INTER CREDITOR AGREEMENT
relating to the National Housing Trust Initiative, Phase 2B
among
the Development Vehicle
as the Borrower
and
the Participating Local Authority
as the Senior Creditor
and
the Scottish Ministers
as Guarantors
and
the Developer
as the Junior Creditor
and
the Developer
as the Subordinated Creditor
INDEX
1.Definitions and Interpretation
2.Purpose and Ranking
3.Undertakings of the Borrower
4.Undertakings of the Scottish Ministers
5.Undertakings of the Junior Creditors
6.Undertakings of the Subordinated Creditor
7.Permitted Payments
8.Turnover
9.Subordination on Insolvency
10.Enforcement
11.Application of Proceeds
12.Consents
13.Protection of Subordination
14.Preservation of Guarantee, Junior and Subordinated Debt
15.Standard Provisions
16.Law and Jurisdiction
Schedule
Part 1 The Development Vehicle
Part 2 Standard Provisions
1
INTER CREDITOR AGREEMENT
AMONG:
(1)THE DEVELOPMENT VEHICLEspecified in Part 1 of the Schedule, being a limited liability partnership incorporated under the Limited Liability Partnerships Act 2000, whose registered office is so specified (the Borrower);
and
(2)THE PARTICIPATING LOCAL AUTHORITYspecified in Part 1 of the Schedule, being incorporated under the Local Government etc (Scotland) Act 1994 and having its principal place of business as so specified (the Senior Creditor);
and
(3)THE SCOTTISH MINISTERS in terms of the Scotland Act 1998 (the Scottish Ministers);
and
(4)THE DEVELOPERspecified in Part 1 of the Schedule, being incorporated under the Companies Acts 1985 and 2006, whose registered office is so specified (in this capacity, the Junior Creditor);
and
(5)THE DEVELOPER referred to above (in this capacity, the Subordinated Creditor).
BACKGROUND:
- The Senior Creditor has agreed in a facility agreement to advance a secured term loan to the Borrower to enable the Borrower to purchase certain housing units from the Developer.
- The Scottish Ministers have agreed to issue a guarantee to the Senior Creditor to underwrite in the event of default the take out funding to be provided by the Senior Creditor to the Borrower.
- The Junior Creditor has agreed to subscribe from time to time for secured A loan stock and unsecured B loan stock allotted and issued by the Borrower.
- The Subordinated Creditor has agreed to contribute from time to time the Developer's Contribution in the Borrower.
- Accordingly, the parties have agreed to regulate their interests as creditors of the Borrower as provided in this Agreement.
AGREEMENT:
- Definitions and Interpretation
- Definitions
In this Agreement (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:
A Loan Stock means the secured A loan stock referred to in the Background section;
B Loan Stock means the unsecured, non-interest bearing B loan stock referred to in the Background section;
Breakage Costs is as defined in the Facility Agreement;
Controlling Creditor means, until the Senior Discharge Date the Senior Creditor, and then the Scottish Ministers until the Guarantee Discharge Date, and then the Junior Creditor;
Developer's Contribution is as defined in the Members Agreement;
Distribution means any payment or discharge (whether by set-off, counterclaim, plea of compensation or otherwise) by the Borrower of any dividend or other distribution (in cash or in kind) on or in respect of any of the Borrower's capital;
Event of Default is as defined in the Facility Agreement;
Facility Agreement means the facility agreement referred to in the Background section as varied and amended from time to time;
Guarantee Debt means the amount payable by the Borrower to the Scottish Ministers arising as a result of any payment made by the Scottish Ministers under the Scottish Government Guarantee;
Guarantee Discharge Date means the date, as determined by the Scottish Ministers, on which all the Guarantee Debt has been fully and irrevocably reimbursed to the reasonable satisfaction of Scottish Ministers by or on behalf of the Borrower;
Guarantee Security Document means a second ranking bond and floating charge created or to be created by the Borrower in favour of and in a form agreed by Scottish Ministers as varied and amended from time to time;
Junior Creditor means the holder of the A Loan Stock from time to time;
Junior Debt means any present or future liability of any kind payable or owing by the Borrower to the Junior Creditor under any Junior Finance Document whether actual or contingent, whether or not matured and whether or not liquidated;
Junior Discharge Date means the date, as determined by the Junior Creditor, on which all Junior Debt has been fully and irrevocably paid or discharged to the reasonable satisfaction of the Junior Creditor, whether or not as the result of an enforcement;
Junior Finance Documents means:
a)the A Loan Stock, and
b)the Junior Security Document;
Junior Security Document means a third ranking bond and floating charge created or to be created by the Borrower in favour of the Junior Creditor as varied and amended from time to time;
Members Agreement means the agreement referred to as such among Scottish Futures Trust Investments Limited (Registered Number SC381388), the Senior Creditor, the Subordinated Creditor and the Borrower as varied and amended from time to time;
Scottish Government Guarantee is as defined in the Facility Agreement;
Security Interest means a mortgage, charge, pledge, assignment by way of security, assignation in security, standard security, floating charge, lien, hypothecation or other security interest securing any obligation of any person or any other agreement or arrangement having a similar effect;
Senior Debt means any present or future liability (actual or contingent) whatsoever payable or owing by the Borrower to the Senior Creditor under or in connection with any Senior Finance Document in each case whether or not matured and whether or not liquidated including, without limitation, any Breakage Costs;
Senior Discharge Date means the date, as determined by the Senior Creditor, on which all Senior Debt has been fully and irrevocably paid or discharged to the reasonable satisfaction of the Senior Creditor, whether or not as the result of an enforcement;
Senior Finance Documents means:
a)the Facility Agreement; and
b)the Senior Security Documents;
Senior Security Documents means:
a)the Security Documents, as defined in the Facility Agreement;
b)any security interest granted under any covenant for further assurance in any of those Security Documents; and
c)any present or future document conferring or evidencing any security interest, guarantee or other assurance against financial loss for, or in respect of, any of the Senior Debt;
SFT is as defined in the Members Agreement;
Subordinated Creditor means the Developer in its capacity as contributor and holder of the Developer's Contribution and in its capacity as the holder of the B Loan Stock; and
Subordinated Debt means any present or future liability of any kind payable or owing by the Borrower to the Subordinated Creditor under or in connection with the Developer's Contribution and/or the B Loan Stock whether actual or contingent, whether or not matured and whether or not liquidated.
1.2Interpretation
In this Agreement, except where the context otherwise requires:
1.2.1all references to Clauses and to the Schedule (and Parts thereof) are references to Clauses of and the Schedule (and Parts thereof) to this Agreement;
1.2.2words 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;
1.2.3any 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;
1.2.4all 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;
1.2.5all references to any party include a reference to their successors and permitted assignees;
1.2.6the expression party means each or any of the parties from time to time to this Agreement, so long as they remain a party;
1.2.7any undertaking by any of the parties not to do any act or thing shall, so far as it is within the power of that party, be deemed to include an undertaking to use reasonable endeavours (taking into account the extent of any control or influence it may have) not to allow or permit the doing of that thing;
1.2.8any notice, instruction, notification, direction, request, consent or approval contemplated herein shall be made or given in writing;
1.2.9the headings to the Clauses are inserted for convenience only and do not affect the interpretation of this Agreement; and any words or expressions defined in the Schedule have the same meaning where used in any other part of this Agreement; and
1.2.10where the words include(s) or including are used they are illustrative and shall not limit the scope of the words preceding them.
- Purpose and Ranking
- The principal purpose of the following provisions of this Agreement is that (subject only as expressly provided to the contrary in this Agreement):
- the Senior Debt, the Guarantee Debt, the Junior Debt and the Subordinated Debt shall rank in the following order:
Firstthe Senior Debt;
Secondthe Guarantee Debt;
Thirdthe Junior Debt;
Fourththe Subordinated Debt; and
2.1.2the Security Interests created by the Borrower shall rank (irrespective of the date of its creation and whether created before, on or after the date of this Agreement) in the following order: -
Firstthe Senior Security Documents;
Secondthe Guarantee Security Document; and
Thirdthe Junior Security Document.
2.2For the avoidance of any doubt, each Controlling Creditor hereby consents to the creation of the Security Interests referred to in Clause 2.1.2and to the payments envisaged by Clause 7.
2.3The parties will co-operate on creation and registration of the Security Interests referred to in Clause 2.1.2 so as to give full effect to the agreed ranking order, including (without limitation) in relation to the filing of any requisite Forms M466 (or equivalent) with the Registrar of Companies.
- Undertakings of the Borrower
- Until the Senior Discharge Date, except as the Controlling Creditor has previously consented in writing, the Borrower will not:
- pay, prepay or repay, or make any Distribution in respect of, or purchase or acquire, any of the Guarantee Debt, the Junior Debt or the Subordinated Debt in cash or in kind except as permitted by Clause 7 (Permitted Payments);
- discharge any of the Guarantee Debt, the Junior Debt or the Subordinated Debt by set-off or any right of combination of accounts, except as provided by Clause 7(Permitted Payments);
- create or permit to subsist any Security Interest over any of its assets for any of the Guarantee Debt, the Junior Debt orthe Subordinated Debt other than under, respectively, the Guarantee Security Document and the Junior Security Document;
- amend, vary, waive or release any term of the Junior Finance Documents or the Guarantee Security Document, except as may be amended by this Agreement; or
- take or omit any action whereby the subordination contemplated by this Agreement may be impaired.
- After the Senior Discharge Date and until the Guarantee Discharge Date, except as the Controlling Creditor has previously consented in writing, the Borrower will not:
- pay, prepay or repay, or make any Distribution in respect of, or purchase or acquire, either of the Junior Debt or the Subordinated Debt in cash or in kind except as permitted by Clause 7 (Permitted Payments);
- discharge either of the Junior Debt or the Subordinated Debt by set-off or any right of combination of accounts, except as provided by Clause 7(Permitted Payments);
- create or permit to subsist any Security Interest over any of its assets for either of the Junior Debt or the Subordinated Debt other than under the Junior Security Document;
- amend, vary, waive or release any term of the Junior Finance Documents, except as may be amended by this Agreement; or
- take or omit any action whereby the subordination contemplated by this Agreement may be impaired.
- Undertakings of the Scottish Ministers
- Until the Senior Discharge Date the Scottish Ministers will not: -
- demand or receive payment of any Guarantee Debt except as may be permitted under Clause 11 (Application of Proceeds), or
- amend, vary, release or waive any term of the Scottish Government Guarantee, or
- take any action whereby the subordination contemplated by this Agreement may be impaired.
- After the Senior Discharge Date and until the Guarantee Discharge Date, the Scottish Ministers shall be entitled to be subrogated to the rights of the Senior Creditor in relation to any amounts paid by them to the Senior Creditor as a result of any claim on the Scottish Government Guarantee.
- Undertakings of the Junior Creditors
Until the Guarantee Discharge Date, except as the Controlling Creditor has previously consented in writing, no Junior Creditor will:
5.1demand or receive payment of, or any Distribution in respect of (or on account of), any of the Junior Debt in cash or kind or apply any money or assets in discharge of any Junior Debt, except in each case to the extent permitted by Clause 7 (Permitted Payments);
5.2discharge any of the Junior Debt by set-off or any right of combination of accounts except if and to the extent that the Junior Debt is permitted to be paid by Clause 7 (Permitted Payments);
5.3permit to subsist or receive any Security Interest or any guarantee or other assurance against financial loss for, or in respect of, any of the Junior Debt other than the Junior Security Document;
5.4permit the Junior Debt to be evidenced by a negotiable instrument unless the subordination is noted on the instrument or the instrument is deposited with the Controlling Creditor;
5.5amend, vary, waive or release any term of the Junior Finance Documents or the Junior Debt; or
5.6take or omit any action whereby the subordination contemplated by this Agreement may be impaired.
- Undertakings of the Subordinated Creditor
Until the Junior Discharge Date, except as the Controlling Creditor has previously consented in writing, no Subordinated Creditor will:
6.1demand or receive payment of, or any Distribution in respect of (or on account of), any of the Subordinated Debt in cash or kind or apply any money or assets in discharge of any Subordinated Debt;
6.2discharge any of the Subordinated Debt by set-off or any right of combination of accounts;
6.3permit to subsist or receive any Security Interest or any guarantee or other assurance against financial loss for, or in respect of, any of the Subordinated Debt;
6.4permit the Subordinated Debt to be evidenced by a negotiable instrument unless the subordination is noted on the instrument or the instrument is deposited with the Junior Creditor;
6.5amend, vary, waive or release any term of the Subordinated Debt; or
6.6take or omit any action whereby the subordination contemplated by this Agreement may be impaired.
- Permitted Payments
Subject to Clause 9 (Subordination on insolvency) and to part 9 (Funding of the LLP) of the schedule to the Members Agreement, the Borrower may pay, and the Junior Creditor may receive and retain, any payment in cash of the Junior Debt to the extent (but only to the extent) that payment of the amount can be, and is, made without contravening any provision of Clause 11 (Application of Proceeds).
- Turnover
- If at any time prior to the Senior Discharge Date:
- the Scottish Ministers, any Junior Creditor or Subordinated Creditor receives a payment or Distribution in cash or in kind of, or on account of, any of the Guarantee Debt, Junior Debt or the Subordinated Debt not permitted by Clause 7 (Permitted Payments) or not made in accordance with the provisions of Clause 11 (Application of Proceeds);
- the Borrower makes any payment or Distribution in cash or in kind on account of the purchase or other acquisition of any of the Guarantee Debt, Junior Debt or the Subordinated Debt except to the extent permitted by Clause 7 (Permitted Payments);
- any of the Guarantee Debt, Junior Debt or the Subordinated Debt is discharged by set-off except to the extent permitted by Clause 7 (Permitted Payments),
then the Scottish Ministers, the receiving Junior Creditor or Subordinated Creditor shall hold the receipt in trust for, and pay and distribute it upon demand to, the Senior Creditor for application towards the Senior Debt. The Borrower shall indemnify the Scottish Ministers and each Junior Creditor and each Subordinated Creditor on demand for the amount of any such payment, distribution, proceeds or set-off.
8.2If at any time after the Senior Discharge Date until the Guarantee Discharge Date:
8.2.1any Junior Creditor or Subordinated Creditor receives a payment or Distribution in cash or in kind of, or on account of, any of the Junior Debt or the Subordinated Debt not permitted by Clause 7 (Permitted Payments) or not made in accordance with the provisions of Clause 11 (Application of Proceeds);
8.2.2the Borrower makes any payment or Distribution in cash or in kind on account of the purchase or other acquisition of any of the Junior Debt or the Subordinated Debt except to the extent permitted by Clause 7 (Permitted Payments);
8.2.3any of the Junior Debt or the Subordinated Debt is discharged by set-off except to the extent permitted by Clause 7 (Permitted Payments),
then the receiving Junior Creditor or Subordinated Creditor shall hold the receipt in trust for, and pay and distribute it upon demand to, the Senior Creditor for application towards the Senior Debt or the Scottish Ministers. The Borrower shall indemnify each Junior Creditor and each Subordinated Creditor on demand for the amount of any such payment, distribution, proceeds or set-off.
8.3If at any time from the Guarantee Discharge Date until the Junior Discharge Date:
8.3.1any Subordinated Creditor receives a payment or Distribution in cash or in kind of, or on account of, any of the Subordinated Debt not permitted by Clause 7 (Permitted Payments) or not made in accordance with the provisions of Clause 11 (Application of Proceeds);
8.3.2the Borrower makes any payment or Distribution in cash or in kind on account of the purchase or other acquisition of any of the Subordinated Debt except to the extent permitted by Clause 7 (Permitted Payments);
8.3.3any of the Subordinated Debt is discharged by set-off except to the extent permitted by Clause 7 (Permitted Payments),
then the receiving Subordinated Creditor shall hold the receipt in trust for, and pay and distribute it upon demand to, the Junior Creditor for application towards the Junior Debt. The Borrower shall indemnify each Subordinated Creditor on demand for the amount of any such payment, Distribution, proceeds or set-off.