Exhibit 4.5.1
EXECUTION VERSION
Dated 19 January, 2005
NORTHERN ROCK PLC
as Cash Manager, Funding 2 Basis Rate Swap Provider and Account Bank
GRANITE FINANCE TRUSTEES LIMITED
as Mortgages Trustee
GRANITE FINANCE FUNDING 2 LIMITED
as Funding 2
GRANITE MASTER ISSUER PLC
as Master Issuer
LAW DEBENTURE CORPORATE SERVICES LIMITED
as Corporate Services Provider
- and -
THE BANK OF NEW YORK
as Funding 2 Security Trustee and
Issuer Security Trustee to the Master Issuer
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FUNDING 2 DEED OF CHARGE
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SIDLEY AUSTIN
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SIDLEY |
CONTENTS
1. Interpretation.......................................................................................2
2. Security.............................................................................................3
3. Release of Funding 2 Charged Property................................................................7
4. Declaration of Trust.................................................................................8
5. Restrictions on Exercise of Certain Rights...........................................................8
6. Enforcement.........................................................................................12
7. Upon Enforcement....................................................................................15
8. Receiver............................................................................................18
9. Further Assurance and Power of Attorney.............................................................23
10. Crystallisation.....................................................................................24
11. Provisions relating to the Security.................................................................25
12. Protection of Third Parties.........................................................................27
13. Set-Off.............................................................................................27
14. Representations and Covenants.......................................................................28
15. Terms of Appointment................................................................................32
16. Modification and Waiver.............................................................................44
17. Remuneration of the Funding 2 Security Trustee......................................................45
18. Appointment, Removal and Retirement of Funding 2 Security Trustee...................................47
19. Miscellaneous Provisions............................................................................49
20. Rights cumulative...................................................................................50
21. Assignment..........................................................................................50
22. Non Petition Covenant; Corporate Obligations........................................................50
23. Notices.............................................................................................51
24. Third Party Rights..................................................................................52
25. Execution in Counterparts; Severability.............................................................52
26. Governing Law and Submission to Jurisdiction........................................................52
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SCHEDULE 1 FORM OF SECURITY POWER OF ATTORNEY...............................................................57
SCHEDULE 2 FORM OF DEED OF ACCESSION........................................................................60
SCHEDULE 3 FUNDING 2 PRIORITY OF PAYMENTS Part I Funding 2 Pre-Enforcement Revenue Priority of
Payments............................................................................................71
Part II Funding 2 Pre-Enforcement Principal Priority of Payments............................................76
Part III Funding 2 Post-Enforcement Priority of Payments....................................................87
SCHEDULE 4 FORM OF NOTICE OF ASSIGNMENT.....................................................................92
SCHEDULE 5 UTILISATION OF FUNDING 2 RESERVES................................................................94
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THIS FUNDING 2 DEED OF CHARGE WAS MADE ON 19 JANUARY, 2005 AND AMENDED AND
RESTATED PURSUANT TO THE DEED OF AMENDMENT AND RESTATEMENT DATED 17 MAY, 2007
BETWEEN:
(1) NORTHERN ROCK PLC (registered number 03273685), a public limited
company incorporated under the laws of England and Wales whose
registered office is at Northern Rock House, Gosforth, Newcastle upon
Tyne NE3 4PL, in its separate capacities as (1) Cash Manager (2)
Funding 2 Basis Rate Swap Provider and (3) Account Bank; and
(2) GRANITE FINANCE TRUSTEES LIMITED (registered number 79309), a private
limited liability company incorporated under the laws of Jersey whose
registered office is at 22 Grenville Street, St. Helier, Jersey JE4
8PX, Channel Islands, in its capacity as Mortgages Trustee;
(3) GRANITE FINANCE FUNDING 2 LIMITED (registered number 5249387), a
private limited company incorporated under the laws of England and
Wales whose registered office is at Fifth Floor, 100 Wood Street,
London EC2V 7EX as Funding 2;
(4) GRANITE MASTER ISSUER PLC (registered number 5250668), a public
limited company incorporated under the laws of England and Wales
whose registered office is at Fifth Floor, 100 Wood Street, London
EC2V 7EX as Master Issuer;
(5) LAW DEBENTURE CORPORATE SERVICES LIMITED, a private limited company
incorporated under the laws of England and Wales whose registered
office is Fifth Floor, 100 Wood Street, London, EC2V 7EX, in its
capacity as Corporate Services Provider; and
(6) THE BANK OF NEW YORK, a New York banking corporation whose London
branch address is at 40th Floor, One Canada Square, London E14 5AL,
in its separate capacities as (1) Funding 2 Security Trustee and (2)
Issuer Security Trustee to the Master Issuer;
WHEREAS:
(A) Pursuant to the terms of the Mortgage Sale Agreement, the Seller has
assigned the Initial Mortgage Portfolio and New Mortgage Portfolios
to the Mortgages Trustee and may, from time to time, assign further
New Mortgage Portfolios to the Mortgages Trustee upon and subject to
the terms thereof. Such property assigned to the Mortgages Trustee
forms part of the Trust Property.
(B) Pursuant to the terms of the Mortgages Trust Deed, the Mortgages
Trustee holds the Trust Property upon trust for the Seller, Funding
and Funding 2. Pursuant to the terms of the Mortgages Trust Deed,
each of Funding and Funding 2 may make Contributions to the Mortgages
Trustee as consideration for its share of the Trust Property.
(C) Pursuant to the terms of the Global Intercompany Loan Agreement, the
Master Issuer has agreed to make Loan Tranches available to Funding 2
upon and subject to the terms thereof.
(D) The Cash Manager has agreed to provide certain cash management
services to Funding 2 on the terms set out in the Cash Management
Agreement.
(E) The Account Bank has agreed to provide certain banking services to
Funding 2 on the terms set out in the Funding 2 Bank Account
Agreement.
(F) The Corporate Services Provider has agreed to provide certain
corporate services to Funding 2 pursuant to the terms set out in the
Corporate Services Agreement.
(G) The Funding 2 Basis Rate Swap Provider has agreed to enter into four
interest rate swap transactions pursuant to the terms of the Funding
2 Basis Rate Swap Agreement.
(H) Funding 2 has agreed to provide the Funding 2 Security Trustee with
the benefit of the security described in this Funding 2 Deed of
Charge to secure Funding 2's obligations under the Funding 2
Transaction Documents, upon and subject to the terms hereof. The
Funding 2 Security Trustee shall hold such security on trust for the
benefit of the Funding 2 Secured Creditors.
NOW THIS DEED WITNESSES AS FOLLOWS:
1. Interpretation
1.1 Definitions: The provisions of the Programme Master Definitions
Schedule signed for the purposes of identification by Sidley Austin
Brown & Wood and Allen & Overy LLP on 19 January, 2005 (as the same
have been and may be amended, varied or supplemented from time to
time with the consent of the parties hereto) are expressly and
specifically incorporated into and shall apply to this Deed.
1.2 Construction: In this Deed, except where the context otherwise
requires:
(a) the terms of the Global Intercompany Loan Agreement, the
Master Definitions Schedule and of any agreement in
existence at the date hereof between the parties hereto in
relation to any such documents are incorporated in this Deed
to the extent required to ensure that any proposed
disposition of the Funding 2 Charged Property contained in
this Deed is a valid disposition in accordance with Section
2(1) of the Law of Property (Miscellaneous Provisions) Act
1989;
(b) a reference in this Deed to any property, assets,
undertakings or rights includes, unless the context
otherwise requires, present and future property, assets,
undertakings or rights;
(c) "this Funding 2 Deed of Charge", "this Deed of Charge" or
"this Deed" means this Funding 2 Deed of Charge and all the
Schedules hereto (as from time to time modified and/or
supplemented in accordance with the provisions set out
herein) and all Deeds of Accession entered into pursuant to
this Deed and each other document or deed entered into
pursuant hereto (as from time to time modified/and or
supplemented as aforesaid) and expressed to be supplemental
hereto;
(d) any reference in this Deed to a Receiver shall be to the
Receiver appointed by the Funding 2 Security Trustee
pursuant to the terms of this Deed; and
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(e) reference to any agreement or other document (including any
of the Funding 2 Transaction Documents) shall be deemed also
to refer to such agreement or document as amended, varied,
supplemented or novated from time to time; and
(f) references to any person shall include references to his
successors, transferees and assigns and any person deriving
title under or through him.
2. Security
2.1 Trust Property:
Funding 2, by way of first fixed security for the payment or
discharge of the Funding 2 Secured Obligations, subject to Clause 3
(Release of Funding 2 Charged Property), hereby assigns to the
Funding 2 Security Trustee all of its right, title, benefit and
interest, present and future, in, to and under the Funding 2 Share of
the Trust Property (including, without limitation, all Scottish Trust
Property, present and future, comprised in the Trust Property),
including all rights to receive payment of any amounts which may
become payable to Funding 2 thereunder and all payments received by
Funding 2 thereunder (including, without limitation, all rights to
serve notices and/or make demands thereunder and/or to take such
steps as are required to cause payments to become due and payable
thereunder and all rights of action in respect of any breach thereof
and all rights to receive damages or obtain relief in respect
thereof) and the proceeds of any of the foregoing, TO HOLD the same
unto the Funding 2 Security Trustee absolutely.
2.2 Contractual rights:
Funding 2, by way of first fixed security for the payment or
discharge of the Funding 2 Secured Obligations, subject to Clause 3
(Release of Funding 2 Charged Property), hereby assigns to the
Funding 2 Security Trustee all of its right, title, benefit and
interest, present and future, in, to and under each of the Funding 2
Transaction Documents (other than this Deed and its rights under the
Seller (Mortgage Trust) Assignment Agreement and provided that the
assignment of the right, title, benefit and interest of Funding 2
under the Funding 2 Basis Rate Swap Agreement shall be subject to the
rights of set-off and netting provided therein) including, without
limitation, all rights to receive payment of any amounts which may
become payable to Funding 2 thereunder and all payments received by
Funding 2 thereunder, all rights to serve notices and/or make demands
thereunder and/or to take such steps as are required to cause
payments to become due and payable thereunder and all rights of
action in respect of any breach thereof and all rights to receive
damages or obtain relief in respect thereof and the proceeds of any
of the foregoing, TO HOLD the same unto the Funding 2 Security
Trustee absolutely.
2.3 Accounts: Funding 2, by way of first fixed security for the payment
or discharge of the Funding 2 Secured Obligations, subject to Clause
3 (Release of Funding 2 Charged Property), hereby charges in favour
of the Funding 2 Security Trustee all of its rights, title, benefit
and interest, present and future, in, to and under:
(a) each Funding 2 Bank Account;
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(b) any Funding 2 Swap Collateral Account; and
(c) each other account (if any) in which Funding 2 may at any
time have or acquire any right, title, benefit or interest,
and to all monies now or at any time hereafter standing to the credit
thereof and the debts represented by them together with all rights
and claims relating or attached thereto, including, without
limitation, the right to interest and the proceeds of any of the
foregoing.
2.4 Authorised Investments, Swap Collateral and Seller (Mortgage Trust)
Assignment Agreement: Funding 2, by way of first fixed security for
the payment or discharge of the Funding 2 Secured Obligations,
subject to Clause 3 (Release of Funding 2 Charged Property), hereby
charges in favour of the Funding 2 Security Trustee all of its right,
title, benefit and interest, present and future in, to and under
(a) any Authorised Investment purchased using monies standing to
the credit of any Funding 2 Bank Account and any Swap
Collateral in the form of securities for the time being
owned by it and all rights in respect of or ancillary to
such Authorised Investments and Swap Collateral, including
the right to income and the proceeds of any of the
foregoing; and
(b) the Seller (Mortgage Trust) Assignment Agreement.
2.5 Floating Charge: Funding 2, by way of first floating security for the
payment or discharge of the Funding 2 Secured Obligations, subject to
Clause 3 (Release of Funding 2 Charged Property), hereby charges by
way of first floating charge in favour of the Funding 2 Security
Trustee the whole of its undertaking and all its property, assets and
rights, whatsoever and wheresoever, both present and future other
than any property or assets from time to time or for the time being
the subject of a fixed charge or effectively assigned by way of
security pursuant to any of the foregoing provisions of this Clause 2
(Security) and/or any Deed of Accession (but excluding from the
foregoing exception all undertaking, property, assets and rights of
Funding 2, present and future, situated in Scotland or the rights to
which are governed by the laws of Scotland, all of which are charged
by the floating charge hereby created).
2.6 Title Guarantee: Each of the dispositions of or charges over property
effected in or pursuant to this Deed is made with full title
guarantee (or, in relation to assets or rights situated in or
governed by the laws of Scotland, with absolute warrandice).
2.7 Further Acquired Items: For the avoidance of doubt, it is hereby
confirmed that the Security Interests created under or pursuant to
Clauses 2.1 (Trust Property) through Clause 2.4 (Authorised
Investments, Swap Collateral and Seller (Mortgage Trust) Assignment
Agreement) (inclusive) and/or any Deed of Accession are intended to
be specific and fixed assignments by way of security of, or specific
and fixed charges over (as the case may be) the property and assets
to which they relate, both present and future, including property and
assets which are acquired after the date hereof.
2.8 No Transfer of Obligations: Notwithstanding anything else in this
Deed, it is hereby agreed that dispositions of property effected in
or pursuant to this Deed do not transfer
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obligations and nothing herein or in any Deed of Accession shall be
construed as a transfer of obligations to the Funding 2 Security
Trustee.
2.9 Notice and Acknowledgement:
(a) The execution of this Deed and/or any Deed of Accession by
each Funding 2 Secured Creditor shall constitute express
notice to such Funding 2 Secured Creditor of the
assignments, charges and any other Security Interests made
by Funding 2 pursuant to this Deed;
(b) By its execution of this Deed and/or a Deed of Accession,
each Funding 2 Secured Creditor acknowledges that it has
notice of and consents to the Funding 2 Security and also
acknowledges that as at the date hereof it has not received
from any other person any notice of any assignment or charge
of any of the Funding 2 Charged Property.
(c) Funding 2 hereby intimates and gives notice to the Mortgages
Trustee as trustee under and in terms of the Mortgages Trust
Deed of the assignations in security made in terms of Clause
2.1 (Trust Property) and Clause 2.2 (Contractual rights),
and the Mortgages Trustee by its execution of this Deed as
such trustee immediately subsequent to the execution hereof
by Funding 2 confirms that as at the date hereof it has
received no intimation of any other dealing with the Funding
2 Share of the Trust Property or any part thereof or the
Funding 2 Transaction Documents except in accordance with
the terms of the Funding 2 Transaction Documents.
(d) Notwithstanding the Funding 2 Security and subject as
provided otherwise in this Deed, each of the parties hereto
acknowledges that:
(i) each Funding 2 Secured Creditor and each other party
to any Funding 2 Transaction Document may continue to
make all payments becoming due to Funding 2 under any
Funding 2 Transaction Document in the manner provided
in such Funding 2 Transaction Document until the
receipt of written notice from the Funding 2 Security
Trustee or any Receiver requiring payments to be made
otherwise; and
(ii) until the Funding 2 Security becomes enforceable in
accordance with Clause 6.2 (Enforceable), Funding 2
shall be entitled to exercise its rights, powers and
discretions and perform its obligations in relation to
the Funding 2 Charged Property and under the Funding 2
Transaction Documents in accordance with the
provisions of the Funding 2 Transaction Documents.
2.10 Funding 2 Security Trustee's Discretion in relation to Funding 2
Charged Property: Without prejudice to any other rights of the
Funding 2 Security Trustee after the Funding 2 Security has become
enforceable and subject to the terms of the Funding 2 Transaction
Documents, the Funding 2 Security Trustee may at any time after any
part or parts of the Funding 2 Security have become enforceable:
(a) enter into, make, execute, sign, deliver and do all such
contracts, agreements, deeds, receipts, payments,
assignments, assignations, transfers, conveyances,
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assurances and things and bring, prosecute, enforce, defend
and abandon all such actions, suits and proceedings in
relation to the Funding 2 Charged Property as it may think
expedient;
(b) exercise or refrain from exercising, in such manner as in
its absolute discretion the Funding 2 Security Trustee shall
think fit, all or any of the rights, powers, authorities
discretions or remedies of Funding 2 under or in relation to
the Funding 2 Charged Property or incidental to the
ownership thereof and, in particular but without limiting
the generality of the foregoing, exercise all rights to vote
or to give any consent or notification or make any
declaration in relation to such Funding 2 Charged Property.
For the avoidance of doubt, the Funding 2 Security Trustee
shall not be required to have regard to the interests of
Funding 2 in the exercise or non-exercise of any such
rights, powers, authorities, discretions and remedies or to
comply with any direction given by Funding 2 in relation
thereto; and
(c) demand, sue for and take any advice or institute any
proceedings to recover or obtain payment of any amounts
which may then be due and payable to Funding 2 but which
remains unpaid under or in respect of the Funding 2 Charged
Property or any part thereof either in its own name or in
the name of Funding 2.
2.11 New Intercompany Loan: At any time after the Funding 2 Programme
Date, Funding 2 may, with the prior written consent of the Funding 2
Security Trustee enter into another Funding 2 Intercompany Loan
Agreement with a new Funding 2 Issuer provided that:
(a) each of the Rating Agencies has confirmed in writing to the
Funding 2 Security Trustee and the Issuer Security Trustee
that any funding arrangements entered into by the applicable
Funding 2 Issuer will not cause the current ratings by the
Rating Agencies of the existing Notes of any Funding 2
Issuer to be reduced, withdrawn or qualified;
(b) no Funding 2 Intercompany Loan Event of Default is
continuing or unwaived at the relevant drawdown date;
(c) there is no debit balance on any Principal Deficiency Ledger
as at the relevant drawdown date;
(d) Funding 2 has entered into, as required by the Rating
Agencies or otherwise, any additional agreements (including
any new bank account agreement, any basis rate swap
agreement and/or any guaranteed investment contract), if
required, in relation to the applicable Funding 2
Intercompany Loan Agreement and the Funding 2 Issuer;
(e) any other relevant creditors, as determined by the Funding 2
Security Trustee, shall have acceded to the terms of this
Deed by executing a Deed of Accession; and
(f) Funding 2 shall have provided confirmation to the parties to
this Deed that the Note Trustee in respect of the Notes to
be issued by the new Funding 2 Issuer
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and the Issuer Security Trustee in respect of the security
to be granted by such Funding 2 Issuer over its assets shall
be the same legal entity as the existing Note Trustee(s) and
Issuer Security Trustee(s) at the time of the issuance of such
Notes.
Each other party to this Deed agrees that it shall enter into the
relevant Deed of Accession required under sub-clause (e) above.
3. Release of Funding 2 Charged Property
3.1 Release, Reassignment or Discharge: Upon the irrevocable and
unconditional payment in full or discharge (or any combination of the
foregoing) of all the Funding 2 Secured Obligations and upon the
Funding 2 Security Trustee being satisfied that Funding 2 is under no
further actual or contingent obligation under this Deed or any other
Funding 2 Transaction Document, the Funding 2 Security Trustee shall
at the request and cost of Funding 2 release, reassign and/or
discharge from the Funding 2 Security all of the relevant Funding 2
Charged Property to, or to the order of, Funding 2.
3.2 Disposal of Authorised Investments and Swap Collateral: On the making
at any time by the Cash Manager on behalf of Funding 2 or the Funding
2 Security Trustee of a disposal of any Authorised Investment or Swap
Collateral charged pursuant to this Deed, the Funding 2 Security
Trustee shall, if so requested by the Cash Manager (and at the sole
cost and expense of Funding 2), but without the Funding 2 Security
Trustee being responsible for any loss, costs, claims or liabilities
whatsoever occasioned by so acting upon such request, release,
reassign or discharge from the Funding 2 Security the relevant
Authorised Investments or Swap Collateral provided that in the case
of a disposal of an Authorised Investment, the proceeds of such
disposal are paid by Funding 2 into the Funding 2 Bank Account(s)
from which the monies to make such Authorised Investment were
originally drawn, and that, in the case of a disposal of Swap
Collateral, the proceeds of such disposal are paid by Funding 2 into
the relevant Funding 2 Swap Collateral Account or Funding 2 Bank
Account (as appropriate in accordance with the Cash Management
Agreement and the Funding 2 Basic Rate Swap Agreement) subject to and
in accordance with the provisions of this Deed and the other Funding
2 Transaction Documents.
3.3 Trust Property: On the purchase or repurchase (as applicable) by the
Seller from the Mortgages Trustee of any Mortgage Loan together with
its Related Security pursuant to and in accordance with the terms of
the Mortgage Sale Agreement, such Mortgage Loan and its Related
Security shall no longer form part of the Trust Property (or, in the
case of any Scottish Mortgage Loan and its Related Security, the
Scottish Trust Property in accordance with Clause 9 (Termination of
Trust) of the relevant Scottish Trust Deed) and shall automatically
be released and retrocessed from any Security Interest created under
or pursuant to this Deed in respect of the Funding 2 Share of the
Trust Property.
3.4 Withdrawals from Funding 2 Bank Accounts and Funding 2 Swap
Collateral Accounts: Subject to and in accordance with this Deed and
the other Funding 2 Transaction Documents, the Cash Manager, on
behalf of Funding 2 and the Funding 2 Security Trustee, is permitted
pursuant to Clause 5 (Restrictions on Exercise of Certain Rights)
from time to time to withdraw amounts from the Funding 2 Bank
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Accounts in order to apply such amounts in accordance with the
relevant Funding 2 Priority of Payments or, in the case of the
Funding 2 Swap Collateral Accounts, to apply in accordance with the
terms of the Cash Management Agreement and the Funding 2 Basis Rate
Swap Agreement. Any amount so withdrawn shall be released from the
Funding 2 Security provided that such amount is applied in accordance
with and subject to the relevant Funding 2 Priority of Payments or,
in the case of any amount withdrawn from the Funding 2 Swap
Collateral Accounts, the Cash Management Agreement and the Funding 2
Basis Rate Swap Agreement.
4. Declaration of Trust
Each of the Funding 2 Secured Creditors declares the Funding 2
Security Trustee as trustee of, and the Funding 2 Security Trustee
hereby declares that it holds on trust for the Funding 2 Secured
Creditors, upon and subject to the terms and conditions of this Deed,
all of the covenants, undertakings and representations made to the
Funding 2 Security Trustee under this Deed and the other Funding 2
Transaction Documents and all of the charges, assignments and other
Security Interests made or given to the Funding 2 Security Trustee or
to be made or given to it for the purpose of securing the Funding 2
Secured Obligations under or pursuant to this Deed and any other
Funding 2 Transaction Document.
5. Restrictions on Exercise of Certain Rights
5.1 Funding 2 Bank Accounts and Funding 2 Swap Collateral Accounts: At
all times prior to the release, reassignment, retrocession or
discharge of the Funding 2 Security pursuant to Clause 3 (Release of
Funding 2 Charged Property):
(a) save as otherwise provided in the Funding 2 Transaction
Documents or unless the Funding 2 Security Trustee otherwise
agrees in writing (and then only on such terms and in such
manner as the Funding 2 Security Trustee may require),
Funding 2 shall procure that:
(i) any distribution of Mortgages Trustee Available
Revenue Receipts to Funding 2 and any distribution of
Principal Receipts to Funding 2 pursuant to the
Mortgages Trust is deposited into the Funding 2 GIC
Account;
(ii) all Swap Collateral delivered to Funding 2 (if any)
pursuant to the Funding 2 Basis Rate Swap Agreement is
deposited into a Funding 2 Swap Collateral Account;
(iii) all proceeds from a Loan Tranche which are to be
applied in or towards repayment of another Loan
Tranche are, pending such repayment, deposited into
the Funding 2 GIC account;
(iv) all other income of Funding 2 (if any) is deposited
into the Funding 2 GIC Account; and
(b) save as otherwise expressly permitted in the Funding 2
Transaction Documents, Funding 2 shall not be entitled to
withdraw or transfer from any Funding 2 Bank Account or any
Funding 2 Swap Collateral Account any
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monies or securities standing to the credit thereof or direct
any payment or transfer to be made therefrom to any person
without the Funding 2 Security Trustee's prior written
consent.
5.2 Permitted Withdrawals from Funding 2 Bank Accounts and Funding 2 Swap
Collateral Accounts; Authorised Investments:
(a) Funding 2 covenants with the Funding 2 Security Trustee that
the amounts standing to the credit of the Funding 2 Bank
Accounts and any Swap Collateral standing to the credit of
the Funding 2 Swap Collateral Accounts may only be withdrawn
in accordance with this Clause 5.2 (Permitted Withdrawals
from Funding 2 Bank Accounts and Funding 2 Swap Collateral
Accounts; Authorised Investments).
(b) On any day during an Interest Period prior to the Funding 2
Security becoming enforceable pursuant to Clause 6.2
(Enforceable), the Funding 2 Security Trustee hereby
authorises the Cash Manager to withdraw such monies from the
Funding 2 GIC Account as are to be applied on such date to
meet any amounts then due and payable by Funding 2 to third
parties in accordance with item (C) of the Funding 2
Pre-Enforcement Revenue Priority of Payments and to apply
such monies in making such payments on behalf of Funding 2.
For the purpose of this paragraph (b), the remaining
provisions of this Clause 5.2 (Permitted Withdrawals from
Funding 2 Bank Accounts; Authorised Investments), Clause 5.3
(Funding 2 Pre-Enforcement Revenue Priority of Payments) and
Clause 5.4 (Funding 2 Pre-Enforcement Principal Priority of
Payments), the Cash Manager shall be entitled to assume that
the Funding 2 Security is not enforceable pursuant to Clause
6.2 (Enforceable) unless it has received notice from Funding
2 or the Funding 2 Security Trustee or is otherwise aware
that the Funding 2 Security has become so enforceable and
shall not be liable to the Funding 2 Security Trustee,
Funding 2 or any other Funding 2 Secured Creditor for making
payments based on this assumption.
(c) The Funding 2 Security Trustee hereby authorises the Cash
Manager, prior to the Funding 2 Security becoming
enforceable pursuant to Clause 6.2 (Enforceable), to make
withdrawals from:
(i) the relevant Funding 2 Bank Accounts for the purposes
of acquiring Authorised Investments provided that all
amounts received in respect of the Authorised
Investments (including earnings thereon) shall be
deposited into the relevant Funding 2 Bank Account
from which they were originally drawn; and
(ii) the relevant Funding 2 Swap Collateral Account for the
purpose of (A) returning Swap Collateral to the
Funding 2 Basis Rate Swap Provider pursuant to the
terms of the Funding 2 Basis Rate Swap Agreement or
(B) transferring Swap Collateral to the Funding 2
Transaction Account pursuant to the terms of the
Funding 2 Basis Rate Swap Agreement and the Cash
Management Agreement.
5.3 Funding 2 Pre-Enforcement Revenue Priority of Payments: On each
Monthly Payment Date falling in a Monthly Payment Period prior to the
Funding 2 Security
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becoming enforceable pursuant to Clause 6.2 (Enforceable), the Funding
2 Security Trustee hereby authorises Funding 2 or the Cash Manager on
its behalf to withdraw Funding 2 Available Revenue Receipts from the
Funding 2 GIC Account that have been allocated towards the payments
and provisions in respect of amounts due on that Monthly Payment Date
in accordance with the rules and the order of priority of the Funding
2 Pre-Enforcement Revenue Priority of Payments and the provisions of
the Cash Management Agreement and to apply such monies to the making
of such payments and provisions.
5.4 Funding 2 Pre-Enforcement Principal Priority of Payments: On each
Monthly Payment Date falling in a Monthly Payment Period prior to the
Funding 2 Security becoming enforceable pursuant to Clause 6.2
(Enforceable), the Funding 2 Security Trustee hereby authorises
Funding 2 or the Cash Manager on its behalf to make withdrawals of
Funding 2 Available Principal Receipts standing to the credit of the
Funding 2 GIC Account that have been allocated towards the payments
and provisions in respect of principal amounts due and payable by
Funding 2 under each Funding 2 Intercompany Loan Agreement or
otherwise on the relevant Monthly Payment Date in accordance with the
rules and the order of priority of the Funding 2 Pre-Enforcement
Principal Priority of Payments and the provisions of the Cash
Management Agreement and to apply such monies to the making of such
payments and provisions.
5.5 Amendment to Funding 2 Priority of Payments: On the making available
of any Loan Tranches by the Master Issuer to Funding 2 or if any
other Funding 2 Intercompany Loans are made available by another
Funding 2 Issuer to Funding 2 in accordance with the terms of the
Funding 2 Transaction Documents, if any amendment to the Funding 2
Priority of Payments is required as a result thereof, then, subject
to the parties to this Deed agreeing the necessary amendments to the
priority of payments, the parties to this Deed, together with any
person entering into a Deed of Accession, shall set out the new
Funding 2 Priority of Payments accordingly in a schedule to that Deed
of Accession. The new Funding 2 Priority of Payments so amended shall
supersede those set out in Schedule 3 (Funding 2 Priority of
Payments) to this Deed.
5.6 No Enforcement against Issuers: Each party to this Deed undertakes to
each Funding 2 Issuer and each of the Funding 2 Secured Creditors
(including the Funding 2 Security Trustee in its capacity as such
under this Deed) that it shall not:
(a) take any steps or pursue any action whatsoever for the
purpose of recovering any debts or amounts due or owing to
it by any Funding 2 Issuer; or
(b) take any steps or legal proceedings for the winding-up,
dissolution or reorganisation of, or the institution of
insolvency proceedings against, any Funding 2 Issuer or for
the appointment of a receiver, administrator, liquidator or
similar officer of any Funding 2 Issuer in respect of any or
all of its revenues and assets.
5.7 No Enforcement by Funding 2 Secured Creditors and Limited Recourse:
Each of the Funding 2 Secured Creditors (other than the Funding 2
Security Trustee and any Receiver) hereby agrees with Funding 2 and
the Funding 2 Security Trustee that:
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(a) only the Funding 2 Security Trustee may enforce the Funding
2 Security in accordance with the provisions hereof;
(b) notwithstanding any other provision of this Deed or any
other Funding 2 Transaction Document (other than Clause 5.2
(Shortfall on Final Repayment Date) of the Global
Intercompany Loan Agreement, no sum due or owing to any
Funding 2 Secured Creditor or to the Funding 2 Security
Trustee (whether for itself or on behalf of the Funding 2
Secured Creditors) from or by Funding 2 under this Deed or
any other Funding 2 Transaction Document shall be payable by
Funding 2 except to the extent that Funding 2 has sufficient
funds available or (following enforcement of the Funding 2
Security) the Funding 2 Security Trustee has realised
sufficient funds from the Funding 2 Security to pay such sum
subject to and in accordance with the relevant Funding 2
Priority of Payments and provided that all liabilities of
Funding 2 required to be paid in priority thereto or pari
passu therewith pursuant to such Funding 2 Priority of
Payments have been paid, discharged and/or otherwise
provided for in full; and
(c) it shall not take any steps for the purpose of recovering
any of the Funding 2 Secured Obligations (including, without
limitation, by exercising any rights of set-off) or
enforcing any rights arising out of the Funding 2
Transaction Documents against Funding 2 and it shall not
take any steps or legal proceedings for the winding-up,
dissolution or reorganisation of, or the institution of
insolvency proceedings against, Funding 2 or for the
appointment of a receiver, administrator, administrative
receiver, liquidator or similar officer of Funding 2 in
respect of any or all of its revenues and assets,
PROVIDED THAT if the Funding 2 Security Trustee having become bound
to do so subject to and in accordance with the terms of this Deed and
the other Funding 2 Transaction Documents, fails to serve a Funding 2
Intercompany Loan Enforcement Notice and/or, to take any steps or
proceedings to enforce the Funding 2 Security within 30 days of
becoming so bound and such failure is continuing, then (for so long
as any Funding 2 Intercompany Loan is outstanding) the applicable
Issuer Security Trustee(s) or, in the event of the failure of the
applicable Issuer Security Trustee(s) (or if there are no Funding 2
Intercompany Loans outstanding), any other Funding 2 Secured Creditor
shall be entitled to take such steps and proceedings to enforce the
Funding 2 Security as it shall deem necessary other than the
presentation of a petition for or making an application for the
winding up, dissolution or reorganisation of, or the institution of
insolvency proceedings against, Funding 2 or the appointment of a
receiver, administrator, administrative receiver, liquidator or
similar officer of Funding 2.
5.8 Acknowledgement of Funding 2 Security Trustee: The Funding 2 Security
Trustee hereby acknowledges and agrees that notwithstanding any other
provision of this Deed or any other Funding 2 Transaction Document,
no sum due or owing to any Funding 2 Secured Creditor or to the
Funding 2 Security Trustee (whether for itself or on behalf of the
Funding 2 Secured Creditors) from or by Funding 2 under this Deed or
any other Funding 2 Transaction Document shall be payable by Funding
2 except to the extent that Funding 2 has sufficient funds available
or (following enforcement of the Funding 2 Security) the Funding 2
Security Trustee has realised sufficient funds from the Funding 2
Security to pay such sum subject to and in accordance with
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the relevant Funding 2 Priority of Payments and provided that all
liabilities of Funding 2 required to be paid in priority thereto or
pari passu therewith pursuant to such Funding 2 Priority of Payments
have been paid, discharged and/or otherwise provided for in full.
5.9 Utilisation of Funding 2 Reserves: Funding 2 and the Cash Manager
shall procure that, subject to and in accordance with the Funding 2
Priority of Payments, amounts standing to the credit of the Funding 2
Reserve Ledger or the Funding 2 Liquidity Reserve Ledger (if any)
shall only be debited for the purposes as specified in Schedule 5
(Utilisation of Funding 2 Reserves).
5.10 Adjustment of Funding 2 Reserves: The Funding 2 Reserve Amount and
the Target Reserve Required Amount may be as specified in paragraph 3
of Schedule 5 (Utilisation of Funding 2 Reserves).
6. Enforcement
6.1 Notification: The Funding 2 Security Trustee shall, if reasonably
practicable, give prior notification to the Seller, the Cash Manager
and each Funding 2 Secured Creditor of the Funding 2 Security
Trustee's intention to enforce the Funding 2 Security. However, the
failure of the Funding 2 Security Trustee to provide such
notification shall not in any way prejudice the ability of the
Funding 2 Security Trustee to enforce the Funding 2 Security.
6.2 Enforceable:
Without prejudice to the provisions of Clause 8 (Receiver) the
Funding 2 Security shall become immediately enforceable and the power
of sale and other powers conferred by Section 101 of the 1925 Act, as
varied or amended by this Deed, shall be exercisable by the Funding 2
Security Trustee, in each case at any time:
(a) upon the service on Funding 2 by the Funding 2 Security
Trustee of a Funding 2 Intercompany Loan Enforcement Notice;
or
(b) if there are no Funding 2 Intercompany Loans outstanding,
following a default in payment of any other Funding 2
Secured Obligation on its due date or within any applicable
grace period following such due date stated in the relevant
Funding 2 Transaction Document but subject always to any
limited recourse provisions stated therein and to Clause 5.7
(No Enforcement by Funding 2 Secured Creditors and Limited
Recourse) hereof.
6.3 Power of Sale:
(a) Notwithstanding any other provision of this Deed, the
Funding 2 Secured Obligations shall be deemed to have become
due and payable for the purposes of Section 101 of the 1925
Act, and (to the extent applicable) the statutory power of
sale and of appointing a receiver and other powers which are
conferred on mortgagees under the 1925 Act as varied or
extended by this Deed shall be deemed to arise immediately
after execution of this Deed.
(b) Section 103 of the 1925 Act shall not apply to this Deed and
forthwith after the Funding 2 Security has become
enforceable in accordance with Clause 6.2
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(Enforceable) the statutory power of sale, as extended by
this Deed, and all other powers shall become immediately
exercisable without notice to Funding 2 and the provisions
of the 1925 Act regulating the power of sale shall, so far
as they relate to the Funding 2 Charged Property, be varied
and extended accordingly.
6.4 Discretionary Enforcement: Subject to the provisions of this Deed,
the Funding 2 Security Trustee may at any time, at its discretion and
without notice, take such proceedings and/or other action as it may
think fit against, or in relation to, Funding 2 or any other party to
any of the Funding 2 Transaction Documents to enforce their
obligations under any of the Funding 2 Transaction Documents. Subject
to the provisions of this Deed, at any time after the Funding 2
Security has become enforceable in accordance with Clause 6.2
(Enforceable), the Funding 2 Security Trustee may, at its discretion
and without notice, take such steps as it may think fit to enforce
the Funding 2 Security.
6.5 Mandatory Enforcement: The Funding 2 Security Trustee shall not, and
shall not be bound to, take any proceedings, actions or steps under
or in connection with any of the Funding 2 Transaction Documents
(including, without limitation, any steps to enforce the Funding 2
Security) unless:
(a) it shall have been directed to do so by the Issuer Security
Trustee(s) acting in accordance with the provisions of this
Deed; or
(b) if there are no Funding 2 Intercompany Loans outstanding, it
shall have been directed to do so by the Funding 2 Secured
Creditor which ranks highest in the Funding 2
Post-Enforcement Priority of Payments; and
(c) in either case, it shall have been indemnified and/or
secured to its satisfaction against all liabilities,
actions, proceedings, claims, costs, charges, damages and
expenses to which it may become liable or which may be
incurred by it in connection therewith.
6.6 Law of Property Act 1925: The provisions of the 1925 Act relating to
the power of sale and the other powers conferred by Section 101(1)
and (2) are hereby extended in relation to Funding 2 as if such
extensions were contained in the 1925 Act such that at any time after
the Funding 2 Security has become enforceable in accordance with
Clause 6.2 (Enforceable) above, the Funding 2 Security Trustee may in
its absolute discretion:
(a) make demand in the name of the Funding 2 Secured Creditors
or in its own right for any monies and liabilities in
respect of the Funding 2 Charged Property;
(b) enforce any rights it may have in respect of the whole or
any part of the Funding 2 Charged Property in such manner
and upon such terms as the Funding 2 Security Trustee shall
think fit;
(c) take possession of, get in and collect the Funding 2 Charged
Property and perfect the interests comprised therein;
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(d) subject as expressly provided in Clause 6.7 (Restriction on
Disposal of Charged Property), sell, transfer, convey,
dispose of vary or otherwise deal with, and also to grant
any option to purchase, and to effect exchanges of, the
whole or any part of the Funding 2 Charged Property or any
interest therein in such manner, for such consideration (if
any) and generally upon such terms (including by deferred
payment or payment by instalments) as it may think fit
and/or to concur in any of the foregoing (and nothing shall
preclude any such disposal being made to a Funding 2 Secured
Creditor);
(e) carry out any transaction, scheme or arrangement which the
Funding 2 Security Trustee may, in its absolute discretion,
consider appropriate with a view to or in connection with
the sale of the Funding 2 Charged Property;
(f) do all or any of the things or exercise all or any of the
powers, authorities and discretions conferred expressly or
by implication on any Receiver under Clause 8.6 (Powers of
the Receiver) or otherwise under this Deed; and
(g) exercise all or any of the powers conferred on mortgagees by
the 1925 Act as varied or extended by this Deed and any
other rights and remedies that may be conferred by statute
or common law or in equity on mortgagees or receivers.
6.7 Restriction on Disposal of Charged Property: Notwithstanding the
foregoing provisions of this Clause 6 (Enforcement), if the Funding 2
Security has become enforceable otherwise than by reason of a default
in payment of any amount due in respect of any AAA Loan Tranche, the
Funding 2 Security Trustee will not be entitled to dispose of all or
part of the Funding 2 Charged Property unless either:
(a) a sufficient amount would be realised to allow a full and
immediate discharge of all amounts owing under all AAA Loan
Tranches of each Funding 2 Issuer and all prior ranking
amounts due by Funding 2 in accordance with the relevant
Funding 2 Priority of Payments; or
(b) the Funding 2 Security Trustee is of the opinion, which
shall be binding on the Funding 2 Secured Creditors, reached
after considering at any time and from time to time the
advice of any financial or such other professional advisers
selected by the Funding 2 Security Trustee (with the fees
and expenses of any such adviser selected by the Funding 2
Security Trustee being paid by Funding 2) for the purpose of
giving such advice that the cashflow expected to be received
by Funding 2 will not, or that there is a significant risk
that it will not, be sufficient (as certified to it by
Funding 2), having regard to any other relevant actual,
contingent or prospective liabilities of Funding 2 to
discharge in full in due course all amounts owing in respect
of each AAA Loan Tranche and all prior ranking amounts due
by Funding 2,
PROVIDED THAT if the Funding 2 Security Trustee is unable to obtain
the advice referred to in paragraph (b) above having made reasonable
efforts to do so, this Clause 6.7 (Restriction on Disposal of Funding
2 Charged Property) shall not apply.
The Funding 2 Security Trustee shall not be bound to make the
determination set out above unless it shall have been indemnified
and/or secured to its satisfaction against all liabilities to which
it may thereby become liable or which it may incur by so doing,
14
6.8 Authorised Investments: Any monies which under the trusts of this
Deed ought to or may be invested by the Funding 2 Security Trustee
(or the Cash Manager on its behalf) after the Funding 2 Security has
become enforceable in accordance with Clause 6.2 (Enforceable) may be
invested in the name or under the control of the Funding 2 Security
Trustee in any Authorised Investments and the Funding 2 Security
Trustee may at any time vary or transfer (or direct the Cash Manager
to vary or transfer) any of such Authorised Investments for or into
other such Authorised Investments as the Funding 2 Security Trustee
in its absolute discretion may determine, and shall not be
responsible for any loss occasioned by reason of any such investments
whether by depreciation in value or otherwise, provided that such
Authorised Investments were made in accordance with the foregoing
provisions. If a bank or institution with which any monies placed on
deposit in accordance with this clause is the Funding 2 Security
Trustee or a subsidiary, holding or associated company of the Funding
2 Security Trustee, it need only account for an amount of interest
equal to the amount of interest which would, at then current rates,
be payable by it on such a deposit to an independent customer.
6.9 Scottish Trust Property: Funding 2 and the Mortgages Trustee hereby
covenant and agree with and undertake to the Funding 2 Security
Trustee that if at any time after the Funding 2 Security has become
enforceable in accordance with Clause 6.2 (Enforceable), the Funding
2 Security Trustee or any Receiver shall so require and subject to
the terms of this Clause 6 (Enforcement), they will join together in
directing the Seller to sell or dispose of all or any part of the
Scottish Trust Property on terms previously approved by the Funding 2
Security Trustee and/or in causing the trusts constituted by all and
any Scottish Trust Deeds to be wound up or performed and they will
take all such actions and execute all such documents as may be
necessary to effect such sale or disposal or winding up or
performance and the distribution or transfer of the Scottish Trust
Property or any part thereof in accordance with the terms of each
Scottish Trust Deed, the Mortgages Trust Deed and this Deed. The
Seller and the Mortgages Trustee hereby acknowledge and consent to
the foregoing as trustee and beneficiary respectively in terms of
each Scottish Trust Deed.
7. Upon Enforcement
7.1 Service of Intercompany Loan Enforcement Notice: Subject to the
provisions of the Funding 2 Transaction Documents, in the event that
a Funding 2 Intercompany Loan Enforcement Notice has been served (and
not withdrawn) by the Funding 2 Security Trustee on Funding 2, the
Funding 2 Security Trustee shall as soon as practicable serve a copy
of that Funding 2 Intercompany Loan Enforcement Notice on the Funding
2 Secured Creditors.
7.2 Crystallisation: From and including the date when the Funding 2
Security Trustee serves a Funding 2 Intercompany Loan Enforcement
Notice (which has not been withdrawn) on Funding 2:
(a) notwithstanding any other provision hereof or of any other
Funding 2 Transaction Document, no amount may be withdrawn
from the Funding 2 Bank Accounts except with the prior
written consent of the Funding 2 Security Trustee; and
15
(b) (provided that the Mortgages Trustee and the Cash Manager
have been notified of the service of a Funding 2
Intercompany Loan Enforcement Notice) no action whatsoever
may be taken by the Mortgages Trustee and the Cash Manager
in relation to or in respect of the Funding 2 Charged
Property without the prior written consent of the Funding 2
Security Trustee save for any action required to preserve or
protect the Mortgages Trustee's or Cash Manager's right,
title or interest therein; and
(c) if not already crystallised, but subject to any prohibition
or restriction imposed by applicable law, any charge created
by this Deed which is a floating charge shall crystallise
provided that the floating charge created by this Deed shall
not be crystallised solely as a result of obtaining a
moratorium (or anything done with a view to obtaining a
moratorium) under the Insolvency Act 2000 except with leave
of the court.
7.3 Funding 2 Post-Enforcement Priority of Payments: At any time after
the Funding 2 Security has become enforceable in accordance with
Clause 6.2 (Enforceable) and provided that a Funding 2 Intercompany
Loan Enforcement Notice has not been withdrawn, all Funding 2
Available Revenue Receipts, Funding 2 Available Principal Receipts
and all other monies (excluding Swap Collateral standing to the
credit of the Funding 2 Swap Collateral Accounts) paid to or received
or recovered by or on behalf of Funding 2 or the Funding 2 Security
Trustee or any Receiver appointed on its behalf, including all
proceeds following any sale or realisation of the Funding 2 Charged
Property or enforcement of the Funding 2 Security and all amounts
(excluding Swap Collateral standing to the credit of the Funding 2
Swap Collateral Accounts) not previously distributed and/or standing
to the credit of any Funding 2 Bank Account and all monies standing
to the credit of the Funding 2 Reserve Ledger (if any) shall (if not
already received by the Funding 2 Security Trustee) be paid to and
held by the Funding 2 Security Trustee on trust to allocate and apply
the same on each Monthly Payment Date falling in a Monthly Payment
Period (save to the extent required otherwise by applicable law) in
accordance with the rules and the order of priority of the Funding 2
Post-Enforcement Priority of Payments.
7.4 Certification of Amounts:
(a) The Funding 2 Security Trustee shall be entitled to rely on
(and to accept as conclusive evidence save in the case of
manifest error) a certificate from each Funding 2 Secured
Creditor as to the amounts owed to such Funding 2 Secured
Creditor under the Funding 2 Transaction Documents. The
Funding 2 Security Trustee shall not take into account for
the purpose of the application of moneys in accordance with
the Funding 2 Post-Enforcement Priority of Payments any
amounts of which it has not been notified by the intended
recipient on or prior to the date in question.
(b) Each Funding 2 Secured Creditor will, at all times, promptly
provide the Funding 2 Security Trustee and/or any Receiver
on request with a certificate setting out detailed
information as to the amount of the Funding 2 Secured
Obligations to which such Funding 2 Secured Creditor is
entitled and such other information as the Funding 2
Security Trustee and/or any Receiver may require to enable
or facilitate the Funding 2 Security Trustee and/or any
Receiver to perform its functions hereunder or under any of
the Funding 2
16
Transaction Documents, such certificate to be in a form
required by the Funding 2 Security Trustee and/or any
Receiver. In determining the respective entitlements of the
Funding 2 Secured Creditors hereunder, such certificates
shall be binding on all of the Funding 2 Secured Creditors.
7.5 Retention Account: If the Funding 2 Security Trustee enforces the
Funding 2 Security at a time when either no amounts or not all
amounts owing in respect of the Funding 2 Secured Obligations have
become due and payable or any of the Funding 2 Secured Obligations
are at such time contingent or future obligations the Funding 2
Security Trustee or a Receiver may, for so long as no such amounts or
not all such amounts have become due and payable or any of the
Funding 2 Secured Obligations are at such time contingent or future
obligations pay any monies referred to in Clause 7.3 (Funding 2
Post-Enforcement Priority of Payments), as the case may be, into, and
retain such monies in, an interest-bearing account (a "retention
account") to be held by it as security and applied by it in
accordance with Clause 7.3 (Funding 2 Post-Enforcement Priority of
Payments) as and when any of the amounts referred to therein become
due and payable.
7.6 Funding 2 Security Trustee Rights upon Enforcement: In addition to
any other rights expressly provided herein, for the period commencing
upon the service of a Funding 2 Intercompany Loan Enforcement Notice
and terminating upon the notification to the Funding 2 Secured
Creditors by the Funding 2 Security Trustee that all Funding 2
Secured Obligations have been satisfied in full:
(a) (provided such Funding 2 Secured Creditor has received a
copy of, or other notice of the service on Funding 2 of, any
such Funding 2 Intercompany Loan Enforcement Notice) each
Funding 2 Secured Creditor agrees that it will pay to the
Funding 2 Security Trustee or the Receiver, as the case may
be, all monies received or recovered by such Funding 2
Secured Creditor otherwise than in accordance with Clause
7.3 (Funding 2 Post-Enforcement Priority of Payments
(whether by way of set-off or otherwise) in order that such
amounts may be applied by the Funding 2 Security Trustee in
accordance with Clause 7.3 (Funding 2 Post-Enforcement
Priority of Payments);
(b) save as otherwise expressly provided in this Deed or as
required by the Funding 2 Security Trustee, all payments
under or arising from this Deed and all amounts payable to
Funding 2 by any Funding 2 Secured Creditor under any
Funding 2 Transaction Document shall be paid to the Funding
2 Security Trustee or to its order;
(c) save as otherwise expressly provided in this Deed, all
rights or remedies provided for by this Deed or available at
law or in equity to the Funding 2 Secured Creditors are
exercisable by the Funding 2 Security Trustee;
(d) save as otherwise expressly provided in this Deed, all
rights to compel performance of the Funding 2 Transaction
Documents are exercisable by the Funding 2 Security Trustee;
and
(e) all payments in respect of the Funding 2 Secured Obligations
shall operate in satisfaction pro tanto of Funding 2's
covenants to the Funding 2 Secured Creditors.
17
7.7 Swap Collateral: Notwithstanding the foregoing provisions of Clause 6
(Enforcement) and this Clause 7 (Upon Enforcement), at any time after
the Funding 2 Security has become enforceable in accordance with
Clause 6.2 (Enforceable) and provided that a Funding 2 Intercompany
Loan Enforcement Notice has not been withdrawn:
(a) all Swap Collateral delivered to or received or recovered by
or on behalf of Funding 2 or the Funding 2 Security Trustee
or any Receiver appointed on its behalf pursuant to the
Funding 2 Basis Rate Swap Agreement will be deposited into a
Funding 2 Swap Collateral Account; and
(b) Swap Collateral may only be withdrawn from the relevant
Funding 2 Swap Collateral Account for the purpose of (i)
returning Swap Collateral to the Funding 2 Basis Rate Swap
Provider pursuant to the terms of the Funding 2 Basis Rate
Swap Agreement or (ii) applying Swap Collateral in or
towards satisfaction of the Funding 2 Basis Rate Swap
Provider's obligations under the Funding 2 Basis Rate Swap
Agreement.
If, in relation to Swap Collateral, there is any conflict between the
terms of the Funding 2 Basis Rate Swap Agreement, the Cash Management
Agreement and/or this Deed, the terms of the Funding 2 Basis Rate
Swap Agreement shall apply.
7.8 Swap Replacement Premium: Notwithstanding the foregoing provisions of
Clause 6 (Enforcement) and this Clause 7 (Upon Enforcement), any Swap
Replacement Premium received by Funding 2 from a replacement swap
provider upon entry into a swap agreement replacing the Funding 2
Basis Rate Swap Agreement shall firstly be applied in payment of any
termination payment due and payable to the Funding 2 Basis Rate Swap
Provider following the termination of the Funding 2 Basis Rate Swap
Agreement. Any amount of such Swap Replacement Premium not applied in
or towards payment of such termination payment will form part of
Funding 2 Available Revenue Receipts.
8. Receiver
8.1 Appointment: At any time after the Funding 2 Security becomes
enforceable, and whether or not the Funding 2 Security Trustee has
taken possession of the Funding 2 Charged Property, the Funding 2
Security Trustee may appoint, in addition to all statutory and other
powers of appointment, by writing or by deed, such person or persons
(including an officer or officers of the Funding 2 Security Trustee)
as the Funding 2 Security Trustee thinks fit to be a receiver, a
receiver and manager or an administrative receiver of the Funding 2
Charged Property or any part thereof (each a "Receiver") and, in the
case of an appointment of more than one person, to act together or
independently of the other or others.
8.2 Removal and Replacement: Except as otherwise required by statute, the
Funding 2 Security Trustee may by writing or by deed remove a
Receiver appointed by it whether or not appointing another in its
place and may also appoint another Receiver to act with any other
Receiver or to replace any Receiver who resigns, retires or otherwise
ceases to hold office.
18
8.3 Extension of Appointment: The exclusion of any part of the Funding 2
Charged Property from the appointment of the Receiver shall not
preclude the Funding 2 Security Trustee from subsequently extending
its appointment (or that of the Receiver replacing it) to that part
of the Funding 2 Charged Property or appointing another Receiver over
any other part of the Funding 2 Charged Property.
8.4 Agent of Funding 2: The Receiver shall, so far as the law permits, be
the agent of Funding 2 and (subject to any restriction or limitation
imposed by law) Funding 2 alone shall be responsible for the
Receiver's contracts, engagements, acts, omissions, misconduct,
negligence or default and for liabilities incurred by it; and in no
circumstances whatsoever shall the Funding 2 Security Trustee or any
Funding 2 Secured Creditor be in any way responsible for or incur any
liability in connection with its contracts, engagements, acts,
omissions, misconduct, negligence or default, and if a liquidator of
Funding 2 shall be appointed, the Receiver shall act as principal and
not as agent for the Funding 2 Security Trustee.
8.5 Remuneration: Subject as provided otherwise by applicable law, the
remuneration of the Receiver shall be fixed by the Funding 2 Security
Trustee and may be or include a commission calculated by reference to
the gross amount of all monies received or otherwise. Such
remuneration (and such commission (if any)) shall be payable
hereunder by Funding 2 alone subject always to Clause 7.3 (Funding 2
Post-Enforcement Priority of Payments) and the amount of such
remuneration shall form part of the Funding 2 Secured Obligations and
shall accordingly be secured by the Funding 2 Security.
8.6 Powers of the Receiver: The Receiver of Funding 2, in addition to any
powers conferred on an administrative receiver, receiver, manager or
receiver and manager by statute or common law, shall have the power
to:
(a) take possession of, get in and collect the Funding 2 Charged
Property;
(b) subject as expressly provided in Clause 6.7 (Restriction on
Disposal of Funding 2 Charged Property), sell, transfer,
convey, license, release or otherwise dispose of vary or
deal with, and also to grant any option to purchase, and to
effect exchanges of, the whole or any part of Funding 2
Charged Property or any interest therein and to grant or
accept surrenders, disclaimers and variations in relation to
or otherwise affecting the Funding 2 Charged Property in
each case in such manner, for such consideration (if any)
and generally upon such terms (including by deferred payment
or payment by instalments) as it may think fit and/or to
concur in any of the foregoing (and nothing shall preclude
any such disposal being made to a Funding 2 Secured
Creditor);
(c) carry out any transaction, scheme or arrangement which the
Funding 2 Security Trustee may, in its absolute discretion,
consider appropriate with a view to or in connection with
the sale of the Funding 2 Charged Property;
(d) insure the Funding 2 Charged Property against such risks and
for such amounts as the Funding 2 Security Trustee may
consider prudent and to obtain bonds and performance
guarantees;
19
(e) otherwise protect, maintain or improve, the Funding 2
Charged Property or any part thereof in any manner and for
any purpose whatsoever as it shall think fit;
(f) transfer all or any of the Funding 2 Charged Property and/or
any of the liabilities to any other company or body
corporate, whether or not formed or acquired for the purpose
(and whether or not a subsidiary or associated company of
the Funding 2 Security Trustee or any other party to the
Funding 2 Transaction Documents) and to form a subsidiary or
subsidiaries of Funding 2;
(g) carry on and manage or concur in managing or appoint a
manager of, the whole or any part of the business of Funding
2 in such manner as it shall in its absolute discretion
think fit including the power to enter into any contract and
to perform, repudiate, rescind or vary any contract to which
Funding 2 is a party;
(h) sell or concur in selling the whole or any part of Funding
2's business whether as a going concern or otherwise;
(i) appoint, dismiss, engage or vary the terms of employment of
any employees, managers, agents or advisers of Funding 2
upon such terms as to remuneration and otherwise for such
periods as it may in its absolute discretion think fit;
(j) in connection with the exercise or proposed exercise of any
of its powers or in order to obtain payment of its
remuneration or reimbursement of its expenses (in each case,
whether or not already due), to borrow or raise money from
any person, without security or on the security of the
Funding 2 Charged Property (either in priority to the
Funding 2 Security or otherwise) and generally in such
manner and on such terms as it may think fit;
(k) bring, defend, submit to arbitration, negotiate, compromise,
enforce, abandon and settle actions, suits, claims and
proceedings concerning or affecting the Funding 2 Charged
Property or the Funding 2 Security;
(l) exercise any powers, discretions, voting, conversion or
other rights or entitlements in relation to any of the
Funding 2 Charged Property or incidental to the ownership of
or rights in or to any of the Funding 2 Charged Property and
to complete or effect any transaction entered into by
Funding 2 or disclaim, abandon or modify all or any of the
outstanding contracts or arrangements of Funding 2 relating
to or affecting the Funding 2 Charged Property;
(m) generally carry out, or cause to be carried out any
transaction or scheme or arrangement whatsoever, whether
similar or not to any of the foregoing, in relation to the
Funding 2 Charged Property which it may consider expedient
as effectual as if it were solely and absolutely entitled to
the Funding 2 Charged Property;
(n) in connection with the exercise of any of its powers,
execute or do, or cause or authorise to be executed or done,
on behalf of or in the name of Funding 2 or
20
otherwise, as it may think fit, all documents, acts or
things, acts or things which it may consider appropriate;
(o) redeem, discharge or compromise any security whether or not
having priority to the security created hereunder;
(p) enter into covenants, guarantees, commitments, indemnities
and other obligations or liabilities as it shall think fit;
(q) pay and discharge out of the profits and income of the
Funding 2 Charged Property and the monies to be made by it
carrying on any such business as aforesaid the expenses in
and about the carrying on and management of such business or
in the exercise of any of the powers conferred by this
Clause 8 (Receiver) or otherwise in respect of the Funding 2
Charged Property and all outgoings which it shall think fit
to pay and to apply the residue of the said profits, income
or monies in the manner provided by Clause 7.3 (Funding 2
Post-Enforcement Priority of Payments); and
(r) exercise any other powers, rights and/or remedies that may
be available at law or in equity including the powers
referred to in Schedule 1 (and where applicable, Schedule 2)
of the Insolvency Act 1986.
8.7 Security: The Funding 2 Security Trustee may from time to time and at
any time require any such Receiver to give security for the due
performance of its duties and may fix the nature and amount of the
security to be so given but the Funding 2 Security Trustee shall not
be bound in any such case to require any such security.
8.8 Application by Receiver: Save so far as otherwise directed by the
Funding 2 Security Trustee, all monies from time to time received by
such Receiver shall be paid over to the Funding 2 Security Trustee to
be held by it on the trusts declared under this Deed and to be
distributed in accordance with Clause 7.3 (Funding 2 Post-Enforcement
Priority of Payments) and Schedule 3 (Funding 2 Priority of
Payments).
8.9 Payment to Receiver: The Funding 2 Security Trustee may pay over to
such Receiver any monies constituting part of the Funding 2 Charged
Property to the intent that the same may be applied for the purposes
of this Deed by such Receiver and the Funding 2 Security Trustee may
from time to time determine what funds the Receiver shall be at
liberty to keep in hand with a view to the performance of its duties
as such Receiver.
8.10 No Restrictions: None of the restrictions imposed by the 1925 Act in
relation to the appointment of receivers or the giving of notice or
otherwise shall apply in relation to the Receiver.
8.11 Appointment of Administrator:
(a) Subject to any relevant provisions of the Insolvency Act
1986, the Funding 2 Security Trustee may, by any instrument
or deed of appointment, appoint one or more persons to be
the administrator of Funding 2 at any time after:
(i) the service of a Funding 2 Intercompany Loan
Enforcement Notice; or
21
(ii) being requested to do so by Funding 2; or
(iii) any application having been made to the court for an
administration order under the Insolvency Act 1986; or
(iv) any person having ceased to be an administrator as a
result of any event specified in paragraph 90 of
Schedule B1 to the Insolvency Act 1986; or
(v) any notice of intention to appoint an administrator
having been given by any person or persons entitled to
make such appointment under the Insolvency Act 1986.
(b) Where any such appointment is made at a time when an
administrator continues in office, the administrator shall
act either jointly or concurrently with the administrator
previously appointed hereunder, as the appointment
specifies.
(c) Subject to any applicable order of the Court, the Funding 2
Security Trustee may replace any administrator, or seek an
order replacing the administrator, in any manner allowed by
the Insolvency Act 1986.
(d) Where the administrator was appointed by the Funding 2
Security Trustee under paragraph 14 of Schedule B1 to the
Insolvency Act 1986, the Funding 2 Security Trustee may, by
notice in writing to Funding 2, replace the administrator in
accordance with paragraph 92 of Schedule B1 to the
Insolvency Act 1986.
(e) Every such appointment shall take effect at the time and in
the manner specified by the Insolvency Act 1986.
(f) If at any time and by virtue of any such appointment(s) any
two or more persons shall hold office as administrators of
the same assets or income, such administrators may act
jointly or concurrently as the appointment specifies so
that, if appointed to act concurrently, each one of such
administrators shall be entitled (unless the contrary shall
be stated in any of the deed(s) or other instrument(s)
appointing them) to exercise all the functions conferred on
an administrator by the Insolvency Act 1986.
(g) Every administrator shall have all the powers of an
administrator under the Insolvency Act 1986.
(h) In exercising his functions hereunder and under the
Insolvency Act 1986, the administrator acts as agent of
Funding 2 and does not act as agent of the Funding 2
Security Trustee.
(i) Every administrator shall be entitled to remuneration for
his services in the manner fixed by or pursuant to the
Insolvency Act 1986 or the Insolvency Rules 1986.
8.12 Administration: Upon application being made to a court of competent
jurisdiction for an administration order or the service of a notice
of intention to appoint an
22
administrator or the filing of documents with the court for the
appointment of an administrator in relation to Funding 2 or
other order having substantially the same effect to be
made on application by a creditor or creditors of Funding 2, the
Funding 2 Security Trustee shall (except in the circumstances where
the Funding 2 Security Trustee has taken steps to appoint an
administrator in accordance with Clause 8.11 (Appointment of
Administrator)), subject to it being indemnified and/or secured to
its satisfaction, as soon as practicable appoint a Receiver in
accordance with this Deed (who shall, to the extent permitted by law,
be an "administrative receiver" under Section 29 (2) of the
Insolvency Act 1986) of the whole of the Funding 2 Charged Property
and, in the case of any application to the court or petition, the
Funding 2 Security Trustee shall instruct the Receiver to attend at
the hearing of the application or the petition and take such steps as
are necessary to prevent the appointment of an administrator. The
Funding 2 Secured Creditors shall co-operate and do all acts and
enter into such further documents, deeds or agreements as the Funding
2 Security Trustee may deem necessary or desirable to ensure that an
administration order is not made or that an administrator is not
otherwise appointed and that an administrative receiver is appointed.
Paragraph 14 of Schedule B1 to the Insolvency Act 1986 applies to the
floating charge created hereunder.
9. Further Assurance and Power of Attorney
9.1 Further Assurance: Funding 2 covenants with and undertakes to the
Funding 2 Security Trustee from time to time (notwithstanding that
the security may not have become enforceable and the Funding 2
Security Trustee may not have served a Funding 2 Intercompany Loan
Enforcement Notice) upon demand:
(a) to execute, at Funding 2's cost, any document or do any act
or thing which the Funding 2 Security Trustee or any
Receiver may specify (including executing such Security
Interests over its rights in and over the Funding 2 Charged
Property and any other assets of Funding 2 in such form as
the Funding 2 Security Trustee and/or any Receiver may
require) with a view to:
(i) registering, perfecting, protecting or improving any
charge or security or Security Interest created or
intended to be created by or pursuant to this Deed
(including any act or document which may be required
or desirable under the laws of any jurisdiction in
which any property or assets may be located in order
to confer on the Funding 2 Security Trustee security
over such property and assets equivalent or similar to
the security intended to be conferred by or pursuant
to this Deed) and in such form as the Funding 2
Security Trustee or the Receiver may specify; and/or
(ii) facilitating the realisation of or enforcement of
rights of, all or any part of the Funding 2 Charged
Property or the exercise, or proposed exercise, of any
of the powers, duties or discretions vested or
intended to be vested in the Funding 2 Security
Trustee or such Receiver by or pursuant to this Deed
or doing any act or thing deemed necessary by the
Funding 2 Security Trustee or the Receiver,
(b) to give or join in giving or procuring the giving of any
notices to any persons and obtain or procure that there is
obtained any necessary acknowledgements
23
in relation to such notices, all in such form as the Funding
2 Security Trustee or the Receiver may require and at the
cost of Funding 2,
and for the purpose of this Clause 9.1 (Further Assurance) a
certificate in writing signed by the Funding 2 Security Trustee to
the effect that any particular assurance or thing is required by it
shall be conclusive evidence of that fact.
9.2 Execution of Power of Attorney: Immediately upon execution of this
Deed, Funding 2 shall execute and deliver to the Funding 2 Security
Trustee the Power of Attorney in or substantially in the form set out
in Schedule 1.
9.3 Charged Property on Trust: To the extent permitted to do so under the
Funding 2 Transaction Documents, for the purpose of giving effect to
this Deed, Funding 2 hereby declares that, after service of a Funding
2 Intercompany Loan Enforcement Notice, it will hold all the Funding
2 Charged Property (subject to the right of redemption) upon trust to
convey, assign or otherwise deal with such Funding 2 Charged Property
in such manner and to such person as the Funding 2 Security Trustee
shall direct pursuant to this Deed, and declares that it shall be
lawful for the Funding 2 Security Trustee to appoint a new trustee or
trustees of the Funding 2 Charged Property in place of Funding 2.
10. Crystallisation
10.1 Notice: In addition and without prejudice to any other event
resulting in a crystallisation of the floating charge created by this
Deed or any other right the Funding 2 Security Trustee may have, but
subject to any prohibition or restriction imposed by applicable law,
the Funding 2 Security Trustee may, by notice in writing to Funding
2, declare that the floating charge hereby created shall be converted
into first specific fixed charges over such of the undertaking,
property and assets of Funding 2 as the Funding 2 Security Trustee
may specify in such notice at any time if:
(a) a Potential Funding 2 Intercompany Loan Event of Default has
occurred; or
(b) it believes that the Funding 2 Charged Property or any part
thereof is in danger of being seized or sold under any form
of distress, execution or diligence levied or is otherwise
in jeopardy; or
(c) it considers that it is desirable in order to protect the
priority of the Funding 2 Security,
provided that the floating charge created under this Deed may not be
converted into a fixed charge or charges solely as a result of
obtaining a moratorium (or anything done with a view to obtaining a
moratorium) under the Insolvency Act 2000 except with leave of the
court.
10.2 Automatic Crystallisation: In addition and without prejudice to any
other event resulting in a crystallisation of the floating charge
contained herein and without prejudice to any rule of law which may
have a similar effect, but subject to any prohibition or restriction
imposed by applicable law, the floating charge created under this
Deed shall automatically and without notice be converted with
immediate effect into a fixed charge as regards:
24
(a) all property, assets or undertaking of Funding 2, subject to
the floating charge, upon:
(i) Funding 2 ceasing to carry on its business or a
material part thereof as a going concern;
(ii) the presentation of a petition for the compulsory
winding-up of Funding 2;
(iii) the convening of a meeting for the passing of a
resolution for the voluntary winding-up of Funding 2;
(iv) the making of an application for an administration
order or the filing of documents with the court for
the appointment of an administrator or the service of
a notice of intention to appoint an administrator in
relation to Funding 2;
(v) the presentation or making of an application for a
warrant of execution, writ of fieri facias, garnishee
order or charging order in respect of any of the
assets of Funding 2 subject to the floating charge;
(vi) the occurrence of a Funding 2 Intercompany Loan Event
of Default or if there are no Funding 2 Intercompany
Loans outstanding, following a default in payment of
any other Funding 2 Secured Obligation on its due date
or within any applicable grace period following such
due date stated in the relevant Funding 2 Transaction
Document; and/or
(b) any property, assets or undertaking of Funding 2, which
become subject to an Encumbrance in favour of any person
other than the Funding 2 Security Trustee or which is/are
the subject of a sale, transfer or other disposition, in
either case, contrary to the covenants and undertakings
contained in the Funding 2 Transaction Documents,
immediately prior to such Encumbrance arising or such sale,
transfer or other disposition being made,
provided that the floating charge created under this Deed may not be
converted into a fixed charge or charges solely as a result of
obtaining a moratorium (or anything done with a view to obtaining a
moratorium) under the Insolvency Act 2000 except with leave of the
court.
11. Provisions relating to the Security
11.1 Continuing Security: The Funding 2 Security shall be:
(a) in addition to and independent of and shall not operate so
as to prejudice or affect or merge in any other security,
right of recourse or other right whatsoever which may be
held by any of the Funding 2 Secured Creditors or the
Funding 2 Security Trustee on their behalf in respect of the
whole or any part of the Funding 2 Secured Obligations and
shall not be affected by any release, reassignment,
retrocession or discharge of such other security; and
(b) a continuing security for the Funding 2 Secured Obligations
and shall remain in force as continuing security for the
Funding 2 Secured Creditors and shall
25
not be considered as satisfied or discharged by any
intermediate payment or settlement of the whole or any part
of the Funding 2 Secured Obligations or the existence at any
time of a credit balance on any current or other account or
any other matter or thing whatsoever.
11.2 Consolidation: Section 93 of the 1925 Act shall not apply in relation
to the Funding 2 Security.
11.3 Ruling Off: If the Funding 2 Security Trustee receives notice of any
Encumbrance affecting the whole or any part of the Funding 2 Charged
Property or any security granted hereunder in contravention of the
provisions hereof:
(a) the Funding 2 Security Trustee may open a new account in the
name of Funding 2 and, if it does not, it shall nevertheless
be deemed to have done so at the time it received such
notice; and
(b) all payments made by Funding 2 to the Funding 2 Security
Trustee after the Funding 2 Security Trustee receives such
notice shall be credited or deemed to have been credited to
the new account, and in no circumstances whatsoever shall
operate to reduce the Funding 2 Secured Obligations as at
the time the Funding 2 Security Trustee received such
notice.
11.4 Avoidance of Payments: Any settlement, discharge or release between
(a) Funding 2 and (b) the Funding 2 Security Trustee or any Receiver
(the "Relevant Person(s)") shall be conditional upon no security or
payment granted or made to the Relevant Person(s) by Funding 2 or any
other person being avoided or reduced by virtue of any provisions or
enactments relating to bankruptcy, insolvency or liquidation for the
time being in force and, in the event of such security or payment
being so avoided or reduced, the Relevant Person(s) shall be entitled
to recover the value or amount of such security or payment from
Funding 2 and from the security subsequently as if such settlement,
discharge or release had not occurred.
11.5 Retention of Charges: If the Funding 2 Security Trustee shall have
reasonable grounds for believing that Funding 2 may be insolvent or
deemed to be insolvent pursuant to the provisions of the Insolvency
Act 1986 (and production of a solvency certificate of a duly
authorised officer of Funding 2 shall be prima facie evidence of the
solvency of Funding 2) as at the date of any payment made by Funding
2 to the Funding 2 Security Trustee or otherwise in respect of the
Funding 2 Secured Obligations and that as a result, such payment may
be capable of being avoided or clawed back, the Funding 2 Security
Trustee shall be at liberty to retain the charges contained in or
created pursuant to this Deed until the expiry of a period of one
month plus such statutory period within which any assurance,
security, guarantee or payment can be avoided or invalidated after
the payment and discharge in full of all Funding 2 Secured
Obligations notwithstanding any release, settlement, discharge or
arrangement which may be given or made by the Funding 2 Security
Trustee on, or as a consequence of, such payment or discharge of
liability provided that, if at any time within such period, a
petition or an application shall be presented to a competent court
for an order for the winding up or the making of an administration
order in respect of Funding 2, or if Funding 2 shall commence to be
wound up or to go into administration or any analogous proceedings
shall be commenced by or against Funding 2, as the case may be, the
Funding 2 Security Trustee shall be at liberty to
26
continue to retain such security for such further period as the
Funding 2 Security Trustee may determine and such security shall be
deemed to continue to have been held as security for the payment and
discharge to the Funding 2 Security Trustee of all Funding 2 Secured
Obligations.
11.6 Possession: Entry into possession of the Funding 2 Charged Property
or any part thereof shall not render the Funding 2 Security Trustee
or any Receiver of Funding 2 liable to account as mortgagee or
creditor in possession for anything except actual receipts. If and
whenever the Funding 2 Security Trustee or the Receiver enters into
possession of the Funding 2 Charged Property, it shall be entitled at
any time to go out of such possession.
11.7 Change of Name, etc.: This Deed shall remain valid and enforceable
notwithstanding any change in the name, composition or constitution
of the Funding 2 Security Trustee or Funding 2 or any amalgamation,
merger or consolidation by the Funding 2 Security Trustee or Funding
2, with any other corporation (whether, in the case of Funding 2,
permitted under the Funding 2 Transaction Documents or not).
12. Protection of Third Parties
12.1 No Enquiry: No purchaser from, or other person dealing with, the
Funding 2 Security Trustee or a Receiver shall be concerned to
enquire whether any of the powers exercised or purported to be
exercised under this Deed has arisen or become exercisable, whether
the Funding 2 Secured Obligations remain outstanding or have become
payable, whether the Funding 2 Security Trustee or the Receiver is
authorised to act or as to the propriety or validity of the exercise
or purported exercise of any power; and the title and the position of
such a purchaser or other person shall not be impeachable by
reference to any of those matters and all the protection to
purchasers contained in Sections 104 and 107 of the 1925 Act shall
apply to any person purchasing from or dealing with the Funding 2
Security Trustee or any such Receiver.
12.2 Receipts to Third Parties: Upon any sale, calling in, collection,
enforcement or other realisation of the Funding 2 Charged Property in
accordance with the terms hereof and upon any other dealing or
transaction under or pursuant to this Deed, the receipt of the
Funding 2 Security Trustee or any Receiver shall be an absolute and a
conclusive discharge to a purchaser or other person dealing with the
Funding 2 Security Trustee or such Receiver and shall relieve it of
any obligation to see to the application of any monies paid to or by
the direction of the Funding 2 Security Trustee or such Receiver.
13. Set-Off
The Funding 2 Security Trustee may at any time following the service
of a Funding 2 Intercompany Loan Enforcement Notice without notice
and notwithstanding any settlement of account or other matter
whatsoever combine or consolidate all or any existing accounts of
Funding 2 whether in its own name or jointly with others and held by
it or any Funding 2 Secured Creditor and may set-off or transfer all
or any part of any credit balance or any sum standing to the credit
of any such account (whether or not the same is due to Funding 2 from
the Funding 2 Security Trustee or relevant Funding 2 Secured Creditor
and whether or not the credit balance and the account in debit or the
Funding 2 Secured Obligations are expressed in the same
27
currency in which case the Funding 2 Security Trustee is hereby
authorised to effect any necessary conversions at its prevailing
rates of exchange) in or towards satisfaction of any of the Funding
2 Secured Obligations (and on or at any time after the Funding 2
Security has become enforceable in accordance with Clause 6.2
(Enforceable) the Funding 2 Security Trustee may make such application
notwithstanding any specified maturity of any deposits) but subject
always to the Funding 2 Priority of Payments and may in its absolute
discretion estimate the amount of any liability of Funding 2 which is
contingent or unascertained and thereafter set-off such estimated
amount and no amount shall be payable by the Funding 2 Security
Trustee to Funding 2 unless and until all Funding 2 Secured
Obligations have been ascertained and fully repaid or discharged.
14. Representations and Covenants
14.1 Representations and Warranties:
(a) Funding 2 hereby represents to the Funding 2 Security
Trustee that it is, as of the date hereof, the beneficial
owner of all of the Funding 2 Charged Property free and
clear of all liens, claims, charges or Encumbrances except
for the Funding 2 Security, and undertakes that it will
retain all rights associated with ownership of the Funding 2
Charged Property free and clear of all liens, claims,
charges and Encumbrances except for the Funding 2 Security.
(b) Funding 2 represents that it has taken all necessary steps
to enable it to create the Funding 2 Security in accordance
with this Deed and has taken no action or steps which will
or may prejudice its right, title and interest in, to and
under the Funding 2 Charged Property.
(c) Funding 2 represents that its Centre of Main Interests (as
defined in the EU Regulation) is in the United Kingdom.
14.2 Negative Covenants: Funding 2 hereby undertakes that, for so long as
any Funding 2 Secured Obligation remains outstanding, Funding 2 shall
not, save to the extent contemplated in or provided in the Funding 2
Transaction Documents or unless it has obtained the prior written
consent of the Funding 2 Security Trustee:
(a) open or maintain any bank account or deposit account with
any bank or any other financial institution other than the
Funding 2 Bank Accounts or the Funding 2 Swap Collateral
Accounts or close the Funding 2 Bank Accounts or the Funding
2 Swap Collateral Accounts other than in accordance with the
Funding 2 Transaction Documents;
(b) either in a single transaction or in a series of
transactions, whether related or not and whether voluntarily
or involuntarily, sell, transfer, lease or otherwise dispose
of or grant any option over all or any part of its assets,
properties or undertakings or any interest, estate, right,
title or benefit therein or agree or purport to do any of
the foregoing, other than as provided for pursuant to the
Funding 2 Transaction Documents;
(c) create or permit to subsist any Security Interest over or in
respect of any of its assets (unless arising by operation of
law) other than as provided pursuant to
28
the Funding 2 Transaction Documents provided that upon it
making available any Loan Tranche or entering into any new
Funding 2 Intercompany Loan Agreement, Funding 2 shall be
entitled to create the Security Interests (if any)
contemplated under the applicable Deed of Accession;
(d) engage in any activities in the United States (directly or
through agents), nor derive any income from United States
sources as determined under United States income tax
principles and will not hold any property if doing so would
cause it to be engaged or deemed to be engaged in a trade or
business within the United States as determined under United
States tax principles; or
(e) establish any branches or other establishments (being any
place of operations where a company carries on a
non-transitory economic activity with human means and goods
as defined in Article 2(h) of the EU Insolvency Regulation)
in any jurisdiction other than England and shall procure
that its management, the place at which the meetings of its
directors are held and the place where the interests of
Funding 2 are administered on a regular basis, is England;
(f) consent to any amendment to, or agree to waive or authorise
any breach of, any provision of any of the Funding 2
Transaction Documents without the prior written consent of
the Funding 2 Security Trustee;
(g) do any act or thing the effect of which would be to make
Funding 2 resident in any jurisdiction other than the United
Kingdom for United Kingdom tax purposes;
(h) hold shares or possess voting power in or in relation to any
company, or possess any power to secure, by virtue of any
powers conferred by the articles of association or other
document regulating any company, control over any company,
other than in respect of the Master Issuer and any other
Funding 2 Issuer that it may create in the future; and
(i) have any employees.
14.3 Positive covenants: Funding 2 covenants and undertakes with the
Funding 2 Security Trustee for the benefit of the Funding 2 Secured
Creditors that it shall:
(a) file or procure the filing with the Registrar of Companies
pursuant to Chapter I of Part XII of the Companies Act 1985
of duly completed Forms 395 together with an executed
original of this Deed and the required fee within 21 days
after the date of this Deed;
(b) on the date hereof join with the Funding 2 Security Trustee
in giving notice of the assignments by way of security and
the security created under or pursuant to this Deed to each
of the Seller, the Administrator, Funding, the Security
Trustee and each Collection Bank and any other party to any
Funding 2 Transaction Document not being a party to this
Deed, and on any date hereafter (to the extent only that
such notice and acknowledgement is not given under or
pursuant to this Deed) join with the Funding 2 Security
Trustee in giving notice of the assignments by way of
security and the security created under this Deed to any
party to a Funding 2 Transaction Document entered
29
into by Funding 2 after the date hereof, in the form (or
substantially in the form) set out in Schedule 4 (Form of
Notice of Assignment);
(c) cause to be prepared and certified by its auditors in
respect of each Financial Year accounts in such form as will
comply with relevant legal and accounting requirements for
the time being and, in particular, cause to be prepared and
certified by the auditors in respect of each of its
financial years, accounts which are in accordance with a
basis of accounting that satisfies the definition of "UK
generally accepted accounting practice" contained in
sub-section 50(4) of the Finance Act 2004;
(d) at all times keep or procure the keeping of such books of
account and records as may be necessary to comply with all
applicable laws and so as to enable financial statements to
be prepared and allow the Funding 2 Security Trustee and any
person or persons appointed by the Funding 2 Security
Trustee free access to such books of account and records at
all reasonable times during normal business hours upon
reasonable notice in writing, provided that such inspection
shall only be for the purposes of carrying out its duties
under this Deed and any information so obtained shall only
be used and passed on to any other person for the purpose of
the Funding 2 Security Trustee carrying out its duties under
this Deed;
(e) give notice in writing to the Funding 2 Security Trustee of
the occurrence of any Funding 2 Intercompany Loan Event of
Default or Potential Funding 2 Intercompany Loan Event of
Default immediately upon becoming aware thereof and without
waiting for the Funding 2 Security Trustee to take any
further action;
(f) immediately on receipt or notice of the same, supply to the
Funding 2 Security Trustee full details of any application
to the court for an administration order under paragraph 10
of Schedule B1 of the Insolvency Act 1986 made in respect of
Funding 2 and (without prejudice to paragraph 12(2) of
Schedule B1 to the Insolvency Act 1986) of any proposed or
actual appointment of an administrator by the holder of a
qualifying floating charge (within the meaning of paragraph
14 of Schedule B1 to the Insolvency Act 1986) or (without
prejudice to paragraph 26(1) of Schedule B1 to the
Insolvency Act 1986) by Funding 2 or its directors;
(g) give to the Funding 2 Security Trustee (i) within seven days
after demand by the Funding 2 Security Trustee therefor and
(ii) (without the necessity for any such demand) promptly
after the publication of its audited accounts in respect of
each Financial Year and in any event not later than the date
required by statute to file or publish (whichever is
earlier) such audited accounts after the end of each such
Financial Period a certificate signed by two directors of
Funding 2 to the effect that as at a date not more than
seven days before delivering such certificate (the
"certification date") there did not exist and had not
existed since the certification date of the previous
certificate (or in the case of the first such certificate
the date hereof) any Funding 2 Intercompany Loan Event of
Default or any Potential Funding 2 Intercompany Loan Event
of Default (or if such then exists or existed specifying the
same) and that during the period from and including the
certification date of the last such
30
certificate (or in the case of the first such certificate
the date hereof) to and including the certification date of
such certificate Funding 2 has complied with all its
obligations contained in this Deed and each of the other
Funding 2 Transaction Documents or (if such is not the case)
specifying the respects in which it has not so complied;
(h) at all times execute all such further documents and do all
such further acts and things as may in the opinion of the
Funding 2 Security Trustee be necessary at any time or times
to give effect to the terms and conditions of this Deed and
the other Funding 2 Transaction Documents;
(i) at all times comply with the provisions of this Deed and the
other Funding 2 Transaction Document which are expressed to
be binding on it and to observe and perform the same;
(j) so far as permitted by applicable law, at all times give to
the Funding 2 Security Trustee such information as it
requires for the performance of its functions;
(k) duly and promptly pay and discharge all Taxes imposed upon
it or its assets unless such Taxes are, in the opinion of
the Funding 2 Security Trustee, being contested in good
faith by Funding 2;
(l) in the event of termination of the Funding 2 Bank Account
Agreement, subject to and in accordance with the provisions
of the Funding 2 Bank Account Agreement use its reasonable
endeavours to enter into a replacement Funding 2 Bank
Account Agreement;
(m) in the event of termination of the Cash Management
Agreement, subject to and in accordance with the provisions
of the Cash Management Agreement, use its reasonable
endeavours to enter into a replacement Cash Management
Agreement;
(n) in the event of the termination of the Funding 2 Basis Rate
Swap Agreement, notify the Funding 2 Security Trustee and
the Rating Agencies and use reasonable endeavours to enter
into a replacement basis rate swap agreement upon terms
acceptable to the Rating Agencies and the Funding 2 Security
Trustee with a swap provider whom the Rating Agencies have
previously confirmed, to Funding 2 and the Funding 2
Security Trustee, will not cause the then current ratings of
the Notes of any Funding 2 Issuer to be downgraded,
withdrawn or qualified;
(o) at all times have its Centre of Main Interests (as defined
in the EU Regulation) in the United Kingdom; and
(p) treat each swap transaction entered into by Funding 2 under
the Funding 2 Basis Rate Swap Agreement as a "derivative
financial instrument" for the purposes of Financial
Reporting Standard 13 (as from time to time amended) and any
replacement of it following the convergence of UK GAAP and
IFRS.
31
15. Terms of Appointment
15.1 Section 1 of the Trustee Act 2000 shall not apply to the duties of
the Trustee in relation to the trusts constituted by this Deed. Where
there are any inconsistencies between the Trustee Acts and the
provisions of this Deed, the provisions of this Deed shall, to the
extent allowed by law, prevail and, in the case of any such
inconsistency with the Trustee Act 2000, the provisions of this Deed
shall constitute a restriction or exclusion for the purposes of that
Act. The Trustee shall have all the powers conferred upon trustees by
the Trustee Acts and by way of supplement thereto it is expressly
declared as set out in the following provisions of this Clause 15
(Terms of Appointment).
15.2 Reliance on Information:
(a) The Funding 2 Security Trustee may in relation to this Deed
act on the opinion or advice of, or a certificate or any
information (whether addressed to the Funding 2 Security
Trustee or not) obtained from, any lawyer, banker, valuer,
surveyor, securities company, broker, auctioneer, accountant
or other expert in the United Kingdom or elsewhere, whether
obtained by Funding 2, the Funding 2 Security Trustee, any
Receiver or otherwise, whether or not any of the aforesaid
or engagement letter or other document entered into by the
Funding 2 Security Trustee and the relevant person in
connection therewith contains any monetary or other limit on
the liability of the relevant person and the Funding 2
Security Trustee shall not be responsible for any loss
occasioned by so acting. Any such opinion, advice,
certificate or information may be sent or obtained by
letter, facsimile reproduction or in any other form and the
Funding 2 Security Trustee shall not be liable for acting in
good faith on any opinion, advice, certificate or
information purporting to be so conveyed although the same
shall contain some error or shall not be authentic provided
that such error or lack of authenticity is not manifest.
(b) The Funding 2 Security Trustee may call for and shall be
entitled to rely upon a certificate signed by two directors
of Funding 2 or a certificate of any other person in respect
of every matter and circumstance for which a certificate is
expressly provided for under this Deed or the other Funding
2 Transaction Documents and to call for and rely upon a
certificate of Funding 2 or any other person as to any other
fact or matter prima facie within the knowledge of Funding 2
or such person as sufficient evidence thereof and the
Funding 2 Security Trustee shall not be bound in any such
case to call for further evidence or be responsible for any
loss, liability, costs, damages, expenses or inconvenience
that may be caused by it failing to do so.
(c) The Funding 2 Security Trustee may call for and shall be
entitled to rely upon any document provided to it by Funding
2, the Mortgages Trustee or the Cash Manager in respect of
every matter and circumstance prima facie within the
knowledge of Funding 2, the Mortgages Trustee or the Cash
Manager and the Funding 2 Security Trustee shall not be
bound in any such case to call for further evidence or be
responsible for any loss, liability, costs, damages,
expenses or inconvenience that may be caused by it failing
to do so.
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(d) The Funding 2 Security Trustee shall be entitled to act on
any Principal Directions provided in accordance with Clause
15.9 (Funding 2 Security Trustee to act on Issuer Security
Trustee direction) without further enquiry and to assume
that any such Principal Directions are (a) given in
accordance with the provisions of this Deed and (b) given,
where appropriate, in accordance with the directions of the
Issuer Security Trustee(s), and the Funding 2 Security
Trustee shall not be liable to any person for any action
taken or omitted under or in connection with this Deed in
accordance with any such Principal Directions. The Funding 2
Security Trustee shall be entitled to act upon any notice,
request or other communication of any party to this Deed for
the purposes of this Deed or any of the Transaction
Documents if such notice, request or other communication
purports to be signed or sent by or on behalf of any
authorised signatory of such party.
15.3 Powers and Duties:
(a) The Funding 2 Security Trustee shall not have any
responsibility for or have any duty to make any
investigation in respect of or in any way be liable
whatsoever for the nature, status, creditworthiness or
solvency of Funding 2. Each Funding 2 Secured Creditor shall
be solely responsible for making its own independent
appraisal of and investigation into the financial condition,
creditworthiness, affairs, status and nature of Funding 2
and the Funding 2 Security Trustee shall not at any time
have any responsibility for the same and each Funding 2
Secured Creditor shall not rely on the Funding 2 Security
Trustee in respect thereof.
(b) The Funding 2 Security Trustee shall not be responsible for
the scope or accuracy of any recitals, statements, warranty,
representation or covenant of any party (other than the
Funding 2 Security Trustee) contained herein or in any other
Funding 2 Transaction Document or any other document entered
into in connection therewith and shall assume the accuracy
and correctness thereof.
(c) The Funding 2 Security Trustee shall (save as expressly
otherwise provided herein or in the other Transaction
Documents) as regards all trusts, powers, authorities and
discretions vested in it by this Deed, the other Transaction
Documents or by operation of law, have absolute and
uncontrolled discretion as to the exercise or non-exercise
thereof and the Funding 2 Security Trustee shall not be
responsible for any liability that may result from the
exercise or non-exercise thereof but whenever the Funding 2
Security Trustee is under the provisions of this Deed bound
to act at the request or direction any party, the Funding 2
Security Trustee shall nevertheless not be so bound unless
first indemnified and/or provided with security to its
satisfaction against all actions, proceedings, claims and
demands to which it may render itself liable and all costs,
charges, damages, expenses and liabilities which it may
incur by so doing.
(d) The Funding 2 Security Trustee may accept without enquiry,
requisition or objection such title as Funding 2 may have to
the Funding 2 Charged Property or any part thereof from time
to time and shall not be required to investigate or make any
enquiry into or be liable for any defect or failure in the
right or title
33
of Funding 2 to the Funding 2 Charged Property or any part
thereof from time to time whether or not any defect was
known to the Funding 2 Security Trustee or might have been
discovered upon examination, inquiry or investigation and
whether or not capable of remedy.
(e) The Funding 2 Security Trustee shall not be responsible for
exercising the rights of any of the parties under the
Transaction Documents or considering the basis upon which
the approvals or consents are granted by any of the parties
under the Transaction Documents.
(f) The Funding 2 Security Trustee shall not be bound to give
notice to any person of the execution of this Deed nor shall
it have any duty to make any investigation in respect of or
in any way be liable whatsoever for the registration,
filing, protection or perfection of the Funding 2 Security
or Funding 2 Transaction Documents relating to the Funding 2
Charged Property or the priority of the security thereby and
shall not be liable for any failure, omission or defect in
perfecting, protecting, procuring the registration of or
further assuring the security created or purported to be
created by or pursuant to this Deed or other documents
entered into in connection herewith.
(g) The Funding 2 Security Trustee shall not have any duty to
make any investigation in respect of or in any way be liable
whatsoever for the failure to call for delivery of documents
of title to or require any transfers, legal mortgages,
charges or other further assurances in relation to any of
the Funding 2 Charged Property or any other document.
(h) The Funding 2 Security Trustee shall be under no obligation
to monitor or supervise and shall not have any duty to make
any investigation in respect of or in any way be liable
whatsoever for the performance or observance by Funding 2 or
any other person of the provisions of this Deed or any other
Funding 2 Transaction Document and shall be entitled to
assume that each person is properly performing and complying
with its obligations thereunder.
(i) The Funding 2 Security Trustee shall not have any
responsibility for or have any duty to make any
investigation in respect of or in any way be liable
whatsoever for the existence, accuracy or sufficiency of any
legal or other opinions, searches, reports, certificates,
valuations or investigations delivered or obtained or
required to be delivered or obtained at any time in
connection with the Funding 2 Charged Property.
(j) The Funding 2 Security Trustee shall not be liable or
responsible for any loss, cost, damage, expense or
inconvenience which may result from anything done or omitted
to be done by it under this Deed or under any of the other
Funding 2 Transaction Documents.
(k) The Funding 2 Security Trustee shall have no responsibility
whatsoever to any Funding 2 Secured Creditor as regards any
deficiency which might arise because the Funding 2 Security
Trustee is subject to any Tax in respect of the Funding 2
Charged Property or any part thereof or any income therefrom
or any proceeds thereof or is required by law to make any
withholding or deduction from any payment to any Funding 2
Secured Creditor.
34
(l) The Funding 2 Security Trustee will not be responsible or
liable for any inadequacy or unfitness of any Funding 2
Charged Property as security or any decline in value or any
loss realised upon any disposition of the Funding 2 Charged
Property.
(m) The Funding 2 Security Trustee shall not be obliged to
perfect the legal title to any Mortgage in its name or any
of the Related Security if, in its opinion, such perfection
would or might result in the Funding 2 Security Trustee
becoming liable to or incurring any obligation to Funding 2
under a Mortgage or any of the Related Security and/or in
its opinion, there is or would be insufficient cash to
discharge, in accordance with the provisions of this Deed
such liabilities or obligations as and when they arise.
(n) Notwithstanding the generality of the above, the Funding 2
Security Trustee shall not be responsible for the execution,
legality, effectiveness, adequacy, genuineness, validity,
enforceability or suitability of any of the Transaction
Documents or any of the documents relating to the Mortgage
Loans or Mortgages or other documents entered into in
connection therewith or any security or the priority thereof
constituted or purported to be constituted thereby or
pursuant thereto nor shall it be responsible or liable to
any person because of any invalidity of any provisions of
such documents or the unenforceability thereof, whether
arising from statute, law or decision of any court and
(without prejudice to the generality of the foregoing) the
Funding 2 Security Trustee shall not have any responsibility
for, or have any duty to make any investigation in respect
of or in any way be liable whatsoever for:
(i) the nature, status, creditworthiness or solvency of
Funding 2 or any other person or entity who has at any
time provided any security or support whether by way
of guarantee, charge or otherwise in respect of any
advance made to Funding 2;
(ii) the title, ownership, value, sufficiency or existence
of any Mortgaged Property;
(iii) the registration, filing, protection or perfection of
any Mortgage Loans or Mortgages or the priority of the
security created thereby whether in respect of any
initial advance or any subsequent advance or any other
sums or liabilities;
(iv) the scope or accuracy of any representation,
warranties or statements made by or on behalf of
Funding 2 in any application for any advance or in any
mortgage or charge or any document entered into in
connection therewith;
(v) the performance or observance by Funding 2 or any
other person of any provisions of any Mortgage Loans
or Mortgages or in any document entered into in
connection therewith or the fulfilment or satisfaction
of any conditions contained therein or relating
thereto or as to the existence or occurrence at any
time of any default, event of default or similar event
contained therein or waiver or consent which has at
any time been granted in relation to any of the
foregoing;
35
(vi) the existence, accuracy or sufficiency of any legal or
other opinions, searches, reports, certificates,
valuations or investigations delivered or obtained or
required to be delivered or obtained at any time in
connection with Mortgage Loans or Mortgages;
(vii) the title of the Seller or the Mortgages Trustee to
Mortgage Loans or Mortgages;
(viii) the suitability, adequacy or sufficiency of any
Lending Criteria and any arrears and enforcement
procedures operated by the Seller or compliance
therewith or compliance with any applicable criteria
for any Further Advances or the legality or
recoverability or enforceability thereof or the
priority of the security in relation thereto;
(ix) the compliance of the provisions and contents of and
the manner and formalities applicable to the execution
of the Mortgage Loans or Mortgages and any documents
connected therewith or the making of any advance
intended to be secured thereby, with the relevant
mortgage indemnity policies and with any applicable
laws or regulations (including without prejudice to
the generality of the foregoing, the Consumer Credit
Act 1974);
(x) the failure by the Seller to obtain or comply with any
licence, consent or other authority in connection with
the origination, sale or purchase of any of the
Mortgage Loans or Mortgages or the making of any
advances in connection therewith or the failure to
effect or procure registration of or to give notice to
any person in relation to or otherwise protect the
security created or purported to be created by or
pursuant to any of the Mortgage Loans or Mortgages or
other documents entered into in connection therewith;
(xi) the failure to call for delivery of documents of title
to or require any transfers, legal mortgages, charges
or other further assurances in relation to any of the
assets the subject matter of any of the Funding 2
Transaction Documents or any other document;
(xii) any accounts, books, records or files maintained by
the Seller, the Administrator or any other person in
respect of any of the Mortgage Loans or Mortgages; or
(xiii) any other matter or thing relating to or in any way
connected with any Mortgage Loans or Mortgages or any
document entered into in connection therewith whether
or not similar to the foregoing.
(o) The Funding 2 Security Trustee shall not be responsible for,
nor shall it have any liability with respect to, any loss or
theft of the Funding 2 Charged Property and, without
prejudice to any provisions relating to insurance under the
Funding 2 Transaction Documents, the Funding 2 Security
Trustee shall not be under any obligation to insure any of
the Funding 2 Charged Property or any deeds or documents of
title or other evidence in respect of the Security or to
require any other person to maintain such insurance and the
Funding 2
36
Security Trustee shall not be responsible for any
loss, expense or liability which may be suffered as a result
of the lack of or inadequacy of such insurance.
(p) The Funding 2 Security Trustee shall not be responsible for
any liability occasioned to the Funding 2 Charged Property
however caused, whether by an act or omission of Funding 2
or any other party to the Transaction Documents or any other
person (including any bank, broker, depositary, warehouseman
or other intermediary or any clearing system or operator
thereof) or otherwise irrespective of whether the Funding 2
Charged Property is held by or to the order of any such
persons.
(q) The Funding 2 Security Trustee shall not be responsible for
the receipt or application by Funding 2 of the proceeds of
any Funding 2 Intercompany Loan.
(r) The Funding 2 Security Trustee shall have full power to
determine all questions and doubts arising in relation to
any of the provisions of this Deed and the other Funding 2
Transaction Documents and every such determination, whether
made upon a question actually raised or implied in the acts
or proceedings of the Funding 2 Security Trustee, shall be
conclusive and shall bind the Funding 2 Security Trustee and
the Funding 2 Secured Creditors.
(s) The Funding 2 Security Trustee may determine whether or not
a default in the performance by Funding 2 of any obligation
under the provisions of this Deed or any other Funding 2
Transaction Document is capable of remedy and/or whether the
same is materially prejudicial to the interests of the
Funding 2 Secured Creditors or any of them and if the
Funding 2 Security Trustee shall certify that any such
default is, in its opinion, not capable of remedy and/or
materially prejudicial to the interests of the Funding 2
Secured Creditors or any of them, such certificate shall be
conclusive and binding upon the Funding 2 Secured Creditors.
(t) Unless provided otherwise in any Transaction Document, where
a Funding 2 Intercompany Loan Event of Default or a
Completion Event refers to materiality or like terminology,
any determination of materiality or like terminology or the
absence thereof will be in the opinion of Funding 2 as
certified to the Funding 2 Security Trustee, which
certificate shall be conclusive evidence of the occurrence
of (or absence of) such circumstances.
(u) The Funding 2 Security Trustee shall have no liability
whatsoever for any loss, cost, damages or expenses directly
or indirectly suffered or incurred by any person as a result
of the delivery by the Funding 2 Security Trustee to Funding
2 or any other party to the Transaction Documents of a
certificate as to material prejudice or as to no material
prejudice pursuant to the Conditions or any Transaction
Document and any such certificate shall be binding on the
Funding 2 Secured Creditors.
(v) The Funding 2 Security Trustee may, in the conduct of its
trust business, instead of acting personally, employ and pay
an agent, whether or not a lawyer
37
or other professional person, to transact or conduct, or
concur in transacting or conducting, any business and to do
or concur in doing all acts required to be done by the
Funding 2 Security Trustee (including the receipt and
payment of monies). The Funding 2 Security Trustee shall not
be responsible for any misconduct or omission on the part of
any person appointed by it or be bound to supervise the
proceedings or acts of any such persons and shall not be
responsible for any loss, costs, liability or expenses
incurred by any misconduct or default on the part of any
such person, provided that the Funding 2 Security Trustee
has exercised reasonable care in selecting any such agent.
(w) Any trustee of this Deed being a lawyer, accountant, broker
or other person engaged in any profession or business shall
be entitled to charge and be paid all usual professional and
other charges for business transacted and acts done by him
or his firm in connection with the trusts of this deed and
the Funding 2 Transaction Documents and also his charges in
addition to disbursements for all other work and business
done and all time spent by him or his firm in connection
with matters arising in connection with this Deed and the
other Funding 2 Transaction Documents, including matters
which might or should have been attended to in person by a
trustee not being a lawyer, accountant, broker or other
professional person.
(x) The Funding 2 Security Trustee may, in the execution of all
or any of the trusts, powers, authorities and discretions
vested in it by this Deed or any of the other Funding 2
Transaction Documents, act by responsible officers or a
responsible officer for the time being of the Funding 2
Security Trustee. The Funding 2 Security Trustee may also,
whenever it thinks expedient in the interests of the Funding
2 Secured Creditors, whether by power of attorney or
otherwise, delegate to any person or persons all or any of
the trusts, rights, powers, duties, authorities and
discretions vested in it by this Deed or any of the other
Funding 2 Transaction Documents. Any such delegation may be
made upon such terms and conditions and subject to such
regulations (including power to sub-delegate) as the Funding
2 Security Trustee may think fit in the interests of the
Funding 2 Secured Creditors, provided that the Funding 2
Security Trustee shall have exercised reasonable care in the
selection of such delegate and, where a power to
sub-delegate has been given, shall oblige the delegate to
exercise reasonable care in the selection of any
sub-delegate. The Funding 2 Security Trustee shall not be
bound to supervise the proceedings of, or be responsible for
any loss, costs, liability or expenses incurred by any
misconduct or default on the part of, such delegate or
sub-delegate. The Funding 2 Security Trustee shall give
prompt notice to Funding 2 of the appointment of any
delegate as aforesaid and shall procure that any delegate
shall also give prompt notice of the appointment of any
sub-delegate to Funding 2.
(y) Where it is necessary or desirable for any purpose in
connection with this Deed to convert any sum from one
currency to another it shall (unless otherwise provided by
this Funding 2 Deed of Charge or required by law) be
converted at such rate or rates in accordance with such
method and as at such date for the determination of such
rate of exchange, as may be specified by the
38
Funding 2 Security Trustee in its absolute discretion but
having regard to current rates of exchange if available and
the Funding 2 Security Trustee shall not be liable for any
loss occasioned by the said conversion and any rate, method
and date so specified shall be binding on Funding 2 and the
Funding 2 Secured Creditors.
(z) Any consent given by the Funding 2 Security Trustee for the
purposes of this Deed or any of the other Transaction
Documents may be given on such terms and subject to such
conditions (if any) as the Funding 2 Security Trustee thinks
fit and may be given retrospectively. The Funding 2 Security
Trustee may (subject to the provisions of Clause 15.9
(Funding 2 Security Trustee to act on Issuer Security
Trustee direction)) give any consent or approval, exercise
any power, authority or discretion or take any similar
action (whether or not such consent, approval, power,
authority, discretion or action is specifically referred to
in this Deed) if it is satisfied that the interests of the
Funding 2 Secured Creditors will not be materially
prejudiced thereby.
(aa) The Funding 2 Security Trustee shall not be liable for any
error of judgment made in good faith by any officer or
employee of the Funding 2 Security Trustee assigned by the
Funding 2 Security Trustee to administer its corporate trust
matters.
(bb) The Funding 2 Security Trustee shall not (unless required by
law or ordered to do so by a court of competent
jurisdiction) be required to disclose to any Funding 2
Secured Creditor or other person any information made
available to the Funding 2 Security Trustee by Funding 2 or
any other person in connection with the trusts of this Deed
or the Funding 2 Transaction Documents and no Funding 2
Secured Creditor or other person shall be entitled to take
any action to obtain from the Funding 2 Security Trustee any
such information.
(cc) Notwithstanding anything else in this Deed or the other
Funding 2 Transaction Documents, the Funding 2 Security
Trustee may refrain from doing anything which would or might
in its opinion be contrary to any law of any jurisdiction or
any directive or regulation of any governmental agency or
which would or might otherwise render it liable to any
person and may do anything which is, in its opinion,
necessary to comply with any such law, directive or
regulation.
(dd) The powers conferred by this Deed upon the Funding 2
Security Trustee or any Receiver shall be in addition to and
not in substitution for any powers which may from time to
time be conferred on the Funding 2 Security Trustee or any
such Receiver by statute or under common law.
(ee) The Funding 2 Security Trustee has no duties or
responsibilities except those expressly set out in this Deed
or in the Funding 2 Transaction Documents.
(ff) The Funding 2 Security Trustee shall not be responsible for
the maintenance of the rating of the Notes.
(gg) The Funding 2 Security Trustee may appoint and pay any
person to act as a custodian or nominee on any terms in
relation to such assets of the trusts
39
constituted by this Deed as the Funding 2 Security Trustee
may determine, including for the purpose of depositing with
a custodian this Deed or any document relating to the trusts
constituted by this Deed and the Funding 2 Security Trustee
shall not be responsible for any Liability incurred by
reason of the misconduct, omission or default on the part of
any person appointed by it hereunder or be bound to
supervise the proceedings or acts of such person; the
Funding 2 Security Trustee is not obliged to appoint a
custodian if the Funding 2 Security Trustee invests in
securities payable to bearer.
15.4 No Financial Liability: Notwithstanding anything else herein
contained, the Funding 2 Security Trustee may refrain from taking any
action or exercising any right, power, authority or discretion vested
in it under this Deed, any other Transaction Document, any Funding 2
Charged Property or any other agreement relating to the transactions
herein or therein contemplated until it has been indemnified and/or
secured to its satisfaction against and all liabilities which might
be brought, made or conferred against or suffered, incurred or
sustained by it as a result. Notwithstanding any other provision of
this Deed or of any other Transaction Document, nothing shall require
the Funding 2 Security Trustee to risk its own funds or otherwise
incur any financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers or otherwise in
connection with this Deed or any other Funding 2 Transaction Document
(including, without limitation, forming any opinion or employing any
legal, financial or other adviser), if it shall believe that
repayment of such funds or adequate indemnity against such risk or
liability is not assured to it. Further, without prejudice to the
right of indemnity by law given to trustees, Funding 2 hereby
covenants further, to reimburse, pay or discharge (on a full
indemnity basis) on demand the Funding 2 Security Trustee and every
attorney, receiver, manager, agent, delegate or other person
appointed by it under this Deed from and against all Liabilities
incurred by or made against it or him in the execution or purported
execution of the trusts of this Deed or of its or his powers or in
respect of any matter or thing done or omitted in any way relating to
this Deed or any of the other Funding 2 Transaction Documents except
such as may arise from the negligence or wilful misconduct or fraud
of any such indemnified person.
15.5 Assumption of No Default:
(a) The Funding 2 Security Trustee shall not be bound to
ascertain whether any Funding 2 Intercompany Loan Event of
Default or Potential Funding 2 Intercompany Loan Event of
Default has happened and, until it shall have actual
knowledge or express notice to the contrary, the Funding 2
Security Trustee shall be entitled to assume that no such
Funding 2 Intercompany Loan Event of Default or Potential
Funding 2 Intercompany Loan Event of Default has happened
and that Funding 2 is observing and performing all the
obligations on its part contained in any Funding 2
Intercompany Loan Agreement and no event has happened as a
consequence of which a Funding 2 Intercompany Loan may
become repayable.
(b) The Funding 2 Security Trustee shall not be bound to
ascertain whether any Completion Event or any failure by the
Seller to comply with any of its obligations under the
Mortgage Sale Agreement or any event which with the giving
of notice or expiry of any grace period or certification as
specified in respect of such Completion Event or Seller
failure of its obligations would
40
constitute the same has happened and, until it shall receive
express notice to the contrary from any party to the
Transaction Documents, the Funding 2 Security Trustee shall
be entitled to assume that no such Completion Event or
Seller failure of its obligations or such other event as
described above has happened and that Funding 2, the
Administrator or the Seller (as the case may be) is
observing and performing all of their respective obligations
contained in each of the Transaction Documents to which they
are a party.
(c) The Funding 2 Security Trustee shall not be bound to
ascertain whether any material breach of any of the
representations and warranties referred to in Clause 7
(Warranties and Repurchase by the Seller) of the Mortgage
Sale Agreement or any event which with the giving of notice
or expiry of any grace period or certification as specified
in such representation and warranties would constitute the
same has happened and, until it shall receive express notice
to the contrary from any party to the Transaction Documents,
the Funding 2 Security Trustee shall be entitled to assume
that no such breach or such other event as described above
has happened and that the Seller is observing and performing
its obligations contained in the Mortgage Sale Agreement.
(d) The Funding 2 Security Trustee shall not be bound to
ascertain whether any Administrator Termination Event or any
event which with the giving of notice or expiry of any grace
period or certification as specified in respect of such
Administrator Termination Event would constitute the same
has happened and, until it shall receive express notice to
the contrary pursuant to Clause 19.5 (Notification of
Termination Event) of the Administration Agreement, the
Funding 2 Security Trustee shall be entitled to assume that
no such Administrator Termination Event under the
Administration Agreement or such other event as described
above has happened and that the Administrator is observing
and performing all of its obligations contained in each of
the Transaction Documents to which it is a party.
(e) The Funding 2 Security Trustee shall not be bound to
ascertain whether any Cash Manager Termination Event or any
event which with the giving of notice or expiry of any grace
period or certification as specified in such Cash Manager
Termination Event would constitute the same has happened
and, until it shall receive express notice to the contrary
pursuant to Clause 12.4 (Note of Event of Default) of the
Cash Management Agreement, the Funding 2 Security Trustee
shall be entitled to assume that no such Cash Manager
Termination Event or such other event as described above has
happened and that the Cash Manager is observing and
performing its obligations contained in the Cash Management
Agreement.
(f) The Funding 2 Security Trustee shall not be bound to
ascertain whether any Termination Event under the Funding 2
Bank Account Agreement or any event which with the giving of
notice or expiry of any grace period or certification as
specified in the Funding 2 Bank Account Agreement, would
constitute the same has happened and, until it shall receive
express notice to the contrary pursuant to Clause 8
(Termination) of the Funding 2 Bank Account Agreement, the
Funding 2 Security Trustee shall be entitled to assume that
no such termination event under the Funding 2 Bank Account
Agreement or such other event as described above has
happened and that the
41
Account Bank is observing and performing its obligations
contained in the Funding 2 Bank Account Agreement.
(g) The Funding 2 Security Trustee shall not be bound to
ascertain whether any Flexible Mortgages Loans or part
thereof is unenforceable and/or does not fall within the
first ranking charge by way of legal mortgage or standard
security over the relevant Mortgaged Property has happened
and, until it shall receive express notice to the contrary
from any party to the Transaction Documents, the Funding 2
Security Trustee shall be entitled to assume that no such
event has happened.
15.6 Commercial Transactions: The Funding 2 Security Trustee shall not,
and no director, officer or employee of any corporation being a
Funding 2 Security Trustee hereof shall by reason of the fiduciary
position of the Funding 2 Security Trustee be in any way precluded
from making any commercial contracts or entering into any commercial
transactions with any party to the Funding 2 Transaction Documents,
whether directly or through any subsidiary or associated company, or
from accepting the trusteeship of any other debenture stock,
debentures or securities of any party to the Funding 2 Transaction
Documents, and without prejudice to the generality of these
provisions, it is expressly declared that such contracts and
transactions include any contract or transaction in relation to the
placing, underwriting, purchasing, subscribing for or dealing with or
lending monies upon or making payments in respect of or any stock,
shares, debenture stock, debentures or other securities of any party
to the Funding 2 Transaction Documents or any contract of banking or
insurance of any party to the Funding 2 Transaction Documents and
neither the Funding 2 Security Trustee nor any such director, officer
or employee shall be accountable to any Funding 2 Secured Creditor or
to any party to the Funding 2 Transaction Documents for any profit,
fees, commissions, interest, discounts or share of brokerage earned,
arising or resulting from any such contracts or transactions, and the
Funding 2 Security Trustee and any such director, officer or employee
shall also be at liberty to retain the same without accounting
therefor.
15.7 Trustee Liable for Negligence: None of the provisions of this Deed or
of any other Transaction Document to which the Funding 2 Security
Trustee is party shall, in any case in which the Funding 2 Security
Trustee has failed to show the degree of care and diligence required
of it as security trustee under this Deed, having regard to the
provisions of this Deed conferring on the Funding 2 Security Trustee
any powers, authorities or discretions, relieve or indemnify the
Funding 2 Security Trustee against any liabilities which by virtue of
any rule of law would otherwise attach to it in respect of any
negligence, default, breach of duty or breach of trust of which it
may be guilty in relation to its duties under this Deed.
15.8 Delegation of Certain Functions to Authorised Third Party: Without
prejudice to the provisions of this Deed, references to the Funding 2
Security Trustee taking action in connection with any duty of the
Seller or Administrator under any Transaction Document shall be read
subject to Clause 25 (Security Trustee: Authorised Third Party) and
Schedule 4 (Authorised Third Party) of the Administration Agreement.
15.9 Funding 2 Security Trustee to act on Issuer Security Trustee
direction: Notwithstanding any other provision in this Deed or any
other Funding 2 Transaction Document, when exercising its opinion
and/or when exercising the rights, benefits,
42
power, trusts, authorities, discretions and obligations expressed to
be granted by this Deed, the other Funding Transaction 2 Documents or
by operation of law, the Funding 2 Security Trustee shall (by virtue
of the assignment by way of security by each Funding 2 Issuer of its
right, title, interest and benefit in this Deed to the relevant
Issuer Security Trustee pursuant to the relevant Issuer Deed of
Charge), for so long as there are any Funding 2 Intercompany Loans
outstanding, act only at the request or in accordance with the
directions of the relevant Issuer Security Trustee(s) and shall not
be responsible for any Liability that may result from the exercise or
non-exercise thereof (including any Liability occasioned by any delay
or failure on the part of the Issuer Security Trustee(s) to make any
such request or to give any such direction) provided that:
(a) if there is a conflict between the interests (as directed by
the Issuer Security Trustee(s)) of holders of Notes issues
by more than one Funding 2 Issuer or a conflict in
directions received from the Issuer Security Trustee(s), the
Funding 2 Security Trustee shall have regard only to the
interests or directions, as applicable, of the Issuer
Security Trustee or Issuer Security Trustee(s) acting as
trustees in respect of the Issuer Security granted in
relation to the highest ranking class of Notes outstanding
(the "Principal Directions"); and
(b) if there is any conflict between the Principal Directions,
due to more than one Funding 2 Issuer having Notes of the
same class as their highest ranking class, the Funding 2
Security Trustee shall have regard only to the Principal
Directions of the Issuer Security Trustee(s) representing
the holders of the greatest aggregate principal amount
outstanding of the highest ranking class of Notes, and for
this purpose, the principal amount outstanding of any Note
not denominated in Sterling shall be converted into Sterling
at the rate specified in the relevant swap agreement
applicable to such Note or, if at the relevant time there is
no such currency swap agreement in effect, at the "spot
rate" at which the relevant currency is converted into
Sterling on the foreign exchange markets.
AND PROVIDED FURTHER THAT
(i) the Funding 2 Security Trustee shall not be bound to
act unless it is first indemnified and/or secured to
its satisfaction against all actions, proceedings,
claims and demands to which it may render itself
liable and all Liabilities which it may incur by so
doing; and
(ii) at any time when all Funding 2 Intercompany Loans have
been repaid in full and/or there is no further claim
outstanding under any Funding 2 Intercompany Loan
Agreement, the foregoing provisions of this Clause
15.9 (Funding 2 Security Trustee to act on Issuer
Security Trustee direction) shall no longer apply and
the Funding 2 Security Trustee shall no longer be
required to act at the request or direction of any
Issuer Security Trustee but instead shall act at the
request or direction (subject to proviso (i) above) of
the Funding 2 Secured Creditor which ranks highest in
the Funding 2 Post-Enforcement Priority of Payments.
Any directions given by the Issuer Security Trustee(s) or, if proviso
(ii) above applies, the Funding 2 Secured Creditor ranking highest in
the Funding 2 Post-Enforcement
43
Priority of Payments, in accordance with this Clause 15.9 (Funding 2
Security Trustee to act on Issuer Security Trustee direction) (and
the operation of provisos (a) and (b) and further provisos (i) and
(ii) thereof) shall be binding on all the Funding 2 Secured
Creditors.
16. Modification and Waiver
16.1 Modifications to Transaction Documents: Subject as expressly provided
otherwise in any Transaction Document, the Funding 2 Security Trustee
(subject to the provisions of Clause 15.9 (Funding 2 Security Trustee
to act on Issuer Security Trustee direction) may from time to time
and at any time without any consent or sanction of the Funding 2
Secured Creditors concur with any person in making or sanctioning any
modification or amendment to any of the Transaction Documents:
(a) provided that the Funding 2 Security Trustee is of the
opinion that such modification would not be materially
prejudicial to the interests of the Funding 2 Secured
Creditors;
(b) which in the Funding 2 Security Trustee's opinion is made to
correct a manifest error or is of a formal, minor or
technical nature or an error established as such to the
satisfaction of the Funding Security Trustee ; or
(c) which it may be necessary to make or which are required by
the Rating Agencies in respect of any person who has
executed a Deed of Accession pursuant to Clause 2 (Security)
hereto.
Any such modification or amendment shall be binding on Funding 2 and
the Funding 2 Secured Creditors and, unless the Funding 2 Security
Trustee otherwise agrees, notice thereof shall be given by Funding 2
to the Funding 2 Secured Creditors as soon as practicable thereafter.
Each of the Funding 2 Secured Creditors agrees from time to time to
do and perform such other and further acts and execute and deliver
any and all such other instruments as may be required to carry out
and effect the intent and purpose of this Clause 16.1 (Modifications
to Transaction Documents).
16.2 Authorisation or Waiver of Breach: Subject to Clause 15.9 (Funding 2
Security Trustee to act on Issuer Security Trustee direction), the
Funding 2 Security Trustee may, without the consent of the Funding 2
Secured Creditors, without prejudice to its right in respect of any
further or other breach, from time to time and at any time, but only
if and in so far as in its opinion the interests of the Funding 2
Secured Creditors would not be materially prejudiced thereby
authorise or waive, on such terms and conditions (if any) as shall
seem expedient to it, any proposed or actual breach of any of the
covenants or provisions contained in or arising pursuant to any of
the Transaction Documents. Any such authorisation or waiver shall be
binding on the Funding 2 Secured Creditors and, unless the Funding 2
Security Trustee otherwise agrees, notice thereof shall be given by
Funding 2 to the Funding 2 Secured Creditors as soon as practicable
thereafter.
16.3 Amendments and Waiver: Except as expressly provided in the preceding
provisions of this Clause 16 (Modification and Waiver) or any other
provision of this Deed, no amendment or waiver of any provision of
this Deed nor consent to any departure by any of the parties
therefrom shall in any event be effective unless the same shall be in
44
writing and signed by each of the parties hereto. In the case of a
waiver or consent, such waiver or consent shall be effective only in
the specific instance and as against the party or parties giving it
for the specific purpose for which it is given.
17. Remuneration of the Funding 2 Security Trustee
17.1 Remuneration: Funding 2 shall (subject as hereinafter provided) pay
to the Funding 2 Security Trustee an annual fee of such amount and on
such Monthly Payment Dates as shall, in each case, from time to time
be agreed by Funding 2 and the Funding 2 Security Trustee. Such
remuneration shall be payable on the applicable Monthly Payment Dates
subject to and in accordance with the Funding 2 Pre-Enforcement
Revenue Priority of Payments or, as the case may be, the Funding 2
Post-Enforcement Priority of Payments and the provisions of this
Deed. Such remuneration shall accrue from day to day and be payable
up to and including the date when all of the Funding 2 Secured
Obligations have been paid or discharged and the Funding 2 Security
Trustee has released, reassigned and/or discharged the Funding 2
Charged Property as provided in Clause 3 (Release of Funding 2
Charged Property).
17.2 Additional Remuneration: In the event of the occurrence of a Funding
2 Intercompany Loan Event of Default or a Potential Funding 2
Intercompany Loan Event of Default or the Funding 2 Security Trustee
giving a Funding 2 Intercompany Loan Enforcement Notice or the
Funding 2 Security Trustee considering it expedient or necessary or
being requested by Funding 2 to undertake duties which the Funding 2
Security Trustee and Funding 2 agree to be of an exceptional nature
or otherwise outside the scope of the normal duties of the Funding 2
Security Trustee under this Deed, Funding 2 shall pay to the Funding
2 Security Trustee such additional remuneration and on such Monthly
Payment Dates as shall, in each case, be agreed between them. In the
event of the Funding 2 Security Trustee failing to agree upon whether
such duties shall be of an exceptional nature or otherwise outside
the scope of the normal duties of the Funding 2 Security Trustee
under this Deed, or upon such additional remuneration, then such
matter shall be determined by a merchant bank (acting as an expert
and not as an arbitrator) selected by the Funding 2 Security Trustee
and approved by Funding 2 or, failing such approval, nominated (on
the application of the Funding 2 Security Trustee) by the President
for the time being of the Law Society of England and Wales (the
expense involved in such nomination and the fees of such merchant
bank being payable by Funding 2) and the determination of any such
merchant bank shall be final and binding upon the Funding 2 Security
Trustee and Funding 2.
17.3 Expenses: Funding 2 shall on written request, pay all other costs,
charges and expenses (including legal and travelling expenses)
(against production of invoices) which the Funding 2 Security Trustee
or any persons appointed by it hereunder may properly incur including
but not limited to:
(a) the negotiation, preparation and execution of and the
exercise of its powers and the performance of its duties
under, this Deed and any other Funding 2 Transaction
Documents to which the Funding 2 Security Trustee is a
party;
(b) the use of its reasonable endeavours to appoint a substitute
Cash Manager pursuant to the Cash Management Agreement;
45
(c) the use of its reasonable endeavours to appoint a substitute
Administrator pursuant to the Administration Agreement;
(d) the preservation or attempted preservation of the Funding 2
Security or any of the Funding 2 Charged Property;
(e) any other action taken by or on behalf of the Funding 2
Security Trustee with a view to the recovery of the Funding
2 Secured Obligations or for enforcing the Funding 2
Security; and
(f) legal and travelling expenses or documentary expenses paid
by the Funding 2 Security Trustee in connection with the
Funding 2 Charged Property.
17.4 Indemnity: Funding 2 shall indemnify the Funding 2 Security Trustee
and any Receiver in respect of all Liabilities to which it (or any
person appointed by it hereunder may be or become liable or which may
be properly incurred by it (or any such person as aforesaid) in the
execution or purported execution of any of its trusts, powers,
authorities and discretions hereunder or its functions under any such
appointment or in respect of any other matter or thing done or
omitted in any way relating to this Deed and any of the other Funding
2 Transaction Documents to which the Funding 2 Security Trustee is a
party save where the same arises as a result of the fraud, negligence
or wilful default by the Funding 2 Security Trustee or, as the case
may be, such Receiver.
17.5 Stamp Duties: Funding 2 shall, to the extent permitted by applicable
United Kingdom law, pay all stamp duties and other duties or taxes of
a similar nature, including for the avoidance of doubt any duty
levied under the Stamp Act 1891 as amended and supplemented, (if any)
payable on or arising out of or in consequence of:
(a) the creation of the security constituted by or pursuant to
this Deed; and
(b) the execution and delivery of this Deed and documents
executed pursuant hereto and the other Funding 2 Transaction
Documents (except where the obligation to pay all stamp
duties and other duties or taxes of a similar nature is
expressed to be the obligation of a person other than
Funding 2).
17.6 VAT: All sums payable by Funding 2 under this Deed are deemed to be
exclusive of any amount in respect of VAT. If, pursuant to any
provision of this Deed, the Funding 2 Security Trustee or the
Receiver of Funding 2 makes any taxable or deemed taxable supply to
Funding 2, then Funding 2 shall pay to the Funding 2 Security Trustee
or the Receiver of Funding 2 (as the case may be) (in addition to the
consideration for the supply) an amount equal to the VAT charged in
respect of such taxable or deemed taxable supply against production
of a valid VAT invoice.
17.7 Interest: Subject as provided in Clause 17.8 (Payment), all sums
payable by Funding 2 under this Clause 17 (Remuneration of the
Funding 2 Security Trustee) shall be payable on demand or, in the
case of any remuneration payable under Clause 17.1 (Remuneration) on
the due date specified therein and shall carry interest at the rate
per annum, which is one per cent. per annum above the base rate from
time to time of the National Westminster Bank Plc from the date on
which they were paid, charged or
46
incurred by the Funding 2 Security Trustee or any Receiver or, in the
case of remuneration, the due date for payment thereof, to the date
of actual payment, and in all other cases shall (if not paid on the
date specified in such demand or, if later, within three days after
such demand and, in either case, the Funding 2 Security Trustee so
requires) carry interest at such rate from the date specified in such
demand.
17.8 Payment: Notwithstanding the other provisions of this Deed, any
amount owing by Funding 2 pursuant to this Clause 17 (Remuneration of
the Funding 2 Security Trustee) shall only be payable by Funding 2
subject to and in accordance with the Funding 2 Pre-Enforcement
Revenue Priority of Payments or, as the case may be, the Funding 2
Post-Enforcement Priority of Payments.
17.9 Survival: Unless otherwise specifically stated in any discharge of
this Deed, the provisions of this Clause 17 (Remuneration of the
Funding 2 Security Trustee) shall continue in full force and effect
notwithstanding such discharge.
18. Appointment, Removal and Retirement of Funding 2 Security Trustee
18.1 Power of Funding 2: The power of appointing a new Funding 2 Security
Trustee and removing the Funding 2 Security Trustee or any new
Funding 2 Security Trustee shall be vested in Funding 2 but such
appointment or removal must be approved by the Issuer Security
Trustee, after consultation with each of the Funding 2 Secured
Creditors (such approval not to be unreasonably withheld or delayed).
A trust corporation may be appointed sole trustee hereof but subject
thereto there shall be at least two trustees hereof, one at least of
which shall be a trust corporation. Any appointment of a new Funding
2 Security Trustee and any retirement of an existing Funding 2
Security Trustee hereof shall as soon as practicable thereafter be
notified by Funding 2 to the Funding 2 Secured Creditors.
18.2 U.S. Investment Company Act: Any new Funding 2 Security Trustee must
(i) meet the requirements of section 26(a)(1) of the U.S. Investment
Company Act of 1940, as amended; (ii) not be an "affiliate" (as
defined in Rule 405 of the U.S. Securities Act of 1933, as amended)
of any Funding 2 Issuer or of any person involved in the organisation
or operation of any Funding 2 Issuer; (iii) not offer or provide
credit or credit enhancement to any Funding 2 Issuer; and (iv)
execute an agreement or instrument concerning the Notes containing
provisions to the effect set forth in section 26(a)(3) of the U.S.
Investment Company Act of 1940, as amended.
18.3 Powers of Funding 2 Security Trustee to appoint: Notwithstanding the
provisions of Clause 18.1 (Power of Funding 2), the Funding 2
Security Trustee may (as attorney for Funding 2) upon giving prior
notice to Funding 2 but without the consent of Funding 2 or the
Funding 2 Secured Creditors appoint any person established or
resident in any jurisdiction (whether a trust corporation or not) to
act either as a separate trustee or as a co-trustee jointly with the
Funding 2 Security Trustee:
(a) if the Funding 2 Security Trustee considers such appointment
to be in the interests of the Funding 2 Secured Creditors;
or
(b) for the purposes of conforming to any legal requirement,
restriction or condition in any jurisdiction in which any
particular act or acts are to be performed or any Funding 2
Charged Property is or is to be located; or
47
(c) for the purposes of obtaining a judgement in any
jurisdiction or the enforcement in any jurisdiction either
of a judgement already obtained or of the provisions of this
Deed or any of the other Funding 2 Transaction Documents to
which the Funding 2 Security Trustee is a party or
obligations arising pursuant thereto or of any of the
Funding 2 Security.
Funding 2 hereby irrevocably appoints the Funding 2 Security Trustee
to be its attorney in its name and on its behalf to execute any such
instrument of appointment. Such a person shall (subject always to the
provisions of this Deed and any other Funding 2 Transaction Document
to which the Funding 2 Security Trustee is a party) have such trusts,
powers, authorities and discretions (not exceeding those conferred on
the Funding 2 Security Trustee by this Deed or any of the other
Funding 2 Transaction Documents to which the Funding 2 Security
Trustee is a party) and such duties and obligations as shall be
conferred or imposed on it by the instrument of appointment. The
Funding 2 Security Trustee shall have power in like manner to remove
any such person. Such proper remuneration as the Funding 2 Security
Trustee may pay to any such person, together with any attributable
costs, charges and expenses incurred by it in performing its function
as such separate trustee or co-trustee, shall for the purposes of
this Deed be treated as costs, charges and expenses incurred by the
Funding 2 Security Trustee.
18.4 Multiple Trustees: Whenever there shall be more than two trustees
hereof, the majority of such trustees shall (provided such majority
includes a trust corporation) be competent to execute and exercise
all the trusts, powers, authorities and discretions vested by this
Deed and any of the other Funding 2 Transaction Documents in the
Funding 2 Security Trustee generally.
18.5 Retirement of Funding 2 Security Trustee: Subject as provided in
Clause 18.6 (Retirement or Removal not Effective), any Funding 2
Security Trustee for the time being of this Deed may retire at any
time upon giving not less than three calendar months' prior notice in
writing to Funding 2 without assigning any reason therefor and
without being responsible for any costs resulting from such
retirement.
18.6 Retirement or Removal not Effective: The retirement or removal of any
Funding 2 Security Trustee shall not become effective unless (1)
there remains at least one trustee hereof being a trust corporation
in office upon such retirement or removal and (2) there remains at
least one trustee of each Issuer Trust Deed and each Issuer Deed of
Charge being the same trust corporation. Funding 2 covenants that, in
the event of a trustee (being a sole trustee or the only trust
corporation) giving notice under Clause 18.5 (Retirement of Funding 2
Security Trustee) or being removed as referred to in Clause 18.1
(Power of Funding 2) it shall use its best endeavours to procure a
new Funding 2 Security Trustee of this Deed (being a trust
corporation) to be appointed as soon as reasonably practicable
thereafter (for the avoidance of doubt, in the same terms as this
Deed). If within 60 days of having given notice of its intention to
retire, Funding 2 has failed to appoint a replacement Funding 2
Security Trustee, the outgoing Funding 2 Security Trustee will be
entitled to appoint its successor (provided that the Rating Agencies
confirm that the then current ratings of the Notes of any Funding 2
Issuer shall not be either downgraded, reviewed or withdrawn as a
result of such appointment).
48
18.7 Funding 2 Security Trustee, Note Trustee and Issuer Security Trustee:
If the Funding 2 Security Trustee retires or is removed in accordance
with the provisions of this Clause 18 (Appointment, Removal and
Retirement of Funding 2 Security Trustee) then each Note Trustee and
each Issuer Security Trustee shall retire at the same time in
accordance with the provisions of the applicable Issuer Trust Deed
and the applicable Issuer Deed of Charge. If a Note Trustee retires
or is removed in accordance with the provisions of the applicable
Issuer Trust Deed and/or an Issuer Security Trustee retires or is
removed in accordance with the provisions of the applicable Issuer
Deed of Charge, then the Funding 2 Security Trustee shall retire at
the same time in accordance with the provisions of this Clause 18
(Appointment, Removal and Retirement of Funding 2 Security Trustee).
In each case the successor Funding 2 Security Trustee, each successor
Note Trustee and each successor Issuer Security Trustee shall be the
same person or persons.
18.8 Merger: Any corporation into which the Funding 2 Security Trustee may
be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to
which the Funding 2 Security Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate
trust business of the Funding 2 Security Trustee, shall be the
successor of the Funding 2 Security Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this
Clause 18 (Appointment, Renewal and Retirement of Funding 2 Security
Trustee), without the execution or filing of any paper or any further
act on the part of any of the parties hereto.
19. Miscellaneous Provisions
19.1 Evidence of Indebtedness: In any action, proceedings or claim
relating to this Deed or the Funding 2 Security, a statement as to
any amount due to any Funding 2 Secured Creditor or of the Funding 2
Secured Obligations or any part thereof or a statement of any amounts
which have been notified to the Funding 2 Security Trustee as being
amounts due to any Funding 2 Secured Creditor which is certified as
being correct by an officer of the Funding 2 Security Trustee or an
officer of the relevant Funding 2 Secured Creditor shall, save in the
case of manifest error, be conclusive evidence that such amount is in
fact due and payable.
19.2 Liability: All the liabilities and obligations of Funding 2 under or
by virtue of this Deed shall not be impaired by:
(a) any failure of this Deed to be legal, valid, binding and
enforceable as regards Funding 2 whether as a result of a
lack of corporate powers or of directors' authority,
defective execution or for any other reason whatsoever;
(b) any giving of time, forbearance, indulgence or waiver as
regards Funding 2;
(c) a discharge or release of Funding 2; or
(d) any other matter or event whatsoever whether similar to the
foregoing or not which might have the effect of impairing
all or any of its liabilities or obligations except proper
and valid payment or discharge of all Funding 2 Secured
Obligations and amounts whatsoever which this Deed provides
are to
49
be paid by Funding 2 or an absolute discharge or
release of Funding 2 signed by the Funding 2 Secured
Creditors and the Funding 2 Security Trustee.
19.3 Funding 2 Secured Creditors: Each Funding 2 Secured Creditor shall be
bound by the provisions of this Deed as if it contained covenants by
each Funding 2 Secured Creditor in favour of the Funding 2 Security
Trustee and every other Funding 2 Secured Creditor to observe and be
bound by all the provisions of this Funding 2 Deed expressed to apply
to Funding 2 Secured Creditors.
20. Rights cumulative
The respective rights of the Funding 2 Security Trustee, each Issuer
Security Trustee, the Funding 2 Secured Creditors and any Receiver to
this Deed are cumulative and may be exercised as often as each
considers appropriate and are in addition to their respective rights
under the general law. No failure on the part of the Funding 2
Security Trustee, each Issuer Security Trustee, the Funding 2 Secured
Creditors or any Receiver to exercise, and no delay in exercising,
any right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right. The
remedies in this Deed are cumulative and not exclusive of any
remedies provided by law.
21. Assignment
None of the Funding 2 Secured Creditors may assign, encumber or
transfer all or any part of its rights or benefits and/or transfer
its obligations under this Deed without the prior written consent of
the Funding 2 Security Trustee, save that each Funding 2 Issuer may
assign its rights under this Deed without such consent to the
applicable Issuer Security Trustee under the applicable Issuer Deed
of Charge.
22. Non Petition Covenant; Corporate Obligations
22.1 Each of the parties hereto hereby agrees that it shall not institute
against the Mortgages Trustee or any Funding 2 Issuer any winding-up,
administration, insolvency or similar proceedings in any jurisdiction
for so long as any sum is outstanding under any Funding 2
Intercompany Loan Agreement or for two years plus one day since the
last day on which any such sum was outstanding provided that the
Funding 2 Security Trustee may prove or lodge a claim in the event of
a liquidation initiated by any other person.
22.2 Corporate Obligations: To the extent permitted by law, no recourse
under any obligation, covenant, or agreement of any person contained
in this Deed shall be had against any shareholder, officer or
director of such person as such, by the enforcement of any assessment
or by any legal proceeding, by virtue of any statute or otherwise; it
being expressly agreed and understood that this Agreement is a
corporate obligation of each person expressed to be a party hereto
and no personal liability shall attach to or be incurred by the
shareholders, officers, agents or directors of such person as such,
or any of them, under or by reason of any of the obligations,
covenants or agreements of such person contained in this Deed, or
implied therefrom, and that any and all personal liability for
breaches by such person of any of such obligations, covenants or
agreements, either under any applicable law or by statute or
constitution, of every such shareholder, officer, agent or director
is hereby expressly waived by each person
50
expressed to be a party hereto as a condition of and consideration for
the execution of this Deed.
23. Notices
Any notices or other communication or document to be given or
delivered pursuant to this Deed to any of the parties hereto shall be
sufficiently served if sent by prepaid first class post, by hand or
by facsimile transmission and shall be deemed to be given (in the
case of facsimile transmission) when despatched or (where delivered
by hand) on the day of delivery if delivered before 17.00 hours on a
London Business Day or on the next London Business Day if delivered
thereafter or (in the case of first class post) when it would be
received in the ordinary course of the post and shall be sent:
(a) in the case of Funding 2, to Granite Finance Funding 2
Limited situated at Fifth Floor, 100 Wood Street, London
EC2V 7EX (facsimile number 020 7606 0643) for the attention
of The Company Secretary with a copy to Northern Rock plc,
Northern Rock House, Gosforth, Newcastle upon Tyne NE3 4PL
(facsimile number 0191 213 2203) for the attention of the
Group Secretary;
(b) in the case of the Funding 2 Security Trustee, to The Bank
of New York situated at 40th Floor, One Canada Square,
London E14 5AL attention Trustee Administration Manager
(facsimile number 020 7964 4637);
(c) in the case of the Issuer Security Trustee, to The Bank of
New York situated at 40th Floor, One Canada Square, London
E14 5AL attention Trustee Administration Manager (facsimile
number 020 7964 4637);
(d) in the case of the Master Issuer, to Granite Master Issuer
plc situated at Fifth Floor, 100 Wood Street, London EC2V
7EX (facsimile number 020 7606 0643) for the attention of
The Company Secretary with a copy to Northern Rock plc,
Northern Rock House, Gosforth, Newcastle upon Tyne NE3 4PL
(facsimile number 0191 213 2203) for the attention of the
Group Secretary;
(e) in the case of the Mortgages Trustee, to Granite Finance
Trustees Limited situated at 22 Grenville Street, St.
Helier, Jersey JE4 8PX, Channel Islands, (facsimile number
01534 609333) for the attention of The Company Secretary
with a copy to Northern Rock plc, Northern Rock House,
Gosforth, Newcastle upon Tyne NE3 4PL (facsimile number 0191
213 2203) for the attention of the Group Secretary;
(f) in the case of the Cash Manager, to Northern Rock plc
situated at Northern Rock House, Gosforth, Newcastle upon
Tyne NE3 4PL (facsimile number 0191 213 2203) for the
attention of the Group Secretary;
(g) in the case of the Account Bank, to Lloyds TSB Bank plc
situated at City Office, Bailey Drive, Gillingham Business
Park, Kent ME8 0LS (facsimile number 020 7775 3642) for the
attention of Jason Eperon;
51
(h) in the case of the Corporate Services Provider, to Law
Debenture Corporate Services Limited situated at Fifth
Floor, 100 Wood Street, London EC2V 7EX (facsimile number
020 7606 0643) for the attention of the Company Secretary;
(i) in the case of Moody's, to Moody's Investor Services
situated at 1st Floor, 2 Minster Court, Mincing Lane, London
EC3R 7XB (facsimile number 020 7772 5400) for the attention
of RMBS Monitoring;
(j) in the case of S&P, to Standard & Poor's situated at Garden
House, 18 Finsbury Circus, London EC2M 7NJ (facsimile number
020 7826 3598) for the attention of Heather Dyke; and
(k) in the case of Fitch, to Fitch Ratings Limited situated at
Eldon House, 2 Eldon Street, London EC2M 7UA (facsimile
number: 020 7417 6262) for the attention of European
Structured Finance Surveillance,
or to such other address or facsimile number or for the attention of
such other person or entity as may from time to time be notified by
any party to the others by fifteen days prior written notice in
accordance with the provisions of this Clause 23 (Notices).
24. Third Party Rights
A person who is not a party to this Deed may not enforce any of its
terms under the Contracts (Rights of Third Parties) Act 1999, but
this shall not affect any right or remedy of a third party which
exists or is available apart from that Act.
25. Execution in Counterparts; Severability
25.1 Counterparts:
(a) This Deed may be executed in any number of counterparts
(manually or by facsimile) and by different parties hereto
in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which when
taken together shall constitute one and the same instrument.
(b) Notwithstanding the provisions of Clause 25.1(a), this Deed
shall be fully effective and binding on Funding 2 upon its
execution and delivery of at least one copy of this Deed,
notwithstanding that this Deed has not then been executed
and delivered by any other party thereto or that such other
party has executed or executes or has delivered or delivers
a counterpart of this Deed.
25.2 Severability: Where any provision in or obligation under this Deed
shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations under this Deed, or of such provision or obligation in
any other jurisdiction, shall not be affected or impaired thereby.
26. Governing Law and Submission to Jurisdiction
26.1 Governing Law: This Deed is governed by, and shall be construed in
accordance with, English law provided that any terms hereof which are
particular to the laws of Scotland shall be construed in accordance
with Scots law.
52
26.2 Submission to Jurisdiction: Each of the parties hereto irrevocably
agrees that the courts of England shall have jurisdiction to hear and
determine any suit, action or proceeding, and to settle any disputes,
which may arise out of or in connection with this Deed and, for such
purposes, irrevocably submits to the jurisdiction of such courts.
26.3 Process Agent: The Mortgages Trustee irrevocably and unconditionally
appoints Mourant & Co. Capital (SPV) Limited at 8th Floor, 68 King
William Street, London EC4N 7DZ or otherwise at its registered office
for the time being as its agent for service of process in England in
respect of any proceedings in respect of this Deed undertakes that in
the event of Mourant & Co. Capital (SPV) Limited ceasing so to act it
will appoint another person with a registered office in London as its
agent for service of process.
26.4 Forum: Each of the parties hereto irrevocably waives any objection
which it might now or hereafter have to the courts of England being
nominated as the forum to hear and determine any Proceedings and to
settle any disputes, and agrees not to claim that any such court is
not a convenient or appropriate forum.
IN WITNESS WHEREOF this Deed has been executed as a deed and delivered by the
parties hereto on the day and year first above written.
as Cash Manager, Funding 2 Basis Rate Swap Provider and Account Bank
EXECUTED AND DELIVERED AS A DEED )
for and on behalf of )
NORTHERN ROCK PLC )
by its duly authorised attorney )
- -------------------------
Name:
in the presence of:
Signature _________________________
Witness
Full name
Occupation
Address
53
as Mortgages Trustee
EXECUTED AND DELIVERED AS A DEED )
for and on behalf of )
GRANITE FINANCE TRUSTEES LIMITED )
a company incorporated in Jersey, Channel Islands, by )
and , being persons )
who, in accordance with the laws of that territory are )
acting under the authority of the company )
- -------------------------------
Name:
- -------------------------------
Name:
in the presence of:
Signature _________________________
Witness
Full name
Occupation
Address
54
as Funding 2 and a Beneficiary
EXECUTED AND DELIVERED AS A DEED )
for and on behalf of )
GRANITE FINANCE FUNDING 2 LIMITED )
acting by two directors )
- -------------------------
for and on behalf of
LDC Securitisation Director No. 1 Limited
Director
Name:
- -------------------------
for and on behalf of
LDC Securitisation Director No. 2 Limited
Director
Name:
as Master Issuer
EXECUTED AND DELIVERED AS A DEED )
for and on behalf of )
GRANITE MASTER ISSUER PLC )
acting by two directors )
- -------------------------
for and on behalf of
LDC Securitisation Director No. 1 Limited
Director
Name:
- -------------------------
for and on behalf of
LDC Securitisation Director No. 2 Limited
Director
Name:
55
as Corporate Services Provider
EXECUTED AND DELIVERED AS A DEED )
for and on behalf of )
LAW DEBENTURE CORPORATE )
SERVICES LIMITED )
acting by a director and its secretary )
- -------------------------
Director
Name:
- -------------------------
Secretary
Name:
as Funding 2 Security Trustee and Issuer Security Trustee
EXECUTED AND DELIVERED AS A DEED )
for and on behalf of )
THE BANK OF NEW YORK )
by its duly authorised signatory )
- -------------------------------
Name:
56
SCHEDULE 1
FORM OF SECURITY POWER OF ATTORNEY
THIS POWER OF ATTORNEY is made on [o] by Granite Finance Funding 2 Limited.
(registered number 5249387), a private limited liability company incorporated
under the laws of England and Wales whose registered office is at Fifth Floor,
100 Wood Street, London EC2V 7EX (the "Principal").
WHEREAS
(1) By virtue of a deed of charge dated [o] between Granite Finance
Funding 2 Limited, and The Bank of New York (in its capacity as
Funding 2 Security Trustee) (as amended and supplemented from time to
time, the "Funding 2 Deed of Charge"), provision was made for the
execution by the Principal of this Power of Attorney.
(2) Words and phrases in this Power of Attorney shall (save where
expressed to the contrary) have the same meanings respectively as the
words and phrases in the Funding 2 Deed of Charge.
NOW THIS POWER OF ATTORNEY WITNESSETH
1. The Principal hereby irrevocably (within the meaning of Section 4 of
the Powers of Attorney Act 1971) and by way of security for the
payment and performance of the Funding 2 Secured Obligations and the
covenants, conditions, obligations and undertakings on the part of
the Principal contained in the Funding 2 Deed of Charge and the other
Funding 2 Transaction Documents to which the Principal is a party
from time to time appoints The Bank of New York and any other person
or persons for the time being the Funding 2 Security Trustee or
Funding 2 Security Trustees of and under the Funding 2 Deed of Charge
(the "Attorney") and each and every person to whom the Funding 2
Security Trustee shall from time to time have delegated the exercise
of the power of attorney conferred by this Power of Attorney (each a
"Delegate") and any receiver including any administrative receiver
and any manager (the "Receiver") and/or administrator (the
"Administrator") appointed from time to time by the Attorney or on
its behalf its true and lawful attorney for and in the Principal's
name or otherwise jointly and severally to sign, seal, execute,
deliver, perfect and do any assurance, act, matter or thing which the
Attorney, Delegate, Receiver or Administrator considers in each case
to be necessary for the protection or preservation of the Attorney's
and the Funding 2 Secured Creditors' interests and rights (as
described in the Funding 2 Deed of Charge) in and to the Funding 2
Charged Property or which ought to be done by the Principal under the
covenants, undertakings and provisions contained in the Funding 2
Deed of Charge and the other Funding 2 Transaction Documents to which
the Principal is a party from time to time and generally to in its
name and on its behalf to exercise all or any of the powers,
authorities or discretions conferred by or pursuant to the Funding 2
Deed of Charge on the Funding 2 Security Trustee and/or any Receiver
whether on or at any time after the Funding 2 Security has become
enforceable in accordance with Clause 6.2 (Enforcement) of the
Funding 2 Deed of Charge or in any other circumstances where the
Attorney has become entitled to take any of the steps referred to in
the Funding 2 Deed of Charge including (without limitation) any or
all of the following:
57
(a) to do every act or thing which the Attorney, Delegate,
Receiver or Administrator may deem to be necessary, proper
or expedient for getting in any of the Funding 2 Charged
Property and/or fully and effectively vesting, transferring
or assigning the Funding 2 Charged Property or any part
thereof and/or the Principal's estate, right, title, benefit
and/or interest therein or thereto in or to the Attorney and
its successors in title or other person or persons entitled
to the benefit thereof or for carrying into effect any other
dealing with the Funding 2 Charged Property whatsoever
permitted under the Funding 2 Deed of Charge in the same
manner and as fully and effectively as the Principal could
have done;
(b) the power by writing under its hand by an officer of the
Attorney (including every Receiver appointed under the
Funding 2 Deed of Charge) from time to time to appoint a
substitute attorney (each a "Substitute") who shall have
power to act on behalf of the Principal as if that
Substitute shall have been originally appointed Attorney by
this Power of Attorney and/or to revoke any such appointment
at any time without assigning any reason therefor.
2. In favour of the Attorney, any Delegate, any Receiver and/or
Administrator and/or Substitute, or a person dealing with any of them
and the successors and assigns of such a person, all acts properly
done and documents executed or signed by the Attorney, a Delegate, a
Receiver, an Administrator or a Substitute in the purported exercise
of any power conferred by this Power of Attorney shall for all
purposes be valid and binding on the Principal and its successors and
assigns.
3. The Principal irrevocably and unconditionally undertakes to indemnify
the Attorney and each Delegate, Receiver and/or Administrator and/or
Substitute appointed from time to time by the Attorney and their
respective estates (each an "Indemnified Party") against all actions,
proceedings, claims, costs, expenses and liabilities of every
description arising from the exercise, or the purported exercise, of
any of the powers conferred by this Power of Attorney, save where the
same arises as the result of the fraud, negligence or wilful default
of the relevant Indemnified Party or its officers or employees.
4. The provisions of Clause 3 shall continue in force after the
revocation or termination, howsoever arising, of this Power of
Attorney.
5. The laws of England and Wales shall apply to this Power of Attorney
and the interpretation thereof and to all acts of the Attorney and
each Delegate, Receiver and/or Administrator and/or Substitute
carried out or purported to be carried out under the terms hereof.
6. The Principal hereby agrees at all times hereafter to ratify and
confirm whatsoever the said Attorney or its attorney or attorneys or
any Delegate, Receiver or Administrator or Substitute shall properly
and lawfully do or cause to be done in and concerning the Funding 2
Charged Property.
IN WITNESS whereof this Power of Attorney has been executed as a deed by the
Principal the day and year first before written.
58
Executed by
GRANITE FINANCE FUNDING 2 LIMITED
as its deed as follows:
Signed for and on its behalf by one of its directors
and by another of its directors/its secretary By________________________________________
Director
Name________________________________________
By________________________________________
Director/Secretary
Name________________________________________
59
SCHEDULE 2
FORM OF DEED OF ACCESSION
THIS DEED OF ACCESSION is made on [ ]
BETWEEN:
(1) GRANITE FINANCE FUNDING 2 LIMITED (registered number 5249387) a
private limited liability company incorporated under the laws of
England and Wales whose London branch is at Fifth Floor, 100 Wood
Street, London EC2V 7EX;
(2) THE BANK OF NEW YORK, a New York banking corporation whose London
branch address is at 40th Floor, One Canada Square, London E14 5AL in
its separate capacities as (i) Funding 2 Security Trustee and (2)
Issuer Security Trustee to the Master Issuer;
(3) GRANITE MASTER ISSUER PLC (registered number 5250668), a public
limited company incorporated under the laws of England and Wales,
whose registered office is at Fifth Floor, 100 Wood Street, London
EC2V 7EX;
(4) GRANITE FINANCE TRUSTEES LIMITED (registered number 79309) a private
limited liability company incorporated under the laws of Jersey whose
registered office is at 22 Grenville Street, St. Helier, Jersey JE4
8PX Channel Islands in its capacity as Mortgages Trustee;
(5) NORTHERN ROCK PLC (registered number 03273685) a public limited
company incorporated under the laws of England and Wales whose
registered office is at Northern Rock House, Gosforth, Newcastle upon
Tyne NE3 4PL, in its capacity as (1) Cash Manager (2) Funding 2 Basis
Rate Swap Provider and (3) Account Bank; and
(6) LAW DEBENTURE CORPORATE SERVICES LIMITED, a private limited company
incorporated under the laws of England and Wales whose registered
office is Fifth Floor, 100 Wood Street, London EC2V 7EX in its
capacity as Corporate Services Provider; and
(7) [Any other additional secured creditor of Funding 2](the "New Funding
2 Secured Creditor").
NOW THIS DEED OF ACCESSION WITNESSES AS FOLLOWS
WHEREAS:
(A) [Pursuant to the terms of a [describe agreement] (the "Agreement")
dated [ ] made between Funding 2 and the New Funding 2 Secured
Creditor, Funding 2 has agreed to [describe nature of the obligations
of Funding 2 under the Agreement].
(B) This Deed is supplemental to a deed of charge dated [o] between,
amongst others, Granite Finance Funding 2 Limited and The Bank of New
York (in its capacity as Funding 2 Security Trustee) (as amended and
supplemented from time to time the "Funding 2 Deed of Charge"),
pursuant to which Funding 2 agreed to provide the
60
Funding 2 Security Trustee with the benefit of the Funding 2 Security
to secure Funding 2's obligations to the Funding 2 Secured Creditors
including the New Funding 2 Secured Creditor.
(C) The terms of the Funding 2 Deed of Charge permit Funding 2 to secure
its obligations to a New Funding 2 Secured Creditor thereunder.
(D) The New Funding 2 Secured Creditor has agreed to enter into this Deed
of Accession (this "Deed") to accede to the provisions of the Funding
2 Deed of Charge.
(E) The Funding 2 Secured Creditors have agreed to enter into this Deed
[and to agree consequential changes to the Funding 2 Priority of
Payments set out in Part I, Part II and Part III of Schedule 3 of the
Funding 2 Deed of Charge as are required and any [other] amendment as
may be required to give effect to this Deed] [and to acknowledge the
Security Interests created hereunder].
1. Interpretation
The provisions of the Programme Master Definitions Schedule signed
for the purposes of identification by Brown and Wood and Allen &
Overy LLP on [?], 2005 (as the same may be amended, varied or
supplemented from time to time with the consent of the parties
hereto) are expressly and specifically incorporated into this Deed.
2. Representations and Warranties
2.1 The New Funding 2 Secured Creditor hereby represents and warrants to
the Funding 2 Security Trustee and each of the Funding 2 Secured
Creditors in respect of itself that as of the date of this Deed:
(a) pursuant to the terms of the Agreement, Funding 2 has agreed
to pay to the New Funding 2 Secured Creditor the amount (if
any) [describe in relation to the Agreement]; and
(b) the Agreement expressly provides that all amounts due from
Funding 2 thereunder are to be secured by or pursuant to the
Funding 2 Deed of Charge.
2.2 Funding 2 hereby represents and warrants to the Funding 2 Security
Trustee and each of the Funding 2 Secured Creditors that as at the
date of this Deed, the conditions to incurring further secured
financial indebtedness set out in Clause 2 (Security) of the Funding
2 Deed of Charge are satisfied.
61
3. Accession
In consideration of the New Funding 2 Secured Creditor being accepted
as a Funding 2 Secured Creditor for the purposes of the Funding 2
Deed of Charge by the parties thereto as from [date], the New Funding
2 Secured Creditor:
(a) confirms that as from [date], it intends to be a party to
the Funding 2 Deed of Charge as a Funding 2 Secured
Creditor;
(b) undertakes to comply with and be bound by all of the
provisions of the Master Definitions Schedule (as the same
may be amended, varied or restated from time to time) and
the Funding 2 Deed of Charge in its capacity as a Funding 2
Secured Creditor, as if it had been an original party
thereto;
(c) undertakes to perform comply with and be bound by all of the
provisions of the Funding 2 Deed of Charge in its capacity
as a Funding 2 Secured Creditor, as if it had been an
original party thereto including, without limitation, Clause
19.3 (Funding 2 Secured Creditors) (including without
limitation Clauses 7.3 (Funding 2 Post-Enforcement Priority
of Payments), 7.6 (Funding 2 Security Trustee Rights upon
Enforcement) and Clause 5 (Restrictions on Exercise of
Certain Rights)); and
(d) agrees that the Funding 2 Security Trustee shall be the
Funding 2 Security Trustee of the Funding 2 Deed of Charge
for all Funding 2 Secured Creditors upon and subject to the
terms set out in the Funding 2 Deed of Charge.
4. [Security(1)
(a) Funding 2 by way of first fixed security for the payment or
discharge of the Funding 2 Secured Obligations, subject to
Clause 3 (Release of Funding 2 Charged Property) of the
Funding 2 Deed of Charge, hereby [Insert appropriate
security provisions and details of further assets]; and
(b) Each of the dispositions of or charges over property
effected in or pursuant to this Deed is made with full title
guarantee (or, in relation to assets or rights situated in
or governed by the laws of Scotland, with absolute
warrandice). ]
5. [Application(2)
Prior to and following enforcement of the Funding 2 Security all
amounts at any time held by Funding 2, the Cash Manager or the
Funding 2 Security Trustee in respect of the security created under
this Deed shall be held and/or applied by such person subject to and
in accordance with the relevant provisions of the Funding 2 Deed of
Charge.]
6. Scope of the Funding 2 Deed of Charge
- --------------------
(1) Include if necessary.
(2) Include if necessary.
62
Funding 2, the New Funding 2 Secured Creditor and the Funding 2
Secured Creditors (including the Funding 2 Security Trustee) hereby
agree that for the relevant purposes under the Funding 2 Deed of
Charge and the Master Definitions Schedule:
(a) the Agreement shall be treated as a Funding 2 Transaction
Document; [and]
(b) [the property and assets of Funding 2 expressed to be
assigned by way of security or charged pursuant to this Deed
of Accession shall constitute Funding 2 Charged
Property;][and]
(c) the New Funding 2 Secured Creditor shall be treated as a
Funding 2 Secured Creditor.
7. Notices and Acknowledgements
(a) The execution of this Deed by the New Funding 2 Secured
Creditor shall constitute notice to such New Funding 2
Secured Creditor of the assignments made by Funding 2
pursuant to Clause 2 (Security) of the Funding 2 Deed of
Charge. The execution of this Deed by each other Funding 2
Secured Creditor shall constitute notice to such Funding 2
Secured Creditor of the assignments made by Funding 2
pursuant to this Deed.
(b) By its execution of this Deed, the New Funding 2 Secured
Creditor acknowledges that it has notice of and consents to
the assignments, charges and Security Interests made or
granted by Funding 2 pursuant to Clause 2 (Security) of the
Funding 2 Deed of Charge and also acknowledges that as at
the date hereof it has not received from any other person
any notice of any assignment or charge of any of the
property the subject of such Security Interests. By its
execution of this Deed, each other Funding 2 Secured
Creditor acknowledges that it has notice of and consents to
the assignments, charges and Security Interests made or
granted by Funding 2 pursuant to this Deed of Accession and
also acknowledges that as at the date hereof it has not
received from any other person any notice of any assignment
or charge of any of the property the subject of such
Security Interests.
(c) Notwithstanding the assignments and charges granted pursuant
to Clause 2 (Security) of the Funding 2 Deed of Charge or
pursuant to this Deed of Accession, the parties hereto
acknowledge that, subject as provided otherwise in the
Funding 2 Deed of Charge, each Funding 2 Secured Creditor
and each other party to any Funding 2 Transaction Document
may continue to make all payments becoming due to Funding 2
under any Funding 2 Transaction Document in the manner
envisaged by such Funding 2 Transaction Document until the
receipt of written notice from the Funding 2 Security
Trustee or any Receiver requiring payments to be made
otherwise.
63
[8. Amendment to the Funding 2 Priority of Payments
The Funding 2 Secured Creditors agree to amend and restate the
Funding 2 Priority of Payments set out in Part I and Part II of
Schedule 3 of the Funding 2 Deed of Charge in accordance with
Appendix 1 hereto.](3)
9. Notices and Demands
Any notice or communication under or in connection with this Deed,
the Funding 2 Deed of Charge shall be given in the manner and at the
times set out in Clause 23 (Notices) of the Funding 2 Deed of Charge
to the addresses given in this Clause or at such other address as the
recipient may have notified to the other parties hereto and/or
thereto in writing.
The address referred to in this Clause 9 for the New Funding 2
Secured Creditor is:
[ ]
For the attention of: [ ]
Telephone: [ ]
Facsimile: [ ]
or such other address and/or numbers as the New Funding 2 Secured
Creditor may notify to the parties to the Funding 2 Deed of Charge in
accordance with the provisions thereof.
10. Non Petition Covenant
Each of the parties hereto hereby agrees that it shall not institute
against the Mortgages Trustee or any Funding 2 Issuer any winding-up,
administration, insolvency or similar proceedings in any jurisdiction
for so long as any sum is outstanding under any Funding 2
Intercompany Loan Agreement or for two years plus one day since the
last day on which any such sum was outstanding provided that the
Funding 2 Security Trustee may prove or lodge a claim in the event of
a liquidation initiated by any other person.
11. Third Party Rights
A person who is not a party to this Deed may not enforce any of its
terms under the Contracts (Rights of Third Parties) Act 1999, but
this shall not affect any right or remedy of a third party which
exists or is available apart from that Act.
12. Execution in Counterparts
This Deed may be executed in any number of counterparts (manually or
by facsimile) and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one
and the same instrument.
- -----------------------
(3) Include if necessary.
64
13. Choice of Law
This Deed of Accession is governed by and shall be construed in
accordance with English law.
65
EXECUTION PAGE
IN WITNESS WHEREOF this Deed has been executed as a deed and delivered by the
parties hereto on the day and year first above written.
as Beneficiary
EXECUTED AND DELIVERED AS A DEED )
for and on behalf of )
GRANITE FINANCE FUNDING 2 LIMITED )
acting by two directors )
- -------------------------
for and on behalf of
LDC Securitisation Director No. 1 Limited
Director
Name:
- -------------------------
for and on behalf of
LDC Securitisation Director No. 2 Limited
Director
Name:
66
as Funding 2 Security Trustee and Issuer Security Trustee to the Master Issuer
EXECUTED AND DELIVERED AS A DEED )
for and on behalf of )
THE BANK OF NEW YORK )
by its duly authorised signatory )
- -------------------------------
Name:
as Master Issuer
EXECUTED AND DELIVERED AS A DEED )
for and on behalf of )
GRANITE MASTER ISSUER PLC )
acting by two directors )
- -------------------------
for and on behalf of
LDC Securitisation Director No. 1 Limited
Director
Name:
- -------------------------
for and on behalf of
LDC Securitisation Director No. 2 Limited
Director
Name:
67
as Mortgages Trustee
EXECUTED AND DELIVERED AS A DEED )
for and on behalf of )
GRANITE FINANCE TRUSTEES LIMITED )
a company incorporated in Jersey, Channel Islands, by )
and , being persons )
who, in accordance with the laws of that territory are )
acting under the authority of the company )
- -------------------------------
Name:
- -------------------------------
Name:
in the presence of:
Signature _________________________
Witness
Full name
Occupation
Address
68
as Account Bank, Cash Manager, Funding 2 Basis Rate Swap Provider and Funding
2 GIC Provider
EXECUTED AND DELIVERED AS A DEED )
for and on behalf of )
NORTHERN ROCK PLC )
by its duly authorised attorney )
- -------------------------
Name:
in the presence of:
Signature _________________________
Witness
Full name
Occupation Trainee Solicitor
Address c/o Sidley Austin Brown & Wood
Woolgate Exchange
25 Basinghall Street
London EC2V 5HA
as Corporate Services Provider
EXECUTED AND DELIVERED AS A DEED )
for and on behalf of )
LAW DEBENTURE CORPORATE )
SERVICES LIMITED )
acting by a director and its secretary )
- -------------------------
Director
Name:
- -------------------------
Secretary
Name:
69
Appendix 1
[Amended and Restated Funding 2 Priority of Payments]
70
SCHEDULE 3
FUNDING 2 PRIORITY OF PAYMENTS
Part I
Funding 2 Pre-Enforcement Revenue Priority of Payments
Distribution of Funding 2 Available Revenue Receipts prior to Enforcement of
the Funding 2 Security
The following order of priority of payments is the "Funding 2
Pre-Enforcement Revenue Priority of Payments":
(A) first, to pay amounts due in the relevant Monthly Payment Period to
the Funding 2 Security Trustee (together with interest and (to the
extent not already inclusive) VAT on those amounts) and to provide
for any amounts due or to become due prior to the next following
Monthly Payment Period to the Funding 2 Security Trustee under this
Funding 2 Deed of Charge or any other Transaction Document;
(B) second, to pay amounts due in the relevant Monthly Payment Period to
the Master Issuer in respect of the Master Issuer's obligations
specified in paragraphs (A) through (D) of the Issuer Pre-Enforcement
Revenue Priority of Payments or, as the case may be, paragraphs (A)
through (C) of the Issuer Post-Enforcement Priority of Payments;
(C) third, to pay amounts due to any third party creditors of Funding 2
(other than those referred to later in this order of priority of
payments or in the Funding 2 Pre-Enforcement Principal Priority of
Payments) of which the Cash Manager has notice prior to the relevant
Monthly Payment Period, which amounts have been incurred without
breach by Funding 2 of the Transaction Documents to which it is a
party (and for which payment has not been provided for elsewhere) and
to provide for any such amounts expected to become due and payable by
Funding 2 prior to the next following Monthly Payment Period and to
pay or discharge any liability of Funding 2 for corporation tax on
any chargeable income or gain of Funding 2;
(D) fourth, to pay amounts due in the relevant Monthly Payment Period to
the Funding 2 Liquidity Facility Provider under the Funding 2
Liquidity Facility Agreement, if any (except for amounts drawn
thereunder to make Funding 2 Liquidity Facility Principal Payments
and any Funding 2 Liquidity Facility Subordinated Amounts);
(E) fifth, towards payment of amounts due in the relevant Monthly Payment
Period to the Cash Manager under the Cash Management Agreement
(together with (to the extent not already inclusive) VAT on those
amounts);
(F) sixth, in no order of priority among them but in proportion to the
respective amounts due in the relevant Monthly Payment Period,
towards payment of amounts, if any, due to (i) the Account Bank under
the terms of the Funding 2 Bank Account Agreement and (ii) the
Corporate Services Provider under the terms of the Corporate Services
Agreement;
71
(G) seventh, in no order of priority among them but in proportion to the
respective amounts due in the relevant Monthly Payment Period,
towards payment of all amounts (including such part of any Swap
Termination Payment) due under the Funding 2 Basis Rate Swaps to the
Funding 2 Basis Rate Swap Provider but excluding any Funding 2 Basis
Rate Swap Excluded Termination Amount;
(H) eighth, in no order of priority among them but in proportion to the
respective amounts due in the relevant Monthly Payment Period,
towards payment of interest due and payable on the AAA Loan Tranches;
(I) ninth, towards a credit to the AAA Principal Deficiency Sub-ledger in
an amount sufficient to eliminate any debit on that sub-ledger (such
credit to be made on the 20th Monthly Payment Date falling in the
relevant Monthly Payment Period);
(J) tenth, in no order of priority among them but in proportion to the
respective amounts due in the relevant Monthly Payment Period,
towards payment of interest due and payable on the AA Loan Tranches;
(K) eleventh, after taking account of the replenishment of the Funding 2
Liquidity Reserve Fund in the relevant Monthly Payment Period from
Funding 2 Available Principal Receipts, replenishing the Funding 2
Liquidity Reserve Fund, if any, up to the Funding 2 Liquidity Reserve
Required Amount but only to the extent that there are AAA Loan
Tranches and AA Loan Tranches outstanding at the end of such Monthly
Payment Period (such replenishment to be made on the 20th Monthly
Payment Date falling in the relevant Monthly Payment Period);
(L) twelfth, towards a credit to the AA Principal Deficiency Sub-ledger
in an amount sufficient to eliminate any debit on that sub-ledger
(such credit to be made on the 20th Monthly Payment Date falling in
the relevant Monthly Payment Period);
(M) thirteenth, in no order of priority among them but in proportion to
the respective amounts due in the relevant Monthly Payment Period,
towards payment of interest due and payable on the A Loan Tranches;
(N) fourteenth, towards a credit to the A Principal Deficiency Sub-ledger
in an amount sufficient to eliminate any debit on that sub-ledger
(such credit to be made on the 20th Monthly Payment Date falling in
the relevant Monthly Payment Period);
(O) fifteenth, in no order of priority among them but in proportion to
the respective amounts due in the relevant Monthly Payment Period,
towards payment of interest due and payable on the BBB Loan Tranches;
(P) sixteenth, towards a credit to the BBB Principal Deficiency
Sub-ledger in an amount sufficient to eliminate any debit on that
sub-ledger (such credit to be made on the 20th Monthly Payment Date
falling in the relevant Monthly Payment Period);
(Q) seventeenth, in no order of priority among them but in proportion to
the respective amounts due in the relevant Monthly Payment Period,
towards payment of interest due and payable on the BB Loan Tranches;
72
(R) eighteenth, towards a credit to the BB Principal Deficiency
Sub-ledger in an amount sufficient to eliminate any debit on that
sub-ledger (such credit to be made on the 20th Monthly Payment Date
falling in the relevant Monthly Payment Period);
(S) nineteenth, to pay amounts due in the relevant Monthly Payment Period
to the Master Issuer in respect of the Master Issuer's obligations to
make payments under the Start-Up Loan Agreement(s) specified in item
(J) of the Issuer Pre-Enforcement Revenue Priority of Payments or, as
the case may be, item (O) of the Issuer Post-Enforcement Priority of
Payments;
(T) twentieth, after taking account any replenishment of the Funding 2
Reserve Fund in the relevant Monthly Payment Period from Funding 2
Available Principal Receipts, to credit the Funding 2 Reserve Ledger
up to an amount no less than the Funding 2 Reserve Required Amount or
if an Arrears or Step-Up Trigger Event has occurred, to credit the
Funding 2 Reserve Ledger with such additional amount as set out in
paragraph 1.3 of Schedule 5 (Utilisation of Funding 2 Reserves) of
this Deed (such credit to be made on the 20th Monthly Payment Date
falling in the relevant Monthly Payment Period);
(U) twenty-first, to the Master Issuer in respect of its obligations (if
any) to make a Swap Termination Payment to any Issuer Swap Provider
in the relevant Monthly Payment Period (but excluding any Issuer Swap
Excluded Termination Amount);
(V) twenty-second, in no order of priority among them but in proportion
to the respective amounts due in the relevant Monthly Payment Period,
to pay amounts due (without double counting) to:
(i) the Master Issuer in respect of its obligations (if any) to
pay any Issuer Swap Excluded Termination Amount;
(ii) the Funding 2 Liquidity Facility Provider, if any, any
Funding 2 Liquidity Facility Subordinated Amounts due under
the Funding 2 Liquidity Facility Agreement; and
(iii) the Funding 2 Basis Rate Swap Provider in respect of any
Funding 2 Basis Rate Swap Excluded Termination Amount;
(W) twenty-third, in no order of priority among them but in proportion to
the relevant amounts, (i) the retention by Funding 2 of an amount
equal to 0.01% per annum of the Funding 2 Available Revenue Receipts
(excluding, for this purpose, amounts standing to the credit of the
Funding 2 Reserve Ledger), which amount will be retained by Funding 2
as profit, less an amount equal to corporation tax in respect of
those profits provided for or paid at paragraph (C) above (which
amounts may be distributed to the shareholders of Funding 2 by way of
dividend) (such retention to be effective as of the 20th Monthly
Payment Date of the relevant Monthly Payment Period), and (ii) to pay
to the Master Issuer the amount to be retained by the Master Issuer
under item (O) of the Issuer Pre-Enforcement Revenue Priority of
Payments (such payment to be made on the 20th Monthly Payment Date
falling in the relevant Monthly Payment Period);
73
(X) twenty-fourth, towards payment of any Deferred Contribution due to
the Mortgages Trustee pursuant to the terms of the Mortgages Trust
Deed; and
(Y) last, any excess to Funding 2, which may, subject to applicable laws,
be distributed by Funding 2 to its shareholders by way of dividend.
Rules for Application of Funding 2 Available Revenue Receipts
(1) Funding 2 Principal Deficiency Ledger
If, on any Monthly Payment Date falling in a Monthly Payment Period,
any Funding 2 Available Revenue Receipts are to be applied by Funding
2 in reducing any deficiency recorded on the Principal Deficiency
Sub-Ledger of any Tier of Loan Tranches (but only to the extent of
any deficiency which has arisen as a result of (i) Losses on the
Mortgage Loans allocated by Funding 2 to that Principal Deficiency
Sub-Ledger and/or (ii) the application of Funding 2 Available
Principal Receipts to fund the Funding 2 Liquidity Reserve Fund but
not as a result of any other principal deficiency of Funding 2), then
the Funding 2 Available Revenue Receipts so applied shall constitute
repayments of principal under the relevant Loan Tranches and shall
(in no order of priority among them, but in proportion to the
respective outstanding balances) reduce the Outstanding Principal
Balance of those Loan Tranches accordingly (and the reduction in the
Outstanding Principal Balance of a relevant Loan Tranche to take
effect on the Monthly Payment Date falling in the relevant Monthly
Payment Period which is a Loan Payment Date for such Loan Tranche).
(2) Funding 2 Principal Ledger and Funding 2 Cash Accumulation Ledger
On the date of which the Funding 2 Available Revenue Receipts in
relation to a Monthly Payment Period are allocated to the payments
and provisions to be made under the Funding 2 Pre-Enforcement Revenue
Priority of Payments on any Monthly Payment Date falling in such
Monthly Payment Period, to the extent that it is determined that the
Funding 2 Available Revenue Receipts so allocated will be
insufficient to pay or provide for amounts due in such Monthly
Payment Period under items (H), (J), (M), (O) and (Q) of the Funding
2 Pre-Enforcement Revenue Priority of Payments, then the Cash Manager
shall provide for that deficit by:
(a) allocating and applying amounts standing to the credit of
the Funding 2 Principal Ledger; and
(b) if amounts standing to the credit of the Funding 2 Principal
Ledger that are allocated in accordance with sub-paragraph
(2)(a) above are insufficient to meet such shortfall on such
date, allocating and applying any amounts standing to the
credit of the Funding 2 Cash Accumulation Ledger.
Funding 2 Available Principal Receipts may not be used to pay
interest on any Loan Tranche if such payment would create or increase
a principal deficiency in respect of a higher ranking Tier of Loan
Tranches. For the purposes of this rule, the amount of Funding 2
Available Principal Receipts that may be allocated and applied to any
deficit of Funding 2 Available Revenue Receipts for any Monthly
Payment Period will be reduced by the amount that would be available
to be drawn from the Issuer Reserve Fund in such Monthly Payment
Period to cover any deficit in Issuer
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Available Revenue Receipts to pay items (A) through (I) of the Issuer
Pre-Enforcement Revenue Priority of Payments, on the assumption that
no Funding 2 Available Principal Receipts are to be applied to such
deficit in Funding 2 Available Revenue Receipts.
(3) Issuer GIC Account and Authorised Investments
The amount of Funding 2 Available Revenue Receipts that may be
allocated to pay items (B), (S), (U) and (V) under the Funding 2
Pre-Enforcement Revenue Priority of Payments on any Monthly Payment
Date falling in a Monthly Payment Period (to the extent such amounts
are to be paid to the Master Issuer) will be reduced by the amount of
interest earned on the Issuer GIC Account and any and all income from
Authorised Investments made on behalf of the Master Issuer, to the
extent that such interest and income is available to the Master
Issuer (subject to the relevant Issuer Priority of Payments) to be
allocated and applied in payment of the obligations of the Master
Issuer referred to in items (B), (S), (U) and (V) (to the extent that
such amounts are payable by the Master Issuer on any Monthly Payment
Date falling in the relevant Monthly Payment Period).
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Part II
Funding 2 Pre-Enforcement Principal Priority of Payments
The following sections (I) through (IV) below set out priorities of
payments for Funding Available Principal Receipts under the following
circumstances and are collectively referred to as the "Funding 2
Pre-Enforcement Principal Priority of Payments":
(I) Repayment of Loan Tranches of each Tier prior to the occurrence of a
Trigger Event and prior to the service on Funding 2 of a Funding 2
Intercompany Loan Enforcement Notice or the service on the Master
Issuer of an Issuer Enforcement Notice;
(II) Repayment of Loan Tranches of each Tier following the occurrence of a
Non-Asset Trigger Event but prior to the service on Funding 2 of a
Funding 2 Intercompany Loan Enforcement Notice or the service on the
Master Issuer of an Issuer Enforcement Notice;
(III) Repayment of Loan Tranches of each Tier following the occurrence of
an Asset Trigger Event but prior to the service on Funding 2 of a
Funding Intercompany Loan Enforcement Notice or the service on the
Master Issuer of an Issuer Enforcement Notice; and
(IV) Repayment of Loan Tranches of each Tier following the service on the
Master Issuer of an Issuer Enforcement Notice but prior to the
service on Funding 2 of a Funding 2 Intercompany Loan Enforcement
Notice.
I. Repayment of Loan Tranches of each Tier prior to the occurrence of a
Trigger Event and prior to the service on Funding 2 of a Funding 2
Intercompany Loan Enforcement Notice or the service on the Master
Issuer of an Issuer Enforcement Notice
Prior to the occurrence of a Trigger Event or the service on Funding 2 of a
Funding 2 Intercompany Loan Enforcement Notice or the service on the Master
Issuer of an Issuer Enforcement Notice (i) on or prior to the first day of
each Monthly Payment Period the Cash Manager shall allocate the Funding 2
Available Principal Receipts towards the payments and provisions in respect of
amounts due on all Monthly Payment Dates falling in such Monthly Payment
Period in the following order of priority (in each case only if and to the
extent that payments or provisions of a higher priority in respect of amounts
due on any Monthly Payment Date falling in such Monthly Payment Period have
been made in full) and (ii) on each Monthly Payment Date falling in the
relevant Monthly Payment Period, the amount of Funding 2 Available Principal
Receipts so allocated towards each payment or provision in respect of amounts
due on the relevant Monthly Payment Date shall be applied in making such
payment or provision:
(A) first, in accordance with the terms of the Funding 2 Liquidity
Facility Agreement, towards repayment of the amounts outstanding
under the Funding 2 Liquidity Facility (if any) that were drawn in
order to make Funding 2 Liquidity Facility Principal Payments;
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(B) second, to the extent that monies have been drawn from the Funding 2
Reserve Fund to make Funding 2 Reserve Principal Payments, towards
the replenishment of the Funding 2 Reserve Fund up to the Funding 2
Reserve Required Amount (such replenishment to be made on the 20th
Monthly Payment Date falling in the relevant Monthly Payment Period);
(C) third, if a Funding 2 Liquidity Reserve Rating Event has occurred and
is continuing (i) to initially fund the Funding 2 Liquidity Reserve
Fund up to the Funding 2 Liquidity Reserve Required Amount and (ii)
once it has been initially funded, to the extent that Funding 2
Available Revenue Receipts are insufficient to do so, to replenish
the Funding 2 Liquidity Reserve Fund up to the Funding 2 Liquidity
Reserve Required Amount (such funding or replenishment to be made on
the 20th Monthly Payment Date falling in the relevant Monthly Payment
Period);
(D) fourth, in order of the Monthly Payment Periods in which their Final
Repayment Dates fall, beginning with the earliest such Monthly
Payment Period (and if two or more AAA Loan Tranches have a Final
Repayment Date falling in the same Monthly Payment Period, in
proportion to the respective amounts due) to repay the principal
amounts due in the relevant Monthly Payment Period (if any) on the
AAA Loan Tranches;
(E) fifth, in no order of priority among them but in proportion to the
respective amounts due, to repay the principal amounts due in the
relevant Monthly Payment Period (if any) on the AA Loan Tranches;
(F) sixth, in no order of priority among them but in proportion to the
respective amounts due, to repay the principal amounts due in the
relevant Monthly Payment Period (if any) on the A Loan Tranches;
(G) seventh, in no order of priority among them but in proportion to the
respective amounts due, to repay the principal amounts due in the
relevant Monthly Payment Period (if any) on the BBB Loan Tranches;
(H) eighth, in no order of priority among them but in proportion to the
respective amounts due, to repay the principal amounts due in the
relevant Monthly Payment Period (if any) on the BB Loan Tranches;
(I) ninth, on the 20th Monthly Payment Date falling in the relevant
Monthly Payment Period, towards a credit to the Funding 2 Cash
Accumulation Ledger until the balance is equal to Funding 2's Cash
Accumulation Requirement (as calculated after any payments are made
at paragraph (D) of this priority of payments); and
(J) tenth, the remainder to be credited to the Funding 2 Principal
Ledger.
II. Repayment of Loan Tranches of each Tier following the occurrence of a
Non-Asset Trigger Event but prior to the service on Funding 2 of a
Funding 2 Intercompany Loan Enforcement Notice or the service on the
Master Issuer of an Issuer Enforcement Notice
Following the occurrence of a Non-Asset Trigger Event (where no Asset
Trigger Event has occurred) under the Mortgages Trust Deed but prior
to the service on
77
Funding 2 of a Funding 2 Intercompany Loan Enforcement Notice or the
service on the Master Issuer of an Issuer Enforcement Notice, the
Bullet Loan Tranches and the Scheduled Repayment Loan Tranches and
the Controlled Repayment Loan Tranches in respect of the Global
Intercompany Loan will be deemed to be Pass-Through Loan Tranches and
(i) on or prior to the first day of each Monthly Payment Period,
Funding 2 will be required to allocate the Funding 2 Available
Principal Receipts towards the payments and provisions in respect of
amounts due on all Monthly Payment Dates falling in such Monthly
Payment Period in the following order of priority (in each case only
if and to the extent that payments or provisions of a higher priority
in respect of amounts due on any Monthly Payment Date falling in such
Monthly Payment Period have been made in full) and (ii) on each
Monthly Payment Date falling in the relevant Monthly Payment Period,
the amount of Funding 2 Available Principal Receipts so allocated
towards each payment or provision in respect of amounts due on the
relevant Monthly Payment Date shall be applied in making such payment
or provision:
(A) first, in accordance with the terms of the Funding 2
Liquidity Facility Agreement, towards repayment of the
amounts outstanding under the Funding 2 Liquidity Facility
(if any) that were drawn in order to make Funding 2
Liquidity Facility Principal Payments;
(B) second, to the extent that monies have been drawn from the
Funding 2 Reserve Fund to make Funding 2 Reserve Principal
Payments, towards the replenishment of the Funding 2 Reserve
Fund up to the Funding 2 Reserve Required Amount (such
replenishment to be made on the 20th Monthly Payment Date
falling in the relevant Monthly Payment Period);
(C) third, if a Funding 2 Liquidity Reserve Rating Event has
occurred and is continuing (i) to initially fund the Funding
2 Liquidity Reserve Fund up to the Funding 2 Liquidity
Reserve Required Amount and (ii) once it has been initially
funded, to the extent that Funding 2 Available Revenue
Receipts are insufficient to do so, to replenish the Funding
2 Liquidity Reserve Fund up to the Funding 2 Liquidity
Reserve Required Amount (such funding or replenishment to be
made on the 20th Monthly Payment Date falling in the
relevant Monthly Payment Period);
(D) fourth, in order of the Monthly Payment Periods in which
their Final Repayment Dates fall, beginning with the
earliest such Monthly Payment Period (and if two or more AAA
Loan Tranches have a Final Repayment Date falling in the
same Monthly Payment Period, in proportion to the respective
amounts due in that Monthly Payment Period) to repay the AAA
Loan Tranches until the AAA Loan Tranches are fully repaid;
(E) fifth, in no order of priority among them but in proportion
to the respective amounts due in the relevant Monthly
Payment Period, to repay the AA Loan Tranches until the AA
Loan Tranches are fully repaid;
(F) sixth, in no order of priority among each of them but in
proportion to the respective amounts due in the relevant
Monthly Payment Period, to repay the A Loan Tranches until
the A Loan Tranches are fully repaid;
78
(G) seventh, in no order of priority among them but in
proportion to the respective amounts due in the relevant
Monthly Payment Period, to repay the BBB Loan Tranches until
the BBB Loan Tranches are fully repaid; and
(H) eighth, in no order of priority among them but in proportion
to the respective amounts due in the relevant Monthly
Payment Period, to repay the BB Loan Tranches until the BB
Loan Tranches are fully repaid.
III. Repayment of Loan Tranches of each Tier following the occurrence of
an Asset Trigger Event but prior to the service on Funding 2 of a
Funding 2 Intercompany Loan Enforcement Notice or the service on the
Master Issuer of an Issuer Enforcement Notice
Following the occurrence of an Asset Trigger Event (whether or not a
Non-Asset Trigger Event occurs or has occurred) but prior to the
service on Funding 2 of a Funding 2 Intercompany Loan Enforcement
Notice or the service on the Master Issuer of an Issuer Enforcement
Notice, the Bullet Loan Tranches and the Scheduled Repayment Loan
Tranches and the Controlled Repayment Loan Tranches in respect of the
Global Intercompany Loan will be deemed to be Pass-Through Loan
Tranches and (i) on or prior to the first day of each Monthly Payment
Period, Funding 2 will be required to allocate the Funding 2
Available Principal Receipts towards the payments and provisions in
respect of amounts due on all Monthly Payment Dates falling in such
Monthly Payment Period in the following order of priority (in each
case only if and to the extent that payments or provisions of a
higher priority in respect of amounts due on any Monthly Payment Date
falling in such Monthly Payment Period have been made in full) and
(ii) on each Monthly Payment Date falling in the relevant Monthly
Payment Period, the amount of Funding 2 Available Principal Receipts
so allocated towards each payment or provision in respect of amounts
due on the relevant Monthly Payment Date shall be applied in making
such payment or provision:
(A) first, in accordance with the terms of the Funding 2
Liquidity Facility Agreement, towards repayment of the
amounts outstanding under the Funding 2 Liquidity Facility
(if any) that were drawn in order to make Funding 2
Liquidity Facility Principal Payments;
(B) second, to the extent that monies have been drawn from the
Funding 2 Reserve Fund to make Funding 2 Reserve Principal
Payments, towards the replenishment of the Funding 2 Reserve
Fund up to the Funding 2 Reserve Required Amount (such
replenishment to be made on the 20th Monthly Payment Date
falling in the relevant Monthly Payment Period);
(C) third, if a Funding 2 Liquidity Reserve Rating Event has
occurred and is continuing (i) to initially fund the Funding
2 Liquidity Reserve Fund up to the Funding 2 Liquidity
Reserve Required Amount and (ii) once it has been initially
funded, to the extent that Funding 2 Available Revenue
Receipts are insufficient to do so, to replenish the Funding
2 Liquidity Reserve Fund up to the Funding 2 Liquidity
Reserve Required Amount (such funding or replenishment to be
made on the 20th Monthly Payment Date falling in the
relevant Monthly Payment Period);
79
(D) fourth, in no order of priority among them, but in
proportion to the respective amounts due in the relevant
Monthly Payment Period, to repay the AAA Loan Tranches until
the AAA Loan Tranches are fully repaid;
(E) fifth, in no order of priority among them, but in proportion
to the respective amounts due in the relevant Monthly
Payment Period, to repay the AA Loan Tranches until the AA
Loan Tranches are fully repaid;
(F) sixth, in no order of priority among them, but in proportion
to the respective amounts due in the relevant Monthly
Payment Period, to repay the A Loan Tranches until the A
Loan Tranches are fully repaid;
(G) seventh, in no order of priority among them, but in
proportion to the respective amounts due in the relevant
Monthly Payment Period, to repay the BBB Loan Tranches until
the BBB are fully repaid; and
(H) eighth, in no order of priority among them, but in
proportion to the respective amounts due in the relevant
Monthly Payment Period, to repay the BB Loan Tranches until
the BB Loan Tranches are fully repaid.
IV. Repayment of Loan Tranches of each Tier following the service on the
Master Issuer of an Issuer Enforcement Notice but prior to the
service on Funding 2 of a Funding 2 Intercompany Loan Enforcement
Notice
If an Issuer Enforcement Notice is served on the Master Issuer, then
that will not result in automatic enforcement of the Funding 2
Security under this Funding 2 Deed of Charge. In those circumstances,
however, any Bullet Loan Tranches and any Scheduled Repayment Loan
Tranches and any Controlled Repayment Loan Tranches under the Global
Intercompany Loan will be deemed to be Pass-Through Loan Tranches and
(i) on or prior to the first day of each Monthly Payment Period,
Funding 2 will be required to allocate the Funding 2 Available
Principal Receipts towards the payments and provisions in respect of
amounts due on all Monthly Payment Dates falling in such Monthly
Payment Period in the following order of priority (in each case only
if and to the extent that payments or provisions of a higher priority
in respect of amounts due on any Monthly Payment Date falling in such
Monthly Payment Period have been made in full) and (ii) on each
Monthly Payment Date falling in the relevant Monthly Payment Period,
the amount of Funding 2 Available Principal Receipts so allocated
towards each payment or provision in respect of amounts due on the
relevant Monthly Payment Date shall be applied in making such payment
or provision:
(A) first, in accordance with the terms of the Funding 2
Liquidity Facility Agreement, towards repayment of the
amounts outstanding under the Funding 2 Liquidity Facility
(if any) that were drawn in order to make Funding 2
Liquidity Facility Principal Payments;
(B) second, to the extent that monies have been drawn from the
Funding 2 Reserve Fund to make Funding 2 Reserve Principal
Payments, towards the replenishment of the Funding 2 Reserve
Fund up to the Funding 2 Reserve Required Amount (such
replenishment to be made on the 20th Monthly Payment Date
falling in the relevant Monthly Payment Period);
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(C) third, if a Funding 2 Liquidity Reserve Rating Event has
occurred and is continuing (i) to initially fund the Funding
2 Liquidity Reserve Fund up to the Funding 2 Liquidity
Reserve Required Amount and (ii) once it has been initially
funded, to the extent that Funding 2 Available Revenue
Receipts are insufficient to do so, to replenish the Funding
2 Liquidity Reserve Fund up to the Funding 2 Liquidity
Reserve Required Amount (such funding or replenishment to be
made on the 20th Monthly Payment Date falling in the
relevant Monthly Payment Period);
(D) fourth, in no order of priority among them, but in
proportion to the respective amounts due in the relevant
Monthly Payment Period, to repay the AAA Loan Tranches until
the AAA Loan Tranches are fully repaid;
(E) fifth, in no order of priority among them, but in proportion
to the respective amounts due in the relevant Monthly
Payment Period, to repay the AA Loan Tranches until the AA
Loan Tranches are fully repaid;
(F) sixth, in no order of priority among them, but in proportion
to the respective amounts due in the relevant Monthly
Payment Period, to repay the A Loan Tranches until the A
Loan Tranches are fully repaid; and
(G) seventh, in no order of priority among them, but in
proportion to the respective amounts due in the relevant
Monthly Payment Period, to repay the BBB Loan Tranches until
the BBB Loan Tranches are fully repaid; and
(H) eighth, in no order of priority among them, but in
proportion to the respective amounts due in the relevant
Monthly Payment Period, to repay the BB Loan Tranches until
the BB Loan Tranches are fully repaid.
If Funding 2 receives a Full Repayment Amount under the Global
Intercompany Loan, then Funding 2 will not apply the Full Repayment
Amount as described above under Funding 2 Principal Priority of
Payments. Rather, Funding 2 will apply, on the relevant date, the Full
Repayment Amount to repay the relevant Loan Tranche. If at any time
only one Loan Tranche is outstanding, then Funding 2 shall apply the
Full Repayment Amount first to repay the Funding 2 Liquidity Facility
Provider any amounts outstanding under the Funding 2 Liquidity
Facility, if any, to the extent that such funds were drawn in order to
repay the principal amounts of any previous Loan Tranches and the
remainder shall be applied to repay the relevant Loan Tranche. Pending
an application of the Full Repayment Amount, as described above, such
proceeds shall be credited to the Funding 2 GIC Account and shall not
be available for any other purpose.
Rules for Application of Funding 2 Available Principal Receipts
In the applicable circumstances, the following rules apply in determining the
amounts to be paid under paragraphs (D), (E), (F), (G) and (H) of the priority
of payments set out in (I) through (IV) above:
Rule (1) Deferral of repayment of Pass-Through Loan Tranches, Scheduled
Repayment Loan Tranches and/or Controlled Repayment Loan Tranches in
certain circumstances
(A) If, for any Monthly Payment Period:
81
(i) after giving effect to the application of the
Funding 2 Available Revenue Receipts on any Monthly
Payment Date falling in that Monthly Payment
Period, there will be a debit balance on the BB
Principal Deficiency Sub-ledger, the BBB Principal
Deficiency Sub-ledger, the A Principal Deficiency
Sub-ledger or the AA Principal Deficiency
Sub-ledger; or
(ii) the Adjusted Funding 2 Reserve Fund Level will be
less than the Funding 2 Reserve Fund Threshold; or
(iii) the aggregate outstanding principal balance of
Mortgage Loans in the Mortgage Portfolio, in
respect of which the aggregate amount in arrears is
more than three times the monthly payment then due,
is more than 4 per cent. of the aggregate
outstanding principal balance of Mortgage Loans
included in the Mortgage Portfolio,
then until the relevant circumstances as described in
sub-paragraphs (i), (ii) or (iii) above has been cured or
otherwise ceases to exist, if:
(a) any AAA Loan Tranche (whether or not such AAA Loan
Tranche is then due) will remain outstanding at the
end of the Monthly Payment Period, after giving
effect to the payments to be made under paragraph
(D) of the Funding 2 Pre-Enforcement Principal
Priority of Payments on any Monthly Payment Date
falling in the relevant Monthly Payment Period, the
AA Loan Tranches will not be entitled to principal
repayments under paragraph (E) of the Funding 2
Pre-Enforcement Principal Priority of Payments;
(b) any AAA Loan Tranche or any AA Loan Tranche
(whether or not such AAA Loan Tranche or AA Loan
Tranche is then due) will remain outstanding at the
end of the Monthly Payment Period, after giving
effect to the payments to be made under paragraphs
(D) and (E) of the Funding 2 Pre-Enforcement
Principal Priority of Payments on any Monthly
Payment Date falling in the relevant Monthly
Payment Period, then the A Loan Tranches will not
be entitled to principal repayments under paragraph
(F) of the Funding 2 Pre-Enforcement Principal
Priority of Payments;
(c) any AAA Loan Tranche, any AA Loan Tranche, any A
Loan Tranche (whether or not such AAA Loan Tranche,
AA Loan Tranche or A Loan Tranche is then due) will
remain outstanding at the end of the Monthly
Payment Period, after giving effect to the payments
to be made under paragraphs (D), (E) and (F) of the
Funding 2 Pre-Enforcement Principal Priority of
Payments on any Monthly Payment Date falling in the
relevant Monthly Payment Period, then the BBB Loan
Tranches will not be entitled to principal
repayments under paragraph (G) of the Funding 2
Pre-Enforcement Principal Priority of Payments;
and/or
(d) any AAA Loan Tranche, any AA Loan Tranche, any A
Loan Tranche or any BBB Loan Tranche (whether or
not such AAA Loan Tranche,
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AA Loan Tranche, A Loan Tranche or BBB Loan Tranche
is then due) will remain outstanding at the end of
the Monthly Payment Period, after giving effect to
the payments to be made under paragraphs (D), (E),
(F) and (G) of the Funding 2 Pre-Enforcement
Principal Priority of Payments on any Monthly
Payment Date falling in the relevant Monthly
Payment Period, then the BB Loan Tranches will not
be entitled to principal repayments under paragraph
(H) of the Funding 2 Pre-Enforcement Principal
Priority of Payments.
(B) On a Monthly Payment Date falling in a Monthly Payment
Period in respect of which principal in respect of any Loan
Tranche is scheduled to be paid:
(i) for the AA Loan Tranches, the amount of principal
due (or any part thereof) in respect of the AA Loan
Tranches may only be paid on the Monthly Payment
Dates falling in the relevant Monthly Payment
Period if, after giving effect to such payments and
the payments to be made on such dates in respect of
the related Series and Classes of Notes, the Class
A Available Subordinated Amount is at least equal
to the Class A Required Subordinated Amount;
(ii) for the A Loan Tranches, the amount of principal
due (or any part thereof) in respect of the A Loan
Tranches may only be paid on the Monthly Payment
Dates falling in the relevant Monthly Payment
Period if, after giving effect to such payments and
the payments to be made on such dates in respect of
the related Series and Classes of Notes, the Class
A Available Subordinated Amount is at least equal
to the Class A Required Subordinated Amount and the
Class B Available Subordinated Amount is at least
equal to the Class B Required Subordinated Amount;
(iii) for the BBB Loan Tranches, the amount of principal
due (or any part thereof) in respect of the BBB
Loan Tranches may only be paid on the Monthly
Payment Dates falling in the relevant Monthly
Payment Period if, after giving effect to such
payments and the payments to be made on such dates
in respect of the related Series and Classes of
Notes, the Class A Available Subordinated Amount is
at least equal to the Class A Required Subordinated
Amount, the Class B Available Subordinated Amount
is at least equal to the Class B Required
Subordinated Amount and the Class M Available
Subordinated Amount is at least equal to the Class
M Required Subordinated Amount; and
(iv) for the BB Loan Tranches, the amount of principal
due (or any part thereof) in respect of the BB Loan
Tranches may only be paid on the Monthly Payment
Dates falling in the relevant Monthly Payment
Period if, after giving effect to such payments and
the payments to be made on such dates in respect of
the related Series and Classes of Notes, the Class
A Available Subordinated Amount is at least equal
to the Class A Required Subordinated Amount, the
Class B Available Subordinated Amount is at least
equal to the Class B Required Subordinated Amount,
the Class M Available Subordinated Amount is
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at least equal to the Class M Required Subordinated
Amount and the Class C Available Subordinated
Amount is at least equal to the Class C Required
Subordinated Amount.
save that, in calculating the Class A Available Subordinated
Amount, the Class B Available Subordinated Amount, the Class
M Available Subordinated Amount, and the Class C Available
Subordinated Amount for the purposes of paragraphs (i),
(ii), (iii) and (iv) above, Excess Spread will be deemed to
be zero.
(C) If, in respect of any Monthly Payment Period:
(i) one or more Bullet Repayment Loan Amounts are
within a Cash Accumulation Period at that time; and
(ii) the quarterly CPR is less than 15 per cent.,
then, on or before their Step-Up Dates, the Scheduled
Repayment Loan Tranches, the Controlled Repayment Loan
Tranches and the Pass-Through Loan Tranches will be entitled
to principal repayments under paragraphs (D), (E), (F), (G)
and (H) (as applicable) of the Funding 2 Pre-Enforcement
Principal Priority of Payments only if there is no Cash
Accumulation Shortfall at such time.
Rule (2) Repayment of Pass-Through Loan Tranches after the occurrence of a
Step-Up Date
Following the occurrence of the Step-Up Date under a Loan Tranche
("Loan Tranche A") and provided that the Funding 2 Share of the Trust
Property is greater than zero, the aggregate amount repayable on a
Loan Payment Date falling in a Monthly Payment Period in relation to
Loan Tranche A under paragraphs (D), (E), (F), (G) and (H) of the
Funding 2 Pre-Enforcement Principal Priority of Payments shall be
limited to an amount calculated as follows:
A x B x C
---------
D
where, in respect of any Distribution Date:
A = the aggregate amount of Mortgages Trustee Principal
Receipts received by the Mortgages Trustee in the relevant
Trust Calculation Period (excluding any Initial Contribution
or Further Contribution);
B = the Funding 2 Share Percentage calculated as at the start
of the relevant Trust Calculation Period or, as applicable
the Weighted Average Funding 2 Share Percentage;
C = the outstanding principal balance of Loan Tranche A; and
D = the aggregate outstanding principal balance of the Global
Intercompany Loan.
Where Rule (2) applies at a level of any priority of payments, the
funds available for making payments at that level shall first be
allocated without reference to Rule (2).
84
However, if the amount so allocated to one or more Loan Tranches
exceeds the amount permitted under Rule (2) to be paid in respect of
those Loan Tranches (the "Capped Loan Tranches"), the excess shall
then be reallocated among any other relevant Loan Tranches at that
level using the method of allocation as applies at that level but
without reference to the Capped Loan Tranches in calculating such
reallocation. If a further such excess arises as a result of the
reallocation process, the reallocation process shall be repeated at
that level in relation to each such further excess that arises until
no further funds can be allocated at that level following which the
remaining excess shall then be applied firstly, between the Capped
Loan Tranches in no order of priority among them but in proportion to
the amounts due and then at the next level of that priority of
payments.
Rule (3) Deferral of repayment of subordinated tiers of Loan Tranches in
certain circumstances
If, on any Monthly Payment Date falling in a Monthly Payment Period,
neither the Issuer Reserve Requirement and the Issuer Arrears Test
for such Monthly Payment Period will be satisfied and the Class A
Notes of any Series and/or the AAA Loan Tranches will not have not
been repaid in full by the end of such Monthly Payment Period, then:
(i) the AA Loan Tranches will not be entitled to principal
repayments under item (E) of the Funding 2 Pre-Enforcement
Principal Priority of Payments;
(ii) the A Loan Tranches will not be entitled to principal
repayments under item (F) of the Funding 2 Pre-Enforcement
Principal Priority of Payments;
(iii) the BBB Loan Tranches will not be entitled to principal
repayments under item (G) of the Funding 2 Pre-Enforcement
Principal Priority of Payments;
(iv) the BB Loan Tranches will not be entitled to principal
repayments under item (H) of the Funding 2 Pre-Enforcement
Principal Priority of Payments;
The "Issuer Arrears Test" will be satisfied in respect of a Monthly
Payment Period if the Master Issuer or the Issuer Cash Manager on its
behalf calculates on the Distribution Date immediately preceding that
Monthly Payment Period that, as of the last day of the Trust
Calculation Period immediately preceding that Distribution Date (i)
the aggregate Current Balance of the Mortgage Loans in the Mortgage
Portfolio which are then in arrears for at least 3 months is less
than 4% of the aggregate Current Balance of all Mortgage Loans in the
Mortgage Portfolio, unless the Rating Agencies have confirmed that
the then current ratings of the Notes will not be reduced, withdrawn,
or qualified if the Issuer Arrears Test is not met at that time; and
(ii) the aggregate interest arrears in respect of all the Mortgage
Loans in the Mortgage Portfolio as a percentage of the aggregate
gross interest due on all Mortgage Loans during the previous 12
months does not exceed 2%, or such other percentage as is then
acceptable to the then current Rating Agencies at such time.
The "Issuer Reserve Requirement" will be satisfied in respect of a
Monthly Payment Period if, after giving effect to the application of
any payment of Funding 2 Available Revenue Receipts to the credit of
the Funding 2 Reserve Ledger and any payment of Issuer Available
Revenue Receipts to the Issuer Reserve Ledger, the
85
aggregate amount of funds in the Funding 2 Reserve Fund and in the
Issuer Reserve Fund at the end of such Monthly Payment Period will be
equal to the Programme Reserve Required Amount.
Rule (4) Application of Funding 2 Available Principal Receipts
Funding 2 and the Cash Manager shall comply with the requirements of
paragraph (8) of Schedule 2 (Cash Management and Maintenance of
Ledgers) to the Cash Management Agreement.
Following the occurrence of a Pass-Through Trigger Event during a
Monthly Payment Period, Funding 2, or the Cash Manager on its behalf,
or the Funding 2 Security Trustee, as applicable, shall comply with
the requirements of Part IV of this Schedule.
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Part III
Funding 2 Post-Enforcement Priority of Payments
At any time after the Funding 2 Security has become enforceable in accordance
with Clause 6.2 (Enforceable) and provided that a Funding 2 Intercompany Loan
Enforcement Notice has not been withdrawn, on or prior to the first day of
each Monthly Payment Period the Funding 2 Security Trustee (or the Cash
Manager on its behalf) will, subject to the Rules for Application of Funding 2
Available Revenue Receipts and Funding 2 Available Principal Receipts
following the occurrence of a Pass-Through Trigger Event during a Monthly
Payment Period set out in Part IV of this Schedule, allocate amounts received
or recovered (excluding Swap Collateral standing to the credit of the Funding
2 Swap Collateral Accounts) following enforcement of the Funding 2 Security
towards the payments and provisions in respect of amounts due on all Monthly
Payment Dates falling in such Monthly Payment Period in the order of priority
set out in the third paragraph below (in each case only if and to the extent
that payments or provisions of a higher priority in respect of amounts due on
any Monthly Payment Date falling in such Monthly Payment Period have been made
in full) (the "Funding 2 Post-Enforcement Priority of Payments"). The amounts
so allocated will not be applied in satisfaction of any payment or provision
until the Monthly Payment Date in such Monthly Payment Period on which such
payment or provision is required to be made.
The allocation of the amounts so received or recovered towards the payments
and provisions in respect of amounts due under any item of the Funding 2
Post-Enforcement Priority of Payments on all Monthly Payment Dates falling in
such Monthly Payment Period shall be made in no order of priority but in
proportion to the respective amounts due under such item (in each case only if
and to the extent that payments or provisions of a higher priority in respect
of amounts due under such item on any Monthly Payment Date falling in such
Monthly Payment Period have been made in full).
On each Monthly Payment Date falling in the relevant Monthly Payment Period,
the amounts so received or recovered and allocated towards each payment and
provision in respect of amounts due on the relevant Monthly Payment Date shall
be applied in making such payment or provision.
The Funding 2 Post-Enforcement Priority of Payments is as follows:
(A) first, to pay amounts due in the relevant Monthly Payment Period to
the Funding 2 Security Trustee and any Receiver appointed by the
Funding 2 Security Trustee, together with interest and (to the extent
not already inclusive) VAT on those amounts, and to provide for any
amounts due or to become due to the Funding 2 Security Trustee and
the Receiver prior to the next following Monthly Payment Period under
the Funding 2 Deed of Charge or any other Transaction Document;
(B) second, to pay amounts due in the relevant Monthly Payment Period to
the Master Issuer in respect of the Master Issuer's obligations
specified in items (A) through (D) of the Issuer Pre-Enforcement
Revenue Priority of Payments or, as the case may be, items (A)
through (C) of the Issuer Post-Enforcement Priority of Payments;
(C) third, towards payment of amounts due and payable in the relevant
Monthly Payment Period to the Cash Manager and any costs, charges,
liabilities and expenses then due
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or to become due and payable to the Cash Manager under the Cash
Management Agreement, together with (to the extent not already
inclusive) VAT on those amounts;
(D) fourth, in no order of priority among them but in proportion to the
respective amounts due in the relevant Monthly Payment Period,
towards payment of amounts (if any) due to (i) the Account Bank under
the terms of the Funding 2 Bank Account Agreement and (ii) to the
Corporate Services Provider under the terms of the Corporate Services
Agreement;
(E) fifth, towards payment of amounts (if any) due in the relevant
Monthly Payment Period to the Funding 2 Liquidity Facility Provider
under the Funding 2 Liquidity Facility (if any) (except for any
Funding 2 Liquidity Subordinated Amounts);
(F) sixth, in no order of priority among them but in proportion to the
respective amounts due in the relevant Monthly Payment Period,
towards payment of amounts due to the Funding 2 Basis Rate Swap
Provider under the Funding 2 Basis Rate Swaps (including any Swap
Termination Payment but excluding any Funding 2 Basis Rate Swap
Excluded Termination Amount);
(G) seventh, in no order of priority between them but in proportion to
the respective amounts due in the relevant Monthly Payment Period,
towards payment of amounts of interest, principal and fees due on the
AAA Loan Tranches;
(H) eighth, in no order of priority between them but in proportion to the
respective amounts due in the relevant Monthly Payment Period,
towards payment of amounts of interest, principal and fees due on the
AA Loan Tranches;
(I) ninth, in no order of priority between them but in proportion to the
respective amounts due in the relevant Monthly Payment Period,
towards payment of amounts of interest, principal and fees due on the
A Loan Tranches;
(J) tenth, in no order of priority between them but in proportion to the
respective amounts due in the relevant Monthly Payment Period,
towards payment of amounts of interest, principal and fees due on the
BBB Loan Tranches;
(K) eleventh, in no order of priority between them but in proportion to
the respective amounts due in the relevant Monthly Payment Period,
towards payment of amounts of interest, principal and fees due on the
BB Loan Tranches;
(L) twelfth, to pay amounts due in the relevant Monthly Payment Period to
the Master Issuer in respect of the Master Issuer's obligations
specified in item (J) of the Issuer Pre-Enforcement Revenue Priority
of Payments or, as the case may be, item (O) of the Issuer
Post-Enforcement Priority of Payments.
(M) thirteenth, to pay amounts due in the relevant Monthly Payment Period
to the Master Issuer in respect of its obligations, if any, to make a
Swap Termination Payment to any Issuer Swap Provider (but excluding
any Issuer Swap Excluded Termination Amount).
(N) fourteenth in no order of priority between them but in proportion to
the respective amounts due in the relevant Monthly Payment Period,
towards payment of amounts due (without double counting) to:
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(i) the Master Issuer in respect of its obligations (if any) to
pay any Issuer Swap Excluded Termination Amount;
(ii) the Funding 2 Liquidity Facility Provider, if any, any
Funding 2 Liquidity Facility Subordinated Amounts due under
the Funding 2 Liquidity Facility Agreement;
(iii) the Funding 2 Basis Rate Swap Provider in respect of any
Funding 2 Basis Rate Swap Excluded Termination Amount;
(O) fifteenth, towards payment of any Deferred Contribution due to the
Mortgages Trustee under the Mortgages Trust Deed; and
(P) last, to pay any amount remaining following the application of
principal and revenue set forth in paragraphs (A) through (O) above,
to Funding 2.
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Part IV
Rules for application of Funding 2 Available Revenue Receipts and Funding 2
Available Principal Receipts following the occurrence of a Pass-Through
Trigger Event during a Monthly Payment Period
If, at any time during a Monthly Payment Period, a Pass-Through Trigger Event
occurs, then:
(1) the Funding 2 Available Revenue Receipts and Funding 2 Available
Principal Receipts previously allocated on the first day of such
Monthly Payment Period towards the making of interest and principal
payments on Loan Tranches then due on all Monthly Payment Dates
falling in such Monthly Payment Period shall, notwithstanding the
occurrence of the Pass-Through Trigger Event and to the extent not
already so applied, be applied on such Monthly Payment Dates in
making such payments and provisions;
(2) all remaining Funding 2 Available Revenue Receipts and Funding 2
Available Principal Receipts for such Monthly Payment Period
(excluding, for the avoidance of doubt, Funding 2 Available Revenue
Receipts and Funding 2 Available Principal Receipts previously
applied or allocated on Monthly Payment Dates falling in the relevant
Monthly Payment Period in making the payments or provisions to which
they had been allocated) ("Remaining Funding 2 Available Revenue
Receipts" and "Remaining Funding 2 Available Principal Receipts"
respectively) will be allocated towards revenue and principal
payments or provisions, as applicable, that would have been due on
all Monthly Payment Dates falling in such Monthly Payment Period if
the Pass-Through Trigger Event had occurred prior to such Monthly
Payment Period (excluding, for this purpose, any payment or provision
due in such Monthly Payment Period which has been made or, in
accordance with paragraph (1) above, will be made) in the order of
priority set out in the Funding 2 Pre-Enforcement Revenue Priority of
Payments, the Funding 2 Pre-Enforcement Principal Priority of
Payments or the Funding 2 Post-Enforcement Priority of Payments, as
applicable (in each case only if and to the extent that payments or
provisions of a higher priority in respect of amounts due on any
Monthly Payment Date falling in such Monthly Payment Period have been
made in full); and
(3) on each Monthly Payment Date falling in the relevant Monthly Payment
Period after the occurrence of the Pass-Through Trigger Event and
until such time as there are no outstanding Funding 2 Secured
Obligations, the Remaining Funding 2 Available Revenue Receipts
and/or Remaining Funding 2 Available Principal Receipts allocated in
accordance with paragraph (2) above towards a payment or provision
due on such Monthly Payment Date shall be applied, in accordance with
the Funding 2 Pre-Enforcement Revenue Priority of Payments, the
Funding 2 Pre-Enforcement Principal Priority of Payments or the
Funding 2 Post-Enforcement Priority of Payments, as applicable, in
making such payments and provisions. Any Remaining Funding 2 Funding
2 Available Revenue Receipts and/or Remaining Funding 2 Available
Principal Receipts allocated in accordance with paragraph (2) above
towards an amount that would have been due on any Monthly Payment
Date in the relevant Monthly Payment Period falling prior to the
occurrence of the Pass-Through Trigger Event, shall be applied in
payment of such amount on the corresponding Monthly Payment Date
falling in the next following Monthly Payment Period (and shall be
taken into account in determining the allocation and application of
other Funding 2
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Available Revenue Receipts and Funding 2 Available Principal
Receipts in such next following Monthly Payment Period).
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SCHEDULE 4
FORM OF NOTICE OF ASSIGNMENT
To: [Addressee(s)]
In respect of the [Description of Funding 2 Transaction Document or Funding 2
Charged Property]
[Date]
Dear Sirs,
Terms and expressions used in this letter are as defined in the deed of charge
(the "Funding 2 Deed of Charge") between Granite Finance Funding 2 Limited
("Funding 2"), The Bank of New York (the "Funding 2 Security Trustee") and
others dated [o].
We hereby give notice to each addressee of this letter that by assignment(s)
under or pursuant to the Funding 2 Deed of Charge, Funding 2 has assigned
absolutely, by way of security for the payment and performance of certain
obligations of Funding 2 described in the Funding 2 Deed of Charge (the
"Funding 2 Secured Obligations"), to the Funding 2 Security Trustee all its
right, title, benefit and interest under the [Agreement(s)] (the "Funding 2
Transaction Documents") [including its right, title interest and benefit in
relation to [describe property] and including, without limitation, all rights
to receive payment of any amounts which may become payable to Funding 2
thereunder, all payments received by Funding 2 thereunder, all rights to serve
notices and/or make demands thereunder and/or to take such steps as are
required to cause payments to become due and payable thereunder and all rights
of action in respect of any breach thereof and all rights to receive damages
or obtain relief in respect thereof and the proceeds of any of the foregoing,
(hereinafter called the "Relevant Funding 2 Property").
By signing the enclosed copy of this notice you acknowledge and consent to the
assignments and agree that:
(i) from the date of this notice you are obliged to and you will
pay all moneys which are or may become payable to Funding 2
under the aforesaid agreements to or to the order of the
Funding 2 Security Trustee; and
(ii) you have not, at the date of this notice, received notice
that any third party has or will have any right of interest
whatsoever in the Relevant Funding 2 Property.
Notwithstanding the assignments made by Funding 2 and referred to in this
notice, the Funding 2 Security Trustee hereby confirms and you further
acknowledge that:
(a) you may continue to make all payments becoming due to
Funding 2 in respect of the Relevant Funding 2 Property in
the manner envisaged by the relevant Funding 2 Transaction
Document(s); and
(b) Funding 2 shall be entitled to exercise its rights, powers
and discretions and perform its obligations in relation to
the Relevant Funding 2 Property and
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under the Funding 2 Transaction Documents in accordance with
the provisions of the Funding 2 Transaction Documents,
but only until such time as you receive notice from the Funding 2 Security
Trustee to the contrary or to the effect that the created under the Funding 2
Deed of Charge has become enforceable, in which event from receipt of such
notice you agree that you will pay all monies becoming due and payable to
Funding 2 in respect of the Relevant Funding 2 Property in accordance with any
instructions received from the Funding 2 Security Trustee.
This letter is governed by, and shall be construed in accordance with, English
law.
Please acknowledge receipt of this notice by executing and returning the copy
of this letter attached hereto.
Yours faithfully,
Executed by
GRANITE FINANCE FUNDING 2 LIMITED
as follows:
Signed for and on its behalf by one of its duly
authorised attorneys/signatories By____________________________________________
Duly Authorised Attorney/Signatory
Name_____________________________________________
Executed by
THE BANK OF NEW YORK
as follows:
Signed for and on its behalf by one of its duly By___________________________________________
authorised attorneys/signatories Duly Authorised Attorney/Signatory
Name___________________________________________
We acknowledge receipt of the above notice and the terms of the assignment
created by you in respect of the Relevant Funding 2 Property.
In respect of the [Agreement]:
For and on behalf of:
[Party to Funding 2 Transaction Document]
By:
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SCHEDULE 5
UTILISATION OF FUNDING 2 RESERVES
1. Funding 2 Reserve Fund:
1.1 Prior to the service of a Funding 2 Intercompany Loan Enforcement
Notice, amounts standing to the credit of the Funding 2 Reserve Fund
may be utilised:
(a) through inclusion in the calculation of Funding 2 Available
Reserve Receipts to help meet and thereby to satisfy any
deficiency in interest and fees due under the Global
Intercompany Loan Agreement and to help meet and thereby to
satisfy any deficit on the Funding 2 Principal Deficiency
Ledger;
(b) through inclusion in the calculation of Funding 2 Available
Principal Receipts, to meet, and thereby to satisfy, any
deficit:
(i) prior to the occurrence of a Trigger Event, repayment
of principal due and payable in respect of the
Original Bullet Loan Tranches; and
(ii) on or after the occurrence of a Trigger Event,
repayment of principal due and payable in respect of
the Original Bullet Loan Tranches on their respective
Final Repayment Dates.
1.2 Following the service of a Funding 2 Intercompany Loan Enforcement
Notice, to the extent not applied on a Monthly Payment Date in
accordance with 1.1 above, amounts standing to the credit of the
Funding 2 Reserve Ledger shall only be applied in making payments of
principal due under the Funding 2 Intercompany Loan Agreements to
fund payments of principal due on the Notes of any Funding 2 Issuer
on any Monthly Payment Date.
1.3 Following the occurrence of an Arrears or Step-Up Trigger Event, the
amount required to be credited to the Funding 2 Reserve Fund will be
an amount equal to the sum of the Funding 2 Reserve Required Amount
and:
(a) if an Arrears or Step-Up Trigger Event has occurred under
item (i) only of the Arrears or Step-Up Trigger Event
definition, the amount specified in relation to such event
in the most recent Pricing Supplement;
(b) if an Arrears or Step-Up Trigger Event has occurred under
item (ii) only of the Arrears or Step-Up Trigger Event
definition, the amount specified in relation to such event
in the most recent Pricing Supplement;
(c) if an Arrears or Step-Up Trigger Event has occurred under
both (i) and (ii) of the Arrears or Step-Up Trigger Event
definition, the amount specified in relation to such event
in the most recent Pricing Supplement.
1.4 If an Arrears or Step-Up Trigger Event has occurred under item (i),
item (ii) or items (i) and (ii) of the Arrears or Step-Up Trigger
Event definition and such event(s) have been cured, the Funding 2
Reserve Fund will be reduced by the applicable amount
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specified in relation to such event(s) in the most recent Pricing
Supplement and the amount of such reduction will constitute Funding 2
Available Revenue Receipts.
2. Funding 2 Liquidity Reserve Fund:
2.1 Prior to the service of a Funding 2 Intercompany Loan Enforcement
Notice, the Funding 2 Liquidity Reserve Fund (if any is required to
be established) shall only be applied on any Monthly Payment Date to:
(a) to help meet any deficit in Funding 2 Available Revenue
Receipts to pay amounts due under the Global Intercompany
Loan Agreement, but only to the extent that such amounts are
necessary to fund the payment by Funding 2 of interest and
fees due on the relevant Monthly Payment Date in respect of
the AAA Loan Tranches and/or the AA Loan Tranches and to
help meet any deficit recorded on the Funding 2 Principal
Deficiency Ledger in respect of the AAA Loan Tranches;
(b) (provided that there are no AAA Loan Tranches and AA Loan
Tranches outstanding) to help meet any deficit in Funding 2
Available Revenue Receipts which are allocated to pay all
interest and fees due under the Global Intercompany Loan
Agreement; and
(c) to help meet any deficit in Funding 2 Available Principal
Receipts available for:
(i) prior to the occurrence of a Trigger Event,
repayment of principal due and payable in respect
of the Original Bullet Loan Tranches (which are AAA
Loan Tranches); and
(ii) on or after the occurrence of a Trigger Event,
repayment of principal due and payable in respect
of the Original Bullet Loan Tranches (which are AAA
Loan Tranches) on their respective Final Repayment
Dates.
2.2 Following the service of a Funding 2 Intercompany Loan Enforcement
Notice, to the extent not applied on a Monthly Payment Date in
accordance with 2.1 above, amounts standing to the credit of the
Funding 2 Liquidity Reserve Ledger shall only be applied in making
payments of principal due under the Funding 2 Intercompany Loan
Agreements in order to fund payments of principal due on the Notes of
any Funding 2 Issuer on any Monthly Payment Date.
3. Adjustment of the Funding 2 Reserve
Funding 2 may, at any time, adjust the Target Reserve Required Amount
or the Funding 2 Required Amount without the consent of the Funding 2
Secured Creditors, so long as the Funding 2 Security Trustee and
Funding 2 obtain confirmation from the Rating Agencies that such
adjustments will not cause a reduction, qualification or withdrawal
of the ratings of any outstanding Notes.
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