Exhibit 4.9
DRAFT: 25/02/03
THIS SECOND ISSUER CASH MANAGEMENT AGREEMENT is made on [6th March], 2003
BETWEEN:
(1) HALIFAX PLC, a public limited company incorporated under the laws of
England and Wales whose registered office is at Xxxxxxx Xxxx, Xxxxxxx,
Xxxx Xxxxxxxxx XX0 0XX acting in its capacity as the Second Issuer Cash
Manager;
(2) PERMANENT FINANCING (NO. 2) PLC, a public limited company incorporated
under the laws of England and Wales (registered number 4623188) whose
registered office is at Xxxxxxxxx Xxxxx, Xxxxxxxxx Xxxx, Xxxxxx XX0X
0XX (the "SECOND ISSUER"); and
(3) U.S. BANK NATIONAL ASSOCIATION, a national banking association formed
under the laws of the United States of America, acting through its
office at 0 Xxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000
acting in its capacity as Security Trustee.
WHEREAS:
(A) On the Second Issuer Closing Date the Second Issuer will issue the
Second Issuer Notes. The Second Issuer will make the Second Issuer Term
Advances to Funding 1 from the proceeds of the issue of the Second
Issuer Notes.
(B) The Second Issuer Cash Manager is willing to provide cash management
services to the Second Issuer and the Security Trustee on the terms and
subject to the conditions contained in this Agreement.
IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 The Amended and Restated Master Definitions and Construction Schedule
and the Second Issuer Master Definitions and Construction Schedule,
both signed for the purposes of identification by Xxxxx & Overy and
Sidley Xxxxxx Xxxxx & Xxxx on [5th March], 2003 (as the same may be
amended, varied or supplemented from time to time with the consent of
the parties to this Agreement) are expressly and specifically
incorporated into this Agreement and, accordingly, the expressions
defined in the Amended and Restated Master Definitions and Construction
Schedule and the Second Issuer Master Definitions and Construction
Schedule shall, except where the context otherwise requires and save
where otherwise defined herein, have the same meanings in this
Agreement and this Agreement shall be construed in accordance with the
interpretation provisions set out in CLAUSE 2 of the Second Issuer
Master Definitions Schedule. In the event of a conflict between the
Amended and Restated Master Definitions and Construction Schedule and
the Second Issuer Master Definitions and Construction Schedule, the
interpretation given in the Second Issuer Master Definitions and
Construction Schedule will apply.
2. APPOINTMENT OF SECOND ISSUER CASH MANAGER
2.1 APPOINTMENT
Until termination pursuant to CLAUSE 12, the Second Issuer and the
Security Trustee (according to their respective estates and interests)
each hereby appoints the Second Issuer
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Cash Manager as its lawful agent to provide the Second Issuer Cash
Management Services set out in this Agreement. The Second Issuer Cash
Manager in each case hereby accepts such appointment on the terms and
subject to the conditions of this Agreement.
2.2 DUTIES PRESCRIBED BY TRANSACTION DOCUMENTS
For the avoidance of doubt and in connection with the powers conferred
under CLAUSE 2.1, save as expressly provided elsewhere in this
Agreement nothing in this Agreement shall be construed so as to give
the Second Issuer Cash Manager any powers, rights, authorities,
directions or obligations other than as specified in this Agreement or
any of the other Transaction Documents.
2.3 APPOINTMENT CONDITIONAL UPON ISSUANCE OF SECOND ISSUER NOTES
The appointment pursuant to CLAUSE 2.1 is conditional upon the issue of
the Second Issuer Notes and shall take effect upon and from the Second
Issuer Closing Date automatically without any further action on the
part of any person PROVIDED THAT if the issue of the Second Issuer
Notes has not occurred by [7th March], 2003, or such later date as the
Second Issuer and the Lead Managers may agree, this Agreement shall
cease to be of further effect.
3. SECOND ISSUER CASH MANAGEMENT SERVICES
3.1 GENERAL
The Second Issuer Cash Manager shall provide the services set out in
this Agreement (including, for the avoidance of doubt, the Schedules)
(the "SECOND ISSUER CASH MANAGEMENT SERVICES").
3.2 APPROVALS AND AUTHORISATIONS
The Second Issuer Cash Manager shall maintain, or procure the
maintenance of, the approvals, authorisations, consents and licences
required in connection with the business of the Second Issuer and shall
prepare and submit, or procure the preparation and submission of, on
behalf of the Second Issuer all necessary applications and requests for
any further approvals, authorisations, consents or licences which may
be required in connection with the business of the Second Issuer and
shall, so far as it is reasonably able to do so, perform the Second
Issuer Cash Management Services in such a way as not to prejudice the
continuation of any such approvals, authorisations, consents or
licences.
3.3 COMPLIANCE WITH TRANSACTION DOCUMENTS, ETC.
The Second Issuer Cash Management Services shall include procuring (so
far as the Second Issuer Cash Manager, using its reasonable endeavours,
is able so to do) compliance by the Second Issuer with all applicable
legal requirements and with the terms of the Second Issuer Transaction
Documents, PROVIDED ALWAYS THAT the Second Issuer Cash Manager shall
not lend or provide any sum to the Second Issuer and that the Second
Issuer Cash Manager shall have no liability whatsoever to the Second
Issuer, the Security Trustee or any other person for any failure by the
Second Issuer to make any payment due under any of the Second Issuer
Transaction Documents (other than to the extent arising from any
failure by the Second Issuer Cash Manager to perform any of its
obligations under any of the Transaction Documents).
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3.4 LIABILITY OF SECOND ISSUER CASH MANAGER
(a) The Second Issuer Cash Manager shall indemnify each of the Second
Issuer and the Security Trustee on demand on an after Tax basis
for any loss, liability, claim, expense or damage suffered or
incurred by it in respect of the negligence, bad faith or wilful
default of the Second Issuer Cash Manager in carrying out its
functions as Second Issuer Cash Manager under, or as a result of
a breach by the Second Issuer Cash Manager of, the terms and
provisions of this Agreement or such other Second Issuer
Transaction Documents to which the Second Issuer Cash Manager is
a party (in its capacity as such) in relation to such functions.
(b) For the avoidance of doubt, the Second Issuer Cash Manager shall
not be liable in respect of any loss, liability, claim, expense
or damage suffered or incurred by the Second Issuer or the
Security Trustee and/or any other person as a result of the
proper performance of the Second Issuer Cash Management Services
by the Second Issuer Cash Manager save to the extent that such
loss, liability, claim, expense or damage is suffered or incurred
as a result of any negligence, bad faith or wilful default of the
Second Issuer Cash Manager under, or as a result of a breach by
the Second Issuer Cash Manager of, the terms and provisions of
this Agreement or any of the other Second Issuer Transaction
Documents to which the Second Issuer Cash Manager is a party (in
its capacity as such) in relation to such functions.
4. PAYMENTS, ACCOUNTS, LEDGERS
4.1 SECOND ISSUER TRANSACTION ACCOUNT
(a) The Second Issuer Cash Manager hereby confirms that the Second
Issuer Transaction Account has been established on or before the
date of this Agreement and that the mandate in the agreed form
will apply to this Agreement at the Second Issuer Closing Date.
The Second Issuer Cash Manager undertakes (to the extent to which
the same is within its control in its capacity as Second Issuer
Cash Manager) that at the Second Issuer Closing Date the Second
Issuer Transaction Account will be operative and that the Second
Issuer Cash Manager will not knowingly create or permit to
subsist any Security Interest in relation to the Second Issuer
Transaction Account other than as created under or permitted
pursuant to the Second Issuer Deed of Charge.
(b) The Second Issuer Cash Manager shall procure that the following
amounts are paid into the Second Issuer Transaction Account:
(i) all amounts of interest paid on the Second Issuer Term
Advances;
(ii) all repayments of principal on the Second Issuer Term
Advances;
(iii) all amounts received by the Second Issuer pursuant to
the Dollar Currency Swap Agreements and the Euro
Currency Swap Agreements; and
(iv) any other amounts whatsoever received by or on behalf
of the Second Issuer after the Second Issuer Closing
Date,
and the Second Issuer Cash Manager shall procure that all interest
earned on the Second Issuer Transaction Account and all investment
proceeds from and income and distributions arising from time to time in
respect of Authorised Investments purchased from amounts standing to
the credit of the Second Issuer Transaction Account are credited to
such account.
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(c) Each of the payments into the Second Issuer Transaction Account
referred to in CLAUSE 4.1(b) shall be made forthwith upon receipt
by the Second Issuer or the Second Issuer Cash Manager of the
amount in question.
(d) For the avoidance of doubt, as soon as reasonably practicable
after becoming aware of the same, the Second Issuer Cash Manager
may, and shall, withdraw Cash from the Second Issuer Transaction
Account if, and to the extent that, such Cash was credited
thereto in error and shall use its reasonable endeavours to
ensure that such Cash is applied correctly thereafter.
(e) The Second Issuer Cash Manager shall promptly notify each of the
Second Issuer and the Security Trustee in writing of any
additional account which supplements or replaces any account
specifically referred to in the definition of the "Second Issuer
Transaction Account" in the Second Issuer Master Definitions and
Construction Schedule.
(f) Each of the Second Issuer Cash Manager and the Second Issuer
undertakes that, so far as it is able to procure the same, the
Second Issuer Transaction Account and all instructions and
mandates in relation thereto will continue to be operative and
will not, save as permitted pursuant to the Second Issuer Bank
Account Agreement, be changed without the prior written consent
of the Security Trustee (such consent not to be unreasonably
withheld or delayed). For the avoidance of doubt, the Second
Issuer Cash Manager may change the authorised signatories in
respect of any instructions or mandates without the prior written
consent of the Security Trustee, in accordance with the terms of
the Second Issuer Bank Account Agreement.
4.2 WITHDRAWALS
(a) The Second Issuer Cash Manager may make withdrawals on behalf of
the Second Issuer from the Second Issuer Transaction Account
until such time as the Second Issuer Cash Manager receives a copy
of a Second Issuer Note Acceleration Notice served by the
Security Trustee on the Second Issuer, as permitted by this
Agreement, but shall not in carrying out its functions as Second
Issuer Cash Manager under this Agreement otherwise make
withdrawals from the Second Issuer Transaction Account.
(b) Upon receipt of such a Second Issuer Note Acceleration Notice, no
amount shall be withdrawn from the Second Issuer Transaction
Account by the Second Issuer Cash Manager without the prior
written consent of the Security Trustee.
4.3 CASH MANAGEMENT
In administering the Second Issuer Transaction Account on behalf of the
Second Issuer and the Security Trustee, the Second Issuer Cash Manager
shall comply with the provisions of SCHEDULE 2 prior to receipt by the
Second Issuer Cash Manager of a copy of any Second Issuer Note
Acceleration Notice served on the Second Issuer. Following service of a
Second Issuer Note Acceleration Notice, the Security Trustee or any
Receiver appointed by the Security Trustee will administer the Second
Issuer Transaction Account in accordance with the terms of the Second
Issuer Deed of Charge.
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5. PAYMENTS UNDER SECOND ISSUER SWAP AGREEMENTS AND TERMINATION OF SECOND
ISSUER SWAP AGREEMENTS
5.1 On each Interest Payment Date, the Second Issuer or the Second Issuer
Cash Manager on its behalf will procure that amounts received from
Funding 1 under the Second Issuer Intercompany Loan Agreement are paid
into the Second Issuer Transaction Account.
5.2 The Second Issuer, or the Second Issuer Cash Manager on its behalf,
will procure that on each Interest Payment Date:
(a) subject to making payments ranking higher in the order of
priorities of payment set out in the Second Issuer
Pre-Enforcement Priority of Payments or, as the case may be, the
Second Issuer Post-Enforcement Priority of Payments, amounts
received in respect of:
(i) the Second Issuer Series 1 Term Advances are paid to the
relevant Series 1 Second Issuer Swap Provider;
(ii) the Second Issuer Series 2 Term Advances are paid to the
relevant Series 2 Second Issuer Swap Provider;
(iii) the Second Issuer Series 3 Term Advances are paid to the
relevant Series 3 Second Issuer Swap Provider; and
(iv) the Second Issuer Series 4 Term Advances are paid to the
relevant Series 4 Second Issuer Swap Provider;
(b) amounts received from each Second Issuer Swap Provider under the
relevant Second Issuer Currency Swap Agreement are paid to the
Principal Paying Agent, which amounts shall be paid by the Paying
Agents (subject to the terms of the Second Issuer Paying Agent
and Agent Bank Agreement) to the holders of the corresponding
classes of Second Issuer Notes.
5.3 The Second Issuer, or the Second Issuer Cash Manager on its behalf,
will procure that on each Interest Payment Date (subject to making
payments ranking higher in the order of priorities of payment set out
in the Second Issuer Pre-Enforcement Priority of Payments or, as the
case may be, the Second Issuer Post-Enforcement Priority of Payments),
amounts received from Funding 1 in respect of the Second Issuer Series
5 Term Advances are paid to the Principal Paying Agent, which amounts
shall be paid by the Paying Agents (subject to the terms of the Second
Issuer Paying Agent and Agent Bank Agreement) to the holders of the
corresponding holders of the Series 5 Second Issuer Notes.
5.4 If on or prior to the date of the earlier of (i) repayment in full of
the Second Issuer Notes or (ii) the service of a Second Issuer Note
Acceleration Notice, any of the Dollar Currency Swaps or the Euro
Currency Swaps is terminated, the Second Issuer Cash Manager (on behalf
of the Second Issuer and the Security Trustee) shall purchase a
replacement hedge (taking into account any early termination payment
received from the relevant Dollar Currency Swap Provider or the
relevant Euro Currency Swap Provider) in respect of the relevant class
of Second Issuer Notes, against fluctuations in, as appropriate:
(a) the relevant currency swap rate between Dollars and Sterling or
the possible variance between LIBOR for three-month Sterling
deposits and either:
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(i) LIBOR for one-month Dollar deposits (in relation to the
Series 1 Class A Second Issuer Notes); or
(ii) LIBOR for three-month Dollar deposits (in relation to
the Series 1 Class B Second Issuer Notes, the Series 1
Class C Second Issuer Notes, the Series 2 Second Issuer
Notes and the Series 4 Class A Second Issuer Notes); or
(b) the relevant currency swap rate between Euro and Sterling or the
possible variance between LIBOR for three-month Sterling deposits
and EURIBOR for three-month Euro deposits (in relation to the
Series 3 Second Issuer Notes, the Series 4 Class B Second Issuer
Notes and the Series 4 Class C Second Issuer Notes),
in each case, on terms acceptable to the Rating Agencies and the Second
Issuer and the Security Trustee and with a swap provider whom the
Rating Agencies have previously confirmed in writing to the Second
Issuer and the Security Trustee will not cause the then current ratings
of the Second Issuer Notes to be downgraded.
5.5 If the Second Issuer receives a Refund Payment (as such term is defined
in the definition of "Second Issuer Revenue Receipts") then the Second
Issuer, or the Second Issuer Cash Manager on its behalf, will pay over
an amount equal to such Refund Payment to the relevant Second Issuer
Swap Provider upon receipt.
6. NO LIABILITY
Save as otherwise provided in this Agreement, the Second Issuer Cash
Manager shall have no liability for the obligations of either the
Security Trustee or the Second Issuer under any of the Transaction
Documents or otherwise and nothing in this Agreement shall constitute a
guarantee, or similar obligation, by the Second Issuer Cash Manager of
either Funding 1, the Security Trustee or the Second Issuer in respect
of any of them.
7. COSTS AND EXPENSES
Subject to and in accordance with the Second Issuer Pre-Enforcement
Priority of Payments or, as the case may be, the Second Issuer
Post-Enforcement Priority of Payments, the Second Issuer will on each
Interest Payment Date reimburse the Second Issuer Cash Manager for all
out-of-pocket costs, expenses and charges (together with any amounts in
respect of Irrecoverable VAT due thereon) properly incurred by the
Second Issuer Cash Manager in the performance of the Second Issuer Cash
Management Services including any such costs, expenses or charges not
reimbursed to the Second Issuer Cash Manager on any previous Interest
Payment Date and the Second Issuer Cash Manager shall supply the Second
Issuer with an appropriate VAT invoice issued by the Second Issuer Cash
Manager or, if the Second Issuer Cash Manager has treated the relevant
cost, expense or charge as a disbursement for VAT purposes, by the
person making the supply.
8. INFORMATION
8.1 USE OF I.T. SYSTEMS
(a) The Second Issuer Cash Manager represents and warrants that at
the date hereof in respect of the software which is to be used by
the Second Issuer Cash Manager in providing the Second Issuer
Cash Management Services it has in place all necessary
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licences and/or consents from the respective licensor or
licensors (if any) of such software.
(b) The Second Issuer Cash Manager undertakes that it shall for the
duration of this Agreement, use reasonable endeavours to:
(i) ensure that the licences and/or consents referred to in
PARAGRAPH (a) are maintained in full force and effect;
and
(ii) except in so far as it would breach any other of its
legal obligations, grant to any person to whom it may
sub-contract or delegate the performance of all or any
of its powers and obligations under this Agreement
and/or to such person as the Second Issuer and the
Security Trustee elect as a substitute cash manager in
accordance with the terms of this Agreement a licence to
use any proprietary software together with any updates
which may be made thereto from time to time.
(c) The Second Issuer Cash Manager shall use reasonable endeavours to
maintain in working order the information technology systems used
by the Second Issuer Cash Manager in providing the Second Issuer
Cash Management Services.
(d) The Second Issuer Cash Manager shall pass to any person to whom
it may sub-contract or delegate the performance of all or any of
its powers and obligations under this Agreement and/or to such
person as the Second Issuer and the Security Trustee elect as a
substitute cash manager in accordance with the terms of this
Agreement the benefit of any warranties in relation to the
software insofar as the same are capable of assignment.
8.2 BANK ACCOUNT STATEMENTS
The Second Issuer Cash Manager shall take all reasonable steps to
ensure that it receives a monthly bank statement in relation to each of
the Second Issuer Bank Accounts (subject to CLAUSE 5.3 of the Second
Issuer Bank Account Agreement) and that it furnishes a copy of such
statements to the Second Issuer and the Security Trustee.
8.3 ACCESS TO BOOKS AND RECORDS
Subject to all applicable laws, the Second Issuer Cash Manager shall
permit the Auditors of the Second Issuer and any other person nominated
by the Security Trustee (to whom the Second Issuer Cash Manager has no
reasonable objection) at any time during normal office hours upon
reasonable notice to have access, or procure that such person or
persons are granted access, to all books of record and account relating
to the Second Issuer Cash Management Services provided by the Second
Issuer Cash Manager and related matters in accordance with this
Agreement.
8.4 STATUTORY OBLIGATIONS
The Second Issuer Cash Manager will use its reasonable endeavours, on
behalf of the Second Issuer, to prepare or procure the preparation of
and file all reports, annual returns, financial statements, statutory
forms and other returns which the Second Issuer is required by law to
prepare and file. Subject to approval thereof by the directors of the
Second Issuer, the
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Second Issuer Cash Manager shall cause such accounts to be audited by
the Auditors and shall procure so far as it is able so to do that the
Auditors shall make a report thereon as required by law and copies of
all such documents shall be delivered to the Security Trustee, the
Second Issuer and the Rating Agencies as soon as practicable after the
end of each accounting reference period of the Second Issuer.
8.5 INFORMATION COVENANTS
(a) The Second Issuer Cash Manager shall provide the Second Issuer,
the Security Trustee, the Seller and the Rating Agencies with a
quarterly report in, or substantially in, the form set out in
SCHEDULE 3 in respect of the Second Issuer. Each such quarterly
report shall be delivered to the Second Issuer, the Security
Trustee, the Seller and the Rating Agencies by the last Business
Day of the month in which each Interest Payment Date occurs.
(b) The Second Issuer Cash Manager shall provide, or procure the
provision of, to the Second Issuer, the Security Trustee and the
Rating Agencies copies of any annual returns or financial
statements referred to in CLAUSE 8.4 as soon as reasonably
practicable after the preparation thereof.
(c) The Second Issuer Cash Manager shall notify the Rating Agencies
in writing of the details of:
(i) any material amendment to the Second Issuer Transaction
Documents;
(ii) the occurrence of a Second Issuer Note Event of Default;
and
(iii) any other information relating to the Second Issuer Cash
Manager as the Rating Agencies may reasonably request in
connection with its obligations under this Agreement,
PROVIDED THAT such request does not adversely interfere
with the Second Issuer Cash Manager's day-to-day
provision of the Second Issuer Cash Management Services
under the other terms of this Agreement.
(d) The Second Issuer Cash Manager shall, at the request of the
Security Trustee, furnish the Security Trustee and the Rating
Agencies with such other information relating to its business and
financial condition as it may be reasonable for the Security
Trustee to request in connection with this Agreement PROVIDED
THAT the Security Trustee shall not make such a request more than
once every three months unless, in the belief of the Security
Trustee, a Second Issuer Intercompany Loan Event of Default,
Second Issuer Note Event of Default or Second Issuer Cash Manager
Termination Event (as defined in CLAUSE 12.1) shall have occurred
and is continuing or may reasonably be expected to occur and
PROVIDED FURTHER THAT such request does not adversely interfere
with the Second Issuer Cash Manager's day-to-day provision of the
Second Issuer Cash Management Services under the other terms of
this Agreement.
9. REMUNERATION
9.1 FEE PAYABLE
The Second Issuer shall pay to the Second Issuer Cash Manager for the
Second Issuer Cash Management Services a cash management fee (which
shall be inclusive of VAT) which shall be agreed in writing between the
Second Issuer, the Security Trustee and the Second Issuer Cash Manager
from time to time.
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9.2 PAYMENT OF FEE
The cash management fee referred to in CLAUSE 9.1 shall be paid to the
Second Issuer Cash Manager in arrear on each Quarterly Interest Payment
Date in the manner contemplated by and in accordance with the
provisions of the Second Issuer Pre-Enforcement Revenue Priority of
Payments or, as the case may be, the Second Issuer Post-Enforcement
Priority of Payments.
10. COVENANTS OF SECOND ISSUER CASH MANAGER
10.1 COVENANTS
The Second Issuer Cash Manager hereby covenants with and undertakes to
each of the Second Issuer and the Security Trustee that without
prejudice to any of its specific obligations under this Agreement:
(a) it will devote all due skill, care and diligence to the
performance of its obligations and the exercise of its
discretions under this Agreement;
(b) it will comply with any proper directions, orders and
instructions which the Second Issuer or the Security Trustee may
from time to time give to it in accordance with the provisions of
this Agreement and, in the event of any conflict, those of the
Security Trustee shall prevail;
(c) it will use its reasonable endeavours to keep in force all
licences, approvals, authorisations and consents which may be
necessary in connection with the performance of the Second Issuer
Cash Management Services and prepare and submit all necessary
applications and requests for any further approval,
authorisation, consent or licence required in connection with the
performance of the Second Issuer Cash Management Services;
(d) save as otherwise agreed with the Second Issuer and the Security
Trustee, it will provide free of charge to the Second Issuer
during normal office hours office space, facilities, equipment
and staff sufficient to fulfil the obligations of the Second
Issuer under this Agreement;
(e) it will not knowingly fail to comply with any legal requirements
in the performance of the Second Issuer Cash Management Services;
(f) it will make all payments required to be made by it pursuant to
this Agreement on the due date for payment thereof for value on
such day without set-off (including, without limitation, in
respect of any fees owed to it) or counterclaim; and
(g) it will not without the prior written consent of the Security
Trustee amend or terminate any of the Second Issuer Transaction
Documents save in accordance with their terms.
10.2 DURATION OF COVENANTS
The covenants of the Second Issuer Cash Manager in CLAUSE 10.1 shall
remain in force until this Agreement is terminated but without
prejudice to any right or remedy of the Second
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Issuer and/or the Security Trustee arising from breach of any such
covenant prior to the date of termination of this Agreement.
11. NON-EXCLUSIVITY
Nothing in this Agreement shall prevent the Second Issuer Cash Manager
from rendering or performing services similar to those provided for in
this Agreement to or for itself or other persons, firms or companies or
from carrying on business similar to or in competition with the
business of the Second Issuer or the Security Trustee.
12. TERMINATION
12.1 SECOND ISSUER CASH MANAGER TERMINATION EVENTS
If any of the following events ("SECOND ISSUER CASH MANAGER TERMINATION
EVENTS") shall occur:
(a) default is made by the Second Issuer Cash Manager in the payment
on the due date of any payment due and payable by it under this
Agreement and such default continues unremedied for a period of
three London Business Days after the earlier of the Second Issuer
Cash Manager becoming aware of such default and receipt by the
Second Issuer Cash Manager of written notice from the Second
Issuer or the Security Trustee, as the case may be, requiring the
same to be remedied; or
(b) default is made by the Second Issuer Cash Manager in the
performance or observance of any of its other covenants and
obligations under this Agreement, which in the reasonable opinion
of the Security Trustee is materially prejudicial to the
interests of the Second Issuer Secured Creditors and such default
continues unremedied for a period of twenty days after the
earlier of the Second Issuer Cash Manager becoming aware of such
default and receipt by the Second Issuer Cash Manager of written
notice from the Security Trustee requiring the same to be
remedied; or
(c) while the Second Issuer Cash Manager is the Seller, an Insolvency
Event occurs,
then the Security Trustee may at once or at any time thereafter while
such default continues by notice in writing to the Second Issuer Cash
Manager terminate its appointment as Second Issuer Cash Manager under
this Agreement with effect from a date (not earlier than the date of
the notice) specified in the notice.
12.2 RESIGNATION OF SECOND ISSUER CASH MANAGER
The appointment of the Second Issuer Cash Manager under this Agreement
may be terminated upon the expiry of not less than 12 months' written
notice of termination given by the Second Issuer Cash Manager to the
Second Issuer and the Security Trustee PROVIDED THAT:
(a) the Second Issuer and the Security Trustee consent in writing to
such termination;
(b) a substitute cash manager shall be appointed, such appointment to
be effective not later than the date of such termination;
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(c) such substitute cash manager has cash management experience and
is approved by the Second Issuer and the Security Trustee;
(d) such substitute cash manager enters into an agreement
substantially on the same terms as the relevant provisions of
this Agreement or on such terms as are satisfactory to the Second
Issuer and the Security Trustee and the Second Issuer Cash
Manager shall not be released from its obligations under the
relevant provisions of this Agreement until such substitute cash
manager has entered into such new agreement and the rights of the
Second Issuer under such agreement are charged in favour of the
Security Trustee on terms satisfactory to the Security Trustee;
and
(e) the then current ratings (if any) of the Second Issuer Notes are
not adversely affected as a result thereof.
12.3 EFFECT OF TERMINATION
(a) On and after termination of the appointment of the Second Issuer
Cash Manager under this Agreement pursuant to this CLAUSE 12, all
authority and power of the Second Issuer Cash Manager under this
Agreement shall be terminated and be of no further effect and the
Second Issuer Cash Manager shall not thereafter hold itself out
in any way as the agent of the Second Issuer or the Security
Trustee pursuant to this Agreement.
(b) Upon termination of the appointment of the Second Issuer Cash
Manager under this Agreement pursuant to this CLAUSE 12, the
Second Issuer Cash Manager shall:
(i) forthwith deliver (and in the meantime hold on trust
for, and to the order of, the Second Issuer or the
Security Trustee, as the case may be) to the Second
Issuer or the Security Trustee, as the case may be or as
it shall direct in writing, all books of account,
papers, records, registers, correspondence and documents
in its possession or under its control relating to the
affairs of or belongings of the Second Issuer or the
Security Trustee, as the case may be, (if practicable,
on the date of receipt) any monies then held by the
Second Issuer Cash Manager on behalf of the Second
Issuer, the Security Trustee and any other assets of the
Second Issuer and the Security Trustee;
(ii) take such further action as the Second Issuer or the
Security Trustee, as the case may be, may reasonably
direct at the expense of the Second Issuer or the
Security Trustee, as the case may be (including in
relation to the appointment of a substitute cash
manager) provided that the Security Trustee shall not be
required to take or direct to be taken such further
action unless it has been indemnified and/or secured to
its satisfaction;
(iii) provide all relevant information contained on computer
records in the form of magnetic tape, together with
details of the layout of the files encoded on such
magnetic tapes; and
(iv) co-operate and consult with and assist the Second Issuer
or the Security Trustee or its nominee, as the case may
be, (which shall, for the avoidance of doubt, include
any Receiver appointed by it) for the purposes of
explaining the file layouts and the format of the
magnetic tapes generally containing such computer
records on the
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computer system of the Second Issuer or the Security
Trustee or such nominee, as the case may be.
12.4 NOTICE OF EVENT OF DEFAULT
The Second Issuer Cash Manager shall deliver to the Second Issuer and
the Security Trustee as soon as reasonably practicable but in any event
within three London Business Days of becoming aware thereof a notice of
any Second Issuer Cash Manager Termination Event or any Second Issuer
Note Event of Default or any event which with the giving of notice or
expiry of any grace period or certification, as specified in such
Second Issuer Cash Manager Termination Event or Second Issuer Note
Event of Default would constitute the same.
12.5 GENERAL PROVISIONS RELATING TO TERMINATION
(a) Termination of the appointment of the Second Issuer Cash Manager
under this Agreement shall be without prejudice to the
liabilities of the Second Issuer and the Security Trustee to the
Second Issuer Cash Manager or vice versa incurred before the date
of such termination. The Second Issuer Cash Manager shall have no
right of set-off or any lien in respect of such amounts against
amounts held by it on behalf of the Second Issuer or the Security
Trustee.
(b) This Agreement shall terminate at such time as the Second Issuer
Secured Obligations have been fully discharged.
(c) On termination of the appointment of the Second Issuer Cash
Manager under the provisions of this CLAUSE 12, the Second Issuer
Cash Manager shall be entitled to receive all fees and other
moneys accrued up to (but excluding) the date of termination but
shall not be entitled to any other or further compensation. The
Second Issuer shall pay such moneys so receivable by the Second
Issuer Cash Manager in accordance with the Second Issuer
Pre-Enforcement Revenue Priority of Payments or, as the case may
be, the Second Issuer Post-Enforcement Priority of Payments, on
the dates on which they would otherwise have fallen due
hereunder. Such termination shall not affect the Second Issuer
Cash Manager's rights to receive payment of all amounts (if any)
due to it from the Second Issuer other than under this Agreement.
(d) Any provision of this Agreement which is stated to continue after
termination of this Agreement shall remain in full force and
effect notwithstanding termination.
13. FURTHER ASSURANCE
13.1 CO-OPERATION, ETC.
The parties to this Agreement agree that they will co-operate fully to
do all such further acts and things and execute any further documents
as may be necessary or desirable to give full effect to the
arrangements contemplated by this Agreement.
13.2 POWERS OF ATTORNEY
Without prejudice to the generality of CLAUSE 13.1, the Second Issuer
and the Security Trustee shall upon request by the Second Issuer Cash
Manager forthwith give to the Second Issuer Cash Manager such further
powers of attorney or other written authorisations, mandates or
instruments as are necessary to enable the Second Issuer Cash Manager
to perform the Second Issuer Cash Management Services.
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13.3 CHANGE OF SECURITY TRUSTEE
In the event that there is any change in the identity of the Security
Trustee or an additional security trustee is appointed in accordance
with the Second Issuer Deed of Charge, the Second Issuer Cash Manager
shall execute such documents with any other parties to this Agreement
and take such actions as such new security trustee may reasonably
require for the purposes of vesting in such new security trustee the
rights of the Security Trustee under this Agreement and under the
Second Issuer Deed of Charge and releasing the retiring Security
Trustee from further obligations thereunder.
13.4 NO OBLIGATION ON SECURITY TRUSTEE
Nothing contained in this Agreement shall impose any obligation or
liability on the Security Trustee to assume or perform any of the
obligations of the Second Issuer or the Second Issuer Cash Manager
under this Agreement or render it liable for any breach thereof.
14. MISCELLANEOUS
14.1 NO SET-OFF
The Second Issuer Cash Manager agrees that it will not:
(a) set-off or purport to set-off any amount which either the Second
Issuer is or will become obliged to pay to it under this
Agreement against any amount from time to time standing to the
credit of or to be credited to the Second Issuer Transaction
Account; or
(b) make or exercise any claims or demands, any rights of
counterclaim or any other equities against or withhold payment of
any and all sums of money which may at any time and from time to
time be standing to the credit of the Second Issuer Transaction
Account.
14.2 NO PETITION
The Second Issuer Cash Manager agrees that for so long as any Second
Issuer Notes are outstanding it will not petition or commence
proceedings for the administration or winding-up of the Second Issuer
or participate in any such proceedings with regard thereto.
14.3 NO RECOURSE
(a) In relation to all sums due and payable by the Second Issuer to
the Second Issuer Cash Manager, the Second Issuer Cash Manager
agrees that it shall have recourse only to sums paid to or
received by (or on behalf of) the Second Issuer pursuant to the
provisions of the Second Issuer Transaction Documents.
(b) For the avoidance of doubt, the Security Trustee shall not be
liable to pay any amounts due under CLAUSES 7 and 9, and without
prejudice to the obligations of the Second Issuer, nor shall it
be liable to pay any amounts due to any Receiver appointed
pursuant to the Second Issuer Deed of Charge in respect of such
amounts.
(c) Notwithstanding any other provisions of this Agreement, all
obligations to, and rights of, the Security Trustee under or in
connection with this Agreement (other than its
14
obligations under CLAUSE 15) shall automatically terminate upon
the discharge in full of all Second Issuer Secured Obligations,
PROVIDED THAT this shall be without prejudice to any claims in
respect of such obligations and rights arising on or prior to
such date.
15. CONFIDENTIALITY
During the continuance of this Agreement or after its termination, each
of the Second Issuer, the Second Issuer Cash Manager and the Security
Trustee shall use its best endeavours not to disclose to any person,
firm or company any information relating to the business, finances or
other matters of a confidential nature of any other party to this
agreement of which it may exclusively by virtue of being party to the
Transaction Documents have become possessed and shall use all
reasonable endeavours to prevent any such disclosure as aforesaid,
PROVIDED HOWEVER that the provisions of this CLAUSE 15 shall not apply:
(a) to any information already known to the recipient otherwise than
as a result of entering into any of the Transaction Documents;
(b) to any information subsequently received by the recipient which
it would otherwise be free to disclose;
(c) to any information which is or becomes public knowledge otherwise
than as a result of the conduct of the recipient;
(d) to any extent that the recipient is required to disclose the same
pursuant to any law or order of any court of competent
jurisdiction or pursuant to any direction, request or requirement
(whether or not having the force of law) of any central bank or
any governmental or other authority (including, without
limitation, any official bank examiners or regulators);
(e) to the extent that the recipient needs to disclose the same for
determining the existence of, or declaring, a Second Issuer Note
Event of Default, or a Second Issuer Cash Manager Termination
Event, the protection or enforcement of any of its rights under
any of the Transaction Documents or in connection herewith or
therewith or for the purpose of discharging, in such manner as it
thinks fit, its duties under or in connection with such
agreements in each case to such persons as require to be informed
of such information for such purposes; or
(f) in relation to any information disclosed to the professional
advisers of the recipient or (in connection with a prospective
rating of any debt to be issued by the Second Issuer or any New
Issuer) to any Rating Agency or any prospective new cash manager
or Security Trustee.
16. NOTICES
Any notices to be given pursuant to this Agreement to any of the
parties hereto shall be sufficiently served if sent by prepaid first
class post, by hand or facsimile transmission and shall be deemed to be
given (in the case of facsimile transmission) when despatched, (where
delivered by hand) on the day of delivery if delivered before 17.00
hours on a Business Day or on the next Business Day if delivered
thereafter or on a day which is not a Business Day or
15
(in the case of first class post) when it would be received in the
ordinary course of the post and shall be sent:
(a) in the case of the Second Issuer Cash Manager, to Halifax plc at
Xxxxxxx Xxxx, Xxxxxxx, Xxxx Xxxxxxxxx XX0 0XX (facsimile number
x00 (0) 0000 000 000 for the attention of Mortgage Securitisation
Manager with a copy to HBOS Treasury Services plc, 00 Xxx Xxxxx
Xxxxxx, Xxxxxx XX0X 0XX (facsimile no. x00 (0) 00 0000 0000) for
the attention of Head of Capital Markets and Securitisation;
(b) in the case of the Second Issuer, to Permanent Financing (No. 2)
PLC at Xxxxxxxxx Xxxxx, Xxxxxxxxx Xxxx, Xxxxxx XX0X 0XX
(facsimile number x00 (0) 00 0000 0000) for the attention of the
Directors with a copy to Halifax plc at Xxxxxxx Xxxx, Xxxxxxx,
Xxxx Xxxxxxxxx XX0 0XX (facsimile number x00 (0) 00 00 000 000)
for the attention of Mortgage Securitisation Manager; and
(c) in the case of the Security Trustee, to U.S. Bank National
Association, at 0 Xxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, (facsimile number + 0 (000) 000 0000) for
the attention of Corporate Trust Services,
or to such other address or facsimile number or for the attention of
such other person or entity as may from time to time be notified by any
party to the others by written notice in accordance with the provisions
of this CLAUSE 16.
17. VARIATION AND WAIVER
No variation or waiver of this Agreement shall be effective unless it
is in writing and signed by (or by some person duly authorised by) each
of the parties. No single or partial exercise of, or failure or delay
in exercising, any right under this Agreement shall constitute a waiver
or preclude any other or further exercise of that or any other right.
18. NO PARTNERSHIP
It is hereby acknowledged and agreed by the parties that nothing in
this Agreement shall be construed as giving rise to any partnership
between any of the parties.
19. ASSIGNMENT
19.1 ASSIGNMENT BY THE SECOND ISSUER
The Second Issuer may not assign or transfer any of its rights and
obligations under this Agreement without the prior written consent of
each of the Security Trustee and the Second Issuer Cash Manager, except
that the Second Issuer may assign its respective rights hereunder
without such consent pursuant to the Second Issuer Deed of Charge.
19.2 NO ASSIGNMENT BY SECOND ISSUER CASH MANAGER
The Second Issuer Cash Manager may not assign or transfer any of its
rights and obligations under this Agreement without the prior written
consent of the Second Issuer and the Security Trustee, such consent not
to be unreasonably withheld or delayed.
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20. EXCLUSION OF THIRD PARTY RIGHTS
A person who is not a party to this Agreement has no right under the
Contracts (Rights of Third Parties) Xxx 0000 to enforce any term of
this Agreement, but this does not affect any right or remedy of a third
party which exists or is available apart from that Act.
21. COUNTERPARTS
This Agreement may be executed in any number of counterparts (manually
or by facsimile) each of which, when executed and delivered, shall
constitute an original, but all the counterparts shall together
constitute but one and the same instrument provided, however, that this
Agreement shall have no force or effect until it is executed by the
last party to execute the same and shall be deemed to have been
executed and delivered in the place where such last party executed this
Agreement.
22. GOVERNING LAW
This Agreement is governed by, and shall be construed in accordance
with, the laws of England.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed the day
and year first before written.
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SCHEDULE 1
CASH MANAGEMENT SERVICES
The Second Issuer Cash Manager shall:
(a) operate the Second Issuer Transaction Account and ensure that payments are
made into and from such accounts in accordance with this Agreement, the
Second Issuer Deed of Charge, the Second Issuer Bank Account Agreement and
any other relevant Second Issuer Transaction Document, PROVIDED HOWEVER
THAT nothing herein shall require the Second Issuer Cash Manager to make
funds available to the Second Issuer to enable such payments to be made
other than as expressly required by the provisions of this Agreement;
(b) keep records for all taxation purposes (including, without limitation,
those relating to VAT);
(c) subject to any applicable law, assist the Auditors of the Second Issuer and
provide such information to them as they may reasonably request for the
purpose of carrying out their duties as auditors of the Second Issuer;
(d) make all filings, give all notices and make all registrations and other
notifications required in the day-to-day operation of the business of the
Second Issuer or required to be given by the Second Issuer pursuant to the
Second Issuer Transaction Documents;
(e) arrange for all payments due to be made by the Second Issuer under any of
the Second Issuer Transaction Documents, PROVIDED THAT such moneys are at
the relevant time available to the Second Issuer and PROVIDED FURTHER that
nothing herein shall constitute a guarantee by the Second Issuer Cash
Manager of all or any of the obligations of the Second Issuer under any of
the Second Issuer Transaction Documents;
(f) without prejudice to the role of and in conjunction with the Second Issuer
Corporate Services Provider under the Second Issuer Corporate Services
Agreement, keep general books of account and records of the Second Issuer;
provide accounting services, including reviewing receipts and payments,
supervising and assisting in the preparation of interim statements and
final accounts and supervising and assisting in the preparation of tax
returns;
(g) without prejudice to the role of and in conjunction with the Second Issuer
Corporate Services Provider under the Second Issuer Corporate Services
Agreement, provide or procure the provision of company secretarial and
administration services to the Second Issuer including the keeping of all
registers and the making of all returns and filings required by applicable
law or by UK regulatory authorities, co-operate in the convening of board
and general meetings and provide registered office facilities;
(h) on behalf of the Second Issuer, PROVIDED THAT monies are at the relevant
time available to the Second Issuer, pay all out-of-pocket expenses of the
Second Issuer, incurred by the Second Issuer Cash Manager on behalf of the
Second Issuer in the performance of the Second Issuer Cash Manager's duties
hereunder including without limitation:
(i) all Taxes which may be due or payable by the Second Issuer;
(ii) all necessary filing and other fees in compliance with regulatory
requirements;
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(iii) all legal and audit fees and other professional advisory fees; and
(iv) all communication expenses including postage, courier and telephone
charges;
(i) with the prior written consent of the Security Trustee, invest monies
standing from time to time to the credit of the Second Issuer Transaction
Account in Authorised Investments, subject to the following provisions:
(i) any such Authorised Investment shall be made in the joint names of
the Second Issuer and the Security Trustee;
(ii) any costs properly and reasonably incurred in making and changing
Authorised Investments will be reimbursed to the Second Issuer Cash
Manager and the Security Trustee by the Second Issuer; and
(iii) all income and other distributions arising on, or proceeds following
the disposal or maturity of, Authorised Investments shall be credited
to the Second Issuer Transaction Account.
The Security Trustee and the Second Issuer Cash Manager shall not be
responsible (save where any loss results from the Security Trustee's or the
Second Issuer Cash Manager's, as the case may be, own fraud, wilful default
or negligence or that of their respective officers or employees) for any
loss occasioned by reason of any such Authorised Investments whether by
depreciation in value or otherwise provided that such Authorised
Investments were made in accordance with the above provisions;
(j) (i) if necessary, perform all currency conversions free of charge,
cost or expense at the relevant exchange rate;
(ii) if necessary, perform all interest rate conversions (whether it be a
conversion from a floating rate of interest to a fixed rate of
interest, or vice versa) free of charge, cost or expense at the
relevant interest swap rate; and
(iii) for the purposes of any calculations referred to in SUB-PARAGRAPHS
(i) and (ii) above, all percentages resulting from such calculations
will be rounded, if necessary, to the nearest one hundred-thousandth
of a percentage point (e.g. 9.876541% (or 0.09876541) being rounded
down to 9.87654% (or 0.0987654)) and (ii) any currency amounts used
in or resulting from such calculations will be rounded in accordance
with the relevant market practice;
(k) make all returns and filings required to be made by the Second Issuer and
provide or procure the provision of company secretarial and administration
services to the Second Issuer; and
(l) arrange payment of all fees to the London Stock Exchange plc or, as
applicable, the UK Listing Authority of the Financial Services Authority.
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SCHEDULE 2
CASH MANAGEMENT AND MAINTENANCE OF LEDGERS
1. DETERMINATION
(a) On each Second Issuer Note Determination Date, the Second Issuer Cash
Manager shall determine each of the following in accordance with this
PARAGRAPH 1:
(i) the amount of any Second Issuer Principal Receipts and Second Issuer
Revenue Receipts available as at the following Interest Payment Date;
and
(iii) the Principal Amount Outstanding of the Second Issuer Notes, the Pool
Factor, and the Note Principal Payment of the Second Issuer Notes in
accordance with the Conditions.
(b) (i) The Second Issuer Cash Manager may make all the determinations
referred to in PARAGRAPH 1(a) on the basis of any reasonable and
proper assumptions as the Second Issuer Cash Manager considers
appropriate (including without limitation as to the amount of any
payments to be made under PARAGRAPH 3 below during the period from
and including the Second Issuer Note Determination Date to but
excluding the next Interest Payment Date).
(ii) The Second Issuer Cash Manager shall on request notify the Second
Issuer and the Security Trustee in writing of any such other
assumptions and shall take account of any representations made by the
Second Issuer and the Security Trustee (as the case may be) in
relation thereto.
(c) Each determination made in accordance with this PARAGRAPH 1 shall (in the
absence of bad faith, wilful default, negligence and/or manifest error) be
final and binding on all persons.
2. NOTIFICATION OF DETERMINATIONS
(a) The Second Issuer Cash Manager will cause each determination of Second
Issuer Available Funds to be notified forthwith to the Second Issuer.
(b) The Second Issuer Cash Manager shall procure that the determinations and
notifications required to be made pursuant to CONDITION 5(C) of the
Conditions are made.
3. PRIORITY OF PAYMENTS FOR SECOND ISSUER REVENUE RECEIPTS
Second Issuer Revenue Receipts will be applied, as applicable:
(i) on each Interest Payment Date; or
(ii) on each day when due in respect of amounts due to third parties
pursuant to PARAGRAPH (b) below or amounts due to the Second Issuer
Account Bank under the Second Issuer Bank Account Agreement pursuant
to PARAGRAPH (d) below,
in each case until enforcement of the Second Issuer Security pursuant to
the Second Issuer Deed of Charge or until such time as there are no Second
Issuer Secured Obligations
20
outstanding, in making such payments and provisions in the following order
of priority (in each case only if and to the extent that payments or
provisions of a higher priority have been made in full and to the extent
that such withdrawal does not cause the Second Issuer Transaction Account
to become overdrawn) (the "SECOND ISSUER PRE-ENFORCEMENT REVENUE PRIORITY
OF PAYMENTS"):
(a) first, pari passu and pro rata, to pay amounts due to:
(i) the Security Trustee, together with interest and any amount in
respect of VAT on those amounts, and to provide for any amounts
due or to become due during the following Interest Period to the
Security Trustee under the Second Issuer Deed of Charge;
(ii) the Note Trustee, together with interest and any amount in
respect of VAT on those amounts, and to provide for any amounts
due or to become due during the following Interest Period to the
Note Trustee under the Second Issuer Trust Deed; and
(iii) the Agent Bank, the Paying Agents, the Registrar and the
Transfer Agent, together with interest and any amount in respect
of VAT on those amounts, and any costs, charges liabilities and
expenses then due or to become due during the following Interest
Period to the Agent Bank, the Registrar, the Transfer Agent and
the Paying Agents under the Second Issuer Paying Agent and Agent
Bank Agreement;
(b) secondly, to pay amounts due to any third party creditors of the
Second Issuer (other than those referred to later in this order of
priority of payments), which amounts have been incurred without breach
by the Second Issuer of the Second Issuer Transaction Documents and
for which payment has not been provided for elsewhere and to provide
for any of those amounts expected to become due and payable during the
following Interest Period by the Second Issuer and to pay or discharge
any liability of the Second Issuer for corporation tax on any
chargeable income or gain of the Second Issuer;
(c) thirdly, pari passu and pro rata, to pay amounts due to the Second
Issuer Cash Manager, together with any amount in respect of VAT on
those amounts, and to provide for any amounts due, or to become due to
the Second Issuer Cash Manager in the immediately succeeding Interest
Period, under this Agreement and to the Corporate Services Provider
under the Second Issuer Corporate Services Agreement and to the Second
Issuer Account Bank under the Second Issuer Bank Account Agreement;
(d) fourthly, pari passu and pro rata, to pay:
(i) on each Funding 1 Interest Payment Date amounts due to the
Series 1 Class A Second Issuer Swap Provider in respect of the
Series 1 Class A Second Issuer Swap (including any termination
payment but excluding any Second Issuer Swap Excluded
Termination Amount) and from amounts received from the Series 1
Class A Second Issuer Swap Provider to pay on each Interest
Payment Date interest due and payable on the Series 1 Class A
Second Issuer Notes;
21
(ii) on each Funding 1 Interest Payment Date amounts due to the
Series 2 Class A Second Issuer Swap Provider in respect of the
Series 2 Class A Second Issuer Swap (including any termination
payment but excluding any Second Issuer Swap Excluded
Termination Amount) and from amounts received from the Series 2
Class A Second Issuer Swap Provider to pay on each Interest
Payment Date interest due and payable on the Series 2 Class A
Second Issuer Notes;
(iii) on each Funding 1 Interest Payment Date amounts due to the
Series 3 Class A Second Issuer Swap Provider in respect of the
Series 3 Second Issuer Class A Swap (including any termination
payment but excluding any Second Issuer Swap Excluded
Termination Amount) and from amounts received from the Series 3
Class A Second Issuer Swap Provider in relation to such swap to
pay on each Interest Payment Date interest due and payable on
the Series 3 Class A Second Issuer Notes; and
(iv) on each Funding 1 Interest Payment Date, amounts due to the
Series 4 Class A Second Issuer Swap Provider in respect of the
Series 4 Class A Second Issuer Swap (including any termination
payment but excluding any Second Issuer Swap Excluded
Termination Amount) and from amounts received from the Series 4
Class A Second Issuer Swap Provider in relation to such swap to
pay on each Interest Payment Date interest due and payable on
the Series 4 Class A Second Issuer Notes; and
(v) interest due and payable on the Series 5 Class A Second Issuer
Notes;
(e) fifthly, pari passu and pro rata, to pay:
(i) on each Funding 1 Interest Payment Date amounts due to the
Series 1 Second Class B Issuer Swap Provider in respect of the
Series 1 Class B Second Issuer Swap (including any termination
payment but excluding any Second Issuer Swap Excluded
Termination Amount) and from amounts received from the Series 1
Class B Second Issuer Swap Provider in relation to such swap to
pay on each Interest Payment Date interest due and payable on
the Series 1 Class B Second Issuer Notes;
(ii) on each Funding 1 Interest Payment Date amounts due to the
Series 2 Class B Second Issuer Swap Provider in respect of the
Series 2 Class B Second Issuer Swap (including any termination
payment but excluding any Second Issuer Swap Excluded
Termination Amount) and from amounts received from the Series 2
Class B Second Issuer Swap Provider in relation to such swap to
pay on each Interest Payment Date interest due and payable on
the Series 2 Class B Second Issuer Notes;
(iii) on each Funding 1 Interest Payment Date amounts due to the
Series 3 Second Class B Issuer Swap Provider in respect of the
Series 3 Class B Second Issuer Swap (including any termination
payment but excluding any Second Issuer Swap Excluded
Termination Amount) and from amounts received from the Series 3
Class B Second Issuer Swap Provider in relation to such
22
swap to pay on each Interest Payment Date interest due and
payable on the Series 3 Class B Second Issuer Notes;
(iv) on each Funding 1 Interest Payment Date amounts due to the
Series 4 Class B Second Issuer Swap Provider in respect of the
Series 4 Class B Second Issuer Swap (including any termination
payment but excluding any Second Issuer Swap Excluded
Termination Amount) and from amounts received from the Series 4
Class B Second Issuer Swap Provider in relation to such swap to
pay on each Interest Payment Date interest due and payable on
the Series 4 Class B Second Issuer Notes; and
(v) interest due and payable on the Series 5 Class B Second Issuer
Notes;
(f) sixthly, pari passu and pro rata, to pay:
(i) on each Funding 1 Interest Payment Date amounts due to the
Series 1 Class C Second Issuer Swap Provider in respect of the
Series 1 Class C Second Issuer Swap (including any termination
payment but excluding any Second Issuer Swap Excluded
Termination Amount) and from amounts received from the Series
1 Class C Second Issuer Swap Provider in relation to such swap
to pay on each Interest Payment Date interest due and payable
on the Series 1 Class C Second Issuer Notes;
(ii) on each Funding 1 Interest Payment Date amounts due to the
Series 2 Second Class C Issuer Swap Provider in respect of the
Series 2 Class C Second Issuer Swap (including any termination
payment but excluding any Second Issuer Swap Excluded
Termination Amount) and from amounts received from the Series
2 Class C Second Issuer Swap Provider in relation to such swap
to pay on each Interest Payment Date interest due and payable
on the Series 2 Class C Second Issuer Notes;
(iii) on each Funding 1 Interest Payment Date amounts due to the
Series 3 Second Class C Issuer Swap Provider in respect of the
Series 3 Class C Second Issuer Swap (including any termination
payment but excluding any Second Issuer Swap Excluded
Termination Amount) and from amounts received from the Series
3 Class C Second Issuer Swap Provider in relation to such swap
to pay on each Interest Payment Date interest due and payable
on the Series 3 Class C Second Issuer Notes;
(iv) on each Funding 1 Interest Payment Date amounts due to the
Series 4 Second Class C Issuer Swap Provider in respect of the
Series 4 Class C Second Issuer Swap (including any termination
payment but excluding any Second Issuer Swap Excluded
Termination Amount) and from amounts received from the Series
4 Class C Second Issuer Swap Provider in relation to such swap
to pay on each Interest Payment Date interest due and payable
on the Series 4 Class C Second Issuer Notes; and
(v) interest due and payable on the Series 5 Class C Second Issuer
Notes;
(g) seventhly, pari passu and pro rata, to pay any termination payment due
to:
23
(i) the Series 1 Second Issuer Swap Provider following a Second
Issuer Swap Provider Default or a Second Issuer Swap Provider
Downgrade Termination Event in respect of the Series 1 Second
Issuer Swap Provider;
(ii) the Series 2 Second Issuer Swap Provider following a Second
Issuer Swap Provider Default or a Second Issuer Swap Provider
Downgrade Termination Event in respect of the Series 2 Second
Issuer Swap Provider;
(iii) the Series 3 Second Issuer Swap Provider following a Second
Issuer Swap Provider Default or a Second Issuer Swap Provider
Downgrade Termination Event in respect of the Series 3 Second
Issuer Swap Provider;
(iv) the Series 4 Second Issuer Swap Provider following a Second
Issuer Swap Provider Default or a Second Issuer Swap Provider
Downgrade Termination Event in respect of the Series 4 Second
Issuer Swap Provider;
(h) eighthly, to the Second Issuer, an amount equal to 0.01 per cent. of
the interest received on the Second Issuer Term Advances, to be
retained by the Second Issuer as profit; and
(i) ninthly, to pay to shareholders of the Second Issuer any dividend
declared by the Second Issuer.
4. PRIORITY OF PAYMENTS FOR SECOND ISSUER PRINCIPAL RECEIPTS
Subject to CONDITION 5 of the Second Issuer Notes, until enforcement of the
Second Issuer Security pursuant to the Second Issuer Deed of Charge or
until such time as there are no Second Issuer Notes outstanding, Second
Issuer Principal Receipts will be applied as follows:
(a) the Series 1 Class A Second Issuer Notes shall be redeemed on each
Interest Payment Date in an amount equal to the amount, if any, repaid
on that Interest Payment Date in respect of the Second Issuer Series 1
Term AAA Advance, converted into Dollars at the relevant Dollar
Currency Exchange Rate;
(b) the Series 2 Class A Second Issuer Notes shall be redeemed on each
Interest Payment Date in an amount equal to the amount, if any, repaid
on that Interest Payment Date in respect of the Second Issuer Series 2
Term AAA Advance, converted into Dollars at the relevant Dollar
Currency Exchange Rate;
(c) the Series 3 Class A Second Issuer Notes shall be redeemed on each
Interest Payment Date in an amount equal to the amount, if any, repaid
on that Interest Payment Date in respect of the Second Issuer Series 3
Term AAA Advance, converted into Euro at the relevant Euro Currency
Exchange Rate;
(d) the Series 4 Class A Second Issuer Notes shall be redeemed on each
Interest Payment Date in an amount equal to the amount, if any, repaid
on that Interest Payment Date in respect of the Second Issuer Series 4
Term AAA Advance, converted into Dollars at the Dollar Currency
Exchange Rate;
24
(e) the Series 5 Class A Second Issuer Notes shall be redeemed on each
Interest Payment Date in an amount equal to the amount, if any, repaid
on that Interest Payment Date in respect of the Second Issuer Series 5
Term AAA Advance;
(f) the Series 1 Class B Second Issuer Notes shall be redeemed on each
Interest Payment Date in an amount equal to the amount, if any, repaid
on that Interest Payment Date in respect of the Second Issuer Series 1
Term AA Advance, converted into Dollars at the relevant Dollar
Currency Exchange Rate;
(g) the Series 2 Class B Second Issuer Notes shall be redeemed on each
Interest Payment Date in an amount equal to the amount, if any, repaid
on that Interest Payment Date in respect of the Second Issuer Series 2
Term AA Advance, converted into Dollars at the relevant Dollar
Currency Exchange Rate;
(h) the Series 3 Class B Second Issuer Notes shall be redeemed on each
Interest Payment Date in an amount equal to the amount, if any, repaid
on that Interest Payment Date in respect of the Second Issuer Series 3
Term AA Advance, converted into Euro at the relevant Euro Currency
Exchange Rate;
(i) the Series 4 Class B Second Issuer Notes shall be redeemed on each
Interest Payment Date in an amount equal to the amount, if any, repaid
on that Interest Payment Date in respect of the Second Issuer Series 4
Term AA Advance, converted into Euro at the relevant Euro Currency
Exchange Rate;
(j) the Series 5 Class B Second Issuer Notes shall be redeemed on each
Interest Payment Date in an amount equal to the amount, if any, repaid
on that Interest Payment Date in respect of the Second Issuer Series 5
Term AA Advance;
(k) the Series 1 Class C Second Issuer Notes shall be redeemed on each
Interest Payment Date in an amount equal to the amount, if any, repaid
on that Interest Payment Date in respect of the Second Issuer Series 1
Term BBB Advance, converted into Dollars at the relevant Dollar
Currency Exchange Rate;
(l) the Series 2 Class C Second Issuer Notes shall be redeemed on each
Interest Payment Date in an amount equal to the amount, if any, repaid
on that Interest Payment Date in respect of the Second Issuer Series 2
Term BBB Advance, converted into Dollars at the relevant Dollar
Currency Exchange Rate;
(m) the Series 3 Class C Second Issuer Notes shall be redeemed on each
Interest Payment Date in an amount equal to the amount, if any, repaid
on that Interest Payment Date in respect of the Second Issuer Series 3
Term BBB Advance, converted into Euro at the relevant Euro Currency
Exchange Rate;
(n) the Series 4 Class C Second Issuer Notes shall be redeemed on each
Interest Payment Date in an amount equal to the amount, if any, repaid
on that Interest Payment Date in respect of the Second Issuer Series 4
Term BBB Advance, converted into Euro at the relevant Euro Currency
Exchange Rate; and
(m) the Series 5 Class C Second Issuer Notes shall be redeemed on each
Interest Payment Date in an amount equal to the amount, if any, repaid
on that Interest Payment Date in respect of the Second Issuer Series 5
Term BBB Advance.
25
SCHEDULE 3
FORM OF SECOND ISSUER QUARTERLY REPORT
PERMANENT FINANCING (NO. 2) PLC
PROFIT & LOSS ACCOUNT
PERIOD ENDED
This Quarter Prior Quarter
------------ -------------
Pound Pound
Sterling Sterling
------------ -------------
Interest Receivable - Inter-Company Loan
Interest Receivable - Cash Deposits
------------ -------------
Interest Payable - Notes
Interest Payable
------------ -------------
------------ -------------
Net Operating Income
Other Income
Insurance Commission
Operating Expenses
------------ -------------
Profit/loss on ordinary activities before tax
Taxation
------------ -------------
Profit/loss on ordinary activities after tax
Dividend
Retained profit brought forward
------------ -------------
Retained profit for the year
============ =============
26
PERMANENT FINANCING (NO. 2) PLC
BALANCE SHEET
PERIOD ENDED
Pound Pound
Sterling Sterling
-------- --------
FIXED ASSET INVESTMENTS
Inter Company Lending
CURRENT ASSETS
Interest Receivable
Other debtors
Cash at Bank
--------
--------
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Accruals
Interest Payable Accrual
Taxation
--------
--------
Net current assets
CREDITORS: AMOUNTS FALLING DUE AFTER ONE YEAR
Amount due to Noteholders
--------
Total Assets less current liabilities
========
Share Capital
Reserves
--------
========
Diff
27
PERMANENT FINANCING (NO. 2) PLC
NOTES OUTSTANDING
PERIOD ENDED
SERIES 1 CLASS A SERIES 2 CLASS A SERIES 3 CLASS A SERIES 4 CLASS A SERIES 5 CLASS A
Xxxxx'x Current Rating Aaa Aaa Aaa Aaa Aaa
Fitch Current Rating AAA AAA AAA AAA AAA
S&P Current Rating AAA AAA AAA AAA AAA
SERIES 1 CLASS B SERIES 2 CLASS B SERIES 3 CLASS B SERIES 4 CLASS B SERIES 5 CLASS B
Xxxxx'x Current Rating Aaa Aa3 Aa3 Aa3 AA3
Fitch Current Rating AAA AA AA AA AA
S&P Current Rating AAA AA AA AA AA
SERIES 1 CLASS C SERIES 2 CLASS C SERIES 3 CLASS C SERIES 4 CLASS C SERIES 5 CLASS C
Xxxxx'x Current Rating Aa3 Baa2 Baa2 Baa2 Baa2
Fitch Current Rating AA BBB BBB BBB BBB
S&P Current Rating AA BBB BBB BBB BBB
SERIES 1 CLASS A SERIES 2 CLASS A SERIES 3 CLASS A SERIES 4 CLASS A SERIES 5 CLASS A
Initial Note Balance
Previous Quarters Note Principal
Note Redemptions
Outstanding Note Principal
SERIES 1 CLASS B SERIES 2 CLASS B SERIES 3 CLASS B SERIES 4 CLASS B SERIES 5 CLASS B
Initial Note Balance
Previous Quarters Note Principal
Note Redemptions
Outstanding Note Principal
SERIES 1 CLASS C SERIES 2 CLASS C SERIES 3 CLASS C SERIES 4 CLASS C SERIES 5 CLASS C
Initial Note Balance
Previous Quarters Note Principal
Note Redemptions
Outstanding Note Principal
SERIES 1 CLASS A SERIES 2 CLASS A SERIES 3 CLASS A SERIES 4 CLASS A SERIES 5 CLASS A
Note Interest Margins
Step Up Dates
Step Up Margins
SERIES 1 CLASS B SERIES 2 CLASS B SERIES 3 CLASS B SERIES 4 CLASS B SERIES 5 CLASS B
Note Interest Margins
Step Up Dates
Step Up Margins
SERIES 1 CLASS C SERIES 2 CLASS C SERIES 3 CLASS C SERIES 4 CLASS C SERIES 5 CLASS C
Note Interest Margins
Step Up Dates
Step Up Margins
28
SERIES 1 CLASS A SERIES 2 CLASS A SERIES 3 CLASS A SERIES 4 CLASS A SERIES 5 CLASS A
Interest Payment Cycle
Interest Payment Date
Next Interest Payment Data
SERIES 1 CLASS B SERIES 2 CLASS B SERIES 3 CLASS B SERIES 4 CLASS B SERIES 5 CLASS B
Interest Payment Cycle
Interest Payment Date
Next Interest Payment Data
SERIES 1 CLASS C SERIES 2 CLASS C SERIES 3 CLASS C SERIES 4 CLASS C SERIES 5 CLASS C
Interest Payment Cycle
Interest Payment Date
Next Interest Payment Data
29
SIGNATORIES
SIGNED BY )
for and on behalf of )
HALIFAX plc )
SIGNED BY )
for and on behalf of )
PERMANENT FINANCING (NO. 2) PLC )
SIGNED BY )
for and on behalf of )
U.S. BANK NATIONAL ASSOCIATION )
DATED [6TH MARCH], 0000
XXXXXXX plc
and
PERMANENT FINANCING (NO. 2) PLC
and
U.S. BANK NATIONAL ASSOCIATION
_______________________________________
SECOND ISSUER CASH MANAGEMENT AGREEMENT
_______________________________________
XXXXX & XXXXX
London
ICM:638826.4
CONTENTS
CLAUSE PAGE
------ ----
1. Definitions and Interpretation.......................................... 1
2. Appointment of Second Issuer Cash Manager............................... 1
3. Second Issuer Cash Management Services.................................. 2
4. Payments, Accounts, Ledgers............................................. 3
5. Payments under Second Issuer Swap Agreements and
Termination of Second Issuer Swap Agreements............................ 5
6. No Liability............................................................ 6
7. Costs and Expenses...................................................... 6
8. Information............................................................. 6
9. Remuneration............................................................ 8
10. Covenants of Second Issuer Cash Manager................................. 9
11. Non-Exclusivity.........................................................10
12. Termination.............................................................10
13. Further Assurance.......................................................12
14. Miscellaneous...........................................................13
15. Confidentiality.........................................................14
16. Notices.................................................................14
17. Variation and Waiver....................................................15
18. No Partnership..........................................................15
19. Assignment..............................................................15
20. Exclusion of Third Party Rights.........................................16
21. Counterparts............................................................16
22. Governing Law...........................................................16
SCHEDULES
1. Cash Management Services................................................17
2. Cash Management and Maintenance of Ledgers..............................19
3. Form of Issuer Quarterly Report.........................................25
SIGNATORIES..................................................................29
