Exhibit 4.1
DRAFT: 11/03/2005
LOAN CONFIRMATION SEVENTH ISSUER
INTERCOMPANY LOAN AGREEMENT
DATED 23RD MARCH, 2005
PERMANENT FUNDING (NO. 1) LIMITED
AS FUNDING 1
AND
PERMANENT FINANCING (NO. 7) PLC
AS SEVENTH ISSUER
AND
THE BANK OF NEW YORK
AS SECURITY TRUSTEE
AND
CITIBANK, N.A., LONDON BRANCH
AS AGENT BANK
[XXXXX & XXXXX LOGO]
XXXXX & XXXXX LLP
London
CONTENTS
CLAUSE PAGE
1. Interpretation.......................................................................................1
2. Intercompany Loan Terms and Conditions...............................................................2
3. The Seventh Issuer Term Advances.....................................................................2
4. Interest.............................................................................................4
5. Repayment............................................................................................6
6. Prepayment...........................................................................................9
7. Certain Fees, etc...................................................................................10
8. Application of Certain Provisions...................................................................12
9. Addresses...........................................................................................12
10. Counterparts........................................................................................14
11. Third Party Rights..................................................................................14
12. Governing Law.......................................................................................14
SCHEDULE
1. Conditions Precedent in Respect of Drawdown.........................................................15
Signatories..................................................................................................18
THIS LOAN CONFIRMATION TO THE SEVENTH ISSUER INTERCOMPANY LOAN AGREEMENT is
dated 23rd March, 2005
BETWEEN:
(1) PERMANENT FUNDING (NO. 1) LIMITED (registered in England and Wales No.
4267660), a private limited company incorporated in England and Wales
whose registered office is at Xxxxxxxxx House, Guildhall Yard, London
EC2V 5AE (FUNDING 1);
(2) PERMANENT FINANCING (NO. 7) PLC (registered in England and Wales No.
5330776), a public limited company incorporated under the law of
England and Wales whose registered office is at Xxxxxxxxx House,
Guildhall Yard, London EC2V 5AE (the SEVENTH ISSUER);
(3) THE BANK OF NEW YORK, a New York banking corporation acting through its
offices at 00xx Xxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxx X00 0XX (acting in its
capacity as SECURITY TRUSTEE); and
(4) CITIBANK, N.A., LONDON BRANCH, whose offices are at 0 Xxxxxxxxx Xxxxxx,
Xxxxxx XX0X 0XX (acting in its capacity as AGENT BANK).
IT IS AGREED as follows:
1. INTERPRETATION
1.1 The amended and restated master definitions and construction schedule
signed by, amongst others, the parties to this Agreement and dated 23rd
March, 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) and the seventh issuer
master definitions and construction schedule signed for the purposes of
identification by Xxxxx & Xxxxx LLP and Xxxxxx Xxxxxx Xxxxx & Xxxx on
23rd March, 2005 (the SEVENTH ISSUER 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 and/or the Seventh Issuer 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 (Interpretation and Construction) of the
Master Definitions and Construction Schedule and the Seventh Issuer
Master Definitions and Construction Schedule.
1.2 Unless the context otherwise requires, references in the Intercompany
Loan Terms and Conditions to:
CLOSING DATE means 23rd March, 2005;
INTERCOMPANY LOAN means the Seventh Issuer Intercompany Loan;
INTERCOMPANY LOAN AGREEMENT means the Seventh Issuer Intercompany Loan
Agreement;
INTERCOMPANY LOAN CONFIRMATION means the Seventh Issuer Intercompany
Loan Confirmation;
1
ISSUER means the Seventh Issuer;
ISSUER TRANSACTION ACCOUNT means the Seventh Issuer Sterling Account;
NEW BASEL CAPITAL ACCORD means the new or revised capital accord as
described in the consultative document "The New Basel Capital Accord"
published by the Basel Committee on Banking Supervision in January
2001;
NOTES means the Seventh Issuer Notes; and
SEVENTH ISSUER TERM ADVANCES has the meaning given in the Seventh
Issuer Master Definitions and Construction Schedule.
2. INTERCOMPANY LOAN TERMS AND CONDITIONS
Each of the parties to this Agreement agrees that the Intercompany Loan
Terms and Conditions signed by Funding 1, the Security Trustee and the
Agent Bank for the purposes of identification on 14th June, 2002, as
amended and restated on 25th November, 2003, 12th March, 2004, 22nd
July, 2004 and 18th November, 2004 and from time to time and the
provisions set out therein shall form part of this Agreement and shall
be binding on the parties to this Agreement as if they had expressly
been set out herein. References in this Agreement to "this Agreement"
shall be construed accordingly.
3. THE SEVENTH ISSUER TERM ADVANCES
3.1 SEVENTH ISSUER TERM AAA ADVANCES
On and subject to the terms of this Agreement, the Seventh Issuer
grants to Funding 1 a term loan which consists of the following
sub-loans:
(a) the series 1 term AAA advance in the maximum aggregate principal
amount of {pound}[__] (the SEVENTH ISSUER SERIES 1 TERM AAA
ADVANCE) and which corresponds to the sterling equivalent of the
principal amount upon issue of the Series 1 Class A Seventh
Issuer Notes;
(b) the series 2 term AAA advance in the maximum aggregate principal
amount of {pound}[__] (the SEVENTH ISSUER SERIES 2 TERM AAA
ADVANCE) and which corresponds to the sterling equivalent of the
principal amount upon issue of the Series 2 Class A Seventh
Issuer Notes;
(c) the series 3 term AAA advance in the maximum aggregate principal
amount of {pound}[__] (the SEVENTH ISSUER SERIES 3 TERM AAA
ADVANCE) and which corresponds to the sterling equivalent of the
principal amount upon issue of the Series 3 Class A Seventh
Issuer Notes;
(d) the series 4 term AAA advance in the maximum aggregate principal
amount of {pound}[__] (the SEVENTH ISSUER SERIES 4 TERM AAA
ADVANCE) and which corresponds to the principal amount upon
issue of the Series 4 Class A Seventh Issuer Notes, and
(e) the series 5 term AAA advance in the maximum aggregate principal
amount of {pound}[__] (the SEVENTH ISSUER SERIES 5 TERM AAA
ADVANCE) and which corresponds to the principal amount upon issue
of the Series 5 Class A Seventh Issuer Notes;
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and together the Seventh Issuer Series 1 Term AAA Advance, the Seventh
Issuer Series 2 Term AAA Advance, the Seventh Issuer Series 3 Term AAA
Advance, the Seventh Issuer Series 4 Term AAA Advance and the Seventh
Issuer Series 5 Term AAA Advance are referred to herein as the SEVENTH
ISSUER TERM AAA ADVANCES.
3.2 SEVENTH ISSUER TERM AA ADVANCES
On and subject to the terms of this Agreement, the Seventh Issuer
grants to Funding 1 a term loan which consists of the following
sub-loans:
(a) the series 1 term AA advance in the maximum aggregate principal
amount of {pound}[__] (the SEVENTH ISSUER SERIES 1 TERM AA
ADVANCE) and which corresponds to the sterling equivalent of the
principal amount upon issue of the Series 1 Class B Seventh
Issuer Notes;
(b) the series 2 term AA advance in the maximum aggregate principal
amount of {pound}[__] (the SEVENTH ISSUER SERIES 2 TERM AA
ADVANCE) and which corresponds to the sterling equivalent of the
principal amount upon issue of the Series 2 Class B Seventh
Issuer Notes;
(c) the series 3 term AA advance in the maximum aggregate principal
amount of {pound}[__] (the SEVENTH ISSUER SERIES 3 TERM AA
ADVANCE) and which corresponds to the sterling equivalent of the
principal amount upon issue of the Series 3 Class B Seventh
Issuer Notes; and
(d) the series 4 term AA advance in the maximum aggregate principal
amount of {pound}[__] (the SEVENTH ISSUER SERIES 4 TERM AA
ADVANCE) and which corresponds to the principal amount upon
issue of the Series 4 Class B Seventh Issuer Notes,
and together the Seventh Issuer Series 1 Term AA Advance, the Seventh
Issuer Series 2 Term AA Advance, the Seventh Issuer Series 3 Term AA
Advance and the Seventh Issuer Series 4 Term AA Advance are referred to
herein as the SEVENTH ISSUER TERM AA ADVANCES.
3.3 SEVENTH ISSUER TERM BBB ADVANCES
On and subject to the terms of this Agreement, the Seventh Issuer
grants to Funding 1 a term loan which consists of the following
sub-loans:
(a) the series 1 term BBB advance in the maximum aggregate principal
amount of {pound}[__] (the SEVENTH ISSUER SERIES 1 TERM BBB
ADVANCE) and which corresponds to the sterling equivalent of the
principal amount upon issue of the Series 1 Class C Seventh
Issuer Notes;
(b) the series 2 term BBB advance in the maximum aggregate principal
amount of {pound}[__] (the SEVENTH ISSUER SERIES 2 TERM BBB
ADVANCE) and which corresponds to the sterling equivalent of the
principal amount upon issue of the Series 2 Class C Seventh
Issuer Notes;
(c) the series 3 term BBB advance in the maximum aggregate principal
amount of {pound}[__] (the SEVENTH ISSUER SERIES 3 TERM BBB
ADVANCE) and which corresponds to the sterling equivalent of the
principal amount upon issue of the Series 3 Class C Seventh
Issuer Notes; and
(d) the series 4 term BBB advance in the maximum aggregate principal
amount of {pound}[__] (the SEVENTH ISSUER SERIES 4 TERM BBB
ADVANCE) and which corresponds to the
3
principal amount upon issue of the Series 4 Class C Seventh
Issuer Notes,
and together the Seventh Issuer Series 1 Term BBB Advance, the Seventh
Issuer Series 2 Term BBB Advance, the Seventh Issuer Series 3 Term BBB
Advance and the Seventh Issuer Series 4 Term BBB Advance are referred
to herein as the SEVENTH ISSUER TERM BBB ADVANCES.
3.4 TERM ADVANCE RATING
The Term Advance Rating in respect of the Seventh Issuer Term AAA
Advances shall be AAA/Aaa/AAA, the Term Advance Rating in respect of
the Seventh Issuer Term AA Advances shall be AA/Aa3/AA and the Term
Advance Rating in respect of the Seventh Issuer Term BBB Advances shall
be BBB/Baa2/BBB.
3.5 CONDITIONS PRECEDENT
Save as the Seventh Issuer and the Security Trustee may otherwise
agree, the Seventh Issuer Term Advances will not be available for
utilisation unless the Security Trustee has confirmed to Funding 1 that
it or its advisers have received all the information and documents
listed IN SCHEDULE 1 hereof in form and substance satisfactory to the
Security Trustee.
4. INTEREST
4.1 RATE OF INTEREST TO FIRST FUNDING 1 INTEREST PAYMENT DATE
On the Closing Date the Agent Bank will determine the Initial Relevant
Screen Rate (as defined below) in respect of each Seventh Issuer Term
Advance as at or about 11.00 a.m. (London time) on that date. If the
Initial Relevant Screen Rate is unavailable, the Agent Bank will
request the principal London office of each of the Reference Banks to
provide the Agent Bank with its offered quotations to leading banks for
two-week and one-month sterling deposits of {pound}10,000,000, in the
London inter-bank market as at or about 11.00 a.m. (London time) on
such Closing Date. The Term Advance Rates of Interest for the first
Interest Period shall be the aggregate of (a) the Relevant Margin and
(b) the Initial Relevant Screen Rate or, if the Initial Relevant Screen
Rate is unavailable, the linear interpolation of the arithmetic mean of
such offered quotations for two-week sterling deposits and the
arithmetic mean of such offered quotations for one-month sterling
deposits (rounded upwards, if necessary, to five decimal places).
INITIAL RELEVANT SCREEN RATE means the linear interpolation of the
arithmetic mean of the offered quotations to leading banks for two-week
sterling deposits and the arithmetic mean of the offered quotations to
leading banks for one-month sterling deposits (rounded upwards if
necessary to five decimal places) displayed on the Moneyline Telerate
monitor at Moneyline Telerate page number 3750 (or such replacement
page on that service which displays the information) or, if that
service ceases to display the information, such other service as may be
determined by the Seventh Issuer with the approval of the Security
Trustee.
4.2 TERM ADVANCE RATES OF INTEREST
The Term Advance Rate of Interest payable on each Term Advance shall be
LIBOR for three-month sterling deposits as determined in accordance
with CLAUSE 6 of the Intercompany Loan Terms and Conditions plus a
RELEVANT MARGIN which shall be:
4
(a) in respect of the Seventh Issuer Series 1 Term AAA Advance, a
margin of minus [__] per cent. per annum;
(b) in respect of the Seventh Issuer Series 2 Term AAA Advance, a
margin of [__] per cent. per annum up to and including the
Interest Period ending in December 2011 and thereafter [__] per
cent. per annum;
(c) in respect of the Seventh Issuer Series 3 Term AAA Advance, a
margin of [__] per cent. per annum up to and including the
Interest Period ending in December 2011 and thereafter [__] per
cent. per annum;
(d) in respect of the Seventh Issuer Series 4 Term AAA Advance, a
margin of [__] per cent. per annum up to and including the
Interest Period ending in December 2011 and thereafter [__] per
cent. per annum;
(e) in respect of the Seventh Issuer Series 5 Term AAA Advance, a
margin of [__] per cent. per annum up to and including the
Interest Period ending in December 2011 and thereafter [__] per
cent. per annum;
(f) in respect of the Seventh Issuer Series 1 Term AA Advance, a
margin of [__] per cent. per annum up to and including the
Interest Period ending in December 2011 and thereafter [__] per
cent. per annum;
(g) in respect of the Seventh Issuer Series 2 Term AA Advance, a
margin of [__] per cent. per annum up to and including the
Interest Period ending in December 2011 and thereafter [__] per
cent. per annum;
(h) in respect of the Seventh Issuer Series 3 Term AA Advance, a
margin of [__] per cent. per annum up to and including the
Interest Period ending in December 2011 and thereafter [__] per
cent. per annum;
(i) in respect of the Seventh Issuer Series 4 Term AA Advance, a
margin of [__] per cent. per annum up to and including the
Interest Period ending in December 2011 and thereafter [__] per
cent. per annum;
(j) in respect of the Seventh Issuer Series 1 Term BBB Advance, a
margin of [__] per cent. per annum up to and including the
Interest Period ending in December 2011 and thereafter [__] per
cent. per annum;
(k) in respect of the Seventh Issuer Series 2 Term BBB Advance, a
margin of [__] per cent. per annum up to and including the
Interest Period ending in December 2011 and thereafter [__] per
cent. per annum;
(l) in respect of the Seventh Issuer Series 3 Term BBB Advance, a
margin of [__] per cent. per annum up to and including the
Interest Period ending in December 2011 and thereafter [__] per
cent. per annum; and
(m) in respect of the Seventh Issuer Series 4 Term BBB Advance, a
margin of [__] per cent. per annum up to and including the
Interest Period ending in December 2011 and thereafter [__] per
cent. per annum.
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4.3 INTEREST PERIODS
The first Interest Period shall commence on (and include) the Closing
Date and end on (but exclude) the Funding 1 Interest Payment Date
falling in June, 2005. Each subsequent Interest Period shall commence
on (and include) a Funding 1 Interest Payment Date and end on (but
exclude) the following Funding 1 Interest Payment Date.
5. REPAYMENT
5.1 REPAYMENT SUBJECT TO TERMS OF THE FUNDING 1 DEED OF CHARGE
The terms and provisions of this CLAUSE 5 are to be read subject to the
provisions of PART II of SCHEDULE 3 to the Funding 1 Deed of Charge and
as the same may be further amended or varied from time to time in
accordance with the terms of the Funding 1 Deed of Charge. Without
limiting the generality of the foregoing, the Seventh Issuer Term
Advances shall become due and payable as described in PARAGRAPH 1.4 of
PART II of SCHEDULE 3 of the Funding 1 Deed of Charge.
5.2 REPAYMENT OF SEVENTH ISSUER TERM AAA ADVANCES PRIOR TO THE OCCURRENCE
OF A TRIGGER EVENT AND PRIOR TO THE SERVICE ON FUNDING 1 OF AN
INTERCOMPANY LOAN ACCELERATION NOTICE OR THE SERVICE ON EACH ISSUER OF
A NOTE ACCELERATION NOTICE
Subject to the provisions of CLAUSES 1 and 2 of PART II of SCHEDULE 3
of the Funding 1 Deed of Charge, prior to the occurrence of a Trigger
Event and prior to the service on Funding 1 of an Intercompany Loan
Acceleration Notice or the service on each Issuer of a Note
Acceleration Notice, Funding 1 shall repay to the Seventh Issuer:
(a) the Seventh Issuer Series 1 Term AAA Advance on the Funding 1
Interest Payment Date falling in March 2006;
(b) the Seventh Issuer Series 2 Term AAA Advance on the Funding 1
Interest Payment Date falling in September 2007;
(c) the Seventh Issuer Series 3 Term AAA Advance in four equal
instalments (each a Scheduled Amortisation Instalment) on the
Funding 1 Interest Payment Date falling in September 2009,
December 2009, March 2010 and June, 2010 but if there are
insufficient funds available to repay the Scheduled Amortisation
Instalments on such Funding 1 Interest Payment Dates, then the
shortfall shall be repaid on subsequent Funding 1 Interest
Payment Dates from Funding 1 Available Principal Receipts until
the Seventh Issuer Series 3 Term AAA Advance is fully repaid;
(d) the Seventh Issuer Series 4 Term AAA Advance in two equal
instalments (each a Scheduled Amortisation Instalment) on the
Funding 1 Interest Payment Date falling June 2010 and September
2010 but if there are insufficient funds available to repay the
Scheduled Amortisation Instalments on such Funding 1 Interest
Payment Dates, then the shortfall shall be repaid on subsequent
Funding 1 Interest Payment Dates from Funding 1 Available
Principal Receipts until the Seventh Issuer Series 4 Term AAA
Advance is fully repaid; and
(e) the Seventh Issuer Series 5 Term AAA Advance in two equal
instalments (each a Scheduled Amortisation Instalment) on the
Funding 1 Interest Payment Date falling in June 2011 and
December 2011 but if there are insufficient funds available to
repay the Scheduled Amortisation Instalments on such Funding 1
Interest Payment Dates, then the shortfall shall be repaid on
subsequent Funding 1 Interest Payment
6
Dates from Funding 1 Available Principal Receipts until the
Seventh Issuer Series 5 Term AAA Advance is fully repaid.
5.3 REPAYMENT OF SEVENTH ISSUER TERM AA ADVANCES PRIOR TO THE OCCURRENCE OF
A TRIGGER EVENT AND PRIOR TO THE SERVICE ON FUNDING 1 OF AN
INTERCOMPANY LOAN ACCELERATION NOTICE OR THE SERVICE ON EACH ISSUER OF
A NOTE ACCELERATION NOTICE
Subject to the provisions of CLAUSES 1 and 2 of PART II of SCHEDULE 3
of the Funding 1 Deed of Charge, prior to the occurrence of a Trigger
Event and prior to the service on Funding 1 of an Intercompany Loan
Acceleration Notice or the service on each Issuer of a Note
Acceleration Notice, Funding 1 shall repay to the Seventh Issuer:
(a) on each Funding 1 Interest Payment Date falling on or after the
Funding 1 Interest Payment Date on which the Seventh Issuer
Series 1 Term AAA Advance is fully repaid, the Seventh Issuer
Series 1 Term AA Advance to the extent of Funding 1 Available
Principal Receipts until the Seventh Issuer Series 1 Term AA
Advance is fully repaid;
(b) on each Funding 1 Interest Payment Date falling on or after the
Funding 1 Interest Payment Date on which the Seventh Issuer
Series 2 Term AAA Advance is fully repaid, the Seventh Issuer
Series 2 Term AA Advance to the extent of Funding 1 Available
Principal Receipts until the Seventh Issuer Series 2 Term AA
Advance is fully repaid;
(c) on each Funding 1 Interest Payment Date falling on or after the
Funding 1 Interest Payment Date on which the Seventh Issuer
Series 3 Term AAA Advance is fully repaid, the Seventh Issuer
Series 3 Term AA Advance to the extent of Funding 1 Available
Principal Receipts until the Seventh Issuer Series 3 Term AA
Advance is fully repaid; and
(d) on each Funding 1 Interest Payment Date falling on or after the
Funding 1 Interest Payment Date on which the Seventh Issuer
Series 4 Term AAA Advance is fully repaid, the Seventh Issuer
Series 4 Term AA Advance to the extent of Funding 1 Available
Principal Receipts until the Seventh Issuer Series 4 Term AA
Advance is fully repaid.
5.4 REPAYMENT OF SEVENTH ISSUER TERM BBB ADVANCES PRIOR TO THE OCCURRENCE
OF A TRIGGER EVENT AND PRIOR TO THE SERVICE ON FUNDING 1 OF AN
INTERCOMPANY LOAN ACCELERATION NOTICE OR THE SERVICE ON EACH ISSUER OF
A NOTE ACCELERATION NOTICE
Subject to the provisions of CLAUSES 1 and 2 of PART II of SCHEDULE 3
of the Funding 1 Deed of Charge, prior to the occurrence of a Trigger
Event and prior to the service on Funding 1 of an Intercompany Loan
Acceleration Notice or the service on each Issuer of a Note
Acceleration Notice, Funding 1 shall repay to the Seventh Issuer:
(a) on each Funding 1 Interest Payment Date falling on or after the
Funding 1 Interest Payment Date on which the Seventh Issuer
Series 1 Term AA Advance is fully repaid, the Seventh Issuer
Series 1 Term BBB Advance to the extent of Funding 1 Available
Principal Receipts until the Seventh Issuer Series 1 Term BBB
Advance is fully repaid;
(b) on each Funding 1 Interest Payment Date falling on or after the
Funding 1 Interest Payment Date on which the Seventh Issuer
Series 2 Term AA Advance is fully repaid, the Seventh Issuer
Series 2 Term BBB Advance to the extent of Funding 1
7
Available Principal Receipts until the Seventh Issuer Series 2
Term BBB Advance is fully repaid;
(c) on each Funding 1 Interest Payment Date falling on or after the
Funding 1 Interest Payment Date on which the Seventh Issuer
Series 3 Term AA Advance is fully repaid, the Seventh Issuer
Series 3 Term BBB Advance to the extent of Funding 1 Available
Principal Receipts until the Seventh Issuer Series 3 Term BBB
Advance is fully repaid; and
(d) on each Funding 1 Interest Payment Date falling on or after the
Funding 1 Interest Payment Date on which the Seventh Issuer
Series 4 Term AA Advance is fully repaid, the Seventh Issuer
Series 4 Term BBB Advance to the extent of Funding 1 Available
Principal Receipts until the Seventh Issuer Series 4 Term BBB
Advance is fully repaid.
5.5 REPAYMENT OF SEVENTH ISSUER TERM ADVANCES FOLLOWING THE OCCURRENCE OF A
NON-ASSET TRIGGER EVENT BUT PRIOR TO THE SERVICE ON FUNDING 1 OF AN
INTERCOMPANY LOAN ACCELERATION NOTICE OR THE SERVICE ON EACH ISSUER OF
A NOTE ACCELERATION NOTICE
On and from the Funding 1 Interest Payment Date following the
occurrence of a Non-Asset Trigger Event but prior to the service on
Funding 1 of an Intercompany Loan Acceleration Notice or the service on
each Issuer of a Note Acceleration Notice, Funding 1 shall repay the
Seventh Issuer Term Advances on each Funding 1 Interest Payment Date
from Funding 1 Available Principal Receipts in the manner set out in
CLAUSE 3 of PART II of SCHEDULE 3 to the Funding 1 Deed of Charge.
5.6 REPAYMENT OF SEVENTH ISSUER TERM ADVANCES FOLLOWING THE OCCURRENCE OF
AN ASSET TRIGGER EVENT BUT PRIOR TO THE SERVICE ON FUNDING 1 OF AN
INTERCOMPANY LOAN ACCELERATION NOTICE OR THE SERVICE ON EACH ISSUER OF
A NOTE ACCELERATION NOTICE
Following the occurrence of an Asset Trigger Event but prior to the
service on Funding 1 of an Intercompany Loan Acceleration Notice or the
service on each Issuer of a Note Acceleration Notice, Funding 1 shall
repay the Seventh Issuer Term Advances on each Funding 1 Interest
Payment Date from Funding 1 Available Principal Receipts in the manner
set out in CLAUSE 4 of PART II of SCHEDULE 3 to the Funding 1 Deed of
Charge.
5.7 REPAYMENT OF SEVENTH ISSUER TERM ADVANCES FOLLOWING THE SERVICE ON EACH
ISSUER OF A NOTE ACCELERATION NOTICE BUT PRIOR TO THE SERVICE ON
FUNDING 1 OF AN INTERCOMPANY LOAN ACCELERATION NOTICE
Following the service on each Issuer (including the Seventh Issuer) of
a Note Acceleration Notice pursuant to the terms of the Seventh Issuer
Deed of Charge but prior to the service on Funding 1 of an Intercompany
Loan Acceleration Notice, Funding 1 shall apply Funding 1 Available
Principal Receipts in the manner set out in CLAUSE 5 of PART II of
SCHEDULE 3 to the Funding 1 Deed of Charge.
5.8 REPAYMENT FOLLOWING THE SERVICE ON FUNDING 1 OF AN INTERCOMPANY LOAN
ACCELERATION NOTICE
Following the service on Funding 1 of an Intercompany Loan Acceleration
Notice pursuant to the terms of the Funding 1 Deed of Charge, the
Seventh Issuer Intercompany Loan shall be repaid in the manner set out
in PART III of SCHEDULE 3 to the Funding 1 Deed of Charge (as the same
shall be amended from time to time).
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5.9 ACKNOWLEDGEMENT OF PREVIOUS INTERCOMPANY LOANS
The Seventh Issuer hereby acknowledges and agrees that Funding 1 has
entered into an intercompany loan agreement with Permanent Financing
(No. 1) PLC (the FIRST ISSUER) dated 14th June, 2002 (the FIRST ISSUER
INTERCOMPANY LOAN AGREEMENT), an intercompany loan agreement with
Permanent Financing (No. 2) PLC (the SECOND ISSUER) dated 6th March,
2003 (the SECOND ISSUER INTERCOMPANY LOAN AGREEMENT), an intercompany
loan agreement with Permanent Financing (No. 3) PLC (the THIRD ISSUER)
dated 25th November, 2003 (the THIRD INTERCOMPANY LOAN AGREEMENT), an
intercompany loan agreement with Permanent Financing (No. 4) PLC (the
FOURTH ISSUER) dated 12th March, 2004 (the FOURTH INTERCOMPANY LOAN
AGREEMENT), an intercompany loan agreement with Permanent Financing
(No. 5) PLC (the FIFTH ISSUER) dated 22nd July, 2004 (the FIFTH
INTERCOMPANY LOAN AGREEMENT) and an intercompany loan agreement with
Permanent Financing (No. 6) PLC (the SIXTH ISSUER) dated 18th November,
2004 (the SIXTH INTERCOMPANY LOAN AGREEMENT) and accordingly, the
obligation of Funding 1 to repay this Seventh Issuer Intercompany Loan,
the Sixth Issuer Intercompany Loan, the Fifth Issuer Intercompany Loan,
the Fourth Issuer Intercompany Loan, the Third Issuer Intercompany
Loan, the Second Issuer Intercompany Loan and the First Issuer
Intercompany Loan will depend on the Term Advance Ratings of the
various Term Advances made to Funding 1 under this Seventh Issuer
Intercompany Loan Agreement, the Sixth Intercompany Loan Agreement, the
Fifth Intercompany Loan Agreement, the Fourth Issuer Intercompany Loan
Agreement, the Third Issuer Intercompany Loan Agreement, the Second
Issuer Intercompany Loan Agreement and the First Issuer Intercompany
Loan Agreement and the provisions of SCHEDULE 3 to the Funding 1 Deed
of Charge.
5.10 ACKNOWLEDGEMENT OF NEW INTERCOMPANY LOANS
The Seventh Issuer hereby acknowledges and agrees that from time to
time Funding 1 may enter into New Intercompany Loans with New Issuers
and that the obligation of Funding 1 to repay this Seventh Issuer
Intercompany Loan and any New Intercompany Loan will depend on the Term
Advance Rating of the individual Term Advances made to Funding 1 under
any of the First Issuer Intercompany Loan, the Second Issuer
Intercompany Loan Agreement, the Third Issuer Intercompany Loan
Agreement, the Fourth Issuer Intercompany Loan, the Fifth Issuer
Intercompany Loan, the Sixth Issuer Intercompany Loan, this Seventh
Issuer Intercompany Loan and any New Intercompany Loans and the
provisions of Schedule 3 to the Funding 1 Deed of Charge. Subject to
CLAUSE 25 of the Funding 1 Deed of Charge (Supplemental Provisions
Regarding the Security Trustee), any amendments to this Agreement will
be made only with the prior written consent of each party to this
Agreement.
6. PREPAYMENT
6.1 PREPAYMENT OF SEVENTH ISSUER TERM ADVANCES
(a) If the conditions to the Redemption Option set out in CONDITION 5(F) of
the Seventh Issuer Notes are met, then Funding 1 has the right to
prepay the Term Advances corresponding to the Called Notes at an amount
equal to their Specified Amount (as set out in CONDITION 5(F) of the
Seventh Issuer Notes) without penalty or premium but subject to CLAUSE
15 (Default Interest and Indemnity) of the Intercompany Loan Terms and
Conditions; and
(b) each of the Security Trustee, the Agent Bank (without liability or
responsibility to any secured creditor in respect of any loss,
liability or claim arising as a result thereof), Funding 1 and the
Seventh Issuer shall concur in, execute and do all such deeds,
instruments, acts and things, and shall consent to any amendment,
modification or waiver of the provisions of the Seventh Issuer
Transaction Documents to which it is a party, which may be necessary or
9
desirable to permit and give effect to the prepayment (as certified by
the Seventh Issuer and/or Funding 1 to the Security Trustee prior to
any such amendment, modification or waiver being effected), including
any waiver of covenants of Funding 1.
6.2 APPLICATION OF MONIES
The Seventh Issuer hereby agrees to apply any amounts received by way
of prepayment pursuant to CLAUSE 6.1 (Prepayment of Seventh Issuer Term
Advances) in making repayments under the relevant Seventh Issuer Notes
pursuant to its Redemption Option.
7. CERTAIN FEES, ETC.
7.1 FEE FOR PROVISION OF SEVENTH ISSUER TERM ADVANCES
Funding 1 shall (except in the case of payments due under paragraphs
(c), (e), (f) and (i) below, which shall be paid when due) on each
Funding 1 Interest Payment Date pay to the Seventh Issuer for same day
value to the Seventh Issuer Transaction Account a fee for the provision
of the Seventh Issuer Term Advances. Such fee shall be an amount or
amounts in the aggregate equal to the following:
(a) the fees, costs, charges, liabilities and expenses and any other
amounts due and payable to the Security Trustee pursuant to the
Seventh Issuer Deed of Charge together with interest thereon as
provided therein;
(b) the fees, costs, charges, liabilities and expenses and any other
amounts due and payable to the Note Trustee pursuant to the
Seventh Issuer Trust Deed together with interest thereon as
provided therein;
(c) the reasonable fees and expenses of any legal advisers,
accountants and auditors appointed by the Seventh Issuer and
properly incurred in their performance of their functions under
the Transaction Documents which have fallen due;
(d) the fees, costs and expenses due and payable to the Paying
Agents, the Registrar, the Transfer Agent and the Agent Bank
pursuant to the Seventh Issuer Paying Agent and Agent Bank
Agreement;
(e) any amounts due and payable by the Seventh Issuer to the Inland
Revenue in respect of the Seventh Issuer's liability to United
Kingdom corporation tax (insofar as payment is not satisfied by
the surrender of group relief or out of the profits, income or
gains of the Seventh Issuer and subject to the terms of the
Seventh Issuer Deed of Charge) or any other Taxes payable by the
Seventh Issuer;
(f) the fees, costs, charges, liabilities and expenses due and
payable to the Seventh Issuer Account Bank, pursuant to the
Seventh Issuer Bank Account Agreement (if any);
(g) the fees, costs, charges, liabilities and expenses due and
payable to the Seventh Issuer Cash Manager, pursuant to the
Seventh Issuer Cash Management Agreement;
(h) any termination payment due and payable by the Seventh Issuer to
any Seventh Issuer Swap Provider, pursuant to any Seventh Issuer
Swap Agreement;
(i) the fees, costs, charges and liabilities and expenses due and
payable to the Corporate Services Provider pursuant to the
Seventh Issuer Corporate Services Agreement;
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(j) an amount equal to "G" where G is calculated as follows:
G = (A - D - H) or, if such calculation is less than zero, then G
shall be zero
where,
A = 0.01 per cent of the interest amounts paid by Funding 1 to
the Seventh Issuer on the Seventh Issuer Term Advances on the
immediately preceding Funding 1 Interest Payment Date;
D = E - F
where,
E = the interest amounts (which excludes those fee
amounts in this CLAUSE 6.1) paid by Funding 1 to the
Seventh Issuer on the Seventh Issuer Term Advances on
the immediately preceding Funding 1 Interest Payment
Date; and
F = amounts paid by the Seventh Issuer under paragraphs
(d) to (h) of the Seventh Issuer Pre-Enforcement
Revenue Priority of Payments on the immediately
preceding Funding 1 Interest Payment Date;
and
H = the cumulative aggregate of (D - A) as calculated on
each previous Funding 1 Interest Payment Date. If
such cumulative aggregate of (D - A) is less than
zero, then H shall be zero;
(k) any other amounts due or overdue by the Seventh Issuer to third
parties including the Rating Agencies and the amounts paid by the
Seventh Issuer under the Subscription Agreement and the
Underwriting Agreement (excluding, for these purposes, the
Noteholders) other than amounts specified in paragraphs (a) to
(j) above; and
(l) if on any Funding 1 Interest Payment Date there are Seventh
Issuer Principal Receipts remaining in the Seventh Issuer Bank
Accounts, an amount equal to the difference between (i) the
interest that would be earned by the Seventh Issuer on such
Seventh Issuer Principal Receipts remaining in the Seventh Issuer
Bank Accounts during the next succeeding Interest Period and (ii)
the interest that would be payable by the Seventh Issuer applying
the weighted average rate of interest payable on the Series 5
Seventh Issuer Notes or the relevant Seventh Issuer Currency Swap
Agreements due for repayment at the end of that Interest Period
to such Seventh Issuer Principal Receipts remaining in the
Seventh Issuer Bank Accounts,
together with, (i) in respect of taxable supplies made to the Seventh
Issuer, an amount in respect of any value added tax or similar tax
payable in respect thereof against production of a valid tax invoice;
and (ii) in respect of taxable supplies made to a person other than the
Seventh Issuer, any amount in respect of any Irrecoverable VAT or
similar tax payable in respect thereof (against production of a copy of
the relevant tax invoice), and to be applied subject to and in
accordance with the provisions of the Seventh Issuer Pre-Enforcement
Revenue Priority of Payments in the Seventh Issuer Cash Management
Agreement.
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7.2 SET-OFF
Funding 1 and each of the other parties to the Seventh Issuer
Intercompany Loan Agreement agree that the Seventh Issuer shall be
entitled to set-off those amounts due and payable by Funding 1 pursuant
to this CLAUSE 7 on the Closing Date against the amount to be advanced
by the Seventh Issuer to Funding 1 by way of the Seventh Issuer Term
Advances on the Closing Date.
8. APPLICATION OF CERTAIN PROVISIONS
The provisions set out in CLAUSE 4.2 (Limited Recourse) of the
Intercompany Loan Terms and Conditions shall apply to:
(a) the Seventh Issuer Term AA Advances; and
(b) the Seventh Issuer Term BBB Advances.
9. ADDRESSES
The addresses referred to in CLAUSE 18.4 (Notices) of the Intercompany
Loan Terms and Conditions are as follows:
THE SECURITY TRUSTEE:
THE BANK OF NEW YORK
For the attention of: Global Structured Finance - Corporate Trust
Address: The Bank of New York
Xxx Xxxxxx Xxxxxx
Xxxxxx
X00 0XX
Facsimile: + 44 20 7964 60 1/6399
THE SEVENTH ISSUER:
For the attention of: The Secretary
Address: Permanent Financing (No. 7) PLC
Xxxxxxxxx House
Xxxxxxxxx Xxxx
Xxxxxx XX0X 0XX
Facsimile: x00 (0) 00 0000 0000
Copy to: HBOS Treasury Services plc
00 Xxx Xxxxx Xxxxxx
Xxxxxx XX0X 0XX
Facsimile: x00 (0) 00 0000 0000
For the attention of: Head of Mortgage Securitisation and Covered Bonds
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FUNDING 1:
For the attention of: The Secretary
Address: Permanent Funding (No. 1) Limited
Xxxxxxxxx House
Guildhall Yard
London EC2V 5AE
Facsimile: x00 (0) 00 0000 0000
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
RATING AGENCIES:
XXXXX'X:
Address: 0 Xxxxxxx Xxxxx, Xxxxxxx Xxxx, Xxxxxx XX0X 0XX
For the attention of: Xxxxxxxx Xxxxxxxxx
Telephone: x00 (0) 00 0000 0000
Facsimile: x00 (0) 00 0000 0000
S&P:
Address: Garden House, 00 Xxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX
For the attention of: Xxxxx Xxxxxxxx
Telephone: x00 (0) 00 0000 0000
Facsimile: x00 (0) 00 0000 0000
FITCH:
Address: 000 Xxxxxxxx Xxxxxxxx, Xxxxxx XX0X 0XX
For the attention of: FS Surveillance
Telephone: x00 (0) 00 0000 0000
Facsimile: x00 (0) 00 0000 0000
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10. COUNTERPARTS
This Intercompany Loan Confirmation may be signed (manually or by
facsimile) and delivered in more than one counterpart all of which,
taken together, shall constitute one and the same Agreement.
11. THIRD PARTY RIGHTS
The Intercompany Loan Confirmation does not create any right under the
Contracts (Rights of Third Parties) Act 1999 which is enforceable by
any person who is not a party to the Intercompany Loan Agreement.
12. GOVERNING LAW
This Seventh Issuer Intercompany Loan Confirmation is governed by and
shall be construed in accordance with English law.
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SCHEDULE 1
CONDITIONS PRECEDENT IN RESPECT OF DRAWDOWN
1. AUTHORISATIONS
(a) A copy of the memorandum and articles of association, certificate of
incorporation and certificate of incorporation on change of name of
Funding 1.
(b) A copy of a resolution of the board of directors of Funding 1
authorising the entry into, execution and performance of each of the
Transaction Documents to which Funding 1 is a party and authorising
specified persons to execute those on its behalf.
(c) A certificate of a director of Funding 1 certifying:
(i) that each document delivered under this paragraph 1 of SCHEDULE 1
is correct, complete and in full force and effect as at a date no
later than the date of execution of the Seventh Issuer
Intercompany Loan Agreement and undertaking to notify the
Security Trustee if that position should change prior to the
first Drawdown Date; and
(ii) as to the identity and specimen signatures of the directors and
signatories of Funding 1.
2. SECURITY
(a) The Funding 1 Deed of Charge (and the Sixth Deed of Accession) duly
executed by the parties thereto.
(b) Duly completed bank account mandates in respect of the Funding 1 GIC
Account and the Funding 1 Transaction Account.
(c) Security Power of Attorney for Funding 1.
3. LEGAL OPINION
Legal opinions of:
(a) Shepherd & Wedderburn Scottish legal advisers to the Seller and
the Servicer, addressed to, inter alios, the Security Trustee;
(b) Xxxxx & Xxxxx LLP, English and U.S. legal advisers to the Seller,
the Seventh Issuer and the Servicer, addressed to, inter alios,
the Security Trustee; and
4. TRANSACTION DOCUMENTS
Xxxx executed copies of:
(a) the Servicing Agreement;
(b) the Mortgages Trust Deed;
(c) the Halifax Deed and Power of Attorney;
(d) the Funding 1 Deed of Charge;
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(e) the Second Supplemental Funding 1 Deed of Charge;
(f) the Funding 1 Swap Agreement;
(g) the Corporate Services Agreements;
(h) the Funding 1 Liquidity Facility Agreement;
(i) the First Issuer Intercompany Loan Agreement, the Second Issuer
Intercompany Loan Agreement and the Third Issuer Intercompany
Loan Agreement, the Fourth Issuer Intercompany Loan Agreement,
the Fifth Issuer Intercompany Loan Agreement, the Sixth Issuer
Intercompany Loan Agreement and the Seventh Issuer Intercompany
Loan Agreement;
(j) the Cash Management Agreement;
(k) the Bank Account Agreement;
(l) the Funding 1 Guaranteed Investment Contract;
(m) the First Start-up Loan Agreement, the Second Start-up Loan
Agreement, the Third Start-up Loan Agreement, the Fourth Start-up
Loan Agreement, the Fifth Start-up Loan Agreement, the Sixth
Start-up Loan Agreement and the Seventh Start-up Loan Agreement;
(n) the Mortgage Sale Agreement;
(o) the Seller Power of Attorney;
(p) the Seventh Issuer Deed of Charge;
(q) the Seventh Issuer Cash Management Agreement;
(r) the Seventh Issuer Swap Agreements;
(s) the Seventh Issuer Bank Account Agreement;
(t) the Seventh Issuer Post-Enforcement Call Option Agreement;
(u) the Seventh Issuer Trust Deed;
(v) the Seventh Issuer Global Notes;
(w) the Seventh Issuer Paying Agent and Agent Bank Agreement;
(x) the Underwriting Agreement;
(y) the Subscription Agreements;
(z) the Mortgages Trustee Guaranteed Investment Contract; and
(aa) the Master Definitions and Construction Schedule, the First
Issuer Master Definitions and Construction Schedule, the Second
Issuer Master Definitions and Construction Schedule, the Third
Issuer Master Definitions and Construction Schedule, the Fourth
Issuer Master Definitions and Construction Schedule, the Fifth
Issuer Master
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Definitions and Construction Schedule, the Sixth Issuer Master
Definitions and Construction Schedule and the Seventh Issuer
Master Definitions and Construction Schedule.
5. BOND DOCUMENTATION
(a) Confirmation that the Seventh Issuer Notes have been issued and the
subscription proceeds received by the Seventh Issuer; and
(b) Copies of the Offering Circular.
6. MISCELLANEOUS
Solvency certificates from Funding 1 signed by two directors of Funding
1 in or substantially in the form set out in SCHEDULE 2 to the
Intercompany Loan Terms and Conditions.
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SIGNATORIES
IN WITNESS WHEREOF the parties have caused this Agreement to be duly executed on
the day and year appearing on page 1.
FUNDING 1
SIGNED by )
for and on behalf of )
PERMANENT FUNDING (NO. 1) LIMITED ) .....................
SEVENTH ISSUER
SIGNED by )
for and on behalf of )
PERMANENT FINANCING (NO. 7) PLC ) .....................
SECURITY TRUSTEE
SIGNED by )
for and on behalf of )
THE BANK OF NEW YORK ) .....................
AGENT BANK
SIGNED by )
for and on behalf of )
CITIBANK, N.A.,
LONDON BRANCH ) .....................
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