance with mandatory legal obligations Nothing in this Agreement shall prevent the disclosure of any information (including In Confidence Information or Restricted Information) received by the Company in proper compliance with any mandatory legal obligation, order of a court of competent jurisdiction or direction by a governmental or regulatory authority, but the Company shall use all reasonable endeavours to give the provider of such information prompt notice of such disclosure in order to allow the provider of such information a reasonable opportunity to obtain a protective order, if permitted by law or the relevant authorities Railway Group Standards ANNEX A: REVISED CONSTITUTION AGREEMENT Page 46 of 67

58 The provisions of clauses 9.2 and 9.3 shall not apply in respect of information which a Member is obliged to provide to the Company in accordance with a Railway Group Standard Effect of confidentiality provisions The provisions set out in this clause 119 shall continue to have effect in relation to any Member which ceases to be a member of the Company. Upon any such cessation of membership, the relevant Member shall forthwith return to the Company or destroy any In Confidence Information or Restricted Information received by that Member from the Company or another Member, together with any copies of that information which may have been made INTELLECTUAL PROPERTY Licence granted to Members Subject to the obligations set out in clause 119, the Company hereby grants to each of its Members a non-exclusive, royalty-free, world-wide, sub-licensable, non-assignable copyright licence to use, for any purpose consistent with the Primary Objective, copyright comprised in the Company s Intellectual Property (except to the extent that the grant of such a licence would result in the Company being in breach of any contract or of any other legally binding duty or obligation) for as long as any such Member remains a member of the Company Licence granted to the Company Subject to the obligations set out in clause 119, each Member hereby grants the Company a non-exclusive, royalty-free, world-wide and irrevocable copyright licence in respect of Open Information provided by such Member to the Company, to use and reproduce in any material form from such Open Information for any purpose consistent with the Primary Objective and to sub-license such use and right to reproduce to other Members (except to the extent that the grant of such a licence would result in the Member being in breach of any contract or of any other legally binding duty or obligation) In Confidence and Restricted Information Nothing in this clause 1210 shall grant any licence whatsoever to the Company in respect of In Confidence Information or Restricted Information No right of recourse No Member shall have a right of recourse against the Company in respect of the licence granted under clause 10.1, whether in respect of any claim which may be made against a Member for infringement of any right relating to Intellectual Property or otherwise howsoever. ANNEX A: REVISED CONSTITUTION AGREEMENT Page 47 of 67

59 Fees Each Member shall be prohibited from charging any licence or similar fees for the sublicensing of any rights granted to it under clause 10.1, unless such charging has been approved by the Board REVIEW AND AMENDMENT General Subject to clause 11.2, the provisions of schedule 5Schedule 5 shall have effect in respect of the review and amendment of this Agreement, the Articles or the memorandum of association of the Company Approval of the ORR The amendment or termination of this Agreement, or any amendment of the memorandum of association of the Company or the Articles (or the adoption of new Articles) shall require the prior approval of the ORR before such amendment, termination or adoption may have effect COMPLIANCE WITH LICENCES The Company and the Members agree that: (a) the Company shall conduct its affairs so as to comply with its obligations under this Agreement and so as to ensure compliance bysupport each Member who holds a licence under section 8 of the Act which contains either of the Licence Conditions in complying with paragraphs 5 to 17 of the Licence Conditions applicable to membership of the Company (as amended from time to time); (b) any Member who holds a licence under section 8 of the Act which contains either of the Licence Conditions shall be entitled to require the Company and the other Members (to the extent that it is within their power to do so) to take such steps as may be necessary in order to enable that Member to comply with any provisional or final order made by the ORR under section 55 of the Act in respect of those paragraphs 5 to 17 of the relevant Licence Condition (including an order in respectapplicable to membership of the noncompliance of this Agreement or the Articles with the terms of that Licence Condition).Company INSURANCE ProposalResponsibility to take out insurance ANNEX A: REVISED CONSTITUTION AGREEMENT Page 48 of 67

60 The Company proposes to take out policies of shall maintain such insurance as is necessary to cover such ofcomply with its risks (including the liability of directors and officers) as might reasonably be expected to be covered bylegal obligations, together with any further insurance that the Board considers appropriate from time to time. (having regard to the proposed activities of the Company and having regard to the availability and cost of such cover). Unavailability of insurance If the Board (acting reasonably) shall at any time resolve that: it is not possible, or will not in respect of the year next following be possible, to obtain insurance or other cover against risks which, in its reasonable opinion, should prudently be covered by insurance; it is not possible, or will not in respect of the year next following be possible, to obtain insurance or other cover against risks which, in its reasonable opinion, should prudently be covered by insurance on reasonable terms and at reasonable premia; or it has incurred, or is likely to incur, a material uninsured, unforeseen liability which was not taken into account or provided for in the Approved Budget for the year then current; then the Board shall carry out an urgent review of the Company s activities in the light of the insurance or other cover then or prospectively available to it in respect of its activities with a view to: making a proposal to amend the provisions of this Agreement and (if necessary) the Articles in accordance with clause 15.3 (an Insurance Proposal ); making a Proposal for Change (in respect of which the provisions of schedule 6 shall have effect); or taking such other steps as the Board may consider appropriate (which may, without limitation, include steps to put the Company into liquidation or administration). In any event the Company shall provide Network Rail with full details of the insurance or other cover obtained by the Company in respect of each year (or other period to which insurance cover applies) as soon as practicable after such insurance or other cover has been effected. The Company shall also provide Network Rail with details of any material liability of the kind referred to in clause 15.2(c) above as soon as it becomes aware of the same or the fact that the same has been or may be incurred, and provide Network Rail with such other information regarding the Company s insurances and any such material liability ANNEX A: REVISED CONSTITUTION AGREEMENT Page 49 of 67

61 as is referred to in clause 15.2(c) above as Network Rail may reasonably request from time to time. Insurance Proposal An Insurance Proposal shall involve the assumption by Network Rail of an obligation to pay levies not exceeding in aggregate 25 million per annum (or such higher amount as may be agreed by Network Rail and the Company from time to time) to the Company (in addition to those which it otherwise has an obligation to pay under clause 6) in an amount which is sufficient to discharge, and contingent on the Company incurring, uninsured liabilities which would, but for the circumstances specified in clauses 15.2(a) or 15.2(b), have been covered by policies of insurance. It is agreed that there shall be no obligation on Network Rail to agree to any Insurance Proposal, or any of its terms, but in the event of the terms of an Insurance Proposal having been agreed between the Company and Network Rail and between the Company and such of the Members as may be required through charges payable by them to Network Rail (which are not subject to reimbursement by the DfT) to fund costs of Network Rail associated with the Insurance Proposal, the Company shall submit the Insurance Proposal to the ORR (together with a written memorandum explaining the reasons for the Insurance Proposal). The provisions of paragraphs 3.2 to 4.6 (except for paragraph 4.2) of schedule 5 shall apply in the same way as they apply to a Proposal for Change. Duty to mitigate The Company shall take all reasonable steps to mitigate its loss in respect of any matter which may give rise to a claim under a policy of insurance or which might give rise to an obligation of Network Rail to pay additional levies under clause ANNEX A: REVISED CONSTITUTION AGREEMENT Page 50 of 67

62 1614 NOTICES Form of notice Any notice required to be given under this Agreement shall be in writing in the English language and shall be delivered personally, or sent by electronic mail, by pre-paid first-class post (or air mail if overseas) or by fax, to each of the parties due to receive the notice, at in the case of Network Rail to its electronic mail addresses (if provided), registered office and fax number set out in schedule 1Schedule 1 and in the case of the Company to the electronic mail address, address or fax number set out below: Company: For the attention of: Block 2 Angel Square, 1 Torrens Street, London EC1V 1NY The Company Secretary Fax number: 44(0) Electronic Mail: company.secretary@rssb.co.uk or to such other address, number or addressee as each party may by notice advise from time to time to each of the other parties, but without prejudice to the effectiveness of any notice already given in accordance with this clause Delivery of notice General Any notice given in accordance with clause 14.1 shall be deemed to be given: (a) if delivered personally, when left at the relevant address referred to in clause 14.1; (b) if sent by electronic mail, on delivery of the electronic mail; (c) if sent by mail (other than air mail), three Business Days after it was posted; (d) if sent by air mail, six Business Days after it was posted; (e) if sent by fax, on completion of its transmission, provided that if, under the above provisions, any such notice would otherwise be deemed to be given after 5pm (local time) on a Business Day, such notice shall be deemed to be given at 9 am9am (local time) on the next Business Day. ANNEX A: REVISED CONSTITUTION AGREEMENT Page 51 of 67

63 Proof of delivery In proving the giving of a notice under this clause 16,14, it shall be conclusive evidence to prove that it was left at the appropriate address or the envelope containing it was properly addressed and posted or the electronic mail was sent in full to the relevant address or the fax was sent in full to the relevant number (as the case may be) MISCELLANEOUS Successors and assigns This Agreement shall be binding on and shall ensure for the benefit of each party s successors Assignment None of the parties may assign, transfer or create or allow to subsist any security interest over any of its rights or obligations under this Agreement No partnership Nothing in this Agreement shall create a partnership or (except as set out in clause 3.1.2(a))3.1.2) establish a relationship of principal and agent or any other fiduciary relationship between or among any of the parties Agreement to prevail over Articles In the event of any conflict, ambiguity or discrepancy between the provisions of this Agreement and the Articles, the Members shall join in procuring that the Articles are altered to accord with the provisions of this Agreement, which shall prevail Remedies No remedy conferred by any of the provisions of this Agreement is intended to be exclusive of any other remedy available at law, in equity, by statute or otherwise. Each and every other remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law in equity, by statute or otherwise. The election by any party to pursue one or more of such remedies shall not constitute a waiver by such party of the right to pursue any other available remedy Payment of costs Each of the parties shall be responsible for its respective legal and other costs incurred in relation to the preparation and negotiation of this Agreement. ANNEX A: REVISED CONSTITUTION AGREEMENT Page 52 of 67

64 Severability If any term or provision in this Agreement shall be held to be illegal or unenforceable, in whole or in part, under any enactment or rule of law, such term or provision or part shall to that extent be deemed not to form part of this Agreement but the enforceability of the remainder of this Agreement shall not be affected Counterparts This Agreement may be entered into in any number of counterparts and by the parties to it on separate counterparts, each of which when executed and delivered shall be an original, but all the counterparts shall together constitute one and the same instrument Effect of Agreement This Agreement shall cease to have effect in relation to a Member who ceases to be a member save in respect of: (a) any provision of this Agreement which is expressed to continue after such cessation; (b) any liability which at the time of such cessation has accrued to another party or which may accrue in respect of any act or omission occurring prior to such cessation Contracts (Rights of Third Parties) Act 1999 No term of this Agreement is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Agreement Governing law This Agreement shall be governed by and interpreted in accordance with English law DISPUTE RESOLUTION General Any dispute between Members or between any Member and the Company arising out of or in connection with this Agreement shall be resolved as follows: (a) where the parties to the dispute agree, the dispute may be referred for resolution by mediation to be administered and conducted in accordance with RIDRR, the provisions of which are deemed to be incorporated by reference into this Agreement to the extent necessary to give effect to this clause; and (b) where either: ANNEX A: REVISED CONSTITUTION AGREEMENT Page 53 of 67

65 (i) (ii) the parties do not agree to refer a dispute for resolution by mediation pursuant to clause 16.1(a),; or a dispute has been the subject of mediation pursuant to clause 16.1(a) and that mediation has terminated in accordance with paragraph B6 of RIDRR and notice of arbitration has been served pursuant to RIDRR on the Disputes Secretary (as defined in RIDRR) by the party wishing to begin the arbitration within 28 days of such termination then the dispute shall be referred for determination by arbitration to be administered and conducted in accordance with RIDRR, the provisions of which are deemed to be incorporated by reference into this Agreement to the extent necessary to give effect to this clause Disputes regarding unpaid sums Where a dispute arises between the Company and a Member relating to the failure of such Member to pay any sums due from it to the Company pursuant to clause 6 of this Agreement (it being agreed that such sums shall constitute a debt immediately due and owing from the relevant Member to the Company), at the option of the Company such dispute shall be referred to the courts of England in which case the parties to this Agreement agree to submit to the exclusive jurisdiction of the courts of England in respect of such dispute Failure to resolve disputes If the referral of a dispute under clause 16.1 for resolution by mediation and/or for determination by arbitration fails because the RIDR Council (as defined in RIDRR) or the Disputes Secretary (as defined in RIDRR) declines or is unable to administer such mediation and/or arbitration or the dispute cannot be administered or conducted pursuant to RIDRR for any other reason, then the provisions of clause 16.1 shall be deemed no longer to apply to such dispute and such dispute shall be subject to the exclusive jurisdiction of the courts of England Provisional relief Nothing in this clause 16 shall prevent a party to a dispute from seeking provisional relief and/or conservatory measures (whether negative or positive and notwithstanding whether the relief and/or measures sought may overlap with a remedy which is, or may be, claimed in proceedings between the parties) from the courts of England and any such request shall not be deemed incompatible with the agreement to arbitrate or a waiver of the right to arbitrate as set out in clause 16.1 of this Agreement. ANNEX A: REVISED CONSTITUTION AGREEMENT Page 54 of 67

66 IN WITNESS whereof this Agreement was entered into on the day and date first above written. ANNEX A: REVISED CONSTITUTION AGREEMENT Page 55 of 67

67 SCHEDULE 1 THE FIRST MEMBER Network Rail Infrastructure Limited Kings Place, 90 York Way, London N1 9AG For the attention of: The Group Company Secretary Fax number: address: hazel.walker@networkrail.co.uk ANNEX A: REVISED CONSTITUTION AGREEMENT Page 56 of 67

68 SCHEDULE 2 APPLICATION FORM The Directors Rail Safety and Standards Board Limited (the Company ) Block 2 Angel Square 1 Torrens Street London EC1V 1NY 20 Dear Sirs We hereby apply for membership of the Company and agree that if the Company is wound up while we are a member or within one year after we cease to be member, we will contribute such amount as may be required (not exceeding 100) to the assets of the Company. Yours faithfully. For and on behalf of ANNEX A: REVISED CONSTITUTION AGREEMENT Page 57 of 67

69 SCHEDULE 3 ACCESSION AGREEMENT THIS ACCESSION AGREEMENT is made on 20 BETWEEN: (1) [INSERT NAME OF NEW MEMBER] (No. ) whose registered office is at (the New Member ); and (2) RAIL SAFETY AND STANDARDS BOARD LIMITED (No ) whose registered office is at Block 2 Angel Square, 1 Torrens Street, London EC1V 1NY (the Company ) for itself and as agent for the members of the Company for the time being (the Members ). WHEREAS This Agreement is supplemental to the constitution agreement made on 1 April 2003 between (1) Network Rail Infrastructure Limited and (2) the Company (as amended from time to time) (the Constitution Agreement ). THE PARTIES AGREE AS FOLLOWS: 1. The New Member confirms it has read a copy of the Constitution Agreement and the Articles of Association of the Company and covenants with each Member and the Company to perform and be bound by all the terms of the Constitution Agreement as if the New Member were named in the Constitution Agreement as a party to it and a Member. 2. The Company and the Members confirm and agree that the Member shall be entitled to the benefit of the Constitution Agreement as if it were named as a party to it and a Member. 3. Any notice to be given to the New Member pursuant to the Constitution Agreement shall be given to the New Member at the address, fax number or electronic mail address set out below: Address: For the attention of: Fax number: Electronic Mail: 4. This Agreement is governed by English law and words and phrases used in this Agreement shall, where the context permits, have the same meanings as are ascribed to them in the Constitution Agreement. ANNEX A: REVISED CONSTITUTION AGREEMENT Page 58 of 67

70 5. This Agreement may be entered into in any number of counterparts and by the parties to it on separate counterparts, each of which when executed and delivered shall be an original, but all the counterparts shall together constitute one and the same instrument. IN WITNESS whereof this Agreement has been executed by the New Member and the Company (for itself and as agent for the Members) on the date first above written. SIGNED by. for and on behalf of RAIL SAFETY AND STANDARDS BOARD LIMITED (for itself and as agent for each of the Members) Director SIGNED by. for and on behalf of the New Member Director ANNEX A: REVISED CONSTITUTION AGREEMENT Page 59 of 67

71 SCHEDULE 4 RESERVED MATTERS Part A 1 Adoption of, any material departure from or any material amendment to strategies prepared by the Board designed to set out how the Primary Objective and the Principles of Operation will be achieved by the exercise of the Functions. 2 Approval of any amendment to the Code or of any revised version of the Code 3 Approval of the carrying outaddition or the cessation by the Company of activitiesfunctions as contemplated by clause 2.73.(b) of this Agreement. Part B 1 Adoption of or any material amendment to the Railway Group Safety Plan. Part C 1 Appointment (other than in respect of the appointments described in clauses or 4.2.2)4.2.2) and removal of Directors to or from the Board of the Company (other than Directors appointed pursuant to clauses and 4.2.2). Part C 2 Approval of, any material departure from or any material amendments to the Company s annual BudgetStrategic Business Plan. 3 Approval of the entry by the Company into any borrowing or other financing facilities. ANNEX A: REVISED CONSTITUTION AGREEMENT Page 60 of 67

72 SCHEDULE 5 CHANGES TO THIS AGREEMENT, THE ARTICLES OR THE MEMORANDUM OF ASSOCIATION 1. Receipt and notification of Proposals for Change 1.1. Entitlement to make Proposal for Change Any Member or the Company shall be entitled to make a Proposal for Change for consideration and, if thought fit, approval by the Company in general meeting. Any such proposal shall (unless made by the Company) be sent to the Company and shall: (a) be in writing; (b) contain reasonable particulars of the change proposed; and (c) be supported by an explanation in reasonable detail of the reasons for the proposed change Reviews carried out by the Board Notwithstanding paragraph 1.1, the Board: (a) shall not less frequently than every five years cause the provisions of this Agreement, the Articles and the memorandum of association of the Company to be reviewed for the more effective achievement of the Primary Objective, having regard to the circumstances then existing and shall, if it considers it appropriate to do so, make Proposals for Change; and (b) may, if it considers that the aggregate Annual Turnover of the Members designated by the Board as falling within either of the categories described in clauses 3.2.1(d) or 3.2.1(f)3.2.1(d) or 3.2.1(f) is substantially unrepresentative of the economic activity of the sector represented by that category and that the total voting rights of that category exercisable at general meetings of the Company (as set out in the Articles) are accordingly disproportionately high, make a Proposal for Change with a view to reducing the voting rights which may be exercised by that category of Members at general meetings of the Company Notice of Proposal for Change The Company shall, within 7 days following receipt of a Proposal for Change from any Member (or in the case of a Proposal for Change made by the Company, within 7 days following the Board resolving to propose such Proposal for Change) or, if later, within 7 days ANNEX A: REVISED CONSTITUTION AGREEMENT Page 61 of 67

73 following receipt of any clarification that the Company may reasonably request from the sponsor of that proposal: (a) give notice of that proposal to each Member, the ORR and the DfT; and (b) invite the submission to the Company of written representations (other than from the ORR) in respect of that proposal within such period as is reasonable in all the circumstances (the Consultation Period ), being a period of not less than 30 days from the date of notification under paragraph (a) above Calling of meeting to consider Proposal for Change The Company shall, within the period of 30 days following the end of the Consultation Period: (a) give notice to convene a general meeting of the Company; and (b) supply the Proposal for Change to each Member together with: (i) (ii) copies of all representations received pursuant to paragraph 1.3(b); 1.3(b); and if the sponsor of the proposal consents, any modification of that proposal Material modification of Proposal for Change If at any time a Proposal for Change is (with the consent of its sponsor) modified in a material way, the Company shall treat the proposal as a new Proposal for Change Clarification The sponsor of a Proposal for Change shall promptly comply with all reasonable written requests of the Company for further clarification of the proposal. 2. Consideration by Members in general meeting 2.1. Voting passmark The Members in general meeting shall consider and, if thought fit, approve each Proposal for Change. A Proposal for Change shall have been approved only if approved by Members holding eighty per cent. or more of the total voting rights exercised in respect of that resolution on a poll at a general meeting of the Company. If a Proposal for Change is not so approved by the Members in general meeting in accordance with this paragraph but Members of not fewer than four of the six categories of Members described in clauses 3.2.1(a)-(f)3.2.1(a)-(f) would, if each of those categories had voted as a class, have approved the Proposal for Change by exercising eighty per cent. or more of the total voting ANNEX A: REVISED CONSTITUTION AGREEMENT Page 62 of 67

74 rights exercised by Members falling within that category in respect of that resolution on a poll, then any Member shall be entitled to require the Company to convene another general meeting of the Company to reconsider the Proposal for Change Further consultation The Company shall, as soon as reasonably practicable following a request by the Members in general meeting to carry out further consultation in respect of any Proposal for Change, carry out that further consultation Appeal procedure General If a Proposal for Change is not approved in accordance with paragraph by the Members in general meeting at two general meetings but Members of not fewer than four of the six categories of Members described in clauses 3.2.1(a)-(f)3.2.1(a)-(f) would, if each of those categories had voted as a class, have approved the Proposal for Change at each of those meetings by exercising eighty per cent. or more of the total voting rights exercised by Members falling within that category in respect of that resolution on a poll, then any Member shall be entitled to give a notice of appeal against it to the ORR. The ORR may adopt such procedures as he thinks fit in considering such appeals. The ORR may publish ORR s Appeal Procedures to be adopted in respect of appeals to the ORR pursuant to this paragraph The ORR s Appeal Procedures shall apply to such appeals as the ORR so directs Liability of the ORR Where any Member shall have given a notice of appeal, the ORR shall not be liable in damages or otherwise for any act or omission to act on hisits part (including negligence) in relation to the appeal Determination of the ORR The determination of the ORR shall be final and binding on all Members and the Company. 3. Consequences of recommendation by Members in general meeting 3.1. Decision to approve a Proposal for Change The Company shall, as soon as reasonably practicable following the passing of a resolution by the Members in general meeting to approve a Proposal for Change, submit the proposal to the ORR, together with a written memorandum: ANNEX A: REVISED CONSTITUTION AGREEMENT Page 63 of 67

75 (a) explaining the reasons for the proposed change; (b) containing details of the results of the consultation process (including copies of any representations made pursuant to paragraph 1.3(b)1.3(b) which shall have been neither accepted nor withdrawn); and (c) stating the reasons for any dissent from that decision by any Member (insofar as such reasons are known by the Company) Provision of Information by Members Members shall use their respective reasonable endeavours to provide any further information required in relation to the consideration of a Proposal for Change by the ORR Effect of Proposal for Change General No Proposal for Change shall have effect unless the ORR (after consultation with the DfT) gives notice to the Company in writing that the ORR approves the Proposal for Change Notice The Company shall, if the ORR gives hisits approval of the Proposal for Change, give written notice to all Members of such approval and the Members and the Company shall immediately be bound by the Proposal for Change and shall execute such documents and shall do such acts and things as may be necessary or requisite to give effect to the Proposal for Change. 4. Notification of Change 4.1. Notification to parties The Company shall notify any change made in accordance with this schedule 6,Schedule 5, to all Members as well as to the ORR and the DfT Arrangements for implementation of a change The Members in general meeting may determine whether a change made in accordance with this schedule 5Schedule 5 shall have effect on a single date or series of dates and the Company shall give notice of such determination to all relevant parties at the same time as it provides notification pursuant to paragraph ANNEX A: REVISED CONSTITUTION AGREEMENT Page 64 of 67

76 4.3. Effective date of change The Company shall determine the applicable effective date or series of dates provided that such date or series of dates commences after the expiry of 21 days from the date of notification made pursuant to paragraph Approval of the ORR Any determination made pursuant to paragraph 4.2 or 4.3 shall be subject to the approval of the ORR Maintenance of records The Company shall keep and retain, for a period of 6 years following receipt, records of all representations made in respect of any Proposal for Change Access to records The records referred to in paragraph shall be open for inspection by Members during reasonable office hours and without charge. Any person inspecting any such records shall be entitled upon request to be provided with copies of the whole or any part of them at a cost not exceeding 0.20 per sheet. ANNEX A: REVISED CONSTITUTION AGREEMENT Page 65 of 67

77 SCHEDULE 6 MEMBERSHIP LEVIES AS AT APRIL 2014 Schedule of Membership levies applying to members in categories (a) excluding Passenger Train Operators that do not operate services under a Franchise Agreement, and 3.2.1(c) (a) Levy applicable at (c) Levy applicable at Network Rail Infrastructure Ltd ANNEX A: REVISED CONSTITUTION AGREEMENT Page 66 of 67

78 SIGNED by and on behalf of ) NETWORK RAIL ) INFRASTRUCTURE LIMITED ). Director/Duly Authorised SIGNED by and on behalf of ) RAIL SAFETY AND ) STANDARDS BOARD ) LIMITED ). Director/Duly Authorised ANNEX A: REVISED CONSTITUTION AGREEMENT Page 67 of 67

79 No THE COMPANIES ACT PRIVATE COMPANY LIMITED BY GUARANTEE AND NOT HAVING A SHARE CAPITAL ARTICLES OF ASSOCIATION OF RAIL SAFETY AND STANDARDS BOARD LIMITED AS AMENDED BY APPROVAL OF THE MEMBERS OBTAINED AT A GENERAL MEETING OF THE MEMBERS ON [ ]10 DECEMBER 2010 PRELIMINARY 1 In these Articles, unless the context otherwise requires, the following expressions have the following meanings: A Members means the members falling within the category of members described in Article 89(a) and A Member shall mean any of them; the Act means the Companies Act , including any statutory modification or reenactment of it for the time being in force; Affected Member has the meaning ascribed to it by Article 1213; Annual Review Period means each successive period of one year, the first of which shall commence on 1 April 2003; Annual Turnover means in respect of a member: (a) (b) subject to Article 1213(c), such part of that member s annual turnover (including subsidies) as is derived from rail-related business activities in Great Britain (excluding turnover relating to any network which is not a Rail Network); or (other than in respect of a member which is an A Member, a B Member or a C Member) if that member is part of a Group, such part of the annual turnover of that Group (including subsidies) as is derived from rail-related business activities in Great Britain (excluding turnover relating to any network which is not a Rail Network) provided that if that Group includes more than one member, then such turnover shall be divided by the number of members in that Group; ANNEX B: REVISED ARTICLES OF ASSOCIATION AND MEMORANDUM OF ASSOCIATION Page 1 of 28

80 Appointments Committee means the appointments committee established and maintained by the Board pursuant to Article 8788; these Articles means these Articles of Association as originally adopted or altered or varied from time to time (and Article means one of these Articles); Audit Committee means the audit committee established and maintained by the Board pursuant to Article 8788; B Members means the members falling within the category of members described in Article 89(b) and B Member shall mean any of them; Board means the Board of Directors for the time being of the Company; Business Day means a day (other than a Saturday or a Sunday) on which banks are ordinarily open for the transaction of normal banking business in London; C Members means the members falling within the category of members described in Article 89(c) and C Member shall mean any of them; Certificate means a certificate for the purposes of Articles 9, 10, 11 or 3839 (as the case may be) regarding the Annual Turnover of a member (broken down, if provided pursuant to Articles 910 or 1011 by reference to the categories of activities respectively set out in Article 89) from the finance director or auditors of a member and which, if the certificate is provided by the finance director of a member, sets out the amount which the finance director certifies to be a bona fide estimate of the Annual Turnover (and, if applicable, the breakdown thereof) of the member or, if provided by the auditors of a member, sets out the amount which is in the opinion of the auditors a bona fide estimate of the Annual Turnover (and, if applicable, the breakdown thereof) of the member; clear days in relation to the period of a notice means that period excluding the day when the notice is given or deemed to be given and the day for which it is given or on which it is to take effect; Code has the meaning ascribed to it by the Constitution Agreement; Constitution Agreement means the agreement entered into or to be entered into between the members of the Company for the time being and the Company to regulate the operation and management of the Company and the relationship between its members; The Company means Rail Safety and Standards Board Limited; D Members means the members falling within the category of members described in Article 89(d) and D Member shall mean any of them; DfT means the Secretary of State for Transport; Director means a director for the time being of the Company; Disqualifying Interest means an interest in any benefit which concerns or is determined by reference to the commercial activities or affairs of any person engaged in or likely to be engaged in the provision of services relating to the Railway Industry but shall not include an entitlement to participate in an all-employee share scheme established by any such person and for the purposes of this definition; all-employee share scheme means any Inland Revenue approved employee share scheme established by a company under which it is a condition of such approval that participation is offered generally to all employees of the company and its participating subsidiaries or to all such employees fulfilling conditions as to length of service; benefit includes any payment, profit, gain or advantage however expressed, established, given or made; and interest in relation to a benefit, includes the possession, receipt or expectation of or entitlement to an interest; ANNEX B: REVISED ARTICLES OF ASSOCIATION AND MEMORANDUM OF ASSOCIATION Page 2 of 28

81 E Members means the members falling within the category of members described in Article 89(e) and E Member shall mean any of them; Excluded Services has the meaning ascribed to it by Article 1213; F Members means the members falling within the category of members described in Article 89(f) and F Member shall mean any of them; Franchise Agreement has the meaning ascribed to it by the Railways Act; Functions has the meaning ascribed to it by the Constitution Agreement; Group means, in respect of a companyan entity, that companyentity and any companyentity which is a holding companyparent undertaking or subsidiary undertaking of that companyentity and any subsidiary undertaking of any such holding companyparent undertaking; and for the purposes of these Articles subsidiary undertaking and holding companyparent undertaking have the meanings ascribed to them by sections 736 and 736Asection 1162 of the Act; Industry Director means a non-executive Director with experience of the Railway Industry as referred to in Article 4849(c) and appointed pursuant to Article 5859; Infrastructure Manager has the meaning ascribed to it by European Union Directive 91/440/EEC of 29 July 1991 on the development of the Community s railways; Memorandum of Association or Memorandum means the provisions listed at Annex 1 to these Articles (formerly forming part of the Company s memorandum of association) and any reference to provisions of the Memorandum shall refer to provisions of the same number at Annex 1. The provisions listed at Annex 1 shall have effect as if set out in the body of these Articles; Network Rail means Network Rail Infrastructure Limited, a company incorporated in England and Wales under number ; Non-Industry Director means a non-executive Director as referred to in Article 4849(b) and who satisfies the criteria set out in Article 6465; Office means the registered office for the time being of the Company; ORR means the Office of Rail Regulation established under section 15 of the Railways and Transport Safety Act 2003; Primary Objective means the primary objectiveprincipal object of the Company as set out in paragraph 3.1 of the memorandum of association of the CompanyAnnex 1; Principles of Operation has the meaning ascribed to it by the Constitution Agreement; Rail Network means: (a) (b) the network of which Network Rail or any successor organisation or organisations is the Infrastructure Manager; and the network of which any other Infrastructure Manager which is for the time being a member of the Company in accordance with Article 7(d) is the Infrastructure Manager; Railway Group means: (a) Network Rail or any successor organisation and any Train Operator or Station Operator which has a safety management system under the Railways (and Other Guided ANNEX B: REVISED ARTICLES OF ASSOCIATION AND MEMORANDUM OF ASSOCIATION Page 3 of 28

82 Transport Systems (Safety) Regulations 2006 for operation on or in relation to infrastructure managed by Network Rail or any successor organisation; and (b) (c) any other Infrastructure Manager which is a member of the Company and any other Train Operator or Station Operator which has a safety management system under the Railways and Other Guided Transport Systems (Safety) Regulations 2006 for operation on or in relation to infrastructure managed by that Infrastructure Manager; and the Company; Railway Group Safety Plan means a plan setting out the collective health and safety performance and objectives of Railway Group members and the activities planned to deliver those objectives, focusing in particular on the encouragement and facilitation of good practice and on co-operation; Railway Group Standards has the meaning ascribed to it in the Code; Railway Industry means members of the Railway Group and Suppliers; Railways Act means the Railways Act 1993; relevant amount Relevant Amount has the meaning ascribed to it by Article 1213; Relevant Employee means: (a) (b) every Director of the Company and every other person who has decisive authority in respect of any aspect of the Company s activities (whether or not an employee of the Company); and the spouse, partner and dependent children of any such person; Remuneration Committee means the remuneration committee established and maintained by the Board pursuant to Article 8788; Reserved Resolution has the meaning ascribed to it by the Constitution Agreement Restricted Information has the meaning ascribed to it by the Constitution Agreement; Secretary means the secretary of the Company or any other person appointed to perform the duties of the secretary of the Company, including a joint, assistant or deputy secretary; the Statutes means the ActCompanies Acts (as defined in section 2 of the Act) and every other act for the time being in force concerning companies and affecting the Company; Station Operator means any person holding a licence under section 8 of the Railways Act or a railway safety case under the Railways (Safety Case) Regulations 2000 in respect of the operation of a station on the Rail Network; Successor Member has the meaning ascribed to it by Article 1213; Supplier means: (a) (b) any person other than a Train Operator or Infrastructure Manager whose business activities or any goods which he manufactures or owns must comply, directly or indirectly, with Railway Group Standards or TSIs; and any person other than a Train Operator or Infrastructure Manager who supplies goods or services to the Railway Industry and whose business activities are, in the opinion of the Board acting reasonably, pertinent to the achievement of the Primary Objective; ANNEX B: REVISED ARTICLES OF ASSOCIATION AND MEMORANDUM OF ASSOCIATION Page 4 of 28

83 Train Operator means any person holding a licence under section 8 of the Railways Act or a railway safety case under the Railways (Safety Case) Regulations 2000 in respect of the operation of trains on the Rail Network; Triennial Review Period means each successive period of 3 years, the first of which shall commence on 1 April 2003; Trigger Date means, for the purposes of Article 1314, the date on which (i) a member gives the Company notice under Article 1112(a) of its intention to cease to be a member of the Company, or (ii) a member ceases to fall within any of the categories of members described in Article 78 subject to Article 1213 or (iii) the Board resolves that such member shall cease to be a member of the Company pursuant to Article 1112(c); TSIs means Technical Specifications for Interoperability under Directives 96/48/EC and 2001/16/EC of the European Parliament and of the Council and under any other Directives adopted by either the Council or the European Parliament and the Council which from time to time relate to technical specifications for interoperability of trans-european rail systems; and United Kingdom means Great Britain and Northern Ireland. 2 Unless the context otherwise requires, words or expressions contained in these Articles bear the same meaning as in the Act but excluding any statutory modification of it not in force when these Articles become binding on the Company. 3 Any reference in these Articles to a statute or statutory provision or any subordinate legislation includes that statute, provision or subordinate legislation as from time to time modified, reenacted or consolidated whether before or after the date of adoption of these Articles. Terms and expressions defined in the Railways Act shall, unless the contrary intention appears, have the same meanings in these Articles. MEMBERSHIP 4 The subscribers to the Memorandum of Association of the Company and such other persons as are admitted to membership in accordance with these Articles shall be members of the Company. 5 Every person who wishes to become a member shall deliver to the Company an application for membership in such form as the Directors may require to be executed by him. 6 Subject to the terms of the Constitution Agreement, no person shall be admitted as a member of the Company unless he is approved by the Directors following receipt of the appropriate application. 7 Subject to an appropriate application for membership having been received, the Board shall admit the following to membership of the Company: (a) Network Rail and each holder of a licence under section 8 of the Railways Act if such persons are required to become members of the Company under the terms of their respective licences; (b) any Supplier which is not required by the terms of any licence held by it under section 8 of the Railways Act to become a member of the Company; (c) (d) any Train Operator which is not required by the terms of any licence held by it under section 8 of the Railways Act to become a member of the Company; and any Infrastructure Manager (other than Network Rail), subject to the prior approval of the ORR having been obtained (such approval to be given only after consultation with the ANNEX B: REVISED ARTICLES OF ASSOCIATION AND MEMORANDUM OF ASSOCIATION Page 5 of 28

84 DfT). 8 The Board may admit as associates, on terms it approves, any party other than those described in Article 7 if it considers that an affiliation with that party would be conducive to the pursuit or attainment of the Primary Objective but such associates shall not be Members of the Company for the purpose of these Articles. 89 On admission to membership of the Company, each member shall be designated by the Board as falling within one only of the following categories of membership: (a) (b) (c) (d) (e) passenger Train Operators; non-passenger Train Operators (excluding any party which operates non-passenger trains wholly or mainly in connection with its role as an infrastructure contractor); Network Rail and other Infrastructure Managers; rolling stock owners (including rolling stock leasing companies); infrastructure contractors that fulfil either or both of the following criteria: (i) (ii) the infrastructure contractor in question is a party to one or more infrastructure renewals contract with Network Rail or any successor organisation, or any other Infrastructure Manager which is a member of the Company or any other contract which the Board reasonably considers a successor to or the equivalent of any of these forms of contract; the infrastructure contractor in question holds a non-passenger operating licence to operate trains on the Rail Network of which Network Rail or any successor organisation, or any other Infrastructure Manager which is a member of the Company is the Infrastructure Manager and operates such trains wholly or mainly in connection with its role as an infrastructure contractor; and (f) Suppliers (including rolling stock manufacturers). 910 If a member s activities fall within more than one of the categories set out in Article 89, that member shall be designated by the Board as falling within the category from which it (or, as the case may be, its Group) derives the greatest part of its Annual Turnover as at its admission to membership of the Company (if appropriate, determined by reference to its most recently published audited accounts). In the event that a member is unable to provide audited accounts as required by this Article 910 or if those audited accounts do not contain the requisite information, the Board shall be entitled to require such member to provide a Certificate regarding the Annual Turnover of such member. Each member undertakes to provide such information as the Company may reasonably require for this purpose. The Company shall keep confidential all information provided by each member pursuant to this Article 910 and such information shall be treated as Restricted Information (unless the member supplying such information agrees otherwise) in accordance with the provisions of the Constitution Agreement. In the event that a member fails to provide the information required by the Company pursuant to this Article 910 within 20 Business Days of the date on which it is requested by the Company, the Board shall be entitled to estimate the Annual Turnover of such member (and the breakdown of Annual Turnover amongst the categories of activities respectively set out in Article 89) and (pending receipt of the information from the member) such estimate shall be treated for the purposes of these Articles as the Annual Turnover (or, as the case may be, the breakdown of such Annual Turnover) of that member The Board shall: (a) prior to the end of each Triennial Review Period review a breakdown of the Annual ANNEX B: REVISED ARTICLES OF ASSOCIATION AND MEMORANDUM OF ASSOCIATION Page 6 of 28

85 Turnover of each A Member, B Member and C Member; and (b) prior to the end of each Annual Review Period review a breakdown of the Annual Turnover of each D Member, E Member and F Member, for the purpose of determining whether any changes need to be made to the category of membership to which it is then allocated having regard to the Annual Turnover of that member amongst the categories of activities respectively set out in Article 89 at that time (if appropriate determined by reference to its audited accounts published immediately prior to such review). In the event that a member is not able to provide audited accounts as required by this Article 1011 or if those audited accounts do not contain the requisite information, the Board shall be entitled to require such member to provide a Certificate regarding the Annual Turnover of such member. Each member undertakes to provide such information as the Company may reasonably require for this purpose. The Company shall keep confidential all information provided by each member pursuant to this Article 1011 and such information shall be treated as Restricted Information (unless the member supplying such information agrees otherwise) in accordance with the provisions of the Constitution Agreement. In the event that a member fails to provide the information required by the Company pursuant to this Article 1011 within 20 Business Days of the date on which it is requested by the Company, the Board shall estimate the Annual Turnover of such member (or, as the case may be, the breakdown of such Annual Turnover) and (pending receipt of the information of that member) such estimate shall be treated for the purposes of these Articles as the Annual Turnover (or, as the case may be, the breakdown of such Annual Turnover) of that member. Notwithstanding Article 1011(b), the D Members, E Members and F Members shall each be entitled to elect to have the words Annual Review Period in Article 1011(b) read and construed as if it were a reference to Triennial Review Period. Such election shall be subject to the consent in writing of the holders of more than onehalf of the voting rights of the members falling within the D Members, E Members or F Members (as the case may be) or with the sanction of an ordinary resolution passed at a separate general meeting of the D Members, E Members or F Members (as the case may be) Membership shall cease in the following circumstances: (a) (b) (c) if a member (other than a member falling within the scope of Article 7(a), save where such cessation is agreed by the ORR to be in accordance with his duties under section 4 of the Railways Act) gives to the Company not less than 6 months notice of its intention to cease to be a member of the Company to expire on the accounting reference date of the Company next following, in which case that member shall cease to be a member of the Company on the accounting reference date of the Company next following; or subject to Article 1213, if a member ceases to fall within any of the descriptions set out in Article 7, in which case that member shall cease to be a member of the Company on the accounting reference date of the Company next following; or if a member (other than a member falling within the scope of Article 7(a)) shall default in the payment of any sum due to the Company under any written agreement between the members and the Company and shall fail to remedy such default within 30 days of being required so to do by the Company, in which case that member shall cease to be a member at such time as the Board may in its absolute discretion determine This Article 1213 applies in relation to any member (an Affected Member ) which is a Train Operator which operates services for the carriage of passengers by railway in the capacity of a franchise operator under a Franchise Agreement as follows: (a) if the Franchise Agreement relevant to an Affected Member is terminated without being replaced and the Affected Member does not continue to operate services for the carriage of passengers by railway, the Affected Member shall (unless otherwise obliged to continue to be a member of the Company under the terms of any licence held by it under section 8 of the Railways Act) cease to be a member when the Train Operator which takes over responsibility for the services previously operated by the Affected Member under the Franchise Agreement: ANNEX B: REVISED ARTICLES OF ASSOCIATION AND MEMORANDUM OF ASSOCIATION Page 7 of 28

86 (i) (ii) becomes a member of the Company (unless already a member of the Company); and assumes all the undischarged obligations which would otherwise be owed to the Company by the Affected Member under the Constitution Agreement for the period from the date from which such assumption is effective until the end of the financial year of the Company then current; (b) if a Franchise Agreement relevant to an Affected Member is amended so as to exclude some (but not all) of the services previously provided by that Affected Member ( Excluded Services ): (i) (ii) (iii) the Affected Member shall continue to be a member; if and to the extent that the Excluded Services are assumed by another (new or existing) member (the Successor Member ) in succession to the Affected Member, then the Successor Member shall, in respect of the period from the date on which the Excluded Services are assumed until the end of the financial year of the Company then current, assume (in place of the Affected Member) the Affected Member s obligation to pay part of the levy which the Affected Member would have been obliged to pay to the Company under the Constitution Agreement but for the amendment of the relevant Franchise Agreement to exclude the Excluded Services; the amount of the levy which the Successor Member shall assume an obligation to pay in place of the Affected Member shall be calculated by reference to the following formula: A B Where: C 365 A is equal to the amount of the levy to be assumed by the Successor Member; B is equal to the levy payable by the Affected Member for the then current year to the extent that such levy is attributable to turnover in respect of the provision of the Excluded Services; and C is equal to the number of whole unexpired monthsdays between the date on which the Successor Member assumes the obligation to pay part of the levy and the end of the financial year of the Company then current; and (iv) the Affected Member shall provide the Company with a certificate from its finance director containing a bona fide estimate of the amount of B (as referred to in Article 1213(b)(iii)) and if the Affected Member fails to provide that certificate within 20 Business Days of the date on which it is requested by the Company, the Board shall be entitled to estimate such amount and (pending receipt of the certificate from the Affected Member) such estimate shall be treated for the purposes of this Agreement as the amount of B. The Company shall keep confidential all information provided by the Affected Member pursuant to this Article 1213(b) and such information shall be treated as Restricted Information (unless the Affected Member agrees otherwise) in accordance with the provisions of the Constitution Agreement; ANNEX B: REVISED ARTICLES OF ASSOCIATION AND MEMORANDUM OF ASSOCIATION Page 8 of 28

87 (c) if Article 1213(a) or Article 1213(b) apply in respect of an Affected Member, then until such time as the relevant Successor Member or other Train Operator taking over responsibility for the services previously operated by that Affected Member is able to produce Annual Turnover information dealing with the provision of the services which it takes over for a complete period of one year, the Annual Turnover in respect of that Successor Member or other Train Operator shall, in respect of such period for which its Annual Turnover would not otherwise include the provision of those services be deemed to include an amount (the relevant amount ) equal to the Annual Turnover which would have been reported by the Affected Member as being referable to those services and the period in question had the services continued in its operation. If any relevant amount is included in the Annual Turnover of a Successor Member or other Train Operator under this Article 1213, it shall be disregarded in calculating the Annual Turnover of the Affected Member which has ceased to operate the services in question. If the relevant Annual Turnover information is not available from the Affected Member in relation to the services being assumed and (where Article 1213(b) applies) no apportionment is otherwise agreed between the members concerned, then the relevant amount shall be estimated by the Board following consultation with the members concerned and having regard to the Annual Turnover last reported to the Company by the Affected Member for the purposes of these Articles Nothing in Article 1112 shall preclude any member from exercising its rights as a member to vote at any general meeting of the Company for so long as the member continues to be a member of the Company, except that a member shall, from the Trigger Date, not be entitled to vote in respect of any resolution to:relating to a period commencing after the cessation of membership. (a) (b) approve the Company s annual budget for a financial year which will commence after that member will have ceased to be a member of the Company; and/or approve the Railway Group Safety Plan applicable to a financial year of the Company which will commence after that member will have ceased to be a member of the Company Membership shall not be transferable. GENERAL MEETINGS 1516 All general meetings other than annual general meetings shall be called extraordinary general meetings The Directors may call general meetings and, on the requisition of members pursuant to the provisions of the Act, shall forthwith proceed to convene an extraordinary general meeting for a date not later than seven weeks after receipt of the requisition. If there are not sufficient Directors to call a general meeting, any Director or member of the Company may call a general meeting. If the Company has only a single member, such member shall be entitled at any time to call a general meeting The provisions of these Articles relating to general meetings of the Company or to the proceedings at general meetings shall apply mutatis mutandis to every class meeting so that: (a) (b) on a show of hands, every member of the relevant class who is present in person or by proxy (including a proxy appointed by a corporation) or by a duly authorised representative appointed by a corporation, shall have one vote; and on a poll, the provisions of Article 3839(b)(i)-(vi) shall apply, mutatis mutandis, to determine the respective voting rights of members falling within the relevant class. ANNEX B: REVISED ARTICLES OF ASSOCIATION AND MEMORANDUM OF ASSOCIATION Page 9 of 28

88 NOTICE OF GENERAL MEETINGS 1819 An annual general meeting and an extraordinary general meeting called for the passing of a special resolution or a resolution appointing a person as a Director shall be called by at least 21 clear days' notice. All other extraordinary general meetings shall be called by at least 14 clear days' notice but a general meeting may be called by shorter notice if it is so agreed: (a) (b) in the case of an annual general meeting or a meeting called for the passing of an elective resolution, by all the members entitled to attend and vote at it; and in the case of any other meeting, by a majority in numbers of the members having a right to attend and vote being a majority together holding not less than 95 per cent of the total voting rights exercisable on a poll by the members in respect of the resolutions to be proposed at that general meeting The notice shall specify the time and place of the meeting, the general nature of the business to be transacted and the terms of any resolution to be proposed at it and, in the case of an annual general meeting, shall specify the meeting as such Subject to the provisions of these Articles, the notice of a general meeting shall be given to all members, to the auditors for the time being of the Company and to such representatives as have been appointed to receive such notice on behalf of the DfT and the ORR Every Director of the Company and every alternate Director shall be entitled to receive notices of general meetings (at his usual address or such other address as he may notify to the Company) in addition to the persons so entitled under the Statutes The accidental omission to give notice of a meeting to, or the non-receipt of notice of a meeting by, any person entitled to receive notice shall not invalidate the proceedings at that meeting. PROCEEDINGS AT GENERAL MEETINGS 2324 No business shall be transacted at any meeting unless a quorum is present. Two persons entitled to vote upon the business to be transacted, each being a member or a proxy for a member described in Article 89 or a duly authorised representative of a corporation, shall be a quorum. Notwithstanding any other provisions of these Articles, members of the Company shall be entitled to attend general meetings of the Company either in person or by proxy or (if a company) by a duly authorised representative If such a quorum is not present within half an hour from the time appointed for the meeting, or if during a meeting such a quorum ceases to be present, the meeting shall stand adjourned to the same day in the next week at the same time and place or to such time and place as the Directors may determine. If at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting the meeting shall be dissolved The chairman, if any, of the Board or in his absence some other Director nominated by the Directors shall preside as chairman of the meeting, but if neither the chairman or such other Director (if any) be present within fifteen minutes after the time appointed for holding the meeting and willing to act, the Directors present shall elect one of their number to be chairman and, if there is only one director present and willing to act, he shall be chairman A Director shall, notwithstanding that he is not a member, be entitled to attend and speak at any general meeting. Representatives of the ORR and the DfT shall, notwithstanding that they are not members of the Company, also be entitled to attend and speak at any general meeting The chairman may, with the consent of a meeting at which a quorum is present (and shall if so directed by the meeting), adjourn the meeting from time to time and from place to place, but no business shall be transacted at an adjourned meeting other than business which might properly ANNEX B: REVISED ARTICLES OF ASSOCIATION AND MEMORANDUM OF ASSOCIATION Page 10 of 28

89 have been transacted at the meeting had the adjournment not taken place. When a meeting is adjourned for fourteen days or more, at least seven clear days' notice shall be given specifying the time and place of the adjourned meeting and the general nature of the business to be transacted. Otherwise it shall not be necessary to give any such notice Subject to the resolutions described in Article 3738 which when proposed at a general meeting of the Company shall be decided by a poll, a resolution put to the vote of a meeting shall be decided on a show of hands unless, before, or on the declaration of the result of, the show of hands, a poll is duly demanded. A poll may be demanded by the chairman or by any member present in person, by proxy or (in the case of a body corporate) by duly authorised representative and entitled to vote Unless a poll is duly demanded a declaration by the chairman that a resolution has been carried or carried unanimously, or by a particular majority, or lost, or not carried by a particular majority and an entry to that effect in the minutes of the meeting shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against the resolution The demand for a poll may, before the poll is taken, be withdrawn but only with the consent of the chairman and a demand so withdrawn shall not be taken to have invalidated the result of a show of hands declared before the demand was made A poll shall be taken as the chairman directs and he may appoint scrutineers (who need not be members) and fix a time and place for declaring the result of the poll. The result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded In the case of an equality of votes, whether on a show of hands or on a poll, the chairman shall not be entitled to a casting vote A poll demanded on the election of a chairman or on any other question shall be taken forthwith The demand for a poll shall not prevent the continuance of a meeting for the transaction of any business other than the question on which the poll was demanded. If a poll is demanded before the declaration of the result of a show of hands and the demand is duly withdrawn, the meeting shall continue as if the demand had not been made A resolution in writing executed by or on behalf of each member who would have been entitled to vote upon it if it had been proposed at a general meeting at which he was present shall be as effectual as if it had been passed at a general meeting duly convened and held and may consist of several instruments in the like form each executed by or on behalf of one or more members. A resolution in writing shall be deemed to have been duly executed on behalf of a corporation if signed by one of its directors or its secretary. The Directors shall cause a record of each resolution in writing, and of the signatures to it, to be entered in a book in the same way as minutes of proceedings of a general meeting of the Company and to be signed by a Director or the Secretary of the Company and which has effect as if agreed by the Company in general meeting. However, failure to do so shall not affect the validity of such decision At or before the time a proposed written resolution is supplied to a member for signature, the Directors and the Secretary of the Company shall, if the Company has auditors, secure that a copy of the resolution is sent to them, or that they are otherwise notified of its contents Subject to the terms of the Constitution Agreement and any other written agreement between the members of the Company, the power of the Company to transact: (a) any of the matters set out in this Article 3738(a) shall be reserved to the members and shall be subject to approval by members holding 80 per cent. or more of the total voting rights exercised on a poll by members in general meeting of the Company who attend and vote in respect of the resolution in question at that general meeting of the Company: (i) adoption of, any material departure from or any material amendment to the strategies for the Company prepared by the Board designed to set out how the ANNEX B: REVISED ARTICLES OF ASSOCIATION AND MEMORANDUM OF ASSOCIATION Page 11 of 28

90 Primary Objective and the Principles of Operation will be achieved by the exercise of the Functions; (ii) (iii) approval of any amendment to the Code or any revised version of the Code; approval of the carrying out of activities as contemplated by clauses 2.7 or 2.8 of the Constitution Agreement; (b) (c) the adoption of or any material amendment to the Railway Group Safety Plan shall be reserved to the members and shall be subject to approval by members holding 80 per cent. or more of (i) the total voting rights exercised on a poll by members in general meeting of the Company who attend and vote in respect of the resolution in question at that general meeting of the Company and (ii) the total voting rights of the "A" Members, B Members, C Members and E Members (to the extent that the E Members also form part of the Railway Group) who attend and vote in respect of the resolution in question at that general meeting of the Company; any of the matters set out in this Article 3738(c) shall be reserved to the members and shall be subject to approval by members holding 65 per cent. or more of the total voting rights exercised on a poll by members in general meeting of the Company who attend and vote in respect of the resolution in question at that general meeting of the Company: (i) (ii) (iii) appointment of Directors (other than the Directors appointed pursuant to Articles 5859 and 7879); approval of, any material departure from or any material amendment to the Company s annual budget; and approval of the entry by the Company into any borrowing or other financing facilities. Nothing in this Article 3738 shall preclude the Board from taking any steps which it considers appropriate to put the Company into liquidation or administration. VOTES OF MEMBERS 3839 Subject to and without prejudice to any special rights and restrictions for the time being attached to any voting rights held by any member, at any general meeting of the Company: (a) (b) on a show of hands, every member who is present in person or by proxy (including a proxy appointed by a corporation) or by a duly authorised representative appointed by a corporation, shall have one vote; subject to Articles 3940 and 4041, on a poll: (i) (ii) the A Members shall be entitled to exercise in aggregate 30 per cent. of the total voting rights exercisable by the members of the Company provided that as amongst themselves each A Member attending and voting in respect of the resolution in question at a general meeting of the Company shall be entitled to exercise such proportion of the 30 per cent. of the total voting rights as its individual Annual Turnover for its last completed financial year prior to the then current Triennial Review Period (if appropriate, determined by reference to its published audited accounts which are available for that period) bears to the aggregate Annual Turnover of all the A Members (calculated on the same basis) who are members and who attend and vote in respect of the resolution in question at that general meeting of the Company; the B Members shall be entitled to exercise in aggregate 10 per cent. of the total ANNEX B: REVISED ARTICLES OF ASSOCIATION AND MEMORANDUM OF ASSOCIATION Page 12 of 28

91 voting rights exercisable by the members of the Company provided that as amongst themselves each B Member attending and voting in respect of the resolution in question at a general meeting of the Company shall be entitled to exercise such proportion of the 10 per cent. of the total voting rights as its individual Annual Turnover for its last completed financial year prior to the then current Triennial Review Period (if appropriate, determined by reference to its most recently published audited accounts which are available for that period) bears to the aggregate Annual Turnover of all the B Members (calculated on the same basis) who are members and who attend and vote in respect of the resolution in question at that general meeting of the Company; (iii) the C Members shall be entitled to exercise in aggregate 30 per cent. of the total voting rights exercisable by the members of the Company provided that as amongst themselves each C Member attending and voting in respect of the resolution in question at a general meeting of the Company shall be entitled to exercise such proportion of the 30 per cent. of the total voting rights as its individual Annual Turnover for its last completed financial year prior to the then current Triennial Review Period (if appropriate, determined by reference to its most recently published audited accounts which are available for that period) bears to the aggregate Annual Turnover of all the C Members (calculated on the same basis) who are members and who attend and vote in respect of the resolution in question at that general meeting of the Company; (iv) the members who are D Members shall be entitled to exercise in aggregate 10 per cent. of the total voting rights exercisable by the members of the Company provided that as amongst themselves each D Member attending and voting in respect of the resolution in question at a general meeting of the Company shall be entitled to exercise such proportion of the 10 per cent. of the total voting rights as its individual Annual Turnover during its most recently completed financial year (if appropriate, determined by reference to its most recently published audited accounts) bears to the aggregate Annual Turnover of all the D Members (calculated on the same basis) who are members and who attend and vote in respect of the resolution in question at that general meeting of the Company; (v) (vi) the E Members shall be entitled to exercise in aggregate 10 per cent. of the total voting rights exercisable by the members of the Company provided that as amongst themselves each E Member attending and voting in respect of the resolution in question at a general meeting of the Company shall be entitled to exercise such proportion of the 10 per cent. of the total voting rights as its individual Annual Turnover during its most recently completed financial year (if appropriate, determined by reference to its most recently published audited accounts) bears to the aggregate Annual Turnover of all the E Members (calculated on the same basis) who are members and who attend and vote in respect of the resolution in question at that general meeting of the Company; the F Members shall be entitled to exercise in aggregate 10 per cent. of the total voting rights exercisable by the members of the Company provided that as amongst themselves each F Member attending and voting in respect of the resolution in question at a general meeting of the Company shall be entitled to exercise such proportion of the 10 per cent. of the total voting rights as its individual Annual Turnover during its most recently completed financial year (if appropriate, determined by reference to its most recently published audited accounts) bears to the aggregate Annual Turnover of all the F Members (calculated on the same basis) who are members and who attend and vote in respect of the resolution in question at that general meeting of the Company. (c) If at any time and for whatever reason (including the fact that there are no members within a particular category of members) one or more of the categories of members (being respectively the A Members, the B Members, the C Members, the D Members, the E Members and the F Members) does not exercise its voting rights on a poll, then the percentages respectively set out in Article 3839(b)(i)-(vi) shall (for those ANNEX B: REVISED ARTICLES OF ASSOCIATION AND MEMORANDUM OF ASSOCIATION Page 13 of 28

92 categories which exercise their voting rights on that poll) be increased in respect of that poll by reference to the following formula: V = A x 100 B Where: V is equal to the percentage of voting rights (as increased); A is equal to the percentage allocated to the relevant category of members set out in Article 3839(b)(i)-(vi); and B is equal to the aggregate of the percentages allocated to all categories of members (as set out in Article 3839(b)(i)-(vi)) which exercise their voting rights on that poll. (d) Each member undertakes to provide such information as the Company may reasonably require for the purpose of this Article In the event that the member is unable to provide audited accounts as required by this Article 3839 or if these audited accounts do not contain the requisite information, the Board shall be entitled to require such member to provide a Certificate regarding the Annual Turnover of such member. The Company shall keep confidential all information provided by each member pursuant to this Article 3839 and such information shall be treated as Restricted Information (unless the member supplying such information agrees otherwise) in accordance with the provisions of the Constitution Agreement. In the event that a member fails to provide the information required by the Company pursuant to this Article 3839, within 20 Business Days of the date on which it is requested by the Company, the Board shall be entitled to estimate the Annual Turnover of such member and (pending receipt of the information from the member) such estimate shall be treated for the purposes of this Agreement as the Annual Turnover of that member Notwithstanding Article 3839, in respect of any resolution proposed at a general meeting of the Company of the type described in Article 3738(c)(ii), then on a poll each member attending and voting in respect of the resolution in question at the relevant general meeting of the Company shall be entitled to exercise such percentage of the total voting rights exercisable by members of the Company as its individual contribution to the budget (by way of the payment of a levy) at that time (or, in respect of the approval of the first such budget, the individual contribution which that member would be obliged to make (by way of the payment of a levy) if the budget submitted for approval were so approved) bears to the aggregate contribution (by way of the payment of a levy) to the budget of all members attending and voting in respect of the resolution in question at the relevant general meeting of the Company (or, in respect of the approval of the first such budget, the individual contribution (by way of the payment of a levy) which all members would be obliged to make if the budget submitted for approval were so approved) Notwithstanding Article 3839, in respect of any resolution proposed at a general meeting of the Company to enable a member or members to comply with any provisional or final order made by the ORR under section 55 of the Railways Act, then on a poll: (a) (b) (c) the A Members and C Members shall each be entitled to exercise in aggregate 36 per cent.; the B Members and E Members shall each be entitled to exercise in aggregate 12 per cent.; the D Members and F Members shall each be entitled to exercise in aggregate 2 per cent., of the total voting rights exercisable by the members of the Company who attend and vote in respect of the resolution in question at that general meeting of the Company. The provisions of Article 3839(b)(i)-(vi) and Article 3839(c) shall apply, mutatis mutandis, to determine the respective voting rights of members falling within the relevant class. ANNEX B: REVISED ARTICLES OF ASSOCIATION AND MEMORANDUM OF ASSOCIATION Page 14 of 28

93 4142 No member shall vote at any general meeting either in person, by proxy or (in the case of a body corporate) by duly authorised representative, unless all moneys (in respect of his capacity as a member) then due and payable by him to the Company have been paid No objection shall be raised to the qualification of any voter except at the meeting or adjourned meeting at which the vote objected to is tendered, and every vote not disallowed at the meeting shall be valid. Any objection made in due time shall be referred to the chairman whose decision shall be final and conclusive On a poll votes may be given either personally or by proxy (including a proxy appointed by a corporation) or by a duly authorised representative of a corporation. A member may appoint more than one proxy to attend on the same occasion. A proxy need not be a member of the Company An instrument appointing a proxy shall be in writing, executed by or on behalf of the appointor and shall be in the following form (or in a form as near to it as circumstances allow or in any other form which is usual or which the Directors may approve) - Rail Safety and Standards Board Limited I/We,, of, being a member/members of the above-named company, hereby appoint of, or failing him, of as my/our proxy to vote in my/our name[s] and on my/our behalf at the annual/extraordinary general meeting of the company to be held on 20 and at any adjournment of it. Signed on Where it is desired to afford members an opportunity of instructing the proxy how he shall act the instrument appointing a proxy shall be in the following form (or in a form as near to it as circumstances allow or in any other form which is usual or which the Directors may approve): Rail Safety and Standards Board Limited I/We,, of, being a member/members of the above-named company, hereby appoint of, or failing him, of, as my/our proxy to vote in my/our name[s] and on my/our behalf at the annual/extraordinary general meeting of the company, to be held on 20 and at any adjournment of it. This form is to be used in respect of the resolutions mentioned below as follows : Resolution No 1 *for *against Resolution No 2 *for *against. *Strike out whichever is not desired. Unless otherwise instructed, the proxy may vote as he thinks fit or abstain from voting. Signed this day of The instrument appointing a proxy and any authority under which it is executed or a copy of such authority certified notarially or in some other way approved by the Directors may: (a) be deposited at the Office or at such other place within the United Kingdom as is specified in the notice convening the meeting or in any instrument of proxy sent out by the Company in relation to the meeting not less than 48 hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote; or ANNEX B: REVISED ARTICLES OF ASSOCIATION AND MEMORANDUM OF ASSOCIATION Page 15 of 28

94 (b) (c) in the case of a poll taken more than 48 hours after it is demanded, be deposited as set out in Article 4647(a) after the poll has been demanded and not less than 24 hours before the time appointed for the taking of the poll; or where the poll is not taken forthwith but is taken not more than 48 hours after it was demanded, be delivered at the meeting at which the poll was demanded to the chairman or to the Secretary or to any Director; and an instrument of proxy which is not deposited or delivered in a manner so permitted shall be invalid A vote given or poll demanded by proxy or by the duly authorised representative of a corporation shall be valid notwithstanding the previous determination of the authority of the person voting or demanding a poll unless notice of the determination was received by the Company at the Office or at such other place at which the instrument of proxy was duly deposited before the commencement of the meeting or adjourned meeting at which the vote is given or the poll demanded or (in the case of a poll taken otherwise than on the same day as the meeting or adjourned meeting) the time appointed for taking the poll. NUMBER OF DIRECTORS 4849 Unless otherwise determined by ordinary resolution, the number of Directors shall not be less than ten and shall not be more than fifteen, of whom: (a) (b) (c) not more than 3 shall be executive Directors; not more than 3 (including any person appointed to be both a Director and chairman of the Board) nor fewer than 2 (unless otherwise approved by the ORR ) shall be Non- Industry Directors; and not more than 8 shall be Industry Directors. ALTERNATE DIRECTORS 4950 Any Director (other than an alternate Director) may appoint any other person willing to act, to be an alternate Director and may remove from office an alternate Director so appointed by him An alternate Director shall for the duration of his appointment be entitled to receive notice of all meetings of Directors and of all meetings of committees of Directors of which his appointor is a member, to attend and vote at any such meeting at which the Director appointing him is not personally present, and shall be deemed to be a Director for the purpose of signing instruments, for signing any resolution in writing of the Directors, and (subject to any limitation contained in his appointment) for all other purposes for the duration of his appointment and shall thereby be responsible for his own acts and defaults to the exclusion of his appointor An alternate Director shall be entitled to contract and be interested in and benefit from contracts or arrangements with the Company and to be repaid expenses and to be indemnified to the same extent mutatis mutandis as if he were a Director, but he shall not be entitled to receive from the Company in respect of his appointment as alternate Director any remuneration, except only such part (if any) of the remuneration otherwise payable to his appointor as such appointor may by notice in writing to the Company from time to time direct An alternate Director shall cease to be an alternate Director if his appointor ceases to be a Director Any appointment or removal of an alternate Director shall be by notice to the Company signed by the Director making or revoking the appointment or in any other manner approved by the Directors and shall be delivered at the Office of the Company. ANNEX B: REVISED ARTICLES OF ASSOCIATION AND MEMORANDUM OF ASSOCIATION Page 16 of 28

95 POWERS OF DIRECTORS 5455 Subject to the provisions of the Act and Article 3738, the Memorandum and the Articles and to any directions given by special resolution, the business of the Company shall be managed by the Directors who may exercise all the powers of the Company. No alteration of the Memorandum or Articles and no such direction shall invalidate any prior act of the Directors which would have been valid if that alteration had not been made or that direction had not been given. The powers given by this Article shall not be limited by any special power given to the Directors by the Articles and a meeting of Directors at which a quorum is present may exercise all powers exercisable by the Directors The Directors may, by power of attorney or otherwise, appoint any person to be the agent of the Company for such purposes and on such conditions as they determine, including authority for the agent to delegate all or any of his powers. DELEGATION OF DIRECTORS' POWERS 5657 The Directors may delegate any of their powers to any committee consisting of two or more Directors, provided that the majority of the voting rights of the members of such committee are exercisable by a non-executive Director member or members. Subject to the provisions of this Article 5657, any committee shall have power unless the Directors direct otherwise to co-opt as a member or members of the committee any person or persons although not being a Director of the Company. Any such delegation may be made subject to any conditions the Directors may impose, and either collaterally with or to the exclusion of their own powers and may be revoked or altered. Subject to any such conditions, the proceedings of a committee with two or more members shall (except in respect of its quorum for meetings) be governed by the Articles regulating the proceedings of Directors so far as they are capable of applying. The quorum for the transaction of the business of a committee must include a majority of nonexecutive directors. APPOINTMENT, DISQUALIFICATION AND REMOVAL OF DIRECTORS 5758 Other than the Directors appointed pursuant to Articles 5859 and 7879 and subject to any written agreement between the members of the Company each appointment shall be effected in accordance with Article 3738(c)(i) Notwithstanding the provisions of Article 3738(c)(i) and without prejudice to the powers of the Company under section of the Act to remove a Director by ordinary resolution and subject to the terms of any written agreement between the members, each of the: (a) (b) A Members and C Members shall have the power, from time to time and at any time to appoint and maintain in office any two persons as Industry Directors, provided that any person appointed and maintained in office by A Members shall at all times occupy a post with responsibility for operational activities within the Railway Industry; B Members, D Members, E Members and F Members shall have the power, from time to time and at any time to appoint and maintain in office any person as an Industry Director and to remove from office any Industry Director respectively nominated by them and appoint another Industry Director in his place. Any such appointment or removal shall be subject to the consent in writing of the holders of more than one-half of the voting rights of the members falling within the A Members, B Members, C Members, D Members, E Members and/or F Members (as the case may be) or with the sanction of an ordinary resolution passed at a ANNEX B: REVISED ARTICLES OF ASSOCIATION AND MEMORANDUM OF ASSOCIATION Page 17 of 28

96 separate general meeting of each of the A Members, B Members, C Members, D Members, E Members and/or F Members (as the case may be) Not used A Director need not be a member Except in the case of Industry Directors appointed pursuant to Article 5859, Directors shall only be removed withthrough the prior approvalpassing of the ORR (such approval to be given only after consultation with the DfT)a Reserved Resolution or otherwise in accordance with the terms of the Constitution Agreement The Directors shall not be liable to retire by rotation The office of a Director shall be vacated if: (a) (b) (c) (d) (e) (f) (g) (h) (i) he is removed from office under Articles 5859 or if the fixed term of his appointment (as referred to in Article 6566) shall expire and he is not reappointed; he resigns his office by notice to the Company; the Board decides that he is no longer able to be a Director because of mental or physical incapacity or mental disorder; he becomes bankrupt or makes any arrangement or composition with his creditors generally; he ceases to be a director by virtue of any provision of the Act or is prohibited by law from being a Director; he is an executive director and is dismissed from his office as an executive director; he is convicted of an indictable offence and the members pass a resolution to remove him; he is no longer entitled to continue in office as a Director by reason of the provisions of Article 7374; and he was appointed under Article 5859 as an Industry Director but there are no longer any members within the class of members which appointed him and the Board decides (at its discretion) that he should cease to be a Director The persons eligible for appointment as Non-Industry Directors must be persons having extensive current knowledge or experience of the management of safety and, unless otherwise agreed by the ORR, must not on the date of appointment as a Director be employed by or be a director of any person falling within any of the categories described in Article Each non-executive Director shall be appointed as a director for a fixed term not less than two years and not exceeding three years but shall be capable of being reappointed Not used. REMUNERATION OF DIRECTORS 6768 The Directors shall be entitled to such remuneration as the Board may from time to time determine (on the basis of recommendations received from the Remuneration Committee) and, unless the resolution provides otherwise, the remuneration shall be deemed to accrue from day to day provided that the total fees paid to Directors for their services as Directors shall not ANNEX B: REVISED ARTICLES OF ASSOCIATION AND MEMORANDUM OF ASSOCIATION Page 18 of 28

97 exceed 600,000 in aggregate in any year or such greater amount as the Members may fix by ordinary resolution. DIRECTORS' EXPENSES 6869 The Directors may be paid all travelling, hotel, and other expenses properly incurred by them in connection with their attendance at meetings of Directors or committees of Directors or general meetings or otherwise in connection with the discharge of their duties. DIRECTORS' APPOINTMENTS AND INTERESTS 6970 Subject to the provisions of the Act, Article 3738(c)(i) and any written agreement between the members of the Company, the Directors may appoint any person to the office of managing Director or to any other executive office under the Company and may enter into an agreement or arrangement with any such person for his employment by the Company or for the provision by him of any services outside the scope of the ordinary duties of a Director. Any such appointment, agreement or arrangement may be made upon such terms as the Directors determine and they may remunerate any such person for his services as the Remuneration Committee may think fit Subject to the provisions of the Act, and provided that he has disclosed to the Directors the nature and extent of any material interest of his at the Board meeting at which the transaction is first considered (or if the Director is not aware of his interest in the transaction, at the first meeting of the Board after he becomes aware of the interest), a Director notwithstanding his office: (a) (b) (c) may be a party to, or otherwise interested in, any transaction or arrangement with the Company or in which the Company is otherwise interested; may be a director or other officer of, or employed by, or a party to any transaction or arrangement with, or otherwise interested in, any body corporate promoted by the Company or in which the Company is otherwise interested; and shall not, by reason of his office, be accountable to the Company for any benefit which he derives from any such office or employment or from any such transaction or arrangement or from any interest in any such body corporate and no such transaction or arrangement shall be liable to be avoided on the ground of any such interest or benefit For the purposes of Article 7071: (a) (b) a general notice given to the Directors that a Director is to be regarded as having an interest of the nature and extent specified in the notice in any transaction or arrangement in which a specified person or class of persons is interested shall be deemed to be a disclosure that the Director has an interest in any such transaction of the nature and extent so specified; and an interest of which a Director has no knowledge and of which it is unreasonable to expect him to have knowledge shall not be treated as an interest of his. DISQUALIFYING INTERESTS 7273 It shall be a condition of the employment of each Relevant Employee and Director of the Company that such person must, prior to commencement of his employment or appointment or when required by the Board (as the case may be), provide a declaration to the effect that: ANNEX B: REVISED ARTICLES OF ASSOCIATION AND MEMORANDUM OF ASSOCIATION Page 19 of 28

98 (a) (b) (c) he/she, and to the best of his knowledge and belief his spouse, partner and dependent children, have no Disqualifying Interest (other than a Disqualifying Interest which has been approved by the ORRAudit Committee or is otherwise permitted pursuant to Article 7475); he/she undertakes to notify his related persons at the time of the declaration that they should not hold a Disqualifying Interest while he is such a Director (other than a Disqualifying Interest which has been approved by the ORRAudit Committee or is otherwise permitted pursuant to Article 7475); and he/she undertakes to notify the Company if by reason of the facts and circumstances then subsisting he becomes aware that the declaration would (if repeated at any time while he is such a Director) be incorrect Subject to Article 7475, no person shall be appointed as or continue to remain in office as a Director or shall become or continue to be a Relevant Employee if he has a Disqualifying Interest Notwithstanding Articles 7273 or 7374, no Relevant Employee or Director shall be treated as having an actual or potential conflict of interest by virtue of any Disqualifying Interest: (a) (b) if his appointment, employment or continued holding of office has been approved in advance by the ORRAudit Committee (such approval to be given only after consultation with the DfT); to the extent the Relevant Employee is an Industry Director and the Disqualifying Interest arises solely from their employment in the Railway Industry. PROCEEDINGS OF DIRECTORS 7576 Subject to the provisions of these Articles, the Directors may regulate their proceedings as they think fit. A Director may, and the Secretary at the request of a Director shall, call a meeting of the Directors. Questions arising at a meeting shall be decided by a majority of votes. In the case of an equality of votes, the chairman shall not have a second or casting vote. A Director who is also an alternate Director shall be entitled in the absence of his appointor to a separate vote on behalf of his appointor in addition to his own vote Notice of a meeting of the Board (together with the accompanying agenda for such meeting) shall be given to all Directors and to such representatives as have been appointed to receive such notice on behalf of the DfT and the ORR and such representatives are, notwithstanding that they are not Directors of the Board, entitled to attend and speak at any meeting of the Board Subject to the terms of the Constitution Agreement, the quorum for the transaction of the business of the Directors shall be seven, including at least four non-executive Directors at least one of whom shall be a Non-Industry Director. A person who holds office only as an alternate Director shall, if his appointor is not present, be counted in the quorum The continuing Directors or a sole continuing Director may act notwithstanding any vacancies in their number, but, if the number of Directors is less than the number fixed as the quorum, the continuing Directors or Director may act only for the purpose of calling a general meeting. The Directors shall have power at any time, and from time to time, to appoint any person to be a Director either to fill a casual vacancy or as an addition to the Directors, provided that the total number of Directors shall not at any time exceed the number set out at Article Any Director so appointed shall hold office only until the next following general meeting of the Company and shall then be eligible for re-election Subject to any written agreement between the members of the Company, the Directors may ANNEX B: REVISED ARTICLES OF ASSOCIATION AND MEMORANDUM OF ASSOCIATION Page 20 of 28

99 appoint one of their number to be the chairman of the board of Directors from among the nonexecutive Directors and may at any time remove him from that office. Unless he is unwilling to do so, the Director so appointed shall preside at every meeting of Directors at which he is present. But if there is no Director holding that office, or if the Director holding it is unwilling to preside or is not present within five minutes after the time appointed for the meeting, the Directors present may appoint one of their number to be chairman of the meeting All acts done by a meeting of Directors, or of a committee of Directors, or by a person acting as a Director shall, notwithstanding that it be afterwards discovered that there was a defect in the appointment of any Director or that any of them were disqualified from holding office, or had vacated office, or were not entitled to vote, be as valid as if every such person had been duly appointed and was qualified and had continued to be a Director and had been entitled to vote A resolution in writing signed by all the Directors entitled to receive notice of a meeting of Directors or of a committee of Directors shall be as valid and effectual as if it had been passed at a meeting of Directors or (as the case may be) a committee of Directors duly convened and held and may consist of several documents in the like form each signed by one or more Directors; but a resolution signed by an alternate Director need not also be signed by his appointor and, if it is signed by a Director who has appointed an alternate Director, it need not be signed by the alternate Director in that capacity For a signed resolution in writing to be effective it shall not be necessary for it to be signed by a Director who is prohibited by the Articles or by law from voting on it A Director may not vote on any matter in which he is treated as having a conflict of interest but may be included for the purpose of a quorum at any meeting at which the same is considered and he may retain for his own benefit all profits and advantages accruing to him A Director who is directly interested in or otherwise directly involved in a matter which is subject to a referral to the Board pursuant to the Code shall not take part in any review of such matter and shall not be entitled to vote in respect of such matter The Company may by ordinary resolution suspend or relax to any extent, either generally or in respect of any particular matter, any provision of the Articles prohibiting a Director from voting at a meeting of Directors or of a committee of Directors If a question arises at a meeting of Directors or of a committee of Directors as to the right of a Director to vote, the question may, before the conclusion of the meeting, be referred to the chairman of the meeting and his ruling in relation to any Director other than himself shall be final and conclusive. COMMITTEES 8788 The Board shall appoint and maintain the Audit Committee, the Remuneration Committee and the Appointments Committee. The Audit Committee, Remuneration Committee and Appointments Committee shall each consist solely of non-executive Directors and shall consist of not less than three non-executive Directors. The Appointments Committee shall include not less than two Non-Industry Directors. The Remuneration Committee shall include a majority in number of Non-Industry Directors The Audit Committee shall review the accounting policies and procedures of the Company, its internal financial control systems and its compliance with statutory requirements and shall consider any matter raised by the Company s external and internal auditors The Remuneration Committee shall consider and make recommendations to the Board on the remuneration and benefits of all executive Directors of the Company and all senior employees of the Company who are not Directors andidentified by the Board from time to time and including any employee whose annual base salary (excluding employer pension contributions, bonuses, travel expenses, car allowances and other benefits in kind) is in excess of ANNEX B: REVISED ARTICLES OF ASSOCIATION AND MEMORANDUM OF ASSOCIATION Page 21 of 28

100 100120,000 per annum or such higher amount as may be proposed by the Appointments Committee and approved by the Board from time to time The Appointments Committee shall consider and make recommendations to the Board on the appointment of all Directors of the Company (other than those appointed pursuant to Articles 5758 and 5859) and all senior employees of the Company who will not be Directors andidentified by the Board from time to time and including any employee whose annual base salary (excluding employer pension contributions, bonuses, travel expenses, car allowances and other benefits in kind) will be in excess of ,000 per annum or such higher amount as may be proposed by the Appointments Committee and approved by the Board from time to time. SECRETARY 9192 Subject to the provisions of the Act, the Secretary shall be appointed by the Directors for such term, at such remuneration and upon such conditions as they may think fit; and any Secretary so appointed may be removed by them. MINUTES 9293 The Directors shall cause minutes to be made in books kept for the purpose: (a) (b) of all appointments of officers made by the Director; and of all proceedings at meetings of the Company and of the Directors, and of committees of Directors, including the names of the Directors present at each such meeting. THE SEAL 9394 If the Company has a common seal, it shall only be used with the authority of the Director or a committee of the Directors. The Directors may determine who shall sign any instrument to which the seal is affixed and unless otherwise so determined it shall be signed by a Director and by the Secretary or second Director If the Company has a common seal, the Company may also have an official seal for use abroad under the provisions of the Act, where and as the Directors shall determine, and the Company may by writing under the common seal appoint any agents or agent, committees or committee abroad to be the duly authorised agents of the Company, for the purpose of affixing and using such official seal, and may impose such restrictions on its use as may be thought fit. DIVIDENDS 9596 The payment of dividends to members is prohibited The profits (if any) or other income of the Company are to be applied in promoting its objects as set out in the Company s Memorandum of Association. ACCOUNTS 9798 No member shall (as such) have any right of inspecting any accounting records or other book or ANNEX B: REVISED ARTICLES OF ASSOCIATION AND MEMORANDUM OF ASSOCIATION Page 22 of 28

101 document of the Company except as conferred by statute or authorised by the Directors or by ordinary resolution of the Company. NOTICES 9899 Any notice required by these Articles to be given by the Company may be given by any visible form on paper, including facsimile and electronic mail, and a notice communicated by such forms of immediate transmission shall be deemed to be given at the time it is transmitted to the person to whom it is addressed A member present, either in person or by proxy, at any meeting of the Company shall be deemed to have received notice of the meeting and, where requisite, of the purposes for which it was called Proof that an envelope containing a notice was properly addressed, prepaid and posted shall be conclusive evidence that the notice was given A notice sent by first class post shall be deemed, unless the contrary is proved, if sent to an address within the United Kingdom, to have been given three Business Days after the envelope containing it was posted and if sent to an address outside the United Kingdom by air mail six Business Days after the envelope containing it was posted. A notice sent by fax shall be deemed received on completion of its transmission and by electronic mail, on delivery of the electronic mail. MEETINGS BY TELEPHONE Any meeting, whether of the members of the Company, the Directors or a committee of the Directors, may with the consent of all those participating, be held by means of conference telephone or similar communication equipment whereby all persons participating in the meeting can hear each other and participation in a meeting in this manner shall be deemed to constitute presence in person at such meeting. WINDING UP If on the winding up or dissolution of the Company there remains, after the satisfaction of all its debts and liabilities, any property whatsoever, the same shall not be paid or distributed among the members of the Company, but shall be given or transferred to a body chosen by the members of the Company at or before the time of the winding up or dissolution having objects similar to its own or to another body the objects of which are the promotion of charity and anything incidental or conducive to it. INDEMNITY Subject to the provisions of, and so far as may be consistent with, the Statutes, but without prejudice to any indemnity to which a Director may be otherwise entitled, every Director, auditor, Secretary or other officer of the Company shall be entitled to be indemnified by the Company against all costs charges losses expenses and liabilities incurred by him in the execution and/or discharge of his duties and/or the exercise of his powers and/or otherwise in relation to or in connection with his duties powers or office including any liability incurred by him in defending any proceedings, civil or criminal, which relate to anything done or omitted or alleged to have been done or omitted by him as an officer or employee of the Company and in which judgment is given in his favour (or the proceedings are otherwise disposed of without any finding or ANNEX B: REVISED ARTICLES OF ASSOCIATION AND MEMORANDUM OF ASSOCIATION Page 23 of 28

102 admission of any material breach of duty on his part) or in which he is acquitted or in connection with any application under any statute for relief from liability in respect of any such act or omission in which relief is granted to him by the court. INSURANCE The Board or any committee authorised by the Board can take out and renew insurance which is for, or which benefits any people who are, or were, at any time directors, officers, employees or auditors of the Company. The Board must comply with the provisions of the Act relating to insurance. This Article does not affect the Company s power to indemnify its officers as set out in Article The insurance which the Board can buy or renew under Article can be for any purpose. This can include, for example, insurance against any liability incurred by any person mentioned in Article : (a) (b) as a result of anything they do, or do not do, in carrying out or trying to carry out their duties, or using or trying to use their powers in relation to the Company; or in any other way in connection with their duties, powers, or positions in relation to the Company. Annex 1 THE COMPANIES ACT PRIVATE COMPANY LIMITED BY GUARANTEE AND NOT HAVING A SHARE CAPITAL PROVISIONS FORMERLY CONTAINED WITHIN THE MEMORANDUM OF ASSOCIATION OF RAIL SAFETY AND STANDARDS BOARD LIMITED 1. The name of the Company is "Rail Safety and Standards Board Limited". 2. The registered office of the Company will be situate in England. 3. ANNEX B: REVISED ARTICLES OF ASSOCIATION AND MEMORANDUM OF ASSOCIATION Page 24 of 28

103 3.1. The principal object for which the Company is established is to lead and facilitate support its members (the railway industry's workrail industry) to achieve continuous improvement in the health and their objectives of improving safety, performance of the railways in Great Britain and thus to facilitate the reduction of and value for money across the industry, with a focus on: (a) (b) (c) Reducing safety risk to passengers, employees and the affected public so far as is reasonably practicable, so aiding compliance by providers of railway services with their obligations under health and safety law ; Increasing capacity (where appropriate); Improving operating performance and customer satisfaction (where appropriate) Subject to clause 3.1, the further objects for which the Company is established are: (a) (b) (c) (d) (e) (f) (g) (h) (i) to receive, purchase or otherwise acquire or have transferred to it and undertake all or any part of the functions, business, property and liabilities of any person carrying on any activity which the Company is authorised to carry on and to dispose of any part of such business which falls outside such authority; to develop, operate and maintain any computer hardware and software systems and other information systems including safety management information systems and models, and safety culture tools; to develop, operate, control and manage safety specifications and standards, procedures, codes of practice and protocols and without prejudice to the generality of the foregoing documents of like character for use in the railway industry, including advising about, and monitoring the implementation of, safety systems and procedures by third parties; to design, plan, manage and provide consultancy, advisory, training, educational and research services to all persons involved in or connected with the railway industry; to do all such other things as the board of directors of the Company considers to be necessary, incidental or helpful to any of the above objects; to purchase, take on lease or in exchange, hire or otherwise acquire and hold, for any estate or interest, and manage, any lands, buildings, servitudes, easements, rights, privileges, concessions, machinery, plant, stock-in-trade, and any heritable and moveable real and personal property of any kind; to purchase or otherwise acquire, dispose of, protect, extend and renew any patents, registered designs, trade marks and service marks {whether registered or not), copyright, design right or any similar property rights including those subsisting in inventions, designs, drawings, performances, computer programs, confidential information, business names, goodwill and the style of presentation of goods or services and applications for protection thereof, which may seem to the Company capable of being used for any of the purposes of the Company, or the acquisition of which may seem calculated directly or indirectly to benefit the Company and to use, exercise, develop, receive or grant licences in respect of or otherwise turn to account any of the same, for any purpose whatsoever, whether manufacturing or otherwise, which the Company may think calculated directly or indirectly to effectuate these objects; to form, promote, subsidise and assist companies, syndicates or other bodies of all kinds and to enter into partnerships or into any arrangements for sharing profits, union of interests, co-operation, reciprocal concessions, or otherwise, with any person or company for the purpose of carrying on business within any of the objects of the Company; to develop, work, improve, manage, lease, mortgage, charge, pledge, turn to account or otherwise deal with all or any part of the property, assets or rights of the Company, to surrender or accept surrender of any lease or tenancy or rights, and to ANNEX B: REVISED ARTICLES OF ASSOCIATION AND MEMORANDUM OF ASSOCIATION Page 25 of 28

104 sell or deal with the property, assets, business, rights or undertaking of the Company, or any part thereof, and on such terms and for such consideration as the Company may think fit, and including for cash or shares, debentures or securities of any other company; (j) (k) (l) (m) (n) (o) (p) (q) (r) (s) to borrow or raise money in such manner as the Company shall think fit and in particular by the issue (whether at par or at a premium or discount and for such consideration as the Company may think fit) of bonds, debentures or debenture stock (payable to bearer or otherwise), mortgages or charges, perpetual or otherwise, and, if the Company thinks fit, charged on all or any of the Company's property (both present and future) and undertaking, and collaterally or further to secure any obligations of the Company by a trust deed or other assurance; to guarantee or otherwise support or secure, either with or without the Company receiving any consideration or advantage, and whether by personal covenant or by mortgage or charging all or part of the undertaking, property, assets and rights present and future of the Company or by both such methods or by any other means whatsoever, the liabilities and obligations or the payment of any moneys whatsoever by any person, firm or company whatsoever, Including but not limited to any company which is for the time being the holding companyparent undertaking or a subsidiary undertaking (both as defined by section of the Companies Act 1985) of the Company or of the Company's holding company or is otherwise associated with the Company In its business; to grant indemnities of every description and to undertake obligations of every description; to pay all or any expenses incurred in connection with the formation and promotion and incorporation of the Company: to make loans or donations, either of cash or of other assets whatsoever to or enter into any arrangement whatsoever for the benefit of such persons and in such cases as the Company may think directly or indirectly conducive to any of its objects or otherwise expedient; to subscribe for, purchase or otherwise acquire, take, hold, or sell any shares or stock, bonds, debentures or debenture stock, or other securities or obligations of any person, firm, government or other authority or issuer (including any subsidiary undertaking of the Company) and to invest, deal with or lend any of the moneys of the Company in such manner, with or without security and on such terms as the Company may think fit; to amalgamate with any other company either whose objects are or include objects similar to those of the Company or which is possessed of property, assets or rights suitable for any of the purposes of the Company, and on any terms whatsoever; to obtain or support any provisional or other regulation, bye-law, order or Act of Parliament of the United Kingdom or in any other State or jurisdiction for enabling the Company to carry any of its objects into effect, or for effecting any modifications to the Company's constitution, or for any other purpose which may seem expedient, and to oppose or make representations in connection with any proceeding, proposal or application which may seem calculated, directly or indirectly, to prejudice the Company's Interests or the interests of any other person or company: to insure the life of any person who may, in the opinion of the Company, be of value to the Company as having or holding for the Company interests, goodwill or influence or other assets and to pay the premiums on such Insurance; to establish and maintain or pursue the establishment or maintenance of contributory or non-contributory pension or superannuation funds for the benefit of the persons referred to below, to grant pensions, emoluments, allowances, donations, gratuities, loans and bonuses to such persons and to make payments for or towards insurance on the life or lives of such persons, to establish, subsidise, subscribe to or otherwise ANNEX B: REVISED ARTICLES OF ASSOCIATION AND MEMORANDUM OF ASSOCIATION Page 26 of 28

105 support any institution, association, society, club, trust, other establishment or fund, the support of which may, in the opinion of the Company, be calculated directly or indirectly to benefit the Company or any such persons, or may be connected with any place where the Company carries on business or otherwise connected in any way with any of the activities of the Company; to institute and maintain any Institution, association, club, society, trust or other establishment calculated to advance the Interests of the Company or to benefit such persons, and to join, participate in and to subsidise or assist any association of employers or employees or any trade association; and to subscribe or guarantee money for charitable or benevolent objects or for any public, general or useful object or for any exhibition: the said persons are any persons who are or were at any time In the employment or service of the Company or of any of its businesses or of any company which was or is for the time being a subsidiary {as defined by section 736 Companies Act 1985) or a subsidiary undertaking (as defined by section 258 Companies1162 of the Act 1985) of the Company or are or were otherwise associated with the Company or any of Its businesses or who are or were at any time directors or officers of the Company or of such other company as aforesaid, or who hold or who held any salaried employment or office in the Company or such other company, and the families (Including former spouses) of them or any person who is or was dependant on them; (t) (u) (v) (w) (x) (y) (z) to purchase and maintain insurance for the benefit of any persons who are or were at any time directors, officers or employees of the Company or any other company which is a subsidiary or subsidiary undertaking of the Company or in which the Company has any interest, whether direct or indirect, or who are or were at any time trustees of any pension fund in which any employee of the Company or of any other such company or subsidiary undertaking are or have been interested indemnifying such persons against liability for negligence, default, breach of duty or breach of trust or any other liabilities which may be lawfully insured against; to administer the Code and the processes set out in the Code and comply with the provisions of the Code to monitor and report on the Railway Industry s health and safety performance and facilitate the collection and flow of information on health and safety matters in the Railway Industry; in relation to its Functions, to respond appropriately to recommendations and enquiries that are directed to the Company by accident investigation or other statutory investigatory bodies; to maintain a capability to undertake Research, Development and Innovation programmes; to manage its interest in Railway Documentation and Drawing Services to engage in cross-industry research, development and innovation programmes to support Functions and industry objectives; (aa) to engage in the facilitation of industry responses and actions to address cross - industry problems and opportunities;; (bb) (cc) (dd) (ee) to engage in the facilitation of system co-ordination and co-operation to support optimisation of the rail industry as a whole; to engage in the provision of support cross-industry programmes and other crossindustry groups for particular purposes; to engage in the provision, maintenance, development and management of information systems, databases and models; to engage in the dissemination of good practice, building of industry knowledge, awareness and competence through providing training, horizon scanning, guidance and learning from experience; ANNEX B: REVISED ARTICLES OF ASSOCIATION AND MEMORANDUM OF ASSOCIATION Page 27 of 28

106 (ff) (gg) (hh) (u)(ii) to engage in the facilitation of the effective representation of the Railway Industry (including direct representation by the Company of one or more Railway Industry Parties if so agreed with those parties) in subject areas relevant to the Primary Objective in discussions with other industries, other railway companies and organisations, public bodies and European Union institutions; to engage in the provision of products and services in support of all Functions listed in this Memorandum and the Constitution Agreement; and subject to the passing of a Reserved Resolution, to carry on of activities other than its Primary Objective for the purpose of making additional income available and/or broadening the Company s knowledge, skills or expertise if, in the opinion of the Directors, the carrying on of such other activities which benefit and do not in any material way prejudice the carrying on of the Primary Objective. to do all such acts or things as are incidental or conducive to the attainment of the above objects or any of them. 4. It is hereby declared that the word "company" in clause 3, except where used In reference to the Company, shall be deemed to include any partnership or other body of persons, whether incorporated or not incorporated, and whether domiciled in the United Kingdom or elsewhere, and whether now existing or hereafter to be formed, and it is also hereby declared that the objects specified in each sub-clause of clause 3, shall, except when otherwise expressed therein, not be limited or restricted in any way by reference to or inference from the terms of any other sub-clause, or the name of the Company, and none of the sub-clauses shall be deemed merely subsidiary or ancillary to the objects mentioned in the first sub-clause. 5. The liability of the members is limited. 6. Each member of the Company undertakes to contribute such amount to the assets of the Company as may be required (not exceeding 100). The obligation to pay this amount only arises if the Company is wound up while it is a member or within one year after it ceases to be a member. The contribution can be required to be made towards the payment of the Company's debts and liabilities contracted before the member ceased to be a member, and of the costs, charges and expenses of winding up and (if appropriate) for the adjustment of the rights of the contributories amongst themselves. ANNEX B: REVISED ARTICLES OF ASSOCIATION AND MEMORANDUM OF ASSOCIATION Page 28 of 28

107 RSSB Strategic Business Plan (1 April March 2019) ANNEX C: RSSB 5 YEAR STRATEGIC BUSINESS PLAN 1 of 27

108 RSSB is an industry owned, member driven organisation created in 2003 to deliver key functions in support of railway operations. It is independent of any single railway company and their commercial interests RSSB s Purpose is: to support its members (the rail industry) cooperation to achieve their objectives of improving safety and performance and value for money across the industry, with a focus on: reducing safety risk so far as is reasonably practicable increasing capacity (where appropriate) improving operating performance and customer satisfaction (where appropriate) RSSB s Role (what we do) We provide a unique breadth and depth of knowledge, skills and experience to help the rail industry collaborate, make informed decisions and deliver their strategic objectives. RSSB s Vision (what we want to be) To be the rail industry s chosen hub for analysis, collaboration and knowledge exchange. Strategy (how are we going to do it) By, in all that we do: working with our members to understand and address their needs and priorities developing the expertise and competence of our staff managing and delivering a broad range of quality products, services and tools ANNEX C: RSSB 5 YEAR STRATEGIC BUSINESS PLAN 2 of 27

109 applying the principles of good process management, governance, knowledge sharing and continuous improvement Behaviours Quality-driven, evidence-based, service-focused, knowledge-sharing, collaborative and consensus building, impartial, value-seeking, authoritative and independent. Contents Chairman s Foreword 4 01 Executive Summary 5 02 Introduction Monitoring, reporting on and revisions to the Plan Principles and Assumptions Operation of the Company Summary of Products and Services by Shall and May Objectives for the Plan Period Budget for members levies Yr 1 of Plan 18 ANNEX A RSSB Organisation (as at Dec 2013) 20 ANNEX B Members and Stakeholders 21 ANNEX C Activities commenced in ANNEX D Glossary 27 ANNEX C: RSSB 5 YEAR STRATEGIC BUSINESS PLAN 3 of 27

110 Foreword by the Chairman This is RSSBs Strategic Business Plan for which has been developed by a subcommittee of the board to show how RSSB will support the industry in Control Period 5. The RSSB board commissioned a Strategic Review in mid 2012, to equip the company for the challenges that lie ahead, and this has clarified our purpose and our relationship with both industry objectives and the newly formed Rail Delivery Group (RDG). We welcome the clarity that the Industry Strategic Business Plan provides and the leadership that RDG is providing and we look forward to working with all our members and stakeholders to deliver for them. In moving into the Plan period we have a robust, internationally recognised and well respected company supporting the industry in many areas. We also have to change however, to improve RSSBs relationships with industry and the way the company and members interact, as well as driving efficiency in all that we do. There are many and varied objectives that Government has set for industry, and which industry has picked up and developed in the Industry Strategic Business Plan. We will be entering Control Period 5 with a new chief executive, Chris Fenton who joins us in early We are proud and highly appreciative of all that has been achieved by Len Porter, and see his legacy as a base from which to build an even more valuable and respected rail industry asset that is fully aligned with our members objectives. For that reason our last objective (set out in Section 7) is that the company Plan for the 5 years from 2019 should be an integral part of the Industry s next strategic plan. I encourage all our members and stakeholders to get behind this Plan, and to work collaboratively to shape the way that we change and deliver more effective support to the industry an industry that has significant cost and performance challenges but also unprecedented levels of investment and growth to make the journey ahead a really positive and safe one for us all. Chairman ANNEX C: RSSB 5 YEAR STRATEGIC BUSINESS PLAN 4 of 27

111 1. Executive Summary 1.1 This is the high level Strategic Business Plan for the period from 1 April 2014 to 31 March 2019 (hereafter the Plan ) and provides the context for the Board to determine the company s objectives and priorities to support members and stakeholders during the plan period. 1.2 RSSB supports its members (the rail industry) in the fulfilment of their objectives and does so through arrangements that are governed by the board and other cross industry groups that take decisions and sponsor activities. Each of RSSB s functions supports these objectives in different ways, and this Plan shows the high level relationship between industry objectives and RSSB functions, products and services. The details behind this will be made available on the RSSB web site. 1.3 The task is to build upon the delivery and evolution of existing products and services to support the industry in addressing their goals of increasing capacity, improving business performance (particularly reducing costs) and reducing risk where reasonably practicable. The Industry Strategic Business Plan (ISBP) sets out the current position and goals for CP5 and longer term goals to 2035 in the following table. Industry today A railway today that: is one of the safest in Europe has customer satisfaction reaching an all time high of 83 per cent is running more trains than ever before, with 14 per cent more train kilometers than 2003/04 and a 62 per cent increase in freight moved since privatisation has the highest ever levels of performance has nearly halved government support from its peak in 2006/07 By 2019 A railway by the end of CP5 that is: the safest in Europe, reducing risk at level crossings by eight per cent in CP5 delivering 20 per cent more seats into central London during peak hours, and 32 per cent into large regional cities. By the end of CP5, moving 225 million more passengers and carrying 355,000 more trains every year maintaining record levels of performance with 92.5 per cent PPM by the end of CP5 delivering continuing improvements in customer satisfaction delivering a step change in connectivity between regional centers eg 6 fast trains and up to a 10 minute reduction in journey time between Manchester and Leeds transforming the nature of the rail network, with over 3,000 km more electrified railway, approximately 2,750 new vehicles, and completion of major enhancements to the network including Birmingham ANNEX C: RSSB 5 YEAR STRATEGIC BUSINESS PLAN 5 of 27

112 New Street, the Intercity Express Programme and the Thameslink, Crossrail and Reading schemes contributing to a lower carbon economy, reducing CO 2 emissions per passenger by 37 per cent and removing the equivalent of one million lorry journeys from the road per year. Freight tonne kilometers forecast to increase by 22 per cent compared to the end of CP4 more efficient. Overall industry subsidy will reduce from 6.0 pence per passenger kilometer by the end of CP4 to between 3.7 pence and 4.2 pence per passenger kilometer by 2019 The longer term By 2035 the industry aspires to deliver: levels of reliability and safety that are among the best in the world passenger satisfaction of at least 90 per cent capacity to accommodate twice as many passengers as today including the integration of HS2 with the national network further improvements in the product offer for freight customers a financially sustainable railway through improved efficiency and revenue generation a further reduction in CO 2 emissions Extract from Industry Strategic Business Plan January 2013 RSSBs high level objectives over the period of the Plan, which are set out in Section 7, will support the achievement of these goals through increasing engagement with members and stakeholders to better align company outputs with industry objectives and through improving the efficiency and quality of the company s delivery. 1.4 Over the last five years the rail industry has changed significantly, with considerable growth in passengers and freight, improvements in performance and safety and a reducing subsidy from taxpayers. Although the franchising process and Network Rail remain the principal means of delivering passenger train services and infrastructure, the relationships between industry and Government, and between the players within the industry have changed considerably with a shift from Government toward the industry in areas of leadership and strategic decision making, and with processes of devolution and alliancing in many parts of service delivery. RSSB has been relatively stable through this period and its broad base of cross industry membership remains although the ownership of its members has become more international. The establishment of the Rail Delivery Group has created a new sense of direction and focus for the leadership of the industry. 1.5 In July 2012 as part of its strategic planning process the RSSB board initiated a strategic review of RSSB to ensure that it is fit for the next Business Plan period and beyond. That review confirmed a revised company purpose (Primary Objective) and a revised Constitution Agreement, involving greater clarity about the relationship between those functions that RSSB does because that is its role in the industry, and those functions it does to support its members because it is efficient to do so in one place or to use RSSB s capabilities. These are termed respectively shall (of which there are five) and may (nine) functions. In preparing this Plan the products and services RSSB ANNEX C: RSSB 5 YEAR STRATEGIC BUSINESS PLAN 6 of 27

113 provides have been divided into the shall and may functions. They are summarised in Section 6 by the senior stakeholder group that sponsor or support the activity. The table summarises the resources associated with each activity. More details of the products and services in support of each activity will be made available on the RSSB web site in time for the commencement of the plan period, and it will be maintained up to date through CP The purpose of the company and how it will be delivered is summarised inside the front cover of this Plan. 1.7 A significant finding of the Strategic Review was the need to more closely align RSSBs products and services with the specific needs of its members and the overall objectives for the industry. While RSSB has taken on a number of significant additional products and services (summarised in Annex C) to meet the needs of the industry in recent years, the production of a Business Plan is the opportunity to take stock and ensure that the right things are being done. The Industry and Network Rail Strategic Business Plans (Jan 2013), the Rail Technical Strategy (Dec 2012), the Government s plans for franchising and the various Network Rail strategies to support sustainability, safety and wellbeing, are all key signals of the future direction of our members. The recent ORR Draft Determination for Network Rail takes this a stage further. Together these documents list members objectives where RSSB s capabilities can support the industry. In addition the new Constitution Agreement has a specific recognition of the Rail Delivery Group, and any relevant strategies that it publishes or endorses will provide further guidance on priorities. 1.8 The relationship between the industry objectives, as set out in the HLOS and the Industry Strategic Business Plan (pages 5 and 6), and the company activities is summarised in the table on the next page which shows an estimate of the company resources allocated to each activity. ANNEX C: RSSB 5 YEAR STRATEGIC BUSINESS PLAN 7 of 27

114 Industry Objective from ISBP Safety - Safest in Europe, reduce risk at level crossings by 8% Capacity - 20 per cent more in peak London hours; 32 per cent into large regional cities. Move 225m more passengers, 355k more trains pa RSSB functions in support of objectives Safety data, analysis and reporting; Research; CIRAS; Innovation; Standards Research, Standards, Innovation, Technical Strategy, New Systems support RSSB Governance Groups RSSB Board SSRG, ISCC CIRAS C tte ISLG, SICs RSSB Board, TSLG SICs ISCC Supporting External Stakeholder NR, TOCs, FOCs, Roscos, Suppliers, Infracos, ISLG ORR, DfT, RAIB RDG NR, TOCs, Roscos, Suppliers ERTMS PCB DfT Approximate RSSB FTE Approximate RSSB Cost m pa Performance at 92.5 % PPM at the end of CP5 Improvements in customer satisfaction Research, Technical Strategy, standards Research, development and Innovation, Standards RSSB Board, ISCC, TSLG, SICs RSSB Board TSLG, ISCC NR, TOCs NTF,DfT RDG, NR, TOCs, Suppliers Step change in connectivity between regional centers Research, development and Innovation, Technical Support, Standards RSSB Board, TSLG, ISCC, SICs RDG, NR, TOCs, Suppliers 15 4 Transforming the nature of the rail network (Investment) Research Development and Innovation, Technical Strategy. Standards RSSB Board, TSLG, ISCC, SICs RDG, NR, TOCs, RIA Reduce CO 2 by 37% per passenger and remove 1m lorry journeys from road pa Efficiency industry subsidy from 6p to c4p per pass/km Sustainable Rail Programme; Research, Innovation embedding Principles within industry during CP5 All functions support greater efficiency in the industry and RSSB will reduce its real cost of delivery by 1% pa. RSSB Board SDSG RSSB Board, TSLG, RISAS, RISQS, R2 Prog Bd, SICs NR, TOCs, FOCs, ROSCOs Infracos, Suppliers, DfT, DECC RDG NR, TOCs, FOCs Other members DfT, ORR Company administrative 27 5 Totals Table showing relationship of industry objectives to RSSB functions, stakeholder groups and estimated resources ANNEX C: RSSB 5 YEAR STRATEGIC BUSINESS PLAN 8 of 27

115 1.9 Two illustrative examples of work RSSB will be doing in the Plan period to support the industry in meeting its objectives are: i. Industry Objective to be the safest railway in Europe in Network Rail s Strategy for Transforming Safety and Wellbeing identifies the Precursor Indicator Model as the key industry measure of multi fatality train accident risk, but also acknowledges that it can be developed to be more useful as a predictive tool. RSSB will develop changes to the model through the appropriate cross industry governance (the user group) to meet that need for all users. ii. Industry Objectives Safety, Efficiency, Transforming the network - The industry is encountering more issues with the interface between platforms and trains which could lead to sub optimal decisions, based on pragmatic local considerations. These could impact on the long term flexibility, cost, interoperability and safety of the system. The RSSB board has been asked to undertake work to explore the issues, define the nature of the problem and opportunities and develop potential solutions using an evidence based approach. This will draw on the research and development and technical capabilities of RSSB and the various cross industry groups that oversee interfaces to explore the nature of the problems, test solutions and identify viable options. On the other hand, RSSB itself is not the right place to adopt an industry strategy that should derive from this work. This is likely to be endorsed by a combination of the Rail Delivery Group and Government to inform future investment plans and procurement decisions As an integral part of the industry, RSSBs costs are part of the overall cost of the industry. At around 43m in 2013/14 (of which around 23m is from DfT for Research Development and Innovation, and around 20m is from members levies) in an industry that turns over 12bn pa, RSSB represents around one third of one percent of industry turnover. However small as a share of the total, it is important that RSSB continues to control its own costs and delivers ever better value for money as its contribution to the industry cost challenge. During the Plan period, RSSB will develop itself as an organisation to better meet the needs of members and to demonstrate increased efficiency (set out in Section 5) and deliver against the Objectives set out in Section 7. ANNEX C: RSSB 5 YEAR STRATEGIC BUSINESS PLAN 9 of 27

116 2. Introduction 2.1 This Plan sets out the context of the RSSB role in the railway industry. It is RSSB s high level statement of what it will provide to members and stakeholders for the period covered by the Government s HLOS, the ORR determined Control Period 5, and the Industry and Network Rail Strategic Business Plans for the same period. 2.2 This Plan is high level and explains how the delivery of existing products and services (summarised in Section 6) are governed, together with the means by which these can be changed (set out in section 3) to meet the emerging priorities of the membership. 2.3 RSSB will have a stable financial relationship with its members through the plan period, with membership levies from existing members reducing by 1% in real terms each year (based on the formula of RPI-1). Given that nearly half of the RSSB turnover relates to staff costs (which are expected to change in line with the market, see section 5) to maintain and grow the company capability (for instance in the area of supporting the industry in proactive health management) it will be necessary to develop a combination of efficiencies and alternative sources of income, including new members. ANNEX C: RSSB 5 YEAR STRATEGIC BUSINESS PLAN 10 of 27

117 3. Monitoring, reporting on and revisions to company activity during the Plan period 3.1 This high level plan sets out the starting point, and the means of monitoring and changing functions or activities during the 5 years of its currency. The core arrangements consist of the following: This plan summarises the current objectives of the industry; the objectives for RSSB going into 2014/19; the functions, products and services of RSSB that support the industry at the commencement of the plan period in 2014; the governance arrangement for the activities and the resources RSSB deploys in support of industry and the funding arrangements that will apply during CP Under the supervision and direction of the Board, RSSB operates and facilitates many cross industry governance groups, which oversee and steer the development and delivery of virtually all RSSB products and services. Most of these groups have their own plans and strategies for the achievement of particular goals and these are generally published in the relevant part of the RSSB web site Each year the Board of RSSB, consisting of representatives of all categories of membership and observers from the ORR and DfT, will undertake a review of the performance of the company, the priorities and resources planned for company activities in the following year, and the fulfillment of the various objectives of each of the main groups reporting to it The key indicators of success the board will monitor are: i. Keeping within the budget ii. iii. Meeting the needs of stakeholders for specific objectives Maintaining an appropriate balance of activity against industry objectives. 3.2 Material changes in the activities, objectives, or funding of the company will be supervised by the board, in accordance with the Constitution Agreement while less material changes can and will be made through the various cross industry groups that govern RSSB activities. A high level description of the relationship between industry objectives, RSSB functions and the way they are organised to deliver is shown below: ANNEX C: RSSB 5 YEAR STRATEGIC BUSINESS PLAN 11 of 27

118 NOTE: TSLG takes strategic direction from RDG for priorities, plan and appointment of Chair The current RSSB organisation for the delivery of both shall and may functions is shown in Annex A. This is subject to change which may occur before the Plan commences. ANNEX C: RSSB 5 YEAR STRATEGIC BUSINESS PLAN 12 of 27

119 4. Principles and assumptions 4.1 Principles of operation RSSB will exercise its functions in a manner best calculated to achieve an appropriate balance between the need to: i. enable members to plan with a reasonable degree of assurance, ii. demonstrate leadership and efficiency in its support functions, iii. take account of strategies promoted by the RDG, iv. be accountable for parts of industry due process, v. lead in areas where a) through is functions it holds industry leading competence, or b) requested by the board, vi. maintain the independence of the company, vii. challenge the industry with respect to its functions, viii. provide an audit trail for the industry decisions it facilitates and ix. promote solutions that recognise the railway as a system Assumptions in the Plan i. Funding. Member s Levies will be set in year one and adjusted annually by RPI-1 to generate efficiency savings for members. The only exception to this will be for members (other than Franchised TOCs and Network Rail) whose turnover changes in such a way that they move to a different level of levy. RSSB activities that are not funded by membership fees (RD&I, CIRAS etc) will be planned and managed within the period in accordance with such funding as is made available or secured through the appropriate governance arrangements. ii. It is assumed that the level of funding for research and development will be broadly similar to that provided in the last ANNEX C: RSSB 5 YEAR STRATEGIC BUSINESS PLAN 13 of 27