Exhibit 10.4
EXECUTION COPY
FUNDING 2 START-UP LOAN AGREEMENT
1 MARCH 2007
PERMANENT FUNDING (NO. 2) LIMITED
as Funding 2
and
HALIFAX plc
as Funding 2 Start-up Loan Provider
and
THE BANK OF NEW YORK
as Funding 2 Security Trustee
[GRAPHIC OMITTED]
▇▇▇▇▇ & ▇▇▇▇▇ LLP
33775-00214 ICM:3780556.6
CONTENTS
CLAUSE PAGE
1. Definitions and Interpretation.......................................1
2. The Facility.........................................................1
3. Interest.............................................................2
4. Repayment............................................................2
5. Acceleration.........................................................3
6. Payments and Limited Recourse........................................3
7. Subordination and Security...........................................4
8. Notices..............................................................5
9. Taxes................................................................5
10. Remedies and Waivers.................................................5
11. Assignments and Transfer.............................................6
12. Funding 2 Security Trustee as a Party................................6
13. No Partnership.......................................................6
14. Variation............................................................6
15. Invalidity of any Provision..........................................6
16. Counterparts.........................................................6
17. Exclusion of Third Party Rights......................................6
18. Governing Law........................................................6
19. Submission to Jurisdiction...........................................7
Signatories...................................................................8
THIS FUNDING 2 START-UP LOAN AGREEMENT (this AGREEMENT) is made on 1
March 2007
BETWEEN:
(1) PERMANENT FUNDING (NO. 2) LIMITED (registered number 4441772), a
private limited company incorporated under the laws of England and
Wales, whose registered office is at ▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇▇'▇, ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ (▇▇ its capacity as FUNDING 2);
(2) HALIFAX PLC (registered number 02367076), a public limited company
incorporated under the laws of England and Wales whose registered
office is at ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (acting in
its capacity as the FUNDING 2 START-UP LOAN PROVIDER); and
(3) THE BANK OF NEW YORK, a New York banking corporation whose London
branch address is at ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
(acting in its capacity as the FUNDING 2 SECURITY TRUSTEE).
WHEREAS:
(A) From time to time the Master Issuer will issue Notes pursuant to the
Programme and lend the proceeds of such issuance to Funding 2 pursuant
to the Master Intercompany Loan Agreement.
(B) In connection with the issuance of the 2007-1 Notes and the advance of
the 2007-1 Loan Tranches under the Master Intercompany Loan Agreement,
the Funding 2 Start-up Loan Provider has agreed to make a loan to
Funding 2 on the 2007-1 Closing Date pursuant to the terms of this
Agreement.
IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
The amended and restated master definitions and construction schedule
signed by, amongst others, the parties to this Agreement and dated 17
October 2006 (as the same may be amended, varied or supplemented from
time to time with the consent of the parties to this Agreement) (the
MASTER DEFINITIONS AND CONSTRUCTION SCHEDULE) are expressly and
specifically incorporated into this Agreement and, accordingly, the
expressions defined in the Master Definitions and Construction Schedule
(as so amended, varied or supplemented from time to time) shall, except
where the context otherwise requires and save where otherwise defined
herein, have the same meanings in this Agreement and this Agreement
(including the Recitals hereto) shall be construed in accordance with
the interpretation provisions set out in Clause 2 of the Master
Definitions and Construction Schedule.
In addition:
2007-1 CLOSING DATE means 1 March 2007;
2007-1 NOTES means the Notes issued by the Master Issuer on 1 March
2007; and
2007-1 LOAN TRANCHES means the Loan Tranches advanced to Funding 2
pursuant to the Master Intercompany Loan Agreement on 1 March 2007.
2. THE FACILITY
2.1 The Funding 2 Start-up Loan Provider grants to Funding 2 simultaneously
with the issue by the Master Issuer of the 2007-1 Notes on the 2007-1
Closing Date and upon the terms and subject to the
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conditions hereof, a sterling loan facility (the FACILITY) in an
aggregate amount of (pound)[80,700,000], which shall be paid to Funding
2 as set out in Schedule 1 (the amount so granted or such part of such
amount as shall be outstanding from time to time being referred to as
the ADVANCE).
2.2 The Advance under this Agreement will only be used by Funding 2 for the
purposes of:
(a) funding the Funding 2 General Reserve Fund (in whole or in part);
and/or
(b) funding the payment of the fees, costs and expenses incurred by
or on behalf of Funding 2 in connection with the increase in
Funding 2's share of the Trust Property (and the corresponding
decrease in the Seller's share of the Trust Property) on the
2007-1 Closing Date; and/or
(c) funding the payment of the fees, costs and expenses payable or
incurred by or on behalf of Funding 2 under the Master
Intercompany Loan Agreement which relate to the costs of issue of
the 2007-1 Notes.
3. INTEREST
3.1 The Advance and any interest capitalised pursuant to Clause 3.4 will
bear interest from (and including) the 2007-1 Closing Date until the
Advance (and all accrued interest thereon) is repaid in full at a rate
of (a) LIBOR for three-month sterling deposits (determined, as if such
rates were the Relevant Screen Rate, in accordance with Clause 7.2(a)
of the Master Intercompany Loan Agreement or, if such rates are
unavailable, the alternative rate determined in accordance with Clause
7.2(a) of the Master Issuer Intercompany Loan Agreement) plus (i) until
the Funding 2 Interest Payment Date occurring in January 2013, a margin
of 0.25 per cent. per annum and (ii) from (and including) the Funding 2
Interest Payment Date occurring in January 2013, a margin of 0.50 per
cent. per annum or (b) in the case of the rate to the first Funding 2
Interest Payment Date after the 2007-1 Closing Date, the linear
interpolation of LIBOR for one-month sterling deposits and LIBOR for
two-months sterling deposits (determined, as if such rates were the
Relevant Screen Rate, in accordance with Clause 7.2(a) of the Master
Intercompany Loan Agreement or, if such rates are unavailable, the
alternative rate determined in accordance with Clause 7.2(a) of the
Master Intercompany Loan Agreement) plus a margin of 0.25 per cent. per
annum.
3.2 Subject to Clauses 6.2 and 6.3, interest on the Advance and any
interest capitalised pursuant to Clause 3.4 will be payable in arrear
on each Funding 2 Interest Payment Date in accordance with the Funding
2 Priority of Payments.
3.3 Interest shall be calculated by reference to any Interest Period on the
basis of the actual number of days elapsed and a 365 day year.
3.4 Any interest accrued in respect of an Interest Period but not paid on
the Funding 2 Interest Payment Date relating thereto shall be
capitalised forthwith.
4. REPAYMENT
4.1 Funding 2 shall make repayments of all or any part of the Advance
(including any interest capitalised pursuant to Clause 3.4) on each
Funding 2 Interest Payment Date if, and to the extent that, there are
Funding 2 Available Revenue Receipts available therefor after making
the payments and provisions referred to in paragraphs (a) to (q) of the
Funding 2 Pre-Enforcement Revenue Priority of Payments, until the
Advance (including any interest capitalised pursuant to Clause 3.4) and
any accrued but unpaid interest thereon has been fully repaid.
2
4.2 The Cash Manager is responsible, pursuant to the Cash Management
Agreement, for determining the amount of Funding 2 Available Revenue
Receipts as at the fourth Business Day prior to each Funding 2 Interest
Payment Date and each determination so made shall (in the absence of
negligence, wilful default, bad faith or manifest error) be final and
binding on the Funding 2 Start-up Loan Provider.
4.3 Subject to Clauses 5, 6.2, 6.3 and 7.2, on any Funding 2 Interest
Payment Date on which the Master Intercompany Loan has been repaid in
full, Funding 2 shall, subject to the Funding 2 Deed of Charge,
immediately repay the Advance (including any interest capitalised
pursuant to clause 3.4) and pay any accrued but unpaid interest
thereon.
4.4 The Funding 2 Start-up Loan Provider hereby acknowledges that from time
to time Funding 2 may enter into New Start-up Loan Agreements with New
Start-up Loan Providers and that the obligation of Funding 2 to repay
the Funding 2 Start-up Loan and any New Start-up Loan will at all times
rank pari passu and the Funding 2 Start-up Loan and any New Start-up
Loan will be paid pro rata between themselves. The Funding 2 Start-up
Loan Provider further acknowledges that the Funding 2 Pre-Enforcement
Revenue Priority of Payments and the Funding 2 Post-Enforcement
Priority of Payments set out in Parts 1 and 3 of Schedule 4 to the
Funding 2 Deed of Charge respectively will be amended to reflect the
entry by Funding 2 into any New Start-up Loan Agreements and related
agreements from time to time and agrees to execute such documents as
are necessary or required by the Funding 2 Security Trustee for the
purpose of including the Funding 2 Start-up Loan Provider and any New
Start-up Loan Provider and the Master Issuer and any New Issuer (and
any other relevant party) in the Transaction Documents to effect those
amendments.
5. ACCELERATION
If any Master Intercompany Loan Acceleration Notice is served, the
Facility shall be cancelled and the Advance (including any interest
capitalised pursuant to Clause 3.4) and any accrued and unpaid interest
shall, subject to the Funding 2 Deed of Charge, become immediately due
and payable.
6. PAYMENTS AND LIMITED RECOURSE
6.1 All payments to be made hereunder by Funding 2 shall be made in
sterling in immediately available cleared funds to the Funding 2
Start-up Loan Provider's account (sort code 11-05-90, account number
▇▇▇▇▇▇▇▇, account name: Halifax plc) (or such other account as the
Funding 2 Start-up Loan Provider may have specified in writing to
Funding 2 for this purpose). If any sum falls due hereunder otherwise
than on a Business Day, it shall be paid on the next succeeding
Business Day.
6.2 Prior to service of any Master Intercompany Loan Acceleration Notice or
repayment in full of the Master Intercompany Loan, amounts of
principal, interest and any other amounts due hereunder shall be paid
only in accordance with Clauses 6.3 and 6.4 and Part 1 of Schedule 4 of
the Funding 2 Deed of Charge.
6.3 If, upon the Advance becoming due and payable pursuant to Clause or
Clause 5, Funding 2 has insufficient funds available to meet its
obligations hereunder in full on such date then:
(a) Funding 2 shall utilise its funds on such date to the extent
available in making payments to the Funding 2 Start-up Loan
Provider to repay the Advance (including any interest capitalised
pursuant to Clause 3.4) and accrued and unpaid interest thereon;
and
(b) the obligations of Funding 2 to pay the shortfall together with
any amounts falling due and payable thereafter shall, on any day,
be limited to the available funds acquired by Funding 2
subsequent to such date, together with (where applicable,
following the enforcement of the security under the Funding 2
Deed of Charge) the proceeds of the enforcement of the
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security, in each case available to be paid to the Funding 2
Start-up Loan Provider pursuant to Clauses 6 and 7 of the Funding
2 Deed of Charge,
provided that the Funding 2 Start-up Loan Provider shall not release
Funding 2 from Funding 2's obligation to pay the remaining amount that
would have been due under this Agreement had this Clause 6.3 not
applied and provided further that this Clause 6.3 shall be subject to
Clause 7.1.
7. SUBORDINATION AND SECURITY
7.1 The parties hereby agree that the Advance shall be subordinated to,
inter alia, payments of principal and interest on any Master
Intercompany Loan, and all other payments or provisions ranking in
priority to payments to be made to the Funding 2 Start-up Loan Provider
under this Agreement, in each case in accordance with the priority of
payments or as provided in Clauses 6 and 7 and Schedule 4 of the
Funding 2 Deed of Charge.
7.2 The Funding 2 Start-up Loan Provider further agrees that, without
prejudice to Clause 7 of the Funding 2 Deed of Charge, its rights
against Funding 2 under this Agreement are limited to the extent that
Funding 2 has sufficient assets to meet its claims or any part thereof
having taken into account all other liabilities, both actual and
contingent, of Funding 2 which pursuant to the Funding 2 Deed of Charge
rank pari passu with or in priority to its liabilities to the Funding 2
Start-up Loan Provider under this Agreement and so that Funding 2 shall
not be obliged to make any payment to the Funding 2 Start-up Loan
Provider hereunder if and to the extent that the making of such payment
would cause Funding 2 to be or become unable to pay its debts within
the meaning of Section 123 of the Insolvency Act 1986 (as amended).
However, if there are sufficient Funding 2 Available Revenue Receipts
available and Funding 2 does not repay the Advance when due in
accordance with the terms hereof, such non-repayment will constitute an
event of default under this Agreement.
7.3 Funding 2 undertakes that its obligations to the Funding 2 Start-up
Loan Provider hereunder shall at all times be secured by the Funding 2
Deed of Charge.
7.4 The Funding 2 Start-up Loan Provider hereby undertakes to be bound by
the terms of the Funding 2 Deed of Charge and the Cash Management
Agreement and in particular acknowledges that all of Funding 2's right,
title, benefit and interest in this Agreement has been assigned to the
Funding 2 Security Trustee under the Funding 2 Deed of Charge and
agrees that on enforcement of the security created by the Funding 2
Deed of Charge, all amounts of principal, interest and any other
amounts due hereunder shall rank in the order of priority set out in
Funding 2 Post-Enforcement Priority of Payments.
7.5 The Funding 2 Start-up Loan Provider further covenants that, except as
permitted under Clause 5.3(b) of the Funding 2 Deed of Charge, it will
not set off or claim to set off the Advance or any interest thereon or
any part of either thereof against any liability owed by it to Funding
2.
7.6 The Funding 2 Start-up Loan Provider undertakes that it will not, prior
to the second anniversary of the date on which the last Notes are
redeemed in full, take any corporate action or other steps (including,
without limitation, the filing of documents with the court or the
service of a notice of intention to appoint an administrator) or legal
proceedings for the winding up, dissolution or reorganisation or for
the appointment of a receiver, administrator, administrative receiver,
trustee, liquidator, sequestrator or similar officer of Funding 2 or of
any or all of the revenues and assets of Funding 2 nor participate in
any ex parte proceedings nor seek to enforce any judgment against
Funding 2, except as permitted under the provisions of the Funding 2
Deed of Charge.
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8. NOTICES
Any notices to be given pursuant to this Agreement or to any of the
parties hereto shall be sufficiently served if sent by prepaid first
class post or by facsimile transmission and shall be deemed to be given
(in the case of facsimile transmission) when dispatched, (where
delivered by hand) on the day of delivery if delivered before 17.00
hours on a London Business Day or on the next London Business Day if
delivered thereafter or (in the case of first class post) when it would
be received in the ordinary course of the post and shall be sent:
(a) in the case of Funding 2: to Permanent Funding (No. 2) Limited,
▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇▇'▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (facsimile number +44 (0)20
7398 6325) for the attention of the Secretary with a copy to HBOS
Treasury Services plc, ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
(facsimile number ▇▇▇ (▇)▇▇ ▇▇▇▇ ▇▇▇▇) for the attention of Head
of Mortgage Securitisation and Covered Bonds;
(b) in the case of the Funding 2 Start-up Loan Provider: to Halifax
plc, ▇▇▇▇▇▇▇ ▇▇▇▇ (▇▇/▇/▇/▇▇▇), ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
(facsimile number ▇▇▇ (▇) ▇▇▇ ▇▇▇ ▇▇▇▇) for the attention of the
Head of Mortgage Securitisation, with a copy to HBOS Treasury
Services plc, ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (facsimile
number ▇▇▇ (▇)▇▇ ▇▇▇▇ ▇▇▇▇) for the attention of Head of Mortgage
Securitisation and Covered Bonds; and
(c) in the case of the Funding 2 Security Trustee: to The Bank of New
York, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, (facsimile
number ▇▇▇ (▇)▇▇ ▇▇▇▇ ▇▇▇▇) for the attention of Global
Structured Finance - Corporate Trust,
or to such other address or facsimile number as may from time to time
be notified by any party to the other by written notice in accordance
with the provisions of this Clause 8.
9. TAXES
9.1 All payments to be made by Funding 2 to the Funding 2 Start-up Loan
Provider hereunder shall be made free and clear of and without
deduction or withholding for or on account of Tax unless Funding 2 is
required by law to make such a payment subject to the deduction or
withholding of Tax, in which case Funding 2 shall promptly upon
becoming aware thereof notify the Funding 2 Start-up Loan Provider of
such obligation, and shall make such payments subject to such deduction
or withholding of Tax which it is required to make.
9.2 If Funding 2 makes any payment hereunder in respect of which it is
required to make any deduction or withholding, it shall pay the full
amount required to be deducted or withheld to the relevant taxation or
other authority within the time allowed for such payment under
applicable law and shall deliver to the Funding 2 Start-up Loan
Provider, within thirty days after such payment falls due to the
applicable authority, any original receipt (or a certified copy
thereof) issued by such authority evidencing such payment.
10. REMEDIES AND WAIVERS
No failure by the Funding 2 Start-up Loan Provider to exercise, nor any
delay by the Funding 2 Start-up Loan Provider in exercising, any right
or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right or remedy prevent any further
or other exercise thereof or the exercise of any other right or remedy.
The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies provided by law.
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11. ASSIGNMENTS AND TRANSFER
11.1 Funding 2 (other than in respect of any assignment by way of security
pursuant to the Funding 2 Deed of Charge) may not assign and/or
transfer any of its rights and/or obligations under this Agreement.
11.2 If there is any change in the identity of the Funding 2 Security
Trustee pursuant to the terms of the Funding 2 Deed of Charge, the
Funding 2 Start-up Loan Provider and Funding 2 shall execute such
documents and take such actions as the new Funding 2 Security Trustee
and the outgoing Funding 2 Security Trustee (as the case may be) may
reasonably require for the purpose of vesting in the new Funding 2
Security Trustee the rights and obligations of the outgoing Funding 2
Security Trustee and releasing the outgoing Funding 2 Security Trustee
(as the case may be) from its future obligations under this Agreement.
12. FUNDING 2 SECURITY TRUSTEE AS A PARTY
The Funding 2 Security Trustee has agreed to become a party to this
Agreement for the better preservation and enforcement of its rights
under this Agreement but shall have no responsibility for any of the
obligations of, nor assume any liabilities to, the Funding 2 Start-up
Loan Provider or to Funding 2 hereunder.
13. NO PARTNERSHIP
Nothing in this Agreement (or in any of the arrangements contemplated
hereby) shall, or shall be deemed to, constitute a partnership amongst
the parties hereto.
14. VARIATION
No variation of this Agreement shall be effective unless it is in
writing and signed by or on behalf of each of the parties hereto.
15. INVALIDITY OF ANY PROVISION
If any of the provisions of this Agreement becomes invalid, illegal or
unenforceable in any respect under any law, the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
16. COUNTERPARTS
This Agreement may be executed in any number of counterparts (including
facsimilie counterparts), and by the parties on separate counterparts,
but shall not be effective until each party has executed at least one
counterpart. Each counterpart shall constitute an original of this
Agreement, but all the counterparts shall together constitute but one
and the same instrument.
17. EXCLUSION OF THIRD PARTY RIGHTS
A person who is not a party to this Agreement has no right under the
Contracts (Rights of Third Parties) ▇▇▇ ▇▇▇▇ to enforce any term of
this Agreement, but this does not affect any right or remedy of a third
party which exists or is available apart from that Act.
18. GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with,
the laws of England.
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19. SUBMISSION TO JURISDICTION
Each party to this Agreement hereby irrevocably submits to the
exclusive jurisdiction of the English courts in any action or
proceeding arising out of or relating to this Agreement, and hereby
irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined by such courts. Each party to
this Agreement hereby irrevocably waives, to the fullest extent it may
possibly do so, any defence or claim that the English courts are an
inconvenient forum for the maintenance or hearing of such action or
proceeding.
IN WITNESS WHEREOF the parties hereto have executed this
Agreement on the date first mentioned above.
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SIGNATORIES
FUNDING 2
SIGNED ) /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
for and on behalf of )
PERMANENT FUNDING (NO. 2) )
LIMITED AS ATTORNEY )
Director
Director/Secretary
Witness: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
FUNDING 2 START-UP LOAN PROVIDER
SIGNED by )
as attorney for and on behalf of ) /s/ ▇▇▇ ▇▇▇▇▇▇▇
HALIFAX plc in the presence of: ) /s/ ▇▇▇▇▇▇▇ Takk
Witness's Signature:
Name: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Address: ▇▇▇▇▇ & ▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
FUNDING 2 SECURITY TRUSTEE
SIGNED by ) /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
for and on behalf of )
THE BANK OF NEW YORK )
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SCHEDULE 1
Total Advance Amount: (pound)80,700,000
(a) Amount to be deposited in Funding 2 GIC Account: (pound)75,700,000
Funding 2 GIC Account Number: 06052751
Funding 2 GIC Sort Code: 12-08-83
(b) Amount to be deposited in Funding 2 Transaction
Account: (pound)5,000,000
Funding 2 Transaction Account Number: 06052778
Funding 2 Transaction Sort Code: 12-08-83
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