LOAN NOTE INSTRUMENT
of the Development Vehicle referred to below
[
] LLP
INDEX
1.
Definitions and Interpretation
1
2.
Stock
3
3.
Certificates
4
4.
Conditions of Issue
4
5.
Payment of the Stock
4
6.
Interest
4
7.
Subordination
5
8.
Rights
5
9.
Variation
5
10.
Notices
5
11.
Law and Jurisdiction
6
Schedule
Part 1 Certificate
7
Part 2 Conditions
8
Part 3 Administration
10
LOAN NOTE INSTRUMENT
OF:
(1)
[
] LLP, being a limited liability partnership incorporated under the Limited Liability
Partnerships Act 2000 (Registered Number: [
]), whose registered office is [ ]
(the
Development Vehicle or the LLP).
BACKGROUND:
A.
The Development Vehicle is a limited liability partnership between SFT, the Local Authority
and the Developer.
B.
The Development Vehicle has entered into a Take Out Agreement with, amongst others, the
Developer, which provides for the purchase of the Units and payment of the Purchase Price.
C.
The Development Vehicle has agreed to issue secured loan notes in order to finance 5% of
each Total Purchase Price.
D.
Accordingly, the Development Vehicle has decided to create and, as from each Settlement
Date, allot in aggregate up to £[
][
]% secured loan notes as now provided in
this Instrument.
THIS INSTRUMENT provides as follows:
1.
DEFINITIONS AND INTERPRETATION
1.1
Definitions
In this Instrument (including the Background section), unless expressly stated to the contrary
or the context otherwise requires, the following words and expressions shall have the
following meanings:
Anniversary is a number of complete years after the date of issue of any Stock;
Approved Transferee is as defined in the Members Agreement;
Business Day means any day which is not a Saturday, a Sunday or a bank or public holiday
in Scotland;
Certificate means the certificate or certificates issued in respect of the Stock in accordance
with Clause 3;
Conditions means the conditions set out in Part 2 of the Schedule;
Developer means [
];
Development is as defined in the Take Out Agreement;
Exit is as defined in the Members Agreement;
2
Instrument means this loan note instrument including the conditions attached in the Schedule
as varied and amended from time to time.
Inter Creditor Agreement means an inter creditor and ranking agreement between, amongst
others, the Development Vehicle, the Local Authority and the Developer as varied and
amended from time to time;
Junior Security Document means a third ranking bond and floating charge created by the
Development Vehicle in favour of the Stockholder on or prior to the date of first issue of the
Stock as varied and amended from time to time;
Local Authority means [
];
Members means SFT, the Local Authority and the Developer;
Members Agreement means the agreement referred to as such among SFT, the Local
Authority, the Developer and the Development Vehicle as varied and amended from time to
time;
Phase is as defined in the Take Out Agreement;
Purchase Price is as defined in the Take Out Agreement.
Register of Stockholders means the register referred to in paragraph 1 of Part 3 of the
Schedule;
Repayment includes redemption and the words repay or repayment shall be construed
accordingly;
Semi-Annual Date means each of 31 March and 30 September in each year;
Senior Finance Documents is as defined in the Inter Creditor Agreement.
SFT means Scottish Futures Trust Investments Limited (Registered Number SC381388),
whose registered office is at 1st Floor, 11-15 Thistle Street, Edinburgh, EH2 1DF;
Stock means the £[
][
]% secured loan notes (also referred to as the A Loan Stock
in the Members Agreement, the Facility Agreement and the Inter Creditor Agreement) hereby
constituted or as the case may require, the amount thereof for the time being issued and
outstanding or, as the context may require, a specific portion thereof;
Stockholder means the Developer;
Take Out Agreement means the agreement referred to as such among SFT, the Local
Authority, the Developer and the Development Vehicle as varied and amended from time to
time;
Total Purchase Price is as defined in the Facility Agreement;
3
Unit is as defined in the Management and Maintenance Agreement;
Unit Disposal is as defined in the Members Agreement; and
Unit Disposal Proceeds is as defined in the Members Agreement.
1.2
Interpretation
In this Instrument, except where the context otherwise requires:
1.2.1
all references to Clauses and to the Schedule (and Parts thereof) are references to
Clauses of and the Schedule (and Parts thereof) to this Instrument;
1.2.2
words signifying the masculine include the feminine and words signifying the neuter
include the masculine and the feminine, and words importing the singular include
the plural and vice versa;
1.2.3
any reference to any statutory provision or enactment of any kind having the force of
law includes a reference to that provision as from time to time amended, extended
or re-enacted;
1.2.4
all references to agreements, documents, or other instruments include a reference
to the same as amended or supplemented or restated from time to time by all the
parties;
1.2.5
all references to SFT, the Development Vehicle, the Developer and the Local
Authority include a reference to their successors and permitted assignees;
1.2.6
any notice, instruction, notification, direction, request, consent or approval
contemplated herein shall be made or given in writing;
1.2.7
the headings to the Clauses are inserted for convenience only and do not affect the
interpretation of this Instrument; and any words or expressions defined in the
Schedule have the same meaning where used in any other part of this Instrument;
and
1.2.8
where the words “include(s)” or “including” are used they are illustrative and shall
not limit the scope of the words preceding them.
2.
STOCK
2.1
The aggregate principal amount of the Stock to be issued hereunder is limited to £[
2.2
The Stock may be issued in denominations of £1 in nominal amount or multiples thereof to
].
such persons at such times and on such terms from time to time as may be necessary to
comply with paragraph 3 of part 9 of the schedule to the Members Agreement.
4
2.3
The Stock shall be secured by the Junior Security Document, which the Development Vehicle
undertakes to create on or prior to the first issue of the Stock and which shall rank in point of
priority as set out in the Inter Creditor Agreement.
3.
CERTIFICATES
3.1
The Stockholder shall be entitled to a Certificate stating the amount of Stock held by it.
3.2
Every Certificate shall be in the form or as nearly as may be in the form set out in Part 1 of the
Schedule and shall be endorsed with a copy of the Conditions.
3.3
Every Certificate shall bear a denoting number and shall be executed by the Development
Vehicle.
4.
CONDITIONS OF ISSUE
4.1
The Development Vehicle shall comply with and the Stock shall be held on the Conditions and
the provisions of the Schedule.
4.2
The Conditions and the provisions of the Schedule shall be deemed to be incorporated in this
Instrument and shall be binding on the Development Vehicle and the Stockholder and all
persons claiming through or under it respectively.
5.
PAYMENT OF THE STOCK
5.1
On Exit or on liquidation of the Development Vehicle, and on such earlier date as is to any
extent provided for in Part 2 of the Schedule, and subject in all cases to Clause 5.2 below, the
Development Vehicle shall pay to the Stockholder the principal amount of the Stock or as the
case may be so much thereof as is due to be repaid, together with accrued interest calculated
in accordance with Clause 6.
5.2
The Development Vehicle will make the payment of the principal amount of the Stock and
accrued interest thereon subject to:
5.2.1
paragraphs 5 and 6 of part 9 of the schedule to the Members Agreement, and
5.2.2
clause 11 of the Inter Creditor Agreement.
6.
INTEREST
6.1
The Development Vehicle will pay to the Stockholder interest on the Stock held by them
respectively at the rate provided in the Conditions (less any tax required to be deducted from
such interest under any applicable law).
6.2
Interest shall accrue from day to day and be payable, subject to Clause 6.3 below, on the
Semi-Annual Dates in each year in arrears as provided in the Conditions and on repayment of
the Stock.
5
6.3
The Development Vehicle will make payments of interest subject to paragraph 4 of part 9 of
the schedule to the Members Agreement.
6.4
Each payment of interest shall be calculated on the basis of a 365 day year.
7.
SUBORDINATION
Notwithstanding any other provision of this Instrument, the obligations of the Development
Vehicle and the rights of the Stockholder under this Instrument and the Junior Security
Document shall be subject to the provisions of the Inter Creditor Agreement.
8.
RIGHTS
The Stock does not carry any membership or voting rights in the Development Vehicle.
9.
VARIATION
The provisions of this Instrument (including the Schedule) and the rights of the Stockholder
hereunder may be modified, abrogated or compromised in any respect with the consent in
writing of the holders of three-fourths in nominal value of the Stock in issue and the consent in
writing of the Members.
10.
NOTICES
Any document, notice, notification, statement, application for consent or any other thing
required to be given or served in terms of this Instrument may be given or served personally,
or by sending the same by first class recorded delivery post at or to:
10.1
in the case of the Development Vehicle, [
]; or
10.2
in the case of the Stockholder, the details specified in the Register of Stockholders;
or in each case, at or to such other address as shall have been notified to either the
Development Vehicle or the Stockholder as applicable for that purpose.
Any document, notice, statement or other thing given or served by post in accordance with
Clause 10 shall be deemed to have been duly given or served on the second Business Day
after the letter containing the same was posted, and in proving that any document, notice,
statement or other thing was so given or served, it shall be necessary only to prove that the
same was properly addressed and posted in accordance with the provisions of the foregoing
Clause.
6
11.
LAW AND JURISDICTION
This Instrument shall be governed by and construed in accordance with the laws of Scotland,
and the Development Vehicle and the Stockholder submit to the irrevocable and exclusive
jurisdiction of the Scottish courts.
IN WITNESS WHEREOF this Instrument consisting of this and the preceding 5 pages, together with
the Schedule annexed, is executed as follows:
Signed for and on behalf of [
] LLP by
……………………………………………… Director/Authorised Signatory of SFT/ the Local Authority/
the Developer as member
……………………………………………… Full Name
at
on the
day of
in the presence of:
Witness
…………………………………………….
Name
…………………………………………….
Address
………………………………………….……………………………………………………
7
This is the Schedule referred to in 3 Parts referred to in the foregoing Loan Note Instrument of
the Development Vehicle dated
PART 1
CERTIFICATE
[
] LLP (the Development Vehicle)
Registered number [
Certificate number:[
]
Issue on [
] of up to £[
] 20[
]
Amount of Stock: £[
][
]% secured loan notes (the Stock). Issued pursuant
to a resolution of the Development Vehicle passed on [ ] 20[
THIS IS TO CERTIFY that
]
].
of
is/are the registered holder(s) of
Pounds of the Stock which is constituted by the Loan Note Instrument entered into by the
Development Vehicle on [
] 20[
] (the Instrument) and is issued subject to the provisions
contained in the Instrument, which include the conditions endorsed on this certificate (the
Conditions). Interest at the rate determined in accordance with the Conditions is payable subject to
the provisions of the Instrument on the Stock semi-annually on
and
and on repayment of the Stock.
The Stock is freely transferable in whole but not part to any Approved Transferee as referred to in the
Conditions. The Stock is repayable subject to the provisions of the Instrument.
The Stock is subject to the provisions of the Inter Creditor Agreement as referred to in the Instrument.
Signed for and on behalf of [
] LLP by
………………………………………………
……………………………………………… Full Name
at [
]
on the [ ] day of [
] 20[ ]
in the presence of:
Witness ………………………
Name
………………………
Address.………………………
8
PART 2
CONDITIONS
1.
Final Repayment
Unless previously repaid as provided in these Conditions, and subject to the provisions of the
Inter Creditor Agreement, each of the Stock will be repayable at par on the date falling on the
tenth Anniversary of the issue of the relevant Stock together with unpaid interest accrued up
to the date of repayment. Any repayment shall be made in pounds sterling or in the lawful
currency of the United Kingdom from time to time.
2.
Early repayment
The Development Vehicle shall, following a Unit Disposal, and to the extent of available Unit
Disposal Proceeds as provided by the Members Agreement and subject to the provisions of
the Inter Creditor Agreement, repay Stock at par plus accrued interest thereon, provided that
such purchase does not cause a breach of any obligation contained in the Members
Agreement and/or the Inter Creditor Agreement to which the Development Vehicle is subject.
3.
Immediate repayment
The Stock held by the Stockholder shall, subject to the provisions of the Inter Creditor
Agreement, become immediately repayable at par together with accrued interest (subject to
any requirement to deduct tax from such interest) if:
3.1
an order is made or an effective resolution is passed for the winding up of the Development
Vehicle (other than while the Development Vehicle is solvent, for the purposes of
amalgamation or reconstruction); or
3.2
any administrator or liquidator is appointed in respect of the whole of the undertaking or
assets of the Development Vehicle; or
3.3
there is an enforcement of the Senior Finance Documents.
4.
Cancellation
All Stock repaid pursuant to these Conditions shall be cancelled and shall not be available for
re-issue.
5.
Interest
5.1
Interest on the Stock is payable (subject to any requirement to deduct any tax from such
interest) and except where a Trigger Date (as defined in the Members Agreement) has
occurred and clause 9.2.4(i) (Change of Member) of the Members Agreement applies:
5.1.1
at a fixed rate of [
]% per annum,
9
5.1.2
six monthly in arrears on each Semi-Annual Date (being 31 March and 30
September each year) and on any repayment of the Stock to which it relates.
5.2
Interest on the Stock will be calculated on the basis of a 365 day year.
5.3
Each interest payment shall be made to the Stockholder who is registered on the Register of
Stockholders at the close of business on the twenty-eighth day preceding the date for
payment of such interest and such Stockholder shall be deemed, for the purpose of these
presents, to be the holder on such Semi-Annual Date of the Stock held by him on such
preceding date notwithstanding any intermediate transfer or transmission of any such Stock.
5.4
If the Development Vehicle shall fail to pay any amount of interest on the due Semi-Annual
Date in accordance with paragraph 5.1 (Overdue Interest) owing to insufficiency of funds
and/or if such payment would have caused the Development Vehicle to breach any other
obligation to which it was subject, the Development Vehicle shall pay the Overdue Interest at
the next Semi-Annual Date thereafter at which the Development Vehicle has sufficient funds
to pay the Overdue Interest and may pay the Overdue Interest without breaching any such
obligation and such payment shall be made in priority to the payment of the interest due to be
paid at such next Semi-Annual Date.
Amongst amounts of Overdue Interest, priority of
payment shall be given to the Overdue Interest longest overdue. Overdue Interest shall itself
bear interest at the interest rate set out in paragraph 5.1.1 above and such interest shall be
payable at the time of payment of the Overdue Interest.
6.
Continuing Interest
Interest on any Stock becoming liable to repayment shall continue to accrue as from the due
date for repayment of such Stock until repayment of the Stock is made.
7.
Transferability
Every Stockholder will subject to clause 9.3 of the Members Agreement be entitled to transfer
the Stock held by it in whole but not in part to any Approved Transferee or otherwise in
accordance with clause 9.2 of the Members Agreement. The Development Vehicle shall not
register any transfer of Stock unless an instrument of transfer, in a form approved by the
Development Vehicle, executed by the Stockholder has been lodged at the registered office of
the Development Vehicle together with the relevant Certificate.
The transferor shall be
deemed to remain the owner of the Stock until the name of the transferee is entered in the
Register of Stockholders in respect thereof.
10
PART 3
ADMINISTRATION
1.
A register of the Stock will at all times be kept by the Development Vehicle and there shall be
entered in such register:
1.1
the names and addresses of the holders for the time being of the Stock;
1.2
the amount of the Stock held by each registered holder; and
1.3
the date upon which the name of each such registered holder is entered in the register in
respect of the Stock standing in his name.
Any change of the name or address of any Stockholder shall forthwith be notified to the
Development Vehicle and thereupon the register shall be altered accordingly but failure so to
notify shall in no way prejudice or affect the rights of a Stockholder.
2.
Except as required by law the Development Vehicle will recognise the registered holder of any
Stock as the absolute owner thereof and shall not be bound to take notice or see to the
execution of any trust whether express, implied or constructive to which any Stock may be
subject and a receipt duly given in accordance with this Schedule for any monies payable in
respect of any Stock shall be a good discharge to the Development Vehicle notwithstanding
any notice it may have whether express or otherwise of the right, title and interest or claim of
any other person to or in such Stock or monies.
3.
Every Stockholder will be recognised by the Development Vehicle as entitled to his Stock free
from any compensation, retention, set-off or counter-claim on the part of the Development
Vehicle against the original or any intermediate holder of the Stock.
4.
Every Stockholder will subject to clause 9.3 of the Members Agreement be entitled to transfer
the Stock held by it in whole but not in part to any Approved Transferee or otherwise in
accordance with clause 9.2 of the Members Agreement. The Development Vehicle shall not
register any transfer of Stock unless an instrument of transfer, in a form approved by the
Development Vehicle, executed by the Stockholder has been lodged at the registered office of
the Development Vehicle together with the relevant Certificate.
The transferor shall be
deemed to remain the owner of the Stock until the name of the transferee is entered in the
Register of Stockholders in respect thereof.
5.
Every Stockholder will be recognised by the Development Vehicle as entitled to its Stock free
from any compensation, retention, set-off or counter-claim on the part of the Development
Vehicle against the original or any intermediate holder of the Stock.
6.
Any notice or other document (including a Certificate for the Stock) may be given or sent to
the Stockholder by sending the same through the post in a prepaid letter addressed to the
Stockholder at its registered address. Any notice given by post shall be deemed to have been
11
served two days after the day on which it is posted and in proving such service it shall be
sufficient to prove that the envelope containing the notice was properly addressed, stamped
and posted.