11/17
*Optional Clauses
*Options within Clauses
Agreement
between
National Westminster Bank Plc
and
[Borrower]
Our ref:
THIS IS AN IMPORTANT DOCUMENT. YOU SHOULD TAKE INDEPENDENT LEGAL ADVICE BEFORE SIGNING AND SIGN ONLY IF YOU WANT TO BE LEGALLY BOUND.
This Agreement is made between:-
(1)[*Borrower]; and
(2)National Westminster Bank Plc;
By which it is agreed as follows:-
1PURPOSE, DEFINITIONS AND INTERPRETATION
1.1This Agreement sets out the terms and conditions upon and subject to which the Bank agrees to make available to the Borrower a loan of up to a maximum principal amount of £ to assist with [*expenditure towards the Total Costs /*expenditure towards the Development Costs.] [*and to allow interest which accrues in respect of the Loan during the Term to be compounded in accordance with the provisions of Clause 3.2].
1.2In this Agreement unless the context otherwise requires:-
"Agreed Plans" means the detailed architect's drawings and building specifications for the Development in form and content acceptable to the Bank;
"Agreement for Lease" means the agreement entered into between the Borrower and [*the Tenant / a lessee whose covenants are acceptable to the Bank] for the grant of a full repairing and insuring lease of the Property for a minimum term of years, at an initial rent of not less than £, subject to yearly upward only rent reviews and a maximum rent free period of [*years / *months];
"Agreement for Sale" means the agreement entered into between the Borrower and the Purchaser in relation to the sale of the Property on completion of the Development for not less than £;
"Bank" means National Westminster Bank Plcand its successors and assigns;
"Bank Office" means the office of the Bank at or such other office/address as the Bank may notify to the Borrower from time to time;
"Base Accounts" means the audited financial statements of the Borrower for the period ended ;
"Borrower" means , Company Number ;
"Building Contract" means the design and/or construct agreement relating to the Development made between the Borrower and the Contractor, or any other permitted replacement design and/or construct agreement in a form and substance satisfactory to the Bank;
"Business Day" means a day (other than a Saturday or Sunday) on which banks are open for general business in London;
"Cash Flow Forecast" means a statement incorporating a month by month cash flow forecast prepared by the Borrower and addressed to the Bank showing, at the date of its delivery to the Bank (i) the anticipated costs of the Development broken down by purpose, including[*land purchase] building costs, licence fees, interest, commission, void costs, professional fees, letting and sale costs and VAT, (ii) the timetable for the Development and the expenditure of such anticipated costs and (iii) income (if any) anticipated during the course of the Development;
"Collateral Warranties" means collateral warranties in favour of the Bank to be executed by the Contractor, each member of the Professional Team and/or any Design Subcontractor in a form and substance satisfactory to the Bank including inter alia the ability to assign at least twice [*and providing step-in rights in favour of the Bank];
"Consents" means all necessary third party consents and all necessary planning permissions, consents, licences, certificates, authorisations, building warrants, building regulation approvals or relaxations and other approvals and relaxations and agreements which may be required from any local or other competent authority or statutory undertaker or any fire officer in connection with the Property [*and/or the Development];
"Contractor"means [* / *a building contractor acceptable to the Bank];
"Contribution" means £[ ];
"Cost Overrun" means expenditure incurred or to be incurred over and above what has been projected in the Cash Flow Forecast;
"Cost Underrun" means expenditure incurred below what has been projected in the Cash Flow Forecast;
"Design Certifier" means a certifier of design registered under Structural Engineers Registration (or any successor prescribed scheme) working for an approved body;
"Design Subcontractor" means [*any subcontractor who is responsible for material elements of the design of the whole or any part or parts of the Development / *the following subcontractor, namely / *any subcontractor responsible for the following elements of work, being ];
"Development" means the [*construction / *re-development / *refurbishment] of at the Property in accordance with the Agreed Plans;
"Development Costs" means the costs involved in undertaking the Development (excluding those in respect of the purchase of the Property and Cost Overruns) as detailed in the Cash Flow Forecast;
"Development Expenditure Evidence" means (i) architect’s certificates for construction costs provided by the architects appointed in respect of the Development and (ii) receipts, invoices or other documents acceptable to the Bank for other Development Costs in each case in a form and substance satisfactory to the Bank;
"Event of Default" means any of the events described in Clause 11.1;
"First Tranche" means the first drawing of the Loan, which drawing shall be utilised to assist the Borrower with the following:-
(a)the costs involved in the purchase of the Property; and
(b)making payment of management and professional fees incurred to the date on which the First Tranche is drawn as agreed by the Bank;
"GAAP" means generally accepted accounting practice in the United Kingdom;
"Loan" means £ or (as the context may require) the principal amount owing to the Bank under this Agreement at any relevant time;
"Material Contracts" means (i) the Building Contract, [*(ii) the Agreement for Lease, *(iii) the Agreement for Sale,] (iv) the Professional Team Appointments, [*(v) the Collateral Warranties, *(vi) the Planning Agreement and *(vii) the Step In Agreements];
"Monitoring Surveyor" means [[*] or such other relevant professional as the Bank may appoint from time to time to monitor the progress of the Development / *such relevant professional as may be appointed by the Bank from time to time to monitor the progress of the Development];
"Monitoring Surveyor's Certificate" means a report prepared by the Monitoring Surveyor and addressed to the Bank, in form and substance satisfactory in all respects to the Bank, confirming [*(i) the value of the work in progress at the Development, (ii) the expenditure incurred (for which payment is requested) is in accordance with the Cash Flow Forecast, (iii) the Development is making progress in accordance with the Cash Flow Forecast and the Agreed Plans, (iv) there is no outstanding Cost Overrun and (v) the undrawn portion of the Loan is sufficient to meet the remaining [*Total Costs / *Development Costs];
"Notice" means a drawdown notice substantially in the form set out in the Schedule to this Agreement;
"Parent" means [], Company Number [];
"Performance Bond" means the [*on demand / *default] performance bond issued to the Borrower in respect of the Development by an issuer acceptable to the Bank;
"Planning Agreement" means the Section 106 / Section 75 agreement (as relevant) between the Borrower, the Bank and [] dated [];
"Professional Team" means the architect, quantity surveyor, structural and other engineers and cost consultants together with such other professional persons from time to time employed by the Borrower or the Contractor in connection with the carrying out of the Development;
"Professional Team Appointments" means the deeds of appointment entered into between the Borrower or the Contractor and each of the members of the Professional Team in form and substance acceptable to the Bank;
"Professional Valuation" means a Bank instructed and addressed valuation of the Property by the Valuer;
"Property" means ;
"Purchaser" means ;
"Step In Agreements" means the step-in agreements in favour of the Bank executed or to be executed by the Bank, the Borrower and/or the Contractor and the relevant grantors thereof enabling inter alia the Bank to assume the rights of the Borrower and/or the Contractor under the Material Contracts, in a form acceptable to the Bank;
"Subsidiary" shall have the meaning ascribed to it in Section 736 of the Companies Act 1985;
"Subsidiary Undertaking" shall have the meaning ascribed to it in Section 258 of the Companies Act 1985;
"Taxes" means all present and future income and other taxes, levies, imposts, deductions, charges, fees, compulsory loans or withholdings of whatsoever nature together with interest thereon and penalties in respect thereof if any and "Taxation" shall be construed accordingly;
"Tenant" means ;
"Term" means the period commencing on the date on which this Agreement is signed on behalf of the Bank and ending on the earliest of (i) [*the date which falls after the date on which the First Tranche is drawn / *], (ii) [*the date of completion under the Agreement for Sale / *the date on which the Property is sold, transferred or otherwise disposed of / *the date on which the final unit at the Property is sold] and (iii) the date on which all sums due under this Agreement are repaid in full;
"Total Costs" means the costs involved in (i) the purchase of the Property and (ii) undertaking the Development in accordance with the Agreed Plans, as detailed in the Cash Flow Forecast;
"Tranche" means any drawing under this Agreement;
"Valuer" means [* or such other valuer appointed by the Bank at its sole discretion / *the valuer appointed by the Bank at its sole discretion];
"VAT" means value added tax, as provided for in the Value Added Tax Act 1994, at the rate in force from time to time during the Term;
"Written Down Development Value" means the aggregate of (i) the Written Down Property Value and (ii) []% of the value of the work in progress at the Development as evidenced at any relevant time by the most recent Monitoring Surveyor's Certificate received by the Bank; and
"Written Down Property Value" means []% of the market value of the Property as evidenced at any relevant time by the most recent Professional Valuation.
1.3Headings in this Agreement are inserted for convenience only and shall be ignored in construing this Agreement. Unless the context otherwise requires, words denoting the singular number only shall include the plural and vice versa.
1.4Any reference in this Agreement to:
(a)any agreement/document shall be construed as a reference to that agreement/document as the same may have been, or may from time to time be, restated, varied, amended, supplemented, substituted, novated or assigned (with consent, where necessary);
(b)laws, statutes and/or statutory provisions (including all orders, regulations, instruments or subordinate legislation thereunder) shall be construed as references to the same as respectively replaced, amended, extended, consolidated or re-enacted from time to time;
(c)"person" shall be construed to include references to any person, firm, company, partnership, corporation or any agency thereof;
(d)"disposal" shall include granting of any lease, licence or other occupancy or use right.
2DRAWING OF THE LOAN
2.1The Borrower shall draw the Loan in Tranches during the Term provided that:-
(a)the First Tranche shall be drawn by not later than ;
(b)the Loan shall be drawn in full by no later than ;
(c)each request for a Tranche shall be made to the Bank Office and shall be accompanied by:-
(i)a Notice specifying the amount of the Tranche and the required date of drawdown which must be a Business Day[, /; and]
(ii)[*a Monitoring Surveyor's Certificate / * Development Expenditure Evidence],
provided that, in relation to the First Tranche:-
- the amount to be drawn shall be restricted to the lowest of (1) £[], (2) the Written Down Property Value and (3) []% of the purchase price of the Property; and
- the provisions of Clauses 2.1(c)(ii) and 2.1(c)(iii) shall not apply.
(d)the available amount to be drawn under the Loan shall be limited to the lowest of:-
(i)such amount (calculated by the Bank) to ensure that at all times there will be a sufficient amount undrawn under the Loan to meet the [*Total Costs / *Development Costs] remaining;
(ii)such amount (calculated by the Bank) to ensure that the Loan (including compounding interest pursuant to Clause 3.2)does not exceed % of the [*Total Costs / *Development Costs] incurred;
(iii)such amount (calculated by the Bank) to ensure that the Loan (including compounding interest pursuant to Clause 3.2)does not exceed the Written Down Property Value;
(iv)such amount (calculated by the Bank) to ensure that the Loan (including compounding interest pursuant to Clause 3.2)does not exceed the Written Down Development Value;
The Borrower shall be entitled to include in any Tranche sums in respect of VAT on the part of the [*Total Costs / *Development Costs] otherwise included therein and which will be repayable to the Borrower by HM Revenue & Customs and the amount of such VAT shall be disregarded in carrying out the calculations referred to in paragraphs (d)(i) or (d)(ii) above;
(e)prior to drawdown of a Tranche the Bank is satisfied that any Cost Overruns have been paid by [*the Borrower / * the Parent];
(f)the Bank is satisfied that any contributions of the Borrower towards the [*Total Costs / *Development Costs] in accordance with the Cash Flow Forecast have been paid;
(g)the Bank is satisfied that all previous Tranches and sums paid in terms of paragraphs (e) and/or (f) above have been duly disbursed to the parties entitled thereto and all VAT recovered has been credited in permanent reduction of the Loan or an equivalent amount deducted from the Tranche to be drawn; and
(h)where any Cost Overruns have been paid by[the Borrower] pursuant to paragraph (e) above but, as a result of subsequent Cost Underruns, the undrawn amount of the Loan exceeds the [*Total Costs / *Development Costs] remaining, the Borrower will be entitled to include in the next following Tranche such sum as shall equate to the lesser of (1) the amount of the Cost Overrun(s) previously paid and (2) the amount by which the undrawn balance of the Loan exceeds the [*Total Costs / *Development Costs] remaining.
2.2If the Borrower maintains a current account with the Bank then the Bank may credit the Loan or any Tranche thereof to such account. Otherwise the Loan or any Tranche thereof will be distributed in accordance with the Borrower's instructions.
2.3Each Tranche shall be consolidated with that part of the Loan already drawn.
2.4In the event of the Loan not being drawn in accordance with the provisions of Clause 2.1, the Bank shall be entitled to cancel any part of the Loan remaining undrawn.
3INTEREST
3.1The Borrower shall pay to the Bank interest at a rate which is equivalent to % per annum above the Bank's Base Rate. As at this formula produced a rate of %. The Bank's Base Rate may vary from time to time. Where the Bank’s Base Rate is below zero, it will be deemed to be zero.
3.2Interest on the Loan shall be calculated and accrue on a daily basis and a year of 365 days and accrued interest shall be [*payable / *compounded] quarterly on the final Business Day of March, June, September and December in each year (or on such other dates as the Bank may advise from time to time) and on final repayment of the Loan. [*Any interest unpaid when payable shall be compounded].
3.3If, during the Term, the compounding of interest in terms of Clause 3.2 would result in the Loan exceeding £, such interest as would result in the Loan exceeding that amount shall, unless otherwise agreed in writing with the Bank, be paid by the Borrower from its own resources on the Business Day on which it is due to be compounded.
3.4At any time after an Event of Default has occurred, which has not been waived or remedied, the Bank shall be entitled to charge interest at a rate of % per annum above the Bank's Base Rate (or such other rate as may be determined by the Bank and notified to the Borrower from time to time) on the Loan up to the earlier of (i) the date on which the Bank notifies the Borrower in writing that it is satisfied that such Event of Default has been remedied and (ii) the date on which the Loan is repaid and any other amounts outstanding under this Agreement have been paid in full. Interest shall be payable at the rate both before and after demand, court decree or judgment.
4INCREASED COSTS
4.1If any official directive, requirement or request (whether or not having force of law) or any law or regulation or the official or judicial interpretation thereof should:-
(a)subject the Bank to Taxes or change the basis of Taxation of the Bank in respect of any payment under this Agreement (other than Taxes or Taxation on the overall net income of the Bank); or
(b) impose, modify or render applicable any reserve requirements or the making of any special deposits against or in respect of any assets or liabilities of, deposits with or for the account of, or advances by, the Bank; or
(c)impose on the Bank any other condition with respect to this Agreement or its obligations hereunder,
then the Borrower shall from time to time within three Business Days of a demand by the Bank pay to the Bank such additional amount as may be certified by the Bank as necessary to compensate the Bank for any increased cost or reduction in the income to the Bank in respect of making available or maintaining the Loan. Any certificate shall be conclusive in the absence of manifest error.