DRAFT: 14.07.04 EXHIBIT 4.1
LOAN CONFIRMATION FIFTH ISSUER INTERCOMPANY LOAN AGREEMENT
DATED [22ND JULY], 2004
PERMANENT FUNDING (NO. 1) LIMITED
AS FUNDING 1
AND
PERMANENT FINANCING (NO. 5) PLC
AS FIFTH ISSUER
AND
THE BANK OF NEW YORK
AS SECURITY TRUSTEE
AND
CITIBANK, N.A., LONDON BRANCH
AS AGENT BANK
▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇ LLP
LONDON
CONTENTS
CLAUSE PAGE
1. Interpretation........................................................ 1
2. Intercompany Loan Terms and Conditions................................ 2
3. The Fifth Issuer Term Advances........................................ 2
4. Interest.............................................................. 4
5. Repayment............................................................. 6
6. Prepayment............................................................ 10
7. Certain Fees, etc..................................................... 10
8. Application of Certain Provisions..................................... 12
9. Addresses............................................................. 12
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 FIFTH ISSUER INTERCOMPANY LOAN AGREEMENT is dated
{circle}, 2004
BETWEEN:
(1) PERMANENT FUNDING (NO. 1) LIMITED (registered in England and Wales No.
4267660) whose registered office is at ▇▇▇▇▇▇▇▇▇ House, Guildhall Yard,
London EC2V 5AE (FUNDING 1);
(2) PERMANENT FINANCING (NO. 5) PLC (registered in England and Wales No.
5114399) whose registered office is at ▇▇▇▇▇▇▇▇▇ House, Guildhall Yard,
London EC2V 5AE (the FIFTH ISSUER);
(3) THE BANK OF NEW YORK, acting through its offices at ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ in its capacity as Security Trustee; and
(4) CITIBANK, N.A., LONDON BRANCH, whose offices are at ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, 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
[{circle}], 2004 (as the same may be amended, varied or supplemented from
time to time with the consent of the parties to this Agreement) (the
MASTER DEFINITIONS AND CONSTRUCTION SCHEDULE) and the fifth issuer master
definitions and construction schedule signed for the purposes of
identification by ▇▇▇▇▇ & ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ on
[{circle}], 2004 (the FIFTH 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 Fifth 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 Fifth 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 [{circle}], 2004;
INTERCOMPANY LOAN means the Fifth Issuer Intercompany Loan;
INTERCOMPANY LOAN AGREEMENT means the Fifth Issuer Intercompany Loan
Agreement;
INTERCOMPANY LOAN CONFIRMATION means the Fifth Issuer Intercompany Loan
Confirmation;
ISSUER means the Fifth Issuer;
ISSUER TRANSACTION ACCOUNT means the Fifth Issuer Sterling Account;
1
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 Fifth Issuer Notes; and
FIFTH ISSUER TERM ADVANCES has the meaning given in the Fifth Issuer
Master Definitions and Construction Schedule.
2. INTERCOMPANY LOAN TERMS AND CONDITIONS
Each of the parties to this Agreement agrees that the Intercompany Loan
Terms and Conditions signed by Funding 1, the Security Trustee and the
Agent Bank for the purposes of identification on 14th June, 2002, as
amended and restated on 25th November, 2003 and 12th March, 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 FIFTH ISSUER TERM ADVANCES
3.1 FIFTH ISSUER TERM AAA ADVANCES
On and subject to the terms of this Agreement, the Fifth 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-sterling}[{circle}] (the FIFTH 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 Fifth
Issuer Notes;
(b) the series 2 term AAA advance in the maximum aggregate principal
amount of {pound-sterling}[{circle}] (the FIFTH 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 Fifth
Issuer Notes;
(c) the series 3 term AAA advance in the maximum aggregate principal
amount of {pound-sterling}[{circle}] (the FIFTH 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 Fifth
Issuer Notes;
(d) the series 4 term AAA advance in the maximum aggregate principal
amount of {pound-sterling}[{circle}] (the FIFTH ISSUER SERIES 4
TERM AAA ADVANCE) and which corresponds to the principal amount
upon issue of the Series 4 Class A Fifth Issuer Notes,
(e) the series 5A1 term AAA advance in the maximum aggregate principal
amount of {pound-sterling}[{circle}] (the FIFTH ISSUER SERIES 5A1
TERM AAA ADVANCE) and which corresponds to the sterling equivalent
of the principal amount upon issue of the Series 5 Class A1 Fifth
Issuer Notes; and
(f) the series 5A2 term AAA advance in the maximum aggregate principal
amount of [{circle}] (the FIFTH ISSUER SERIES 5A2 TERM AAA
ADVANCE) and which corresponds to the sterling equivalent of the
principal amount upon issue of the Series 5 Class A2 Fifth Issuer
Notes,
2
and together the Fifth Issuer Series 1 Term AAA Advance, the Fifth Issuer
Series 2 Term AAA Advance, the Fifth Issuer Series 3 Term AAA Advance,
the Fifth Issuer Series 4 Term AAA Advance, the Fifth Issuer Series 5A1
Term AAA Advance and the Fifth Issuer Series A2 Term AAA Advance are
referred to herein as the FIFTH ISSUER TERM AAA ADVANCES.
3.2 FIFTH ISSUER TERM AA ADVANCES
On and subject to the terms of this Agreement, the Fifth 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-sterling}[{circle}] (the FIFTH 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 Fifth
Issuer Notes;
(b) the series 2 term AA advance in the maximum aggregate principal
amount of {pound-sterling}[{circle}] (the FIFTH 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 Fifth
Issuer Notes;
(c) the series 3 term AA advance in the maximum aggregate principal
amount of {pound-sterling}[{circle}] (the FIFTH 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 Fifth
Issuer Notes;
(d) the series 4 term AA advance in the maximum aggregate principal
amount of {pound-sterling}[{circle}] (the FIFTH ISSUER SERIES 4
TERM AA ADVANCE) and which corresponds to the sterling equivalent
of the principal amount upon issue of the Series 4 Class B Fifth
Issuer Notes; and
(e) the series 5 term AA advance in the maximum aggregate principal
amount of {pound-sterling}[{circle}] (the FIFTH ISSUER SERIES 5
TERM AA ADVANCE) and which corresponds to the principal amount
upon issue of the Series 5 Class B Fifth Issuer Notes,
and together the Fifth Issuer Series 1 Term AA Advance, the Fifth Issuer
Series 2 Term AA Advance, the Fifth Issuer Series 3 Term AA Advance, the
Fifth Issuer Series 4 Term AA Advance and the Fifth Issuer Series 5 Term
AA Advance are referred to herein as the FIFTH ISSUER TERM AA ADVANCES.
3.3 FIFTH ISSUER TERM BBB ADVANCES
On and subject to the terms of this Agreement, the Fifth 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-sterling}[{circle}] (the FIFTH 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 Fifth
Issuer Notes;
(b) the series 2 term BBB advance in the maximum aggregate principal
amount of {pound-sterling}[{circle}] (the FIFTH 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 Fifth
Issuer Notes;
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(c) the series 3 term BBB advance in the maximum aggregate principal
amount of {pound-sterling}[{circle}] (the FIFTH 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 Fifth
Issuer Notes;
(d) the series 4 term BBB advance in the maximum aggregate principal
amount of {pound-sterling}[{circle}] (the FIFTH ISSUER SERIES 4
TERM BBB ADVANCE) and which corresponds to the sterling equivalent
of the principal amount upon issue of the Series 4 Class C Fifth
Issuer Notes; and
(e) the series 5 term BBB advance in the maximum aggregate principal
amount of {pound-sterling}[{circle}] (the FIFTH ISSUER SERIES 5
TERM BBB ADVANCE) and which corresponds to the principal amount
upon issue of the Series 5 Class C Fifth Issuer Notes,
and together the Fifth Issuer Series 1 Term BBB Advance, the Fifth Issuer
Series 2 Term BBB Advance, the Fifth Issuer Series 3 Term BBB Advance,
the Fifth Issuer Series 4 Term BBB Advance and the Fifth Issuer Series 5
Term BBB Advance are referred to herein as the FIFTH ISSUER TERM BBB
ADVANCES.
3.4 TERM ADVANCE RATING
The Term Advance Rating in respect of the Fifth Issuer Term AAA Advances
shall be AAA/Aaa/AAA, the Term Advance Rating in respect of the Fifth
Issuer Term AA Advances shall be AA/Aa3/AA and the Term Advance Rating in
respect of the Fifth Issuer Term BBB Advances shall be BBB/Baa2/BBB.
3.5 CONDITIONS PRECEDENT
Save as the Fifth Issuer and the Security Trustee may otherwise agree,
the Fifth 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
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 Fifth 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 three-month
and four-month sterling deposits of {pound-sterling}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
4
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
Fifth Issuer with the approval of the Security Trustee.
4.2 TERM ADVANCE RATES OF INTEREST
The Term Advance Rate of Interest payable on each Term Advance shall be
LIBOR for three-month sterling deposits as determined in accordance with
CLAUSE 6 of the Intercompany Loan Terms and Conditions plus a RELEVANT
MARGIN which shall be:
(a) in respect of the Fifth Issuer Series 1 Term AAA Advance, a margin
of -[{circle}] per cent. per annum;
(b) in respect of the Fifth Issuer Series 2 Term AAA Advance, a margin
of [{circle}] per cent. per annum up to and including the Interest
Period ending in [June 2011] and thereafter [{circle}] per cent.
per annum;
(c) in respect of the Fifth Issuer Series 3 Term AAA Advance, a margin
of [{circle}] per cent. per annum up to and including the Interest
Period ending in [June 2011] and thereafter [{circle}] per cent.
per annum;
(d) in respect of the Fifth Issuer Series 4 Term AAA Advance, a margin
of [{circle}] per cent. per annum up to and including the Interest
Period ending in [June 2011] and thereafter [{circle}] per cent.
per annum;
(e) in respect of the Fifth Issuer Series 5A1 Term AAA Advance, a
margin of [{circle}] per cent. per annum up to and including the
Interest Period ending in [June 2011] and thereafter [{circle}]
per cent. per annum;
(f) in respect of the Fifth Issuer Series 5A2 Term AAA Advance, a
margin of [{circle}] per cent. per annum up to and including the
Interest Period ending in [June 2011] and thereafter [{circle}]
per cent. per annum;
(g) in respect of the Fifth Issuer Series 1 Term AA Advance, a margin
of [{circle}] per cent. per annum up to and including the Interest
Period ending in [June 2011] and thereafter [{circle}]per cent.
per annum;
(h) in respect of the Fifth Issuer Series 2 Term AA Advance, a margin
of [{circle}] per cent. per annum up to and including the Interest
Period ending in [June 2011] and thereafter [{circle}] per cent.
per annum;
(i) in respect of the Fifth Issuer Series 3 Term AA Advance, a margin
of [{circle}] per cent. per annum up to and including the Interest
Period ending in [June 2011] and thereafter [{circle}] per cent.
per annum;
(j) in respect of the Fifth Issuer Series 4 Term AA Advance, a margin
of [{circle}] per cent. per annum up to and including the Interest
Period ending in [June 2011] and thereafter [{circle}] per cent.
per annum;
(k) in respect of the Fifth Issuer Series 5 Term AA Advance, a margin
of [{circle}] per cent. per annum up to and including the Interest
Period ending in [June 2011] and thereafter [{circle}] per cent.
per annum;
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(l) in respect of the Fifth Issuer Series 1 Term BBB Advance, a margin
of [{circle}] per cent. per annum up to and including the Interest
Period ending in [June 2011] and thereafter [{circle}] per cent.
per annum;
(m) in respect of the Fifth Issuer Series 2 Term BBB Advance, a margin
of [{circle}] per cent. per annum up to and including the Interest
Period ending in [June 2011] and thereafter [{circle}] per cent.
per annum;
(n) in respect of the Fifth Issuer Series 3 Term BBB Advance, a margin
of [{circle}] per cent. per annum up to and including the Interest
Period ending in [June 2011]and thereafter [{circle}] per cent.
per annum;
(o) in respect of the Fifth Issuer Series 4 Term BBB Advance, a margin
of [{circle}] per cent. per annum up to and including the Interest
Period ending in [June 2011] and thereafter [{circle}] per cent.
per annum; and
(p) in respect of the Fifth Issuer Series 5 Term BBB Advance, a margin
of [{circle}] per cent. per annum up to (and including) the
Interest Period ending in [June 2011] and thereafter [{circle}]
per cent. per annum.
4.3 INTEREST PERIODS
The first Interest Period shall commence on (and include) the Closing
Date and end on (but exclude) the Funding 1 Interest Payment Date falling
in [September], 2004. 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 Fifth 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 FIFTH 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 Fifth Issuer:
(a) the Fifth Issuer Series 1 Term AAA Advance on the Funding 1
Interest Payment Date falling in [June 2005];
(b) the Fifth Issuer Series 2 Term AAA Advance in [four] equal
instalments (each a Scheduled Amortisation Instalment) on the
Funding 1 Interest Payment Date falling in [December 2006, March
2007, June 2007 and September 2007] but if there are insufficient
funds available to repay the Fifth Issuer Series 2 Term AAA
Advance on
6
such Funding 1 Interest Payment Date, then the shortfall shall be
repaid on subsequent Funding 1 Interest Payment Dates from Funding
1 Available Principal Receipts until the Fifth Issuer Series 2
Term AAA Advance is fully repaid;
(c) the Fifth Issuer Series 3 Term AAA Advance in two equal
instalments (each a Scheduled Amortisation Instalment) on the
Funding 1 Interest Payment Date falling in [March 2009 and June
2009] 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 Fifth Issuer Series 3 Term AAA
Advance is fully repaid;
(d) the Fifth Issuer Series 4 Term AAA Advance in two equal
instalments (each a Scheduled Amortisation Instalment) on the
Funding 1 Interest Payment Date falling in [December 2009 and
March 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 Fifth Issuer Series 4 Term AAA
Advance is fully repaid;
(e) the Fifth Issuer Series 5A1 Term AAA Advance on each Funding 1
Interest Payment Date commencing on the Funding 1 Interest Payment
Date falling in [June 2011] to the extent of Funding 1 Available
Principal Receipts until the Fifth Issuer Series 5A1 Term AAA
Advance is fully repaid; and
(f) the Fifth Issuer Series 5A2 Term AAA Advance on each Funding 1
Interest Payment Date commencing on the Funding 1 Interest Payment
Date falling in [June 2011] to the extent of Funding 1 Available
Principal Receipts until the Fifth Issuer Series 5 Term AAA
Advance is fully repaid.
5.3 REPAYMENT OF FIFTH 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 Fifth Issuer:
(a) on each Funding 1 Interest Payment Date falling on or after the
Funding 1 Interest Payment Date on which the Fifth Issuer Series 1
Term AAA Advance is fully repaid, the Fifth Issuer Series 1 Term
AA Advance to the extent of Funding 1 Available Principal Receipts
until the Fifth 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 Fifth Issuer Series 2
Term AAA Advance is fully repaid, the Fifth Issuer Series 2 Term
AA Advance to the extent of Funding 1 Available Principal Receipts
until the Fifth 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 Fifth Issuer Series 3
Term AAA Advance is fully repaid, the Fifth Issuer Series 3 Term
AA Advance to the extent of Funding 1 Available Principal Receipts
until the Fifth Issuer Series 3 Term AA Advance is fully repaid;
7
(d) on each Funding 1 Interest Payment Date falling on or after the
Funding 1 Interest Payment Date on which the Fifth Issuer Series 4
Term AAA Advance is fully repaid, the Fifth Issuer Series 4 Term
AA Advance to the extent of Funding 1 Available Principal Receipts
until the Fifth Issuer Series 4 Term AA Advance is fully repaid;
and
(e) on each Funding 1 Interest Payment Date falling on or after the
Funding 1 Interest Payment Date on which the Fifth Issuer Series 5
Term AAA Advance is fully repaid, the Fifth Issuer Series 5 Term
AA Advance to the extent of Funding 1 Available Principal Receipts
therefor until the Fifth Issuer Series 5A2 Term AA Advance is
fully repaid.
5.4 REPAYMENT OF FIFTH 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 Fifth Issuer:
(a) on each Funding 1 Interest Payment Date falling on or after the
Funding 1 Interest Payment Date on which the Fifth Issuer Series 1
Term AA Advance is fully repaid, the Fifth Issuer Series 1 Term
BBB Advance to the extent of Funding 1 Available Principal
Receipts until the Fifth 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 Fifth Issuer Series 2
Term AA Advance is fully repaid, the Fifth Issuer Series 2 Term
BBB Advance to the extent of Funding 1 Available Principal
Receipts until the Fifth 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 Fifth Issuer Series 3
Term AA Advance is fully repaid, the Fifth Issuer Series 3 Term
BBB Advance to the extent of Funding 1 Available Principal
Receipts until the Fifth Issuer Series 3 Term BBB Advance is fully
repaid;
(d) on each Funding 1 Interest Payment Date falling on or after the
Funding 1 Interest Payment Date on which the Fifth Issuer Series 4
Term AA Advance is fully repaid, the Fifth Issuer Series 4 Term
BBB Advance to the extent of Funding 1 Available Principal
Receipts until the Fifth Issuer Series 4 Term BBB Advance is fully
repaid;
(e) on each Funding 1 Interest Payment Date falling on or after the
Funding 1 Interest Payment Date on which the Fifth Issuer Series 5
Term AA Advance is fully repaid, the Fifth Issuer Series 5 Term
BBB Advance to the extent of Funding 1 Available Principal
Receipts therefor until the Fifth Issuer Series 5 Term BBB Advance
is fully repaid.
5.5 REPAYMENT OF FIFTH 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
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Fifth 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 FIFTH 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 Fifth 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 FIFTH 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 Fifth Issuer) of a
Note Acceleration Notice pursuant to the terms of the Fifth 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 Fifth
Issuer Intercompany Loan shall be repaid in the manner set out in Part
III of Schedule 3 to the Funding 1 Deed of Charge (as the same shall be
amended from time to time).
5.9 ACKNOWLEDGEMENT OF PREVIOUS INTERCOMPANY LOANS
The Fifth 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) and an
intercompany loan agreement with Permanent Financing (No. 4) PLC (the
FOURTH ISSUER) dated 12th March, 2004 (the FOURTH INTERCOMPANY LOAN
AGREEMENT) and accordingly, the obligation of Funding 1 to repay this
Fifth Issuer Intercompany Loan, 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 Fifth
Issuer Intercompany Loan Agreement, 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.
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5.10 ACKNOWLEDGEMENT OF NEW INTERCOMPANY LOANS
The Fifth 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 Fifth 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, this Fifth 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 FIFTH ISSUER TERM ADVANCES
(a) If the conditions to the Redemption Option set out in Condition
5(F) of the Fifth 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 Fifth 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
Fifth 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 Fifth Issuer
Transaction Documents to which it is a party, which may be
necessary or desirable to permit and give effect to the prepayment
(as certified by the Fifth 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 Fifth Issuer hereby agrees to apply any amounts received by way of
prepayment pursuant to CLAUSE 6.1 (Prepayment of Fifth Issuer Term Advances) in
making repayments under the relevant Fifth Issuer Notes pursuant to its
Redemption Option.
7. CERTAIN FEES, ETC.
7.1 FEE FOR PROVISION OF FIFTH 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 eah Funding 1
Interest Payment Date pay to the Fifth Issuer for same day value to the
Fifth Issuer Transaction Account a fee for the provision of the Fifth
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
Fifth Issuer Deed of Charge together with interest thereon as
provided therein;
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(b) the fees, costs, charges, liabilities and expenses and any other
amounts due and payable to the Note Trustee pursuant to the Fifth
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 Fifth 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 Fifth Issuer Paying Agent and Agent Bank Agreement;
(e) any amounts due and payable by the Fifth Issuer to the Inland
Revenue in respect of the Fifth 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 Fifth Issuer and subject to the terms of the Fifth
Issuer Deed of Charge) or any other Taxes payable by the Fifth
Issuer;
(f) the fees, costs, charges, liabilities and expenses due and payable
to the Fifth Issuer Account Bank, pursuant to the Fifth Issuer
Bank Account Agreement (if any);
(g) the fees, costs, charges, liabilities and expenses due and payable
to the Fifth Issuer Cash Manager, pursuant to the Fifth Issuer
Cash Management Agreement;
(h) any termination payment due and payable by the Fifth Issuer to any
Fifth Issuer Swap Provider, pursuant to any Fifth Issuer Swap
Agreement;
(i) the fees, costs, charges and liabilities and expenses due and
payable to the Corporate Services Provider pursuant to the Fifth
Issuer Corporate Services Agreement;
(j) an amount equal to "G" where G is calculated as follows:
G = (A - D - H) or, if such calculation is less than zero, then G
shall be zero
where,
A = 0.01 per cent of the interest amounts paid by Funding 1 to
the Fifth Issuer on the Fifth Issuer Term Advances on the
immediately preceding Funding 1 Interest Payment Date;
D = E - F
where,
E = the interest amounts (which excludes those fee amounts
in this CLAUSE 6.1) paid by Funding 1 to the Fifth Issuer on
the Fifth Issuer Term Advances on the immediately preceding
Funding 1 Interest Payment Date; and
F= amounts paid by the Fifth Issuer under paragraphs (d)
to (h) of the Fifth Issuer Pre-Enforcement Revenue Priority
of Payments on the immediately preceding Funding 1 Interest
Payment Date;
and
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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 Fifth Issuer to third
parties including the Rating Agencies and the amounts paid by the
Fifth 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 Fifth Issuer
Principal Receipts remaining in the Fifth Issuer Bank Accounts, an
amount equal to the difference between (i) the interest that would
be earned by the Fifth Issuer on such Fifth Issuer Principal
Receipts remaining in the Fifth Issuer Bank Accounts during the
next succeeding Interest Period and (ii) the interest that would
be payable by the Fifth Issuer applying the weighted average rate
of interest payable on the Series 5 Fifth Issuer Notes or the
relevant Fifth Issuer Currency Swap Agreements due for repayment
at the end of that Interest Period to such Fifth Issuer Principal
Receipts remaining in the Fifth Issuer Bank Accounts,
together with, (i) in respect of taxable supplies made to the Fifth
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 Fifth
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 Fifth Issuer Pre-Enforcement Revenue Priority of
Payments in the Fifth Issuer Cash Management Agreement.
7.2 SET-OFF
Funding 1 and each of the other parties to the Fifth Issuer Intercompany
Loan Agreement agree that the Fifth 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 Fifth Issuer to
Funding 1 by way of the Fifth 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 Fifth Issuer Term AA Advances; and
(b) the Fifth 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
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Address: The Bank of New York
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇
Facsimile: + 44 20 7964 60 1/6399
THE FIFTH ISSUER:
For the attention of: The Secretary
Address: Permanent Financing (No. 5) PLC
Facsimile: ▇▇▇ (▇) ▇▇ ▇▇▇▇ ▇▇▇▇
Copy to: HBOS Treasury Services plc
▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Facsimile: ▇▇▇ (▇) ▇▇ ▇▇▇▇ ▇▇▇▇
For the attention of: Head of Capital Markets and Securitisation
FUNDING 1:
For the attention of: The Secretary
Address: Permanent Funding (No. 1) Limited
Facsimile: ▇▇▇ (▇) ▇▇ ▇▇▇▇ ▇▇▇▇
Copy to: HBOS Treasury Services plc
▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Facsimile number: ▇▇▇ (▇) ▇▇ ▇▇▇▇ ▇▇▇▇
For the attention of: Head of Capital Markets and Securitisation
RATING AGENCIES:
▇▇▇▇▇'▇:
Address: ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
For the attention of: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone: ▇▇▇ (▇) ▇▇ ▇▇▇▇ ▇▇▇▇
Facsimile: ▇▇▇ (▇) ▇▇ ▇▇▇▇ ▇▇▇▇
S&P:
Address: Garden House, ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
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For the attention of: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: ▇▇▇ (▇) ▇▇ ▇▇▇▇ ▇▇▇▇
Facsimile: ▇▇▇ (▇) ▇▇ ▇▇▇▇ ▇▇▇▇
FITCH:
Address: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
For the attention of: FS Surveillance
Telephone: ▇▇▇ (▇) ▇▇ ▇▇▇▇ ▇▇▇▇
Facsimile: ▇▇▇ (▇) ▇▇ ▇▇▇▇ ▇▇▇▇
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 Fifth Issuer Intercompany Loan Confirmation is governed by and shall
be construed in accordance with English law.
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SCHEDULE 1
CONDITIONS PRECEDENT IN RESPECT OF DRAWDOWN
1. AUTHORISATIONS
(a) A copy of the memorandum and articles of association, certificate of
incorporation and certificate of incorporation on change of name of
Funding 1.
(b) A copy of a resolution of the board of directors of Funding 1
authorising the entry into, execution and performance of each of the
Transaction Documents to which Funding 1 is a party and authorising
specified persons to execute those on its behalf.
(c) A certificate of a director of Funding 1 certifying:
(i) that each document delivered under this paragraph 1 of
Schedule 1 is correct, complete and in full force and effect
as at a date no later than the date of execution of the Fifth
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 Fourth 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) ▇▇▇▇▇ & ▇▇▇▇▇, English and U.S. legal advisers to the Seller, the
Fifth Issuer and the Servicer, addressed to, inter alios, the
Security Trustee; and
4. TRANSACTION DOCUMENTS
▇▇▇▇ 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 and the
Fifth 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 Issuer Start-up Loan
Agreement, the Third Start-up Loan Agreement, the Fourth Start-up
Loan Agreement and the Fifth Start-up Loan Agreement;
(n) the Mortgage Sale Agreement;
(o) the Seller Power of Attorney;
(p) the Fifth Issuer Deed of Charge;
(q) the Fifth Issuer Cash Management Agreement;
(r) the Fifth Issuer Swap Agreements;
(s) the Fifth Issuer Bank Account Agreement;
(t) the Fifth Issuer Post-Enforcement Call Option Agreement;
(u) the Fifth Issuer Trust Deed;
(v) the Fifth Issuer Global Notes;
(w) the Fifth Issuer Paying Agent and Agent Bank Agreement;
(x) the Underwriting Agreement;
(y) the Subscription Agreement;
(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 and the Fifth Issuer
Master Definitions and Construction Schedule.
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5. BOND DOCUMENTATION
(a) Confirmation that the Fifth Issuer Notes have been issued and the
subscription proceeds received by the Fifth Issuer; and
(b) Copies of the Offering Circular.
6. MISCELLANEOUS
Solvency certificates from Funding 1 signed by two directors of Funding 1
in or substantially in the form set out in Schedule 2 to the Intercompany
Loan Terms and Conditions.
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SIGNATORIES
IN WITNESS WHEREOF the parties have caused this Agreement to be duly executed
on the day and year appearing on page 1.
FUNDING 1
SIGNED by )
for and on behalf of )
PERMANENT FUNDING (NO. 1) LIMITED )
FIFTH ISSUER
SIGNED by )
for and on behalf of )
PERMANENT FINANCING (NO. 5) 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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