Exhibit 10.5
FUNDING 2 START-UP LOAN AGREEMENT
[*] 2006
PERMANENT FUNDING (NO. 2) LIMITED
AS FUNDING 2
AND
[*]
AS FUNDING 2 START-UP LOAN PROVIDER
AND
THE BANK OF NEW YORK
AS SECURITY TRUSTEE
XXXXX & XXXXX
XXXXX & XXXXX LLP
CONTENTS
CLAUSE PAGE
1. Definitions and Interpretation........................................ 1
2. The Start-up Loan Tranches............................................ 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.................................................. 6
11. Assignments and Transfer.............................................. 6
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....................................... 7
18. Governing Law......................................................... 7
19. Submission to Jurisdiction............................................ 7
SCHEDULE
1. Form of Start-up Loan Tranche Supplement 8
Signatories..................................................................10
THIS FUNDING 2 START-UP LOAN AGREEMENT is made on [*] 2006
BETWEEN:
(1) PERMANENT FUNDING (NO. 2) LIMITED (registered number [*]), a private
limited company incorporated under the laws of England and Wales whose
registered office is at 00 Xxxxx Xx. Xxxxx'x, Xxxxxx XX0X 0XX (xx its
capacity as FUNDING 2);
(2) [*] (registered number [*]), a [*]incorporated under the laws of
[*]whose registered office is at [*](acting in its capacity as FUNDING 2
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).
WHEREAS:
(A) From time to time the Master Issuer will issue Notes pursuant to the
Funding 2 Programme and lend the proceeds of such issuance to Funding 2
pursuant to the Master Intercompany Loan Agreement.
(B) In connection with each issuance of Notes and the advance of Loan
Tranches under the Master Intercompany Loan Agreement, the Funding 2
Start-up Loan Provider may make a loan to Funding 2 pursuant to the
terms of this Agreement.
(C) Unless otherwise agreed, Funding 2 will use the proceeds of each loan
from the Funding 2 Start-up Loan Provider to fund the Funding 2 General
Reserve Fund (in whole or in part) and/or towards payment (in whole or
in part) of the fees and expenses incurred by Funding 2 in connection
with the payment to the Seller of part of the consideration for Loans
(together with their Related Security) sold to the Mortgages Trustee on
the relevant Closing Date and/or any fees payable under the Master
Intercompany Loan Agreement which relate to the costs of issue of the
relevant Series of Notes.
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 [*]
2006 (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) is 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 START-UP LOAN TRANCHES
2.1 Subject to the terms of this Agreement, simultaneously with the issue by
the Master Issuer of a Series of Notes on a Closing Date, the Funding 2
Start-up Loan Provider may make available to Funding 2 a Start-up Loan
Tranche in the amount described in the supplement entered into on such
date by the parties hereto substantially in the form of SCHEDULE 1 (each
such supplement being a START-UP LOAN TRANCHE SUPPLEMENT).
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2.2 Each Start-up Loan Tranche advanced under this Agreement will only be
used by Funding 2 for the purposes of:
(a) funding the Funding 2 General Reserve Fund (in whole or in part);
and/or
(b) funding the payment of the fees and expenses incurred by Funding 2
in connection with the payment to the Seller of part of the
consideration for Loans (together with their Related Security)
sold to the Mortgages Trustee on the relevant Closing Date; and/or
(c) funding the payment of any fees payable under the Master
Intercompany Loan Agreement which relate to the costs of issue of
the relevant Series of Notes; and/or
(d) for such other purpose as is specified in the relevant Start-up
Loan Tranche Supplement.
2.3 Each portion of a Start-up Loan Tranche advanced under this Agreement
for purposes of funding the Funding 2 General Reserve Fund will be
deposited in the Funding 2 GIC Account. Each portion of a Start-up Loan
Tranche advanced under this Agreement for any other purpose will be
deposited in the Funding 2 Transaction Account unless otherwise
specified in the relevant Start-up Loan Tranche Supplement.
3. INTEREST
3.1 The first Interest Period in respect of each Start-up Loan Tranche made
under this Agreement will commence on (and include) the relevant Closing
Date in relation to the Start-up Loan Tranche (as specified in the
applicable Start-up Loan Tranche Supplement and end on (but exclude) the
first Funding 2 Interest Payment Date falling thereafter. Each
subsequent Interest Period in respect of each Start-up Loan Tranche made
under this Agreement will commence on (and include) a Funding 2 Interest
Payment Date and end on (but exclude) the next following Funding 2
Interest Payment Date.
3.2 Each Start-up Loan Tranche advanced under this Agreement and any
interest capitalised pursuant to CLAUSE 3.5 will bear interest
calculated in accordance with CLAUSE 3.4 at the rate specified in the
applicable Start-up Loan Tranche Supplement.
3.3 Subject to CLAUSE 6.2 and CLAUSE 6.3, interest on each Start-up Loan
Tranche Supplement and any interest capitalised pursuant to CLAUSE 3.5
will be payable in arrear on each Funding 2 Interest Payment Date in
accordance with the Funding 2 Priorities of Payments. The amount of
interest due on each Start-up Loan Tranche advanced under this Agreement
will rank pari passu with the amount of interest due on each other
Start-up Loan Tranche and will be paid pro rata among such Start-up Loan
Tranches
3.4 Interest shall be calculated on each Start-up Loan Tranche advanced
under this Agreement by reference to any Interest Period on the basis of
the actual number of days elapsed and a 365 day year.
3.5 Any interest accrued in respect of an Interest Period but not paid on
the Funding 2 Interest Payment Date relating thereto shall be
capitalised forthwith.
4. REPAYMENT
4.1 Funding 2 shall repay principal of each Start-up Loan Tranche advanced
under this Agreement on each Funding 2 Interest Payment Date if and to
the extent that there are Funding 2 Available Revenue Receipts available
therefor after making the payments and provisions referred to in the
applicable Funding 2 Priorities of Payments. The obligation to repay
each Start-up Loan Tranche advanced under this Agreement will rank pari
passu with the obligation to repay each other Start-up
2
Loan Agreement advanced under this Agreement and will be paid pro rata
among such Start-up Loan Tranches.
4.2 The Cash Manager is responsible, pursuant to the Cash Management
Agreement, for determining:
(a) The interest and principal amounts payable by Funding 2 under
CLAUSE 3 and CLAUSE 4 of this Agreement; and
(b) the amount of Funding 2 Available Revenue Receipts as at each
Funding 2 Interest Payment Date available therefor,
and each determination so made shall (in the absence of negligence,
wilful default, bad faith or manifest error) be final and binding on the
Funding 2 Start-up Loan Provider.
4.3 Subject to CLAUSES 5, 6.2, 6.3 and 7, on the earlier to occur of:
(a) any Funding 2 Interest Payment Date on which all Loan Tranches
under the Master Intercompany Loan Agreement have been repaid in
full; or
(b) the Final Maturity Date of the last outstanding Series and Class
of Notes,
each Start-up Loan Tranche advanced under this Agreement (including any
interest accrued but unpaid) shall, subject to the Funding 2 Deed of
Charge, become immediately due and payable.
4.4 The Funding 2 Start-up Loan Provider hereby acknowledges that from time
to time Funding 2 may enter into other start-up loan agreements with
other start-up loan providers and that the obligation of Funding 2 to
repay the Start-up Loan Tranches advanced under this Agreement and any
other start-up loans made under any other start-up loan agreements will
rank pari passu and will be paid pro rata between themselves. The
Funding 2 Start-up Loan Provider further acknowledges that the Funding 2
Priorities of Payments may be amended to reflect the entry by Funding 2
into another start-up loan agreement 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 any other start-up
loan provider (and any other relevant party) in the Transaction
Documents to effect those amendments.
5. ACCELERATION
Each Start-up Loan Tranche advanced under this Agreement (including any
interest accrued but unpaid) will, subject to the Funding 2 Deed of
Charge, become immediately due and payable following the service of a
Master Intercompany Loan Acceleration Notice.
6. PAYMENTS AND LIMITED RECOURSE
6.1 All payments to be made hereunder by Funding 2 shall be made in sterling
in immediately available cleared funds to the Funding 2 Start-up Loan
Provider's account (sort code [*], account number [*], account name:
[*]) (or such other account as the Funding 2 Start-up Loan Provider may
have specified in writing to Funding 2 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 a Master Intercompany Loan Acceleration Notice or
the earlier to occur of repayment in full of all Loan Tranches under the
Master Intercompany Loan Agreement or the Final Maturity Date of the
last outstanding Series and Class of Notes, amounts of principal,
interest and any other amounts due hereunder shall be paid only in
accordance with Part 1 of Schedule 3 of the Funding 2 Deed of Charge.
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6.3 If, upon a Start-up Loan Tranche becoming due and payable pursuant to
CLAUSE 4.3 or CLAUSE 5, Funding 2 has insufficient funds available to
meet its obligations hereunder in full on such date then:
(a) Funding 2 shall utilise its funds on such date to the extent
available in making payments to the Funding 2 Start-up Loan
Provider to repay the Start-up Loan Tranches (including any
interest capitalised pursuant to CLAUSE 3.5) and accrued and
unpaid interest thereon; and
(b) the obligations of Funding 2 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 2 subsequent to
such date, together with the proceeds of the enforcement of the
security, paid to the Funding 2 Start-up Loan Provider pursuant to
CLAUSE 8 of the Funding 2 Deed of Charge,
provided that the Funding 2 Start-up Loan Provider shall not release
Funding 2 from Funding 2'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 2 Post-Enforcement Priority of Payments.
7. SUBORDINATION AND SECURITY
7.1 The parties hereby agree that repayments in respect of each Start-up
Loan Tranche made under this Agreement shall be subordinated to, inter
alia, payments of principal and interest on any Loan Tranche, and all
other payments or provisions ranking in priority to payments to be made
to the Funding 2 Start-up Loan Provider under this Agreement, in each
case in accordance with the Funding 2 Priorities of Payments and the
terms of the Funding 2 Deed of Charge.
7.2 The Funding 2 Start-up Loan Provider further agrees that, without
prejudice to CLAUSE 8 of the Funding 2 Deed of Charge, its rights
against Funding 2 under this Agreement are limited to the extent that
Funding 2 has sufficient assets to meet its claims or any part thereof
having taken into account all other liabilities, both actual and
contingent, of Funding 2 which pursuant to the Funding 2 Deed of Charge
rank pari passu with or in priority to its liabilities to the Funding 2
Start-up Loan Provider under this Agreement and so that Funding 2 shall
not be obliged to make any payment to the Funding 2 Start-up Loan
Provider hereunder if and to the extent that the making of such payment
would cause Funding 2 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 2 Available Revenue Receipts available
and Funding 2 does not repay the Start-up Loan Tranches when due in
accordance with the terms hereof, such non-repayment will constitute an
event of default under this Agreement.
7.3 Funding 2 undertakes that its obligations to the Funding 2 Start-up Loan
Provider hereunder shall at all times be secured by the Funding 2 Deed
of Charge.
7.4 The Funding 2 Start-up Loan Provider hereby undertakes to be bound by
the terms of the Funding 2 Deed of Charge and the Cash Management
Agreement and in particular acknowledges that all of Funding 2's right,
title, benefit and interest in this Agreement has been assigned to the
Security Trustee under the Funding 2 Deed of Charge and agrees that on
enforcement of the security created by the Funding 2 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 2 Post-Enforcement
Priority of Payments.
7.5 The Funding 2 Start-up Loan Provider further covenants that, except as
permitted under CLAUSE [9] of the Funding 2 Deed of Charge, it will not
set off or claim to set off any Start-up Loan Tranche or any interest
thereon or any part of either thereof against any liability owed by it
to Funding 2.
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7.6 The Funding 2 Start-up Loan Provider undertakes that it will not 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 2 or of any or all of the
revenues and assets of Funding 2 nor participate in any ex parte
proceedings nor seek to enforce any judgment against Funding 2, except
as permitted under the provisions of the Funding 2 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 2, to Permanent Funding (No. 2) Limited, 00
Xxxxx Xx. Xxxxx'x, Xxxxxx XX0X 0XX (facsimile number +44 (020)
7398 6325) for the attention of the Secretary 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 Mortgage Securitisation and Covered Bonds; and
(b) in the case of the Funding 2 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 +44
(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.
9. TAXES
9.1 All payments to be made by Funding 2 to the Funding 2 Start-up Loan
Provider hereunder shall be made free and clear of and without deduction
or withholding for or on account of Tax unless Funding 2 is required by
law to make such a payment subject to the deduction or withholding of
Tax, in which case Funding 2 shall promptly upon becoming aware thereof
notify the Funding 2 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 2 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 Funding 2 Start-up Loan
Provider, within 30 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.
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10. REMEDIES AND WAIVERS
No failure by the Funding 2 Start-up Loan Provider to exercise, nor any
delay by the Funding 2 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 2 (other than in respect of any assignment by way of security
pursuant to the Funding 2 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 2 Deed of Charge, the Funding 2 Start-up
Loan Provider and Funding 2 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 Funding 2 Start-up Loan Provider
or Funding 2 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 (including
facsimile 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.
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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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SCHEDULE 1
FORM OF START-UP LOAN TRANCHE SUPPLEMENT
THIS START-UP LOAN TRANCHE SUPPLEMENT is dated [*] between:
(1) PERMANENT FUNDING (NO. 2) LIMITED (registered number [*]), a private
limited company incorporated under the laws of England and Wales whose
registered office is at 00 Xxxxx Xx. Xxxxx'x, Xxxxxx XX0X 0XX (as
FUNDING 2);
(2) [*] (registered number [*]), a [*]incorporated under the laws of
[*]whose registered office is at [*] (acting in its capacity as FUNDING
2 START-UP LOAN PROVIDER); and
(3) THE BANK OF NEW YORK, acting through its office at 00xx Xxxxx, Xxx
Xxxxxx Xxxxxx, Xxxxxx X00 0XX in its capacity as the Funding 2 Security
Trustee.
This document constitutes the Start-up Loan Tranche Supplement relating to the
Start-up Loan Tranches described herein. Terms used herein shall be deemed to
be defined as such for the purposes of the Funding 2 Start-up Loan Agreement
entered into between the parties hereto on [*] 2006. This Start-up Loan Tranche
Supplement contains the final terms of the Start-up Loan Tranches identified
and described herein, is supplemental to and must be read in conjunction with
the Funding 2 Start-up Loan Agreement.
The Start-up Loan Tranches will have the following terms:
1. Closing Date: [*]
2. Total Principal Amount: [POUND][*]
(a) Principal Amount to be deposited [POUND][*]
in Funding 2 GIC Account:
(b) Principal Amount to be deposited [POUND][*]
in Funding 2 Transaction Account:
3. Interest Rate: [Describe terms (e.g. LIBOR
for one-month sterling
deposits plus margin
(including any step-up in
margin))]
SIGNED by )
for and on behalf of )
PERMANENT FUNDING (NO. 2) )
LIMITED )
Witness's Signature:
Name:
Address:
SIGNED by )
as attorney for and on behalf of )
[*] plc in the presence of: )
Witness's Signature:
8
Name:
Address:
SIGNED by )
for and on behalf of )
THE BANK OF NEW YORK )
9
SIGNATORIES
FUNDING
SIGNED by )
for and on behalf of )
PERMANENT FUNDING (NO. 2) )
LIMITED )
Witness's Signature:
Name:
Address:
FUNDING 2 START-UP LOAN PROVIDER
SIGNED by )
as attorney for and on behalf of )
[*]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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