EXHIBIT 10.4
DRAFT (2): 31ST MAY, 2005 [XXXXX & XXXXX GRAPHIC]
XXXXX & OVERY LLP
EIGHTH START-UP LOAN AGREEMENT
PERMANENT FUNDING (NO. 1) LIMITED
as Funding 1
and
HALIFAX plc
as Eighth Start-up Loan Provider
and
THE BANK OF NEW YORK
as Security Trustee
[22nd] June, 2005
CONTENTS
CLAUSE PAGE
1. Definitions and Interpretation.......................................................................1
2. The Facility.........................................................................................1
3. Interest.............................................................................................1
4. Repayment............................................................................................2
5. Acceleration.........................................................................................3
6. Payments and Limited Recourse........................................................................3
7. Subordination and Security...........................................................................3
8. Notices..............................................................................................4
9. Taxes................................................................................................5
10. Remedies and Waivers.................................................................................5
11. Assignments and Transfer.............................................................................5
12. Security Trustee as a Party..........................................................................5
13. No Partnership.......................................................................................5
14. Variation............................................................................................5
15. Invalidity of any Provision..........................................................................6
16. Counterparts.........................................................................................6
17. Exclusion of Third Party Rights......................................................................6
18. Governing Law........................................................................................6
19. Submission to Jurisdiction...........................................................................6
Signatories...................................................................................................7
THIS EIGHTH START-UP LOAN AGREEMENT is made on [22nd] June, 2005.
BETWEEN:
(1) PERMANENT FUNDING (NO. 1) LIMITED (registered number 4267660), a
private limited company incorporated in England and Wales, whose
registered office is at 00 Xxxxx Xx. Xxxxx'x, Xxxxxx XX0X 0XX (xx its
capacity as FUNDING 1);
(2) HALIFAX PLC (registered number 02367076), a public limited company
incorporated under the laws of England and Wales whose registered
office is at Xxxxxxx Xxxx, Xxxxxxx, Xxxx Xxxxxxxxx XX0 0XX (acting in
its capacity as EIGHTH START-UP LOAN PROVIDER); and
(3) THE BANK OF NEW YORK, a New York banking corporation whose London
branch address is at 00xx Xxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxx X00 0XX
(acting in its capacity as SECURITY TRUSTEE).
IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
The amended and restated master definitions and construction schedule
signed by, amongst others, the parties to this Agreement and dated 8th
June, 2005 (as the same may be amended, varied or supplemented from
time to time with the consent of the parties to this Agreement) (the
MASTER DEFINITIONS AND CONSTRUCTION SCHEDULE) are expressly and
specifically incorporated into this Agreement and, accordingly, the
expressions defined in the Master Definitions and Construction Schedule
(as so amended, varied or supplemented from time to time) shall, except
where the context otherwise requires and save where otherwise defined
herein, have the same meanings in this Agreement and this Agreement
shall be construed in accordance with the interpretation provisions set
out in CLAUSE 2 of the Master Definitions and Construction Schedule.
2. THE FACILITY
The Eighth Start-up Loan Provider grants to Funding 1 simultaneously
with the issue by the Eighth Issuer of the Eighth Issuer Notes on the
Eighth Issuer Closing Date and upon the terms and subject to the
conditions hereof, a sterling loan facility in an aggregate amount of
up to [GBP] [35,000,000] ([thirty-five] million pounds sterling)
available (the amount so granted or such part of such amount as shall
be outstanding from time to time being referred to as the Advance) for
the purposes of providing funding for fees, costs and expenses incurred
by or on behalf of Funding 1 in respect of increasing the Funding 1
Share of the Trust Property and in respect of amounts payable by
Funding 1 under the Eighth Issuer Intercompany Loan in relation to the
issue of the Eighth Issuer Notes which shall be paid into the Funding 1
Transaction Account.
3. INTEREST
3.1 The Advance and any interest capitalised pursuant to CLAUSE 3.4 will
bear interest from (and including) the Eighth Issuer Closing Date until
the Advance (and all accrued interest thereon) is repaid in full at a
rate of LIBOR for three-month sterling deposits plus (i) until the
Funding 1 Interest Payment Date ending in [December 2011], a margin of
[o] per cent. per annum and (ii) from the Funding 1 Interest Payment
Date in [December 2011], a margin of [o] per cent. per annum.
3.2 Subject to CLAUSES 6.2 and 6.3, interest on the Advance and any
interest capitalised pursuant to CLAUSE 3.4 will be payable in arrear
on each Funding 1 Interest Payment Date in accordance with the Funding
1 Priority of Payments.
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3.3 Interest shall be calculated by reference to any Interest Period on the
basis of the actual number of days elapsed and a 365 day year.
3.4 Any interest accrued in respect of an Interest Period but not paid on
the Funding 1 Interest Payment Date relating thereto shall be
capitalised forthwith.
4. REPAYMENT
4.1 Funding 1 shall make repayments of all or any part of the Advance
(including any interest capitalised pursuant to CLAUSE 3.4) on each
Funding 1 Interest Payment Date if, and to the extent that, there are
Funding 1 Available Revenue Receipts available therefor after making
the payments and provisions referred to in paragraphs (a) to ([n]) of
the Funding 1 Pre-Enforcement Revenue Priority of Payments, until the
Advance (including any interest capitalised pursuant to CLAUSE 3.4) and
any accrued but unpaid interest thereon has been fully repaid.
4.2 The Cash Manager is responsible, pursuant to the Cash Management
Agreement, for determining the amount of Funding 1 Available Revenue
Receipts as at the fourth Business Day prior to each Funding 1 Interest
Payment Date and each determination so made shall (in the absence of
negligence, wilful default, bad faith or manifest error) be final and
binding on the Eighth Start-up Loan Provider.
4.3 Subject to CLAUSES 5, 6.2, 6.3 and 7.2, on any Funding 1 Interest
Payment Date on which all Intercompany Loans have been repaid in full,
Funding 1 shall immediately repay the Advance (including any interest
capitalised pursuant to CLAUSE 3.4) and pay any accrued but unpaid
interest thereon.
4.4 The Eighth Start-up Loan Provider hereby acknowledges that (i) on 14th
June, 2002, Funding 1 entered into the First Start-up Loan Agreement
with the First Start-up Loan Provider, (ii) on 6th March, 2003, Funding
1 entered into the Second Start-up Loan Agreement with the Second
Start-up Loan Provider, (iii) on 25th November, 2003, Funding 1 entered
into the Third Start-up Loan Agreement with the Third Start-up Loan
Provider, (iv) on 12th March, 2004, Funding 1 entered into the Fourth
Start-up Loan Agreement with the Fourth Start-up Loan Provider, (v) on
22nd July, 2004, Funding 1 entered into the Fifth Start-up Loan
Agreement with the Fifth Start-up Loan Provider, (vi) on 18th November,
2004, Funding 1 entered into the Sixth Start-up Loan Agreement with the
Sixth Start-up Loan Provider, (vii) on 23rd March, 2005, Funding 1
entered into the Seventh Start-up Loan Agreement with the Seventh
Start-up Loan Provider and (viii) that from time to time Funding 1 may
enter into New Start-up Loan Agreements with New Start-up Loan
Providers and that the obligation of Funding 1 to repay the First
Start-up Loan, the Second Start-up Loan, the Third Start-up Loan, the
Fourth Start-up Loan, the Fifth Start-up Loan, the Sixth Start-up Loan,
the Seventh Start-up Loan, the Eighth Start-up Loan and any New
Start-up Loan will at all times rank pari passu and the First Start-up
Loan, the Second Start-up Loan, the Third Start-up Loan, the Fourth
Start-up Loan, the Fifth Start-up Loan, the Sixth Start-up Loan, the
Seventh Start-up Loan, the Eighth Start-up Loan and any New Start-up
Loan will be paid pro rata between themselves. The Eighth Start-up Loan
Provider further acknowledges that the Funding 1 Pre-Enforcement
Revenue Priority of Payments and the Funding 1 Post-Enforcement
Priority of Payments set out in PARTS I and III of SCHEDULE 3 to the
Funding 1 Deed of Charge respectively will be amended to reflect the
entry by Funding 1 into this Eighth Start-up Loan Agreement and any New
Start-up Loan Agreements and related agreements from time to time and
agrees to execute such documents as are necessary or required by the
Security Trustee for the purpose of including the Eighth Start-up Loan
Provider and any New Start-up Loan Provider and the Eighth Issuer and
any New Issuer (and any other relevant party) in the Transaction
Documents to effect those amendments.
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5. ACCELERATION
If any Intercompany Loan Acceleration Notice is served, this facility
shall be cancelled and the Advance (including any interest capitalised
pursuant to CLAUSE 3.4) and any accrued and unpaid interest shall,
subject to the Funding 1 Deed of Charge, become immediately due and
payable.
6. PAYMENTS AND LIMITED RECOURSE
6.1 All payments to be made hereunder by Funding 1 shall be made in
sterling in immediately available cleared funds to the Eighth Start-up
Loan Provider's account (sort code [11-05-90], account number
[00000000], account name: Halifax plc) (or such other account as the
Eighth Start-up Loan Provider may have specified in writing to Funding
1 for this purpose). If any sum falls due hereunder otherwise than on a
Business Day, it shall be paid on the next succeeding Business Day.
6.2 Prior to service of any Intercompany Loan Acceleration Notice or
repayment in full of all the Intercompany Loans, amounts of principal,
interest and any other amounts due hereunder shall be paid only in
accordance with CLAUSE 7.3 and PART I of SCHEDULE 3 of the Funding 1
Deed of Charge.
6.3 If, upon the Advance becoming due and payable pursuant to CLAUSE 4.3 or
CLAUSE 5, Funding 1 has insufficient funds available to meet its
obligations hereunder in full on such date then:
(a) Funding 1 shall utilise its funds on such date to the extent
available in making payments to the Eighth Start-up Loan
Provider to repay the Advance (including any interest
capitalised pursuant to CLAUSE 3.4) and accrued and unpaid
interest thereon; and
(b) the obligations of Funding 1 to pay the shortfall together
with any amounts falling due and payable thereafter shall on
any day be limited to the available funds acquired by Funding
1 subsequent to such date, together with the proceeds of the
enforcement of the security, paid to the Eighth Start-up Loan
Provider pursuant to CLAUSE 8 of the Funding 1 Deed of Charge,
provided that the Eighth Start-up Loan Provider shall not release
Funding 1 from Funding 1's obligation to pay the remaining amount that
would have been due under this Agreement had this CLAUSE 6.3 not
applied and subject to the Funding 1 Post-Enforcement Priority of
Payments.
7. SUBORDINATION AND SECURITY
7.1 The parties hereby agree that the Advance shall be subordinated to,
inter alia, payments of principal and interest on any Intercompany
Loan, and all other payments or provisions ranking in priority to
payments to be made to the Eighth Start-up Loan Provider under this
Agreement, in each case in accordance with the priority of payments or
as provided in CLAUSE 8 and SCHEDULE 3 of the Funding 1 Deed of Charge.
7.2 The Eighth Start-up Loan Provider further agrees that, without
prejudice to CLAUSE 8 of the Funding 1 Deed of Charge, its rights
against Funding 1 under this Agreement are limited to the extent that
Funding 1 has sufficient assets to meet its claims or any part thereof
having taken into account all other liabilities, both actual and
contingent, of Funding 1 which pursuant to the Funding 1 Deed of Charge
rank pari passu with or in priority to its liabilities to the Eighth
Start-up Loan Provider under this Agreement and so that Funding 1 shall
not be obliged to make any payment to the Eighth Start-up Loan Provider
hereunder if and to the extent that the making of such payment would
cause Funding 1 to be or become unable to pay its debts within the
meaning of Section 123 of the Insolvency Act 1986 (as amended).
However, if there are sufficient Funding 1 Available Revenue Receipts
available and the Eighth Issuer does not repay the Advance when due in
accordance with the terms hereof, such non-repayment will constitute an
event of default under this Eighth Start-up Loan Agreement.
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7.3 Funding 1 undertakes that its obligations to the Eighth Start-up Loan
Provider hereunder shall at all times be secured by the Funding 1 Deed
of Charge.
7.4 The Eighth Start-up Loan Provider hereby undertakes to be bound by the
terms of the Funding 1 Deed of Charge and the Cash Management Agreement
and in particular acknowledges that all of Funding 1's right, title,
benefit and interest in this Agreement has been assigned to the
Security Trustee under the Funding 1 Deed of Charge and agrees that on
enforcement of the security created by the Funding 1 Deed of Charge,
all amounts of principal, interest and any other amounts due hereunder
shall rank in the order of priority set out in Funding 1
Post-Enforcement Priority of Payments.
7.5 The Eighth Start-up Loan Provider further covenants that, except as
permitted under CLAUSE 9 of the Funding 1 Deed of Charge, it will not
set off or claim to set off the Advance or any interest thereon or any
part of either thereof against any liability owed by it to Funding 1.
7.6 The Eighth Start-up Loan Provider undertakes that it will not, prior to
the second anniversary of the date on which any Notes are redeemed in
full, take any corporate action or other steps (including, without
limitation, the filing of documents with the court or the service of a
notice of intention to appoint an administrator) or legal proceedings
for the winding up, dissolution or reorganisation or for the
appointment of a receiver, administrator, administrative receiver,
trustee, liquidator, sequestrator or similar officer of Funding 1 or of
any or all of the revenues and assets of Funding 1 nor participate in
any ex parte proceedings nor seek to enforce any judgment against
Funding 1, except as permitted under the provisions of the Funding 1
Deed of Charge.
8. NOTICES
Any notices to be given pursuant to this Agreement or to any of the
parties hereto shall be sufficiently served if sent by prepaid first
class post or by facsimile transmission and shall be deemed to be given
(in the case of facsimile transmission) when despatched, (where
delivered by hand) on the day of delivery if delivered before 17.00
hours on a London Business Day or on the next London Business Day if
delivered thereafter or (in the case of first class post) when it would
be received in the ordinary course of the post and shall be sent:
(a) in the case of Funding 1: to Permanent Funding (No. 1)
Limited, 00 Xxxxx Xx. Xxxxx'x, Xxxxxx XX0X 0XX (facsimile
number x00 (0)00 0000 0000) for the attention of the Secretary
with a copy to HBOS Treasury Services plc, 00 Xxx Xxxxx
Xxxxxx, Xxxxxx XX0X 0XX (facsimile number x00 (0)00 0000 0000)
for the attention of Head of Mortgage Securitisation and
Covered Bonds;
(b) in the case of the Eighth Start-up Loan Provider: to Halifax
plc, Xxxxxxx Xxxx (XX/0/0/XXX), Xxxxxxx, Xxxx Xxxxxxxxx XX0
0XX (facsimile number x00 (0) 000 000 0000) for the attention
of the Head of Mortgage Securitisation, with a copy to HBOS
Treasury Services plc, 00 Xxx Xxxxx Xxxxxx, Xxxxxx XX0X 0XX
(facsimile number x00 (0)00 0000 0000) for the attention of
Head of Mortgage Securitisation and Covered Bonds; and
(c) in the case of the Security Trustee: to The Bank of New York,
00xx Xxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxx X00 0XX, (facsimile
number x00 (0)00 0000 0000) for the attention of Global
Structured Finance - Corporate Trust,
or to such other address or facsimile number as may from time to time
be notified by any party to the other by written notice in accordance
with the provisions of this CLAUSE 8.
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9. TAXES
9.1 All payments to be made by Funding 1 to the Eighth Start-up Loan
Provider hereunder shall be made free and clear of and without
deduction for or on account of Tax unless Funding 1 is required by law
to make such a payment subject to the deduction or withholding of Tax,
in which case Funding 1 shall promptly upon becoming aware thereof
notify the Eighth Start-up Loan Provider of such obligation, and shall
make such payments subject to such deduction or withholding of Tax
which it is required to make.
9.2 If Funding 1 makes any payment hereunder in respect of which it is
required to make any deduction or withholding, it shall pay the full
amount required to be deducted or withheld to the relevant taxation or
other authority within the time allowed for such payment under
applicable law and shall deliver to the Eighth Start-up Loan Provider,
within thirty days after such payment falls due to the applicable
authority, any original receipt (or a certified copy thereof) issued by
such authority evidencing such payment.
10. REMEDIES AND WAIVERS
No failure by the Eighth Start-up Loan Provider to exercise, nor any
delay by the Eighth Start-up Loan Provider in exercising, any right or
remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right or remedy prevent any further
or other exercise thereof or the exercise of any other right or remedy.
The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies provided by law.
11. ASSIGNMENTS AND TRANSFER
11.1 Funding 1 (other than in respect of any assignment by way of security
pursuant to the Funding 1 Deed of Charge) may not assign and/or
transfer any of its rights and/or obligations under this Agreement.
11.2 If there is any change in the identity of the Security Trustee pursuant
to the terms of the Funding 1 Deed of Charge, the Eighth Start-up Loan
Provider and Funding 1 shall execute such documents and take such
actions as the new Security Trustee and the outgoing Security Trustee
(as the case may be) may reasonably require for the purpose of vesting
in the new Security Trustee the rights and obligations of the outgoing
Security Trustee and releasing the outgoing Security Trustee (as the
case may be) from its future obligations under this Agreement.
12. SECURITY TRUSTEE AS A PARTY
The Security Trustee has agreed to become a party to this Agreement for
the better preservation and enforcement of its rights under this
Agreement but shall have no responsibility for any of the obligations
of, nor assume any liabilities to, the Eighth Start-up Loan Provider or
to Funding 1 hereunder.
13. NO PARTNERSHIP
Nothing in this Agreement (or in any of the arrangements contemplated
hereby) shall, or shall be deemed to, constitute a partnership amongst
the parties hereto.
14. VARIATION
No variation of this Agreement shall be effective unless it is in
writing and signed by or on behalf of each of the parties hereto.
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15. INVALIDITY OF ANY PROVISION
If any of the provisions of this Agreement becomes invalid, illegal or
unenforceable in any respect under any law, the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
16. COUNTERPARTS
This Agreement may be executed in any number of counterparts, and by
the parties on separate counterparts, but shall not be effective until
each party has executed at least one counterpart. Each counterpart
shall constitute an original of this Agreement, but all the
counterparts shall together constitute but one and the same instrument.
17. EXCLUSION OF THIRD PARTY RIGHTS
A person who is not a party to this Agreement has no right under the
Contracts (Rights of Third Parties) Xxx 0000 to enforce any term of
this Agreement, but this does not affect any right or remedy of a third
party which exists or is available apart from that Act.
18. GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with,
the laws of England.
19. SUBMISSION TO JURISDICTION
Each party to this Agreement hereby irrevocably submits to the
non-exclusive jurisdiction of the English courts in any action or
proceeding arising out of or relating to this Agreement, and hereby
irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined by such courts. Each party to
this Agreement hereby irrevocably waives, to the fullest extent it may
possibly do so, any defence or claim that the English courts are an
inconvenient forum for the maintenance or hearing of such action or
proceeding.
IN WITNESS WHEREOF the parties hereto have executed this Agreement on the date
first mentioned above.
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SIGNATORIES
FUNDING
SIGNED by )
as attorney for and on behalf of )
PERMANENT FUNDING (NO. 1) )
LIMITED ) ....................................
Witness's Signature: ....................................
Name: ....................................
Address: ....................................
EIGHTH START-UP LOAN PROVIDER
SIGNED by )
as attorney for and on behalf of )
HALIFAX PLC in the presence of: ) ...................................
Witness's Signature: .....................................
Name: ....................................
Address: ....................................
SECURITY TRUSTEE
SIGNED by )
for and on behalf of )
THE BANK OF NEW YORK ) ....................................
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