Exhibit 10.4
DRAFT: 25/02/03
THIS SECOND START-UP LOAN AGREEMENT is made on [6th March], 2003
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 Second
Start-up Loan Provider); and
(3) STATE STREET BANK AND TRUST COMPANY a Massachusetts trust company organised
under the laws of the Commonwealth of Massachusetts of the United States of
America acting through its office at 000 Xxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000 (acting as a co-trustee in its capacity as Security
Trustee); and
(4) U.S. BANK NATIONAL ASSOCIATION, a national banking association formed under
the laws of the United States of America, acting through its office at 0
Xxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (acting as a
co-trustee 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 for the purposes of identification by Xxxxx & Xxxxx and Xxxxxx
Xxxxxx Xxxxx & Xxxx on [5th March], 2003 (as the same may be amended,
varied or supplemented from time to time with the consent of the parties
hereto) are expressly and specifically incorporated into this Agreement
and, accordingly, the expressions defined in the Amended and Restated
Master Definitions and Construction Schedule (as so amended, varied or
supplemented) 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 that
Amended and Restated Master Definitions and Construction Schedule.
2. THE FACILITY
The Second Start-up Loan Provider grants to Funding 1 simultaneously with
the issue by the Second Issuer of the Second Issuer Notes on the Second
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[52,409,278.89] ([fifty two million, four hundred and nine
thousand, two hundred and seventy eight pounds sterling and eighty nine
xxxxx]) 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 (o) for the purposes of
increasing the amount of the Reserve Fund which shall be paid into the
Funding 1 GIC Account; and
(b) a tranche in the sum of up to Pound Sterling (o) for the purposes of
providing funding for fees, costs and expenses incurred by or on
behalf of Funding 1 in respect of increasing the
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Funding 1 Share of the Trust Property and in respect of amounts
payable by Funding 1 under the Second Issuer Intercompany Loan in
relation to the issue of the Second 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 Second 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 2008], a margin of 0.25 per cent.
per annum and (ii) from the Funding 1 Interest Payment Date in [December
2008], 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 Second
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 the 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 Second Start-up Loan Provider hereby acknowledges that on 14th June,
2002 Funding 1 entered into the First Start-up Loan Agreement with the
First Start-up Loan Provider, 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, this Second
Start-up Loan and any New Start-up Loan will at all times rank pari passu
and the First Start-up Loan, this Second Start-up Loan and any New Start-up
Loan will be paid pro rata between themselves. The Second Start-up Loan
Provider further acknowledges that the
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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 Second 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 Second Start-up Loan
Provider and any New Start-up Loan Provider and the Second 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 Second Start-up Loan Provider's
account (sort code [11-99-06], account number [o], account name: [Halifax
CHAPS Funding]) (or such other account as the Second 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 Second 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 Second Start-up Loan Provider pursuant to CLAUSE 8 of the Funding
1 Deed of Charge,
provided that the Second 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.
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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 Second 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 Second 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 Second Start-up Loan Provider under this
Agreement and so that Funding 1 shall not be obliged to make any payment to
the Second 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 Second 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 Second Start-up Loan Agreement.
7.3 Funding 1 undertakes that its obligations to the Second Start-up Loan
Provider hereunder shall at all times be secured by the Funding 1 Deed of
Charge.
7.4 The Second 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 Second 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 Second 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 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
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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 +44
(000) 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 (000) 0000 0000) for the attention of Head of
Capital Markets and Securitisation;
(b) in the case of the Second Start-up Loan Provider, to Halifax plc,
Xxxxxxx Xxxx, Xxxxxxx, Xxxx Xxxxxxxxx XX0 0XX (facsimile number +44
(0) 0000 000000) for the attention of Mortgage Securitisation Manager,
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 State Street Bank and Trust
Company at 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000,
(facsimile number + 0 (000) 000 0000) for the attention of Xxxx Xxxxxx
and to U.S. Bank National Association at1 Xxxxxxx Xxxxxx, 0xx Xxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, (facsimile number + 0 (000) 000 0000) for
the attention of Corporate Trust Services,
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 Second 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 Second 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 Second 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 Second Start-up Loan Provider to exercise, nor any delay
by the Second 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.
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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 Second 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 Second 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.
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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
SIGNED by )
for and on behalf of )
PERMANENT FUNDING (NO. 1) LIMITED )
SIGNED by )
for and on behalf of )
HALIFAX plc
SIGNED by )
for and on behalf of )
STATE STREET BANK AND TRUST COMPANY )
)
SIGNED by )
for and on behalf of )
U.S. BANK NATIONAL ASSOCIATION )
DATED [6TH MARCH], 2003
PERMANENT FUNDING (NO. 1) LIMITED
as Funding 1
and
HALIFAX plc
as Second Start-up Loan Provider
and
STATE STREET BANK AND TRUST COMPANY
and
U.S. BANK NATIONAL ASSOCIATION
as Security Trustee
______________________________
SECOND START-UP LOAN AGREEMENT
______________________________
XXXXX & OVERY
London
ICM:638827.4
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................................................................. 4
9. Taxes................................................................... 5
10. Remedies and Waivers.................................................... 5
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......................................... 6
18. Governing Law........................................................... 7
19. Submission to Jurisdiction.............................................. 7
SIGNATORIES.................................................................. 8
