Exhibit 4.1
FINAL VERSION
FIRST DEED OF AMENDMENT TO THE INTERCOMPANY
LOAN TERMS AND CONDITIONS
DATED 25TH NOVEMBER, 2003
PERMANENT FUNDING (NO. 1) LIMITED
AND
PERMANENT FINANCING (NO. 1) PLC
AND
PERMANENT FINANCING (NO. 2) PLC
AND
THE BANK OF NEW YORK
AND
CITIBANK, N.A.
ALLEN & OVERY
London
CONTENTS
CLAUSE PAGE
1. Interpretation.......................................................4
2. Amendments To The Original Intercompany Loan Terms and Conditions....4
3. Amendments...........................................................4
4. Exclusion of Third Party Rights......................................4
5. Counterparts and Severability........................................4
6. Governing Law and Jurisdiction.......................................5
Signatories...................................................................6
Appendix
THIS FIRST DEED OF AMENDMENT TO THE INTERCOMPANY LOAN TERMS AND CONDITIONS is
made on 25th November, 2003
BETWEEN:
(1) PERMANENT FUNDING (NO. 1) LIMITED (registered number 4267660), a private
limited company incorporated under the laws of England and Wales, whose
registered office is at Blackwell House, Guildhall Yard, London EC2V 5AE
(FUNDING 1);
(2) PERMANENT FINANCING (NO. 1) PLC (registered number 4416192), a public
limited company incorporated under the laws of England and Wales, whose
registered office is at Blackwell House, Guildhall Yard, London EC2V 5AE
(the FIRST ISSUER);
(3) PERMANENT FINANCING (NO. 2) PLC (registered number 4623188), a public
limited company incorporated under the laws of England and Wales, whose
registered office is at Blackwell House, Guildhall Yard, London EC2V 5AE
(the SECOND ISSUER);
(4) THE BANK OF NEW YORK, whose principal office is at One Canada Square,
London E14 5AL in its capacity as Security Trustee; and
(5) CITIBANK, N.A., acting through its office is at 5 Carmelite Street,
London EC4Y 0PA and acting in its capacity as the Agent Bank.
WHEREAS:
(A) On 14th June, 2002 the First Issuer made a loan to Funding 1 on the terms
set out in the terms and conditions signed for the purposes of
identification by Funding 1, the Agent Bank and the Security Trustee on
14th June, 2002 (the ORIGINAL INTERCOMPANY LOAN TERMS AND CONDITIONS) and
a separate intercompany loan confirmation dated 14th June, 2002 (the
FIRST ISSUER INTERCOMPANY LOAN CONFIRMATION (together the FIRST ISSUER
INTERCOMPANY LOAN AGREEMENT).
(B) On 6th March, 2003 the Second Issuer made a loan to Funding 1 on the
terms set out in the Original Intercompany Loan Terms and Conditions and
a separate intercompany loan confirmation dated 6th March, 2003 (the
SECOND ISSUER INTERCOMPANY LOAN CONFIRMATION (together the SECOND ISSUER
INTERCOMPANY LOAN AGREEMENT).
(C) From time to time Funding 1 may enter into new intercompany loan
agreements with New Issuers on the terms set out in the Intercompany Loan
Terms and Conditions (as amended and restated in the manner set out in
this Deed and from time to time) and the relevant new intercompany loan
confirmation (each a NEW INTERCOMPANY LOAN CONFIRMATION and together with
the Intercompany Loan Terms and Conditions a NEW INTERCOMPANY LOAN
AGREEMENT).
(D) The parties to the First Intercompany Loan Agreement and the Second
Intercompany Loan Agreement have agreed to amend and restate the Original
Intercompany Loan Terms and Conditions as set out herein.
NOW THIS DEED WITNESSES as follows:
1. INTERPRETATION
1.1 The amended and restated master definitions and construction schedule
signed by, amongst others, the parties to this Deed and dated 25th
November, 2003 (as the same may be amended, varied or supplemented from
time to time with the consent of the parties to this Deed) (the MASTER
DEFINITIONS AND CONSTRUCTION SCHEDULE) are expressly and specifically
incorporated into this Deed 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 Deed, including the Recitals hereto and this Deed shall
be construed in accordance with the interpretation provisions set out in
Clause 2 of the Master Definitions and Construction Schedule.
1.2 The Intercompany Loan Terms and Conditions as amended and restated
pursuant to this Deed will be referred to as the First Amended and
Restated Intercompany Loan Terms and Conditions and/or the Intercompany
Loan Terms and Conditions, as the context so requires.
2. AMENDMENTS TO THE ORIGINAL INTERCOMPANY LOAN TERMS AND CONDITIONS
2.1 Upon execution of this Deed by the parties hereto, the Original
Intercompany Loan Terms and Conditions shall be and hereby are amended
and restated in the form set out in the form of Appendix 1 hereto and the
First Issuer Intercompany Loan Agreement and the Second Intercompany Loan
Agreement will be deemed to be amended so that references to 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, shall be construed as the Intercompany Terms and Conditions
as amended and restated by this Deed.
3. AMENDMENTS
Subject to Clause 25.8 of the Funding 1 Deed of Charge (Supplemental
Provisions Regarding the Security Trustee), any amendments to this Deed
will be made only with the prior written consent of each party to this
Deed.
4. EXCLUSION OF THIRD PARTY RIGHTS
The parties to this Deed do not intend that any term of this Deed should
be enforced, by virtue of the Contracts (Rights of Third Parties) Act
1999, by any person who is not a party to this Deed.
5. COUNTERPARTS AND SEVERABILITY
5.1 This Deed may be executed in any number of counterparts (manually or by
facsimile) and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of
which when taken together shall constitute one and the same instrument.
5.2 Where any provision in or obligation under this Deed shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations under this
Deed, or of such provision or obligation in any other jurisdiction, shall
not be affected or impaired thereby.
6. GOVERNING LAW AND JURISDICTION
6.1 This Deed is governed by the laws of England.
6.2 Each party to this Deed hereby irrevocably submits to the non-exclusive
jurisdiction of the English courts in any action or proceeding arising
out of or relating to this Deed, 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 Deed 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.
DULY EXECUTED AND DELIVERED AS A DEED by each of the parties hereto or on its
behalf on the date appearing on page 1.
SIGNATORIES
FUNDING 1
EXECUTED as a DEED by )
PERMANENT FUNDING (NO. 1) )
LIMITED acting by two )
directors/a director and the secretary )
Director: DAVID BALAI
Director: JAMES GARNER SMITH MACDONALD
FIRST ISSUER
EXECUTED as a DEED by )
PERMANENT FINANCING (NO. 1) )
PLC acting by two )
directors/a director and the secretary )
Director: DAVID BALAI
Director: JAMES GARNER SMITH MACDONALD
SECOND ISSUER
EXECUTED as a DEED by )
PERMANENT FINANCING (NO. 2) )
PLC acting by two )
directors/a director and the secretary )
Director: DAVID BALAI
Director: JAMES GARNER SMITH MACDONALD
AGENT BANK
EXECUTED as a DEED on behalf of
CITIBANK, N.A., a company incorporated in )
the United States of America, )
in its capacity as Agent Bank )
by )GEORGIA MITCHELL
being a person who, in accordance with the laws
of that territory, is acting under the authority
of the company
SECURITY TRUSTEE
EXECUTED as a DEED by )KATE RUSSELL
THE BANK OF NEW YORK )
acting by its attorney in the presence of )
Witness: M. AFSHAR
Name: M. AFSHAR
Address: ALLEN & OVERY, LONDON
APPENDIX 1
AMENDED AND RESTATED INTERCOMPANY LOAN TERMS AND CONDITIONS
INTERCOMPANY LOAN TERMS AND CONDITIONS
PERMANENT FUNDING (NO. 1) LIMITED
CONTENTS
CLAUSE PAGE
1. Interpretation............................................................11
2. The Term Advances.........................................................11
3. Purpose...................................................................12
4. Limited Recourse..........................................................13
5. Utilisation of the Term Advances..........................................13
6. Interest..................................................................14
7. Repayment.................................................................16
8. Prepayment................................................................16
9. Taxes.....................................................................17
10. Illegality................................................................17
11. Mitigation................................................................18
12. Representations and Warranties of Funding 1...............................18
13. Covenants.................................................................20
14. Default...................................................................23
15. Default Interest and Indemnity............................................24
16. Payments..................................................................25
17. Entrenched Provisions.....................................................26
18. Further Provisions........................................................26
19. Redenomination............................................................28
20. Governing Law.............................................................28
SCHEDULE
1. Amended and Restated Intercompany Loan Terms And Conditions................8
2. Notice of Drawdown of a Term Advance......................................29
3. Solvency Certificate......................................................30
4. Form of Relevant Intercompany Loan Confirmation...........................32
Signatories.....................................................................
TERMS AND CONDITIONS MADE ON 14TH JUNE, 2002 and signed on the front page hereof
for the purposes of identification by Permanent Funding (No. 1) Limited,
Citibank, N.A., London Branch (in its capacity as Agent Bank) and State Street
Bank and Trust Company (in its capacity as Security Trustee).
WHEREAS:
(A) On 14th June, 2002 Permanent Financing (No. 1) PLC (the FIRST ISSUER)
shall make a loan to Permanent Funding (No. 1) Limited (FUNDING 1) on the
terms set out in these terms and conditions (the INTERCOMPANY LOAN TERMS
AND CONDITIONS) and the separate intercompany loan confirmation dated
14th June, 2002 (the FIRST ISSUER INTERCOMPANY LOAN CONFIRMATION
(together the FIRST ISSUER INTERCOMPANY LOAN AGREEMENT).
(B) From time to time Funding 1 may enter into new intercompany loan
agreements with New Issuers which shall be made on the terms set out in
these Intercompany Loan Terms and Conditions (as the same may be amended
from time to time in the manner set out herein) and the relevant new
intercompany loan confirmation (each a NEW INTERCOMPANY LOAN CONFIRMATION
and together with the Intercompany Loan Terms and Conditions a NEW
INTERCOMPANY LOAN AGREEMENT).
1. INTERPRETATION
1.1 Terms used but not otherwise defined in these Intercompany Loan Terms and
Conditions shall, except where the context otherwise requires and save
where otherwise defined in these Intercompany Loan Terms and Conditions
or the relevant Intercompany Loan Agreement, have the meanings given to
them in the master definitions and construction schedule dated 25th
November, 2003 and signed by the parties to the Transaction Documents (as
the same may be amended, varied or supplemented from time to time with
the consent of the parties to the Transaction Documents) (the MASTER
DEFINITIONS AND CONSTRUCTION SCHEDULE) and these Intercompany Loan Terms
and Conditions shall be construed accordingly. References in these
Intercompany Loan Terms and Conditions to the Intercompany Loan Agreement
shall include references to these Intercompany Loan Terms and Conditions
as incorporated into the Intercompany Loan Agreement by way of reference
and shall be construed accordingly.
2. THE TERM ADVANCES
2.1 CONDITIONS PRECEDENT
Save as the Issuer and the Security Trustee may otherwise agree, the Term
Advances will not be available for utilisation unless:
(a) Funding 1 and the Issuer have signed an Intercompany Loan
Confirmation (substantially in the form set out in Schedule 3 to
these Intercompany Loan Terms and Conditions);
(b) the Security Trustee has confirmed to Funding 1 that it or its
advisers have received all of the information and documents listed
in Schedule 1 to the Intercompany Loan Confirmation in form and
substance satisfactory to the Security Trustee; and
ALLEN & OVERY
Allen & Overy LLP
London
(c) the conditions set out in Clause 5.1 (Drawdown conditions relating
to the Term Advances) have been satisfied.
2.2 NEW INTERCOMPANY LOAN AGREEMENTS
Funding 1 may at any time, by written notice to the Security Trustee and
the Rating Agencies, enter into a New Intercompany Loan Agreement with a
New Issuer and draw additional term advances thereunder (each a NEW TERM
ADVANCE). Each New Term Advance will be financed by the issue of New
Notes by the New Issuer, and will only be permitted if the following
conditions precedent are satisfied on the relevant Drawdown Date:
(a) the proceeds of the New Intercompany Loan are used by Funding 1 in
accordance with Clause 3.1 (Purpose and application of the Term
Advances) hereof;
(b) each of the Rating Agencies confirms in writing to the Security
Trustee that there will not, as a result of the New Issuer issuing
any New Notes or Funding 1 entering into any additional agreements
as a result of entering into the New Intercompany Loan, be any
adverse effect on the then current ratings by the Rating Agencies
of the existing Notes of any Issuer, the proceeds of which have
been advanced to Funding 1 pursuant to, inter alia, these
Intercompany Loan Terms and Conditions;
(c) no Intercompany Loan Event of Default under any Intercompany Loan
Agreement is continuing or unwaived at the relevant Drawdown Date;
(d) the Principal Deficiency Ledger does not have a debit balance as
at the relevant Drawdown Date; and
(e) any other relevant conditions precedent specified in the
Intercompany Loan Confirmation.
3. PURPOSE
3.1 PURPOSE AND APPLICATION OF THE TERM ADVANCES
The Term Advances shall be used by Funding 1 either:
(a) to pay the Seller (in whole or in part) for New Loans to be
assigned to the Mortgages Trustee pursuant to the terms of the
Mortgage Sale Agreement (which shall increase the Funding 1 Share
of the Trust Property); and/or
(b) to acquire a portion of the Current Seller Share of the Trust
Property from the Seller pursuant to the terms of the Mortgages
Trust Deed; and/or
(c) to refinance the existing debt of Funding 1, including any
existing Intercompany Loan.
3.2 APPLICATION OF AMOUNTS
Without prejudice to the obligations of Funding 1 under this Clause 3,
neither the Security Trustee nor any of the Funding 1 Secured Creditors
shall be obliged to concern themselves as to the application of amounts
drawn by Funding 1 under the Intercompany Loan Agreement.
4. LIMITED RECOURSE
4.1 RECOURSE LIMITED TO AVAILABLE FUNDS
Each of the Issuer and the Security Trustee agree that the liability of
Funding 1 in respect of its obligations to repay principal and pay
interest or any other amounts due under the Intercompany Loan Agreement
or for any breach of any other representation, warranty, covenant or
undertaking of Funding 1 under the Intercompany Loan Agreement, shall be
limited to amounts standing to the credit of the Funding 1 Transaction
Account and the Funding 1 GIC Account from time to time (including, for
the avoidance of doubt, amounts received by Funding 1 in respect of the
Funding 1 Share of the Trust Property and from the Funding 1 Swap
Provider); provided that the application of such amounts to the discharge
of Funding 1's obligations under an Intercompany Loan Agreement shall be
subject to the terms of the Funding 1 Deed of Charge and the relevant
Funding 1 Priority of Payments in all cases.
4.2 SHORTFALL ON FINAL REPAYMENT DATE IN RESPECT OF CERTAIN TERM ADVANCES
(a) Clause 4.2(b) will only apply to those Term Advances specified in the
Intercompany Loan Confirmation.
(b) On the Final Repayment Date of an Intercompany Loan, the amount of
interest and principal due and payable on the Term AA Advances or Term
BBB Advances of that Intercompany Loan shall be an amount equal to the
sum available to pay all outstanding interest and/or principal amounts
due (including interest and principal amounts deferred and unpaid) on
such Term Advance after paying amounts of a higher order of priority in
accordance with the relevant Funding 1 Priority of Payments. To the
extent that on the Final Repayment Date of an Intercompany Loan there is
a shortfall between the amount available to pay such interest and
principal on the Term AA Advances or Term BBB Advances of that
Intercompany Loan and the amount required to pay such interest and
principal on such Term Advance, then shall shortfall shall be
extinguished on the Final Repayment Date of such Term Advance and Funding
1 shall have no further liability therefor.
5. UTILISATION OF THE TERM ADVANCES
5.1 DRAWDOWN CONDITIONS RELATING TO THE TERM ADVANCES
Save as otherwise provided in the Intercompany Loan Agreement, the Term
Advances will be made available by the Issuer to Funding 1 on the Closing
Date if:
(a) the Notes have been issued by the Issuer and the subscription
proceeds have been received by or on behalf of the Issuer;
(b) not later than 2.00 p.m. (London time) on the Closing Date (or
such later time as may be agreed in writing by Funding 1,
theIssuer and the Security Trustee), the Issuer and the Security
Trustee have received from Funding 1 a Drawdown Notice requesting
a drawing under the Intercompany Loan Agreement, receipt of which
shall (subject to the terms of the Intercompany Loan Agreement and
to the issue of the Notes by the Issuer) oblige Funding 1 to
borrow the whole of the amount requested in the Drawdown Notice on
the date stated in the Drawdown Notice (which shall be the Closing
Date) upon the terms and subject to the conditions contained in
the Intercompany Loan Agreement;
(c) Funding 1 has confirmed in the relevant Drawdown Notice that:
(i) no Intercompany Loan Event of Default has occurred and is
continuing unremedied (if capable of remedy) or unwaived or
would result from the making of the Term Advances;
(ii) the representations set out in Clause 12 (Representations
and Warranties of Funding 1) are true on and as of the
Closing Date by reference to the facts and circumstances
then existing;
(d) the aggregate principal amount of the Term Advances to be drawn on
the Drawdown Date would not exceed the amount available for
drawing under the Intercompany Loan Agreement as at the relevant
Drawdown Date; and
(e) Funding 1 has delivered a solvency certificate substantially in
the form set out in Schedule 2 to these Intercompany Loan Terms
and Conditions.
5.2 SINGLE DRAWING OF THE TERM ADVANCES
Each of the Term Advances will only be available for drawing in one
amount by Funding 1 on the Drawdown Date subject to satisfaction of the
matters specified in Clause 2.1 (Conditions precedent) and Clause 5.1
(Drawdown conditions relating to the Term Advances).
6. INTEREST
6.1 INTEREST PERIODS
(a) The first Interest Period will commence on (and include) the Drawdown
Date of the Term Advances and end on (but exclude) the first Funding 1
Interest Payment Date falling thereafter. Each subsequent Interest Period
shall commence on (and include) a Funding 1 Interest Payment Date and end
on (but exclude) the next following Funding 1 Interest Payment Date.
(b) Whenever it is necessary to compute an amount of interest in respect of
the Term Advances for any period (including any Interest Period), such
interest shall be calculated on the basis of actual days elapsed in a 365
day year.
6.2 DETERMINATION OF TERM ADVANCE RATES OF INTEREST
(a) The rate of interest payable in respect of each Term Advance (each a TERM
ADVANCE RATE OF INTEREST and together the TERM ADVANCE RATES OF INTEREST)
shall be determined on the basis of the provisions set out below:
(i) On the first TERM ADVANCE INTEREST DETERMINATION DATE (being the
first day of the Interest Period for which the rate will apply) of
the Term Advances, the Agent Bank will determine the Term Advance
Rates of Interest in accordance with the provisions of the
Intercompany Loan Confirmation;
(ii) on each subsequent Term Advance Interest Determination Date, the
Agent Bank will determine the Relevant Screen Rate in respect of
each Term Advance as at or about 11.00 a.m. (London time) on the
Term Advance Interest Determination Date in question. If the
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 quotation to leading banks
for 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 the Term Advance Interest Determination Date and the Term
Advance Rates of Interest for the relevant Interest Period shall
be the aggregate of (A) the Relevant Margin (as defined in the
relevant Intercompany Loan Confirmation) for the Term Advances and
(B) the Relevant Screen Rate for the Term Advances or, if the
Relevant Screen Rate is unavailable, the linear interpolation of
the arithmetic mean of such offered quotations for three-month
Sterling deposits (rounded upwards, if necessary, to five decimal
places); and
(iii) if on any Term Advance Interest Determination Date, the Relevant
Screen Rate is unavailable and only two or three of the Reference
Banks provide offered quotations, the Term Advance Rates of
Interest for the relevant Interest Period shall be determined in
accordance with the provisions of sub-paragraph (i) or, as the
case may be, (ii) above on the basis of the offered quotations of
those Reference Banks providing such quotations. If, on any such
Term Advance Interest Determination Date, only one or none of the
Reference Banks provide the Agent Bank with such an offered
quotation, the Agent Bank shall forthwith consult with the
Security Trustee and the Issuer for the purposes of agreeing two
banks (or, where one only of the Reference Banks provided such a
quotation, one additional bank) to provide such a quotation or
quotations to the Agent Bank (which bank or banks are in the
opinion of the Security Trustee suitable for such purpose) and the
Term Advance Rates of Interest for the Interest Period in question
shall be determined, as aforesaid, on the basis of the offered
quotations of such banks as so agreed (or, as the case may be, the
offered quotations of such bank as so agreed and the relevant
Reference Bank). If no such bank or banks is or are so agreed or
such bank or banks as so agreed does or do not provide such a
quotation or quotations, then the Term Advance Rates of Interest
for the relevant Interest Period shall be the Term Advance Rates
of Interest in effect for the last preceding Interest Period to
which sub-paragraph (i) or sub-paragraph (ii), as the case may be,
shall have applied but taking account of any change in the
Relevant Margin.
There will be no maximum or minimum Term Advance Rate of Interest.
(b) The Agent Bank shall, as soon as practicable after 11.00 a.m. (London
time) on each Term Advance Interest Determination Date, determine and
notify the Issuer, Funding 1, the Cash Manager and the Security Trustee
of (i) the Term Advance Rates of Interest applicable to the relevant
Interest Period and (ii) the sterling amount (the INTEREST AMOUNT)
payable in respect of such Interest Period in respect of the Outstanding
Principal Balance of each Term Advance. The Interest Amount in respect of
each Term Advance shall be determined by applying the relevant Term
Advance Rate of Interest to the Outstanding Principal Balance of the
relevant Term Advance, multiplying the sum by 365 days and rounding the
resultant figure to the nearest pence (half a pence being rounded
upwards).
(c) If the Agent Bank does not at any time for any reason determine the Term
Advance Rate of Interest and/or calculate the Interest Amount for any of
the Term Advances in accordance with the foregoing paragraphs, the
Security Trustee shall (i) determine the Term Advance Rate of Interest at
such rate as (having such regard as it shall think fit to the procedure
described above) it shall deem fair and reasonable in all the
circumstances and/or (as the case may be) (ii) calculate the Interest
Amount for each Term Advance in the manner specified in Clause 6.2(a) and
any such determination and/or calculation shall be deemed to have been
made by the Agent Bank.
(d) All notifications, opinions, determinations, certificates, calculations,
quotations and decisions given, expressed, made or obtained for the
purposes of this Clause 6, whether by the
Reference Banks (or any of them) or any other bank or the Agent Bank or
the Security Trustee shall (in the absence of wilful default, bad faith
or manifest error) be binding on Funding 1, the Issuer, the Cash Manager,
the Reference Banks, such bank, the Agent Bank, the Security Trustee and
(in such absence as aforesaid) no liability to Funding 1 shall attach to
the Issuer, the Reference Banks, such bank, the Agent Bank, the Security
Trustee or the Cash Manager in connection with the exercise or
non-exercise by them or any of them of their powers, duties and
discretions hereunder.
7. REPAYMENT
7.1 REPAYMENT ON FUNDING 1 INTEREST PAYMENT DATES
Each Term Advance shall be repaid in instalments on the Funding 1
Interest Payment Dates and in the amounts specified in the Intercompany
Loan Confirmation.
7.2 TERM ADVANCE RATINGS DETERMINE ORDER OF REPAYMENT
(a) Unless otherwise specified in the Intercompany Loan Confirmation, each
Term Advance shall be repaid (as to both interest and principal) in
accordance with the Term Advance Rating of that Term Advance, such that,
to the extent that amounts are due and payable on more than one Term
Advance on any Funding 1 Interest Payment Date, the Term Advance with the
highest Term Advance Rating shall be repaid (as to both interest and
principal) ahead of the Term Advances with the next highest Term Advance
Rating, down to the Term Advances with the lowest Term Advance Rating
being repaid (as to both interest and principal) only after all of the
Term Advances with higher Term Advance Ratings have been repaid.
(b) The Term Advances shall be funded by the issue of a class or classes of
Notes to be issued by the Issuer. The Term Advance Ratings shall be
determined by the rating assigned by the Rating Agencies to the relevant
class of Notes on the Closing Date. If the ratings assigned to a class of
Notes by any Rating Agency changes after the Closing Date, then that
shall not affect the designated Term Advance Ratings. If the ratings
assigned to two or more Term Advances (including any New Term Advances)
are the same, then those Term Advances and New Term Advances will be
repaid (as to both interest and principal) pro rata and pari passu (but
subject to the relevant Schedule Repayment Dates and permitted repayment
dates thereof). If the ratings assigned to a class of Notes by the Rating
Agencies are not consistent, then the affected Term Advance will reflect
all the ratings assigned to it and Funding 1 will make payments on such
Term Advance after making payments on Term Advances with a Term Advance
Rating equivalent to or higher than the highest of the ratings assigned
to the affected Term Advance and before Term Advances with a Term Advance
Rating equivalent to or lower than the lowest of the ratings assigned to
the affected Term Advance (unless otherwise agreed with the Security
Trustee and the Rating Agencies).
(c) The Term Advance Ratings for each Term Advance are specified in the
Intercompany Loan Confirmation.
8. PREPAYMENT
8.1 PREPAYMENT FOR TAXATION OR OTHER REASONS
If:
(a) the total Interest Amount in relation to the Intercompany Loan for
any Interest Period ceases to be receivable (on account of any
present or future Taxes, duties, assessments or governmental
charges of whatever nature); or
(b) a Term Advance becomes illegal as described in Clause 10
(Illegality); or
(c) the Issuer is required to deduct or withhold from any payment of
principal, interest or premium in respect of its Notes any amount
for or on account of Tax,
then, without prejudice to the obligations of Funding 1 under Clause 10
(Illegality) and subject to Clause 11 (Mitigation), Funding 1 may, on any
Funding 1 Interest Payment Date having given not more than 60 days and
not less than 30 days' (or such shorter period as may be required by any
relevant law in the case of any Term Advance which becomes illegal
pursuant to Clause 10 (Illegality)) prior written notice to the Issuer
and the Security Trustee (or on or before the latest date permitted by
the relevant law in the case of Clause 10 (Illegality)) and while the
relevant circumstances continue, prepay all but not some only of all of
the Term Advances without penalty or premium but subject to Clause 15
(Default Interest and Indemnity).
8.2 APPLICATION OF MONIES
The Issuer hereby agrees to apply any amounts received by way of
prepayment pursuant to Clauses 7.1 (Repayment on Funding 1 Interest
Payment Dates) and 8.1 (Prepayment for taxation or other reasons) in
making prepayments under the Notes.
8.3 FUNDING 1 LEDGERS
Funding 1 shall maintain, or cause to be maintained, the Funding 1
Ledgers in accordance with the Cash Management Agreement.
9. TAXES
9.1 NO GROSS UP
All payments by Funding 1 under the Intercompany Loan Agreement shall be
made without any deduction or withholding for or on account of and free
and clear of, any Taxes, except to the extent that Funding 1 is required
by law to make payment subject to any Taxes.
9.2 TAX RECEIPTS
All Taxes required by law to be deducted or withheld by Funding 1 from
any amounts paid or payable under the Intercompany Loan Agreement shall
be paid by Funding 1 when due and Funding 1 shall, within 30 days of the
payment being made, deliver to the Issuer evidence satisfactory to that
Issuer (including all relevant Tax receipts) that the payment has been
duly remitted to the appropriate authority.
10. ILLEGALITY
If, at any time, it is unlawful for the Issuer to make, fund or allow to
remain outstanding a Term Advance made or to be made by it under the
Intercompany Loan Agreement, then the Issuer shall, promptly after
becoming aware of the same, deliver to Funding 1, the Security Trustee
and the Rating Agencies a legal opinion to that effect from reputable
counsel and if the Issuer so requires, Funding 1 shall promptly to the
extent necessary to cure such illegality prepay all the Term Advances
subject to and in accordance with the provisions of Clause 8.1
(Prepayment for taxation or other reasons).
11. MITIGATION
If circumstances arise in respect of the Issuer which would, or would
upon the giving of notice, result in:
(a) the prepayment of the Term Advances pursuant to Clause 10
(Illegality);
(b) a withholding or deduction from the amount to be paid by Funding 1
on account of Taxes, pursuant to Clause 9 (Taxes),
then, without in any way limiting, reducing or otherwise qualifying the
obligations of Funding 1 under this Agreement, the Issuer shall:
(i) promptly upon becoming aware of the circumstances, notify the
Security Trustee, Funding 1 and the Rating Agencies; and
(ii) upon written request from Funding 1, take such steps as may be
practical to mitigate the effects of those circumstances including
(without limitation) the assignment of all its rights under the
Intercompany Loan Agreement to, and assumption of all its
obligations under that Intercompany Loan Agreement by, another
company satisfactory to the Security Trustee, which is willing to
participate in the relevant Term Advances in its place and which
is not subject to (a) and/or (b) above,
provided that no such transfer or assignment and transfer may be
permitted unless the Rating Agencies confirm in writing to the Issuer and
the Security Trustee that there will be no downgrading of the then
current rating of the Notes of any Issuer as a result and Funding 1
indemnifies the Issuer and the Security Trustee for any reasonable costs
and expenses properly incurred as a result of such transfer or
assignment.
12. REPRESENTATIONS AND WARRANTIES OF FUNDING 1
12.1 REPRESENTATIONS AND WARRANTIES
Funding 1 makes the representations and warranties set out in this Clause
12 to the Issuer and the Security Trustee (as trustee for each of the
Funding 1 Secured Creditors).
12.2 STATUS
(a) It is a limited liability company duly incorporated, validly existing and
registered under the laws of the jurisdiction in which it is
incorporated, capable of being sued in its own right and not subject to
any immunity from any proceedings.
(b) It has the power to own its property and assets and to carry on its
business as it is being conducted.
12.3 POWERS AND AUTHORITY
It has the power to enter into, perform and deliver, and has taken all
necessary corporate and other action to authorise the execution, delivery
and performance by it of each of the Transaction Documents to which it is
a party.
12.4 LEGAL VALIDITY
Each Transaction Document to which it is or will be a party constitutes
or when executed in accordance with its terms will constitute, a legal,
valid and binding obligation enforceable in accordance with its terms,
subject to general equitable principles, insolvency, liquidation and
other laws affecting creditors rights generally.
12.5 NON-CONFLICT
The execution by it of each of the Transaction Documents to which it is
a party and the exercise by it of its rights and the performance of its
obligations under such Transaction Documents including, without
limitation, borrowing pursuant to the terms of the Intercompany Loan
Agreement or granting any security contemplated by the Transaction
Documents will not:
(a) result in the existence or imposition of nor oblige it to create
any Security Interest in favour of any person (other than the
Funding 1 Secured Creditors) over all or any of its present or
future revenues or assets;
(b) conflict with any document which is binding upon it or any of its
assets;
(c) conflict with its constitutional documents; or
(d) conflict with any law, regulation or official or judicial order of
any government, governmental body or court, domestic or foreign,
having jurisdiction over it.
12.6 NO LITIGATION
No litigation, arbitration or administrative proceedings are current or,
to its knowledge, pending or threatened.
12.7 NO DEFAULT
No Intercompany Loan Event of Default is continuing unremedied (if
capable of remedy) or unwaived or would result from the making of any
Term Advance.
12.8 AUTHORISATIONS
All governmental consents, licences and other approvals and
authorisations required or desirable in connection with the entry into,
performance, validity and enforceability of, and the transactions
contemplated by, the Transaction Documents have been obtained or effected
(as appropriate) and are in full force and effect.
12.9 REGISTRATION REQUIREMENTS
Except for due registration of the Funding 1 Deed of Charge under Section
395 of the Companies Act 1985, it is not necessary that the Funding 1
Deed of Charge or the Intercompany Loan Agreement be filed, recorded or
enrolled with any authority or that, except for registration fees payable
to the Registrar of Companies in respect of the Security Documents, any
stamp, registration or similar tax be paid on or in respect thereof.
12.10 RANKING OF SECURITY
The security conferred by the Funding 1 Deed of Charge constitutes a
first priority security interest of the type described in the Funding 1
Deed of Charge, over the security assets referred to, in the Funding 1
Deed of Charge and the security assets are not subject to any prior or
pari passu Security Interests.
12.11 NO OTHER BUSINESS
(a) It has not traded or carried on any business since its date of
incorporation or engaged in any activity whatsoever that is not
incidental to or necessary in connection with any of the activities in
which the Transaction Documents provide or envisage that it will engage.
(b) It is not party to any material agreements other than the Transaction
Documents.
12.12 OWNERSHIP
(a) Its entire issued share capital is legally and beneficially owned and
controlled by Holdings.
(b) Its shares are fully paid.
12.13 GOOD TITLE AS TO ASSETS
Funding 1 is and will remain the absolute beneficial owner of the Funding
1 Share and absolute legal and beneficial owner of all other assets
charged or assigned by the Funding 1 Deed of Charge to which it is a
party.
12.14 TAX
(a) It is tax resident and legally domiciled in its jurisdiction of
incorporation.
(b) It has no branch, business establishment or other fixed establishment
outside the United Kingdom.
12.15 REPETITION
The representations in this Clause 12 shall survive the execution of the
Intercompany Loan Agreement and the making of each Term Advance under the
Intercompany Loan Agreement, and shall be repeated by Funding 1 on each
Funding 1 Interest Payment Date after the date of the Intercompany Loan
Agreement by reference to the facts and circumstances then subsisting.
13. COVENANTS
13.1 DURATION
The undertakings in this Clause 13 remain in force from the date of the
Intercompany Loan Agreement for so long as any amount is or may be
outstanding under the Intercompany Loan Agreement.
13.2 INFORMATION
Funding 1 shall supply to the Security Trustee and the Rating Agencies:
(a) as soon as the same are available its audited accounts for that
Financial Year; and
(b) promptly, such other information in connection with the matters
contemplated by the Transaction Documents as the Security Trustee
or the Rating Agencies may reasonably request.
13.3 NOTIFICATION OF DEFAULT
Funding 1 shall notify the Issuer and the Security Trustee of any
Intercompany Loan Event of Default (and the steps, if any, being taken to
remedy it) promptly upon its occurrence.
13.4 AUTHORISATIONS
Funding 1 shall promptly:
(a) obtain, maintain and comply with the terms of; and
(b) upon request, supply certified copies to the Issuer and the
Security Trustee of,
any authorisation required under any law or regulation to enable it to
perform its obligations under, or for the validity or enforceability of,
any Transaction Document to which it is a party.
13.5 PARI PASSU RANKING
Funding 1 shall procure that its obligations under the Transaction
Documents do and will rank at least pari passu with all its other present
and future unsecured obligations, except for obligations mandatorily
preferred by law applying to companies generally.
13.6 NEGATIVE PLEDGE
Funding 1 shall not create or permit to subsist any security interest
(including but not limited to any mortgage, standard security, charge
(whether legal or equitable), assignment by way of security, pledge,
lien, hypothecation or other security interest securing any obligation of
any person (including, without limitation, any trust or arrangement
having the effect of providing security)) over or in respect of any of
its assets (unless arising by operation of law) other than as provided
pursuant to the Transaction Documents.
13.7 DISPOSALS
Funding 1 shall not either in a single transaction or in a series of
transactions, whether related or not and whether voluntarily or
involuntarily, sell, transfer, lease or otherwise dispose of all or any
part of its assets, properties or undertakings or any interest, estate,
rights, title or benefits therein, other than as provided for pursuant to
the Transaction Documents.
13.8 MERGERS AND ACQUISITIONS
(a) Funding 1 shall not, without the consent of the Issuer and the Security
Trustee, enter into any amalgamation, demerger, merger or reconstruction.
(b) Funding 1 shall not acquire any assets or business or make any
investments other than as contemplated in the Transaction Documents.
13.9 LENDING AND BORROWING
(a) Save as contemplated by the Transaction Documents, Funding 1 shall not
make any loans or provide any other form of credit to any person.
(b) Funding 1 shall not give any guarantee or indemnity to or for the benefit
of any person in respect of any obligation of any other person or enter
into any document under which Funding 1 assumes any liability of any
other person.
(c) Funding 1 shall not incur any indebtedness in respect of any borrowed
money other than under the Transaction Documents.
13.10 SHARES AND DIVIDENDS
Funding 1 shall not:
(a) declare or pay any dividend or make any other distribution in
respect of any of its shares other than in accordance with the
Funding 1 Deed of Charge;
(b) issue any further shares or alter any rights attaching to its
issued shares as at the date hereof; or
(c) repay or redeem any of its share capital.
13.11 CHANGE OF BUSINESS
(a) Funding 1 shall not carry on any business or engage in any activity other
than as contemplated by the Transaction Documents.
(b) Funding 1 shall not have any subsidiaries or subsidiary undertakings as
defined in the Companies Act 1985.
(c) Funding 1 shall not have any employees or own any premises.
13.12 TAX
(a) Funding 1 shall join with the Issuer in making a group income election
under section 247 of the Income and Corporation Taxes Act 1988 in
relation to any such payments as are referred to in section 247(4) of
that Act and which are made under the Intercompany Loan Agreement by
Funding 1 to the Issuer and Funding 1 will ensure that no steps will be
taken (whether by act, omission or otherwise) by it which would
reasonably be expected to lead to the revocation or invalidation of the
aforementioned election. Funding 1 shall immediately notify the Issuer
and the Security Trustee if it becomes aware that the aforementioned
election has ceased to be in full force and effect or if circumstances
arise, of which it is aware, which would be reasonably likely to result
in that election ceasing to be in full force and effect.
(b) Funding 1 shall not apply to become part of any group for the purposes of
section 43 of the Value Added Tax Act 1994 with the Issuer unless
required to do so by law.
13.13 UNITED STATES ACTIVITIES
Funding 1 will not engage in any activities in the United States
(directly or through agents), will not derive any income from United
States sources as determined under United States income tax principles
and will not hold any property if doing so would cause it to be engaged
or deemed to be engaged in a trade or business within the United States
as determined under United States tax principles.
14. DEFAULT
14.1 INTERCOMPANY LOAN EVENTS OF DEFAULT
Each of the events set out in Clauses 14.2 to 14.9 (inclusive) is an
Intercompany Loan Event of Default (whether or not caused by any reason
whatsoever outside the control of Funding 1 or any other person).
14.2 NON-PAYMENT
Subject to Clause 4.1 (Recourse limited to available funds), Funding 1
does not pay on the due date or for a period of three London Business
Days after such due date any amount payable by it under any Intercompany
Loan Agreement at the place at and in the currency in which it is
expressed to be payable.
14.3 BREACH OF OTHER OBLIGATIONS
Funding 1 does not comply in any material respect with any of its
obligations under the Transaction Documents (other than those referred to
in Clause 14.2 (Non-payment)) and such non-compliance, if capable of
remedy, is not remedied promptly and in any event within twenty London
Business Days of Funding 1 becoming aware of the non-compliance or
receipt of a notice from the Security Trustee requiring Funding 1's
non-compliance to be remedied.
14.4 MISREPRESENTATION
A representation, warranty or statement made or repeated in or in
connection with any Transaction Document or in any document delivered by
or on behalf of Funding 1 under or in connection with any Transaction
Document is incorrect in any material respect when made or deemed to be
made or repeated.
14.5 INSOLVENCY
Any corporate action is taken by Funding 1, or any legal proceedings are
started, for the winding-up, dissolution, administration or appointment
of a liquidator, receiver, administrator, administrative receiver,
trustee or similar officer of Funding 1 or of any or all of Funding 1's
revenues and assets or any documents are filed with the court for the
appointment of an administrator of Funding 1 or any formal notice of
intention to appoint an administrator of Funding 1 is served or any
application is made or petition is lodged for the making of an
administration order in relation to Funding 1 .
14.6 CREDITORS' PROCESS
Any attachment, sequestration, distress or execution affects any asset of
Funding 1 and is not discharged within twenty London Business Days.
14.7 UNLAWFULNESS
It is or becomes unlawful for Funding 1 to perform any of its obligations
under any Transaction Document.
14.8 THE FUNDING 1 DEED OF CHARGE
The Funding 1 Deed of Charge is not, or is alleged by Funding 1 not to
be, binding on or enforceable against Funding 1 or effective to create
the security intended to be created by it.
14.9 OWNERSHIP
The entire issued share capital of Funding 1 ceases to be legally and
beneficially owned and controlled by Holdings.
14.10 ACCELERATION
Upon the occurrence of an Intercompany Loan Event of Default which is
continuing unremedied and/or has not been waived, the Security Trustee
may by written notice to Funding 1 (the INTERCOMPANY LOAN ACCELERATION
NOTICE) which is copied to each of the Funding 1 Secured Creditors and
the Mortgages Trustee:
(a) declare the Term Advances under each or any Intercompany Loan
Agreement to be immediately due and payable (whereupon the same
shall, subject to Clause 14.11 (Repayment of Term Loan on
acceleration)), become so payable together with accrued interest
thereon and any other sums then owed by Funding 1 under the
relevant Intercompany Loan Agreement or Agreements; and/or
(b) declare the Term Advances under each or any Intercompany Loan
Agreement to be due and payable on demand of the Security Trustee.
14.11 REPAYMENT OF TERM LOAN ON ACCELERATION
Upon the Security Trustee declaring the Term Advances to be immediately
due and payable pursuant to Clause 14.10(a) (Acceleration), the amount
due and payable in respect of the Term Advances shall be calculated on
the basis described in Clause 8.1 (Prepayment for taxation or other
reasons).
15. DEFAULT INTEREST AND INDEMNITY
15.1 DEFAULT LOAN INTEREST PERIODS
If any sum due and payable by Funding 1 under the Intercompany Loan
Agreement is not paid on the due date for payment in accordance with the
relevant provision of the Intercompany Loan Agreement or if any sum due
and payable by Funding 1 under any judgment or decree of any court in
connection with the Intercompany Loan Agreement is not paid on the date
of such judgment or decree, the period beginning on such due date or, as
the case may be, the date of such judgment or decree and ending on the
date upon which the obligation of Funding 1 to pay such sum (the balance
thereof for the time being unpaid being herein referred to as an UNPAID
SUM) is discharged shall be divided into successive periods, each of
which (other than the first) shall start on the last day of the preceding
such period and the duration of each of which shall (except as otherwise
provided in this Clause 15) be selected by the Security Trustee having
regard to when such unpaid sum is likely to be paid.
15.2 DEFAULT INTEREST
During each such period relating to an unpaid sum as is mentioned in this
Clause 15 an unpaid sum shall bear interest at the rate per annum which
the Issuer, acting reasonably, determines and certifies to Funding 1 and
the Security Trustee, will be sufficient to enable it
to pay interest and other costs and indemnities on or in respect of any
amount which the Issuer does not pay as a result of a non-payment under
the Intercompany Loan Agreement, and/or any drawing made by it under the
Liquidity Facility Agreement, as a result of such unpaid sum not being
paid to it.
15.3 PAYMENT OF DEFAULT INTEREST
Any interest which shall have accrued under Clause 15.2 (Default
interest) in respect of an unpaid sum shall be due and payable and shall
be paid by Funding 1 at the end of the period by reference to which it is
calculated or on such other date or dates as the Security Trustee may
specify by written notice to Funding 1.
15.4 BROKEN PERIODS
Funding 1 shall forthwith on demand indemnify the Issuer against any loss
or liability that the Issuer incurs as a consequence of any payment of
principal being received from any source otherwise than on a Funding 1
Interest Payment Date or an overdue amount being received otherwise than
on its due date.
15.5 FUNDING 1'S PAYMENT INDEMNITY
Funding 1 undertakes to indemnify the Issuer:
(a) against any cost, claim, loss, expense (including legal fees) or
liability together with any amount in respect of Irrecoverable VAT
thereon (other than by reason of the negligence or wilful default
by the Issuer), which it may sustain or incur as a consequence of
the occurrence of any Intercompany Loan Event of Default or any
default by Funding 1 in the performance of any of the obligations
expressed to be assumed by it in any of the Transaction Documents
(other than by reason of negligence or wilful default on the part
of the Issuer or prior breach by the Issuer of the terms of any of
the Transaction Documents to which it is a party);
(b) against any loss it may suffer as a result of its funding a Term
Advance requested by Funding 1 under the Intercompany Loan
Agreement (which shall include the amounts referred to in clause 6
of the Intercompany Loan Confirmation) but not made; and
(c) against any other loss or liability (other than by reason of the
negligence or default of the Issuer or breach by the Issuer of the
terms of any of the Transaction Documents to which it is a party
(except where such breach is caused by the prior breach of Funding
1) or loss of profit) it may suffer by reason of having made the
Term Advances available or entering into the Intercompany Loan
Agreement or enforcing any security granted pursuant to the
Funding 1 Deed of Charge.
16. PAYMENTS
16.1 PAYMENT
(a) Subject to Clause 4 (Limited Recourse), interest and principal shall be
paid on the Term Advances for value by Funding 1 to the Issuer
Transaction Account specified by the Issuer in the Intercompany Loan
Confirmation on each Funding 1 Interest Payment Date and the relevant
irrevocable payment instruction for such payment shall be given by
Funding 1 by no later than noon to the Cash Manager under the Cash
Management Agreement (with a copy to the Issuer and the Security Trustee)
on the Intercompany Loan Determination Date immediately before the
relevant Funding 1 Interest Payment Date.
(b) On each date on which the Intercompany Loan Agreement requires an amount
to be paid by Funding 1 under that Intercompany Loan Agreement, Funding 1
shall, unless the Intercompany Loan Agreement specifies otherwise, make
the same available to the Issuer in accordance with the terms of the
Intercompany Loan Agreement and by payment in Sterling in immediately
available, freely transferable, cleared funds to the Issuer Transaction
Account specified in the Intercompany Company Loan Confirmation or, if
the Intercompany Loan Agreement specifies otherwise, to the relevant
account or to such other account as the Issuer (with the consent of the
Security Trustee) may notify to Funding 1 for this purpose.
16.2 ALTERNATIVE PAYMENT ARRANGEMENTS
If, at any time, it shall become impracticable (by reason of any action
of any governmental authority or any change in law, exchange control
regulations or any similar event) for Funding 1 to make any payments
under the Intercompany Loan Agreement in the manner specified in Clause
16.1 (Payment), then Funding 1 shall make such alternative arrangements
for the payment direct to the Issuer of amounts due under the
Intercompany Loan Agreement as are acceptable to the Security Trustee
(acting reasonably).
16.3 NO SET-OFF
Subject to the terms of the Intercompany Loan Confirmation, all payments
required to be made by Funding 1 under the Intercompany Loan Agreement
shall be calculated without reference to any set-off or counterclaim and
shall be made free and clear of and without any deduction for or on
account of any set-off or counterclaim.
17. ENTRENCHED PROVISIONS
Each of Funding 1, the Issuer and the Security Trustee acknowledge and
agree that Funding 1 may from time to time enter into New Intercompany
Loan Agreements subject to the provisions of Clause 2 (The Term Advances)
of this Agreement. If Funding 1 intends to enter into a New Intercompany
Loan Agreement then the provisions of this Agreement may be varied (with
the consent of the parties to this Agreement) in the Intercompany Loan
Confirmation to the extent necessary to reflect the terms of that New
Intercompany Loan PROVIDED THAT no variation shall be made to any of the
following terms without the prior written consent of the Funding 1
Secured Creditors and the Rating Agencies:
(a) the Funding 1 Interest Payment Dates;
(b) the determination of the Term Advance Rates of Interest (other
than the Relevant Margin);
(c) Clause 4 (Limited Recourse);
(d) Clause 7 (Repayment); and
(e) Clause 9 (Taxes).
18. FURTHER PROVISIONS
18.1 EVIDENCE OF INDEBTEDNESS
In any proceeding, action or claim relating to the Intercompany Loan
Agreement a statement as to any amount due to the Issuer under the
Intercompany Loan Agreement which is certified as being correct by an
officer of the Security Trustee shall, unless otherwise provided in the
Intercompany Loan Agreement, be prima facie evidence that such amount is
in fact due and payable.
18.2 RIGHTS CUMULATIVE, WAIVERS
The respective rights of the Issuer and the Security Trustee under the
Intercompany Loan Agreement:
(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive of its rights under the general
law; and
(c) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is not a waiver of
that right.
18.3 SEVERABILITY
If a provision of the Intercompany Loan Agreement is or becomes illegal,
invalid or unenforceable in any jurisdiction, that shall not affect:
(a) the validity or enforceability in that jurisdiction of any other
provision of the Intercompany Loan Agreement; or
(b) the validity or enforceability in other jurisdictions of that or
any other provision of the Intercompany Loan Agreement.
18.4 NOTICES
Any notices to be given pursuant to the Intercompany Loan Agreement to
any of the parties thereto shall be in writing and shall be sufficiently
served if sent by prepaid first class post, by hand or 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 5.00 p.m. (London time) on a London Business
Day or on the next London Business Day if delivered thereafter or on a
day which is not a London Business Day or (in the case of first class
post) when it would be received in the ordinary course of post and shall
be sent to such addresses as are set out in the Intercompany Loan
Confirmation or to such other address or facsimile number or for the
attention of such other person or entity as may from time to time be
notified by any party to the others by written notice in accordance with
the provisions of this Clause 18.4.
18.5 VARIATION
Subject to Clause 17 (Entrenched Provisions), no variation of any
provision(s) of the Intercompany Loan Agreement shall be effective unless
it is in writing and signed by (or by a person duly authorised by) each
of the parties to the Intercompany Loan Agreement.
18.6 SECURITY TRUSTEE
The Security Trustee shall have no responsibility for any of the
obligations of the Issuer or any other party to the Intercompany Loan
Agreements (other than itself). For the avoidance of doubt, the parties
to the Intercompany Loan Agreement acknowledge that the rights and
obligations of the Security Trustee under the Intercompany Loan
Agreements are governed by the Funding 1 Deed of Charge.
18.7 COUNTERPARTS
The Intercompany Loan Agreement 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.
18.8 THIRD PARTY RIGHTS
The Intercompany Loan Agreement 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.
19. REDENOMINATION
Each obligation under this Agreement which has been denominated in
sterling shall be redenominated in Euro in accordance with EMU
legislation upon such redenomination of the Notes.
20. GOVERNING LAW
The Intercompany Loan Agreement is governed by English law.
21. SUBMISSION TO JURISDICTION
Each party to the Intercompany Loan Agreement hereby irrevocably submits
to the non-exclusive jurisdiction of the English courts in any action or
proceeding arising out of or relating to the Intercompany Loan 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
the Intercompany Loan 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.
SCHEDULE 1
NOTICE OF DRAWDOWN OF A TERM ADVANCE
From: Permanent Funding (No. 1) Limited (FUNDING 1)
To: [ ] (the ISSUER)
Copy: The Bank of New York (the SECURITY TRUSTEE)
Dear Sirs,
1. We refer to the agreement between, inter alios, ourselves, the Issuer and
the Security Trustee (as from time to time amended, varied, novated or
supplemented (the INTERCOMPANY LOAN AGREEMENT)) dated [ ] whereby an
Intercompany Loan was made available to Funding 1. Terms defined in the
Intercompany Loan Agreement shall have the same meaning in this notice.
2. We hereby give you notice that, pursuant to the Intercompany Loan
Agreement and upon the terms and subject to the conditions contained
therein, we wish a [describe Term Advance] to be made to us as follows:
(a) Amount: (pound)[ ] of which (pound)[ ] is to be retained by you by
way of set off against our obligation to reimburse such amount to
you on the Closing Date under [clause 6.1] (Fee for provision of
Term Advance) of the Intercompany Loan Confirmation.
(b) Drawdown Date: [ ]
3. We confirm that no Intercompany Loan Event of Default has occurred and is
continuing which has not been waived, or would result from the making of
such Term Advance.
4. We confirm that the principal amount of the Term Advance requested does
not exceed the amount available under the Intercompany Loan Agreement as
at [relevant Drawdown Date].
5. The net proceeds of this drawdown should be credited to our account
numbered [ ] with [ ].
Yours faithfully,
for and on behalf of
Permanent Funding (No. 1) Limited
SCHEDULE 2
SOLVENCY CERTIFICATE
PERMANENT FUNDING (NO. 1) LIMITED (the COMPANY)
To: [o]
(the ISSUER)
The Bank of New York (the SECURITY TRUSTEE)
We the undersigned HEREBY CERTIFY, that (i) having made all appropriate searches
and investigations of the Company's books and records and the Company's accounts
(both management and those required by law); and (ii) the officers of the
Company having duly considered the provisions of the insolvency laws of the
United Kingdom (including, without limitation, the provisions of sections 123
and 238 to 241 and 423 of the Insolvency Act 1986 (the ACT)):
(a) the Company is not unable to pay its debts within the meaning of section
123 of the Act and would not become unable to do so in consequence of
entering into the Transaction Documents to which it is a party or making
any drawing or granting any security under the Transaction Documents to
which it is a party, and the Company's assets currently exceed its
liabilities (taking into account its actual, contingent and prospective
liabilities) and will continue to do so notwithstanding the entry into by
it of the Transaction Documents and the making of any drawing or the
granting of any security under the Transaction Documents to which it is a
party;
(b) no execution or other process issued on a judgment, decree or order of
any court in favour of a creditor of the Company remains unsatisfied in
whole or in part;
(c) to the best of our knowledge and belief no corporate action has been
taken or is pending, no other steps have been taken and no legal
proceedings have been commenced or are threatened or are pending for (i)
the winding-up, liquidation, dissolution, administration or
reorganisation of the Company and no documents have been filed with the
court for the appointment of an administrator and no notice of intention
to appoint an administrator has been served; or (ii) the Company to enter
into any composition or arrangement with its creditors generally; or
(iii) the appointment of a receiver, administrative receiver, trustee or
similar officer in respect of the Company or any of its property,
undertaking or assets. No event equivalent to any of the foregoing has
occurred in or under the laws of any relevant jurisdiction;
(d) no steps have been taken by the Company with a view to obtaining a
moratorium in respect of any indebtedness of the Company or for the
purpose of proposing a company voluntary arrangement. No event equivalent
to any of the foregoing has occurred in or under the laws of any relevant
jurisdiction;
(e) neither the entry into of the Transaction Documents to which it is a
party nor the making of any drawing nor granting of security under the
Transaction Documents to which it is a party would be a transaction at an
undervalue within the meaning of section 238 of the Act, since the value
of any consideration received by the Company as a result of such drawing
and/or
grant of security would not be significantly less than the value of any
consideration provided by the Company under the Transaction Documents to
which it is a party;
(f) the entry into of the Transaction Documents to which it is a party, any
drawing made by the Company under or pursuant to the Transaction
Documents to which it is a party, and any security granted by the Company
under or pursuant to the Transaction Documents to which it is a party
will be entered into or made, as the case may be, by the Company, in good
faith and for the purpose of carrying on its business, and there are
reasonable grounds for believing that such entry into of such Transaction
Documents, such drawings and grants of security would benefit the
Company; and
(g) in entering into the Transaction Documents to which it is a party, making
a drawing under or pursuant to the Transaction Documents to which it is a
party and/or granting security under or pursuant to the Transaction
Documents to which it is a party the Company has no desire to give a
preference to any person as contemplated by section 239 of the Act nor is
it the purpose of the Company to put assets beyond the reach of a person
who is making, or may at some time make, a claim against the Company or
of otherwise prejudicing the interests of such a person in relation to
the claim which he is making or may make.
Terms defined in the Master Definitions and Construction Schedule signed by the
parties to the Transaction Documents and dated 25th November, 2003 shall have
the same respective meanings when used in this Certificate.
DATED o
Signed for and on behalf of Permanent Funding (No. 1) Limited
.....................................
Director
.....................................
Director/Secretary
SCHEDULE 3
FORM OF RELEVANT INTERCOMPANY LOAN CONFIRMATION
LOAN CONFIRMATION
INTERCOMPANY LOAN AGREEMENT
DATED O
PERMANENT FUNDING (NO. 1) LIMITED
AS FUNDING 1
O
AS RELEVANT ISSUER
STATE STREET BANK AND TRUST COMPANY
AS SECURITY TRUSTEE
CITIBANK, N.A., LONDON BRANCH
AS AGENT BANK
ALLEN & OVERY
London
THIS AGREEMENT is dated o
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) [RELEVANT ISSUER] (registered in England and Wales No. o) whose
registered office is at Blackwell House, Guildhall Yard, London EC2V 5AE
(the [RELEVANT ISSUER]);
(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 with a branch office at 1 Canada Square, Canary
Wharf, London E14 5AF, acting 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 Master Definitions and Construction Schedule signed for the purposes
of identification by Allen & Overy and Sidley Austin Brown & Wood on 13th
June, 2002 (as the same may be amended, varied or supplemented from time
to time with the consent of the parties hereto) and the [Relevant Issuer]
Master Definitions and Construction Schedule signed for the purposes of
identification by Allen & Overy and Sidley Austin Brown & Wood on 13th
June, 2002 (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 Master Definitions and Construction Schedule
and/or the [Relevant 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 of the Master Definitions and Construction
Schedule and the [Relevant Issuer] Master Definitions and Construction
Schedule. In the event of a conflict between the Master Definitions and
Construction Schedule and the [Relevant Issuer] Master Definitions and
Construction Schedule, the [Relevant Issuer] Master Definitions and
Construction Schedule shall prevail.
1.2 Unless the context otherwise requires, references in the Intercompany
Loan Term and Conditions to:
[complete as appropriate]
2. INTERCOMPANY LOAN TERMS AND CONDITIONS
Each of the parties to this Agreement agree that the Intercompany Loan
Terms and Conditions signed by Funding 1 and the Security Trustee 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 TERM ADVANCES
3.1 TERM ADVANCES
[describe the term advances]
3.2 [TERM ADVANCE RATING]
The Term Advance Rating in respect of the [Term AAA Advances] shall be o,
in respect of the [Term AA Advances] shall be o and the Term Advance
Rating in respect of the [Term BBB Advances] shall be o.
3.3 [CONDITIONS PRECEDENT]
Save as the [Relevant Issuer] and the Security Trustee may otherwise
agree, the 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 0 in form and
substance satisfactory to the Security Trustee.
4. INTEREST
[Set out interest rate, interest periods and payment dates]
5. REPAYMENT
5.1 [Describe, inter alios:
Repayment subject to terms of the Funding 1 Deed of Charge;
Repayment of relevant Term 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;
Repayment of relevant 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;
Repayment of the relevant Terms 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;
Repayment following of relevant Term Advances following the service on
each Issuer of a Note Acceleration Notice bur prior to the service on
Funding 1 of an Intercompany Loan Acceleration Notice;
Repayment following the service on Funding 1 of an Intercompany Loan
Acceleration Notice].
5.2 [ACKNOWLEDGEMENT OF NEW INTERCOMPANY LOANS
The [Relevant 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 Intercompany Loan and any
New Intercompany Loan will depend on the Term Advance Rating of the
individual Term Advances made to Funding 1 under the respective
Intercompany Loans. 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. CERTAIN FEES, ETC.
[describe payment and provision, including set-off, for fees and
indemnities]
7. APPLICATION OF CERTAIN PROVISIONS
The provisions set out in Clause 4.2 (Shortfall on Final Repayment Date
in respect of certain Term Advances) of the Intercompany Loan Terms and
Conditions shall apply to: [describe Term Advances]
8. ADDRESSES
The addresses referred to in [Clause 15.4] of the Intercompany Loan Terms
and Conditions are as follows:
THE SECURITY TRUSTEE:
For the attention of: Corporate Trust
Address: State Street Bank and Trust Company,
1 Canada Square, Canary Wharf, London
E14 5AF
Facsimile: +44 (0) 20 7416 2548
THE [RELEVANT ISSUER]:
For the attention of: [The Secretary]
Address: [Relevant Issuer]
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 Securitisations
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 Securitisations
RATING AGENCIES:
MOODY'S: 2 Minster Court, Mincing Lane, London
EC3R 7XB
For the attention of: Nicholas Lindstrom
Telephone: +44 (0) 20 7772 5332
Fax: +44 (0) 20 7772 5400
S&P: Garden House, 18 Finsbury Circus, London
EC2M 7BP
For the attention of: Andre Vollman
Telephone: +44 (0) 20 7826 3855
Fax: +44 (0) 20 7826 3598
FITCH: Eldon House, 2 Eldon Street, London EC2M 7UA
For the attention of: European Structured Finance
Telephone: +44 (0) 20 7417 4355
Fax: +44 (0) 20 7417 6262
EXECUTION COPY
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
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 Blackwell 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 Blackwell 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 48th Floor, One Canada Square, London E14 5AL (acting 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 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 Allen & Overy LLP and Sidley Austin Brown & Wood 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 6th March, 2003, 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)523,013,000 (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)732,218,000 (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)1,183,200,000 (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)850,000,000 (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)500,000,000 (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;
2
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)22,699,000 (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)31,747,000 (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)51,296,000 (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)36,800,000 (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)22,071,000 (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)30,963,000 (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)49,973,000 (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
3
(d) the series 4 term BBB advance in the maximum aggregate principal
amount of (pound)35,900,000 (the SEVENTH ISSUER SERIES 4 TERM BBB
ADVANCE) and which corresponds to the 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-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).
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 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 0.0462 per cent. per annum;
(b) in respect of the Seventh Issuer Series 2 Term AAA Advance, a
margin of 0.0504 per cent. per annum up to and including the
Interest Period ending in December 2011 and thereafter 0.3508 per
cent. per annum;
(c) in respect of the Seventh Issuer Series 3 Term AAA Advance, a
margin of 0.07662 per cent. per annum up to and including the
Interest Period ending in December 2011 and thereafter 0.40324 per
cent. per annum;
(d) in respect of the Seventh Issuer Series 4 Term AAA Advance, a
margin of 0.0800 per cent. per annum up to and including the
Interest Period ending in December 2011 and thereafter 0.1600 per
cent. per annum;
(e) in respect of the Seventh Issuer Series 5 Term AAA Advance, a
margin of 0.1000 per cent. per annum up to and including the
Interest Period ending in December 2011 and thereafter 0.2000 per
cent. per annum;
(f) in respect of the Seventh Issuer Series 1 Term AA Advance, a
margin of 0.1146 per cent. per annum up to and including the
Interest Period ending in December 2011 and thereafter 0.4792 per
cent. per annum;
(g) in respect of the Seventh Issuer Series 2 Term AA Advance, a
margin of 0.1275 per cent. per annum up to and including the
Interest Period ending in December 2011 and thereafter 0.505 per
cent. per annum;
(h) in respect of the Seventh Issuer Series 3 Term AA Advance, a
margin of 0.13178 per cent. per annum up to and including the
Interest Period ending in December 2011 and thereafter 0.51356 per
cent. per annum;
(i) in respect of the Seventh Issuer Series 4 Term AA Advance, a
margin of 0.1300 per cent. per annum up to and including the
Interest Period ending in December 2011 and thereafter 0.2600 per
cent. per annum;
(j) in respect of the Seventh Issuer Series 1 Term BBB Advance, a
margin of 0.3886 per cent. per annum up to and including the
Interest Period ending in December 2011 and thereafter 1.0272 per
cent. per annum;
(k) in respect of the Seventh Issuer Series 2 Term BBB Advance, a
margin of 0.3818 per cent. per annum up to and including the
Interest Period ending in December 2011 and thereafter 1.0136 per
cent. per annum;
(l) in respect of the Seventh Issuer Series 3 Term BBB Advance, a
margin of 0.4649 per cent. per annum up to and including the
Interest Period ending in December 2011 and thereafter 1.1798 per
cent. per annum; and
(m) in respect of the Seventh Issuer Series 4 Term BBB Advance, a
margin of 0.4500 per cent. per annum up to and including the
Interest Period ending in December 2011 and thereafter 0.9000 per
cent. per annum.
5
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 Dates
6
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 27.1) 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
One Canada Square
London
E14 5AL
Facsimile: + 44 20 7964 60 1/6399
THE SEVENTH ISSUER:
For the attention of: The Secretary
Address: Permanent Financing (No. 7) PLC
Blackwell House
Guildhall Yard
London EC2V 5AE
Facsimile: +44 (0) 20 7556 0975
Copy to: HBOS Treasury Services plc
33 Old Broad Street
London EC2N 1HZ
Facsimile: +44 (0) 20 7574 8303
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
Blackwell House
Guildhall Yard
London EC2V 5AE
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 8303
For the attention of: Head of Mortgage Securitisation and Covered
Bonds
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: 101 Finsbury Pavement, London EC2A 1RS
For the attention of: FS Surveillance
Telephone: +44 (0) 20 7417 4355
Facsimile: +44 (0) 20 7417 6262
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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 3
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) Allen & Overy 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
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 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
16
Definitions and Construction Schedule, the Sixth Issuer Master
Definitions and Construction Schedule and the Seventh Issuer Master
Definitions and Construction Schedule.
5. BOND DOCUMENTATION
(d) Confirmation that the Seventh Issuer Notes have been issued and the
subscription proceeds received by the Seventh Issuer; and
(e) 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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