Exhibit 4.9
DRAFT 2: 07/11/03
THIRD ISSUER CASH MANAGEMENT AGREEMENT
DATED [o], 2003
HALIFAX plc
and
PERMANENT FINANCING (NO. 3) PLC
and
THE BANK OF NEW YORK
ALLEN & OVERY
London
CONTENTS
Clause Page
1. Definitions and Interpretation.............................................1
2. Appointment of Third Issuer Cash Manager...................................1
3. Third Issuer Cash Management Services......................................2
4. Payments, Accounts, Ledgers................................................3
5. Payments under Third Issuer Swap Agreements, Payments to the
Principal Paying Agents and Termination of Third Issuer Swap Agreements....4
6. No Liability...............................................................6
7. Costs and Expenses.........................................................6
8. Information................................................................6
9. Remuneration...............................................................8
10. Covenants of Third Issuer Cash Manager.....................................9
11. Non-Exclusivity............................................................9
12. Termination...............................................................10
13. Further Assurance.........................................................12
14. Miscellaneous.............................................................12
15. Confidentiality...........................................................13
16. Notices...................................................................14
17. Variation and Waiver......................................................14
18. No Partnership............................................................15
19. Assignment................................................................15
20. Exclusion of Third Party Rights...........................................15
21. Counterparts..............................................................15
22. Governing Law.............................................................15
23. Submission to Jurisdiction................................................15
Schedule
1. Cash Management Services..................................................16
2. Cash Management and Maintenance of Ledgers................................18
3. Form of Third Issuer Quarterly Report.....................................25
Signatories...................................................................29
THIS THIRD ISSUER CASH MANAGEMENT AGREEMENT is made on [o], 2003 BETWEEN:
(1) HALIFAX plc, a public limited company incorporated under the laws of
England and Wales whose registered office is at Trinity Road, Halifax,
West Yorkshire HX1 2RG acting in its capacity as the Third Issuer Cash
Manager;
(2) PERMANENT FINANCING (NO. 3) PLC, a public limited company incorporated
under the laws of England and Wales (registered number 4907355) whose
registered office is at Blackwell House, Guildhall Yard, London EC2V 5AE
(the Third Issuer); and
(3) THE BANK OF NEW YORK, a New York banking corporation whose London branch
address is at 48th Floor, One Canada Square, London E14 5AL acting in its
capacity as Security Trustee.
WHEREAS:
(A) On the Third Issuer Closing Date the Third Issuer will issue the Third
Issuer Notes. The Third Issuer will make the Third Issuer Term Advances to
Funding 1 from the proceeds of the issue of the Third Issuer Notes.
(B) The Third Issuer Cash Manager is willing to provide cash management
services to the Third 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 Third Issuer Master Definitions and Construction Schedule, both signed
for the purposes of identification by Allen & Overy and Sidley Austin
Brown & Wood on o, 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 Third 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
Third Issuer Master Definitions Schedule. In the event of a conflict
between the Amended and Restated Master Definitions and Construction
Schedule and the Third Issuer Master Definitions and Construction
Schedule, the interpretation given in the Third Issuer Master Definitions
and Construction Schedule will apply.
2. APPOINTMENT OF THIRD ISSUER CASH MANAGER
2.1 Appointment
Until termination pursuant to Clause 12, the Third Issuer and the Security
Trustee (according to their respective estates and interests) each hereby
appoints the Third Issuer Cash Manager as its lawful agent to provide the
Third Issuer Cash Management Services set out in this Agreement. The Third
Issuer Cash Manager in each case hereby accepts such appointment on the
terms and subject to the conditions of this Agreement.
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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 Third
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 Third Issuer Notes
The appointment pursuant to Clause 2.1 is conditional upon the issue of
the Third Issuer Notes and shall take effect upon and from the Third
Issuer Closing Date automatically without any further action on the part
of any person PROVIDED THAT if the issue of the Third Issuer Notes has not
occurred by o, 2003, or such later date as the Third Issuer and the Lead
Managers may agree, this Agreement shall cease to be of further effect.
3. THIRD ISSUER CASH MANAGEMENT SERVICES
3.1 General
The Third Issuer Cash Manager shall provide the services set out in this
Agreement (including, for the avoidance of doubt, the Schedules) (the
Third Issuer Cash Management Services).
3.2 Approvals and authorisations
The Third Issuer Cash Manager shall maintain, or procure the maintenance
of, the approvals, authorisations, consents and licences required in
connection with the business of the Third Issuer and shall prepare and
submit, or procure the preparation and submission of, on behalf of the
Third 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 Third Issuer and shall, so far as it
is reasonably able to do so, perform the Third 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 Third Issuer Cash Management Services shall include procuring (so far
as the Third Issuer Cash Manager, using its reasonable endeavours, is able
so to do) compliance by the Third Issuer with all applicable legal
requirements and with the terms of the Third Issuer Transaction Documents,
PROVIDED ALWAYS THAT the Third Issuer Cash Manager shall not lend or
provide any sum to the Third Issuer and that the Third Issuer Cash Manager
shall have no liability whatsoever to the Third Issuer, the Security
Trustee or any other person for any failure by the Third Issuer to make
any payment due under any of the Third Issuer Transaction Documents (other
than to the extent arising from any failure by the Third Issuer Cash
Manager to perform any of its obligations under any of the Transaction
Documents).
3.4 Liability of Third Issuer Cash Manager
(a) The Third Issuer Cash Manager shall indemnify each of the Third 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, fraud or wilful default of the Third Issuer Cash
Manager in carrying out its functions as Third Issuer Cash Manager under,
or as a result of a breach by the Third Issuer Cash Manager of, the terms
and provisions of this
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Agreement or such other Third Issuer Transaction Documents to which the
Third Issuer Cash Manager is a party (in its capacity as such) in relation
to such functions.
(b) For the avoidance of doubt, the Third Issuer Cash Manager shall not be
liable in respect of any loss, liability, claim, expense or damage
suffered or incurred by the Third Issuer or the Security Trustee and/or
any other person as a result of the proper performance of the Third Issuer
Cash Management Services by the Third 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, fraud or wilful default of the
Third Issuer Cash Manager under, or as a result of a breach by the Third
Issuer Cash Manager of, the terms and provisions of this Agreement or any
of the other Third Issuer Transaction Documents to which the Third Issuer
Cash Manager is a party (in its capacity as such) in relation to such
functions.
4. PAYMENTS, ACCOUNTS, LEDGERS
4.1 Third Issuer Transaction Account
(a) The Third Issuer Cash Manager hereby confirms that the Third 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 Third Issuer Closing Date. The Third Issuer Cash Manager
undertakes (to the extent to which the same is within its control in its
capacity as Third Issuer Cash Manager) that at the Third Issuer Closing
Date the Third Issuer Transaction Account will be operative and that the
Third Issuer Cash Manager will not knowingly create or permit to subsist
any Security Interest in relation to the Third Issuer Transaction Account
other than as created under or permitted pursuant to the Third Issuer Deed
of Charge.
(b) The Third Issuer Cash Manager shall procure that the following amounts are
paid into the Third Issuer Transaction Account:
(i) all amounts of interest paid on the Third Issuer Term Advances;
(ii) all repayments of principal on the Third Issuer Term Advances;
(iii) all amounts received by the Third Issuer pursuant to the Third
Issuer Swap Agreements; and
(iv) any other amounts whatsoever received by or on behalf of the Third
Issuer after the Third Issuer Closing Date,
and the Third Issuer Cash Manager shall procure that all interest earned
on the Third 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 Third Issuer Transaction Account are credited to such account.
(c) Each of the payments into the Third Issuer Transaction Account referred to
in Clause 4.1(b) shall be made forthwith upon receipt by the Third Issuer
or the Third 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 Third Issuer Cash Manager may, and shall,
withdraw Cash from the Third 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.
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(e) The Third Issuer Cash Manager shall promptly notify each of the Third
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 Third Issuer Transaction Account in the Third Issuer
Master Definitions and Construction Schedule.
(f) Each of the Third Issuer Cash Manager and the Third Issuer undertakes
that, so far as it is able to procure the same, the Third 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 Third 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 Third
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 Third Issuer Bank
Account Agreement.
4.2 Withdrawals
(a) The Third Issuer Cash Manager may make withdrawals on behalf of the Third
Issuer from the Third Issuer Transaction Account until such time as the
Third Issuer Cash Manager receives a copy of a Third Issuer Note
Acceleration Notice served by the Security Trustee on the Third Issuer, as
permitted by this Agreement, but shall not in carrying out its functions
as Third Issuer Cash Manager under this Agreement otherwise make
withdrawals from the Third Issuer Transaction Account.
(b) Upon receipt of such a Third Issuer Note Acceleration Notice, no amount
shall be withdrawn from the Third Issuer Transaction Account by the Third
Issuer Cash Manager without the prior written consent of the Security
Trustee.
4.3 Cash Management
In administering the Third Issuer Transaction Account on behalf of the
Third Issuer and the Security Trustee, the Third Issuer Cash Manager shall
comply with the provisions of Schedule 2 prior to receipt by the Third
Issuer Cash Manager of a copy of any Third Issuer Note Acceleration Notice
served on the Third Issuer. Following service of a Third Issuer Note
Acceleration Notice, the Security Trustee or any Receiver appointed by the
Security Trustee will administer the Third Issuer Transaction Account in
accordance with the terms of the Third Issuer Deed of Charge.
5. PAYMENTS UNDER THIRD ISSUER SWAP AGREEMENTS, PAYMENTS TO THE PRINCIPAL
PAYING AGENTS AND TERMINATION OF THIRD ISSUER SWAP AGREEMENTS
5.1 On each Interest Payment Date, the Third Issuer or the Third Issuer Cash
Manager on its behalf will procure that amounts received from Funding 1
under the Third Issuer Intercompany Loan Agreement are paid into the Third
Issuer Transaction Account.
5.2 The Third Issuer, or the Third 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 Third Issuer Pre-Enforcement Priority of
Payments or, as the case may be, the Third Issuer Post-Enforcement
Priority of Payments, amounts received in respect of:
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(i) the Third Issuer Series 1 Term Advances are paid to the
relevant Series 1 Third Issuer Swap Provider;
(ii) the Third Issuer Series 2 Term Advances are paid to the
relevant Series 2 Third Issuer Swap Provider;
(iii) the Third Issuer Series 3 Term Advances are paid to the
relevant Series 3 Third Issuer Swap Provider;
(iv) the Third Issuer Series 4 Term Advances (other than the Third
Issuer Series 4A2 Term AAA Advance) are paid to the relevant
Series 4 Third Issuer Swap Provider; and
(v) the Third Issuer Series 5 Term Advances are paid to the
relevant Series 5 Third Issuer Swap Provider;
(b) amounts received from each Third Issuer Swap Provider under the
relevant Third Issuer Swap Agreement are paid to the Principal
Paying Agent, which amounts shall be paid by the Paying Agents
(subject to the terms of the Third Issuer Paying Agent and Agent
Bank Agreement) to the holders of the corresponding classes of Third
Issuer Notes.
5.3 The Third Issuer, or the Third 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 Third
Issuer Pre-Enforcement Priority of Payments or, as the case may be, the
Third Issuer Post-Enforcement Priority of Payments), amounts received from
Funding 1 in respect of the Third Issuer Series 4A2 Term AAA Advance are
paid to the Principal Paying Agent, which amounts shall be paid by the
Paying Agents (subject to the terms of the Third Issuer Paying Agent and
Agent Bank Agreement) to the holders of the corresponding holders of the
Series 4 Class A2 Third Issuer Notes.
5.4 If on or prior to the date of the earlier of (i) repayment in full of the
Third Issuer Notes or (ii) the service of a Third Issuer Note Acceleration
Notice, any of the Third Issuer Swaps is terminated, the Third Issuer Cash
Manager (on behalf of the Third Issuer and the Security Trustee) shall
purchase a replacement hedge (taking into account any early termination
payment received from the relevant Third Issuer Swap Provider) in respect
of the relevant class of Third Issuer Notes, against, as appropriate:
(a) fluctuations in the relevant currency swap rate between Dollars and
Sterling or the possible variance between LIBOR for three-month
Sterling deposits and either:
(i) LIBOR for one-month Dollar deposits (in relation to the Series
1 Class A Third Issuer Notes); or
(ii) LIBOR for three-month Dollar deposits (in relation to the
Series 1 Class B Third Issuer Notes, the Series 1 Class C
Third Issuer Notes, the Series 2 Third Issuer Notes and the
Series 3 Class A Third Issuer Notes); or
(b) fluctuations in 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 4 Class A1 Third Issuer Notes, the Series 4
Class B Third Issuer Notes, the Series 4 Class C Third Issuer Notes,
the Series 5 Class B Third Issuer Notes and the Series 5 Class C
Third Issuer Notes); or
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(c) the possible variance between a LIBOR based rate for three-month
Sterling deposits and the fixed rate applicable to the Series 5
Class A Third Issuer Notes up to and including the Interest Payment
Date falling in [December 2010] payable, during this period (i)
annually on the Interest Payment Date falling in December of each
year until the occurrence of a Trigger Event or the enforcement of
the Third Issuer Security and (ii) quarterly on and following the
Interest Payment Date thereafter,
in each case, on terms acceptable to the Rating Agencies and the Third
Issuer and the Security Trustee and with a swap provider whom the Rating
Agencies have previously confirmed in writing to the Third Issuer and the
Security Trustee will not cause the then current ratings of the Third
Issuer Notes to be downgraded.
5.5 If the Third Issuer receives a Refund Payment (as such term is defined in
the definition of Third Issuer Revenue Receipts) then the Third Issuer, or
the Third Issuer Cash Manager on its behalf, will pay over an amount equal
to such Refund Payment to the relevant Third Issuer Swap Provider upon
receipt.
6. NO LIABILITY
Save as otherwise provided in this Agreement, the Third Issuer Cash
Manager shall have no liability for the obligations of either the Security
Trustee or the Third Issuer under any of the Transaction Documents or
otherwise and nothing in this Agreement shall constitute a guarantee, or
similar obligation, by the Third Issuer Cash Manager of either Funding 1,
the Security Trustee or the Third Issuer in respect of any of them.
7. COSTS AND EXPENSES
Subject to and in accordance with the Third Issuer Pre-Enforcement
Priority of Payments or, as the case may be, the Third Issuer
Post-Enforcement Priority of Payments, the Third Issuer will on each
Interest Payment Date reimburse the Third 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 Third
Issuer Cash Manager in the performance of the Third Issuer Cash Management
Services including any such costs, expenses or charges not reimbursed to
the Third Issuer Cash Manager on any previous Interest Payment Date and
the Third Issuer Cash Manager shall supply the Third Issuer with an
appropriate VAT invoice issued by the Third Issuer Cash Manager or, if the
Third 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 Third Issuer Cash Manager represents and warrants that at the date
hereof in respect of the software which is to be used by the Third Issuer
Cash Manager in providing the Third Issuer Cash Management Services it has
in place all necessary licences and/or consents from the respective
licensor or licensors (if any) of such software.
(b) The Third 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
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(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 Third 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 Third Issuer Cash Manager shall use reasonable endeavours to maintain
in working order the information technology systems used by the Third
Issuer Cash Manager in providing the Third Issuer Cash Management
Services.
(d) The Third 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 Third 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 Third Issuer Cash Manager shall take all reasonable steps to ensure
that it receives a monthly bank statement in relation to each of the Third
Issuer Bank Accounts (subject to Clause 5.3 of the Third Issuer Bank
Account Agreement) and that it furnishes a copy of such statements to the
Third Issuer and the Security Trustee, unless otherwise agreed.
8.3 Access to Books and Records
Subject to all applicable laws, the Third Issuer Cash Manager shall permit
the Auditors of the Third Issuer and any other person nominated by the
Security Trustee (to whom the Third 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 Third Issuer Cash
Management Services provided by the Third Issuer Cash Manager and related
matters in accordance with this Agreement.
8.4 Statutory Obligations
The Third Issuer Cash Manager will use its reasonable endeavours, on
behalf of the Third Issuer, to prepare or procure the preparation of and
file all reports, annual returns, financial statements, statutory forms
and other returns which the Third Issuer is required by law to prepare and
file. Subject to approval thereof by the directors of the Third Issuer,
the Third 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 Third
Issuer and the Rating Agencies as soon as practicable after the end of
each accounting reference period of the Third Issuer.
8.5 Information Covenants
(a) The Third Issuer Cash Manager shall provide the Third 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 Third
Issuer. Each such quarterly report shall be delivered to the Third 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.
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(b) The Third Issuer Cash Manager shall provide, or procure the provision of,
to the Third 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 Third Issuer Cash Manager shall notify the Rating Agencies in writing
of the details of:
(i) any material amendment to the Third Issuer Transaction Documents;
(ii) the occurrence of a Third Issuer Note Event of Default; and
(iii) any other information relating to the Third 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 Third Issuer Cash Manager's
day-to-day provision of the Third Issuer Cash Management Services
under the other terms of this Agreement.
(d) The Third 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 Third Issuer Intercompany Loan Event of Default, Third
Issuer Note Event of Default or Third 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 Third Issuer Cash Manager's
day-to-day provision of the Third Issuer Cash Management Services under
the other terms of this Agreement.
9. REMUNERATION
9.1 Fee payable
The Third Issuer shall pay to the Third Issuer Cash Manager for the Third
Issuer Cash Management Services a cash management fee (which shall be
inclusive of VAT) which shall be agreed in writing between the Third
Issuer, the Security Trustee and the Third Issuer Cash Manager from time
to time.
9.2 Payment of fee
The cash management fee referred to in Clause 9.1 shall be paid to the
Third Issuer Cash Manager in arrear on each Quarterly Interest Payment
Date in the manner contemplated by and in accordance with the provisions
of the Third Issuer Pre-Enforcement Revenue Priority of Payments or, as
the case may be, the Third Issuer Post-Enforcement Priority of Payments.
10. COVENANTS OF THIRD ISSUER CASH MANAGER
10.1 Covenants
The Third Issuer Cash Manager hereby covenants with and undertakes to each
of the Third Issuer and the Security Trustee that without prejudice to any
of its specific obligations under this Agreement:
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(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 Third 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 Third 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 Third Issuer Cash
Management Services;
(d) save as otherwise agreed with the Third Issuer and the Security
Trustee, it will provide free of charge to the Third Issuer during
normal office hours office space, facilities, equipment and staff
sufficient to fulfil the obligations of the Third Issuer under this
Agreement;
(e) it will not knowingly fail to comply with any legal requirements in
the performance of the Third 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 Third Issuer Transaction
Documents save in accordance with their terms.
10.2 Duration of covenants
The covenants of the Third 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 Third 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 Third 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
Third Issuer or the Security Trustee.
12. TERMINATION
12.1 Third Issuer Cash Manager Termination Events
If any of the following events (Third Issuer Cash Manager Termination
Events) shall occur:
(a) default is made by the Third 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
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unremedied for a period of three London Business Days after the
earlier of the Third Issuer Cash Manager becoming aware of such
default and receipt by the Third Issuer Cash Manager of written
notice from the Third Issuer or the Security Trustee, as the case
may be, requiring the same to be remedied; or
(b) default is made by the Third 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 Third
Issuer Secured Creditors and such default continues unremedied for a
period of twenty days after the earlier of the Third Issuer Cash
Manager becoming aware of such default and receipt by the Third
Issuer Cash Manager of written notice from the Security Trustee
requiring the same to be remedied; or
(c) while the Third 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 Third Issuer Cash Manager
terminate its appointment as Third 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 Third Issuer Cash Manager
The appointment of the Third 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 Third Issuer Cash Manager to the Third Issuer
and the Security Trustee PROVIDED THAT:
(a) the Third 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;
(c) such substitute cash manager has cash management experience and is
approved by the Third 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 Third Issuer and the Security
Trustee and the Third 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 Third 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 Third 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 Third Issuer Cash
Manager under this Agreement pursuant to this Clause 12, all
authority and power of the Third Issuer Cash Manager under this
Agreement shall be terminated and be of no further effect and the
Third Issuer Cash Manager shall not thereafter hold itself out in
any way as the agent of the Third Issuer or the Security Trustee
pursuant to this Agreement.
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(b) Upon termination of the appointment of the Third Issuer Cash Manager
under this Agreement pursuant to this Clause 12, the Third Issuer
Cash Manager shall:
(i) forthwith deliver (and in the meantime hold on trust for, and
to the order of, the Third Issuer or the Security Trustee, as
the case may be) to the Third 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 Third Issuer or the
Security Trustee, as the case may be, (if practicable, on the
date of receipt) any monies then held by the Third Issuer Cash
Manager on behalf of the Third Issuer, the Security Trustee
and any other assets of the Third Issuer and the Security
Trustee;
(ii) take such further action as the Third Issuer or the Security
Trustee, as the case may be, may reasonably direct at the
expense of the Third 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 Third 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 computer system of the
Third Issuer or the Security Trustee or such nominee, as the
case may be.
12.4 Notice of event of default
The Third Issuer Cash Manager shall deliver to the Third 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 Third
Issuer Cash Manager Termination Event or any Third 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 Third Issuer Cash
Manager Termination Event or Third Issuer Note Event of Default would
constitute the same.
12.5 General provisions relating to termination
(a) Termination of the appointment of the Third Issuer Cash Manager under this
Agreement shall be without prejudice to the liabilities of the Third
Issuer and the Security Trustee to the Third Issuer Cash Manager or vice
versa incurred before the date of such termination. The Third 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 Third Issuer or the
Security Trustee.
(b) This Agreement shall terminate at such time as the Third Issuer Secured
Obligations have been fully discharged.
(c) On termination of the appointment of the Third Issuer Cash Manager under
the provisions of this Clause 12, the Third 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 Third Issuer shall pay such moneys so
receivable by the
11
Third Issuer Cash Manager in accordance with the Third Issuer
Pre-Enforcement Revenue Priority of Payments or, as the case may be, the
Third Issuer Post-Enforcement Priority of Payments, on the dates on which
they would otherwise have fallen due hereunder. Such termination shall not
affect the Third Issuer Cash Manager's rights to receive payment of all
amounts (if any) due to it from the Third 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 Third Issuer and
the Security Trustee shall upon request by the Third Issuer Cash Manager
forthwith give to the Third Issuer Cash Manager such further powers of
attorney or other written authorisations, mandates or instruments as are
necessary to enable the Third Issuer Cash Manager to perform the Third
Issuer Cash Management Services.
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 Third Issuer Deed of Charge, the Third 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 Third 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 Third Issuer or the Third Issuer Cash Manager under
this Agreement or render it liable for any breach thereof.
14. MISCELLANEOUS
14.1 No set-off
The Third Issuer Cash Manager agrees that it will not:
(a) set-off or purport to set-off any amount which either the Third
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 Third 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
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time and from time to time be standing to the credit of the Third
Issuer Transaction Account.
14.2 No Petition
The Third Issuer Cash Manager agrees that for so long as any Third Issuer
Notes are outstanding it will not petition or commence proceedings for the
administration or winding-up of the Third Issuer or participate in any
such proceedings with regard thereto or file documents with the court for
the appointment of an administrator in relation to the Third Issuer or
serve a notice of intention to appoint an administrator in relation to the
Third Issuer.
14.3 No recourse
(a) In relation to all sums due and payable by the Third Issuer to the Third
Issuer Cash Manager, the Third Issuer Cash Manager agrees that it shall
have recourse only to sums paid to or received by (or on behalf of) the
Third Issuer pursuant to the provisions of the Third 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 Third Issuer, nor shall it be liable to pay any amounts
due to any Receiver appointed pursuant to the Third 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 obligations under Clause 15) shall automatically
terminate upon the discharge in full of all Third 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 Third Issuer, the Third 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);
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(e) to the extent that the recipient needs to disclose the same for
determining the existence of, or declaring, a Third Issuer Note
Event of Default, or a Third 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 Third 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 (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 Third Issuer Cash Manager, to Halifax plc at
Trinity Road (LP/3/3/SEC), Halifax, West Yorkshire HX1 2RG
(facsimile number +44 (0) 113 235 7511) for the attention of the
Head of Mortgage Securitisation with a copy to HBOS Treasury
Services plc, 33 Old Broad Street, London EC2N 1HZ (facsimile no.
+44 (0) 20 7574 8784) for the attention of Head of Capital Markets
and Securitisation;
(b) in the case of the Third Issuer, to Permanent Financing (No. 3) PLC
at Blackwell House, Guildhall Yard, London EC2V 5AE (facsimile
number +44 (0) 20 7556 0975) for the attention of the Directors with
a copy to Halifax plc at Trinity Road (LP/3/3/SEC), Halifax, West
Yorkshire HX1 2RG (facsimile number +44 (0) 113 235 7511) for the
attention of the Head of Mortgage Securitisation; and
(c) in the case of the Security Trustee, to The Bank of New York, 48th
Floor, One Canada Square, London E14 5AL (facsimile number +44 (0)
20 7964 6399) for the attention of Global Structured Finance -
Corporate Trust,
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.
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19. ASSIGNMENT
19.1 Assignment by the Third Issuer
The Third 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 Third Issuer Cash Manager, except that the
Third Issuer may assign its respective rights hereunder without such
consent pursuant to the Third Issuer Deed of Charge.
19.2 No assignment by Third Issuer Cash Manager
The Third Issuer Cash Manager may not assign or transfer any of its rights
and obligations under this Agreement without the prior written consent of
the Third Issuer and the Security Trustee, such consent not to be
unreasonably withheld or delayed.
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) Act 1999 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.
23. SUBMISSION TO JURISDICTION
Each party to this Agreement hereby irrevocably submits to the
non-exclusive jurisdiction of the English courts in any action or
proceeding arising out of or relating to this Agreement, and hereby
irrevocably agrees that all claims in respect of such action or proceeding
may be heard and determined by such courts. Each party to this Agreement
hereby irrevocably waives, to the fullest extent it may possibly do so,
any defence or claim that the English courts are an inconvenient forum for
the maintenance or hearing of such action or proceeding.
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 Third Issuer Cash Manager shall:
(a) operate the Third Issuer Transaction Account and ensure that payments are
made into and from such accounts in accordance with this Agreement, the
Third Issuer Deed of Charge, the Third Issuer Bank Account Agreement and
any other relevant Third Issuer Transaction Document, PROVIDED HOWEVER
THAT nothing herein shall require the Third Issuer Cash Manager to make
funds available to the Third 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 Third Issuer and
provide such information to them as they may reasonably request for the
purpose of carrying out their duties as auditors of the Third 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
Third Issuer or required to be given by the Third Issuer pursuant to the
Third Issuer Transaction Documents;
(e) arrange for all payments due to be made by the Third Issuer under any of
the Third Issuer Transaction Documents, PROVIDED THAT such moneys are at
the relevant time available to the Third Issuer and PROVIDED FURTHER THAT
nothing herein shall constitute a guarantee by the Third Issuer Cash
Manager of all or any of the obligations of the Third Issuer under any of
the Third Issuer Transaction Documents;
(f) without prejudice to the role of and in conjunction with the Third Issuer
Corporate Services Provider under the Third Issuer Corporate Services
Agreement, keep general books of account and records of the Third 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 Third Issuer
Corporate Services Provider under the Third Issuer Corporate Services
Agreement, provide or procure the provision of company secretarial and
administration services to the Third 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 Third Issuer, PROVIDED THAT monies are at the relevant
time available to the Third Issuer, pay all out-of-pocket expenses of the
Third Issuer, incurred by the Third Issuer Cash Manager on behalf of the
Third Issuer in the performance of the Third Issuer Cash Manager's duties
hereunder including without limitation:
(i) all Taxes which may be due or payable by the Third Issuer;
(ii) all necessary filing and other fees in compliance with regulatory
requirements;
(iii) all legal and audit fees and other professional advisory fees; and
16
(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 Third 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 Third Issuer and the Security Trustee;
(ii) any costs properly and reasonably incurred in making and changing
Authorised Investments will be reimbursed to the Third Issuer Cash
Manager and the Security Trustee by the Third 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 Third Issuer Transaction Account.
The Security Trustee and the Third Issuer Cash Manager shall not be
responsible (save where any loss results from the Security Trustee's or
the Third 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 per cent. (or 0.09876541) being
rounded down to 9.87654 per cent. (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 Third Issuer and
provide or procure the provision of company secretarial and administration
services to the Third 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.
17
SCHEDULE 2
CASH MANAGEMENT AND MAINTENANCE OF LEDGERS
1. Determination
(a) On each Third Issuer Note Determination Date, the Third Issuer Cash
Manager shall determine each of the following in accordance with this
paragraph 1:
(i) the amount of any Third Issuer Principal Receipts and Third Issuer
Revenue Receipts available as at the following Interest Payment
Date; and
(ii) the Principal Amount Outstanding of the Third Issuer Notes, the Pool
Factor, and the Note Principal Payment of the Third Issuer Notes in
accordance with the Conditions.
(b) (i) The Third 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 Third 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 Third Issuer Note Determination Date to but
excluding the next Interest Payment Date).
(ii) The Third Issuer Cash Manager shall on request notify the Third
Issuer and the Security Trustee in writing of any such other
assumptions and shall take account of any representations made by
the Third 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 fraud, wilful default, negligence and/or manifest error) be
final and binding on all persons.
2. Notification of Determinations
(a) The Third Issuer Cash Manager will cause each determination of Third
Issuer Available Funds to be notified forthwith to the Third Issuer.
(b) The Third Issuer Cash Manager shall procure that the determinations and
notifications required to be made pursuant to Condition 5(C) of the
Conditions are made.
(c) The Third Issuer Cash Manager will promptly notify the Third Issuer and
each Calculation Agent (as defined in each of the Funding 1 Swap Agreement
and each Third Issuer Swap Agreement) of the relevant Note Principal
Payment determined in accordance with paragraph 1(a)(ii) above.
3. Priority of Payments for Third Issuer Revenue Receipts
Third 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 Third Issuer
Account Bank under the Third Issuer Bank Account Agreement pursuant
to paragraph (d) below,
18
in each case until enforcement of the Third Issuer Security pursuant to
the Third Issuer Deed of Charge or until such time as there are no Third
Issuer Secured Obligations 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 Third
Issuer Transaction Account to become overdrawn) (the Third 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 Third 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 Third 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 Third
Issuer Paying Agent and Agent Bank Agreement;
(b) secondly, to pay amounts due to any third party creditors of the
Third Issuer (other than those referred to later in this order of
priority of payments), which amounts have been incurred without
breach by the Third Issuer of the Third 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 Third Issuer and to pay
or discharge any liability of the Third Issuer for corporation tax
on any chargeable income or gain of the Third Issuer;
(c) thirdly, pari passu and pro rata, to pay amounts due to the Third
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 Third Issuer Cash Manager in the immediately succeeding
Interest Period, under this Agreement and to the Corporate Services
Provider under the Third Issuer Corporate Services Agreement and to
the Third Issuer Account Bank under the Third 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 Third Issuer Swap Provider in respect of the
Series 1 Class A Third Issuer Swap (including any termination
payment but excluding any related Third Issuer Swap Excluded
Termination Amount) and from amounts received from the Series
1 Class A Third Issuer Swap Provider to pay on each Interest
Payment Date interest due and payable on the Series 1 Class A
Third Issuer Notes;
19
(ii) on each Funding 1 Interest Payment Date amounts due to the
Series 2 Class A Third Issuer Swap Provider in respect of the
Series 2 Class A Third Issuer Swap (including any termination
payment but excluding any related Third Issuer Swap Excluded
Termination Amount) and from amounts received from the Series
2 Class A Third Issuer Swap Provider to pay on each Interest
Payment Date interest due and payable on the Series 2 Class A
Third Issuer Notes;
(iii) on each Funding 1 Interest Payment Date amounts due to the
Series 3 Class A Third Issuer Swap Provider in respect of the
Series 3 Class A Third Issuer Swap (including any termination
payment but excluding any related Third Issuer Swap Excluded
Termination Amount) and from amounts received from the Series
3 Class A Third 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 Third Issuer Notes;
(iv) on each Funding 1 Interest Payment Date, amounts due to the
Series 4 Class A Third Issuer Swap Provider in respect of the
Series 4 Class A1 Third Issuer Swap (including any termination
payment but excluding any related Third Issuer Swap Excluded
Termination Amount) and from amounts received from the Series
4 Class A Third Issuer Swap Provider in relation to such swap
to pay on each Interest Payment Date interest due and payable
on the Series 4 Class A1 Third Issuer Notes;
(v) interest due and payable on the Series 4 Class A2 Third Issuer
Notes; and
(vi) on each Funding 1 Interest Payment Date, amounts due to the
Series 5 Class A Third Issuer Swap Provider in respect of the
Series 5 Class A Third Issuer Swap (including any termination
payment but excluding any related Third Issuer Swap Excluded
Termination Amount) and from amounts received from the Series
5 Class A Third Issuer Swap Provider in relation to such swap
to pay on each Interest Payment Date interest due and payable
on the Series 5 Class A Third 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 Third Class B Issuer Swap Provider in respect of the
Series 1 Class B Third Issuer Swap (including any termination
payment but excluding any related Third Issuer Swap Excluded
Termination Amount) and from amounts received from the Series
1 Class B Third 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 Third Issuer Notes;
(ii) on each Funding 1 Interest Payment Date amounts due to the
Series 2 Class B Third Issuer Swap Provider in respect of the
Series 2 Class B Third Issuer Swap (including any termination
payment but excluding any related Third Issuer Swap Excluded
Termination Amount) and from amounts received from the Series
2 Class B Third 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 Third Issuer Notes;
(iii) on each Funding 1 Interest Payment Date amounts due to the
Series 3 Third Class B Issuer Swap Provider in respect of the
Series 3 Class B Third Issuer
20
Swap (including any termination payment but excluding any
related Third Issuer Swap Excluded Termination Amount) and
from amounts received from the Series 3 Class B Third Issuer
Swap Provider in relation to such swap to pay on each Interest
Payment Date interest due and payable on the Series 3 Class B
Third Issuer Notes;
(iv) on each Funding 1 Interest Payment Date amounts due to the
Series 4 Class B Third Issuer Swap Provider in respect of the
Series 4 Class B Third Issuer Swap (including any termination
payment but excluding any related Third Issuer Swap Excluded
Termination Amount) and from amounts received from the Series
4 Class B Third 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 Third Issuer Notes; and
(v) on each Funding 1 Interest Payment Date amounts due to the
Series 5 Class B Third Issuer Swap Provider in respect of the
Series 5 Class B Third Issuer Swap (including any termination
payment but excluding any related Third Issuer Swap Excluded
Termination Amount) and from amounts received from the Series
5 Class B Third Issuer Swap Provider in relation to such swap
to pay on each Interest Payment Date interest due and payable
on the Series 5 Class B Third 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 Third Issuer Swap Provider in respect of the
Series 1 Class C Third Issuer Swap (including any termination
payment but excluding any related Third Issuer Swap Excluded
Termination Amount) and from amounts received from the Series
1 Class C Third 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 Third Issuer Notes;
(ii) on each Funding 1 Interest Payment Date amounts due to the
Series 2 Third Class C Issuer Swap Provider in respect of the
Series 2 Class C Third Issuer Swap (including any termination
payment but excluding any related Third Issuer Swap Excluded
Termination Amount) and from amounts received from the Series
2 Class C Third 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 Third Issuer Notes;
(iii) on each Funding 1 Interest Payment Date amounts due to the
Series 3 Third Class C Issuer Swap Provider in respect of the
Series 3 Class C Third Issuer Swap (including any termination
payment but excluding any related Third Issuer Swap Excluded
Termination Amount) and from amounts received from the Series
3 Class C Third 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 Third Issuer Notes;
(iv) on each Funding 1 Interest Payment Date amounts due to the
Series 4 Third Class C Issuer Swap Provider in respect of the
Series 4 Class C Third Issuer Swap (including any termination
payment but excluding any related Third Issuer Swap Excluded
Termination Amount) and from amounts received from the Series
4 Class C Third Issuer Swap Provider in relation to such
21
swap to pay on each Interest Payment Date interest due and
payable on the Series 4 Class C Third Issuer Notes; and
(v) on each Funding 1 Interest Payment Date amounts due to the
Series 5 Third Class C Issuer Swap Provider in respect of the
Series 5 Class C Third Issuer Swap (including any termination
payment but excluding any related Third Issuer Swap Excluded
Termination Amount) and from amounts received from the Series
5 Class C Third Issuer Swap Provider in relation to such swap
to pay on each Interest Payment Date interest due and payable
on the Series 5 Class C Third Issuer Notes;
(g) seventhly, pari passu and pro rata, to pay any termination payment
due to:
(i) the Series 1 Third Issuer Swap Provider following a Third
Issuer Swap Provider Default or a Third Issuer Swap Provider
Downgrade Termination Event in respect of the Series 1 Third
Issuer Swap Provider;
(ii) the Series 2 Third Issuer Swap Provider following a Third
Issuer Swap Provider Default or a Third Issuer Swap Provider
Downgrade Termination Event in respect of the Series 2 Third
Issuer Swap Provider;
(iii) the Series 3 Third Issuer Swap Provider following a Third
Issuer Swap Provider Default or a Third Issuer Swap Provider
Downgrade Termination Event in respect of the Series 3 Third
Issuer Swap Provider;
(iv) the Series 4 Third Issuer Swap Provider following a Third
Issuer Swap Provider Default or a Third Issuer Swap Provider
Downgrade Termination Event in respect of the Series 4 Third
Issuer Swap Provider; and
(v) the Series 5 Third Issuer Swap Provider following a Third
Issuer Swap Provider Default or a Third Issuer Swap Provider
Downgrade Termination Event in respect of the Series 5 Third
Issuer Swap Provider;
(h) eighthly, to the Third Issuer, an amount equal to 0.01 per cent. of
the interest received on the Third Issuer Term Advances, to be
retained by the Third Issuer as profit; and
(i) ninthly, to pay to shareholders of the Third Issuer any dividend
declared by the Third Issuer.
4. Priority of Payments for Third Issuer Principal Receipts
Subject to Condition 5 of the Third Issuer Notes, until enforcement of the
Third Issuer Security pursuant to the Third Issuer Deed of Charge or until
such time as there are no Third Issuer Notes outstanding, Third Issuer
Principal Receipts will be applied as follows:
(a) the Series 1 Class A Third 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 Third Issuer
Series 1 Term AAA Advance, converted into Dollars at the relevant
Dollar Currency Exchange Rate;
(b) the Series 2 Class A Third 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 Third Issuer
Series 2 Term AAA Advance, converted into Dollars at the relevant
Dollar Currency Exchange Rate;
22
(c) the Series 3 Class A Third 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 Third Issuer
Series 3 Term AAA Advance, converted into Dollars at the relevant
Dollar Currency Exchange Rate;
(d) the Series 4 Class A1 Third 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 Third Issuer
Series 4A1 Term AAA Advance, converted into Euro at the Euro
Currency Exchange Rate;
(e) the Series 4 Class A2 Third 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 Third Issuer
Series 4A2 Term AAA Advance;
(f) the Series 5 Class A Third 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 Third Issuer
Series 5 Term AAA Advance;
(g) the Series 1 Class B Third 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 Third Issuer
Series 1 Term AA Advance, converted into Dollars at the relevant
Dollar Currency Exchange Rate;
(h) the Series 2 Class B Third 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 Third Issuer
Series 2 Term AA Advance, converted into Dollars at the relevant
Dollar Currency Exchange Rate;
(i) the Series 3 Class B Third 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 Third Issuer
Series 3 Term AA Advance, converted into Dollars at the relevant
Dollar Currency Exchange Rate;
(j) the Series 4 Class B Third 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 Third Issuer
Series 4 Term AA Advance, converted into Euro at the relevant Euro
Currency Exchange Rate;
(k) the Series 5 Class B Third 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 Third Issuer
Series 5 Term AA Advance, converted into Euro at the relevant Euro
Currency Exchange Rate;
(l) the Series 1 Class C Third 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 Third Issuer
Series 1 Term BBB Advance, converted into Dollars at the relevant
Dollar Currency Exchange Rate;
(m) the Series 2 Class C Third 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 Third Issuer
Series 2 Term BBB Advance, converted into Dollars at the relevant
Dollar Currency Exchange Rate;
23
(n) the Series 3 Class C Third 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 Third Issuer
Series 3 Term BBB Advance, converted into Dollars at the relevant
Dollar Currency Exchange Rate;
(o) the Series 4 Class C Third 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 Third Issuer
Series 4 Term BBB Advance, converted into Euro at the relevant Euro
Currency Exchange Rate; and
(p) the Series 5 Class C Third 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 Third Issuer
Series 5 Term BBB Advance converted into Euro at the relevant Euro
Currency Exchange Rate.
24
SCHEDULE 3
FORM OF THIRD ISSUER QUARTERLY REPORT
Permanent Financing (No. 3) PLC
Profit & Loss Account
Period Ended
This Prior
Quarter Quarter
(pound) (pound)
-------------------
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
===================
25
Permanent Financing (No. 3) PLC
Balance Sheet
Period Ended
(pound) (pound)
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
26
Permanent Financing (No. 3) 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
Moody's Current Rating [P-1] [Aaa] [Aaa] [Aaa] [Aaa]
Fitch Current Rating [F1+] [AAA] [AAA] [AAA] [AAA]
S&P Current Rating [A-1+] [AAA] [AAA] [AAA] [AAA]
Series 1 Class B Series 2 Class B Series 3 Class B Series 4 Class B Series 5 Class B
Moody's 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
Moody's Current Rating [Baa2] [Baa2] [Baa2] [Baa2] [Baa2]
Fitch Current Rating [BBB] [BBB] [BBB] [BBB] [BBB]
S&P Current Rating [BBB] [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
27
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
28
SIGNATORIES
SIGNED by )
for and on behalf of )
HALIFAX plc )
SIGNED by )
for and on behalf of )
PERMANENT FINANCING (NO. 3) PLC )
SIGNED by )
for and on behalf of )
THE BANK OF NEW YORK )
29