EXHIBIT 4.5.1
GRANITE FINANCE FUNDING LIMITED
as Funding
THE BANK OF NEW YORK
as Security Trustee
and
OTHERS
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FUNDING DEED OF CHARGE
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DATED 26 MARCH 2001
BROWN & WOOD
(A MULTINATIONAL PARTNERSHIP)
LONDON
CONTENTS
CLAUSE PAGE NO.
1. Interpretation...........................................................3
2. Covenant to Pay and to Perform...........................................4
3. Funding Security.........................................................4
4. Release of Funding Charged Property.....................................11
5. Declaration of Trust....................................................12
6. Restrictions on Exercise of Certain Rights..............................13
7. Enforcement.............................................................17
8. Upon Enforcement........................................................20
9. Receiver................................................................22
10. Further Assurance and Power of Attorney.................................26
11. Crystallisation.........................................................27
12. Provisions relating to the Security.....................................28
13. Protection of Third Parties.............................................30
14. Set-Off.................................................................30
15. Representations and Covenants...........................................30
16. Terms of Appointment....................................................33
17. Modification and Waiver.................................................45
18. Remuneration of the Security Trustee....................................46
19. Appointment, Removal and Retirement of Security Trustee.................49
20. Miscellaneous Provisions................................................51
21. Rights cumulative.......................................................52
22. Assignment..............................................................52
23. Non Petition Covenant; Corporate Obligations............................52
24. Notices.................................................................53
25. Third Party Rights......................................................54
26. Execution in Counterparts; Severability.................................54
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27. Governing Law and Submission to Jurisdiction............................55
SCHEDULE 1 FORM OF SECURITY POWER OF ATTORNEY................................56
SCHEDULE 2 FORM OF DEED OF ACCESSION.........................................60
SCHEDULE 3 FUNDING PRIORITY OF PAYMENTS......................................74
SCHEDULE 4 FORM OF NOTICE OF ASSIGNMENT......................................82
SCHEDULE 5 UTILISATION OF ISSUER RESERVES....................................85
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THIS DEED OF CHARGE is made on 26 March 2001
BETWEEN:
(1) GRANITE FINANCE FUNDING LIMITED (registered number 79308) a private
limited liability company incorporated under the laws of Jersey whose
London Branch is at 4th Floor, 35 New Bridge Street, London EC4V 6BW
("FUNDING");
(2) THE BANK OF NEW YORK, a New York banking corporation whose London branch
address is at One Canada Square, 48th Floor, London E14 5AL, United
Kingdom, as security trustee (the "SECURITY TRUSTEE" which expression
shall include such person and all other persons for the time being acting
as the security trustee or security trustees pursuant to this Funding
Deed of Charge);
(3) THE BANK OF NEW YORK, a New York banking corporation whose London branch
address is at One Canada Square, 48th Floor, London E14 5AL, United
Kingdom, as note trustee (the "NOTE TRUSTEE" which expression shall
include such person and all other persons for the time being acting as
the note trustee or note trustees pursuant to the First Issuer Trust Deed
and the First Issuer Deed of Charge);
(4) GRANITE MORTGAGES 01-1 PLC (registered number 4129652) a public limited
company incorporated under the laws of England and Wales whose registered
office is at Fifth Floor, 100 Wood Street, London EC2V 7EX (the "FIRST
ISSUER");
(5) GRANITE FINANCE TRUSTEES LIMITED (registered number 79309) a private
limited liability company incorporated under the laws of Jersey whose
registered office is at 22 Grenville Street, St. Helier, Jersey JE4 8PX
Channel Islands as trustee of the Mortgages Trust (the "MORTGAGES
TRUSTEE");
(6) NORTHERN ROCK PLC (registered number 03273685) a public limited company
incorporated under the laws of England and Wales whose registered office
is at Northern Rock House, Gosforth, Newcastle upon Tyne NE3 4PL, in its
capacity as cash manager under the Cash Management Agreement (the "CASH
MANAGER", which expression shall include such person and all other
persons for the time being acting as the cash manager or cash managers
pursuant to the Cash Management Agreement);
(7) LLOYDS TSB BANK PLC, acting through its office at City Office, Bailey
Drive, Gillingham Business Park, Kent ME8 0LS in its capacity as account
bank under the Bank Account Agreement (the "ACCOUNT BANK", which
expression shall include such person and all other persons for the time
being acting as the account bank or account banks to Funding pursuant to
the Bank Account Agreement) and acting through its office at 25 Monument
Street, London EC3R 8BQ in its capacity as GIC provider to Funding
pursuant to the Funding Guaranteed Investment Contract (the "FUNDING GIC
PROVIDER", which expression shall include such person and all other
persons for the time being acting as the GIC provider to Funding pursuant
to the Funding Guaranteed Investment Contract and each Funding (Issuer)
Guaranteed Investment Contract);
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(8) MOURANT & CO. CAPITAL (SPV) LIMITED, a private limited company
incorporated under the laws of Jersey whose registered office is 4th
Floor, 35 New Bridge Street, London, EC4V 6BW (the "CORPORATE SERVICES
PROVIDER" which expression shall include such person and all other
persons for the time being acting as the corporate services provider or
corporate services providers pursuant to the Corporate Services
Agreement); and
(9) NORTHERN ROCK PLC (registered number 03273685) acting through its office
at Northern Rock House, Gosforth, Newcastle upon Tyne NE3 4PL as start-up
loan provider pursuant to the Start-Up Loan Agreement (the "START-UP LOAN
PROVIDER", which expression shall include such person or all other
persons for the time being acting as start-up loan provider pursuant to
the Start-Up Loan Agreement).
WHEREAS:
(A) Pursuant to the terms of the First Issuer Intercompany Loan Agreement of
even date herewith, the First Issuer has agreed to make available the
First Issuer Intercompany Loan, upon and subject to the terms thereof.
(B) The Seller has agreed to assign the Initial Mortgage Portfolio to the
Mortgages Trustee (as trustee for the Seller and Funding) pursuant to the
Mortgage Sale Agreement to be held on the terms of the Mortgages Trust
Deed for the consideration including the Deferred Consideration set out
therein. The Seller may assign New Mortgage Portfolios to the Mortgages
Trustee after the Initial Closing Date. Save as expressly provided
otherwise in the Funding Transaction Documents, the Initial Mortgage
Portfolio and each New Mortgage Portfolio will form part of the Trust
Property under the terms of the Mortgages Trust Deed. Pursuant to the
Mortgages Trust Deed, Funding has agreed to pay to the Mortgages Trustee
from time to time consideration for the Funding Share of the Trust
Property in the form of Contributions including Deferred Contributions
subject to and in accordance with the terms of the Mortgages Trust Deed.
(C) The Cash Manager has agreed to provide certain cash management services
to Funding on the terms set out in the Cash Management Agreement.
(D) The Account Bank has agreed to provide certain banking services to
Funding on the terms set out in the Bank Account Agreement and the
Funding (First Issuer) Bank Account Agreement.
(E) The Funding GIC Provider has agreed to provide certain guaranteed
investment services to Funding on the terms set out in the Funding
Guaranteed Investment Contract and the Funding (First Issuer) Guaranteed
Investment Contract.
(F) The Corporate Services Provider has agreed to provide certain corporate
services to Funding on the terms set out in the Corporate Services
Agreement.
(G) The Start-Up Loan Provider has agreed to make available the Start-Up Loan
to Funding on the terms set out in the Start-Up Loan Agreement.
(H) Funding has agreed to provide security for the benefit of each of the
Funding Secured Creditors in respect of Funding's obligations under the
Funding Transaction Documents
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including any New Intercompany Loan Agreement and associated agreements,
subject to and in accordance with the terms thereof and hereof.
(I) Funding has agreed to provide the Security Trustee with the benefit of
the security described in this Funding Deed of Charge to secure Funding's
obligations under the Funding Transaction Documents, upon and subject to
the terms of this Funding Deed of Charge. The Security Trustee shall
hold such security on trust for the benefit of the Funding Secured
Creditors.
(J) Pursuant to the terms of the First Issuer Deed of Charge dated of even
date herewith, the First Issuer will grant security to the Note Trustee
(as Note Trustee for the First Issuer Secured Creditors) in and to all of
its right, title, interest and benefit, present and future, under this
Funding Deed of Charge to secure the First Issuer's obligations to the
First Issuer Secured Creditors upon and subject to the terms thereof.
(K) Funding and the Funding Secured Creditors have each agreed with the
Security Trustee and the Note Trustee that in exercising its powers
granted under this Funding Deed of Charge, the Security Trustee shall,
save as otherwise contemplated in this Funding Deed of Charge, act only
at the direction of the Note Trustee in accordance with the terms hereof.
NOW THIS DEED WITNESSES AS FOLLOWS:
1. INTERPRETATION
1.1 DEFINITIONS: The Master Definitions Schedule signed for the purposes of
identification by Brown & Wood and Clifford Chance Limited Liability
Partnership on 26 March 2001 (as the same may be amended, varied or
supplemented from time to time with the consent of the parties hereto)
are expressly and specifically incorporated into this Deed and,
accordingly, the expressions defined in the Master Definitions Schedule
(as so amended, varied or supplemented) shall, except where the context
otherwise requires and save where otherwise defined herein, have the same
meanings in this Deed, including the recitals hereto and this Deed shall
be construed in accordance with the interpretation provisions set out in
Clause 2 (Interpretation and Construction) of the Master Definitions
Schedule.
1.2 CONSTRUCTION: In this Deed, except where the context otherwise requires:
(a) the terms of the First Issuer Intercompany Loan Agreement, the Master
Definitions Schedule and of any agreement in existence at the date
hereof between the parties hereto in relation to any such documents
are incorporated in this Deed to the extent required to ensure that
any proposed disposition of the Funding Charged Property contained in
this Deed is a valid disposition in accordance with Section 2(1) of
the Law of Property (Miscellaneous Provisions) Act 1989;
(b) a reference in this Deed to any property, assets, undertakings or
rights includes, unless the context otherwise requires, present and
future property, assets, undertakings or rights;
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(c) "THIS FUNDING DEED OF CHARGE" or "THIS DEED" means this Deed of Charge
and all the Schedules hereto (as from time to time modified and/or
supplemented in accordance with the provisions set out herein) and all
Deeds of Accession entered into pursuant to this Deed of Charge and
each other document or deed entered into pursuant hereto (as from time
to time modified/and or supplemented as aforesaid) and expressed to be
supplemental hereto.
2. COVENANT TO PAY AND TO PERFORM
Subject to the provisions of the Funding Transaction Documents,
including, without limitation, any limited recourse provisions, Funding
covenants with and undertakes to the Security Trustee for itself and as
trustee for the Funding Secured Creditors that it will:
(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 by Funding to the Security
Trustee (whether for its own account or as trustee for the Funding
Secured Creditors) or to any of the other Funding Secured Creditors,
whether actually or contingently, under this Deed or any other of the
Funding Transaction Documents; and (b) observe, perform and satisfy
all its other obligations and liabilities under this Deed and/or any
of the Funding Transaction Documents, PROVIDED THAT every payment in
respect of any Funding Transaction Document made to the relevant
Funding Secured Creditor in the manner provided in such Funding
Transaction Document shall operate in satisfaction pro tanto of the
relevant covenant by Funding in this Clause.
3. FUNDING SECURITY
3.1 TRUST PROPERTY:
(a) Funding, by way of first fixed charge for the payment or discharge of
the Funding Secured Obligations, subject to Clause 4 (Release of
Funding Charged Property), hereby charges to the Security Trustee,
save to the extent that the same may be situate in Jersey at any
relevant time, all of its right, title, benefit and interest, present
and future, in, to and under the Funding Share of the Trust Property
including all rights to receive payment of any amounts which may
become payable to Funding thereunder and all payments received by
Funding thereunder including, without limitation, all rights to serve
notices and/or make demands thereunder and/or to take such steps as
are required to cause payments to become due and payable thereunder
and all rights of action in respect of any breach thereof and all
rights to receive damages or obtain relief in respect thereof and the
proceeds of any of the foregoing, TO HOLD the same unto the Security
Trustee absolutely.
(b) To the intent that the Security Trustee shall have a security interest
in accordance with the Security Interests (Jersey) Law 1983 (the
"JERSEY SECURITY LAW") (and as secured party for the purposes of such
law) for the payment or discharge of the
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Funding Secured Obligations, subject to Clause 4 (Release of Funding
Charged Property), Funding (as debtor for the purposes of the Jersey
Security Law) hereby assigns to the extent that the same may be
situate in Jersey at any relevant time to the Security Trustee all of
its right, title, benefit and interest, present and future, in, to and
under the Funding Share of the Trust Property including all rights to
receive payment of any amounts which may become payable to Funding
thereunder and all payments received by Funding thereunder including,
without limitation, all rights to serve notices and/or make demands
thereunder and/or to take such steps as are required to cause payments
to become due and payable thereunder and all rights of action in
respect of any breach thereof and all rights to receive damages or
obtain relief in respect thereof and the proceeds of any of the
foregoing, TO HOLD the same unto the Security Trustee absolutely.
3.2 CONTRACTUAL RIGHTS:
(a) Funding, by way of first fixed security for the payment or discharge
of the Funding Secured Obligations, subject to Clause 4 (Release of
Funding Charged Property), hereby assigns to the Security Trustee,
save to the extent that the same may be situate in Jersey at any
relevant time, all of its right, title, benefit and interest, present
and future, in, to and under:
(i) the Mortgages Trust Deed;
(ii) the Mortgage Sale Agreement;
(iii) the Administration Agreement;
(iv) the Corporate Services Agreement;
(v) the Bank Account Agreement;
(vi) the Funding Guaranteed Investment Contract;
(vii) the Cash Management Agreement;
(viii) the Start-up Loan Agreement;
(ix) the Collection Bank Agreement;
(x) the First Issuer Intercompany Loan Agreement; (xi) each New
Intercompany Loan Agreement to be entered into by Funding after
the date hereof; and
(xii)(save to the extent that the same are at such time subject to the
Security Interests created under or pursuant to Clause 3.6
(Accounts for Issuer Reserves) or any Deed of Accession) each
other Funding Transaction Document (other than this Funding Deed
of Charge) entered into or to be entered into by Funding pursuant
to or in connection with any of the
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documents set out in paragraphs (i) through (xi) above (including
any agreement entered into by Funding as a replacement of any of
the above agreements upon the termination of such agreement),
including, without limitation, Funding's rights against the
Mortgages Trustee under the Mortgages Trust Deed, all rights to
receive payment of any amounts which may become payable to
Funding thereunder and all payments received by Funding
thereunder including, without limitation, all rights to serve
notices and/or make demands thereunder and/or to take such steps
as are required to cause payments to become due and payable
thereunder and all rights of action in respect of any breach
thereof and all rights to receive damages or obtain relief in
respect thereof and the proceeds of any of the foregoing, TO HOLD
the same unto the Security Trustee absolutely.
(b) To the intent that the Security Trustee shall have a security
interest in accordance with the Jersey Security Law (and as
secured party for the purposes of such law) for the payment or
discharge of the Funding Secured Obligations, subject to Clause 4
(Release of Funding Charged Property), Funding (as debtor for the
purposes of the Jersey Security Law) hereby assigns, to the
extent that the same may be situate in Jersey at any relevant
time to the Security Trustee all of its right, title, benefit and
interest, present and future, in, to and under:
(i) the Mortgages Trust Deed;
(ii) the Mortgage Sale Agreement;
(iii) the Administration Agreement;
(iv) the Corporate Services Agreement;
(v) the Bank Account Agreement;
(vi) the Funding Guaranteed Investment Contract;
(vii) the Cash Management Agreement;
(viii) the Start-up Loan Agreement; (ix) the Collection Bank
Agreement;
(x) the First Issuer Intercompany Loan Agreement;
(xi) each New Intercompany Loan Agreement to be entered into by
Funding after the date hereof; and
(xii)(save to the extent that the same are at such time subject
to the Security Interests created under or pursuant to
Clause 3.6 (Accounts for Issuer Reserves) or any Deed of
Accession) each other Funding Transaction Document (other
than this Funding Deed of Charge) entered into or to be
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entered into by Funding pursuant to or in connection with
any of the documents set out in paragraphs (i) through (xi)
above (including any agreement entered into by Funding as a
replacement of any of the above agreements upon the
termination of such agreement),
including, without limitation, Funding's rights against the
Mortgages Trustee under the Mortgages Trust Deed, all rights to
receive payment of any amounts which may become payable to Funding
thereunder and all payments received by Funding thereunder
including, without limitation, all rights to serve notices and/or
make demands thereunder and/or to take such steps as are required
to cause payments to become due and payable thereunder and all
rights of action in respect of any breach thereof and all rights
to receive damages or obtain relief in respect thereof and the
proceeds of any of the foregoing, TO HOLD the same unto the
Security Trustee absolutely.
3.3 ACCOUNTS: Funding, by way of first fixed security for the payment or
discharge of the Funding Secured Obligations, subject to Clause 4
(Release of Funding Charged Property), hereby assigns in favour of the
Security Trustee all of its rights, title, benefit and interest, present
and future, in:
(a) the Funding GIC Account (including, without limitation, all
monies at any time constituting the whole or any part of the
Funding Reserve Fund); and/or
(b) the Funding Transaction Account; and/or
(c) (save to the extent that the same are at such time subject to the
Security Interests created under or pursuant to Clause 3.6
(Accounts for Issuer Reserves) or any Deed of Accession) each
other account (if any) in which Funding may at any time have or
acquire any right, title, benefit or interest,
and to all monies now or at any time hereafter standing to the credit
thereof and the debts represented by them together with all rights and
claims relating or attached thereto including, without limitation, the
right to interest and the proceeds of any of the foregoing, TO HOLD the
same unto the Security Trustee absolutely.
3.4 AUTHORISED INVESTMENTS: Funding, by way of first fixed charge for the
payment or discharge of the Funding Secured Obligations, subject to
Clause 4 (Release of Funding Charged Property), hereby charges to the
Security Trustee all of its right, title, benefit and interest, present
and future in, to and under any Authorised Investment purchased using
monies standing to the credit of (save to the extent that the same are at
such time subject to the Security Interests created under or pursuant to
Clause 3.6 (Accounts for Issuer Reserves) or any Deed of Accession) any
Funding Bank Account for the time being owned by it and all rights in
respect of or ancillary to such Authorised Investments, including the
right to income and the proceeds of any of the foregoing, TO HOLD the
same unto the Security Trustee absolutely.
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3.5 FLOATING CHARGE: Funding, by way of first floating security for the
payment or discharge of the Funding Secured Obligations, subject to
Clause 4 (Release of Funding Charged Property), hereby charges by way of
first floating charge in favour of the Security Trustee the whole of its
undertaking and all its property, assets and rights, whatsoever and
wheresoever, both present and future other than any property or assets
from time to time or for the time being the subject of a fixed charge or
effectively assigned by way of security pursuant to any of the foregoing
provisions of this Clause 3 (Funding Security), Clause 3.6 (Accounts for
Issuer Reserves) and/or any Deed of Accession.
3.6 ACCOUNTS FOR ISSUER RESERVES:
(a) Funding, by way of first fixed security for the payment or
discharge of only that portion of the Funding Secured Obligations
which represent Funding's obligations and liabilities to the
First Issuer under the First Issuer Intercompany Loan Agreement
(the "FUNDING (FIRST ISSUER) SECURED OBLIGATIONS"), subject to
Clause 4 (Release of Funding Charged Property), hereby:
(i) assigns by way of security to the Security Trustee for the
benefit of the First Issuer (but not any other Funding
Secured Creditor) all of its right, title, benefit and
interest, present and future, in, to and under:
(1) the Funding (First Issuer) Bank Account Agreement;
and/or
(2) the Funding (First Issuer) Guaranteed Investment
Contract;
including all rights to receive payment of any amounts which
may become payable to Funding thereunder and all payments
received by Funding thereunder including, without
limitation, all rights to serve notices and/or make demands
thereunder and/or to take such steps as are required to
cause payments to become due and payable thereunder and all
rights of action in respect of any breach thereof and all
rights to receive damages or obtain relief in respect
thereof and the proceeds of any of the foregoing, TO HOLD
the same unto the Security Trustee absolutely;
(ii) assigns in favour of the Security Trustee for the benefit of
the First Issuer (but not any other Funding Secured
Creditor) all of its rights, title, benefit and interest,
present and future, in and to all monies now or at any time
hereafter standing to the credit of the Funding (First
Issuer) GIC Account and the debts represented by them
together with all rights and claims relating or attached
thereto including, without limitation, the right to interest
and the proceeds of any of the foregoing, TO HOLD the same
unto the Security Trustee absolutely; and
(iii) charges to the Security Trustee for the benefit of the First
Issuer (but not any other Funding Secured Creditor) all of
its right, title, benefit and interest, present and future
in, to and under any Authorised Investment purchased using
monies standing to the credit of the Funding (First Issuer)
GIC Account
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and all rights in respect of or ancillary to such Authorised
Investments, including the right to income and the proceeds
of any of the foregoing, TO HOLD the same unto the Security
Trustee absolutely;
(b) Each Funding Secured Creditor (other than the First Issuer)
acknowledges that for so long as any of the Funding (First Issuer)
Secured Obligations are not paid or discharged in full, the Security
Trustee shall hold the Security Interests created under Clause 3.6(a)
for the sole benefit of the First Issuer and such Funding Secured
Creditor shall have no right or claim in respect of the relevant
Funding Charged Property so assigned or charged pursuant to Clause
3.6(a).
(c) Funding covenants and undertakes with and to the Security Trustee on
behalf of the relevant Funding Secured Creditors that, as a condition
precedent to the drawing of each New Intercompany Loan from any New
Issuer, Funding will enter into a Deed of Accession (substantially in
the form set out in Schedule 2 (Form of Deed of Accession) or such
other form as shall be agreed by the parties thereto) pursuant to
which (if required by the terms of the relevant Intercompany Loan
Agreement) Funding will grant in favour of the Security Trustee for
the benefit of the relevant New Issuer, by way of first fixed security
for the payment or discharge of only that portion of the Funding
Secured Obligations which represent Funding's obligations and
liabilities to such New Issuer under such New Intercompany Loan
Agreement (being the relevant "FUNDING (ISSUER) SECURED OBLIGATIONS"),
subject to Clause 4 (Release of Funding Charged Property), the
Security Interests contemplated thereunder in its right, title,
interest and benefit in and to, the relevant Funding (Issuer) GIC
Account for the New Issuer (into which the Issuer Reserve Fund and the
Issuer Liquidity Reserve Fund (if any) of such New Issuer will be
deposited) the Funding Transaction Documents relating thereto and the
Authorised Investments purchased using monies standing to the credit
of such account.
(d) Each Funding Secured Creditor (other than the relevant New Issuer
referred to in paragraph (c) above) including the First Issuer
acknowledges that for so long as the relevant Funding (Issuer) Secured
Obligations in relation to such New Issuer are not paid or discharged
in full, the Security Trustee shall hold the Security Interests
created pursuant to the related Deed of Accession referred to in
paragraph (c) above for the sole benefit of the relevant New Issuer
and each other Funding Secured Creditor shall have no right or claim
in respect of the relevant Funding Charged Property so assigned or
charged pursuant to such Deed of Accession.
3.7 TITLE GUARANTEE: Each of the dispositions of or charges over property
effected in or pursuant to this Funding Deed of Charge is made with full
title guarantee.
3.8 FURTHER ACQUIRED ITEMS: For the avoidance of doubt, it is hereby
confirmed that the Security Interests (including the Jersey Security
Interests) created under or pursuant to Clauses 3.1 (Trust Property) to
Clause 3.4 (Authorised Investments) (inclusive), Clause 3.6 (Accounts for
Issuer Reserves) and/or any Deed of Accession are intended to be specific
and fixed assignments by way of security of, or specific and fixed
charges over (as the case may be) the property and assets to which they
relate, both present and future, including property and
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assets which are acquired after the date hereof and are given for the
purpose of securing New Intercompany Loans made to Funding by any Newm
Issuer and Funding's obligations that may arise from time to time to any
person (other than the First Issuer) who has delivered a duly completed
Deed of Accession to the Security Trustee in accordance with the terms of
this Deed.
3.9 NO TRANSFER OF OBLIGATIONS: Notwithstanding anything else in this Funding
Deed of Charge, it is hereby agreed that dispositions of property effected
in or pursuant to this Funding Deed of Charge do not transfer obligations,
and nothing herein or in any Deed of Accession shall be construed as a
transfer of obligations to, the Security Trustee.
3.10 NOTICE AND ACKNOWLEDGEMENT:
(a) The execution of this Funding Deed of Charge by each Funding Secured
Creditor shall constitute express notice to such Funding Secured
Creditor of the assignments, charges and Security Interests (including
the Jersey Security Interests) made by Funding pursuant to this
Funding Deed of Charge;
(b) By its execution of this Funding Deed of Charge each Funding Secured
Creditor acknowledges that it has notice of and consents to the
assignments, charges and Security Interests (including the Jersey
Security Interests) made or granted by Funding under or pursuant to
this Funding Deed of Charge and also acknowledges that as at the date
hereof it has not received from any other person any notice of any
assignment or charge of any of the property the subject of such
Security Interests.
(c) Notwithstanding the assignments, charges and Security Interests
(including the Jersey Security Interests) granted under or pursuant to
this Funding Deed of Charge and subject as provided otherwise in this
Funding Deed of Charge, each of the parties hereto acknowledges that:
(i) each Funding Secured Creditor and each other party to any Funding
Transaction Document may continue to make all payments becoming
due to Funding under any Funding Transaction Document in the
manner envisaged by such Funding Transaction Document until the
receipt of written notice from the Security Trustee or any
Receiver requiring payments to be made otherwise; and
(ii) until the Funding Security becomes enforceable in accordance with
Clause 7.2 (Enforceable), Funding shall be entitled to exercise
its rights, powers and discretions and perform its obligations in
relation to the Funding Charged Property and under the Funding
Transaction Documents in accordance with the provisions of the
Funding Transaction Documents.
3.11 SECURITY TRUSTEE'S DISCRETION IN RELATION TO FUNDING CHARGED PROPERTY:
Without prejudice to any other rights of the Security Trustee after the
security created under this Deed has become enforceable and subject to
the terms of the Funding Transaction Documents, the
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Security Trustee may at any time after any part or parts of the Funding
Security have become enforceable:
(a) enter into, make, execute, sign, deliver and do all such contracts,
agreements, deeds, receipts, payments, assignments, transfers,
conveyances, assurances and things and bring, prosecute, enforce,
defend and abandon all such actions, suits and proceedings in relation
to the Funding Charged Property as it may think expedient;
(b) exercise or refrain from exercising, in such manner as in its absolute
discretion the Security Trustee shall think fit, all or any of the
rights, powers, authorities discretions or remedies of Funding under
or in relation to the Funding Charged Property or incidental to the
ownership thereof and, in particular but without limiting the
generality of the foregoing, exercise all rights to vote or to give
any consent or notification or make any declaration in relation to
such Funding Charged Property. For the avoidance of doubt, the
Security Trustee shall not be required to have regard to the interests
of Funding in the exercise or non-exercise of any such rights, powers,
authorities, discretions and remedies or to comply with any direction
given by Funding in relation thereto; and
(c) demand, sue for and take any advice or institute any proceedings to
recover or obtain payment of any amounts which may then be due and
payable to Funding but which remains unpaid under or in respect of the
Funding Charged Property or any part thereof either in its own name or
in the name of Funding.
3.12 NEW INTERCOMPANY LOANS: If Funding enters into a New Intercompany Loan
Agreement, then:
(a) as conditions precedent thereto, in addition to the relevant New
Issuer acceding to the terms of this Funding Deed of Charge,
(i) any other relevant creditors (as determined by the Security
Trustee) shall accede to the terms of this Funding Deed of
Charge by executing a Deed of Accession; and
(ii) Funding shall provide confirmation to the parties to this
Funding Deed of Charge that the Note Trustee in respect of
the New Notes to be issued shall be the same legal entity as
the existing Note Trustee at the time of the issuance of the
New Notes; and
(b) each other party to this Funding Deed of Charge agrees that it shall
enter into the relevant Deed of Accession.
4. RELEASE OF FUNDING CHARGED PROPERTY
4.1 RELEASE, REASSIGNMENT OR DISCHARGE: Upon the irrevocable and
unconditional payment in full or discharge (or any combination of the
foregoing) of all the Funding Secured Obligations and upon the Security
Trustee being satisfied that Funding is under no further actual or
contingent obligation under this Deed or any other Funding Transaction
Document, the
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Security Trustee shall at the request and cost of Funding release,
reassign and/or discharge from the Security Interests (including the
Jersey Security Interests) all the relevant Funding Charged Property to,
or to the order of, Funding; provided that where any such release,
re-assignment or discharge is made in whole or in part on the faith of
any payment, security or other disposition which is avoided or which must
be repaid on bankruptcy, liquidation or otherwise, the security
constituted by or pursuant to this Funding Deed of Charge and the
liability of Funding hereunder and thereunder shall continue as if there
had been no such release, re-assignment or discharge.
4.2 DISPOSAL OF AUTHORISED INVESTMENTS: On the making at any time by the Cash
Manager on behalf of Funding or the Security Trustee of a disposal of any
Authorised Investment charged pursuant to this Funding Deed of Charge,
the Security Trustee shall, if so requested by and at the sole cost and
expense of Funding, but without the Security Trustee being responsible
for any loss, costs, claims or liabilities whatsoever occasioned by so
acting upon such request, release, reassign or discharge from the
Security Interests constituted by or pursuant to this Funding Deed of
Charge the relevant Authorised Investments, provided that in the case of
a disposal of an Authorised Investment, the proceeds of such disposal are
paid by Funding into the Funding Bank Account from which the monies to
make such Authorised Investment were originally drawn, subject to and in
accordance with the provisions of the this Funding Deed of Charge and the
Funding Transaction Documents.
4.3 TRUST PROPERTY: On the repurchase by the Seller from the Mortgages
Trustee of any Mortgage Loan together with its Related Security pursuant
to and in accordance with the terms of the Mortgage Sale Agreement, such
Mortgage Loan and its Related Security shall no longer form part of the
Trust Property and shall automatically be released from any Security
Interest created under or pursuant to this Deed in respect of the Funding
Share of the Trust Property.
4.4 WITHDRAWALS FROM FUNDING BANK ACCOUNTS: Subject to and in accordance
with this Funding Deed of Charge and the other Funding Transaction
Documents, the Cash Manager, on behalf of the Funding and the Security
Trustee, is permitted pursuant to Clause 6 (Restrictions on Exercise of
Certain Rights) from time to time to withdraw amounts from the Funding
Bank Accounts in order to apply such amounts in accordance with the
relevant Funding Priority of Payments. Any amount so withdrawn shall be
released from the Security Interests (including the Jersey Security
Interests) created under or pursuant to this Funding Deed of Charge
provided that such amount is applied in accordance with and subject to
the relevant Funding Priority of Payments.
5. DECLARATION OF TRUST
Each of the Funding Secured Creditors declares the Security Trustee as trustee
of, and the Security Trustee hereby declares that it holds on trust for the
Funding Secured Creditors (or, as the case may be, the relevant Funding Secured
Creditor), upon and subject to the terms and conditions of this Funding Deed of
Charge, all of the covenants, undertakings and representations made to the
Security Trustee under this Funding Deed of Charge or any other Funding
Transaction Document and all of the charges, assignments, security and Security
Interests made or given to the Security Trustee or to be
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made or given to it for the purpose of securing the Funding Secured Obligations
under or pursuant to this Funding Deed of Charge or any other Funding
Transaction Document.
6. RESTRICTIONS ON EXERCISE OF CERTAIN RIGHTS
6.1 FUNDING BANK ACCOUNTS: At all times prior to the release, reassignment
or discharge of the Funding Security pursuant to Clause 4 (Release of
Funding Charged Property):
(a) (save as otherwise provided in the Funding Transaction Documents or
unless the Security Trustee otherwise agrees in writing (and then only
on such terms and in such manner as the Security Trustee may
require)), Funding shall procure that:
(i) any distribution of Mortgages Trustee Available Revenue
Receipts to Funding and any distribution of Principal
Receipts to Funding pursuant to the Mortgages Trust is
deposited into the Funding GIC Account;
(ii) all other income of Funding (if any) is deposited into the
Funding GIC Account; and
(iii) all Issuer Reserve Funds and Issuer Liquidity Reserve Funds
(if any) held by Funding in respect of any New Issuer are
deposited into the relevant Funding (Issuer) GIC Account
established by Funding for such purpose; and
(b) Funding shall not be entitled to withdraw or transfer from any Funding
Bank Account any monies standing to the credit thereof or direct any
payment to be made therefrom to any person without the Security
Trustee's prior written consent.
6.2 PERMITTED WITHDRAWALS FROM FUNDING BANK ACCOUNTS; AUTHORISED INVESTMENTS:
(a) Funding covenants with the Security Trustee that the amounts standing
to the credit of the Funding Bank Accounts may only be withdrawn in
accordance with this Clause 6.2 (Permitted Withdrawals from Funding
Bank Accounts; Authorised Investments) or otherwise with the Security
Trustee's prior written consent.
(b) On any day during an Interest Period prior to the security becoming
enforceable pursuant to Clause 7.2 (Enforceable), the Security Trustee
hereby authorises the Cash Manager to transfer such monies from the
Funding GIC Account to the Funding Transaction Account as are to be
applied on such date to meet any amounts then due and payable by
Funding to third parties in accordance with item (B) of the Funding
Pre-Enforcement Revenue Priority of Payments and further authorises
the Cash Manager to withdraw such amounts from the Funding Transaction
Account on such date to apply such monies in making such payments on
behalf of Funding. For the purpose of this paragraph (b), the
remaining provisions of this Clause 6.2 (Permitted Withdrawals from
Funding Bank Accounts; Authorised Investments), Clause 6.3 (Funding
Pre-Enforcement Revenue Priority of Payments) and Clause 6.4 (Funding
Pre-Enforcement Principal Priority of Payments), the Cash Manager
shall be entitled to assume that the security is not enforceable
pursuant to Clause 7.2 (Enforceable) unless it has received notice
from Funding or the Security Trustee or is otherwise
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aware that the security has become so enforceable and shall not be
liable to the Security Trustee, Funding or any other Funding Secured
Creditor for making payments based on this assumption.
(c) On each Payment Date prior to the security becoming enforceable
pursuant to Clause 7.2 (Enforceable), the Security Trustee hereby
authorises the Cash Manager to transfer:
(i) from the Funding GIC Account and (subject as provided in
paragraph (ii) below) each Funding (Issuer) GIC Account to
the Funding Transaction Account (or, in the case of any such
amounts which are to be used to fund or replenish any Issuer
Reserve Fund or Issuer Liquidity Reserve Fund (if any) of
any Issuer, to the relevant Funding (Issuer) GIC Account for
such Issuer) such amounts of Funding Available Revenue
Receipts as may be necessary on such date to be applied to
meet Funding's payment obligations in accordance with the
Funding Pre-Enforcement Revenue Priority of Payments (as the
same may be amended or varied from time to time); and
(ii) for so long as the relevant Funding (Issuer) Secured
Obligations in respect of any Issuer are not paid or
discharged in full, the Cash Manager shall only transfer
funds from the relevant Funding (Issuer) GIC Account on any
Payment Date to pay amounts due to such Issuer.
(d) On each Payment Date, prior to the security becoming enforceable
pursuant to Clause 7.2 (Enforceable), the Security Trustee hereby
authorises the Cash Manager to transfer:
(i) from the Funding GIC Account and (subject as provided in
paragraph (ii) below) each Funding (Issuer) GIC Account to
the Funding Transaction Account (or, in the case of any such
amounts which are to be used to fund or replenish any Issuer
Liquidity Reserve Fund (if any) of any Issuer, to the
relevant Funding (Issuer) GIC Account for such Issuer) such
amounts of Funding Available Principal Receipts as may be
necessary on such date to be applied to meet Funding's
payment obligations in accordance with the Funding Pre-
Enforcement Principal Priority of Payments (as the same may
be amended or varied from time to time); and
(ii) for so long as the relevant Funding (Issuer) Secured
Obligations in respect of any Issuer are not paid or
discharged in full the Cash Manager shall only transfer
funds from the relevant Funding (Issuer) GIC Account on any
Payment Date to pay amounts due to such Issuer.
(e) The Security Trustee hereby authorises the Cash Manager, prior to the
security becoming enforceable pursuant to Clause 7.2 (Enforceable), to
make withdrawals from the relevant Funding Bank Accounts for the
purposes of acquiring Authorised Investments provided that all amounts
received in respect of the Authorised
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Investments (including earnings thereon) shall be deposited into
the relevant Funding Bank Account from which they were originally
drawn.
6.3 FUNDING PRE-ENFORCEMENT REVENUE PRIORITY OF PAYMENTS: On each Payment
prior to the security becoming enforceable pursuant to Clause 7.2
(Enforceable), the Security Trustee hereby authorises Funding or the Cash
Manager in its place to withdraw Funding Available Revenue Receipts from
the Funding Transaction Account and to apply such monies in accordance
with the rules and the order of priority of the Funding Pre-Enforcement
Revenue Priority of Payments.
6.4 FUNDING PRE-ENFORCEMENT PRINCIPAL PRIORITY OF PAYMENTS: On each Payment
Date prior to the security becoming enforceable pursuant to Clause 7.2
(Enforceable), the Security Trustee hereby authorises Funding or the Cash
Manager in its place to make withdrawals of Funding Available Principal
Receipts standing to the credit of the Funding Transaction Account and to
apply such monies to repay principal due and payable by Funding under
each Intercompany Loan Agreement or otherwise in accordance with the
rules and the order of priority of the Funding Pre-Enforcement Principal
Priority of Payments.
6.5 AMENDMENT TO FUNDING PRIORITY OF PAYMENTS: If any New Intercompany Loans
are made available by any New Issuer to Funding in accordance with the
terms of the Funding Transaction Documents and any amendment to the
Funding Priority of Payments is required as a result thereof, then,
subject to the parties to this Funding Deed of Charge agreeing the
necessary amendments to the priority of payments, the parties to this
Funding Deed of Charge, together with such New Issuer and any person
entering into a Deed of Accession shall set out the new Funding Priority
of Payments accordingly in a schedule to that Deed of Accession. The new
Funding Priority of Payments so amended shall supersede those set out in
Schedule 3 (Funding Priority of Payments) to this Deed.
6.6 NO ENFORCEMENT AGAINST ISSUERS: Each party to this Funding Deed of
Charge undertakes to the First Issuer and each of the Funding Secured
Creditors (including the Security Trustee in its capacity as such under
this Funding Deed of Charge) that it shall not:
(a) take any steps or pursue any action whatsoever for the purpose of
recovering any debts or amounts due or owing to it by any Issuer; or
(b) take any steps or legal proceedings for the winding-up, dissolution or
reorganisation of, or the institution of insolvency proceedings
against, any Issuer or for the appointment of a receiver,
administrator, liquidator or similar officer of any Issuer in respect
of any or all of its revenues and assets.
6.7 NO ENFORCEMENT BY FUNDING SECURED CREDITORS AND LIMITED RECOURSE: Each
of the Funding Secured Creditors (other than the Security Trustee and any
Receiver) hereby agrees with Funding 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;
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(b) notwithstanding any other provision of this Funding Deed of Charge or
any other Funding Transaction Document, no sum due or owing to any
Funding Secured Creditor or to the Security Trustee (whether for
itself or on behalf of the Funding Secured Creditors) from or by
Funding under this Funding Deed of Charge or any other Funding
Transaction Document shall be payable by Funding except to the extent
that Funding has sufficient funds available or (following enforcement
of the Funding Security) the Security Trustee has realised sufficient
funds from the Funding Security to pay such sum subject to and in
accordance with the relevant Funding Priority of Payments and provided
that all liabilities of Funding required to be paid in priority
thereto or pari passu therewith pursuant to such Funding Priority of
Payments have been paid, discharged and/or otherwise provided for in
full; and
(c) it shall not take any steps for the purpose of recovering any of the
Funding Secured Obligations (including, without limitation, by
exercising any rights of set-off) or enforcing any rights arising out
of the Funding Transaction Documents against Funding and it shall not
take any steps or legal proceedings for the winding-up, dissolution or
reorganisation of, or the institution of insolvency proceedings
against, Funding or for the appointment of a receiver, administrator,
liquidator or similar officer of Funding in respect of any or all of
its revenues and assets
PROVIDED THAT if the Security Trustee having become bound to do so
subject to and in accordance with the terms of this Funding Deed of
Charge and the Funding Transaction Documents, fails to serve an
Intercompany Loan Enforcement Notice and/or, to take any steps or
proceedings to enforce the security created hereunder within 30 days of
becoming so bound and such failure is continuing, then (for so long as
any Intercompany Loan is outstanding) the Note Trustee (or in the event
of the failure of the Note Trustee) any Issuer or (if there are no
Intercompany Loans outstanding) any other Funding Secured Creditor shall
be entitled to take such steps and proceedings to enforce the security
created under and in accordance with this Funding Deed of Charge as it
shall deem necessary other than the presentation of a petition for the
winding up, dissolution or reorganisation of, or the institution of
insolvency proceedings against, Funding or the appointment of an
administrator or liquidator of Funding.
6.8 ACKNOWLEDGEMENT OF SECURITY TRUSTEE: The Security Trustee hereby
acknowledges and agrees that notwithstanding any other provision of this
Funding Deed of Charge or any other Funding Transaction Document, no sum
due or owing to any Funding Secured Creditor or to the Security Trustee
(whether for itself or on behalf of the Funding Secured Creditors) from
or by Funding under this Funding Deed of Charge or any other Funding
Transaction Document shall be payable by Funding except to the extent
that Funding has sufficient funds available or (following enforcement of
the Funding Security) the Security Trustee has realised sufficient funds
from the Funding Security to pay such sum subject to and in accordance
with the relevant Funding Priority of Payments and provided that all
liabilities of Funding required to be paid in priority thereto or pari
passu therewith pursuant to such Funding Priority of Payments have been
paid, discharged and/or otherwise provided for in full.
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6.9 UTILISATION OF ISSUER RESERVES: Funding and the Cash Manager shall
procure that, subject to and in accordance with the Funding Priority of
Payments, amounts standing to the credit of the Issuer Reserve Fund
Ledger or the Issuer Liquidity Reserve Ledger of any Issuer shall only be
debited for the purpose of making payments falling due under the
Intercompany Loan Agreement of such Issuer and then only for the purposes
specified in (in the case of the First Issuer) Schedule 5 (Utilisation of
Issuer Reserves) or, in the case of any New Issuer, Schedule I to the
Deed of Accession.
7. ENFORCEMENT
7.1 NOTIFICATION: The Security Trustee shall, if reasonably practicable,
give prior notification to the Seller, and the Cash Manager and each
Funding Secured Creditor of the Security Trustee's intention to enforce
the security created by this Funding Deed of Charge. However, the
failure of the Security Trustee to provide such notification shall not in
any way prejudice the ability of the Security Trustee to enforce the
security created by this Funding Deed of Charge.
7.2 ENFORCEABLE:
(a) Without prejudice to the provisions of Clause 9 (Receiver) the
security created under or pursuant to this Funding Deed of Charge
shall become immediately enforceable and the power of sale and other
powers conferred by Section 101 of the 1925 Act, as varied or amended
by this Funding Deed of Charge, shall be exercisable by the Security
Trustee, in each case at any time:
(i) upon the service on Funding by the Security Trustee of an
Intercompany Loan Enforcement Notice; or
(ii) if there are no Intercompany Loans outstanding, following a
default in payment of any other Funding Secured Obligation
on its due date or within any applicable grace period
following such due date stated in the relevant Funding
Transaction Document but subject always to any limited
recourse provisions stated therein and to Clause 6.7 (No
Enforcement by Funding Secured Creditors and Limited
Recourse) hereof.
(b) For the purposes of the Jersey Security Interests, upon the
occurrence of any of the events specified in Clause 7.2 (a) (i) or
(ii) (which shall constitute events of default for the purposes of
the Jersey Security Interests in accordance with the Jersey
Security Law) the Security Trustee shall have the right but not
subject to Clause 7.5 (Mandatory Enforcement) the obligation to
give notice (the "FUNDING JERSEY ENFORCEMENT NOTICE") to Funding
in accordance with the Jersey Security Law and the power of sale
of the Funding Jersey Secured Property shall become exercisable
without the order of the Jersey court in accordance with the
Jersey Security Law so that the Jersey Security Interests shall be
enforceable in accordance with the provisions of the Jersey
Security Law.
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7.3 POWER OF SALE:
(a) Notwithstanding any other provision of this Funding Deed of Charge,
the Funding Secured Obligations shall be deemed to have become due and
payable for the purposes of Section 101 of the 1925 Act and Article 8
of the Jersey Security Law, and (to the extent applicable) the
statutory power of sale and of appointing a receiver and other powers
which are conferred on mortgagees under the 1925 Act as varied or
extended by this Funding Deed of Charge shall be deemed to arise
immediately after execution of this Deed.
(b) Section 103 of the 1925 Act shall not apply to this Deed and forthwith
after the security has become enforceable in accordance with Clause
7.2 (Enforceable) the statutory power of sale, as extended by this
Funding Deed of Charge, and all other powers shall become immediately
exercisable without notice to Funding and the provisions of the 1925
Act regulating the power of sale shall, so far as they relate to the
Funding Charged Property, be varied and extended accordingly.
7.4 DISCRETIONARY ENFORCEMENT: Subject to the provisions of this Funding
Deed of Charge, 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, Funding or any other party to any
of the Funding Transaction Documents to enforce their obligations under
any of the Funding Transaction Documents. Subject to the provisions of
this Funding Deed of Charge, at any time after the security has become
enforceable in accordance with Clause 7.2 (Enforceable), the Security
Trustee may, at its discretion and without notice, take such steps as it
may think fit to enforce the security created pursuant to this Funding
Deed of Charge.
7.5 MANDATORY ENFORCEMENT: The Security Trustee shall not, and shall not be
bound to, take any proceedings, actions or steps under or in connection
with any of the Funding Transaction Documents (including, without
limitation, any steps to enforce the security constituted by this Funding
Deed of Charge) unless:
(a) it shall have been directed to do so by the Note Trustee acting in
accordance with the provisions of this Funding Deed of Charge; or
(b) if there are no Intercompany Loans outstanding, it shall have been
directed to do so by the Funding Secured Creditor which ranks highest
in the Funding Post-Enforcement Priority of Payments; and
(c) in either case, it shall have been indemnified to its satisfaction
against all liabilities, actions, proceedings, claims, costs, charges,
damages and expenses to which it may become liable or which may be
incurred by it in connection therewith.
7.6 LAW OF PROPERTY ACT 1925: Subject in the case of the Funding Jersey
Secured Property to the provisions of the Jersey Security Law, the
provisions of the 1925 Act relating to the power of sale and the other
powers conferred by Section 101(1) and (2) are hereby extended in
relation to Funding as if such extensions were contained in the 1925 Act
such that at any time after the
18
security constituted by this Funding Deed of Charge has become enforceable
in accordance with Clause 7.2 (Enforceable) above, the Security Trustee may
in its absolute discretion:
(a) make demand in the name of the Funding Secured Creditors or in its
own right for any monies and liabilities in respect of the Funding
Charged Property;
(b) enforce any rights it may have in respect of the whole or any part of
the Funding Charged Property in such manner and upon such terms as the
Security Trustee shall think fit;
(c) take possession of, get in and collect the Funding Charged Property
and perfect the interests comprised therein;
(d) subject as expressly provided in Clause 7.7 (Restriction on Disposal
of Funding Charged Property), sell, transfer, convey, dispose of vary
or otherwise deal with, and also to grant any option to purchase, and
to effect exchanges of, the whole or any part of the Funding Charged
Property or any interest therein in such manner, for such
consideration (if any) and generally upon such terms (including by
deferred payment or payment by instalments) as it may think fit and/or
to concur in any of the foregoing (and nothing shall preclude any such
disposal being made to a Funding Secured Creditor);
(e) carry out any transaction, scheme or arrangement which the Security
Trustee may, in its absolute discretion, consider appropriate with a
view to or in connection with the sale of the Funding Charged
Property;
(f) do all or any of the things or exercise all or any of the powers,
authorities and discretions conferred expressly or by implication on
any Receiver under Clause 9.6 (Powers of the Receiver) or otherwise
under this Funding Deed of Charge; and
(g) exercise all or any of the powers conferred on mortgagees by the 1925
Act as varied or extended by this Funding Deed of Charge and any other
rights and remedies that may be conferred by statute or common law or
in equity on mortgagees or receivers.
7.7 RESTRICTION ON DISPOSAL OF FUNDING CHARGED PROPERTY: Notwithstanding the
foregoing provisions of this Clause 7 (Enforcement), if the Funding
Security has become enforceable otherwise than by reason of a default in
payment of any amount due in respect of any Intercompany Loan which would
be utilised to fund the payment of any amount due on the Class A Notes of
any Issuer, the Security Trustee will not be entitled to dispose of all
or part of the Funding Charged Property unless either:
(a) a sufficient amount would be realised to allow a full and immediate
discharge of such amount under each Intercompany Loan as would be
sufficient to fund the payment in full of all amounts owing in respect
of the Class A Notes of each Issuer and all prior ranking amounts due
by Funding in accordance with the relevant Funding Priority of
Payments; or
19
(b) the Security Trustee is of the opinion, which shall be binding on the
Funding Secured Creditors, reached after considering at any time and
from time to time the advice of any financial or such other
professional advisers selected by the Security Trustee for the purpose
of giving such advice that the cashflow prospectively receivable by
Funding 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 Funding, to discharge in full
in due course such amount under each Intercompany Loan as would be
sufficient to fund the payment in full of all amounts owing in respect
of the Class A Notes of each Issuer and all prior ranking amounts due
by Funding. The fees and expenses of the aforementioned financial
adviser or such other professional adviser selected by the Security
Trustee shall be paid by Funding; and
(c) the Security Trustee shall not be bound to make the determination set
out above unless it shall have been indemnified and/or secured to its
satisfaction against all liabilities to which it may thereby become
liable or which it may incur by so doing,
PROVIDED THAT if the Security Trustee is unable to obtain the advice
referred to in paragraph (b) above having made reasonable efforts to do
so, this Clause 7.7 (Restriction on Disposal of Funding Charged Property)
shall not apply.
7.8 AUTHORISED INVESTMENTS: Any monies which under the trusts of this
Funding Deed of Charge ought to or may be invested by the Security
Trustee (or the Cash Manager on its behalf) after the security has become
enforceable in accordance with Clause 7.2 (Enforceable) may be invested
in the name or 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 in its absolute discretion may determine, and shall
not be responsible (save where any loss results from the Security
Trustee's fraud, wilful default or gross 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. UPON ENFORCEMENT
8.1 SERVICE OF INTERCOMPANY LOAN ENFORCEMENT NOTICE: Subject to the
provisions of the Funding Transaction Documents (including, without
limitation, Clause 14.10 (Acceleration) of the Intercompany Loan Terms
and Conditions), in the event that an Intercompany Loan Enforcement
Notice has been served (and not withdrawn) by the Security Trustee on
Funding, the Security Trustee shall as soon as practicable serve a copy
of that Intercompany Loan Enforcement Notice on the Funding Secured
Creditors.
8.2 CRYSTALLISATION: From and including the date when the Security Trustee
serves an Intercompany Loan Enforcement Notice (which has not been
withdrawn) on Funding:
(a) notwithstanding any other provision hereof or of any other Funding
Transaction Document, no amount may be withdrawn from the Funding Bank
Accounts except with the prior written consent of the Security
Trustee; and
20
(b) (provided that the Mortgages Trustee and the Cash Manager have been
notified of the service of an Intercompany Loan Enforcement Notice) no
action whatsoever may be taken by the Mortgages Trustee in relation to
or in respect of the Funding Charged Property without the prior
written consent of the Security Trustee save for any action required
to preserve or protect the Mortgages Trustee's right, title or
interest therein; and
(c) if not already crystallised, any charge created by this Funding Deed
of Charge which is a floating charge shall crystallise.
8.3 FUNDING POST-ENFORCEMENT PRIORITY OF PAYMENTS: At any time after the
security created under this Funding Deed of Charge has become enforceable
in accordance with Clause 7.2 (Enforceable) and provided that the
Intercompany Loan Enforcement Notice has not been withdrawn, all Funding
Available Revenue Receipts, Funding Available Principal Receipts and all
other monies paid to or received or recovered by or on behalf of Funding
or the Security Trustee or any Receiver appointed on its behalf,
including all proceeds following any sale, realisation or enforcement of
the security created under this Funding Deed of Charge and all amounts
not previously distributed and/or standing to the credit of any Funding
Bank Account and all monies standing to the credit of the Funding Reserve
Ledger (if any) shall (if not already received by the Security Trustee)
be paid to and held by the Security Trustee on trust to apply the same
(save to the extent required otherwise by applicable law) in accordance
with the rules and the order of priority of the Funding Post-Enforcement
Priority of Payments.
8.4 CERTIFICATION OF AMOUNTS:
(a) The Security Trustee shall be entitled to rely on (and to accept as
conclusive evidence save in the case of manifest error) a certificate
from each Funding Secured Creditor as to the amounts owed to such
Funding Secured Creditor under the Funding Transaction Documents. The
Security Trustee shall not take into account for the purpose of the
application of moneys in accordance with the Funding Post-Enforcement
Priority of Payments any amounts of which it has not been notified by
the intended recipient on or prior to the date in question.
(b) Each Funding Secured Creditor will, at all times, promptly provide the
Security Trustee and/or any Receiver on request with a certificate
setting out detailed information as to the amount of the Funding
Secured Obligations to which such Funding Secured Creditor is entitled
and such other information as the Security Trustee and/or any Receiver
may require to enable or facilitate the Security Trustee and/or any
Receiver to perform its functions hereunder or under any of the
Funding Transaction Documents, such certificate to be in a form
required by the Security Trustee and/or any Receiver. In determining
the respective entitlements of the Funding Secured Creditors
hereunder, such certificates shall be binding on all of the Funding
Secured Creditors.
8.5 RETENTION ACCOUNT: If the Security Trustee enforces the security created
under this Funding Deed of Charge at a time when either no amounts or not
all amounts owing in respect of the Funding Secured Obligations have
become due and payable or any of the Funding Secured
21
Obligations are at such time contingent or future, the Security Trustee or
a Receiver may, for so long as no such amounts or not all such amounts have
become due and payable or any of the Funding Secured Obligations are at
such time contingent or future, pay any monies referred to in Clause 8.3
(Funding Post-Enforcement Priority of Payments), as the case may be, into,
and retain such monies in, an interest-bearing account (a "RETENTION
ACCOUNT") to be held by it as security and applied by it in accordance with
Clause 8.3 (Funding Post-Enforcement Priority of Payments) as and when any
of the amounts referred to therein become due and payable.
8.6 SECURITY TRUSTEE RIGHTS UPON ENFORCEMENT: In addition to any other
rights expressly provided herein, for the period commencing upon the
service of an Intercompany Loan Enforcement Notice and terminating upon
the notification to the Funding Secured Creditors by the Security Trustee
that all Funding Secured Obligations have been satisfied in full:
(a) (provided such Funding Secured Creditor has received a copy of, or
other notice of the service on Funding of, any such Intercompany Loan
Enforcement Notice) each Funding Secured Creditor agrees that it will
pay to the Security Trustee or the Receiver, as the case may be, all
monies received or recovered by such Funding Secured Creditor
otherwise than in accordance with Clause 8.3 (Funding Post-Enforcement
Priority of Payments (whether by way of set-off or otherwise) in order
that such amounts may be applied by the Security Trustee in accordance
with Clause 8.3 (Funding Post- Enforcement Priority of Payments);
(b) save as otherwise expressly provided in this Funding Deed of Charge or
as required by the Security Trustee, all payments under or arising
from this Funding Deed of Charge and all amounts payable to Funding by
any Funding Secured Creditor under any Funding Transaction Document
shall be paid to the Security Trustee or to its order;
(c) save as otherwise expressly provided in this Funding Deed of Charge,
all rights or remedies provided for by this Funding Deed of Charge or
available at law or in equity to the Funding Secured Creditors are
exercisable by the Security Trustee;
(d) save as otherwise expressly provided in this Funding Deed of Charge,
all rights to compel performance of the Funding Transaction Documents
are exercisable by the Security Trustee; and
(e) all payments in respect of the Funding Secured Obligations shall
operate in satisfaction pro tanto of Funding's covenants to the
Funding Secured Creditors.
9. RECEIVER
9.1 APPOINTMENT: At any time after the security constituted hereunder
becomes enforceable, and whether or not the Security Trustee has taken
possession of the Funding Charged Property, the Security Trustee may
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 a receiver, a receiver and manager or an administrative
receiver of the Funding Charged Property or any
22
part thereof (each a "RECEIVER") and, in the case of an appointment of more
than one person, to act together or independently of the other or others.
9.2 REMOVAL AND REPLACEMENT: Except as otherwise required by statute, the
Security Trustee may by writing or by deed remove a Receiver and appoint
another in its place or to act with a Receiver and the Security Trustee
may apply to the court for an order removing an administrative receiver.
9.3 EXTENSION OF APPOINTMENT: The exclusion of any part of the Funding
Charged Property from the appointment of the Receiver shall not preclude
the Security Trustee from subsequently extending its appointment (or that
of the Receiver replacing it) to that part of the Funding Charged
Property or appointing another Receiver over any other part of the
Funding Charged Property.
9.4 AGENT OF FUNDING: The Receiver shall, so far as the law permits, be the
agent of Funding and Funding alone shall be responsible for the
Receiver's contracts, engagements, acts, omissions, misconduct,
negligence or default and for liabilities incurred by it; and in no
circumstances whatsoever shall the Security Trustee or any Funding
Secured Creditor be in any way responsible for or incur any liability in
connection with its contracts, engagements, acts, omissions, misconduct,
negligence or default, and if a liquidator of Funding shall be appointed,
the 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 its powers, authorities and discretions conform
to the regulations (if any) from time to time made and given by the
Security Trustee.
9.5 REMUNERATION: Subject as provided otherwise by applicable law, the
remuneration of the Receiver shall be fixed by the Security Trustee and
may be or include a commission calculated by reference to the gross
amount of all monies received or otherwise. Such remuneration and such
commission) (if any) shall be payable hereunder by Funding alone subject
always to Clause 8.3 (Funding Post-Enforcement Priority of Payments) and
the amount of such remuneration shall form part of the Funding Secured
Obligations and shall accordingly be secured on the Funding Charged
Property under the security created by or pursuant to this Funding Deed
of Charge.
9.6 POWERS OF THE RECEIVER: Subject in the case of the Funding Jersey
Secured Property to the provisions of Jersey Security Law, the Receiver
of Funding, in addition to any powers conferred on an administrative
receiver, receiver, manager or receiver and manager by statute or common
law, shall have the power to:
(a) take possession of, get in and collect the Funding Charged Property;
(b) subject as expressly provided in Clause 7.7 (Restriction on Disposal
of Funding Charged Property), sell, transfer, convey, license, release
or otherwise dispose of vary or deal with, and also to grant any
option to purchase, and to effect exchanges of, the whole or any part
of Funding Charged Property or any interest therein and to grant or
accept surrenders, disclaimers and variations in relation to or
otherwise affecting the Funding Charged Property in each case in such
manner, for such
23
consideration (if any) and generally upon such terms (including by deferred
payment or payment by instalments) as it may think fit and/or to concur in
any of the foregoing (and nothing shall preclude any such disposal being
made to a Funding Secured Creditor);
(c) carry out any transaction, scheme or arrangement which the Security
Trustee may, in its absolute discretion, consider appropriate with a
view to or in connection with the sale of the Funding Charged
Property;
(d) insure the Funding Charged Property against such risks and for such
amounts as the Security Trustee may consider prudent and to obtain
bonds and performance guarantees;
(e) otherwise protect, maintain or improve, the Funding Charged Property
or any part thereof in any manner and for any purpose whatsoever as it
shall think fit;
(f) transfer all or any of the Funding Charged Property and/or any of the
liabilities to any other company or body corporate, whether or not
formed or acquired for the purpose (and whether or not a subsidiary or
associated company of the Security Trustee or any other party to the
Funding Transaction Documents) and to form a subsidiary or
subsidiaries of Funding;
(g) carry on and manage or concur in managing or appoint a manager of, the
whole or any part of the business of Funding in such manner as it
shall in its absolute discretion think fit including the power to
enter into any contract and to perform, repudiate, rescind or vary any
contract to which Funding is a party;
(h) sell or concur in selling the whole or any part of Funding's business
whether as a going concern or otherwise;
(i) appoint, dismiss, engage or vary the terms of employment of any
employees, managers, agents or advisers of Funding upon such terms as
to remuneration and otherwise for such periods as it may in its
absolute discretion think fit;
(j) in connection with the exercise or proposed exercise of any of its
powers or in order to obtain payment of its remuneration or
reimbursement of its expenses (in each case, whether or not already
due), to borrow or raise money from any person, without security or on
the security of the Funding Charged Property (either in priority to
the security constituted by this Funding Deed of Charge or otherwise)
and generally in such manner and on such terms as it may think fit;
(k) bring, defend, submit to arbitration, negotiate, compromise, enforce,
abandon and settle actions, suits, claims and proceedings concerning
or affecting the Funding Charged Property or the security created
under or pursuant to this Funding Deed of Charge;
(l) exercise any powers, discretions, voting, conversion or other rights
or entitlements in relation to any of the Funding Charged Property or
incidental to the ownership of or
24
rights in or to any of the Funding Charged Property and to complete
or effect any transaction entered into by Funding or disclaim,
abandon or modify all or any of the outstanding contracts or
arrangements of Funding relating to or affecting the Funding Charged
Property;
(m) generally carry out, or cause to be carried out any transaction or
scheme or arrangement whatsoever, whether similar or not to any of the
foregoing, in relation to the Funding Charged Property which it may
consider expedient as effectual as if it were solely and absolutely
entitled to the Funding Charged Property;
(n) in connection with the exercise of any of its powers, execute or do,
or cause or authorise to be executed or done, on behalf of or in the
name of Funding or otherwise, as it may think fit, all documents, acts
or things, acts or things which it may consider appropriate;
(o) redeem, discharge or compromise any security whether or not having
priority to the security created hereunder;
(p) enter into covenants, guarantees, commitments, indemnities and other
obligations or liabilities as it shall think fit;
(q) pay and discharge out of the profits and income of the Funding Charged
Property and the monies to be made by it carrying on any such business
as aforesaid the expenses in and about the carrying on and management
of such business or in the exercise of any of the powers conferred by
Clause 9 (Receiver) or otherwise in respect of the Funding Charged
Property and all outgoings which it shall think fit to pay and to
apply the residue of the said profits, income or monies in the manner
provided by Clause 8.3 (Funding Post-Enforcement Priority of
Payments); and
(r) exercise any other powers, rights and/or remedies that may be
available at law or in equity including the powers referred to in
Section 1 of the Insolvency Act 1986.
9.7 SECURITY: The Security Trustee may from time to time and at any time
require any such Receiver to give security for the due performance of its
duties and may fix the nature and amount of the security to be so given
but the Security Trustee shall not be bound in any such case to require
any such security.
9.8 APPLICATION BY RECEIVER: Save so far as otherwise directed by the
Security Trustee, all monies from time to time received by such Receiver
shall be paid over to the Security Trustee to be held by it on the trusts
declared under this Funding Deed of Charge and to be distributed in
accordance with Clause 8.3 (Funding Post-Enforcement Priority of
Payments) and Schedule 3 (Funding Priority of Payments).
9.9 PAYMENT TO RECEIVER: The Security Trustee may pay over to such Receiver
any monies constituting part of the Funding Charged Property to the
intent that the same may be applied for the purposes of this Funding Deed
of Charge by such Receiver and the Security Trustee may from time to time
determine what funds the Receiver shall be at liberty to keep in hand
with a view to the performance of its duties as such Receiver.
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9.10 NO RESTRICTIONS: None of the restrictions imposed by the 1925 Act in
relation to the appointment of receivers or the giving of notice or
otherwise shall apply in relation to the Receiver.
9.11 PETITION FOR ADMINISTRATION: Upon receipt of notice of a petition to a
court of competent jurisdiction for an administration order in relation
to Funding or other order having substantially the same effect to be made
on application by a creditor or creditors of Funding, the Security
Trustee shall, subject to it being indemnified to its satisfaction, as
soon as practicable appoint a Receiver in accordance with this Funding
Deed or Charge (who shall, to the extent permitted by law, be an
"administrative receiver" under Section 29 (2) of the Insolvency Act
1986) of the whole of the Funding Charged Property and the Security
Trustee shall instruct the Receiver to attend at the hearing of the
petition and take such steps as are necessary to prevent the appointment
of an administrator. The Funding Secured Creditors shall co-operate and
do all acts and enter into such further documents, deeds or agreements as
the Security Trustee may deem necessary or desirable to ensure that an
administration order is not made and that an administrative receiver is
appointed.
10. FURTHER ASSURANCE AND POWER OF ATTORNEY
10.1 FURTHER ASSURANCE: Funding covenants with and undertakes to the Security
Trustee from time to time (notwithstanding that the security may not have
become enforceable and the Security Trustee may not have served an
Intercompany Loan Enforcement Notice) upon demand:
(a) to execute, at Funding's cost, any document or do any act or thing
which the Security Trustee or any Receiver may specify (including
executing such Security Interests over its rights in and over the
Funding Charged Property and any other assets of Funding in such form
as the Security Trustee and/or any Receiver may require) with a view
to:
(i) registering, perfecting, protecting or improving any charge
or security or Security Interest (including any Jersey
Security Interest) created or intended to be created by or
pursuant to this Funding Deed or Charge (including any act
or document which may be required or desirable under the
laws of any jurisdiction in which any property or assets may
be located in order to confer on the Security Trustee
security over such property and assets equivalent or similar
to the security intended to be conferred by or pursuant to
this Funding Deed of Charge) and in such form as the
Security Trustee or the Receiver may specify; and/or
(ii) facilitating the realisation of or enforcement of rights of,
all or any part of the Funding Charged Property or the
exercise, or proposed exercise, of any of the powers, duties
or discretions vested or intended to be vested in the
Security Trustee or such Receiver by or pursuant to this
Funding Deed of Charge or doing any act or thing deemed
necessary by the Security Trustee or the Receiver,
26
(b) to give or join in giving or procuring the giving of any notices
to any persons and obtain or procure that there is obtained any
necessary acknowledgements in relation to such notices, all in
such form as the Security Trustee or the Receiver may require and
at the cost of Funding,
and for the purpose of this Clause 10.1 a certificate in writing signed
by the Security Trustee to the effect that any particular assurance or
thing is required by it shall be conclusive evidence of that fact.
10.2 EXECUTION OF POWER OF ATTORNEY: Immediately upon execution of this Deed,
Funding shall execute and deliver to the Security Trustee the Power of
Attorney in or substantially in the form set out in Schedule 1.
10.3 FUNDING CHARGED PROPERTY ON TRUST: To the extent permitted to do so
under the Funding Transaction Documents, for the purpose of giving effect
to this Funding Deed of Charge, Funding hereby declares that, after
service of an Intercompany Loan Enforcement Notice, it will hold all the
Funding Charged Property (subject to the right of redemption) upon trust
to convey, assign or otherwise deal with such Funding Charged Property in
such manner and to such person as the Security Trustee shall direct
pursuant to this Funding Deed of Charge, and declares that it shall be
lawful for the Security Trustee to appoint a new trustee or trustees of
the Funding Charged Property in place of Funding.
11. CRYSTALLISATION
11.1 NOTICE: In addition and without prejudice to any other event resulting
in a crystallisation of the floating charge created by this Funding Deed
or Charge or any other right the Security Trustee may have, the Security
Trustee may, by notice in writing to Funding, declare that the floating
charge hereby created shall be converted into first specific fixed
charges over such of the undertaking, property and assets of Funding as
the Security Trustee may specify in such notice at any time if:
(a) a Potential Intercompany Loan Event of Default has occurred; or
(b) it believes that the Funding Charged Property or any part thereof is
in danger of being seized or sold under any form of distress,
execution or diligence levied or is otherwise in jeopardy or;
(c) it considers that it is desirable in order to protect the priority of
the security created by this Funding Deed of Charge.
11.2 AUTOMATIC CRYSTALLISATION: In addition and without prejudice to any
other event resulting in a crystallisation of the floating charge
contained herein and without prejudice to any rule of law which may have
a similar effect, the floating charge created under this Funding Deed of
Charge shall automatically and without notice be converted with immediate
effect into a fixed charge as regards:
(a) all property, assets or undertaking of Funding, subject to the
floating charge, upon:
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(i) the presentation of a petition for the compulsory winding-up
of Funding;
(ii) the convening of a meeting for the passing of a resolution
for the voluntary winding-up of Funding;
(iii) the presentation of a petition for the making of an
administration order in relation to Funding;
(iv) the presentation or making of an application for a warrant
of execution, writ of fieri facias, garnishee order or
charging order in respect of any of the assets of Funding
subject to the floating charge;
(v) the occurrence of an Intercompany Loan Event of Default;
and/or
(b) any property, assets or undertaking of Funding, which become subject
to an Encumbrance in favour of any person other than the Security
Trustee or which is/are the subject of a sale, transfer or other
disposition, in either case, contrary to the covenants and
undertakings contained in the Funding Transaction Documents,
immediately prior to such Encumbrance arising or such sale, transfer
or other disposition being made.
12. PROVISIONS RELATING TO THE SECURITY
12.1 CONTINUING SECURITY: The security created under or pursuant to this
Funding Deed of Charge shall be:
(a) in addition to and independent of and shall not operate so as to
prejudice or affect or merge in any other security, right of recourse
or other right whatsoever which may be held by any of the Funding
Secured Creditors or the Security Trustee on their behalf in respect
of the whole or any part of the Funding Secured Obligations and shall
not be affected by any release, reassignment or discharge of such
other security; and
(b) a continuing security for the Funding Secured Obligations and shall
remain in force as continuing security for the Funding Secured
Creditors and shall not be considered as satisfied or discharged by
any intermediate payment or settlement of the whole or any part of the
Funding Secured Obligations or the existence at any time of a credit
balance on any current or other account or any other matter or thing
whatsoever.
12.2 CONSOLIDATION: Section 93 of the 1925 Act shall not apply in relation to
any of the Security Interest contained in this Funding Deed of Charge.
12.3 RULING OFF: If the Security Trustee receives notice of any Encumbrance
affecting the whole or any part of the Funding Charged Property or any
security granted hereunder in contravention of the provisions hereof:
(a) the Security Trustee may open a new account in the name of Funding
and, if it does not, it shall nevertheless be deemed to have done so
at the time it received such notice; and
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(b) all payments made by Funding 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 Funding Secured Obligations as
at the time the Security Trustee received such notice.
12.4 AVOIDANCE OF PAYMENTS: Any settlement, discharge or release between (a)
Funding and (b) the Security Trustee or any Receiver (the "RELEVANT
PERSON(S)") shall be conditional upon no security or payment granted or
made to the Relevant Person(s) by Funding or any other person being
avoided or reduced by virtue of any provisions or enactments relating to
bankruptcy, insolvency or liquidation for the time being in force and, in
the event of such security or payment being so avoided or reduced, the
Relevant Person(s) shall be entitled to recover the value or amount of
such security or payment from Funding and from the security subsequently
as if such settlement, discharge or release had not occurred.
12.5 RETENTION OF CHARGES: If the Security Trustee shall have reasonable
grounds for believing that Funding may be insolvent or deemed to be
insolvent pursuant to the provisions of the Insolvency Act 1986 (and
production of a solvency certificate of a duly authorised officer of
Funding shall be prima facie evidence of the solvency of Funding) as at
the date of any payment made by Funding to the Security Trustee or
otherwise in respect of the Funding Secured Obligations 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 charges contained in
or created pursuant to this Funding Deed of Charge until the expiry of a
period of one month plus such statutory period within which any
assurance, security, guarantee or payment can be avoided or invalidated
after the payment and discharge in full of all Funding 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 Funding, or if Funding shall commence
to be wound up or to go into administration or any analogous proceedings
shall be commenced by or against Funding, 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 Funding Secured
Obligations.
12.6 POSSESSION: Entry into possession of the Funding Charged Property or any
part thereof shall not render the Security Trustee or any Receiver of
Funding liable to account as mortgagee in possession for anything except
actual receipts. If and whenever the Security Trustee or the Receiver
enters into possession of the Funding Charged Property, it shall be
entitled at any time to go out of such possession.
12.7 CHANGE OF NAME, ETC.: This Funding Deed of Charge shall remain valid and
enforceable notwithstanding any change in the name, composition or
constitution of the Security Trustee or Funding or any amalgamation,
merger or consolidation by the Security Trustee or Funding, with any
other corporation (whether, in the case of Funding, permitted under the
Funding Transaction Documents or not).
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13. PROTECTION OF THIRD PARTIES
13.1 NO 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 under this Funding
Deed of Charge has arisen or become exercisable, whether the Funding
Secured Obligations remain outstanding or have become payable, whether
the Security Trustee or the Receiver is authorised to act or as to the
propriety or validity of the exercise or purported exercise of any power;
and the title and the position of such a purchaser or other person shall
not be impeachable by reference to any of those matters and all the
protection to purchasers contained in Sections 104 and 107 of the 1925
Act shall apply to any person purchasing from or dealing with the
Security Trustee or any such Receiver.
13.2 RECEIPTS TO THIRD PARTIES: Upon any sale, calling in, collection,
enforcement or other realisation of the Funding Charged Property in
accordance with the terms hereof and upon any other dealing or
transaction under or pursuant to this Funding Deed of Charge, the receipt
of the Security Trustee or any Receiver shall be an absolute and a
conclusive discharge to a purchaser or other person dealing with the
Security Trustee or such Receiver and shall relieve it of any obligation
to see to the application of any monies paid to or by the direction of
the Security Trustee or such Receiver.
14. SET-OFF
The Security Trustee may at any time following the service of an
Intercompany Loan Enforcement Notice without notice and notwithstanding
any settlement of account or other matter whatsoever combine or
consolidate all or any existing accounts of Funding whether in its own
name or jointly with others and held by it or any Funding Secured
Creditor and may set-off or transfer all or any part of any credit
balance or any sum standing to the credit of any such account (whether or
not the same is due to Funding from the Security Trustee or relevant
Funding Secured Creditor and whether or not the credit balance and the
account in debit or the Funding 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 Funding Secured Obligations (and on
or at any time after the security created under this Funding Deed of
Charge has become enforceable in accordance with Clause 7.2 (Enforceable)
the Security Trustee may make such application notwithstanding any
specified maturity of any deposits) but subject always to the Funding
Priority of Payments and may in its absolute discretion estimate the
amount of any liability of Funding which is contingent or unascertained
and thereafter set-off such estimated amount and no amount shall be
payable by the Security Trustee to Funding unless and until all Funding
Secured Obligations have been ascertained and fully repaid or discharged.
15. REPRESENTATIONS AND COVENANTS
15.1 REPRESENTATIONS AND WARRANTIES:
(a) Funding hereby represents to the Security Trustee that it is, as of
the date hereof, the beneficial owner of all of the Funding Charged
Property free and clear of all liens, claims, charges or Encumbrances
except those specifically created by this Funding
30
Deed of Charge, and undertakes that it will retain all rights
associated with ownership of the Funding Charged Property free and
clear of all liens, claims, charges, Encumbrances except those
specifically created by this Funding Deed of Charge or any other
Transaction Document.
(b) Funding represents that it has taken all necessary steps to enable it
to create the Security Interests in respect of the Funding Charged
Property in accordance with this Funding Deed of Charge and has taken
no action or steps which will or may prejudice its right, title and
interest in, to and under the Funding Charged Property.
15.2 NEGATIVE COVENANTS: Funding hereby undertakes that, for so long as any
Funding Secured Obligation remains outstanding, Funding shall not, save
to the extent contemplated in or provided in the Funding Transaction
Documents or unless it has obtained the prior written consent of the
Security Trustee:
(a) open or maintain any bank account or deposit account with any bank or
any other financial institution other than the Funding Bank Accounts
or close the Funding Bank Accounts other than in accordance with the
Funding Transaction Documents provided that upon its entering into any
New Intercompany Loan Agreement Funding shall be entitled to establish
from time to time new Funding (Issuer) GIC Accounts;
(b) either in a single transaction or in a series of transactions, whether
related or not and whether voluntarily or involuntarily, sell,
transfer, lease or otherwise dispose of or grant any option over all
or any part of its assets, properties or undertakings or any interest,
estate, right, title or benefit therein or agree or purport to do any
of the foregoing, other than as provided for pursuant to the Funding
Transaction Documents;
(c) create or permit to subsist any Security Interest over or in respect
of any of its assets (unless arising by operation of law) other than
as provided pursuant to the Funding Transaction Documents provided
that upon its entering into any New Intercompany Loan Agreement
Funding shall be entitled to create the Security Interests
contemplated under the Deed of Accession;
(d) engage in any activities in the United States (directly or through
agents), nor derive any income from United States sources as
determined under United States income tax principles and will not hold
any property if doing so would cause it to be engaged or deemed to be
engaged in a trade or business within the United States as determined
under United States tax principles; or
(e) consent to any amendment to, or agree to waive or authorise any breach
of any provision of any of the Funding Transaction Documents without
the prior written consent of the Security Trustee.
15.3 POSITIVE COVENANTS: Funding covenants and undertakes with the Security
Trustee for the benefit of the Funding Secured Creditors that it shall:
31
(a) file or procure the filing with the Registrar of Companies pursuant to
Chapter I of Part XII of the Companies Act 1985 of duly completed
Forms 395 together with an executed original of this Funding Deed of
Charge and the required fee within 21 days after the date of this
Funding Deed of Charge;
(b) on the date hereof join with the Security Trustee in giving notice of
the assignments by way of security and the security created under or
pursuant to this Funding Deed of Charge to each of the Seller, the
Administrator and each Collection Bank and any other party to any
Funding Transaction Document not being a party to this Funding Deed of
Charge and, for the purposes of the Jersey Security Interests, to any
person not being a party to this Funding Deed of Charge from whom
Funding would have been entitled to claim the collateral (but for the
Jersey Security Interests), and on any date hereafter (to the extent
only that such notice and acknowledgement is not given under or
pursuant to this Funding Deed of Charge) join with the Security
Trustee in giving notice of the assignments by way of security and the
security created under this Funding Deed of Charge to any party to a
Funding Transaction Document entered into by Funding after the date
hereof and, for the purposes of the Jersey Security Interests, to any
person from whom Funding would have been entitled to claim the
collateral (but for the Jersey Security Interests), in each case in
the form (or substantially in the form) set out in Schedule 4 (Form of
Notice of Assignment);
(c) cause to be prepared and certified by its auditors in respect of each
Financial Year accounts in such form as will comply with relevant
legal and accounting requirements for the time being;
(d) at all times keep or procure the keeping of such books of account and
records as may be necessary to comply with all applicable laws and so
as to enable financial statements to be prepared and allow the
Security Trustee and any person or persons appointed by the Security
Trustee free access to such books of account and records at all
reasonable times during normal business hours upon reasonable notice
in writing, provided that such inspection shall only be for the
purposes of carrying out its duties under this Funding Deed of Charge
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 Funding Deed of Charge;
(e) give notice in writing to the Security Trustee of the occurrence of
any Intercompany Loan Event of Default, Potential Intercompany Loan
Event of Default immediately upon becoming aware thereof and without
waiting for the Security Trustee to take any further action;
(f) give to the Security Trustee (i) within seven 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 Funding 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
32
had not existed since the certification date of the previous
certificate (or in the case of the first such certificate the date
hereof) any Intercompany Loan Event of Default or any Potential
Intercompany Loan Event of Default (or if such then exists or existed
specifying the same) and that during the period from and including
the certification date of the last such certificate (or in the case
of the first such certificate the date hereof) to and including the
certification date of such certificate Funding has complied with all
its obligations contained in this Funding Deed of Charge and each of
the other Funding Transaction Documents or (if such is not the case)
specifying the respects in which it has not so complied;
(g) at all times execute all such further documents and do all such
further acts and things as may in the opinion of the Security Trustee
be necessary at any time or times to give effect to the terms and
conditions of this Funding Deed of Charge and the other Funding
Transaction Documents;
(h) at all times comply with the provisions of this Funding Deed of Charge
and of any other Funding Transaction Document which are expressed to
be binding on it and to observe and perform the same;
(i) so far as permitted by applicable law, at all times give to the
Security Trustee such information as it requires for the performance
of its functions;
(j) duly and promptly pay and discharge all Taxes imposed upon it or its
assets unless such Taxes are, in the opinion of the Security Trustee,
being contested in good faith by Funding;
(k) in the event of termination of the Bank Account Agreement (or any
Funding (Issuer) Bank Account Agreement), subject to and in accordance
with the provisions of the Bank Account Agreement (or such other
agreement) use its reasonable endeavours to enter into a replacement
Bank Account Agreement (or replacement Funding (Issuer) Bank Account
Agreement);
(l) in the event of termination of the Cash Management Agreement, subject
to and in accordance with the provisions of the Cash Management
Agreement, use its reasonable endeavours to enter into a replacement
Cash Management Agreement.
16. TERMS OF APPOINTMENT
16.1 By way of supplement to the Trustee Act 1925 and the Trustee Act 2000 it
is expressly declared as set out in the following provisions of this
Clause 16 (Terms of Appointment).
16.2 RELIANCE ON INFORMATION:
(a) The Security Trustee may in relation to this Funding Deed of Charge
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 in the United
Kingdom or elsewhere, whether obtained by the Security Trustee or any
Receiver, and shall not be responsible for any loss occasioned by so
acting.
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Any such opinion, advice, certificate or information may be sent or
obtained by letter, 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.
(b) The Security Trustee may call for and shall be entitled to rely upon,
unless any of its officers in charge of the administration of this
Funding Deed of Charge shall have actual knowledge or express notice
to the contrary, a certificate signed by two directors of Funding or a
certificate of any other person in respect of every matter and
circumstance for which a certificate is expressly provided for under
this Funding Deed of Charge or the other Funding Transaction Documents
and to call for and rely upon, unless any of its officers in charge of
the administration of this Funding Deed of Charge shall have actual
knowledge or express notice to the contrary, a certificate of Funding
or any other person as to any other fact or matter prima facie within
the knowledge of Funding 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.
(c) The Security Trustee may call for and shall be entitled to rely,
unless any of its officers in charge of the administration of this
Funding Deed of Charge shall have actual knowledge or express notice
to the contrary, upon any document provided to it by Funding, the
Mortgages Trustee or the Cash Manager in respect of every matter and
circumstance prima facie within the knowledge of Funding, the
Mortgages Trustee or the Cash Manager 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.
(d) The Security Trustee shall be entitled to act on any requests or
instructions of the Note Trustee without further enquiry and to assume
that any requests or instructions of the Note Trustee pursuant to this
Funding Deed of Charge or any of the other Transaction Documents are
(a) given in accordance with the provisions of this Funding Deed of
Charge and (b) given, where appropriate, in accordance with the
directions of the Noteholders of the relevant class, and the Security
Trustee shall not be liable to any person for any action taken or
omitted under or in connection with this Funding Deed of Charge in
accordance with any such instructions or requests. The Security
Trustee shall be entitled to act upon any notice, request or other
communication of any party to this Funding Deed of Charge for the
purposes of this Funding Deed of Charge or any of the Transaction
Documents if such notice, request or other communication purports to
be signed or sent by or on behalf of any authorised signatory of such
party.
16.3 POWERS AND DUTIES:
(a) 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 the nature,
34
status, creditworthiness or solvency of Funding. Each Funding Secured
Creditor shall be solely responsible for making its own independent
appraisal of and investigation into the financial condition,
creditworthiness, affairs, status and nature of Funding and the
Security Trustee shall not at any time have any responsibility for the
same and each Funding Secured Creditor shall not rely on the Security
Trustee in respect thereof.
(b) The Security Trustee shall not be responsible for the scope or
accuracy of any recitals, statements, warranty, representation or
covenant of any party (other than the Security Trustee) contained
herein or in any other Funding Transaction Document or any other
document entered into in connection therewith and shall assume the
accuracy and correctness thereof.
(c) The Security Trustee shall (save as expressly otherwise provided
herein or in the other Transaction Documents) as regards all trusts,
powers, authorities and discretions vested in it by this Funding Deed
of Charge, the other Transaction Documents or by operation of law,
have absolute and uncontrolled discretion as to the exercise or
non-exercise thereof and the Security Trustee shall not be responsible
for any liability that may result from the exercise or non-exercise
thereof but whenever the Security Trustee is under the provisions of
this Funding Deed of Charge bound to act at the request or direction
any party, the Security Trustee shall nevertheless not be so bound
unless first indemnified and/or provided with security to its
satisfaction against all actions, proceedings, claims and demands to
which it may render itself liable and all costs, charges, damages,
expenses and liabilities which it may incur by so doing.
(d) The Security Trustee may accept without enquiry, requisition or
objection such title as Funding may have to the Funding Charged
Property or any part thereof from time to time and shall not be
required to investigate or make any enquiry into or be liable for any
defect or failure in the right or title of Funding to the Funding
Charged Property or any part thereof from time to time whether or not
any defect was known to the Security Trustee or might have been
discovered upon examination, inquiry or investigation and whether or
not capable of remedy.
(e) The Security Trustee shall not be responsible for exercising the
rights of any of the parties under the Transaction Documents or
considering the basis upon which the approvals or consents are granted
by any of the parties under the Transaction Documents.
(f) The Security Trustee shall not be bound to give notice to any person
of the execution of this Funding Deed of Charge nor shall it have any
duty to make any investigation in respect of or in any way be liable
whatsoever for the registration, filing, protection or perfection of
any security constituted by this Funding Deed of Charge or the other
Funding Transaction Documents relating to the Funding Charged Property
or the priority of the security thereby and shall not be liable for
any failure, omission or defect in perfecting, protecting, procuring
the registration of or further assuring the
35
security created or purported to be created by or pursuant to this
Funding Deed of Charge or other documents entered into in connection
herewith.
(g) The Security Trustee shall not have any duty to make any investigation
in respect of or in any way be liable whatsoever for the failure to
call for delivery of documents of title to or require any transfers,
legal mortgages, charges or other further assurances in relation to
any of the assets the subject matter of this Funding Deed or Charge or
any other document.
(h) The Security Trustee shall be under no obligation to monitor or
supervise and shall not have any duty to make any investigation in
respect of or in any way be liable whatsoever for the performance or
observance by Funding or any other person of the provisions of this
Funding Deed of Charge or any other Funding Transaction Document and
shall be entitled to assume that each person is properly performing
and complying with its obligations.
(i) 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 the existence, accuracy or sufficiency of any legal or
other opinions, searches, reports, certificates, valuations or
investigations delivered or obtained or required to be delivered or
obtained at any time in connection with the Funding Charged Property.
(j) 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 Funding Deed of Charge or
under any of the other Funding Transaction Documents save where the
same arises as a result of the Security Trustee's fraud, wilful
default or gross negligence.
(k) The Security Trustee shall have no responsibility whatsoever to any
Funding Secured Creditor as regards any deficiency which might arise
because the Security Trustee is subject to any Tax in respect of the
Funding Charged Property or any part thereof or any income therefrom
or any proceeds thereof or is required by law to make any withholding
or deduction from any payment to any Funding Secured Creditor.
(l) The Security Trustee will not be responsible or liable for any
inadequacy or unfitness of any Funding Charged Property as security or
any decline in value or any loss realised upon any disposition of the
Funding Charged Property.
(m) The Security Trustee shall not be obliged to perfect the legal title
to any mortgage in its name or any of the related security if, in its
opinion, such perfection would or might result in the Security Trustee
becoming liable to or incurring any obligation to Funding under a
mortgage or any of the related security and/or in its opinion, there
is or would be insufficient cash to discharge, in accordance with the
provisions of this Funding Deed of Charge such liabilities or
obligations as and when they arise.
(n) Notwithstanding the generality of the above, the Security Trustee
shall not be responsible for the execution, legality, effectiveness,
adequacy, genuineness, validity,
36
enforceability or suitability of any of the Transaction Documents or
any of the documents relating to the Mortgage Loans or Mortgages or
other documents entered into in connection therewith or any security
or the priority thereof constituted or purported to be constituted
thereby or pursuant thereto nor shall it be responsible or liable to
any person because of any invalidity of any provisions of such
documents or the unenforceability thereof, whether arising from
statute, law or decision of any court and (without prejudice to the
generality of the foregoing) the Security Trustee shall not have any
responsibility for, or have any duty to make any investigation in
respect of or in any way be liable whatsoever for:
(i) the nature, status, creditworthiness or solvency of Funding or
any other person or entity who has at any time provided any
security or support whether by way of guarantee, charge or
otherwise in respect of any advance made to Funding;
(ii) the title, ownership, value, sufficiency or existence of any
Mortgaged Property;
(iii)the registration, filing, protection or perfection of any
Mortgage Loans or Mortgages or the priority of the security
created thereby whether in respect of any initial advance or any
subsequent advance or any other sums or liabilities;
(iv) the scope or accuracy of any representation, warranties or
statements made by or on behalf of Funding in any application for
any advance or in any mortgage or charge or any document entered
into in connection therewith;
(v) the performance or observance by Funding or any other person of
any provisions of any Mortgage Loans or Mortgages or in any
document entered into in connection therewith or the fulfilment
or satisfaction of any conditions contained therein or relating
thereto or as to the existence or occurrence at any time of any
default, event of default or similar event contained therein or
waiver or consent which has at any time been granted in relation
to any of the foregoing;
(vi) the existence, accuracy or sufficiency of any legal or other
opinions, searches, reports, certificates, valuations or
investigations delivered or obtained or required to be delivered
or obtained at any time in connection with Mortgage Loans or
Mortgages;
(vii)the title of the Seller or the Mortgages Trustee to Mortgage
Loans or Mortgages;
(viii) the suitability, adequacy or sufficiency of any Lending
Criteria and any arrears and enforcement procedures operated by
the Seller or compliance therewith or compliance with any
applicable criteria for any Further
37
Advances or the legality or recoverability or enforceability
thereof or the priority of the security in relation thereto;
(ix) the compliance of the provisions and contents of and the
manner and formalities applicable to the execution of the
Mortgage Loans or Mortgages and any documents connected
therewith or the making of any advance intended to be
secured thereby, with the relevant mortgage indemnity
policies and with any applicable laws or regulations
(including without prejudice to the generality of the
foregoing, the Consumer Credit Act 1974);
(x) the failure by the Seller to obtain or comply with any
licence, consent or other authority in connection with the
origination, sale or purchase of any of the Mortgage Loans
or Mortgages or the making of any advances in connection
therewith or the failure to effect or procure registration
of or to give notice to any person in relation to or
otherwise protect the security created or purported to be
created by or pursuant to any of the Mortgage Loans or
Mortgages or other documents entered into in connection
therewith;
(xi) the failure to call for delivery of documents of title to or
require any transfers, legal mortgages, charges or other
further assurances in relation to any of the assets the
subject matter of any of the Funding Transaction Documents
or any other document;
(xii) any accounts, books, records or files maintained by the
Seller, the Administrator or any other person in respect of
any of the Mortgage Loans or Mortgages; or
(xiii)any other matter or thing relating to or in any way
connected with any Mortgage Loans or Mortgages or any
document entered into in connection therewith whether or not
similar to the foregoing.
(o) The Security Trustee shall not be responsible for, nor shall it
have any liability with respect to, any loss or theft of the
Funding Charged Property and, without prejudice to any provisions
relating to insurance under the Funding Transaction Documents,
the Security Trustee shall not be under any obligation to insure
any of the Funding Charged Property or any deeds or documents of
title or other evidence in respect of the Security or to require
any other person to maintain such insurance and the Security
Trustee shall not be responsible for any loss, expense or
liability which may be suffered as a result of the lack of or
inadequacy of such insurance.
(p) The Security Trustee shall not be responsible for any liability
occasioned to the Funding Charged Property however caused,
whether by an act or omission of Funding or any other party to
the Transaction Documents or any other person (including any
bank, broker, depositary, warehouseman or other intermediary or
any clearing system or operator thereof) or otherwise
irrespective of whether the Funding Charged Property is held by
or to the order of any such persons, unless such loss is caused
by the fraud, wilful default or gross negligence of the Security
Trustee.
38
(q) The Security Trustee shall not be responsible for the receipt or
application by Funding of the proceeds of any Intercompany Loan
or any Start-up Loan.
(r) The Security Trustee shall have full power to determine all
questions and doubts arising in relation to any of the provisions
of this Funding Deed of Charge and the other Funding 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 Funding Secured Creditors.
(s) The Security Trustee may determine whether or not a default in
the performance by Funding of any obligation under the provisions
of this Funding Deed of Charge or any other Funding Transaction
Document is capable of remedy and/or whether the same is
materially prejudicial to the interests of the Funding Secured
Creditors or any of them and if the Security Trustee shall
certify that any such default is, in its opinion, not capable of
remedy and/or materially prejudicial to the interests of the
Funding Secured Creditors or any of them, such certificate shall
be conclusive and binding upon the Funding Secured Creditors.
(t) The Security Trustee shall be entitled to assume for the purposes
of exercising any power, trust, authority, duty or discretion
under or in relation to these presents or any of the other
Transaction Documents, that such exercise will not be materially
prejudicial to the interests of the Noteholders if the Rating
Agencies have confirmed in writing that the then current ratings
of the Notes would not be adversely affected by such exercise.
(u) Unless provided otherwise in any Transaction Document, where an
Intercompany Loan Event of Default or a Completion Event refers
to materiality or like terminology, any determination of
materiality or like terminology or the absence thereof will be in
the opinion of Funding as certified to the Security Trustee,
which certificate shall be conclusive evidence of the occurrence
of (or absence of) such circumstances.
(v) The Security Trustee shall have no liability whatsoever for any
loss, cost, damages or expenses directly or indirectly suffered
or incurred by any person as a result of the delivery by the
Security Trustee to Funding or any other party to the Transaction
Documents of a certificate as to material prejudice or as to no
material prejudice pursuant to the Conditions or any Transaction
Document and any such certificate shall be binding on the Funding
Secured Creditors.
(w) The Security Trustee may, in the conduct of its trust business,
instead of acting personally, employ and pay an agent, whether or
not a lawyer or other professional person, to transact or
conduct, or concur in transacting or conducting, any business and
to do or concur in doing all acts required to be done by the
Security Trustee (including the receipt and payment of monies).
The Security Trustee shall not be responsible for any misconduct
or omission on the part of any person appointed by it or be bound
to supervise the proceedings or acts of any such persons and
shall not be
39
responsible for any loss, costs, liability or expenses incurred
by any misconduct or default on the part of any such person,
provided that the Security Trustee has exercised reasonable care
in selecting any such agent.
(x) Any trustee of this Funding Deed of Charge being a lawyer,
accountant, broker or other person engaged in any profession or
business shall be entitled to charge and be paid all usual
professional and other charges for business transacted and acts
done by him or his firm in connection with the trusts of this
deed and the Funding Transaction Documents and also his charges
in addition to disbursements for all other work and business done
and all time spent by him or his firm in connection with matters
arising in connection with this Funding Deed of Charge and the
Funding Transaction Documents, including matters which might or
should have been attended to in person by a trustee not being a
lawyer, accountant, broker or other professional person.
(y) The Security Trustee may, in the execution of all or any of the
trusts, powers, authorities and discretions vested in it by this
Funding Deed of Charge or any of the other Funding 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
Funding 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 Funding Deed of Charge or any of the other
Funding 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 Funding Secured Creditors,
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, shall oblige 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, costs, liability
or expenses incurred by any misconduct or default on the part of,
such delegate or sub-delegate. The Security Trustee shall give
prompt notice to Funding of the appointment of any delegate as
aforesaid and shall procure that any delegate shall also give
prompt notice of the appointment of any sub-delegate to Funding.
(z) Where it is necessary or desirable for any purpose in connection
with this Funding Deed of Charge to convert any sum from one
currency to another it shall (unless otherwise provided by this
Funding Deed of Charge or required by law) be converted at such
rate or rates in accordance with such method and as at such date
for the determination of such rate of exchange, as may be
specified by the 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 and any rate, method and date so specified
shall be binding on Funding and the Funding Secured Creditors.
(aa) Any consent given by the Security Trustee for the purposes of
this Funding Deed of Charge or any of the other Transaction
Documents may be given on such terms and
40
subject to such conditions (if any) as the Security Trustee
thinks fit and may be given retrospectively.
(bb) 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 the Security Trustee was
grossly negligent in ascertaining the pertinent facts.
(cc) The Security Trustee shall not (unless required by law or ordered
to do so by a court of competent jurisdiction) be required to
disclose to any Funding Secured Creditor or other person any
information made available to the Security Trustee by Funding or
any other person in connection with the trusts of this Funding
Deed of Charge or the Funding Transaction Documents and no
Funding Secured Creditor or other person shall be entitled to
take any action to obtain from the Security Trustee any such
information.
(dd) Notwithstanding anything else in this Funding Deed of Charge or
the other Funding Transaction Documents, the Security Trustee may
refrain from doing anything which would or might in its opinion
be contrary to any law of any jurisdiction or any directive or
regulation of any governmental agency or which would or might
otherwise render it liable to any person and may do anything
which is, in its opinion, necessary to comply with any such law,
directive or regulation.
(ee) The powers conferred by this Funding Deed of Charge upon the
Security Trustee or any Receiver shall be in addition to and not
in substitution for any powers which may from time to time be
conferred on the Security Trustee or any such Receiver by statute
or under common law.
(ff) The Security Trustee has no duties or responsibilities except
those expressly set out in this Funding Deed of Charge or in the
Funding Transaction Documents.
(gg) The Security Trustee shall not be responsible for the maintenance
of the rating of the Notes.
16.4 NO FINANCIAL LIABILITY: Notwithstanding anything else herein contained,
the Security Trustee may refrain from taking any action or exercising any
right, power, authority or discretion vested in it under this Funding Deed
of Charge, any other Transaction Document, any Funding Charged Property or
any other agreement relating to the transactions herein or therein
contemplated until it has been indemnified and/or secured to its
satisfaction against and all liabilities which might be brought, made or
conferred against or suffered, incurred or sustained by it as a result.
Notwithstanding any other provision of this Funding Deed of Charge or of
any other Transaction Document, nothing shall require the Security Trustee
to risk its own funds or otherwise incur any financial liability in the
performance of any of its duties or in the exercise of any of its rights
or powers or otherwise in connection with this Funding Deed of Charge or
any other Funding 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
41
assured to it. Further, without prejudice to the right of indemnity by law
given to trustees, Funding hereby covenants further, to reimburse, pay or
discharge (on a full indemnity basis) on demand the Security Trustee and
every attorney, receiver, manager, agent, delegate or other person
appointed by it under this Funding Deed of Charge from and against all
liabilities, losses, damages, costs, expenses, actions, proceedings,
claims and demands (including without limitation legal fees and any
applicable value added tax or similar tax) incurred by or made against it
or him in the execution or purported execution of the trusts of this
Funding Deed of Charge or of its or his powers or in respect of any matter
or thing done or omitted in any way relating to this Funding Deed of
Charge or any of the other Funding Transaction Documents except such as
may arise from the gross negligence or wilful misconduct or fraud of any
such indemnified person.
16.5 ASSUMPTION OF NO DEFAULT:
(a) The Security Trustee shall not be bound to ascertain whether any
Intercompany Loan Event of Default or Potential Intercompany Loan
Event of Default has happened and, until it shall have actual
knowledge or express notice to the contrary, the Security Trustee
shall be entitled to assume that no such Intercompany Loan Event
of Default or Potential Intercompany Loan Event of Default has
happened and that Funding is observing and performing all the
obligations on its part contained in each Intercompany Loan
Agreement and no event has happened as a consequence of which any
Intercompany Loan may become repayable.
(b) The Security Trustee shall not be bound to ascertain whether any
Completion Event or any failure by the Seller to comply with any
of its obligations under the Mortgage Sale Agreement or any event
which with the giving of notice or expiry of any grace period or
certification as specified in respect of such Completion Event or
Seller failure of its obligations would constitute the same has
happened and, until it shall receive express notice to the
contrary from any party to the Transaction Documents, the
Security Trustee shall be entitled to assume that no such
Completion Event or Seller failure of its obligations or such
other event as described above has happened and that Funding, the
Administrator or the Seller (as the case may be) is observing and
performing all of their respective obligations contained in each
of the Transaction Documents to which they are a party.
(c) The Security Trustee shall not be bound to ascertain whether any
material breach of any of the representations and warranties
referred to in Clause 8 of the Mortgage Sale Agreement or any
event which with the giving of notice or expiry of any grace
period or certification as specified in such representation and
warranties would constitute the same has happened and, until it
shall receive express notice to the contrary from any party to
the Transaction Documents, the Security Trustee shall be entitled
to assume that no such breach or such other event as described
above has happened and that the Seller is observing and
performing its obligations contained in the Mortgage Sale
Agreement.
(d) The Security Trustee shall not be bound to ascertain whether any
termination event under the Administration Agreement or any event
which with the giving of notice or
42
expiry of any grace period or certification as specified in
respect of such termination event would constitute the same has
happened and, until it shall receive express notice to the
contrary pursuant to Clause 19.5 of the Administration Agreement,
the Security Trustee shall be entitled to assume that no such
termination event under the Administration Agreement or such
other event as described above has happened and that the
Administrator is observing and performing all of its obligations
contained in each of the Transaction Documents to which it is a
party.
(e) The Security Trustee shall not be bound to ascertain whether any
Cash Manager Termination Event or any event which with the giving
of notice or expiry of any grace period or certification as
specified in such Cash Manager Termination Event would constitute
the same has happened and, until it shall receive express notice
to the contrary pursuant to Clause 12.4 of the Cash Management
Agreement, the Security Trustee shall be entitled to assume that
no such Cash Manager Termination Event or such other event as
described above has happened and that the Cash Manager is
observing and performing its obligations contained in the Cash
Management Agreement.
(f) The Security Trustee shall not be bound to ascertain whether any
Termination Event under the Bank Account Agreement or the Funding
(First Issuer) Bank Account Agreement or any event which with the
giving of notice or expiry of any grace period or certification
as specified in such Bank Account Agreement or such Funding
(First Issuer) Bank Account Agreement, as applicable, would
constitute the same has happened and, until it shall receive
express notice to the contrary pursuant to Clause 8.3 of the Bank
Account Agreement or the Funding (First Issuer) Bank Account
Agreement, as applicable, the Security Trustee shall be entitled
to assume that no such termination event under the Bank Account
Agreement or the Funding (First Issuer) Bank Account Agreement or
such other event as described above has happened and that the
relevant Account Bank is observing and performing its obligations
contained in the Bank Account Agreement or the Funding (First
Issuer) Bank Account Agreement, as applicable.
(g) The Security Trustee shall not be bound to ascertain whether any
Flexible Mortgages Loans or part thereof is unenforceable and/or
does not fall within the first ranking charge by way of legal
mortgage over the relevant Mortgaged Property has happened and,
until it shall receive express notice to the contrary from any
party to the Transaction Documents, the Security Trustee shall be
entitled to assume that no such event has happened.
16.6 COMMERCIAL TRANSACTIONS: The Security Trustee shall not, and no
director, officer or employee of any corporation being a Security Trustee
hereof shall by reason of the fiduciary position of the Security Trustee
be in any way precluded from making any commercial contracts or entering
into any commercial transactions with any party to the Funding
Transaction Documents, whether directly or through any subsidiary or
associated company, or from accepting the trusteeship of any other
debenture stock, debentures or securities of any party to the Funding
Transaction Documents, and without prejudice to the generality of these
43
provisions, it is expressly declared that such contracts and transactions
include any contract or transaction in relation to the placing,
underwriting, purchasing, subscribing for or dealing with or lending
monies upon or making payments in respect of or any stock, shares,
debenture stock, debentures or other securities of any party to the
Funding Transaction Documents or any contract of banking or insurance of
any party to the Funding Transaction Documents and neither the Security
Trustee nor any such director, officer or employee shall be accountable to
any Funding Secured Creditor or to any party to the Funding Transaction
Documents for any profit, fees, commissions, interest, discounts or share
of brokerage earned, arising or resulting from any such contracts or
transactions, and the Security Trustee and any such director, officer or
employee shall also be at liberty to retain the same without accounting
therefor.
16.7 TRUSTEE LIABLE FOR NEGLIGENCE: None of the provisions of this Funding
Deed of Charge 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 under this Funding Deed of Charge, having regard to the
provisions of this Funding Deed of Charge 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 gross negligence,
default, breach of duty or breach of trust of which it may be guilty in
relation to its duties under this Funding Deed of Charge.
16.8 DELEGATION OF CERTAIN FUNCTIONS TO AUTHORISED THIRD PARTY: Without
prejudice to the provisions of this Funding Deed of Charge, references to
the Security Trustee taking action in connection with any duty of the
Seller or Administrator under any Transaction Document shall be read
subject to clause 25 and Schedule 4 of the Administration Agreement.
16.9 SECURITY TRUSTEE TO ACT ON NOTE TRUSTEE DIRECTION: Notwithstanding any
other provision in any other Funding Transaction Document, the Funding
Secured Creditors and Funding acknowledge that when exercising its
opinion and/or when exercising the rights, benefits, power, trusts,
authorities, directions and obligations expressed to be granted by this
Funding Deed of Charge, the other Funding Transaction Documents or by
operation of law, the Security Trustee shall (by virtue of the assignment
by way of security by each Issuer of its right, title, interest and
benefit in its related Intercompany Loan to the Note Trustee pursuant to
an Issuer Deed of Charge) act only at the request or direction of the
Note Trustee and shall not be responsible for any loss, costs, damages,
expenses or inconveniences that may result from the exercise or non-
exercise thereof PROVIDED THAT:
(a) if there is a conflict in directions pursuant to the resolutions of
holders of Notes issued by more than one Issuer, the Note Trustee
shall have regard only to the directions of the Issuer or Issuers
that has or have the highest ranking class of Notes outstanding
(meaning the Class A Notes for so long as there are Class A Notes
outstanding and thereafter the Class B Notes so long as there are no
Class A Notes outstanding, and thereafter the Class C Notes so long
as there are neither Class A Notes nor Class B Notes outstanding)
(the "PRINCIPAL DIRECTIONS"); and
(b) if there is any conflict between the Principal Directions, due to two
Issuers having Notes of the same class as their highest ranking
class, the Note Trustee shall have
44
regard only to the Principal Directions representing the greatest
aggregate principal amount outstanding of the highest ranking class of
Notes,
AND PROVIDED FURTHER THAT
(i) the Security Trustee shall not be bound to act unless it is
first indemnified and/or secured to its satisfaction against
all actions, proceedings, claims and demands to which it may
render itself liable and all costs, charges, damages,
expenses and liabilities which it may incur by so doing; and
(ii) at any time when the Intercompany Loans have been repaid in
full and/or there is no further claim outstanding under any
Intercompany Loan Agreement, this Clause 16.9 (Security
Trustee to act on Note Trustee's Discretion) shall no longer
apply and the Security Trustee shall no longer be required
to act at the request or direction of the Note Trustee but
instead shall act at the request or direction of the Funding
Secured Creditor which ranks next highest in the Funding
Post-Enforcement Priority of Payments.
17. MODIFICATION AND WAIVER
17.1 MODIFICATIONS TO TRANSACTION DOCUMENTS: Subject as expressly provided
otherwise in any Transaction Document, the Security Trustee (at the
direction of the Note Trustee) may from time to time and at any time
without any consent or sanction of the Funding Secured Creditors concur
with any person in making or sanctioning any modification or amendment:
(a) 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 that such modification will
not be materially prejudicial to the interests of the
Noteholders;
(b) 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; or
(c) to any of the Transaction Documents which it may be necessary to
make or which are required by the Rating Agencies in respect of
any New Issuer or any other person who has executed a Deed of
Accession pursuant to Clause 3 (Funding Security) hereto or
Clause 2.2 (New Intercompany Loan Agreement) of the Intercompany
Loan Terms and Conditions.
Any such modification or amendment shall be binding on Funding and the
Funding Secured Creditors and, unless the Security Trustee otherwise
agrees, notice thereof shall be given by Funding to the Funding Secured
Creditors as soon as practicable thereafter. Each of the Funding Secured
Creditors agrees from time to time to do and perform such other and
further acts and execute and deliver any and all such other instruments
as may be required to carry out and effect the intent and purpose of this
Clause 17.1 (Modifications to Transaction Documents).
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17.2 AUTHORISATION OR WAIVER OF BREACH: Subject to Clause 14.10
(Acceleration) of the Intercompany Loan Terms and Conditions, the
Security Trustee (at the direction of the Note Trustee) may, without the
consent of the Funding Secured Creditors, without prejudice to its right
in respect of any further or other breach, from time to time and at any
time, but only if and in so far as in its opinion the interests of the
Noteholders 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 Funding Secured Creditors
and, unless the Security Trustee otherwise agrees, notice thereof shall
be given by Funding to the Funding Secured Creditors as soon as
practicable thereafter.
17.3 AMENDMENTS AND WAIVER: Except as expressly provided in the preceding
provisions of this Clause 17 or any other provision of this Funding Deed
of Charge, no amendment or waiver of any provision of this Funding Deed
of Charge nor consent to any departure by any of the parties therefrom
shall in any event be effective unless the same shall be in writing and
signed by each of the parties hereto. In the case of a waiver or consent,
such waiver or consent shall be effective only in the specific instance
and as against the party or parties giving it for the specific purpose
for which it is given.
18. REMUNERATION OF THE SECURITY TRUSTEE
18.1 REMUNERATION: Funding shall (subject as hereinafter provided) pay to the
Security Trustee an annual fee of such amount as shall from time to time
be agreed by Funding and the Security Trustee. Such remuneration shall be
payable on Payment Dates subject to and in accordance with the Funding
Pre-Enforcement Revenue Priority of Payments or, as the case may be, the
Funding Post-Enforcement Priority of Payments. Such remuneration shall
accrue from day to day and be payable up to and including the date when
all of the Funding Secured Obligations have been paid or discharged and
the Security Trustee has released, reassigned and/or discharged the
Funding Charged Property as provided in Clause 4 (Release of Funding
Charged Property).
18.2 ADDITIONAL REMUNERATION: In the event of the occurrence of an
Intercompany Loan Event of Default or a Potential Intercompany Loan Event
of Default or the Security Trustee giving an Intercompany Loan
Enforcement Notice or the Security Trustee using its reasonable
endeavours to appoint and maintain an Authorised Third Party or
considering it expedient or necessary or being requested by Funding to
undertake duties which the Security Trustee and Funding agree to be of an
exceptional nature or otherwise outside the scope of the normal duties of
the Security Trustee under this Funding Deed of Charge, Funding shall pay
to the Security Trustee such additional remuneration as shall be agreed
between them. In the event of the Security Trustee failing to agree upon
whether such duties shall be of an exceptional nature or otherwise
outside the scope of the normal duties of the Security Trustee under this
Funding Deed of Charge, or upon such additional remuneration, then such
matter shall be determined by a merchant bank (acting as an expert and
not as an arbitrator) selected by the Security Trustee and approved by
Funding or, failing such approval, nominated (on the application of the
Security Trustee) by the President for the time being of the Law Society
of
46
England and Wales (the expense involved in such nomination and the fees of
such merchant bank being payable by Funding) and the determination of any
such merchant bank shall be final and binding upon the Security Trustee
and Funding.
18.3 EXPENSES: Funding shall on written request, pay all other costs, charges
and expenses (including legal and travelling expenses and the cost of
using its reasonable endeavours to appoint and maintain an Authorised
Third Party) (against production of invoices) which the Security Trustee
or any persons appointed by it to whom any trust, power, authority or
discretion may be delegated by it in relation to this Funding Deed of
Charge may properly incur including but not limited to:
(a) the negotiation, preparation and execution of, the exercise of its
powers and the performance of its duties under this Funding Deed of
Charge and any other Funding Transaction Documents to which the
Security Trustee is a party;
(b) the use of its reasonable endeavours to appoint and maintain an
Authorised Third Party pursuant to Schedule 4 of the Administration
Agreement;
(c) the use of its reasonable endeavours to appoint a substitute Cash
Manager pursuant to the Cash Management Agreement;
(d) the use of its reasonable endeavours to appoint a substitute
Administrator pursuant to the Administration Agreement;
(e) the preservation or attempted preservation of any of the charges
contained in or granted pursuant to this Funding Deed of Charge or
any of the Funding Charged Property;
(f) any other action taken by or on behalf of the Security Trustee with a
view to the recovery of the Funding Secured Obligations or for
enforcing the security constituted in this Funding Deed of Charge;
and
(g) legal and travelling expenses or documentary expenses paid by the
Security Trustee in connection with the Funding Charged Property.
18.4 INDEMNITY: Funding shall indemnify the Security Trustee and any Receiver
in respect of all proceedings, claims, actions, demands, losses, costs,
charges, 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 Funding
Deed of Charge and any of the other Funding 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 Funding Deed of Charge and any of the other
Funding Transaction Documents to which the Security Trustee is a party
save where the same arises as a result of the fraud, gross negligence or
wilful default by the Security Trustee or, as
47
the case may be, such Receiver or any of their officers or employees or
the breach by the Security Trustee of the terms of this Funding Deed of
Charge.
18.5 STAMP DUTIES: Funding shall, to the extent permitted by applicable
United Kingdom law, pay all stamp duties and other duties or taxes of a
similar nature, including for the avoidance of doubt any duty levied
under the Stamp Act 1891 as amended and supplemented, (if any) payable on
or arising out of or in consequence of:
(a) the creation of the security constituted by or pursuant to this
Funding Deed of Charge; and
(b) the execution and delivery of this Funding Deed of Charge and
documents executed pursuant hereto and the other Funding
Transaction Documents (except where the obligation to pay all
stamp duties and other duties or taxes of a similar nature is
expressed to be the obligation of a person other than Funding).
18.6 VAT: All sums payable by Funding under this Funding Deed of Charge are
deemed to be exclusive of any amount in respect of VAT. If, pursuant to
any provision of this Funding Deed of Charge, the Security Trustee or the
Receiver of Funding makes any taxable or deemed taxable supply to
Funding, then Funding shall pay to the Security Trustee or the Receiver
of Funding (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.
18.7 INTEREST: Subject as provided in Clause 18.8 (Payment), all sums payable
by Funding under this Clause 18 (Remuneration of the Security Trustee)
shall be payable on demand or, in the case of any remuneration payable
under Clause 18.1 (Remuneration) on the due date specified therein and
shall carry interest at the rate per annum, which is one per cent. per
annum above the base rate from time to time of the National Westminster
Bank Plc from the date on which they were paid, charged or incurred by
the Security Trustee or any Receiver or, in the case of remuneration, the
due date for payment thereof, to the date of actual payment.
18.8 PAYMENT: Notwithstanding the other provisions of this Funding Deed of
Charge, any amount owing by Funding pursuant to this Clause 18
(Remuneration of the Security Trustee) shall only be payable by Funding
subject to and in accordance with the Funding Pre-Enforcement Revenue
Priority of Payments or, as the case may be, the Funding Post-Enforcement
Priority of Payments.
18.9 SURVIVAL: Unless otherwise specifically stated in any discharge of this
Funding Deed of Charge, the provisions of this Clause 18 (Remuneration of
the Security Trustee) shall continue in full force and effect
notwithstanding such discharge.
18.10 JERSEY LAW WAIVERS:
(a) Any right which at any time Funding has under the existing or
future laws of Jersey whether by virtue of the droit de discussion
or otherwise to require that recourse be had to the assets of any
other person before any claim is enforced against Funding in
48
respect of the obligations hereby assumed by Funding is hereby
abandoned and waived.
(b) Funding undertakes that if at any time any person indemnified sues
Funding in respect of any such obligations and the person in
respect of whose obligations the indemnity is given is not sued
also, Funding shall not claim that such person be made a party to
the proceedings and Funding agrees to be bound by this indemnity
whether or not it is made a party to legal proceedings for the
recovery of the amount due or owing to the person indemnified, as
aforesaid, by the person in respect of whose obligations the
indemnity is given and whether the formalities required by any law
of Jersey whether existing or future in regard to the rights or
obligations of securities shall or shall not have been observed.
(c) Any right which Funding may have under the existing or future
laws of Jersey whether by virtue of the droit de division or
otherwise to require that any liability under this indemnity be
divided or apportioned with any other person or reduced in any
manner whatsoever is hereby abandoned and waived.
19. APPOINTMENT, REMOVAL AND RETIREMENT OF SECURITY TRUSTEE
19.1 POWER OF FUNDING: The power of appointing a new Security Trustee and
removing the Security Trustee or any new Security Trustee shall be vested
in Funding but such appointment or removal must be approved by the Note
Trustee, after consultation with each of the Funding Secured Creditors
(such approval not to be unreasonably withheld or delayed). A trust
corporation may be appointed sole trustee hereof but subject thereto
there shall be at least two trustees hereof, one at least of which shall
be a trust corporation. Any appointment of a new Security Trustee and
any retirement of an existing Security Trustee hereof shall as soon as
practicable thereafter be notified by Funding to the Funding Secured
Creditors.
19.2 U.S. INVESTMENT COMPANY ACT: Any new Security Trustee must (i) meet the
requirements of section 26(a)(1) of the U.S. Investment Company Act of
1940; (ii) not be an affiliate (as defined in Rule 405 of the U.S.
Securities Act of 1933, as amended) of any relevant Issuer or of any
person involved in the organisation or operation of any relevant Issuer;
(iii) not offer or provide credit or credit enhancement to any relevant
Issuer; and (iv) execute an agreement or instrument concerning the Notes
containing provisions to the effect set forth in section 26(a)(3) of the
U.S. Investment Company Act of 1940.
19.3 POWERS OF SECURITY TRUSTEE TO APPOINT: Notwithstanding the provisions of
Clause 19.1 (Power of Funding), the Security Trustee may (as attorney for
Funding) upon giving prior notice to Funding but without the consent of
Funding or the Funding Secured Creditors appoint any person established
or resident in any jurisdiction (whether a trust corporation or not) to
act either as a separate trustee or as a co-trustee jointly with the
Security Trustee:
(a) if the Security Trustee considers such appointment to be in the
interests of the Funding Secured Creditors; or
49
(b) for the purposes of conforming to any legal requirement,
restriction or condition in any jurisdiction in which any
particular act or acts are to be performed or any Funding 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 either of a judgment already
obtained or of the provisions of this Funding Deed of Charge or any
of the other Funding Transaction Documents to which the Security
Trustee is a party or obligations arising pursuant thereto or of
any of the security constituted by or pursuant to this Funding Deed
of Charge.
Funding 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 Funding Deed of Charge and any other Funding Transaction Document 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 Funding Deed of Charge or any of the other
Funding 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 Funding Deed of Charge be treated as costs, charges and expenses
incurred by the Security Trustee.
19.4 MULTIPLE TRUSTEES: Whenever there shall be more than two trustees
hereof, the majority of such trustees shall (provided such majority
includes a trust corporation) be competent to execute and exercise all
the trusts, powers, authorities and discretions vested by this Funding
Deed of Charge and any of the other Funding Transaction Documents in the
Security Trustee generally.
19.5 RETIREMENT OF SECURITY TRUSTEE: Subject as provided in Clause 19.6
(Retirement or Removal not Effective), any Security Trustee for the time
being of this Funding Deed of Charge may retire at any time upon giving
not less than three calendar months' prior notice in writing to Funding
without assigning any reason therefor and without being responsible for
any costs resulting from such retirement.
19.6 RETIREMENT OR REMOVAL NOT EFFECTIVE: The retirement or removal of any
Security Trustee shall not become effective unless (1) there remains at
least one trustee hereof being a trust corporation in office upon such
retirement or removal and (2) there remains at least one trustee of each
Issuer Trust Deed and Issuer Deed of Charge being the same trust
corporation. Funding covenants that, in the event of a trustee (being a
sole trustee or the only trust corporation) giving notice under Clause
19.5 (Retirement of Security Trustee) or being removed as referred to in
Clause 19.1 (Power of Funding) it shall use its best endeavours to
procure a new Security Trustee of this Deed (being a trust corporation)
to be appointed as soon as reasonably practicable thereafter (for the
avoidance of doubt, in the same terms as this Funding Deed of Charge).
If within 60 days of having given notice of its intention to retire,
Funding has failed to appoint a replacement Security Trustee, the
outgoing Security Trustee will be entitled to appoint its successor
(provided that the Rating Agencies confirm that the
50
then current ratings of the Notes shall not be either downgraded,
reviewed or withdrawn as a result of such appointment).
19.7 SECURITY TRUSTEE AND NOTE TRUSTEE: If the Security Trustee retires or is
removed in accordance with the provisions of this Clause 19 (Appointment,
Removal and Retirement of Security Trustee) then the Note Trustee shall
retire at the same time in accordance with the provisions of the First
Issuer Trust Deed and each other Issuer Trust Deed. If the Note Trustee
retires or is removed in accordance with the provisions of the First
Issuer Trust Deed and each other Issuer Trust Deed, then the Security
Trustee shall retire at the same time in accordance with the provisions
of this Clause 19 (Appointment, Removal and Retirement of Security
Trustee). In either case the successor Security Trustee and the successor
Note Trustee shall be the same person or persons.
19.8 MERGER: Any corporation into which the Security Trustee may be merged or
converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the
Security Trustee shall be a party, or any corporation succeeding to all
or substantially all the corporate trust business of the Security
Trustee, shall be the successor of the Security Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under
this Clause, without the execution or filing of any paper or any further
act on the part of any of the parties hereto.
20. MISCELLANEOUS PROVISIONS
20.1 EVIDENCE OF INDEBTEDNESS: In any action, proceedings or claim relating
to this Funding Deed of Charge or the charges contained in this Funding
Deed of Charge, a statement as to any amount due to any Funding Secured
Creditor or of the Funding 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 Funding Secured Creditor which is certified
as being correct by an officer of the Security Trustee or an officer of
the relevant Funding Secured Creditor shall, save in the case of manifest
error, be conclusive evidence that such amount is in fact due and
payable.
20.2 LIABILITY: All the liabilities and obligations of Funding under or by
virtue of this Funding Deed of Charge shall not be impaired by:
(a) any failure of this Funding Deed of Charge to be legal, valid,
binding and enforceable as regards Funding whether as a result of a
lack of corporate powers or of directors' authority, defective
execution or for any other reason whatsoever;
(b) any giving of time, forbearance, indulgence or waiver as regards
Funding;
(c) a discharge or release of Funding; or
(d) any other matter or event whatsoever whether similar to the
foregoing or not which might have the effect of impairing all or
any of its liabilities or obligations except proper and valid
payment or discharge of all Funding Secured Obligations and amounts
whatsoever which this Funding Deed of Charge provides are to be
paid by
51
Funding or an absolute discharge or release of Funding signed by
the Funding Secured Creditors and the Security Trustee.
20.3 FUNDING SECURED CREDITORS: Each Funding Secured Creditor shall be bound
by the provisions of this Funding Deed of Charge as if it contained
covenants by each Funding Secured Creditor in favour of the Security
Trustee and every other Funding Secured Creditor to observe and be bound
by all the provisions of this Funding Deed expressed to apply to Funding
Secured Creditors.
21. RIGHTS CUMULATIVE
The respective rights of the Security Trustee, the Note Trustee, the
Funding Secured Creditors and any Receiver to this Funding Deed of Charge
are cumulative and may be exercised as often as each considers
appropriate and are in addition to their respective rights under the
general law. No failure on the part of the Security Trustee, the Note
Trustee, the Funding Secured Creditors or any Receiver to exercise, and
no delay in exercising, any right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any
other right. The remedies in this Deed are cumulative and not exclusive
of any remedies provided by law.
22. ASSIGNMENT
None of the Funding Secured Creditors may assign, encumber or transfer
all or any part of its rights or benefits and/or transfer its obligations
under this Funding Deed of Charge without the prior written consent of
the Security Trustee, save that each relevant Issuer may assign its
rights under this Funding Deed of Charge without such consent to the Note
Trustee under the First Issuer Deed of Charge or the relevant Issuer Deed
of Charge applicable to such New Issuer, as the case may be.
23. NON PETITION COVENANT; CORPORATE OBLIGATIONS
23.1 Each of the parties hereto hereby agrees that it shall not institute
against Funding, the Mortgages Trustee or any Issuer any winding-up,
administration, insolvency or similar proceedings in any jurisdiction for
so long as any sum is outstanding under any Intercompany Loan Agreement
of any Issuer or for two years plus one day since the last day on which
any such sum was outstanding provided that the Security Trustee may prove
or lodge a claim in the event of a liquidation initiated by any other
person.
23.2 CORPORATE OBLIGATIONS: To the extent permitted by law, no recourse under
any obligation, covenant, or agreement of any person contained in this
Funding Deed of Charge shall be had against any shareholder, officer or
director of such person as such, by the enforcement of any assessment or
by any legal proceeding, by virtue of any statute or otherwise; it being
expressly agreed and understood that this Agreement is a corporate
obligation of each person expressed to be a party hereto and no personal
liability shall attach to or be incurred by the shareholders, officers,
agents or directors of such person as such, or any of them, under or by
reason of any of the obligations, covenants or agreements of such person
contained in this Funding Deed of Charge, or implied therefrom, and that
any and all personal liability for
52
breaches by such person of any of such obligations, covenants or
agreements, either under any applicable law or by statute or
constitution, of every such shareholder, officer, agent or director is
hereby expressly waived by each person expressed to be a party hereto as
a condition of and consideration for the execution of this Funding Deed
of Charge.
24. NOTICES
Any notices or other communication or document to be given or delivered
pursuant to this Funding Deed of Charge to any of the parties hereto
shall be sufficiently served if sent by prepaid first class post, by hand
or by facsimile transmission and shall be deemed to be given (in the case
of facsimile transmission) when despatched or (where delivered by hand)
on the day of delivery if delivered before 17.00 hours on a London
Business Day or on the next London Business Day if delivered thereafter
or (in the case of first class post) when it would be received in the
ordinary course of the post and shall be sent:
(a) in the case of Funding, to Granite Finance Funding Limited situated
at 4th Floor, 35 New Bridge Street, Blackfriars, London EC4V 6BW
(facsimile number 020 7332 6199) for the attention of The Company
Secretary with a copy to Northern Rock plc, Northern Rock House,
Gosforth, Newcastle upon Tyne NE3 4PL (facsimile number 0191 213
2203) for the attention of the Group Secretary;
(b) in the case of the Security Trustee, to The Bank of New York
situated at 48th Floor, One Canada Square, London E14 5AL attention
Corporate Trust (Global Structured Finance) (facsimile number 020
7964 6399);
(c) in the case of the Note Trustee, to The Bank of New York situated
at 48th Floor, One Canada Square, London E14 5AL attention
Corporate Trust (Global Structured Finance) (facsimile number 020
7964 6399);
(d) in the case of the First Issuer, to Granite Mortgages 01-1 PLC
situated at Fifth Floor, 100 Wood Street, London EC2V 7EX
(facsimile number 020 7606 0643) for the attention of The Company
Secretary with a copy to Northern Rock plc, Northern Rock House,
Gosforth, Newcastle upon Tyne NE3 4PL (facsimile number 0191 213
2203) for the attention of the Group Secretary;
(e) in the case of the Mortgages Trustee, to Granite Finance Trustees
Limited situated at 22 Grenville Street, St. Helier, Jersey JE4
8PX, Channel Islands, (facsimile number 01534 609333) for the
attention of The Company Secretary with a copy to Northern Rock
plc, Northern Rock House, Gosforth, Newcastle upon Tyne NE3 4PL
(facsimile number 0191 213 2203) for the attention of the Group
Secretary;
(f) in the case of the Cash Manager, to Northern Rock plc situated at
Northern Rock House, Gosforth, Newcastle upon Tyne NE3 4PL
(facsimile number 0191 213 2203) for the attention of the Group
Secretary;
(g) in the case of the Account Bank, to Lloyds TSB Bank plc situated at
City Office, Bailey Drive, Gillingham Business Park, Kent ME8 0LS
(facsimile number 0207 775 3642) for the attention of Jason Eperon;
53
(h) in the case of the Funding GIC Provider, to Lloyds TSB Bank plc
situated at 25 Monument Street, London EC3R 8BQ (facsimile number
0207 623 2338) for the attention of Treasury Division (Graham
Sparry);
(i) in the case of the Start-Up Loan Provider, to Northern Rock plc
situated at Northern Rock House, Gosforth, Newcastle upon Tyne NE3
4PL (facsimile number 0191 213 2203) for the attention of the Group
Secretary;
(j) in the case of the Corporate Services Provider, to Mourant & Co.
Capital (SPV) Limited situated at 4th Floor, 35 New Bridge Street,
Blackfriars, London EC4V 6BW (facsimile number 020 7332 6199) for
the attention of the Company Secretary;
(k) in the case of Moody's, to Moody's Investor Services situated at
1st Floor, 2 Minster Court, Mincing Lane, London EC3R 7XB
(facsimile number 020 7772 5400) for the attention of David
Harrison, Asset Backed Finance;
(l) in the case of S&P, to Standard & Poor's situated at Garden House,
18 Finsbury Circus, London EC2M 7NJ (facsimile number 020 7826
3598) for the attention of Heather Dyke; and
(m) in the case of Fitch, to Fitch Ratings Limited situated at Eldon
House, 2 Eldon Street, London EC2M 7UA (facsimile number:020 7417
6262) for the attention of European Structured Finance
Surveillance,
or to such other address or facsimile number or for the attention of such
other person or entity as may from time to time be notified by any party
to the others by fifteen days prior written notice in accordance with the
provisions of this Clause 24.
25. THIRD PARTY RIGHTS
A person who is not a party to this Deed may not enforce any of its terms
under the Contracts (Rights of Third Parties) Act 1999, but this shall
not affect any right or remedy of a third party which exists or is
available apart from that Act.
26. EXECUTION IN COUNTERPARTS; SEVERABILITY
26.1 COUNTERPARTS: This Funding Deed of Charge may be executed in any number
of counterparts (manually or by facsimile) and by different parties
hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which when taken together shall
constitute one and the same instrument.
26.2 SEVERABILITY: Where any provision in or obligation under this Funding
Deed of Charge shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations under this Funding Deed of Charge, or of such
provision or obligation in any other jurisdiction, shall not be affected
or impaired thereby.
54
27. GOVERNING LAW AND SUBMISSION TO JURISDICTION
27.1 GOVERNING LAW: This Funding Deed of Charge is governed by, and shall be
construed in accordance with, English law save that those parts of this
Funding Deed of Charge concerned with the creation, subsistence or
enforcement of the Jersey Security Interests shall be governed by and in
accordance with Jersey law.
27.2 SUBMISSION TO JURISDICTION: Each of the parties hereto irrevocably agrees
that the courts of England shall have jurisdiction to hear and determine
any suit, action or proceeding, and to settle any disputes, which may
arise out of or in connection with this Funding Deed of Charge and, for
such purposes, irrevocably submits to the jurisdiction of such courts.
27.3 PROCESS AGENT: The Mortgages Trustee irrevocably and unconditionally
appoints Mourant & Co. Capital (SPV) Limited at Fourth Floor, New Bridge
Street, Blackfriars, London EC4V 6BW or otherwise at its registered
office for the time being as its agent for service of process in England
in respect of any proceedings in respect of this Funding Deed of Charge
and undertakes that in the event of Mourant & Co. Capital (SPV) Limited
ceasing so to act it will appoint another person with a registered office
in London as its agent for service of process.
27.4 FORUM: Each of the parties hereto irrevocably waives any objection which
it might now or hereafter have to the courts of England being nominated
as the forum to hear and determine any Proceedings and to settle any
disputes, and agrees not to claim that any such court is not a convenient
or appropriate forum.
IN WITNESS of which this Funding Deed of Charge has been executed by the
parties hereto as a deed which has been delivered on the date first appearing
on page one.
55
SCHEDULE 1
FORM OF SECURITY POWER OF ATTORNEY
THIS POWER OF ATTORNEY is made on 26 March 2001 by Granite Finance Funding
Limited. (registered number 79308) a private limited liability company
incorporated under the laws of Jersey whose registered office is at 22
Grenville Street, St. Helier, Jersey JE4 8PX, Channel Islands (the
"PRINCIPAL").
WHEREAS
(1) By virtue of a Funding Deed of Charge dated 26 March 2001 between Granite
Finance Funding Limited, Granite Mortgages 01-1 plc, the Security
Trustee, the Mortgages Trustee, the Cash Manager, the Account Bank, the
Funding GIC Provider, the Corporate Services Provider, the Start-Up Loan
Provider (as amended and supplemented from time to time, the "FUNDING
DEED OF CHARGE"), provision was made for the execution by the Principal
of this Power of Attorney.
(2) Words and phrases in this Power of Attorney shall (save where expressed
to the contrary) have the same meanings respectively as the words and
phrases in the Funding Deed of Charge.
NOW THIS POWER OF ATTORNEY WITNESSETH
1. The Principal hereby irrevocably (within the meaning of Section 4 of the
Powers of Attorney Act 1971) and by way of security for the payment and
performance of the Funding Secured Obligations and the covenants,
conditions, obligations and undertakings on the part of the Principal
contained in the Funding Deed of Charge and the other Funding Transaction
Documents to which the Principal is a party from time to time appoints
The Bank of New York and any other person or persons for the time being
the Security Trustee or Security Trustees of and under the Funding Deed
of Charge (the "ATTORNEY") and each and every person to whom the Security
Trustee shall from time to time have delegated the exercise of the power
of attorney conferred by this Power of Attorney (each a "DELEGATE") and
any receiver including any administrative receiver and any manager (the
"RECEIVER") and/or administrator (the "ADMINISTRATOR") appointed from
time to time by the Attorney or on its behalf its true and lawful
attorney for and in the Principal's name or otherwise jointly and
severally to sign, seal, execute, deliver, perfect and do any assurance,
act, matter or thing which the Attorney, Delegate, Receiver or
Administrator considers in each case to be necessary for the protection
or preservation of the Attorney's and the Funding Secured Creditors'
interests and rights (as described in the Funding Deed of Charge) in and
to the Funding Charged Property or which ought to be done by the
Principal under the covenants, undertakings and provisions contained in
the Funding Deed of Charge and the other Funding Transaction Documents to
which the Principal is a party from time to time and generally to in its
name and on its behalf to exercise all or any of the powers, authorities
or discretions conferred by or pursuant to the Funding Deed of Charge on
the Security Trustee and/or any Receiver whether on or at any time after
the security has become enforceable in accordance with Claus 7.2
(Enforceable) of the Funding Deed of Charge or in any other circumstances
56
where the Attorney has become entitled to take any of the steps referred
to in the Funding Deed of Charge including (without limitation) any or
all of the following:
(a) to do every act or thing which the Attorney, Delegate, Receiver or
Administrator may deem to be necessary, proper or expedient for
getting in any of the Funding Charged Property and/or fully and
effectively vesting, transferring or assigning the Funding Charged
Property or any part thereof and/or the Principal's estate, right,
title, benefit and/or interest therein or thereto in or to the
Attorney and its successors in title or other person or persons
entitled to the benefit thereof or for carrying into effect any
other dealing with the Funding Charged Property whatsoever
permitted under the Funding Deed of Charge in the same manner and
as fully and effectively as the Principal could have done;
(b) the power by writing under its hand by an officer of the Attorney
(including every Receiver appointed under the Funding Deed of
Charge) from time to time to appoint a substitute attorney (each a
"SUBSTITUTE") who shall have power to act on behalf of the
Principal as if that Substitute shall have been originally
appointed Attorney by this Power of Attorney and/or to revoke any
such appointment at any time without assigning any reason
therefor.
2. In favour of the Attorney, any Delegate, any Receiver and/or
Administrator and/or Substitute, or a person dealing with any of them and
the successors and assigns of such a person, all acts properly done and
documents executed or signed by the Attorney, a Delegate, a Receiver, an
Administrator or a Substitute in the purported exercise of any power
conferred by this Power of Attorney shall for all purposes be valid and
binding on the Principal and its successors and assigns.
3. The Principal irrevocably and unconditionally undertakes to indemnify the
Attorney and each Delegate, Receiver and/or Administrator and/or
Substitute appointed from time to time by the Attorney and their
respective estates (each an "INDEMNIFIED PARTY") against all actions,
proceedings, claims, costs, expenses and liabilities of every description
arising from the exercise, or the purported exercise, of any of the
powers conferred by this Power of Attorney, save where the same arises as
the result of the fraud, negligence or wilful default of the relevant
Indemnified Party or its officers or employees.
4. The provisions of Clause 3 (Funding Security) shall continue in force
after the revocation or termination, howsoever arising, of this Power of
Attorney.
5. The laws of England and Wales shall apply to this Power of Attorney and
the interpretation thereof and to all acts of the Attorney and each
Delegate, Receiver and/or Administrator and/or Substitute carried out or
purported to be carried out under the terms hereof except that in
relation to any action taken by the Attorney, each Delegate, Receiver
and/or Administrator in respect of the Jersey Security Interests or the
Jersey Secured Property, the laws of Jersey law shall apply.
6. The Principal hereby agrees at all times hereafter to ratify and confirm
whatsoever the said Attorney or its attorney or attorneys or any
Delegate, Receiver or Administrator or Substitute
57
shall properly and lawfully do or cause to be done in and concerning the
Funding Charged Property.
58
IN WITNESS whereof this Power of Attorney has been executed as a deed by the
Principal the day and year first before written.
EXECUTED AS A DEED by )
GRANITE FINANCE FUNDING LIMITED)
acting by: )
________________________
Director
Name:
Title:
________________________
Director/Secretary
Name:
Title:
59
SCHEDULE 2
FORM OF DEED OF ACCESSION
THIS DEED OF ACCESSION is made on [ ]
BETWEEN:
(1) GRANITE FINANCE FUNDING LIMITED. (registered number 79308) a private
limited liability company incorporated under the laws of Jersey whose
London branch is at 4th Floor, 25 New Bridge Street, Blackfriars, London
EC4V 6BW ("FUNDING");
(2) THE BANK OF NEW YORK, a New York banking corporation whose London branch
address is at One Canada Square, 48th Floor, London E14 5AL, United
Kingdom, as security trustee (the "SECURITY TRUSTEE" which expression
shall include such person and all other persons for the time being acting
as the security trustee or security trustees pursuant to this Funding
Deed of Charge);
(3) THE BANK OF NEW YORK, a New York banking corporation whose London branch
address is at One Canada Square, 48th Floor, London E14 5AL, United
Kingdom, as note trustee (the "NOTE TRUSTEE" which expression shall
include such person and all other persons for the time being acting as
the note trustee or note trustees pursuant to each Issuer Trust Deed and
each Issuer Deed of Charge );
(4) GRANITE MORTGAGES 01-1 PLC (registered number 4129652) a public limited
company incorporated under the laws of England and Wales whose registered
office is at Fifth Floor, 100 Wood Street, London EC2V 7EX (the "FIRST
ISSUER");
(5) GRANITE FINANCE TRUSTEES LIMITED (registered number 79309) a private
limited liability company incorporated under the laws of Jersey whose
registered office is at 22 Grenville Street, St. Helier, Jersey JE4 8PX
Channel Islands as trustee of the Mortgages Trust (the "MORTGAGES
TRUSTEE");
(6) NORTHERN ROCK PLC (registered number 03273685) a public limited company
incorporated under the laws of England and Wales whose registered office
is at Northern Rock House, Gosforth, Newcastle upon Tyne NE3 4PL, in its
capacity as cash manager under the Cash Management Agreement (the "CASH
MANAGER", which expression shall include such person and all other
persons for the time being acting as the cash manager or cash managers
pursuant to the Cash Management Agreement);
(7) LLOYDS TSB BANK PLC, acting through its office at City Office, Bailey
Drive, Gillingham Business Park, Kent ME8 0LS in its capacity as account
bank under the Bank Account Agreement (the "ACCOUNT BANK", which
expression shall include such person and all other persons for the time
being acting as the account bank or account banks to Funding pursuant to
the Bank Account Agreement) and acting through its office at 25 Monument
Street, London EC3R 8BQ in its capacity as GIC provider to Funding
pursuant to the Funding Guaranteed Investment Contract (the "FUNDING GIC
PROVIDER", which expression shall include such person and all other
persons for the time being acting as the GIC provider to
60
(8) [Any other additional secured creditor of Funding including any New
Issuer.]
(9) [ ] (the "NEW FUNDING SECURED CREDITOR").
Funding pursuant to the Funding Guaranteed Investment Contract and each
Funding (Issuer) Guaranteed Investment Contract);
(10) MOURANT & CO. CAPITAL (SPV) LIMITED, a private limited company
incorporated under the laws of Jersey whose registered office is 4th
Floor, 35 New Bridge Street, London EC4V 6BW. (the "CORPORATE SERVICES
PROVIDER" which expression shall include such person and all other
persons for the time being acting as the corporate services provider or
corporate services providers pursuant to the Corporate Services
Agreement); and
(11) NORTHERN ROCK PLC (registered number 03273685) acting through its office
at Northern Rock House, Gosforth, Newcastle upon Tyne NE3 4PL as start-up
loan provider pursuant to the Start-Up Loan Agreement (the "START-UP LOAN
PROVIDER", which expression shall include such person or all other
persons for the time being acting as start-up loan provider pursuant to
the Start-Up Loan Agreement).
NOW THIS DEED OF ACCESSION WITNESSES AS FOLLOWS
WHEREAS:
(A) [Pursuant to the terms of a [describe agreement] (the "AGREEMENT") dated
[ ] made between Funding and the New Funding Secured Creditor,
Funding has agreed to [describe nature of the obligations of Funding
under the Agreement].
(B) This Deed is supplemental to a Deed of Charge dated 26 March 2001 between
Granite Finance Funding Limited, Granite Mortgages 01-1 plc, the Security
Trustee, the Mortgages Trustee, the Cash Manager, the Account Bank, the
Funding GIC Provider, the Corporate Services Provider, the Start-Up Loan
Provider (as amended and supplemented from time to time the "FUNDING DEED
OF CHARGE"), pursuant to which Funding agreed to provide the Security
Trustee with the benefit of the security described in the Funding Deed of
Charge to secure Funding's obligations to the Funding Secured Creditors
including the New Funding Secured Creditor.
(C) The terms of the Funding Deed of Charge permit Funding to secure its
obligations to a New Funding Secured Creditor thereunder [and (where such
New Funding Secured Creditor is a New Issuer) permit Funding to create
certain Security Interests in favour of the Security Trustee for the
benefit of such New Funding Secured Creditor.]
(D) The New Funding Secured Creditor has agreed to enter into this Deed of
Accession (this "DEED") to accede to the provisions of the Funding Deed
of Charge.
(E) The Funding Secured Creditors have agreed to enter into this Deed [and to
agree consequential changes to the Funding Priority of Payments set out
in PART I, PART II and PART III of SCHEDULE 3 of the Funding Deed of
Charge as are required and any [other]
61
amendment as may be required to give effect to this Deed] [and to
acknowledge the Security Interests created hereunder].
1. INTERPRETATION
The Master Definitions Schedule signed for the purposes of identification
by Brown and Wood and Clifford Chance Limited Liability Partnership on 26
March 2001 (as the same may be amended, varied or supplemented from time
to time with the consent of the parties hereto) are expressly and
specifically incorporated into this Deed and, accordingly, the
expressions defined in the Master Definitions Schedule (as so amended,
varied or supplemented) shall, except where the context otherwise
requires and save where otherwise defined herein, have the same meanings
in this Deed, including the recitals hereto and this Deed shall be
construed in accordance with the interpretation provisions set out in
Clause 2 (Interpretation and Construction) of the Master Definitions
Schedule.
2. REPRESENTATIONS AND WARRANTIES
2.1 The New Funding Secured Creditor hereby represents and warrants to the
Security Trustee and each of the Funding Secured Creditors in respect of
itself that as of the date of this Deed:
(a) pursuant to the terms of the Agreement, Funding has agreed to pay
to the New Funding Secured Creditor the amount (if any) [describe
in relation to the Agreement]; and
(b) the Agreement expressly provides that all amounts due from Funding
thereunder are to be secured by or pursuant to the Funding Deed of
Charge.
2.2 Funding hereby represents and warrants to the Security Trustee and each
of the Funding Secured Creditors that as at the date of this Deed, the
conditions to incurring further secured financial indebtedness set out in
Clause 2.2 (New Intercompany Loan Agreements) of the Intercompany Loan
Terms and Conditions are satisfied.
3. ACCESSION
In consideration of the New Funding Secured Creditor being accepted as a
Funding Secured Creditor for the purposes of the Funding Deed of Charge
by the parties thereto as from [date], the New Funding Secured Creditor:
(a) confirms that as from [date], it intends to be a party to the
Funding Deed of Charge as a Funding Secured Creditor;
(b) undertakes to comply with and be bound by all of the provisions of
the Master Definitions Schedule (as the same may be amended,
varied or restated from time to time) and the Funding Deed of
Charge in its capacity as a Funding Secured Creditor, as if it had
been an original party thereto;
(c) undertakes to perform comply with and be bound by all of the
provisions of the Funding Deed of Charge in its capacity as a
Funding Secured Creditor, as if it had
62
been an original party thereto including, without limitation,
Clause 20.3 (Funding Secured Creditors) (including without
limitation Clauses 8.3 (Funding Post-Enforcement Priority of
Payments), 8.6 (Security Trustee Rights upon Enforcement) and
Clause 6 (Restrictions on Exercise of Certain Rights)); and
(d) agrees that the Security Trustee shall be the Security Trustee of
the Funding Deed of Charge for all Funding Secured Creditors upon
and subject to the terms set out in the Funding Deed of Charge.
4. [ACCOUNTS FOR ISSUERS
Include if New Funding Secured Creditor is a New Issuer [1]
Funding, by way of first fixed security for the payment or discharge of
that portion of the Funding Secured Obligations which represent the
obligations and liabilities of Funding to the New Funding Secured
Creditor under the Agreement (the "FUNDING ([INSERT RELEVANT ISSUER])
SECURED OBLIGATIONS"), subject to Clause 4 (Release of Funding Charged
Property) of the Funding Deed of Charge, hereby:
(a) assigns by way of security to the Security Trustee for the
benefit of the New Funding Secured Creditor all of its right,
title, benefit and interest, present and future, in, to and
under:
(i) the [insert relevant Funding (Issuer) Bank Account
Agreement]; and
(ii) the [insert relevant Funding (Issuer) Guaranteed Investment
Contract];
including all rights to receive payment of any amounts which may
become payable to Funding thereunder and all payments received by
Funding thereunder including, without limitation, all rights to
serve notices and/or make demands thereunder and/or to take such
steps as are required to cause payments to become due and payable
thereunder and all rights of action in respect of any breach
thereof and all rights to receive damages or obtain relief in
respect thereof and the proceeds of any of the foregoing, TO HOLD
the same unto the Security Trustee absolutely;
(b) assigns in favour of the Security Trustee for the benefit of the
New Funding Secured Creditor all of its rights, title, benefit
and interest, present and future, in and to all monies now or at
any time hereafter standing to the credit of the [insert relevant
Funding (Issuer) GIC Account] and the debts represented by them
together with all rights and claims relating or attached thereto
including, without limitation, the right to interest and the
proceeds of any of the foregoing, TO HOLD the same unto the
Security Trustee absolutely; and
(c) charges to the Security Trustee for the benefit of the New
Funding Secured Creditor all of its right, title, benefit and
interest, present and future in, to and under any Authorised
Investment purchased using monies standing to the credit of the
[insert
------------------------
1 Include if New Funding Secured Creditor is a New Issuer
63
relevant Funding (Issuer) GIC Account] and all rights in respect of or
ancillary to such Authorised Investments, including the right to income
and the proceeds of any of the foregoing, TO HOLD the same unto the
Security Trustee absolutely.
5. [TITLE GUARANTEE
Each of the dispositions of or charges over property effected in or
pursuant to Clause 4 (Accounts for Issuers) is made with full title
guarantee.]2
6. [APPLICATION 3
Prior to and following enforcement of the Funding Security all amounts at
any time held by Funding, the Cash Manager or the Security Trustee in
respect of the security created under this Deed shall be held and/or
applied by such person subject to and in accordance with the relevant
provisions of the Funding Deed of Charge.]
7. SCOPE OF THE FUNDING DEED OF CHARGE
Funding, the New Funding Secured Creditor and the Funding Secured
Creditors (including the Security Trustee) hereby agree that for the
relevant purposes under the Funding Deed of Charge and the Master
Definitions Schedule:
(a) the Agreement shall be treated as a Funding Transaction Document;
[and]
(b) [[insert relevant Funding (Issuer) Bank Account Agreement] shall
be treated as a Funding Transaction Document;]
(c) [[insert relevant Funding (Issuer) Bank Account Agreement] shall
be treated as a Funding Transaction Document;]
(d) [the property and assets of Funding expressed to be assigned by
way of security or charged pursuant to this Deed of Accession
shall constitute Funding Charged Property;][and]
(e) the New Funding Secured Creditor shall be treated as a Funding
Secured Creditor.
8. NOTICES AND ACKNOWLEDGEMENTS
(a) The execution of this Deed by the New Funding Secured Creditor shall
constitute notice to such New Funding Secured Creditor of the
assignments made by Funding pursuant to Clause 3 (Funding Security) of
the Funding Deed of Charge. The execution of this Deed by each other
Funding Secured Creditor shall constitute notice
- - ---------------------------------
2 as above
3 Include if necessary
64
to such Funding Secured Creditor of the assignments made by Funding
pursuant to this Deed.
(b) By its execution of this Deed, the New Funding Secured Creditor
acknowledges that it has notice of and consents to the
assignments, charges and Security Interests (including the Jersey
Security Interests) made or granted by Funding pursuant to Clause
3 (Funding Security) of the Funding Deed of Charge and also
acknowledges that as at the date hereof it has not received from
any other person any notice of any assignment or charge of any of
the property the subject of such Security Interests. By its
execution of this Deed, each other Funding Secured Creditor
acknowledges that it has notice of and consents to the
assignments, charges and Security Interests made or granted by
Funding pursuant to this Deed of Accession and also acknowledges
that as at the date hereof it has not received from any other
person any notice of any assignment or charge of any of the
property the subject of such Security Interests.
(c) Notwithstanding the assignments and charges granted pursuant to
Clause 3 (Funding Security) of the Funding Deed of Charge or
pursuant to this Deed of Accession, the parties hereto
acknowledge that, subject as provided otherwise in the Funding
Deed of Charge, each Funding Secured Creditor and each other
party to any Funding Transaction Document may continue to make
all payments becoming due to Funding under any Funding
Transaction Document in the manner envisaged by such Funding
Transaction Document until the receipt of written notice from the
Security Trustee or any Receiver requiring payments to be made
otherwise.
[9. AMENDMENT TO THE FUNDING PRIORITY OF PAYMENTS
The Funding Secured Creditors agree to amend and restate the Funding
Priority of Payments set out in PART I and PART II of SCHEDULE 3 of the
Funding Deed of Charge in accordance with APPENDIX 1 hereto.]4
10. NOTICES AND DEMANDS
Any notice or communication under or in connection with this Deed, the
Funding Deed of Charge shall be given in the manner and at the times set
out in Clause 24 (Notices) of the Funding Deed of Charge to the addresses
given in this Clause or at such other address as the recipient may have
notified to the other parties hereto and/or thereto in writing.
The address referred to in this Clause 10 for the New Funding Secured
Creditor is:
[ ]
- - -----------------------------
4 Include if necessary
65
For the attention of:[ ]
Telephone: [ ]
Facsimile: [ ]
or such other address and/or numbers as the New Funding Secured Creditor
may notify to the parties to the Funding Deed of Charge in accordance
with the provisions thereof.
11. NON PETITION COVENANT
Each of the parties hereto hereby agrees that it shall not institute
against Funding, the Mortgages Trustee or any Issuer any winding-up,
administration, insolvency or similar proceedings in any jurisdiction for
so long as any sum is outstanding under any Intercompany Loan Agreement
of any Issuer or for two years plus one day since the last day on which
any such sum was outstanding provided that the Security Trustee may prove
or lodge a claim in the event of a liquidation initiated by any other
person.
12. THIRD PARTY RIGHTS
A person who is not a party to this Deed may not enforce any of its terms
under the Contracts (Rights of Third Parties) Act 1999, but this shall
not affect any right or remedy of a third party which exists or is
available apart from that Act.
13. EXECUTION IN COUNTERPARTS
This Deed may be executed in any number of counterparts (manually or by
facsimile) and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of
which when taken together shall constitute one and the same instrument.
14. CHOICE OF LAW
This Deed of Accession is governed by and shall be construed in
accordance with English law.
66
DULY EXECUTED AND DELIVERED AS A DEED by each of the parties hereto or on its
behalf on the date appearing on page one.
NEW FUNDING SECURED CREDITOR
[EXECUTED AS A DEED by )
[NEW FUNDING SECURED CREDITOR] )
acting by:
)
________________________
Director
Name:
Title:
________________________
Director/Secretary
Name:
Title:]
FUNDING
EXECUTED AS A DEED by )
GRANITE FINANCE FUNDING LIMITED)
acting by:
)
________________________
Director
Name:
Title:
________________________
Director/Secretary
Name:
Title:
67
THE SECURITY TRUSTEE
EXECUTED AS A DEED for and)
on behalf of )
THE BANK OF NEW YORK )
by: )
________________________
Authorised Signatory
Name:
Title:
THE NOTE TRUSTEE
EXECUTED AS A DEED for and)
on behalf of )
THE BANK OF NEW YORK )
by: )
________________________
Authorised Signatory
Name:
Title:
EXECUTED AS A DEED by )
GRANITE MORTGAGES 01-1 PLC)
acting by: )
________________________
Director
Name:
Title:
________________________
Director/Secretary
Name:
Title:
68
THE MORTGAGES TRUSTEE
EXECUTED AS A DEED by )
GRANITE FINANCE TRUSTEES LIMITED )
acting by: )
________________________
Director
Name:
Title:
________________________
Director/Secretary
Name:
Title:
THE CASH MANAGER
EXECUTED under THE COMMON SEAL of )
NORTHERN ROCK PLC )
affixed by order of the Board of Directors)
in the presence of:
)
________________________
Authorised Signatory
Name:
Title:
________________________
Authorised Signatory
Name:
Title:
69
THE ACCOUNT BANK
EXECUTED AS A DEED by )
LLOYDS TSB BANK PLC )
Acting by its attorney: )
________________________
in the presence of:
Name:
________________________
Address:
________________________
_______________________
Occupation:
________________________
THE FUNDING GIC PROVIDER
EXECUTED AS A DEED by )
LLOYDS TSB BANK PLC )
Acting by its attorney: )
________________________
in the presence of:
Name:
________________________
Address:
________________________
_
_______________________
Occupation:
_
_______________________
70
THE CORPORATE SERVICES PROVIDER
EXECUTED AS A DEED by )
MOURANT & CO. CAPITAL (SPV) )
LIMITED )
acting by:
)
________________________
Director
Name:
Title:
________________________
Director/Secretary
Name:
Title:
THE START-UP LOAN PROVIDER
EXECUTED under THE COMMON SEAL of )
NORTHERN ROCK PLC )
affixed by order of the Board of Directors)
in the presence of: )
_
_______________________
Authorised Signatory
Name:
Title:
________________________
Authorised Signatory
Name:
Title:
71
[SCHEDULE 1
UTILISATION OF ISSUER RESERVES]
72
[APPENDIX
AMENDED AND RESTATED FUNDING PRIORITY OF PAYMENTS]
73
SCHEDULE 3
FUNDING PRIORITY OF PAYMENTS
PART I
FUNDING PRE-ENFORCEMENT REVENUE PRIORITY OF PAYMENTS
DISTRIBUTION OF FUNDING AVAILABLE REVENUE RECEIPTS PRIOR TO ENFORCEMENT OF THE
FUNDING SECURITY
On each Payment Date or, in respect of amounts due to third parties by Funding
under paragraph (B), when due, prior to enforcement of the Funding Security,
the Cash Manager will, subject to the rules for application of Funding
Available Revenue Receipts (set out below), apply Funding Available Revenue
Receipts in the following order of priority (the "FUNDING PRE-ENFORCEMENT
REVENUE PRIORITY OF PAYMENTS"):
(A) first, to pay amounts due to the Security Trustee (together with interest
and (to the extent not already inclusive) VAT on those amounts) and to
provide for any amounts due or to become due during the following
Interest Period to the Security Trustee, under the Funding Deed of Charge
or any other Transaction Document;
(B) second, to pay amounts due to any third party creditors of Funding (other
than those referred to later in this order of priority of payments or in
the Funding Pre-enforcement Principal Priority of Payments) of which the
Cash Manager has notice prior to the relevant Payment Date, which amounts
have been incurred without breach by Funding of the Transaction Documents
to which it is a party (and for which payment has not been provided for
elsewhere) and to provide for any such amounts expected to become due and
payable by Funding during the following Interest Period and to pay or
discharge any liability of Funding for corporation tax on any chargeable
income or gain of Funding;
(C) third, towards payment of amounts due to the Cash Manager under the Cash
Management Agreement (together with (to the extent not already inclusive)
VAT on those amounts);
(D) fourth, in no order of priority between them but in proportion to the
respective amounts due, towards payment of amounts, if any, due to the
Account Bank under the terms of the Bank Account Agreement and to the
Corporate Services Provider under the Corporate Services Agreement;
(E) fifth, to pay to each Issuer an amount up to its Issuer Allocable Revenue
Receipts in respect of interest and fees due on that Issuer's
Intercompany Loan but not exceeding the aggregate amount of, and to be
applied in the amounts and priorities set forth in, the Issuer Pre-
Liquidity Payments for that Issuer.
(F) sixth, to pay such amount for each Issuer up to its Issuer Allocable
Revenue Receipts as is necessary to replenish the Issuer Liquidity
Reserve Fund, if any, established in respect of that Issuer up to the
Issuer Liquidity Reserve Required Amount (to the extent that monies have
been drawn from the Issuer Liquidity Reserve Fund to pay interest and
fees due under the relevant intercompany loan);
74
(G) seventh, to pay to each Issuer an amount up to its Issuer Allocable
Revenue Receipts in respect of interest and fees due on that issuer's
Intercompany Loan but not exceeding the aggregate amount of, and to be
applied in the amounts and priorities set forth in, the Issuer Post-
Liquidity Payments for that Issuer;
(H) eighth, to pay such amount for each Issuer up to its Issuer Allocable
Revenue Receipts as is necessary to replenish the Issuer Reserve Fund
established in respect of that Issuer up to the Issuer Reserve Required
Amount;
(I) ninth, from Issuer Allocable Revenue Receipts, to credit the Funding
Reserve Ledger in an amount up to the Funding Reserve Required Amount;
(J) tenth, to pay to each Issuer an amount up to its Issuer Allocable Revenue
Receipts in respect of interest and fees due on that issuer's
Intercompany Loan but not exceeding the aggregate amount of, and to be
applied in the amounts and priorities set forth in, the Issuer Post-
Reserve Payments for that Issuer;
(K) eleventh, from Issuer Allocable Revenue Receipts, towards payment of
interest and principal amounts due to the Start-Up Loan Provider under
the Start-up Loan Agreement;
(L) twelfth, to pay to each Issuer an amount up to its Issuer Allocable
Revenue Receipts in respect of interest and fees and any other amount (if
any) due on that Issuer's Intercompany Loan but not exceeding the
aggregate amount of, and to be applied in the amounts and priorities set
forth in, the Issuer Post Start-Up Payments for that Issuer;
(M) thirteenth, to apply all Shared Issuer Revenue Receipts in the priorities
set forth in items (E) through (L) above;
(N) fourteenth, towards payment to Funding of an amount equal to 0.01% per
annum of the Funding Available Revenue Receipts, which amount will be
retained by Funding as profit;
(0) fifteenth, towards payment of any Deferred Contribution due to the
Mortgages Trustee pursuant to the terms of the Mortgages Trust Deed; and
(P) last, towards payment to the shareholders of Funding of any dividend
declared by Funding.
PROVIDED THAT no amount will be applied in replenishing any of the reserve
funds held by Funding in respect of an issuer under paragraphs (F) and/or (H)
above following an enforcement of the Issuer Security relating to that Issuer.
RULES FOR APPLICATION OF FUNDING AVAILABLE REVENUE RECEIPTS
(1) Subject as provided in paragraphs (2) through (4) below, the portion of
Issuer Allocable Revenue Receipts, if any, not required to be applied by
the Issuer on a Payment Date to pay interest on the Notes or to credit
the related Issuer Principal Deficiency Ledger or to pay any other costs
and expenses due by the Issuer on that date pursuant to the relevant
Issuer Priority of Payments, together with the portion of Issuer
Allocable Revenue Receipts relating to all
75
other Issuers not required to be so applied by those other Issuers on
that Payment Date (excluding any Issuer Reserve Fund or Issuer Liquidity
Reserve Fund (if any) of any Issuer), constitute "SHARED ISSUER REVENUE
RECEIPTS". Shared issuer revenue receipts will be reallocated by the Cash
Manager and distributed among the Issuers as payments of interest and
fees under the applicable Intercompany Loans to the extent required to
make payments of interest due on the Notes, to credit the related Issuer
Principal Deficiency Ledgers and to pay other costs, expenses and third
party amounts payable by the Issuers under the relevant Issuer Priority
of Payments (but excluding principal payable under any Intercompany
Loan). Each Issuer will be entitled to receive a portion of the Shared
Issuer Revenue Receipts equal to:
Outstanding Principal Balance of the
Amount of Shared Intercompany Loan of the Issuer
Issuer Revenue x --------------------------------------------------------
Receipts Aggregate Outstanding Principal Balance
of the Intercompany Loans of all Issuers
(2) No Issuer shall be entitled to or shall receive any amount of Issuer
Allocable Revenue Receipts from Funding on a Payment Date which is not
required by that Issuer to make a payment on that date in accordance with
the relevant Issuer Pre-Enforcement Revenue Priority of Payments or other
relevant Issuer Priority of Payments which applies to that Issuer on that
date, and the Cash Manager will take account of all of the funds which
are or will become available to that Issuer on that Payment Date and
which constitute Issuer Available Revenue Receipts (including any
payments due under any Swap Agreement and any interest or other income
received or to be received) for that Issuer for the purpose of making
this determination.
(3) Unless and until the Intercompany Loan of any Issuer has been repaid in
full and Funding has no further liability under the relevant Intercompany
Loan Agreement, amounts standing to the credit of the Issuer Reserve
Ledger and the Issuer Liquidity Reserve Ledger, if any, established by
Funding for that Issuer may only be utilized by Funding in making
payments due under that Issuer's Intercompany Loan and may not be used in
or towards the payment of any other liability of Funding. On the payment
date following the repayment in full of the Intercompany Loan of that
Issuer and provided that Funding has no further liability in respect of
the relevant Intercompany Loan Agreement, any remaining amounts standing
to the credit of the Issuer Reserve Ledger and the Issuer Liquidity
Reserve Ledger, if any, of that Issuer will constitute "SHARED ISSUER
REVENUE RECEIPTS" for the purpose of paragraph (1) above and may be
utilized by Funding in paying any other liability of Funding subject to
and in accordance with the relevant Funding priority of payments.
(4) If on any Payment Date any Issuer Allocable Revenue Receipts and/or any
Shared Issuer Revenue Receipts are paid to an Issuer and are applied by
that Issuer, in reducing any deficiency recorded on the Issuer Principal
Deficiency Ledger of that Issuer then the Issuer Allocable Revenue
Receipts and/or Shared Issuer Revenue Receipts so applied shall
constitute repayments of principal under the relevant Intercompany Loan
and shall reduce the outstanding principal balance of that Intercompany
Loan accordingly.
76
PART II
FUNDING PRE-ENFORCEMENT PRINCIPAL PRIORITY OF PAYMENTS
On each payment date prior to enforcement of the Funding security, the Cash
Manager will, subject to the rules for application of Funding Available
Principal Receipts set forth below, apply Funding Available Principal Receipts
in the following order of priority (the "FUNDING PRE-ENFORCEMENT PRINCIPAL
PRIORITY OF PAYMENTS"):
(A) first, an amount necessary to fund or replenish, as the case may be, the
Issuer Liquidity Reserve Fund, if any, of each Issuer up to the Issuer
Liquidity Reserve Required Amount but only from and to the extent of the
Issuer Allocable Principal Receipts for that Issuer;
(B) second, to pay to (or, if required under that Issuer's Intercompany Loan,
set aside for) each Issuer an amount up to its Issuer Allocable Principal
Receipts in respect of principal due (or, if required under that Issuer's
Intercompany Loan, to become due) on that Issuer's Intercompany Loan,
which shall be an amount up to the aggregate amount of, and shall be
applied in the amounts and priorities set forth in, the Issuer Principal
Payments for that Issuer;
(C) last, to pay to (or, if required under that Issuer's Intercompany Loan,
set aside for) each issuer up to its allocable portion of Shared Issuer
Principal Receipts in respect of principal due (or, if required under
that Issuer's Intercompany Loan, to become due) on that Issuer's
Intercompany Loan, which in the case of the Issuer shall be an amount up
to the aggregate amount of, and shall be applied in the amounts and
priorities set forth in, the Issuer Principal Payments for that Issuer
until there are no remaining Funding Available Principal Receipts on such
Payment Date,
PROVIDED THAT no amount will be applied in replenishing the Issuer Liquidity
Reserve Fund held by Funding in respect of an Issuer under paragraph (A) above
following an enforcement of the Issuer Security relating to that Issuer.
RULES FOR APPLICATION OF FUNDING AVAILABLE PRINCIPAL RECEIPTS
(1) On the Distribution Date immediately preceding such Payment Date, the
Cash Manager will calculate the "Issuer Allocable Principal Receipts" for
each Issuer in respect of the relevant Payment Date which, subject as
provided in paragraphs (2) through (7) below, is for any issuer an amount
which is equal to the lesser of:
(a) (only if relevant) the principal amount due on the Intercompany
Loan of such Issuer equal to the Controlled Amortisation Amount
due, if any, on the Payment Date immediately succeeding such
Distribution Date; and
(b) an amount equal to:
Outstanding Principal Balance on such
Funding Available Issuer's Intercompany Loan
Principal x --------------------------------------------------------
Receipts Aggregate Outstanding Principal Balance
of the Intercompany Loans of all Issuers
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PROVIDED THAT, subject as provided in paragraphs (2) through (7) below,
for the purpose only of determining the amount of Issuer Allocable
Principal Receipts which may be allocated and paid to that Issuer (but
not to any other Issuer) in accordance with this paragraph (1), following
an enforcement of the Issuer Security relating to that Issuer the amount
so determined may be increased to the extent of the aggregate of any
amounts standing to the credit of the Issuer Liquidity Reserve Ledger, if
any, and the Issuer Reserve Ledger of that Issuer remaining on that
Payment Date after the application of such reserve funds in accordance
with the Funding Pre-Enforcement Revenue Priority of Payments.
(2) If the Notes of any Issuer have become immediately due and payable as a
result of the service of a Note Enforcement Notice or if the Intercompany
Loan of any Issuer and the other Intercompany Loans of any other Issuers
have become immediately due and payable as a result of the service of an
Intercompany Loan Enforcement Notice or otherwise on any Payment Date
following the occurrence of any Trigger Event, principal payments in
respect of any Intercompany Loan may be made in excess of any Controlled
Amortisation Amount and paragraph (1)(a) above shall no longer apply in
relation to that Issuer and the amount of Issuer Allocable Principal
Receipts payable to that Issuer on the relevant Payment Date may not
exceed the amount determined under paragraph (1)(b) above but subject
always to any increase in that amount as a result of the utilisation of
the Issuer Reserve Fund and the Issuer Liquidity Reserve Fund (if any)
following enforcement of the Issuer Security relating to that Issuer as
provided in that paragraph.
(3) For the purpose of determining the amount of Issuer Allocable Principal
Receipts which may be paid to any Issuer on a Payment Date pursuant to
paragraph (1) above or paragraph (6) below, the Outstanding Principal
Balance of that Intercompany Loan shall be deemed to be reduced by the
amount of any deficiency recorded on the Issuer Principal Deficiency
Ledger of that Issuer as at such Payment Date, but only to the extent
that such deficiency has arisen as a result of (i) losses on the Mortgage
Loans allocated by Funding to that Issuer and/or (ii) the application of
Funding Available Principal Receipts to fund the Issuer Liquidity Reserve
Fund of that Issuer but not as a result of any other principal deficiency
of that Issuer.
(4) The amount of Funding Available Principal Receipts payable to each Issuer
on a Payment Date will be reduced in proportion to the aggregate of the
Issuer Available Revenue Receipts of that Issuer which are to be applied
on that Payment Date in reducing deficiencies recorded on the Issuer
Principal Deficiency Ledgers, but only to the extent that the Issuer
Available Revenue Receipts which are to be so applied on that Payment
Date would not otherwise be payable as principal on the relevant Notes on
such Payment Date.
(5) No issuer shall be entitled to, or shall receive on a Payment Date, any
amount of Issuer Allocable Principal Receipts from Funding which is not
required by that Issuer to make a payment on that date in accordance with
the relevant Issuer Pre-Enforcement Principal Priority of Payments or
otherwise to make a payment of principal on the Notes.
(6) The portion of Issuer Allocable Principal Receipts, if any, not required
to be applied by the Issuer to pay principal on the notes on a Payment
Date together with the portion of Issuer Allocable Principal Receipts
relating to all other Issuers not required to be so applied by such other
Issuers (or otherwise required to be set aside by Funding for any Issuer)
on that
78
Payment Date (excluding the amount of any Issuer Reserve Fund or Issuer
Liquidity Reserve Fund (if any) of any Issuer), constitute "SHARED ISSUER
PRINCIPAL RECEIPTS". Shared Issuer Principal Receipts will be reallocated
by the Cash Manager and distributed among the Issuers as payments of
principal under the applicable Intercompany Loans to the extent required to
make payments of principal due on the relevant Notes. Save as provided in
paragraph (2) above, each Issuer will be entitled to receive a portion of
the Shared Issuer Principal Receipts equal to:
Outstanding Principal Balance of the
Shared Intercompany Loan of the Issuer
Issuer Principal x -------------------------------------------------------
Receipts Aggregate Outstanding Principal Balance
of the Intercompany Loans of all Issuers
(7) The repayment of any Intercompany Loan prior to the occurrence of a
Trigger Event, enforcement of the Issuer Security by the Note Trustee
under the Issuer Deed of Charge or enforcement of the Funding Security by
the Security Trustee under the Funding Deed of Charge will be made in
accordance with the terms of the relevant Intercompany Loan Agreement.
79
PART III
FUNDING POST-ENFORCEMENT PRIORITY OF PAYMENTS
At any time after the security created under this Funding Deed of Charge has
become enforceable in accordance with Clause 7.2 (Enforceable) and provided
that the Intercompany Loan Enforcement Notice has not been withdrawn, all
Funding Available Revenue Receipts, Funding Available Principal Receipts and
all other monies paid to or received or recovered by or on behalf of Funding or
the Security Trustee or any Receiver appointed on its behalf, including all
proceeds following any sale, realisation or enforcement of the security created
under this Funding Deed of Charge and all amounts not previously distributed
and/or standing to the credit of any Funding Bank Account and all monies
standing to the credit of the Funding Reserve Ledger (if any) shall (if not
already received by the Security Trustee) be paid to and held by the Security
Trustee on trust to apply the same (save to the extent required otherwise by
applicable law) in accordance with the rules and the order of priority of the
Funding Post-Enforcement Priority of Payments.
The Security Trustee (or the Cash Manager on its behalf) will, subject to the
rules for application of Funding Available Principal Receipts and Funding
Available Revenue Receipts set out in Part I and Part II of this Schedule,
apply all such amounts received or recovered following enforcement of the
Funding Security on each Payment Date in accordance with the following order of
priority (known as the "FUNDING POST-ENFORCEMENT PRIORITY OF PAYMENTS"):
(A) first, to pay amounts due to the Security Trustee and any Receiver
appointed by the Security Trustee, together with interest and (to the
extent not already inclusive) VAT on those amounts, and to provide for
any amounts due or to become due to the Security Trustee and the Receiver
in the following Interest Period under the Funding Deed of Charge or any
other Transaction Document;
(B) second, towards payment of amounts due and payable to the Cash Manager
and any costs, charges, liabilities and expenses then due or to become
due and payable to the Cash Manager under the Cash Management Agreement,
together with (to the extent not already inclusive) VAT on those amounts;
(C) third, (in no order of priority between them but in proportion to the
respective amounts due) towards payment of amounts (if any) due to the
Account Bank under the terms of the Bank Account Agreement and to the
Corporate Services Provider under the Corporate Services Agreement;
(D) fourth, (in no order of priority between them but in proportion to the
respective amounts due) to each Issuer its share of Issuer Allocable
Revenue Receipts and Issuer Allocable Principal Receipts towards payment
of amounts of interest, principal and fees due to such Issuer under such
Issuer's Intercompany Loan Agreement, which in the case of the Issuer
shall be up to the aggregate amount of the amounts, and shall be applied
in the amounts and priorities, as set forth in the Issuer Post-
Enforcement Priority of Payments;
(E) fifth, towards payment of amounts due to the Start-Up Loan Provider under
the Start-Up Loan Agreement;
80
(F) sixth, towards payment of any Deferred Contribution due to the Mortgages
Trustee under the Mortgages Trust Deed; and
(G) last, to pay any amount remaining following the application of principal
and revenue set forth in paragraphs (A) through (F) above, to Funding,
Provided that for the avoidance of doubt funds standing to the credit of any
Issuer Reserve Fund or Issuer Liquidity Reserve Fund of any Issuer shall only
be applied in reduction of the liabilities owing under the Intercompany Loan of
such Issuer.
81
SCHEDULE 4
FORM OF NOTICE OF ASSIGNMENT
To: [Addressee(s)]
In respect of the [Description of Funding Transaction Document or Funding
Charged Property]
[Date]
Dear Sirs,
Terms and expressions used in this letter are as defined in the Funding Deed of
Charge (the "FUNDING DEED OF CHARGE") between Granite Finance Funding Limited
(the "FUNDING"), The Bank of New York (the "SECURITY TRUSTEE") and others dated
26 March 2001.
We hereby give notice to each addressee of this letter that by assignment(s)
under or pursuant to the Funding Deed of Charge, Funding has assigned
absolutely, by way of security for the payment and performance of certain
obligations of Funding described in the Funding Deed of Charge (the "FUNDING
SECURED OBLIGATIONS"), to the Security Trustee all its right, title, benefit
and interest under the [Agreement(s)] (the "FUNDING TRANSACTION DOCUMENTS")
[including its right, title interest and benefit in relation to [describe
property] and including, without limitation, all rights to receive payment of
any amounts which may become payable to Funding thereunder, all payments
received by Funding thereunder, all rights to serve notices and/or make demands
thereunder and/or to take such steps as are required to cause payments to
become due and payable thereunder and all rights of action in respect of any
breach thereof and all rights to receive damages or obtain relief in respect
thereof and the proceeds of any of the foregoing, (hereinafter called the
"RELEVANT FUNDING PROPERTY").
In relation to any of the Relevant Funding Property which may be situated in
Jersey at any time, we hereby give notice for the purpose of the Security
Interests (Jersey) Law 1983 to each addressee of this letter that with the
intention of creating a security interest in accordance with such law in such
property in favour of the Security Trustee for the payment and performance of
the Funding Secured Obligations, Funding has assigned all of its rights, title,
benefit and interest, present and future, in, to and under the Relevant Funding
Property to the Security Trustee.
By signing the enclosed copy of this notice you acknowledge and consent to the
assignments and agree that:
(i) from the date of this notice you are obliged to and you will pay
all moneys which are or may become payable to Funding under the
aforesaid agreements to or to the order of the Security Trustee;
and
(ii) you have not, at the date of this notice, received notice that any
third party has or will have any right of interest whatsoever in
the Relevant Funding Property.
82
Notwithstanding the assignments made by Funding and referred to in this notice,
the Security Trustee hereby confirms and you further acknowledge that:
(d) you may continue to make all payments becoming due to Funding in
respect of the Relevant Funding Property in the manner envisaged
by the relevant Funding Transaction Document(s); and
(e) Funding shall be entitled to exercise its rights, powers and
discretions and perform its obligations in relation to the
Relevant Funding Property and under the Funding Transaction
Documents in accordance with the provisions of the Funding
Transaction Documents,
but only until such time as you receive notice from the Security Trustee to the
contrary or to the effect that the security created under the Funding Deed of
Charge has become enforceable, in which event from receipt of such notice you
agree that you will pay all monies becoming due and payable to Funding in
respect of the Relevant Funding Property in accordance with any instructions
received from the Security Trustee.
This letter is governed by, and shall be construed in accordance with, English
law, except that to the extent of any Relevant Funding Property which may be
situated in Jersey at any time, it is governed by and shall be construed in
accordance with the laws of Jersey.
Please acknowledge receipt of this notice by executing and returning the copy
of this letter attached hereto.
Yours faithfully,
EXECUTED for and on behalf of )
GRANITE FINANCE FUNDING LIMITED)
by: )
________________________
Authorised Signatory
Name:
Title:
83
EXECUTED for and on behalf of)
THE BANK OF NEW YORK )
by: )
________________________
Authorised Signatory
Name:
Title:
We acknowledge receipt of the above notice and the terms of the assignment
created by you in respect of the Relevant Funding Property.
In respect of the [Agreement]:
For and on behalf of:
[Party to Funding Transaction Document]
By:
84
SCHEDULE 5
UTILISATION OF ISSUER RESERVES
RESERVES FOR FIRST ISSUER
1. FIRST ISSUER RESERVE FUND:
1.1 Prior to enforcement of the First Issuer Security, the First Issuer
Reserve Fund shall only be applied on any Payment Date to increase that
portion of Funding Available Revenue Receipts which are allocated to the
First Issuer to make payments of interest and fees due under the First
Issuer Intercompany Loan.
1.2 Following enforcement of the First Issuer Security, to the extent not
applied on a Payment Date in accordance with 1.1 above, amounts standing
to the credit of the First Issuer Reserve Fund Ledger shall only be
applied in making payments of principal due under the First Issuer
Intercompany Loan (but not in respect of any other Intercompany Loan of
any New Issuer) to fund payments of principal due on the First Issuer
Notes on any Payment Date.
2. ISSUER LIQUIDITY RESERVE FUND:
2.1 Prior to enforcement of the First Issuer Security, the First Issuer
Liquidity Reserve Fund (if any is required to be established) shall only
be applied on any Payment Date to:
(a) increase that portion of Funding Available Revenue Receipts which are
allocated to the First Issuer to pay amounts due under the First
Issuer Intercompany Loan, but only to the extent necessary to fund the
payment by the First Issuer of interest and fees due on the relevant
Payment Date in respect of the Class A Notes and/or the Class B Notes
and to credit the Class A Principal Deficiency Sub Ledger; and
(b) (provided that there are no Class A Notes outstanding) increase
Funding Available Revenue Receipts which are allocated to the First
Issuer to pay interest and fees due on the First Issuer Intercompany
Loan.
2.2 Following enforcement of the First Issuer Security, to the extent not
applied on a Payment Date in accordance with 2.1 above, amounts standing
to the credit of the First Issuer Liquidity Reserve Ledger shall only be
applied in making payments of principal due under the First Issuer
Intercompany Loan (but not in respect of any other Intercompany Loan of
any New Issuer) in order to fund payments of principal due on the First
Issuer Notes on any Payment Date.
85
EXECUTION PAGE
FUNDING
EXECUTED AS A DEED by )
GRANITE FINANCE FUNDING LIMITED)
acting by: )
________________________
Director
Name:
Title:
________________________
Director/Secretary
Name:
Title:
THE SECURITY TRUSTEE
EXECUTED AS A DEED for and )
on behalf of )
THE BANK OF NEW YORK )
by: )
________________________
Authorised Signatory
Name:
Title:
THE NOTE TRUSTEE
EXECUTED AS A DEED for and)
on behalf of )
THE BANK OF NEW YORK )
by: )
________________________
Authorised Signatory
Name:
Title:
THE FIRST ISSUER
EXECUTED AS A DEED by )
GRANITE MORTGAGES 01-1 PLC)
acting by: )
________________________
Director
Name:
Title:
________________________
Director/Secretary
Name:
Title:
THE MORTGAGES TRUSTEE
EXECUTED AS A DEED by )
GRANITE FINANCE TRUSTEES LIMITED )
acting by: )
________________________
Director
Name:
Title:
________________________
Director/Secretary
Name:
Title:
THE CASH MANAGER
EXECUTED AS A DEED under )
THE COMMON SEAL of )
NORTHERN ROCK PLC )
affixed by order of the Board of Directors)
in the presence of:
________________________
Authorised Signatory
Name:
Title:
________________________
Authorised Signatory
Name:
Title:
THE ACCOUNT BANK
EXECUTED AS A DEED by )
LLOYDS TSB BANK PLC )
Acting by its attorney: )
________________________
in the presence of:
Name:
________________________
Address:
________________________
________________________
Occupation:
________________________
THE FUNDING GIC PROVIDER
EXECUTED AS A DEED by )
LLOYDS TSB BANK PLC )
Acting by its attorney: )
________________________
in the presence of:
Name:
________________________
Address:
________________________
________________________
Occupation:
________________________
THE CORPORATE SERVICES PROVIDER
EXECUTED AS A DEED by )
MOURANT & CO. CAPITAL (SPV) )
LIMITED )
acting by: )
________________________
Director
Name:
Title:
________________________
Director/Secretary
Name:
Title:
THE START-UP LOAN PROVIDER
EXECUTED AS A DEED under )
THE COMMON SEAL of )
NORTHERN ROCK PLC )
affixed by order of the Board of Directors)
in the presence of:
________________________
Authorised Signatory
Name:
Title:
________________________
Authorised Signatory
Name:
Title: