DRAFT: 03.11.04 Exhibit 10.4
SIXTH START-UP LOAN AGREEMENT
DATED [{circle}], 2004
PERMANENT FUNDING (NO. 1) LIMITED
AS FUNDING 1
AND
HALIFAX PLC
AS SIXTH START-UP LOAN PROVIDER
AND
THE BANK OF NEW YORK
AS SECURITY TRUSTEE
ALLEN & OVERY
ALLEN & OVERY LLP
LONDON
CONTENTS
CLAUSE PAGE
1. Definitions and Interpretation.......................................... 1
2. The Facility............................................................ 1
3. Interest................................................................ 2
4. Repayment............................................................... 2
5. Acceleration............................................................ 3
6. Payments and Limited Recourse........................................... 3
7. Subordination and Security.............................................. 3
8. Notices................................................................. 4
9. Taxes................................................................... 5
10. Remedies and Waivers.................................................... 5
11. Assignments and Transfer................................................ 5
12. Security Trustee as a Party............................................. 6
13. No Partnership.......................................................... 6
14. Variation............................................................... 6
15. Invalidity of any Provision............................................. 6
16. Counterparts............................................................ 6
17. Exclusion of Third Party Rights......................................... 6
18. Governing Law........................................................... 6
19. Submission to Jurisdiction.............................................. 6
Signatories................................................................... 7
THIS SIXTH START-UP LOAN AGREEMENT is made on [{circle}], 2004.
BETWEEN:
(1) PERMANENT FUNDING (NO. 1) LIMITED (registered number 4267660), a private
limited company incorporated in England and Wales, whose registered office
is at Blackwell House, Guildhall Yard, London EC2V 5AE (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 Trinity Road, Halifax, West Yorkshire HX1 2RG (acting in its
capacity as SIXTH START-UP LOAN PROVIDER); and
(3) THE BANK OF NEW YORK, a New York banking corporation whose London branch
address is at 48th Floor, One Canada Square, London E14 5AL (acting in its
capacity as SECURITY TRUSTEE).
IT IS HEREBY AGREED as follows:
1. DEFINITIONS and INTERPRETATION
The amended and restated master definitions and construction schedule,
signed by, amongst others, the parties to this Agreement and dated
[{circle}], 2004 (as the same may be amended, varied or supplemented from
time to time with the consent of the parties to this Agreement) (the
MASTER DEFINITIONS AND CONSTRUCTION SCHEDULE) are expressly and
specifically incorporated into this Agreement and, accordingly, the
expressions defined in the Master Definitions and Construction Schedule
(as so amended, varied or supplemented from time to time) shall, except
where the context otherwise requires and save where otherwise defined
herein, have the same meanings in this Agreement, including the Recitals
hereto and this Agreement shall be construed in accordance with the
interpretation provisions set out in CLAUSE 2 of the Master Definitions
and Construction Schedule.
2. THE FACILITY
The Sixth Start-up Loan Provider grants to Funding 1 simultaneously with
the issue by the Sixth Issuer of the Sixth Issuer Notes on the Sixth
Issuer Closing Date and upon the terms and subject to the conditions
hereof, a sterling loan facility in an aggregate amount of up to
[GBP][{circle}] ([{circle}] pounds sterling) available by way of two
tranches (the amount so granted or such part of such amount as shall be
outstanding from time to time being referred to as the Advance) as
follows:
(a) a tranche in the sum of [GBP][{circle}] ([{circle}] pounds sterling)
for the purposes of increasing the amount of the General Reserve Fund
which shall be paid into the Funding 1 GIC Account; and
(b) a tranche in the sum of up to [GBP][{circle}] ([{circle}] pounds
sterling) for the purposes of providing funding for fees, costs and
expenses incurred by or on behalf of Funding 1 in respect of
increasing the Funding 1 Share of the Trust Property and in respect
of amounts payable by Funding 1 under the Sixth Issuer Intercompany
Loan in relation to the issue of the Sixth Issuer Notes which shall
be paid into the Funding 1 Transaction Account.
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3. INTEREST
3.1 The Advance and any interest capitalised pursuant to CLAUSE 3.4 will bear
interest from (and including) the Sixth 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 [September 2011], a margin of [{circle}]
per cent. per annum and (ii) from the Funding 1 Interest Payment Date in
[September 2011], a margin of [{circle}] 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 Sixth Start-up Loan Provider.
4.3 Subject to CLAUSES 5, 6.2, 6.3 and 7.2, on any Funding 1 Interest Payment
Date on which all Intercompany Loans have been repaid in full, Funding 1
shall immediately repay the Advance (including any interest capitalised
pursuant to CLAUSE 3.4) and pay any accrued but unpaid interest thereon.
4.4 The Sixth Start-up Loan Provider hereby acknowledges that (i) on 14th
June, 2002, Funding 1 entered into the First Start-up Loan Agreement with
the First Start-up Loan Provider, (ii) on 6th March, 2003, Funding 1
entered into the Second Start-Up Loan Agreement with the Second Start-Up
Loan Provider, (iii) on 25th November, 2003, Funding 1 entered into the
Third Start-up Loan Agreement with the Third Start-up Loan Provider, (iv)
on 12th March, 2004, Funding 1 entered into the Fourth Start-up Loan
Agreement with the Fourth Start-up Loan Provider, (v) on 22nd July, 2004,
Funding 1 entered into the Fifth Start-up Loan Agreement with the Fifth
Start-up Loan Provider, (vi) that from time to time Funding 1 may enter
into New Start-up Loan Agreements with New Start-up Loan Providers and
that the obligation of Funding 1 to repay the First Start-up Loan, the
Second Start-up Loan, the Third Start-up Loan, the Fourth Start-up Loan,
the Fifth Start-up Loan, the Sixth Start-up Loan and any New Start-up Loan
will at all times rank pari passu and the First Start-up Loan, the Second
Start-up Loan, the Third Start-up Loan, the Fourth Start-up Loan, the
Fifth Start-up Loan, the Sixth Start-up Loan and any New Start-up Loan
will be paid pro rata between
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themselves. The Sixth Start-up Loan Provider further acknowledges that the
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 Sixth 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 Sixth Start-up Loan
Provider and any New Start-up Loan Provider and the Sixth 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 Sixth Start-up Loan
Provider's account (sort code [{circle}], account number [{circle}],
account name: [{circle}]) (or such other account as the Sixth 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
CLAUSE 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 Sixth 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 Sixth Start-up Loan Provider pursuant to CLAUSE
8 of the Funding 1 Deed of Charge,
provided that the Sixth Start-up Loan Provider shall not release Funding 1
from Funding 1's obligation to pay the remaining amount that would have
been due under this Agreement had this CLAUSE 6.3 not applied and subject
to the Funding 1 Post-Enforcement Priority of Payments.
7. SUBORDINATION AND SECURITY
7.1 The parties hereby agree that the Advance shall be subordinated to, inter
alia, payments of principal and interest on any Intercompany Loan, and all
other payments or provisions ranking in priority to payments to be made to
the Sixth Start-up Loan Provider under this
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Agreement, in each case in accordance with the priority of payments or as
provided in CLAUSE 8 and SCHEDULE 3 of the Funding 1 Deed of Charge.
7.2 The Sixth 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 Sixth Start-up Loan Provider under this
Agreement and so that Funding 1 shall not be obliged to make any payment
to the Sixth 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 Act
1986. However, if there are sufficient Funding 1 Available Revenue
Receipts available and the Sixth 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 Sixth Start-up Loan Agreement.
7.3 Funding 1 undertakes that its obligations to the Sixth Start-up Loan
Provider hereunder shall at all times be secured by the Funding 1 Deed of
Charge.
7.4 The Sixth 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 Sixth 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 Sixth Start-up Loan Provider undertakes that it will not, prior to the
second anniversary of the date on which any Notes are redeemed in full,
take any corporate action or other steps (including, without limitation,
the filing of documents with the court or the service of a notice of
intention to appoint an administrator) or legal proceedings for the
winding up, dissolution or reorganisation or for the appointment of a
receiver, administrator, administrative receiver, trustee, liquidator,
sequestrator or similar officer of Funding 1 or of any or all of the
revenues and assets of Funding 1 nor participate in any ex parte
proceedings nor seek to enforce any judgment against Funding 1, except as
permitted under the provisions of the Funding 1 Deed of Charge.
8. NOTICES
Any notices to be given pursuant to this Agreement or to any of the
parties hereto shall be sufficiently served if sent by prepaid first class
post or by facsimile transmission and shall be deemed to be given (in the
case of facsimile transmission) when despatched, (where delivered by hand)
on the day of delivery if delivered before 17.00 hours on a London
Business Day or on the next London Business Day if delivered thereafter or
(in the case of first class post) when it would be received in the
ordinary course of the post and shall be sent:
(a) in the case of Funding 1: to Permanent Funding (No. 1) Limited,
Blackwell House, Guildhall Yard, London EC2V 5AE (facsimile number
+44 (0)20 7556 0975) for the attention of the Secretary with a copy
to HBOS Treasury Services plc, 33 Old Broad
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Street, London EC2N 1HZ (facsimile number +44 (0)20 7574 8784) for
the attention of Head of Capital Markets and Securitisation;
(b) in the case of the Sixth Start-up Loan Provider: to Halifax plc,
Trinity Road (LP/3/3/SEC), Halifax, West Yorkshire HX1 2RG (facsimile
number +44 (0) 113 235 7511) for the attention of the Head of
Mortgage Securitisation, with a 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; and
(c) in the case of the Security Trustee: to The Bank of New York, 48th
Floor, One Canada Square, London E14 5AL, (facsimile number +44 (0)20
7964 6399) for the attention of Global Structured Finance - Corporate
Trust,
or to such other address or facsimile number as may from time to time be
notified by any party to the other by written notice in accordance with
the provisions of this CLAUSE 8.
9. TAXES
9.1 All payments to be made by Funding 1 to the Sixth 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 Sixth 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 Sixth 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 Sixth Start-up Loan Provider to exercise, nor any delay
by the Sixth Start-up Loan Provider in exercising, any right or remedy
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right or remedy prevent any further or other
exercise thereof or the exercise of any other right or remedy. The rights
and remedies herein provided are cumulative and not exclusive of any
rights or remedies provided by law.
11. ASSIGNMENTS AND TRANSFER
11.1 Funding 1 (other than in respect of any assignment by way of security
pursuant to the Funding 1 Deed of Charge) may not assign and/or transfer
any of its rights and/or obligations under this Agreement.
11.2 If there is any change in the identity of the Security Trustee pursuant to
the terms of the Funding 1 Deed of Charge, the Sixth Start-up Loan
Provider and Funding 1 shall execute such documents and take such actions
as the new Security Trustee and the outgoing Security Trustee (as the case
may be) may reasonably require for the purpose of vesting in the new
Security Trustee the rights and obligations of the outgoing Security
Trustee and releasing the outgoing Security Trustee (as the case may be)
from its future obligations under this Agreement.
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12. SECURITY TRUSTEE AS A PARTY
The Security Trustee has agreed to become a party to this Agreement for
the better preservation and enforcement of its rights under this Agreement
but shall have no responsibility for any of the obligations of, nor assume
any liabilities to, the Sixth 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) Act 1999 to enforce any term of this
Agreement, but this does not affect any right or remedy of a third party
which exists or is available apart from that Act.
18. GOVERNING LAW
This Agreement shall be governed by the laws of England.
19. SUBMISSION TO JURISDICTION
Each party to this Agreement hereby irrevocably submits to the
non-exclusive jurisdiction of the English courts in any action or
proceeding arising out of or relating to this Agreement, and hereby
irrevocably agrees that all claims in respect of such action or proceeding
may be heard and determined by such courts. Each party to this Agreement
hereby irrevocably waives, to the fullest extent it may possibly do so,
any defence or claim that the English courts are an inconvenient forum for
the maintenance or hearing of such action or proceeding.
IN WITNESS WHEREOF the parties hereto have executed this Agreement on the date
first mentioned above.
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SIGNATORIES
FUNDING
SIGNED by )
for and on behalf of )
PERMANENT FUNDING (NO. 1) )
LIMITED ) ......................................
SIXTH START-UP LOAN PROVIDER
SIGNED by )
as attorney for and on behalf of )
HALIFAX PLC in the presence of: ) ......................................
Witness's Signature: .....................
Name: .....................
Address: .....................
SECURITY TRUSTEE
SIGNED by )
for and on behalf of )
THE BANK OF NEW YORK ) ......................................
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