EXHIBIT 4.4
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DRAFT: 25/02/03
ALLEN & OVERY
London
DATED [6th March], 2003
PERMANENT FINANCING (NO. 2) PLC
and
U.S. BANK NATIONAL ASSOCIATION
and
HALIFAX plc
and
CITIBANK, N.A.
and
CITIBANK, N.A., NEW YORK BRANCH
and
THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND
and
CDC IXIS CAPITAL MARKETS
and
JPMORGAN CHASE BANK
and
BANQUE AIG
- and -
STRUCTURED FINANCE MANAGEMENT LIMITED
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SECOND ISSUER DEED OF CHARGE
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CONTENTS
<Table>
<Caption>
Clause Page
1. Interpretation......................................................................................3
2. Second Issuer's Covenant to Pay.....................................................................3
3. Security and Declaration of Trust...................................................................3
4. Release of Second Issuer Charged Property...........................................................5
5. Payments out of the Second Issuer Accounts, Authorised Investments and
Application of Cash Prior to Enforcement............................................................6
6. Payments out of the Second Issuer Accounts upon Enforcement.........................................8
7. Conflict...........................................................................................14
8. The Security Trustee's Powers......................................................................16
9. Receiver...........................................................................................19
10. Protection of Third Parties........................................................................22
11. Protection of Security Trustee and Receiver........................................................22
12. Expenses and Indemnity.............................................................................23
13. Protection of Security.............................................................................25
14. Crystallisation....................................................................................25
15. Power of Attorney, etc.............................................................................27
16. Other Security, etc................................................................................27
17. Avoidance of Payments..............................................................................28
18. Set off............................................................................................29
19. Execution of Documents.............................................................................29
20. Exercise of Certain Rights.........................................................................29
21. Covenants and Warranties...........................................................................31
22. Supplements to the Trustee Acts....................................................................34
23. Supplemental Provisions regarding the Security Trustee.............................................40
24. Remuneration and Indemnification of the Security Trustee...........................................44
25. Appointment of New Security Trustee and Removal of Security Trustee................................46
26. Retirement of Security Trustee.....................................................................47
27. Trust Indenture Act Prevails.......................................................................47
28. Notices and Demands................................................................................47
29. Further Provisions.................................................................................49
30. Choice of Law......................................................................................50
Signatories.................................................................................................52
Schedules
1. Power of Attorney..................................................................................56
2. Form of Notice of Assignment and Consent to Assignment.............................................58
</Table>
THIS SECOND ISSUER DEED OF CHARGE is made on [6th March], 2003
Between:
(1) PERMANENT FINANCING (NO. 2) PLC, (registered number 4623188) a public
limited company incorporated under the laws of England and Wales whose
registered office is at Blackwell House, Guildhall Yard, London EC2V
5AE (the "Second Issuer");
(2) U.S. BANK NATIONAL ASSOCIATION, a national banking association formed
under the laws of the United States of America, acting through its
office situated at 1 Federal Street, 3rd Floor, Boston, Massachusetts,
02110 (acting in its capacity as the Security Trustee);
(3) U.S. BANK NATIONAL ASSOCIATION, a national banking association formed
under the laws of the United States of America, acting through its
office situated at 1 Federal Street, 3rd Floor, Boston, Massachusetts,
02110 (acting in its capacity as the Note Trustee);
(4) CITIBANK, N.A., acting through its office is at 5 Carmelite Street,
London EC4Y 0PA and acting in its capacity as the Agent Bank;
(5) CITIBANK, N.A., acting through its office is at 5 Carmelite Street,
London EC4Y 0PA and acting in its capacity as the Principal Paying
Agent;
(6) CITIBANK, N.A., acting through its office is at 5 Carmelite Street,
London EC4Y 0PA and acting in its capacity as the Registrar;
(7) CITIBANK, N.A., acting through its office is at 5 Carmelite Street,
London EC4Y 0PA and acting in its capacity as the Transfer Agent;
(8) HALIFAX plc, a public limited company incorporated under the laws of
England and Wales whose registered office is at Trinity Road, Halifax,
West Yorkshire HX1 2RG acting in its capacity as the Second Issuer Cash
Manager;
(9) THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND, established by an Act
of the Parliament of Scotland in 1695, as amended, acting through its
office situated at 16 Wellington Street, Leeds LS1 4LT, and acting in
its capacity as the Second Issuer Account Bank;
(10) CITIBANK, N.A., NEW YORK BRANCH, whose principal office is at 14th
Floor, Zone 3, 111 Wall Street, New York, New York 10043 acting in its
capacity as the US Paying Agent;
(11) CDX IXIS CAPITAL MARKETS, acting through its London branch located at
Cannon Bridge, 25 Dowgate Hill, London EC4R 2GN acting in its capacity
as Series 1 Second Issuer Swap Provider, in respect of the Series 1
Class A Second Issuer Swap Agreement, the Series 1 Class B Second
Issuer Swap Agreement and the Series 1 Class C Second Issuer Swap
Agreement;
(12) JPMORGAN CHASE BANK, whose principal office is at 270 Park Avenue, New
York, New York 10017-2070 acting in its capacity as Series 2 Second
Issuer Swap Provider in respect of the Series 2 Class A Second Issuer
Swap Agreement, the Series 2 Class B Second Issuer Swap Agreement and
the Series 2 Class C Second Issuer Swap Agreement;
(13) CDX IXIS CAPITAL MARKETS, acting through its London branch located at
Cannon Bridge, 25 Dowgate Hill, London EC4R 2GN acting in its capacity
as Series 3 Second Issuer
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Swap Provider in respect of the Series 3 Class A Second Issuer Swap
Agreement, the Series 3 Class B Second Issuer Swap Agreement and the
Series 3 Class C Second Issuer Swap Agreement;
(14) BANQUE AIG, whose principal office is at 46, rue de Bassano, 75008
Paris, France, acting in its capacity as Series 4 Second Issuer Swap
Provider, in respect of the Series 4 Class A Second Issuer Swap
Agreement, the Series 4 Class B Second Issuer Swap Agreement and the
Series 4 Class C Second Issuer Swap Agreement; and
(15) STRUCTURED FINANCE MANAGEMENT LIMITED, (registered number 3853947),
whose registered office is at Blackwell House, Guildhall Yard, London
EC2V 5AE acting in its capacity as the Corporate Services Provider
under the terms of the Second Issuer Corporate Services Agreement.
Whereas:
(A) This Deed secures and will secure, inter alia, the Second Issuer
Secured Obligations.
(B) The Second Issuer will on the date of this Deed issue the Second Issuer
Notes pursuant to the Second Issuer Trust Deed.
(C) By the Second Issuer Paying Agent and Agent Bank Agreement, the Paying
Agents and the Agent Bank have agreed to provide certain agency
services on behalf of the Second Issuer for the benefit of the
Noteholders.
(D) By the Second Issuer Cash Management Agreement, the Second Issuer Cash
Manager has agreed to act as cash manager and to provide certain
administration and cash management services to the Second Issuer.
(E) By the Second Issuer Bank Account Agreement, the Second Issuer Account
Bank has agreed to provide certain bank account services to the Second
Issuer.
(F) By the Series 1 Second Issuer Swap Agreements, each Series 1 Second
Issuer Swap Provider has agreed to enter into dollar/sterling currency
swaps with the Second Issuer in relation to the Series 1 Second Issuer
Notes.
(G) By the Series 2 Second Issuer Swap Agreements, each Series 2 Second
Issuer Swap Provider has agreed to enter into dollar/sterling currency
swaps with the Second Issuer in relation to the Series 2 Second Issuer
Notes.
(H) By the Series 3 Second Issuer Swap Agreements, each Series 3 Second
Issuer Swap Provider has agreed to enter into euro/sterling currency
swaps with the Second Issuer in relation to the Series 3 Second Issuer
Notes.
(I) By the Series 4 Second Issuer Swap Agreements, each Series 4 Second
Issuer Swap Provider has agreed to enter into dollar/sterling currency
swaps with the Second Issuer in relation to the Series 4 Class A Second
Issuer Notes and euro/sterling currency swaps with the Second Issuer in
relation to the Series 4 Class B Second Issuer Notes and the Series 4
Class C Second Issuer Notes.
(J) By the Second Issuer Corporate Services Agreement, the Corporate
Services Provider has agreed to act as corporate services provider to
the Second Issuer.
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IT IS AGREED as follows:
1. INTERPRETATION
The Amended and Restated Master Definitions and Construction Schedule
and the Second Issuer Master Definitions and Construction Schedule
signed for the purposes of identification by Allen & Overy and Sidley
Austin Brown & Wood on [5th March], 2003 are expressly and specifically
incorporated into this Deed and, accordingly, the expressions defined
in the Amended and Restated Master Definitions and Construction
Schedule and the Second Issuer Master Definitions and Construction
Schedule shall, except where the context otherwise requires and save
where otherwise defined herein, have the same meanings in this Deed and
this Deed shall be construed in accordance with the interpretation
provisions set out in Clause 2 of the Second Issuer Master Definitions
and Construction Schedule. In the event of a conflict between the
Amended and Restated Master Definitions and Construction Schedule and
the Second Issuer Master Definitions and Construction Schedule, the
Second Issuer Master Definitions and Construction Schedule shall
prevail.
2. SECOND ISSUER'S COVENANT TO PAY
The Second Issuer covenants with and undertakes to the Security Trustee
for itself and on trust for the Second Issuer Secured Creditors that it
will, subject to the provisions of the Second Issuer Transaction
Documents:
(a) duly and punctually pay and discharge all monies and
liabilities whatsoever which now are or at any time hereafter
may (whether before or after demand) become due and payable to
the Security Trustee (whether for its own account or as
trustee for the Second Issuer Secured Creditors) or any of the
other Second Issuer Secured Creditors by the Second Issuer
whether actually or contingently, under this Deed or any other
Second Issuer Transaction Document; and
(b) observe, perform and satisfy all its other obligations and
liabilities under this Deed and/or any other Second Issuer
Transaction Document.
3. SECURITY AND DECLARATION OF TRUST
3.1 CONTRACTUAL RIGHTS
The Second Issuer, by way of first fixed security for the payment or
discharge of the Second Issuer Secured Obligations, subject to Clause 4
(Release of Second Issuer Charged Property), hereby assigns to the
Security Trustee all of its right, title, interest and benefit, present
and future, in, to and under the Second Issuer Transaction Documents
including, without limitation, all rights to receive payment of any
amounts which may become payable to the Second Issuer thereunder and
all payments received by the Second Issuer 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 other relief in respect thereof, TO HOLD the same unto the
Security Trustee absolutely.
3.2 SECOND ISSUER ACCOUNTS
The Second Issuer, by way of first fixed security for the payment or
discharge of the Second Issuer Secured Obligations, subject to Clause 4
(Release of Second Issuer Charged Property),
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hereby assigns to the Security Trustee all its right, title, interest
and benefit, present and future, in and to all moneys now or at any
time hereafter standing to the credit of the Second Issuer Accounts,
together with all interest accruing from time to time thereon and the
debt represented thereby, TO HOLD the same unto the Security Trustee
absolutely.
3.3 AUTHORISED INVESTMENTS
The Second Issuer, by way of first fixed security for the payment or
discharge of the Second Issuer Secured Obligations, subject to Clause 4
(Release of Second Issuer Charged Property), hereby charges by way of
first fixed charge in favour of the Security Trustee all its right,
title, interest and benefit, present and future, in and to such
Authorised Investments to be made from time to time by or on behalf of
the Second Issuer using moneys standing to the credit of the Second
Issuer Accounts and all moneys, income and proceeds payable thereunder
or accrued thereon and the benefit of all covenants relating thereto
and all rights and remedies for enforcing the same, TO HOLD the same
unto the Security Trustee absolutely.
3.4 FLOATING CHARGE
The Second Issuer, by way of security for the payment or discharge of
the Second Issuer Secured Obligations, subject to Clause 4 (Release of
Second Issuer Charged Property), hereby charges to the Security Trustee
by way of first floating charge the whole of its undertakings and all
its property and assets whatsoever and wheresoever, present and future,
including without limitation its uncalled capital, other than any
property or assets from time to time or for the time being by Clauses
3.1 (Contractual Rights) to 3.3 (Authorised Investments) (inclusive)
effectively charged by way of fixed charge or otherwise effectively
assigned as security. The floating charge hereby created is a
qualifying floating charge for the purpose of paragraph 14 of Schedule
B1 of the Insolvency Act 1986.
3.5 FULL TITLE GUARANTEE
Each of the dispositions, assignments or charges over property effected
in or pursuant to Clauses 3.1 (Contractual Rights) to 3.4 (Floating
Charge) (inclusive) is made with full title guarantee.
3.6 ACKNOWLEDGEMENTS AND UNDERTAKINGS
Each of the Second Issuer Secured Creditors hereby acknowledges the
assignments, charges and other security interests made or granted by
the foregoing provisions of this Clause 3 and undertakes to the
Security Trustee not to do anything inconsistent with the security
given under or pursuant to this Deed or knowingly to prejudice the
security granted to the Security Trustee pursuant to this Clause 3 or
the Second Issuer Charged Property or the Security Trustee's interest
therein provided that, without prejudice to Clause 9 (Receiver),
nothing in this Deed shall be construed as limiting the rights
exercisable by the aforesaid parties in accordance with the terms of
the Second Issuer Transaction Documents.
3.7 DECLARATION OF TRUST
Each of the Second Issuer Secured Creditors hereby declares the
Security Trustee, and the Security Trustee hereby declares itself,
trustee of all the covenants, undertakings, charges, assignments,
assignations and other security interests made or given or to be made
or given under or pursuant to this Deed and the other Second Issuer
Transaction Documents for the Second Issuer Secured Creditors in
respect of the Second Issuer Secured Obligations owed to each of them
respectively upon and subject to the terms and conditions of this Deed.
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3.8 SECURITY TRUSTEE'S DISCRETION
Subject to Clause 23.6 (Consent of Security Trustee), without prejudice
to the rights of the Security Trustee after the security created under
this Deed has become enforceable, the Second Issuer hereby authorises
the Security Trustee, prior to the security created by this Deed
becoming enforceable, to exercise, or refrain from exercising, all
rights, powers, authorities, discretions and remedies under or in
respect of the Second Issuer Transaction Documents referred to in
Clause 3.1 (Contractual Rights) in such manner as the Security Trustee
in its absolute discretion shall think fit. For the avoidance of doubt,
the Security Trustee shall not be required to have regard to the
interests of the Second Issuer in the exercise or non-exercise of any
such rights, powers, authorities, discretions and remedies or to comply
with any direction given by the Second Issuer in relation thereto.
4. RELEASE OF SECOND ISSUER CHARGED PROPERTY
4.1 PRIOR TO PAYMENT OR DISCHARGE OF SECOND ISSUER SECURED OBLIGATIONS
(a) Except to the extent expressly provided in this Clause 4, the Security
Trustee shall, release, reassign or discharge the Second Issuer Charged
Property or any part thereof only upon receipt of a written request
from the Second Issuer accompanied by (i) an Officers' Certificate and
(ii) certificates of independent parties in accordance with Sections
314(c) and 314(d)(1) of the Trust Indenture Act (the "Independent
Certificates") or an Opinion of Counsel to the effect that the Trust
Indenture Act does not require any such Independent Certificates;
(b) Prior to the release of any part of the Second Issuer Charged Property,
the Second Issuer shall, in addition to any obligation imposed in this
Clause 4.1 or elsewhere in this Deed, furnish to the Security Trustee
an Officers' Certificate certifying or stating the opinion of each
person signing such certificate as to the fair value of that part of
the Second Issuer Charged Property to be so released. The officers so
certifying may consult with, and may conclusively rely upon a
certificate as to the fair value of such property provided to such
officers by an internationally recognised financial institution with
expertise in such matters;
(c) Whenever the Second Issuer is required to furnish to the Security
Trustee an Officers' Certificate certifying or stating the opinion of
any signer thereof as to the matters described in the preceding
paragraph, the Second Issuer shall also deliver to the Security Trustee
an Independent Certificate as to the same matters, if the fair value of
that part of the Second Issuer Charged Property to be so released (and
of all other such property made the basis of any such release since the
commencement of the Second Issuer's then current fiscal year, as set
forth in the certificates delivered pursuant to this Clause 4.1), is 10
per cent. or more of the Principal Amount Outstanding of the Second
Issuer Notes, but such Independent Certificate need not be furnished
with respect to any property so released if the fair value thereof as
set forth in the related Officers' Certificate is less than US$25,000
or less than one per cent. of the Principal Amount Outstanding of the
Second Issuer Notes;
(d) Whenever any part of the Second Issuer Charged Property is to be
released from the security constituted by this Deed, the Second Issuer
shall also furnish to the Security Trustee an Officer's Certificate
certifying or stating the opinion of each person signing such
certificate that in the opinion of such person the proposed release
will not impair the security under this Deed in contravention of the
provisions hereof; and
(e) Notwithstanding anything to the contrary contained herein, the Second
Issuer may (a) make cash payments out of the Second Issuer Account
relating to the Second Issuer Notes as and to the extent permitted or
required by the Second Issuer Transaction Documents and (b) take any
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other action permitted or required by the Second Issuer Transaction
Documents not inconsistent with the Trust Indenture Act.
4.2 ON PAYMENT OR DISCHARGE OF SECOND ISSUER SECURED OBLIGATIONS
Upon the irrevocable and unconditional payment or discharge (or any
combination of the foregoing) of all the Second Issuer Secured
Obligations, the Security Trustee shall, at the written request and
cost of the Second Issuer, release, reassign or discharge the Second
Issuer Charged Property to, or to the order of, the Second Issuer.
4.3 DISPOSAL OF AUTHORISED INVESTMENTS
Upon the Second Issuer Cash Manager, on behalf of the Second Issuer and
the Security Trustee, making a disposal of any Authorised Investment
charged pursuant to Clause 3.3 (Authorised Investments), the Security
Trustee shall, if so requested in writing by and at the sole cost and
expense (on an indemnity basis) of the Second Issuer, but without being
responsible for any loss, costs, claims or liabilities whatsoever
occasioned and howsoever arising by so acting upon such request,
release, reassign or discharge from the encumbrances constituted by
this Deed the relevant Authorised Investments, provided that the
proceeds of such disposal are paid into an account charged pursuant to
Clauses 3.2 (Second Issuer Accounts) in accordance with Clause 5.5
(Authorised Investments).
4.4 WITHDRAWALS FROM SECOND ISSUER ACCOUNTS
From time to time there shall be deemed to be released from the
encumbrances constituted by this Deed all amounts which the Second
Issuer Cash Manager, on behalf of the Second Issuer and the Security
Trustee, is permitted to withdraw from the Second Issuer Accounts
pursuant to Clauses 5.2 (Pre-Enforcement Priorities of Payment) and 5.3
(Payments under the Second Issuer Cash Management Agreement) and any
such release will take effect immediately upon the relevant withdrawal
being made provided that where the relevant amount is transferred to
another bank account of the Second Issuer such bank account shall
thereupon become subject to the encumbrances constituted by this Deed.
5. PAYMENTS OUT OF THE SECOND ISSUER ACCOUNTS, AUTHORISED INVESTMENTS AND
APPLICATION OF CASH PRIOR TO ENFORCEMENT
5.1 FOLLOWING SERVICE OF A SECOND ISSUER NOTE ACCELERATION NOTICE
No payment, transfer or withdrawal from the Second Issuer Accounts may
be made under this Clause 5 at any time after a Second Issuer Note
Acceleration Notice has been served in respect of the Second Issuer.
5.2 PRE-ENFORCEMENT PRIORITIES OF PAYMENT
Notwithstanding the security rights created by or pursuant to Clause 3
(Security and Declaration of Trust), but prior to the service of a
Second Issuer Note Acceleration Notice on the Second Issuer, the Second
Issuer Cash Manager, on behalf of the Second Issuer and the Security
Trustee, shall:
(a) withdraw, or shall instruct the Second Issuer Account Bank or
cause the Second Issuer Account Bank to be instructed, to
withdraw (unless the intended recipient of the relevant
payment agrees otherwise) moneys from the Second Issuer
Accounts (subject to Clause 5.8 (VAT) below) to be applied in
the order of priority on the
7
specified dates (and in each case only if and to the extent
that payments or provisions of a higher order of priority have
been made in full and to the extent that such withdrawal does
not cause the Second Issuer Accounts to become overdrawn) as
set out in Schedule 2 of the Second Issuer Cash Management
Agreement (the "Second Issuer Pre-Enforcement Priority of
Payments"); and
(b) instruct the Second Issuer Swap Providers to pay to the
specified bank account of the Principal Paying Agent amounts
due to be paid on dates specified in the Second Issuer Swap
Agreements.
5.3 PAYMENTS UNDER THE SECOND ISSUER CASH MANAGEMENT AGREEMENT
Notwithstanding the security rights created by or pursuant to Clause 3
(Security and Declaration of Trust), but prior to the service of a
Second Issuer Note Acceleration Notice on the Second Issuer, the Second
Issuer Cash Manager, on behalf of the Second Issuer and the Security
Trustee, shall withdraw, or shall instruct the Second Issuer Account
Bank or cause the Second Issuer Account Bank to be instructed, to
withdraw (unless the intended recipient of the relevant payment agrees
otherwise) moneys from the Second Issuer Accounts for application on
any Business Day in making any payments due to be made subject to and
in accordance with the Second Issuer Cash Management Agreement (but
only to the extent that such withdrawal does not cause the Second
Issuer Accounts to become overdrawn).
5.4 INVESTMENTS IN AUTHORISED INVESTMENTS
The Security Trustee may request the Second Issuer Cash Manager to (or
the Second Issuer Cash Manager may request the Security Trustee to)
invest in the names of the Security Trustee and the Second Issuer,
jointly, moneys standing from time to time and at any time standing to
the credit of the Second Issuer Accounts in Authorised Investments in
accordance with the following provisions:
(a) any costs properly and reasonably incurred in making and
changing investments will be reimbursed to the Second Issuer
Cash Manager and the Security Trustee; and
(b) all income or proceeds following the disposal or maturity of
Authorised Investments shall be credited to the Second Issuer
Accounts.
5.5 AUTHORISED INVESTMENTS
Notwithstanding the security rights created by or pursuant to Clause 3
(Security and Declaration of Trust), Authorised Investments may, on any
Business Day, be sold or redeemed or disposed of or realised or
otherwise deposited subject always to the other provisions hereof
(including without limitation Clauses 3.3 (Authorised Investments) and
4.3 (Disposal of Authorised Investments)).
5.6 MANAGEMENT AND APPLICATION OF FUNDS
The Second Issuer shall take or cause to be taken such action as may
from time to time be necessary on its part to ensure that the Second
Issuer Accounts shall from time to time be credited with all amounts
received by the Second Issuer and falling within any of the following
categories:
(a) amounts received by the Second Issuer from or on behalf of
Funding 1 pursuant to the provisions of the Second Issuer
Intercompany Loan Agreement;
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(b) interest received on the Second Issuer Accounts;
(c) amounts received by the Second Issuer from the Dollar Currency
Swap Providers under the Dollar Currency Swap Agreements;
(d) amounts received by the Second Issuer from the Euro Currency
Swap Providers under the Euro Currency Swap Agreements;
(e) the proceeds arising from the disposal of any Authorised
Investments and any and all income or other distributions
received by the Second Issuer in respect thereof or arising
from the proceeds of any Authorised Investments;
(f) amounts received by the Second Issuer from the Security
Trustee in its capacity as security trustee under the Funding
1 Deed of Charge or a Receiver following the service of a
Second Issuer Intercompany Loan Enforcement Notice; and
(g) such other payments received by the Second Issuer as are, or
ought in accordance with this Deed to be, comprised in the
Second Issuer Charged Property.
5.7 ENFORCEMENT WHEN NOT ALL AMOUNTS DUE AND PAYABLE
If the Security Trustee enforces the Second Issuer Security at a time
when either no amounts or not all amounts owing in respect of the
Second Issuer Secured Obligations have become due and payable, the
Security Trustee (or a Receiver) may, for so long as no such amounts or
not all such amounts have become due and payable, pay any monies
referred to in Clause 6 (Payments out of the Second Issuer Accounts
Upon Enforcement) 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 6 as and when any of the
amounts referred to therein become due and payable.
5.8 VAT
If any sums which are payable by the Second Issuer under Clause 5.2
(Pre-Enforcement Priorities of Payments) or Clause 6 (Payments out of
Second Issuer Accounts upon Enforcement) of this Deed are subject to
VAT, the Second Issuer shall make payment of the amount in respect of
VAT to the relevant person in accordance with the order of priorities
set out in those clauses.
6. PAYMENTS OUT OF THE SECOND ISSUER ACCOUNTS UPON ENFORCEMENT
6.1 AFTER A SECOND ISSUER NOTE ACCELERATION NOTICE
From and including the time when a Second Issuer Note Acceleration
Notice (which has not been withdrawn) has been served on the Second
Issuer:
(a) no amount may be withdrawn from the Second Issuer Accounts
without the prior written consent of the Security Trustee; and
(b) if not already crystallised, any charge created under or
pursuant to this Deed, which is a floating charge, shall
immediately and without further action on the part of the
Security Trustee, crystallise.
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6.2 PAYMENT OF SECOND ISSUER REVENUE RECEIPTS AFTER SERVICE OF A SECOND
ISSUER NOTE ACCELERATION NOTICE BUT PRIOR TO THE SERVICE OF A SECOND
ISSUER INTERCOMPANY LOAN ENFORCEMENT NOTICE
From and including the time when a Second Issuer Note Acceleration
Notice has been served on the Second Issuer but prior to the service by
the Security Trustee of a Second Issuer Intercompany Loan Enforcement
Notice, all Second Issuer Revenue Receipts received or recovered by the
Security Trustee or any Receiver for the benefit of the Second Issuer
Secured Creditors in respect of the Second Issuer Secured Obligations
shall be held by the Security Trustee or any Receiver, as the case may
be, on trust to be applied in accordance with Clauses 5.2 to 5.6
(inclusive) and 5.7 but as if:
(a) each of the references in the Second Issuer Pre-Enforcement
Revenue Priority of Payments to the Security Trustee included
a reference to any Receiver appointed by the Security Trustee;
(b) any reference in the Second Issuer Pre-Enforcement Revenue
Priority of Payments to an amount payable by the Second Issuer
which is not an Second Issuer Secured Obligation were deleted;
and
(c) Clause 5.2 (Pre-Enforcement Priorities of Payment) and the
Second Issuer Pre-Enforcement Revenue Priority of Payments
were expressed to be subject to the provisions of Clause 5.7
(Enforcement When Not All Amounts Due and Payable).
6.3 PAYMENT OF SECOND ISSUER PRINCIPAL RECEIPTS AFTER SERVICE OF A SECOND
ISSUER NOTE ACCELERATION NOTICE BUT PRIOR TO THE SERVICE OF A SECOND
ISSUER INTERCOMPANY LOAN ENFORCEMENT NOTICE
From and including the time when a Second Issuer Note Acceleration
Notice has been served on the Second Issuer but prior to the service by
the Security Trustee of a Second Issuer Intercompany Loan Enforcement
Notice, all Second Issuer Principal Receipts received or recovered by
the Security Trustee or any Receiver for the benefit of the Second
Issuer Secured Creditors in respect of the Second Issuer Secured
Obligations shall be held by it on trust to be applied (save to the
extent required otherwise by law) on each Interest Payment Date in the
following order of priority (in each case only if and to the extent
that payments or provisions of a higher order of priority have been
made in full):
(a) first, pro rata and pari passu to repay the Second Issuer Class A Notes
as follows:
(i) any principal amounts received by the Second Issuer from
Funding 1 in respect of the Second Issuer Series 1 Term AAA
Advance on each Funding 1 Interest Payment Date, shall be paid
by the Second Issuer to the Series 1 Class A Second Issuer
Swap Provider, and on each Interest Payment Date the Series 1
Class A Second Issuer Notes will be redeemed in amounts
corresponding to the principal exchange amounts (if any)
received from the Series 1 Class A Second Issuer Swap Provider
under the Series 1 Class A Second Issuer Swap;
(ii) any principal amounts received by the Second Issuer from
Funding 1 in respect of the Second Issuer Series 2 Term AAA
Advance on each Funding 1 Interest Payment Date, shall be paid
by the Second Issuer to the Series 2 Class A Second Issuer
Swap Provider, and on each Interest Payment Date the Series 2
Class A Second Issuer Notes will be redeemed in amounts
corresponding to the principal exchange amounts
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(if any) received from the Series 2 Class A Second Issuer Swap
Provider under the Series 2 Class A Second Issuer Swap;
(iii) any principal amounts received by the Second Issuer from
Funding 1 in respect of the Second Issuer Series 3 Term AAA
Advance on each Funding 1 Interest Payment Date, shall be paid
by the Second Issuer to the Series 3 Class A Second Issuer
Swap Provider, and on each Interest Payment Date the Series 3
Class A Second Issuer Notes will be redeemed in amounts
corresponding to the principal exchange amounts (if any)
received from the Series 3 Class A Second Issuer Swap Provider
under the Series 3 Class A Second Issuer Swap;
(iv) any principal amounts received by the Second Issuer from
Funding 1 in respect of the Second Issuer Series 4 Term AAA
Advance on each Funding 1 Interest Payment Date, shall be paid
by the Second Issuer to the Series 4 Class A Second Issuer
Swap Provider, and on each Interest Payment Date the Series 4
Class A Second Issuer Notes will be redeemed in amounts
corresponding to the principal exchange amounts (if any)
received from the Series 4 Class A Second Issuer Swap Provider
under the Series 4 Class A Second Issuer Swap; and
(v) any principal amounts received by the Second Issuer from
Funding 1 in respect of the Second Issuer Series 5 Term AAA
Advance on each Funding 1 Interest Payment Date shall be
applied by the Second Issuer to redeem the Series 5 Class A
Second Issuer Notes on such Interest Payment Date.
(b) secondly, pro rata and pari passu, to repay the Second Issuer Class B
Notes as follows:
(i) any principal amounts received by the Second Issuer from
Funding 1 in respect of the Second Issuer Series 1 Term AA
Advance on each Funding 1 Interest Payment Date, shall be paid
by the Second Issuer to the Series 1 Class B Second Issuer
Swap Provider, and on each Interest Payment Date the Series 1
Class B Second Issuer Notes will be redeemed in amounts
corresponding to the principal exchange amounts (if any)
received from the Series 1 Class B Second Issuer Swap Provider
under the Series 1 Class B Second Issuer Swap;
(ii) any principal amounts received by the Second Issuer from
Funding 1 in respect of the Second Issuer Series 2 Term AA
Advance on each Funding 1 Interest Payment Date, shall be paid
by the Second Issuer to the Series 2 Class B Second Issuer
Swap Provider, and on each Interest Payment Date the Series 2
Class B Second Issuer Notes will be redeemed in amounts
corresponding to the principal exchange amounts (if any)
received from the Series 2 Class B Second Issuer Swap Provider
under the Series 2 Class B Second Issuer Swap;
(iii) any principal amounts received by the Second Issuer from
Funding 1 in respect of the Second Issuer Series 3 Term AA
Advance on each Funding 1 Interest Payment Date, shall be paid
by the Second Issuer to the Series 3 Class B Second Issuer
Swap Provider, and on each Interest Payment Date the Series 3
Class B Second Issuer Notes will be redeemed in amounts
corresponding to the principal exchange amounts (if any)
received from the Series 3 Class B Second Issuer Swap Provider
under the Series 3 Class B Second Issuer Swap Agreement;
(iv) any principal amounts received by the Second Issuer from
Funding 1 in respect of the Second Issuer Series 4 Term AA
Advance on each Funding 1 Interest Payment Date, shall be paid
by the Second Issuer to the Series 4 Class B Second Issuer
Swap
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Provider, and on each Interest Payment Date the Series 4 Class
B Second Issuer Notes will be redeemed in amounts
corresponding to the principal exchange amounts (if any)
received from the Series 4 Class B Second Issuer Swap Provider
under the Series 4 Class B Second Issuer Swap; and
(v) any principal amounts received by the Second Issuer from
Funding 1 in respect of the Second Issuer Series 5 Term AA
Advance on each Funding 1 Interest Payment Date shall be
applied by the Second Issuer towards redemption of the Series
5 Class B Second Issuer Notes on such Interest Payment Date.
(c) thirdly, pro rata and pari passu to repay the Second Issuer Class C
Notes as follows:
(i) any principal amounts received by the Second Issuer from
Funding 1 in respect of the Second Issuer Series 1 Term BBB
Advance on each Funding 1 Interest Payment Date, shall be paid
by the Second Issuer to the Series 1 Class C Second Issuer
Swap Provider, and on each Interest Payment Date the Series 1
Class C Second Issuer Notes will be redeemed in amounts
corresponding to the principal exchange amounts (if any)
received from the Series 1 Class C Second Issuer Swap Provider
under the Series 1 Class C Second Issuer Swap;
(ii) any principal amounts received by the Second Issuer from
Funding 1 in respect of the Second Issuer Series 2 Term BBB
Advance on each Funding 1 Interest Payment Date, shall be paid
by the Second Issuer to the Series 1 Class C Second Issuer
Swap Provider, and on each Interest Payment Date the Series 2
Class C Second Issuer Notes will be redeemed in amounts
corresponding to the principal exchange amounts (if any)
received from the Series 2 Class C Second Issuer Swap Provider
under the Series 2 Class C Second Issuer Swap;
(iii) any principal amounts received by the Second Issuer from
Funding 1 in respect of the Second Issuer Series 3 Term BBB
Advance on each Funding 1 Interest Payment Date, shall be paid
by the Second Issuer to the Series 3 Class C Second Issuer
Swap Provider, and on each Interest Payment Date the Series 3
Class C Second Issuer Notes will be redeemed in amounts
corresponding to the principal exchange amounts (if any)
received from the Series 3 Class C Second Issuer Swap Provider
under the Series 3 Class C Second Issuer Swap;
(iv) any principal amounts received by the Second Issuer from
Funding 1 in respect of the Second Issuer Series 4 Term BBB
Advance on each Funding 1 Interest Payment Date, shall be paid
by the Second Issuer to the Series 4 Class C Second Issuer
Swap Provider, and on each Interest Payment Date the Series 4
Class C Second Issuer Notes will be redeemed in amounts
corresponding to the principal exchange amounts (if any)
received from the Series 4 Class C Second Issuer Swap Provider
under the Series 4 Class C Second Issuer Swap; and
(v) any principal amounts received by the Second Issuer from
Funding 1 in respect of the Second Issuer Series 5 Term BBB
Advance on each Funding 1 Interest Payment Date shall be
applied by the Second Issuer towards redemption of the Series
5 Class C Second Issuer Notes on such Interest Payment Date.
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6.4 PAYMENT OF SECOND ISSUER REVENUE RECEIPTS AND SECOND ISSUER PRINCIPAL
RECEIPTS AFTER SERVICE OF A SECOND ISSUER NOTE ACCELERATION NOTICE AND
SERVICE OF A SECOND ISSUER INTERCOMPANY LOAN ENFORCEMENT NOTICE
All Second Issuer Revenue Receipts and Second Issuer Principal Receipts
received or recovered by the Security Trustee or any Receiver, after
the service of a Second Issuer Note Acceleration Notice and after the
service of a Second Issuer Intercompany Loan Enforcement Notice, for
the benefit of the Second Issuer Secured Creditors in respect of the
Second Issuer Secured Obligations, shall be held by it in the Second
Issuer Accounts on trust to be applied (save to the extent required
otherwise by law), on each Interest Payment Date, in the following
order of priority (and, in each case, only if and to the extent that
payments or provisions of a higher order of priority have been made in
full):
(a) first, to pay pro rata and pari passu amounts due to:
(i) the Security Trustee and any Receiver appointed by the Security
Trustee together with interest and any amount in respect of VAT
on those amounts and any amounts then due or to become due to
the Security Trustee and the Receiver under the provisions of
this Deed;
(ii) the Note Trustee together with interest and any amount in
respect of VAT on those amounts and any amounts then due or to
become due and payable to the Note Trustee under the provisions
of this Deed; and
(iii) the Agent Bank, the Paying Agents, the Registrar and the
Transfer Agent together with interest and any amount in respect
of VAT on those amounts and any costs, charges, liabilities and
expenses then due or to become due and payable to them under
the provisions of the Second Issuer Paying Agent and Agent Bank
Agreement;
(b) secondly, to pay pro rata and pari passu amounts due and payable
(together with any amount in respect of VAT on those amounts) to the
Second Issuer Cash Manager under the Second Issuer Cash Management
Agreement and to the Corporate Services Provider under the Second Issuer
Corporate Services Agreement and to the Second Issuer Account Bank under
the Second Issuer Bank Account Agreement;
(c) thirdly, to pay pro rata and pari passu:
(i) amounts due to the Series 1 Class A Second Issuer Swap Provider
in respect of the Series 1 Class A Second Issuer Swap
(including any termination payment but excluding any Second
Issuer Swap Excluded Termination Amount) and from amounts
received from the Series 1 Class A Second Issuer Swap Provider
in respect of the Series 1 Class A Second Issuer Swap to pay
interest and principal due and payable on the Series 1 Class A
Second Issuer Notes;
(ii) amounts due to the Series 2 Class A Second Issuer Swap Provider
in respect of the Series 2 Class A Second Issuer Swap
(including any termination payment but excluding any Second
Issuer Swap Excluded Termination Amount) and from amounts
received from the Series 2 Class A Second Issuer Swap Provider
in respect of the Series 2 Class A Second Issuer Swap to pay
interest and principal due and payable on the Series 2 Class A
Second Issuer Notes;
(iii) amounts due to the Series 3 Class A Second Issuer Swap Provider
in respect of the Series 3 Class A Second Issuer Swap
(including any termination payment but
13
excluding any Second Issuer Swap Excluded Termination Amount)
and from amounts received from the Series 3 Class A Second
Issuer Swap Provider in respect of the Series 3 Class A Second
Issuer Swap to pay interest and principal due and payable on
the Series 3 Class A Second Issuer Notes;
(iv) amounts due to the Series 4 Class A Second Issuer Swap Provider
in respect of the Series 4 Class A Second Issuer Swap
(including any termination payment but excluding any Second
Issuer Swap Excluded Termination Amount) and from amounts
received from the Series 4 Class A Second Issuer Swap Provider
in respect of the Series 4 Class A Second Issuer Swap to pay
interest and principal due and payable on the Series 4 Class A
Second Issuer Notes; and
(v) interest and principal on the Series 5 Class A Second Issuer
Notes;
(d) fourthly, to pay pro rata and pari passu:
(i) amounts due to the Series 1 Class B Second Issuer Swap Provider
in respect of the Series 1 Class B Second Issuer Swap
(including any termination payment but excluding any Second
Issuer Swap Excluded Termination Amount) and from amounts
received from the Series 1 Class B Second Issuer Swap Provider
in respect of the Series 1 Class B Second Issuer Swap to pay
interest and principal due and payable on the Series 1 Class B
Second Issuer Notes;
(ii) amounts due to the Series 2 Class B Second Issuer Swap Provider
in respect of the Series 2 Class B Second Issuer Swap
(including any termination payment but excluding any Second
Issuer Swap Excluded Termination Amount) and from amounts
received from the Series 2 Class B Second Issuer Swap Provider
in respect of the Series 2 Class B Second Issuer Swap to pay
interest and principal due and payable on the Series 2 Class B
Second Issuer Notes;
(iii) amounts due to the Series 3 Class B Second Issuer Swap Provider
in respect of the Series 3 Class B Second Issuer Swap
(including any termination payment but excluding any Second
Issuer Swap Excluded Termination Amount) and from amounts
received from the Series 3 Class B Second Issuer Swap Provider
in respect of the Series 3 Class B Second Issuer Swap to pay
interest and principal due and payable on the Series 3 Class B
Second Issuer Notes;
(iv) amounts due to the Series 4 Class B Second Issuer Swap Provider
in respect of the Series 4 Class B Second Issuer Swap
(including any termination payment but excluding any Second
Issuer Swap Excluded Termination Amount) and from amounts
received from the Series 4 Class B Second Issuer Swap Provider
in respect of the Series 4 Class B Second Issuer Swap to pay
interest and principal due and payable on the Series 4 Class B
Second Issuer Notes; and
(v) interest and principal due and payable on the Series 5 Class B
Second Issuer Notes;
(e) fifthly, to pay pro rata and pari passu:
(i) amounts due to the Series 1 Class C Second Issuer Swap Provider
in respect of the Series 1 Class C Second Issuer Swap
(including any termination payment but excluding any Second
Issuer Swap Excluded Termination Amount) and from amounts
received from the Series 1 Class C Second Issuer Swap Provider
in respect of the
14
Series 1 Class C Second Issuer Swap to pay interest and
principal due and payable on the Series 1 Class C Second
Issuer Notes;
(ii) amounts due to the Series 2 Class C Second Issuer Swap Provider
in respect of the Series 2 Class C Second Issuer Swap
(including any termination payment but excluding any Second
Issuer Swap Excluded Termination Amount) and from amounts
received from the Series 2 Class C Second Issuer Swap Provider
in respect of the Series 2 Class C Second Issuer Swap to pay
interest and principal due and payable on the Series 2 Class C
Second Issuer Notes;
(iii) amounts due to the Series 3 Class C Second Issuer Swap Provider
in respect of the Series 3 Class C Second Issuer Swap
(including any termination payment but excluding any Second
Issuer Swap Excluded Termination Amount) and from amounts
received from the Series 3 Class C Second Issuer Swap Provider
in respect of the Series 3 Class C Second Issuer Swap to pay
interest and principal due and payable on the Series 3 Class C
Second Issuer Notes;
(iv) amounts due to the Series 4 Class C Second Issuer Swap Provider
in respect of the Series 4 Class C Second Issuer Swap
(including any termination payment but excluding any Second
Issuer Swap Excluded Termination Amount) and from amounts
received from the Series 4 Class C Second Issuer Swap Provider
in respect of the Series 4 Class C Second Issuer Swap to pay
interest and principal due and payable on the Series 4 Class C
Second Issuer Notes; and
(v) interest and principal due and payable on the Series 5 Class C
Second Issuer Notes;
(f) sixthly, to pay pro rata and pari passu amounts due to:
(i) the Series 1 Second Issuer Swap Provider, following a Second
Issuer Swap Provider Default or a Second Issuer Swap Provider
Downgrade Termination Event by the Series 1 Second Issuer Swap
Provider;
(ii) the Series 2 Second Issuer Swap Provider, following a Second
Issuer Swap Provider Default or a Second Issuer Swap Provider
Downgrade Termination Event by the Series 2 Second Issuer Swap
Provider;
(iii) the Series 3 Second Issuer Swap Provider, following a Second
Issuer Swap Provider Default or a Second Issuer Swap Provider
Downgrade Termination Event by the Series 3 Second Issuer Swap
Provider; and
(iv) the Series 4 Second Issuer Swap Provider, following a Second
Issuer Swap Provider Default or a Second Issuer Swap Provider
Downgrade Termination Event by the Series 4 Second Issuer Swap
Provider.
7. CONFLICT
7.1 SECOND ISSUER SECURED CREDITORS
Subject to Clause 7.2 and except as otherwise expressly provided in
this Deed, the Security Trustee shall have regard to the interests of
the Second Issuer Secured Creditors only as regards the exercise and
performance of all powers, rights, trusts, authorities, duties and
discretions of the Security Trustee in respect of the Second Issuer
Charged Property, under this Deed or any other Second Issuer
Transaction Document to which the Security Trustee is
15
a party or the rights or benefits in respect of which are comprised in
the Second Issuer Charged Property (except where specifically provided
otherwise).
7.2 NOTEHOLDERS
(a) If (in the Security Trustee's sole opinion) there is or may be a
conflict of interest between the Class A Noteholders and any other
Second Issuer Secured Creditor, then, subject to Condition 11 of the
Second Issuer Notes, the Security Trustee will have regard to the
interests of the Class A Noteholders only;
(b) subject to paragraph (a) above, if (in the Security Trustee's sole
opinion) there is or may be a conflict of interest between the Class B
Noteholders and any other Second Issuer Secured Creditor then, subject
to Condition 11 of the Second Issuer Notes, the Security Trustee will
have regard to the interests of the Class B Noteholders only;
(c) subject to paragraphs (a) and (b) above, if (in the Security Trustee's
sole opinion) there is or may be a conflict of interest between the
Class C Noteholders and any other Second Issuer Secured Creditor then,
subject to Condition 11 of the Second Issuer Notes, the Security
Trustee will have regard to the interests of the Class C Noteholders
only;
(d) subject to paragraphs (a) to (c) above and paragraphs (e) and (f)
below, if (in the Security Trustee's sole opinion) there is or may be a
conflict between the respective interests of the Second Issuer Swap
Providers and any of the other Second Issuer Secured Creditors, other
than the Noteholders, the Security Trustee will have regard to the
interests of the Second Issuer Swap Providers;
(e) subject to paragraph (f) below if, in the Security Trustee's sole
opinion, there is a conflict between the respective interests of the
Dollar Currency Swap Providers and the Euro Currency Swap Provider then
the Security Trustee will have regard to the interests of the highest
ranking swap providers (being the Series 1 Class A Dollar Currency Swap
Provider, the Series 2 Class A Dollar Currency Swap Provider, the
Series 3 Class A Euro Currency Swap Provider and the Series 4 Class A
Dollar Currency Swap Provider) only; and thereafter the Security
Trustee will have regard to the next highest ranking swap providers
(being the Series 1 Class B Dollar Currency Swap Provider, the Series 2
Class B Dollar Currency Swap Provider, the Series 3 Class B Euro
Currency Swap Provider and the Series 4 Class B Dollar Currency Swap
Provider);
(f) if, in the Security Trustee's sole opinion, there is a conflict between
the respective interests of the Second Issuer Swap Providers with the
equal ranking as set out in paragraph (e) above, then the Security
Trustee will have regard to the interests of the relevant Second Issuer
Swap Provider or Second Issuer Swap Providers in respect of the Second
Issuer Notes with the greatest principal amount outstanding; and
(g) subject to paragraphs (a) to (f) above, if (in the Security Trustee's
sole opinion) there is or may be a conflict between the respective
interests of any of the Second Issuer Secured Creditors, other than the
Noteholders and the Second Issuer Swap Providers, the Security Trustee
will have regard to the interests of the Second Issuer Secured Creditor
who ranks highest in the order of priority of payments set out in
Clause 6.4 above.
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7.3 ACKNOWLEDGEMENT
Each of the Second Issuer Secured Creditors hereby acknowledges and
concurs with the provisions of Clauses 7.1 and 7.2 and each of them
agrees that it shall have no claim against the Security Trustee as a
result of the application thereof.
8. THE SECURITY TRUSTEE'S POWERS
8.1 PRIOR NOTIFICATION
The Security Trustee shall, if reasonably practicable, give prior
notification to the Seller of the Security Trustee's intention to
enforce the security created by this Deed, provided always that the
failure of the Security Trustee to provide such notification shall not
prejudice the ability of the Security Trustee to enforce the security
created by this Deed.
8.2 ENFORCEABLE
Without prejudice to the provisions of Clauses 8.5 (Law of Property Act
1925) and 9.1 (Appointment), (i) the security created under this Deed
shall become immediately enforceable and (ii) the power of sale and
other powers conferred by Section 101 of the Law of Property Act 1925
(the "1925 Act"), as varied or amended by this Deed, shall, in
accordance with this Clause 8, be exercisable by the Security Trustee,
in each case at any time following service of a Second Issuer Note
Acceleration Notice or, if there are no Second Issuer Notes
outstanding, following a default in payment of any other Second Issuer
Secured Obligations on its due date. Without prejudice to the
effectiveness of any service of the Second Issuer Note Acceleration
Notice, the Note Trustee shall serve a copy of any Second Issuer Note
Acceleration Notice on each of the Second Issuer Secured Creditors,
Funding 1 and the Rating Agencies.
8.3 AMOUNTS DUE
Notwithstanding any other provision of this Deed, all amounts owing
under the Second Issuer Secured Obligations shall be deemed to have
become due 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 which are conferred on the Security Trustee under the 1925 Act
(as varied or extended by this Deed) only (and for no other purpose)
and all other powers shall be deemed to arise immediately after
execution of this Deed but shall only become enforceable in accordance
with Clause 8.2 (Enforceable) above. For the avoidance of doubt, the
Security Trustee shall not be required to have regard to the interests
of the Second Issuer in the exercise of its rights, powers,
authorities, discretions and remedies under this Deed.
8.4 POWER OF SALE
Section 103 of the 1925 Act shall not apply in relation to any of the
charges contained in this Deed and the statutory power of sale (as
extended by this Deed) and all other powers shall be exercisable at any
time after service of a Second Issuer Note Acceleration Notice.
8.5 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 the Second Issuer (as if such extensions were contained
therein) to authorise the Security Trustee at its absolute discretion
at any time following the occurrence of a Second Issuer Note Event of
Default and subject to
17
the Security Trustee being indemnified and/or secured to its
satisfaction in relation to the exercise of such powers:
(a) to make demand in the name of the Second Issuer Secured
Creditors or in its own right for any moneys and liabilities
in respect of the Second Issuer Charged Property;
(b) to sell, transfer, convey, vary or otherwise dispose of the
Second Issuer's title to or interest in the Second Issuer
Charged Property, and to do so for any shares, debentures or
other securities including, without limitation, any Authorised
Investments whatsoever comprising part thereof, or in
consideration of an agreement to pay all or part of the
purchase price at a later date or dates, or an agreement to
make periodical payments, whether or not the agreement is
secured by an Encumbrance or a guarantee, or for such other
consideration whatsoever as the Security Trustee may in its
absolute discretion think fit, and also to grant any option to
purchase, and to effect exchanges of, the whole or any part of
the Second Issuer Charged Property (and nothing shall preclude
any such disposal being made to a Second Issuer Secured
Creditor);
(c) with a view to or in connection with the sale of the Second
Issuer Charged Property, to carry out any transaction, scheme
or arrangement which the Security Trustee may, in its absolute
discretion, consider appropriate;
(d) to insure the Second Issuer Charged Property against such
risks and for such amounts as the Security Trustee may in its
absolute discretion consider prudent; and
(e) to do all or any of the things or exercise all or any of the
powers which are mentioned or referred to in Clause 9.6
(Powers) as if each of them was expressly conferred on the
Security Trustee by this Deed and which may not be included in
paragraphs (a) to (d) above.
8.6 DELEGATION TO RECEIVER
In addition and without prejudice to any of its statutory powers, the
Security Trustee may at any time by deed delegate to any Receiver all
or any of the extended powers of leasing, surrendering or accepting
surrenders of leases conferred on the Security Trustee by this Deed.
8.7 ADDITIONAL POWERS
The Security Trustee shall have the power to insure against any
liabilities or obligations arising:
(a) as a result of the Security Trustee acting or failing to act
in a certain way (other than which may arise from its
negligence or wilful default or that of its officers or
employees);
(b) as a result of any act or failure to act by any person or
persons to whom the Security Trustee has delegated any of its
trusts, rights, powers, duties, authorities or discretions, or
appointed as its agent (other than which may arise from such
person's negligence or wilful default);
(c) in connection with the Second Issuer Charged Property; or
18
(d) in connection with or arising from the enforcement of the
security created by this Deed.
The Security Trustee shall not be under any obligation to insure in
respect of such liabilities and/or obligations or to require any other
person to maintain insurance, but to the extent that it does so, the
Second Issuer shall quarterly and on written request pay all insurance
premiums and expenses which the Security Trustee may properly incur in
relation to such insurance. If the Second Issuer fails to pay such
premiums or expenses or to reimburse the Security Trustee therefor, the
Security Trustee shall be entitled to be indemnified out of the Second
Issuer Charged Property in respect thereof and, in the case of a Second
Issuer Note Acceleration Notice having been served, the indemnification
of the Security Trustee in respect of all such insurance premiums and
expenses shall be payable in priority to payments to the Second Issuer
Noteholders and all other Second Issuer Secured Creditors and otherwise
in accordance with this Deed.
8.8 APPLICATION TO COURT
The Security Trustee may at any time after the occurrence of a Second
Issuer Note Event of Default apply to the Court for an order that the
powers and trusts of this Deed be exercised or carried into execution
under the direction of the Court and for the appointment of a Receiver
of the Second Issuer Charged Property or any part thereof and for any
other order in relation to the execution and administration of the
powers and trusts hereof as the Security Trustee shall deem expedient,
and it may assent to or approve any application to the Court made at
the instance of any of the Second Issuer Noteholders.
8.9 AUTHORISED INVESTMENTS
Any moneys which under the trusts of this Deed ought to or may be
invested by the Security Trustee (or by the Cash Manager on its behalf)
after the occurrence of a Second Issuer Note Event of Default may be
invested in the name of the Security Trustee or in the name of any
nominee on its behalf and under the control of the Security Trustee in
any Authorised Investments and the 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 Security Trustee at its absolute discretion may
determine, and shall not be responsible (save where any loss results
from the Security Trustee's fraud, wilful default or negligence or that
of its officers or employees) 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.
8.10 DEFICIENCY OR ADDITIONAL PAYMENT
The Security Trustee shall have no responsibility whatsoever to any
Second Issuer Secured Creditor as regards any deficiency or additional
payment, as the case may be, which might arise because the Security
Trustee is subject to any Tax in respect of the Second Issuer Charged
Property or any part thereof or any income therefrom or any proceeds
thereof or is required to make any withholding or deduction from any
payment to any Second Issuer Secured Creditor.
8.11 APPLICATION OF FUNDS
If, after the service of a Second Issuer Note Acceleration Notice, the
amount of the moneys at any time available for payment of principal and
interest in respect of any Second Issuer Notes under Clause 6 (Payments
out of the Second Issuer Accounts upon Enforcement) shall be less
19
than one-tenth of the Principal Amount Outstanding of all the Second
Issuer Notes then outstanding, the Security Trustee may, at its
absolute discretion, invest such moneys to the extent that it is
permitted to do so under the FSMA 2000 in any Authorised Investments
and the Security Trustee may at any time vary or transfer any of such
Authorised Investments for or into other such Authorised Investments as
the Security Trustee at its absolute discretion may determine; and such
investments with the resulting income thereof may be accumulated until
the accumulations, together with any other funds for the time being
under the control of the Security Trustee and applicable for the
purpose, shall amount to a sum equal to at least one-tenth of the
Principal Amount Outstanding of all the Second Issuer Notes then
outstanding and such accumulations and funds shall then be applied in
accordance with Clause 6 (Payments out of the Second Issuer Accounts
upon Enforcement).
9. RECEIVER
9.1 APPOINTMENT
(a) Subject to paragraph (b) below, at any time following the occurrence of
a Second Issuer Note Event of Default, the Security Trustee may, at its
absolute discretion, appoint, by writing or by deed, such person or
persons (including an officer or officers of the Security Trustee) as
the Security Trustee thinks fit, to be Receiver of the Second Issuer
Charged Property or any part thereof and, in the case of an appointment
of more than one person, to act together or independently of the other
or others.
(b) The Security Trustee may not appoint an administrative receiver,
receiver, manager or receiver and manager pursuant to paragraph (a)
above solely as a result of the obtaining of a moratorium (or anything
done with a view to obtaining a moratorium) under the Insolvency Act
2000 except with leave of the court.
9.2 REMOVAL AND REPLACEMENT
Except as otherwise required by statute, the Security Trustee may by
writing or by deed remove any Receiver and appoint another in its place
or to act with any Receiver and the Security Trustee may apply to the
Court for an order removing an administrative receiver.
9.3 EXTENT OF APPOINTMENT
The exclusion of any part of the Second Issuer Charged Property from
the appointment of any Receiver shall not preclude the Security Trustee
from subsequently extending its appointment (or that of any Receiver
replacing it) to that part of the Second Issuer Charged Property or
appointing another Receiver over any other part of the Second Issuer
Charged Property.
9.4 AGENT OF THE SECOND ISSUER
Any Receiver shall, so far as the law permits, be the agent of the
Second Issuer and the Second Issuer alone shall be responsible for such
Receiver's contracts, engagements, acts, omissions, misconduct,
negligence or default and for liabilities incurred by him and in no
circumstances whatsoever shall the Security Trustee be in any way
responsible for or incur any liability in connection with such
Receiver's contracts, engagements, acts, omissions, misconduct,
negligence or default, and if a liquidator of the Second Issuer shall
be appointed, such Receiver shall act as principal and not as agent for
the Security Trustee. Notwithstanding the generality of the foregoing,
such Receiver shall in the exercise of his powers, authorities and
discretions conform to the regulations (if any) from time to time made
and given in writing by the Security Trustee.
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9.5 REMUNERATION
The remuneration of any Receiver shall be fixed by the Security Trustee
and may be or include a commission calculated by reference to the gross
amount of all moneys received or otherwise and may include remuneration
in connection with claims, actions or proceedings made or brought
against such Receiver by the Second Issuer or any other person or the
performance or discharge of any obligation imposed upon him by statute
or otherwise, but subject to Clause 6 (Payments out of the Second
Issuer Accounts upon Enforcement), such remuneration shall be payable
hereunder by the Second Issuer. The amount of such remuneration shall
be paid in accordance with the terms and conditions and in the manner
agreed from time to time between such Receiver and the Security
Trustee.
9.6 POWERS
Any Receiver of the Second Issuer, in addition to any powers conferred
on a Receiver by statute or common law, shall have the following
powers:
(a) to take possession of, get in and collect the Second Issuer
Charged Property (or such part thereof in respect of which it
may be appointed) or any part thereof including income whether
accrued before or after the date of his appointment;
(b) to carry on, manage, concur in or authorise the management of,
or appoint a manager of, the whole or any part of the business
of the Second Issuer;
(c) to sell, exchange, license, surrender, release, disclaim,
abandon, return or otherwise dispose of or in any way
whatsoever deal with the whole or any part of the Second
Issuer Charged Property or any interest in the Second Issuer
Charged Property or any part thereof for such consideration
(if any) and upon such terms (including by deferred payment or
payment by instalments) as it may think fit and to concur in
any such transaction;
(d) to sell or concur in selling the whole or any part of the
Second Issuer's business whether as a going concern or
otherwise;
(e) to appoint, engage, dismiss or vary the terms of employment of
any employees, officers, managers, agents and advisers of the
Second Issuer upon such terms as to remuneration and otherwise
and for such periods as he may determine;
(f) to insure, protect, maintain, repair, alter, improve, replace,
exploit, add to and develop or concur in so doing, the Second
Issuer Charged Property or any part thereof in any manner and
for any purpose whatsoever;
(g) in connection with the exercise or the proposed exercise of
any of its powers or in order to obtain payment of its
remuneration (whether or not it is already payable), to borrow
or raise money from any person without security or on the
security of any of the Second Issuer Charged Property and
generally in such manner and on such terms as it may think
fit;
(h) to bring, defend, submit to arbitration, negotiate,
compromise, abandon and settle any claims, disputes and
proceedings concerning the Second Issuer Charged Property or
any part thereof;
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(i) to transfer all or any of the Second Issuer Charged Property
and/or any of the liabilities of the Second Issuer to any
other company or body corporate, whether or not formed or
acquired for the purpose and to form a subsidiary or
subsidiaries of the Second Issuer;
(j) to call up or require the directors of the Second Issuer to
call up all or any portion of the uncalled capital for the
time being of the Second Issuer and to enforce payment of any
call by action (in the name of the Second Issuer or the
Receiver as may be thought fit);
(k) to redeem, discharge or compromise any Encumbrance from time
to time having priority to or ranking pari passu with this
Deed;
(l) to effect or maintain indemnity insurance and other insurance
(including without limitation the Insurance Policies) and
obtain bonds and performance guarantees;
(m) in connection with the exercise of any of its powers, to
execute or do, or cause or authorise to be executed or done,
on behalf of or in the name of the Second Issuer or otherwise,
as it may think fit, all documents, receipts, registrations,
acts or things which it may consider appropriate;
(n) to exercise any powers, discretions, voting, conversion or
other rights or entitlements in relation to any of the Second
Issuer Charged Property or incidental to the ownership of or
rights in or to any of the Second Issuer Charged Property and
to complete or effect any transaction entered into by the
Second Issuer and complete, disclaim, abandon or modify all or
any of the outstanding contracts or arrangements of the Second
Issuer relating to or affecting the Second Issuer Charged
Property;
(o) to exercise all powers as are described in Schedule 1 to the
Insolvency Act 2000, whether or not the Receiver is an
"administrative receiver" as defined in that Act;
(p) to delegate its powers by way of power of attorney or in any
other manner to any person any right, power or discretion
exercisable by it under this Deed on the terms (including the
power to sub-delegate) and subject to any regulations which
such Receiver may think fit and such Receiver shall not be
liable or responsible in any way to the Second Issuer or the
Security Trustee for any loss or liability arising from any
act, default, omission or misconduct on the part of any such
delegate or sub-delegate;
(q) generally to carry out, or cause or authorise to be carried
out, any transaction, scheme or arrangement whatsoever,
whether similar or not to any of the foregoing, in relation to
the Second Issuer Charged Property which it may consider
expedient as effectually as if he were solely and absolutely
entitled to the Second Issuer Charged Property;
(r) in addition:
(i) to do all other acts and things which it may consider
desirable or necessary for realising any Second
Issuer Charged Property or incidental or conducive to
any of the rights, powers or discretions conferred on
a Receiver under or by virtue of this Deed; and
(ii) to exercise in relation to any Second Issuer Charged
Property all the powers, authorities and things which
it would be capable of exercising if he were the
absolute beneficial owner of the same,
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and may use the name of the Second Issuer for any of the
above purposes; and
(s) to pay and discharge out of the profits and income of the
relevant Second Issuer Charged Property and the moneys to be
made by it in carrying on the business of the Second Issuer
the expenses incurred in and about the carrying on and
management of the business or in the exercise of any of the
powers conferred by this Clause 9.6 or otherwise in respect of
such Second Issuer Charged Property and all outgoings which it
shall think fit to pay and to apply the residue of the said
profits, income or moneys in the manner provided by Clause 6
(Payments out of the Second Issuer Accounts upon Enforcement)
hereof.
The Security Trustee may pay over to a Receiver any moneys constituting
part of the Second Issuer Charged Property to the intent that the same
may be applied for the purposes referred to in Clause 6 (Payments out
of the Second Issuer Accounts upon Enforcement) by such Receiver and
the Security Trustee may from time to time determine what funds such
Receiver shall be at liberty to keep in hand with a view to the
performance of his duties as such Receiver.
10. PROTECTION OF THIRD PARTIES
10.1 ENQUIRY
No purchaser from, or other person dealing with, the Security Trustee
or a Receiver shall be concerned to enquire whether any of the powers
exercised or purported to be exercised has arisen or become
exercisable, whether the Second Issuer Secured Obligations remain
outstanding or have become payable, whether such Receiver is authorised
to act or as to the propriety or validity of the exercise or purported
exercise of any power; and the title of such a purchaser and the
position of such a person shall not be impeachable by reference to any
of those matters and the protections contained in Sections 104 to 107
of the 1925 Act shall apply to any person purchasing from or dealing
with a Receiver or the Security Trustee.
10.2 RECEIPTS
Upon any dealing or transaction under this Deed, the receipt of the
Security Trustee or a Receiver, as the case may be, shall be an
absolute and a conclusive discharge to a purchaser and shall relieve
him of any obligation to see to the application of any moneys paid to
or by the direction of the Security Trustee or such Receiver.
11. PROTECTION OF SECURITY TRUSTEE AND RECEIVER
11.1 LIABILITY
Neither the Security Trustee nor any Receiver shall be liable to the
Second Issuer in the absence of breach of the terms of this Deed by
them, or wilful default, fraud, negligence or wilful misconduct on
their part or that of their officers, employees or agents in respect of
any loss or damage which arises out of the exercise or the attempted or
purported exercise of or failure to exercise any of their respective
powers.
11.2 POSSESSION
Without prejudice to the generality of Clause 11.3 (Mortgagee in
Possession), entry into possession of the Second Issuer Charged
Property or any part thereof shall not render the Security Trustee or
the Receiver of that company liable to account as mortgagee in
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possession. If and whenever the Security Trustee or the Receiver enters
into possession of the Second Issuer Charged Property, it shall be
entitled at any time to go out of such possession.
11.3 MORTGAGEE IN POSSESSION
Neither the Security Trustee nor the Second Issuer Secured Creditors
shall, by reason of any assignment or other security made under this
Deed, be or be deemed to be a mortgagee in possession nor shall they
take any action (other than, in the case of the Second Issuer Secured
Creditors, with the Security Trustee's prior written consent) which
would be likely to lead to the Second Issuer Secured Creditors or the
Security Trustee becoming a mortgagee in possession in respect of any
property referred to in this Deed. The Security Trustee, in its
absolute discretion, may at any time, serve a written notice on the
Second Issuer Secured Creditors requiring the Second Issuer Secured
Creditors from the date such notice is served to obtain the Security
Trustee's prior written consent before taking any action which would be
likely to lead to the Second Issuer Secured Creditors or the Security
Trustee becoming a mortgagee in possession in respect of any property
referred to in this Deed.
12. EXPENSES AND INDEMNITY
12.1 EXPENSES
The Second Issuer covenants with and undertakes to the Security Trustee
to reimburse or pay to the Security Trustee or any Receiver of the
Second Issuer (on the basis of a full indemnity) the amount of all
costs (including legal costs), charges and expenses (including
insurance premiums) properly incurred or sustained by the Security
Trustee or any Receiver (including, for the avoidance of doubt, any
such costs, charges and expenses arising from any act or omission of,
or proceedings involving, any third person) in connection with:
(a) the exercise or the attempted exercise, or the consideration
of the exercise by or on behalf of the Security Trustee or any
Receiver of any of the powers of the Security Trustee or such
Receiver, and the enforcement, preservation or attempted
preservation of this Deed (or any of the charges contained in
or granted pursuant to it) or any of the Second Issuer Charged
Property or any other action taken by or on behalf of the
Security Trustee or such Receiver with a view to or in
connection with the recovery by the Security Trustee or such
Receiver of the Second Issuer Secured Obligations from the
Second Issuer or any other person; or
(b) the carrying out of any other act or matter which the Security
Trustee or any Receiver may reasonably consider to be
necessary for the preservation, improvement or benefit of the
Second Issuer Charged Property.
12.2 INDEMNITY
The Second Issuer agrees to indemnify the Security Trustee and any
Receiver, on an after-Tax basis, from and against all losses, actions,
claims, costs (including legal costs on a full indemnity basis),
expenses (including insurance premiums), demands and liabilities
whether in contract, tort, delict or otherwise now or hereafter
properly sustained or incurred by the Security Trustee or such Receiver
and their respective officers and employees or by any person for whose
liability, act or omission the Security Trustee or such Receiver may be
answerable, in connection with anything done or omitted to be done
under or pursuant to this Deed or any other Transaction Document to
which such entity is a party, or in the exercise or purported exercise
of the powers herein contained, or occasioned by any breach by the
Second Issuer of any of its covenants or other obligations to the
Security Trustee, or in
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consequence of any payment in respect of the Second Issuer Secured
Obligations (whether made by the Second Issuer or a third person) being
declared void or impeached for any reason whatsoever save where the
same arises as the result of the fraud, negligence or wilful default of
the Security Trustee or such Receiver or their respective officers or
employees or breach by the Security Trustee or such Receiver or their
respective officers or employees of the terms of this Deed.
12.3 TAXES
All sums payable by the Second Issuer under this Deed are deemed to be
exclusive of any amount in respect of VAT. If, pursuant to any
provision of this Deed, the Security Trustee or any Receiver of the
Second Issuer makes any taxable or deemed taxable supply to the Second
Issuer, then the Second Issuer shall pay to the Security Trustee or
such Receiver (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.
If the Security Trustee or any Receiver shall make any payment for a
taxable or deemed taxable supply to it pursuant to or in connection
with this Deed and any such payment shall bear VAT which is
Irrecoverable VAT the Second Issuer shall indemnify the Security
Trustee or such Receiver (as the case may be) on demand for an amount
equal to such Irrecoverable VAT so far as it has not been taken into
account in computing the amount of any payment made by the Second
Issuer to the Security Trustee or such Receiver under any other
indemnity contained in this Deed.
12.4 INTEREST
All sums payable by the Second Issuer under Clauses 24.3 (Disputes),
24.4 (Expenses) and 24.5 (Indemnity) shall be payable on demand and:
(a) in the case of payments actually made by the Security Trustee
prior to the demand, shall carry interest at the rate per
annum which is 1 per cent. per annum higher than the base rate
of the Agent Bank for the time being from the first Business
Day following the date of the same being demanded to the date
of actual payment (provided that such demand shall be made on
a Business Day, otherwise interest shall be payable from the
second Business Day following the date of the demand to the
date of actual payment); and
(b) in all other cases, shall carry interest at such rate from the
date 14 days after the date of the same being demanded or
(where the demand specifies that payment by the Security
Trustee will be made on an earlier date provided such earlier
date is a business day) from such earlier date (not being
earlier than the Business Day following the date of such
demand) to the date of actual payment.
Any amounts payable pursuant to Clauses 24.1 (Remuneration) and 24.2
(Additional Remuneration) shall carry interest at the aforesaid rate
from the due date thereof to the date of actual payment.
12.5 STAMP DUTIES
The Second Issuer 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
25
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 Second Issuer Transaction
Documents (except where such obligation to pay such stamp
duties and other duties on Taxes of a similar nature is
expressed to be the obligation of any other party to the
Second Issuer Transaction Documents).
13. PROTECTION OF SECURITY
The Second Issuer further covenants with and undertakes to the Security
Trustee from time to time (and, for the purposes mentioned in paragraph
(a) below, notwithstanding that the a Second Issuer Note Acceleration
Notice may not have been served) upon demand to execute, at the Second
Issuer's own cost, any document or do any act or thing (other than any
amendment hereto) which the Security Trustee may specify:
(a) with a view to registering or perfecting any charge or other
security created or intended to be created by or pursuant to
this Deed (including the perfecting of the conversion of any
floating charge to a fixed charge pursuant to Clause 14.1
(Notice) or 14.2 (Automatic Crystallisation)) subject to
having first obtained all necessary consents (if any); or
(b) with a view to facilitating the exercise or the proposed
exercise of any of their powers or the realisation of any of
the Second Issuer Charged Property; or
(c) with a view to protecting the encumbrances created by or
pursuant to this Deed,
provided that the Second Issuer shall not be obliged to execute any
further documentation or take any other action or steps to the extent
that it would breach a restriction in any such agreement to which it is
party relating to assignment, transferring, charging or sharing of
possession/rights of such benefit.
14. CRYSTALLISATION
14.1 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 Security Trustee may have, the Security Trustee may, at
any time, if:
(a) a Potential Second Issuer Note Event of Default is subsisting
and has not been waived; or
(b) it believes that the Second Issuer Charged Property or any
part thereof is in danger of being seized or sold under any
form of distress or execution levied or threatened or is
otherwise in jeopardy or imperilled; or
(c) any circumstance shall occur which, in the reasonable opinion
of the Security Trustee, prejudices, imperils, threatens or is
likely to do any of the foregoing in respect of the security
created by this Deed or the Second Issuer takes or threatens
to
26
take any action that would be prejudicial to, or would be
inconsistent with, the security created hereby,
by notice in writing to the Second Issuer declare that the floating
charge hereby created shall be converted into a first specific fixed
charge as to all of the undertakings, property and assets or such of
them as may be specified in the notice, and by way of further
assurance, the Second Issuer, at its own expense, shall execute all
documents in such form as the Security Trustee shall require and shall
deliver to the Security Trustee all conveyances, deeds, certificates
and documents which may be necessary to perfect such first specific
fixed charge.
14.2 AUTOMATIC CRYSTALLISATION
Subject as set out below, in addition and without prejudice to any
other event resulting in a crystallisation of the floating charge
created by this Deed, the floating charge contained herein shall
automatically be converted into a fixed charge over all property,
assets or undertaking of the Second Issuer subject to the floating
charge, if and when:
(a) a Second Issuer Note Event of Default occurs; or
(b) the Second Issuer ceases to carry on all or a substantial part
of its business or ceases to be a going concern or thereafter
to do any of the foregoing; or
(c) the Second Issuer stops making payments to its creditors or
gives notice to creditors that it intends to stop payment; or
(d) the holder of any other Encumbrance in relation to the Second
Issuer, whether ranking in priority to or pari passu with or
after the charges contained in this Deed, appoints a Receiver;
or
(e) any floating charge granted by the Second Issuer to any other
person (whether permitted by the Second Issuer Transaction
Documents or not) crystallises for any reason whatsoever.
The floating charge created by Clause 3.4 of this Deed may not be
converted into a fixed charge solely as a result of the obtaining of a
moratorium (or anything done with a view to obtaining a moratorium)
under the Insolvency Act 2000 except with leave of the court.
14.3 FAILURE OF PETITION FOR ADMINISTRATION OR WINDING-UP
If any petition for the administration or winding-up of the Second
Issuer is dismissed or withdrawn or a resolution for winding-up the
Second Issuer is not passed by the necessary majority, then without
prejudice to any rights exercisable otherwise than in consequence of
the presentation of such petition or resolution and subject to anything
done in the meantime in pursuance of the powers given by this Deed and
subject to the provisions contained in this Deed as to costs charges
and expenses incurred and payments made, possession of the Second
Issuer Charged Property will be restored to the Second Issuer, and the
Second Issuer and all persons concerned will be remitted to their
original rights provided that the Security Trustee is satisfied that
its security position at that time is not materially different to that
as at the date of this Deed.
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15. POWER OF ATTORNEY, ETC.
15.1 EXECUTION OF POWER OF ATTORNEY
Immediately upon execution of this Deed, the Second Issuer shall
execute and deliver to the Security Trustee a power of attorney in or
substantially in the form set out in Schedule 1. For the avoidance of
doubt, the Security Trustee confirms that it may only exercise the
powers conferred under such power of attorney in the circumstances set
out in paragraph 1 of Schedule 1.
15.2 SECOND ISSUER CHARGED PROPERTY ON TRUST
To the extent that it is permitted to do so under the Transaction
Documents, for the purpose of giving effect to this Deed, the Second
Issuer hereby declares that, after service of a Second Issuer Note
Acceleration Notice, it will hold all of the Second Issuer Charged
Property (subject to the right of redemption) upon trust to convey,
assign or otherwise deal with such Second Issuer Charged Property in
such manner and to such person as the Security Trustee shall direct,
and declares that it shall be lawful for the Security Trustee to
appoint a new trustee or trustees of the Second Issuer Charged Property
in place of the Second Issuer.
16. OTHER SECURITY, ETC.
16.1 NO MERGER
The Security Interests contained in or created pursuant to this Deed
are in addition to, and shall neither be merged in, nor in any way
exclude or prejudice any other Encumbrance, right of recourse, set-off
or other right whatsoever which the Security Trustee or any Second
Issuer Secured Creditor may now or at any time hereafter hold or have
(or would apart from this Deed or any charge contained or created
pursuant to this Deed hold or have) as regards the Second Issuer or any
other person in respect of the Second Issuer Secured Obligations, and
neither the Security Trustee (subject to the provisions of Clause 20.4
(Mandatory Enforcement) nor any Second Issuer Secured Creditor shall be
under any obligation to take any steps to call in or to enforce any
security for the Second Issuer Secured Obligations, and shall not be
liable to the Second Issuer for any loss arising from any omission on
the part of the Security Trustee or any Second Issuer Secured Creditor
to take any such steps or for the manner in which the Security Trustee
or any Second Issuer Secured Creditor shall enforce or refrain from
enforcing any such security.
16.2 CONSOLIDATION
Section 93 of the 1925 Act shall not apply in relation to any of the
charges contained in this Deed.
16.3 RULING OFF
If the Security Trustee receives notice of any Encumbrance affecting
the whole or any part of the Second Issuer Charged Property or any
Security Interests created under this Deed in contravention of the
provisions hereof:
(a) the Security Trustee may open a new account in respect of the
Second Issuer and, if it does not, it shall nevertheless be
deemed to have done so at the time it received such notice;
and
28
(b) all payments made by the Second Issuer to the Security Trustee
after the 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
Second Issuer Secured Obligations as at the time the Security
Trustee received such notice.
16.4 CHANGE OF NAME, ETC.
This Deed shall remain valid and enforceable notwithstanding any change
in the name, composition or constitution of the Security Trustee or the
Second Issuer or any amalgamation or consolidation by the Security
Trustee or the Second Issuer with any other corporation (whether, in
the case of the Second Issuer, permitted by the Second Issuer
Transaction Documents or not).
17. AVOIDANCE OF PAYMENTS
17.1 NO RELEASE
No assurance, security or payment which may be avoided or adjusted
under the law, including under any enactment relating to bankruptcy or
insolvency and no release, settlement or discharge given or made by the
Security Trustee or any Second Issuer Secured Creditor on the faith of
any such assurance, security or payment, shall prejudice or affect the
right of the Security Trustee or any Second Issuer Secured Creditor to
recover the Second Issuer Secured Obligations from the Second Issuer
(including any monies which it may be compelled to pay or refund under
the provisions of the Insolvency Act 1986 and any costs payable by it
pursuant to or otherwise incurred in connection therewith) or to
enforce the Security Interests created under or pursuant to this Deed
to the full extent of the Second Issuer Secured Obligations.
17.2 RETENTION OF CHARGES
If the Security Trustee shall have reasonable grounds for believing
that the Second Issuer 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 the Second
Issuer shall be prima facie evidence of the solvency of the Second
Issuer) at the date of any payment made by the Second Issuer to the
Security Trustee and that as a result, such payment may be capable of
being avoided or clawed back, the Security Trustee shall be at liberty
to retain the Security Interests 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 Second Issuer Secured Obligations notwithstanding any release,
settlement, discharge or arrangement which may be given or made by the
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 shall be presented to a competent court for an order for the
winding up or the making of an administration order in respect of the
Second Issuer or the Second Issuer shall commence to be wound up or to
go into administration or any analogous proceedings shall be commenced
by or against the Second Issuer, as the case may be, the Security
Trustee shall be at liberty to continue to retain such security for
such further period as the 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 Security Trustee of all Second Issuer
Secured Obligations.
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18. SET OFF
The Security Trustee may at any time following the service of a Second
Issuer Note Acceleration Notice (without notice and notwithstanding any
settlement of account or other matter whatsoever) combine or
consolidate all or any existing accounts of the Second Issuer whether
in its own name or jointly with others and held by it or any Second
Issuer 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 the Second Issuer from the
Security Trustee or relevant Second Issuer Secured Creditor and whether
or not the credit balance and the account in debit or the Second Issuer
Secured Obligations are expressed in the same currency in which case
the Security Trustee is hereby authorised to effect any necessary
conversions at its prevailing rates of exchange) in or towards
satisfaction of any of the Second Issuer Secured Obligations and may in
its absolute discretion estimate the amount of any liability of the
Second Issuer which is contingent or unascertained and thereafter set
off such estimated amount and no amount shall be payable by the
Security Trustee to the Second Issuer unless and until all Second
Issuer Secured Obligations have been ascertained and fully repaid or
discharged.
19. EXECUTION OF DOCUMENTS
Any document required to be executed as a deed by the Security Trustee
under or in connection with this Deed shall be validly executed if
executed as a deed by a duly authorised attorney of the Security
Trustee.
20. EXERCISE OF CERTAIN RIGHTS
20.1 NO ENFORCEMENT BY SECOND ISSUER SECURED CREDITORS
Each of the Second Issuer Secured Creditors (other than the
Noteholders, the Note Trustee acting on behalf of the Second Issuer
Noteholders and the Security Trustee) hereby agrees with the Second
Issuer and the Security Trustee that:
(a) only the Security Trustee may enforce the security created in
favour of the Security Trustee by this Deed in accordance with
the provisions hereof; and
(b) it shall not take any steps for the purpose of recovering any
of the Second Issuer Secured Obligations (including, without
limitation, by exercise any rights of set off) or enforcing
any rights arising out of the Second Issuer Transaction
Documents against the Second Issuer or procuring the winding
up, administration or liquidation of the Second Issuer in
respect of any of its liabilities whatsoever,
unless a Second Issuer Note Acceleration Notice shall have been served
or the Note Trustee, having become bound to serve a Second Issuer Note
Acceleration Notice, and/or having become bound to take any steps or
proceedings to enforce the said security pursuant to this Deed, fails
to do so within 30 days of becoming so bound and that failure is
continuing (in which case each of such Second Issuer Secured Creditors
shall be entitled to take any such steps and proceedings as it shall
deem necessary other than the presentation of a petition for the
winding up of, or for an administration order in respect of, the Second
Issuer).
20.2 KNOWLEDGE OF SECURITY TRUSTEE OF A SECOND ISSUER NOTE EVENT OF DEFAULT
The Security Trustee will not be deemed to have knowledge of the
occurrence of a Second Issuer Note Event of Default unless the Security
Trustee has received written notice from a
30
Second Issuer Secured Creditor stating that a Second Issuer Note Event
of Default has occurred and describing that Second Issuer Note Event of
Default.
20.3 DISCRETIONARY ENFORCEMENT
Subject to the provisions of this Deed, the 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, the
Second Issuer or any other person to enforce their respective
obligations under any of the Second Issuer Transaction Documents.
Subject to the provisions of this Deed, at any time after the security
created by this Deed has become enforceable, the Security Trustee may,
at its discretion and without notice, take such steps as it may think
fit to enforce such security.
20.4 MANDATORY ENFORCEMENT
The Security Trustee shall not be bound to take any steps or to
institute any proceedings or to take any other action under or in
connection with any of the Second Issuer Transaction Documents
(including, without limitation, enforcing the security constituted by
or pursuant to this Deed) unless (subject to the provisions of
Condition 10 of the Second Issuer Notes) the Security Trustee:
(a) shall have been directed or requested to do so by an
Extraordinary Resolution of the Class A Noteholders, the Class
B Noteholders or the Class C Noteholders or in writing by the
holders of at least 25 per cent. in aggregate Principal Amount
Outstanding of the Class A Second Issuer Notes, the Class B
Second Issuer Notes or the Class C Second Issuer Notes then
outstanding or by any other Second Issuer Secured Creditor
PROVIDED THAT:
(i) the Security Trustee shall not, and shall not be
bound to, act at the direction or request of the
Class B Noteholders as aforesaid unless either so to
do would not, in the sole opinion of the Security
Trustee, be materially prejudicial to the interests
of the Class A Noteholders or such action is
sanctioned by an Extraordinary Resolution of the
Class A Noteholders;
(ii) the Security Trustee shall not, and shall not be
bound to, act at the direction or request of the
Class C Noteholders as aforesaid unless either so to
do would not, in the sole opinion of the Security
Trustee, be materially prejudicial to the interests
of the Class A Noteholders and/or the Class B
Noteholders or such action is sanctioned by an
Extraordinary Resolution of the Class A Noteholders
and/or the Class B Noteholders, as the case may be;
(iii) the Security Trustee shall not, and shall not be
bound to, act at the direction or request of any
other Second Issuer Secured Creditor as aforesaid
unless so to do would not, in the sole opinion of the
Security Trustee, be materially prejudicial to the
interests of the Class A Noteholders and the Class B
Noteholders and the Class C Noteholders or such
action is sanctioned by Extraordinary Resolutions of
the Class A Noteholders and the Class B Noteholders
and the Class C Noteholders and each of the Second
Issuer Secured Creditors who ranks higher than the
relevant Second Issuer Secured Creditor in the order
or priority of payments in Clause 6 (Payments out of
the Second Issuer Accounts upon Enforcement) consents
to such action; and
31
(b) shall have been indemnified and/or secured to its satisfaction
against all liabilities, actions, proceedings, claims and
demands to which it may thereby render itself liable and all
costs, charges, damages and expenses which it may incur by so
doing and the terms of such indemnity may include the
provision of a fighting fund, non-recourse loan or other
similar arrangement.
20.5 DISPOSAL OF SECOND ISSUER CHARGED PROPERTY
Notwithstanding Clause 8 (The Security Trustee's Powers), if the Second
Issuer Security has become enforceable otherwise than by reason of a
default in payment of any amount due on the Class A Notes (or, once the
Class A Notes have been redeemed in full, the Class B Notes or, once
the Class A Notes and the Class B Notes have been redeemed in full, the
Class C Notes), the Security Trustee will not be entitled to dispose of
any of the Second Issuer Charged Property unless either a sufficient
amount would be realised to allow discharge in full of all amounts
owing to the Class A Noteholders and, once all of the Class A
Noteholders have been repaid, the Class B Noteholders and, once all of
the Class A Noteholders and the Class B Noteholders have been repaid,
the Class C Noteholders or the Security Trustee is of the sole opinion,
which shall be binding on the Second Issuer Secured Creditors, reached
after considering at any time and from time to time the advice of any
financial adviser (or such other professional advisers reasonably
selected by the Security Trustee for the purpose of giving such
advice), that the cash flow prospectively receivable by the Second
Issuer will not (or that there is a significant risk that it will not)
be sufficient, having regard to any other relevant actual, contingent
or prospective liabilities of the Second Issuer, to discharge in full
in due course all amounts owing to the Class A Noteholders (or once all
of the Class A Noteholders have been repaid, the Class B Noteholders,
or once all of the Class A Noteholders and the Class B Noteholders have
been repaid, the Class C Noteholders). The fees and expenses of the
aforementioned financial adviser or other professional adviser selected
by the Security Trustee shall be paid by the Second Issuer.
21. COVENANTS AND WARRANTIES
21.1 NOTICE OF ASSIGNMENT
Immediately upon the execution of this Deed, the Second Issuer shall
deliver one or more notices of assignment substantially in the form set
out in Schedule 2 to each of the persons named in such notices and
shall use all reasonable endeavours to procure the delivery to the
Security Trustee on the date hereof of receipts from the addressees of
such notices substantially in the form attached to the notice.
21.2 WARRANTY
The Second Issuer warrants to the Security Trustee that it has taken
all necessary steps to enable it to charge or assign as security the
Second Issuer Charged Property in accordance with Clause 3 (Security
and Declaration of Trust), and that it has taken no action or steps to
prejudice its right, title and interest in and to the Second Issuer
Charged Property.
21.3 NEGATIVE COVENANTS
So long as any of the Second Issuer Secured Obligations remain
outstanding, the Second Issuer shall not, save to the extent permitted
by or provided for in the Transaction Documents or with the prior
written consent of the Security Trustee:
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(a) create or permit to subsist any mortgage, pledge, lien, charge
or other security interest whatsoever (unless arising by
operation of law) upon the whole or any part of its assets
(including any uncalled capital) or its undertaking, present
or future;
(b) (i) carry on any business other than as described in the
Prospectus dated [6th March], 2003 relating to the
issue of the Second Issuer Notes and the related
activities described therein; or
(ii) have any subsidiaries or any subsidiary undertakings
(as defined in the Companies Act 1985) or any
employees or premises;
(c) transfer, sell, lend, part with or otherwise dispose of, or
deal with, or grant any option or present or future right to
acquire any of its assets or undertaking or any interest,
estate, right, title or benefit therein or thereto or agree or
attempts or purport to do so;
(d) pay any dividend or make any other distribution to its
shareholder or issue any further shares;
(e) incur any indebtedness in respect of borrowed money whatsoever
or give any guarantee or indemnity in respect of any
indebtedness or of any obligation of any person;
(f) consolidate or merge with any other person or convey or
transfer its properties or assets substantially as an entirety
to any other person;
(g) permit any of the Second Issuer Transaction Documents to which
it is a party to become invalid or ineffective, or the
priority of the Security Interests created thereby to be
reduced, or consent to any variation of, or exercise any
powers of consent or waiver pursuant to the terms of any of
the Second Issuer Transaction Documents to which it is a
party, or permit any party to any of the Transaction Documents
to which it is a party or any other person whose obligations
form part of the Second Issuer Charged Property to be released
from its respective obligations;
(h) have an interest in any bank account other than the Second
Issuer Accounts, unless such account or interest therein is
charged to the Security Trustee on terms acceptable to it;
(i) offer to surrender to any company any amounts which are
available for surrender by way of group relief within Chapter
IV of Part X of the Income and Corporation Taxes Act 1988
except for full payment at the current applicable rate of
corporation tax applied to the surrendered amount and payable
at the date when corporation tax is due to be paid by the
claimant or would be due in the absence of the surrender;
(j) allow or permit the group election in force between the Second
Issuer and Funding 1 under Section 247 of the Income and
Corporation Taxes Act 1988 to cease, unless required to do so
by law;
(k) do any act or thing the effect of which would be to make the
Second Issuer resident in any jurisdiction other than the
United Kingdom;
(l) permit any person other than the Second Issuer and the
Security Trustee to have any equitable interest in any of its
assets or undertakings or any interest, estate, right, title
or benefit therein;
33
(m) purchase or otherwise acquire any Note or Notes (including the
Second Issuer Notes); or
(n) engage in any activities in the United States (directly or
through agents) or derive any income from United States
sources as determined under United States income tax
principles or 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.
21.4 POSITIVE COVENANTS
The Second Issuer covenants and undertakes with the Security Trustee
for the benefit of the Second Issuer Secured Creditors as follows:
(a) at all times to carry on and conduct its affairs in a proper
and efficient manner and in accordance with its constitutive
documents and all laws and regulations applicable to it;
(b) give to the Security Trustee within a reasonable time after
request such information and evidence as it shall reasonably
require and in such form as it shall reasonably require,
including without prejudice to the generality of the foregoing
the procurement by the Second Issuer of all such certificates
called for by the Security Trustee pursuant to this Deed or
any other Transaction Document for the purpose of the
discharge or exercise of the duties, trusts, powers,
authorities and discretions vested in it under these presents
or any other Transaction Document to which the Security
Trustee is a party or by operation of law;
(c) to 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
applicable to it for the time being;
(d) at all times to keep or procure the keeping of proper books of
account and records and allow the Security Trustee and any
person or persons appointed by the Security Trustee to whom
the Second Issuer shall have no reasonable objection free
access to such books of account and records at all 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 Security Trustee carrying out
its duties under this Deed;
(e) to send to the Security Trustee a copy of every balance sheet,
profit and loss account, source and application of funds
statement (if any), report, or other notice, statement,
circular or document issued or given to any holder of
securities (including Noteholders and shareholders in their
capacity as such) or creditors of the Second Issuer as soon as
reasonably practicable after issue of the same;
(f) to give notice in writing to the Security Trustee of the
occurrence of any Second Issuer Note Event of Default,
Potential Second Issuer Note Event of Default and/or service
of a Second Issuer Note Acceleration Notice (which has not
been served by the Security Trustee) (such notice to be
effective by the delivery of a copy of the Second Issuer Note
Acceleration Notice to Security Trustee) immediately upon
becoming aware thereof and without waiting for the Security
Trustee to take any further action;
34
(g) give to the Security Trustee (i) within fourteen days after
demand by the 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 Year a certificate signed
by two directors of the Second Issuer 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 Second Issuer Note 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 certificate (or in the case of the first such
certificate the date hereof) to and including the
certification date of such certificate the Second Issuer has
complied, to the best of such directors' knowledge and belief,
with all its obligations contained in this Deed and each of
the other Second Issuer Transaction Documents to which it is a
party or (if such is not the case) specifying the respects in
which it has not so complied;
(h) at all times to execute all such further documents and do all
such further acts and things as may in the reasonable opinion
of the Security Trustee be necessary at any time or times to
give effect to the terms and conditions of this Deed and the
other Second Issuer Transaction Documents;
(i) at all times to comply with the obligations and provisions
binding upon it under and pursuant to this Deed and the other
Second Issuer Transaction Documents;
(j) duly and promptly to pay and discharge all Taxes imposed upon
it or its assets unless such Taxes are, in the sole opinion of
the Security Trustee, being contested in good faith by the
Second Issuer; and
(k) so far as permitted by law to enter into and maintain in full
force and effect a group income election under Section 247 of
the Income and Corporation Taxes Act 1988 in relation to any
such payments as are referred to in Section 247(4) of that Act
and which are made under the Second Issuer Intercompany Loan
Agreement by Funding 1 to the Second Issuer and ensure that no
steps will be taken (whether by act, omission or otherwise)
which would reasonably be expected to lead to the revocation
or invalidation of the aforementioned election; and
immediately to notify the Security Trustee if it becomes aware
that the aforementioned election ceases to be in full force
and effect or if circumstances arise, of which it is aware,
which may result in that election ceasing to be in full force
and effect.
21.5 FORMS 395
The Second Issuer shall make a filing or shall procure that a filing is
made with the Registrar of Companies of a duly completed Form 395
together with an executed original of this Deed within the applicable
time limit.
22. SUPPLEMENTS TO THE TRUSTEE ACTS
22.1 POWERS OF SECURITY TRUSTEE
Section 1 of the Trustee Act 2000 shall not apply to the duties of the
Security Trustee in relation to the trusts constituted by this Deed.
Where there are any inconsistencies between the Trustee Act 1925, the
Trustee Act 2000 and the provisions of
35
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.
By way of supplement it is expressly declared as follows:
(a) the Security Trustee may in relation to this Deed or any of
the other Second Issuer Transaction Documents act on the
opinion or advice of, or a certificate or any information
obtained from, any lawyer, banker, valuer, surveyor,
securities company, broker, auctioneer, accountant or other
expert or adviser in the United Kingdom or elsewhere
(including, without limitation, any certificate or
confirmation from the Rating Agencies), whether obtained by
the Security Trustee or any Receiver and shall not be
responsible for any loss occasioned by so acting;
(b) any such opinion, advice, certificate or information may be
sent or obtained by letter, telegram, telex, facsimile
reproduction or in any other form and the 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;
(c) the Security Trustee shall (save as expressly otherwise
provided in this Deed or any of the other Second Issuer
Transaction Documents) as regards all rights, powers,
authorities and discretions vested in it by this Deed or any
of the other Transaction Documents, or by operation of law,
have absolute and uncontrolled discretion as to, and save as
otherwise provided in this Deed shall not be liable for any
loss, liability, costs, expenses or inconvenience arising as a
result of, the exercise or non-exercise thereof;
(d) the Security Trustee shall be at liberty to place this Deed
and all deeds and other documents relating to this Deed with
any bank or banking company, or lawyer or firm of lawyers
believed by it to be of good repute, in any part of the world,
and the Security Trustee shall not be responsible for or be
required to insure against any loss incurred in connection
with any such deposit and the Second Issuer shall pay all sums
required to be paid on account of or in respect of any such
deposit;
(e) the Security Trustee may, in the conduct of its trust
business, instead of acting personally, employ and pay, on
such terms as it in its absolute discretion deems fit, an
agent 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 Security Trustee (including the
receipt and payment of money). The Security Trustee (except
where such agent is an affiliate or associated company of, or
otherwise connected with, the Security Trustee) shall not be
responsible for any misconduct or default on the part of any
person appointed by it in good faith hereunder or be bound to
supervise the proceedings or acts of any such persons;
(f) 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 Deed 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 Security Trustee in its absolute discretion but having
regard to current rates of exchange if available and the
Security Trustee shall not be liable for any loss occasioned
by the said conversion under this paragraph (f);
36
(g) subject to Clause 23.6 (Consent of Security Trustee), any
consent given by the 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
Security Trustee in its absolute discretion thinks fit and,
notwithstanding anything to the contrary contained in this
Deed or any of the other Second Issuer Transaction Documents,
may be given retrospectively;
(h) the Security Trustee shall be entitled to rely (without
investigation or further inquiry) upon a certificate,
reasonably believed by it to be genuine, of the Second Issuer
or any other person in respect of every matter and
circumstance for which a certificate is expressly provided for
under this Deed or the other Second Issuer Transaction
Documents and to call for and rely upon a certificate of the
Second Issuer or any other person reasonably believed by it to
be genuine as to any other fact or matter prima facie within
the knowledge of the Second Issuer or such person as
sufficient evidence thereof and the 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;
(i) the Security Trustee shall be entitled to rely (without
investigation or further inquiry) upon instructions or
directions given to it by the Note Trustee as being given on
behalf of the relevant class of Second Issuer Noteholders and
the Security Trustee shall not be bound in any such case to
inquire as to the compliance with the Second Issuer Trust Deed
or be responsible for any loss, liability, costs, damages,
expenses or inconvenience that may be caused by it failing to
do so;
(j) the Security Trustee shall not be responsible for acting upon
any resolution purporting to have been passed at any meeting
of the Class A Noteholders or the Class B Noteholders or the
Class C Noteholders in respect whereof minutes have been made
and purporting to have been signed by the chairman thereof,
even though it may subsequently be found that there was some
defect in the constitution of the meeting or the passing of
the resolution or that for any reason the resolution was not
valid or binding upon the Class A Noteholders or the Class B
Noteholders or the Class C Noteholders;
(k) the Security Trustee may call for and shall be at liberty to
accept and place full reliance on as sufficient evidence of
the facts stated therein a certificate or letter of
confirmation certified as true and accurate and signed on
behalf of DTC, Euroclear, Clearstream, Luxembourg or any
depository or common depository for them or such person as the
Security Trustee considers appropriate, or any form of record
made by any of them to the effect that any particular time or
through any particular period any particular person is, was or
will be shown in its records as entitled to a particular
number of Second Issuer Notes;
(l) the Security Trustee shall, in connection with the exercise by
it of any of its trusts, duties, rights, powers, authorities
and discretions under this Deed and the other Second Issuer
Transaction Documents:
(i) where it is required to have regard to the interests
of the Second Issuer Noteholders of any class, it
shall have regard to the interests of such Second
Issuer Noteholders as a class and, in particular but
without prejudice to the generality of the foregoing,
shall not have regard to, or be in any way liable
for, the consequences of any exercise thereof for
individual Second Issuer Noteholders resulting from
their being for any purpose domiciled or resident
37
in, or otherwise connected with, or subject to the
jurisdiction of, any particular territory or any
political sub-division thereof and the Security
Trustee shall not be entitled to require, nor shall
any Second Issuer Noteholder be entitled to claim,
from the Second Issuer, the Security Trustee or any
other person any indemnification or payment in
respect of any tax consequence of any such exercise
upon individual Second Issuer Noteholders; and
(ii) be entitled to assume that such exercise will not be
materially prejudicial to the interests of the Class
A Noteholders if each of the Rating Agencies has
confirmed that the then current rating by it of the
Class A Notes would not be adversely affected by such
exercise, that such exercise will not be materially
prejudicial to the interests of the Class B
Noteholders if each of the Rating Agencies has
confirmed that the then current rating by it of the
Class B Notes would not be adversely affected by such
exercise and that such exercise will not be
materially prejudicial to the interests of the Class
C Noteholders if each of the Rating Agencies has
confirmed that the then current rating by it of the
Class C Notes will not be adversely affected by such
exercise;
(m) the Security Trustee shall have no responsibility for the
maintenance of any rating of the Second Issuer Notes by the
Rating Agencies or any other person;
(n) the Security Trustee shall not be liable for any error of
judgment made in good faith by any officer or employee of the
Security Trustee assigned by the Security Trustee to
administer its corporate trust matters unless it shall be
proved that the Security Trustee was negligent in ascertaining
the pertinent facts;
(o) no provision of this Deed or any other Document shall require
the Security Trustee to do anything which may be illegal or
contrary to applicable law or regulation or expend or 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 Second Issuer 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;
(p) the Security Trustee shall not (unless and to the extent
ordered to do so by a court of competent jurisdiction) be
required to disclose to any Second Issuer Secured Creditor any
information made available to the Security Trustee by the
Second Issuer in connection with the trusts of this Deed or
the Second Issuer Transaction Documents and no Second Issuer
Secured Creditor shall be entitled to take any action to
obtain from the Security Trustee any such information; and
(q) the 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 trust as the Security Trustee may determine, including
for the purpose of depositing with a custodian this Deed or
any documents relating to the trusts created hereunder. The
Security Trustee shall not be responsible for any misconduct
or default on the part of any person appointed by it in good
faith hereunder or be bound to supervise the proceedings or
acts of any such persons.
38
22.2 REPRESENTATIONS AND WARRANTIES, ETC.
The Security Trustee shall not be responsible for any recitals or
statements or warranties or representations of any party (other than
the Security Trustee) contained herein or in any other Transaction
Document or any other document entered into in connection therewith and
may assume the accuracy and correctness thereof and shall not be
responsible for the execution, legality, effectiveness, adequacy,
genuineness, validity or enforceability or admissibility in evidence of
any such agreement or other document or any trust or security thereby
constituted or evidenced. The Security Trustee may accept without
enquiry, requisition or objection such title as the Second Issuer may
have to the Second Issuer Charged Property or any part thereof from
time to time and shall not be required to investigate or make any
enquiry into the title of the Second Issuer to the Second Issuer
Charged Property or any part thereof from time to time whether or not
any default or failure is or was known to the Security Trustee or might
be, or might have been, discovered upon examination, inquiry or
investigation and whether or not capable of remedy. Notwithstanding the
generality of the foregoing, each Second Issuer Secured Creditor shall
be solely responsible for making its own independent appraisal of and
investigation into the financial condition, creditworthiness,
condition, affairs, status and nature of the Second Issuer, and the
Security Trustee shall not at any time have any responsibility for the
same and each Second Issuer Secured Creditor shall not rely on the
Security Trustee in respect thereof.
22.3 PERFECTION
The Security Trustee shall not be bound to give notice to any person of
the execution of this Deed nor shall it be liable for any failure,
omission or defect in perfecting the security intended to be
constituted hereby including, without prejudice to the generality of
the foregoing:
(a) failure to obtain any licence, consent or other authority for
the execution of the same;
(b) failure to register the same in accordance with the provisions
of any of the documents of title of the Second Issuer to any
of the Second Issuer Charged Property; and
(c) failure to effect or procure registration of or otherwise
protect any of the Second Issuer Transaction Documents by
registering the same under any registration laws in any
territory, or by registering any notice, caution or other
entry prescribed by or pursuant to the provisions of the said
laws.
22.4 ENFORCEABILITY, ETC.
The Security Trustee shall not be responsible for the genuineness,
validity, suitability or effectiveness of any of the Second Issuer
Transaction Documents or any other documents entered into in connection
therewith or any other document or any obligations or rights created or
purported to be created thereby or pursuant thereto or any security or
the priority thereof constituted or purported to be constituted by or
pursuant to this Deed or any of the Second Issuer Transaction
Documents, nor shall it be responsible or liable to any person because
of any invalidity of any provision 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 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:
(a) the nature, status, creditworthiness or solvency of the Second
Issuer or Funding 1 or any other person or entity who has at
any time provided any security or support
39
whether by guarantee, charge or otherwise in respect of any
advance made to the Second Issuer;
(b) the title, ownership, value, sufficiency, enforceability or
existence of any Second Issuer Charged Property or any
security (howsoever described) relating thereto;
(c) the execution, legality, validity, adequacy, admissibility in
evidence, sufficiency or enforceability of this Deed or any
other Second Issuer Transaction Document comprised within the
Second Issuer Charged Property or any other document entered
into in connection therewith;
(d) the registration, filing, protection or perfection of any
security relating to this Deed or the other Transaction
Documents relating to the Second Issuer Charged Property or
the priority of the security thereby created whether in
respect of any initial advance or any subsequent advance or
any other sums or liabilities;
(e) the scope or accuracy of any representations, warranties or
statements made by or on behalf of the Second Issuer or any
other person or entity who has at any time provided any Second
Issuer Transaction Document comprised within the Second Issuer
Charged Property or in any document entered into in connection
therewith;
(f) the performance or observance by the Second Issuer or any
other person with any provisions of this Deed or any other
Second Issuer Transaction Document comprised within the Second
Issuer Charged Property 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 any waiver or
consent which has at any time been granted in relation to any
of the foregoing;
(g) 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
Second Issuer Charged Property;
(h) the title of the Second Issuer to any of the Second Issuer
Charged Property;
(i) 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
this Deed or other documents entered into in connection
herewith;
(j) the failure to call for delivery of documents of title to or
require any transfers, assignments, legal mortgages, charges
or other further assurances in relation to any of the assets
the subject matter of any of this Deed or any other document;
or
(k) any other matter or thing relating to or in any way connected
with this Deed or the Second Issuer Charged Property or any
document entered into in connection therewith whether or not
similar to the foregoing.
22.5 NO SUPERVISION
The Security Trustee shall be under no obligation to monitor or
supervise the respective functions of the Second Issuer Account Bank
under the Second Issuer Bank Account Agreement or the Second Issuer
Cash Manager under the Second Issuer Cash Management
40
Agreement or of any other person under or pursuant to any of the other
Transaction Documents.
22.6 NO LIABILITY
The 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 any of the other
Transaction Documents.
22.7 CONCLUSIVE AND BINDING DETERMINATIONS
The Security Trustee as between itself and the Second Issuer Secured
Creditors shall have full power to determine all questions and doubts
arising in relation to any of the provisions of this Deed and the other
Second Issuer Transaction Documents and every such determination,
whether made upon a question actually raised or implied in the acts or
proceedings of the Security Trustee, shall be conclusive and shall bind
the Security Trustee and the Second Issuer Secured Creditors.
22.8 USE OF PROCEEDS
The Security Trustee shall not be responsible for the receipt or
application by the Second Issuer of the proceeds of the issue of the
Second Issuer Notes.
22.9 MATERIAL PREJUDICE
The Security Trustee may determine whether or not any event, matter or
thing is, in its opinion, materially prejudicial to the interests of
the Second Issuer Secured Creditors and if the Security Trustee shall
certify that any such event, matter or thing is, in its opinion,
materially prejudicial, such certificate shall be conclusive and
binding upon the Second Issuer Secured Creditors.
22.10 NO INDEMNITY
None of the provisions of this Deed shall, in any case in which the
Security Trustee has failed to show the degree of care and diligence
required of it as security trustee of this Deed, having regard to the
provisions of this Deed and any of the other Second Issuer Transaction
Documents to which the Security Trustee is a party conferring on the
Security Trustee any powers, authorities or discretions, relieve or
indemnify the 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.
23. SUPPLEMENTAL PROVISIONS REGARDING THE SECURITY TRUSTEE
23.1 ASSUMPTION OF NO DEFAULT
Except as herein otherwise expressly provided, the Security Trustee
shall be and is hereby authorised to assume without enquiry, and it is
hereby declared to be the intention of the Security Trustee that it
shall assume without enquiry, that the Second Issuer and each of the
other parties thereto is duly performing and observing all the
covenants and provisions contained in this Deed and the other
Transaction Documents to be performed and observed on their parts and
that no event has occurred which constitutes a Second Issuer Note Event
of Default or a Potential Second Issuer Note Event of Default or which
would cause a right or
41
remedy to become exercisable, whether by Funding 1, the Second Issuer
or the Security Trustee, under or in respect of any of the Transaction
Documents.
23.2 DELEGATION
The 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 Second Issuer Transaction Documents, act by responsible
officers or a responsible officer for the time being of the Security
Trustee. The Security Trustee may also, whenever it thinks expedient in
the interests of the Second Issuer 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 Second Issuer 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 Security Trustee may think fit in the interests of
the Second Issuer Secured Creditors or any of them and, provided that
the Security Trustee shall have exercised reasonable care in the
selection of such delegate and, where a power to sub-delegate has been
given, has obliged the delegate to exercise reasonable care in the
selection of any sub-delegate, the Security Trustee shall not be bound
to supervise the proceedings of, or be responsible for any loss
incurred by any misconduct or default on the part of, such delegate or
sub-delegate. The Security Trustee shall give prompt notice to the
Second Issuer 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 the Second Issuer.
23.3 COMMERCIAL TRANSACTIONS
The Security Trustee shall not, and no director, officer or employee of
any corporation being a trustee hereof shall, by reason of the
fiduciary position of the Security Trustee, be in any way precluded
from making any contracts or entering into any transactions in the
ordinary course of business with the Second Issuer, Funding 1 or
Holdings or any other subsidiary of Holdings or any other party to the
Second Issuer Transaction Documents or any other party to any of the
Second Issuer Transaction Documents or from accepting the trusteeship
of any stock, shares, debenture stock, debentures or securities of any
such person. Without prejudice to the generality of the foregoing, 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 money upon or
making payments in respect of any stock, shares, debenture stock,
debentures or other securities of the Second Issuer, Funding 1 or
Holdings or any other subsidiary of Holdings or any other party to the
Second Issuer Transaction Documents or any contract of banking or
insurance with the Second Issuer, Funding 1 or Holdings or any other
subsidiary of Holdings or any other party to the Transaction Documents.
Neither the Security Trustee nor any such director or officer of the
Security Trustee shall be accountable to any of the Second Issuer
Secured Creditors or the Second Issuer, Funding 1 or Holdings for any
profit, fees, commissions, interest, discounts or share of brokerage
earned, arising or resulting from any such contracts or transactions.
The Security Trustee and any such director, officer or employee shall
be at liberty to retain the same for its or his own benefit.
23.4 ADDITIONAL POWERS
The powers conferred by this Deed upon the Security Trustee shall be in
addition to any powers which may from time to time be vested in it by
general law.
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23.5 DUTIES AND RESPONSIBILITIES OF SECURITY TRUSTEE
The Security Trustee has no duties or responsibilities except those
expressly set out in this Deed or in the Transaction Documents.
23.6 CONSENT OF SECURITY TRUSTEE
If a request in writing is made to the Security Trustee by the Second
Issuer or any other person to give its consent to any event, matter or
thing, then:
(a) if the Second Issuer Transaction Document specifies that the
Security Trustee is required to give its consent to that
event, matter or thing if certain specified conditions are
satisfied in relation to that event, matter or thing, then the
Security Trustee shall give its consent to that event, matter
or thing upon being satisfied acting reasonably that those
specified conditions have been satisfied; and
(b) in any other case, the Security Trustee may give its consent
if to do so would not, in its opinion, be materially
prejudicial to the interests of the Second Issuer Secured
Creditors.
23.7 INTERESTS OF SECOND ISSUER SECURED CREDITORS
Where the Security Trustee is required to have regard to the interests
of any Second Issuer Secured Creditor (other than the Second Issuer
Noteholders), the Security Trustee may consult with such Second Issuer
Secured Creditor and may rely on the opinion of such Second Issuer
Secured Creditor as to whether any act, matter or thing is or is not in
the interests of, or materially prejudicial to the interests of, such
Second Issuer Secured Creditor.
23.8 MODIFICATION TO TRANSACTION DOCUMENTS
(a) Without prejudice to Clause 23.6 (Consent of Security Trustee), the
Security Trustee may from time to time and at any time without any
consent or sanction of the Second Issuer Secured Creditors concur with
any person in making or sanctioning any modification:
(i) to any of the Transaction Documents which in the opinion of
the Security Trustee it may be expedient to make, provided
that the Security Trustee is of the opinion, acting
reasonably, that such modification will not be materially
prejudicial to the interests of the Second Issuer Secured
Creditors or, if it is not of that opinion in relation to any
Second Issuer Secured Creditor, such Second Issuer Secured
Creditor has given its written consent to such modification;
or
(ii) to any of the Transaction Documents which in the Security
Trustee's opinion is made to correct a manifest error or is of
a formal, minor or technical nature.
(b) Without prejudice to Clause 23.6 (Consent of Security Trustee) and
subject to paragraph (c) below, the Security Trustee shall be required
to give its consent to any modifications to the Mortgage Sale
Agreement, the Servicing Agreement, the Cash Management Agreement, the
Funding 1 Deed of Charge, the Funding 1 Liquidity Facility Agreement,
the Funding 1 Swap Agreement, the Intercompany Loan Terms and
Conditions, the Bank Account Agreement and the Master Definitions and
Construction Schedule that are requested by Funding 1 or the Cash
Manager, provided that (i) the Funding 1 Liquidity Facility Provider,
the Funding 1 Swap Provider and each of the Second Issuer Swap
Providers provide written confirmation to the Security Trustee
consenting to such modification of any and all of those documents
listed
43
under this paragraph (b) to which they are, respectively, a party (such
consent not to be unreasonably withheld) and in any event such consent
shall be deemed to be given by each of the Funding 1 Liquidity Facility
Provider, the Funding 1 Swap Provider and each Second Issuer Swap
Provider (as the case may be) if no written response is received by the
Security Trustee from each party, respectively, by the tenth Business
Day after the Security Trustee's request for such consent and (ii)
Funding 1 or the Cash Manager, as the case may be, has certified to the
Security Trustee in writing that such modifications are required in
order to accommodate:
(i) the entry by Funding 1 into New Intercompany Loan Agreements
and/or the addition of other relevant creditors to the
Transaction Documents;
(ii) the issue of new types of notes by New Issuers;
(iii) the inclusion of Funding 2 as a beneficiary of the Mortgages
Trust;
(iv) the issue of new notes by Funding 2;
(v) the assignment of New Loan Types to the Mortgages Trustee;
(vi) changes to be made to the Reserve Fund Required Amount and/or
the manner in which the Reserve Fund is funded;
(vii) changes to be made to the definitions of Asset Trigger Event
and Non-Asset Trigger Event; and
(viii) the addition of an Additional Funding 1 Liquidity Facility
pursuant to the terms of the Funding 1 Deed of Charge.
(c) The Security Trustee shall only be required to give its consent to the
modifications set out in paragraph (b) above if the Security Trustee is
satisfied that:
(i) in respect of the matters set out in paragraphs (b)(i) to
(b)(iv) inclusive, the relevant conditions precedent to, as
applicable, the addition of New Issuers (as set out in Clause
2.2 of the Intercompany Loan Terms and Conditions), the
inclusion of Funding 2 as a beneficiary of the Mortgages Trust
(as set out in Clause 13 of the Mortgages Trust Deed) and the
assignment of New Loans to the Mortgages Trustee (as set out
in Clause 4 of the Mortgage Sale Agreement), have been
satisfied; and
(ii) in respect of the matters set out in paragraphs (b)(i) to
(b)(vii) inclusive, the Security Trustee has received written
confirmation from each of the Rating Agencies that the
relevant modifications will not adversely affect the then
current ratings of the Notes.
(d) Each Second Issuer Secured Creditor hereby acknowledges that the
Security Trustee is required to make the modifications set out in
paragraph (b) above (subject to paragraph (c)), and each Second Issuer
Secured Creditor further acknowledges that such modifications may
adversely affect the manner in which the Mortgages Trustee allocates
monies to Funding 1 and/or the manner in which Funding 1 pays monies to
the Second Issuer and/or the amount of monies available to the Second
Issuer to meet the Second Issuer Secured Obligations. Each Second
Issuer Secured Creditor agrees that such modifications shall be binding
on it and unless the Security Trustee otherwise agrees, notice thereof
shall be given by the Second
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Issuer Cash Manager to the Second Issuer Secured Creditors as soon as
practicable after the modifications have been made.
(e) Each of the Second Issuer 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 documents and instruments as may be required by law
or requested by the other party at the other party's expense to
establish, maintain and protect the rights and remedies of the other
party and carry out and effect the intent and purpose of this Clause
23.8.
23.9 AUTHORISATION OR WAIVER OF BREACH
The Security Trustee may, without the consent of the Second Issuer
Secured Creditors and 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 acting reasonably the interests of the
Second Issuer Secured Creditors will 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 Second Issuer Secured Creditors and, unless the Security
Trustee otherwise agrees, notice thereof shall be given by the Second
Issuer Cash Manager to the Second Issuer Secured Creditors as soon as
practicable thereafter.
23.10 INCORPORATION BY REFERENCE
The provisions of Schedule 4 to the Second Issuer Trust Deed shall be
deemed to be incorporated in this Deed but as if references therein to
the Note Trustee were to the Security Trustee.
24. REMUNERATION AND INDEMNIFICATION OF THE SECURITY TRUSTEE
24.1 REMUNERATION
(a) The Second Issuer shall (subject as hereinafter provided) pay to the
Security Trustee annually a fee of such amount and payable on such
dates as shall from time to time be agreed in writing by the Second
Issuer and the Security Trustee, provided that if and for so long as
the Note Trustee and the Security Trustee are the same person, no such
fee shall be payable under this Deed. All such remuneration shall be
payable in accordance with the Second Issuer Pre-Enforcement Revenue
Priority of Payments or, as the case may be, the Second Issuer
Post-Enforcement Priority of Payments. Such remuneration shall accrue
from day to day and shall be payable up to and including the date when
all of the Second Issuer Secured Obligations have been paid or
discharged and the Security Trustee has released, reassigned and/or
discharged the Second Issuer Charged Property as provided in Clause 4.1
(Prior to Payment or Discharge of Second Issuer Secured Obligations).
(b) The Second Issuer shall in addition pay to the Security Trustee an
amount equal to the amount of any VAT chargeable in respect of its
remuneration hereunder subject to the Security Trustee issuing to the
Second Issuer a proper VAT invoice in respect thereof.
24.2 ADDITIONAL REMUNERATION
In the event of a Second Issuer Note Event of Default or Potential
Second Issuer Note Event of Default occurring or in the event of the
Security Trustee finding it expedient or necessary or being required to
undertake any duties which the Security Trustee and the Second Issuer
45
agree to be of an exceptional nature or otherwise outside the scope of
the normal duties of the Security Trustee under this Deed, the Second
Issuer shall pay to the Security Trustee such additional remuneration
as shall be agreed between the Security Trustee and the Second Issuer.
24.3 DISPUTES
In the event of the Security Trustee and the Second Issuer failing to
agree upon the amount of any remuneration from time to time pursuant to
Clause 24.1 (Remuneration) or to agree in a case to which Clause 24.2
(Additional Remuneration) above applies, upon whether such duties are
of an exceptional nature or otherwise outside the scope of the normal
duties of the Security Trustee hereunder or upon the amount of such
additional remuneration, such matters shall be determined by an
investment bank (acting as an expert and not as an arbitrator) selected
by the Security Trustee and approved by the Second Issuer or, failing
such approval, nominated by the President for the time being of the Law
Society of England and Wales, the expenses being involved in such
nomination and the fees of such investment bank being payable by the
Second Issuer, and the decision of any such investment bank shall be
final and binding on the Second Issuer and the Security Trustee.
24.4 EXPENSES
In addition to remuneration hereunder, the Second Issuer shall on
written request, pay (on the basis of a full indemnity) all other
costs, charges and expenses which the Security Trustee may properly
incur in relation to the negotiation, preparation and execution of, the
exercise of its powers and the performance of its duties under, and in
any other manner in relation to, this Deed, the Second Issuer Security
and any of the other Second Issuer Transaction Documents to which the
Security Trustee is a party including but not limited to travelling and
legal expenses and any stamp, issue, registration, documentary and
other Taxes or duties paid or payable by the Security Trustee in
connection with any action taken or contemplated by or on behalf of the
Security Trustee for enforcing, or resolving any doubt concerning, or
for any other purpose in relation to, this Deed or any of the other
Transaction Documents.
24.5 INDEMNITY
Without prejudice to the right of indemnity by law given to trustees,
the Second Issuer shall indemnify the Security Trustee, on an after Tax
basis, in respect of all proceedings (including claims and liabilities
in respect of taxes other than on its own overall net income), claims
and demands and all costs, charges, expenses (including, without
prejudice to the generality of the foregoing, legal and travelling
expenses), and liabilities to which it (or any person appointed by it
to whom any trust, power, authority or discretion may be delegated by
it in the execution or purported execution of the trusts, powers,
authorities or discretions vested in it by or pursuant to this Deed and
any of the other Second Issuer Transaction Documents to which the
Security Trustee is a party) 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 Second Issuer
Transaction Documents to which the Security Trustee is a party, or any
such appointment and the Security Trustee shall be entitled to be
indemnified out of the Second Issuer Charged Property in respect
thereof save where the same arises as the result of the fraud,
negligence or wilful default of the Security Trustee or its officers or
employees. The Security Trustee shall not be entitled to be indemnified
twice in respect of the same matter pursuant to this Clause and the
indemnity contained in Clause 12.2 (Indemnity) of this Deed.
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24.6 SURVIVAL
Unless otherwise specifically stated in any discharge of this Deed, the
provisions of this Clause 24 shall continue in full force and effect
notwithstanding such discharge.
25. APPOINTMENT OF NEW SECURITY TRUSTEE AND REMOVAL OF SECURITY TRUSTEE
25.1 POWER OF SECOND ISSUER
(a) The power of appointing a new Security Trustee and removing the
Security Trustee or any new Security Trustee shall be vested in the
Second Issuer, provided that such appointment or removal must be
approved by (i) an Extraordinary Resolution of the Class A Noteholders,
the Class B Noteholders and the Class C Noteholders and (ii) in writing
by each Second Issuer Secured Creditor (such approval not to be
reasonably withheld or delayed). Any appointment of a new Security
Trustee and any retirement or removal of an existing Security Trustee
hereof shall as soon as practicable thereafter be notified by the
Second Issuer to the Second Issuer Secured Creditors.
(b) Any new Security Trustee must (i) meet the requirements of section
26(a)(1) of the US Investment Company Act of 1940; (ii) not be an
affiliate (as defined in Rule 405 of the US Securities Act of 1933, as
amended) of the Second Issuer or of any person involved in the
organisation or operation of the Second Issuer; (iii) not offer or
provide credit or credit enhancement to the Second Issuer; and (iv)
execute an agreement or instrument concerning the Second Issuer Notes
containing provisions to the effect set forth in section 26(a)(3) of
the US Investment Company Act of 1940.
25.2 POWER OF SECURITY TRUSTEE
Notwithstanding the provisions of Clause 25.1 (Power of Second Issuer),
the Security Trustee may (as attorney for the Second Issuer) upon
giving prior written notice to the Second Issuer but without the
consent of the Second Issuer or the Second Issuer Secured Creditors
appoint any person established or resident in any jurisdiction (whether
a trust corporation or not) to act either as a separate security
trustee or as a co-trustee jointly with the Security Trustee:
(a) if the Security Trustee considers such appointment to be in
the interests of the Second Issuer Secured Creditors (or any
of them);
(b) for the purposes of conforming to any legal requirement,
restrictions or conditions in any jurisdiction in which any
particular act or acts are to be performed or any Second
Issuer Charged Property is or is to be located; or
(c) for the purposes of obtaining a judgment in any jurisdiction
or the enforcement in any jurisdiction of either a judgment
already obtained or any of the provisions of this Deed or any
of the other Transaction Documents to which the Security
Trustee is a party or obligations arising pursuant thereto or
any of the security constituted by or pursuant to this Deed.
The Second Issuer hereby irrevocably appoints the 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 or any of the other Transaction Documents to
which the Security Trustee is a party) have such trusts, powers,
authorities and discretions (not exceeding those conferred on the
Security Trustee by this Deed or any of the other
47
Transaction Documents to which the Security Trustee is a party) and
such duties and obligations as shall be conferred or imposed on it by
the instrument of appointment. The Security Trustee shall have power in
like manner to remove any such person. Such proper remuneration as the
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 Security Trustee.
25.3 MULTIPLE TRUSTEES
Whenever there shall be more than two security trustees hereof, the
majority of such security trustees shall be competent to execute and
exercise all the trusts, powers, authorities and discretions vested by
this Deed and any of the other Transaction Documents in the Security
Trustee generally.
26. RETIREMENT OF SECURITY TRUSTEE
Any 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 the Second Issuer without assigning any reason therefor and
without being responsible for any costs resulting from such retirement.
Provided, however, that the retirement or removal of any security
trustee shall not become effective unless there remains at least one
security trustee hereof in office upon such retirement or removal. The
Second Issuer covenants that, in the event of a security trustee (being
a sole security trustee) giving notice under this Clause or being
removed as referred to in Clause 25.1 (Power of Second Issuer), it
shall use its best endeavours to procure a new security trustee of this
Deed to be appointed as soon as reasonably practicable thereafter. If
within 60 days of having given notice of its intention to retire, the
Second Issuer has failed to appoint a replacement Security Trustee, the
outgoing Security Trustee will be entitled to appoint its successor
(provided that such successor is acceptable to the Rating Agencies and
will agree to the terms of this Deed) and that the Rating Agencies
confirm in writing that the current ratings of the Notes shall not be
either downgraded, reviewed or withdrawn as a result of such
appointment).
27. TRUST INDENTURE ACT PREVAILS
If any provision of this Deed limits, qualifies or conflicts with
another provision which is required to be included in this Deed by, and
is not subject to a contractual waiver under, the U.S. Trust Indenture
Act of 1939, as amended, the required provision of that act shall
prevail.
28. NOTICES AND DEMANDS
28.1 SERVICE OF NOTICES
Any notices to be given pursuant to this Deed to any of the parties
hereto shall be in writing and shall be sufficiently served if sent to
the addresses given in Clause 28.2 (Addresses) by prepaid first class
post, by hand or facsimile transmission and shall be deemed to be given
(in the case of facsimile transmission) when despatched, (where
delivered by hand) on the day of delivery if delivered before 17.00
hours on a Business Day or on the next Business Day if delivered
thereafter or on a day which is not a Business Day or (in the case of
first class post) when it would be received in the ordinary course of
the post.
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28.2 ADDRESSES
The addresses referred to in this Clause 28.2 are as follows:
(a) in the case of the Second Issuer, to Permanent Financing (No.
2) PLC at Blackwell House, Guildhall Yard, London EC2V 5AE
(facsimile number +44 (0) 20 7556 0975) for the attention of
the Directors with a copy to Halifax plc at the address and
facsimile number set out in paragraph (d) below;
(b) in the case of the Security Trustee and the Note Trustee, to
U.S. Bank National Association, 1 Federal Street, 3rd Floor,
Boston, Massachusetts, 02110 (facsimile number + 1 (617) 603
6638) for the attention of Corporate Trust Services;
(c) in the case of the Principal Paying Agent, the Agent Bank, the
Registrar and the Transfer Agent, to Citibank, N.A., London
Branch, 5 Carmelite Street, London EC4Y 0PA (facsimile number
+44 (0) 20 7508 3878) for the attention of Agency and Trust;
(d) in the case of the Second Issuer Cash Manager, to Halifax plc
at Trinity Road, Halifax, West Yorkshire HX1 2RG (facsimile
number +44 (0) 1422 391 777) for the attention of Mortgage
Securitisation Manager with a copy to HBOS Treasury Services
plc, 33 Old Broad Street, London EC2N 1HZ (facsimile number
+44 (0) 20 7574 8784) for the attention of the Head of Capital
Markets and Securitisation;
(e) in the case of the Second Issuer Account Bank, to Bank of
Scotland plc, Leeds Business Centre, 116 Wellington Street,
Leeds, LS1 4LT (facsimile number +44 (0) 1132 155804) for the
attention of the Associate Director with copies to: Bank of
Scotland plc, c/o Halifax plc, Bradford Business Centre, 28
Bank Street, Bradford BD1 1PT (facsimile number +44 (0) 1274
725290 for the attention of the Associate Director; Halifax
plc, Trinity Road, Halifax, West Yorkshire HX1 2RG (facsimile
number +44 (0) 1422 391777) for the attention of Mortgage
Securitisation Manager; and HBOS Treasury Services plc, 33 Old
Broad Street, London EC2N 1HZ (facsimile number +44 (0) 20)
7574 8784) for the attention of Head of Capital Markets and
Securitisation;
(f) in the case of the US Paying Agent, to Citibank, N.A., New
York Branch, 14th Floor, Zone 3, 111 Wall Street, New York,
New York 10043 for the attention of Agency and Trust
(facsimile number +1 (212) 657 3862);
(g) in the case of the Series 1 Second Issuer Swap Providers, to
CDC IXIS Capital Markets, o (facsimile number o) for the
attention of o;
(h) in the case of the Series 2 Second Issuer Swap Providers, to
JPMorgan Chase Bank, 125 London Wall, London EC2Y 5AJ,
(facsimile number +44 (0) 20 7777 4758) for the attention of
Head of Legal Department - FX and Derivatives Group;
(i) in the case of the Series 3 Second Issuer Swap Providers, to
CDC IXIS Capital Markets, o (facsimile number o) for the
attention of o;
(j) in the case of the Series 4 Second Issuer Swap Providers, to
Banque AIG, 46, rue de Bassano (facsimile number +33 149 52
3600) for the attention of Swaps Administration, with a copy
to AIG Financial Products Corp., 50 Danbury Road,
49
Wilton, CT 06897-4444, USA (facsimile no +1 203 222 4780) for
the attention of Chief Financial Officer (with a copy to
General Counsel);
(k) in the case of the Corporate Services Provider, to Structured
Finance Management Limited, Blackwell House, Guildhall Yard,
London EC2V 5AE (facsimile number +44 (0) 20 7556 0975) for
the attention of the Directors;
(l) in the case of Fitch Ratings, to Fitch Ratings Limited, Eldon
House, 2 Eldon Street, London EC2M 7UA (facsimile number +44
(0) 20 7417 6262) for the attention of European Structured
Finance;
(m) in the case of Moody's, to Moody's Investor Services, 2
Minster Court, Mincing Lane, London EC3R 7XB (facsimile number
+44 (0) 20 7772 5400) for the attention of Asset Backed
Finance; and
(n) in the case of S&P, to Standard & Poor's, Garden House, 18
Finsbury Circus, London EC2M 7BP (facsimile number +44 (0) 20
7826 3598) for the attention of the Structured Finance
Surveillance Group,
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 written notice in accordance with the provisions
of this Clause 28.
29. FURTHER PROVISIONS
29.1 EVIDENCE OF INDEBTEDNESS
In any action, proceedings or claim relating to this Deed or the
charges contained in this Deed, a statement as to any amount due to any
Second Issuer Secured Creditor or of the Second Issuer Secured
Obligations or any part thereof or a statement of any amounts which
have been notified to the Security Trustee as being amounts due to any
Second Issuer Secured Creditor which is certified as being correct by
an officer of the Security Trustee or an officer of the relevant Second
Issuer Secured Creditor shall, save in the case of manifest error, be
conclusive evidence that such amount is in fact due and payable.
29.2 RIGHTS CUMULATIVE, WAIVERS
The respective rights of the Security Trustee, the Second Issuer
Secured Creditors and any Receiver are cumulative, and may be exercised
as often as they consider appropriate and are in addition to their
respective rights under the general law. The respective rights of the
Security Trustee, the Second Issuer Secured Creditors and any Receiver
in relation to this Deed (whether arising under this Deed or under the
general law) shall not be capable of being waived or varied otherwise
than by express waiver or variation in writing; and, in particular, any
failure to exercise or any delay in exercising any such rights shall
not operate as a variation or waiver of that or any other such right;
any defective or partial exercise of such rights shall not preclude any
other or further exercise of that or any other such right; and no act
or course of conduct or negotiation on their part or on their behalf
shall in any way preclude them from exercising any such right or
constitute a suspension or any variation of any such right.
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29.3 INVALIDITY OF ANY PROVISION
If any of the provisions of this Deed become invalid, illegal or
unenforceable in any respect under any law, the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired.
29.4 SEVERABILITY
Any provision of this Deed which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the Second Issuer hereby waives any
provision of law but only to the extent permitted by law which renders
any provision of this Deed prohibited or unenforceable in any respect.
29.5 COUNTERPARTS
This Deed may be executed in any number of counterparts each of which,
when executed and delivered, shall constitute an original, but all the
counterparts shall together constitute but one and the same instrument
provided, however, that this Deed shall have no force or effect until
it is executed by the last party to execute the same and shall be
deemed to have been executed and delivered in the place where such last
party executed this Deed.
29.6 NEW INTERCOMPANY LOAN AGREEMENTS
If Funding 1 enters into a New Intercompany Loan Agreement, then the
parties hereto shall execute such documents and take such action as may
be necessary or required by the Security Trustee for the purpose of
including the New Issuer, any New Funding 1 Swap Provider, any New
Start-Up Loan Provider or any other person who has executed an
Accession Undertaking or any New Term Advance in the Transaction
Documents.
29.7 VARIATION
No variation of any provision(s) of this Deed shall be effective unless
it is in writing and signed by (or by a person duly authorised by) each
of the parties hereto.
29.8 EXCLUSION OF THIRD PARTY RIGHTS
The parties to this Deed do not intend that any term of this Deed
should be enforced, by virtue of the Contracts (Rights of Third
Parties) Act 1999, by any person who is not a party to this Deed.
30. CHOICE OF LAW
30.1 GOVERNING LAW
This Deed is governed by, and shall be construed in accordance with
English law.
30.2 SUBMISSION TO JURISDICTION
Each party to this Deed hereby irrevocably submits to the non-exclusive
jurisdiction of the English courts in any action or proceeding arising
out of or relating to this Deed, and hereby
51
irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined by such courts. Each party to
this Deed hereby irrevocably waives, to the fullest extent it may
possibly do so, any defence or claim that the English courts are an
inconvenient forum for the maintenance or hearing of such action or
proceeding.
30.3 AGENT FOR PROCESS
The US Paying Agent shall at all times maintain an agent for service of
process of any other documents in proceedings in England or any
proceedings in connection with this Deed. Such agent shall be the
Principal Paying Agent having its office at 5 Carmelite Street, London
EC4Y 0PA (and by execution of this Deed, the Principal Paying Agent
hereby accepts such appointment). Any writ judgment or other notice of
legal process shall be sufficiently served on the Second Issuer if
delivered to such agent at its address for the time being. The US
Paying Agent undertakes not to revoke the authority of the above agent
and if, for any reason, the Security Trustee requests the US Paying
Agent to do so, it shall promptly appoint another such agent with an
address in England and advise the Note Trustee, the Second Issuer Swap
Providers, the Corporate Services Provider and the Security Trustee
thereof. If following such a request the US Paying Agent fails to
appoint another agent the Security Trustee shall be entitled to appoint
one on their behalf.
The US Paying Agent agrees that failure by a process agent to notify
the US Paying Agent of the process will not invalidate the proceedings
concerned.
IN WITNESS WHEREOF the parties hereto have caused this Deed to be duly executed
and delivered as a deed the day and year first before written.
THE SECOND ISSUER
EXECUTED as a DEED )
by PERMANENT FINANCING (NO. 2) PLC )
acting by [director])
and [director/secretary] )
The Security Trustee
EXECUTED as a DEED by
U.S. BANK NATIONAL ASSOCIATION )
in its capacity as Security Trustee )
acting by its authorised signatory )
Authorised Signatory:
The Note Trustee
52
EXECUTED as a DEED by
U.S. BANK NATIONAL ASSOCIATION )
in its capacity as Note Trustee )
acting by its authorised signatory )
Authorised Signatory:
AGENT BANK, PRINCIPAL PAYING AGENT, REGISTRAR AND TRANSFER AGENT
EXECUTED as a DEED on behalf of
CITIBANK, N.A., a company incorporated in )
the United States of America, )
in its capacities as Agent Bank, Principal )
Paying Agent, Registrar and Transfer Agent, )
by )
being a person who, in accordance with the laws
of that territory, is acting under the authority
of the company
Second Issuer Cash Manager
EXECUTED as a DEED by )
HALIFAX plc )
in its capacity as Second Issuer Cash Manager )
acting by its attorney )
in the presence of )
Witness's Signature:
Name:
Address:
53
Second Issuer Account Bank
EXECUTED as a DEED by )
THE GOVERNOR AND COMPANY OF )
THE BANK OF SCOTLAND )
in its capacity as Account Bank )
acting by two directors/a director )
and the secretary )
Director
Director/Secretary
U.S. Paying Agent
EXECUTED as a DEED by
CITIBANK, N.A., NEW YORK BRANCH )
a company incorporated in )
the United States of America, )
in its capacity as U.S. Paying Agent )
by )
being a person who, in accordance with the laws
of that territory, is acting under the authority
of the company
Series 1 Second Issuer Swap Provider
EXECUTED as a DEED by
CDC IXIS CAPITAL MARKETS )
in its capacity as Series 1 Second Issuer )
Currency Swap Provider )
acting by its attorney )
in the presence of: )
Witness's Signature:
Name:
Address:
54
Series 2 Second Issuer Swap Provider
EXECUTED as a DEED by
JPMORGAN CHASE BANK in its capacity )
as Series 2 Second Issuer )
Swap Provider )
acting by its attorney )
in the presence of: )
Witness's Signature:
Name:
Address:
Series 3 Second Issuer Swap Provider
EXECUTED as a DEED by
CDC IXIS CAPITAL MARKETS in its capacity )
as Series 3 Second Issuer Swap Provider )
acting by its attorney )
in the presence of: )
Witness's Signature:
Name:
Address:
Series 4 Second Issuer Swap Provider
EXECUTED as a DEED by
BANQUE AIG )
in its capacity as )
Series 4 Second Issuer Swap Provider )
acting by its attorney )
in the presence of: )
Witness's Signature:
Name:
Address:
55
Corporate Services Provider
EXECUTED as a DEED by )
STRUCTURED FINANCE )
MANAGEMENT LIMITED )
in its capacity as )
Corporate Services Provider )
acting by two directors/ )
a director and the secretary )
56
SCHEDULE 1
Power of Attorney
THIS POWER OF ATTORNEY is made on [6th March], 2003 by PERMANENT FINANCING (NO.
2) PLC (registered number 4623188) whose registered office is Blackwell House,
Guildhall Yard, London EC2V 5AE (the "Principal").
WHEREAS
(1) By virtue of a deed of charge (the "Second Issuer Deed of Charge")
dated [6th March], 2003 between, inter alia, the Principal, the
Security Trustee, the Note Trustee, the Agent Bank, the Principal
Paying Agent, the Registrar, the Transfer Agent, the Second Issuer Cash
Manager, the Second Issuer Account Bank, the Corporate Services
Provider and the Second Issuer Swap Providers (each as referred to
therein) 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 Second Issuer Deed of Charge.
NOW THIS POWER OF ATTORNEY WITNESSETH
1. The Principal hereby irrevocably and by way of security for the
performance of the covenants, conditions, obligations and undertakings
on the part of the Principal contained in the Second Issuer Deed of
Charge appoints U.S. Bank National Association and any other person or
persons for the time being the security trustee or security trustees of
and under the Second Issuer Deed of Charge (the "Attorney") 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 do any act matter or thing which the Attorney, Receiver or
Administrator considers in each case bona fide necessary for the
protection or preservation of the Attorney's interests and rights in
and to the Second Issuer Charged Property or which ought to be done
under the covenants, undertakings and provisions contained in the
Second Issuer Deed of Charge on or at any time after the service of a
Second Issuer Note Acceleration Notice or in any other circumstances
where the Attorney has become entitled to take the steps referred to in
Clauses 8.4 to 8.10 (inclusive) of the Second Issuer Deed of Charge
including (without limitation) any or all of the following:
(a) to do every act or thing which the Attorney, Receiver or
Administrator may deem to be necessary, proper or expedient
for fully and effectually vesting, transferring or assigning
the Second Issuer Security and/or the Second Issuer 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 in the same manner and
as fully and effectually in all respects as the Principal
could have done; and
(b) the power by writing under its hand by an officer of the
Attorney (including every Receiver appointed under the Second
Issuer 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
57
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 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 done and documents executed or
signed by the Attorney, 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 Receiver and/or Administrator and/or Substitute
appointed from time to time by the Attorney and their respective
estates 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 shall apply to this Power of Attorney and the
interpretation thereof and to all acts of the Attorney and each
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 Receiver or Administrator or Substitute shall properly and lawfully
do or cause to be done in and concerning the Security Trustee's Second
Issuer Security and/or the Second Issuer Charged Property.
IN WITNESS whereof this Power of Attorney has been executed and delivered as a
deed by the Principal the day and year first before written.
EXECUTED as a DEED by )
PERMANENT FINANCING (NO. 2) PLC )
acting by [director] )
and [director/secretary] )
58
SCHEDULE 2
FORM OF NOTICE OF ASSIGNMENT AND CONSENT TO ASSIGNMENT
FORM OF NOTICE OF ASSIGNMENT
From: Permanent Financing (No. 2) PLC (the "Second Issuer")
U.S. Bank National Association (the "Security Trustee")
To: J.P. Morgan Securities Limited
Lehman Brothers International (Europe)
Credit Suisse First Boston (Europe) Limited
Deutsche Bank AG London (together, the "Managers")
and
J.P. Morgan Securities Inc.
Lehman Brothers Inc.
Credit Suisse First Boston Corporation
Deutsche Bank Securities Inc. (together, the "Underwriters")
[o], 2003
Dear Sirs,
US$[1,000,000,000] SERIES 1 CLASS A ASSET BACKED FLOATING RATE NOTES DUE [MARCH
2004]
US$[34,000,000] SERIES 1 CLASS B ASSET BACKED FLOATING RATE NOTES DUE [JUNE
2042]
US$[34,000,000] SERIES 1 CLASS C ASSET BACKED FLOATING RATE NOTES DUE [JUNE
2042]
US$[1,750,000,000] SERIES 2 CLASS A ASSET BACKED FLOATING RATE NOTES DUE
[SEPTEMBER 2007]
US$[61,000,000] SERIES 2 CLASS B ASSET BACKED FLOATING RATE NOTES DUE [JUNE
2042]
US$[61,000,000] SERIES 2 CLASS C ASSET BACKED FLOATING RATE NOTES DUE [JUNE
2042]
E.[1,250,000,000] SERIES 3 CLASS A ASSET BACKED FLOATING RATE NOTES DUE
[DECEMBER 2032]
E.[43,500,000] SERIES 3 CLASS B ASSET BACKED FLOATING RATE NOTES DUE [JUNE 2042]
E.[43,500,000] SERIES 3 CLASS C ASSET BACKED FLOATING RATE NOTES DUE [JUNE 2042]
US$[1,750,000,000] SERIES 4 CLASS A ASSET BACKED FLOATING RATE NOTES DUE
[DECEMBER 2009]
E.[56,500,000] SERIES 4 CLASS B ASSET BACKED FLOATING RATE NOTES DUE [JUNE 2042]
E.[56,500,000] SERIES 4 CLASS C ASSET BACKED FLOATING RATE NOTES DUE [JUNE 2042]
L.[750,000,000] SERIES 5 CLASS A ASSET BACKED FLOATING RATE NOTES DUE [JUNE
2042]
L.[26,000,000] SERIES 5 CLASS B ASSET BACKED FLOATING RATE NOTES DUE [JUNE 2042]
L.[26,000,000] SERIES 5 CLASS C ASSET BACKED FLOATING RATE NOTES DUE [JUNE 2042]
(THE "NOTES")
We hereby give you notice that by a Second Issuer deed of charge dated [6th
March], 2003 and made between the Second Issuer, the Security Trustee and others
(the "Second Issuer Deed of Charge"), the Second Issuer assigned to the Security
Trustee, inter alia, all of its right, title, interest and benefit, present and
future, in, to and under the underwriting agreement and the subscription
agreement relating to the Notes both dated [27th February], 2003 and made
between, inter alios, the Second Issuer and the Underwriters or Managers (as
appropriate) named therein (together the "Agreements").
You are authorised and instructed henceforth to deal with the Security Trustee
in relation to the Agreement without further reference to us.
59
This notice is irrevocable. Please acknowledge receipt of this notice to the
Security Trustee by executing the attached Consent to Assignment.
Yours faithfully,
...........................................
For and on behalf of
PERMANENT FINANCING (NO. 2) PLC
...........................................
For and on behalf of
U.S. BANK NATIONAL ASSOCIATION
60
CONSENT TO ASSIGNMENT
From: J.P. Morgan Securities Limited
Lehman Brothers International (Europe)
Credit Suisse First Boston (Europe) Limited
Deutsche Bank AG London (together, the "Managers")
and
J.P. Morgan Securities Inc.
Lehman Brothers Inc.
Credit Suisse First Boston Corporation
Deutsche Bank Securities Inc. (together, the "Underwriters")
To: U.S. Bank National Association (the "Security Trustee")
Permanent Financing No. 2 PLC (the "Second Issuer")
o, 2003
Dear Sirs,
We hereby acknowledge receipt of the notice of assignment dated o, 2003 relating
to the Second Issuer Deed of Charge dated [6th March], 2003 between the Second
Issuer, the Security Trustee and others as adequate notice of the assignment
described therein.
We agree to deal only with Security Trustee in relation to the underwriting
agreement and the subscription agreement dated, in each case, [27th February],
2003 between the Second Issuer and the Underwriters or the Underwriters or
Managers (as appropriate) named therein (together the "Agreements") without any
reference to the Second Issuer.
We have not received from any other person any notice of assignment or charge of
or any interest in the Agreement.
Yours faithfully,
...........................................
For and on behalf of
o
[on behalf of all of the Managers]
...........................................
For and on behalf of
o
[on behalf of all of the Underwriters]