EXECUTION COPY
DATED 25TH JULY, 2003
PERMANENT FUNDING (NO. 1) LIMITED
and
PERMANENT FINANCING (NO. 1) PLC
and
PERMANENT FINANCING (NO. 2) PLC
and
STATE STREET BANK AND TRUST COMPANY
and
U.S. BANK NATIONAL ASSOCIATION
and
THE BANK OF NEW YORK
and
HALIFAX PLC
and
JPMORGAN CHASE BANK
and
STRUCTURED FINANCE MANAGEMENT LIMITED
and
THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND
----------------------------------------------------
FIRST SUPPLEMENTAL FUNDING 1 DEED OF CHARGE
----------------------------------------------------
ALLEN & OVERY
London
THIS FIRST SUPPLEMENTAL FUNDING 1 DEED OF CHARGE is made on 25th July, 2003
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 in 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 in England and Wales, whose registered
office is at Blackwell House, Guildhall Yard, London EC2V 5AE (the SECOND
ISSUER);
(4) STATE STREET BANK AND TRUST COMPANY (STATE STREET), a Massachusetts trust
company organised under the Commonwealth of Massachusetts of the United
States of America acting through its office at 225 Franklin Street,
Boston, Massachusetts 02110, (acting in its capacity as RETIRING
CO-FUNDING 1 SECURITY TRUSTEE);
(5) U.S. BANK NATIONAL ASSOCIATION, a national banking association formed
under the laws of the United States of America, acting through its office
situated at 1 Federal Street, 3rd Floor, Boston, Massachusetts 02110,
(U.S. BANK) (acting in its capacity as RETIRING CO-FUNDING 1 SECURITY
TRUSTEE);
(6) THE BANK OF NEW YORK acting through its office at One Canada Square,
London E14 5AL (acting in its capacity as NEW FUNDING 1 SECURITY
TRUSTEE);
(7) 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
capacity as Cash Manager;
(8) 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, England acting
in its capacity as Account Bank;
(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, England acting
in its capacity as Funding 1 GIC Provider;
(10) 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 capacity as Seller;
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(11) 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
capacity as Funding 1 Swap Provider;
(12) 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
capacity as the Start-Up Loan Provider;
(13) JPMORGAN CHASE BANK acting through its office at 125 London Wall, London
EC2Y 5AJ in its capacity as Funding 1 Liquidity Facility Provider; and
(14) 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.
WHEREAS:
(A) This Deed is supplemental to the Funding 1 Deed of Charge dated 14th
June, 2002 (hereinafter called the PRINCIPAL DEED) made between the
parties hereto (other than the Second Issuer, U.S. Bank and the New
Funding 1 Security Trustee).
(B) The Second Issuer and U.S. Bank acceded to the terms of the Principal
Deed by executing a Deed of Accession to the Principal Deed (the DEED OF
ACCESSION) dated 6th March, 2003 between, inter alios, Funding 1, the
Second Issuer and U.S. Bank.
(C) Pursuant to the terms of the Deed of Accession and Clause 27.2 of the
Principal Deed, U.S. Bank was appointed to act as a co-trustee under the
Principal Deed jointly with State Street.
(D) The Retiring Co-Funding 1 Security Trustees have given notice to Funding
1 pursuant to Clause 28 of the Principal Deed of their intention to
retire from their respective roles as Funding 1 Security Trustee.
(E) The power to appoint new Funding 1 Security Trustees is vested in Funding
1 by Clause 27.1 of the Principal Deed which further provides that (I)
any such appointment is subject to the approval in writing of each of the
Funding 1 Secured Creditors; and (II) any new Funding 1 Security Trustee
must meet certain requirements specified in sub-clause (b) thereof.
(F) The First Issuer and the Second Issuer are Funding I Secured Creditors
and have pursuant to the First Issuer Deed of Charge and the Second
Issuer Deed of Charge, respectively, assigned their rights under the
Principal Deed to the Funding 1 Security Trustees under the First Issuer
Deed of Charge and the Second Issuer Deed of Charge (as the case may be).
In consequence, the appointment of the New Funding 1 Security Trustee is
also subject to the approval, by Extraordinary Resolution, of each Class
of the First Issuer Noteholders and each Class of the Second Issuer
Noteholders (as defined in the First Issuer Master Definitions Schedule
dated 13th June, 2002 and the Second Issuer Master Definitions and
Construction Schedule dated 5th March, 2003, respectively).
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(G) Funding 1 wishes to appoint the New Funding 1 Security Trustee to act as
sole Funding 1 Security Trustee of the Principal Deed in place of the
Retiring Co-Trustees.
(H) The Funding 1 Secured Creditors have agreed in writing to the appointment
of the New Funding 1 Security Trustee.
(I) The New Funding 1 Security Trustee has by a letter to Allen & Overy dated
23rd June, 2003 confirmed that it satisfies the requirements set out in
Clause 27.1(b) of the Principal Deed.
(J) At separate Meetings of the holders of each Class of First Issuer Notes
and Second Issuer Notes duly convened and held on 25th July, 2003
Resolutions in the form set out in the Schedule hereto were duly passed
as Extraordinary Resolutions and the draft supplemental funding 1 deed of
charge referred to in each such Resolution was a draft of this Deed.
NOW THIS DEED WITNESSES AS FOLLOWS:
1. INTERPRETATION
1.1 DEFINITIONS
The Amended and Restated Master Definitions and Construction Schedule
signed for the purposes of identification by Allen & Overy and Sidley
Austin Brown & Wood on 5th March, 2003 (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 Amended and Restated Master
Definitions and Construction 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 of the
Amended and Restated Master Definitions and Construction Schedule.
1.2 CONSTRUCTION
In this Deed, except where the context otherwise requires, "THIS DEED"
means this First Supplemental Funding 1 Deed of Charge and the Schedule
hereto (as from time to time modified and/or supplemented in accordance
with the provisions set out in the Principal Deed).
2. APPOINTMENT
In exercise of the power conferred on it by Clause 27.1 of the Principal
Deed, Funding 1 HEREBY APPOINTS with effect from and including 25th July,
2003 the New Funding 1 Security Trustee (who hereby accepts the
appointment) to be the sole Funding 1 Security Trustee of the Principal
Deed in place of the Retiring Co-Funding 1 Security Trustees who are
hereby discharged from the trusts of the same and each of the parties
hereto HEREBY ACKNOWLEDGES (I) that this Deed constitutes express notice
to it in accordance with
6
Section 136 of the Law of Property Act 1925 of the vesting in the New
Funding 1 Security Trustee of all the property subject to the trusts of
the Principal Deed; and (II) that the New Funding 1 Security Trustee is
the Funding 1 Security Trustee for all purposes of and accordingly has
all the rights, powers, privileges, obligations, duties and discretions
conferred upon or vested in the Funding 1 Security Trustee under or
pursuant to the Principal Deed.
3. MODIFICATIONS
The provisions of Clause 30.2(k) of the Principal Deed are hereby by
modified by the deletion therefrom of the words "State Street Bank and
Trust Company, 1 Canada Square, Canary Wharf, London E14 5AF (facsimile
number +44(0) 20 7416 2548) for the attention of Corporate Trust" and the
substitution therefor of the words "The Bank of New York, 48th Floor, One
Canada Square, London E14 5AL (facsimile number +44(0) 20 7964 6399) for
the attention of Global Trust Services".
4. US INVESTMENT COMPANY ACT OF 1940
4.1 By its execution of this Deed the New Funding 1 Security Trustee confirms
that it is a bank (for the purposes of the US Investment Company Act of
1940 (the 1940 ACT)) with capital and surplus of at least US$50,000,000
as set forth in its most recent published annual report of condition.
4.2 Without prejudice to the provisions of Clauses 27 and 28 of the Principal
Deed, the New Funding 1 Security Trustee agrees that it shall not resign
until either (a) the trust has been completely liquidated and the
proceeds of the liquidation distributed to the Funding 1 Secured
Creditors or (b) a successor trustee having the qualifications prescribed
in section 26(a)(1) of the 1940 Act has been designated and has accepted
such trusteeship.
5. TRUST INDENTURE ACT PREVAILS
If any provision of this Deed limits, qualifies or conflicts with another
provision which is required to be included in this Deed by, and is not
subject to a contractual waiver under, the U.S. Trust Indenture Act of
1939, as amended, the required provision of that act shall prevail.
6. EXCLUSION OF THIRD PARTY RIGHTS
The parties to this Deed do not intend that any term of this Deed should
be enforced, by virtue of the Contracts (Rights of Third Parties) Act
1999, by any person who is not a party to this Deed.
7
7. MISCELLANEOUS
The Principal Deed and this Deed shall henceforth be read and construed
together as one deed. A Memorandum of this Deed shall be endorsed by the
New Funding 1 Security Trustee on the Principal Deed and by Funding 1 on
the duplicate thereof.
DULY EXECUTED AND DELIVERED AS A DEED by each of the parties hereto or on its
behalf on the date appearing on page 1.
8
SCHEDULE
EXTRAORDINARY RESOLUTION OF THE FIRST ISSUER NOTEHOLDERS
EXTRAORDINARY RESOLUTION
"THAT this single Meeting of the holders of those of the [Class A First Issuer
Notes/Class B First Issuer Notes/Class C First Issuer Notes] (as defined in the
First Issuer Master Definitions and Construction Schedule dated 13 June 2002)
presently outstanding hereby:
1. acknowledges that State Street Bank and Trust Company (STATE STREET) and
U.S. Bank National Association (U.S. BANK) have notified Permanent
Financing No. 1 PLC (the FIRST ISSUER) of their intention to resign from
their respective roles as (a) Funding 1 Security Trustee pursuant to the
Funding 1 Deed of Charge (as defined below) and the Deed of Accession to
the Funding 1 Deed of Charge dated 6 March 2003 between, inter alios,
Permanent Funding (No. 1) Limited and U.S. Bank; (b) First Issuer Funding
1 Security Trustee pursuant to the First Issuer Deed of Charge (as
defined below); and (c) First Issuer Note Trustee pursuant to the First
Issuer Trust Deed (as defined below), in each case, with effect from 1
July 2003;
2. instructs State Street and U.S. Bank in their capacity as First Issuer
Funding 1 Security Trustees under the First Issuer Deed of Charge dated
14 June 2002 (the FIRST ISSUER DEED OF CHARGE) between, inter alios, the
First Issuer and State Street to concur in and approve the appointment of
The Bank of New York as Funding 1 Security Trustee pursuant to the
Funding 1 Deed of Charge dated 14 June 2002 (the FUNDING 1 DEED OF
CHARGE) between, inter alios, Permanent Funding (No. 1) Limited and State
Street in place of State Street and U.S. Bank in their respective roles
as Funding 1 Security Trustee;
3. instructs State Street and U.S. Bank in their capacity as First Issuer
Note Trustees under the First Issuer Trust Deed dated 14 June 2002 (the
FIRST ISSUER TRUST DEED) between the First Issuer and State Street to
concur in and approve the appointment of The Bank of New York as First
Issuer Funding 1 Security Trustee pursuant to the First Issuer Deed of
Charge in place of State Street and U.S. Bank in their respective roles
as First Issuer Funding 1 Security Trustee;
4. assents to and approves the appointment of The Bank of New York as First
Issuer Funding 1 Security Trustee pursuant to the First Issuer Deed of
Charge in place of State Street and U.S. Bank;
5. assents to and approves the appointment of The Bank of New York as First
Issuer Note Trustee pursuant to the First Issuer Trust Deed in place of
State Street and U.S. Bank; and
6. authorises, directs and requests State Street, U.S. Bank and The Bank of
New York, in order to give effect to the terms of this Resolution, to (i)
enter into deeds supplemental to the Funding 1 Deed of Charge, the First
Issuer Deed of Charge and the First Issuer Trust Deed in the forms or
substantially in the forms of the respective drafts produced to this
Meeting and for the purposes of identification signed by the Chairman
thereof with such amendments (if
9
any) thereto as State Street and U.S. Bank shall require or agree to; and
(ii) agree to and concur in and to exercise and do all such other deeds,
instruments, acts and things as may be necessary or desirable to carry
out and give effect to this Extraordinary Resolution."
EXTRAORDINARY RESOLUTION OF THE SECOND ISSUER NOTEHOLDERS
EXTRAORDINARY RESOLUTION
"THAT this single Meeting of the holders of those of the [Class A Second Issuer
Notes/Class B Second Issuer Notes/Class C Second Issuer Notes] (as defined in
the Second Issuer Master Definitions and Construction Schedule dated 5 March
2003) presently outstanding hereby:
1. acknowledges that State Street Bank and Trust Company (STATE STREET) and
U.S. Bank National Association (U.S. BANK) have notified Permanent
Financing No. 2 PLC (the SECOND ISSUER) of their intention to resign from
their respective roles as (a) Funding 1 Security Trustee pursuant to the
Funding 1 Deed of Charge (as defined below) and the Deed of Accession to
the Funding 1 Deed of Charge dated 6 March 2003 between, inter alios,
Permanent Funding (No. 1) Limited and U.S. Bank; (b) in the case of U.S.
Bank only, Second Issuer Funding 1 Security Trustee pursuant to the
Second Issuer Deed of Charge (as defined below); and (c) in the case of
U.S. Bank only, Second Issuer Note Trustee pursuant to the Second Issuer
Trust Deed (as defined below), in each case, with effect from 1 July
2003;
2. instructs U.S. Bank in its capacity as Second Issuer Funding 1 Security
Trustee under the Second Issuer Deed of Charge dated 6 March 2003 (the
SECOND ISSUER DEED OF CHARGE) between, inter alios, the Second Issuer and
U.S. Bank to concur in and approve the appointment of The Bank of New
York as Funding 1 Security Trustee pursuant to the Funding 1 Deed of
Charge dated 14 June 2002 (the FUNDING 1 DEED OF CHARGE) between, inter
alios, Permanent Funding (No. 1) Limited and State Street in place of
State Street and U.S. Bank in their respective roles as Funding 1
Security Trustee;
3. instructs U.S. Bank in its capacity as Second Issuer Note Trustee under
the Second Issuer Trust Deed dated 6 March 2003 (the SECOND ISSUER TRUST
DEED) between the Second Issuer and U.S. Bank to concur in and approve
the appointment of The Bank of New York as Second Issuer Funding 1
Security Trustee pursuant to the Second Issuer Deed of Charge in place of
U.S. Bank in its role as Second Issuer Funding 1 Security Trustee;
4. assents to and approves the appointment of The Bank of New York as Second
Issuer Funding 1 Security Trustee pursuant to the Second Issuer Deed of
Charge in place of U.S. Bank;
5. assents to and approves the appointment of The Bank of New York as Second
Issuer Note Trustee pursuant to the Second Issuer Trust Deed in place of
U.S. Bank; and
6. authorises, directs and requests State Street, U.S. Bank and The Bank of
New York, in order to give effect to the terms of this Resolution, to (i)
enter into deeds supplemental to the Funding 1 Deed of Charge, the Second
Issuer Deed of Charge and the Second Issuer Trust Deed in the forms or
substantially in the forms of the respective drafts produced to this
Meeting and for the purposes of identification signed by the Chairman
thereof with such
10
amendments (if any) thereto as State Street and U.S. Bank shall require
or agree to; and (ii) agree to and concur in and to exercise and do all
such other deeds, instruments, acts and things as may be necessary or
desirable to carry out and give effect to this Extraordinary Resolution."
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FUNDING 1
EXECUTED as a DEED by )
PERMANENT FUNDING (NO. 1) )
LIMITED acting by two )
Directors/a Director and the Secretary: )
Director James Macdonald
Director/Secretary Robert Berry
FIRST ISSUER
EXECUTED as a DEED by )
PERMANENT FINANCING (NO. 1) PLC )
acting by two Directors/a Director and the )
Secretary: )
Director James Macdonald
Director/Secretary Robert Berry
SECOND ISSUER
EXECUTED as a DEED by )
PERMANENT FINANCING (NO. 2) PLC )
acting by two Directors/a Director and the )
Secretary: )
Director James Macdonald
Director/Secretary Robert Berry
12
SELLER
EXECUTED as a DEED by ) I G Stewart
HALIFAX PLC )
IN ITS CAPACITY AS SELLER )
acting by its attorney in the presence of: )
Witness:
Name: T Hill
Address: Halifax Plc, Trinity Road, Halifax
CASH MANAGER
EXECUTED as a DEED by ) I G Stewart
HALIFAX PLC )
IN ITS CAPACITY AS CASH MANAGER )
acting by its attorney in the presence of: )
Witness:
Name: T Hill
Address: Halifax Plc, Trinity Road, Halifax
ACCOUNT BANK
EXECUTED as a DEED by )
THE GOVERNOR AND COMPANY OF )
THE BANK OF SCOTLAND )
IN ITS CAPACITY AS ACCOUNT BANK )
acting by two Directors/a Director and the )
Secretary: )
Director W G McQueen
Director/Secretary G Mitchell
13
FUNDING 1 SWAP PROVIDER
EXECUTED as a DEED by ) I G Stewart
HALIFAX PLC )
IN ITS CAPACITY AS FUNDING 1 SWAP PROVIDER )
acting by its attorney in the presence of: )
Witness:
Name: Neil Berry
Address: Halifax Plc, Trinity Road, Halifax
FUNDING 1 GIC PROVIDER
EXECUTED as a DEED by )
THE GOVERNOR AND COMPANY OF )
THE BANK OF SCOTLAND )
IN ITS CAPACITY AS FUNDING 1 GIC PROVIDER )
acting by two Directors/a Director and the )
Secretary )
Director W G McQueen
Director/Secretary G Mitchell
FUNDING 1 CORPORATE SERVICES PROVIDER
EXECUTED as a DEED by )
STRUCTURED FINANCE )
MANAGEMENT LIMITED )
acting by two Directors/a Director and the )
Secretary: )
Director James Macdonald
Director/Secretary Robert Berry
14
START-UP LOAN PROVIDER
EXECUTED as a DEED by ) I G Stewart
HALIFAX PLC )
IN ITS CAPACITY AS )
START-UP LOAN PROVIDER )
acting by its attorney in the presence of: )
Witness:
Name: Neil Berry
Address: Halifax Plc, Trinity Road, Halifax
FUNDING 1 LIQUIDITY FACILITY PROVIDER
EXECUTED as a DEED by ) S J Nelson
JPMORGAN CHASE BANK )
acting by its attorney in the presence of: )
Witness:
Name: Hugo Parson
Address: 125 London Wall
London
EC2Y 5AJ
RETIRING CO-FUNDING 1 SECURITY TRUSTEE
EXECUTED as a DEED by ) David Duclos
STATE STREET BANK AND )
TRUST COMPANY )
acting by its authorised signatory: )
Authorised Signatory
15
RETIRING CO-FUNDING 1 SECURITY TRUSTEE
EXECUTED and DELIVERED as a DEED by ) David Duclos
U.S. BANK NATIONAL ASSOCIATION )
acting by its authorised signatory: )
Authorised Signatory
NEW FUNDING 1 SECURITY TRUSTEE
EXECUTED and DELIVERED as a DEED by ) Kate Russell
THE BANK OF NEW YORK )
acting by its attorney in the presence of: )
Witness:
Name: Louise Bradbury
Address: One Canada Square
London E14 5AL
16
EXECUTION COPY
SIXTH DEED OF ACCESSION TO FUNDING 1
DEED OF CHARGE
DATED 23RD MARCH, 2005
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
PERMANENT FINANCING (NO. 7) 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 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]............................................................5
7. Application...........................................................5
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
Amended and Restated Funding Priority of Payments.............................12
Funding 1 Pre-Enforcement Revenue Priority of Payments...............12
Funding 1 Principal Priorities of Payments...........................18
Funding 1 Post-Enforcement Priority of Payments......................27
THIS SIXTH DEED OF ACCESSION TO THE FUNDING 1 DEED OF CHARGE is made on 23rd
March, 2005
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) 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);
(8) THE BANK OF NEW YORK, whose principal office is at One Canada Square,
London E14 5AL in its capacity as Security Trustee;
(9) 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), Sixth Start-up
Loan Provider (the SIXTH START-UP LOAN PROVIDER) and Seventh Start-up
Loan Provider (the SEVENTH START-UP LOAN PROVIDER);
(10) 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);
(11) 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);
1
(12) 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
(13) PERMANENT FINANCING (NO. 7) PLC (registered number 5330776), 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 SEVENTH ISSUER).
WHEREAS:
(A) Pursuant to the terms of an intercompany loan agreement dated 23rd March,
2005 made between Funding 1 and the Seventh Issuer (the SEVENTH ISSUER
INTERCOMPANY LOAN AGREEMENT), the Seventh Issuer has agreed to make the
Seventh Issuer Term Advances available to Funding 1 and Funding 1 has
agreed to secure its obligations and other liabilities to the Seventh
Issuer thereunder pursuant to the Funding 1 Deed of Charge.
(B) Pursuant to the terms of a start-up loan agreement dated 23rd March 2005
made between Funding 1 and the Seventh Start-up Loan Provider (the
SEVENTH START-UP LOAN AGREEMENT), the Seventh 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 Seventh 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).
2
(I) On the Sixth Issuer Closing Date, the Sixth Issuer and the Sixth 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
Sixth Issuer and the Sixth Start-up Loan Provider (the FIFTH DEED OF
ACCESSION).
(J) The Seventh Issuer and the Seventh Start-up Loan Provider have agreed to
enter into this Deed to accede to the provisions of the Funding 1 Deed of
Charge.
(K) 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 23rd March,
2005 (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 Seventh 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 Seventh Issuer Intercompany Loan
Agreement, Funding 1 has agreed to pay to the Seventh Issuer the
amounts set out in the Seventh Issuer Intercompany Loan Agreement;
and
(b) the Seventh 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 Seventh 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 Seventh Start-up Loan Agreement,
Funding 1 has agreed to pay to the Seventh Start-up Loan Provider
the amounts set out in the Seventh Start-up Loan Agreement; and
3
(b) the Seventh 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. ACCESSION
In consideration of the Seventh Issuer and the Seventh 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 Seventh Issuer and the Seventh 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 Seventh Issuer, the Seventh 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 Seventh Issuer Intercompany Agreement and the Seventh Start-up
Loan Agreement shall be treated as Funding 1 Agreements; and
(b) the Seventh Issuer and the Seventh 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.
4
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.
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 Seventh Issuer is:
Permanent Financing (No. 7) PLC
Blackwell House
Guildhall Yard
London
EC2V 5AE
Facsimile: +44 (0) 20 7556 0975
For the attention of: The Director
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 Seventh 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
5
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
or such other address and/or numbers as the Seventh Issuer, the Seventh
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
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: ..................
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, )
FIFTH START-UP LOAN PROVIDER, )
SIXTH START-UP LOAN PROVIDER AND )
SEVENTH 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: ......................
9
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: ....................
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: ....................
SEVENTH ISSUER
EXECUTED as a DEED by ) ...............................
PERMANENT FINANCING (NO. 7) )
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):
firstly, in or towards satisfaction of pro rata and pari passu, the
amounts due to:
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;
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;
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;
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;
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;
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;
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
pro rata and pari passu, to pay amounts due to the Seventh Issuer
in respect of the Seventh Issuer's obligations specified in items
(a) to (c) inclusive of the Seventh Issuer Pre-Enforcement Revenue
Priority of Payments or, as the case may be, items (a) and (b) of
the Seventh Issuer Post-Enforcement Priority of Payments;
12
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
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;
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);
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);
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;
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);
sixthly, in or towards satisfaction, pro rata and pari passu, of the
amounts of interest due and payable on the Term AAA Advances;
seventhly, towards a credit to the AAA Principal Deficiency Sub-Ledger in
an amount sufficient to eliminate any debit on that ledger;
eighthly, in or towards satisfaction, pro rata and pari passu, of the
amounts of interest due and payable on the Term AA Advances;
ninthly, towards a credit to the AA Principal Deficiency Sub-Ledger in an
amount sufficient to eliminate any debit on that ledger;
tenthly, in or towards satisfaction, pro rata and pari passu, of the
amounts of interest due and payable on the Term A Advances;
eleventhly, towards a credit to the A Principal Deficiency Sub-Ledger in
an amount sufficient to eliminate any debit on that ledger;
twelfthly, in or towards satisfaction, pro rata and pari passu, of
amounts of interest due and payable on the Term BBB Advances;
thirteenthly, towards a credit to the BBB Principal Deficiency Sub-Ledger
in an amount sufficient to eliminate any debit on that ledger;
fourteenthly, in or towards satisfaction, pro rata and pari passu,
according to the respective amounts thereof:
13
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);
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);
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);
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);
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);
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); and
any amounts due to the Seventh Issuer in respect of the Seventh
Issuer's obligations (if any) to make a termination payment to a
Seventh Issuer Swap Provider (but excluding any Seventh Issuer
Swap Excluded Termination Amount);
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;
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;
seventeenthly, in or towards satisfaction, pro rata and pari passu, of
any amounts due (without double counting) to:
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;
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;
14
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;
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;
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;
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;
the Seventh Issuer in respect of the Seventh Issuer's obligations
to make any termination payment to a Seventh Issuer Swap Provider
as a result of a Seventh Issuer Swap Provider Excluded Termination
Amount;
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;
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;
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;
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;
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;
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;
the Seventh Issuer in respect of any other amounts due and payable
under the Seventh Issuer Intercompany Loan Agreement and not
otherwise provided for in this order of priorities;
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
15
the Funding 1 Liquidity Facility Provider to pay any Funding 1
Liquidity Subordinated Amounts due under the Funding 1 Liquidity
Facility Agreement;
eighteenthly, towards payment pro rata and pari passu amounts due to:
the First Start-up Loan Provider under the First Start-up Loan
Agreement;
the Second Start-up Loan Provider under the Second Start-up Loan
Agreement;
the Third Start-up Loan Provider under the Third Start-up Loan
Agreement;
the Fourth Start-up Loan Provider under the Fourth Start-up Loan
Agreement;
the Fifth Start-up Loan Provider under the Fifth Start-up Loan
Agreement;
the Sixth Start-up Loan Provider under the Sixth Start-up Loan
Agreement; and
the Seventh Start-up Loan Provider under the Seventh Start-up Loan
Agreement;
nineteenthly, towards payment of an amount equal to 0.01 per cent. of the
Funding 1 Available Revenue Receipts; and
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:
each respective First Issuer Term Advances Due Date;
the date upon which a Trigger Event occurs;
the date upon which the Note Trustee serves a Note Acceleration
Notice on the First Issuer; and
the date upon which the Security Trustee serves an Intercompany
Loan Acceleration Notice on Funding 1.
Each Second Issuer Term Advance shall become "due and payable" on the
earlier to occur of:
each respective Second Issuer Term Advances Due Date;
the date upon which a Trigger Event occurs;
the date upon which the Note Trustee serves a Note Acceleration
Notice on the Second Issuer;
the date upon which the Security Trustee serves an Intercompany
Loan Acceleration Notice on Funding 1; and
the date upon which a Step-up Date occurs in relation to the
relevant Second Issuer Term Advance.
Each Third Issuer Term Advance shall become "due and payable" on the
earlier to occur of:
each respective Third Issuer Term Advances Due Date;
the date upon which a Trigger Event occurs;
the date upon which the Note Trustee serves a Note Acceleration
Notice on the Third Issuer;
the date upon which the Security Trustee serves an Intercompany
Loan Acceleration Notice on Funding 1; and
the date upon which a Step-up Date occurs in relation to the
relevant Third Issuer Term Advance.
Each Fourth Issuer Term Advance shall become "due and payable" on the
earlier to occur of:
each respective Fourth Issuer Term Advances Due Date;
the date upon which a Trigger Event occurs;
17
the date upon which the Note Trustee serves a Note Acceleration
Notice on the Fourth Issuer;
the date upon which the Security Trustee serves an Intercompany
Loan Acceleration Notice on Funding 1; and
the date upon which a Step-up Date occurs in relation to the
relevant Fourth Issuer Term Advance.
Each Fifth Issuer Term Advance shall become "due and payable" on the
earlier to occur of:
each respective Fifth Issuer Term Advances Due Date;
the date upon which a Trigger Event occurs;
the date upon which the Note Trustee serves a Note Acceleration
Notice on the Fifth Issuer;
the date upon which the Security Trustee serves an Intercompany
Loan Acceleration Notice on Funding 1; and
the date upon which a Step-up Date occurs in relation to the
relevant Fifth Issuer Term Advance.
1.2 Each Sixth Issuer Term Advance shall become "due and payable" on the
earlier to occur of:
each respective Sixth Issuer Term Advances Due Date;
the date upon which a Trigger Event occurs;
the date upon which the Note Trustee serves a Note Acceleration Notice on
the Sixth Issuer;
the date upon which the Security Trustee serves an Intercompany Loan
Acceleration Notice on Funding 1; and
the date upon which a Step-up Date occurs in relation to the relevant
Sixth Issuer Term Advance.
1.3 Each Seventh Issuer Term Advance shall become "due and payable" on the
earlier to occur of:
each respective Seventh Issuer Term Advances Due Date;
the date upon which a Trigger Event occurs;
the date upon which the Note Trustee serves a Note Acceleration Notice on
the Seventh Issuer;
the date upon which the Security Trustee serves an Intercompany Loan
Acceleration Notice on Funding 1; and
the date upon which a Step-up Date occurs in relation to the relevant
Seventh Issuer Term Advance.
18
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
Cash Manager shall apply Funding 1 Available Principal Receipts in the
following order of priority:
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;
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;
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;
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;
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;
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;
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;
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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
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:
Rule (1) - Deferral of repayment of Pass-Through Term Advances
and/or Scheduled Amortisation Instalments in certain
circumstances.
Deferral of Term AA Advances, Term A Advances and/or Term
BB Advances
If on a Funding 1 Interest Payment Date:
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
the Adjusted General Reserve Fund Level is less than
the General Reserve Fund Threshold; or
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 Seventh 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
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under paragraphs 2.1(d) and/or (e) and/or (f) above then
the Term BBB Advances (including the Seventh Issuer Term
BBB Advances) will not be entitled to Principal Repayments
under paragraph 2.1(g) above.
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:
one or more Bullet Term Advances are within a Cash
Accumulation Period at that time (irrespective of whether
any Scheduled Amortisation Instalments are then in a Cash
Accumulation Period); and
either:
the quarterly CPR is less than 10 per cent.; or
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.
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:
one or more Bullet Term Advances and/or Scheduled
Amortisation Instalments are within a Cash Accumulation
Period at that time; and
the quarterly CPR is less than 15 per cent.; and
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.
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
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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:
Outstanding Principal Balance of
Intercompany Loan A
Funding 1 Principal Funds x ------------------------------------------
Aggregate Outstanding Principal Balance
of all Intercompany Loans
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:
service of a Note Acceleration Notice will not result in automatic
enforcement of the Funding 1 Security;
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;
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
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:
Outstanding Principal Balance of
Intercompany Loan B
Funding 1 Principal Funds x ------------------------------------------
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
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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 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:
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;
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;
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;
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;
fifthly, pro rata and pari passu, to repay the Term AA Advances,
until those Term AA Advances are fully repaid;
sixthly, in satisfaction of pro rata and pari passu to repay the
Term A Advances, until each of those is fully repaid; and
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
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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:
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;
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;
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;
fourthly, pro rata and pari passu, towards repayment of the Term
AAA Advances, until each of those Term AAA Advances is fully
repaid;
fifthly, pro rata and pari passu, towards repayment of the Term AA
Advances until each of those Term AA Advances is fully repaid;
sixthly, pro rata and pari passu, towards repayment of the Term A
Advances until each of those Term A Advances is fully repaid; and
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:
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;
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;
24
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;
fourthly, pro rata and pari passu, towards repayment of the Term
AAA Advances, until each of those Term AAA Advances is fully
repaid.
fifthly, pro rata and pari passu, towards repayment of the Term AA
Advances, until each of those Term AA Advances is fully repaid;
sixthly, pro rata and pari passu, towards repayment of the Term A
Advances, until each of those Term A Advances is fully repaid; and
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.
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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:
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;
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;
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;
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;
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;
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;
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; and
the Seventh Issuer in respect of the Seventh Issuer's obligations
specified in items (a) and (b) of the Seventh 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);
26
(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;
(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:
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);
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);
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);
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);
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);
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);
and
the Seventh Issuer in respect of the Seventh Issuer's obligations
(if any) to make a termination payment to a Seventh Issuer Swap
Provider (but excluding any Seventh Issuer Swap Excluded
Termination Amount);
(k) eleventhly, in or towards satisfaction of, pro rata and pari passu
(without double counting):
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);
27
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);
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);
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 Swap Provider Default or a
Fourth Issuer Swap Provider Downgrade Termination Event (as
appropriate);
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);
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);
amounts due to the Seventh Issuer in respect of the Seventh
Issuer's obligations to pay any termination payment to a Seventh
Issuer Swap Provider as a result of a Current Swap Provider
Default or a Seventh Issuer Swap Provider Downgrade Termination
Event (as appropriate);
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;
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;
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;
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;
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;
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;
any other amounts due to the Seventh Issuer under the Seventh
Issuer Intercompany Loan Agreement and not otherwise provided for
earlier in this order of priorities;
any Funding 1 Liquidity Subordinated Amounts due to the Funding 1
Liquidity Facility Provider; and
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:
28
the First Start-up Loan Provider under the First Start-up Loan
Agreement;
the Second Start-up Loan Provider under the Second Start-up Loan
Agreement;
the Third Start-up Loan Provider under the Third Start-up Loan
Agreement;
the Fourth Start-up Loan Provider under the Fourth Start-up Loan
Agreement;
the Fifth Start-up Loan Provider under the Fifth Start-up Loan
Agreement;
the Sixth Start-up Loan Provider under the Sixth Start-up Loan
Agreement; and
the Seventh Start-up Loan Provider under the Seventh Start-up Loan
Agreement.
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