Exhibit 4.1
DRAFT: (1) 06.10.03
LOAN CONFIRMATION Third ISSUER INTERCOMPANY LOAN AGREEMENT
DATED [o], 2003
PERMANENT FUNDING (NO. 1) LIMITED
as Funding 1
PERMANENT FINANCING (NO. 3) PLC
as Third Issuer
and
THE BANK OF NEW YORK
as Security Trustee
[CITIBANK, N.A., LONDON BRANCH]
as Agent Bank
ALLEN & OVERY
London
CONTENTS
Clause Page
1. Interpretation.............................................................1
2. Intercompany Loan Terms and Conditions.....................................2
3. The Third Issuer Term Advances.............................................2
4. Interest...................................................................4
5. Repayment..................................................................6
6. Prepayment................................................................10
7. Certain fees, etc.........................................................10
8. Application of certain Provisions.........................................12
9. Addresses.................................................................12
Schedule
1. Conditions Precedent in Respect of Drawdown...............................14
Signatories..................................................................17
THIS LOAN CONFIRMATION TO THE THIRD ISSUER INTERCOMPANY LOAN AGREEMENT is dated
[ ], 2003
BETWEEN:
(1) PERMANENT FUNDING (NO. 1) LIMITED (registered in England and Wales No.
4267660) whose registered office is at Blackwell House, Guildhall Yard,
London EC2V 5AE (Funding 1);
(2) PERMANENT FINANCING (NO. 3) PLC (registered in England and Wales No.
04907355) whose registered office is at Blackwell House, Guildhall Yard,
London EC2V 5AE (the Third Issuer);
(3) THE BANK OF NEW YORK, acting through its offices at 48th Floor, One Canada
Square, London E14 5AL in its capacity as Security Trustee; and
(4) [CITIBANK, N.A., LONDON BRANCH, whose offices are at 5 Carmelite Street,
London EC4Y 0PA], 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 for the purposes of identification by Allen & Overy and Sidley
Austin Brown & Wood on [o], 2003 (as the same may be amended, varied or
supplemented from time to time with the consent of the parties hereto) and
the Third Issuer Master Definitions and Construction Schedule signed for
the purposes of identification by Allen & Overy and Sidley Austin Brown &
Wood on [o], 2003 are expressly and specifically incorporated into this
Agreement and, accordingly, the expressions defined in the Amended and
Restated Master Definitions and Construction Schedule and/or the Third
Issuer 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 (Interpretation and Construction) of the Amended and Restated
Master Definitions and Construction Schedule and the Third Issuer Master
Definitions and Construction Schedule. In the event of a conflict between
the Amended and Restated Master Definitions and Construction Schedule and
the Third Issuer Master Definitions and Construction Schedule, the Third
Issuer Master Definitions and Construction Schedule shall prevail.
1.2 Unless the context otherwise requires, references in the Intercompany Loan
Terms and Conditions to:
Closing Date means [o], 2003;
Intercompany Loan means the Third Issuer Intercompany Loan;
Intercompany Loan Agreement means the Third Issuer Intercompany Loan
Agreement;
1
Intercompany Loan Confirmation means the Third Issuer Intercompany Loan
Confirmation;
Issuer means the Third Issuer;
Issuer Transaction Account means the Third 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 Third Issuer Notes; and
Third Issuer Term Advances has the meaning given in the Third 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, 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 THIRD ISSUER TERM ADVANCES
3.1 Third Issuer Term AAA Advances
On and subject to the terms of this Agreement, the Third 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)[o] (the Third 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 Third Issuer Notes;
(b) the series 2 term AAA advance in the maximum aggregate principal
amount of (pound)[o] (the Third 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 Third Issuer Notes;
(c) the series 3 term AAA advance in the maximum aggregate principal
amount of (pound)[o] (the Third 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 Third Issuer Notes;
(d) the series 4 term AAA advance in the maximum aggregate principal
amount of (pound)[o] (the Third Issuer Series 4 Term AAA Advance)
and which corresponds to the sterling equivalent of the principal
amount upon issue of the Series 4 Class A Third Issuer Notes, and
2
(e) the series 5 term AAA advance in the maximum aggregate principal
amount of (pound)[o] (the Third Issuer Series 5 Term AAA Advance)
and which corresponds to the principal amount upon issue of the
Series 5 Class A Third Issuer Notes,
and together the Third Issuer Series 1 Term AAA Advance, the Third Issuer
Series 2 Term AAA Advance, the Third Issuer Series 3 Term AAA Advance, the
Third Issuer Series 4 Term AAA Advance and the Third Issuer Series 5 Term
AAA Advance are referred to herein as the Third Issuer Term AAA Advances.
3.2 Third Issuer Term AA Advances
On and subject to the terms of this Agreement, the Third 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)[o] (the Third 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 Third Issuer Notes;
(b) the series 2 term AA advance in the maximum aggregate principal
amount of (pound)[o] (the Third 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 Third Issuer Notes;
(c) the series 3 term AA advance in the maximum aggregate principal
amount of (pound)[o] (the Third 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 Third Issuer Notes;
(d) the series 4 term AA advance in the maximum aggregate principal
amount of (pound)[o] (the Third Issuer Series 4 Term AA Advance) and
which corresponds to the sterling equivalent of the principal amount
upon issue of the Series 4 Class B Third Issuer Notes; and
(e) the series 5 term AA advance in the maximum aggregate principal
amount of (pound)[o] (the Third Issuer Series 5 Term AA Advance) and
which corresponds to the principal amount upon issue of the Series 5
Class B Third Issuer Notes,
and together the Third Issuer Series 1 Term AA Advance, the Third Issuer
Series 2 Term AA Advance, the Third Issuer Series 3 Term AA Advance, the
Third Issuer Series 4 Term AA Advance and the Third Issuer Series 5 Term
AA Advance are referred to herein as the Third Issuer Term AA Advances.
3.3 Third Issuer Term BBB Advances
On and subject to the terms of this Agreement, the Third 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)[o] (the Third 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 Third Issuer Notes;
3
(b) the series 2 term BBB advance in the maximum aggregate principal
amount of (pound)[o] (the Third 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 Third Issuer Notes;
(c) the series 3 term BBB advance in the maximum aggregate principal
amount of (pound)[o] (the Third 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 Third Issuer Notes;
(d) the series 4 term BBB advance in the maximum aggregate principal
amount of [o] (the Third Issuer Series 4 Term BBB Advance) and which
corresponds to the sterling equivalent of the principal amount upon
issue of the Series 4 Class C Third Issuer Notes; and
(e) the series 5 term BBB advance in the maximum aggregate principal
amount of [o] (the Third Issuer Series 5 Term BBB Advance) and which
corresponds to the principal amount upon issue of the Series 5 Class
C Third Issuer Notes,
and together the Third Issuer Series 1 Term BBB Advance, the Third Issuer
Series 2 Term BBB Advance, the Third Issuer Series 3 Term BBB Advance and
the Third Issuer Series 4 Term BBB Advance and the Third Issuer Series 5
Term BBB Advance are referred to herein as the Third Issuer Term BBB
Advances.
3.4 Term Advance Rating
The Term Advance Rating in respect of the Third Issuer Term AAA Advances
shall be AAA/Aaa/AAA, the Term Advance Rating in respect of the Third
Issuer Term AA Advances shall be AA/Aa3/AA and the Term Advance Rating in
respect of the Third Issuer Term BBB Advances shall be BBB/Baa2/BBB.
3.5 Conditions Precedent
Save as the Third Issuer and the Security Trustee may otherwise agree, the
Third 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 Third 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-month and
three-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-month sterling deposits and the arithmetic mean
of such offered quotations for three-month sterling deposits (rounded
upwards, if necessary, to five decimal places).
4
Initial Relevant Screen Rate means the linear interpolation of the
arithmetic mean of the offered quotations to leading banks for two-month
sterling deposits and the arithmetic mean of the offered quotations to
leading banks for three-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
Third 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:
(a) in respect of the Third Issuer Series 1 Term AAA Advance, a margin
of -[o] per cent. per annum;
(b) in respect of the Third Issuer Series 2 Term AAA Advance, a margin
of [o] per cent. per annum;
(c) in respect of the Third Issuer Series 3 Term AAA Advance, a margin
of [o] per cent. per annum [up to and including the Interest Period
ending in [o] and thereafter [o] per cent. per annum];
(d) in respect of the Third Issuer Series 4 Term AAA Advance, a margin
of [o] per cent. per annum [up to and including the Interest Period
ending in [o] and thereafter [o] per cent. per annum];
(e) in respect of the Third Issuer Series 5 Term AAA Advance, a margin
of [o] per cent. per annum [up to and including the Interest Period
ending in [o] and thereafter [o] per cent. per annum];
(f) in respect of the Third Issuer Series 1 Term AA Advance, a margin of
[o] per cent. per annum [up to and including the Interest Period
ending in [o] and thereafter [o] per cent. per annum];
(g) in respect of the Third Issuer Series 2 Term AA Advance, a margin of
[o] per cent. per annum [up to and including the Interest Period
ending in [o] and thereafter [o] per cent. per annum];
(h) in respect of the Third Issuer Series 3 Term AA Advance, a margin of
[o] per cent. per annum [up to and including the Interest Period
ending in [o] and thereafter [o] per cent. per annum];
(i) in respect of the Third Issuer Series 4 Term AA Advance, a margin of
[o] per cent. per annum [up to and including the Interest Period
ending in [o] and thereafter [o] per cent. per annum];
(j) in respect of the Third Issuer Series 5 Term AA Advance, a margin of
[o] per cent. per annum [up to and including the Interest Period
ending in [o] and thereafter [o] per cent. per annum];
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(k) in respect of the Third Issuer Series 1 Term BBB Advance, a margin
of [o] per cent. per annum [up to and including the Interest Period
ending in [o] and thereafter [o] per cent. per annum];
(l) in respect of the Third Issuer Series 2 Term BBB Advance, a margin
of [o] per cent. per annum [up to and including the Interest Period
ending in [o] and thereafter [o] per cent. per annum];
(m) in respect of the Third Issuer Series 3 Term BBB Advance, a margin
of [o] per cent. per annum up to and including the Interest Period
ending in [o] and thereafter [o] per cent. per annum;
(n) in respect of the Third Issuer Series 4 Term BBB Advance, a margin
of [o] per cent. per annum [up to and including the Interest Period
ending in [o] and thereafter [o] per cent. per annum]; and
(o) in respect of the Third Issuer Series 5 Term BBB Advance, a margin
of [1.45000] per cent. per annum [up to (and including) the Interest
Period ending in [o] and thereafter [o] per cent. per annum];
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
[o]. 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 Third Issuer Term Advances shall become
due and payable as described in paragraph 1 of Part II of Schedule 3 of
the Funding 1 Deed of Charge.
5.2 Repayment of Third 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 Third Issuer:
(a) the Third Issuer Series 1 Term AAA Advance on the Funding 1 Interest
Payment Date falling in [September 2004];
(b) the Third Issuer Series 2 Term AAA Advance on the Funding 1 Interest
Payment Date falling in [December 2008] but if there are
insufficient funds available to repay the Third Issuer Series 2 Term
AAA Advance on such Funding 1 Interest Payment Date, then the
shortfall shall be repaid on subsequent Funding 1 Interest Payment
6
Dates from Funding 1 Available Principal Receipts until the Third
Issuer Series 2 Term AAA Advance is fully repaid;
(c) the Third Issuer Series 3 Term AAA Advance in two equal instalments
(each a Scheduled Amortisation Instalment) on the Funding 1 Interest
Payment Date falling in [o] and [o] 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 on subsequent Funding 1 Interest Payment Dates from
Funding 1 Available Principal Receipts until the Third Issuer Series
3 Term AAA Advance is fully repaid;
(d) the Third Issuer Series 4 Term AAA Advance in two equal instalments
(each a Scheduled Amortisation Instalment) on the Funding 1 Interest
Payment Date falling in [o] and o 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 Third Issuer Series 4 Term
AAA Advance is fully repaid; and
(e) on each Funding 1 Interest Payment Date falling on or after the
Funding 1 Interest Payment Date on which the Third Issuer Series 4
Term AAA Advance is fully repaid, the Third Issuer Series 5 Term AAA
Advance to the extent of Funding 1 Available Principal Receipts
until the Third Issuer Series 5 Term AAA Advance is fully repaid.
5.3 Repayment of Third 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 Third Issuer:
(a) on each Funding 1 Interest Payment Date falling on or after the
Funding 1 Interest Payment Date on which the Third Issuer Series 1
Term AAA Advance is fully repaid, the Third Issuer Series 1 Term AA
Advance to the extent of Funding 1 Available Principal Receipts
until the Third 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 Third Issuer Series 2
Term AAA Advance is fully repaid, the Third Issuer Series 2 Term AA
Advance to the extent of Funding 1 Available Principal Receipts
until the Third 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 Third Issuer Series 3
Term AAA Advance is fully repaid, the Third Issuer Series 3 Term AA
Advance to the extent of Funding 1 Available Principal Receipts
until the Third Issuer Series 3 Term AA Advance is fully repaid;
(d) on each Funding 1 Interest Payment Date falling on or after the
Funding 1 Interest Payment Date on which the Third Issuer Series 4
Term AAA Advance is fully repaid, the Third Issuer Series 4 Term AA
Advance to the extent of Funding 1 Available Principal Receipts
until the Third Issuer Series 4 Term AA Advance is fully repaid; and
7
(e) on each Funding 1 Interest Payment Date falling on or after the
Funding 1 Interest Payment Date on which the Third Issuer Series 5
Term AAA Advance is fully repaid, the Third Issuer Series 5 Term AA
Advance to the extent of Funding 1 Available Principal Receipts
therefor until the Third Issuer Series 5 Term AA Advance is fully
repaid.
5.4 Repayment of Third 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 Third Issuer:
(a) on each Funding 1 Interest Payment Date falling on or after the
Funding 1 Interest Payment Date on which the Third Issuer Series 1
Term AA Advance is fully repaid, the Third Issuer Series 1 Term BBB
Advance to the extent of Funding 1 Available Principal Receipts
until the Third 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 Third Issuer Series 2
Term AA Advance is fully repaid, the Third Issuer Series 2 Term BBB
Advance to the extent of Funding 1 Available Principal Receipts
until the Third 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 Third Issuer Series 3
Term AA Advance is fully repaid, the Third Issuer Series 3 Term BBB
Advance to the extent of Funding 1 Available Principal Receipts
until the Third Issuer Series 3 Term BBB Advance is fully repaid;
(d) on each Funding 1 Interest Payment Date falling on or after the
Funding 1 Interest Payment Date on which the Third Issuer Series 4
Term AA Advance is fully repaid, the Third Issuer Series 4 Term BBB
Advance to the extent of Funding 1 Available Principal Receipts
until the Third Issuer Series 4 Term BBB Advance is fully repaid;
and
(e) on each Funding 1 Interest Payment Date falling on or after the
Funding 1 Interest Payment Date on which the Third Issuer Series 5
Term AA Advance is fully repaid, the Third Issuer Series 5 Term BBB
Advance to the extent of Funding 1 Available Principal Receipts
therefor until the Third Issuer Series 5 Term BBB Advance is fully
repaid.
5.5 Repayment of Third 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 Third 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.
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5.6 Repayment of Third 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 Third 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 Third 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 Third Issuer) of a
Note Acceleration Notice pursuant to the terms of the Third 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 Third
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).
5.9 Acknowledgement of previous Intercompany Loans
The Third 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) and an intercompany loan agreement with Permanent
Financing (No. 2) PLC (the Second Issuer) dated 6th March, 2003 (the
Second Issuer Intercompany Loan Agreement) and accordingly, the obligation
of Funding 1 to repay this 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 Third 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 Third 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 Third 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, this Third Issuer Intercompany Loan 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.
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6. PREPAYMENT
6.1 Prepayment of Third Issuer Term Advances
If the New Basel Capital Accord has been implemented in the United
Kingdom, whether by rule of law, recommendation of best practices or by
any other regulation and PROVIDED THAT a Third Issuer Note Acceleration
Notice has not been served, then Funding 1 may, on any Funding 1 Interest
Payment Date on or after the Funding 1 Interest Payment Date falling in
[December 2007], having given not more than 60 days and not less than 30
days' (or such shorter period as may be agreed with the Third Issuer and
the Security Trustee) prior written notice to the Third Issuer and the
Security Trustee, prepay all but not some only of all of the Third Issuer
Term Advances without penalty or premium but subject to Clause 15 (Default
interest and indemnity) of the Intercompany Loan Terms and Conditions.
6.2 Application of monies
The Third Issuer hereby agrees to apply any amounts received by way of
prepayment pursuant to Clause 6.1 (Prepayment of Third Issuer Term
Advances) in making prepayments under the Third Issuer Notes.
7. CERTAIN FEES, ETC.
7.1 Fee for provision of Third 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 Third Issuer for same day value to the
Third Issuer Transaction Account a fee for the provision of the Third
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
Third 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 Third
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 Third 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
Third Issuer Paying Agent and Agent Bank Agreement;
(e) any amounts due and payable by the Third Issuer to the Inland
Revenue in respect of the Third 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 Third Issuer and subject to the terms of the Third Issuer Deed
of Charge) or any other Taxes payable by the Third Issuer;
(f) the fees, costs, charges, liabilities and expenses due and payable
to the Third Issuer Account Bank, pursuant to the Third Issuer Bank
Account Agreement (if any);
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(g) the fees, costs, charges, liabilities and expenses due and payable
to the Third Issuer Cash Manager, pursuant to the Third Issuer Cash
Management Agreement;
(h) any termination payment due and payable by the Third Issuer to any
Third Issuer Swap Provider, pursuant to any Third Issuer Swap
Agreement;
(i) the fees, costs, charges and liabilities and expenses due and
payable to the Corporate Services Provider pursuant to the Third
Issuer Corporate Services Agreement;
(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
Third Issuer on the Third 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 7.1) paid by Funding 1 to the Third
Issueron the Third Issuer Term Advances on the
immediately preceding Funding 1 Interest Payment Date;
and
F= amounts paid by the Third Issuer under paragraphs (d) to
(g) of the Third 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 Third Issuer to third
parties including the Rating Agencies and the amounts paid by the
Third 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 Third Issuer
Principal Receipts remaining in the Third Issuer Bank Accounts, an
amount equal to the difference between (i) the interest that would
be earned by the Third Issuer on such Third Issuer Principal
Receipts remaining in the Third Issuer Bank Accounts during the next
succeeding Interest Period and (ii) the interest that would be
payable by the Third Issuer applying the weighted average rate of
interest payable on the Series 5 Third Issuer Notes or the relevant
Third Issuer Currency Swap Agreements due for repayment at the end
of that Interest Period to such Third Issuer Principal Receipts
remaining in the Third Issuer Bank Accounts,
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together with, (i) in respect of taxable supplies made to the Third
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 Third 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 Third Issuer Pre-Enforcement Revenue Priority of
Payments in the Third Issuer Cash Management Agreement.
7.2 Set-off
Funding 1 and each of the other parties to the Third Issuer Intercompany
Loan Agreement agree that the Third 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 Third Issuer to
Funding 1 by way of the Third 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 Third Issuer Term AA Advances; and
(b) the Third 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 Services
Address: The Bank of New York
One Canada Square
London
E14 5AL
Facsimile: + 44 20 7964 60 1/6399
The Third Issuer:
For the attention of: The Secretary
Address: Permanent Financing (No. 3) PLC
Facsimile: +44 (0) 20 7556 0975
Copy to: HBOS Treasury Services plc
33 Old Broad Street
London EC2N 1HZ
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Facsimile: +44 (0) 20 7574 8784
For the attention of: Head of Capital Markets and Securitisation
Funding 1:
For the attention of: The Secretary
Address: Permanent Funding (No. 1) Limited
Facsimile: +44 (0) 20 7556 0975
Copy to: HBOS Treasury Services plc
33 Old Broad Street
London EC2N 1HZ
Facsimile number: +44 (0) 20 7574 8784
For the attention of: Head of Capital Markets and Securitisation
Rating Agencies:
Moody's:
Address: 2 Minster Court, Mincing Lane, London EC3R 7XB
For the attention of: [Nicholas Lindstrom]
Telephone: +44 (0) 20 7772 5332
Facsimile: +44 (0) 20 7772 5400
S&P:
Address: Garden House, 18 Finsbury Circus, London EC2M 7NJ
For the attention of: [Andre Vollmann]
Telephone: +44 (0) 20 7826 3855
Facsimile: +44 (0) 20 7826 3598
Fitch:
Address: Eldon House, 2 Eldon Street, London EC2M 7UA
For the attention of: [European Structured Finance]
Telephone: +44 (0) 20 7417 4355
Facsimile: +44 (0) 20 7417 6262
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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 Third 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 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) Allen & Overy, English and U.S. legal advisers to the Seller, the
Third Issuer and the Servicer, addressed to, inter alios, the
Security Trustee; and
(b) Sidley Austin Brown & Wood, English and U.S. legal advisers to the
Co-Arrangers, addressed to, inter alios, the Security Trustee.
4. Transaction Documents
Duly 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 Funding 1 Swap Agreement;
(f) the Corporate Services Agreements;
(g) [the Funding 1 Liquidity Facility Agreement;]
(h) the First Issuer Intercompany Loan Agreement, the Second Issuer
Intercompany Loan Agreement and the Third Issuer Intercompany Loan
Agreement;
(i) the Cash Management Agreement;
(j) the Bank Account Agreement;
(k) the Funding 1 Guaranteed Investment Contract;
(l) the First Start-up Loan Agreement, the Second Issuer Start-up Loan
Agreement and the Third Start-up Loan Agreement;
(m) the Mortgage Sale Agreement;
(n) the Seller Power of Attorney;
(o) the Third Issuer Deed of Charge;
(p) the Third Issuer Cash Management Agreement;
(q) the Third Issuer Swap Agreements;
(r) the Third Issuer Bank Account Agreement;
(s) the Third Issuer Post-Enforcement Call Option Agreement;
(t) the Third Issuer Trust Deed;
(u) the Third Issuer Global Notes;
(v) the Third Issuer Paying Agent and Agent Bank Agreement;
(w) the Underwriting Agreement;
(x) the Subscription Agreement;
(y) the Mortgages Trustee Guaranteed Investment Contract; and
(z) the Amended and Restated Master Definitions and Construction
Schedule, the First Issuer Master Definitions and Construction
Schedule and the Third Issuer Master Definitions and Construction
Schedule.
5. Bond Documentation
(a) Confirmation that the Third Issuer Notes have been issued and the
subscription proceeds received by the Third Issuer; and
(b) Copies of the Prospectus and the Offering Circular.
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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)
Third Issuer
SIGNED by )
for and on behalf of )
PERMANENT FINANCING (NO. 3) 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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