Exhibit 4.1
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Draft: 25/02/03
THIS AGREEMENT is dated [6th March], 2003
BETWEEN:
(1) PERMANENT FUNDING (NO. 1) LIMITED (registered in England and Wales No.
4267660) whose registered office is at Xxxxxxxxx Xxxxx, Xxxxxxxxx Xxxx,
Xxxxxx XX0X 0XX ("FUNDING 1");
(2) PERMANENT FINANCING (NO. 2) PLC (registered in England and Wales No.
4623188) whose registered office is at Xxxxxxxxx Xxxxx, Xxxxxxxxx Xxxx,
Xxxxxx XX0X 0XX (the "SECOND ISSUER");
(3) U.S. BANK NATIONAL ASSOCIATION, a national banking association formed
under the laws of the United States of America, acting through its
office at 0 Xxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000,
acting in its capacity as Security Trustee; and
(4) CITIBANK, N.A., LONDON BRANCH, whose offices are at 0 Xxxxxxxxx Xxxxxx,
Xxxxxx XX0X 0XX, acting in its capacity as Agent Bank.
IT IS AGREED as follows:
1. INTERPRETATION
1.1 The Amended and Restated Master Definitions and Construction Schedule
signed for the purposes of identification by Xxxxx & Xxxxx and Xxxxxx
Xxxxxx Xxxxx & Wood on [5th March], 2003 (as the same may be amended,
varied or supplemented from time to time with the consent of the
parties hereto) and the Second Issuer Master Definitions and
Construction Schedule signed for the purposes of identification by
Xxxxx & Xxxxx and Xxxxxx Xxxxxx Xxxxx & Xxxx on [5th March], 2003 are
expressly and specifically incorporated into this Agreement and,
accordingly, the expressions defined in the Amended and Restated Master
Definitions and Construction Schedule and/or the Second Issuer Master
Definitions and Construction Schedule (as so amended, varied or
supplemented) shall, except where the context otherwise requires and
save where otherwise defined herein, have the same meanings in this
Agreement, including the Recitals hereto and this Agreement shall be
construed in accordance with the interpretation provisions set out in
CLAUSE 2 of the Amended and Restated Master Definitions and
Construction Schedule and the Second Issuer Master Definitions and
Construction Schedule. In the event of a conflict between the Amended
and Restated Master Definitions and Construction Schedule and the
Second Issuer Master Definitions and Construction Schedule, the Second
Issuer Master Definitions and Construction Schedule shall prevail.
1.2 Unless the context otherwise requires, references in the Intercompany
Loan Terms and Conditions to:
"CLOSING DATE" means [6th March], 2003;
"INTERCOMPANY LOAN" means the Second Issuer Intercompany Loan;
"INTERCOMPANY LOAN AGREEMENT" means the Second Issuer Intercompany Loan
Agreement;
"INTERCOMPANY LOAN CONFIRMATION" means the Second Issuer Intercompany
Loan Confirmation;
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"ISSUER" means the Second Issuer;
"ISSUER TRANSACTION ACCOUNT" means the Second Issuer Sterling Account;
"NEW BASEL CAPITAL ACCORD" means the new or revised capital accord as
described in the consultative document "The New Basel Capital Accord"
published by the Basel Committee on Banking Supervision in January
2001;
"NOTES" means the Second Issuer Notes; and
"SECOND ISSUER TERM ADVANCES" has the meaning given in the Second
Issuer Master Definitions and Construction Schedule.
2. INTERCOMPANY LOAN TERMS AND CONDITIONS
Each of the parties to this Agreement agree that the Intercompany Loan
Terms and Conditions signed by Funding 1, the Security Trustee and the
Agent Bank for the purposes of identification on 14th June, 2002, and
the provisions set out therein shall form part of this Agreement and
shall be binding on the parties to this Agreement as if they had
expressly been set out herein. References in this Agreement to "THIS
AGREEMENT" shall be construed accordingly.
3. THE SECOND ISSUER TERM ADVANCES
3.1 SECOND ISSUER TERM AAA ADVANCES
On and subject to the terms of this Agreement, the Second Issuer grants
to Funding 1 a term loan which consists of the following sub-loans:
(a) the series 1 term AAA advance in the maximum aggregate
principal amount of Pound Sterling[607,976,654] (the "SECOND
ISSUER SERIES 1 TERM AAA ADVANCE") and which corresponds to
the sterling equivalent of the principal amount upon issue of
the Series 1 Class A Second Issuer Notes;
(b) the series 2 term AAA advance in the maximum aggregate
principal amount of Pound Sterling[759,970,817] (the "SECOND
ISSUER SERIES 2 TERM AAA ADVANCE") and which corresponds to
the sterling equivalent of the principal amount upon issue of
the Series 2 Class A Second Issuer Notes;
(c) the series 3 term AAA advance in the maximum aggregate
principal amount of Pound Sterling[816,139,984] (the "SECOND
ISSUER SERIES 3 TERM AAA ADVANCE") and which corresponds to
the sterling equivalent of the principal amount upon issue of
the Series 3 Class A Second Issuer Notes;
(d) the series 4 term AAA advance in the maximum aggregate
principal amount of Pound Sterling[759,970,817] ("THE SECOND
ISSUER SERIES 4 TERM AAA ADVANCE") and which corresponds to
the sterling equivalent of the principal amount upon issue of
the Series 4 Class A Second Issuer Notes, and
(e) the series 5 term AAA advance in the maximum aggregate
principal amount of Pound Sterling[1,000,000,000] (the "SECOND
ISSUER SERIES 5 TERM AAA ADVANCE") and which corresponds to
the principal amount upon issue of the Series 5 Class A Second
Issuer Notes,
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and together the Second Issuer Series 1 Term AAA Advance, the Second
Issuer Series 2 Term AAA Advance, the Second Issuer Series 3 Term AAA
Advance, the Second Issuer Series 4 Term AAA Advance and the Second
Issuer Series 5 Term AAA Advance are referred to herein as the "SECOND
ISSUER TERM AAA ADVANCES".
3.2 SECOND ISSUER TERM AA ADVANCES
On and subject to the terms of this Agreement, the Second Issuer grants
to Funding 1 a term loan which consists of the following sub-loans:
(a) the series 1 term AA advance in the maximum aggregate
principal amount of Pound Sterling[20,671,206] (the "SECOND
ISSUER SERIES 1 TERM AA ADVANCE") and which corresponds to the
sterling equivalent of the principal amount upon issue of the
Series 1 Class B Second Issuer Notes;
(b) the series 2 term AA advance in the maximum aggregate
principal amount of Pound Sterling[26,142,996] (the "SECOND
ISSUER SERIES 2 TERM AA ADVANCE") and which corresponds to the
sterling equivalent of the principal amount upon issue of the
Series 2 Class B Second Issuer Notes;
(c) the series 3 term AA advance in the maximum aggregate
principal amount of Pound Sterling[28,728,127] (the "SECOND
ISSUER SERIES 3 TERM AA ADVANCE") and which corresponds to the
sterling equivalent of the principal amount upon issue of the
Series 3 Class B Second Issuer Notes,
(d) the series 4 term AA advance in the maximum aggregate
principal amount of Pound Sterling[26,116,480] (the "SECOND
ISSUER SERIES 4 TERM AA ADVANCE") and which corresponds to the
sterling equivalent of the principal amount upon issue of the
Series 4 Class B Second Issuer Notes; and
(e) the series 5 term AA advance in the maximum aggregate
principal amount of Pound Sterling[35,000,000] (the "SECOND
ISSUER SERIES 5 TERM AA ADVANCE") and which corresponds to the
principal amount upon issue of the Series 5 Class B Second
Issuer Notes,
and together the Second Issuer Series 1 Term AA Advance, the Second
Issuer Series 2 Term AA Advance, the Second Issuer Series 3 Term AA
Advance, the Second Issuer Series 4 Term AA Advance and the Second
Issuer Series 5 Term AA Advance are referred to herein as the "SECOND
ISSUER TERM AA ADVANCES".
3.3 SECOND ISSUER TERM BBB ADVANCES
On and subject to the terms of this Agreement, the Second Issuer grants
to Funding 1 a term loan which consists of the following sub-loans:
(a) the series 1 term BBB advance in the maximum aggregate
principal amount of Pound Sterling[20,671,206] (the "SECOND
ISSUER SERIES 1 TERM BBB ADVANCE") and which corresponds to
the sterling equivalent of the principal amount upon issue of
the Series 1 Class C Second Issuer Notes;
(b) the series 2 term BBB advance in the maximum aggregate
principal amount of Pound Sterling[26,142,996] (the "SECOND
ISSUER SERIES 2 TERM BBB ADVANCE") and which
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corresponds to the sterling equivalent of the principal amount
upon issue of the Series 2 Class C Second Issuer Notes;
(c) the series 3 term BBB advance in the maximum aggregate
principal amount of Pound Sterling[28,728,127] (the "SECOND
ISSUER SERIES 3 TERM BBB ADVANCE") and which corresponds to
the sterling equivalent of the principal amount upon issue of
the Series 3 Class C Second Issuer Notes; and
(d) the series 4 term BBB advance in the maximum aggregate
principal amount of [26,116,480] (the "SECOND ISSUER SERIES 4
TERM BBB ADVANCE") and which corresponds to the sterling
equivalent of the principal amount upon issue of the Series 4
Class C Second Issuer Notes,
(e) the series 5 term BBB advance in the maximum aggregate
principal amount of Pound Sterling35,000,000 (the "SECOND
ISSUER SERIES 5 TERM BBB ADVANCE") and which corresponds to
the principal amount upon issue of the Series 5 Class C Second
Issuer Notes,
and together the Second Issuer Series 1 Term BBB Advance, the Second
Issuer Series 2 Term BBB Advance, the Second Issuer Series 3 Term BBB
Advance and the Second Issuer Series 4 Term BBB Advance and the Second
Issuer Series 5 Term BBB Advance are referred to herein as the "SECOND
ISSUER TERM BBB ADVANCES".
3.4 TERM ADVANCE RATING
The Term Advance Rating in respect of the Second Issuer Term AAA
Advances shall be AAA/Aaa/AAA, the Term Advance Rating in respect of
the Second Issuer Term AA Advances shall be AA/Aa3/AA and the Term
Advance Rating in respect of the Second Issuer Term BBB Advances shall
be BBB/Baa2/BBB.
3.5 CONDITIONS PRECEDENT
Save as the Second Issuer and the Security Trustee may otherwise agree,
the Second Issuer Term Advances will not be available for utilisation
unless the Security Trustee has confirmed to Funding 1 that it or its
advisers have received all the information and documents listed in
SCHEDULE 1 hereof in form and substance satisfactory to the Security
Trustee.
4. INTEREST
4.1 RATE OF INTEREST TO FIRST FUNDING 1 INTEREST PAYMENT DATE
On the Closing Date the Agent Bank will determine the "INITIAL RELEVANT
SCREEN RATE" (as defined below) in respect of each Second Issuer Term
Advance as at or about 11.00 a.m. (London time) on that date. If the
Initial Relevant Screen Rate is unavailable, the Agent Bank will
request the principal London office of each of the Reference Banks to
provide the Agent Bank with its offered quotations to leading banks for
two-month and three-month sterling deposits of Pound
Sterling10,000,000, in the London inter-bank market as at or about
11.00 a.m. (London time) on such Closing Date. The Term Advance Rates
of Interest for the first Interest Period shall be the aggregate of (1)
the Relevant Margin and (2) the Initial Relevant Screen Rate or, if the
Initial Relevant Screen Rate is unavailable, the linear interpolation
of the arithmetic mean of such offered quotations for two-month
sterling deposits and the arithmetic mean of
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such offered quotations for three-month sterling deposits (rounded
upwards, if necessary, to five decimal places).
"INITIAL RELEVANT SCREEN RATE" means the linear interpolation of the
arithmetic mean of the offered quotations to leading banks for
two-month sterling deposits and the arithmetic mean of the offered
quotations to leading banks for three-month sterling deposits (rounded
upwards if necessary to five decimal places) displayed on the Moneyline
Telerate monitor at Moneyline Telerate page number 3750 (or such
replacement page on that service which displays the information) or, if
that service ceases to display the information, such other service as
may be determined by the Second Issuer with the approval of the
Security Trustee.
4.2 TERM ADVANCE RATES OF INTEREST(1)
The Term Advance Rate of Interest payable on each Term Advance shall be
LIBOR for three-month sterling deposits as determined in accordance
with CLAUSE 6 of the Intercompany Loan Terms and Conditions plus a
"RELEVANT MARGIN" which shall be:
(a) in respect of the Second Issuer Series 1 Term AAA Advance, a
margin of [o] per cent. per annum;
(b) in respect of the Second Issuer Series 2 Term AAA Advance, a
margin of [o] per cent. per annum;
(c) in respect of the Second Issuer Series 3 Term AAA Advance, a
margin of [o] per cent. per annum up to an including the
Interest Period ending in December 2008 and thereafter [o] per
cent. per annum;
(d) in respect of the Second Issuer Series 4 Term AAA Advance, a
margin of [o] per cent. per annum;
(e) in respect of the Second Issuer Series 5 Term AAA Advance, a
margin of [o] per cent. per annum up to and including the
Interest Period ending in December 2008 and thereafter [o] per
cent. per annum;
(f) in respect of the Second Issuer Series 1 Term AA Advance, a
margin of [o] per cent. per annum up to and including the
Interest Period ending in December 2008 and thereafter [o] per
annum;
(g) in respect of the Second Issuer Series 2 Term AA Advance, a
margin of [o] per cent. per annum up to and including the
Interest Period ending in December 2008 and thereafter [o] per
cent. per annum;
(h) in respect of the Second Issuer Series 3 Term AA Advance, a
margin of [o] per cent. per annum up to and including the
Interest Period ending in December 2008 and thereafter [o] per
cent. per annum;
(i) in respect of the Second Issuer Series 4 Term AA Advance, a
margin of [o] per cent. per annum up to and including the
Interest Period ending in December 2008 and thereafter [o] per
cent. per annum;
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(j) in respect of the Second Issuer Series 5 Term AA Advance, a
margin of [o] per cent. per annum up to and including the
Interest Period ending in December 2008 and thereafter [o] per
cent. per annum;
(k) in respect of the Second Issuer Series 1 Term BBB Advance, a
margin of [o] per cent. per annum up to and including the
Interest Period ending in December 2008 and thereafter [o] per
cent. per annum;
(l) in respect of the Second Issuer Series 2 Term BBB Advance, a
margin of [o] per cent. per annum up to and including the
Interest Period ending in December 2008 and thereafter [o] per
cent. per annum;
(m) in respect of the Second Issuer Series 3 Term BBB Advance, a
margin of [o] per cent. per annum up to and including the
Interest Period ending in December 2008 and thereafter [o] per
cent. per annum;
(n) in respect of the Second Issuer Series 4 Term BBB Advance, a
margin of [o] per cent. per annum up to and including the
Interest Period ending in December 2008 and thereafter [o] per
cent. per annum; and
(o) in respect of the Second Issuer Series 5 Term BBB Advance, a
margin of [o] per cent. per annum up to (and including) the
Interest Period ending in December 2008 and thereafter [o] per
cent. per annum;
4.3 INTEREST PERIODS
The first Interest Period shall commence on (and include) the Closing
Date and end on (but exclude) the Funding 1 Interest Payment Date
falling in June 2003. Each subsequent Interest Period shall commence on
(and include) a Funding 1 Interest Payment Date and end on (but
exclude) the following Funding 1 Interest Payment Date.
5. REPAYMENT
5.1 REPAYMENT SUBJECT TO TERMS OF THE FUNDING 1 DEED OF CHARGE
The terms and provisions of this CLAUSE 5 are to be read subject to the
provisions of PART II of SCHEDULE 3 to the Funding 1 Deed of Charge and
as the same may be further amended or varied from time to time in
accordance with the terms of the Funding 1 Deed of Charge. Without
limiting the generality of the foregoing, the Second Issuer Term
Advances shall become due and payable as described in PARAGRAPH 1 of
PART II of SCHEDULE 3 of the Funding 1 Deed of Charge.
5.2 REPAYMENT OF SECOND ISSUER TERM AAA ADVANCES PRIOR TO THE OCCURRENCE OF
A TRIGGER EVENT AND PRIOR TO THE SERVICE ON FUNDING 1 OF AN
INTERCOMPANY LOAN ACCELERATION NOTICE OR THE SERVICE ON EACH ISSUER OF
A NOTE ACCELERATION NOTICE
Subject to the provisions of CLAUSES 1 and 2 of PART II of SCHEDULE 3
of the Funding 1 Deed of Charge, prior to the occurrence of a Trigger
Event and prior to the service on Funding 1 of an Intercompany Loan
Acceleration Notice or the service on each Issuer of a Note
Acceleration Notice, Funding 1 shall repay to the Second Issuer:
(a) the Second Issuer Series 1 Term AAA Advance on the Funding 1
Interest Payment Date falling in March 2004;
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(b) the Second Issuer Series 2 Term AAA Advance on the Funding 1
Interest Payment Date falling in September 2005 but if there
are insufficient funds available to repay the Second Issuer
Series 2 Term AAA Advance on such Funding 1 Interest Payment
Date, then the shortfall shall be repaid on subsequent Funding
1 Interest Payment Dates from Funding 1 Available Principal
Receipts until the Second Issuer Series 2 Term AAA Advance is
fully repaid;
(c) the Second Issuer Series 3 Term AAA Advance in two equal
instalments (each a "SCHEDULED AMORTISATION INSTALMENT") on
the Funding 1 Interest Payment Date falling in March 2006 and
June 2006 but if there are insufficient funds available to
repay the Scheduled Amortisation Instalments on such Funding 1
Interest Payment Dates, then the shortfall shall be repaid on
on subsequent Funding 1 Interest Payment Dates from Funding 1
Available Principal Receipts until the Second Issuer Series 3
Term AAA Advance is fully repaid;
(d) the Second Issuer Series 4 Term AAA Advance on the Funding 1
Interest Payment Date falling in December 2007 but if there
are insufficient funds available to repay the Second Issuer
Series 4 Term AAA Advance on such Funding 1 Interest Payment
Date, then the shortfall shall be repaid on subsequent Funding
1 Interest Payment Dates from Funding 1 Available Principal
Receipts until the Second Issuer Series 4 Term AAA Advance is
fully repaid; and
(e) on each Funding 1 Interest Payment Date falling on or after
the Funding 1 Interest Payment Date on which the Second Issuer
Series 4 Term AAA Advance is fully repaid, the Second Issuer
Series 5 Term AAA Advance to the extent of Funding 1 Available
Principal Receipts until the Second Issuer Series 5 Term AAA
Advance is fully repaid.
5.3 REPAYMENT OF SECOND ISSUER TERM AA ADVANCES PRIOR TO THE OCCURRENCE OF
A TRIGGER EVENT AND PRIOR TO THE SERVICE ON FUNDING 1 OF AN
INTERCOMPANY LOAN ACCELERATION NOTICE OR THE SERVICE ON EACH ISSUER OF
A NOTE ACCELERATION NOTICE
Subject to the provisions of CLAUSES 1 and 2 of PART II of SCHEDULE 3
of the Funding 1 Deed of Charge, prior to the occurrence of a Trigger
Event and prior to the service on Funding 1 of an Intercompany Loan
Acceleration Notice or the service on each Issuer of a Note
Acceleration Notice, Funding 1 shall repay to the Second Issuer:
(a) on each Funding 1 Interest Payment Date falling on or after
the Funding 1 Interest Payment Date on which the Second Issuer
Series 1 Term AAA Advance is fully repaid, the Second Issuer
Series 1 Term AA Advance to the extent of Funding 1 Available
Principal Receipts until the Second Issuer Series 1 Term AA
Advance is fully repaid;
(b) on each Funding 1 Interest Payment Date falling on or after
the Funding 1 Interest Payment Date on which the Second Issuer
Series 2 Term AAA Advance is fully repaid, the Second Issuer
Series 2 Term AA Advance to the extent of Funding 1 Available
Principal Receipts until the Second Issuer Series 2 Term AA
Advance is fully repaid;
(c) on each Funding 1 Interest Payment Date falling on or after
the Funding 1 Interest Payment Date on which the Second Issuer
Series 3 Term AAA Advance is fully repaid, the Second Issuer
Series 3 Term AA Advance to the extent of Funding 1
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Available Principal Receipts until the Second Issuer Series 3
Term AA Advance is fully repaid;
(d) on each Funding 1 Interest Payment Date falling on or after
the Funding 1 Interest Payment Date on which the Second Issuer
Series 4 Term AAA Advance is fully repaid, the Second Issuer
Series 4 Term AA Advance to the extent of Funding 1 Available
Principal Receipts until the Second Issuer Series 4 Term AA
Advance is fully repaid; and
(e) on each Funding 1 Interest Payment Date falling on or after
the Funding 1 Interest Payment Date on which the Second Issuer
Series 5 Term AAA Advance is fully repaid, the Second Issuer
Series 5 Term AA Advance to the extent of Funding 1 Available
Principal Receipts therefor until the Second Issuer Series 5
Term AA Advance is fully repaid.
5.4 REPAYMENT OF SECOND ISSUER TERM BBB ADVANCES PRIOR TO THE OCCURRENCE OF
A TRIGGER EVENT AND PRIOR TO THE SERVICE ON FUNDING 1 OF AN
INTERCOMPANY LOAN ACCELERATION NOTICE OR THE SERVICE ON EACH ISSUER OF
A NOTE ACCELERATION NOTICE
Subject to the provisions of CLAUSES 1 and 2 of PART II of SCHEDULE 3
of the Funding 1 Deed of Charge, prior to the occurrence of a Trigger
Event and prior to the service on Funding 1 of an Intercompany Loan
Acceleration Notice or the service on each Issuer of a Note
Acceleration Notice, Funding 1 shall repay to the Second Issuer:
(a) on each Funding 1 Interest Payment Date falling on or after
the Funding 1 Interest Payment Date on which the Second Issuer
Series 1 Term AA Advance is fully repaid, the Second Issuer
Series 1 Term BBB Advance to the extent of Funding 1 Available
Principal Receipts until the Second Issuer Series 1 Term BBB
Advance is fully repaid;
(b) on each Funding 1 Interest Payment Date falling on or after
the Funding 1 Interest Payment Date on which the Second Issuer
Series 2 Term AA Advance is fully repaid, the Second Issuer
Series 2 Term BBB Advance to the extent of Funding 1 Available
Principal Receipts until the Second Issuer Series 2 Term BBB
Advance is fully repaid;
(c) on each Funding 1 Interest Payment Date falling on or after
the Funding 1 Interest Payment Date on which the Second Issuer
Series 3 Term AA Advance is fully repaid, the Second Issuer
Series 3 Term BBB Advance to the extent of Funding 1 Available
Principal Receipts until the Second Issuer Series 3 Term BBB
Advance is fully repaid;
(d) on each Funding 1 Interest Payment Date falling on or after
the Funding 1 Interest Payment Date on which the Second Issuer
Series 4 Term AA Advance is fully repaid, the Second Issuer
Series 4 Term BBB Advance to the extent of Funding 1 Available
Principal Receipts until the Second Issuer Series 4 Term BBB
Advance is fully repaid; and
(e) on each Funding 1 Interest Payment Date falling on or after
the Funding 1 Interest Payment Date on which the Second Issuer
Series 5 Term AA Advance is fully repaid, the Second Issuer
Series 5 Term BBB Advance to the extent of Funding 1 Available
Principal Receipts therefor until the Second Issuer Series 5
Term BBB Advance is fully repaid.
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5.5 REPAYMENT OF SECOND ISSUER TERM ADVANCES FOLLOWING THE OCCURRENCE OF A
NON-ASSET TRIGGER EVENT BUT PRIOR TO THE SERVICE ON FUNDING 1 OF AN
INTERCOMPANY LOAN ACCELERATION NOTICE OR THE SERVICE ON EACH ISSUER OF
A NOTE ACCELERATION NOTICE
On and from the Funding 1 Interest Payment Date following the
occurrence of a Non-Asset Trigger Event but prior to the service on
Funding 1 of an Intercompany Loan Acceleration Notice or the service on
each Issuer of a Note Acceleration Notice, Funding 1 shall repay the
Second Issuer Term Advances on each Funding 1 Interest Payment Date
from Funding 1 Available Principal Receipts in the manner set out in
CLAUSE 3 of PART II of SCHEDULE 3 to the Funding 1 Deed of Charge.
5.6 REPAYMENT OF SECOND ISSUER TERM ADVANCES FOLLOWING THE OCCURRENCE OF AN
ASSET TRIGGER EVENT BUT PRIOR TO THE SERVICE ON FUNDING 1 OF AN
INTERCOMPANY LOAN ACCELERATION NOTICE OR THE SERVICE ON EACH ISSUER OF
A NOTE ACCELERATION NOTICE
Following the occurrence of an Asset Trigger Event but prior to the
service on Funding 1 of an Intercompany Loan Acceleration Notice or the
service on each Issuer of a Note Acceleration Notice, Funding 1 shall
repay the Second Issuer Term Advances on each Funding 1 Interest
Payment Date from Funding 1 Available Principal Receipts in the manner
set out in CLAUSE 4 of PART II of SCHEDULE 3 to the Funding 1 Deed of
Charge.
5.7 REPAYMENT OF SECOND ISSUER TERM ADVANCES FOLLOWING THE SERVICE ON EACH
ISSUER OF A NOTE ACCELERATION NOTICE BUT PRIOR TO THE SERVICE ON
FUNDING 1 OF AN INTERCOMPANY LOAN ACCELERATION NOTICE
Following the service on each Issuer (including the Second Issuer) of a
Note Acceleration Notice pursuant to the terms of the Second Issuer
Deed of Charge but prior to the service on Funding 1 of an Intercompany
Loan Acceleration Notice, Funding 1 shall apply Funding 1 Available
Principal Receipts in the manner set out in CLAUSE 5 of PART II of
SCHEDULE 3 to the Funding 1 Deed of Charge.
5.8 REPAYMENT FOLLOWING THE SERVICE ON FUNDING 1 OF AN INTERCOMPANY LOAN
ACCELERATION NOTICE
Following the service on Funding 1 of an Intercompany Loan Acceleration
Notice pursuant to the terms of the Funding 1 Deed of Charge, the
Second Issuer Intercompany Loan shall be repaid in the manner set out
in PART III of SCHEDULE 3 to the Funding 1 Deed of Charge (as the same
shall be amended from time to time).
5.9 ACKNOWLEDGEMENT OF FIRST ISSUER INTERCOMPANY LOAN
The Second Issuer hereby acknowledges and agrees that Funding 1 has
entered into an intercompany loan agreement with Permanent Financing
(No. 1) PLC (the "FIRST ISSUER") dated 14th June, 2002 (the "FIRST
ISSUER INTERCOMPANY LOAN AGREEMENT") and accordingly, the obligation of
Funding 1 to repay this Second Issuer Intercompany Loan and the First
Issuer Intercompany Loan will depend on the Term Advance Ratings of the
various Term Advances made to Funding 1 under this Second Issuer
Intercompany Loan Agreement and the First Issuer Intercompany Loan
Agreement and the provisions of SCHEDULE 3 to the Funding 1 Deed of
Charge.
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5.10 ACKNOWLEDGEMENT OF NEW INTERCOMPANY LOANS
The Second Issuer hereby acknowledges and agrees that from time to time
Funding 1 may enter into New Intercompany Loans with New Issuers and
that the obligation of Funding 1 to repay this Second Issuer
Intercompany Loan and any New Intercompany Loan will depend on the Term
Advance Rating of the individual Term Advances made to Funding 1 under
any of the First Issuer Intercompany Loan, this Second Issuer
Intercompany Loan any New Intercompany Loans and the provisions of
SCHEDULE 3 to the Funding 1 Deed of Charge. Subject to CLAUSE 25 of the
Funding 1 Deed of Charge (Supplemental Provisions Regarding the
Security Trustee), any amendments to this Agreement will be made only
with the prior written consent of each party to this Agreement.
6. PREPAYMENT
6.1 PREPAYMENT OF SECOND ISSUER TERM ADVANCES
If the New Basel Capital Accord has been implemented in the United
Kingdom, whether by rule of law, recommendation of best practices or by
any other regulation and PROVIDED THAT a Second Issuer Note
Acceleration Notice has not been served, then Funding 1 may, on any
Funding 1 Interest Payment Date on or after the Funding 1 Interest
Payment Date falling in December 2007, having given not more than 60
days and not less than 30 days' [(or such shorter period as may be
agreed with the Second Issuer and the Security Trustee)] prior written
notice to the Second Issuer and the Security Trustee, prepay all but
not some only of all of the Second Issuer Term Advances without penalty
or premium but subject to CLAUSE 15 (Default interest and indemnity) of
the Intercompany Loan Terms and Conditions.
6.2 APPLICATION OF MONIES
The Second Issuer hereby agrees to apply any amounts received by way of
prepayment pursuant to CLAUSE 6.1 (Prepayment of Second Issuer Term
Advances) in making prepayments under the Second Issuer Notes.
7. CERTAIN FEES, ETC.
7.1 FEE FOR PROVISION OF SECOND ISSUER TERM ADVANCES
Funding 1 shall (except in the case of payments due under paragraphs
(c), (e), (f) and (i) below, which shall be paid when due) on each
Funding 1 Interest Payment Date pay to the Second Issuer for same day
value to the Second Issuer Transaction Account a fee for the provision
of the Second Issuer Term Advances. Such fee shall be an amount or
amounts in the aggregate equal to the following:
(a) the fees, costs, charges, liabilities and expenses and any
other amounts due and payable to the Security Trustee pursuant
to the Second Issuer Deed of Charge together with interest
thereon as provided therein;
(b) the fees, costs, charges, liabilities and expenses and any
other amounts due and payable to the Note Trustee pursuant to
the Second Issuer Trust Deed together with interest thereon as
provided therein;
(c) the reasonable fees and expenses of any legal advisers,
accountants and auditors appointed by the Second Issuer and
properly incurred in their performance of their functions
under the Transaction Documents which have fallen due;
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(d) the fees, costs and expenses due and payable to the Paying
Agents, the Registrar, the Transfer Agent and the Agent Bank
pursuant to the Second Issuer Paying Agent and Agent Bank
Agreement;
(e) any amounts due and payable by the Second Issuer to the Inland
Revenue in respect of the Second Issuer's liability to United
Kingdom corporation tax (insofar as payment is not satisfied
by the surrender of group relief or out of the profits, income
or gains of the Second Issuer and subject to the terms of the
Second Issuer Deed of Charge) or any other Taxes payable by
the Second Issuer;
(f) the fees, costs, charges, liabilities and expenses due and
payable to the Second Issuer Account Bank, pursuant to the
Second Issuer Bank Account Agreement (if any);
(g) the fees, costs, charges, liabilities and expenses due and
payable to the Second Issuer Cash Manager, pursuant to the
Second Issuer Cash Management Agreement;
(h) any termination payment due and payable by the Second Issuer
to any Second Issuer Swap Provider, pursuant to any Second
Issuer Swap Agreement;
(i) the fees, costs, charges and liabilities and expenses due and
payable to the Corporate Services Provider pursuant to the
Second Issuer Corporate Services Agreement;
(j) an amount equal to "G" where G is calculated as follows:
G = (A - D - H) or, if such calculation is less than zero,
then G shall be zero
where,
A = 0.01 per cent of the interest amounts paid by
Funding 1 to the Second Issuer on the Second Issuer
Term Advances on the immediately preceding Funding 1
Interest Payment Date;
D = E - F
where,
E = the interest amounts (which excludes those
fee amounts in this CLAUSE 7.1) paid by
Funding 1 to the Second Issuer on the Second
Issuer Term Advances on the immediately
preceding Funding 1 Interest Payment Date;
and
F = amounts paid by the Second Issuer under
paragraphs (d) to (h) of the Second Issuer
Pre-Enforcement Revenue Priority of Payments
on the immediately preceding Funding 1
Interest Payment Date;
and
H = the cumulative aggregate of (D - A) as calculated on
each previous Funding 1 Interest Payment Date. If such
cumulative aggregate of (D - A) is less than zero,
then H shall be zero;
12
(k) any other amounts due or overdue by the Second Issuer to third
parties including the Rating Agencies and the amounts paid by
the Second Issuer under the Subscription Agreement and the
Underwriting Agreement (excluding, for these purposes, the
Noteholders) other than amounts specified in paragraphs (a) to
(j) above; and
(l) if on any Funding 1 Interest Payment Date there are Second
Issuer Principal Receipts remaining in the Second Issuer Bank
Accounts, an amount equal to the difference between (i) the
interest that would be earned by the Second Issuer on such
Second Issuer Principal Receipts remaining in the Second
Issuer Bank Accounts during the next succeeding Interest
Period and (ii) the interest that would be payable by the
Second Issuer applying the weighted average rate of interest
payable on the Series 5 Second Issuer Notes or the relevant
Second Issuer Currency Swap Agreements due for repayment at
the end of that Interest Period to such Second Issuer
Principal Receipts remaining in the Second Issuer Bank
Accounts,
together with, (i) in respect of taxable supplies made to the Second
Issuer, an amount in respect of any value added tax or similar tax
payable in respect thereof against production of a valid tax invoice;
and (ii) in respect of taxable supplies made to a person other than the
Second 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 Second Issuer Pre-Enforcement
Revenue Priority of Payments in the Second Issuer Cash Management
Agreement.
7.2 SET-OFF
Funding 1 and each of the other parties to the Second Issuer
Intercompany Loan Agreement agree that the Second Issuer shall be
entitled to set-off those amounts due and payable by Funding 1 pursuant
to this CLAUSE 7 on the Closing Date against the amount to be advanced
by the Second Issuer to Funding 1 by way of the Second Issuer Term
Advances on the Closing Date.
8. APPLICATION OF CERTAIN PROVISIONS
The provisions set out in CLAUSE 4.2 (Limited Recourse) of the
Intercompany Loan Terms and Conditions shall apply to:
(a) the Second Issuer Term AA Advances; and
(b) the Second Issuer Term BBB Advances.
9. ADDRESSES
The addresses referred to in CLAUSE 18.4 of the Intercompany Loan Terms
and Conditions are as follows:
13
THE SECURITY TRUSTEE:
For the attention of: Corporate Trust Services
Address: 0 Xxxxxxx Xxxxxx
` 0xx Xxxxx
Xxxxxx
Xxxxxxxxxxxxx 00000
Facsimile: + 0 (000) 000 0000
THE SECOND ISSUER:
For the attention of: The Secretary
Address: Permanent Financing (No. 2) PLC
Facsimile: x00 (0) 00 0000 0000
Copy to: HBOS Treasury Services plc
00 Xxx Xxxxx Xxxxxx
Xxxxxx XX0X 0XX
Facsimile: x00 (0) 00 0000 0000
For the attention of: Head of Capital Markets and Securitisation
FUNDING 1:
For the attention of: The Secretary
Address: Permanent Funding (No. 1) Limited
Facsimile: x00 (0) 00 0000 0000
Copy to: HBOS Treasury Services plc
00 Xxx Xxxxx Xxxxxx
Xxxxxx XX0X 0XX
Facsimile number: x00 (0) 00 0000 0000
For the attention of: Head of Capital Markets and Securitisation
RATING AGENCIES:
XXXXX'X:
Address: 0 Xxxxxxx Xxxxx, Xxxxxxx Xxxx, Xxxxxx XX0X 0XX
For the attention of: Xxxxxxxx Xxxxxxxxx
Telephone: x00 (0) 00 0000 0000
Facsimile: x00 (0) 00 0000 0000
14
S&P:
Address: Xxxxxx Xxxxx, 00 Xxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX
For the attention of: Xxxxx Xxxxxxxx
Telephone: x00 (0) 00 0000 0000
Facsimile: x00 (0) 00 0000 0000
FITCH:
Address: Xxxxx Xxxxx, 0 Xxxxx Xxxxxx, Xxxxxx XX0X 0XX
For the attention of: European Structured Finance
Telephone: x00 (0) 00 0000 0000
Facsimile: x00 (0) 00 0000 0000
15
SCHEDULE 1
CONDITIONS PRECEDENT IN RESPECT OF DRAWDOWN
1. AUTHORISATIONS
(a) A copy of the memorandum and articles of association, certificate of
incorporation and certificate of incorporation on change of name of
Funding 1.
(b) A copy of a resolution of the board of directors of Funding 1
authorising the entry into, execution and performance of each of the
Transaction Documents to which Funding 1 is a party and authorising
specified persons to execute those on its behalf.
(c) A certificate of a director of Funding 1 certifying:
(i) that each document delivered under this PARAGRAPH 1 of
SCHEDULE 1 is correct, complete and in full force and effect
as at a date no later than the date of execution of the Second
Issuer Intercompany Loan Agreement and undertaking to notify
the Security Trustee if that position should change prior to
the first Drawdown Date; and
(ii) as to the identity and specimen signatures of the directors
and signatories of Funding 1.
2. SECURITY
(a) The Funding 1 Deed of Charge duly executed by the parties thereto.
(b) Duly completed bank account mandates in respect of the Funding 1 GIC
Account and the Funding 1 Transaction Account.
(c) Security Power of Attorney for Funding 1.
3. LEGAL OPINION
Legal opinions of:
(a) Xxxxx & Xxxxx, English and U.S. legal advisers to the Seller,
the Second Issuer and the Servicer, addressed to, inter alios,
the Security Trustee;
(b) Sidley Xxxxxx Xxxxx & Xxxx, English and U.S. legal advisers to
the Co-Arrangers, addressed to, inter alios, the Security
Trustee.
4. TRANSACTION DOCUMENTS
Duly executed copies of:
(a) the Servicing Agreement;
(b) the Mortgages Trust Deed;
(c) the Halifax Deed and Power of Attorney;
16
(d) the Funding 1 Deed of Charge;
(e) the Funding 1 Swap Agreement;
(f) the Corporate Services Agreements;
(g) the Funding 1 Liquidity Facility Agreement;
(h) the First Issuer Intercompany Loan Agreement and the Second
Issuer Intercompany Loan Agreement;
(i) the Cash Management Agreement;
(j) the Bank Account Agreement;
(k) the Funding 1 Guaranteed Investment Contract;
(l) the First Start-up Loan Agreement and Second Start-up Loan
Agreement;
(m) the Mortgage Sale Agreement;
(n) the Seller Power of Attorney;
(o) the Insurance Acknowledgements;
(p) the Insurance Endorsements;
(q) the Second Issuer Deed of Charge;
(r) the Second Issuer Cash Management Agreement;
(s) the Second Issuer Swap Agreements;
(t) the Second Issuer Bank Account Agreement;
(u) the Second Issuer Post-Enforcement Call Option Agreement;
(v) the Second Issuer Trust Deed;
(w) the Second Issuer Global Notes;
(x) the Second Issuer Paying Agent and Agent Bank Agreement;
(y) the Underwriting Agreement;
(z) the Subscription Agreement;
(aa) the Mortgages Trustee Guaranteed Investment Contract; and
(bb) the Amended and Restated Master Definitions and Construction
Schedule, the First Issuer Master Definitions and Construction
Schedule and the Second Issuer Master Definitions and
Construction Schedule.
17
5. BOND DOCUMENTATION
(a) Confirmation that the Second Issuer Notes have been issued and the
subscription proceeds received by the Second Issuer; and
(b) Copies of the Prospectus and the Offering Circular.
6. MISCELLANEOUS
Solvency certificates from Funding 1 signed by two directors of Funding
1 in or substantially in the form set out in SCHEDULE 2 to the
Intercompany Loan Terms and Conditions.
18
IN WITNESS WHEREOF the parties have caused this Agreement to be duly executed on
the day and year appearing on page 1.
FUNDING 1
SIGNED by )
for and on behalf of )
PERMANENT FUNDING (NO. 1) LIMITED )
SECOND ISSUER
SIGNED by )
for and on behalf of )
PERMANENT FINANCING (NO. 2) PLC )
SECURITY TRUSTEE
SIGNED by )
for and on behalf of )
U.S. BANK NATIONAL ASSOCIATION )
AGENT BANK
SIGNED by )
for and on behalf of )
CITIBANK, N.A., )
LONDON BRANCH )
DATED [6TH MARCH], 2003
PERMANENT FUNDING (NO. 1) LIMITED
as Funding 1
PERMANENT FINANCING (NO. 2) PLC
as Second Issuer
U.S. BANK NATIONAL ASSOCIATION
as Security Trustee
CITIBANK, N.A., LONDON BRANCH
as Agent Bank
-------------------------------------------------------
LOAN CONFIRMATION
SECOND ISSUER INTERCOMPANY LOAN AGREEMENT
-------------------------------------------------------
XXXXX & OVERY
London
ICM:638658.4
CONTENTS
CLAUSE PAGE
1. Interpretation..........................................................................................1
2. Intercompany Loan Terms and Conditions..................................................................2
3. The Second Issuer Term Advances.........................................................................2
4. Interest................................................................................................4
5. Repayment...............................................................................................6
6. Prepayment.............................................................................................10
7. Certain Fees, etc......................................................................................10
8. Application of Certain Provisions......................................................................12
9. Addresses..............................................................................................12
SCHEDULE
Conditions Precedent in Respect of Drawdown..................................................................15
SIGNATORIES..................................................................................................18
