Operating Lease Agreement in relation to a fleet of class 350 electric multiple units and associated equipment

Direct Award of a 16-year lease of a fleet of 37 Class 350/2 electric multiple units to replace the current Class 323 electric multiple unit fleet which Northern Trains Limited ("Northern") lease and operate on the Northern Network, primarily in the Greater Manchester area. The lease includes an ability for Northern to break the lease after 8 years (in August 2034) where the rolling stock fails to meet performance targets in respect of reliability and availability. As part of the leasing of the class 350 fleet, Northern have also agreed with the lessor that the lessor will agree to the termination of the lease by the same lessor of a fleet of 34 class 323 electric multiple units early, allowing the class 350 fleet to be substituted for the class 323 fleet without any increase in subsidy required to Northern to enable leasing of the class 350 fleet. The lease makes provision for sub-leasing of the rolling stock to other operators in specified circumstances under the lease, either on a short-term basis (under 48 hours) or on a longer term basis with consent. The lease also permits the assignment, transfer, novation or disposal of all of rights and obligations of the lessee under the lease (a "Transfer") to a public sector company who will also operate the rolling stock on the Northern Network. The lease also contains mechanisms which allow for modification of the rolling stock provided under the lease at the request of either Northern or the lessor, including where this is required by law ("the Modification Provisions"). In the event that the rolling stock is let to a third party, the lease is subject to a Transfer or any of the Modification Provisions are engaged, it is considered that these would be permitted modifications provided for in the contract.