Exhibit 4.1.1
MASTER INTERCOMPANY LOAN AGREEMENT
[*] 2006
PERMANENT FUNDING (NO. 2) LIMITED
as Funding 2
PERMANENT MASTER ISSUER PLC
as Master Issuer
THE BANK OF NEW YORK
as Security Trustee
and
CITIBANK, N.A.
as Agent Bank
▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇ LLP
CONTENTS
CLAUSE PAGE
1. Definitions and Interpretation..........................................1
2. The Facility............................................................1
3. Conditions Precedent....................................................2
4. Purpose.................................................................2
5. Limited Recourse........................................................3
6. Advance of Loan Tranches................................................3
7. Interest................................................................4
8. Repayment...............................................................8
9. Prepayment..............................................................9
10. Taxes..................................................................10
11. Illegality.............................................................10
12. Mitigation.............................................................10
13. Representations and Warranties of Funding 2............................11
14. Covenants..............................................................13
15. Default................................................................15
16. Default Interest and Indemnity.........................................17
17. Payments...............................................................18
18. Entrenched Provisions..................................................18
19. Further Provisions.....................................................19
20. Redenomination.........................................................20
21. Notices................................................................20
22. Governing Law and Submission to Jurisdiction...........................21
SCHEDULE
1. Conditions Precedent...................................................22
2. Form of Loan Tranche Notice............................................23
3. Form of Loan Tranche Supplement........................................24
4. Solvency Certificate...................................................31
Signatories..................................................................33
THIS MASTER INTERCOMPANY LOAN AGREEMENT (this AGREEMENT) is dated [*] 2006
BETWEEN:
(1) PERMANENT FUNDING (NO. 2) LIMITED (registered number [*]), a private
limited company incorporated under the laws of England and Wales whose
registered office is at ▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇▇'▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (as FUNDING
2);
(2) PERMANENT MASTER ISSUER PLC (registered number [*]), a public limited
company incorporated under the laws of England and Wales whose registered
office is at ▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇▇'▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (as MASTER ISSUER);
(3) THE BANK OF NEW YORK, a New York banking corporation acting through its
office at ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (in its capacity
as SECURITY TRUSTEE, which expression shall include such company and all
other persons or companies for the time being acting as security trustee
(or co-trustee) pursuant to the terms of the Funding 2 Deed of Charge);
and
(4) CITIBANK, N.A., acting through its office at Citigroup Centre, Canada
Square, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ in its capacity as Agent Bank.
WHEREAS:
(A) From time to time, the Master Issuer will issue Notes pursuant to the
Funding 2 Programme.
(B) The Master Issuer has agreed that it will lend the proceeds (or, as
applicable, the sterling equivalent thereof) of any issue of Notes by it
to Funding 2.
(C) This Agreement sets out the terms and conditions with respect to lending
by the Master Issuer of the proceeds of the issue of Notes to Funding 2.
1. DEFINITIONS AND INTERPRETATION
The amended and restated master definitions and construction schedule
signed by, amongst others, the parties to this Agreement and dated [*]
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) is expressly and specifically
incorporated into this Agreement and, accordingly, the expressions
defined in the Master Definitions and Construction Schedule (as so
amended, varied or supplemented from time to time) shall, except where
the context otherwise requires and save where otherwise defined herein,
have the same meanings in this Agreement, including the Recitals hereto
and this Agreement shall be construed in accordance with the
interpretation provisions set out in CLAUSE 2 of the Master Definitions
and Construction Schedule.
2. THE FACILITY
Subject to the terms of this Agreement, the Master Issuer agrees to make
available to Funding 2 a facility in an aggregate amount equal to the
Total Credit Commitment (the MASTER INTERCOMPANY LOAN FACILITY). On the
London Business Day prior to each Closing Date, the Master Issuer shall
offer Loan Tranches to Funding 2 under the Master Intercompany Loan
Facility that correspond to each Series and Class of Notes to be issued
by the Master Issuer on the following Closing Date. Each Loan Tranche
shall be denominated in Sterling. Subject to the terms of this Agreement,
on each Closing Date Funding 2 shall accept the offer.
1
3. CONDITIONS PRECEDENT
Save as the Master Issuer, Funding 2 and the Security Trustee may
otherwise agree, each Loan Tranche will not be available for utilisation
on a Closing Date unless:
(a) the related Series and Class of Notes has been issued by the
Master Issuer on the relevant Closing Date and the subscription
proceeds thereof have been received by or on behalf of the Master
Issuer;
(b) the Security Trustee has confirmed to Funding 2 that it or its
advisers have received all the information and documents listed in
Schedule 1 hereto (Conditions Precedent) in form and substance
satisfactory to the Security Trustee;
(c) Funding 2 and the Master Issuer have signed a Loan Tranche
Supplement (substantially in the form set out in Schedule 3 hereto
(Form of Loan Tranche Supplement));
(d) Funding 2 has confirmed in the applicable Loan Tranche Supplement
that:
(i) no Master Intercompany Loan Event of Default has occurred
and is continuing unremedied (if capable of remedy) or
unwaived or would result from the making of such Loan
Tranche;
(ii) the representations set out in CLAUSE 13 are true on and as
of the Closing Date by reference to the facts and
circumstances then existing; and
(iii) there is no debit balance on the Funding 2 Principal
Deficiency Ledger;
(e) Funding 2 has delivered a solvency certificate substantially in
the form set out in Schedule 4 hereto;
(f) the Master Issuer has confirmed in the applicable Loan Tranche
Supplement that:
(i) no Note Event of Default has occurred and is continuing
unremedied (if capable of remedy) or unwaived or would
result from the making of such Loan Tranche;
(ii) the aggregate principal amount of Loan Tranches to be drawn
on the Closing Date and any Loan Tranches outstanding on
such Closing Date do not exceed the Total Credit
Commitment;
(g) each of the Rating Agencies has confirmed in writing to the
Security Trustee that there will not, as a result of the Master
Issuer issuing any Notes, be any adverse effect on the then
current ratings by the Rating Agencies of any existing Notes of
the Master Issuer; and
(h) one or more Deeds of Accession relating to the Funding 2 Deed of
Charge have been executed by the parties to the Funding 2 Deed of
Charge; and
(i) all other conditions precedent as may be specified in the
applicable Loan Tranche Supplement have been satisfied.
4. PURPOSE
4.1 PURPOSE AND APPLICATION OF A LOAN TRANCHE
The proceeds of each Loan Tranche may only be used by Funding 2 either:
2
(a) to make a Contribution (excluding a Deferred Contribution) to the
Mortgages Trustee (which shall increase the Funding 2 Share of the
Trust Property in accordance with the terms of the Mortgages Trust
Deed);
(b) to acquire part of the Funding 1 Share and/or the Seller Share of
the Trust Property (such payment to be made to Funding 1 and/or
the Seller, as the case may be, which shall increase the Funding 2
Share of the Trust Property in accordance with the terms of the
Mortgages Trust Deed);
(c) to refinance the existing debt of Funding 2, including any
existing Loan Tranche (in whole or in part); and/or
(d) to fund or partly fund or replenish the Funding 2 General Reserve
Fund.
4.2 APPLICATION OF AMOUNTS
Without prejudice to the obligations of Funding 2 under this CLAUSE 4,
neither the Security Trustee nor any of the Funding 2 Secured Creditors
shall be obliged to concern themselves as to the application of amounts
raised by Funding 2 under a Loan Tranche.
5. LIMITED RECOURSE
5.1 RECOURSE LIMITED TO AVAILABLE FUNDS
Subject to CLAUSE 5.2 but notwithstanding the terms of any other
provision in this Agreement or any other Transaction Document, each of
the Master Issuer and the Security Trustee agree that the liability of
Funding 2 in respect of its obligations to repay principal and pay
interest or any other amounts due under this Agreement or for any breach
of any representation, warranty, covenant or undertaking of Funding 2
under this Agreement shall be limited to amounts standing to the credit
of the Funding 2 GIC Account and the Funding 2 Transaction Account from
time to time (including, for the avoidance of doubt, amounts received by
Funding 2 in respect of the Funding 2 Share of the Trust Property and
from the Funding 2 Swap Provider) provided that the application of such
amounts to the discharge of Funding 2's obligations under the Master
Intercompany Loan Agreement shall be subject to the terms of the Funding
2 Deed of Charge and the relevant Funding 2 Priority of Payments in all
cases.
5.2 SHORTFALL ON FINAL REPAYMENT DATE:
To the extent that on the Final Repayment Date of a Loan Tranche advanced
under this Agreement there is a shortfall between all amounts (including
interest and principal) payable on that Loan Tranche under this Agreement
and the amounts available therefor, that shortfall shall not be due and
payable to the Master Issuer until the time, if ever, when Funding 2 has
enough money available to pay the shortfall on that Loan Tranche after
making any other payments due that rank higher in priority to that Loan
Tranche. Following enforcement of the Funding 2 Security and distribution
of all enforcement proceeds in accordance with the Funding 2 Deed of
Charge, all outstanding claims that the Master Issuer may otherwise have
against Funding 2 will be extinguished.
6. ADVANCE OF LOAN TRANCHES
6.1 NOTICE TO FUNDING 2
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 2, the Master Issuer and the
Security Trustee), Funding 2 shall give to the Master Issuer (copied to
the Security Trustee) a Loan Tranche Notice (substantially in the form
set out in
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Schedule 1 hereto (Form of Loan Tranche Notice)) which shall request the
drawing of a Loan Tranche and delivery of which shall (subject to the
terms of this Agreement and to the issue of the relevant Series and Class
of Notes by the Master Issuer) oblige Funding 2 to borrow the whole
amount stated in the Loan Tranche Notice on the Closing Date upon the
terms and subject to the conditions contained in this Agreement and such
Loan Tranche Notice will set out, inter alia:
(a) the amount and currency or currencies of the proposed issue of
each Series and Class of Notes under the Programme;
(b) the Specified Currency Exchange Rate(s) at which the Master Issuer
will swap the proceeds of each Series and Class of Notes that is
not denominated in Sterling into Sterling; and
(c) the principal amount of each Loan Tranche available for drawing
under the Master Intercompany Loan Facility on such Closing Date.
6.2 LOAN TRANCHES CORRESPOND TO SERIES AND CLASSES OF NOTES
Each Loan Tranche shall be identified by reference to the relevant Series
and Class of Notes that is used to fund it, as set out in the applicable
Loan Tranche Supplement.
6.3 LOAN TRANCHE SUPPLEMENT
The Loan Tranche Supplement to be signed on each Closing Date in
accordance with CLAUSE 3(C) shall record, amongst other things, the
amount of each Loan Tranche to be made on such Closing Date, which shall
correspond to the principal amount of such Loan Tranche that is available
for drawing which is notified to the Master Issuer in the applicable Loan
Tranche Notice.
6.4 SINGLE DRAWING OF THE LOAN TRANCHE
On satisfaction of the conditions set out in CLAUSE 3, the Master Issuer
shall make the applicable Loan Tranches available to Funding 2 on the
applicable Closing Date. The aggregate of the Loan Tranches to be made on
such Closing Date will only be available for drawing in one amount by
Funding 2 on the such Closing Date.
6.5 REDEMPTION/PAYMENT BASIS
Each Loan Tranche may be a Bullet Loan Tranche, a Scheduled Amortisation
Loan Tranche, a Pass-Through Loan Tranche or a combination of any of the
foregoing, depending upon the Redemption/Payment Basis shown in the
applicable Loan Tranche Supplement.
7. INTEREST
7.1 LOAN TRANCHE INTEREST PERIODS
(a) The first Loan Tranche Interest Period in respect of a Loan
Tranche will commence on (and include) the Loan Tranche Interest
Commencement Date relating to that Loan Tranche and end on (but
exclude) the first Loan Payment Date falling thereafter. Each
subsequent Loan Tranche Interest Period shall commence on (and
include) a Loan Payment Date and end on (but exclude) the next
following Loan Payment Date.
(b) Whenever it is necessary to compute an amount of interest in
respect of a Loan Tranche for any period (including any Loan
Tranche Interest Period), such interest shall be calculated on the
basis of actual days elapsed in a 365 day year.
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7.2 DETERMINATION OF LOAN TRANCHE INTEREST AMOUNT
In relation to any Loan Tranche, the rate of interest payable (the LOAN
TRANCHE RATE OF INTEREST) and the relevant Sterling interest amount (each
a LOAN TRANCHE INTEREST AMOUNT) in respect of such Loan Tranche shall be
determined on the basis of the provisions set out below:
(a) On the Loan Tranche Interest Determination Date in relation to
such Loan Tranche, the Agent Bank will determine the Relevant
Screen Rate in respect of such Loan Tranche at or about 11.00 am
London time. 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 am London time on such Loan Tranche Interest Determination
Date.
The Loan Tranche Rate of Interest for such Loan Tranche for the
Loan Tranche Interest Period relating to such Loan Tranche shall
be the aggregate of:
(i) the Relevant Margin in respect of such Loan Tranche; and
(ii) the Relevant Screen Rate in respect of such Loan Tranche
or, if the Relevant Screen Rate is unavailable, the
arithmetic mean (or, in the case of the initial Loan
Tranche Interest Determination Date for such Loan Tranche,
the linear interpolation of the arithmetic mean) of such
offered quotations by the Reference Banks (rounded upwards,
if necessary, to five decimal places).
(b) If on any Loan Tranche Interest Determination Date in relation to
such Loan Tranche, the Relevant Screen Rate in respect of such
Loan Tranche is unavailable and only two or three of the Reference
Banks provide offered quotations, the Loan Tranche Rate of
Interest for such Loan Tranche for the relevant Loan Tranche
Interest Period shall be determined in accordance with the
provisions of sub-paragraph (a) above on the basis of the offered
quotations of those Reference Banks providing such quotations.
(c) If, on any such Loan Tranche Interest Determination Date, only one
or none of the Reference Banks provides the Agent Bank with such
an offered quotation, the Agent Bank shall forthwith consult with
the Security Trustee 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 Loan Tranche
Rate of Interest for such Loan Tranche for the Loan Tranche
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).
(d) 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 Loan Tranche Rate of Interest for such Loan
Tranche for the relevant Loan Tranche Interest Periods shall be
the Loan Tranche Rate of Interest in relation to such Loan Tranche
in effect for the immediately preceding Loan Tranche Interest
Period to which sub-paragraph (a) above shall have applied but
taking account of any change in the Relevant Margin in relation to
such Loan Tranche.
(e) There will be no minimum or maximum Loan Tranche Rate of Interest
for such Loan Tranche.
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(f) The Agent Bank shall as soon as practicable after 11:00 a.m.
(London time) on each Loan Tranche Interest Determination Date,
determine and notify the Master Issuer, Funding 2, the Cash
Manager and the Security Trustee of: (i) the Loan Tranche Rate of
Interest applicable to such Loan Tranche for the relevant Loan
Tranche Interest Period and (ii) the Loan Tranche Interest Amount
payable in respect of such Loan Tranche for the relevant Loan
Tranche Interest Period.
(g) The Loan Tranche Interest Amount for such Loan Tranche shall be
determined by applying the relevant Loan Tranche Rate of Interest
to the Outstanding Principal Balance of such Loan Tranche,
multiplying the sum by the day count fraction described in CLAUSE
7.1 and rounding the resultant figure to the nearest ▇▇▇▇▇ (half a
▇▇▇▇▇ being rounded upwards).
(h) If the Agent Bank does not at any time for any reason determine
the Loan Tranche Rate of Interest and the Loan Tranche Interest
Amount for any Loan Tranche in accordance with paragraphs 7.2(a)
to (g) above, the Security Trustee shall (subject to it being
indemnified to its satisfaction) determine the Loan Tranche Rate
of Interest and Loan Tranche Interest Amount for each Loan Tranche
and any such determination shall be deemed to have been made by
the Agent Bank.
(i) All notifications, opinions, determinations, certificates,
calculations and decisions given, expressed, made or obtained for
the purposes of this CLAUSE 7, whether by the Agent Bank or the
Security Trustee, shall (in the absence of wilful default, bad
faith or manifest error) be binding on Funding 2, the Master
Issuer, the Cash Manager, the Agent Bank, the Security Trustee and
(in such absence as aforesaid) no liability to Funding 2 shall
attach to the Master Issuer, 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.
7.3 PAYMENT ON LOAN PAYMENT DATES
Subject to CLAUSE 5.1, Funding 2 shall pay interest in respect of each
Loan Tranche on the Loan Payment Dates specified in the applicable Loan
Tranche Supplement.
7.4 DEFERRED INTEREST
Subject to CLAUSE 5.2, to the extent that there are insufficient funds
available to pay interest on a Loan Tranche on any Loan Payment Date, the
shortfall in the interest amount payable will not then fall due but will
instead be due on the following Loan Payment Date on which sufficient
funds are available to pay such interest, and pending such payment, will
accrue interest at the rate specified for such Loan Tranche in the
applicable Loan Tranche Supplement.
7.5 CERTAIN FEES
In addition to the interest and principal payments to be made by Funding
2 in respect of each Loan Tranche under this CLAUSE 7 and CLAUSE 8,
respectively, on each Funding 2 Interest Payment Date or on any other
date on which the Master Issuer notifies Funding 2, but subject to CLAUSE
5.1, Funding 2 shall pay to the Master Issuer for same day value to the
Master Issuer Transaction Account a fee for the provision of the Master
Intercompany Loan Facility (except that in the case of payments due under
paragraphs (b), (d), (e) and (h) below, such payments shall be paid when
due). 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 Note Trustee and the Security
Trustee pursuant to
6
the Master Issuer Trust Deed, the Master Issuer Deed of Charge or
any other Transaction Document, together with interest thereon as
provided therein;
(b) the reasonable fees and expenses of any legal advisers,
accountants and auditors appointed by the Master Issuer and
properly incurred in their performance of their functions under
the Transaction Documents which have fallen due;
(c) the fees, costs and expenses due and payable to the Paying Agents,
the Agent Bank, the Transfer Agent and the Registrar pursuant to
the Master Issuer Paying Agent and Agent Bank Agreement;
(d) any amounts due and payable by the Master Issuer to HM Revenue and
Customs in respect of the Master Issuer's liability to United
Kingdom corporation tax (insofar as payment is not or will not be
capable of being satisfied by the surrender of group relief or out
of the profits, income or gains of the Master Issuer and subject
to the terms of the Master Issuer Deed of Charge) or any other
Taxes payable by the Master Issuer;
(e) the fees, costs, charges, liabilities and expenses due and payable
to the Master Issuer Account Bank pursuant to the Master Issuer
Bank Account Agreement (if any);
(f) the fees, costs, charges, liabilities and expenses due and payable
to the Master Issuer Cash Manager pursuant to the Master Issuer
Cash Management Agreement;
(g) any termination payment due and payable by the Master Issuer to a
Master Issuer Swap Provider pursuant to a Master Issuer Swap
Agreement;
(h) the fees, costs, charges, liabilities and expenses due and payable
to the Master Issuer Corporate Services Provider pursuant to the
Master Issuer Corporate Services Agreement;
(i) 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 2 to the
Master Issuer on the Loan Tranches on the immediately preceding
Loan Payment Date;
D = E - F
where,
E = the interest amounts (which excludes those fee
amounts in this CLAUSE 7.5) paid by Funding 2 to the
Master Issuer on the Loan Tranches on the
immediately preceding Funding 2 Interest Payment
Date; and
F = amounts paid by the Master Issuer under paragraphs
[(d) to (g)] of the Master Issuer Pre-Enforcement
Revenue Priority of Payments on the immediately
preceding Funding 2 Interest Payment Date;
and
H = the cumulative aggregate of (D - A) as calculated on
each previous Funding 2 Interest Payment Date. If
such cumulative aggregate of (D - A) is less than
zero, then H shall be zero;
7
(j) any other amounts due or overdue by the Master Issuer to third
parties including the Rating Agencies and the amounts paid by the
Master Issuer under the Programme Agreement, each Subscription
Agreement and each Underwriting Agreement (excluding, for these
purposes, the Noteholders) other than amounts specified in
paragraphs (a) to (i) above,
together with, (i) in respect of taxable supplies made to the Master
Issuer, an amount in respect of any VAT 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 Master 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 Master Issuer Pre-Enforcement Revenue Priority of
Payments in the Master Issuer Cash Management Agreement.
7.6 SET-OFF
Funding 2 and each of the other parties to this Agreement agree that the
Master Issuer shall be entitled to set-off those amounts due and payable
by Funding 2 pursuant to CLAUSE 7.5 on the Closing Date for a Loan
Tranche against the amount to be advanced by the Master Issuer to Funding
2 under such Loan Tranche on such Closing Date.
8. REPAYMENT
8.1 REPAYMENT OF LOAN TRANCHES
Subject to CLAUSE 5, on each Loan Payment Date, other than a Loan Payment
Date on which a Loan Tranche is to be repaid under CLAUSE 9, Funding 2
shall repay principal in respect of such Loan Tranche in an amount equal
to:
(a) prior to the earlier to occur of the Step-Up Date (if any) in
respect of such Loan Tranche and prior to the occurrence of a
Trigger Event, service on Funding 2 of a Master Intercompany Loan
Acceleration Notice or the service on the Master Issuer of a Note
Acceleration Notice, the lower of:
(i) the amount due to be paid on such Loan Payment Date as
specified for such Loan Tranche in the applicable Loan
Tranche Supplement; and
(ii) the amount which is available, under the terms of the
Funding 2 Deed of Charge and the Cash Management Agreement
to repay principal in respect of such Loan Tranche as set
out in Part 1 of Schedule 3 of the Funding 2 Deed of
Charge,
provided that, in the case of any Pass-Through Loan Tranche, the
amount of principal to be repaid by Funding 2 in respect of such
Loan Tranche on the applicable Loan Payment Date shall be
calculated in accordance with sub-paragraph (ii) above; or
(b) following the occurrence of a Non-Asset Trigger Event but prior to
the occurrence of an Asset Trigger Event, service on Funding 2 of
a Master Intercompany Loan Acceleration Notice or service on the
Master Issuer of a Note Acceleration Notice, the amount which is
available under the terms of the Funding 2 Deed of Charge and the
Cash Management Agreement to repay principal in respect of such
Loan Tranche as set out in Part 2 of Schedule 3 of the Funding 2
Deed of Charge; or
(c) following the occurrence of an Asset Trigger Event but prior to
service on Funding 2 of a Master Intercompany Loan Acceleration
Notice or service on the Master Issuer of a Note Acceleration
Notice, the amount which is available under the terms of the
8
Funding 2 Deed of Charge and the Cash Management Agreement to
repay principal in respect of such Loan Tranche as set out in Part
2 of Schedule 3 of the Funding 2 Deed of Charge;
(d) following service on Funding 2 of a Master Intercompany Loan
Acceleration Notice but prior to service on the Master Issuer of a
Note Acceleration Notice, the amount which is available under the
terms of the Funding 2 Deed of Charge and the Cash Management
Agreement to repay principal in respect of such Loan Tranche as
set out in Part 2 of Schedule 3 of the Funding 2 Deed of Charge;
(e) following service on the Master Issuer of a Note Acceleration
Notice, the amount which is available under the terms of the
Funding 2 Deed of Charge and the Cash Management Agreement to
repay principal in respect of such Loan Tranche as set out in Part
3 of Schedule 3 of the Funding 2 Deed of Charge;
To the extent that there are insufficient funds available to Funding 2 to
repay the amount due to be paid on such Loan Payment Date, Funding 2 will
be required to repay the shortfall, to the extent that it receives funds
therefor (and subject to the terms of the Funding 2 Deed of Charge and
the Cash Management Agreement) on subsequent Loan Payment Dates in
respect of such Loan Tranche.
8.2 LOAN TRANCHE RATINGS
Unless otherwise specified for any Loan Tranche in the applicable Loan
Tranche Supplement, such Loan Tranche shall be repaid (as to both
interest and principal) in the priority according to the Loan Tranche
Rating of that Loan Tranche. The Loan Tranche Rating for a Loan Tranche
will be specified for such Loan Tranche in the applicable Loan Tranche
Supplement.
8.3 PAYMENT SUBJECT TO TERMS OF THE FUNDING 2 DEED OF CHARGE
The terms and conditions of CLAUSE 7 and this CLAUSE 8 are to be read in
conjunction with the provisions of the Funding 2 Deed of Charge, as the
same may be amended or varied from time to time in accordance with the
provisions thereof.
9. PREPAYMENT
9.1 PREPAYMENT FOR TAXATION OR OTHER REASONS:
If:
(a) Funding 2 is required to withhold or deduct from any payment of
principal or interest in respect of any Loan Tranche any amount
for or on account of Tax; or
(b) the Master Issuer is required to withhold or deduct from any
payment of principal, interest or premium in respect of its Notes
any amount for or on account of Tax; or
(c) a Loan Tranche becomes illegal as described in CLAUSE 11,
then, without prejudice to the obligations of Funding 2 under CLAUSE 11
and subject to CLAUSE 12, Funding 2 may prepay, on any Funding 2 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 Loan Tranche which becomes illegal pursuant to CLAUSE 11)
prior written notice to the Master Issuer and the Note Trustee (or on or
before the latest date permitted by the relevant law in the case of
CLAUSE 11) so long as the relevant circumstances continue, the applicable
Loan Tranches without penalty or premium but subject to CLAUSE 16,
provided that the Repayment Tests will be satisfied following such
prepayment and the Master Issuer is able to repay the related Notes used
to
9
fund such Loan Tranche on such Funding 2 Interest Payment Date from funds
received from repayment of such Loan Tranche.
9.2 PREPAYMENT AT OPTION OF MASTER ISSUER
The Master Issuer, at its option, may require Funding 2 to prepay the
outstanding principal amount of a Loan Tranche (together with any accrued
interest) on any Loan Payment Date on which the Master Issuer has decided
to exercise its option, if any, to redeem in full the Notes used to fund
such Loan Tranche provided that the Repayment Tests will be satisfied
following such prepayment. The Master Issuer shall give Funding 2 not
more than 60 days' and not less than 30 days' prior written notice of the
Master Issuer's decision to exercise its option to require Funding 2 to
prepay the relevant Loan Tranche. Any prepayment by Funding 2 will be
made without penalty or premium but will be subject to CLAUSE 16.
9.3 APPLICATION OF MONIES
The Master Issuer hereby agrees to apply any amounts received by way of
prepayment pursuant to CLAUSE 9.1 or CLAUSE 9.2 in making prepayments
under the relevant Notes.
10. TAXES
10.1 NO GROSS UP
All payments by Funding 2 under this 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 2 is required by law to make
payment subject to any Taxes.
10.2 TAX RECEIPTS
All Taxes required by law to be deducted or withheld by Funding 2 from
any amounts paid or payable under this Agreement shall be paid by Funding
2 when due and Funding 2 shall, within 30 days of the payment being made,
deliver to the Master Issuer evidence satisfactory to the Master Issuer
(including all relevant Tax receipts) that the payment has been duly
remitted to the appropriate authority.
11. ILLEGALITY
If, at any time, it is unlawful for the Master Issuer to make, fund or
allow to remain outstanding a Loan Tranche made by it under this
Agreement, then the Master Issuer shall, promptly after becoming aware of
the same, deliver to Funding 2, the Security Trustee and the Rating
Agencies a legal opinion to that effect from reputable counsel and if the
Master Issuer so requires, Funding 2 shall promptly to the extent
necessary to cure such illegality prepay such Loan Tranche subject to and
in accordance with the provisions of CLAUSE 9.1.
12. MITIGATION
If circumstances arise in respect of the Master Issuer which would, or
would upon the giving of notice, result in:
(a) the prepayment of the Loan Tranches pursuant to CLAUSE 11;
(b) a withholding or deduction from the amount to be paid by Funding 2
on account of Taxes pursuant to CLAUSE 10,
10
then, without in any way limiting, reducing or otherwise qualifying the
obligations of Funding 2 under this Agreement, the Master Issuer shall:
(i) promptly upon becoming aware of the circumstances, notify the
Security Trustee, Funding 2 and the Rating Agencies; and
(ii) upon written request from Funding 2, take such reasonable steps as
may be practical to mitigate the effects of those circumstances
including (without limitation) the assignment of the Master
Issuer's rights under this Agreement to, and assumption of all the
Master Issuer's obligations under this Agreement by, another
company satisfactory to the Security Trustee, which is willing to
participate in the Loan Tranches in its place and which is not
subject to (a) and/or (b) above,
provided that no such transfer or assignment and transfer of such rights
and obligations may be permitted unless the Rating Agencies confirm in
writing to Funding 2 and the Security Trustee that there will be no
downgrading of the then current rating of the Notes issued by the Master
Issuer as a result and Funding 2 indemnifies the Master Issuer for any
reasonable costs and expenses properly incurred as a result of such
transfer or assignment.
13. REPRESENTATIONS AND WARRANTIES OF FUNDING 2
13.1 REPRESENTATIONS AND WARRANTIES
Funding 2 makes the representations and warranties set out in this CLAUSE
13 to the Master Issuer and the Security Trustee (as trustee for each of
the Funding 2 Secured Creditors).
13.2 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; and
(b) it has the power to own its property and assets and to carry on
its business as it is being conducted.
13.3 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.
13.4 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 of Funding 2.
13.5 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 this Agreement or granting
any security contemplated by the Transaction Documents will not:
11
(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 2 Secured Creditors or as otherwise contemplated in the
Transaction Documents) 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.
13.6 NO LITIGATION
No litigation, arbitration or administrative proceedings are current or,
to its knowledge, pending or threatened.
13.7 NO DEFAULT
No Master Intercompany Loan Event of Default is continuing unremedied (if
capable of remedy) or unwaived or would result from the making of any
Loan Tranche.
13.8 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.
13.9 REGISTRATION REQUIREMENTS
Except for due registration of the Funding 2 Deed of Charge under Section
395 of the Companies ▇▇▇ ▇▇▇▇, it is not necessary that the Funding 2
Deed of Charge or this 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 Funding 2 Deed of Charge, any stamp,
registration or similar tax be paid on or in respect thereof.
13.10 RANKING OF SECURITY
The security conferred by the Funding 2 Deed of Charge constitutes a
first priority security interest of the type described, and over the
security assets referred to, in the Funding 2 Deed of Charge and the
Funding 2 Charged Property is not subject to any prior or pari passu
Security Interests.
13.11 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; and
(b) it is not party to any material agreements other than the
Transaction Documents.
13.12 OWNERSHIP
(a) Its entire issued share capital is legally and beneficially owned
and controlled by Holdings; and
12
(b) its shares are fully paid.
13.13 GOOD TITLE AS TO ASSETS
Subject to the Security Interests created under the Funding 2 Deed of
Charge, it is and will remain the absolute beneficial owner of the
Funding 2 Share and absolute legal and beneficial owner of all other
assets charged or assigned by the Funding 2 Deed of Charge to which it is
a party.
13.14 TAX
(a) It is a tax resident and legally domiciled in its jurisdiction of
incorporation; and
(b) it has no branch, business establishment or other fixed
establishment outside the United Kingdom.
13.15 REPETITION
The representations in this CLAUSE 13 shall survive the execution of this
Agreement and the making of each Loan Tranche under this Agreement, and
shall be repeated by Funding 2 on each Closing Date relating to the
making of each Loan Tranche by reference to the facts and circumstances
then existing.
14. COVENANTS
14.1 DURATION
The undertakings in this CLAUSE 14 shall remain in force from the date of
this Agreement for so long as any amount is or may be outstanding under
this Agreement.
14.2 INFORMATION
Funding 2 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.
14.3 NOTIFICATION OF DEFAULT
Funding 2 shall notify the Master Issuer and the Security Trustee of any
Master Intercompany Loan Event of Default (and the steps, if any, being
taken to remedy it) promptly upon Funding 2 becoming aware of its
occurrence.
14.4 AUTHORISATIONS
Funding 2 shall promptly:
(a) obtain, maintain and comply with the terms of; and
(b) upon request, supply certified copies to the Master 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
14.5 PARI PASSU RANKING
Funding 2 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.
14.6 NEGATIVE PLEDGE
Funding 2 shall not create or permit to subsist any Security Interest
over or in respect of any of its assets (unless arising by operation of
law) other than as provided pursuant to the Transaction Documents.
14.7 DISPOSALS
Funding 2 shall not, either in a single transaction or in a series of
transactions, whether related or not and whether voluntarily or
involuntarily, sell, assign, transfer, lease or otherwise dispose of or
grant any option over all or any part of its assets, properties or
undertakings or any interest, estate, right, title or benefit therein,
other than as provided for pursuant to the Transaction Documents.
14.8 MERGERS AND ACQUISITIONS
(a) Funding 2 shall not, without the consent of the Master Issuer and
the Security Trustee, enter into any amalgamation, demerger,
merger or reconstruction.
(b) Funding 2 shall not acquire any assets or business or make any
investments other than as contemplated in the Transaction
Documents.
14.9 LENDING AND BORROWING
(a) Except as provided or contemplated under the Transaction
Documents, Funding 2 shall not make any loans or provide any other
form of credit to any person.
(b) Funding 2 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 2 assumes
any liability of any other person.
(c) Funding 2 shall not incur any indebtedness in respect of any
borrowed money other than under the Transaction Documents.
14.10 SHARES AND DIVIDENDS
Funding 2 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 2 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.
14.11 CHANGE OF BUSINESS
(a) Funding 2 shall not carry on any business or engage in any
activity other than as contemplated by the Transaction Documents
or which is not incidental to or necessary in
14
connection with any of the activities in which the Transaction
Documents provide or envisage that Funding 2 will engage.
(b) Funding 2 shall not have any subsidiaries or subsidiary
undertakings as defined in the Companies ▇▇▇ ▇▇▇▇, as amended.
(c) Funding 2 shall not have any employees or own any premises.
14.12 TAX
(a) Funding 2 shall join with the Master 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 this
Agreement by Funding 2 to the Master Issuer and Funding 2 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
2 shall immediately notify the Master 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; and
(b) Funding 2 shall not apply to become part of any group for the
purposes of section 43 of the Value Added Tax ▇▇▇ ▇▇▇▇ with the
Master Issuer unless required to do so by law.
14.13 UNITED STATES ACTIVITIES
Funding 2 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.
15. DEFAULT
15.1 MASTER INTERCOMPANY LOAN EVENTS OF DEFAULT
Each of the events set out in CLAUSE 15.2 to CLAUSE 15.8 (inclusive) is a
MASTER INTERCOMPANY LOAN EVENT OF DEFAULT (whether or not caused by any
reason whatsoever outside the control of Funding 2 or any other person).
15.2 NON-PAYMENT
Subject to CLAUSE 5.1, Funding 2 does not pay on the due date or such
failure to pay continues for a period of three London Business Days after
such due date any amount payable by it under this Agreement or any other
loan agreement entered into by Funding 2 at the place at and in the
currency in which it is expressed to be payable.
15.3 BREACH OF OTHER OBLIGATIONS
Funding 2 does not comply in any material respect (in the opinion of the
Security Trustee) with any of its obligations under the Transaction
Documents to which it is a party (other than those referred to in CLAUSE
15.2) and such non-compliance, if capable of remedy, is not remedied
promptly and in any event within twenty London Business Days of Funding 2
becoming aware of the non-compliance
15
or receipt of a written notice from the Security Trustee requiring
Funding 2's non-compliance to be remedied.
15.4 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 2 under or in connection with any Transaction
Document is incorrect in any material respect (in the opinion of the
Security Trustee) when made or deemed to be made or repeated.
15.5 INSOLVENCY
Any corporate action is taken by Funding 2, 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 2 or of any or all of Funding 2's
revenues and assets or any application is made or petition is lodged for
the making of an administration order in relation to Funding 2.
15.6 CREDITORS' PROCESS
Any attachment, sequestration, distress or execution affects any asset of
Funding 2 and is not discharged within twenty London Business Days.
15.7 UNLAWFULNESS
It is or becomes unlawful for Funding 2 to perform any of its obligations
under any Transaction Document.
15.8 THE FUNDING 2 DEED OF CHARGE
The Funding 2 Deed of Charge is no longer binding on or enforceable
against Funding 2 or effective to create the security intended to be
created by it.
15.9 OWNERSHIP
The entire issued share capital of Funding 2 ceases to be legally and
beneficially owned and controlled by Holdings.
15.10 ACCELERATION OF MASTER INTERCOMPANY LOAN
Upon the occurrence of a Master Intercompany Loan Event of Default which
is continuing unremedied and/or has not been waived, the Security Trustee
may by written notice to Funding 2 (a MASTER INTERCOMPANY LOAN
ACCELERATION NOTICE) which is copied to each of the Funding 2 Secured
Creditors and the Mortgages Trustee:
(a) declare all Loan Tranches made under this Agreement to be
immediately due and payable, whereupon the same shall, subject to
CLAUSE 15.11, become so payable together with accrued interest
thereon and any other sums then owed by Funding 2 under this
Agreement; and/or
(b) declare the Loan Tranches to be due and payable on demand of the
Security Trustee.
16
15.11 REPAYMENT OF MASTER INTERCOMPANY LOAN ON ACCELERATION
Upon the Security Trustee declaring the Loan Tranches to be immediately
due and payable pursuant to CLAUSE 15.10, the amount due and payable in
respect of each Loan Tranche shall be paid by Funding 2 without penalty
or premium but subject to CLAUSE 16.
16. DEFAULT INTEREST AND INDEMNITY
16.1 DEFAULT LOAN INTEREST PERIODS
If any sum due and payable by Funding 2 under a Loan Tranche is not paid
on the due date for payment in accordance with this Agreement or if any
sum due and payable by Funding 2 under any judgment or decree of any
court in connection with this 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 2 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 16) be selected by the Security Trustee having regard to when
such unpaid sum is likely to be paid.
16.2 DEFAULT INTEREST
During each such period relating to an unpaid sum as is mentioned in this
CLAUSE 16 an unpaid sum shall bear interest at the rate per annum which
the Master Issuer, acting reasonably, determines and certifies to Funding
2 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 Master Issuer does not pay as a result of Funding 2's
non-payment under this Agreement, as a result of such unpaid sum not
being paid to it.
16.3 PAYMENT OF DEFAULT INTEREST
Any interest which shall have accrued under CLAUSE 16.2 in respect of an
unpaid sum shall be due and payable and shall be paid by Funding 2 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 2.
16.4 BROKEN PERIODS
Funding 2 shall forthwith on demand indemnify the Master Issuer against
any loss or liability that the Master Issuer incurs as a consequence of
any payment of principal being received from any source otherwise than on
a Loan Payment Date or an overdue amount being received otherwise than on
its due date.
16.5 FUNDING 2'S PAYMENT INDEMNITY
Funding 2 undertakes to indemnify the Master 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 Master Issuer) which it may sustain or incur as a
consequence of the occurrence of any Master Intercompany Loan
Event of Default or any default by Funding 2 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
17
the Master Issuer or prior breach by the Master 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 Loan
Tranche requested by Funding 2 under the Master Intercompany Loan
Agreement but not made; and
(c) against any other loss or liability (other than by reason of the
negligence or default of the Master Issuer or breach by the Master
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 2) or loss of profit) it may suffer by reason of
having made a Loan Tranche available or entering into this
Agreement or enforcing any security granted pursuant to the
Funding 2 Deed of Charge.
17. PAYMENTS
17.1 PAYMENT
(a) Subject to CLAUSE 5, all amounts of interest and principal to be
paid to the Master Issuer under this Agreement shall be paid in
Sterling for value by Funding 2 to the Master Issuer Transaction
Account and the relevant irrevocable payment instruction for such
payment shall be given by Funding 2 by no later than noon to the
Master Issuer Cash Manager under the Master Issuer Cash Management
Agreement (with a copy to the Master Issuer and the Security
Trustee) on the Distribution Date immediately preceding the
relevant Loan Payment Date.
(b) On each date on which this Agreement requires any amount other
than the amounts specified in CLAUSE 17.1(A) to be paid by Funding
2, Funding 2 shall, save as provided otherwise herein, make the
same available to the Master Issuer by payment in Sterling in
immediately available, freely transferable, cleared funds to the
Master Issuer Transaction Account.
17.2 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 2 to make any payments
under this Agreement in the manner specified in CLAUSE 17.1, then Funding
2 shall make such alternative arrangements for the payment direct to the
Master Issuer of amounts due under this Agreement as are acceptable to
the Security Trustee.
17.3 NO SET-OFF
All payments required to be made by Funding 2 under this 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.
18. ENTRENCHED PROVISIONS
Each of Funding 2, the Master Issuer and the Security Trustee acknowledge
and agree that Funding 2 may from time to time enter into new Funding 2
loan agreements and that the obligation of Funding 2 to repay the Loan
Tranches made under this Agreement will rank pari passu with the
obligations of Funding 2 to repay any such other loans made under such
Funding 2 loan agreements. If Funding 2 intends to enter into a new
Funding 2 loan agreement then the provisions of this Agreement may be
varied (with the consent of the parties to this Agreement to the extent
necessary to reflect the terms of that Funding 2 loan agreement) PROVIDED
THAT no variation shall be made to any of the
18
following terms without the prior written consent of the Funding 2
Secured Creditors and the Rating Agencies:
(a) the Loan Payment Dates;
(b) the determination of the Loan Tranche Rates of Interest;
(c) CLAUSE 5 (Limited Recourse);
(d) CLAUSE 10 (Taxes); and
(e) CLAUSE 19.5 (Security Trustee).
19. FURTHER PROVISIONS
19.1 EVIDENCE OF INDEBTEDNESS
In any proceeding, action or claim relating to a Loan Tranche a statement
as to any amount due to the Master Issuer under such Loan Tranche which
is certified as being correct by an officer of the Security Trustee
shall, unless otherwise provided in this Agreement, be prima facie
evidence that such amount is in fact due and payable.
19.2 ENTIRE AGREEMENT, AMENDMENTS AND WAIVER AND RIGHTS CUMULATIVE
(a) This Agreement sets out the entire agreement and understanding
between the parties with respect to the subject matter of this
Agreement superseding all prior oral or written understandings
other than the other Transaction Documents.
(b) Subject to CLAUSE 18, no amendment or waiver of any provision of
this Agreement nor consent to any departure by any of the parties
therefrom shall in any event be effective unless the same shall be
in writing and signed by each of the parties hereto. In the case
of a waiver or consent, such waiver or consent shall be effective
only in the specific instance and as against the party or parties
giving it for the specific purpose for which it is given.
(c) The respective rights of each of the parties to this Agreement are
cumulative and may be exercised as often as they consider
appropriate. No failure on the part of any party to exercise, and
no delay in exercising, any right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies in this Agreement are
cumulative and not exclusive of any remedies provided by law.
19.3 ASSIGNMENT
Neither the Master Issuer nor Funding 2 may assign or transfer any of its
respective rights and obligations under this Agreement PROVIDED THAT:
(a) the Master Issuer may assign its rights, title, interest or
benefit hereunder to the Security Trustee pursuant to the Master
Issuer Deed of Charge;
(b) Funding 2 may assign its rights hereunder to the Security Trustee
pursuant to the Funding 2 Deed of Charge.
19
19.4 SEVERABILITY
If a provision of this 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 this Agreement; or
(b) the validity or enforceability in other jurisdictions of that or
any other provision of this Agreement.
19.5 SECURITY TRUSTEE
The Security Trustee shall have no responsibility for any of the
obligations of the Master Issuer or any other party to this Agreement
(other than itself). For the avoidance of doubt, the parties to this
Agreement acknowledge that the rights and obligations of the Security
Trustee under this Agreement are governed by the Funding 2 Deed of
Charge.
19.6 COUNTERPARTS
This Agreement 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.
19.7 THIRD PARTY RIGHTS
A person who is not a party to this Agreement may not enforce any of its
terms under the Contracts (Rights of Third Parties) ▇▇▇ ▇▇▇▇, but this
shall not affect any right or remedy of a third party which exists or is
available apart from that Act.
20. REDENOMINATION
Each obligation under this Agreement which has been denominated in
Sterling shall be redenominated in Euro in accordance with applicable
legislation passed by the European Monetary Union upon such
redenomination of the Notes.
21. NOTICES
Any notices to be given pursuant to this Agreement to any of the parties
hereto 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. 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 the Master Issuer: to Permanent Master Issuer PLC,
▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇▇'▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (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 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;
(c) in the case of the Security Trustee: to the Bank of New York, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (facsimile number + 44
(▇)▇▇ ▇▇▇▇ ▇▇▇▇ or + ▇▇ (▇)▇▇ ▇▇▇▇ ▇▇▇▇, for the attention of
Global Structured Finance - Corporate Trust); and
(d) in the case of Agent Bank, to Citibank, N.A., Citigroup Centre,
Canada Square, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, (facsimile number 020
7508 3881) for the attention of Rate Fixing,
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 21. All notices served under this Agreement shall be
simultaneously copied to the Security Trustee by the person serving the
same.
22. GOVERNING LAW AND SUBMISSION TO JURISDICTION
22.1 This Agreement is governed by the laws of England.
22.2 Each party to this Agreement hereby irrevocably submits to the
non-exclusive jurisdiction of the English courts in any action or
proceeding arising out of or relating to this Agreement, and hereby
irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined by such courts. Each party to this
Agreement hereby irrevocably waives, to the fullest extent it may
possibly do so, any defence or claim that the English courts are an
inconvenient forum for the maintenance or hearing of such action or
proceeding.
IN WITNESS WHEREOF the parties have caused this Agreement to be duly executed
on the day and year first before written.
21
SCHEDULE 1
CONDITIONS PRECEDENT
1. AUTHORISATIONS
(a) A copy of the memorandum and articles of association and certificate of
incorporation of Funding 2.
(b) A copy of a resolution of the board of directors of Funding 2 authorising
the entry into, execution and performance of the Loan Tranche Supplement
and each of the relevant Transaction Documents related to the relevant
Loan Tranche Supplement to which Funding 2 is a party and authorising
specified persons to execute those on its behalf.
(c) A certificate of a director of Funding 2 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 the Loan Tranche Supplement and undertaking
to notify the Security Trustee if that position should change
prior to the relevant Closing Date; and
(ii) as to the identity and specimen signatures of the directors and
signatories of Funding 2.
2. LEGAL OPINION
Legal opinions of:
(a) *, English and U.S. legal advisers to the Seller, the Master
Issuer and Funding 2, addressed to the Security Trustee; and
(b) [List Scottish opinion as necessary].
3. TRANSACTION DOCUMENTS
Duly executed copies of:
[list the transaction documents related to the issuance of the particular
Series]
22
SCHEDULE 2
FORM OF LOAN TRANCHE NOTICE
From: Permanent Funding (No. 2) Limited (FUNDING 2)
To: Permanent Master Issuer plc (the MASTER ISSUER)
Copy: The Bank of New York (the SECURITY TRUSTEE)
Dear Sirs,
1. We refer to the agreement between, inter alios, ourselves, the Master
Issuer and the Security Trustee (as from time to time amended, varied,
novated or supplemented (the MASTER INTERCOMPANY LOAN AGREEMENT)) dated
[*] 2006 whereby a Master Intercompany Loan Facility was made available
to us. Terms defined in the Master Intercompany Loan Agreement shall have
the same meaning in this notice.
2. We hereby give you notice that, pursuant to the Master Intercompany Loan
Agreement and upon the terms and subject to the conditions contained
therein, we wish the following Loan Tranches to be made available to us
on [specify Closing Date]:
* Series [*] [*] (Class [*]) Loan Tranche to be funded by the Series
[*] Class [*] Notes on the Closing Date:
(a) principal amount and currency of [*];
(b) specified Currency Exchange Rate of GBP 1.00/[*];
(c) Principal amount (in Sterling) available to be drawn in
respect of such Loan Tranche of [POUND][*];
[repeat for all applicable Loan Tranches]
3. The interest rate(s) applicable to each Loan Tranche will be as follows:
* Series [*] [*] (Class [*]) Loan Tranche: [*] [Set out relevant
interest rate(s)]
[repeat for all applicable Loan Tranches]
Yours faithfully,
For and on behalf of
PERMANENT FUNDING (NO. 2) LIMITED
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SCHEDULE 3
FORM OF LOAN TRANCHE SUPPLEMENT
24
FORM OF LOAN TRANCHE SUPPLEMENT
DATED [*]
PERMANENT FUNDING (NO. 2) LIMITED
as Funding 2
PERMANENT MASTER ISSUER PLC
as Master Issuer
THE BANK OF NEW YORK
as Security Trustee
AND
CITIBANK, N.A.
as Agent Bank
25
THIS LOAN TRANCHE SUPPLEMENT is dated [*] between:
(1) PERMANENT FUNDING (NO. 2) LIMITED (registered number [*]), a private
limited company incorporated under the laws of England and Wales whose
registered office is at ▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇▇'▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (as FUNDING
2);
(2) PERMANENT MASTER ISSUER PLC (registered number [*]), a public limited
company incorporated under the laws of England and Wales whose registered
office is at ▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇▇'▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (as MASTER ISSUER);
(3) THE BANK OF NEW YORK, acting through its office at ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ in its capacity as the Funding 2 Security Trustee;
and
(4) CITIBANK, N.A., acting through its office at Citigroup Centre, Canada
Square, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ in its capacity as the Agent Bank.
This document constitutes the Loan Tranche Supplement relating to the Loan
Tranches described herein. Terms used herein shall be deemed to be defined as
such for the purposes of the Master Intercompany Loan Agreement entered into
between the parties hereto on [*] 2006. This Loan Tranche Supplement contains
the final terms of the Loan Tranches identified and described herein, is
supplemental to and must be read in conjunction with the Master Intercompany
Loan Agreement.
[TO BE REPEATED FOR EACH LOAN TRANCHE FUNDED BY NOTES OF EACH CLASS OF THE SAME
SERIES]
LOAN TRANCHE: The Series [*] Class [*] Notes will fund the [identifier] Loan
Tranche which shall have the following terms:
2. Borrower: Permanent Funding (No. 2)
Limited
3. Lender: Permanent Master Issuer plc
4. (i) Loan Tranche Rating: [*]
(ii) Series Number: [*]
5. Initial Outstanding Principal Balance: [*]
6. (i) Closing Date: [*]
(ii) Loan Tranche Interest
Commencement Date: [*]
(iii) Loan Tranche Interest
Determination Dates: The Monthly Payment Date falling
in [*], [*], [*] and [*] of each
year or, following the earlier
to occur of the Step-Up Date in
relation to this Loan Tranche or
the occurrence of a Trigger
Event, service of a Master
Intercompany Loan Acceleration
Notice or a Note Acceleration
Notice, each Monthly Payment
Date of each year.
7. Final Repayment Date: [*]
8. Loan Payment Dates: Each Monthly Payment Date in
each year up to and including
the Final Repayment Date
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9. Initial Relevant Screen Rate: [*]
10. Loan Reference Rate: [*] or, following the earlier to
occur of the Step-Up Date in
relation to this Loan Tranche or
the occurrence of a Trigger
Event or service of a Master
Intercompany Loan Acceleration
Notice or a Note Acceleration
Notice, LIBOR for one-month
sterling deposits
11. Relevant Margin: [*]
12. Step-Up Date: [Not Applicable/The Loan Payment
Date occurring in [specify
date]]
13. Relevant Margin following Step-Up Date: [Not Applicable/[*]]
14. Redemption/Payment Basis: [Bullet Redemption][Scheduled
Amortisation][Pass-through]
15. Change of Redemption/Payment Basis: [Specify details of any
provision for change of Loan
Tranches into another
Redemption/Payment Basis
16. Details relating to Bullet
Loan Tranche: [Applicable/Not Applicable] [if
not applicable, delete the
remaining sub-paragraphs of this
paragraph]
(i) Bullet Repayment Loan Amount: [*]
(ii) Bullet Redemption Date: [*]
17. Details relating to Scheduled
Amortisation Loan Tranche: [Applicable/Not Applicable]
[if the Scheduled Amortisation
Loan Tranche is applicable,
specify the Scheduled
Amortisation Dates and Scheduled
Amortisation Instalments below]
[if not applicable, delete the
remaining sub-paragraphs of this
paragraph]
(i) Scheduled Amortisation Dates: Loan Payment Dates occurring in
[*]
(ii) Scheduled Amortisation
Instalments: [*]
18. Details relating to Pass-through
Loan Tranches: [Applicable/Not Applicable]
[If the Pass-through Loan
Tranche is applicable, specify
the Loan Payment Date following
which the Pass-Through Loan
Tranches will be due]
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19. Other terms and special conditions: [Not Applicable/give details]
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CONFIRMATIONS:
Funding 2 confirms that:
(a) no Master Intercompany Loan Event of Default has occurred and is
continuing which has not been waived, or would result from the making of
such Loan Tranche;
(b) the representations and warranties set out in CLAUSE 13 of the Master
Intercompany Loan Agreement are true on and as of the Closing Date
specified in this Loan Tranche Supplement by reference to the facts and
circumstances then existing; and
(c) as of the Closing Date specified in this Loan Tranche Supplement, there
is no debit balance on the Funding 2 Principal Deficiency Ledger.
The Master Issuer confirms that:
(a) no Note Event of Default has occurred and is continuing which has not
been waived, or would result from the making of such Loan Tranche;
(b) the aggregate amount of the Loan Tranches to be made on the Closing Date
specified in this Loan Tranche Supplement and any Loan Tranches
outstanding on such Closing Date do not exceed the Total Credit
Commitment.
29
EXECUTION PAGE
FOR LOAN TRANCHE SUPPLEMENT
AS FUNDING 2
EXECUTED for and on behalf of )
PERMANENT FUNDING (NO. 2) LIMITED )
by: )
________________________
Name:
AS MASTER ISSUER
EXECUTED for and on behalf of )
PERMANENT MASTER ISSUER PLC )
by: )
________________________
Name:
AS SECURITY TRUSTEE
EXECUTED for and on behalf of )
THE BANK OF NEW YORK )
by: )
________________________
Name:
AS AGENT BANK
EXECUTED for and on behalf of )
CITIBANK, N.A. )
by )
________________________
Name:
30
SCHEDULE 4
SOLVENCY CERTIFICATE
PERMANENT FUNDING (NO. 2) LIMITED (the "COMPANY")
To: Permanent Master Issuer plc (the MASTER ISSUER)
Copy: 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 ▇▇▇ ▇▇▇▇ (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; or (ii) the
Company to enter into any composition or arrangement with its
creditors generally; or (iii) the appointment of a receiver,
administrator, 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) 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;
(e) 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;
(f) 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
31
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; and
(f) 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
not and will not breach any provision or exceed any powers
contained in its Memorandum and Articles of Association.
Terms defined in the amended and restated master definitions and construction
schedule signed by, amongst others, the Master Issuer and the Security Trustee
and dated [*] 2006 (as the same may be amended, varied or supplemented from
time to time) shall have the same respective meanings when used in this
Certificate.
DATED [*]
Signed for and on behalf of Permanent Funding (No. 2) Limited
........................................
Director
........................................
Director/Secretary
32
EXECUTION PAGE
AS FUNDING 2
EXECUTED for and on behalf of )
PERMANENT FUNDING (NO. 2) LIMITED )
by: )
________________________
Name:
AS MASTER ISSUER
EXECUTED for and on behalf of )
PERMANENT MASTER ISSUER PLC )
by: )
________________________
Name:
AS FUNDING 2 SECURITY TRUSTEE
EXECUTED for and on behalf of )
THE BANK OF NEW YORK )
by: )
________________________
Name:
AS AGENT BANK
EXECUTED for and on behalf of )
CITIBANK, N.A. )
by )
________________________
Name:
33