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24 March 2010
THE SECRETARY OF STATE FOR BUSINESS, INNOVATION & SKILLS
POST OFFICE LIMITED
ROYAL MAIL HOLDINGS PLC
ROYAL MAIL GROUP LIMITED
FUNDING AGREEMENT
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GOVERNMENT FUNDING FOR THE COMMUNITY NETWORK......
POL WORKING CAPITAL FACILITY .....
POL BANKING CONSULTATION
MAILS’? ACKNOWLEDGMENT
HOLDINGS’ ACKNOWLEDGMENT
ACCESS CRITERIA .....
PUBLIC CONSULTATION, COMMUNICATION AND EQUALITY
14. CONSENTS ....
15. CONFIDENTIALITY...
16. NOTICES...
17. ENTIRE AGREEMENT
18.
SCHEDULE I DELIVERABLES ....
SCHEDULE 2.......
PART A FUNDAMENTAL CHANGE........
CONTENTS
CLAUSE PAGE
1. INTERPRETATION...... sal
2. 2007 FUNDING AGREEMENT a4
3. POCA ADJUSTMENT... 4
4, CONDITIONS...... 5
5. DELAYED PAYMENT.. 6
6. STATE AID CLEARANCES....... 6
7. 27
8. 1
9.
=
SE
»
PART B POTENTIAL FUNDAMENTAL CHANGE
SCHEDULE 3 CALCULATION OF NETWORK SUBSIDY PAYMENT.
SCHEDULE 4 POL BANKING CONSULTATION: NEW PRODUCTS AND
SERVICE!
APPENDIX A RESTATED POL WORKING CAPITAL FACILITY AGREEMENT.......... 25
APPENDIX B POL ENTRUSTMENT LETTER...
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THIS AGREEMENT is made on 24 March 2010
BETWEEN:
qd) THE SECRETARY OF STATE FOR BUSINESS, INNOVATION & SKILLS of
1 Victoria Street, London SW1H OET (the Secretary of State);
(2) POST OFFICE LIMITED, a company incorporated in England and Wales
(registered number 2154540) and whose registered address is 148 Old Street, London
EC1V 9HQ (POL);
(3) ROYAL MAIL HOLDINGS PLC, a company incorporated in England and Wales
(registered number 4074919) and whose registered address is 100 Victoria
Embankment, London EC4Y 0HQ (Holdings); and
(4) ROYAL MAIL GROUP LIMITED, a company incorporated in England and Wales
(registered number 4138203) and whose registered address is 100 Victoria
Embankment, London EC4Y 0HQ (Mails).
‘WHEREAS:
(A) All of the issued share capital of Holdings is beneficially owned by Government, all
of the issued share capital of Mails is beneficially owned by Holdings and all of the issued
share capital of POL is beneficially owned by Mails.
(B) The Secretary of State has requested POL to continue to provide a national network
of post office Branches across the United Kingdom and wishes to entrust to POL the
provision of certain services of general economic interest over that network.
(©) The Secretary of State has agreed to enter into this Agreement, which shall supersede
the 2007 Funding Agreement, in order to provide funding to POL to enable it to continue to
provide services of general economic interest across that national network.
(D) It is acknowledged by the Parties that POL requires a long term funding solution to
restore its solvency and that the funding implemented by this Agreement does not complete
that process.
NOW THIS AGREEMENT WITNESSES as follows:
1. INTERPRETATION
Ll In this Agreement, including the recitals, Schedules and Appendices, unless the
context requires otherwise:
2007 Funding Agreement means the funding agreement dated 16 May 2007 between the
Secretary of State, POL, Holdings and Mails.
Act means the Postal Services Act 2000.
Branch means any retail outlet of POL, including any post office counter at a retail outlet and
any other facility (including an “outreach” facility) designated for the transaction of business
with members of the public by or on behalf of POL.
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Business Day means a day (not being a Saturday or a Sunday) on which banks are open for
general non-automated banking business in the City of London.
Code of Practice means the Code of Practice on Public Consultation and Communication
with respect to change in the post office network introduced on 1 April 2009.
Community Network means those post office Branches providing the services described in
clause 12.1(a) (Access Criteria), which Branches are from time to time loss-making to POL.
Deprived Urban Areas means:
(a) the most deprived fifteen per cent. (15%) of super output areas in England;
(b) the most deprived fifteen per cent. (15% ) of data zones in Scotland; and
(c) the most deprived thirty per cent. (30%) of super output areas in Wales and Northern
Ireland,
based upon each country’s then current index of multiple deprivation.
Discussion Period has the meaning given to it in clause 8.5 (POL Working Capital Facility).
Effective Date has the meaning given to it in clause 8.1 (POL Working Capital Facility).
Entrustment Letter means the letter dated on or around the date of this Agreement in the form
set out at Appendix B (POL Entrustment Letter) from the Secretary of State to POL and
countersigned by POL.
Existing Entrustment Letter means the letter dated 8 November 2007 entitled “Entrustment
of Post Office Limited with the Delivery of certain Public Services” from the Secretary of
State to POL and countersigned by POL.
Financial Year means an accounting period of POL commencing on or around 1 April in any
calendar year and ending on or around 31 March in the following calendar year.
Fundamental Change means the occurrence of any of the events listed in Part A of
Schedule 1 (Fundamental Change).
Funding Period means the period from the date of this Agreement until 30 March, 2012.
GCA Contract means the agreement dated 5 March 2009 between POL and the Secretary of
State for Work and Pensions for the provision of Government Card Account Services.
Government means Her Majesty’s Government.
Network Subsidy Order has the meaning given to it in clause 7.3(a)(i) (Government funding
Sor the Community Network).
Network Subsidy Payment means a payment by the Secretary of State in a Financial Year of
an amount calculated in accordance with Schedule 3 (Calculation of Network Subsidy
Payment) to compensate POL for the cost of providing services of general economic interest
over the Community Network during that Financial Year.
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NSP Statement has the meaning given to it in clause 7.10 (Government funding for the
Community Network).
Parties means the parties to this Agreement.
POL Banking Consultation means the consultation launched on 2 December 2009 into the
development of banking and financial services provided by POL.
POL Investment Case means the document dated 20 December, 2006 and entitled
“Transforming Post Office Limited: The Investment Case” as amended in May, 2007 to take
into account certain factors as described therein.
POL Working Capital Facility means the £1,150,000,000 working capital facility provided to
POL pursuant to the terms of the credit facilities agreement between the Secretary of State
and POL dated 17 October, 2003, as amended and restated on 16 May 2007 and further
amended on 18 April, 2008.
Potential Fundamental Change has the meaning given to it in PartB of Schedule 1
(Potential Fundamental Change).
Relevant Payment has the meaning given to it in clause 5 (Delayed payment).
Remedy Period has the meaning given to it in clause 5 (Delayed payment).
Required Payment Date has the meaning given to it in clause 5 (Delayed payment).
Restated POL Working Capital Facility Agreement means the POL Working Capital
Facility, as amended by this Agreement, the terms of which are set out in Appendix A
(Restated POL Working Capital Facility Agreement).
Royal Mail Group means Holdings and each of its Subsidiaries.
Rural Areas means those communities which are not Urban Areas.
State Aid Clearance means, in respect of any payment to be made to POL under this
Agreement, or any amendment to the POL Working Capital Facility, confirmation by the
European Commission that such payment or amendment is compatible with the requirements
on state aid of the Treaty on the functioning of the European Union.
Subsidiary means, in relation to a person, an entity of which that person owns directly or
indirectly more than fifty per cent. (50%) of the share capital or whose management and
policies that person directly or indirectly has the power to direct whether through the
ownership of shares, contract or otherwise.
Supporting Statement has the meaning given to it in clause 7.10 (Government funding for the
Community Network).
Urban Areas means communities with ten thousand (10,000) or more inhabitants in a
continuous built up area.
VAT Amount has the meaning given to it in clause 7.13 (Government funding for the
Community Network).
1.2 In this Agreement, except where the context otherwise requires:
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(a) a reference to a person (which shall include any individual, firm, company,
corporation or other body corporate, government, state or agency or any association,
trust, fund or partnership (whether or not having separate legal personality) shall
include, as appropriate, its successors, permitted assignees or transferees;
(b) a reference to an enactment or statutory provision shall include a reference to any
subordinate legislation made under that enactment or statutory provision and is a
reference to that enactment, statutory provision or subordinate legislation as from
time to time amended, consolidated, modified, or re-enacted;
(c) words in the singular shall include the plural and vice versa;
(d) references to one gender include other genders;
(e) a reference to any agreement or other instrument (other than an enactment or statutory
provision) shall be deemed to be a reference to that agreement or instrument as from
time to time amended, varied, supplemented, substituted, novated, assigned or
restated;
(f) a reference to a clause or Schedule shall be a reference to a clause of, or Schedule to,
this Agreement;
(g) a reference to “includes” or “including” shall be construed without limitation to any
events, circumstances, conditions, acts or matters specified after those words;
(h) references to dates which do not fall on a Business Day shall be construed as
references to the immediately subsequent Business Day;
(i) the headings are for convenience only and shall not affect its interpretation; and
a references to this Agreement include this Agreement as amended or supplemented.
13 The Schedules and Appendices form part of this Agreement and shall have the same
force and effect as if expressly set out in this Agreement, and any reference to this Agreement
shall include the Schedules and Appendices.
2. 2007 FUNDING AGREEMENT
With effect from the date of this Agreement, and subject to clause 3 (POCA adjustment)
below, the Parties irrevocably and unconditionally release and discharge one another from
their respective obligations and liabilities (actual or contingent) arising under, or pursuant to,
the terms of the 2007 Funding Agreement (including, for the avoidance of doubt, the
obligation of the Secretary of State to make any payments to POL for the 2010/11 Financial
Year but excluding the provisions of clause 22 (Confidentiality) therein).
3. POCA ADJUSTMENT
3.1 It is acknowledged that State Aid Clearance for payments pursuant to clause 6 of the
2007 Funding Agreement has been obtained.
3.2 The Secretary of State agrees to make a payment of six million, seven hundred
thousand pounds (£6,700,000) (the Final POCA Adjustment) on 1 April, 2010 pursuant to
clause 6 of the 2007 Funding Agreement.
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3.3 The Parties hereby acknowledge that payment of the Final POCA Adjustment
represents the final payment from the Secretary of State pursuant to clause 6 of the 2007
Funding Agreement.
4, CONDITIONS
4.1 The obligation of the Secretary of State under this Agreement to make any Network
Subsidy Payment is conditional on all necessary State Aid Clearances having been obtained
for the making of that payment.
42 It is acknowledged that State Aid Clearance for the payment of the Network Subsidy
Payment in respect of the Financial Year 2010/11 has been obtained.
43 Each of the amendments made to the POL Working Capital Facility pursuant to this
Agreement is conditional on State Aid Clearance having been obtained for that amendment.
4.4 Each obligation of POL, Holdings and Mails under clauses 7.1(b) (Government
funding for the Community Network), 9 (POL Banking Consultation), 10 (Mails’
acknowledgement), 11 (Holdings’ acknowledgement), 12 (Access criteria) and 13 (Public
consultation, communication and equality) of this Agreement, and the obligations of POL
under the Entrustment Letter, in each case in the Financial Year 2011/12, is conditional on the
conditions referred to in clause 4.1 having been met in respect of the Network Subsidy
Payment for that Financial Year.
Deliverables
45 On the date of this Agreement, POL, Mails and Holdings shall deliver (or ensure that
there is delivered) all those documents listed in Schedule 1 (Deliverables) in a form and
substance satisfactory to the Secretary of State (acting reasonably).
4.6 Within five (5) Business Days of the date of this Agreement, POL agrees to deliver to
the Secretary of State its forecast cashflow statements for the Financial Years 2010/11 and
2011/12, as calculated at the date of this Agreement.
Fundamental Change
47 Without prejudice to the accrued rights and remedies of the Parties, the obligations of
the Secretary of State to make or facilitate any payments in accordance with this Agreement,
the obligations of POL, Holdings and Mails under clauses 7.1 (Government funding for the
Community Network), 9 (POL Banking Consultation), 10 (Mails' acknowledgement), 11
(Holdings’ acknowledgement), 12 (Access criteria) and 13 (Public consultation,
communication and equality) of this Agreement and the obligations of POL under the
Existing Entrustment Letter or the Entrustment Letter (as applicable), shall immediately
terminate upon the occurrence of a Fundamental Change.
48 If on the date on which any payment is due to be made by the Secretary of State to
POL under this Agreement a Potential Fundamental Change exists, the Secretary of State
shall be entitled to withhold such payment until such time as:
(a) a Fundamental Change occurs, whereupon clause 4.7 shall apply and the Secretary of
State shall have no obligation to make that payment; or
(b) the Potential Fundamental Change ceases to exist, whereupon the payment shall
become immediately due and payable, together with interest from the due date until
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the date of actual payment at a rate equivalent to the rate of interest then applicable to
drawings by POL under the POL Working Capital Facility (as amended from time to
time).
49 Until the date on which the last payment is due to be made by the Secretary of State
to POL under this Agreement, POL shall promptly disclose to the Secretary of State any
matter or thing of which its board of directors becomes aware after entering into this
Agreement which constitutes, or which in the reasonable opinion of its board of directors is
reasonably likely to give rise to, a Fundamental Change or a Potential Fundamental Change.
5. DELAYED PAYMENT
If any Network Subsidy Payment to be made by the Secretary of State to POL under this
Agreement (a Relevant Payment) is not made on or by the date on which it is required by
clause 7.8 (Government funding for the Community Network) to be made (the Required
Payment Date), then during the period between the Required Payment Date and the end of the
tenth (10") Business Day thereafter (such period being the Remedy Period), the Parties shall
continue to comply with their respective obligations under this Agreement and the Secretary
of State shall make the Relevant Payment within the Remedy Period.
6. STATE AID CLEARANCES
6.1 The Secretary of State agrees to:
(a) Prepare as soon as reasonably practicable, in consultation with Mails and POL, an
application for State Aid Clearance for:
(i) all arrangements under this Agreement requiring such State Aid Clearance (to
the extent not already obtained) including any payments to POL under clause
7 (Government funding for the Community Network) in respect of the
Financial Year 2011/12 and any amendments to the POL Working Capital
Facility; and
(ii) the extension of the POL Working Capital Facility to 31 March 2016;
(b) pursue such State Aid Clearance application in good faith and expeditiously;
(c) keep Mails and POL informed as to the progress of such State Aid Clearance
application;
(d) permit representatives appointed by POL to attend meetings with the European
Commission in respect of such application, to the extent permitted by the European
Commission and deemed appropriate by the Secretary of State;
(e) discuss with POL any written notifications to the European Commission in respect of
such State Aid Clearance application before they are submitted; and
() discuss with POL any written notifications from the European Commission in respect
of such State Aid Clearance application promptly upon their receipt.
6.2 As at the date of this Agreement the Secretary of State is targeting the obtaining of
the State Aid Clearance referred to in clause 6.1 by 31 March, 2011 and the Parties shall use
their reasonable endeavours to obtain the State Aid Clearance by such date, it being
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acknowledged that a mere failure to achieve that target is not of itself a breach of this clause
6.2.
7. GOVERNMENT: FUNDING FOR THE COMMUNITY NETWORK
TA POL undertakes to the Secretary of State to provide:
(a) from the date of this Agreement until the Effective Date, the services of general
economic interest entrusted to it by the Existing Entrustment Letter; and
(b) from the Effective Date until the expiry of the Funding Period, the services of general
economic interest entrusted to it by the Entrustment Letter.
72 Subject to clause 4.1 (Conditions) the Secretary of State agrees to make to POL in
each of the Financial Years 2010/11 and 2011/12 a Network Subsidy Payment in the amount
specified in clause 7.8 to enable POL to maintain the Community Network and to provide
services of general economic interest over the Community Network.
73 The Network Subsidy Payment for each of the Financial Years 2010/11 and 2011/12
shall be made in one or more of the following ways to be determined by the Secretary of State
in his absolute discretion (but having consulted with Holdings, Mails and POL as to the
impact thereof on the profit and loss account of Holdings, Mails and POL respectively and the
tax treatment of such payments):
(a) a payment under a subsidy scheme introduced under section 103 of the Act by means
of:
(i) the Post Office Network Subsidy Scheme Order 2007 (SI 2007/962) (the
Network Subsidy Order); or
(ii) a new order, amending the subsidy scheme to increase the maximum amount
payable under it in any twelve (12) month period,
provided that:
(iii) the necessary statutory instrument to permit such payment has been approved
by an affirmative resolution of each House of Parliament; and
(iv) any necessary consent to the making of such statutory instrument has been
given by the Lords Commissioners of Her Majesty’s Treasury;
(b) a payment in cash by the Secretary of State to Mails under section 8 of the Industrial
Development Act 1982 on the basis that immediately upon receipt of that payment
Mails shall use those funds to subscribe for shares in POL, provided that:
(i) an affirmative resolution of the House of Commons in respect of that
payment has been passed; and
(ii) any necessary consent to the making of such payment has been obtained from
Her Majesty’s Treasury;
(c) a payment in cash by the Secretary of State to Holdings under section 8 of the
Industrial Development Act 1982 on the basis that immediately upon receipt of that
payment, Holdings shall use those funds to subscribe for shares in Mails and
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immediately thereafter Mails shall use those funds to subscribe for shares in POL,
provided that:
(i) an affirmative resolution of the House of Commons in respect of that
payment has been passed; and
(ii) any necessary consent to the making of such payment has been obtained from
Her Majesty’s Treasury;
(d) a payment in cash by the Secretary of State to POL under section 8 of the Industrial
Development Act 1982, provided that:
(i) an affirmative resolution of the House of Commons in respect of that
payment has been passed; and
(ii) any necessary consent to the making of such payment has been obtained from
Her Majesty’s Treasury; or
(e) the payment of such amount by the Secretary of State under section 64 of the Act by
way of subscription for shares in Holdings on the basis that immediately upon receipt
of that payment, Holdings shall use those funds to subscribe for shares in Mails and
immediately thereafter Mails shall use those funds to subscribe for shares in POL.
TA The Secretary of State acknowledges that, without prejudicing his discretion to
determine the method of payment of the Network Subsidy Payment referred to in clause 7.3
above, it is his current expectation that:
(a) the Network Subsidy Payment for Financial Year 2010/11 will be made in the manner
described in clause 7.3(a)(i) above; and
(b) the Network Subsidy Payment for Financial Year 2011/12 will be made in the manner
described in clause 7.3(a)(ii) above.
However, if, having determined in his discretion to make either or both of the Network
Subsidy Payments pursuant to either of the mechanics described in clause 7.3(a) above the
Secretary of State fails to obtain a necessary approval to make either or both of the Network
Subsidy Payments by such means, then the relevant Network Subsidy Payment(s) shall be
made by some other mechanism described in clause 7.3.
15 It is acknowledged by the Parties that Network Subsidy Payments received by POL
under a network subsidy scheme under section 103 of the Act would be treated as revenue in
POL’s accounts, which has an impact on POL’s operating profit. Should any Network
Subsidy Payment (or part thereof) be made in any Financial Year in any manner which would
result in it not being treated as revenue in POL’s accounts then any target operating profit
applicable for any purpose to POL or the Royal Mail Group as a whole in such Financial Year
shall be reduced by the amount of any Network Subsidy Payment (or part thereof) received in
any such manner in that Financial Year.
7.6 The Secretary of State agrees:
(a) to submit for approval of both Houses of Parliament as soon as reasonably practicable
any order amending or replacing the Network Subsidy Order to increase the
maximum amount payable under the Network Subsidy Order in any period of twelve
(12) months in order to make any payment under this Agreement which it is
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determined by the Secretary of State in accordance with clause 7.3 will be made
pursuant to section 103 of the Act;
(b) to submit for approval of the House of Commons as soon as reasonably, practicable
any payment under this Agreement which it is determined by the Secretary of State in
accordance with clause 7.3 will be made pursuant to section 8 of the Industrial
Development Act 1982;
(c) to keep Mails and POL informed as to the progress of such approval(s); and
(d) to notify Mails and POL in writing as soon as reasonably practicable after such
approval(s) have been obtained.
V7 Any payment to Mails or Holdings under any sub-clause of clause 7.3 shall be held
by Mails or Holdings, as applicable, upon trust to apply it immediately in the manner required
by that sub-clause and for no other purpose.
7.8 The amount of the Network Subsidy Payment payable in each of the Financial Years
2010/lland 2011/12 shall be calculated in accordance with Schedule 3 (Calculation of
Network Subsidy Payment) but subject always to the maximum amount specified in clause
7.9. The Network Subsidy Payments shall be made by way of payment on 1 April of each
relevant Financial Year of the maximum amount payable for that Financial Year as specified
in clause 7.9 (subject to reimbursement in accordance with clause 7.11).
719 The maximum amount of the Network Subsidy Payment in the Financial Year
2010/11 shall be one hundred and fifty million pounds (£150,000,000) and in the Financial
Year 2011/12 shall be one hundred and eighty million pounds (£180,000,000). In
ascertaining for any purpose of this clause 7 the amount or maximum amount of any Network
Subsidy Payment no account shall be taken of: (i) any VAT Amount which may be payable
under clause 7.13; or (ii) the benefit of any interest receivable on any amount held by POL
prior to its expenditure.
7.10 Within three months following the signature of POL’s accounts in respect of each of
the Financial Years 2009/10, 2010/11 and 2011/12, POL shall provide to the Secretary of
State a statement (the NSP Statement) setting out in writing the actual amount of the Network
Subsidy Payment for that Financial Year, the supporting calculation and a clear explanation of
how the actual amount of the Network Subsidy Payment has been calculated. Each NSP
Statement shall be accompanied by a statement (the Supporting Statement) from an
independent firm of auditors confirming:
(a) that the NSP Statement has been properly prepared in accordance with the
requirements of Schedule 3 (Calculation of Network Subsidy Payment) and any
additional conditions imposed by any relevant State Aid Clearance; and
(b) that while carrying out its audit for the purposes of providing the statement referred to
in paragraph (a) above, they did not discover any inconsistency of POL’s use of the
Network Subsidy Payments as against the terms of this Agreement or of any
applicable State Aid Clearance.
For the avoidance of doubt the independent firm of auditors will not be responsible for
determining whether the allocation of costs in paragraph 3 of Schedule 3 (Calculation of
Network Subsidy Payment) is appropriate or whether the profit in paragraph 4 of Schedule 3
(Calculation of Network Subsidy Payment) is reasonable. POL agrees to use reasonable
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endeavours to engage such independent firm of auditors on the basis that, if requested by the
Secretary of State and on such terms as the auditors may agree:
(c) an accountancy firm nominated by the Secretary of State shall be entitled to discuss
directly with the auditors the manner in which the Supporting Statement has been
prepared; and
(d) the auditors shall provide to the Secretary of State all notes and other work products
produced by them in the preparation of the Supporting Statement.
TAL Tf
(a) in respect of Financial Year 2011/12 the actual amount of the Network Subsidy
Payment as set out in the NSP Statement for the relevant Financial Year is less than
one hundred and eighty million pounds (£180,000,000); and/or
(b) in respect of Financial Year 2009/10 or 2010/11 the actual amount of the Network
Subsidy Payment as set out in the NSP Statement for the relevant Financial Year is
less than one hundred and fifty million pounds (£150,000,000),
POL shall, within ten (10) Business Days of receipt of the NSP Statement referred to in clause
7.10, reimburse to the Secretary of State, without deduction, an amount equal to the
difference.
7.12 POL shall use each Network Subsidy Payment only to meet the direct and indirect
costs associated with the provision by POL of services of general economic interest over the
Community Network, as described in Schedule 3 (Calculation of Network Subsidy Payment)
(or to make any reimbursement required to be made by POL pursuant to clause 7.1 1) and only
for purposes permitted by any State Aid Clearance applicable to it.
7.13 It is the mutual opinion of the Parties that the Network Subsidy Payments do not (and
POL agrees not to take any steps with the intention of procuring that they will) constitute, for
VAT purposes, the consideration for any taxable supply and that, accordingly, the receipt by
POL of the Network Subsidy Payments should not give rise to any liability of POL (or any
other member of the Royal Mail Group) to account for VAT in respect of any such receipt.
Notwithstanding the foregoing opinion, if it should, at any time (whether or not a time falling
within the duration of this Agreement), be determined by Her Majesty’s Revenue and
Customs that the Network Subsidy Payments (or any of them) must be treated as the
consideration for taxable supplies made by POL (or, as the case may be, by any other member
of the Royal Mail Group) and that in consequence POL (or such other member of the Royal
Mail Group) is liable to account for VAT in respect of the receipt of any of the Network
Subsidy Payments (the VAT Amount), POL shall notify the Secretary of State of that
determination within five (5) Business Days of being so advised by Her Majesty’s Revenue
and Customs and the Secretary of State shall, as soon as reasonably practicable following
notification of such determination, make a payment to POL, in addition to all amounts
otherwise payable by the Secretary of State to POL under this Agreement, of a sum equal to
the VAT Amount, against production of a valid VAT invoice.
7.14 — If Her Majesty’s Revenue and Customs issues a determination as referred to in clause
7.13, the Parties shall (acting reasonably) consult as to what action to take regarding such
determination. If the Secretary of State disagrees with the determination he may, within ten
(10) Business Days of being notified by POL of such determination, give written notice to
POL that he requires POL (or any other Party) to obtain a review by Her Majesty’s Revenue
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and Customs of that determination; and POL (or such other Party, as the case may be) shall
promptly request (the form of that request being subject to reasonable review by the Secretary
of State) Her Majesty’s Revenue and Customs to undertake such review. In the event that the
review results in POL obtaining a refund of any VAT Amount, or not being required to pay a
VAT Amount, in each case in respect of which the Secretary of State shall have made a
corresponding payment under clause 7.13, POL shall promptly refund to the Secretary of
State the amount of such corresponding payment.
7.15 Upon the payment of the Network Subsidy Payment for the Financial Year 2011/12,
the Parties irrevocably and unconditionally release and discharge one another from their
respective obligations and liabilities (actual or contingent) arising under, or pursuant to, the
terms of clause 6 of the 2007 Funding Agreement.
7.16 The Secretary of State acknowledges the expectation of the Parties that ongoing
Network Subsidy Payments will be required to be made to POL following the end of the
Funding Period to the extent that POL may be requested to continue to maintain a loss-
making Branch network following the Funding Period.
8. POL WORKING CAPITAL FACILITY
8.1 With effect from the date on which State Aid Clearance is granted by the European
Commission in respect of the changes to be made to the POL Working Capital Facility (the
Effective Date), the POL Working Capital Facility shall be amended and restated so that it
shall be read and construed for all purposes as set out in Appendix A (Restated POL Working
Capital Facility Agreement).
8.2 Jn connection with the amendments made to the POL Working Capital Facility, the
Repeating Representations (as defined in the POL Working Capital Facility) are deemed to be
made by POL (by reference to the facts and circumstances then existing) on the date of this
Agreement and on the Effective Date, in each case, as if references to the POL Working
Capital Facility are references to this Agreement and the Restated POL Working Capital
Facility Agreement.
8.3 Notwithstanding the execution of this Agreement, in respect of the period prior to the
Effective Date, the existing rights and obligations under the POL Working Capital Facility
shall continue in full force and effect and the provisions of this Agreement shall be without
prejudice to any rights, remedies, obligations or liabilities of any party accrued under the POL
Working Capital Facility.
8.4 The Parties hereby confirm that the other Finance Documents (as defined in the POL
Working Capital Facility) shall remain in full force and effect notwithstanding the
amendments to the POL Working Capital Facility effected pursuant to this Agreement from
the Effective Date.
8.5 During the thirty (30) Business Day period after each anniversary of this Agreement
(each, a Discussion Period), the Parties shall, in consultation with Her Majesty’s Treasury,
engage in discussions in good faith about whether it is appropriate to reduce the maximum
overall size of the POL Working Capital Facility (as amended from time to time) and the
Parties shall implement any reduction that is agreed during a Discussion Period as soon as
reasonably practicable after the expiry of that Discussion Period.
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9. POL BANKING CONSULTATION
POL agrees to comply with the obligations set out in Schedule 4 (POL Banking
Consultation).
10. MAILS’ ACKNOWLEDGMENT
10.1 Mails agrees that it shall (insofar as is lawful and consistent with the fiduciary duties
of the directors of Mails in the context of Mails’ insolvency and appropriate for a parent
company in its position) take all necessary steps, including minimising any downside for
POL, and take responsibility for requiring that POL takes all necessary steps, to execute the
strategy agreed upon for POL wholly within the financial resources made available to POL by
this Agreement.
10.2 In the context of this clause 10, Mails agrees that it will consider in good faith any
request to make available to POL inter-company debt facilities, where such request is
received from POL or the Government during the Funding Period.
11. HOLDINGS’ ACKNOWLEDGMENT
Holdings acknowledges the steps required to be taken by Mails under clause 9 (Mails’
acknowledgement) and agrees to take all necessary steps appropriate for a parent company in
its position (and acknowledging that Mails is the principal material asset of Holdings) to
procure that Mails takes those steps.
12. ACCESS CRITERIA
12.1 Without prejudice to its obligations pursuant to clause 7.1 (Government funding for
the Community Network), POL shall throughout the Funding Period provide a network of at
least eleven thousand, five hundred (11,500) Branches which:
(a) provide access to all of the following services:
(i) postal services;
(ii) basic cash and banking facilities and services offered in accordance with the
GCA Contract;
(iii) bill payment facilities; and
(iv) information about other services which may be available from POL outlets
from time to time; and
(b) enables the following criteria to be met:
(i) Nationally:
(A) ninety per cent. (90%) of the UK population are within one (1) mile
of the nearest Branch;
(B) ninety per cent. (99%) of the UK population are within three (3)
miles of the nearest Branch;
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(ii) In Urban Areas:
(A) ninety five per cent. (95%) of the total population within Urban
Areas across the UK are within one (1) mile of the nearest Branch;
(B) ninety nine per cent. (99%) of the total population within Deprived
Urban Areas across the UK are within one (1) mile of the nearest
Branch;
(ii) In Rural Areas: ninety five per cent. (95%) of the total population within
Rural Areas across the UK are within three (3) miles of the nearest Branch;
(iv) In each postcode district: ninety five per cent. (95%) of the population in
each individual postcode district are within six (6) miles of the nearest
Branch.
12.2 In applying the above criteria POL shall in addition take account of geographical
constraints such as rivers, mountains and valleys, motorways and sea crossings to islands so
as not to impose undue hardship when considering the appropriate Branch network.
12.3 Reference to “Branch” in this clause 12 shall mean a Branch providing the services
described in clause 12.1(a).
13. PUBLIC CONSULTATION, COMMUNICATION AND EQUALITY
13.1 POL shall at all times comply with the Code of Practice as amended, varied,
supplemented or substituted from time to time.
13.2 POL acknowledges the commitment recorded in the resolutions made during its board
meeting of 21 January, 2008 that any individuals taking any decision or exercising any other
function on POL’s behalf should do so having due regard to the need to observe factors which
comprise the statutory equality duties and that appropriate steps be taken to inform all people
making decisions or exercising functions on POL’s behalf of these equality duties. POL shall
ensure that this commitment is maintained in the performance of its obligations under this
Agreement.
14, CONSENTS
The Secretary of State hereby consents, for all purposes of the articles of association of
Holdings and any other document or arrangement under which its consent or approval is
required, and Holdings hereby consents, for all purposes of the articles of association of
Mails, to the execution and performance by Holdings, Mails and POL of this Agreement and
the documents and arrangements to be entered into pursuant to, or otherwise contemplated by,
this Agreement. Each of the Secretary of State and Holdings agrees that such consents will
take effect notwithstanding any failure to comply with any procedural requirements of such
articles or other documents in connection with the obtaining of such consents.
15. CONFIDENTIALITY
15.1 Each Party undertakes to each other Party that, subject to clause 15.2, it shall treat as
strictly confidential all confidential information. For the purposes of this clause 15,
confidential information shall mean:
(a) the provisions of this Agreement; and
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(b) the negotiations relating to this Agreement.
15.2 Clause 15.1 shall not prevent the disclosure by a Party of any confidential
information:
(a) to those of its officers (including auditors), employees and agents as it considers have
a need for such information in the performance of their respective functions and who
shall in each case be made aware by such Party of its obligations under this
Agreement and shall be required by such Party to observe the same restrictions on the
use of the confidential information as are contained in this clause 15;
(b) to its professional advisers who are bound to such Party by a duty of confidence
which applies to the confidential information disclosed;
(c) to the extent required by applicable law or by the regulations of any regulatory or
supervisory authority to which such Party is subject or pursuant to any order of court
or other competent authority or tribunal;
(d) which shall have entered the public domain or ceased to be confidential other than as
a result of a breach by such Party of its obligations under this clause 15;
(e) which was already known to such Party prior to its disclosure to such Party other than
as a result of a breach by such Party of an obligation of confidentiality;
() as such Party, acting reasonably, considers necessary in connection with any
investigations, inquiries, or actual or threatened proceedings in connection with
Holdings, Mails or POL or any of their respective directors;
(g) in the case of Holdings, Mails or POL, to the extent that its board of directors acting
reasonably, considers disclosure necessary from time to time in its statutory accounts;
(h) to the extent that the Secretary of State, acting reasonably, considers disclosure
necessary from time to time in the published accounts of the Department of Business,
Innovation & Skills or Her Majesty’s Treasury;
@ to the extent required by any Parliamentary obligation;
Gg) to the extent required for the purposes of any examination pursuant to section 6(1) of
the National Audit Act 1983 of the economy, efficiency and effectiveness with which
the Secretary of State has used his resources;
(kK) to the European Commission for the purposes of obtaining State Aid Clearance; or
@ with the prior written consent of the other Parties.
15.3. Ifa Party becomes required, in circumstances contemplated by clause 15.2(c), (f) or
(g) to disclose any confidential information, such Party shall, to the extent permitted by law,
give to each other Party such notice of such disclosure as is practicable in the circumstances
and shall, to the extent permitted by law and practicable in the circumstances, consult with the
other Parties as to the extent of such disclosure.
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16. NOTICES
16.1 A notice to be served pursuant to or in connection with this Agreement shall be in
writing and, unless otherwise stated, served in person or sent by pre-paid first class post, fax
or any electronic method of communication as agreed by the Parties to the relevant Party at its
address or fax number set out below, or such other address in England or Wales or fax
number notified by it to the other Parties and marked for the attention of the person or
department therein specified.
16.2 The address and addressee of each Party at the date of this Agreement are:
Name of Party I Addressee Address Fax Number
Secretary of I Legal Director for I 1 Victoria Street, 0207 215 3221
State Postal Services London SW1H 0ET
Holdings Company Secretary 100 Victoria 020 7530 7104
Embankment, London
. EC4Y 0HQ
Mails Company Secretary 100 Victoria 020 7530 7104
Embankment, London
EC4Y 0HQ
POL Company Secretary 148 Old Street, 020 7751 6150
London EC1V 9HQ
16.3 A notice shall be deemed to be received on the date and time specified below (save
that where such notice would otherwise be deemed to be received after 17:00 London time on
a particular day, it shall be deemed to have been received at 9:00 London time on the next
Business Day):
=
(a) in the case of a notice served in person, upon delivery at the address of the addressee;
(b) in the case of a posted letter, on the second Business Day after posting;
(c) in the case of a fax, when received in legible form; and
(d) in the case of any other electronic method of communication agreed by the Parties,
when actually received in readable form.
16.4 Each Party undertakes to notify all of the other Parties by notice served in accordance
with this clause if the address specified for that Party herein is no longer an appropriate
address for the service of notice or if it is desired to substitute any individual addressee of that
Party named in clause 16.2.
16.5 In proving service of any notice under or in connection with this Agreement it will be
sufficient to prove:
(a) in the case of a letter, that such letter was properly stamped or franked, addressed and
placed in the post or in the case of personal delivery, was left at the correct address;
and
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(b) in the case of a fax transmission, that fax was duly transmitted to the fax number, as
appropriate, of the addressee referred to in clause 16.2.
17. ENTIRE AGREEMENT
17.1 This Agreement and any documents referred to in it or annexed to it constitute the
whole and only agreement among the Parties or any of them relating to its subject matter and,
for the avoidance of doubt, supersedes the 2007 Funding Agreement and any other prior
arrangement, understanding or agreement between the Parties or any of them relating to the
subject matter of this Agreement.
17.2 Each Party acknowledges that in entering into this Agreement, it is not relying on any
pre-contractual statement which is not set out in this Agreement.
17.3 Except in the case of fraud, no Party shall have any right of action against any other
Party arising out of or in connection with any pre-contractual statement except to the extent
that it is expressly provided for in this Agreement.
17.4 For the purposes of this clause 17, pre-contractual statement means any draft,
agreement, undertaking, representation, warranty, promise, assurance, forecast, estimate or
arrangement of any nature whatsoever, whether or not in writing, relating to the subject matter
of this Agreement made or given by any person at any time prior to the date of this
Agreement.
18. GENERAL
Secretary of State
18.1 Nothing in this Agreement fetters the powers conferred on the Secretary of State by
the Act.
Costs
18.2 Save as expressly provided for elsewhere in this Agreement, each of the Parties shall
at its own expense do all such things as shall be necessary to give full effect to the obligations
imposed on it under this Agreement.
Third parties
18.3 For the purposes of the Contracts (Rights of Third Parties) Act 1999, no person other
than a Party shall have any rights in respect of this Agreement save for the rights of Her
Majesty’s Treasury pursuant to clause 8.5 (POL Working Capital Facility).
Counterparts
18.4 This Agreement may be executed in any number of counterparts and by the Parties on
separate counterparts, each of which when so executed and delivered shall be an original, but
all the counterparts shall together constitute one and the same instrument.
Partial invalidity
18.5 If any term or provision in this Agreement is held to be illegal or unenforceable in
whole or in part under any enactment or rule of law, such term or provision or part shall to
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that extent be deemed not to form part of this Agreement but the enforceability of the
remainder of this Agreement shall not be affected.
Rights, variations and waivers
18.6 The rights and remedies of the Parties shall not be affected by any failure to exercise
or delay in exercising any right or remedy or by the giving of any indulgence by any other
Party or by anything whatsoever except a specific waiver or release in writing and any such
waiver or release shall not prejudice or affect any other rights or remedies of the Parties. No
single or partial exercise of any right or remedy prevents any further or other exercise thereof
or the exercise of any other right or remedy.
18.7 No variation of this Agreement shall be of any effect unless it is agreed in writing by
or on behalf of each Party.
18.8 Any waiver of any right, power or remedy under this Agreement must be in writing
and may be given subject to any conditions thought fit by the grantor. The person seeking the
waiver shall disclose to the grantor all material facts then in that person’s knowledge relevant
to the subject matter of the waiver. Unless otherwise expressly stated, any waiver shall be
effective only in the instance and only for the purpose for which it is given.
Remedies
18.9 Without prejudice to any other rights or remedies that any Party may have, each Party
acknowledges and agrees that damages alone would not be an adequate remedy for any
breach by a Party of the provisions of this Agreement, and that the remedies of injunction and
specific performance as well as any other equitable relief for any threatened or actual breach
of the provisions of this Agreement by a Party may be more appropriate remedies and that no
proof of special damages shall be necessary for the enforcement of this Agreement.
Governing law and jurisdiction
18.10 This Agreement and any non-contractual obligations arising out of or in relation to
this Agreement shall be governed by and construed in accordance with English law.
18.11 Each Party hereby submits to the exclusive jurisdiction of the courts of England.
EXECUTED by the Parties on the date first written above.
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SIGNED by
for and on behalf of
THE SECRETARY OF STATE FOR BUSINESS, INNOVATION & SKILLS
Signatures... SEZTINQUIIII TIT eeseeeeeeteeeeeeeeeee
Name: OUver ims
Title: atuemy DIRECRE, SrABEMOUDER ExECUTVE
SIGNED by
for and on behalf of
POST OFFICE LIMITED
Signature:
Name: Muar Meol<s
Title: ace DilecmR ,
SIGNED by
for and on behalf of
ROYAL MAIL HOLDINGS PLC
SIGNED by
for and on behalf of
ROYAL MAIL GROUP LIMITED
Name: Sue LOHAULES
Title: GPouP ScRATEgy PLectoR
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SCHEDULE 1
DELIVERABLES
A certified copy of the resolution of the board of POL:
(a) approving the terms of, and the transactions contemplated by, this Agreement and the
Restated POL Working Capital Facility Agreement and resolving that it execute and
perform this Agreement and, from the Effective Date, the Restated POL Working
Capital Facility Agreement;
(b) authorising a specific person or persons to execute this Agreement on its behalf; and
(c) authorising a specified person or persons, on its behalf, to sign and/or dispatch all
documents and notices to be signed and/or dispatched by it under or in connection
with this Agreement and the Restated POL Working Capital Facility Agreement.
1.2 A certified copy of the resolution of the board of Mails and the board of Holdings:
(a) approving the terms of, and the transactions contemplated by, this Agreement and
resolving that it execute and perform this Agreement;
(b) authorising a specific person or persons to execute this Agreement on its behalf; and
(c) authorising a specified person or persons, on its behalf, to sign and/or dispatch all
documents and notices to be signed and/or dispatched by it under or in connection
with this Agreement.
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SCHEDULE 2
Part A
Fundamental Change
A Fundamental Change will have occurred if:
1.
an order has been made or resolution has been passed for the winding-up of, or a
provisional liquidator to be appointed in respect of, POL;
an administrator has been appointed in respect of POL;
a receiver (which expression shall include an administrative receiver) has been
appointed in respect of POL;
POL has stopped paying its debts as they fall due;
a moratorium is declared in respect of the indebtedness of POL or POL enters into a
moratorium or a composition, assignment or similar arrangement with its creditors
generally;
a scheme of arrangement is approved, or proposed by POL, under Part 26 of the
Companies Act 2006 with a view to rescheduling or restructuring POL’s
indebtedness;
a voluntary arrangement has been proposed by POL under section 1 of the Insolvency
Act 1986 in respect of POL; or
an event analogous to the foregoing has occurred in relation to POL in any
jurisdiction outside England.
Part B
Potential Fundamental Change
A Potential Fundamental Change exists at any time if at that time a Fundamental Change shall
not have occurred but:
1.
a petition has been presented or a meeting has been convened for the purpose of
winding-up POL or appointing a provisional liquidator in respect of POL and such
petition has not been discharged or such meeting has not been held; or
2. POL is currently taking steps with a view to appointing an administrator or agreeing a
moratorium, composition, assignment or similar arrangement with its creditors
generally.
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SCHEDULE 3
CALCULATION OF NETWORK SUBSIDY PAYMENT
The amount of the Network Subsidy Payment shall (subject to clause 7.9 (Government
funding for the Community Network)) be equal to all the direct and indirect costs associated
with the provision by POL of services of general economic interest (SGEI) over the
Community Network, including:
1.
all variable costs of sustaining the Community Network and providing the SGEI and
non-SGEI services over it; plus
all fixed costs incurred solely in providing the Community Network; plus
such proportion of fixed costs common to both the Community Network and other
activities of POL as is appropriate to be allocated to the Community Network (based
on generally accepted cost accounting principles); plus
a reasonable profit in providing the SGEI activities over the Community Network;
less
the revenues received from the SGEI and non-SGEI activities attributable to the
Community Network.
For the purposes of paragraph 3 of this definition the fixed costs common to both the
Community Network and other activities of POL shall include, without limitation,
contributions to the Royal Mail Group pension funds, interest costs, group central cost
allocations, capital expenditure and contributions to the cost of any employee share scheme or
other incentivisation arrangements in which staff and/or agents of POL participate.
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SCHEDULE 4
POL BANKING CONSULTATION: NEW PRODUCTS AND SERVICES
References to “Branch” in this Schedule 4 shall mean a Branch providing the services
described in clause 12.1(a) (Access criteria).
References to “financial institutions” in this Schedule 4 shall include Her Majesty’s Treasury.
Access to bank accounts
1. POL agrees to continue discussions, in good faith, with Santander UK plc in relation
to allowing customers to access their Santander current accounts at POL Branches.
2. POL agrees to continue discussions, in good faith, with The Royal Bank of Scotland
in relation to allowing customers to access their current and business accounts (including
‘NatWest accounts) at POL Branches.
Children’s savings account
3. POL agrees to procure the launch of a children’s savings account through the Post
Office within the next twelve months, subject to:
(a) any necessary consents and approvals being granted for the provision of the
children’s savings account;
(b) the co-operation of any financial institution to the extent necessary to enable the
children’s savings account to be provided; and
(c) POL being able to make an appropriate commercial return from the children’s savings
account.
Saving gateway account
4, POL agrees to procure the launch of a saving gateway account through the Post
Office in 2010, subject to:
(a) Government funding of sixteen million pounds (£16,000,000) (or such other amount
as agreed by Government and POL) being made available to POL as follows:
(i) ten million pounds (£10,000,000) upon State Aid Clearance being granted for
the funding referred to in paragraph (a) above;
(ii) three million pounds (£3,000,000) during the Financial Year 2011/12; and
(iii) three million pounds (£3,000,000) during the Financial Year 2012/13,
subject to any adjustments that may be required to the above instalments should the
Government and POL agree that funding for the saving gateway account will be
greater or less than sixteen million pounds (£16,000,000);
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(b) State Aid Clearance being granted for the funding referred to in paragraph (a) above
and the saving gateway account being accepted as an SGEI for the purpose of the
POL Working Capital Facility and Entrustment Letter;
(c) any necessary consents and approvals being granted for the implementation of the
saving gateway account; and
(d) the co-operation of any financial institution to the extent necessary to enable the
saving gateway account to be provided.
Current account
5. POL agrees to procure the launch of a current account through the Post Office as soon
as the directors of POL consider, acting reasonably, that market conditions are appropriate,
subject to:
(a) any necessary consents and approvals being granted for the implementation of the
current account;
(b) the co-operation of any financial institution to the extent necessary to enable the
current account to be provided; and
(c) POL being able to make an appropriate commercial return from such current account.
Mortgages
6. POL agrees to procure the offer of mortgages, with a 90 per cent. loan-to-value ratio,
specifically targeted at first-time buyers and priced according to risk, subject to:
(a) any necessary consents and approvals being granted for the provision of such
mortgages;
(b) the co-operation of any financial institution to the extent necessary to enable such
mortgages to be provided; and
(c) POL being able to make an appropriate commercial return from such mortgages.
7. POL agrees to use such rights and influence as it has to seek a substantial increase in
lending secured by such mortgages, aiming to double the value of that mortgage book in the
Financial Year 2010/11.
Weekly budgeting account
8. POL agrees to work with the Government to determine the features of a weekly
budgeting account that could help people on low incomes to manage their household budgets
and take advantage of discounts for using direct debit to pay their utility bills. Following
agreement as to its features, terms and conditions POL will procure the launch of such an
account through the Post Office, subject to:
(a) such external funding as may be required to provide an appropriate commercial return
being made available for the weekly budgeting accounts (such amount to be agreed
between Government and POL);
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any necessary State Aid Clearance being granted for the funding referred to in
paragraph (a) above;
the account being accepted as an SGEI for the purpose of the POL Working Capital
Facility and Entrustment Letter;
any necessary consents and approvals being granted for the provision of the weekly
budgeting account; and
the co-operation of any third party to the extent necessary to enable the weekly
budgeting account to be provided.
Credit unions
9.
POL agrees to take steps to strengthen the relationship with credit unions, building on
local arrangements to create a “Best Practice Guide” for Sub postmasters on developing
closer working links with credit unions.
10.
POL agrees to make a link available between credit unions and POL Branches
allowing people to access credit union loans, current accounts and saving accounts through
POL Branches, subject to:
(a) such funding as may be required to provide an appropriate commercial return being
made available for such link (by way of a community finance levy or alternative
funding) such amount to be agreed between Government and POL);
(b) any necessary State Aid Clearance being granted for the funding referred to in
paragraph (a) above;
(c) the account being accepted as an SGEI for the purpose of the POL Working Capital
Facility and Entrustment Letter;
(d) a single compatible platform being made available to POL to enable such link to be
provided;
(e) any necessary consents and approvals being granted for the implementation and
operation of such link; and
() the co-operation of ABCUL and of any credit union or financial institution to the
extent necessary to establish and operate such link.
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APPENDIX A
RESTATED POL WORKING CAPITAL FACILITY AGREEMENT
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DATED 17" OCTOBER 2003
as amended and restated on 16 May 2007, amended on 18 April 2008
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and further amended and restated on 24 March 2010
POST OFFICE LIMITED
and
SECRETARY OF STATE FOR BUSINESS, INNOVATION & SKILLS
CREDIT FACILITIES AGREEMENT
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TABLE OF CONTENTS
Clause Headings
1.
2.
DEFINITIONS AND INTERPRETATION
THE FACILITY
CONDITIONS OF UTILISATION
UTILISATION
REPAYMENT
PREPAYMENT AND CANCELLATION
INTEREST
FEES
STAMP TAXES AND VAT
OTHER INDEMNITIES
MITIGATION BY THE LENDER
COSTS AND EXPENSES
GUARANTEE AND INDEMNITY
REPRESENTATIONS
INFORMATION UNDERTAKINGS
GENERAL UNDERTAKINGS
EVENTS OF DEFAULT
TRANSFER BY THE LENDER
CHANGES TO THE OBLIGORS
FINANCE PARTY
TIMING OF CONSENTS
PAYMENT MECHANICS
SET OFF
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24.
25.
26.
27.
28.
29.
30.
31.
NOTICES
CALCULATIONS AND CERTIFICATES
PARTIAL INVALIDITY
REMEDIES AND WAIVERS
AMENDMENTS AND WAIVERS
COUNTERPARTS
GOVERNING LAW
ENFORCEMENT
SCHEDULE 1 Conditions Precedent
SCHEDULE 2 Utilisation Request
SCHEDULE 3 Form of Debt Security
SCHEDULE 4 Conditions of Debt Security
SCHEDULE 5 Full Cancellation of Utilisation Request
SCHEDULE 6 Part Cancellation of Utilisation Request
SCHEDULE 7 Monitoring Regime
SCHEDULE 8 SGEI provided by Post Office Limited
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THIS AGREEMENT is dated 17" October 2003, was amended and restated on 16 May 2007
and further amended on 18 April 2008 and is further amended and restated on 24 March 2010
and made between:
(1) POST OFFICE LIMITED (company number 02154540) (the "Company"); and
(2) THE SECRETARY OF STATE FOR BUSINESS, INNOVATION & SKILLS (FORMERLY
THE SECRETARY OF STATE FOR TRADE AND INDUSTRY) (the "Lender’).
WHEREAS:
(A) The Company requires funds in order to meet its requirements relating to Cash Items
and Near-Cash Items (in each case to the extent that they are connected with the
provision of SGEI).
(B) The Lender intends, pursuant to section 64 of the Postal Services Act 2000, to purchase
certain debt securities issued by the Company.
IT IS AGREED as follows:
INTERPRETATION
1. DEFINITIONS AND INTERPRETATION
4.41 Definitions
In this Agreement:
“Additional Borrower" means a company which becomes an Additional Borrower in
accordance with Clause 19 (Changes to the Obligors).
"Advance" means an advance made or to be made under the Facility (by way of
purchase of Debt Securities) or the principal amount outstanding for the time being of
that advance.
“A&L" means Alliance & Leicester plc (company number 03263713).
"ALCB" means Alliance & Leicester Commercial Bank pic (company number
01950000).
"Authorisation" means an authorisation, consent, approval, resolution, licence,
exemption, filing, notarisation or registration.
“Authorised Investment" has the meaning given to it in Clause 16.12 (Authorised
investments).
“Availability Period" means the period to and including 31 March 2016.
207738112840 CACopyt JRT 240310:1444
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“Available Commitment" means the Commitment minus:
(A) the amount of any outstanding Advances other than, in relation to any proposed
Utilisation, the amount of any Advances that are due to be repaid or prepaid on
or before the proposed Utilisation Date; and
(B) in relation to any proposed Utilisation, the amount of any Advances that are due
to be made on or before the proposed Utilisation Date.
"Borrower" means the Company or an Additional Borrower unless it has ceased to be a
Borrower in accordance with Clause 19 (Changes to the Obligors).
“Business Day" means a day (other than a Saturday or Sunday) on which banks are
open for general business in London.
“Cancellation of Utilisation Request" means a Full Cancellation of Utilisation Request
or a Part Cancellation of Utilisation Request.
"Cash Items" means each of:
(A) Cash-on-hand;
(B) Foreign Currency-on-hand;
(C) Cash-in-transit; and
(D) Cash-at-bank,
but excluding any Note Circulation Scheme Cash provided that, for the purposes of
calculating the amount of Cash Items at any time, any amount included as a Cash Item
under paragraph (A), (B), (C) or, as the case may be, (D) above shall not be included (i)
as a Cash Item under the other paragraphs above and/or (ii) as a Near-Cash Item.
“Cash Centre" means a centre or warehouse, including the secure stock centre used
as a distribution centre for foreign currency and excluding any secure locations
designated (for the purposes of the Note Circulation Scheme) as qualifying cash centres
by the Bank of England and the Company, established by the Company for the purpose
of secure storage of the cash and other similar resources of the Company and/or any of
its Subsidiaries.
"Cash-at-bank" means the net amount (the "relevant net amount’) of the balance(s) of
all the Client Bank Account(s) provided that, for the purposes of calculating the
aggregate amount of Cash Items at any time, (1) the relevant net amount shall be
deducted from the other elements of Cash Items if the relevant net amount is a debit
balance and (2) the relevant net amount shall be added to the other elements of Cash
Items if the relevant net amount is a credit balance.
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"Cash-on-hand" means bank notes and coins (denominated in sterling) which are held
by or on behalf of the Company and/or any of its Subsidiaries in any Post Office or Cash
Centre but excluding any bank notes (denominated in sterling) contained in any
automated teller machine owned and operated by a person other than the Company or
any of its Subsidiaries.
“Cash-in-transit" means bank notes and coins (whether denominated in sterling or any
other currency) which are being transported (by whatever means) between Post Offices,
Cash Centres or, as the case may be, any Post Office and any Cash Centre.
"Cheques-in-clearing" means Relevant Cheques held by a supplier of cheque-
processing services or any bank.
~"Cheques-in-transit' means Relevant Cheques which are being transported (by
whatever means) between any of the following: any Post Office, any Cash Centre, any
processing centre or any bank.
"Cheques-on-hand" means Relevant Cheques which are held by or on behalf of the
Company and/or any of its Subsidiaries in any Post Office or Cash Centre.
“Client Bank Account" means each account (held with a bank or otherwise) utilised by
the Company and/or its Subsidiaries for the purposes of making or receiving payments
in relation to any Intermediary Transaction.
"Commitment" means:
(A) in relation to the first Relevant Period, the amount notified by the Lender to the
Company pursuant to Clause 3.1 (Initial conditions precedent) (as the same
may be increased in accordance with Clause 4.5 (Re-setting Commitment),
and
(B) in relation to each Relevant Period (other than the first Relevant Period), the
amount determined in accordance with Clause 4.5 (Re-setting Commitment),
in each case, to the extent not cancelled or reduced under this Agreement.
“Debt Security" means any debt security substantially in the form set out in Schedule 3
(Form of Debt Security) issued or to be issued in respect of any Advance or the principal
amount outstanding for the time being of such Advance.
"Default" means an Event of Default or any event or circumstance specified in Clause
17 (Events of Default) which would (with the expiry of a grace period, the giving of
notice, the making of any determination under the Finance Documents or any
combination of any of the foregoing) be an Event of Default.
"Deposit Agreement" means the deposit agreement to be entered into between the
Company, the Lender and DMO.
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“Disclosure Letter’ means the letter dated the same date.as this Agreement delivered
by or on behalf of the Company disclosing certain matters for the purposes of this
Agreement.
"DMO" means the Debt Management Office of Her Majesty's Treasury.
"DWP" means the Department for Work and Pensions.
“Estimating Debtor Receivables" means:
(A)
(B)
in relation to each Intermediary Transaction under which the Company or any of
its Subsidiaries (the “relevant intermediary") receives sums from any
governmental agency or other person (a "client") in advance, and for the
purposes, of disbursing the same to any person(s) entitled to be paid such
sums (“customer(s)") who visit(s) a Post Office for the purposes of receiving
the same (where the sums received by the relevant intermediary from the client
are based on estimates of the amounts to be disbursed to the relevant
customer(s) in respect of such sums), the amount payable by the client which is
equal to the amount by which (a) the aggregate amount paid to relevant
customer(s) by the relevant intermediary exceeds (b) the amounts received by
the relevant intermediary from the client in advance, and for the purposes, of
those payments to the customer(s); and
in relation to each Intermediary Transaction under which the Company.or any of
its Subsidiaries (the "relevant intermediary") disburses sums to any
governmental agency or other person (a "client") in circumstances where (i) the
relevant intermediary receives sums from another person or other persons
("customer(s)") for the purposes of paying the same to the client and (ii) the
sums disbursed to the relevant client are based on estimates of the amounts
received or to be received by the relevant intermediary from the relevant
customer(s), the amount payable by the client which is equal to the amount by
which (a) the aggregate amount disbursed to the client by the relevant
intermediary exceeds (b) the aggregate amount received by the relevant
intermediary from the relevant customer(s) for the purposes of making the
relevant disbursements to the client.
"Event of Default" means any event or circumstance specified as such in Clause 17
(Events of Default).
"Facility" means the debt securities facility made available under this Agreement as
described in Clause 2.1 (Facility).
“Final Maturity Date" means 31 March 2016.
“Finance Document" means this Agreement, each Debt Security, the Deposit
Agreement, the Security Documents, the Intercreditor Agreement and any other
document designated as such by the Lender and the Borrower in writing.
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"Financial Indebtedness" means any indebtedness (without double counting) for or in
respect of:
(A) moneys borrowed;
(B) any amount raised by acceptance under any acceptance credit facility with a
bank or financial institution,
(C) any amount raised pursuant to any note purchase facility or the issue of bonds,
notes, debentures, loan stock or any similar instrument;
(D) the amount of any liability in respect of any lease or hire purchase contract
which would, in accordance with GAAP, be treated as a finance or capital lease;
(E) receivables sold or discounted (other than any receivables to the extent they
are sold on a non recourse basis);
(F) any amount raised under any other transaction (including any forward sale or
purchase agreement) having the commercial effect of a borrowing and which
would be shown as such in any financial statements delivered under Clause 15
(Information Undertakings);
(G) any derivative transaction entered into in connection with protection against or
benefit from fluctuation in any rate or price (and, when calculating the value of
any derivative transaction, only the net marked to market value shall be taken
into account);
(H) the amount of any liability in respect of any guarantee or indemnity for any bank
guarantee, indemnity, bond, standby or documentary letter of credit or any other
instrument issued by a bank or financial institution; and
(I) the amount of any liability in respect of any guarantee or indemnity for any of
the items referred to in paragraphs (A) to (H) above.
"Foreign Currency-on-hand" means bank notes and coins (denominated other than in
sterling) which are held by or on behalf of the Company and/or any of its Subsidiaries in
any Post Office or Cash Centre.
“Framework Agreement’ means the funding agreement dated 24 March 2010 between
Holdings, the Company, Royal Mail Group and the Lender.
"Full Cancellation of Utilisation Request" means a notice substantially in the form set
out in Schedule 5 (Full Cancellation of Utilisation Request).
"Funding Requirement" means the aggregate amount of borrowings that the Group
will require under this Agreement in order to fund its provision of SGEI and liabilities
relating to Cash Items and Near-Cash Items as and when the same fall due or are
anticipated to fall due.
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"GAAP" means generally accepted accounting principles in the United Kingdom
including without limitation IFRS.
"Gilt Rate" means, in relation to any Long Term Advance, the relevant rate determined
by the Lender (with reference to, where available, the applicable Screen Rate) as being
the rate as of 11:00 a.m. on the Quotation Date, for gilt edged securities issued by the
Government of the United Kingdom having a period of maturity which is comparable to
the period from (and including) the Utilisation Date for such Advance to (and including)
its Maturity Date.
"Group" means the Company and its Subsidiaries for the time being.
"Group Reorganisation" means the reorganisation and restructuring of the Group
approved by the Lender in its capacity as shareholder of Holdings which may be
effected after the date of this Agreement pursuant to which, among other things, the
Company shall cease to be a wholly-owned Subsidiary of Royal Mail Group and shall,
instead, become a Subsidiary of Holdings.
"Guarantor" means a company which becomes a Guarantor in accordance with Clause
19 (Changes to the Obligors), unless it has ceased to be a Guarantor in accordance
with Clause 19 (Changes to the Obligors).
“Holding Company" means, in relation to a company or corporation, any other
company or corporation in respect of which it is a Subsidiary.
"Holdings" means Royal Mail Holdings plc (company number 04074919).
"IFRS" means international accounting standards within the meaning given in the IAS
Regulation 1606 2002 to the extent applicable to the relevant financial statements.
“Information Package" means:
(A) any information provided by or on behalf of the Company pursuant to Clause
4.5 (Re-setting Commitment);
(B) any information provided by or on behalf of the Company pursuant to the audit
of the monitoring regime carried out prior to its implementation under Clause
15.6.2 (Initial implementation of Monitoring Regime) (whether such information
is provided to the Lender or the independent consultant appointed to carry out
such audit); and
(C) any information contained in any Weekly Report or otherwise provided by or on
behalf of the Company in connection with the Monitoring Regime (including any
information provided pursuant to Clause 15.7.4 (Monitoring Regime)).
"Intercreditor Agreement" means the agreement of the same name dated 20 March
2007 between A&L, ALCB, the Company and the Lender.
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“Interest Period" means:
(A) in relation to each Long Term Advance:
(4) the period of six months or less commencing on the Utilisation Date for
that Advance and ending on the earlier of the first 19 March or 19
September to occur after such Utilisation Date; and, thereafter,
(2) each successive period of six months commencing on 20 March and 20
September and ending on the next 19 September or, as the case may
be, the next 19 March (the last such period ending on the day preceding
the Maturity Date for that Advance);
(B) in relation to any Short Term Advance, the period commencing on its Utilisation
Date and ending on the day preceding the Maturity Date for that Advance; and
(C) in relation to any Unpaid Sum, each period determined in accordance with
Clause 7.3 (Default interest).
“Intermediary Transaction" means any transaction under which the Company or any
of its Subsidiaries acts as an intermediary for the receipt of sums from one person and
the payment of the same to another person.
"Key Assets" has the meaning given to it in Clause 16.3 (Negative pledge).
“LIBOR" means, in relation to any Short Term Advance:
(A) the relevant rate determined by the Lender (with reference to the applicable
Screen Rate) as being the rate based upon the rates supplied by BBA's
Contributor Panel Banks; or
(B) if the applicable Screen Rate is not available, the arithmetic mean (rounded
upward to four decimal places) of the rates determined by the Lender to be
quoted by the Reference Banks to leading banks in the London interbank
market,
in each case as of 11.00 a.m. on the Quotation Day, for the offering of deposits in
sterling and for a period comparable to the Interest Period for that Short Term Advance,
except that where the Interest Period for any Short Term Advance does not coincide
exactly with a relevant period shown on Reuters for the purpose of establishing the
Screen Rate under paragraph (A) of this definition of LIBOR, the Lender shall calculate
LIBOR by interpolation between the nearest longer and shorter relevant period shown
on Reuters.
"Long Term Advance" means any Advance, the Maturity Date of which falls more than
12 months after its Utilisation Date.
"Margin" means 0.25 per cent. per annum.
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“Material Adverse Effect" means a material adverse effect on:
(A) the business or financial position of the Group, taken as a whole; or
(B) the ability of the Company to perform its obligations or, as the case may be, if at
any time there is more than one Obligor, the ability of the Obligors (taken as a
whole) to perform their obligations, in each case, under any of the Finance
Documents when the same are due to be performed or within any applicable
grace period.
"Maturity Date" has the meaning given to it in Clause 4.2 (Completion of a Utilisation
Request).
“Maximum Commitment" means the maximum amount of the Commitment at any
time, being £1,150,000,000 (or such lesser amount as the Company and the Lender
may from time to time agree).
“Monitoring Regime" has the meaning given to it in Clause 15.6 (Initial implementation
of Monitoring Regime).
"Near-Cash Items" means each of:
(A) Cheques-on-hand;
(B) Cheques-in-transit;
(C) Cheques-in-clearing;
(D) Estimating Debtor Receivables;
(E) Other Debtor Receivables;
(F) Unpaid Payment Files; and
(G) Suspense Items,
provided that, for the purposes of calculating the amount of Near-Cash Items at any
time, any amount included as a Near-Cash Item under paragraph (A), (B), (C), (D), (E),
(F) or, as the case may be, (G) above shall not be included (i) as a Near-Cash Item
under the other paragraphs above and/or (ii) as a Cash Item.
"Net Utilisations" has the meaning given to it in Schedule 7 (Monitoring Regime).
"Note Circulation Scheme" means the scheme of that name operated by the Bank of
England under which members of the scheme are able to (a) sell to the Bank of
England at the close of a Business Day bank notes held in a specific location and under
specific conditions and (b) re-purchase those bank notes at the start of the next
Business Day in accordance with the terms laid down by the Bank of England.
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"Note Circulation Scheme Cash" means bank notes (denominated in sterling) issued
by the Bank of England falling within the Note Circulation Scheme which are held by the
Company or on its behalf in secure locations designated (for the purposes of the Note
Circulation Scheme) as qualifying cash centres by the Bank of England and the
Company or are being transported to and from such cash centres (including such bank
notes to which the Bank of England has title).
"NPV Formula" means the formula which is referred to in paragraphs 29.2.16 to
29.2.20 and annex 29.1 of the document entitled "Government Accounting" available on
the website www.government-accounting.gov.uk as at the date of this Agreement (or, if
agreed between the Company and the Lender, in the case of each of such formula, the
relevant cross-references, the government publication and the website address, as
amended or replaced from time to time).
“Obligor" means a Borrower or a Guarantor.
“Original Financial Statements" means:
(A) in relation to the Company, its audited financial statements for its financial year
ended 26 March 2006; and
(B) in relation to any other Obligor, such of its audited financial statements as the
Lender and the Company shall designate in writing as being its "Original
Financial Statements" for the purposes of this Agreement.
“Other Debtor Receivables" means, in relation to any Intermediary Transaction under
which the Company or any of its Subsidiaries (the "relevant intermediary") pays (on
behalf of a person (the "ultimate payer") that utilises the relevant intermediary as an
intermediary for the purposes of making such payment) sums to any person (the
“ultimate recipient") in respect of which the ultimate payer will pay to the relevant
intermediary an amount equal to the sums so paid by such relevant intermediary to the
ultimate recipient, the amounts so payable by any ultimate payer.
"Part Cancellation of Utilisation Request" means a notice substantially in the form set
out in Schedule 6 (Part Cancellation of Utilisation Request).
“Party" means a party to this Agreement.
“Permitted Leasing Indebtedness” has the meaning given to it in paragraph (J) of
clause 16.4.2 (Permitted Indebtedness).
"Post Offices" means Crown post offices, the counter or counters within agency post
offices designated for the Company's business and any other counter facilities (by
whatever name called) operated from time to time by or on behalf of the Company.
“Principal Subsidiary" means, at any time, any Subsidiary of the Company whose
gross assets, gross revenues or operating profits represent at least 5% of the
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consolidated gross assets, gross revenues or, as the case may be, the operating profits
of the Group.
"Quotation Day" means, in relation to any period for which an interest rate is to be
determined, the first day of that period.
"Reference Banks" means Barclays Bank Plc, The Royal Bank of Scotland Plc and
Lloyds TSB plc.
“Relevant Cheque" means, in relation to any Intermediary Transaction under which the
Company or any of its Subsidiaries (the "relevant intermediary") is provided a cheque
(which is payable to such relevant intermediary) by a person (the “payer") as
reimbursement for the payment made or to be made by the relevant intermediary of an
amount equal to the amount of the cheque to the person (the "ultimate payee") utilising
the relevant intermediary as an intermediary for payments by the payer to the ultimate
payee, the amount payable under any such cheque provided by any such payer to the
extent that the same has not been cleared and the relevant intermediary has not been
reimbursed for the amount that has been or is to be paid to the ultimate payee.
“Relevant Estimates" means any estimates and/or projections relating to payments of
pensions and/or allowances through Post Offices (a) that have been provided to the
Company by DWP or any other relevant government department and (b) on which the
Company has relied or is relying when determining its Funding Requirement (where
“relevant government department" means any government department (i) the identity
of which has been notified by the Company to the Lender and (ii) in respect of which
relevant contact details have been provided by the Company to the Lender).
"Relevant JV" means (a) First Rate Travel Services Limited (company number
04287490), (b) First Rate Travel Services Holdings Limited (company number
04287534) and (c) each joint venture or outsourcing arrangement entered into with the
approval of the Lender pursuant to Clause 16.11 (JVs) and/or the relevant joint venture
or other entity incorporated or set up for the purposes of carrying out such joint venture
or outsourcing arrangement.
"Relevant Period" means:
(A) the period from (and including) the date of this Agreement to (and including) the
first 31 March to occur after the date of this Agreement (the “first Relevant
Period"); and, thereafter,
(B) each period of 12 months from (and including) 1 April to (and including) 34
March falling in the period ending on the Final Maturity Date.
“Repeating Representations" means each of the representations set out in Clause 14
(Representations) other than Clause 14.6 (No filing), Clause 14.7 (No default), Clause
14.9 (Original financial statements), Clause 14.11 (No proceedings pending or
threatened) and Clause 14.12 (Security).
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"Reporting Period" means:
(A) the period from and including the first Utilisation Date to and including the first
Wednesday to occur after such date; and, thereafter,
(B) each successive period of seven days ending on each Sunday (or on such
other day of the week as agreed by the Company and the Lender) occurring
prior to the Final Maturity Date.
"Royal Mail Group" means Royal Mail Group Limited (formerly known as Royal Mail
Group plc) (company number 04138203).
"Screen Rate" means:
(A) in relation to the Gilt Rate, the yield to redemption of the relevant benchmark gilt
edged securities issued by the Government of the United Kingdom as shown on
the DMO's composite screen displayed on (i) page DMO10 on the Bloomberg
screen, (ii) page DMO/BENCH1 on the Reuters screen or (iii) page 44720 on
the Topic screen; and
(B) in relation to LIBOR, the British Bankers' Association Interest Settlement Rate
for sterling for the relevant period displayed on the appropriate page of the
Reuters screen.
If, in each case, the agreed page is replaced or the relevant service ceases to be
available, the Lender, may, after consultation with the Company, specify a reasonable
alternative page or service displaying the appropriate rate.
"Security" means a mortgage, charge, pledge, lien or other security interest securing
any obligation of any person or any other agreement or arrangement having the effect
of creating security.
"Security Document" means each of.
(A) the debenture between the Company and the Lender dated on or about the
date of this Agreement; and
(B) any documents from time to time entered into pursuant to this Agreement under
which security over assets is granted to the Lender in respect of liabilities and/or
obligations owed to it under this Agreement or any other Finance Document and
designated as Security Documents by the Company and Lender in writing.
"SGEI" means services of general economic interest provided by the Company and as
listed in Schedule 8 (SGEI provided by Post Office Limited).
“Short Term Advance" means any Advance, the Maturity Date of which falls 12 months
or less after its Utilisation Date.
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"Subsidiary" means a subsidiary undertaking within the meaning of section 1159 of the
Companies Act 2006.
“Suspense Items" means:
(A) any amount arising (by reason of the role played by the Company or any of its
Subsidiaries as an intermediary in any Intermediary Transaction) which would
be (but for such amount being unreconciled or disputed) treated in accordance
with GAAP as a receivable due to the Company and/or any of its Subsidiaries;
and
(B) any amount (arising by reason of the role played by the Company or any of its
Subsidiaries as an intermediary in any Intermediary Transaction) which is due to
the Company or such Subsidiary in respect of which a BACS transfer has been
made but which has not been credited to the bank account of the Company or
such Subsidiary.
"Tax" means any tax, levy, impost, duty or other charge or withholding of a similar
nature (including any penalty or interest payable in connection with any failure to pay or
any delay in paying any of the same).
“Transaction Party" means each Obligor and each other member of the Group party to
a Finance Document.
“Total Borrowings" has the meaning given to it in Schedule 7 (Monitoring Regime).
"Unpaid Payment Files" means, in relation to any Intermediary Transaction under
which the Company or any of its Subsidiaries (the "relevant intermediary") is paid an
amount via debit or credit card by a person (the "payer") as reimbursement for the
payment made or to be made by the relevant intermediary of an amount equal to the
amount of the relevant debit or credit card payment to the person (the "ultimate payee")
utilising the relevant intermediary as an intermediary for payments by the payer to the
ultimate payee, the amount of any such debit or credit card payment made by any such
payer to the extent that the same has not been cleared and the relevant intermediary
has not been reimbursed for the amount that has been or is to be paid to the ultimate
payee.
“Unpaid Sum" means any sum due and payable but unpaid by an Obligor under the
Finance Documents.
"Utilisation" means a utilisation of the Facility.
“Utilisation Date" means the date of a Utilisation, being the date on which the relevant
Advance is to be made.
"Utilisation Request" means a notice substantially in the form set out in Schedule 2
(Utilisation Request).
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"VAT" means value added tax as provided for in the Value Added Tax Act 1994 and any
other tax of a similar nature.
"Weekly Reports" means the reports referred to in paragraph 2 of Schedule 7
(Monitoring Regime) which are produced pursuant to the Monitoring Regime in the form
agreed between the Lender and Company on or before the date of this Agreement (and
initialled, for the purposes of identification, by or on behalf of the Company and the
Lender on or about the date of this Agreement) or such other form (i) as may be
tequired pursuant to Clause 15.7 (Monitoring Regime) or (ii) as the Company and the
Lender may otherwise agree.
Construction
1.2.1. Unless a contrary indication appears, any reference in this Agreement to:
(A) the "Lender", any "Obligor" or any "Party" shall be construed so as to
include its successors in title, permitted assigns and permitted
transferees;
(B) "assets" includes present and future properties, revenues and rights of
every description;
(C) a "Finance Document" or any other agreement or instrument is a
reference to that Finance Document or other agreement or instrument
as amended or novated;
(D) “indebtedness” includes any obligation (whether incurred as principal
or as surety) for the payment or repayment of money, whether present
or future, actual or contingent;
(E) a "person" includes any person, firm, company, corporation,
government, state or agency of a state or any association, trust or
partnership (whether or not having separate legal personality) or two or
more of the foregoing;
(F) a "regulation" includes any regulation, rule or official directive of any
governmental, intergovernmental or supranational body or regulatory,
self regulatory or other authority or organisation;
(G) a provision of law is a reference to that provision as amended or re
enacted;
(H) a time of day is a reference to London time; and
(I) the word "including" is without limitation.
1.2.2 Section, Clause and Schedule headings are for ease of reference only.
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Unless a contrary indication appears, a term used in any other Finance
Document or in any notice given under or in connection with any Finance
Document has the same meaning in that Finance Document or notice as in this
Agreement.
A Default (including an Event of Default) is "continuing" if it has not been
remedied or waived.
Third party rights
1.3.1
1.3.2
Unless expressly provided to the contrary in a Finance Document, a person
who is not a Party has no right under the Contracts (Rights of Third Parties) Act
1999 (the "Third Parties Act) to enforce or to enjoy the benefit of any term of
this Agreement.
Notwithstanding any terms of any Finance Document, the consent of any
person who is not a Party is not required to rescind or vary this Agreement at
any time.
Shareholder consent
The Lender (in its capacity as shareholder of Holdings) hereby consents, for all
purposes of the articles of association of Holdings, to the execution and performance by
the Company of the Finance Documents and the Lender agrees that such consent shall
take effect notwithstanding any failure to comply with any procedural requirements of
such articles in connection with the obtaining of such consent. Holdings may rely on
this Clause.
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2.2
2.3
3.4
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THE FACILITY
THE FACILITY
Facility
Subject to the terms of this Agreement, in each Relevant Period, the Lender shall
purchase from the Borrowers sterling debt securities up to an aggregate amount equal
to the Commitment for that Relevant Period.
Purpose
Each Borrower must apply all amounts borrowed by it under this Agreement towards
funding the Cash Items and Near-Cash Items (in each case to the extent that they are
connected with the provision of SGEI).
Monitoring
The Lender is not bound to monitor or verify the application of any amount borrowed
pursuant to this Agreement.
CONDITIONS OF UTILISATION
Initial conditions precedent.
No Borrower may deliver a Utilisation Request unless the Lender has (a) received all of
the documents and other evidence listed in Schedule 1 (Conditions Precedent) in form
and substance satisfactory to the Lender (acting reasonably) and (b) confirmed to the
Company the amount of the Commitment applicable to the first Relevant Period. The
Lender shall notify the Company promptly upon being so satisfied pursuant to
paragraph (a).
Further conditions precedent
The Lender will only be obliged to comply with Clause 4.4 (Availability of Advance) if:
3.2.1 on the date of the Utilisation Request and on the proposed Utilisation Date:
(A) no Default is continuing or will result from the proposed Advance;
(B) the Repeating Representations to be made by each Obligor are true in
all material respects; and
3.2.2 subject to Clause 3.4 (Parliamentary approval), on or before the proposed
Utilisation Date, the Lender has received the necessary approvals from
Parliament to permit it to utilise funds for the purposes of purchasing the Debt
Securities to be issued in respect of the proposed Advance; and
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3.4
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3.2.3 on the proposed Utilisation Date, the Borrower to whom such Advance is to be
made has issued to the Lender a Debt Security or Debt Securities in respect of
such Advance in an aggregate principal amount equal to such Advance.
Maximum number of Advances
A Borrower may not deliver a Utilisation Request if as a result of the proposed Utilisation
more than 30 Advances would be outstanding.
Parliamentary approval
The Lender will use its best endeavours to obtain the necessary approvals from
Parliament referred to in Clause 3.2.2 (Further conditions precedent).
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UTILISATION
UTILISATION
Delivery of a Utilisation Request
A Borrower may utilise the Facility by delivery to the Lender of a duly completed
Utilisation Request on a Business Day falling (in the case of any proposed Short Term
Advance) 5 Business Days or (in the case of any proposed Long Term Advance) 15
Business Days prior to the proposed Utilisation Date set out in the Utilisation Request.
Completion of a Utilisation Request
4.2.1
4.2.2
4.2.3
4.2.4
No Utilisation Request will be regarded as having been duly completed unless:
(A) it specifies a repayment date ("Maturity Date") for the Advance
requested which complies with Clause 4.3 (Currency, amount and
maturity);
(B) the proposed Utilisation Date is a Business Day within the Availability
Period; and
(C) the currency and amount of the Utilisation comply with Clause 4.3
(Currency, amount and maturity).
Only one Advance may be requested in each Utilisation Request.
A Borrower may revoke a Utilisation Request in full or in part by delivery to the
Lender of a duly completed Full Cancellation of Utilisation Request or a Part
Cancellation of Utilisation Request (as the case may be) on a Business Day
falling not less than 2 Business Days prior to the proposed Utilisation Date set
out in that Utilisation Request, provided that a Borrower may deliver to the
Lender no more than one Cancellation of Utilisation Request in respect of each
Utilisation Request and, in the case of a Part Cancellation of Utilisation
Request, only the amount of the Advance may be amended in that Part
Cancellation of Utilisation Request.
As soon as reasonably practicable, the Lender shall confirm receipt of a
Cancellation of Utilisation Request to the relevant Borrower. In the case of a
Full Cancellation of Utilisation Request, the Lender shall also confirm that it will
not make available the Advance specified in the Utilisation Request to which
that Full Cancellation of Utilisation Request relates.
Currency, amount and maturity
4.3.1
4.3.2
The currency specified in a Utilisation Request must be sterling.
The amount of any proposed Advance must be:
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(A) in the case of any Long Term Advance, a multiple of £5,000,000;
(B) in the case of any Short Term Advance, a minimum of £1,000,000 and
multiple of £1,000,000,
or, in each case, if less, the Available Commitment.
4.3.3 The Maturity Date for any Advance must be a Business Day falling on or before
the Final Maturity Date.
Availability of Advance
If the conditions set out in this Agreement have been met, the Lender shall make each
Advance available to the Borrower that submitted the Utilisation Request for such
Advance by the Utilisation Date. Where the Borrower has submitted a Part Cancellation
of Utilisation Request pursuant to Clause 4.2.3, the Lender shall make an Advance
equal to the Final Amount specified in that Part Cancellation of Utilisation Request
available to that Borrower on the Utilisation Date specified in that Part Cancellation of
Utilisation Request.
Re-setting Commitment
4.5.1 Proposal Notices
(A) On a date falling no later than four months before the commencement
of each Relevant Period (other than the first Relevant Period), the
Company must issue a notice (the "Initial Proposal Notice") to the
Lender setting out its proposal for the amount of the Commitment which
should apply for that Relevant Period.
(B) On a date falling no later than two months before the commencement of
each Relevant Period (other than the first Relevant Period), the
Company may issue a further notice (the "Further Proposal Notice") to
the Lender setting out a revised proposal for the amount of the
Commitment which should apply for that Relevant Period.
(C) At any time during each Relevant Period, the Company may request
that the Commitment applicable to that Relevant Period be increased to
an amount not exceeding the Maximum Commitment by issuing a
notice to the Lender (an "Interim Proposal Notice") setting out the
Company's proposal for the amount of the Commitment which should
apply to that Relevant Period following such an increase.
(D) For the purposes of this Agreement, "Proposal Notice" means any of
the notices issued by the Company under this Clause 4.5.1.
4.5.2 Content of Proposal Notices
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(B)
(Cc)
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Each Proposal Notice must be accompanied by:
(1) all such documents, information and evidence as may be
necessary to support the Commitment proposed and any other
information contained in such Proposal Notice (including,
without limitation, (i) any information relating. to the funding
requirements of the Group and the sources of committed
funding for the Relevant Period to which that Proposal Notice
relates and (ii) any Relevant Estimates (together with any
supporting information relating thereto), the identity. of each
government department that provided the Relevant Estimates
and relevant contact details for such government department);
and
(2) any other information as the Lender may reasonably request in
order to assess the amount of the Commitment to apply for the
Relevant Period to which such Proposal Notice relates.
Each Proposal Notice must specify:
(1) the Commitment which the Company proposes should apply;
(2) the Gross Borrowings; and
(3) the Gross Repayments,
in each case, for the Relevant Period to which that Proposal Notice
relates.
The amount of the Commitment proposed by the Company in any
Proposal Notice must not exceed the Maximum Commitment.
For the purposes of this Agreement:
(1) "Gross Borrowings" means:
(a) in relation to each Initial Proposal Notice and each
Further Proposal Notice, the aggregate amount of the
Advances that are projected to be made in the Relevant
Period to which that Proposal Notice relates; and
(b) in relation to each Interim Proposal Notice, the
aggregate amount of (a) the Advances that have been
made and (b) the Advances that are projected to be
made, in each case, in the Relevant Period to which
that Proposal Notice relates.
(2) "Gross Repayments" means:
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(a) in relation to each Initial Proposal Notice and each
Further Proposal Notice, the aggregate amount of the
Advances that are projected to be repaid in the
Relevant Period to which that Proposal Notice relates;
and
(b) in relation to each Interim Proposal Notice, the
aggregate amount of (a) the Advances that have been
repaid and (b) the Advances that are projected to be
repaid, in each case, in the Relevant Period to which
that Proposal Notice relates.
4.5.3 Additional content - inaccurate estimates
(A)
(B)
Each Interim Proposal Notice must specify the extent to which the
relevant increase in Commitment sought pursuant to such Interim
Proposal Notice is required as a result of the then current Commitment
being set on the basis of inaccurate Relevant Estimates.
Each Further Proposal Notice that contains a proposed Commitment
("current proposed amount") which exceeds the Commitment
proposed in the preceding Initial Proposal Notice (the "initial proposed
amount") must specify the extent to which the difference between the
current and the initial proposed amounts is required as a result of the
initial proposed amount being proposed on the basis of inaccurate
Relevant Estimates.
Confirming Commitment
(A)
(B)
(C)
As soon as reasonably practicable after the issue of each Proposal
Notice (other than any Initial Proposal Notice), the Lender shall confirm
to the Company whether the Lender will need to seek any necessary
approvals from Parliament with respect to the Commitment, Gross
Borrowings and/or Gross Repayments specified in that Proposal Notice.
If the Company has issued an Initial Proposal Notice or any other
Proposal Notice in respect of which the Lender is required to seek
necessary approvals from Parliament, the Lender shall (subject to
Clause 3.4 (Parliamentary approval)) respond to that Proposal Notice
by issuing to the Company, no later than ten Business Days after the
date on which the Lender receives the relevant approvals from
Parliament, a notice confirming the Commitment for the Relevant Period
to which that Proposal Notice relates.
If the Company has issued a Proposal Notice (not being an Initial
Proposal Notice) in respect of which the Lender is not required to seek
any necessary approvals from Parliament, the Lender shall, within ten
Business Days of having considered all such information provided by
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(E)
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the Company pursuant to Clause 4.5.2 (Content of Proposal Notices)
and/or Clause 4.5.3 (Additional content — inaccurate estimates),
respond to that Proposal Notice by issuing to the Company a notice
confirming the Commitment for the Relevant Period to which that
Proposal Notice relates.
The amount of the Commitment confirmed by the Lender in each notice
issued by it under Clause 4.5.4 (B) or (C) (each, a "Confirmation
Notice") must:
(1) not exceed the Maximum Commitment; and
(2) subject to Clause 4.5.5 (Setting a lower Commitment), be equal
to the Commitment proposed in the relevant Proposal Notice in
response to which such Confirmation Notice is issued.
In the case of (a) each Confirmation Notice issued in response to an
Initial Proposal Notice or (b) each Confirmation Notice (issued prior to
the commencement of the Relevant Period to which it relates) in
response to any Further Proposal Notice, the Commitment specified in
such Confirmation Notice shall, subject to Clause 4.5.5 (Setting a lower
Commitment), automatically be the Commitment for the Relevant
Period to which such Confirmation Notice relates on the first day of that
Relevant Period.
In the case of any other Confirmation Notice, the Commitment specified
in such Confirmation Notice shall, subject to Clause 4.5.5 (Setting a
lower Commitment), apply to the Relevant Period to which such
Confirmation Notice relates on and from the effective date specified in
such Confirmation Notice.
45.5 Setting a lower Commitment
(A)
If the Lender can demonstrate (by reference to the information provided
to it in connection with this Agreement) that the amount of Commitment
specified in any Proposal Notice exceeds (to a material extent) the
Funding Requirement for the Relevant Period to which that Proposal
Notice relates, the Lender shall be entitled to issue a Confirmation
Notice which confirms an amount of Commitment which is less than that
proposed in the relevant Proposal Notice provided that such amount
shall not, in any event, be less than:
(1) the Funding Requirement (determined by the Lender, acting
reasonably in consultation with the Company) for the Relevant
Period to which that Proposal Notice relates;
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in the case of any Confirmation Notice issued in response to an
Interim Proposal Notice, the Commitment then current on the
date of issue of that Interim Proposal Notice; or
in the case of any Confirmation Notice issued (after the
commencement of the Relevant Period to which that
Confirmation Notice relates) in response to any Further
Proposal Notice that specifies a proposed Commitment that is
equal to or more than the Commitment (the "initial
Commitment’) as at the first day of that Relevant Period, that
initial Commitment.
If the Lender issues a Confirmation Notice which confirms an amount of
Commitment which is less than that proposed in the relevant Proposal
Notice in response to which such Confirmation Notice has been issued
then:
(1)
(2)
(3)
at any time within 15 days after the Lender has issued such a
Confirmation Notice, the Company shall be entitled by notice in
writing to the Lender to object to such confirmation, and to refer
to an independent firm of accountants the determination of the
amount of the Funding Requirement, such firm of accountants
to be agreed between the Company and the Lender within 15
days of delivery of such notice of objection by the Company or,
in the absence of agreement within such 15 day period,
selected by the President of the Institute of Chartered
Accountants in England and Wales (the "Expert");
until the Expert shall have made his determination, the amount
of the Commitment which shall apply to the Relevant Period in
respect of which the determination is being made shall be the
amount confirmed by the Lender in its Confirmation Notice;
upon determination of the amount of the Funding Requirement
by the Expert, the amount of the Commitment which shall apply
to the Relevant Period in respect of which the determination has
been made shall, unless the Company and the Lender agree
that it shall be another amount, be the amount of the Funding
Requirement determined by the Expert.
If the Expert determines that:
(1)
the Funding Requirement is equal to or more than the
Commitment proposed by the Company in the relevant
Proposal Notice, the Lender shall pay all costs and expenses in
connection with the determination by the Expert under this
Clause 4.5.5;
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(2) the Funding Requirement is equal to or less than the
Commitment confirmed by the Lender in the relevant
Confirmation Notice, the Company shall pay all costs and
expenses in connection with the determination by the Expert
under this Clause 4.5.5; or
(3) the Funding Requirement is greater than the Commitment
confirmed by the Lender in the relevant Confirmation Notice but
less than the Commitment proposed in the relevant Proposal
Notice, the costs and expenses of the Expert in connection with
the determination under this Clause 4.5.5 shall be paid by the
Company and the Lender in such proportions as shall be set by
the Expert, but which shall be in proportion to the degree to
which the estimate of the Funding Requirement put forward by
each of the Company and the Lender differs from the Funding
Requirement determined by the Lender.
4.5.6 Updating information
4.5.7
(A)
(B)
If the Company becomes aware at any time that the figures for Gross
Borrowings and/or Gross Repayments that it last provided to the Lender
under this Clause 4.5 have ceased to be accurate or are otherwise in
need of updating, it must promptly inform the Lender of the same and
supply any information relating thereto that the Lender may reasonably
request.
Without prejudice to Clause 4.5.6(A), if the Lender so requests from
time to time, the Company shall provide to the Lender such updated
information as the Lender may reasonably request in relation to the
figures for Gross Borrowings and/or Gross Repayments which the
Company last provided to the Lender under this Clause 4.5.
No application
The provisions of Clause 21 (Timing of Consents) shall not apply to the
procedures contemplated by this Clause 4.5.
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5.2
6.1
REPAYMENT
Maturity Date
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REPAYMENT, PREPAYMENT AND CANCELLATION
The Borrowers shall repay each Advance and thereby redeem the Debt Securities
relating thereto on the Maturity Date for that Advance.
Cancellation of Debt Securities
Upon such repayment, each Debt Security relating to the Advance so repaid under
Clause 5.1 (Maturity Date) shall automatically be cancelled.
PREPAYMENT AND CANCELLATION
illegality
6.1.1
If it becomes unlawful in any applicable jurisdiction for the Lender to perform
any of its obligations as contemplated by the Finance Documents or to fund or
maintain its participation in any Advance:
(A)
(B)
(C)
the Lender shall promptly notify the Company upon becoming aware of
that event;
upon the Lender so notifying the Company, the Commitments will be
immediately cancelled; and
each Borrower shall repay each Advance (and redeem any Debt
Securities relating thereto) made to it on the last day of the Interest
Period for that Advance occurring after the Lender has notified the
Company or, if earlier, the date specified by the Lender in the notice
delivered to the Company (being no earlier than the last day of any
applicable grace period permitted by law).
If it becomes unlawful in any applicable jurisdiction for a Borrower to perform
any of its obligations as contemplated by the Finance Documents:
(A)
(B)
the Company shall promptly notify the Lender upon becoming aware of
that event; and
such Borrower shall repay each Advance (and redeem any Debt
Securities relating thereto) made to it on the last day of the Interest
Period for that Advance occurring after the Company has notified the
Lender or, if earlier, the date specified by the Company in the notice
delivered to the Lender (being no earlier than the last day of any
applicable grace period permitted by law).
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6.3
6.4
6.5
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Voluntary cancellation
The Company may at any time during each Relevant Period, if it gives the Lender not
less than five Business Days' (or such shorter period as the Lender may agree) prior
notice, cancel the whole or any part (being a minimum amount of £1,000,000 and
integral multiples thereof) of the Available Commitment for that Relevant Period. This
Clause shall not affect any rights which the Company has under Clause 4.5 (Re-setting
Commitment).
Voluntary prepayment of Advances
A Borrower to which an Advance has been made may, if it gives the Lender not less
than five Business Days' (or such shorter period as the Lender may agree) prior notice,
prepay the whole of any Advance (and thereby redeem the Debt Securities relating
thereto) prior to its Maturity Date (provided that no Advance may be prepaid under this
Clause 6.3 on and from the date falling seven days prior to its Maturity Date).
Redemption on last day of Relevant Period
6.4.1 If the Commitment relating to a Relevant Period (the “current Relevant
Period") is at any time more than the Commitment for the next Relevant Period,
on the last Business Day of the current Relevant Period, the Borrowers shall
repay the Advance(s) outstanding on that day (and thereby redeem the Debt
Securities relating thereto) in an amount equal to the difference between the
Commitment for the current Relevant Period and the Commitment for the next
Relevant Period.
6.4.2 The Advance(s) (or part thereof) to be repaid shall be determined by the
Company acting reasonably (in consultation with the Lender).
Prepayment on change of control
6.5.1 The following events shall constitute a "Change of Control Event" for the
purposes of this Clause 6.5:
(A) Holdings ceases to control the Company or any person or group of
persons acting in concert gains control of the Company; or
(B) the Crown ceases to control Holdings or any person or group of
persons acting in concert gains control of Holdings.
6.5.2 For the purposes of this Clause 6.5:
“control” has the meaning given to such term in section 416 of the Income and
Corporation Taxes Act 1988; and
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“acting in concert" has the meaning given to such term in the City Code on
Takeovers and Mergers and the presumptions specified therein in relation to the
term "acting in concert" shall apply to such term as used in this Agreement.
At any time after a Change of Control Event has occurred:
(A) the Lender may notify the Company that it requires repayment and
cancellation in full of the Facility; and
(B) upon the Lender so notifying the Company, the Commitments will be
immediately cancelled in full and the Borrowers shall repay each
Advance (and redeem any Debt Securities relating thereto) on the date
specified by the Lender in such notice.
Restrictions
6.6.1
6.6.2
6.6.3
6.6.4
6.6.5
6.6.6
Any notice of cancellation or prepayment given by any Party under this Clause
6 shall be irrevocable and, unless a contrary indication appears in this
Agreement, shall specify the date or dates upon which the relevant cancellation
or prepayment is to be made and the amount of that cancellation or
prepayment.
Any prepayment under this Agreement shall be made together with accrued
interest on the amount prepaid without premium or penalty. The aggregate
amount to be prepaid or repaid if any Advance (or part thereof) is prepaid or
repaid other than on its Maturity Date shall be determined by the Lender in
accordance with the NPV Formula.
The Borrowers shall not repay or prepay all or any part of the Advances or
cancel all or any part of the Commitments except at the times and in the manner
expressly provided for in this Agreement.
No amount of the Commitment cancelled under this Agreement in any Relevant
Period may be subsequently reinstated in that Relevant Period other than (i) in
accordance with Clause 4.5 (Re-setting Commitment) or (ii) otherwise with the
Lender's consent.
Upon the repayment or prepayment of all or any part of any Advance pursuant
to this Clause 6, the Debt Securities in respect of such Advance shall be
automatically cancelled (to the extent of the amount so repaid or prepaid) and
the nominal amount of the relevant Debt Securities shall be deemed to be
reduced accordingly.
Without prejudice to Clause 6.6.5, if only part of any Advance has been repaid
or prepaid pursuant to this Clause 6, the Company shall, if the Lender so
requests, issue, or procure the issue of, a replacement Debt Security in respect
of the aggregate amount of the Advance which remains outstanding. Such
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replacement Debt Security shall be issued forthwith upon the Lender
surrendering the Debt Securities relating to the Advance so repaid or prepaid.
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7.3
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COSTS OF UTILISATION
INTEREST
Calculation of interest
7.44
The rate of interest on each Long Term Advance for each Interest Period is the
percentage rate per annum which is the aggregate of:
(A) the Margin; and
(B) the Gilt Rate applicable to such Advance.
The rate of interest on each Short Term Advance for each Interest Period is the
percentage rate per annum which is the aggregate of:
(A) the Margin; and
(B) —_ LIBOR.
Payment of interest
The Borrower to which an Advance has been made shall pay accrued interest on that
Advance on the first Business Day following the expiry of each Interest Period relating
to that Advance.
Default interest
7.34
7.3.2
If an Obligor fails to pay any amount payable by it under a Finance Document
on its due date, interest shall accrue on the overdue amount from the due date
up to the date of actual payment (both before and after judgment) at a rate
which, subject to Clause 7.3.2 below, is one per cent. higher than the rate which
would have been payable if the overdue amount had, during the period of non
payment, constituted an Advance in the currency of the overdue amount for
successive Interest Periods, each of a duration selected by the Lender (acting
reasonably). Any interest accruing under this Clause 7.3 shall be immediately
payable by the Obligor on demand by the Lender.
lf any overdue amount consists of all or part of an Advance which became due
on a day which was not the last day of an Interest Period relating to that
Advance:
(A) the first Interest Period for that overdue amount shall have a duration
equal to the unexpired portion of the current Interest Period relating to
that Advance; and
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8.2
7.3.3
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(B) the rate of interest applying to the overdue amount during that first
Interest Period shall be one per cent. higher than the rate which would
have applied if the overdue amount had not become due.
Default interest (if unpaid) arising on an overdue amount will be compounded
with the overdue amount at the end of each Interest Period applicable to that
overdue amount but will remain immediately due and payable.
Notification of rates of interest
The Lender shall promptly notify the relevant Borrower of the determination of a rate of
interest under this Agreement.
Changes to the calculation of interest
7.51
7.5.2
FEES
If LIBOR is to be determined by reference to the Reference Banks but a
Reference Bank does not supply a quotation by 11.00 a.m. on the Quotation
Day, the applicable LIBOR shall be determined on the basis of the quotations of
the remaining Reference Banks.
If at or about noon on the Quotation Day for the relevant Interest Period the
Screen Rate is not available and none or only one of the Reference Banks
supplies a rate to the Lender to determine LIBOR for the relevant Interest
Period and the Lender or the Company so requires, the Lender and the
Company shall enter into negotiations (for a period of not more than fifteen
days) with a view to agreeing a substitute basis for determining the rate of
interest.
Commitment fee
8.1.1
The Company shall pay to the Lender a commitment fee computed at the rate
of 0.125 per cent. per annum on the Lender's Available Commitment (if any) for
the Availability Period.
The accrued commitment fee is payable on the last day of each successive
period of three months which ends during the Availability Period, on the last day
of the Availability Period and, if the Lender's Commitment is cancelled in full
during the Availability Period, on the amount of that cancelled Commitment at
the time the cancellation is effective.
Additional commitment fee
8.2.1
If, following the submission by the Company of any Further Proposal Notice or
Interim Proposal Notice under Clause 4.5 (Re-setting Commitment), the
Commitment for any Relevant Period is increased during such Relevant Period
and save to the extent that the Company can demonstrate to the reasonable
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satisfaction of the Lender that such an increase is required as a result of the
Commitment (prior to such increase taking effect) being set on the basis of
inaccurate Relevant Estimates, the Company shall pay to the Lender an
additional commitment fee computed at the rate of 0.125 per cent. per annum
on the difference between the Commitment so increased and the Commitment
immediately prior to such increase taking effect in accordance with Clause 4.5
(Re-setting Commitment).
8.2.2 The additional commitment fee referred to in Clause 8.2.1 shall:
(A) accrue in the period from and including the first day of the then current
Relevant Period to and including the date (the "effective date") on which
the relevant increased Commitment takes effect pursuant to Clause
4.5.4(F) (Confirming Commitment) or, as the case may be, Clause
4.5.5(B)(3) (Setting a lower Commitment); and
(B) be payable on the effective date or, if the effective date is not a
Business Day, the next Business Day falling thereafter.
8.3 Arrangement fee
The Company shall pay to the Lender an arrangement fee of £1,300,000 on or before
the date of this Agreement payment of which is acknowledged by the Lender.
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9.2
10.
10.1
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ADDITIONAL PAYMENT OBLIGATIONS
STAMP TAXES AND VAT
Stamp taxes
The Company shall pay and, within three Business Days of demand, indemnify the
Lender against any cost, loss or liability the Lender incurs in relation to all stamp duty,
registration and other similar documentary Taxes payable in respect of any Finance
Document other than in respect of an assignment or transfer by the Lender of its rights
and/or obligations under any such Finance Document.
Value added tax
9.2.1
9.2.2
All consideration expressed to be payable under a Finance Document by any
Party to the Lender shall be deemed to be exclusive of any VAT. If VAT is
chargeable on any supply made by the Lender to any Party in connection with a
Finance Document, that Party shall pay to the Lender (in addition to and at the
same time as paying the consideration) an amount equal to the amount of the
VAT.
Where a Finance Document requires any Party to reimburse the Lender for any
costs or expenses, that Party shall also at the same time pay and indemnify the
Lender against all VAT incurred by the Lender in respect of the costs or
expenses to the extent that the Lender reasonably determines that it is not
entitled to credit or repayment of the VAT.
OTHER INDEMNITIES
Currency indemnity
10.1.1. If any sum due from an Obligor under the Finance Documents (a "Sum"), or any
order, judgment or award given or made in relation to a Sum, has to be
converted from the currency (the "First Currency") in which that Sum is
payable into another currency (the "Second Currency") for the purpose of:
(A) making or filing a claim or proof against that Obligor; or
(B) obtaining or enforcing an order, judgment or award in relation to any
litigation or-arbitration proceedings,
that Obligor shall, as an independent obligation, within five Business Days of
demand, indemnify the Lender against any cost, loss or liability arising out of or
as a result of the conversion including any discrepancy between (i) the rate of
exchange used to convert that Sum from the First Currency into the Second
Currency and (ii) the rate or rates of exchange available to that person at the
time of its receipt of that Sum.
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11.
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10.1.2 Each Obligor waives any right it may have in any jurisdiction to pay any amount
under the Finance Documents in a currency or currency unit other than that in
which it is expressed to be payable.
Other indemnities
The Company shall (or shall procure that an Obligor will), within three Business Days of
demand, indemnify the Lender against any cost, loss or liability incurred by the Lender
as a direct result of:
10.2.1 the occurrence of any Event of Default;
10.2.2 a failure by an Obligor to pay any amount due under a Finance Document on its
due date;
10.2.3 funding, or making arrangements to fund, its participation in an Advance
requested by a Borrower in a Utilisation Request but not made by reason of a
Default or an act or omission of an Obligor; or
10.2.4 an Advance (or part of an Advance) not being prepaid in accordance with a
notice of prepayment given by a Borrower or the Company.
Indemnity to the Lender
The Company shall, within 30 days of demand, indemnify the Lender against any cost,
loss or liability incurred by the Lender (acting reasonably) as a direct result of:
10.3.1 investigating any event which it reasonably believes is a Default; or
10.3.2 acting or relying on any notice, request or instruction which it reasonably
believes to be genuine, correct and appropriately authorised by an Obligor.
MITIGATION BY THE LENDER
Mitigation
11.1.1 The Lender shall, in consultation with the Company, take all reasonable steps to
mitigate any circumstances which arise and which would result in any amount
becoming payable under or pursuant to, or cancelled pursuant to Clause 6.1.1
(illegality).
11.1.2 Clause 11.1.1 above does not in any way limit the obligations of any Obligor
under the Finance Documents.
11.1.3 The Lender shall notify the Company as soon as it becomes aware that any
circumstances of the kind described in Clause 11.1.1 above have arisen.
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Limitation of liability
11.2.1 The Company shall indemnify the Lender for all costs and expenses reasonably
incurred by the Lender as a result of steps taken by it under Clause 11.1
(Mitigation).
11.2.2 The Lender is not obliged to take any steps under Clause 11.1 (Mitigation) if, in
the opinion of the Lender (acting reasonably), to do so might be materially
prejudicial to it.
COSTS AND EXPENSES
Transaction expenses
The Company shall within thirty days of demand pay the Lender the amount of all costs
and expenses (including external legal fees) reasonably incurred by it in connection with
the negotiation, preparation, printing and execution of:
12.1.1. this Agreement and any other documents referred to in this Agreement; and
12.1.2 any other Finance Documents executed after the date of this Agreement,
but shall not be required to pay (a) legal expenses or recharges of the Lender's legal
department or (b) all costs and expenses payable to Deloitte & Touche in relation to the
work done by Deloitte & Touche in the period up to and including the date of this
Agreement.
Amendment costs
If (a) an Obligor requests an amendment, waiver or consent or (b) an amendment is
required pursuant to Clause 22.7 (Change of currency) or the Group Reorganisation
(unless the Group Reorganisation is effected on the instructions of the Lender), the
Company shall, within thirty days of demand, reimburse the Lender for the amount of all
costs and expenses (including legal fees) reasonably incurred by the Lender in
responding to, evaluating, negotiating or complying with that request or requirement.
Enforcement costs
The Company shall, within five Business Days of demand, pay to the Lender the
amount of all costs and expenses (including legal fees) incurred by the Lender in
connection with the enforcement of, or the preservation of any rights under, any Finance
Document.
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13.2
13.4
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GUARANTEE
GUARANTEE AND INDEMNITY
Guarantee and indemnity
Each Guarantor irrevocably and unconditionally jointly and severally:
13.1.1 guarantees to the Lender punctual performance by each Borrower of all that
Borrower's obligations under the Finance Documents;
13.1.2 undertakes with the Lender that whenever a Borrower does not pay any amount
when due under or in connection with any Finance Document, that Guarantor
shall immediately on demand pay that amount as if it were the principal obligor;
and
13.1.3. indemnifies the Lender immediately on demand against any cost, loss or liability
suffered by the Lender if any obligation guaranteed by it is or becomes
unenforceable, invalid or illegal. The amount of the cost, loss or liability shall be
equal to the amount which the Lender would otherwise have been entitled to
recover.
Continuing guarantee
This guarantee is a continuing guarantee and will extend to the ultimate balance of
sums payable by any Obligor under the Finance Documents, regardless of any
intermediate payment or discharge in whole or in part.
Reinstatement
If any payment by an Obligor or any discharge given by the Lender (whether in respect
of the obligations of any Obligor or any security for those obligations or otherwise) is
avoided or reduced as a result of insolvency or any similar event:
13.3.1 the liability of each Obligor shall continue as if the payment, discharge,
avoidance or reduction had not occurred; and
13.3.2 the Lender shall be entitled to recover the value or amount of that security or
payment from each Obligor, as if the payment, discharge, avoidance or
reduction had not occurred.
Waiver of defences
The obligations of each Guarantor under this Clause 13 will not be affected by an act,
omission, matter or thing which, but for this Clause, would reduce, release or prejudice
any of its obligations under this Clause 13 (without limitation and whether or not known
to it or the Lender) including:
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13.6
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13.4.1 any time, waiver or consent granted to, or composition with, any Obligor or
other person;
13.4.2 the release of any other Obligor or any other person under the terms of any
composition or arrangement with any creditor of any member of the Group;
13.4.3. the taking, variation, compromise, exchange, renewal or release of, or refusal or
neglect to perfect, take up or enforce, any rights against, or security over assets
of, any Obligor or other person or any non presentation or non observance of
any formality or other requirement in respect of any instrument or any failure to
realise the full value of any security;
13.4.4 any incapacity or lack of power, authority or legal personality of or dissolution or
change in the members or status of an Obligor or any other person;
13.4.5 any amendment (however fundamental) or replacement of a Finance Document
or any other document or security;
13.4.6 any unenforceability, illegality or invalidity of any obligation of any person under
any Finance Document or any other document or security; or
13.4.7 any insolvency or similar proceedings.
Immediate recourse
Each Guarantor waives any right it may have of first requiring the Lender (or any trustee
or agent on its behalf) to proceed against or enforce any other rights or security or claim
payment from any person before claiming from that Guarantor under this Clause 13.
This waiver applies irrespective of any law or any provision of a Finance Document to
the contrary.
Appropriations
Until all amounts which may be or become payable by the Obligors under or in
connection with the Finance Documents have been irrevocably paid in full, the Lender
(or any trustee or agent on its behalf) may:
13.6.1 refrain from applying or enforcing any other moneys, security or rights held or
received by the Lender (or any trustee or agent on its behalf) in respect of those
amounts, or apply and enforce the same in such manner and order as it sees fit
(whether against those amounts or otherwise) and no Guarantor shall be
entitled to the benefit of the same; and
13.6.2 hold in an interest bearing suspense account any moneys received from any
Guarantor or on account of any Guarantor's liability under this Clause 13.
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13.7 Deferral of Guarantors' rights
Until all amounts which may be or become payable by the Obligors under or in
connection with the Finance Documents have been irrevocably paid in full and unless
the Lender otherwise directs, no Guarantor will exercise any rights which it may have by
reason of performance by it of its obligations under the Finance Documents:
13.7.1 to be indemnified by an Obligor;
13.7.2 to claim any contribution from any other guarantor of any Obligor's obligations
under the Finance Documents; and/or
13.7.3 to take the benefit (in whole or in part and whether by way of subrogation or
otherwise) of any rights of the Lender under the Finance Documents or of any
other guarantee or security taken pursuant to, or in connection with, the Finance
Documents by the Lender.
13.8 Additional security
This guarantee is in addition to and is not in any way prejudiced by any other guarantee
or security now or subsequently held by the Lender.
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14,
14.1
14,2
14.3
14.4
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REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT
REPRESENTATIONS
Each Obligor makes the representations and warranties set out in this Clause 14 (other
than Clause 14.10 (Financial statements) and Clause 14.13 (Material adverse change))
to the Lender on the date of this Agreement.
Status
14.1.1 It is a corporation, duly incorporated and validly existing under the law of its
jurisdiction of incorporation.
14.1.2 It and each of its Principal Subsidiaries has the power to own its assets and
carry on its business as it is being conducted.
Binding obligations
The obligations expressed to be assumed by it in each Finance Document are, subject
to any laws or legal procedures affecting the enforceability of creditors' rights generally
and any other qualifications and reservations set out in any legal opinion delivered
pursuant to Clause 3 (Conditions of Utilisation) or Clause 19 (Changes to the Obligors),
legal, valid, binding and enforceable obligations.
Non conflict with other obligations
The entry into and performance by it of, and the transactions contemplated by, the
Finance Documents do not and will not conflict with:
14.3.1 any law or regulation applicable to it;
14.3.2. its constitutional documents; or
14.3.3 any agreement or instrument binding upon it or any of its assets in a manner
which would reasonably be expected to have a Material Adverse Effect.
Power and authority
It has the power to enter into, perform and deliver, and has taken all necessary action to
authorise its entry into, performance and delivery of, the Finance Documents to which it
is a party and the transactions contemplated for it by those Finance Documents.
Validity and admissibility in evidence
All Authorisations required:
14.5.1 to enable it lawfully to enter into, exercise its rights and comply with its
obligations in the Finance Documents to which it is a party; and
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14.7
14.8
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14.5.2 to make the Finance Documents to which it is a party admissible in evidence in
its jurisdiction of incorporation; and
14.5.3 (save to the extent that not to do so would reasonably be expected not to have
a Material Adverse Effect) to undertake its business and carry on its operations,
have been obtained or effected and are in full force and effect.
No filing
Other than registration of the Security Documents in accordance with section 395 of the
Companies Act 1985, under the law of its jurisdiction of incorporation it is not necessary
that the Finance Documents be filed, recorded or enrolled with any court or other
authority in that jurisdiction.
No default
14.7.1 No Event of Default is continuing or might reasonably be expected to result from
the making of any Utilisation.
14.7.2 No other event or circumstance is outstanding which constitutes a default under
any other agreement or instrument which is binding on it or any of its
Subsidiaries or to which its (or any of its Subsidiaries) assets are subject which
would reasonably be expected to have a Material Adverse Effect.
No misleading information
14.8.1 Any factual information provided in the most recently delivered Information
Package was true and accurate in all material respects as at the date it was
provided or as at the date (if any) at which it is stated.
14.8.2 The financial projections contained in the most recently delivered Information
Package have been prepared on the basis of recent historical information and
on the basis of assumptions which the directors of the Company consider
reasonable. The forecasts, opinions and assumptions contained or made in the
most recently delivered Information Package have been given in good faith and
are based on grounds which the directors of the Company consider reasonable.
Original financial statements
14.9.1 Its’ Original Financial Statements were prepared in accordance with GAAP
consistently applied save as disclosed therein and unless expressly disclosed to
the Lender in writing to the contrary before the date of this Agreement.
14.9.2 Its Original Financial Statements give a true and fair view of its financial
condition as at the end of the relevant financial year and its operations during
the relevant financial year unless expressly disclosed to the Lender in writing to
the contrary before the date of this Agreement.
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14.11
14.12
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14.9.3 Save as previously disclosed in writing to the Lender before the date of this
Agreement, there has been no material adverse change in the business or
financial condition of the Company since 26 March 2006.
Financial statements
14.10.1 Its financial statements and the financial statements of the Group, in each case,
most recently delivered to the Lender pursuant to Clause 15.1 (Financial
statements) have been prepared in accordance with GAAP consistently applied
unless save as disclosed therein and expressly disclosed to the Lender in
writing to the contrary (A) at the time such financial statements were delivered
to the Lender or (B) prior to the date on which this representation is made or
deemed to be made.
14.10.2 Its financial statements and the financial statements of the Group, in each case,
most recently delivered to the Lender pursuant to Clause 15.1 (Financial
Statements) give a true and fair view of its financial condition or, as the case
may be, consolidated financial condition as at the end of the relevant financial
year and its operations during the relevant financial year unless expressly
disclosed to the Lender in writing to the contrary (A) at the time such financial
statements were delivered to the Lender or (B) prior to the date on which this
representation is made or deemed to be made.
No proceedings pending or threatened
Save as disclosed to the Lender in the Disclosure Letter, no litigation, arbitration or
administrative proceedings of or before any court, arbitral body or agency which, if
adversely determined, would have a Material Adverse Effect have (to the best of its
knowledge and belief) been started or threatened against it or any member of the
Group.
Security
14.12.1 It has legal and beneficial title to all or any of the assets over which Security is
or is expressed to be created by it pursuant to any Finance Document.
14.12.2 Save for any Security that it is permitted to grant or permit to subsist pursuant to
Clause 16.3 (Negative pledge), no Security exists over all or any of its assets.
14.12.3lts execution of the Finance Documents and its exercise of its rights and
obligations under the Finance Documents and its entry into the arrangements
contemplated by the Finance Documents will not result in the existence of nor
oblige it to create any Security (other than any Security that it is permitted to
grant or permit to subsist pursuant to Clause 16.3 (Negative pledge)) over all or
any of its assets.
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14.13
14.14
15.
15.1
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14.12.4 Subject to laws or legal procedures affecting the enforceability of creditors rights
generally and any other qualifications and reservations set out in any legal
opinion delivered pursuant to Clause 3.1 (/nitial conditions precedent):
(A) each Security Document to which it is a party (subject to due
registration (to the extent required) under section 395 of the Companies
Act 1985) confers the Security it purports to confer over its assets; and
(B) the Security created under or pursuant to each Security Document to
which it is a party, is not liable to avoidance on liquidation or bankruptcy,
composition or any other similar insolvency proceedings.
Material adverse change
No event or series of events or development and/or change in circumstances has
occurred since the date to which the financial statement(s) most recently delivered to
the Lender under Clause 15.1.1 (Financial statements) or, as the case may be, Clause
15.1.2 (Financial statements) were drawn up which would reasonably be expected to
have a Material Adverse Effect.
Repetition
The Repeating Representations are deemed to be made by each Obligor by reference
to the facts and circumstances then existing (but subject to any matters previously
disclosed by the Company and accepted for the purpose of such disclosure in writing by
the Lender) on:
14.14.1 the date of each Utilisation Request, the Utilisation Date and the first day of
each Interest Period;
14.14.2 each 31 March and 30 September falling in the Availability Period; and
14.14.3 in the case of an Additional Borrower or Guarantor, the day on which the person
becomes an Additional Borrower or Guarantor.
INFORMATION UNDERTAKINGS
The undertakings and provisions in this Clause 15 remain in force from the date of this
Agreement for so long as any amount is outstanding under the Finance Documents or
any Commitment is in force.
Financial statements
The Company shall supply to the Lender (in such number of copies as the Lender may
reasonably request):
15.1.1 as soon as the same are published, but in any event within 120 days after the
end of each of its financial years:
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(A) if consolidated financial statements are produced, the audited
consolidated financial statements of the Group for that financial year;
and
(B) the audited financial statements of each Obligor for that financial year.
15.1.2 as soon as the same are published, but in any event within 90 days after the
end of the first half of each of its financial years, if consolidated financial
statements are produced, the consolidated financial statements of the Group for
that financial half year.
Requirements as to financial statements
The Company shall procure that each set of financial statements of an Obligor delivered
pursuant to Clause 15.1 (Financial statements) is prepared using GAAP, accounting
practices and, in the case of any annual financial statements, financial reference
periods consistent with those applied in the preparation of the Original Financial
Statements for that Obligor unless, in relation to any set of financial statements, the
Company notifies the Lender promptly that there has been a change in GAAP or the
accounting practices or financial reference periods. In such circumstances, the
Company shall:
15.2.1 provide a description of any change necessary for those financial statements to
reflect the GAAP, accounting practices and reference periods upon which that
Obligor's Original Financial Statements were prepared; and
15.2.2 provide sufficient information in form and substance satisfactory to the Lender
(acting reasonably) to enable it to make an accurate comparison between the
financial position indicated in those financial statements and that Obligor's
Original Financial Statements.
Information: miscellaneous
The Company shall supply to the Lender (in such number of copies as the Lender may
reasonably request):
15.3.1 all documents dispatched by the Company to its shareholders (or any class of
them) or its creditors generally at the same time as they are dispatched;
15.3.2 promptly upon becoming aware of them, the details of any litigation, arbitration
or administrative proceedings which have been commenced, are current or
pending against any member of the Group, and which would, if adversely
determined, have a Material Adverse Effect;
15.3.3 a Weekly Report for each Reporting Period as soon as reasonably practicable
and in any event not later than 14 days after expiry of that Reporting Period;
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15.3.4 promptly, such further information regarding the financial condition, business
and operations of any member of the Group as the Lender may reasonably
request; and
15.3.5 from time to time if the Lender so requests, a list of Post Offices and/or Cash
Centres and/or cash centres which are designated as qualifying cash centres
for the purposes of the Company's participation in the Note Circulation Scheme.
Notification of default
15.4.1 Each Obligor shall notify the Lender of any Default (and the steps, if any, being
taken to remedy it) promptly upon becoming aware of its occurrence (unless
that Obligor is aware that a notification has already been provided by another
Obligor).
15.4.2 Promptly upon a request by the Lender, the Company shall supply to the Lender
a certificate signed by two of its directors or senior officers on its behalf
certifying that no Default is continuing (or if a Default is continuing, specifying
the Default and the steps, if any, being taken to remedy it).
15.4.3 The Company shall notify the Lender promptly upon becoming aware of the
occurrence of a material breach of the Framework Agreement by Holdings,
Royal Mail Group or the Company.
New Subsidiaries
15.5.1 The Company shall promptly notify the Lender if it or any Obligor or any of its or
any Obligor's Subsidiaries shall acquire any Principal Subsidiary or form or
cause the formation of a new Principal Subsidiary.
15.5.2 Any notice issued by the Company pursuant to Clause 15.5.1 shall include
reasonable details of the relevant new Subsidiary and the circumstances
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the provision of any further information that the Lender may reasonably request
in relation to such new Subsidiary and/or its acquisition or formation.
Initial implementation of Monitoring Regime
15.6.1 Prior to the first Utilisation Date, the Company must implement and operate a
monitoring regime which complies with:
(A) the principles set out in Schedule 7 (Monitoring Regime); and
(B) the reasonable requirements of the Lender from time to time notified by
it to the Company pursuant to any audit carried out under this Clause
15.6.
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The Lender may at its own cost appoint an independent consultant to carry out
an audit of such monitoring regime prior to its initial implementation.
Accordingly, at all reasonable times prior to the first Utilisation Date and upon
reasonable requests, the Company shall provide and shall ensure that each of
its Subsidiaries and the directors, employees and agents of the Company and
such Subsidiaries provides all such information, access and assistance as the
Lender and/or the appointed independent consultant shall require for the
purpose of such audit.
The monitoring regime shall only be treated as having been implemented for the
purposes of this Agreement if (a) the Lender has received an audit report
(satisfactory to the Lender) from the independent consultant referred to in
Clause 15.6.2 confirming, inter alia, that the regime so implemented complies
with the requirements of Clause 15.6.1; and (b) (where such an audit report
includes any requirements and/or recommendations relating to such monitoring
regime or its implementation) the Lender is satisfied, acting reasonably, that all
such requirements and/or recommendations have been implemented. For the
purposes of this Agreement, the "Monitoring Regime" means the regime so
implemented and in respect of which a satisfactory audit report has been
delivered to the Lender (together with the practices, systems and information
underpinning the same and/or required to produce the Weekly Reports) as the
same may be modified from time to time in accordance with Clause 15.7.1
(Monitoring Regime).
15.7 Monitoring Regime
15.7.1
15.7.2
Following the implementation of the Monitoring Regime, in accordance with
Clause 15.6 (/nitial implementation of Monitoring Regime), each Obligor shall
ensure that it maintains, operates and complies with such Monitoring Regime.
If, pursuant to any audit carried out in accordance with this Clause 15.7, the
Lender (acting reasonably) identifies additional matters that need to be covered
by the Monitoring Regime and/or any other modifications that need to be made
to the Monitoring Regime, it may notify the Company of the same and each
Obligor shall use its reasonable endeavours to ensure that the Monitoring
Regime is modified to take account of the additional matters and/or other
modifications so notified by the Lender, in each case, to the reasonable
satisfaction of the Lender. Following any such modification of the Monitoring
Regime, each Obligor shall ensure that it maintains, operates and complies with
the Monitoring Regime so modified.
The Company shall (at its own expense) commission annual audits of the
Monitoring Regime relating to each Relevant Period from Ernst & Young or such
other auditor of the Company as shall be approved by the Lender and supply to
the Lender audit reports (in such form and containing such information as the
Lender may reasonably require) of the result of such audits. Each audit report
carried out pursuant to this Clause 15.7.2 must be delivered to the Lender no
later than 120 days after the expiry of such Relevant Period.
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15.7.3 Without prejudice to Clause 15.7.2, the Lender may, at any time, and at its own
cost appoint an independent consultant to carry out an audit of the Monitoring
Regime and the Company (without prejudice to Clause 15.7.4) shall provide
and shall ensure that each of its Subsidiaries and the directors, employees and
agents of the Company and such Subsidiaries provides all such assistance and
information as the Lender and/or the appointed independent consultant shall
reasonably require for the purpose of such audit.
15.7.4 At all reasonable times and upon reasonable requests, each Obligor (and the
Company shall procure that each member of the Group) must:
(A) allow the Lender, the National Audit Office, any appointed
representative of the Lender and/or the National Audit Office or any
independent consultant appointed by the Lender pursuant to Clause
15.7.3 (each, a "Relevant Person") access to its offices, files, records
and computing systems and its directors, employees and/or agents;
(B) provide and ensure that its directors, employees and agents provide all
such assistance and information as any Relevant Person may
reasonably require,
in each case, for the purposes of checking the Monitoring Regime and/or
verifying any information produced pursuant to the Monitoring Regime
(including, without limitation, the Weekly Reports).
16. GENERAL UNDERTAKINGS
The undertakings and provisions in this Clause 16 remain in force from the date of this
Agreement for so long as any amount is outstanding under the Finance Documents or
any Commitment is in force. The Company may in accordance with Clause 21 (Timing
of Consents) seek consent from the Lender to take any action that would otherwise be
restricted by the undertakings in this Clause 16.
16.1 Authorisations
Each Obligor shall promptly obtain, comply with and do all that is necessary to maintain
in full force and effect any Authorisation required under any law or regulation of its
jurisdiction of incorporation to enable it to perform its obligations under the Finance
Documents, to ensure the legality, validity, enforceability and in the case of an Obligor
that is not incorporated in England and Wales, admissibility in evidence in its jurisdiction
of incorporation, of any Finance Document.
16.2 Compliance with laws
Each Obligor shall comply in all respects with all laws to which it may be subject, if
failure so to comply would have a material adverse effect on its ability to perform its
obligations under the Finance Documents.
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16.3 Negative pledge
16.3.1
16.3.2
16.3.3
16.3.4
No Obligor shall (and the Company shall ensure that no other member of the
Group will) create or permit to subsist any Security over any (i) Cash Items; (ii)
Near-Cash Items; (iii) Authorised Investments made pursuant to Clause 16.12
(Authorised investments); (iv) Client Bank Accounts (or sums standing to the
credit thereto); or (v) its interests relating to the assets referred to in (i), (ii), (iii)
and (iv) (together, the "Key Assets").
No Obligor shall and the Company shall ensure that no other member of the
Group will:
(A) transfer or otherwise dispose of any of its Key Assets on terms whereby
they are or may be leased to or re acquired by an Obligor or any other
member of the Group;
(B) sell, transfer or otherwise dispose of any of its Key Assets on recourse
terms;
(C) enter into any arrangement with respect to any of its Key Assets under
which money or the benefit of a bank or other account may be applied,
set off or made subject to a combination of accounts; or
(D) enter into any other preferential arrangement with respect to any of its
Key Assets having a similar effect,
in circumstances where the arrangement or transaction is entered into primarily
as a method of raising Financial Indebtedness or of financing the acquisition of
an asset.
Clauses 16.3.1 and 16.3.2 shall not apply to:
(A) any Security granted or other arrangement falling under Clause 16.3.2
entered into pursuant to any Finance Document;
(B) any lien arising by operation of law and in the ordinary course of
business; and
(C) any netting or set-off arrangement entered into by the Company in the
ordinary course of its financing arrangements for the purpose of netting
or setting off debit or credit balances.
As soon as reasonably practicable after the same shall have been granted or
entered into, the Company shall:
(A) notify the Lender of any Security that has been granted or entered into
by it or any of its Subsidiaries in accordance with this Clause 16.3 or
otherwise; and
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if so requested by the Lender, provide copies of any documents relating
thereto.
16.4 Financial Indebtedness
16.4.1 Except as provided below, no member of the Group may incur any Financial
Indebtedness.
16.4.2 Clause 16.4.1 does not apply to:
(A)
(B)
(C)
(D)
()
(F)
(S)
(H)
any Financial Indebtedness incurred under the Finance Documents;
any Financial Indebtedness arising from the purchase of goods and
services by any member of the Group on normal credit terms in the
ordinary course of business provided that such Financial Indebtedness
is discharged on or before the expiry of the relevant period of credit;
any Financial Indebtedness owed to Royal Mail Group which has been
provided by Royal Mail Group in accordance with clause 18.6.6 of the
credit agreement dated 20 December 2002 as amended as restated on
19 March 2007 between (among others) Royal Mail Group and the
Lender (provided that such Financial Indebtedness does not at any time
exceed £250,000,000 (or its equivalent) in aggregate and is discharged
and/or repaid no later than 28 days after it has been incurred);
any intra-day Financial Indebtedness owed to Royal Mail Group or any
other person as a result of Royal Mail Group or such other person
making payments or incurring liabilities on behalf of the Company in
connection with the Note Circulation Scheme;
any Financial Indebtedness incurred on terms whereby such Financial
Indebtedness is expressly subordinated in right of payment to the
Financial Indebtedness under the Finance Documents and the terms of
such subordination are satisfactory to the Lender;
any Financial Indebtedness owed by one member of the Group to
another member of the Group;
on and from the date on which such arrangements replace the
Company's participation in the Note Circulation Scheme, any Financial
Indebtedness incurred as a result of any arrangements entered into with
the approval of the Lender (such approval not to be unreasonably
withheld or delayed) in substitution for the Company's participation in
the Note Circulation Scheme;
any Financial Indebtedness arising in the ordinary course of business
as a result of settlement or reimbursement obligations of the Company
or any of its Subsidiaries by reason of the role played by the Company
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16.4.3
Loans
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or such Subsidiary as an intermediary in respect of the handling of
Cash Items and Near-Cash Items;
(I) to the extent that the same is discharged at the close of the relevant
day, any intra-day Financial Indebtedness arising as a result of a debit
balance existing with respect to any of the Company's bank accounts;
(J) Financial Indebtedness arising pursuant to any leasing arrangements as
described in paragraph (D) of the definition of Financial Indebtedness
(‘Permitted Leasing Indebtedness’), provided that such Permitted
Leasing Indebtedness does not exceed, at any time, an aggregate
principal amount of £50,000,000 (or its equivalent); and
(K) Financial Indebtedness (arising other than pursuant to paragraphs (A)
to (J) of this clause 16.4.2) not exceeding, at any time, an aggregate
principal amount of £50,000,000 (or its equivalent), provided that no
Permitted Leasing Indebtedness shall be incurred by POL pursuant to
this paragraph (K).
Prior to incurring any Permitted Leasing Indebtedness, the Company shall
consider and be of the reasonable opinion that such Permitted Leasing
Indebtedness is the most appropriate form of Financial Indebtedness for the
particular business requirement of the Company.
No Obligor shall (and the Company shall ensure that no other member of the Group will)
be the creditor in respect of any Financial Indebtedness except:
16.5.4
16.5.2
16.5.3
16.5.4
16.5.5
in relation to any of its suppliers or customers on normal credit terms in the
ordinary course of its business;
any cash deposits made with financial institutions and, in accordance with the
guidelines and procedures approved by the Lender from time to time, other
entities, in each case, at arm's length and on normal commercial terms as part
of the deposit maker's cash management procedures in the ordinary course of
its business;
Financial Indebtedness permitted to be incurred under Clause 16.4.2(F)
(Financial Indebtedness);
any cash deposits and other investments made in accordance with Clause
16.12 (Authorised investments);
loans to Relevant JVs not exceeding £40,000,000 (when aggregated with the
amount of any subscription for any shares or equity contribution to Relevant JVs
permitted under Clause 16.11 (JVs));
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16.6
16.7
16.8
16.9
16.10
16.11
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16.5.6 loans to employees of members of the Group or to sub-post masters engaged
by the Company, in each case, in the ordinary course of business; and
16.5.7 any Financial Indebtedness arising in the ordinary course of business as a
result of settlement or reimbursement obligations owed to the Company or any
of its Subsidiaries by reason of the role played by the Company or such
Subsidiary as an intermediary in respect of the handling of Cash Items and
Near-Cash Items.
Merger
No Obligor shall enter into any amalgamation, demerger, merger or corporate
reconstruction other than the Group Reorganisation.
Change of business
The Company shall procure that no substantial change is made to the general nature of
the business of the Group from that carried on at the date of this Agreement.
Subsidiaries
The Company shall ensure that each Principal Subsidiary shall continue to be a
Subsidiary of the Company.
Insurance
Each Obligor shall (and the Company shall ensure that each other member of the
Group will) (A) maintain insurances on and in relation to its business and assets with
reputable underwriters or insurance companies and/or (B) self-insure, in the case of (A)
and (B), against such risks and to such extent as is usual for prudent companies
carrying on a business such as that carried on by such Obligor or member of the Group.
Debt Security
Each Obligor shall comply with the terms and conditions of each Debt Security issued
pursuant to this Agreement.
JVs
No Obligor and no member of the Group shall:
16.11.1 enter into any joint venture or outsourcing arrangements without the consent of
the Lender (not to be unreasonably withheld or delayed); and
16.11.2 in any event, subscribe for any shares or other securities issued by or otherwise
provide any equity contributions to any Relevant JVs, other than subscriptions
or equity contributions to Relevant JVs where the amount subscribed or
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contributed does not exceed, when aggregated with loans to Relevant JVs
permitted under Clause 16.5.5 (Loans), £40,000,000.
16.12 Authorised investments
16.12.1 The Company shall from time to time ensure that monies are:
(A) placed on deposit with the DMO pursuant to the Deposit Agreement; or
(B) invested with financial institutions or in money market funds approved
by and on such terms as are approved, in each case, from time to time
by the Lender (including in accordance with the letter dated 8th
November 2001 from Derek Davis of the Lender to Marisa Cassoni of
Royal Mail Group),
in each case, in order to ensure that the aggregate amount of all outstanding
Advances at any time does not exceed the Aggregate Utilisations at such time.
For the purposes of this Agreement, "Authorised Investment" means each
such deposit or investment within paragraphs (A) and (B) of this Clause 16.12.1
16.12.2 For the purposes of this Agreement, “Aggregate Utilisations" on any date
means an amount calculated (without double counting) in accordance with the
following formula:
AU = Cl + NCI + D— RM —A&L Debt
where:
"AU" is the relevant amount of the Aggregate Utilisations on such date;
"CI" is the aggregate amount (calculated in sterling) of Cash Items on such
date;
"NCI" is the aggregate amount (calculated in sterling) of Near-Cash Items on
such date;
"D" is the aggregate amount (calculated in sterling) of deposits and other
investments made pursuant to Clause 16.12.1 on such date;
"RM" is the aggregate amount, if any, (calculated in sterling) of funds provided
by Royal Mail Group within the terms of Clause 16.4.2(C) (Financial
Indebtedness) to the Group on or before such date which (a) have been
specifically provided by Royal Mail Group to enable the Group to fund Cash
Items and/or Near-Cash Items arising in the period ending on such date; (b)
have not been utilised by the Group (or any member thereof) for such purposes
on or before such date; and (c) have not been repaid by the Group (or any
member thereof) on or before such date; and
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"A&L Debt" has the same meaning as in the Intercreditor Agreement.
16.13 Segregation
Each Obligor shall ensure that:
16.13.1 the Group maintains accounting systems and practices, bank accounts,
computing systems, filing and recording systems and practices and other
operational mechanisms, systems and practices which allow:
(A) the liabilities of the members of the Group and/or the assets of the
members of the Group (whether held by a member of the Group or on
its behalf) to be separately identifiable from the liabilities and assets of
(i) Royal Mail Group and Holdings and any of their Subsidiaries that are
not members of the Group or (ii) any other person that is not a member
of the Group (each person referred to in (i) and (ii) being, for the
purposes of this Clause 16.13, a "Third Person"); and
(B) the liabilities and assets relating to or represented by Cash Items and
Near-Cash Items to be separately identifiable from any other liabilities
and/or assets of the Group;
16.13.2 (without prejudice to Clause 16.13.1) all Cash Items and Near-Cash Items are
held and/or dealt with in a manner which will allow the same to be separately
identifiable from (i) any other assets or liabilities of the Group and (ii) any assets
or liabilities of any Third Person;
16.13.3 (without prejudice to Clause 16.13.1) it will not co-mingle or permit to be co-
mingled:
(A) any cash, deposits, investments or other fungible assets held by or on
behalf of any member of the Group with the cash deposits, investments
or other fungible assets of any Third Person; and
(B) any cash, deposits, investments or other fungible assets held by or on
behalf of any member of the Group for the purposes of or in connection
with the funding of Cash Items and Near-Cash Items with cash,
deposits, investments or other fungible assets held by or on behalf of
any member of the Group for any other purposes,
in each case, to the satisfaction of the Lender.
17. EVENTS OF DEFAULT
Each of the events or circumstances set out in Clause 17 is an Event of Default.
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17.41
17.2
17.3
17.5
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Non payment
An Obligor does not pay on the due date any amount payable pursuant to a Finance
Document at the place at and in the currency in which it is expressed to be payable
unless:
17.1.1 its failure to pay is caused by administrative or technical error; and
17.1.2 payment is made within three Business Days of its due date.
Other covenants
An Obligor does not comply with any of Clause 16.3 (Negative pledge), Clause 16.4
(Financial Indebtedness), Clause 16.7 (Change of business) and Clause 16.11 (JVs).
Other obligations
17.3.1 The Company does not comply with any provision of this Agreement or any
other Finance Document (other than those referred to in Clause 15.3.3
(Information: miscellaneous), Clause 17.1 (Non payment) and Clause 17.2
(Other covenants).
17.3.2 No Event of Default under Clause 17.3.1 above will occur if the failure to comply
is capable of remedy and is remedied within 21 Business Days of the Lender
giving notice to the Company of the failure to comply.
Misrepresentation
Any representation or statement made or deemed to be made by any Obligor in the
Finance Documents is or proves to have been incorrect or misleading in any material
respect when made or deemed to be made.
Cross default
17.5.1 Any Financial Indebtedness of any member of the Group is not paid when due
nor within any originally applicable grace period.
17.5.2 Any Financial Indebtedness of any member of the Group is declared to be or
otherwise becomes due and payable prior to its specified maturity as a result of
an event of default (however described).
17.5.3. Any creditor of any member of the Group becomes entitled to declare any
Financial Indebtedness of any member of the Group due and payable prior to its
specified maturity as a result of an event of default (however described).
17.5.4 No Event of Default will occur under this Clause 17.5 if:
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(A) the aggregate amount of Financial Indebtedness falling within Clauses
17.5.1 to 17.5.3 above is less than £10,000,000 (or its equivalent in any
other currency or currencies); or
(B) the Lender is satisfied (acting reasonably) that the relevant member of
the Group is contesting the claim in question in good faith (on the basis
of independent legal advice to the effect that the relevant member of the
Group is more likely than not to succeed in its claim).
Insolvency
17.6.1
17.6.2
A Transaction Party or any Principal Subsidiary is unable or admits inability to
pay its debts as they fall due (save that this shall not apply by virtue only of a
party being deemed unable to pay its debt by section 123(2) of the Insolvency
Act 1986), suspends making payments on all or any class of its debts or, by
reason of actual or anticipated financial difficulties, commences negotiations
with one or more of its creditors with a view to rescheduling all or any class of its
indebtedness.
A moratorium is declared in respect of any indebtedness of any Transaction
Party or Principal Subsidiary.
Insolvency proceedings
Any corporate action, legal proceedings or other procedure or step is taken in relation
to:
47.7.1
17.7.2
17.7.3
17.7.4
the suspension of payments, a moratorium of any indebtedness, winding up,
dissolution, administration or reorganisation (by way of voluntary arrangement,
scheme of arrangement or otherwise) of any Transaction Party or Principal
Subsidiary other than a solvent liquidation or reorganisation of any Principal
Subsidiary which is not a Transaction Party;
a composition, assignment or arrangement with the creditors generally of any
Transaction Party or Principal Subsidiary;
the appointment of a liquidator (other than in respect of a solvent liquidation of a
Principal Subsidiary which is not a Transaction Party), receiver, administrator,
administrative receiver, compulsory manager or other similar officer in respect
of any Transaction Party or Principal Subsidiary or all or a material part of its
assets; or
enforcement of any Security over all or a material part of the assets of any
Transaction Party or Principal Subsidiary,
or any analogous procedure or step is taken in any jurisdiction provided that an Event of
Default under this Clause 17.7 will occur in relation to presentation of a petition for
winding up only if (i) such petition is not discharged or struck out within 30 days or (ii)
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17.9
17.10
17.14
17.12
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the Lender, acting reasonably, is satisfied that a provisional liquidator is reasonably
likely to be appointed within those 30 days as a result of such petition.
Creditors’ process
Any expropriation, attachment, sequestration, distress or execution in respect of
indebtedness exceeding £5,000,000 (or its equivalent) affects any asset or assets of
any Transaction Party or Principal Subsidiary and is not discharged within 30 days.
Ownership of the Obligors
A Transaction Party (other than the Company) is not or ceases to be a Subsidiary of the
Company.
Repudiation
A Transaction Party repudiates a Finance Document.
Cessation of business
Any Transaction Party or Principal Subsidiary ceases or threatens to cease to carry on
the whole or substantially the whole of its business or operations unless, in the case of
any Principal Subsidiary that is not a Transaction Party, all of the assets and liabilities of
the Principal Subsidiary that ceases to carry on the whole or substantially the whole of
its business or operations have been transferred to a Transaction Party or any other
Principal Subsidiary on or before the date on which such cessation of business or
operations takes effect.
Compliance with Framework Agreement
Failure by the Company to comply with any material provisions of the Framework
Agreement within 7 days of the Lender giving notice to the Company of the failure to
comply.
Required Security
17.13.1 Failure by the Company to provide the Lender with a Weekly Report for any
Reporting Period within 16 days of the expiry of that Reporting Period.
17.13.2 If any Weekly Report provided to the Lender demonstrates that the Total
Borrowings on the last day of the Reporting Period to which it relates is more
than the Net Utilisations on that date:
(A) failure by the Company to provide (within 7 days of the date on which
the relevant Weekly Report is provided) any explanation of the reason
for such Total Borrowings exceeding such Net Utilisations;
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(c)
17.14 Acceleration
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failure by the Company to demonstrate (within 7 days of the date on
which the relevant Weekly Report is provided) to the reasonable
satisfaction of the Lender that such Total Borrowings have exceeded
such Net Utilisations for reasons other than a contravention of Clause
2.2 (Purpose) and/or Clause 16.12 (Authorised investments), or
if such Total Borrowings have exceeded such Net Utilisations by reason
of a contravention of Clause 2.2 (Purpose) and/or Clause 16.12
(Authorised investments), failure by the Company to rectify or otherwise
address the matter(s) that has or have resulted in such Total Borrowings
exceeding such Net Utilisations to the reasonable satisfaction of the
Lender within 7 days of the date on which the Lender notifies the
Company that it must rectify or otherwise address such matter(s).
17.14.1On and at any time after the occurrence of an Event of Default which is
continuing the Lender may by notice to the Company:
(A)
(B)
(Cc)
cancel the Commitments, whereupon they shall immediately be
cancelled;
declare that all or part of the Advances, together with accrued interest,
and all other amounts accrued or outstanding under the Finance
Documents be immediately due and payable, whereupon they shall
become immediately due and payable; and/or
declare that all or part of the Advances be payable on demand,
whereupon they shall immediately become payable on demand by the
Lender.
17.14.2 The aggregate amount of principal to be repaid under Clause 17.14.1 above
shall be determined by the Lender in accordance with the NPV Formula.
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18.3
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CHANGES TO PARTIES
TRANSFER BY THE LENDER
Assignments and transfers by the Lender
Subject to this Clause 18, the Lender may:
18.1.1 assign any of its rights; or
18.1.2 transfer by novation any of its rights and obligations, to another governmental
body or to a bank or financial institution (the "New Lender’).
Conditions of assignment or transfer
18.2.1 The consent of the Company is required for an assignment or transfer by the
Lender.
18.2.2 The consent of the Company to an assignment or transfer must not be
unreasonably withheld or delayed. The Company will be deemed to have given
its consent fifteen Business Days after the Lender has requested it unless
consent is expressly refused by the Company within that time.
18.2.3 The transfer of any obligations of the Lender will be effective only if the New
Lender confirms to the Lender and the Company that it undertakes to be bound
by the terms of this Agreement in form and substance reasonably satisfactory to
the Lender and the Company.
Disclosure of information
The Lender may disclose to:
18.3.1 Her Majesty's Treasury and/or DMO;
18.3.2 any person to (or through) whom the Lender assigns or transfers (or with whom
the Lender enters into negotiations with regard to a proposed assignment or
transfer or (or through) such person) all or any of its rights and obligations under
this Agreement and/or any other Finance Documents;
18.3.3 any person to whom, and to the extent that, information is required to be
disclosed by any applicable law or regulation; and/or
18.3.4 any professional adviser of the Lender, Her Majesty's Treasury and/or DMO,
any information about any Obligor, the Group and the Finance Documents as the
Lender shall reasonably consider appropriate, subject to any person referred to in
Clause 18.3.2 entering into a confidentiality undertaking in form and substance
satisfactory to the Company (acting reasonably).
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19.1
19.2
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CHANGES TO THE OBLIGORS
Assignments and transfer by Obligors
No Obligor may assign any of its rights or transfer any of its rights or obligations under
the Finance Documents.
Additional Borrowers
19.2.1 The Company may request that any Holding Company (other than Holdings or
Royal Mail Group) in respect of which the Company is a wholly owned
Subsidiary or any of the Company's wholly owned Subsidiaries becomes an
Additional Borrower.
19.2.2 That Holding Company or Subsidiary shall become an Additional Borrower (a) if
the Lender consents to the same and (b) upon its accession to this Agreement
and any Debt Security on such terms and conditions and the delivery of such
documents, in each case, as the Lender may reasonably require.
Additional Guarantors
19.3.1 If the Lender so requires from time to time, each Obligor shall procure the
accession by any Principal Subsidiary (that is not an Obligor) to this Agreement
and any Debt Security as a Guarantor.
19.3.2 That Principal Subsidiary shall become a Guarantor upon its accession to this
Agreement and any Debt Security on such terms and conditions and the
delivery of such documents, in each case, as the Lender may reasonably
require.
Release of Borrowers and Guarantors
In connection with any person (A) becoming an Additional Borrower in accordance with
Clause 19.2 (Additional Borrowers) or (B) becoming a Guarantor in accordance with
Clause 19.3 (Additional Guarantors) the Lender may, in the case of (A), release an
existing Borrower or existing Borrower(s) from this Agreement in its or their capacity as
such or, in the case of (B), release an existing Guarantor or existing Guarantors from
this Agreement in its or their capacity as such. Such release shall, in each case, be
effected on such terms and conditions and the delivery of such documents as the
Lender may reasonably require.
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20.
20.1
20.2
21.
21.4
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GENERAL PROTECTIONS
FINANCE PARTY
Rights and discretions of the Lender
20.1.1. The Lender may rely on:
(A) any representation, notice or document believed by it to be genuine,
correct and appropriately authorised; and
(B) any statement made by a director, authorised signatory or employee of
any person regarding any matters which may reasonably be assumed
to be within his knowledge or within his power to verify.
20.1.2 The Lender may assume that any notice or request made by the Company
(other than a Utilisation Request) is made on behalf of and with the consent and
knowledge of all the Obligors.
20.1.3 The Lender may act in relation to the Finance Documents through its personnel
and agents.
Exclusion of liability
No Party (other than the Lender) may take any proceedings against any officer,
employee or agent of the Lender in respect of any claim it might have against the
Lender or in respect of any act or omission of any kind by that officer, employee or
agent in relation to any Finance Document and any officer, employee or agent of the
Lender may rely on this Clause.
TIMING OF CONSENTS
Submission of request
21.1.1. If any Obligor wishes to obtain the Lender's consent to any matter in respect of
which the Lender's consent is required to be obtained under the Finance
Documents, such Obligor shall issue a request for such consent in accordance
with Clause 24 (Notices) save that such request shall be delivered to the Lender
at the relevant address personally.
21.1.2 Any request issued under Clause 21.1.1 must:
(A) clearly state that it is important and requires immediate attention;
(B) clearly identify itself as a request served pursuant to this Clause 21 and
that failure to respond within ten Business Days will result in the Lender
being deemed to have given his consent to the matter in question; and
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(C) contain or annex such information as can reasonably be expected to
enable the Lender to consider the matter being proposed.
Response by Lender
21.2.1
21.2.2
21.2.3
On or before the date which falls ten Business Days after the date of receipt by
the Lender of any request issued in accordance with Clause 21.1 (Submission
of request) (the “Initial Expiry Date"), the Lender shall issue a notice to the
Obligor submitting the relevant request stating:
(A) its consent to the matter contained in the request; or
(B) its refusal to consent to the matter contained in the request (together
with, in reasonable detail and on a confidential basis, the reasons for
such refusal); or
(C)- that it requires a further period of ten business days (commencing from
and including the first Business Day after the Initial Expiry Date) in
which to consider the matter.
If on or before the Initial Expiry Date, the Lender issues a notice pursuant to
Clause 21.2.1(C), the Lender shall (on or before that date which falls ten
Business Days after the Initial Expiry Date (the "Subsequent Expiry Date"))
issue a further notice to the Obligor submitting the relevant request stating:
(A) its consent to the matter contained in the request; or
(B) its refusal to consent to the matter contained in the request (together
with, in reasonable detail and on a confidential basis, the reasons for
such refusal).
The Lender may, at any time, request any Obligor submitting a request for
consent under Clause 21.1 (Submission of request) for such information as it
reasonably requires in order to assist it to consider the matter being proposed
and such Obligor shall deliver such information to the Lender as soon as
reasonably practicable thereafter.
Deemed consent
If the Obligor submitting a request for consent under Clause 21.1 (Submission of
request) does not receive any notice pursuant to Clause 21.2.1 (Response by Lender)
on or before the Initial Expiry Date or if the Lender has given notice to the Company
under Clause 21.2.1(C) (Response by Lender) in accordance with Clause 21.2.2
(Response by Lender), on or before the Subsequent Expiry Date, that Obligor shall be
entitled to undertake the matter contained in the request issued by it and the Lender
shall be deemed irrevocably to have given its consent to such matter.
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22.1
22.2
22.3
22.4
22.5
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ADMINISTRATION
PAYMENT MECHANICS
Payments to the Lender
22.1.1 On each date on which an Obligor is required to make a payment under a
Finance Document, that Obligor shall make the same available to the Lender
(unless a contrary indication appears in a Finance Document) for value on the
due date at the time and in such funds specified by the Lender as being
customary at the time for settlement of transactions in the relevant currency in
the place of payment.
22.1.2 Payment shall be made to such account as the Lender specifies.
Distributions by the Lender
Each payment to be made by the Lender under the Finance Documents shall, subject to
Clause 22.3 (Distributions to an Obligor) be made available by it, to such account as (a)
the Party entitled to receive it may notify to the Lender by not less than five Business
Days' notice with a bank in the principal financial centre of the country of that currency
or, (b) in the case of any Advance, may be specified in the Utilisation Request for such.
Distributions to an Obligor
The Lender may (with the consent of the Obligor or in accordance with Clause 23 (Set
Off)) apply any amount received by it for or to be paid to that Obligor in or towards
payment (on the date and in the currency and funds of receipt) of any amount due from
that Obligor under the Finance Documents or in or towards purchase of any amount of
any currency to be so applied.
No set off by Obligors
All payments to be made by an Obligor under the Finance Documents shall be
calculated and be made without (and free and clear of any deduction for) set off or
counterclaim.
Business Days
22.5.1 Any payment which is due to be made on a day that is not a Business Day shall
be made on the next Business Day.
22.5.2 During any permitted extension of the due date for payment of any principal or
Unpaid Sum under this Agreement interest is payable on the principal or Unpaid
Sum at the rate payable on the original due date.
Currency of account
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22.6.1 Subject to Clauses 22.6.2 to 22.6.5 below, sterling is the currency of account
and payment for any sum due from an Obligor under any Finance Document.
22.6.2 A repayment of an Advance or Unpaid Sum or a part of an Advance or Unpaid
Sum shall be made in the currency in which that Advance or Unpaid Sum is
denominated on its due date.
22.6.3 Each payment of interest shall be made in the currency in which the sum in
respect of which the interest is payable was denominated when that interest
accrued.
22.6.4 Each payment in respect of costs, expenses or Taxes shall be made in the
currency in which the costs, expenses or Taxes are incurred.
22.6.5 Any amount expressed to be payable in a currency other than sterling shall be
paid in that other currency.
Change of currency
22.7.1 Unless otherwise prohibited by law, if more than one currency or currency unit
are at the same time recognised by the central bank of any country as the lawful
currency of that country, then:
(A) any reference in the Finance Documents to, and any obligations arising
under the Finance Documents in, the currency of that country shall be
translated into, or paid in, the currency or currency unit of that country
designated by the Lender (after consultation with the Company); and
(B) any translation from one currency or currency unit to another shall be at
the official rate of exchange recognised by the central bank for the
conversion of that currency or currency unit into the other, rounded up
or down by the Lender (acting reasonably).
1.1.2 If a change in any currency of a country occurs, the Parties will enter into
negotiations in good faith with a view to agreeing any amendments to the
Finance Documents necessary to comply with any generally accepted
conventions and market practice in the London interbank market and otherwise
to reflect the change in currency.
SET OFF
The Lender may at any time after notice has been served on the Company under
Clause 17.14 (Acceleration) set off any matured obligation due from an Obligor under
the Finance Documents (to the extent beneficially owned by the Lender) against any
matured obligation owed by the Lender to that Obligor, regardless of the place of
payment, booking branch or currency of either obligation. If the obligations are in
different currencies, the Lender may convert either obligation at a market rate of
exchange in its usual course of business for the purpose of the set off. The Lender will
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give notice to the Company that it has exercised its rights under this Clause 23 promptly
after it has exercised such rights.
NOTICES
Communications in writing
Any communication to be made under or in connection with the Finance Documents
shall be made in writing and, unless otherwise stated, may be made by fax or letter.
Addresses
The address or fax number (and the department or officer, if any, for whose attention the
communication is to be made) of each of the Company and the Lender for any
communication or document to be made or delivered under or in connection with the
Finance Documents is that identified with its name and signature below or, in each
case, any substitute address, fax number or department or officer as the relevant Party
may notify to the other Parties by not less than five Business Days' notice.
Delivery
1.1.3. Any communication or document made or delivered by one person to another
under or in connection with the Finance Documents will only be effective:
(A) if by way of fax, when received in legible form; or
(B) if by way of letter, when it has been left at the relevant address or five
Business Days after being deposited in the post (postage prepaid) in an
envelope addressed to it at that address,
and, if a particular department or officer is specified as part of its address details
provided under Clause 24.2 (Addresses), if addressed to that department or officer or, in
the case of any communication or document made or delivered to the Lender under
Clause 21 (Timing of Consents), if addressed and sent to each of the four officers so
specified.
1.1.4. Any communication or document to be made or delivered to the Lender will be
effective only when actually received by the Lender and then only if it is
expressly marked for the attention of the department or officer(s) identified with
the Lender's signature below (or any substitute department or officer as the
Lender shall specify for this purpose).
1.1.5 Any communication or document made or delivered to the Company in
accordance with this Clause will be deemed to have been made or delivered to
each of the Obligors.
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24.5
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Electronic communication
1.1.6
Any communication to be made between the Company and the Lender under or
in connection with the Finance Documents may be made by electronic mail or
other electronic means, if the Company and the Lender:
(A) agree that, unless and until notified to the contrary, this is to be an
accepted form of communication;
(B) notify each other in writing of their electronic mail address and/or any
other information required to enable the sending and receipt of
information by that means; and
notify each other of any change to their address or any other such Any
electronic communication made between the Lender and the Company will be
effective only when actually received in readable form and only if it is addressed
in such a manner as the Lender or as the case may be the Company shall
specify for this purpose.
English language
1.1.8
1.1.9
Any notice given under or in connection with any Finance Document must be in
English.
All other documents provided under or in connection with any Finance
Document must be:
(A) in English; or
(B) if not in English, and if so required by the Lender, accompanied by a
certified English translation and, in this case, the English translation will
prevail unless the document is a constitutional, statutory or other official
document.
CALCULATIONS AND CERTIFICATES
Accounts
In any litigation or arbitration proceedings arising out of or in connection with a Finance
Document, the entries made in the accounts maintained by the Lender are prima facie
evidence of the matters to which they relate.
Certificates and Determinations
Any certification or determination by the Lender of a rate or amount under any Finance
Document is, in the absence of manifest or proven error, prima facie evidence of the
matters to which it relates.
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28.
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Day count convention
Any interest, commission or fee accruing under a Finance Document will accrue from
day to day and is calculated on the basis of the actual number of days elapsed and a
year of 365 days or, in any case where the practice in the London interbank market
differs, in accordance with that market practice.
PARTIAL INVALIDITY
If, at any time, any provision of the Finance Documents is or becomes illegal, invalid or
unenforceable in any respect under any law of any jurisdiction, neither the legality,
validity or enforceability of the remaining provisions nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction will in any way be
affected or impaired.
REMEDIES AND WAIVERS
No failure to exercise, nor any delay in exercising, on the part of the Lender, any right or
remedy under the Finance Documents shall operate as a waiver, nor shall any single or
partial exercise of any right or remedy prevent any further or other exercise or the
exercise of any other right or remedy. The rights and remedies provided in this
Agreement are cumulative and not exclusive of any rights or remedies provided by law.
AMENDMENTS AND WAIVERS
Any term of any Finance Document may be amended or waived only with the consent of
all the parties to such Finance Document and any such amendment or waiver will be
binding on all Parties.
COUNTERPARTS,
Each Finance Document may be executed in any number of counterparts, and this has
the same effect as if the signatures on the counterparts were on a single copy of the
Finance Document.
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GOVERNING LAW AND ENFORCEMENT
GOVERNING LAW
This Agreement is governed by English law.
ENFORCEMENT
Jurisdiction of English courts
The courts of England have exclusive jurisdiction to settle any dispute arising out of or
in connection with this Agreement (including a dispute regarding the existence, validity
or termination of this Agreement) (a "Dispute").
Convenient Forum
The Parties agree that the courts of England are the most appropriate and convenient
courts to settle Disputes and accordingly no Party will argue to the contrary.
Benefit
This Clause 31 is for the benefit of the Lender only. As a result, the Lender shall not be
prevented from taking proceedings relating to a Dispute in any other courts with
jurisdiction. To the extent allowed by law, the Lender may take concurrent proceedings
in any number of jurisdictions.
Service of process
Without prejudice to any other mode of service allowed under any relevant law, each
Obligor (other than an Obligor incorporated in England and Wales):
31.4.1 irrevocably appoints the Company as its agent for the service of process in
relation to any proceedings before the English courts in connection with any
Finance Document; and
31.4.2 agrees that failure by a process agent to notify the relevant Obligor of the
process will not invalidate the proceedings concerned.
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SCHEDULE 1
Conditions Precedent
1. ORIGINAL OBLIGORS
1.1.1. Acopy of the constitutional documents of the Company.
1.1.2. Acopy ofa resolution of the board of directors of the Company:
(A) approving the terms of, and the transactions contemplated by, the
Finance Documents to which it is a party and resolving that it execute
the Finance Documents to which it is a party;
(B) authorising a specified person or persons to execute the Finance
Documents to which it is a party on its behalf; and
(C) authorising a specified person or persons, on its behalf, to sign and/or
despatch all documents and notices (including, if relevant, any
Utilisation Request) to be signed and/or despatched by it under or in
connection with the Finance Documents to which it is a party.
1.1.3 A specimen of the signature of each person authorised by the resolution
referred to in paragraph 1.1.2 above.
1.1.4. Acertificate of the Company (signed by a director) confirming that borrowing the
Maximum Commitment would not cause any borrowing, guaranteeing or similar
limit binding on it to be exceeded.
1.1.5 Acertificate of an authorised signatory of the Company certifying that each copy
document relating to it specified in this Schedule 1 is correct, complete and in
full force and effect as at a date no earlier than the date of this Agreement.
1.1.6 Acertificate of solvency signed by two directors of the Company.
2. LEGAL OPINIONS
Alegal opinion from the Lender's English legal advisers, Herbert Smith.
3. OTHER DOCUMENTS AND EVIDENCE
3.1.1. The Original Financial Statements of the Company.
3.1.2 Evidence that the fees due from the Company pursuant to Clause 8.3
(Arrangement fee) have been paid.
3.1.3 Originals of the following, duly executed by the parties thereto:
(A) the Security Documents; and
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(B) the Deposit Agreement,
in each case, unconditional and in full force and effect.
(A) evidence that a monitoring regime has been implemented in accordance
with Clause 15.6 (Initial implementation of Monitoring Regime) and (B) a
satisfactory audit report (the "relevant audit report’) (from such independent
consultant as may be appointed pursuant to Clause 15.6.2 (Initial
implementation of Monitoring Regime)) relating thereto.
Evidence that each requirement and/or recommendation specified in the
relevant audit report referred to in paragraph 3.1.4 has been implemented.
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SCHEDULE 2
Utilisation Request
From: [Borrower]
To: [Lender] Fax No: [Lender fax]
[FAO required Lender contacts]
Date: [date request submitted]
Copy: [*] Fax No: [Copy recipient fax]
Dear Sirs
Secretary of State for Business, Innovation & Skills — Post Office Limited - credit facilities
agreement dated 17th October 2003 (as amended and restated on 16 May, 2007; amended
on 18 April 2008; and amended and restated on 24 March 2010) (the “Agreement")
1. We refer to the Agreement. This is a Utilisation Request. Terms defined in the
Agreement have the same meaning in this Utilisation Request unless given a different
meaning in this Utilisation Request.
2. We wish you to make us an Advance on the following terms:
Number: ial
Proposed Utilisation Date: [+] (or, if that is not a Business Day, the
next Business Day)
Amount: [*] or, if less, the Available Facility
Interest Period: tl
Maturity Date (i.e. Repayment due date): Cl
3. We confirm that each condition specified in Clause 3.2.1 (Further conditions precedent)
of the Agreement is satisfied on the date of this Utilisation Request.
4. The proceeds of this Advance should be credited to:
Account No: i}
Sort Code: Cl
Account Name: Ct)
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Yours faithfully
Cl Information to be inserted as required when submitting a request. Such information must be represented in
the preferred format of the Lender, which shall be agreed after discussion with the Borrower.
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SCHEDULE 3
Form of Debt Security
Debt Security No:
Amount £
POST OFFICE LIMITED
(Company number 02154540)
(the "Company")
DEBT SECURITY
Issued pursuant to the credit facilities agreement dated 17th October 2003 between the
Secretary of State for Business, Innovation & Skills (formerly the Secretary of State for Trade
and Industry) and Post Office Limited (as amended and restated on 16 May, 2007; amended on
18 April 2008; and amended and restated on 24 March, 2010) (the "Agreement').
This is a Debt Security for an Advance of £[e].
This Debt Security is issued in accordance with and subject to the Agreement and pursuant to
the Memorandum and Articles of Association of the Company and a resolution of the Directors
of the Company dated 15th October 2003. Unless otherwise defined in this Debt Security,
terms defined in the Agreement shall have the same meanings when used in this Debt Security.
"Conditions" means the conditions that are set out in Schedule 4 of the Agreement and which
shall be deemed to be part of this Debt Security. This Debt Security is issued subject to and
with the benefit of such Conditions.
For the purposes of Condition 3 of the Conditions, the rate of interest on the Advance in respect
of which this Debt Security has been issued is [e]per cent. per annum and shall be payable in
accordance with the Agreement.
The Company will pay to the Secretary of State for Business, Innovation & Skills (or any person
to whom it transfers its interest in this Debt Security in accordance with the Conditions) (the
"Lender") the principal sum of £[e] together with interest thereon in accordance with the
Conditions.
IN WITNESS whereof this Debt Security has been executed on [e].
POST OFFICE LIMITED
By:
SECRETARY OF STATE FOR BUSINESS, INNOVATION & SKILLS
By:
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[eo] Information to be inserted as required when issuing debt security. Such information must be represented in
the preferred format of the Lender, which shall be agreed after discussion with the Borrower.
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SCHEDULE 4
Conditions of Debt Security
DEFINITIONS
In this Debt Security (including these Conditions) (the Agreement") means the credit
facilities agreement dated 17 October 2003 (as amended and restated on 16 May,
2007; amended on 18 April 2008; and amended and restated on 24 March, 2010)
between the Secretary of State for Business, Innovation & Skills (formerly the Secretary
of State for Trade and Industry) and Post Office Limited.
Unless otherwise defined, in this Debt Security (including these Conditions) all defined
terms in the Agreement shall have the same meanings when used herein.
INCORPORATION
The terms and conditions of the Agreement shall be incorporated into this Debt Security
and the parties hereto shall comply with such terms and conditions mutatis mutandis as
if they were set out in full in this Debt Security (with references to the "Lender" being
construed as references to the "Holder").
INTEREST
The rate of interest on the Advance in respect of which this Debt Security has been
issued is [e]’ per cent. per annum and shall be payable in accordance with the
Agreement.
REDEMPTION
The Company shall repay and/or prepay all or part of the Advance in respect of which
this Debt Security has been issued in accordance with the Agreement and this Debt
Security shall be redeemed accordingly upon such repayment and/or prepayment.
CANCELLATION
If this Debt Security is redeemed pursuant to Condition 4 above, it shall be cancelled
forthwith and the Company shall not be permitted to reissue the same. In the event of a
redemption of part of this Debt Security the Company shall, on surrender by the Holder
of this Debt Security, issue to the Holder a replacement Debt Security for a principal
amount representing the outstanding principal amount of the Advance in respect of
which this Debt Security has been issued after such part redemption or repayment has
been made.
* Insert relevant figure calculated by the Lender in accordance with Clause 7.1 (Calculation of interesf) and notified by it
in accordance with Clause 7.4 (Notification of rates and interest).
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TRANSFER
The Holder may transfer its interest in all or part of this Debt Security to any person to
whom the Holder transfers its interests in the Agreement pursuant to Clause 18
(Transfer by the Lender) of the Agreement but not otherwise.
Upon the Holder confirming in writing to the Company that it has transferred its interest
in this Debt Security to another person in accordance with Condition 6.1, the Company
will replace this certificate by issuing (i) a new certificate for the Debt Security to the
transferee and (ii) where the Holder transfers only part of its interest in this Debt
Security, a new certificate (representing the amount of the Advance not transferred) to
the transferor. Upon the issue of such new certificate(s), this certificate shall
automatically be cancelled.
REPLACEMENT DEBT SECURITIES
If this Debt Security is defaced, worn-out, lost or destroyed, it shall be renewed and
replaced by the Company free of charge and (in case of defacement or wearing out) on
delivery up of the old Debt Security certificate.
GOVERNING LAW
This Debt Security is governed by English Law. The Courts of England shall have
exclusive jurisdiction to settle any dispute arising out of or in connection with this Debt
Security (including a dispute regarding the existence, validity or termination of this Debt
Security) (a "Dispute"). The parties hereto agree that the Courts of England are the
most appropriate and convenient courts to settle Disputes and accordingly, no party will
argue to the contrary. This Condition 8 is for the benefit of the Holder only. As a result,
the Holder shall not be prevented from taking proceedings relating to a Dispute in any
other courts with jurisdiction. To the extent allowed by law, the Holder may take
concurrent proceedings in any number of jurisdictions.
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SCHEDULE 5
Full Cancellation of Utilisation Request
Number: tl] Date: [Date cancellation submitted]
From: [Borrower]
To: [Lender] Fax No: [Lender fax]
Copy:
[FAO required Lender contacts]
tl Fax No:[Copy recipient fax]
Dear Sirs
Secretary of State for Business, Innovation & Skills (formerly the Secretary of State for
Trade and Industry) — Post Office Limited - credit facilities agreement dated 17th October
2003 (as amended and restated on 16 May, 2007; amended on 18 April 2008; and
amended and restated on 24 March, 2010) (the "Agreement”)
1.
We refer to the Agreement. This is a Full Cancellation of Utilisation Request ("Full
Cancellation Request"). Terms defined in the Agreement have the same meaning in
this Full Cancellation Request unless given a different meaning in this Full Cancellation
Request.
We wish to cancel in full our previous Utilisation Request reference number [insert
Number] containing the following details:
Proposed Utilisation Date: []
Amount: tr]
We confirm that we wish to cancel the above Utilisation Request as set out in this Full
Cancellation Request with immediate effect.
Yours faithfully,
authorised signatory for [name of relevant Borrower]
le]
Information to be inserted as required when issuing debt security. Such information must be represented in
the preferred format of the Lender, which shall be agreed after discussion with the Borrower.
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SCHEDULE 6
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Part Cancellation of Utilisation Request
Number: tl
From: [Borrower]
To: [Lender]
[FAO required Lender contacts]
Copy: ig]
Dear Sirs
Secretary of State for Business, Innovation & Skills (formerly the Secretary of State for
Trade and Industry) — Post Office Limited - credit facilities agreement dated 17th October
2003 (as amended and restated on 16 May, 2007; amended on 18 April 2008; and
[Date cancellation submitted]
Fax No:[Lender fax]
Fax No:[Copy recipient fax]
amended and restated on 24 March, 2010) (the "Agreement")
1. We refer to the Agreement. This is a Part Cancellation of Utilisation Request ("Part
Cancellation Request"). Terms defined in the Agreement have the same meaning in
this Part Cancellation Request unless given a different meaning in this Part Cancellation
Request.
2. We wish to part cancel our Utilisation Request (number [insert number]) as set out
below with immediate effect:
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INITIAL UTILISATION REQUEST FINAL UTILISATION REQUEST
Number: i} Number: t]
Proposed Utilisation Date: ig} Proposed Utilisation Date: tl
Initial Amount: i] Final Amount: C]
Interest Period: [] Interest Period: tl
Maturity Date (i.e. Repayment Due tl Maturity Date (i.e. t]
Date): Repayment Due Date):
3. We confirm that each condition specified in Clause 3.2.1 (Further conditions precedent)
of the Agreement is satisfied on the date of this Part Cancellation Request.
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4. The proceeds of this Advance set out in this Part Cancellation Request as the "Final
Amount" should be credited to:
Account No: [+]
Sort Code: Cl
Account Name: [+]
Yours faithfully
authorised signatory for [name of relevant Borrower]
ig] Information to be inserted as required when submitting a request. Such information must be represented in
the preferred format of the Lender, which shall be agreed after discussion with the Borrower.
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2.2
2.3
24
2.5
2.6
27
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SCHEDULE 7
Monitoring Regime
The monitoring regime that the Company must set up pursuant to Clause 15.6 (/nitial
implementation of Monitoring Regime) must enable the Lender to monitor (on a weekly
basis) whether the Group's utilisation of the funds made available under this Agreement
are for the purposes specified in Clause 2 (The Facility).
The monitoring regime must enable the Company to provide weekly reports each of
which shows, without double counting, for each Business Day of the Reporting Period to
which such report relates:
the aggregate amount of outstanding Advances on such date ("Total Borrowings");
the aggregate amount (calculated in sterling) of Cash Items on such date;
the aggregate amount (calculated in sterling) of Near-Cash Items on such date;
the aggregate amount (calculated in sterling) of deposits and other investments made
pursuant to Clause 16.12 (Authorised investments) on such date;
the aggregate amount, if any, (calculated in sterling) of funds provided by Royal Mail
Group within the terms of Clause 16.4.2(C) (Financial Indebtedness) to the Group on or
before such date which (a) have been specifically provided by Royal Mail Group to
enable the Group to fund Cash Items and/or Near-Cash Items arising in the period
ending on such date; (b) have not been utilised by the Group (or any member thereof)
for such purposes on or before such date; and (c) have not been repaid by the Group
(or any member thereof) on or before such date;
the amount of the A&L Debt (as defined in the Intercreditor Agreement);
the amount calculated (without double counting) in accordance with the following
formula:
X=Cl+NCl+D—RM—A&L Debt
where:
is the relevant amount to be specified on such date (the "Net Utilisations");
"Cl" is the amount referred to in paragraph 2.2;
"NCI" is the amount referred to in paragraph 2.3;
"D" is the amount referred to in paragraph 2.4;
"RM" is the amount referred to in paragraph 2.6;
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2.9
2.10
2.11
2.12
2.13
3.1
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"A&L Debt" is the amount referred to in paragraph 2.8.
the difference between Total Borrowings and Net Utilisations on such date and (if that
difference is not nil) whether Total Borrowings exceed Net Utilisations or, as the case
may be, whether Net Utilisations exceed Total Borrowings;
the Total Borrowings on such date expressed as a proportion of the Net Utilisations on
such date;
the aggregate amount of all Advances (whether or not still outstanding on such date)
that have been made in the period from and including the first day of the then current
Relevant Period to and including such date;
the aggregate amount of all Advances that have been repaid in the period from and
including the first day of the then current Relevant Period to and including such date;
the aggregate amount (in sterling) of all sums payable by any member of the Group in
relation to any Intermediary Transaction on such date which have not been taken into
account when calculating the amounts referred to in paragraphs 2.2 to 2.8 (inclusive);
and
(in the case of each weekly report relating to the last Relevant Period of each month)
each of the constituent elements of, and/or each amount that has been taken into
account for the purposes of determining, the amounts referred to in paragraphs 2.2 to
2.8 (inclusive) and paragraph 2.14.
The monitoring regime must be supported by banking, information, accounting and
computing systems and practices which:
allow each such weekly report referred to in paragraph 2 above and its contents to be
independently verified at any time;
separate the cash flows of the Company (and its Subsidiaries) from the cash flows of
Royal Mail Group (and its Subsidiaries that are not members of the Group) and
otherwise comply with Clause 16.13 (Segregation).
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SCHEDULE 8
SGEI provided by Post Office Limited
(A) Overarching Network Provisions SGEI
Post Office Limited's public service obligation extends to maintaining a network of post offices
beyond its optimum commercial size and providing SGEIs over that network. Post Office
Limited is required by the Lender to provide a network of post office branches to make available
the SGEls listed in Section B of this Schedule 8. Post Office Limited is entrusted with the
delivery of these SGEls using its network in accordance with the contractual terms which apply
to each service.
(B)
Specific SGEIs to be provided at Post Office Branches
Category of
service
Service provided
Service provided on behalf of
Processing social
benefit and tax
credit payments to
the public.
Cash payment of state benefits
including state pension, child
benefits and tax credits and
encashment of benefit cheques.
Cash payment of benefits and the
issuing of vouchers to eligible
asylum seekers.
Cash payment of health benefits
and the provision of form EHIC
benefits
Department for Work and
Pensions, Social Security Agency
- Northern Ireland, Her Majesty's
Revenue & Customs and financial
institutions
Home Office
Department of Health.
2. I Processing of
national identity and
licensing scheme
applications
Providing passport application
forms for customers to complete
and return to IPS
Checking and authentication of
passport applications and
supporting documentation
Providing vehicle licence
application forms for customers to
complete and return to DVLA, and
budget cash savings schemes for
licence fees.
The Identity and Passport Service
CIPS")
IPS
The Driver and Vehicle Licensing
Agency (“DVLA”)
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Category of
service
Service provided
Service provided on behalf of
Receiving payment for vehicle
licences and Photocard Licences,
and checking Photocard
application forms and supporting
documentation.
DVLA
Universal payment
facilities for public
utility services.
Provision of facilities for payment
of electricity, gas,
telecommunications and water
bills. Payment options include
pre-payment and other budgeting
schemes (e.g. savings stamps).
Provision of facilities for payment
of tax bills and social housing
rents.
Financial institutions, individual
utility service providers, and billing
service providers
Her Majesty's Revenue and
Customs, local authorities and
housing associations.
Universal postal
service.
Provision of postal services which
the universal service provider
(Royal Mail Group Limited) is
required to provide under its postal
services licence
Royal Mail Group Limited.
Universal access to
basic cash and
banking facilities
and Government
savings
instruments,
especially for rural
customers and
those on social
benefits.
Provision of basic community
banking facilities (cashing of
cheques, cash deposit, Post Office
card account and automated cash
withdrawals and deposits) and
cash transmission facilities (postal
orders), in particular to socially
excluded customers. This
includes deposits and withdrawals
of cash by businesses local to
Post Office branches.
Access to Saving Gateway
accounts and Government savings
instruments including Premium
Bonds, Investment Accounts,
Children’s Bonds and National
Savings certificates.
Financial institutions including Her
Majesty’s Treasury, the
Government-owned National
Savings & Investments, the
Department for Work and
Pensions, the Social Security
Agency - Northern Ireland, and
Her Majesty's Revenue &
Customs.
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80
(Cc) Amendments to SGEIs to be provided by Post Office Limited
The SGEls are currently defined in the entrustment letter from the Secretary of State for
Business, Innovation & Skills (formerly the Secretary of State for Trade and Industry) to Post
Office Limited dated 24 March, 2010. If the Secretary of State issues a further entrustment
letter that revises the scope of the SGEls entrusted to Post Office Limited and this amendment
has been approved (if required) by the European Commission under the State aid rules of the
Treaty on the functioning of the European Union, then the above wording will be amended as
necessary to conform with the wording of the entrustment letter applicable to Post Office Limited
at that time.
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81
THIS AGREEMENT has been entered into on the date stated at the beginning of this
Agreement.
POST OFFICE LIMITED
By: Peter Corbett
Contact Details
Address : 148 Old Street
London EC1V 9HQ
FaxNumber = 020 7751 6150
Attention : Charles Colquhoun
With copies to :
Address : 1st Floor
1 Future Walk
West Bars
Chesterfield
Derbyshire S49 1PF
Fax Number : 01246 546 922
Attention : Rod Ismay
and
Address : 100 Victoria Embankment
London
EC4Y 0HQ
Fax Number: 020 7530 7104
Attention : Matthew Rose
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SECRETARY OF STATE FOR BUSINESS, INNOVATION & SKILLS (FORMERLY THE
SECRETARY OF STATE FOR TRADE AND INDUSTRY)
By: Nigel Leese
Contact Details (other than for the purposes of Clause 21 (Timing of Consents)
Address : Shareholder Executive — Royal Mail and Post Office Team
Department for Business, Innovation & Skills
Bay 6-025
1 Victoria Street
London SW1H OET
FaxNumber : 020 7215 5336
Attention : James Baugh, Policy Adviser
Contact Details for the purpose of Clause 21 (Timing of Consents)
Address: As above
Fax number: As above
Attention: James Baugh, Policy Adviser
Address: As above
Fax number: As above
Attention: Robert Faull, Grade 6
Address: As above
Fax number: As above
Attention: Will Gibson, Grade 6
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APPENDIX B
POL ENTRUSTMENT LETTER
LON11018707 Page 26
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Department for Business
Innovation & Skills
BIS Ir
Post Office Limited
148 Old Street
London
EC1V 9HQ
For the attention of: Mike Moores
March 2010
Dear Sirs,
ENTRUSTMENT OF POST OFFICE LIMITED WITH THE DELIVERY OF CERTAIN
PUBLIC SERVICES
Commencement
This letter has effect from the date on which the European Commission confirms that the
schedule of services of general economic interest as set out in Annex A to this letter are
compatible with the requirements on State aid of the Treaty on the functioning of the
European Union (the “Effective Date”).
Existing entrustment letter
Notwithstanding the signing of this letter, in respect of the period prior to the Effective
Date, the provisions of the letter from the Secretary of State to Post Office Limited entitled
“Entrustment of Post Office Limited with the delivery of certain public services’ and dated 8
November 2007 (the “Existing Entrustment Letter’) shall continue in full force and effect
and the provisions of this letter shall be without prejudice to any rights, remedies,
obligations or liabilities of any party accrued under the Existing Entrustment Letter.
The Existing Entrustment Letter shall be terminated on the Effective Date.
Entrustment
This letter contains an overarching ministerial instruction entrusting Post Office Limited
with the provision and delivery of certain public services of general economic interest.
This instruction is legally binding on Post Office Limited and Post Office Limited has signed
this letter in agreement and acknowledgement of this.
Post Office Limited is required to provide a network of post office branches to make
available the services of general economic interest detailed in Annex A (“SGEI”). Post
Office Limited is entrusted with the delivery of these SGEI using its network in accordance
with the contractual terms which apply to each service.
1 Victoria Street, London SW1H OET
http:/www.bis.gov.uk/
Direct Line I GRO a) Fax +44 (0)20 7215 3468
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Innovation & Skills
Specifically, the SGEI are provided under commercial contracts entered into by Post Office
Limited and the Government department or body purchasing the service. In the case of
universal postal services, the services made available at post office branches are ones
which the universal service provider (Royal Mail Group Limited) is required to provide
under the terms of its postal service licence.
The entrustment of the delivery of the SGEI set out in this letter to Post Office Limited does
not replace or change in any way contracts and other agreements under which the terms
of the provision of the individual SGEI are made. Post Office Limited is expected to use
reasonable endeavours to enter into contracts with the Government department or body
purchasing the service to provide the SGEI.
We confirm that Post Office Limited’s public service obligation extends to maintaining a
network of post offices beyond its optimum commercial size and providing services of
general economic interest over that network from the start of its financial year on or around
1st April 2011 until its financial year ending on or around 31st March 2012. Additionally,
as set out in the Post Office Limited Funding Agreement dated on or around the date of
this letter (the “2010 Funding Agreement’), Post Office Limited will, as a minimum, be
required to meet the following access requirements:
. Nationally, 99% of the UK population to be within 3 miles and 90% of the population I
to be within 1 mile of their nearest post office outlet.
. 99% of the total population in deprived urban areas across the UK to be within 1
mile of their nearest post office outlet.
. 95% of the total urban population across the UK to be within 1 mile of their nearest
post office outlet.
. 95% of the total rural population across the UK to be within 3 miles of their nearest
post outlet.
In addition the following criterion will apply at the level of each and every individual I
postcode district, establishing a minimum level of coverage at a very local level. I
. 95% of the population of the postcode district to be within 6 miles of their nearest
post office outlet.
Method of Calculating Compensation
As soon as reasonably practicable following publication of its audited accounts for each of
the Financial Years 2010/11 and 2011/12, Post Office Limited will be required to provide,
in accordance with the 2010 Funding Agreement, a statement (the “NSP Statement’),
accompanied by a supporting statement from independent auditors, to confirm that the
amount of the Social Network Payment made by the Government to Post Office Limited in
respect of that Financial Year under the 2010 Funding Agreement did not exceed the
direct and indirect costs incurred by Post Office Limited in connection with the provision of
SGEI during that Financial Year, including:
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1. all variable costs incurred in providing the SGEI; plus
2. all fixed costs incurred in providing the SGEI; plus
3. such proportion of fixed costs common to both the SGEI and other activities of Post
Office Limited as is appropriate to be allocated to the SGEI (based on generally accepted
cost accounting principles); plus
4. a reasonable profit in providing the SGEI; less
5. the revenues received by Post Office Limited from the SGEI activities,
in each case in respect of the relevant Financial Year.
For the purposes of paragraph 3 above, the fixed costs common to both the SGEI and
other activities of Post Office Limited shall include, without limitation, contributions to the
Royal Mail Group pension fund, interest costs, group central cost allocations, capital
expenditure, contributions to the cost of any employee incentivisation arrangements and
the costs of rationalising the network to maintain a network with optimal coverage for
delivery of SGEI at minimum cost within the funding envelope.
Recovery of Overpayment
Notwithstanding clause 7.2 of the 2010 Funding Agreement, in the event that the NSP
Statement discloses that the amount paid to Post Office Limited on account of the Social
Network Payment for any Financial Year exceeds the costs incurred by Post Office Limited
in providing the SGEI during that Financial Year, as calculated in accordance with the
above formula, Post Office Limited will be required to repay to the Government, within 10
Business Days of the receipt by Government of the NSP Statement, an amount equal to
such excess.
Pat McFadden
Post Office Limited acknowledges that the instructions set out in this letter are legally
binding.
Signed by )
for and on behalf of Post Office Limited )
Dated
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Annex A
SCHEDULE OF SERVICES OF GENERAL ECONOMIC INTEREST PROVIDED
BY POST OFFICE LTD AT POST OFFICE BRANCHES
Category of service
Service provided
Service provided on behalf of
Processing social
benefit and tax credit
payments to the
public.
Cash payment of state
benefits including state
pension, child benefits and
tax credits and encashment
of benefit cheques.
Cash payment of benefits
and the issuing of vouchers
to eligible asylum seekers.
Cash payment of health
benefits and the provision of
form EHIC benefits
Department for Work and
Pensions, Social Security
Agency - Northern Ireland, Her
Majesty’s Revenue & Customs
and financial institutions
Home Office
Department of Health.
Processing of
national identity and
licensing scheme
applications
Providing passport
application forms for
customers to complete and
return to IPS
Checking and
authentication of passport
applications and supporting
documentation
Providing vehicle licence
application forms for
customers to complete and
return to DVLA, and budget
cash savings schemes for
licence fees.
Receiving payment for
vehicle licences and
Photocard Licences, and
checking Photocard
application forms and
supporting documentation.
The Identity and Passport
Service (“IPS”)
IPS
The Driver and Vehicle
Licensing Agency (“DVLA”)
DVLA.
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Category of service Service provided Service provided on behalf of
Universal payment Provision of facilities for Financial Institutions individual
facilities for public payment of electricity, gas, I utility service providers, and
utility services. telecommunications and billing service providers
water bills. Payment
options include pre-payment
and other budgeting
schemes (e.g. savings
stamps).
Provision of facilities for Her Majesty's Revenue and
payment of tax bills and Customs, local authorities and
social housing rents. housing associations.
Universal postal Provision of postal services I Royal Mail Group Limited.
service. which the universal service
provider (Royal Mail Group
Limited) is required to
provide under its postal
services licence
Universal access to Provision of basic Financial Institutions including
basic cash and community banking facilities I Her Majesty's Treasury, the
banking facilities and I (cashing of cheques, cash Government-owned National
Government savings I deposit, Post Office card Savings & Investments, the
instruments, account and automated Department for Work and
especially for rural cash withdrawals and Pensions, the Social Security
customers and those I deposits) and cash Agency - Northern Ireland, and
on social benefits. transmission facilities Her Majesty’s Revenue &
(postal orders), in particular I Customs.
to socially excluded
customers. This includes
deposits and withdrawals of
cash by businesses local to
Post Office branches.
Access to Saving Gateway
accounts and Government
savings instruments
including Premium Bonds,
Investment Accounts,
Children’s Bonds and
National Savings
certificates.
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