DRAFT: 14.07.04 EXHIBIT 10.4
FIFTH START-UP LOAN AGREEMENT
DATED [22ND JULY], 2004
PERMANENT FUNDING (NO. 1) LIMITED
AS FUNDING 1
AND
HALIFAX PLC
AS FIFTH START-UP LOAN PROVIDER
AND
THE BANK OF NEW YORK
AS SECURITY TRUSTEE
XXXXX & XXXXX
XXXXX & XXXXX LLP
LONDON
CONTENTS
CLAUSE PAGE
1. Definitions and Interpretation..........................................1
2. The Facility............................................................1
3. Interest................................................................2
4. Repayment...............................................................2
5. Acceleration............................................................3
6. Payments and Limited Recourse...........................................3
7. Subordination and Security..............................................4
8. Notices.................................................................5
9. Taxes...................................................................5
10. Remedies and Waivers....................................................5
11. Assignments and Transfer................................................5
12. Security Trustee as a Party.............................................6
13. No Partnership..........................................................6
14. Variation...............................................................6
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 FIFTH START-UP LOAN AGREEMENT is made on {circle}, 2004.
BETWEEN:
(1) PERMANENT FUNDING (NO. 1) LIMITED (registered number 4267660), a private
limited company incorporated in England and Wales, whose registered
office is at Xxxxxxxxx Xxxxx, Xxxxxxxxx Xxxx, Xxxxxx XX0X 0XX (in 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 (in its capacity as
FIFTH 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 (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
{circle}, 2004 (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, including the Recitals
hereto 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 Fifth Start-up Loan Provider grants to Funding 1 simultaneously with
the issue by the Fifth Issuer of the Fifth Issuer Notes on the Fifth
Issuer Closing Date and upon the terms and subject to the conditions
hereof, a sterling loan facility in an aggregate amount of up to
{pound-sterling} [{circle}] ([{circle}] pounds sterling) available by way
of two tranches (the amount so granted or such part of such amount as
shall be outstanding from time to time being referred to as the Advance)
as follows:
(a) a tranche in the sum of {pound-sterling}[{circle}] ([{circle}]
pounds sterling) for the purposes of increasing the amount of the
General Reserve Fund which shall be paid into the Funding 1 GIC
Account; and
(b) a tranche in the sum of up to {pound-sterling} [{circle}]
([{circle}] pounds sterling) 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 Fifth
Issuer Intercompany Loan in relation to the issue of the Fifth
Issuer Notes which shall be paid into the Funding 1 Transaction
Account.
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3. INTEREST
3.1 The Advance and any interest capitalised pursuant to Clause 3.4 will bear
interest from (and including) the Fifth 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 [June 2011], a margin of 0.25 per cent.
per annum and (ii) from the Funding 1 Interest Payment Date in [June
2011], a margin of 0.50 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.
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 Fifth 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 Fifth 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) 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 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 and any New Start-up Loan will be paid pro rata
between themselves. The Fifth Start-up Loan Provider further acknowledges
that the Funding 1 Pre-Enforcement Revenue Priority of Payments and the
Funding 1 Post-Enforcement
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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 Fifth 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 Fifth Start-up Loan Provider and
any New Start-up Loan Provider and the Fifth Issuer and any New Issuer
(and any other relevant party) in the Transaction Documents to effect
those amendments.
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 [Fifth] Start-up Loan
Provider's account (sort code 11-99-06, account number [00000000],
account name: Halifax CHAPS Funding) (or such other account as the Fifth
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
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 Fifth 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 Fifth Start-up Loan Provider pursuant to
CLAUSE 8 of the Funding 1 Deed of Charge,
provided that the Fifth 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 Fifth Start-up Loan Provider under this
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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 Fifth 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 Fifth Start-up Loan
Provider under this Agreement and so that Funding 1 shall not be obliged
to make any payment to the Fifth 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 Xxx 0000. However, if there are sufficient Funding 1
Available Revenue Receipts available and the Fifth 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 Fifth Start-up
Loan Agreement.
7.3 Funding 1 undertakes that its obligations to the Fifth Start-up Loan
Provider hereunder shall at all times be secured by the Funding 1 Deed of
Charge.
7.4 The Fifth 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 Fifth 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 Fifth 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,
Xxxxxxxxx Xxxxx, Xxxxxxxxx Xxxx, Xxxxxx XX0X 0XX (facsimile number
x00 (000) 0000 0000) for the attention of the Secretary with a
copy to HBOS Treasury Services plc, 00 Xxx Xxxxx
0
Xxxxxx, Xxxxxx XX0X 0XX (facsimile number x00 (000) 0000 0000) for
the attention of Head of Capital Markets and Securitisation;
(b) in the case of the Fifth 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 (000) 0000 0000) for the attention of Head of Capital
Markets and Securitisation; 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 +44
(000) 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.
9. TAXES
9.1 All payments to be made by Funding 1 to the Fifth 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 Fifth 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 Fifth 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 Fifth Start-up Loan Provider to exercise, nor any delay
by the Fifth 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 Fifth 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.
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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 Fifth 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.
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 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
SIGNED by )
for and on behalf of )
PERMANENT FUNDING (NO. 1) )
LIMITED )
SIGNED by )
as attorney for and on behalf of )
HALIFAX PLC in the presence of: )
Witness's Signature:
Name:
Address:
SIGNED by )
for and on behalf of )
THE BANK OF NEW YORK )
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