Exhibit 4.5
EXECUTION COPY
FIFTH DEED OF ACCESSION TO FUNDING 1
DEED OF CHARGE
DATED 18TH NOVEMBER, 2004
PERMANENT FUNDING (NO. 1) LIMITED
AND
PERMANENT FINANCING (NO. 1) PLC
AND
PERMANENT FINANCING (NO. 2) PLC
AND
PERMANENT FINANCING (NO. 3) PLC
AND
PERMANENT FINANCING (NO. 4) PLC
AND
PERMANENT FINANCING (NO. 5) PLC
AND
PERMANENT FINANCING (NO. 6) PLC
AND
THE BANK OF NEW YORK
AND
HALIFAX PLC
AND
THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND
AND
JPMORGAN CHASE BANK, N.A.
AND
STRUCTURED FINANCE MANAGEMENT LIMITED
[Allen & Overy Logo]
ALLEN & OVERY LLP
LONDON
CONTENTS
CLAUSE PAGE
1. Interpretation.......................................................3
2. Representations and Warranties.......................................3
3. Accession............................................................4
4. Scope of the Funding 1 Deed of Charge................................4
5. Amendment to the Funding 1 Priority of Payments......................4
6. [Reserved]...........................................................4
7. Application..........................................................4
8. Notices and Demands..................................................5
9. Choice of Law........................................................6
10. Counterparts.........................................................6
11. Third Party Rights...................................................6
12. Submission to Jurisdiction...........................................6
Signatories...................................................................7
APPENDIX
1. Amended and Restated Funding Priority of Payments...................11
Part 1 Funding 1 Pre-Enforcement Revenue Priority of Payments.....11
Part 2 Funding 1 Principal Priorities of Payments.................17
Part 3 Funding 1 Post-Enforcement Priority of Payments............26
THIS FIFTH DEED OF ACCESSION TO THE FUNDING 1 DEED OF CHARGE is made on
18th November, 2004
BETWEEN:
(1) PERMANENT FUNDING (NO. 1) LIMITED (registered number 4267660), a
private limited company incorporated under the laws of England and
Wales, whose registered office is at Blackwell House, Guildhall Yard,
London EC2V 5AE (FUNDING 1);
(2) PERMANENT FINANCING (NO. 1) PLC (registered number 4416192), a public
limited company incorporated under the laws of England and Wales, whose
registered office is at Blackwell House, Guildhall Yard, London EC2V
5AE (the FIRST ISSUER);
(3) PERMANENT FINANCING (NO. 2) PLC (registered number 4623188), a public
limited company incorporated under the laws of England and Wales, whose
registered office is at Blackwell House, Guildhall Yard, London EC2V
5AE (the SECOND ISSUER);
(4) PERMANENT FINANCING (NO. 3) PLC (registered number 4907355), a public
limited company incorporated under the laws of England and Wales, whose
registered office is at Blackwell House, Guildhall Yard, London EC2V
5AE (the THIRD ISSUER);
(5) PERMANENT FINANCING (NO. 4) PLC (registered number 4988201), a public
limited company incorporated under the laws of England and Wales, whose
registered office is at Blackwell House, Guildhall Yard, London EC2V
5AE (the FOURTH ISSUER);
(6) PERMANENT FINANCING (NO. 5) PLC (registered number 5114399), a public
limited company incorporated under the laws of England and Wales, whose
registered office is at Blackwell House, Guildhall Yard, London EC2V
5AE (the FIFTH ISSUER);
(7) THE BANK OF NEW YORK, whose principal office is at One Canada Square,
London E14 5AL in its capacity as Security Trustee;
(8) HALIFAX PLC (registered number 2367076), a public limited
company incorporated under the laws of England and Wales, whose
registered office is at Trinity Road, Halifax, West Yorkshire HX1 2RG,
acting in its capacities as Cash Manager, Seller, Funding 1 Swap
Provider, First Start-up Loan Provider (the FIRST START-UP LOAN
PROVIDER), Second Start-up Loan Provider (the SECOND START-UP LOAN
PROVIDER), Third Start-up Loan Provider (the THIRD START-UP LOAN
PROVIDER), Fourth Start-up Loan Provider (the FOURTH START-UP LOAN
PROVIDER), Fifth Start-up Loan Provider (the FIFTH START-UP LOAN
PROVIDER) and Sixth Start-up Loan Provider (the SIXTH START-UP LOAN
PROVIDER);
(9) THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND, established by an Act
of the Parliament of Scotland in 1695, as amended, acting through its
office situated at 116 Wellington Street, Leeds LS1 4LT (acting in its
capacities as ACCOUNT BANK and FUNDING 1 GIC PROVIDER);
(10) JPMORGAN CHASE BANK, N.A. acting through its office at 125 London Wall,
London EC2Y 5AJ (acting in its capacity as FUNDING 1 LIQUIDITY FACILITY
PROVIDER);
(11) STRUCTURED FINANCE MANAGEMENT LIMITED (registered number 3853947), a
private limited company incorporated under the laws of England and
Wales, whose registered office is at Blackwell House, Guildhall Yard,
London EC2V 5AE (acting in its capacity as the FUNDING 1 CORPORATE
SERVICES Provider); and
1
(12) PERMANENT FINANCING (NO. 6) PLC (registered number 5232464), a public
limited company incorporated under the laws of England and Wales, whose
registered office is at Blackwell House, Guildhall Yard, London EC2V
5AE (the SIXTH ISSUER).
WHEREAS:
(A) Pursuant to the terms of an intercompany loan agreement dated 18th
November, 2004 made between Funding 1 and the Sixth Issuer (the SIXTH
ISSUER INTERCOMPANY LOAN AGREEMENT), the Sixth Issuer has agreed to
make the Sixth Issuer Term Advances available to Funding 1 and Funding
1 has agreed to secure its obligations and other liabilities to the
Sixth Issuer thereunder pursuant to the Funding 1 Deed of Charge.
(B) Pursuant to the terms of a start-up loan agreement dated 18th November
2004 made between Funding 1 and the Sixth Start-up Loan Provider (the
SIXTH START-UP LOAN AGREEMENT), the Sixth Start-up Loan Provider has
agreed to make a subordinated loan to Funding 1 and Funding 1 has
agreed to secure its obligations and other liabilities to the Sixth
Start-up Loan Provider thereunder pursuant to the Funding 1 Deed of
Charge.
(C) On the First Issuer Closing Date, Funding 1 agreed to provide the
Security Trustee with the benefit of the security described in the
Funding 1 Deed of Charge to secure Funding 1's obligations to the then
Funding 1 Secured Creditors. The terms of the Funding 1 Deed of Charge
permit Funding 1 to secure its obligations to a New Funding 1 Secured
Creditor thereunder.
(D) On the Second Issuer Closing Date, the Second Issuer and the Second
Start-up Loan Provider acceded to the Funding 1 Deed of Charge,
pursuant to a deed of accession, made between the then Funding 1
Secured Creditors, the Second Issuer and the Second Start-up Loan
Provider (the FIRST DEED OF ACCESSION).
(E) On the Third Issuer Closing Date, the Third Issuer and the Third
Start-up Loan Provider acceded to the Funding 1 Deed of Charge,
pursuant to a deed of accession, made between the then Funding 1
Secured Creditors, the Third Issuer and the Third Start-up Loan
Provider (the SECOND DEED OF ACCESSION);
(F) On the Fourth Issuer Closing Date, the Fourth Issuer and the Fourth
Start-up Loan Provider acceded to the Funding 1 Deed of Charge,
pursuant to a deed of accession, made between the then Funding 1
Secured Creditors, the Fourth Issuer and the Fourth Start-up Loan
Provider (the THIRD DEED OF ACCESSION);
(G) On the Fourth Issuer Closing Date, Funding 1 agreed to provide the
Security Trustee with the benefit of the security described in the
Second Supplemental Funding 1 Deed of Charge to secure Funding 1's
obligations to the then Funding 1 Secured Creditors. The terms of the
Second Supplemental Funding 1 Deed of Charge also permit Funding 1 to
secure its obligations to a New Funding 1 Secured Creditor thereunder;
(H) On the Fifth Issuer Closing Date, the Fifth Issuer and the Fifth
Start-up Loan Provider acceded to the Funding 1 Deed of Charge,
pursuant to a deed of accession, made between the then Funding 1
Secured Creditors, the Fifth Issuer and the Fifth Start-up Loan
Provider (the FOURTH DEED OF ACCESSION);
(I) The Sixth Issuer and the Sixth Start-up Loan Provider have agreed to
enter into this Deed to accede to the provisions of the Funding 1 Deed
of Charge.
2
(J) The Funding 1 Secured Creditors have agreed to enter into this Deed to,
among other things, acknowledge and agree to such accession and to
permit any consequential changes to the Funding 1 Priority of Payments
set out in PART 1, PART 2 and PART 3 of SCHEDULE 3 of the Funding 1
Deed of Charge as are required and any other amendment as may be
required to give effect to this Accession Undertaking.
NOW THIS DEED WITNESSES as follows:
1. INTERPRETATION
1.1 The amended and restated master definitions and construction schedule
signed by, amongst others, the parties to this Deed and dated 18th
November, 2004 (as the same may be amended, varied or supplemented from
time to time with the consent of the parties to this Deed) (the MASTER
DEFINITIONS AND CONSTRUCTION SCHEDULE) is expressly and specifically
incorporated into this Deed and, accordingly, the expressions defined
in the Master Definitions and Construction Schedule (as so amended,
varied or supplemented from time to time) 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 of the Master Definitions and
Construction Schedule.
1.2 For the avoidance of doubt, references in this Deed to the Funding 1
Deed of Charge shall include, where the context so permits, the Second
Supplemental Funding 1 Deed of Charge.
2. REPRESENTATIONS AND WARRANTIES
2.1 The Sixth Issuer hereby represents and warrants to the Security Trustee
and each of the Funding 1 Secured Creditors in respect of itself that
as of the date of this Deed:
(a) pursuant to the terms of the Sixth Issuer Intercompany Loan
Agreement, Funding 1 has agreed to pay to the Sixth Issuer the
amounts set out in the Sixth Issuer Intercompany Loan
Agreement; and
(b) the Sixth Issuer Intercompany Loan Agreement expressly
provides that all amounts due from Funding 1 thereunder are to
be secured by the Funding 1 Deed of Charge.
2.2 The Sixth Start-up Loan Provider hereby represents and warrants to the
Security Trustee and each of the Funding 1 Secured Creditors in respect
of itself that as of the date of this Deed:
(a) pursuant to the terms of the Sixth Start-up Loan Agreement,
Funding 1 has agreed to pay to the Sixth Start-up Loan
Provider the amounts set out in the Sixth Start-up Loan
Agreement; and
(b) the Sixth Start-up Loan Agreement expressly provides that all
amounts due from Funding 1 thereunder are to be secured by the
Funding 1 Deed of Charge.
2.3 Funding 1 hereby represents and warrants to the Security Trustee and
each of the Funding 1 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
3. ACCESSION
In consideration of the Sixth Issuer and the Sixth Start-up Loan
Provider being accepted as Funding 1 Secured Creditors for the purposes
of the Funding 1 Deed of Charge by the parties thereto as from the date
of this Deed, each of the Sixth Issuer and the Sixth Start-up Loan
Provider:
(a) confirms that as from the date of this Deed, it intends to be
a party to the Funding 1 Deed of Charge as a Funding 1 Secured
Creditor;
(b) undertakes to comply with and be bound by all of the
provisions of the Master Definitions and Construction Schedule
(as the same may be further amended, varied or restated from
time to time) and the Funding 1 Deed of Charge in its capacity
as a Funding 1 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 1 Deed of Charge in its capacity as
a Funding 1 Secured Creditor, as if it had been an original
party thereto as provided in CLAUSE 31.8 (Funding 1 Secured
Creditors) (including without limitation CLAUSES 8.4
(Priorities of Payment - After Service of an Intercompany Loan
Acceleration Notice), 8.5 (Application of Monies Received
After Intercompany Loan Acceleration Notice) and 9.2 (No
Enforcement by Funding 1 Secured Creditors); and
(d) agrees that the Security Trustee shall be the Security Trustee
of the Funding 1 Deed of Charge for all Funding 1 Secured
Creditors upon and subject to the terms set out in the Funding
1 Deed of Charge.
4. SCOPE OF THE FUNDING 1 DEED OF CHARGE
Funding 1, the Sixth Issuer, the Sixth Start-up Loan Provider and the
Security Trustee hereby agree that for relevant purposes under the
Funding 1 Deed of Charge and the Master Definitions and Construction
Schedule:
(a) the Sixth Issuer Intercompany Agreement and the Sixth Start-up
Loan Agreement shall be treated as Funding 1 Agreements; and
(b) the Sixth Issuer and the Sixth Start-up Loan Provider shall be
treated as Funding 1 Secured Creditors.
5. AMENDMENT TO THE FUNDING 1 PRIORITY OF PAYMENTS
The Funding 1 Secured Creditors agree to amend and restate the Funding
1 Priority of Payments set out in PART 1, PART 2 and PART 3 of SCHEDULE
3 of the Funding 1 Deed of Charge in accordance with APPENDIX 1 hereto.
6. [RESERVED]
7. APPLICATION
Prior to and following enforcement of the Funding 1 Security all
amounts at any time held by Funding 1, 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 1 Deed of Charge.
4
8. NOTICES AND DEMANDS
Any notice or communication under or in connection with this Deed, the
Funding 1 Deed of Charge or the Master Definitions and Construction
Schedule shall be given in the manner and at the times set out in
CLAUSE 30 (Notices and Demands) of the Funding 1 Deed of Charge to the
addresses given in this CLAUSE 8 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 8 for the Sixth Issuer is:
Permanent Financing (No. 6) PLC
Blackwell House
Guildhall Yard
London
EC2V 5AE
Facsimile: +44 (0) 20 7556 0975
For the attention of: The Directors
with a copy to: HBOS Treasury Services plc
33 Old Broad Street
London
EC2N 1HZ
Facsimile: +44 (0) 20 7574 8303
For the attention of: Head of Mortgage Securitisation and Covered Bonds
The address referred to in this CLAUSE 8 for the Sixth Start-up Loan Provider
is:
Halifax plc
Trinity Road (LP/3/3/SEC)
Halifax
West Yorkshire
HX1 2RG
Facsimile: +44 (0) 113 235 7511
For the attention of: the Head of Mortgage Securitisation
with a copy to: HBOS Treasury Services plc
33 Old Broad Street
London
EC2N 1HZ
Facsimile: +44 (0) 20 7574 8303
For the attention of: the Head of Mortgage Securitisation and Covered
Bonds
The address referred to in this CLAUSE 8 for the Security Trustee is:
The Bank of New York
One Canada Square
London E14 5AL
Facsimile: +(44) (0) 20 7964 6061/6399
For the attention of: Global Structured Finance - Corporate Trust
5
or such other address and/or numbers as the Sixth Issuer, the Sixth
Start-up Loan Provider or the Security Trustee may notify to the
parties to the Funding 1 Deed of Charge in accordance with the
provisions thereof.
9. CHOICE OF LAW
This Deed is governed by and shall be construed in accordance with
English law.
10. COUNTERPARTS
This Deed may be signed (manually or by facsimile) and delivered in
more than one counterpart all of which, taken together, shall
constitute one and the same Deed.
11. THIRD PARTY RIGHTS
This Deed does not create any right under the Contracts (Rights of
Third Parties) Act 1999 which is enforceable by any person who is not a
party to this Deed.
12. SUBMISSION TO JURISDICTION
Each party to this Deed hereby irrevocably submits to the non-exclusive
jurisdiction of the English courts in any action or proceeding arising
out of or relating to this Deed, and hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard and
determined by such courts. Each party to this Deed hereby irrevocably
waives, to the fullest extent it may possibly do so, any defence or
claim that the English courts are an inconvenient forum for the
maintenance or hearing of such action or proceeding.
DULY EXECUTED AND DELIVERED AS A DEED by each of the parties hereto or on its
behalf on the date appearing on page 1.
6
SIGNATORIES
FUNDING 1
EXECUTED as a DEED by ) ................................
PERMANENT FUNDING (NO. 1) )
LIMITED acting by its attorney )
in the presence of )
Witness's Signature: ....................
Name: ....................
Address: ....................
FIRST ISSUER
EXECUTED as a DEED by ) ................................
PERMANENT FINANCING (NO. 1) )
PLC acting by its attorney )
in the presence of )
Witness's Signature: ....................
Name: ....................
Address: ....................
SECOND ISSUER
EXECUTED as a DEED by ) ................................
PERMANENT FINANCING (NO. 2) )
PLC acting by its attorney )
in the presence of )
Witness's Signature: ....................
Name: ....................
Address: ....................
7
THIRD ISSUER
EXECUTED as a DEED by ) ................................
PERMANENT FINANCING (NO. 3) )
PLC acting by its attorney )
in the presence of )
Witness's Signature: ....................
Name: ....................
Address: ....................
FOURTH ISSUER
EXECUTED as a DEED by ) ................................
PERMANENT FINANCING (NO. 4) )
PLC acting by its attorney )
in the presence of )
Witness's Signature: ....................
Name: ....................
Address: ....................
FIFTH ISSUER
EXECUTED as a DEED by ) ................................
PERMANENT FINANCING (NO. 5) )
PLC acting by its attorney )
in the presence of )
Witness's Signature: ....................
Name: ....................
Address: ....................
8
HALIFAX
EXECUTED as a DEED by )
HALIFAX PLC )
IN ITS CAPACITIES AS SELLER, CASH MANAGER )
FUNDING 1 SWAP PROVIDER, FIRST START-UP )
LOAN PROVIDER, SECOND START-UP LOAN )
PROVIDER, THIRD START-UP LOAN PROVIDER, )
FOURTH START-UP LOAN PROVIDER AND )
FIFTH START-UP LOAN PROVIDER AND
SIXTH START-UP LOAN PROVIDER )
acting by its attorney )
in the presence of ) .............................
Witness's Signature: ....................
Name: ....................
Address: ....................
THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND
EXECUTED as a DEED by ) .............................
THE GOVERNOR AND COMPANY OF )
THE BANK OF SCOTLAND )
IN ITS CAPACITIES AS ACCOUNT BANK )
AND FUNDING 1 GIC PROVIDER )
acting by its attorney )
in the presence of )
Witness's Signature: ...................
Name: ...................
Address: ...................
FUNDING 1 CORPORATE SERVICES PROVIDER
EXECUTED as a DEED by ) ............................
STRUCTURED FINANCE )
MANAGEMENT LIMITED )
in its capacity as )
CORPORATE SERVICES PROVIDER )
acting by its attorney )
in the presence of: )
(as attorney for STRUCTURED
FINANCE MANAGEMENT LIMITED)
Witness's Signature: ...................
9
Name: ...................
Address: ...................
FUNDING 1 LIQUIDITY FACILITY PROVIDER
EXECUTED as a DEED by )
JPMORGAN CHASE BANK, N.A. )
acting by its attorney )
in the presence of ) ...........................
Witness's Signature: ...................
Name: ...................
Address: ...................
SECURITY TRUSTEE
EXECUTED as a DEED by )
THE BANK OF NEW YORK )
acting by its attorney in the presence of ) ...........................
Witness's Signature: ...................
Name: ...................
Address: ...................
SIXTH ISSUER
EXECUTED as a DEED by ) ..........................
PERMANENT FINANCING (NO. 6) )
PLC acting by its attorney )
in the presence of )
Witness's Signature: ...................
Name: ...................
Address: ...................
10
APPENDIX 1
AMENDED AND RESTATED FUNDING PRIORITY OF PAYMENTS
SCHEDULE 3
FUNDING 1 PRIORITY OF PAYMENTS
PART 1
FUNDING 1 PRE-ENFORCEMENT REVENUE PRIORITY OF PAYMENTS
1. CALCULATION OF FUNDING 1 AVAILABLE REVENUE RECEIPTS
1.1 On the day falling four Business Days prior to each Funding 1 Interest
Payment Date, the Cash Manager will calculate whether Funding 1
Available Revenue Receipts will be sufficient on the next Funding 1
Interest Payment Date to pay items (a) to (f), (h), (j) and (l) in the
Funding 1 Pre-Enforcement Revenue Priority of Payments.
1.2 Subject to paragraph 1.3 below, if there would be insufficient Funding
1 Available Revenue Receipts on the relevant Funding 1 Interest Payment
Date to pay items (a) to (f), (h), (j) and (l) of the Funding 1
Pre-Enforcement Revenue Priority of Payments, then Funding 1 (or the
Cash Manager on its behalf) shall pay or provide for that deficit by
applying amounts then standing to the credit of (a) first, the Funding
1 Principal Ledger, if any, and (b) second, any amounts standing to the
credit of the Cash Accumulation Ledger after deducting the amounts
standing to the credit of the Funding 1 Principal Ledger (if any) from
such ledger, and the Cash Manager shall make a corresponding entry in
the relevant Principal Deficiency Ledger.
1.3 Funding 1 Principal Receipts may not be used to pay interest on any
Term Advance if and to the extent that would result in a deficiency
being recorded or an existing deficiency being increased on a Principal
Deficiency Sub-Ledger relating to a higher ranking Term Advance.
1.4 If there are no (or insufficient) amounts standing to the credit of the
Funding 1 Principal Ledger and the Cash Accumulation Ledger to cure the
insufficiency described in paragraph 1.2 above (an "UNCURED FUNDING 1
REVENUE SHORTFALL"), then on the London Business Day immediately
preceding the relevant Funding 1 Interest Payment Date the Cash Manager
will (i) direct Funding 1 to request a drawing pursuant to CLAUSE 5.1
of the Funding 1 Liquidity Facility Agreement to apply towards the
Uncured Funding 1 Revenue Shortfall to apply towards the Uncured
Funding 1 Revenue Shortfall in accordance with the Funding 1
Pre-Enforcement Revenue Priority of Payments.
2. DISTRIBUTION OF FUNDING 1 AVAILABLE REVENUE RECEIPTS PRIOR TO THE
SERVICE OF AN INTERCOMPANY LOAN ACCELERATION NOTICE ON FUNDING 1
2.1 This section sets out the order of priority of payments by Funding 1 as
at the Closing Date. If Funding 1 enters into New Intercompany Loan
Agreements, then this order of priority may change pursuant to CLAUSE
7.5 of the Funding 1 Deed of Charge.
2.2 Except for amounts due to third parties by an Issuer and/or Funding 1
under paragraph (a) below or amounts due to the Account Bank and/or an
Issuer Account Bank which shall be paid when due, on each Funding 1
Interest Payment Date prior to the service of an Intercompany Loan
Acceleration Notice on Funding 1, the Cash Manager will apply (i) the
Funding 1 Available Revenue Receipts, (ii) if Funding 1 Available
Revenue Receipts are
11
insufficient to pay items (a) to (f), (h), (j) and (l), amounts
standing to the credit of the Funding 1 Principal Ledger and the Cash
Accumulation Ledger and (iii), if there is an Uncured Revenue Shortfall
on such date, drawings under the Funding 1 Liquidity Facility Agreement
to the extent necessary to pay the items in items (a) to (f), (h), (j)
and (l), in the following order of priority (being the FUNDING 1
PRE-ENFORCEMENT REVENUE PRIORITY OF Payments):
(a) firstly, in or towards satisfaction of pro rata and pari
passu, the amounts due to:
(i) the Security Trustee (together with interest and any
amount in respect of VAT on those amounts) and to
provide for any amounts due or to become due in the
immediately following Interest Period to the Security
Trustee under the Funding 1 Deed of Charge;
(ii) pro rata and pari passu, to pay amounts due to the
First Issuer in respect of the First Issuer's
obligations specified in items (a) to (c) inclusive
of the First Issuer Pre-Enforcement Revenue Priority
of Payments or, as the case may be, items (a) and (b)
of the First Issuer Post-Enforcement Priority of
Payments;
(iii) pro rata and pari passu, to pay amounts due to the
Second Issuer in respect of the Second Issuer's
obligations specified in items (a) to (c) inclusive
of the Second Issuer Pre-Enforcement Revenue Priority
of Payments or, as the case may be, items (a) and (b)
of the Second Issuer Post-Enforcement Priority of
Payments;
(iv) pro rata and pari passu, to pay amounts due to the
Third Issuer in respect of the Third Issuer's
obligations specified in items (a) to (c) inclusive
of the Third Issuer Pre-Enforcement Revenue Priority
of Payments or, as the case may be, items (a) and (b)
of the Third Issuer Post-Enforcement Priority of
Payments;
(v) pro rata and pari passu, to pay amounts due to the
Fourth Issuer in respect of the Fourth Issuer's
obligations specified in items (a) to (c) inclusive
of the Fourth Issuer Pre-Enforcement Revenue Priority
of Payments or, as the case may be, items (a) and (b)
of the Fourth Issuer Post-Enforcement Priority of
Payments;
(vi) pro rata and pari passu, to pay amounts due to the
Fifth Issuer in respect of the Fifth Issuer's
obligations specified in items (a) to (c) inclusive
of the Fifth Issuer Pre-Enforcement Revenue Priority
of Payments or, as the case may be, items (a) and (b)
of the Fifth Issuer Post-Enforcement Priority of
Payments;
(vii) pro rata and pari passu, to pay amounts due to the
Sixth Issuer in respect of the Sixth Issuer's
obligations specified in items (a) to (c) inclusive
of the Sixth Issuer Pre-Enforcement Revenue Priority
of Payments or, as the case may be, items (a) and (b)
of the Sixth Issuer Post-Enforcement Priority of
Payments;
(viii) any third party creditors of Funding 1 (other than
those referred to later in this order of priority of
payments), which amounts have been incurred without
breach by Funding 1 of the Funding 1 Agreements (and
for which payment has not been provided for
elsewhere) and to provide for any of these amounts
expected to become due and payable in the immediately
following Interest
12
Period by Funding 1 and to pay or discharge any
liability of Funding 1 for corporation tax on any
chargeable income or gain of Funding 1;
(b) secondly, in or towards satisfaction of amounts due to the
Funding 1 Liquidity Facility Provider under the Funding 1
Liquidity Facility Agreement, together with VAT, if any,
(except for amounts drawn thereunder to repay principal on the
Bullet Term Advances, the Scheduled Amortisation Term Advances
and any Funding 1 Liquidity Subordinated Amounts);
(c) thirdly, in or towards satisfaction of amounts due and payable
to the Cash Manager under the Cash Management Agreement
(together with any amount in respect of VAT on those amounts);
(d) fourthly, in or towards satisfaction, pro rata and pari passu,
of amounts, if any, due and payable to the Account Bank under
the terms of the Bank Account Agreement and to the Funding 1
Corporate Services Provider under the Funding 1 Corporate
Services Agreement;
(e) fifthly, in or towards satisfaction of all amounts (if any)
due and payable to the Funding 1 Swap Provider under the
Funding 1 Swap Agreement (including termination payments but
excluding any Funding 1 Swap Excluded Termination Amount);
(f) sixthly, in or towards satisfaction, pro rata and pari passu,
of the amounts of interest due and payable on the Term AAA
Advances;
(g) seventhly, towards a credit to the AAA Principal Deficiency
Sub-Ledger in an amount sufficient to eliminate any debit on
that ledger;
(h) eighthly, in or towards satisfaction, pro rata and pari passu,
of the amounts of interest due and payable on the Term AA
Advances;
(i) ninthly, towards a credit to the AA Principal Deficiency
Sub-Ledger in an amount sufficient to eliminate any debit on
that ledger;
(j) tenthly, in or towards satisfaction, pro rata and pari passu,
of the amounts of interest due and payable on the Term A
Advances;
(k) eleventhly, towards a credit to the A Principal Deficiency
Sub-Ledger in an amount sufficient to eliminate any debit on
that ledger;
(l) twelfthly, in or towards satisfaction, pro rata and pari
passu, of amounts of interest due and payable on the Term BBB
Advances;
(m) thirteenthly, towards a credit to the BBB Principal Deficiency
Sub-Ledger in an amount sufficient to eliminate any debit on
that ledger;
(n) fourteenthly, in or towards satisfaction, pro rata and pari
passu, according to the respective amounts thereof:
(i) any amounts due to the First Issuer in respect of the
First Issuer's obligations (if any) to make a
termination payment to a First Issuer Swap Provider
(but excluding any First Issuer Swap Excluded
Termination Amount);
13
(ii) any amounts due to the Second Issuer in respect of
the Second Issuer's obligations (if any) to make a
termination payment to a Second Issuer Swap Provider
(but excluding any Second Issuer Swap Excluded
Termination Amount); and
(iii) any amounts due to the Third Issuer in respect of the
Third Issuer's obligations (if any) to make a
termination payment to a Third Issuer Swap Provider
(but excluding any Third Issuer Swap Excluded
Termination Amount);
(iv) any amounts due to the Fourth Issuer in respect of
the Fourth Issuer's obligations (if any) to make a
termination payment to a Fourth Issuer Swap Provider
(but excluding any Fourth Issuer Swap Excluded
Termination Amount);
(v) any amounts due to the Fifth Issuer in respect of the
Fifth Issuer's obligations (if any) to make a
termination payment to a Fifth Issuer Swap Provider
(but excluding any Fifth Issuer Swap Excluded
Termination Amount);
(vi) any amounts due to the Sixth Issuer in respect of the
Sixth Issuer's obligations (if any) to make a
termination payment to a Sixth Issuer Swap Provider
(but excluding any Sixth Issuer Swap Excluded
Termination Amount);
(o) fifteenthly, towards a credit to the General Reserve Ledger in
an amount up to the General Reserve Fund Required Amount
taking into account any net replenishment of the General
Reserve Fund on that Funding 1 Interest Payment Date from
Funding 1 Available Principal Receipts;
(p) sixteenthly, if a Liquidity Reserve Fund Rating Event has
occurred and is continuing, towards a credit to the Liquidity
Reserve Ledger to the extent the amount standing to the credit
thereof is less than the Liquidity Reserve Fund Required
Amount, taking into account any net replenishment of the
Liquidity Reserve Fund on the Funding 1 Interest Payment Day
from Funding 1 Available Principal Receipts;
(q) seventeenthly, in or towards satisfaction, pro rata and pari
passu, of any amounts due (without double counting) to:
(i) the First Issuer in respect of the First Issuer's
obligations to make any termination payment to a
First Issuer Swap Provider as a result of a First
Issuer Swap Provider Excluded Termination Amount;
(ii) the Second Issuer in respect of the Second Issuer's
obligations to make any termination payment to a
Second Issuer Swap Provider as a result of a Second
Issuer Swap Provider Excluded Termination Amount;
(iii) the Third Issuer in respect of the Third Issuer's
obligations to make any termination payment to a
Third Issuer Swap Provider as a result of a Third
Issuer Swap Provider Excluded Termination Amount;
(iv) the Fourth Issuer in respect of the Fourth Issuer's
obligations to make any termination payment to a
Fourth Issuer Swap Provider as a result of a Fourth
Issuer Swap Provider Excluded Termination Amount;
14
(v) the Fifth Issuer in respect of the Fifth Issuer's
obligations to make any termination payment to a
Fifth Issuer Swap Provider as a result of a Fifth
Issuer Swap Provider Excluded Termination Amount;
(vi) the Sixth Issuer in respect of the Sixth Issuer's
obligations to make any termination payment to a
Sixth Issuer Swap Provider as a result of a Sixth
Issuer Swap Provider Excluded Termination Amount;
(vii) the First Issuer in respect of any other amounts due
and payable under the First Issuer Intercompany Loan
Agreement and not otherwise provided for in this
order of priorities;
(viii) the Second Issuer in respect of any other amounts due
and payable under the Second Issuer Intercompany Loan
Agreement and not otherwise provided for in this
order of priorities;
(ix) the Third Issuer in respect of any other amounts due
and payable under the Third Issuer Intercompany Loan
Agreement and not otherwise provided for in this
order of priorities;
(x) the Fourth Issuer in respect of any other amounts due
and payable under the Fourth Issuer Intercompany Loan
Agreement and not otherwise provided for in this
order of priorities;
(xi) the Fifth Issuer in respect of any other amounts due
and payable under the Fifth Issuer Intercompany Loan
Agreement and not otherwise provided for in this
order of priorities;
(xii) the Sixth Issuer in respect of any other amounts due
and payable under the Sixth Issuer Intercompany Loan
Agreement and not otherwise provided for in this
order of priorities;
(xiii) after the occurrence of a Funding 1 Swap Provider
Default or a Funding 1 Swap Provider Downgrade
Termination Event, towards payment of any termination
amount due and payable by Funding 1 under the Funding
1 Swap Agreement; and
(xiv) the Funding 1 Liquidity Facility Provider to pay any
Funding 1 Liquidity Subordinated Amounts due under
the Funding 1 Liquidity Facility Agreement;
(r) eighteenthly, towards payment pro rata and pari passu amounts
due to:
(i) the First Start-up Loan Provider under the First
Start-up Loan Agreement;
(ii) the Second Start-up Loan Provider under the Second
Start-up Loan Agreement;
(iii) the Third Start-up Loan Provider under the Third
Start-up Loan Agreement;
(iv) the Fourth Start-up Loan Provider under the Fourth
Start-up Loan Agreement;
15
(v) the Fifth Start-up Loan Provider under the Fifth
Start-up Loan Agreement; and
(vi) the Sixth Start-up Loan Provider under the Sixth
Start-up Loan Agreement;
(s) nineteenthly, towards payment of an amount equal to 0.01 per
cent. of the Funding 1 Available Revenue Receipts; and
(t) twentiethly, towards payment to the shareholders of Funding 1
of any dividend declared by Funding 1.
16
PART 2
FUNDING 1 PRINCIPAL PRIORITIES OF PAYMENTS
1. DUE AND PAYABLE DATES OF TERM ADVANCES
1.1 Each First Issuer Term Advance shall become "due and payable" on the
earlier to occur of:
(a) each respective First Issuer Term Advances Due Date;
(b) the date upon which a Trigger Event occurs;
(c) the date upon which the Note Trustee serves a Note
Acceleration Notice on the First Issuer; and
(d) the date upon which the Security Trustee serves an
Intercompany Loan Acceleration Notice on Funding 1.
1.2 Each Second Issuer Term Advance shall become "due and payable" on the
earlier to occur of:
(a) each respective Second Issuer Term Advances Due Date;
(b) the date upon which a Trigger Event occurs;
(c) the date upon which the Note Trustee serves a Note
Acceleration Notice on the Second Issuer;
(d) the date upon which the Security Trustee serves an
Intercompany Loan Acceleration Notice on Funding 1; and
(e) the date upon which a Step-up Date occurs in relation to the
relevant Second Issuer Term Advance.
1.3 Each Third Issuer Term Advance shall become "due and payable" on the
earlier to occur of:
(a) each respective Third Issuer Term Advances Due Date;
(b) the date upon which a Trigger Event occurs;
(c) the date upon which the Note Trustee serves a Note
Acceleration Notice on the Third Issuer;
(d) the date upon which the Security Trustee serves an
Intercompany Loan Acceleration Notice on Funding 1; and
(e) the date upon which a Step-up Date occurs in relation to the
relevant Third Issuer Term Advance.
1.4 Each Fourth Issuer Term Advance shall become "due and payable" on the
earlier to occur of:
(a) each respective Fourth Issuer Term Advances Due Date;
(b) the date upon which a Trigger Event occurs;
17
(c) the date upon which the Note Trustee serves a Note
Acceleration Notice on the Fourth Issuer;
(d) the date upon which the Security Trustee serves an
Intercompany Loan Acceleration Notice on Funding 1; and
(e) the date upon which a Step-up Date occurs in relation to the
relevant Fourth Issuer Term Advance.
1.5 Each Fifth Issuer Term Advance shall become "due and payable" on the
earlier to occur of:
(a) each respective Fifth Issuer Term Advances Due Date;
(b) the date upon which a Trigger Event occurs;
(c) the date upon which the Note Trustee serves a Note
Acceleration Notice on the Fifth Issuer;
(d) the date upon which the Security Trustee serves an
Intercompany Loan Acceleration Notice on Funding 1; and
(e) the date upon which a Step-up Date occurs in relation to the
relevant Fifth Issuer Term Advance.
1.6 Each Sixth Issuer Term Advance shall become "due and payable" on the
earlier to occur of:
(a) each respective Sixth Issuer Term Advances Due Date;
(b) the date upon which a Trigger Event occurs;
(c) the date upon which the Note Trustee serves a Note
Acceleration Notice on the Sixth Issuer;
(d) the date upon which the Security Trustee serves an
Intercompany Loan Acceleration Notice on Funding 1; and
(e) the date upon which a Step-up Date occurs in relation to the
relevant Sixth Issuer Term Advance.
1.7 In respect of certain of the Term Advances, if there are insufficient
Funding 1 Available Principal
Receipts available to repay such Term Advance on a Funding 1 Interest
Payment Date upon which that Term Advance is due and payable (either in
full or as a Scheduled Amortisation Instalment), then the shortfall
will be repaid on subsequent Funding 1 Interest Payment Dates from
Funding 1 Available Principal Receipts until that Term Advance is fully
repaid.
2. REPAYMENT OF TERM ADVANCES OF EACH SERIES PRIOR TO THE
OCCURRENCE OF A TRIGGER EVENT AND PRIOR TO THE SERVICE ON FUNDING 1 OF
AN INTERCOMPANY LOAN ACCELERATION NOTICE OR THE SERVICE ON EACH ISSUER
OF A NOTE ACCELERATION NOTICE
2.1 On each Funding 1 Interest Payment Date (but prior to the date
on which (a) a Trigger Event occurs, (b) the Security Trustee serves an
Intercompany Loan Acceleration Notice on Funding 1 or (c) each Issuer
has been served with a Note Acceleration Notice by the Note Trustee),
the
18
Cash Manager shall apply Funding 1 Available Principal Receipts in the
following order of priority:
(a) firstly, towards repayment of amounts due to the Funding 1
Liquidity Facility Provider under the Funding 1 Liquidity
Facility to the extent only that amounts were drawn thereunder
in order to make Eligible Liquidity Facility Principal
Repayments;
(b) secondly, to the extent only that monies have been drawn from
the General Reserve Fund to make Eligible General Reserve Fund
Principal Repayments, towards replenishment of the General
Reserve Fund to the extent that the amount standing to the
credit thereof is less than the General Reserve Fund Required
Amount;
(c) thirdly, if a Liquidity Reserve Fund Rating Event has occurred
and is continuing (i) to the extent only that monies have been
drawn from the Liquidity Reserve Fund in order to make
Eligible Liquidity Reserve Fund Principal Repayments or (ii)
to the extent that the Liquidity Reserve fund has not been
previously fully funded and Funding 1 Available Revenue
Receipts on such Funding 1 Interest Payment Date are
insufficient to do so, towards a credit to the Funding 1
Liquidity Reserve Ledger to the extent that the amount
standing to the credit thereof is less than the Liquidity
Reserve Required Amount;
(d) fourthly, towards repayment of all Term AAA Advances that are
then due and payable in an order of priority based on their
Final Repayment Date, so that the earliest maturing Term AAA
Advance is paid first (and if any Term AAA Advances have the
same Final Repayment Date, then those Term Advances will be
repaid pro rata and pari passu), in each case subject to Rules
(1), (2) and (3) set out in paragraphs 2.2(a), (b) and (c)
below;
(e) fifthly, pro rata and pari passu towards repayment of all Term
AA Advances that are then due and payable, in each case
subject to Rules (1), (2) and (3) set out in paragraphs
2.2(a), (b) and (c) below;
(f) sixthly, pro rata and pari passu towards repayment of all Term
A Advances that are then due and payable, in each case subject
to Rules (1), (2) and (3) set out in paragraphs 2.2(a), (b)
and (c) below;
(g) seventhly, pro rata and pari passu towards repayment of all
Term BBB Advances that are then due and payable, in each case
subject to Rules (1), (2) and (3) set out in paragraphs
2.2(a), (b) and (c) below;
(h) eigthly, towards a credit to the Cash Accumulation Ledger
until the balance is equal to Funding 1's Cash Accumulation
Liability (as calculated after any payments are made at
paragraph 2.1(d) above); and
(i) ninethly, the remainder shall be credited to the Funding 1
Principal Ledger.
2.2 In the applicable circumstances, the following Rules apply in
determining the amounts to be paid under paragraphs 2.1(d), (e), (f)
and (g) above and, where indicated, paragraphs 3.1(d), (e), (f) and (g)
and 4.1(d), (e), (f) and (g) below:
(a) Rule (1) - Deferral of repayment of Pass-Through Term Advances
and/or Scheduled Amortisation Instalments in certain
circumstances.
19
(i) Deferral of Term AA Advances, Term A Advances and/or Term
BB Advances
(A) If on a Funding 1 Interest Payment Date:
I. there is a debit balance on the BBB Principal
Deficiency Sub-Ledger, the A Principal Deficiency
Sub-Ledger or the AA Principal Deficiency
Sub-Ledger, after application of the Funding 1
Available Revenue Receipts on that Funding 1
Interest Payment Date; or
II. the Adjusted General Reserve Fund Level is less than
the General Reserve Fund Threshold; or
III. the aggregate Outstanding Principal Balance of Loans
in the Mortgages Trust, in respect of which the
aggregate amount in arrears is more than three times
the Monthly Payment then due, is more than 5 per
cent. of the aggregate Outstanding Principal Balance
of Loans in the Mortgages Trust,
then until the relevant circumstance as described in
subparagraphs 2.2(a)(i)(A)I, II or III above has been
cured or otherwise ceases to exist, if:
(aa) any Term AAA Advance (whether or not such Term AAA
Advance is then due and payable) remains outstanding
after making the payments under paragraph 2.1(d)
above the Term AA Advances (including the Sixth
Issuer Term AA Advances) will not be entitled to
Principal Repayments under paragraph 2.1(e) above;
(bb) any Term AAA Advance or any Term AA Advance (whether
or not such Term AAA Advance or Term AA Advance is
then due and payable) remains outstanding after
making the payments under paragraphs 2.1(d) and/or
(e) above then the Term A Advances will not be
entitled to Principal Repayments under paragraph
2.1(f) above.
(cc) any Term AAA Advance, any Term AA Advance or any
Term A Advance (whether or not such Term AAA Advance
or Term AA Advance or Term A Advance is then due and
payable) remains outstanding after making the
payments under paragraphs 2.1(d) and/or (e) and/or
(f) above then the Term BBB Advances (including the
Sixth Issuer Term BBB Advances) will not be entitled
to Principal Repayments under paragraph 2.1(g)
above.
(ii) Deferral of Scheduled Amortisation Term Advances when CPR
is below certain threshold(s) prior to Step-up Date:
If on a Funding 1 Interest Payment Date:
(A) one or more Bullet Term Advances are within a Cash
Accumulation Period at that time (irrespective of
whether any Scheduled
20
Amortisation Instalments are then in a Cash
Accumulation Period); and
(B) either:
I. the quarterly CPR is less than 10 per cent.; or
II. both:
(aa) the quarterly CPR is equal to or greater
than 10 per cent., but less than 15 per
cent.; and
(bb) the annualised CPR is less than 10 per
cent.,
then on or before their Step-up Dates the
Scheduled Amortisation Term Advances will be
entitled to Principal Repayments under
paragraph 2.1(d) above only to the extent
permitted under the Scheduled Amortisation
Repayment Restrictions.
(iii) Deferral of original Pass-Through Term Advances when CPR
is below a certain threshold prior to Step-up Date:
If on a Funding 1 Interest Payment Date:
(A) one or more Bullet Term Advances and/or Scheduled
Amortisation Instalments are within a Cash
Accumulation Period at that time; and
(B) the quarterly CPR is less than 15 per cent.; and
(C) there is a Cash Accumulation Shortfall at that time,
then, on or before their Step-up Dates, the Original
Pass-Through Term Advances will be entitled to principal
repayments under paragraphs 2.1(d), (e), (f) and (g) (as
applicable) above only to the extent permitted under the
Pass-Through Repayment Restrictions.
(b) Rule (2) - Repayment of Payable Pass-Through Term Advances
after the occurrence of a Step-up Date
Following the occurrence of the Step-up Date under an
Intercompany Loan Agreement (INTERCOMPANY LOAN A) but prior to
the time which Rule (3) (as set out in paragraph 2.2(c) below)
becomes applicable and provided that the Funding 1 Share of
the Trust Property is greater than zero, the aggregate amount
repaid on a Funding 1 Interest Payment Date in relation to
Term Advances (other than Bullet Term Advances or Scheduled
Amortisation Instalments) under that Intercompany Loan A under
paragraphs 2.1(d), (e), (f) and (g) above shall be limited to
an amount calculated as follows:
Funding 1 Principal Funds x Outstanding Principal Balance of Intercompany
Loan A
--------------------------------------------------
Aggregate Outstanding Principal Balance of all
Intercompany Loans
21
(c) Rule (3) - Repayment of Term Advances after service of a Note
Acceleration Notice on one or more (but not all) of the
Issuers
If the Note Trustee serves a Note Acceleration Notice on one
or more (but not all) of the Issuers, then this Rule (3) will
apply. In these circumstances:
(i) service of a Note Acceleration Notice will not result in
automatic enforcement of the Funding 1 Security;
(ii) all of the Term Advances (including any outstanding
Bullet Term Advances and Scheduled Amortisation
Instalments) under the Intercompany Loan relating to the
relevant Issuer who has been served a Note Acceleration
Notice (INTERCOMPANY LOAN B) will become immediately due
and payable;
(iii)the Cash Manager shall apply the appropriate amount of
Funding 1 Available Principal Receipts allocated to
Intercompany Loan B at the relevant level of the Funding
1 Principal Priorities of Payments, towards repayment,
pro rata and pari passu, of any Term AAA Advances
outstanding under that Intercompany Loan B (that is,
those Term AAA Advances will not be repaid in an order of
priority based on their Final Repayment Date); and
(iv) the aggregate amount repaid on a Funding 1 Interest
Payment Date in respect of Intercompany Loan B under
paragraphs 2.1(d), (e), (f) and (g), 3.1(d), (e), (f) and
(g) or 4.1(d), (e), (f) and (g) (as applicable) of the
relevant priority of payments shall be limited to an
amount calculated as follows:
Funding 1 Principal Funds x Outstanding Principal Balance of Intercompany
Loan B
---------------------------------------------------
Aggregate Outstanding Principal Balance of all
Intercompany Loans
ALLOCATIONS INVOLVING RULE (2) OR RULE (3)
3. Where Rule (2) or Rule (3) applies at a level of any priority of
payments, the funds available for making payments at that level shall
first be allocated without reference to Rule (2) or Rule (3) (as
applicable). However, if the amount so allocated to one or more Term
Advances exceeds the amount permitted under Rule (2) or Rule (3) (as
applicable) to be paid in respect of those Term Advances (the CAPPED
ADVANCES), the excess shall then be reallocated among any other Term
Advances at that level using the method of allocation as applies at
that level but without reference to the Capped Advances in calculating
such reallocation. If a further such excess arises as a result of the
reallocation process, the reallocation process shall be repeated at
that level in relation to each such further excess that arises until no
further funds can be allocated at that level following which the
remaining excess shall then be applied at the next level of that
priority of payments. Repayment of Term Advances of each Series
following the occurrence of a Non-Asset Trigger Event but prior to the
service on Funding 1 of an Intercompany Loan Acceleration Notice or the
service on each Issuer of a Note Acceleration Notice
3.1 On each Funding 1 Interest Payment Date following the occurrence of a
Non-Asset Trigger Event (but prior to the date on which (i) an Asset
Trigger Event occurs, (ii) the Security Trustee serves an Intercompany
Loan Acceleration Notice on Funding 1 or (iii) each Issuer has been
served with a Note Acceleration Notice), the Bullet Term Advances and
the Scheduled Amortisation Term Advances under each Intercompany Loan
will be deemed to be
22
Pass-Through Term Advances and, on each Funding 1 Interest Payment
Date, Funding 1 will be required to apply Funding 1 Available Principal
Receipts in the following order of priority:
(a) firstly, towards repayment of amounts due to the Funding 1
Liquidity Facility Provider under the Funding 1 Liquidity
Facility to the extent only that amounts were drawn thereunder
in order to make Eligible Liquidity Facility Principal
Repayments;
(b) secondly, to the extent only that monies have been drawn from
the General Reserve Fund to make Eligible General Reserve Fund
Principal Repayments, towards replenishment of the General
Reserve Fund to the extent that the amount standing to the
credit thereof is less than the General Reserve Fund Required
Amount;
(c) thirdly, if a Liquidity Reserve Fund Rating Event has occurred
and is continuing (i) to the extent only that monies have been
drawn from the Liquidity Reserve Fund in order to make
Eligible Liquidity Reserve Fund Principal Repayments or (ii)
to the extent that the Liquidity Reserve fund has not been
previously fully funded and Funding 1 Available Revenue
Receipts on such Funding 1 Interest Payment Date are
insufficient to do so, towards replenishment of the Liquidity
Reserve Fund to the extent only that the amount standing to
the credit thereof is less than the Liquidity Reserve Fund
Required Amount;
(d) fourthly, to repay the Term AAA Advance with the earliest
Final Repayment Date, then to repay the Term AAA Advance with
the next earliest Final Repayment Date, and so on until the
Term AAA Advances are fully repaid;
(e) fifthly, pro rata and pari passu, to repay the Term AA
Advances, until those Term AA Advances are fully repaid;
(f) sixthly, in satisfaction of pro rata and pari passu to repay
the Term A Advances, until each of those is fully repaid; and
(g) seventhly, pro rata and pari passu, to repay the Term BBB
Advances, until each of those Term BBB Advances are fully
repaid.
4. REPAYMENT OF TERM ADVANCES OF EACH SERIES FOLLOWING THE OCCURRENCE OF
AN ASSET TRIGGER EVENT BUT PRIOR TO THE SERVICE ON FUNDING 1 OF AN
INTERCOMPANY LOAN ACCELERATION NOTICE OR THE SERVICE ON EACH ISSUER OF
A NOTE ACCELERATION NOTICE
4.1 Following the occurrence of an Asset Trigger Event (whether or
not a Non-Asset Trigger Event occurs or has occurred) (but prior to (i)
service by the Security Trustee of an Intercompany Loan Acceleration
Notice on Funding 1 or (ii) each issuer has been served with a Note
Acceleration Notice), the Bullet Term Advances and the Scheduled
Amortisation Term Advances in respect of all Intercompany Loans will be
deemed to be Pass-Through Term Advances, and on each Funding 1 Interest
Payment Date Funding 1 will be required to apply Funding 1 Available
Principal Receipts in the following order of priority:
(a) firstly, towards repayment of amounts due to the Funding 1
Liquidity Facility Provider under the Funding 1 Liquidity
Facility to the extent only that those amounts were drawn in
order to make Eligible Liquidity Facility Principal
Repayments;
(b) secondly, to the extent only that monies have been drawn from
the General Reserve Fund to make Eligible General Reserve Fund
Principal Repayments, towards a credit to the General Reserve
Ledge to the extent the amount standing to the credit thereof
is less than the General Reserve Fund Required Amount;
23
(c) thirdly, if a Liquidity Reserve Fund Rating Event has occurred
and is continuing (i) to the extent only that monies have been
drawn from the Liquidity Reserve Fund in order to make
Eligible Liquidity Reserve Fund Principal Repayments or (ii)
to the extent that the Liquidity Reserve fund has not been
previously fully funded and Funding 1 Available Revenue
Receipts on such Funding 1 Interest Payment Date are
insufficient to do so, towards a credit to the Liquidity
Reserve Ledger to the extent that the amount standing to the
credit thereof is less than the Liquidity Reserve Fund
Required Amount;
(d) fourthly, pro rata and pari passu, towards repayment of the
Term AAA Advances, until each of those Term AAA Advances is
fully repaid;
(e) fifthly, pro rata and pari passu, towards repayment of the
Term AA Advances until each of those Term AA Advances is fully
repaid;
(f) sixthly, pro rata and pari passu, towards repayment of the
Term A Advances until each of those Term A Advances is fully
repaid; and
(g) seventhly, pro rata and pari passu, towards repayment of the
Term BBB Advances, until each of those Term BBB Advances is
fully repaid.
5. REPAYMENT OF TERM ADVANCES OF EACH SERIES FOLLOWING THE SERVICE ON EACH
ISSUER OF A NOTE ACCELERATION NOTICE BUT PRIOR TO THE SERVICE ON
FUNDING 1 OF AN INTERCOMPANY LOAN ACCELERATION NOTICE
5.1 If each Issuer has been served with a Note Acceleration Notice, then
that will not result in automatic enforcement of the Funding 1 Security
under the Funding 1 Deed of Charge. In those circumstances, however,
the Bullet Term Advances and any Scheduled Amortisation Term Advances
under each Issuer's respective Intercompany Loan will be deemed to be
Pass-Through Term Advances and Funding 1 will be required to apply
Funding 1 Available Principal Receipts on each Funding 1 Interest
Payment Date in the following order of priority:
(a) firstly, towards repayment to the Funding 1 Liquidity Facility
Provider of amounts drawn under the Funding 1 Liquidity
Facility on the prior Funding 1 Interest Payment Date in order
to make Eligible Liquidity Facility Principal Repayments;
(b) secondly, to the extent only that monies have been drawn from
the General Reserve Fund to make Eligible General Reserve Fund
Principal Repayments, towards a credit to the General Reserve
Ledger to the extent the amount standing to the credit thereof
is less than the General Reserve Fund Required Amount;
(c) thirdly, if a Liquidity Reserve Fund Rating Event has occurred
and is continuing (i) to the extent only that monies have been
drawn from the Liquidity Reserve Fund in order to make
Eligible Liquidity Reserve Fund Principal Repayments or (ii)
to the extent that the Liquidity Reserve Fund has not been
previously fully funded and Funding 1 Available Revenue
Receipts on such Funding 1 Interest Payment Date are
insufficient to do so, towards a credit to the Liquidity
Reserve Ledger to the extent that the amount standing to the
credit thereof is less than the Liquidity Reserve Fund
Required Amount;
(d) fourthly, pro rata and pari passu, towards repayment of the
Term AAA Advances, until each of those Term AAA Advances is
fully repaid.
24
(e) fifthly, pro rata and pari passu, towards repayment of the
Term AA Advances, until each of those Term AA Advances is
fully repaid;
(f) sixthly, pro rata and pari passu, towards repayment of the
Term A Advances, until each of those Term A Advances is fully
repaid; and
(g) seventhly, pro rata and pari passu, towards repayment of the
Term BBB Advances, until each of those Term BBB Advances is
fully repaid.
6. REPAYMENT OF TERM ADVANCES WHEN FUNDING 1 RECEIVES THE AMOUNT
OUTSTANDING UNDER AN INTERCOMPANY LOAN
If Funding 1 receives a payment from the Seller in the circumstances
set out in CLAUSE 7 of the Mortgages Trust Deed or the proceeds of a
New Intercompany Loan which are to be used to refinance another
Intercompany Loan (such payment by the Seller or such proceeds being a
FULL REPAYMENT Amount), then Funding 1 will not apply the Full
Repayment Amount as described in paragraphs 2 to 5 above. Instead,
Funding 1 will apply the Full Repayment Amount to repay the relevant
Intercompany Loan. If at any time only one Intercompany Loan is
outstanding, then Funding 1 will apply the Full Repayment Amount first
to repay amounts due to the Funding 1 Liquidity Facility Provider under
the Funding 1 Liquidity Facility to the extent only that amounts were
drawn thereunder in order to repay the principal amounts of any Bullet
Term Advances made under any of the Intercompany Loans and the
remainder shall be applied to repay the relevant Intercompany Loan.
25
PART 3
FUNDING 1 POST-ENFORCEMENT PRIORITY OF PAYMENTS
All monies received or recovered by the Security Trustee or the Receiver in
respect of the Funding 1 Security subsequent to the Security Trustee serving an
Intercompany Loan Acceleration Notice on Funding 1, will be applied (save to the
extent required by law) by the Security Trustee or the Receiver on each Funding
1 Interest Payment Date in accordance with the following order of priority (in
each case only and to the extent that payments or provision of a higher priority
have been made in full):
(a) firstly, in or towards satisfaction of, pro rata and pari passu,
amounts due to:
(i) the Security Trustee and any Receiver appointed by the
Security Trustee, together with interest and any amount in
respect of VAT on those amounts, and 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 1
Deed of Charge;
(ii) the First Issuer in respect of the First Issuer's obligations
specified in items (a) and (b) of the First Issuer
Post-Enforcement Priority of Payments;
(iii) the Second Issuer in respect of the Second Issuer's
obligations specified in items (a) and (b) of the Second
Issuer Post-Enforcement Priority of Payments;
(iv) the Third Issuer in respect of the Third Issuer's obligations
specified in items (a) and (b) of the Third Issuer
Post-Enforcement Priority of Payments;
(v) the Fourth Issuer in respect of the Fourth Issuer's
obligations specified in items (a) and (b) of the Fourth
Issuer Post-Enforcement Priority of Payments;
(vi) the Fifth Issuer in respect of the Fifth Issuer's obligations
specified in items (a) and (b) of the Fifth Issuer
Post-Enforcement Priority of Payments; and
(vii) the Sixth Issuer in respect of the Sixth Issuer's obligations
specified in items (a) and (b) of the Sixth Issuer
Post-Enforcement Priority of Payments;
(b) secondly, in or towards satisfaction 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 VAT on those amounts;
(c) thirdly, in or towards satisfaction of, pro rata and pari passu,
amounts (if any) due to the Account Bank under the terms of the Bank
Account Agreement and to the Funding 1 Corporate Services Provider
under the Funding 1 Corporate Services Agreement;
(d) fourthly, in or towards satisfaction of amounts (if any) due to the
Funding 1 Liquidity Facility Provider under the Funding 1 Liquidity
Facility Agreement, together with VAT, if any, (except for any Funding
1 Liquidity Facility Subordinated Amounts);
(e) fifthly, in or towards satisfaction of amounts (if any) due to the
Funding 1 Swap Provider under the Funding 1 Swap Agreement (including
any termination payment but excluding any Funding 1 Swap Excluded
Termination Amount);
(f) sixthly, in or towards satisfaction of, pro rata and pari passu,
amounts of interest and principal due and payable on the Term AAA
Advances;
26
(g) seventhly, in or towards satisfaction of, pro rata and pari passu,
amounts of interest and principal due and payable on the Term AA
Advances;
(h) eighthly, in or towards satisfaction of, pro rata and pari passu,
amounts of interest and principal due and payable on the Term A
Advances;
(i) ninthly, in or towards satisfaction of, pro rata and pari passu,
amounts of interest and principal due and payable on the Term BBB
Advances;
(j) tenthly, in or towards satisfaction of any amounts due to:
(i) the First Issuer in respect of the First Issuer's obligation's
(if any) to make a termination payment to a First Issuer Swap
Provider (but excluding any First Issuer Swap Excluded
Termination Amount);
(ii) the Second Issuer in respect of the Second Issuer's
obligations (if any) to make a termination payment to a Second
Issuer Swap Provider (but excluding any Second Issuer Swap
Excluded Termination Amount);
(iii) the Third Issuer in respect of the Third Issuer's obligations
(if any) to make a termination payment to a Third Issuer Swap
Provider (but excluding any Third Issuer Swap Excluded
Termination Amount);
(iv) the Fourth Issuer in respect of the Fourth Issuer's
obligations (if any) to make a termination payment to a Fourth
Issuer Swap Provider (but excluding any Fourth Issuer Swap
Excluded Termination Amount);
(v) the Fifth Issuer in respect of the Fifth Issuer's obligations
(if any) to make a termination payment to a Fifth Issuer Swap
Provider (but excluding any Fifth Issuer Swap Excluded
Termination Amount); and
(vi) the Sixth Issuer in respect of the Sixth Issuer's obligations
(if any) to make a termination payment to a Sixth Issuer Swap
Provider (but excluding any Sixth Issuer Swap Excluded
Termination Amount);
(k) eleventhly, in or towards satisfaction of, pro rata and pari passu
(without double counting):
(i) amounts due to the First Issuer in respect of the First
Issuer's obligations to pay any termination payment to a First
Issuer Swap Provider as a result of a First Issuer Swap
Provider Default or a First Issuer Swap Provider Downgrade
Termination Event (as appropriate);
(ii) amounts due to the Second Issuer in respect of the Second
Issuer's obligations to pay any termination payment to a
Second Issuer Swap Provider as a result of a Second Issuer
Swap Provider Default or a Second Issuer Swap Provider
Downgrade Termination Event (as appropriate);
(iii) amounts due to the Third Issuer in respect of the Third
Issuer's obligations to pay any termination payment to a Third
Issuer Swap Provider as a result of a Current Swap Provider
Default or a Third Issuer Swap Provider Downgrade Termination
Event (as appropriate);
(iv) amounts due to the Fourth Issuer in respect of the Fourth
Issuer's obligations to pay any termination payment to a
Fourth Issuer Swap Provider as a result of a Current
27
Swap Provider Default or a Fourth Issuer Swap Provider
Downgrade Termination Event (as appropriate);
(v) amounts due to the Fifth Issuer in respect of the Fifth
Issuer's obligations to pay any termination payment to a Fifth
Issuer Swap Provider as a result of a Current Swap Provider
Default or a Fifth Issuer Swap Provider Downgrade Termination
Event (as appropriate);
(vi) amounts due to the Sixth Issuer in respect of the Sixth
Issuer's obligations to pay any termination payment to a Sixth
Issuer Swap Provider as a result of a Current Swap Provider
Default or a Sixth Issuer Swap Provider Downgrade Termination
Event (as appropriate);
(vii) any other amounts due to the First Issuer under the First
Issuer Intercompany Loan Agreement and not otherwise provided
for earlier in this order of priorities;
(viii) any other amounts due to the Second Issuer under the Second
Issuer Intercompany Loan Agreement and not otherwise provided
for earlier in this order of priorities;
(ix) any other amounts due to the Third Issuer under the Third
Issuer Intercompany Loan Agreement and not otherwise provided
for earlier in this order of priorities;
(x) any other amounts due to the Fourth Issuer under the Fourth
Issuer Intercompany Loan Agreement and not otherwise provided
for earlier in this order of priorities;
(xi) any other amounts due to the Fifth Issuer under the Fifth
Issuer Intercompany Loan Agreement and not otherwise provided
for earlier in this order of priorities;
(xii) any other amounts due to the Sixth Issuer under the Sixth
Issuer Intercompany Loan Agreement and not otherwise provided
for earlier in this order of priorities;
(xiii) any Funding 1 Liquidity Subordinated Amounts due to the
Funding 1 Liquidity Facility Provider; and
(xiv) amounts due to the Funding 1 Swap Provider in respect of any
termination payment due to the Funding 1 Swap Provider as a
result of a Funding 1 Swap Provider Default or a Funding 1
Swap Provider Downgrade Termination Event; and
(l) twelfthly, towards payment, pro rata and pari passu, of amounts due to:
(i) the First Start-up Loan Provider under the First Start-up Loan
Agreement;
(ii) the Second Start-up Loan Provider under the Second Start-up
Loan Agreement;
(iii) the Third Start-up Loan Provider under the Third Start-up Loan
Agreement;
(iv) the Fourth Start-up Loan Provider under the Fourth Start-up
Loan Agreement;
(v) the Fifth Start-up Loan Provider under the Fifth Start-up Loan
Agreement; and
(vi) the Sixth Start-up Loan Provider under the Sixth Start-up Loan
Agreement.
28