OPERATING CONDITIONS – PART I

DEFINITIONS

In this Agreement, the following words have the meaning set out opposite them and include the definitions set out in Part X of the Operating Conditions where any Facility includes Debtor Protection:

Definition Meaning

“Advance Rate”

any percentage to be paid by us on account of the Purchase Price of each Approved Invoice specified in the Commercial Terms as varied in accordance with this Agreement from time to time.

“Advance”

the amount paid by us on account of the Purchase Price of each Approved Invoice, in the case of Invoice Discounting and Factoring Clients, calculated by applying the Advance Rate to such Invoice or in the case of Payroll Finance Clients disbursed in the manner set out in Operating Conditions – Part VII – Provisions relating to Payroll Finance Clients only or Part IX – Provisions relating to Invoice Discounting/Factoring Clients with Payroll Services only.

“Approved Currency”

any currency referred to in the Commercial Terms or any other currency which we may approve from time to time but excluding any currency which we give you notice is removed from this definition.

“Approval Limit”

any limit established by us and notified to you from time to time in relation to the maximum value of Invoices owing by some or all of your Customers expressed either as a fixed monetary amount or a percentage of all your Invoices outstanding from time to time.

“Approved Invoice”

all or part of any Notified Invoice not classified by us as Disapproved and “Approved” shall be construed accordingly.

“Approved Country”

any country referred to in the Commercial Terms or agreed by us from time to time but excluding any country which we give you notice is excluded from this category.

“Assignment”

includes an assignment or an assignation, as applicable.

“Associated Business”

any person or business which is owned or controlled by:

  1. you or your spouse/civil partner if you are a sole trader; or
  2. any director, partner or shareholder of your business or spouse or partner of any of them; or
  3. anyone who controls (or who can take control of) you; or
  4. anyone you control (or you can take control of); or
  5. any holding company.

“Audit”

any inspection of your books of account and/or other records by our employee/s or agent/s either pursuant to the undertakings given in condition 9.1.9 of Operating Conditions – Part II – Provisions relating to all Clients or otherwise.

“Availability”

the amount of any Invoice Discounting, Factoring, Contingent Liability or Payroll Finance Facility available to you calculated as set out in condition 4.5 of the Operating Conditions – Part II – Provisions relating to all Clients.

“BACS”

the Bankers Automated Clearing System.

“Bank”

Lloyds Bank plc and its successors or assigns.

“Base Rate”

for Sterling, the bank rate from time to time of the Bank of England (or any rate at any time replacing that rate), which may be varied (either up or down) by the Bank of England at any time and if in any such case that rate is less than zero, Base Rate shall be deemed to be zero.

“CHAPS”

same day payment of cleared funds through the Clearing Houses Automated Payment System.

“Client”

at any time, a person to whom a Facility is made available.

“Collection Date”

in the case of any Invoice which is:

  1. paid in cash: the date of receipt of the cash by us;
  2. paid by cheque or other instrument: the date on which funds representing the same are cleared by our bankers for interest;
  3. paid by BACS: the date on which funds are credited to our bank account;
  4. paid by CHAPs or Faster Payment: the Working Day after the day on which funds are credited to our bank account plus, in any case, any period specified in the Commercial Terms.

“Commercial Terms”

the terms set out in the main body of the Agreement (other than the Operating Conditions) as varied, amended, supplemented or replaced from time to time.

“Contingent Instrument”

a guarantee, bond or letter of credit issued by us or an Issuer pursuant to any Contingent Liability Facility.

“Contingent Liability Facility”

any contingent liability facility provided by us to you pursuant to which we will issue (or arrange for a bank or other financial institution approved by us to issue on your behalf):

  1. guarantees and bonds
  2. letters of credit.

“Contract of Sale”

a contract in any form (including a purchase order) for the sale or hire of goods and/or provision of services to a Customer under which an Invoice arises.

“Cost of Funds”

the Debit Reference Rate for the relevant Approved Currency from time to time in effect on each day during any charging period for which a relevant determination is to be made. The Debit Reference Rates are available from us on request. If at any time the relevant Debit Reference Rate is less than zero, our Cost of Funds shall be deemed to be zero.

“Counter Indemnity”

an indemnity provided by us to an Issuer in their preferred form for all monies, obligations and liabilities incurred under a Contingent Instrument.

“Currency Facility”

a Facility where we have agreed to pay for your Currency Invoices owing by a UK Customer.

“Currency Invoice”

any Invoice payable in an Approved Currency (other than Sterling).

“Current Account”

the account described in condition 4 of the Operating Conditions – Part II – Provisions relating to all Clients.

“Customer”

a person under a Contract of Sale obliged to pay you the Invoice and, where the context so permits, a prospective Customer.

“Debit Balance”

any debit balance on the Current Account.

“Debtor Protection”

the debtor protection described in Operating Conditions – Part X – Debtor Protection Conditions and provided by us in accordance with this Agreement.

“Delivered”

in relation to Goods:

  1. physical delivery to (or to the order of) a Customer;
  2. the Customer taking the risk in the Goods;
  3. performance of the Contract of Sale;

in relation to services: completed and “Deliver” and “Delivery” are to be construed accordingly.

“Disapproved Invoice”

all or part of any Invoice classified by us as disapproved in accordance with condition 2 of the Operating Conditions – Part II – Provisions relating to all Clients and ‘Disapproved’ is to be construed accordingly.

“Domestic Invoice”

an Invoice payable in Sterling arising from a Contract of Sale performed in UK, the invoice for which is addressed to a location in the UK.

“DPA”

the Data Protection Act 1998.

“Euro”

Euro (EUR) or the single currency of the Participating Member States.

“EURIBOR”

in relation to each calculation period agreed by us by reference to which a rate is to be set for the charging of the Discount Charge:

  1. the Screen Rate for Euro as of the Specified Time; or
  2. if no Screen Rate is available for Euro as of the Specified Time, the Interpolated Screen Rate; or
  3. if:
    1. no Screen Rate is available for Euro; and
    2. it is not possible to calculate an Interpolated Screen Rate, the Offered Rate, and if, in any such case, that rate is less than zero, EURIBOR shall be deemed to be zero.

“EEA”

European Economic Area.

“Export Facility”

a Facility pursuant to which we have agreed to purchase your Export Invoices.

“Export Invoice”

an Invoice which is:

  1. addressed to a Customer in an Approved Country; and
  2. expressed either in an Approved Currency or Sterling.

“Facility”

means any or all (as the context requires) of an Invoice Discounting Facility, Factoring Facility, Export and/or Currency Facility, Contingent Liability Facility, Payroll Finance Facility or Debtor Protection Facility made available by us to you from time to time under the terms of this Agreement.

“Factoring Client”

at any time, a Client to whom a Factoring Facility is made available, or a Client to whom a Payroll Service is made available on the basis of a Factoring Facility.

“Factoring Facility”

a Facility provided on the terms of this Agreement where the applicable Operating Conditions include Parts I, II and IV.

“Faster Payment”

same day transmission of cleared funds as arranged by the payer with their bankers and accepted by the payee’s bankers.

“Fees and Charges”

all those fees and charges to which we are entitled for providing any Facility (and any VAT thereon).

“Goods”

any goods the subject of a Contract of Sale.

“Group”

Lloyds Banking Group plc and all its associated companies. For these purposes “associated companies” includes Lloyds Banking Group plc and any subsidiary, affiliate, and related company or other firm directly or indirectly controlled from time to time by the Lloyds Banking Group plc.

“Guarantor”

means any person who provides a guarantee or indemnity to us in respect of your Obligations under this Agreement.

“Insolvency” or “Insolvent”

in relation to a company, partnership or limited liability partnership:

  1. the presentation of a petition to wind it up;
  2. the passing of a resolution to wind it up or the giving of notice by any person convening a meeting of creditors for the purpose of considering the same;
  3. the appointment of or the making of an application to court to appoint, an administrator to it;
  4. its members, directors or creditors resolving to effect any of the above;
  5. the giving of notice by any person to us of an intention to appoint an administrator, interim manager or liquidator to it;

in relation to a company: the taking of any steps towards or the coming into force of a moratorium under section IA of the Insolvency Act 1986;

in relation to an individual or a partnership established in Scotland:

  1. the issue of a petition (whether by the individual or his creditors) or a debtor's application for the bankruptcy of that individual (and where that individual is in partnership with others the partnership will be treated as Insolvent on the issue of such a petition);
  2. granting a trust deed for the benefit of his creditors;

in relation to a company, limited liability partnership, partnership or individual

  1. the holder of any Security Interest exercising or enforcing his rights, whether by taking possession of or appointing an administrative or other receiver, to any of its or his undertaking, assets or property or otherwise; or
  2. suffering commercial rent arrears recovery, sequestration for rent, diligence, attachment, seizure, execution, sequestration or other legal process upon any assets;
  3. being subject to an injunction or interdict (interim or permanent) preventing or restricting dealings with its income or assets;
  4. giving notice of the intended suspension of payment of debts
  5. the directors, members or any individual(as appropriate) taking any steps towards filing (or in Scotland, lodging) with the Court any documents or statements or making an application for a moratorium in connection with a voluntary arrangement under the Insolvency Act 1986;
  6. the taking of any steps towards implementing a proposal for a voluntary arrangement under the Insolvency Act 1986;
  7. commencing negotiations with one or more creditors for the general readjustment or rescheduling of all or part of its indebtedness;
  8. making a general assignment or assignation for the benefit of, or composition with, its creditors;
  9. ceasing or threatening to cease to carry on business;
  10. allowing any judgment, decree, order or award of any court or tribunal for payment of money to remain unsatisfied for 7 days or more;
  11. being insolvent within the terms of section 123 Insolvency Act 1986 or, in our reasonable opinion, being unable to pay its debts as they fall due; or
  12. receipt by it of a statutory demand;

in relation to a Scottish partnership: the appointment of a judicial factor.

“Interpolated Screen Rate”

in relation to LIBOR or (as the case may be) EURIBOR, the rate (rounded to the same number of decimal places as the two relevant Screen Rates) which results from calculating on a straight line basis the position between:

  1. the applicable Screen Rate for the longest period (for which that Screen Rate is available) which is less than the period agreed by us by reference to which LIBOR or (as the case may be) EURIBOR is set; and
  2. the applicable Screen Rate for the shortest period (for which that Screen Rate is available) which exceeds the period agreed by us by reference to which LIBOR or (as the case may be) EURIBOR is set, each as of the Specified Time for the currency of the amount for which the determination is made.

“Invoice”

any present, future or contingent obligation (including any tax or duty) of a Customer to make payment under a Contract of Sale (whether invoiced or not) and, where the context permits, includes part of an Invoice.

“Invoice Discounting Client”

at any time, a Client to whom an Invoice Discounting Facility is made available, or a Client to whom a Payroll Service is made available on the basis of an Invoice Discounting Facility.

“Invoice Discounting Facility”

a Facility provided on the terms of this Agreement where the applicable Operating Conditions include Parts I to IV.

“Issuer”

a bank or other financial institution approved by us which issues a Contingent Instrument on your behalf.

“Liability”

any actions, awards, costs, claims, damages, losses (including, without limitation, any direct or indirect consequential losses), demands, expenses, loss of profits, loss of reputation, judgments, penalties and proceedings and any other losses and/or liabilities suffered and/or incurred by you.

“LIBOR”

in relation to each calculation period agreed by us by reference to which a rate is to be set for the charging of the Discount Charge:

  1. the applicable Screen Rate for the relevant Approved Currency; or
  2. if no Screen Rate is available for the Approved Currency as of the Specified Time, the Interpolated Screen Rate; or

if:

  1. no Screen Rate is available for the relevant Approved Currency; and
  2. it is not possible to calculate an Interpolated Screen Rate, the Offered Rate, and if in any such case, that rate is less than zero, LIBOR shall be zero.

“Minimum Fee”

any minimum or fixed fee (replacing or supplementing the Service Fee) specified in the Commercial Terms.

“Minimum Term”

the shortest period for which this Agreement must endure specified in the Commercial Terms.

“Net Value”

in relation to any Invoice, the amount actually received by us in settlement or discharge of the Invoice after taking into account all deductions, discounts and set-offs.

“Non-Notifiable Invoices”

those Invoices described as non-notifiable in the Operating Conditions - Part II and specified as Additional Non-Notifiable Invoices in the Commercial Terms.

“Notice Period”

the period of notice to be served to terminate this Agreement specified in the Commercial Terms.

“Notification”

your notification to us in the format we specify (being, in the case of Clients receiving Payroll Services, Time Sheet Data) of the amount of Invoices and other matters referred to in conditions 9.1.6 and 9.1.7 of the Operating Conditions – Part II – Provisions relating to all Clients. “Notified” and “Notify” are to be construed accordingly.

“Notified Value”

the full amount of each Invoice given in a Notification (including any applicable tax or duty) and before any discount for prompt payment or otherwise.

“Obligations”

all your obligations owed to us and all Liabilities suffered or incurred by you under or pursuant to this Agreement.

“Operating Conditions”

the terms and conditions on which we will provide a Facility, Debtor Protection and /or Payroll Services to you incorporated in the Agreement, appearing on the Website, as amended, varied, supplemented or replaced from time to time.

“Offered Rate”

in relation to each calculation period agreed by us to be the period by reference to which we are to set our rate for the charging of the Discount Charge, the rate determined by us as at the Specified Time for that Approved Currency to be the rate at which the Bank could fund itself for that amount of that Approved Currency for that period in the Relevant Market, and if that rate is less than zero, the Offered Rate shall be deemed to be zero. Any such Offered Rate is available from us on request.

“Participating Member State”

any member state of the European Union that has the Euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.

"Payee Bank"

the bank and the account in the name of your business detailed in the Commercial Terms or such other bank and account in the name of your business that you give to us notice of in writing on at least two Working Days notice to which we will make all payments to you.

“Payroll Finance Client”

a Client to whom a Payroll Finance Facility is made available.

“Payroll Finance Facility”

a Facility provided on the terms of this Agreement where the Operating Conditions Parts VII and VIII apply.

“Payroll Services”

those services specified in Operating Conditions – Part VIII – Payroll Service Conditions.

“Personal Data”

personal data relating to a living individual as defined under the DPA.

“Purchase Price”

the amount payable by us for each Invoice together with its Related Rights.

“Quotation Day”

in relation to any period by reference to which a rate for the charging of the Discount Charge is to be determined:

  1. in the case of Sterling, the first day of that period;
  2. in the case of any Approved Currency (other than Sterling or Euro), two Working Days before the first day of that period; and
  3. in the case of Euro, two TARGET Days before the first day of that period,

unless market practice differs in the Relevant Market in which case the Quotation Day will be determined by us in accordance with market practice in the Relevant Market (and if quotations would normally be given on more than one day, the Quotation Day will be the last of those days).

“Refactoring Charge”

any fee charged to Factoring Clients in respect of Invoices still unpaid after an agreed period of months.

“Related Rights”

  1. all your rights under a Contract of Sale (including your right to damages);
  2. all (negotiable and non negotiable) instruments, security, bonds, guarantees and indemnities relating to an Invoice;
  3. all documents, ledgers, databases and computer files (including operating systems) recording or evidencing performance of a Contract of Sale or Invoices;
  4. all Goods returned to or repossessed by you or rejected by a Customer and all documents of title to such Goods;
  5. the benefit of any credit insurance in respect of an Invoice;
  6. any time sheets or proofs of delivery.

“Relevant Market”

  1. in the case of any Approved Currency other than Euro, the London interbank market; and
  2. in the case of Euro, the European interbank market.

“Remittance”

means the making of or receipt of a payment whether by cash, cheque, credit transfer or any other payment method.

“Repurchase Price”

for any Invoice repurchased by you it will be its Notified Value plus all relevant Fees and Charges less all sums received in or towards discharge of the Invoice and where we require you to repurchase all of your Invoices, then, for administrative convenience, it will be the Debit Balance on the Current Account after we have debited all Fees and Charges and any other monies and liabilities actually, contingently or prospectively owing by you to us.

“Returned Goods”

any goods relating to an Invoice which are returned to you by a Customer.

“Reserve”

any reserve applied by us to your Availability in such amount as we may determine from time to time.

“Review Limit”

any maximum Availability permitted to you which, until further notice from us, is the amount shown in the Commercial Terms.

“Sanctioned Entity”

a person or entity that is:

  1. listed on, or owned or controlled by a person listed on any sanctions list;
  2. located in, incorporated under the laws of, or owned or controlled by, or acting on behalf of, a person located in or organised under the laws of a country or territory that is the target of country-wide Sanctions; or

otherwise a target of Sanctions.

“Sanctions”

any economic sanctions laws, regulations, embargoes or restrictive measures imposed by, administered, enacted or enforced from time to time by the international community including:

  1. the United States of America;
  2. the United Nations;
  3. the European Union;
  4. the United Kingdom;
  5. the respective governmental institutions and agencies of any of the foregoing, including, without limitation, OFAC, the United States Department of State and Her Majesty’s Treasury (together, the “Sanctions Authorities”).

“Scottish Invoice”

  1. an Invoice arising from a Contract of Sale which is governed by the laws of Scotland; or
  2. an Invoice arising from a Contract of Sale which is not governed by the Laws of Scotland but where the Invoice is addressed to a Customer located in Scotland.

“Screen Rate”

  1. for any Approved Currency other than Euro, the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for that Approved Currency for the period agreed by us as displayed on pages LIBOR01 or LIBOR02 of the Thomson Reuters screen (or any replacement Thomson Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Thomson Reuters. If such page or service ceases to be available, we may specify another page or service displaying the relevant rate; and
  2. for Euro, the euro interbank offered rate administered by the European Money Markets Institute (or any other person which takes over the administration of that rate) for the period agreed by us as displayed on page EURIBOR01 of the Thomson Reuters screen (or any replacement Thomson Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Thomson Reuters. If such page or service ceases to be available, we may specify another page or service displaying the relevant rate.

“Security”

  1. the Security Interests granted in our favour that secure your Obligations under this Agreement; and
  2. any guarantee, suretyship or similar undertaking given in support of your Obligations to us under this Agreement,

whether generally or specifically.

“Security Interest”

any mortgage, standard security, charge, pledge, trust, assignment or assignation by way of security, hypothecation, lien, right of set-off, trust or flawed asset arrangements or any other arrangement for the purpose of or having a similar effect to creating security or any title retention rights, whether or not conditional.

“Sensitive Personal Data”

sensitive Personal Data relating to a living individual as defined under the DPA.

“Service Fee”

The fee, referred to in the Commercial Terms, charged for the provision of our services to you calculated, unless otherwise agreed, as provided in condition 6.2 of the Operating Conditions – Part II – Provisions relating to all Clients.

“Specified Time”

in the case of:

  1. any Approved Currency other than Euro, 11:00 a.m. (London time) on the relevant Quotation Day; and
  2. Euro, 11:00 a.m. (Brussels time) on the relevant Quotation Day.

“Sterling”

Sterling (GBP) or the currency of the United Kingdom.

“Swiss Francs”

Swiss Francs (CHF) or the currency of Switzerland.

“TARGET2”

the Trans European Automated Real time Gross Settlement Express Transfer payment system which utilises a single shared platform and which was launched on 19 November 2007.

“TARGET Day”

any day on which TARGET2 is open for the settlement of payments in Euro.

“Termination Event”

any of the events set out in condition 10 of the Operating Conditions – Part II – Provisions relating to all Clients.

“Trust Account”

any bank account into which Remittances from Customers in respect of Invoices are required to be paid which is unencumbered and declared in trust for us and on which we are the only authorised signatory.

“United Kingdom” and “UK”

the United Kingdom of Great Britain and Northern Ireland and the Isle of Man and the Channel Islands.

“Under Utilisation Fee”

any fee referred to in the Commercial Terms calculated in the manner set out in condition 5.4 of the Operating Conditions – Part III – Provisions relating to Invoice Discounting Clients only.

“US Dollars”

United States Dollars (USD) or the currency of the United States of America.

“we” or “us”

Lloyds Bank Commercial Finance Limited (company number 00733011) and our transferees and assignees.

“Website”

www.lloydsbankcommercialfinance.co.uk/operating-conditions/, additionally in the case of Invoice Discounting Clients https://www.lloydsbanksolutionsplus.co.uk/ referred to as N-able, in the case of Factoring Clients www.cashconnect.co.uk referred to as Cash Connect and, in any case, includes any additional or alternative domain name by which we may communicate with each other over the internet from time to time. The terms under which they are provided are shown on the Websites.

“Working Day”

a day when the Bank is open for all normal business in England and Wales.

“Yen”

Japanese Yen (JPY) or the currency of Japan.

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Lloyds Bank Commercial Finance Ltd. Registered office: No.1, Brookhill Way, Banbury OX16 3EL. Registered in England and Wales no.733011.

Lloyds Bank Commercial Finance Scotland Limited, Registered in Scotland no. 93252. Registered office: 110 St Vincent Street, Glasgow, G2 5ER.

Lloyds Bank Commercial Finance Limited is authorised and regulated by the Financial Conduct Authority under registration number 724228 for activities relating to certain types of consumer credit which are regulated under the Consumer Credit Act 1974 and by the Financial Services and Markets Act 2000. We are not deposit takers and are not regulated by the Prudential Regulation Authority.

When using Asset Finance your agreement will be with a Lloyds Banking Group company whose terms and conditions will apply. The provision of credit or leasing services by us is subject to your meeting our Credit approval. Please ensure that you only apply for credit or leasing services that you can comfortably afford.