AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY [ ], 2006
REGISTRATION NOS. 333-128502, 128502-01 and 128502-02
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
_____________________
ARRAN FUNDING LIMITED SOUTH GYLE RECEIVABLES TRUSTEE LIMITED RBS CARDS SECURITISATION FUNDING LIMITED
(Issuer of the Notes) (Receivables Trustee) (Depositor and Loan Note Issuer)
(Exact Name of Registrants as Specified in Their
Charters)
JERSEY, CHANNEL ISLANDS JERSEY, CHANNEL ISLANDS JERSEY, CHANNEL ISLANDS
(State or Other Jurisdictions of Incorporation or
Organisation)
NONE
(I.R.S. Employer Identification Numbers)
22 GRENVILLE STREET 22 GRENVILLE STREET ROYAL BANK HOUSE, 71 BATH STREET,
ST. HELIER, JERSEY, JE4 8PX ST. HELIER, JERSEY, JE4 8PX ST. HELIER, JERSEY, JE4 8PX
CHANNEL ISLANDS CHANNEL ISLANDS CHANNEL ISLANDS
(44) 1534-609000 (44) 1534-609000 (44) 1534-285279
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Principal Executive Offices of Registrants)
Daniel P. McGarvey
Greenwich Capital Markets, Inc.
600 Steamboat Road
Greenwich, Connecticut 06830
Tel (203) 618 6238
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)
WITH COPIES TO:
LEWIS RINAUDO COHEN, ESQ. STEVE THIERBACH, ESQ.
Clifford Chance US LLP Linklaters
31 West 52nd Street One Silk Street
New York, New York 10019 London, EC2Y 8HQ
Approximate Date of Commencement of Proposed Sale to the Public: From
time to time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [box]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [box]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [box]______________________
If this Form is a registration statement pursuant to General Instruction
I.D. or a post-effective amendment thereto that shall become effective upon
filing with the Commission pursuant to Rule 462(e) under the Securities Act,
check the following box. [box]
If this Form is a post-effective amendment to a registration statement
filed pursuant to General Instruction I.D. filed to register additional
securities or additional classes of securities pursuant to Rule 413(b) under the
Securities Act, check the following box. [box]
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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INTRODUCTORY NOTE
This registration statement includes: (i) a base prospectus, and (ii) an
illustrative form of prospectus supplement for use in the offering of each
series of notes. Appropriate modifications will be made to the form of
prospectus supplement to disclose the specific terms of any particular series of
notes, the specific classes of notes to be offered thereby and the terms of the
related offering. Each base prospectus used (in either preliminary or final
form) will be accompanied by a prospectus supplement.
$7,500,000,000 MEDIUM TERM NOTE PROGRAMME
(ultimately backed by trust property in the South Gyle Receivables Trust held
by South Gyle Receivables Trustee Limited)
ARRAN FUNDING LIMITED
ISSUING ENTITY
THE ROYAL BANK OF SCOTLAND PLC
SPONSOR, ORIGINATOR AND SERVICER
NATIONAL WESTMINSTER BANK PLC
ORIGINATOR
RBS CARDS SECURITISATION FUNDING LIMITED
DEPOSITOR
Arran Funding Limited, as issuing entity, has entered into a medium term
note programme and prepared this base prospectus to describe it. Under the
programme, notes may be issued from time to time denominated in US dollars,
sterling or euro. Notes will be issued in series, each with three classes of
notes. Each class may comprise one or more sub-classes with each sub-class
having the same maturity date and differing in, among other things, the
currency and interest rate of the relevant sub-class. The maximum aggregate
principal amount of notes outstanding under the programme at any time may not
exceed $7,500,000,000 (or its equivalent in other currencies).
The offer of a series of notes will be made through this base prospectus and
a prospectus supplement containing a set of final terms that will set forth the
terms and conditions of the respective notes and the names of the dealers
participating in the offering. In compliance with the Financial Services and
Markets Act 2000 ("FSMA"), this base prospectus may not be used to offer any
notes more than 12 months after the date of admission to listing on the
Official List of the Financial Services Authority in its capacity as the UK
Listing Authority (the "UKLA") and to trading on the gilt-edged and fixed
interest market of the London Stock Exchange plc (the "LONDON STOCK EXCHANGE").
The gilt edged and fixed interest market of the London Stock Exchange is a
regulated market for the purposes of Investment Services Directive 19/93/22/EC
(the "REGULATED MARKET OF THE LONDON STOCK EXCHANGE"). In the case of notes
listed on the regulated market of the London Stock Exchange, a copy of the
prospectus supplement containing the final terms will be delivered to the
regulated market of the London Stock Exchange on or before the date of issue of
those notes.
The ultimate source of payment on the notes will be collections on consumer
credit card accounts originated in the United Kingdom by The Royal Bank of
Scotland plc and by its subsidiary National Westminster Bank Plc, both acting
through The Royal Bank of Scotland plc's division Retail Markets Division --
Cards Business, or by RBS Advanta and transferred to The Royal Bank of Scotland
plc.
No notes may be issued under the programme which have a minimum denomination
of less than [e]50,000 (or equivalent in another currency).
In the case of each class or sub-class of notes denominated in US dollars or
euro, a separate currency swap transaction will be entered into by the issuing
entity to convert the sterling amounts received into US dollar or euro amounts
for payments to that class or sub-class.
PLEASE REVIEW AND CONSIDER THE RISK FACTORS BEGINNING ON PAGE 19 IN THIS
BASE PROSPECTUS CAREFULLY BEFORE YOU PURCHASE ANY NOTES.
You should read this base prospectus and the applicable final terms
carefully before you invest. A note is not a deposit and neither the notes nor
the underlying receivables are insured or guaranteed by The Royal Bank of
Scotland plc, National Westminster Bank Plc, The Bank of New York, RBS
Greenwich Capital or by any United Kingdom or United States governmental
agency. The notes offered in this base prospectus will be obligations of the
issuing entity only. The issuing entity will only have a limited pool of assets
to satisfy its obligations under the notes. The notes will not be obligations
of The Royal Bank of Scotland plc, National Westminster Bank Plc, The Bank of
New York, RBS Greenwich Capital or any of their affiliates.
NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THE NOTES OR DETERMINED THAT
THIS BASE PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENCE.
Application has been made to have admitted to listing on the Official List
of the UKLA and to trading on the regulated market of the London Stock
Exchange, any notes issued under the programme for the period of 12 months from
the date of this base prospectus.
ARRANGER
THE ROYAL BANK OF SCOTLAND
DEALERS
THE ROYAL BANK OF SCOTLAND RBS GREENWICH CAPITAL
GREENWICH CAPITAL MARKETS, INC.
U.S. Distributor
[__], 2006
The information contained in this prospectus is not complete and may be
changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and is not seeking an offer to buy
these securities in any state where the offer or sale is not permitted.
TABLE OF CONTENTS
Important Notices ............................................................................................ 7
Supplementary Base Prospectus ................................................................................ 7
Responsibility Statement ..................................................................................... 8
Prospectus Summary ........................................................................................... 9
Structural Diagram of the Securitisation Programme.......................................................... 9
Programme Structural Overview............................................................................... 10
Previous Series............................................................................................. 10
Receivables Master Trust.................................................................................... 10
Issuance of New Series of Loan Notes and Notes.............................................................. 10
Overview of the Arran Funding Medium Term Note Programme ..................................................... 12
Initial Programme Amount.................................................................................... 12
Issuance in Series.......................................................................................... 12
Final terms................................................................................................. 12
The Parties .................................................................................................. 13
The Receivables............................................................................................. 14
The Loan Note Issuer and Investor Beneficiary............................................................... 15
Swap Counterparty........................................................................................... 15
Transaction Fees............................................................................................ 16
The Notes -- Overview ........................................................................................ 16
Listing..................................................................................................... 16
Clearing Systems............................................................................................ 16
Status, Security and Priority of Payments of the Notes...................................................... 16
Form of Notes............................................................................................... 17
Currencies.................................................................................................. 17
Issue Price................................................................................................. 17
Maturities.................................................................................................. 17
Scheduled Redemption........................................................................................ 17
Mandatory Early Redemption and Priority of Payments......................................................... 17
Final Redemption............................................................................................ 18
Interest.................................................................................................... 18
Denominations............................................................................................... 18
Negative Covenants.......................................................................................... 18
Credit Enhancement.......................................................................................... 18
Taxation.................................................................................................... 18
Governing Law............................................................................................... 18
Enforcement of Notes in Global Form......................................................................... 18
Ratings..................................................................................................... 18
Selling Restrictions........................................................................................ 18
Risk Factors ................................................................................................. 19
Tax Considerations ........................................................................................... 33
United Kingdom Tax Status................................................................................... 33
Jersey Tax Status........................................................................................... 33
United States Federal Income Tax Status..................................................................... 33
ERISA Considerations for Investors.......................................................................... 34
US Dollar/Sterling Exchange Rate ............................................................................. 35
The Issuing Entity ........................................................................................... 36
Directors and Secretary..................................................................................... 36
Management's Discussion and Analysis of Financial Condition................................................. 37
Results of Operations....................................................................................... 37
Litigation.................................................................................................. 38
Financial Position.......................................................................................... 38
2
Use of Proceeds............................................................................................. 38
Series expense loan drawings................................................................................ 38
The Loan Note Issuer ......................................................................................... 39
Directors and Secretary..................................................................................... 39
Administration Agreement.................................................................................... 40
Management's Discussion and Analysis of Financial Condition................................................. 40
The Administrator ............................................................................................ 41
The Receivables Trustee ...................................................................................... 42
Directors and Secretary..................................................................................... 42
Management and Activities................................................................................... 42
The Originators .............................................................................................. 45
The Credit Card Portfolio .................................................................................... 49
Maturity Assumptions ......................................................................................... 53
Receivables Yield Considerations ............................................................................. 54
The Receivables .............................................................................................. 56
Transfer of Receivables to the Receivables Trustee.......................................................... 56
Redesignation and Removal of Accounts....................................................................... 58
Discount Option Receivables................................................................................. 59
Special Fees................................................................................................ 59
Interchange................................................................................................. 60
Annual Fees................................................................................................. 60
Reductions in Receivables, Early Collections and Credit Adjustments......................................... 60
Representations............................................................................................. 60
Amendments to Credit Card Agreements and Credit Card Guidelines............................................. 63
Overview of Securitised Portfolio........................................................................... 63
The Receivables Trust ........................................................................................ 64
General Legal Structure..................................................................................... 64
Enhancement Provider........................................................................................ 64
Acquisitions................................................................................................ 64
The Receivables Trust's Property............................................................................ 66
General Entitlement of Beneficiaries to Receivables Trust Property.......................................... 67
Application of Collections.................................................................................. 69
Acquiring Additional Entitlements to Receivables Trust Property and Payments for Receivables................ 71
Non-Petition Undertaking.................................................................................... 71
Trust Pay Out Events........................................................................................ 72
Termination of the Receivables Trust........................................................................ 73
Amendments to the Receivables Trust Deed and Trust Cash Management Agreement................................ 73
Disposals................................................................................................... 73
Trustee Payment Amount...................................................................................... 74
Servicing of Receivables and Trust Cash Management ........................................................... 75
General --- Servicing....................................................................................... 75
Servicer Compensation....................................................................................... 76
Termination of Appointment of Servicer...................................................................... 79
General -- Trust Cash Management............................................................................ 80
Trust Cash Manager Compensation............................................................................. 81
Termination of Appointment of Trust Cash Manager............................................................ 81
Sources of Funds to Pay the Loan Notes ....................................................................... 84
General..................................................................................................... 84
Beneficial Entitlement of the Loan Note Issuer to Receivables Trust Property................................ 84
Beneficial Entitlement of Loan Note Issuer to Finance Charge Collections.................................... 85
Calculation and Distribution of Finance Charge Collections and Acquired Interchange to the Loan Note Issuer. 88
3
Class A Investor Interest................................................................................... 89
Class B Investor Interest................................................................................... 92
Class C Investor Interest................................................................................... 93
Distributions of Principal Collections to the Loan Note Issuer.............................................. 95
Revolving Period............................................................................................ 95
Controlled Accumulation Period.............................................................................. 95
Regulated Amortisation Period............................................................................... 96
Rapid Amortisation Period................................................................................... 97
Calculation of Principal Collections to be Distributed to the Loan Note Issuer in Respect of Each Series.... 97
Postponement of Controlled Accumulation Period.............................................................. 102
Unavailable Principal Collections........................................................................... 102
Shared Principal Collections................................................................................ 102
Defaulted Receivables; Investor Charge-Offs................................................................. 103
Available Spread............................................................................................ 105
Aggregate Investor Indemnity Amount......................................................................... 106
Principal Funding Account................................................................................... 107
Reserve Account............................................................................................. 107
Spread Account.............................................................................................. 109
Series Collection Account................................................................................... 110
Trustee Payment Amount...................................................................................... 110
Qualified Institutions...................................................................................... 111
Series Pay-Out Events....................................................................................... 111
The Security Trust Deed ...................................................................................... 114
Constitution of Loan Notes.................................................................................. 114
Covenants of the Loan Note Issuer........................................................................... 114
Loan Note Security.......................................................................................... 114
Enforcement and Priority of Payments........................................................................ 114
Trust Indenture Act Compliance.............................................................................. 115
Appointment, Powers, Responsibilities and Liability of the Security Trustee................................. 115
The Loan Notes ............................................................................................... 117
Limited Recourse............................................................................................ 117
Security.................................................................................................... 117
Cashflows of the Loan Note Issuer ............................................................................ 118
Interest and Payments....................................................................................... 118
Loan Note Events of Default................................................................................. 119
The Trust Deed and Trust Deed Supplements .................................................................... 121
General..................................................................................................... 121
Constitution of the notes................................................................................... 121
Covenants, Representations and Warranties of the Issuing Entity............................................. 121
Note security............................................................................................... 121
Enforcement and priority of payments........................................................................ 121
The notes................................................................................................... 121
Recourse.................................................................................................... 122
Appointment, powers, responsibilities and liability of the note trustee..................................... 122
The US Trust Indenture Act.................................................................................. 123
Cashflows of the Issuing Entity .............................................................................. 124
Amounts transferred by the loan note issuer relating to the Issuing Entity distribution account............. 124
Monthly payments............................................................................................ 124
Annual, quarterly or monthly payments....................................................................... 127
Interest and payments....................................................................................... 127
Interest payment dates...................................................................................... 127
4
Withholding or deduction................................................................................... 127
Scheduled redemption of a series............................................................................ 128
Mandatory redemption of a series............................................................................ 128
Jersey bank account operating agreement..................................................................... 128
The Notes and the Global Notes ............................................................................... 129
Terms and Conditions of the Notes ............................................................................ 133
Description of the Swap Agreements ........................................................................... 163
General..................................................................................................... 163
In relation to Foreign Exchange Swap Agreements only........................................................ 163
Early termination........................................................................................... 163
Taxation.................................................................................................... 164
Rating downgrade or withdrawal.............................................................................. 165
General..................................................................................................... 165
Material Legal Aspects of the Receivables .................................................................... 166
Consumer Credit Act 1974.................................................................................... 166
Enforcement of improperly executed or modified credit card agreements....................................... 166
Liability for supplier's misrepresentation or breach of contract............................................ 166
Transfer of Benefit of Receivables.......................................................................... 167
Material United Kingdom Tax Consequences ..................................................................... 169
Material Jersey Tax Consequences ............................................................................. 171
General..................................................................................................... 171
General Overview............................................................................................ 171
Income Taxes................................................................................................ 171
Taxation of the Receivables Trust........................................................................... 172
Withholding Taxes........................................................................................... 172
Jersey and the EU Directive on the Taxation of Savings Income............................................... 172
Other Taxes................................................................................................. 173
Material United States Federal Income Tax Consequences ....................................................... 174
General..................................................................................................... 174
Overview of Special US Tax Counsel's Opinions............................................................... 174
Tax Treatment of the Receivables Trustee, the Receivables Trust, the Loan Note Issuer and the Issuing Entity 175
US Holders.................................................................................................. 175
Non-US Holders.............................................................................................. 177
Backup Withholding and Information Reporting................................................................ 177
Certain State, Local and Other Tax Consequences............................................................. 177
ERISA Considerations ......................................................................................... 178
General..................................................................................................... 178
Equity Treatment............................................................................................ 178
Further Considerations...................................................................................... 179
Enforcement of Foreign Judgments in Jersey or England and Wales .............................................. 180
Plan of Distribution ......................................................................................... 181
United Kingdom.............................................................................................. 182
Jersey...................................................................................................... 182
General..................................................................................................... 182
Ratings of the Notes ......................................................................................... 184
Experts ...................................................................................................... 185
Legal Matters ................................................................................................ 186
Governing Law ................................................................................................ 187
Reports to Noteholders ....................................................................................... 188
Where You Can Find More Information .......................................................................... 189
Listing and General Information .............................................................................. 190
Index of Appendices .......................................................................................... 193
5
Appendix A Report of Independent Accountants for Arran Funding Limited..................................... 194
Appendix B Balance Sheet of Arran Funding Limited........................................................... 195
Appendix C Notes to Financial Statements.................................................................... 196
Appendix D Report of Independent Accountants for RBS Cards Securitisation Funding Limited................... 197
Appendix E Profit and Loss Account of RBS Cards Securitisation Funding Limited.............................. 198
Appendix F Notes to Financial Statements.................................................................... 200
Appendix G Final Terms...................................................................................... 201
Index of Terms in the Base Prospectus ........................................................................ 223
6
IMPORTANT NOTICES
When this base prospectus is circulated, the consent of the Jersey Financial
Services Commission under the Control of Borrowing (Jersey) Order 1958, as
amended, will have been obtained to the issue of the notes by the issuing
entity.
When this base prospectus is circulated we will have delivered a copy of it
to the Registrar of Companies in Jersey, Channel Islands, in accordance with
Article 5 of the Companies (General Provisions) (Jersey) Order 2002 and the
Registrar of Companies will have given and not withdrawn his consent to such
circulation.
It must be distinctly understood that, in giving those consents, neither the
Registrar of Companies in Jersey nor the Jersey Financial Services Commission
takes any responsibility for the financial soundness of the issuing entity or
for the correctness of any statements made, or opinions expressed, with regard
to it.
This document constitutes a `base prospectus' for the purposes of article
5.4 of Directive 2003/71/EC (the "PROSPECTUS DIRECTIVE") for the purposes of
giving information with regard to the issuing entity which is necessary to
enable investors to make an informed assessment of the assets and liabilities,
financial position, profits and losses and prospects of the issuing entity.
The notes will be obligations of the issuing entity only. They will not be
obligations or responsibilities of, nor will they be guaranteed by, any other
party, including The Bank of New York, The Royal Bank of Scotland plc and/or
National Westminster Bank Plc in any of its capacities, or any of their
affiliates or advisers, successors or assigns.
No request has been made for a certificate permitting public offers of the
notes in other member states of the European Union.
IN CONNECTION WITH THE ISSUE OF ANY SERIES OF NOTES, THE DEALER OR DEALERS
(IF ANY) NAMED AS THE STABILISING MANAGER(S) (OR PERSONS ACTING ON BEHALF OF
ANY STABILISING MANAGER(S)) IN THE APPLICABLE FINAL TERMS MAY OVER ALLOT NOTES
(PROVIDED THAT IN THE CASE OF ANY SERIES OF NOTES TO BE ADMITTED TO TRADING ON
THE REGULATED MARKET OF THE LONDON STOCK EXCHANGE, THE AGGREGATE PRINCIPAL
AMOUNT OF NOTES ALLOTTED DOES NOT EXCEED 105 PER CENT. OF THE AGGREGATE
PRINCIPAL AMOUNT OF THE RELEVANT SERIES) OR EFFECT TRANSACTIONS WITH A VIEW TO
SUPPORTING THE MARKET PRICE OF THE NOTES AT A LEVEL HIGHER THAN THAT WHICH
MIGHT OTHERWISE PREVAIL. HOWEVER, THERE IS NO ASSURANCE THAT THE STABILISING
MANAGER(S) (OR PERSONS ACTING ON BEHALF OF THE STABILISING MANAGER(S)) WILL
UNDERTAKE SUCH STABILISATION ACTION. ANY STABILISATION ACTION MAY BEGIN AT ANY
TIME AFTER THE ADEQUATE PUBLIC DISCLOSURE OF THE FINAL TERMS OF THE OFFER OF
THE RELEVANT SERIES OF NOTES AND, IF BEGUN, MAY BE ENDED AT ANY TIME, BUT IT
MUST END NO LATER THAN THE EARLIER OF 30 DAYS AFTER THE ISSUE DATE OF THE
RELEVANT SERIES OF NOTES AND 60 DAYS AFTER THE DATE OF THE ALLOTMENT OF THE
RELEVANT SERIES OF NOTES.
The Jersey Financial Services Commission has requested the inclusion of the
following statement: an investment in the notes is only suitable for
financially sophisticated investors who are capable of evaluating the merits
and risks of such investment and who have sufficient resources to be able to
bear any losses which may result from such investment.
We include cross-references to captions in this base prospectus where you
can find further related discussions. The following table of contents provides
the pages on which these captions are located.
You can find an index beginning on page 227 under the caption "Index of
Terms In The Base Prospectus" which lists where some terms used in this
document are explained.
SUPPLEMENTARY BASE PROSPECTUS
The issuing entity has undertaken, in connection with the admission of the
notes to listing on the Official List of the UKLA and the admission to trading
on the regulated market of the London Stock Exchange, that if there shall occur
any adverse change in the business or financial position of the issuing entity
or any change in the information set out under "Terms and Conditions of the
Notes", that is material in the context of issuance of notes under the
programme pursuant to Section 87 of the Financial Services and Markets Act
2000, then the issuing entity will prepare or procure the preparation of an
amendment or supplement to this base prospectus or, as the case may be, publish
a new base prospectus, for use in connection with any subsequent issue by the
issuing entity of notes to be listed on the regulated market of the London
Stock Exchange which shall constitute a
7
supplemental prospectus as required by the UKLA and Section 87 of the Financial
Services and Markets Act 2000.
When delivered in the United States, this base prospectus must be
accompanied by a set of final terms pursuant to which the series of notes
referred to therein will be offered. Such final terms are contained in a
prospectus supplement and constitute, with respect to the series of notes
offered thereby, the "RELEVANT FINAL TERMS" or the "APPLICABLE FINAL TERMS"
referred to herein.
The issuing entity will, at the specified offices of the paying agents,
provide, free of charge, upon oral or written request, a copy of this base
prospectus. Written or telephone requests for this base prospectus should be
directed to the specified office of any paying agent.
RESPONSIBILITY STATEMENT
The issuing entity accepts responsibility for the information contained in
this base prospectus. The issuing entity declares that, having taken all
reasonable care to ensure that such is the case, the information contained in
this base prospectus is, to the best of its knowledge, in accordance with the
facts and contains no omission likely to affect the import of such information.
The information relating to RBS Cards Securitisation Funding Limited and
South Gyle Receivables Trustee Limited has been accurately reproduced from
information provided by RBS Cards Securitisation Funding Limited and South Gyle
Receivables Trustee Limited, respectively. So far as the issuing entity is
aware and/or is able to ascertain from information provided by each of RBS
Cards Securitisation Funding Limited and South Gyle Receivables Trustee
Limited, no facts have been omitted which would render the reproduced
information misleading.
The information relating to The Royal Bank of Scotland plc, National
Westminster Bank Plc and their affiliates has been accurately reproduced from
information provided by The Royal Bank of Scotland plc. So far as the issuing
entity is aware and/or is able to ascertain from information provided by The
Royal Bank of Scotland plc, no facts have been omitted which would render the
reproduced information misleading.
8
PROSPECTUS SUMMARY
STRUCTURAL DIAGRAM OF THE SECURITISATION PROGRAMME
[STRUCTURAL DIAGRAM OF THE SECURITISATION PROGRAMME]
9
PROGRAMME STRUCTURAL OVERVIEW
The following is a brief overview description of the Arran Funding Medium
Term Note Programme, of which your notes will form a part.
In this base prospectus, we will refer to The Royal Bank of Scotland plc as
"RBS", to National Westminster Bank Plc as "NATWEST", to RBS, in its capacity
as sponsor of the programme as the "SPONSOR" and to both of them, in their
capacities as originators of the receivables, as the "ORIGINATORS". "We" means
Arran Funding Limited, RBS Cards Securitisation Funding Limited and South Gyle
Receivables Trustee Limited. Where we refer to these companies separately, we
will identify them specifically. The servicer of the receivables (the
"SERVICER") is the Retail Markets Division -- Card Business of RBS. The cash
manager of the receivables trust (the "TRUST CASH MANAGER") is jointly the
Retail Markets Division -- Cards Business and the Global Banking & Markets
Business of RBS. We will refer to South Gyle Receivables Trustee Limited, a
special purpose vehicle incorporated in Jersey, Channel Islands, as the
"RECEIVABLES TRUSTEE", to Arran Funding Limited as the "ISSUING ENTITY", to the
Retail Markets Division -- Cards Business of RBS as "CARDS BUSINESS" and to the
Global Banking & Markets Business of RBS as "GBM".
RECEIVABLES MASTER TRUST
From time to time, one or both originators may transfer to the receivables
trustee all of their respective present and future beneficial interests in
receivables in designated revolving credit card accounts originated or
purchased by each of RBS and NatWest in the United Kingdom. As regards
receivables that are governed by English law, such transfers are constituted by
way of assignment under the terms of the receivables securitisation agreement.
As regards receivables that are governed by Scots law, such transfers are
constituted by way of Scottish declarations of trust. Only the receivables will
be so transferred. The accounts will be retained by RBS and NatWest,
respectively.
In 2000, RBS and its indirect wholly-owned subsidiary RBS Advanta, which we
will refer to as "RBSA" effected three transfers by way of assignment and
Scottish declaration of trust of the present and future beneficial interest in
receivables in designated revolving credit card accounts originated in the
United Kingdom by, respectively, RBS and RBSA. We refer to the transfers that
occurred in 2000 as aforesaid as the "2000 TRANSFERS" and we refer to the 2000
transfers and each assignment and Scottish declaration of trust that has
occurred, or that will occur, after the 2000 transfers, as the "TRANSFERS" with
each being a "TRANSFER" and the term "TRANSFERRED" shall be construed
accordingly in that context. The credit card portfolio of RBSA was transferred
to RBS on 1 January 2004, at the same time as the transfer of the originator
interest of RBSA in the receivables trust (as defined below) to RBS. NatWest
acceded to the receivables trust (as defined below) pursuant to a deed of
accession (the "NATWEST DEED OF ACCESSION") on 27 October 2005. RBS and NatWest
made an offer of receivables to the receivables trustee on 27 October 2005, and
when the offer was accepted, NatWest received an originator interest in its
capacity as an originator beneficiary (as defined below) in the receivables
trust. The originators may, but are not obliged to, assign to the receivables
trustee their present and future beneficial interest in receivables arising on
further credit card accounts originated or purchased by RBS and NatWest in the
United Kingdom.
The receivables trustee will hold the receivables on trust for RBS and
NatWest, as originator beneficiaries, and for a special purpose vehicle
subsidiary of RBS called RBS Cards Securitisation Funding Limited, as investor
beneficiary (as defined below). In this base prospectus, we will refer to this
trust as the "RECEIVABLES TRUST". When we describe their entitlement to
property in the receivables trust, we will refer to RBS, NatWest and any future
originator beneficiary as the "ORIGINATOR BENEFICIARIES" and each an
"ORIGINATOR BENEFICIARY". We will refer to RBS Cards Securitisation Funding
Limited as the "LOAN NOTE ISSUER" and the "INVESTOR BENEFICIARY" in this base
prospectus.
"RECEIVABLES" means finance charge receivables and principal receivables
arising on accounts held within the receivables trust.
ISSUANCE OF NEW SERIES OF LOAN NOTES AND NOTES
The loan note issuer has funded prior acquisitions, and may fund future
acquisitions, of its undivided beneficial interest in the receivables trust by
issuing limited recourse loan notes. We will refer to these limited recourse
loan notes as the "LOAN NOTES". The loan note issuer will have future issuances
of loan notes listed on the Channel Islands Stock Exchange or such other stock
exchange as the loan note issuer may choose.
10
In 2000, the loan note issuer issued the Series 00-A, 00-B and 00-C loan
notes (to which we will refer, collectively, as the "2000 LOAN NOTES"). The 2000
loan notes were sold by the loan note issuer to Arran One Limited and to Arran
Two Limited and the proceeds of those sales were used by the loan note issuer to
fund its purchase of its undivided beneficial interest in the receivables trust.
See "The Loan Note Issue". The 2000 loan notes have now all been redeemed.
On 15 December 2005, the loan note issuer issued the Series 05-A and 05-B
loan notes (to which we will refer, collectively, as the "2005 LOAN NOTES").
The 2005 loan notes were sold by the loan note issuer to the issuing entity and
the proceeds of those sales were used by the loan note issuer to increase its
beneficial interest in the receivables trust. As at the date of this base
prospectus, the 2005 loan notes remain outstanding.
In connection with each issuance of a new series of notes by the issuing
entity under the programme, the loan note issuer will increase its undivided
beneficial interest in the receivables trust using the proceeds of the issuance
of a corresponding loan note to the issuing entity. The limited recourse nature
of each loan note will ensure that the loan note issuer is only ever liable to
the purchaser of any loan note for payments in an amount equal to payments
received by the loan note issuer from the receivables trustee in respect of
that loan note. Each loan note will be segregated from each previously issued
loan note and will not provide any cross-collateralisation. Each increase in
the loan note issuer's undivided beneficial interest in the receivables trust
will be evidenced by a corresponding annotation to the investor certificate,
which sets out the size of the loan note issuer's beneficial interest. See "The
Receivables -- Assignment of the Receivables to the Receivables Trustee" and
"The Receivables Trust -- Acquisitions".
The initial principal amount of a loan note is the amount that is stated in
the loan note supplement for such loan note to be payable to the holder of such
loan note. It will be denominated in sterling. Such amount will be set out in
the final terms of the series which such loan note supports.
The outstanding principal amount of a loan note is the initial principal
amount of that loan note, as described in the relevant loan note supplement for
such loan note and the relevant final terms, less principal payments made to
the holder of that loan note.
The issuing entity will finance its subscription for each loan note by
issuing under the programme a separate series of notes that will be sold to
investors from time to time (after swapping the proceeds of the notes in any
currency other than sterling into sterling, if applicable).
Each series of notes to be issued by the issuing entity will be secured in
favour of a trustee for the benefit of the secured creditors of the relevant
series. The secured asset for a whole series of notes is the corresponding
single loan note. The security for a series of notes will not be cross-
collateralised with the security for another series of notes. The secured
creditors of each relevant series will include, among others, the trustee for
itself and acting on behalf of the noteholders of such series. The issuance of
any new series of notes will not require the approval of the noteholders of any
outstanding series and such noteholders will not be entitled to receive any
prior notice of such new issuance.
From time to time the loan note issuer may use the proceeds of further loan
notes to increase further the size of its beneficial interest in the
receivables trust. Alternatively, the loan note issuer may repay principal on a
loan note or there may be charge-offs on receivables in the receivables trust
(as described further below), thereby reducing the size of its beneficial
interest in the receivables trust. The receivables trustee will annotate the
investor certificate to show the correct size of the loan note issuer's
beneficial entitlement each time the loan note issuer increases the size of its
beneficial entitlement or receives payments of principal amounts from the
receivables trust. By owning its beneficial interest in the receivables trust,
the loan note issuer will be entitled to receive payments from the receivables
trustee by way of distribution in respect of interest, principal and certain
other fees paid by cardholders on designated revolving credit card accounts.
The size of the loan note issuer's share of the collections from the
cardholders will be in proportion to the size of its beneficial interest in the
receivables trust.
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OVERVIEW OF THE ARRAN FUNDING MEDIUM TERM NOTE PROGRAMME
The following overview does not purport to be complete and is qualified in
its entirety by the remainder of this base prospectus and, with respect to a
particular series, the relevant final terms contained in a prospectus
supplement.
INITIAL PROGRAMME AMOUNT
Up to $7,500,000,000 (or its equivalent in other currencies) aggregate
principal amount of notes outstanding at any one time.
ISSUANCE IN SERIES
Notes issued under the programme will be issued in series. Each series will
comprise three classes of notes issued on a single issue date. Each class of
notes within a series may be comprised of sub-classes, each denominated in any
of sterling, US dollars or euro. The notes of the same class or sub-class
within a given series will all be subject to identical terms and conditions in
all respects. These sub-classes within a class of notes will rank pari passu
among themselves and rateably without priority or preference among themselves.
The notes of each series will not necessarily be subject to identical terms in
all respects. Differences may include interest rates, interest calculations,
the date of expected maturity and final maturity.
FINAL TERMS
Each series will be the subject of a set of final terms which, for the
purposes of that series only, supplements the terms and conditions of the notes
in this base prospectus, and must be read in conjunction with this base
prospectus. The terms and conditions applicable to any particular series of
notes are the terms and conditions of the notes as supplemented, amended and/or
replaced by the relevant final terms.
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THE PARTIES
ARRANGER
The Royal Bank of Scotland plc, Global Banking & Markets.
DEALERS
Greenwich Capital Markets Inc., The Royal Bank of Scotland plc, Global
Banking & Markets and any other dealer appointed from time to time by the
issuing entity either generally in respect to the programme or in relation to a
particular series or class of notes in accordance with the terms of the dealer
agreement (see "Plan of Distribution").
THE ISSUING ENTITY
Arran Funding Limited is a public limited liability company incorporated in
Jersey, Channel Islands. Its registered office is at 22 Grenville Street, St.
Helier, Jersey JE4 8PX, Channel Islands. Its telephone number is +44 1534 609
000.
The issuing entity is a special purpose vehicle described below under "The
Issuing Entity". The purpose of the issuer is to issue, from time to time,
notes under the programme as described below under "The Notes," which represent
its asset-backed debt obligations. On each respective closing date under the
programme on which a series is issued, the issuing entity will utilise the
proceeds of issue of the issued series of notes to acquire an additional loan
note issued by the loan note issuer. The issuing entity will not engage in any
activities which are not related to the issue of the notes (see "The Loan
Notes", "The issuing entity" and "Use of Proceeds").
THE NOTE TRUSTEE, PRINCIPAL PAYING AGENT, REGISTRAR AND AGENT BANK
The note trustee is The Bank of New York, acting through its London branch.
The Bank of New York has served as trustee in numerous asset-backed
securitisation transactions and programmes involving pools of credit card
receivables. The Bank of New York is also the principal paying agent,
registrar, transfer agent and agent bank. The note trustee will act as trustee
for the noteholders of each series under the trust deed (and each relevant
series trust deed supplement), as described below under "The Trust Deed" and
"The Notes and The Global Notes". The note trustee will also hold the security
for the notes of each series under the terms of the trust deed (and the
relevant series trust deed supplement), as described below under "Terms and
conditions of the Notes". The principal paying agent will make payments on the
notes of each series. The registrar will hold the global notes of each class or
sub-class. The agent bank will calculate the interest rate on the notes of each
class or sub-class. The Bank of New York's address in London is One Canada
Square, London E14 5AL and its address in New York is 101 Barclay Street, Floor
21 West, New York, New York 10286. Its telephone number in London is +44 20
7570 1784 and its telephone number in New York is +1 212 495 1784.
THE SECURITY TRUSTEE
The security trustee in relation to the loan note issuer is The Bank of New
York, acting through its London branch, whose principal place of business is at
One Canada Square, London E14 5AL, England (the "SECURITY TRUSTEE"). The
security trustee acts as trustee for the holder of each series loan note
(including the issuing entity) under a security trust deed (and the relevant
loan note supplement), which we will refer to in this base prospectus as the
"SECURITY TRUST DEED".
THE ROYAL BANK OF SCOTLAND PLC
The Royal Bank of Scotland plc is a public limited company incorporated in
Scotland. Its registered office is located at 36 St Andrew Square, Edinburgh
EH2 2YB, Scotland. It is regulated in the United Kingdom by the Financial
Services Authority. Its telephone number is +44 131 556 8555.
NATIONAL WESTMINSTER BANK PLC
National Westminster Bank Plc is a public limited company incorporated in
England and Wales. Its registered office is located at 135 Bishopsgate, London
EC2M 3UR. It is a wholly-owned subsidiary of RBS. It is regulated in the United
Kingdom by the Financial Services Authority as part of the RBS group of
companies. Its telephone number is +44 20 7085 5000.
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THE ORIGINATORS
RBS and NatWest, both acting through Cards Business, originate, and may from
time to time purchase, portfolios of revolving credit card accounts. RBS and
NatWest have transferred receivables to the receivables trustee prior to the
date of this base prospectus and each of RBS and NatWest may in the future
transfer additional receivables to the receivables trustee.
THE SERVICER
RBS, acting through Cards Business, currently services the receivables in
the receivables trust. It is intended that RBS, acting through Cards Business,
will continue to service the credit card receivables in the receivables trust.
Except in exceptional circumstances, RBS may not resign as servicer, but its
appointment may be terminated and a successor servicer appointed in the event
of a default by the servicer. In the future, additional originators, if any,
may act as co-servicers.
THE TRUST CASH MANAGER
In connection with the issuance of the 2000 loan notes, RBS, acting through
Cards Business, was also appointed as the initial trust cash manager to manage
the bank accounts of the receivables trustee. It is intended that RBS, acting
through both Cards Business and GBM, will continue to act as trust cash manager
of the receivables trustee in connection with the programme.
THE RECEIVABLES TRUSTEE
South Gyle Receivables Trustee Limited, the receivables trustee, is a
private limited liability company, which was incorporated in Jersey, Channel
Islands on 2 February 2000. Its registered office is located at 22 Grenville
Street, St. Helier, Jersey JE4 8PX, Channel Islands. Its telephone number is
+44 1534 609000. The receivables trustee does not have any employees. The
shares of the receivables trustee are held by two nominees for a professional
trust company -- not affiliated to RBS -- on trust for charitable purposes.
After the receivables trustee has paid all amounts due in respect of each
beneficial interest in the receivables trust and met all of its costs and
expenses, any profits will be paid as dividends to the professional trust
company which will pay them on to charities in Jersey selected at its
discretion. The payments on your notes will not be affected by this
arrangement.
THE RECEIVABLES
The receivables consist of amounts charged by cardholders, who are
individuals, to designated MasterCard[R]* and VISA[R]* revolving credit card
accounts of the originators originated or acquired in the United Kingdom for
the acquisition of merchandise, services and cash advances. The receivables
also include the periodic finance charges and fees charged to the credit card
accounts and interchange fees.
THE RECEIVABLES TRUST
The receivables trust was established on 27 March 2000 under the terms of
the receivables trust deed and trust cash management agreement dated 27 March
2000 (we will refer to this agreement as the "RECEIVABLES TRUST DEED AND TRUST
CASH MANAGEMENT AGREEMENT"), under which the originator beneficiaries and the
investor beneficiary have an undivided interest in the trust property equal to
the proportion of their contributions to the receivables trust.
The receivables trustee was established to acquire credit card receivables
from RBS and RBS Advanta, pursuant to the 2000 transfers, and any additional
originators (such as NatWest) and to hold those receivables and the related
collections on trust for the beneficiaries under the terms of the receivables
trust set out in the receivables trust deed and trust cash management agreement
and to make payments to the beneficiaries in accordance with the terms of that
agreement as supplemented from time to time. Further transfers of receivables
to the receivables trust may occur from time to time. The receivables trustee
has previously accepted offers of credit card receivables from RBS and RBS
Advanta in an initial transaction on 27 March 2000 and in subsequent transfers
on 30 June 2000, 10 September 2001, 26 November 2001, 8 January 2002, 1
February 2002 (two transfers on that date), 31 May 2002 and 25 June 2003.
Recently, the receivables trustee accepted an offer of credit card receivables
on 27 October 2005 from RBS and NatWest. Before the offer from NatWest
* MasterCard[R] and VISA[R] are US federally registered servicemarks of
MasterCard[R] International Inc. and VISA[R] USA Inc., respectively, and are
registered trademarks in the United Kingdom of MasterCard[R] International Inc.
and VISA[R] International Service Association, respectively.
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was accepted, NatWest acceded to the receivables trust as originator
beneficiary with an originator interest in the receivables trust. The
receivables trustee may from time to time adjust the relative sizes of the
undivided beneficial interests in the receivables trust. The receivables
trustee may not engage in any unrelated activities.
THE INVESTOR INTEREST
As is further described under "The Receivables Trust -- Acquisitions", the
loan note issuer will pay the proceeds of the issue of each loan note to the
receivables trustee to increase its undivided beneficial interest in the
receivables trust. We will refer to that undivided beneficial interest as the
"AGGREGATE INVESTOR INTEREST". The aggregate investor interest is evidenced by
an investor certificate which will be annotated to evidence each increase in
the aggregate investor interest.
The loan note issuer will make payments of principal and interest on each
loan note using distributions made to it by the receivables trustee with
respect to that part of the aggregate investor interest which is referable to
that loan note. We call the part of the aggregate investor interest, for
purposes of calculating these amounts for a series, a "SERIES INVESTOR
INTEREST".
The receivables trustee will be entitled to use the amount contributed by
the loan note issuer -- together with monies contributed to it by the other
beneficiaries of the receivables trust -- in the ways set out in the
receivables trust deed and trust cash management agreement, which include
accepting offers by the originators to transfer to the receivables trustee the
present and future receivables generated by credit card accounts of the
originators, making further payments in respect of future receivables on
existing accounts which have been assigned to the receivables trustee by the
originators, and distributing any remaining available cash to the originator
beneficiaries in accordance with their beneficial entitlement to the undivided
trust property.
The receivables trustee has used the previous trust contributions made by
the loan note issuer together with contributions made by the originator
beneficiaries to accept the offers made by the originators described above.
The aggregate investor interest will entitle the loan note issuer to receive
at specified times payment of a designated proportion of collections of the
credit card receivables assigned by the originators to the receivables trustee
in respect of each series investor interest. The loan note issuer will use
those collections to pay amounts due on the corresponding series loan note.
THE LOAN NOTE ISSUER AND INVESTOR BENEFICIARY
RBS Cards Securitisation Funding Limited, the loan note issuer and
depositor, is a private limited liability company incorporated in Jersey,
Channel Islands. Its registered office is located at Royal Bank House, 71 Bath
Street, St. Helier, Jersey JE4 8PJ, Channel Islands. Its telephone number is
+44 1534 285 279. The loan note issuer is a wholly-owned subsidiary of RBS.
The loan note issuer was incorporated on 2 February 2000 to issue loan notes
from time to time in respect of which it becomes an investor beneficiary of the
receivables trust.
The loan note issuer does not have any employees. The loan note issuer has
entered into an agreement dated 27 March 2000 with The Royal Bank of Scotland
International Limited, a wholly-owned subsidiary of RBS incorporated and
resident in Jersey, under which The Royal Bank of Scotland International
Limited has agreed to provide administrative services to the loan note issuer.
SWAP COUNTERPARTY
The notes within a series to be issued by the issuing entity from time to
time may be denominated in different currencies and have a fixed or floating
rate of interest (as specified in the relevant final terms). The issuing entity
may, in relation to certain classes and sub-classes of notes, enter into an
ISDA master agreement and related schedules and confirmations (each, referred
to herein as a "SWAP AGREEMENT") with a swap counterparty (referred to herein
as the "SWAP COUNTERPARTY"). Each set of final terms will provide details of
any swap agreement in respect of a particular class or sub-class of notes
including the name of the swap counterparty (see "Description of the Swap
Agreements").
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TRANSACTION FEES
The following table summarises certain fees payable out of cashflows from
the receivables trust.
Recipient Fee Priority in cashflow Frequency
- ------------------------- ------------------------- ------------------------ ----------------------
Servicing Fee............ 0.75% of adjusted Subordinate to class A Each distribution date
investor interest of each and class B monthly
series distribution amounts but
in priority to class C
monthly distribution
amounts
Trust Cash Management Fee [GBP]6,000 per annum per Subordinate to class A Each distribution date
series in issuance or as and class B monthly
otherwise set out in the distribution amounts but
relevant final terms in priority to class C
monthly distribution
amount
THE NOTES -- OVERVIEW
LISTING
Each series may be admitted to the Official List of the UKLA and admitted to
trading on the regulated market of the London Stock Exchange and/or admitted to
listing, trading and/or quotation by any other listing authority, stock
exchange and/or quotation system as may be agreed between the issuing entity,
the arranger and the relevant dealer(s) and specified in the relevant final
terms.
CLEARING SYSTEMS
The clearing systems are the Depository Trust Company ("DTC"), Euroclear
Bank S.A./N.V., as operator of the Euroclear System ("EUROCLEAR") (1 Boulevard
du Roi Albert II, B-1210 Brussels, Belgium) and/or Clearstream Banking, societe
anonyme ("CLEARSTREAM") (L-2967 Luxembourg, Luxembourg) and/or, in relation to
any series, any other clearing system as may be specified in the relevant final
terms.
STATUS, SECURITY AND PRIORITY OF PAYMENTS OF THE NOTES
Each series will be constituted by a trust deed supplement between, among
others, the issuing entity and the note trustee (referred to herein as the
"SERIES TRUST DEED SUPPLEMENT"). Within a series, notes of each class will rank
pari passu among themselves and rateably without preference or priority among
themselves. Each class of notes within a series may be comprised of sub-
classes, each denominated in any of sterling, dollar or euro. The sub-classes
within a class of notes will rank pari passu among themselves and rateably
without priority or preference among themselves. As security for the payment of
all monies payable in respect of a series, the issuing entity will, pursuant to
the trust deed and the relevant series trust deed supplement executed in
relation to that series, create a first fixed security interest over, amongst
other things, its rights to receive payments under the relevant loan note (see
"Terms and conditions of the Notes", "The Loan Notes" and "The Trust Deed and
the Trust Deed Supplements"). The note trustee will be the registered holder of
each loan note in order to perfect properly the first fixed security interest
in respect of each loan note, which is the main asset of the issuing entity
backing the relevant series (see "The Loan Notes").
For details of the priority of payments with respect to amounts available to
the issuing entity, both prior to and post enforcement of the security (see
"Cashflows of the issuing entity" and "Terms and conditions of the Notes").
Amounts available to the issuing entity for payment of interest and
repayment of principal on a series will be derived from amounts received by the
issuing entity from the loan note issuer as payments of interest and principal
on the corresponding loan note (see "The Loan Notes").
Such payments will, if paid in full, be sufficient for the issuing entity to
meet the amounts required (a) to pay the fees, costs and expenses of the
issuing entity and the note trustee as herein described, (b) to make any
necessary payments to the swap counterparty, if any, as specified in the
relevant final terms, (c) to make payments of interest on the notes as
specified in this base prospectus and the relevant final terms, (d) to make
payments of principal on the notes on the relevant
16
distribution date or dates as specified in this base prospectus and relevant
final terms, (e) to pay certain amounts representing earnings of the issuing
entity in the conduct of its business, and (f) to make other payments required
to be made by the issuing entity from time to time as herein described or as
further described in the relevant final terms.
We will refer to the 15th day in each month or, if such day is not a
business day, the next business day, or any other date as may be specified in
the relevant final terms as a "DISTRIBUTION DATE" in this base prospectus.
References in this base prospectus, unless specified otherwise, to a "business
day" have the meaning given to it in the terms and conditions of the notes (See
also "The Receivables Trustee," "The Loan Notes" and "The Trust Deed and the
Trust Deed Supplements").
FORM OF NOTES
The notes will be issued in registered form. The notes of each class or sub-
class will be represented by a global note certificate registered in the name
of The Depository Trust Company or its nominee, and cleared through Clearstream
and/or Euroclear and/or, in relation to any series, any other clearing system
as may be specified in the relevant final terms. We refer to each beneficial
interest in a global note certificate as a "BOOK-ENTRY NOTE". A holder of notes
may exchange those notes for other notes of the same class or sub-class of any
authorised denominations and of the same aggregate stated principal amount and
tenor.
Any holder of a note may present that note for registration of transfer,
with the form of transfer properly executed, at the office of the registrar or
at the office of any transfer agent that the issuing entity designates. Holders
of notes will not be charged any service charge for the exchange or transfer of
their notes. Holders of notes that are to be transferred or exchanged will be
liable for the payment of any taxes and other governmental charges described in
the trust deed or any trust deed supplement before the transfer or exchange is
completed. The registrar or transfer agent, as the case may be, will effect a
transfer or exchange when it is satisfied with the documents of title and
identity of the person making the request.
The issuing entity has appointed The Bank of New York as the registrar for
the notes. The issuing entity may also at any time designate additional
transfer agents for any series or class or sub-class of notes. The issuing
entity may at any time rescind the designation of any transfer agent or approve
a change in the location through which any transfer agent acts. However, the
issuing entity will be required to maintain a transfer agent in each place of
payment for a series or class or sub-class of notes.
CURRENCIES
Notes of each class or sub-class will be denominated in US dollars, sterling
or euro, as specified in the relevant final terms, and subject to compliance
with all applicable legal and/or regulatory and/or central bank requirements.
ISSUE PRICE
Notes may be issued at any price as specified in the relevant final terms.
MATURITIES
Notes may be issued with any maturity as specified in the relevant final
terms, subject to compliance with all applicable legal and/or regulatory and/or
central bank requirements.
SCHEDULED REDEMPTION
Unless previously purchased and cancelled, each class or sub-class of a
particular series will be redeemed on the scheduled redemption date as
specified in the relevant final terms of such series to the extent of the
amount which has on that day been credited to the relevant class or sub-class
distribution ledger in the relevant issuing entity distribution account of such
series, in accordance with the provisions of the relevant loan note.
MANDATORY EARLY REDEMPTION AND PRIORITY OF PAYMENTS
Notes of a particular class or sub-class may be redeemed before their stated
scheduled redemption date upon the commencement of a rapid amortisation period
or a regulated amortisation period (see "Terms and conditions of the Notes",
and "Description of the Swap Agreements") as further specified in this base
prospectus and in the relevant final terms.
17
FINAL REDEMPTION
If a series has not been redeemed in full as described in the "Scheduled
Redemption" section of the relevant final terms, the series will be finally
redeemed at its respective principal amount outstanding plus accrued interest
by the final redemption date as specified in the relevant final terms.
INTEREST
Interest will be payable in arrear and accrue at a fixed rate or a floating
rate (see "Terms and conditions of the Notes") and the method of calculating
interest will be specified in the relevant final terms for each series of
notes. An interest payment date for each series will be specified in the
relevant final terms but may be subject to change upon the commencement of a
rapid amortisation period or regulated amortisation period.
References in this base prospectus to an "INTEREST PERIOD" shall mean the
period commencing on and including an interest payment date or, in the case of
a first period for a series, the relevant closing date for such series, and
ending on but excluding the next interest payment date or, in the case of the
first period, the first interest payment date as specified in the relevant
final terms.
DENOMINATIONS
Notes will be issued in such denominations as may be specified in the
relevant final terms, subject to compliance with all applicable legal and/or
regulatory and/or central bank requirements. Notes will be issued in minimum
denominations of at least [e]50,000 or its equivalent or as otherwise specified
in the related final terms (as applicable to the currency of each particular
series).
NEGATIVE COVENANTS
The notes will have the benefit of negative covenants of the issuing entity
as described in condition 5 (see "Terms and Conditions of the Notes -- Negative
Covenants of the Issuing Entity").
CREDIT ENHANCEMENT
Credit enhancement, if any, for each class or sub-class of notes in a series
is for the benefit of that class or sub-class only and will be described
further in the relevant final terms.
TAXATION
In the event of any withholding or deduction for, or on account of, any
taxes, duties, assessments or government charges of whatever nature being
imposed, levied, collected, withheld or assessed on payments of principal or
interest in respect of the notes by Jersey, the United Kingdom, or any other
jurisdiction or political subdivision or any authority in or of such
jurisdiction having power to tax, the issuing entity or the paying agent shall
make such payments after such withholding or deduction and neither the issuing
entity nor the paying agent will be required to make any additional payments to
holders of the affected series of notes in respect of such withholding or
deduction.
GOVERNING LAW
English law.
ENFORCEMENT OF NOTES IN GLOBAL FORM
In the case of each global note certificate in relation to a class or sub-
class, noteholders' rights against the issuing entity will be governed by the
trust deed and the series trust deed supplement which will be entered into by
the issuing entity prior to the issuance of each series.
RATINGS
Each class of notes may on issue be assigned a rating by any of Standard &
Poor's Rating Services, a division of The McGraw-Hill Companies, Inc.
("STANDARD & POOR'S"), Moody's Investors Service Inc. ("MOODY'S") or Fitch
Ratings Ltd ("FITCH RATINGS" and, together with Standard & Poor's and Moody's,
the "RATING AGENCIES"). The ratings expected to be assigned to each class of
notes by the relevant rating agency will be stated in the final terms for that
series. A rating is not a recommendation to buy, sell or hold the notes. A
rating may be suspended, lowered or withdrawn at any time.
SELLING RESTRICTIONS
Any selling restrictions applicable to a series will be as described in the
applicable final terms.
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RISK FACTORS
You should consider the following principal risk factors carefully before
deciding to invest in the notes offered by this base prospectus and the
applicable final terms.
THE ISSUING ENTITY'S ABILITY TO MEET ITS OBLIGATIONS ON YOUR NOTES DEPENDS ON
RECEIPT OF PAYMENTS DUE UNDER THE RELEVANT LOAN NOTE.
The ability of the issuing entity to pay the principal of and interest on
your notes will depend on the receipt by it of payments due under the relevant
loan note issued by the loan note issuer.
The issuing entity will be entitled to receive interest payments under the
relevant loan note for each series which will be applied (i) to pay the fees,
costs and expenses of the issuing entity and the note trustee, (ii) to meet its
obligations to pay interest (including deferred and additional interest) on the
notes to noteholders (either directly or indirectly via payments made to and
received from swap counterparties), (iii) to pay amounts representing the
earnings for the issuing entity, and (iv) to meet any other payments required
to be made by the issuing entity. Additionally, the issuing entity will be
entitled to receive certain principal payments under the relevant loan note
which will be applied in redeeming the notes (either directly or indirectly via
payments made to and received from swap counterparties).
If the issuing entity does not receive sufficient funds under the relevant
series loan note, then the payment of interest and/or the repayment of
principal on your notes may be delayed or reduced.
The issuing entity's receipt of sufficient funds under the relevant loan
note to pay the amounts due and to repay the entire principal amount of the
notes will be dependent on, amongst other things: (i) payments actually being
made by cardholders (from whom no security has been taken in the support of
those payments) and the proceeds of any relevant guarantees or insurance
policies in respect of cardholders (to the extent such are capable of
assignment), (ii) those payments being collected by the servicer in accordance
with the provisions of the receivables trust deed and trust cash management
agreement and paid to the receivables trustee, (iii) distributions being made
by the receivables trustee to the loan note issuer of amounts allocable to the
loan note issuer in accordance with the receivables trust deed and trust cash
management agreement in respect of the relevant loan note, (iv) payment being
made by the relevant swap counterparty, if any, in respect of its obligations
to the issuing entity under the swap agreements (if any), and (v) payment being
made by the loan note issuer in respect of its obligations to the issuing
entity under the relevant loan note.
Amounts paid to the issuing entity by the loan note issuer in respect of
each loan note will be used to pay principal and interest on the notes of the
corresponding series in accordance with the terms and conditions for that
series (subject to payment of amounts for fees, costs and expenses of the
issuing entity and the note trustee).
INVESTORS IN CLASS B NOTES AND CLASS C NOTES (AND ANY SUB-CLASS THEREOF) OF ANY
SERIES WILL HAVE ADDITIONAL RISKS BECAUSE THEIR NOTES ARE SUBORDINATED.
The class B notes of a series (and every sub-class thereof (if any)) are
subordinated in right of payment of interest and principal to the class A notes
(and every sub-class thereof (if any)) in the same series.
The class C notes of a series (and every sub-class thereof (if any)) are
subordinated in right of payment of interest and principal to the class A notes
(and every sub-class thereof (if any)) and the class B notes (and every sub-
class thereof (if any)) in the same series. Interest and principal payments to
the class C noteholders will not be made until the class A noteholders and the
class B noteholders are paid interest and principal due in full. This could
cause the class C noteholders not to receive the full amount of interest and
principal due to them.
If available funds are not sufficient to pay interest on all classes of
notes, the notes may not receive full payment of interest if, in the case of
class A and class B notes, there are insufficient retained principal
collections to cover such shortfall, and if, in the case of class C notes,
there are insufficient amounts on deposit in the spread account to cover the
shortfall.
"CLASS A NOTEHOLDER" means, in respect of a class A global note, the holder
of the class A global note or any sub-class thereof, or, in respect of a class
A definitive note, the person whose name appears on the register (or if more
than one person is named in the register, the first person named).
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"CLASS B NOTEHOLDER" means, in respect of a class B global note, the holder
of the class B global note or any sub-class thereof, or, in respect of a class B
definitive note, the person whose name appears on the register (or if more than
one person is named in the register, the first person named).
"CLASS C NOTEHOLDER" means, in respect of a class C global note, the holder
of the class C global note or any sub-class thereof, or, in respect of a class
C definitive note, the person whose name appears on the register (or if more
than one person is named in the register, the first person named).
THE ISSUANCE OF ADDITIONAL SERIES OF NOTES FROM TIME TO TIME MAY, IN CERTAIN
CIRCUMSTANCES, ADVERSELY AFFECT YOUR RIGHTS BY DILUTING YOUR VOTING POWER.
The issuing entity may issue additional series of notes from time to time.
Noteholders of a given series may be entitled to instruct the note trustee to
enforce their rights against the issuing entity. Under the trust deed, the
giving of some instructions to the note trustee may only necessitate the vote
of the noteholders of one particular series. However, the giving of other
instructions to the note trustee may require the consent or approval of a
percentage of the noteholders of all outstanding series of notes. Thus, under
the latter scenario, the issuance of future series that will be entitled to
vote together with pre-existing series will dilute the voting power of holders
of those pre-existing series.
Noteholders whose notes are related to a loan note of a given series may
require the loan note issuer, as investor beneficiary, to enforce its rights
against the receivables trustee to require it to perform its role as
receivables trustee. However, it may be necessary to obtain the consent or
approval of noteholders whose notes are related to a certain percentage of the
total principal balance of all series loan notes to require or direct those
actions. These actions include terminating the appointment of the servicer
under the beneficiaries servicing agreement. Thus noteholders whose notes are
related to any future series loan note will have voting rights that will reduce
the percentage interest of noteholders whose notes are related to previously
issued loan notes. Noteholders whose notes are related to loan notes of various
series may have interests that conflict with the interests of noteholders whose
notes are related to another series loan note. This may ultimately restrict the
ability of the noteholders or the note trustee to direct the loan note issuer
or the security trustee to take the actions referred to above.
ALLOCATIONS OF CHARGED-OFF RECEIVABLES COULD REDUCE YOUR PAYMENTS.
We anticipate that the servicer will charge-off or write-off as
uncollectable some of the receivables (we will refer to these throughout this
base prospectus as "charged-off receivables"). Each beneficiary of the
receivables trust -- including the investor beneficiary -- will bear a
proportionate share of charged-off receivables. If the amount of charged-off
receivables allocated to the investor interest with respect to any series of
notes issued under this base prospectus and the relevant final terms exceeds
the amount of funds available to cover those charge-offs, the amount paid to
the issuing entity in respect of the corresponding loan note by the loan note
issuer on the next following payment date may be reduced. This could cause the
holders of the notes not to receive the full amount of principal and interest
due to them. Any loss will be borne in order of subordination of the different
classes and sub-classes of notes among themselves, as described in the relevant
final terms.
INABILITY OF NOTEHOLDERS TO RECEIVE THE FULL PERCENTAGE ALLOCATION OF PRINCIPAL
COLLECTIONS DURING THE REGULATED AMORTISATION PERIOD COULD DELAY PAYMENTS ON
YOUR NOTES OR CAUSE A LOSS ON YOUR NOTES.
Some pay out events with respect to a series of notes issued under this base
prospectus and the relevant final terms, may cause the start of the regulated
amortisation period rather than the rapid amortisation period. During a
regulated amortisation period, not all of the principal collections allocated
to the series investor interest, with respect to any such series of notes, may
be used to make payments of principal to the loan note issuer, as they would be
during a rapid amortisation period. Instead, the amount of principal payments
to the loan note issuer -- and thus ultimately on your notes -- will not exceed
the controlled deposit amount. This could cause you to receive payments of
principal slower than you would during a rapid amortisation period. A
deterioration in the performance of the receivables may have the effect of
starting a regulated amortisation period with respect to a class or sub-class
of notes, which could cause a delay in the principal payments on your notes or
expose you to an increased risk of losses on your notes.
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NO INDEPENDENT INVESTIGATION
None of the loan note issuer, the receivables trustee, the security trustee,
the note trustee, the issuing entity, the arranger or the dealers has
undertaken or will undertake any investigations, searches or other actions to
verify the details of the receivables -- other than steps taken by the issuing
entity to verify the details of the receivables that are presented in any set
of final terms -- or to establish the credit-worthiness of any cardholder on
the designated accounts. The loan note issuer, the receivables trustee, the
security trustee, the note trustee and the issuing entity will rely solely on
the representations given by an originator to the receivables trustee about its
receivables, the cardholders on the designated accounts, the designated
accounts and the effect of the assignment of its receivables.
"DESIGNATED ACCOUNT" means an account which has been originated under and
continues to conform to the credit card eligibility criteria described in the
base prospectus and has been flagged on the relevant originator's system as
being the subject of an offer of transfer to the receivables trustee.
INSOLVENCY OF AN ORIGINATOR MAY RESULT IN AN INABILITY TO REPURCHASE
RECEIVABLES.
If any representation made by an originator about the receivables proves to
have been incorrect when made, that originator will be required to repurchase
the affected receivables from the receivables trustee. If an originator becomes
bankrupt or insolvent, the receivables trustee may be unable to compel that
originator to repurchase receivables, and you could incur a loss on your
investment or an early redemption of your notes.
INSOLVENCY OF THE ISSUING ENTITY, THE LOAN NOTE ISSUER OR THE RECEIVABLES
TRUSTEE COULD CAUSE AN EARLY REDEMPTION OF YOUR NOTES AND/OR A LOSS ON YOUR
NOTES.
The ability of each of the issuing entity, the loan note issuer and the
receivables trustee to meet its obligations under the notes, the relevant loan
note, the receivables securitisation agreement, as defined under the heading
"The Receivables -- Assignment of Receivables to the Receivables Trustee", or
the receivables trust deed and trust cash management agreement, as the case may
be, will depend upon its continued solvency.
A company that has assets in Jersey will be insolvent, as a matter of Jersey
law, if it is unable to pay its debts as they fall due. Each of the issuing
entity, the loan note issuer and the receivables trustee has been structured so
that the likelihood of its becoming insolvent is remote. Each of these entities
is or will be contractually restricted from undertaking any business other than
in connection with the financings described in this base prospectus. Each of
them is or will be expressly prohibited from incurring any additional
indebtedness, except as permitted by the agreements to which it is party,
having any employees, owning any premises and establishing or acquiring any
subsidiaries. Contractual provisions are or will be contained in each of the
agreements to which they are or will be a party that will prohibit the other
parties to those agreements from taking any actions against these entities that
might lead to their bankruptcy. Together, these provisions help ensure that the
likelihood of any of these entities becoming insolvent or bankrupt is remote.
Notwithstanding these actions, it is still possible that the issuing entity,
the loan note issuer or the receivables trustee could become insolvent. If this
were to occur, you could suffer an early redemption of your notes or a loss on
your notes.
ENFORCEMENT OF THE SECURITY FOR THE NOTES
If the security for the notes of your series created by the relevant trust
deed supplement is enforced following an event of default in respect of such
series, the note trustee will have recourse to payments due from the loan note
issuer under the loan note securing the series of which your notes are a part.
However, enforcement of the security will not result in accelerated repayment
of your notes unless amounts become available for distribution as a result of
the enforcement of the relevant security. It is expected that the note trustee
will only be able to distribute to you and other noteholders within a
particular series those funds which are available under the loan note securing
that series. If the security is enforced, the monies deposited in respect of
the loan note securing that series on each distribution date in the relevant
issuing entity distribution account of such series will be applied first to
meet any remuneration due to any receiver appointed pursuant to the security
trust deed and the security trustee and to meet other fees, costs and amounts
due to the security trustee as provided in the security trust deed and
applicable loan note supplement, secondly (to the extent not already paid) to
meet the fees, costs and expenses of the issuing entity and the note trustee,
and then
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(as qualified by the next paragraph) to meet payments of principal and interest
on the notes and payments to the swap counterparty if any.
ENFORCEMENT OF THE SECURITY FOR THE LOAN NOTES
Upon enforcement of the loan note security for any loan note, the security
trustee will have recourse only to the loan note issuer's beneficial
entitlement to trust property under the receivables trust to the extent of that
part of the investor interest backing the relevant loan note. However,
enforcement of the loan note security in respect of a single series will not
result in accelerated repayment of all of the loan notes, except in the event
of a trust pay out event (see "The Loan Notes -- Loan note events of default")
or unless amounts become available for distribution as a result of the
enforcement of the relevant security. With respect to each series, the security
trustee will only be able to pay to the issuing entity as beneficial holder of
the relevant loan note those funds which are credited to the relevant loan note
issuer distribution account of the series (in accordance with each set of final
terms). The loan note issuer and the security trustee will have no recourse to
any originator other than the ability (in certain circumstances) to call
upon the receivables trustee to exercise its rights against an originator for
any breach of certain representations in respect of the receivables and for any
breach of certain other obligations as therein specified. In summary, if the
security over the loan note of a particular series is enforced, the monies
deposited in the relevant loan note issuer distribution account of such series
on each distribution date will be applied first to meet any remuneration due to
any receiver appointed pursuant to the security trust deed and the security
trustee, to meet other fees, costs and amounts due to the security trustee as
provided in the security trust deed and to meet the fees, costs and expenses of
the loan note issuer, and secondly to meet payments of principal and interest
on the relevant loan note. If funds credited to the relevant loan note issuer
distribution account are insufficient to meet payments of principal and
interest on the loan note of the series, payments of principal and interest on
your notes may be delayed or reduced.
APPLICATION OF THE CONSUMER CREDIT ACT 1974 AND UNFAIR TERMS IN CONSUMER
CONTRACTS REGULATIONS 1999 MAY IMPEDE COLLECTION EFFORTS AND COULD CAUSE EARLY
REDEMPTION OF YOUR NOTES AND/OR A LOSS ON YOUR NOTES.
The primary statute dealing with consumer credit in the United Kingdom is
the Consumer Credit Act 1974 -- which we will refer to in this base prospectus
as the "CONSUMER CREDIT ACT". The Office of Fair Trading (the ''OFT'') is
responsible for the issue of licences under, and the superintendence of, the
CCA, related consumer credit regulations and other consumer protection
legislation. The OFT may review businesses and operation, provide guidelines to
follow and take action when necessary. Currently, a credit agreement is
regulated by the CCA where (a) the borrower is or includes an individual, (b)
the amount of ''credit'' as defined in the CCA does not exceed the financial
limit, which is [GBP]25,000 for credit agreements made on or after 1 May 1998
and lower amounts for credit agreements made before that date and (c) the
credit agreement is not an exempt agreement under the CCA. A vast majority of
the credit card transactions which occur on a designated account have or will
have a credit limit of an amount up to [GBP]25,000. Accordingly, the Consumer
Credit Act applies to the transactions occurring on the designated accounts and,
in whole or in part, to the credit card agreements. This may have consequences
for your investment in the notes because of the possible unenforceability of,
or possible liabilities for misrepresentation or breach of contract in relation
to, an underlying credit card agreement.
(a) Enforcement of improperly executed or modified credit card agreements
Any credit card agreement that is wholly or partly regulated by the CCA or
treated as such has to comply with requirements under the CCA as to licensing of
lenders and brokers, documentation and procedures of credit card agreements and
(in so far as applicable) pre-contract disclosure. If it does not comply with
those requirements, then to the extent that the credit card agreement is
regulated by the CCA or treated as such, it is unenforceable against the
borrower (a) without an order of the OFT, if the lender or any broker does not
hold the required licence at the relevant time, (b) totally, if the form to be
signed by the borrower is not signed by the borrower personally or omits or
mis-states a ''prescribed term'' or (c) without a court order in other cases
and, in exercising its discretion whether to make the order, the court would
take into account any prejudice suffered by the borrower and any culpability of
the lender. If a credit card agreement related to a designated account has not
been executed or modified in accordance with the provisions of the Consumer
Credit Act and is completely unenforceable as a result, the principal
receivables arising thereon will be treated as ineligible receivables. See "The
Receivables -- Representations".
With respect to those credit card agreements which may not comply with the
Consumer Credit Act, such that a court order could not be obtained, the
originators estimate that, on any pool selection date or additional selection
date, this will represent less than 1 per cent. of the aggregate principal
amount of receivables in the designated accounts. The originators do not
anticipate any material increase in the percentage of these receivables in the
securitised portfolio. In respect of those designated accounts that do not
comply with the Consumer Credit Act, it will still be possible to collect
amounts owing by cardholders and seek arrears from cardholders who are falling
behind with their payments. It is unlikely that the originators will have an
obligation to pay or to account to a cardholder for any payments received by an
originator because of this non-compliance with the Consumer Credit Act. Any
such receivables will be treated by the receivables trustee as ineligible
receivables. See "Representations".
(b) Liability for supplier's misrepresentation or breach of contract
Transactions involving the use of a credit card in and outside the United
Kingdom may constitute transactions under debtor-creditor-supplier agreements
for the purposes of section 75 of the
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Consumer Credit Act. A debtor-creditor-supplier agreement includes an agreement
where the creditor under pre-existing arrangements with suppliers advances funds
to finance a purchase by the debtor of goods or services from suppliers under
those arrangements.
Section 75 of the Consumer Credit Act provides that if a supplier is in
breach of the contract between the supplier and a cardholder with respect to a
transaction under a debtor-creditor-supplier agreement (for example, by
supplying an item of merchandise which is not fit for the purpose for which it
is intended), or if the supplier has made a misrepresentation in respect of
that contract, both the supplier and the creditor (which will include the
originators) may be liable to the cardholder in respect of the breach or
misrepresentation. However, the creditor will not be liable where the cash
price of the item or service supplied underlying the claim is less than
[GBP]100 or greater than [GBP]30,000. Where the creditor (or the relevant
originator) is liable, the cardholder may have the right to claim against the
relevant originator and/or to set off an amount in respect of that claim
against his obligation to make payments under his credit card account or any
other obligation owed to the originators. This right will survive the sale of
the receivables to the receivables trustee. As a result, the receivables
trustee may not receive payments from cardholders which it would otherwise
expect to receive.
The receivables trustee has agreed on a limited recourse basis to indemnify
each originator for any loss suffered by it from a cardholder claim under
section 75 of the Consumer Credit Act. This indemnity will not exceed the
original outstanding principal balance of the affected charges on a credit card
account in the securitised portfolio. The receivables trustee's indemnity will
be payable only from and to the extent the amount of indemnity allocable to
each outstanding series of notes can be met from the spread applicable to such
series for distribution for such purposes in accordance with the relevant final
terms.
Any recovery by an originator in accordance with its rights of indemnity
against suppliers pursuant to section 75 of the Consumer Credit Act or pursuant
to any right of the originator to "charge-back" the transaction concerned under
the applicable operating regulations of VISA[R] or MasterCard[R] (as the case
may be), will reduce the amount of the originator's loss for the purpose of
claims under the indemnification provisions outlined above.
"SECURITISED PORTFOLIO" means the pool of receivables that have been
transferred to the receivables trustee from time to time as set out in the
relevant final terms.
PROPOSED CHANGES TO THE CONSUMER CREDIT ACT AND RELATED REGULATIONS MAY HAVE AN
UNEXPECTED EFFECT ON CONSUMER CREDIT AGREEMENTS AS A RESULT OF WHICH YOUR NOTES
MAY BE ADVERSELY AFFECTED.
In December 2003, the Secretary of State for Trade and Industry in the
United Kingdom published a report entitled "Fair, Clear and Competitive: The
Consumer Credit Market in the 21st Century". This report sets forth a number of
government goals to reform the consumer credit industry, including the
provision of credit under credit cards, loans and overdrafts. In this report,
the Department of Trade and Industry (which we will refer to in this base
prospectus as the "DTI") has announced a programme of reforms some of which
will take effect through statutory instruments, others which will be made in a
Bill amending the Consumer Credit Act.
On 9 June 2004, the DTI laid before Parliament the first set of regulations
amending the Consumer Credit Act, which comprised (a) amendments to the rules
on advertising which, except for some minor exceptions, came into force on 31
October 2004; (b) requirements to provide borrowers with prescribed contractual
information prior to concluding the agreement which came into force on 31 May
2005; and (c) amended form and content requirements for consumer credit
agreements which came into force on 31 May 2005.
None of these new provisions applies to credit card agreements entered into
prior to the coming into force of the legislation. However, they apply to
credit card agreements originated after these dates.
The new rules also replaced the formula for calculating the maximum amount
payable on early settlement with a formula more favourable to the borrower,
coming into force on 31 May 2005 for new agreements or on 31 May 2007 or 31 May
2010 (depending on the term of the agreement) for agreements existing before 31
May 2005.
In the case of credit card agreements, the new rules changed the manner in
which the annual percentage rate ("APR") is calculated, the effect of which
may, in some cases, increase the APR which must be shown in advertising and on
agreements. The new provisions have also changed the manner in which credit may
be promoted such that the rates shown in advertisements may be higher and given
greater prominence than is presently the case. The new provisions also require
additional disclosures to be made prior to the agreement being made and make
changes to the layout of consumer credit agreements and increase the prominence
given to additional ancillary products, such as payment protection insurance.
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On 5 August 2004, Regulations were laid before Parliament which implement the
European Distance Marketing Directive and will apply to the credit and charge
card agreements where these agreements are entered into by distance means.
These Regulations provide for additional information to be given to customers
before the agreement is made and give customers a 14 day right of cancellation.
In addition, on 30 March 2006 the consumer credit bill received royal assent
as the Consumer Credit Act 2006 (the "CONSUMER CREDIT ACT 2006"). The Consumer
Credit Act 2006, when fully brought into force by secondary legislation, will
amend the Consumer Credit Act to, amongst other things, introduce a concept of
"unfair relationship", which is not defined and a court will be entitled to
look at all aspects of a credit relationship to determine if any unfairness
exists. The new act will also extend the ombudsman scheme under the Financial
Services and Markets Act 2000 to licensees under the Consumer Credit Act. The
extension of the ombudsman scheme will allow a cardholder who has a complaint
to raise it with the ombudsman, provided that the complaint falls within the
consumer credit jurisdiction conferred upon the ombudsman.
Such amendments (when brought into force) may, for example, increase the
possibility of a challenge to agreements on the basis of "unfairness" (with
some retrospective application to existing agreements); and may result in more
restrictions being placed upon the activities of consumer credit licence
holders.
Directive 2005/29/EC concerning unfair business to consumer commercial
practices was made on 11 May 2005. This is a directive of general application
and is not confined to consumer credit or other financial services. It is
anticipated that the DTI will lead implementation of this directive into UK
law. The directive is due to be implemented by 12 June 2007, coming into force
(with some transitional provisions) not later than 12 December 2007. The
directive is intended to achieve a high level of consumer protection across the
EU through harmonization of relevant EU laws. The directive has a substantial
focus on advertising and sales promotion practices.
The European Commission adopted a second revised proposal for a new consumer
credit directive in October 2005. This latest proposal would permit regulation
of personal credit up to [e]50,000. Key consumer rights in the proposal include
a 14-day right of withdrawal, early repayment rights and a right to break a
credit agreement if the related purchase is cancelled. The timetable for further
developments is unclear.
We are unable to determine and have no basis on which to predict accurately
what effect these new provisions might have on the consumer credit agreements.
No assurance can be given that the legislation and legislative proposals will
not adversely affect the ability of the issuing entity to make payments to the
noteholders.
UNDER THE UNFAIR TERMS IN CONSUMER CONTRACTS REGULATIONS 1999 A CARDHOLDER MAY
ASSERT CLAIMS AGAINST THE TERMS OF THE CREDIT CARD AGREEMENTS USED BY THE
ORIGINATORS WHICH, IF SUCCESSFUL, MAY ADVERSELY AFFECT YOUR NOTES.
The Unfair Terms in Consumer Contracts Regulations 1999 (the "UTCCRs")
provide that certain unfair terms in consumer agreements shall not be binding
on consumers. A consumer may challenge the fairness of a term in court. If a
consumer has made payments under an unfair term obliging the consumer to do so,
the consumer may seek to recover those payments or set off those payments
against future payments under the agreement. The OFT and other bodies may
seek a court order preventing a business from relying on an unfair term. The
OFT has power to commence proceedings against card issuers who they believe
have breached the UTCCRs, including for injunctive relief.
The OFT wrote to RBS in October 2003 regarding a number of terms in its
standard credit card terms and conditions. RBS corresponded with the OFT and
has resolved all of the issues except in relation to the level of
administration charges. RBS has expressed throughout that it believes the level
of its administration charges is fair and does not contravene the UTCCRs.
The OFT engaged in a three month consultation period with RBS and seven
other major credit card companies on the level of credit card administration
charges in 2005. RBS (and the other main UK credit card providers) each
received a letter from the OFT dated 25 July 2005 (believed to be in broadly
similar terms). In the letter, the OFT set out its preliminary conclusion that
the level of administration charges levied by the main UK credit card issuers
is excessive. The OFT gave RBS and the other card issuers three months to give
certain undertakings in relation to the way in which administration charges are
estimated or to otherwise address the OFT's concerns.
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On 25 July 2005 the OFT expressed the provisional view that the level of
these charges needs to be reduced in order to be fair. RBS responded to the
OFT's letter on 24 October 2005 declining to give any undertakings and setting
out its reasons for rejecting the OFT's assertion that these charges are unfair.
However, on 5 April 2006, the OFT made an announcement to the press and
public at large:
* setting out its view of the principles credit card issuers should follow
in setting default charges in their standard contracts with consumers in
order to meet the test of fairness under the UTCCR 1999; and
* stating that those principles have wider implications for analogous
standard default terms in other agreements including those of mortgages,
bank current accounts and storecards.
In summary, the OFT's view is that default charge provisions are unfair if
they have the object of raising more in revenue than is reasonably expected to
be necessary to recover certain limited administrative costs incurred by the
credit card issuer. The OFT has adopted a "two fold regulatory strategy" to
deal with its finding: (i) it has purported to provide guidance to credit card
issuers which can be used by those credit card issuers in order to arrive at a
fair default fee; (ii) a simple threshold of [GBP]12 has been set for
intervention by the OFT on default charges.
The OFT has stated that it expects all credit card issuers to recalculate
default charges in line with the principles in its statement; and has asked
credit card issuers to confirm by 31 May 2006 their response to the OFT's
statement. The OFT has informed customers that they are free to take account of
its statement in deciding whether to question default fees that they have been
charged.
If the administration charge in an RBS credit card agreement was found to be
unfair, the receivables trustee may not receive payments from borrowers which
it might currently expect to receive.
If there is a reduction in the level of administration charges, there may
be a reduction in the amounts received by RBS under its credit card agreements.
Furthermore, if any term of the credit card agreements was found to be unfair,
RBS may be subject to claims from cardholders seeking reimbursement of
administration charges paid although these amounts will not be payable by the
receivables trustee in the case of credit card agreements in the securitised
portfolio. RBS continues to engage in discussions with the OFT and believes
that its charges are fair.
TERMINATION OF THE SERVICER MAY CAUSE DISRUPTIONS IN THE COLLECTION PROCESS
THAT COULD AFFECT THE TIMELINESS OF YOUR PAYMENTS ON YOUR NOTES.
If the appointment of RBS as servicer is terminated under the terms of the
receivables trust deed and trust cash management agreement, it will be
necessary for the receivables trustee to appoint a successor servicer to
undertake the obligations and to perform the services of Cards Business. See
"Servicing of Receivables and Trust Cash Management" for a description of the
circumstances in which such termination may occur and the consequences of such
termination. The transfer to a new servicer may create disruptions in the
collection process that could cause delays in the payments received by the loan
note issuer and the issuing entity and, ultimately, in payments due on your
notes.
FAILURE TO NOTIFY CARDHOLDERS OF THE TRANSFER OF RECEIVABLES COULD DELAY OR
REDUCE PAYMENTS ON YOUR NOTES.
No notice has been given to cardholders of any transfers previously
effected, and no notice is expected to be given to the cardholders of any
future transfers of receivables to the receivables trustee. The receivables
trustee has agreed, amongst other things, that notice of the transfers will not
be given to cardholders unless RBS' long-term senior unsecured indebtedness as
rated by Moody's, Standard & Poor's or Fitch Ratings were to fall below Baa2,
BBB or BBB, respectively. The lack of notice has several legal consequences
that could delay or reduce payments on your notes.
Until notice is given to a cardholder and, where necessary, a legal transfer
of the receivable is made, the cardholder will discharge his or her obligation
under that designated account by making payment to the relevant originator.
Until notice is given to a cardholder who is a depositor or other creditor
of that originator, equitable set-offs may accrue in favour of the cardholder
against his or her obligation to make payments to that originator under the
designated account. These rights may result in the receivables trustee
receiving reduced payments on the relevant receivables. The transfer of the
benefit of any receivables to the receivables trustee will continue to be
subject both to any prior equities that a
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cardholder has and to any equities the cardholder may become entitled to after
the transfer. Where notice of the transfer is given to a cardholder, however,
some rights of set-off may not arise after the date notice is given.
Failure to give notice to the cardholder means that the receivables trustee
would not take priority over any interest of a later encumbrancer or transferee
of the relevant originator's rights who has no notice of the transfer to the
receivables trustee where such later encumbrancer or transferee gives notice.
This could lead to a loss on your notes.
Failure to give notice to the cardholder also means that the relevant
originator or the cardholder could amend the credit card agreement without
obtaining the receivables trustee's consent. This could adversely affect the
receivables trustee's interest in the receivables, which could lead to an early
redemption of or a loss on your notes.
YOU MAY NOT BE ABLE TO SELL YOUR NOTES.
Even if a series of notes is listed on one or more exchanges, it is not
certain that a secondary market will develop. The dealers may assist in resales
of the notes, but are not required to do so. If a secondary market does
develop, it might not continue or it might not be sufficiently liquid to allow
you to resell any of your notes.
COMPETITION IN THE UK CREDIT CARD INDUSTRY COULD LEAD TO AN EARLY REDEMPTION OF
YOUR NOTES.
The credit card industry in the United Kingdom is highly competitive and
card issuers are using advertising, targeted marketing and pricing competition
in interest rates, loyalty schemes and cardholder fees are at high levels as
both traditional and new card issuers seek to try to expand their presence in
or enter the UK market and compete for customers.
Certain card issuers may rely on customer loyalty and may have particular
ways of reaching and attracting customers. For example, major supermarket
retailers are promoting the use of their own cards through extensive in-store
campaigns and low introductory interest rates, called teaser rates ("TEASER
RATES"). Renewed competition from High Street banks has prompted certain
competitors to offer cards to selected customers with various cost reducing
features and/or at lower interest rates than those offered by the originators.
This competitive environment may affect the originators' ability to
originate new accounts and generate new receivables and may also affect the
level of attrition of existing accounts. Some of the recently originated
accounts in the portfolio of the originators, which we will refer to as the
"BANK PORTFOLIO", were originated with the use of teaser rates. Such accounts
are more susceptible to attrition upon expiration of the teaser rate (i.e., at
repricing) than accounts originated without a teaser rate. Until recently, the
attrition rate for such accounts has been increasing. However, the introduction
of balance transfer fees has meant that this trend has softened. If the rate at
which new receivables are generated declines significantly and if the
originators are unable to nominate sufficient additional accounts (as defined
in "The Receivables -- Assignment of Receivables to the Receivables Trustee")
for the receivables trust, a pay out event could occur with respect to any
series of notes issued under a set of final terms. This pay out event could
result in an early redemption of your notes.
SOCIAL, LEGAL, POLITICAL AND ECONOMIC FACTORS CAN AFFECT CREDIT CARD PAYMENTS
AND MAY CAUSE A DELAY IN OR DEFAULT ON PAYMENTS.
Changes in card use, payment patterns, amounts of yield on the bank
portfolio generally and the rate of defaults by cardholders may result from a
variety of social, legal, political and economic factors in the United Kingdom.
Social factors include changes in public confidence levels, attitudes toward
incurring debt and perception of the use of credit cards. Economic factors
include the rate of inflation, the unemployment rate and relative interest
rates offered for various types of loans. Political factors include lobbying
from interest groups, such as consumers and retailers, and government
initiatives in consumer and related affairs.
At the present time, there is significant political interest in the UK
consumer credit market and, in particular, credit cards. For example, a recent
report by the Treasury Select Committee is placing significant public pressure
on credit card issuers to increase disclosure of charges. It is also calling
for the introduction of a standardised approach to the calculation of interest
rates. Another example is the OFT's examination of whether the levels of
interchange paid by retailers in respect of MasterCard[R] credit and charge
cards in the UK are too high. In September 2005 the OFT issued a
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decision concluding that the agreement of the MasterCard[R] UK Members Forum
("MMF") in relation to the setting of the interchange fees on MasterCard[R]
cards in the period 1 March 2000 to 18 November 2004 infringed the Chapter I
prohibition of the Competition Act 1998 and Article 81(1) of the EC Treaty.
The OFT has decided not to impose any financial penalties in respect of this
decision and, because the relevant agreement has come to an end, did not
consider it necessary to impose directions in relation to the conduct of the
parties to the agreement.
The decision of the OFT has been appealed to the Competition Appeal Tribunal
by MasterCard[R], the MMF and RBS. The OFT has lodged a defence to such appeal
and has stated that, prior to the conclusion of the appeal proceedings, its
investigative steps will be confined to the gathering of certain further
information about MasterCard[R]'s revised interchange fee arrangements. As a
result, the OFT has said that it does not propose to issue any statement of
objections, nor to reach any decision as to infringement, until after the
conclusion of the appeal proceedings, which is expected later in 2006.
MasterCard[R] introduced new arrangements for setting the MasterCard[R]
interchange fee on 18 November 2004. The OFT has indicated in a statement
accompanying its decision that it has concerns that under the new arrangements
the MasterCard[R] interchange fee may be set in a way which infringes relevant
competition law. If the OFT's approach to the setting MasterCard[R] interchange
fees were to persist, it could affect the yield on the UK credit card
portfolios. On 19 October 2005, the OFT issued a statement of objections ("SO")
against VISA[R] and its members, which includes RBS, regarding the rates of
interchange applicable to VISA[R] consumer credit card, charge card and
deferred debit card transactions in the UK. The OFT is of the view that the
collective agreement between VISA[R] and its member banks on the interchange
fee charged between card issuing banks and merchant acquirers restricts
competition and infringes Article 81 of the EC Treaty and the Chapter I
prohibition of the Competition Act 1998.
On 2 February 2006, the OFT announced that it had launched an investigation
into whether the arrangements put in place by MasterCard[R] since 18 November
2004 for setting the fallback interchange fees for UK domestic transactions
involving MasterCard[R] cards infringe Article 81 of the EC Treaty and/or the
Chapter I prohibition of the Competition Act 1998.
The European Commission issued a decision on 24 July 2002 concluding that
the level of cross-border interchange within the European Union in respect of
VISA[R] credit and charge cards was too high and required VISA[R] to undertake
a phased reduction in the level of interchange to be paid by retailers in the
future. The European Commission will be free to re-examine this issue after 31
December 2007. In addition, the European Commission is at present investigating
MasterCard's[R] rules and agreement, in particular on the interchange fees.
We are unable to determine, and have no basis on which to predict
accurately, whether, or to what extent, social, legal, political or economic
factors will affect the future use of credit, default rates or the yield on the
bank portfolio generally or cardholder repayment patterns.
A CHANGE IN THE TERMS OF THE DESIGNATED ACCOUNTS MAY ADVERSELY AFFECT THE
AMOUNT OR TIMING OF COLLECTIONS AND MAY CAUSE AN EARLY REDEMPTION OF YOUR NOTES
AND/OR A LOSS ON YOUR NOTES OR A DOWNGRADE OF YOUR NOTES.
Only the receivables arising on the designated accounts will be transferred
to the receivables trustee. Each originator will continue to own its designated
accounts. As owners of their respective accounts, the originators retain the
right to change the terms of those accounts. For example, the originators can
change or eliminate fees on the accounts or change the required minimum monthly
payment required and various other terms with respect to the designated
accounts, including increasing or decreasing the annual percentage rate and
changing the annual percentage rate from a fixed rate to a floating rate. A
decrease in the monthly periodic finance charges and a reduction in credit card
or other fees would decrease the effective yield on the designated accounts and
could result in the occurrence of a regulated amortisation trigger event with
respect to each series and the commencement of the regulated amortisation
period. In addition, if the rate of periodic finance charges is changed, the
new rate of periodic finance charges will not be applicable until the following
monthly period. There can be no guarantee that the yield represented by the
amount of finance charge collections will remain at the same level relative to
the rate of interest payable by the loan note issuer on the loan notes.
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Each originator has agreed that it may change the terms of the credit card
agreements or the credit card guidelines (including without limitation the
reduction of the required minimum monthly payment and the calculation of the
amount or the timing of finance charge and other fees assessed thereon), if such
change (i) would not, in the reasonable belief of the originator, cause a pay
out event to occur, (ii) is made applicable to the comparable segment of
revolving credit card accounts owned and serviced by the originator which have
characteristics the same as or substantially similar to the designated accounts
which are subject to such change (unless the originator may not do so by the
terms of an endorsement, sponsorship or other agreement between the originator
and an unrelated third party or by the terms of the relevant credit card
agreement) and (iii) would not reduce or release any amount owed by a
cardholder to the originator.
The originators may change the terms of the accounts to maintain their
competitive position in the UK credit card industry. Changes in interest rates
and fees could lower the amount of finance charge receivables generated by
affected accounts. This could cause a pay out event to occur with respect to
any series of notes issued under this base prospectus and the relevant final
terms, which might cause an early redemption of or a loss on your notes. This
could also cause a reduction in the credit ratings on your notes.
PRINCIPAL ON YOUR NOTES MAY BE PAID TO YOU EARLIER THAN EXPECTED -- CREATING A
REINVESTMENT RISK -- OR LATER THAN EXPECTED.
The receivables in the receivables trust may be paid at any time and we
cannot assure you that new receivables will be generated or will be generated
at levels needed to maintain the receivables trust. The receivables trust is
required to maintain a minimum amount of receivables. To prevent the early
redemption of the notes, new receivables must be generated and added to the
receivables trust and levels of attrition may require that new accounts must be
originated and designated for the receivables trust. The generation of new
receivables or receivables in new accounts will be affected by the originators'
ability to compete in the then current industry environment and by customers'
changing use and payment patterns. If there is a decline in the generation of
new receivables or new accounts, you may be repaid your principal before the
expected date.
One factor that affects the level of finance charge collections and
principal collections is the extent of convenience usage. Convenience usage
means that the cardholders pay their account balances in full on or prior to
the due date. The cardholder, therefore, avoids all finance charges on his or
her account. An increase in the convenience usage by cardholders would decrease
the effective yield on the accounts and could cause a pay out event with
respect to any series of notes issued under this base prospectus and the
relevant final terms and, therefore, possibly an early redemption of your
notes.
No premium will be paid upon an early redemption of your notes. If you
receive principal on your notes earlier than expected, you may not be able to
reinvest the principal at a similar rate of return.
Alternatively, a decrease in convenience usage may reduce the principal
payment rate on the accounts. This could result in you receiving the principal
on your notes later than expected.
THE NOTES WILL NOT HAVE THE BENEFIT OF ANY EXTERNAL CREDIT ENHANCEMENT, UNLESS
SPECIFIED.
The only assets that will be available to make payment on your notes are the
assets of the issuing entity charged to secure payment of your notes
(principally the relevant series loan note). Unless otherwise indicated in the
corresponding final terms, the notes will not have the benefit of any external
credit enhancement.
DISRUPTIONS TO CASHFLOW MAY LEAD TO A LOSS ON YOUR NOTES.
If problems develop with the receivables, such as an increase in losses on
the receivables, or if there are problems in the collection and transfer of the
receivables to the receivables trust, or if the relevant swap counterparty, if
any, fails to make payments on the swap agreement, it is possible that you may
not receive the full amount of interest and principal that you would otherwise
receive.
THE ISSUANCE OF ADDITIONAL SERIES BY THE RECEIVABLES TRUSTEE ON BEHALF OF THE
RECEIVABLES TRUST MAY ADVERSELY AFFECT PAYMENTS ON YOUR NOTES.
Each new series of beneficial entitlements -- and the relevant loan note and
notes -- will be payable from the receivables in the receivables trust. The
principal terms of each new series of
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beneficial entitlements will be contained in a new series supplement for the
relevant new series to the receivables trust deed and trust cash management
agreement. The terms of a new series contained in a new supplement to the
receivables trust deed and trust cash management agreement will not be subject
to your prior review or consent.
The terms of a new series may include methods for determining investor
percentages and allocating collections, provisions creating different or
additional security or other credit enhancement for the new series, provisions
subordinating the new series to other series and other amendments or
supplements to the receivables trust deed and trust cash management agreement
that apply only to the new series. It is a condition to the issuance of a new
series that each rating agency that has rated any debt ultimately payable from
a prior series of beneficial entitlements that is outstanding -- including your
notes -- confirms in writing that the issuance of the new series will not
result in a reduction or withdrawal of its then current rating.
However, the terms of a new series could adversely affect the timing and
amounts of payments on any other outstanding series, including the series of
which your notes are a part.
CREDIT QUALITY OF THE RECEIVABLES TRUST'S ASSETS MAY BE ERODED BY THE ADDITION
OF NEW ACCOUNTS WHICH COULD ADVERSELY AFFECT COLLECTIONS OF RECEIVABLES.
The originators may designate additional credit card accounts as designated
accounts and offer the receivables trustee an assignment of the receivables
arising under the additional accounts. The originators may be required at times
to nominate additional accounts as designated accounts. These accounts may
include accounts that were originated using criteria that are different from
those applicable to the accounts from which receivables were originally
assigned to the receivables trustee prior to the issuance of the series of
notes issued pursuant to this base prospectus and the relevant final terms. For
example, they could be originated at a different date with different
underwriting standards or they could be acquired from another institution that
used different underwriting standards. Consequently, there can be no assurance
that accounts that become designated accounts in the future will have the same
credit quality as the designated accounts on the closing date. This could
adversely affect collections on the receivables which may result in early
redemption of or a loss on your notes.
INTEREST RATE PAYABLE BY THE ISSUING ENTITY ON THE NOTES MAY INCREASE WITHOUT A
CORRESPONDING CHANGE IN CARD RATES POTENTIALLY CAUSING EARLY REDEMPTION OF YOUR
NOTES AND/OR A LOSS ON YOUR NOTES.
The monthly interest rate on the majority of the designated accounts is
generally constant, except that the relevant originator has the ability to
change the interest rate at its discretion. This affects the amount of finance
charge collections the receivables trustee can pay to the loan note issuer to
fund interest payments on the loan notes then outstanding. In addition, the
interest rate paid by the loan note issuer to the issuing entity on the loan
notes will be based on the London interbank offered rate for deposits in
sterling, which changes from time to time. Accordingly, the interest payable to
the issuing entity by the loan note issuer could increase without a
corresponding increase in the amount of finance charge collections. If this
occurred a pay out event could occur causing an early redemption of your notes
and/or a loss on your notes.
COMMINGLING OF RECEIVABLES TRUST'S COLLECTIONS WITH ORIGINATORS' MAY DELAY OR
REDUCE PAYMENTS ON YOUR NOTES.
Collections from cardholders for the designated accounts and other
cardholders of non-securitised accounts will initially be paid to an operating
account of each originator. Each originator has declared a trust over its
operating account in favour of the receivables trustee for collections that are
deposited in it. Collections on the designated accounts are transferred to the
trustee collection account within two operating business days of being
identified unless identified as collections in respect of ineligible
receivables.
"OPERATING BUSINESS DAY" means, unless defined otherwise in the relevant
final terms, a day other than a Saturday, a Sunday or a day on which banking
institutions in London, England, New York, New York, Jersey, Channel Islands or
Edinburgh, Scotland are authorised or obliged by law or executive order to be
closed.
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For the limited time that collections on the designated accounts are in an
operating account, they may be commingled with other funds of the relevant
originator beneficiary and they may be untraceable. Consequently, if an
originator beneficiary were to become insolvent, there may be a delay in the
transfer of collections to the receivables trustee if that originator
beneficiary -- or a liquidator or administrator of that originator beneficiary
- -- attempted to freeze the operation of its operating account pending
completion of any rights of tracing. This could ultimately cause a delay or
reduction in the payments you receive on your notes.
IF THE ORIGINATORS OPT TO TREAT A PORTION OF PRINCIPAL RECEIVABLES AS FINANCE
CHARGE RECEIVABLES, AN EARLY REDEMPTION OF YOUR NOTES COULD OCCUR OR PAYMENT ON
YOUR NOTES COULD BE DELAYED.
Each of the originators may opt to cause a percentage of receivables that
would otherwise be treated as principal receivables to be treated as finance
charge receivables. This is called a discount option ("DISCOUNT OPTION"). If an
originator were to exercise this option, it could prevent a pay out event with
respect to any series of notes issued under this base prospectus and the
relevant final terms from occurring because of a reduction of the portfolio
yield, which could delay an early redemption of your notes at a time when the
performance of the receivables is deteriorating. Having exercised its discount
option, the originator may also redesignate all or part of such receivables as
principal receivables at any time. However, if an originator exercises its
discount option, it will reduce the aggregate amount of principal receivables,
which may increase the likelihood that the originators will be required to
designate additional accounts from which receivables will be assigned to the
receivables trustee. If the originators were unable to designate sufficient
additional accounts, a pay out event with respect to any series of notes issued
under this base prospectus and the relevant final terms could occur and you
could receive payments of principal on your notes before you otherwise would.
See "The Receivables -- Discount Option Receivables".
IF CARDHOLDERS ARE CONCENTRATED IN A GEOGRAPHIC REGION, ECONOMIC DOWNTURN IN
THAT REGION MAY ADVERSELY AFFECT COLLECTIONS OF RECEIVABLES.
If the receivables trust has a high concentration of receivables from
cardholders located in a single region, an economic downturn in that region may
have a material adverse effect on the receivables trust because of that
concentration. The current concentration levels may change in the future.
We are not aware of any existing adverse economic conditions affecting any
specific regions that would be material to you. Future adverse economic
conditions affecting any specific regions or any of the other regions, however,
could adversely affect the performance of the receivables which could result in
a loss on your notes.
ADOPTION OF THE EUROPEAN MONETARY UNION MAY HAVE UNCERTAIN EFFECTS ON THE
NOTES.
It is possible that prior to the maturity of one or more series of notes,
the United Kingdom may become a participating member state in the European
Economic and Monetary Union and that therefore the euro may become the lawful
currency of the United Kingdom. In that event, (i) all amounts payable in
sterling in respect of a class or sub-class of notes may become payable in euro
and (ii) applicable provisions of law may allow the issuing entity to
redenominate each class or sub-class of notes denominated in sterling into euro
and take additional measures in respect of each class or sub-class. If any
class or sub-class is outstanding at a time when the euro becomes the lawful
currency of the United Kingdom, the issuing entity intends to make payment on
the notes of such class or sub-class in accordance with the then market
practice of payment on such debts. It cannot be said with certainty what
effect, if any, the adoption of the euro by the United Kingdom may have on any
class or sub-class of any series.
THE CREDIT RATING ASSIGNED TO YOUR NOTES IS NOT A GUARANTEE THAT YOU WILL
RECEIVE ALL PAYMENTS OWED TO YOU UNDER YOUR NOTES.
Each credit rating assigned to your notes reflects the relevant rating
agency's assessment only of the likelihood that interest and principal will be
paid to you by the legal final redemption date, not that it will be paid when
expected or scheduled. These ratings are based, among other things, on the
rating agencies' determination of the value of the receivables, the reliability
of the payments on the receivables, the creditworthiness of any swap
counterparty and the availability of credit enhancement.
30
The ratings do not address the following:
* the likelihood that the principal will be redeemed or interest will
be paid on your notes, as expected on the scheduled redemption
dates;
* the possibility of the imposition of UK, Jersey or European
withholding tax;
* the marketability of the notes, or any market price for the notes;
or
* whether an investment in the notes is a suitable investment for
you.
A rating is not a recommendation to purchase, hold or sell notes.
IF THE RATING ASSIGNED TO YOUR NOTES IS LOWERED OR WITHDRAWN AFTER YOU PURCHASE
THE NOTES, THE VALUE OF YOUR NOTES MAY DECREASE AND IT MAY BE MORE DIFFICULT,
OR IMPOSSIBLE, TO FIND A BUYER FOR THE NOTES.
Any rating agency may lower its rating or withdraw its rating if, in the
sole judgement of that rating agency, the credit quality of the notes has
declined or is in question. If any rating assigned to your notes is lowered or
withdrawn, the market value of your notes may be reduced.
Any rating agency may also lower or withdraw its rating with respect to the
relevant swap counterparty. Under the terms of any swap agreement that may be
entered into in respect of a class or sub-class of notes, the swap counterparty
shall be required to transfer or novate the swap agreement to a replacement
swap counterparty or enter into other suitable arrangements if the long-term
credit rating of the swap counterparty is withdrawn or reduced below certain
thresholds. We cannot assure you, however, that the issuing entity would be
able to find a replacement swap counterparty, transfer or novate the swap
agreement and/or enter into other suitable arrangements in this event or that
the ratings of your notes will not be lowered or withdrawn in this event.
EARLY TERMINATION OF A SWAP AGREEMENT COULD RESULT IN AN EARLY REDEMPTION OF
YOUR NOTES AND/OR AN INABILITY OF THE ISSUING ENTITY TO ACQUIRE SUFFICIENT
AMOUNTS IN THE RELEVANT CURRENCY TO PAY THE AMOUNTS DUE ON YOUR NOTES.
Any swap agreement may be terminated upon the occurrence of certain events.
In the event that a swap agreement is terminated without replacement within 30
days, an event of default will occur under the terms and conditions of the
relevant notes. There can be no assurance that a swap agreement will not be
terminated prior to the payment in full of the notes of the relevant class or
sub-class.
If a swap agreement is terminated before its scheduled termination date, the
issuing entity or the swap counterparty may be liable to make an early
termination payment to the other party. The amount of such termination payment
will be based on the market value of the terminated swap agreement. This market
value will be computed on the basis of market quotations of the cost of
entering into a swap transaction with the same terms and conditions that would
have the effect of preserving the respective full payment obligations of the
parties. Any such termination payment could, for example, if interest rates or
currency exchange rates (as the case may be) have changed significantly, be
substantial.
The termination of a swap agreement in connection with any class or sub-
class of notes, whether or not your own, may reduce, accelerate or delay
payments of interest and principal on your class or sub-class of notes and/or
result in an insufficient amount of sterling being available to the issuing
entity for the issuing entity to acquire the US dollar or other currency
amounts due to you on your notes.
WITHHOLDING TAXES ON SWAP PAYMENTS MAY REDUCE THE AMOUNT YOU ARE PAID ON YOUR
NOTES.
The issuing entity and each swap counterparty will each represent and
warrant in each swap agreement entered into in connection with any class or
sub-class of notes that, under current law, it is entitled to make all payments
required to be made by it under the swap agreement without deduction for any
taxes or other charges which we refer to as "WITHHOLDING TAXES". However, if
the law changes after the closing date, neither the issuing entity nor the swap
counterparty will be required to indemnify the other party for any withholding
taxes imposed on payments under the swap agreement.
However, if any withholding taxes are imposed by any jurisdiction on any
payments made between the swap counterparty and the issuing entity and no
reasonable steps can be taken by the swap counterparty or the issuing entity to
avoid the obligation to deduct or withhold, then the issuing entity may
terminate the swap agreement, but only if the issuing entity has been directed
to do so by
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the relevant noteholders. Until the relevant noteholders elect to terminate the
swap agreement corresponding to their notes, or if such noteholders do not so
elect, payments to the noteholders of the relevant class or sub-class will be
reduced proportionately among noteholders of that class or sub-class by an
amount withheld for any withholding taxes, and the amount that you receive on
your notes may accordingly be reduced.
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TAX CONSIDERATIONS
UNITED KINGDOM TAX STATUS
Provided the notes are and continue to be listed on a "RECOGNISED STOCK
EXCHANGE" within the meaning of section 841 of the Income and Corporation Taxes
Act 1988 then interest payments thereon may be made without withholding or
deduction on account of UK income tax. The regulated market of the London Stock
Exchange is currently a "RECOGNISED STOCK EXCHANGE" for these purposes.
JERSEY TAX STATUS
As is further described in this base prospectus under "Material Jersey Tax
Consequences," Mourant du Feu & Jeune, as "SPECIAL JERSEY TAX COUNSEL", are of
the opinion that each of the issuing entity, the loan note issuer and the
receivables trustee will, provided they satisfy the conditions set out in
Article 123A of the Income Tax (Jersey) Law 1961, as amended, qualify as an
"EXEMPT COMPANY" under the 1961 law. Based upon the fact that the issuing
entity, the loan note issuer and the receivables trustee qualify as exempt
companies, special Jersey tax counsel is of the opinion that, amongst other
things, none of these companies for so long as they have such status will be
subject to Jersey income tax and that no Jersey withholding tax will be
deducted from interest and other amounts paid by the loan note issuer on the
loan notes to be issued to the issuing entity from time to time or by the
issuing entity on the notes. On 3 June 2003, the European Union Council of
Economic and Finance Ministers reached political agreement on the adoption of a
Code of Conduct on Business Taxation. Jersey is not a member of the European
Union, however, the Policy & Resources Committee of the States of Jersey has
announced that, in keeping with Jersey's policy of constructive international
engagement, it intends to propose legislation to replace the Jersey exempt
company regime by the end of 2008 with a general zero rate of corporate tax.
The receivables trust is not a legal entity for Jersey tax purposes and
therefore it will not be subject to Jersey income tax. See "Material Jersey Tax
Consequences".
UNITED STATES FEDERAL INCOME TAX STATUS
As is further described herein, Clifford Chance US LLP, as "SPECIAL US TAX
COUNSEL", is of the opinion that, although there is no directly governing
authority, based upon the anticipated activities and relevant covenants of the
receivables trustee, the loan note issuer and the issuing entity, none of the
receivables trustee, the receivables trust, the loan note issuer and the
issuing entity will be subject to US federal income tax on its net income.
The issuing entity intends to treat the notes as debt for US federal income
tax purposes. Each holder of a note, by holding a beneficial interest in a
note, will agree to conform to that treatment; however, no ruling will be
obtained from the US Internal Revenue Service (referred to herein as the "IRS")
on the characterisation of the notes for federal income tax purposes. Special
US tax counsel is of the opinion that, although there is no governing authority
addressing the classification of securities similar to the notes, under current
law, the class A notes, the class B notes and the class C notes (and every sub-
class thereof (if any)) will be treated as indebtedness for US federal income
tax purposes. Unlike a tax ruling, an opinion of special US tax counsel is not
binding on the IRS, and no assurance can be given that the characterisation of
the class A notes, the class B and the class C notes (and every sub-class
thereof (if any)) as debt would prevail if the issue were challenged by the
IRS. US holders (as described in "Material United States Federal Income Tax
Consequences") of notes that are treated as equity in the issuing entity, are
likely to be treated as owning shares in a passive foreign investment company.
If any class or sub-class of notes were treated as equity in a passive
foreign investment company (in particular, any class or sub-class deeply
subordinated with respect to others), all or a portion of both distributions
and gains on such notes would generally be taxable to the US holder as ordinary
income, and would be taxable at the highest marginal rates applicable to prior
years during the holding period. Further, all or a portion of the distributions
could be subject to an additional interest charge. This interest charge regime
may be avoided by an investor treated as owning equity in a passive foreign
investment company if that investor makes an effective qualified electing fund,
or "QEF", election. A US holder making a QEF election would generally be
required to include its pro rata share of the issuing entity's ordinary income
and net capital gain in income for each taxable year. In general, a QEF
election would be required to be made on or before the due date for filing a US
holder's federal income tax return for the first taxable year for which it
holds a note. The QEF election is effective only if certain required
information is made available by the issuing entity to an
33
investor. The issuing entity will, upon request, endeavour to provide the
requesting investor with information that the issuing entity deems reasonably
necessary for the investor to make a proper QEF election. Requesting investors
should address their request for information in writing to the registered
office of the issuer set forth in this base prospectus. While the issuing
entity does not expect to charge for this information, by making a request the
investor agrees to reimburse the issuing entity for its reasonable costs
incurred in providing this information. The issuing entity expects to provide a
holder with the necessary information within 60 days of the end of the issuing
entity's taxable year, which is 31 December. The issuing entity expects to
process requests for QEF election forms received after the 60th day after the
end of its taxable year within 15 business days of receiving the request.
Alternatively, it may be possible for an investor to avoid the interest charge
regime applicable to equity in a passive foreign investment company by making
an election to account for its investment using a mark-to-market method of tax
accounting. However, the notes do not appear to be marketable within the
meaning of the mark-to-market provisions, and therefore, the mark-to-market
election will not be available to US holders of notes. Should the QEF election
not be made, such investors would be subject to the tax rules applicable to
investors in passive foreign investment companies described above.
Special US tax counsel has prepared and reviewed the overview of US federal
income tax consequences set forth in this base prospectus and rendered the
opinions contained in "Material United States Federal Income Tax Consequences".
ERISA CONSIDERATIONS FOR INVESTORS
Where applicable, the final terms for each series may contain information
regarding eligibility of each class or sub-class of notes for purchase by
persons investing assets of employee benefit plans or individual retirement
accounts.
34
US DOLLAR/STERLING EXCHANGE RATE
References throughout this base prospectus to "[GBP]", "POUNDS" or
"STERLING" are to the lawful currency of the United Kingdom of Great Britain
and Northern Ireland. References in this base prospectus to "US$", "$" "US
DOLLARS" or "DOLLARS" are to the lawful currency of the United States of
America.
The following table sets out the historical movement of the US dollar/
sterling exchange rate. There can be no assurance that future movements in the
exchange rate will follow the precedent displayed in the table.
US DOLLAR/STERLING EXCHANGE RATE HISTORY(1)
[__] months Year ended 31 December
ended --------------------------------------------
[__] 2005 2004 2003 2002 2001 2000
---- ---- ------ ------ ------ ------ ------
Last(2)... [__] 1.7230 1.9181 1.7858 1.6100 1.4546 1.4930
Average(3) [__] 1.8196 1.8334 1.6358 1.5038 1.4407 1.5160
High...... [__] 1.9291 1.9467 1.7858 1.6100 1.5038 1.6537
Low....... [__] 1.7142 1.7559 1.5541 1.4082 1.3727 1.3977
Notes
(1) Data obtained from Bloomberg GBP Currency HP screen (closing exchange
rate).
(2) Last is the closing exchange rate on the last operating business day of
each of the periods indicated; periods commencing from 1 January or the
next business day.
(3) Average is the average daily exchange rate during each of the periods
indicated.
35
THE ISSUING ENTITY
Arran Funding Limited, the issuing entity, is a public limited liability
company which was incorporated in Jersey, Channel Islands, as a special purpose
vehicle for the issue of asset backed securities, under the Companies (Jersey)
Law 1991 on 7 September 2004 with registered number 88474. Its registered
office and principal place of business are located at 22 Grenville Street, St.
Helier, Jersey JE4 8PX, Channel Islands.
The authorised share capital of the issuing entity is [GBP]10,000,
comprising 10,000 shares, each of [GBP]1 par value. The issued share capital of
the issuing entity is [GBP]10, comprising ten shares, each of which is fully
paid. All of the issuing entity's issued share capital is held by Arran
Holdings Limited. It has a fiscal year end date of 31 December, and it will
publish audited accounts for each fiscal year within six months of its year
end. The issuing entity does not have any subsidiaries. Its telephone number is
+44 1534 609 000.
Arran Holdings Limited is a private limited company which was formed in
Jersey, Channel Islands on 2 February 2000 with registered number 76198. The
registered office of Arran Holdings Limited is at 22 Grenville Street, St.
Helier, Jersey JE4 8PX, Channel Islands. All of its issued share capital is
held by Juris Limited and Lively Limited as nominees for a trust company
incorporated in Jersey, Mourant & Co. Trustees Limited, acting as trustee of
the Arran Charitable Trust, a charitable trust established under the laws of
Jersey, Channel Islands.
The issuing entity was formed principally to:
* issue notes from time to time;
* enter into and perform its duties under all financial arrangements
in connection with the programme;
* purchase the relevant loan notes;
* enter into and perform its duties under all the documents necessary
to purchase each relevant loan note as specified in each set of
final terms;
* enter into and perform its duties under all of the programme
documents and exercise its powers in relation to the issue of the
notes; and
* exercise its related rights and powers pursuant to the programme
documents to which it is a party and perform any other activities
incidental thereto.
DIRECTORS AND SECRETARY
The following sets out the directors of the issuing entity and their
business addresses and principal activities. The issuing entity is organised as
a special purpose vehicle and will be largely passive, engaging only in the
types of transactions described in this base prospectus. The issuing entity is
managed and controlled by its directors in Jersey, however, in conducting its
business, the company only requires a small amount of active management.
Name Nationality Business Address Principal Activities Age
- ----------------------- ----------- -------------------- -------------------- -----
Helen Grant British 22 Grenville Street, Business Manager of 39
St. Helier, Mourant
Jersey JE4 8PX, International Finance
Channel Islands Administration
Louise Kerhoat British 22 Grenville Street, Business Manager of 30
St. Helier, Mourant
Jersey JE4 8PX, International Finance
Channel Islands Administration
Gareth Paul Essex-Cater British 22 Grenville Street, Head of Corporate 48
St. Helier, Operations of
Jersey JE4 8PX, Mourant
Channel Islands International Finance
Administration
Lynn Cleary Irish Royal Bank House, Offshore Financial 34
71 Bath Street, Director, The Royal
St. Helier, Bank of Scotland
Jersey JE4 8PJ, International Limited
Channel Islands
36
The directors of the issuing entity do not have a specific term of office
but each may be removed by a resolution passed at a shareholders' meeting.
Mourant & Co. Limited provides the issuing entity with general secretarial,
registrar and company administration services under the terms of an agreement
which we will refer to as the "CORPORATE SERVICES AGREEMENT". The fees of
Mourant & Co. Limited for providing such services will be included in the
amount of interest paid by the loan note issuer to the issuing entity in
respect of each series loan note -- see "The Loan Notes".
The secretary of the issuing entity is:
Name Business Address
- --------------------------------- ----------------------------------------------------------------
Mourant & Co. Secretaries Limited 22 Grenville Street, St. Helier, Jersey JE4 8PX, Channel Islands
Helen Grant, Louise Kerhoat and Gareth Essex-Cater are employees of Mourant
Services Limited. Each of Mourant & Co. Limited, Mourant & Co. Trustees
Limited, Mourant & Co. Secretaries Limited and Mourant Services Limited are
ultimately owned by Mourant Limited. Gareth Essex-Cater is a shareholder in
Mourant Limited. Lynn Cleary is an employee of The Royal Bank of Scotland
International Limited.
The net proceeds of the sale of each series of notes will be used by the
issuing entity to purchase the corresponding series loan note. The issuing
entity will be prohibited by the trust deed, the relevant series trust deed
supplement and the terms and conditions of the relevant series of notes from
engaging in any business other than:
* the business described in this base prospectus;
* issuing the notes and using their proceeds to acquire the
corresponding series loan note; and
* performing its obligations and preserving and exercising its rights
under the dealer agreement, the loan notes, the agency agreement,
the trust deed, each series trust deed supplement, the expenses
loan agreement, any swap agreements, the corporate services
agreement and any documents relating thereto.
The issuing entity's ability to incur, assume or guarantee debt will also be
restricted by the trust deed, each series trust deed supplement and the terms
and conditions of the relevant series of notes.
Neither RBS nor NatWest owns, directly or indirectly, any of the share
capital of the issuing entity.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
SOURCES OF CAPITAL AND REVENUE
The issuing entity's source of capital will be the net proceeds of the
offering of each series of notes.
The issuing entity's primary sources of revenue will be payments of interest
and principal on each series loan note acquired from the loan note issuer and
borrowings under any series expense loan drawings as described below.
CAPITALISATION AND INDEBTEDNESS
The audited capitalisation and indebtedness of the issuing entity as at 31
December 2005 is as follows:
Share Capital
Total authorised share capital...................................... [GBP][__]
Total issued share capital.......................................... [GBP][__]
LOAN CAPITAL........................................................ [GBP][__]
There are no outstanding loans or subscriptions, allotments or options in
respect of the issuing entity. There are no guarantees or contingent
liabilities in respect of the issuing entity.
The capitalisation and indebtedness of the issuing entity as set out above
is correct as of 31 December 2005, however, the capitalisation and indebtedness
of the issuing entity will change as
37
new series of notes are issued from time to time. Each set of final terms will
contain information regarding all series of notes issued under the programme
then outstanding.
There is no goodwill in the balance sheet of the issuing entity, nor will
any goodwill need to be written off upon the issue of any notes.
LITIGATION
There are no, nor since the issuing entity's incorporation on 7 September
2004 have there been any, legal or arbitration proceedings which may have, or
have had, a significant effect on the issuing entity's financial position. The
issuing entity is not aware that any such proceedings are pending or
threatened.
FINANCIAL POSITION
The report of the issuing entity's reporting accountants, [__], and its
most recent report and accounts are set out in appendices A to C herein. These
financial statements have been prepared in accordance with IFRS. There has been
no material adverse change in the financial position or prospects of the issuing
entity since 31 December 2005. There has been no significant change in the
financial or trading position of the issuer since 31 December 2005.
USE OF PROCEEDS
The proceeds of the issue of each series of notes (after taking into account
the conversion into sterling of any other currency received with respect to the
issue of the notes) will be used to purchase from the loan note issuer the
corresponding loan note of such value and on such terms as further specified in
the relevant final terms. The issuing entity will pay the fees and commissions
arising from the issue of each series of notes by making a drawing under the
corresponding series expense loan drawing (as defined below) of an amount at
least equal to the fees and commissions payable on the notes.
SERIES EXPENSE LOAN DRAWINGS
On 15 December 2005, the issuing entity entered into a revolving facility
under a loan agreement (the "EXPENSES LOAN AGREEMENT") made with RBS as lender,
this facility being the "EXPENSE LOAN FACILITY". On the date of issuance of
each series of notes, the issuing entity -- as borrower -- will make a drawing
under the expense loan facility under which RBS will lend to the issuing entity
in respect of such series an amount to be set out in the final terms
corresponding to such series, to be used by the issuing entity to meet its
costs and expenses relating to issuing such series of notes. Each such drawing
under the expense loan facility is called a "SERIES EXPENSE LOAN DRAWING". The
amount outstanding under each series expense loan drawing will bear interest at
the rate set out in the final terms corresponding to such series. The issuing
entity will pay amounts due under each series expense loan drawing out of funds
that would otherwise be ultimately payable to RBS from excess spread (see
"Series Available Spread"). The issuing entity will pay interest to RBS on each
payment date. If on any payment date the issuing entity has insufficient funds
left after making all payments of principal and interest on the notes to pay
amounts due under any series expense loan drawing, the obligation to pay the
shortfall will be deferred until the next payment date. Unless otherwise
specified in the relevant final terms, the principal amount outstanding under
any series expense loan drawing will not fall due for repayment until all
principal, interest and other amounts due on the corresponding notes have been
paid in full.
38
THE LOAN NOTE ISSUER
RBS Cards Securitisation Funding Limited, the loan note issuer, is a private
limited liability company which was formed in Jersey, Channel Islands under the
Companies (Jersey) Law 1991 on 2 February 2000 with registered number 76199.
Its registered office and principal place of business are located at Royal Bank
House, 71 Bath Street, St. Helier, Jersey JE4 8PJ, Channel Islands.
The authorised share capital of the loan note issuer is [GBP]10,000,
comprising 10,000 shares, each of [GBP]1 par value. The issued share capital of
the loan note issuer is [GBP]10, comprising ten shares, each of which is fully
paid. RBS holds 100 per cent. of the issued share capital of the loan note
issuer. By way of a resolution passed on 25 July 2000, the loan note issuer
changed its fiscal year end from 30 September to 31 December, which is its
current fiscal year end. It will publish audited accounts for each fiscal year
within six months of its year end. It does not have any subsidiaries. Its
telephone number is +44 1534 285 279.
The loan note issuer was formed principally to:
* issue loan notes;
* enter into the financial arrangements to issue loan notes;
* purchase an initial investor certificate representing the aggregate
investor interest in the receivables trust on 27 March 2000, and
thereafter to increase its aggregate investor interest in the
receivables trust by further investments in the receivables trust;
and
* enter into documents and exercise its powers connected to the
above.
The loan note issuer has not engaged in any activities since its
incorporation other than the above.
DIRECTORS AND SECRETARY
The following sets out the directors of the loan note issuer and their
business addresses and principal activities. The loan note issuer is organised
as a special purpose vehicle and is largely passive, engaging only in the types
of transactions described in this base prospectus. The loan note issuer is
managed and controlled by its directors in Jersey, however, it is expected that
it will continue to only require a small amount of active management with
respect to its day-to-day activities.
Name Nationality Business Address Principal Activities
- ----------------- ----------- -------------------- --------------------
<c>
Richard Le Breton British Royal Bank House, Regional Director
71 Bath Street, Structured Lending,
St. Helier, The Royal Bank of
Jersey JE4 8PJ, Scotland
Channel Islands International
Limited
Mark Hansford British Royal Bank House, Head of Treasury
71 Bath Street, Trading Desk, The
St. Helier, Royal Bank of
Jersey JE4 8PJ, Scotland
Channel Islands International
Limited
Lynn Cleary Irish Royal Bank House, Offshore Financial
71 Bath Street, Director, The Royal
St. Helier, Bank of Scotland
Jersey JE4 8PJ, International
Channel Islands Limited
Helen Grant British 22 Grenville Street, Business Manager
St. Helier, of Mourant
Jersey JE4 8PX, International
Channel Islands Finance
Administration
39
The secretary of the loan note issuer is:
Name Business Address
- ------------------------------------------------ ---------------------------------------------
The Royal Bank of Scotland International Limited Royal Bank House, 71 Bath Street, St. Helier,
Jersey JE4 8PJ, Channel Islands
The directors of the loan note issuer do not have a specific term of office
but each may be removed by a resolution passed at a shareholders' meeting.
Richard Le Breton, Mark Hansford and Lynn Cleary are employees of The Royal
Bank of Scotland International Limited. Helen Grant is an employee of Mourant
Services Limited.
ADMINISTRATION AGREEMENT
The loan note issuer does not and will not have any employees. In order to
fulfil its obligations under the loan notes and the documents to which it is a
party, the loan note issuer on 27 March 2000 entered into an administration
agreement with The Royal Bank of Scotland International Limited, (the
"ADMINISTRATION AGREEMENT" and the "ADMINISTRATOR", respectively). Under the
terms of the administration agreement, the administrator has agreed to provide
company secretarial, company administration and management services to the loan
note issuer, in return for a fee, which will be paid out of the loan note
issuer costs amount.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
SOURCES OF CAPITAL AND REVENUE
The loan note issuer's source of capital will be the proceeds of the
offering of each series loan note.
The loan note issuer's primary source of revenue will be payments in respect
of the aggregate investor interest.
CAPITALISATION AND INDEBTEDNESS
The audited capitalisation and indebtedness of the loan note issuer as at 31
December 2005, is as follows:
SHARE CAPITAL
Total authorised share capital...................................... [GBP][__]
Total issued share capital.......................................... [GBP][__]
LOAN CAPITAL........................................................ [GBP][__]
There are no other outstanding loans or subscriptions, allotments or options
in respect of the loan note issuer. There are no guarantees or contingent
liabilities in respect of the loan note issuer.
There is no goodwill in the balance sheet of the loan note issuer.
The capitalisation and indebtedness of the loan note issuer as set out above
is correct as of 31 December 2005, however, the capitalisation and indebtedness
of the loan note issuer will change as new series loan notes are issued from
time to time. Each set of final terms will contain information regarding all
loan notes issued under the programme then outstanding.
LITIGATION
There are no, nor since the loan note issuer's incorporation on 2 February
2000 have there been any, legal or arbitration proceedings which may have, or
have had, a significant effect on the loan note issuer's financial position.
The loan note issuer is not aware that any such proceedings are pending or
threatened.
FINANCIAL POSITION
The report of the loan note issuer's reporting accountants, [__], and its
most recent annual report and accounts are set out in appendices D to F herein.
These financial statements have been prepared in accordance with IFRS. There has
been no material adverse change in the loan note issuer's financial position or
prospects since 31 December 2005. Other than as disclosed in this base
prospectus, there has been no significant change in the financial or trading
position of the loan note issuer since 31 December 2005.
40
THE ADMINISTRATOR
The Royal Bank of Scotland International Limited, which we will refer to as
"RBSI", is the administrator under the administration agreement and provides
company secretarial, company administration and management services to the loan
note issuer in order to enable the loan note issuer to fulfil its obligations
under the loan notes.
RBSI is a private limited company which was incorporated in Jersey, Channel
Islands on 14 July 1966 with registered number 2304. Its registered office is
located at Royal Bank House, 71 Bath Street, St. Helier, Jersey JE4 8PJ,
Channel Islands.
The authorised share capital of RBSI is [GBP]300,000,000 of which
[GBP]86,539,817 has been issued and paid up. The entire issued share capital of
RBSI is held by The Royal Bank of Scotland International (Holdings) Limited, a
non-trading company incorporated in Jersey, Channel Islands, other than 48
shares which are held by C J Fiduciaries Limited, which acts as the nominee of
The Royal Bank of Scotland International (Holdings) Limited. The ultimate
parent of The Royal Bank of Scotland International Limited is The Royal Bank of
Scotland Group plc.
RBSI undertakes diversified financial services and banking activities,
including offshore retail banking, treasury and corporate banking services. As
of 31 December, 2005, RBSI had approximately 1,918 employees.
41
THE RECEIVABLES TRUSTEE
South Gyle Receivables Trustee Limited, the receivables trustee, is a
private limited liability company incorporated in Jersey, Channel Islands under
the Companies (Jersey) Law 1991 on 2 February 2000 with registered number
76197. Its registered office is at 22 Grenville Street, St. Helier, Jersey JE4
8PX, Channel Islands.
All of the issued share capital of the receivables trustee is held by Juris
Limited and Lively Limited as nominees for a trust company incorporated in
Jersey, Mourant & Co. Trustees Limited, acting as trustee of the South Gyle
Charitable Trust, a charitable trust established under the laws of Jersey,
Channel Islands.
The receivables trustee was formed principally to:
* act as trustee of the receivables trust;
* purchase and accept transfers of the receivables from the
originators;
* issue certificates to beneficiaries on behalf of the receivables
trust; and
* enter into documents incidental to or relating to those
activities.
DIRECTORS AND SECRETARY
Mourant & Co. Limited, a company incorporated in Jersey, Channel Islands,
provides the receivables trustee with company secretarial, registrar and
company administration services. Its fees for providing these services are
included in the fees paid to the receivables trustee. See the section "The
Receivables Trust -- Trustee Payment Amount".
The following sets out the directors of the receivables trustee and their
business addresses and principal activities. The receivables trustee is
organised as a special purpose vehicle and is largely passive, engaging only in
the types of transactions described in this base prospectus. The receivables
trustee is managed and controlled by its directors in Jersey, however, it is
expected that it will continue to require only a small amount of active
management.
Name Nationality Business Address Principal Activities
- --------------- ----------- -------------------- ---------------------------
Helen Grant British 22 Grenville Street, Business Manager of Mourant
St. Helier, Jersey, International Finance
JE4 8PX, Administration
Channel Islands
Louise Kerhoat British 22 Grenville Street, Business Manager of Mourant
St. Helier, Jersey, International Finance
JE4 8PX, Administration
Channel Islands
Gareth Paul British 22 Grenville Street, Head of Corporate Operations
Essex-Cater St. Helier, Jersey, of Mourant International
JE4 8PX, Finance Administration
Channel Islands
Helen Grant, Louise Kerhoat and Gareth Essex-Cater are employees of Mourant
Services Limited. Each of Mourant & Co. Trustees Limited, Mourant & Co.
Secretaries Limited, Mourant & Co. Limited and Mourant Services Limited are
ultimately owned by Mourant Limited. Gareth Essex-Cater is a shareholder of
Mourant Limited.
The directors of the receivables trustee do not have a specific term of
office but each may be removed by a resolution passed at a shareholders'
meeting.
RBS does not own, directly or indirectly, any of the share capital of the
receivables trustee.
MANAGEMENT AND ACTIVITIES
The receivables trustee has been established specifically to act as trustee
of the receivables trust. Its activities are restricted by the receivables
trust deed and trust cash management agreement and the related supplements.
Since it was formed, the receivables trustee has:
* engaged in activities incidental to the declaration of the
receivables trust;
42
* obtained any necessary consents or licences in the United Kingdom
and/or Jersey;
* authorised and executed the documents to which it is a party in
order to establish the receivables trust;
* purchased and accepted transfers of the receivables from the
originators;
* issued certificates to beneficiaries in respect of their interests
in the receivables trust;
* established and maintained a register of the entitlements of
beneficiaries under the receivables trust;
* engaged in activities incidental to the transfer to it of
receivables under the designated accounts, as defined under the
heading "Assignment of Receivables to the Receivables Trustee";
and
* authorised the other documents to which it is to be party.
The receivables trustee has not engaged in any activities since its
incorporation other than the above.
The receivables trustee has made a number of covenants in the receivables
trust deed and trust cash management agreement, including that it will not
without the prior written consent of each of the beneficiaries of the
receivables trust:
* carry on any business other than as trustee of the receivables
trust and will not engage in any activity or do anything at all
except:
(1) hold and exercise its rights in the property of the
receivables trust or other segregated trusts created by the
receivables trust deed and trust cash management agreement
and perform its obligations as trustee for the property of
those trusts;
(2) preserve, exercise and enforce any of its rights and
perform and observe its obligations under the receivables
trust deed and trust cash management agreement, the
receivables securitisation agreement, the master framework
agreement, each supplement and each other related document,
including any documents secured directly or indirectly by
an interest under the receivables trust, any mandate and
other agreement about a trust account -- see "The
Receivables Trust -- Application of Collections", or a bank
account in which the receivables trustee has a beneficial
interest, the trust section 75 indemnity, and any other
document contemplated by and executed in connection with
any of the preceding documents. We refer to these documents
collectively as the "RELEVANT DOCUMENTS";
(3) pay dividends or make other distributions to the extent
required by applicable law;
(4) use, invest or dispose of any of its property or assets in
the manner provided in or contemplated by the relevant
documents; and
(5) perform any and all acts incidental to or otherwise
necessary in connection with (1), (2), (3) or (4) above;
* incur any debt other than debt that is described by this base
prospectus or contemplated by the relevant documents;
* give any guarantee or indemnity in respect of any debt;
* create any mortgage, charge, pledge, lien or other encumbrance
securing any obligation of any person or other type of
preferential arrangement having similar effect over any of its
assets, or use, invest, sell or otherwise dispose of any part of
its assets, including any uncalled capital or undertaking, present
or future, other than as expressly contemplated by the relevant
documents;
* consolidate or merge with any other person or entity or convey or
transfer its properties or assets to any person or entity;
* permit the validity or effectiveness of the receivables trust to
be supplemented, amended, varied, terminated, postponed or
discharged -- other than as expressly contemplated in the
receivables trust deed and trust cash management agreement or in
any supplement;
* have any subsidiary; or
43
* have an interest in any bank account other than a trust account
and its own bank account opened for the purpose of receiving and
making payments to be made otherwise than in its capacity as
receivables trustee -- including paying the trust cash management
fee to the trust cash manager and the annual fee due to Mourant &
Co. Limited for the provision of corporate services to the
receivables trustee.
44
THE ORIGINATORS
THE BUSINESS OF THE ORIGINATORS
Both The Royal Bank of Scotland plc, which we will refer to in this base
prospectus as "RBS" and National Westminster Bank Plc, which we will refer to
in this prospectus as "NATWEST", are the principal UK banking operating
subsidiaries of The Royal Bank of Scotland Group plc, which, together with its
subsidiaries, we will refer to in this base prospectus as the "GROUP" or
"RBSG". RBSG is a public limited company incorporated in Scotland with
registration number 45551. RBSG was incorporated under Scots law on 25 March
1968 under the name "National and Commercial Banking Group Limited" and its
name was changed to "The Royal Bank of Scotland Group Limited" by Special
Resolution passed on 4 July 1979. By Resolution of the Directors passed on 28
January 1982, pursuant to section 8 of the Companies Act, 1980, the name of
RBSG was changed to "The Royal Bank of Scotland Group public limited company".
RBSG is the holding company of one of the world's largest banking and financial
services groups. Headquartered in Edinburgh, the group operates in the UK, the
US and internationally through its two principal subsidiaries RBS and NatWest.
Both RBS and NatWest are major clearing banks whose origins go back over 275
years.
RBS is a public limited liability company registered in Scotland under
number 90312. Its registered office is located at 36 St Andrew Square,
Edinburgh EH2 2YB, Scotland and its head office is located at Gogarburn, PO Box
1000, Edinburgh, EH12 1HQ. RBS's origins go back over 275 years, but the
current entity through which it operates was incorporated on 31 October 1984
under the Companies Acts 1948 to 1980. RBS directs and promotes the operations
of various subsidiary companies.
NatWest is a public limited company registered in England and Wales under
number 929027. Its registered and principal office is located at 135
Bishopsgate, London EC2M 3UR. NatWest was incorporated in 1968 under the
Companies Acts 1948 to 1980.
The group acquired NatWest on 6 March 2000 and on 31 January 2003 ownership
of NatWest's entire issued ordinary share capital was transferred to RBS. As
part of the integration of NatWest into the group, a number of businesses and
assets have been transferred between NatWest and RBS to bring together similar
operations and functions.
At and for the year ended 31 December 2005, based on domicile of customer,
no country other than the United Kingdom and the United States accounted for
more than 10 per cent. of total assets or net income available for ordinary
shareholders of the group.
At 31 December 2005, the group had total assets of [GBP]776,827 million --
including total net loans and advances of [GBP]487,813 million, total
liabilities of [GBP]739,283 million and shareholders' funds or shareholders'
equity of [GBP]35,400 million. The group's profit before tax in accordance with
IFRS for the year ending 31 December 2005 was [GBP]7,936 million. The group's
net income for the year ending 31 December 2005 -- being the profit attributable
to ordinary shareholders in accordance with IFRS -- was [GBP]5,558 million.
At 31 December 2004, the group had total assets of [GBP]588,122 million --
including total net loans and advances of [GBP]408,324 million, total
liabilities of [GBP]550,725 million -- including total deposits of
[GBP]384,143 million and shareholders' funds or shareholders' equity of
[GBP]33,905 million. The group's profit on ordinary activities before tax in
accordance with IAS for the year ending 31 December 2004 was [GBP]7,284
million. The group's net income for the year ending 31 December 2004 -- being
the profit attributable to ordinary shareholders in accordance with IAS -- was
[GBP]4,856 million.
At 31 December 2003, the group had total assets of [GBP]454,428 million --
including total net loans and advances of [GBP]304,422 million, total
liabilities of [GBP]454,428 million -- including total deposits of
[GBP]304,286 million and shareholders' funds or shareholders' equity of
[GBP]26,098 million -- comprising equity of [GBP]23,175 million and non
equity of [GBP]2,923 million. The group's profit on ordinary activities
before tax in accordance with UK GAAP for the year ending 31 December 2003 was
[GBP]6,076 million. The group's net income for the year ending 31 December
2003 -- being the profit attributable to ordinary shareholders in accordance
with UK GAAP -- was [GBP]2,254 million.
At 31 December 2005, the group employed approximately 137,000 staff. At 31
December 2003, the group employed approximately 120,900 staff.
45
ORGANISATIONAL STRUCTURE AND BUSINESS OVERVIEW
The Group's activities are organised in the following business divisions:
Corporate Markets, Retail Markets, Manufacturing, RBS Insurance, Ulster Bank and
Citizens.
Corporate Markets
Corporate Markets (formerly Corporate Banking & Financial Markets) is a
provider of banking services and integrated financial solutions to corporate
customers in the UK and major corporations and financial institutions globally.
Since the start of 2006 Corporate Markets has been organised into two
distinct businesses, UK Corporate Banking (UKCB) and Global Banking & Markets
(GBM). UKCB focuses on the needs of UK domestic and international corporate
customers and provides a full suite of banking products and specialist services
to meet domestic and international needs. GBM supports the requirements of large
international corporates and financial institutions around the world and
specialises in providing these customers with a full range of debt financing,
risk management and investment services.
Retail Markets
Retail Markets comprises both RBS and NatWest retail brands. It offers a
full range of banking products and related financial services to the personal,
premium and small business markets.
In the personal banking market, Retail Markets offers a comprehensive
product range: money transmission, savings, loans, mortgages and insurance. In
the small business market, Retail Markets provides a full range of services
which include money transmission and cash management, short, medium and
long-term financing, deposit products and insurance.
Retail Markets also includes non-branch based retail businesses. Retail
Markets issues a comprehensive range of credit, charge and debit cards to
personal and corporate customers and provides merchant acquisition and
processing facilities for retail businesses. It also includes Tesco Personal
Finance, The One Account, Direct Line Financial Services, Lombard Direct,
WorldPay Limited (the Group's internet banking platform), the Primeline brand
and in Europe, the Comfort Card businesses, all of which offer products to
customers through direct channels.
In continental Europe, Retail Markets controls Bibit NV, a leading internet
payment specialist and provides consumer finance services through the outlets of
Tchibo, a leading German retailer.
Within Retail Markets, Wealth Management provides private banking and
investment services to its clients through a number of leading UK and overseas
private banking subsidiaries and offshore banking businesses. Wealth Management
has a network of more than 50 offices worldwide, including Switzerland, Dubai,
Monaco, Hong Kong and Singapore. Adam & Company is the major private bank in
Scotland. The offshore banking businesses - The Royal Bank of Scotland
International and NatWest Offshore - deliver retail banking services to local
and expatriate customers, and corporate banking and treasury services to
corporate, intermediary and institutional clients, principally in the Channel
Islands, the Isle of Man and Gibraltar.
Customer choice and product flexibility are central to the Retail Markets
operation and customers are able to access services through a full range of
channels: branches, ATMs, the internet and the telephone.
Manufacturing
Manufacturing supports the customer facing businesses in the UK and Ireland
and manages the Group's telephony, account management and money transmission
operations. Manufacturing is also responsible for information technology
operations and development, global purchasing, property and other services.
RBS Insurance
RBS Insurance is the second largest general insurer in the UK, by gross
earned premiums. Through the Direct Line, Churchill and Privilege brands, RBS
Insurance sells and underwrites personal insurance over the telephone and the
internet in the UK. Through the red phone brand, RBS Insurance also sells and
underwrites personal insurance in Spain, Italy and Germany. Through UKI
Partnerships, the Group operates insurance schemes on behalf of third parties
who in turn sell insurance products to their customers. The National Insurance
and Guarantee Corporation sells personal and commercial products through a
network of intermediaries, while Inter Group acts as an insurance administrator
and Devitt Insurance Services operates as a specialist broker administrator.
46
Ulster Bank
Ulster Bank provides a comprehensive range of retail and corporate banking
services in Northern Ireland and the Republic of Ireland. In retail banking,
Ulster Bank operates a network of branches throughout Ireland serving personal
and commercial customers. Its Corporate Banking and Financial Markets provides a
wide range of services in the corporate and institutional markets.
Ulster Bank includes First Active plc, a provider of mortgages, retail
savings and investment products in the Republic of Ireland. First Active and
Ulster Bank have retained their own distinctive brands, branch networks and
customer propositions, with efficiencies derived from shared central
manufacturing activities.
CITIZENS
Citizens Financial Group Inc. (CITIZENS) provides retail and corporate
banking services under the Citizens brand in the states of Connecticut,
Delaware, Massachusetts, New Hampshire, New Jersey, Pennsylvania and Rhode
Island, and the Charter One brand in the states of Illinois, Indiana, Michigan,
New York, Ohio and Vermont. Through its branch network, Citizens provides a full
range of retail and corporate banking services, including personal banking,
residential mortgages and cash management. In addition, Citizens engages in a
wide variety of commercial lending, consumer lending, commercial and consumer
deposit products, merchant credit card services, insurance products, trust
services and retail investment services.
RECENT DEVELOPMENTS
In 2005 the Group launched a strategic partnership with the Bank of China.
The Group leads an investment of 10% in the Bank of China for U.S.$3.048
billion, of which RBSG itself invested U.S.$1.6 billion. The two banks will
co-operate across a range of business activities including credit cards, wealth
management, corporate banking and personal lines insurance. They will also
closely co-operate in key operational areas.
Sir George Ross Mathewson retired as Chairman from the boards of directors
of each of RBSG and RBS at the Annual General Meeting on 28 April 2006. Sir Tom
McKillop, Deputy Chairman, succeeded him as Chairman.
On 1 March 2006 the Group appointed John Cameron, Chief Executive,
Corporate Markets and Mark Fisher, Chief Executive, Manufacturing as executive
directors. William Friedrich was also appointed as a non-executive director of
the Group and of RBS.
PRINCIPAL SUBSIDIARY UNDERTAKINGS
RBSG's shares are widely held and, to the best of its knowledge, RBSG is
not directly or indirectly controlled by anyone.
RBS is wholly-owned by RBSG and supervised by the Financial Services
Authority as a bank.
RBSG's direct principal operating subsidiaries are RBS and RBS Insurance
Group Limited. The principal subsidiary undertakings of RBS are shown below.
Their capital consists of ordinary and preference shares, which are unlisted
with the exception of certain preference shares issued by NatWest.
All of the subsidiary undertakings are owned directly or indirectly through
intermediate holding companies and are wholly-owned. All of the subsidiaries
shown below are included in the consolidated financial statements of RBSG and
RBS and have an accounting reference date of 31 December.
* Citizens Financial Group, Inc.;
* Coutts & Co;
* Greenwich Capital Markets, Inc.;
* National Westminster Bank Plc; and
* Ulster Bank Limited.
RBS
RBS will perform the following roles in connection with the issuance of the
notes:
* sponsor;
47
* originator;
* servicer;
* trust cash manager;
* originator beneficiary;
* lender under the series expense loan agreement;
* swap counterparty (unless specified otherwise in the relevant final
terms); and
* dealer and arranger.
RBS provides banking and other related financial services to individuals and
small to medium-sized corporate clients through a UK wide branch network and
various subsidiary companies. It also provides banking and other related
financial services to larger corporate and institutional clients in the United
Kingdom, United States and elsewhere.
The short-term unsecured and unguaranteed debt obligations of RBS are
currently rated A-1+ by Standard & Poor's, P-1 by Moody's and F1+ by Fitch
Ratings and the long-term unsecured and unguaranteed debt obligations of RBS
are currently rated AA by Standard & Poor's, Aa1 by Moody's and AA+ by Fitch
Ratings.
NATWEST
NatWest will perform the following roles in connection with the issuance of
the notes:
* originator; and
* originator beneficiary.
NatWest is regulated under the Financial Services and Markets Act 2000 and,
with its subsidiaries, is engaged principally in providing a comprehensive
range of banking, insurance and other financial products and services.
USE OF SECURITISATION AS A SOURCE OF FUNDING
RBS has been securitising its own credit card receivables since 2000 when
Arran One Limited and Arran Two Limited were established. The securities issued
by Arran One Limited and Arran Two Limited have been redeemed in full. The
Arran Funding Limited $7.5 billion medium term note programme was established
on 10 November 2005. Two series of notes were issued pursuant to the medium
term programme on 15 December 2005. Both series currently remain outstanding --
see "Transaction Overview -- Previous Series". In total, RBS has completed
three securitisation transactions in which an aggregate initial principal
amount in excess of US$7 billion (equivalent) have been issued.
NatWest acceded to the receivables trust on 27 October 2005, having not
previously sponsored any securitisation of its credit card receivables.
RBS also originates and securitises commercial loan mortgage backed loans
through its Epic programme, where it acts as originator and servicer of the
assets as well as cash manager, account bank, swap counterparty, arranger and
lead manager.
No prior securitisation organised by RBS has experienced an event of default
or early amortisation event to date.
The annual report of the group on Form 20-F for the year ended 31 December
2005 has been filed with the US Securities and Exchange Commission. The
financial information set out above is extracted, without material adjustment,
from the annual report. RBS will provide, without charge to each person to whom
this base prospectus is delivered, on the request of that person, a copy of the
Form 20-F referred to in the previous sentence. Written requests should be
directed to: The Royal Bank of Scotland plc, Gogarburn, PO Box 1000, Edinburgh,
EH12 1HQ, United Kingdom, Attention: Group Financial Reporting.
The notes will not be obligations of the group, RBS, NatWest or any of their
affiliates.
48
CREDIT CARD USAGE IN THE UNITED KINGDOM
RBS and NatWest believe the UK credit card market is the largest and
relatively the most developed in Europe. The adult population of the United
Kingdom is approximately 46.6 million and the total population is approximately
59.8 million as of mid 2004 (Office of National Statistics). It is estimated
that approximately 31 million adults in the United Kingdom hold at least one
credit card as of end 2004 (Association for Payment Clearing Systems).
According to the British Bankers Association, the total number of credit,
charge and corporate cards in issue in the United Kingdom has grown rapidly and
stood at approximately 71.6 million (excluding American Express and Diners
Club) at the end of September 2005.
Data from the British Bankers' Association indicate that UK card borrowings
were approximately [GBP]66.9 billion at the end of September 2005.
THE CREDIT CARD PORTFOLIO
GENERAL
Both RBS and NatWest issued their first credit cards in 1972. Cards Business
manages the bank portfolios and leads the development of new credit card
products for the originators. Through its development of sophisticated
portfolio analysis systems, advanced direct marketing techniques and an
extensive database of consumer behavioural information, RBS has been recognised
as an innovator within the UK credit card industry. Following the group's
acquisition of NatWest, Cards Business became responsible for servicing the
credit card accounts originated by NatWest. The RBS group's total UK credit
card portfolio is one of the largest credit card portfolios in the United
Kingdom, as of December 2005, measured by the number of cards in issue and
balances.
Cards Business currently pursues a multi-brand/multi-channel approach to
growing its credit card portfolio. In addition to credit card accounts
originated under the RBS and NatWest brands, Cards Business, directly and
through affiliates, also markets credit cards under the MINT brand and various
co-brands with third parties. MINT-branded accounts include accounts formerly
originated under the RBSA brand as well as accounts originated directly under
the MINT brand.
Receivables to be included in the securitised portfolio, from time to time,
will be acquired from the RBS and NatWest portfolios, including Classic
VISA[R], Classic MasterCard[R], Platinum and Gold VISA[R] and Gold
MasterCard[R]. Any RBS and NatWest receivables which may be included in the
securitised portfolio, from time to time, will not be generated from accounts
issued by RBS and NatWest through affinity and co-brand marketing programmes.
Cards Business uses a customer-driven strategy to offer a range of products
through a variety of origination channels with an objective of targeting the
most profitable segments of the market and seeks to build a cardholder base
among the more financially mature segment of the market. For example, the Cards
Business has increased the number of agents dedicated solely to the MINT
product line in order to more efficiently strengthen and broaden the MINT brand
and to distinguish it from its competitors by offering superior and more
knowledgeable customer service to customers with MINT-branded products.
Accounts originated by NatWest have been marketed to potential customers who
tend to be more focused on customer service, loyalty schemes, their perception
of the status conferred by carrying a NatWest card and, historically, less on
pricing (although this has been changing lately).
Cards Business operates its credit card activities in respect of the bank
portfolio from a number of sites including:
Edinburgh, Scotland Head office;
London, England Marketing office;
Manchester, England Service/call centre; and
Southend-on-Sea, England Operations centre, including service/call
centre, fraud monitoring, collections and
training.
49
As at 31 December 2005, Cards Business employed in excess of 5,000 employees
in the UK and worldwide.
ACCOUNT ORIGINATION
The eligible accounts from which the current designated accounts have been
selected and from which additional accounts will be selected from time to time,
represent a substantial portion of all consumer revolving credit loans arising
in VISA[R] and MasterCard[R] accounts originated and/or owned by the
originators. See "The Receivables -- Assignment of Receivables to the
Receivables Trustee". Additional accounts selected in the future may include
eligible accounts originated after the date of this base prospectus that are
selected using eligibility criteria different from those used in selecting the
designated accounts in respect of the programme as at 17 October 2005.
The originators are members of VISA[R] and MasterCard[R] International.
VISA[R] and MasterCard[R] credit cards are issued as part of the worldwide
VISA[R] and MasterCard[R] International systems, and transactions creating the
receivables through the use of those credit cards are processed through the
VISA[R] and MasterCard[R] International authorisation and settlement systems.
The VISA[R] and MasterCard[R] accounts, the receivables in which have been and
will be conveyed to the receivables trust, from time to time, include both
standard and premium VISA[R] and MasterCard[R] accounts. Premium accounts may
carry higher credit lines and may offer different services to cardholders.
Cards Business applies the same practices for originating eligible accounts
under the RBS, NatWest and MINT brands, except that where a prospective
accountholder already has an existing banking relationship with RBS or NatWest,
the behaviour of that relationship is taken into consideration when the
application is assessed. Cards Business generates its eligible accounts
principally through mass-media advertising, targeted direct mail, internet
recruitment, in-branch solicitation and telemarketing solicitation. Cards
Business applies risk and response models to many types of sponsored lists, the
electoral roll and mailing lists to identify prospects. Cards Business also
pre-screens mailing lists to prevent solicitations being sent to prospective
accountholders who have significant adverse credit bureau information.
Additionally, RBS and NatWest-branded accounts are originated by providing
application forms to prospective accountholders who have banking facilities
with RBS or NatWest at the time that they are solicited. A limited number of
new credit card accounts generated through direct mail solicitation campaigns
are directed at individuals who have been pre-approved by Cards Business based
on an existing banking relationship with RBS and NatWest. In addition, Cards
Business generates certain accounts (which will not be designated accounts)
through affinity and co-brand marketing programmes. In the future, Cards
Business may use additional criteria to determine the eligibility of
individuals for pre-approved solicitation.
Applications are consistent with the format that Cards Business understands
is generally used by bank credit card issuers in the UK and require prospective
cardholders to provide information on, among other things, the applicant's
income, employment status and residence. Data entry for each credit card
application is performed by Graphic Data Ltd, a company that is unaffiliated
with the group and that is based in London, England. Application details are
screened for creditworthiness by a combination of system-based checking,
external credit bureau data and manual verification, where appropriate. In
addition, dual bureau processing is undertaken at Experian Limited, a wholly-
owned subsidiary of Great Universal Stores plc located in Nottingham, England,
which we will refer to as "EXPERIAN", and Equifax Plc for credit searching and
money laundering verification. System-based application checking includes the
use of a database widely used in the UK credit card industry to attempt to
detect fraudulent applications. That database is maintained by Experian.
Cards Business uses a credit scoring system developed by Experian. Cards
Business believes that, should Experian cease to provide application processing
services to Cards Business, it will be able to contract for comparable services
from another qualified entity. The scorecards used by Cards Business have been
built by Experian, and by its own risk department.
50
The credit scoring system provides an indication of an applicant's
likelihood to repay his or her obligations. The credit scoring system applies
information about applicants from various sources, including the electoral
roll, credit reference data, previous credit searches, records of county court
judgements and a fraud avoidance credit referencing database maintained by
Experian, as well as information supplied by the applicant on the application
form. The data are then assessed using proprietary scoring variables to select
suitable applicants. Cards Business determines the credit score that is
required for acceptance of a particular application based on a variety of
factors, including the product applied for, the manner in which the application
was made and the risk tolerance of Cards Business pertaining at the time of
scoring. The risk tolerance may be adjusted based on factors such as economic
conditions, campaign objectives, competition and the analysis of historical
data. An applicant whose application is approved is assigned an initial credit
limit based on the applicant's credit score and income level.
Cards Business manages the bank portfolio with the goal of maximising
profitability. This is done by splitting classes of applicants into different
segments based on profitability and risk. Several scorecards are used for
applicants, including banked, non-banked and dual bureau. Different cut-offs
are applied for acceptance of applicants in each of the segments.
Credit limits are adjusted based on Cards Business's continuing evaluation
of accountholders' credit behaviour and suitability using Triad 7.0, an account
management system developed by Fair Isaac Corporation, an independent firm
experienced in developing credit scoring models.
Once an account has been in existence for between three and six months,
payment and behavioural information in respect of that account is
systematically evaluated on a monthly basis by Cards Business. Credit limits
may also be adjusted at the request of an accountholder, subject to Cards
Business's independent evaluation of such accountholder's card usage and
payment history. In addition, Cards Business may also adjust the account's
credit limit automatically based on updated behaviour scores and the
performance of the account.
ACCOUNT USE AND MAINTENANCE
Cardholders may use their cards for purchases, cash advances and to finance
balance transfers. Purchases occur when cardholders use their cards to acquire
goods or services. Cash advances occur when cardholders use their cards to
obtain cash from a financial institution or ATM. Balance transfers occur when a
customer arranges by telephone or as part of his or her original application to
transfer the balance of another credit or store-card or to consolidate his or
her overdraft to his or her credit card. Amounts due with respect to purchases,
cash advances and balance transfers will be included in the receivables offered
to the receivables trustee under the receivables securitisation agreement.
Each accountholder is subject to an agreement governing the terms and
conditions of his or her account. Each agreement provides that the relevant
originator, if it gives advance notice to the accountholder, may, at any time,
change or terminate any terms, conditions, services or features of the account
(including increasing or decreasing periodic finance charges, other charges or
minimum payments). Credit limits may be adjusted periodically based upon an
evaluation of the accountholder's performance.
PROCESSING
ACCOUNT MANAGEMENT
RBS, as part of the group, is party to an agreement, which will be referred
to as the "TSYS CONTRACT", with Total Systems Services Inc., which we will
refer to as "TSYS". TSYS is a majority-owned subsidiary of Synovus Financial
Corporation and has credit card account processing capabilities in North
America, Europe, Latin America and Asia Pacific. TSYS's UK credit card
processing centre is based in York with a data centre in Knaresborough.
TSYS provides certain processing services including but not limited to:
* Maintenance of account holder data and account holder transaction
management;
* Transmission of cardholder data to the group's appointed suppliers;
* Transmission of credit card statement data to the group's appointed
statement printing and fulfilment supplier; and
* Interface to the payment schemes (VISA[R] and MasterCard[R])
enabling the processing of authorisations and settlement.
51
TSYS's settlement process has links to VISA[R] and MasterCard[R] to enable
cardholder transactions to be transferred.
If TSYS were to fail or become insolvent, delays in processing and recovery
of information with respect to charges incurred by cardholders could occur, and
the replacement of the services that TSYS currently provides to RBS and NatWest
could be time consuming. As a result, delays in payments to holders of notes of
any series outstanding at such time could occur.
The group and TSYS are parties to a contract that has an effective date of
27 July 2000. The contract expires on 31 July 2014.
CARD PRODUCTION
RBS and NatWest are each party to agreements which we will collectively
refer to as the "G&D CONTRACT", with Giesecke and Devrient GB Ltd. and Giesecke
& Devrient GmbH, collectively referred to as "G&D".
G&D is a global technology group specialising in banknote and securities
printing. G&D also specialises in credit card encoding, embossing and
personalisation services through its plant in London.
G&D provide Cards Business with certain services including, but not limited
to:
* Receipt of daily transmissions from TSYS containing cardholder data
relating to new cards, replacement cards and monthly re-issue
cards;
* Magnetic stripe and chip encoding;
* Plastic card personalised embossing;
* Matching of plastics to card carriers and insertion of relevant
inserts; and
* Secure preparation of cards mail packages.
STATEMENT PRINTING
Statement production and printing is carried out by the group statement
production facility, which is based in Loughborough. The statement printing
facility is part of the group's manufacturing division.
BILLING AND PAYMENT
TSYS creates a monthly statement with respect to each account holder, the
details of which are transmitted daily to RBS' statement production facility in
Loughborough, where printing, insertion and mailing is managed. Each statement
contains details of transactions on the account that have occurred since the
previous statement date. The statement may also contain details of other
products of Cards Business and the group that may be of interest to the
accountholder.
Most credit card agreements issued by the originators contain terms that
allow cardholders to make purchases free of interest for up to 59 days. This
means that if a balance consists only of purchases, and the balance is paid in
full by the due date noted on the customer statement (this is generally 28 days
from the date of the statement), finance charges will be waived. Balance
transfers are eligible for a similar interest free period, although customers
may be required to pay a fee. Cash advances are not eligible for interest free
periods, and, as such, no interest waivers are allowed. Currently, cardholders
must make a monthly payment of at least an amount equal to the greater of 2.25
per cent. of the statement balance or the total amount if the balance is less
than [GBP]5.
The terms and conditions of the credit card agreements issued by the
originators allow the originators to offer certain eligible cardholders a
payment holiday pursuant to which they would be given the option to allow one
monthly payment cycle to lapse without making the minimum payment normally due
during that payment cycle. Interest on the outstanding balance continues to
accrue during that period. This option has rarely been exercised by the
originators and in any event no customer would receive such an option more than
once per year.
A number of charges and fees are assessed on card accounts in accordance
with the terms and conditions of the product held. These fees include finance
charges, annual fees, cash advance handling fees, late payment fees, returned
payment fees, overlimit fees, foreign exchange fees and insurance premiums.
Finance charges on purchases, cash advances and balance transfers are
calculated using the average daily balance method on the TSYS platform. Finance
charges are calculated from the date of
52
the transaction. Finance charges are assessed monthly and are posted to the
customer's account, subject to terms and conditions relating to interest-free
periods and interest waivers.
DELINQUENCY AND LOSS EXPERIENCE
Cards Business considers an account to be contractually delinquent if the
minimum payment is not received by the due date indicated on the customer's
statement. Efforts to deal with delinquent receivables occur at various stages
of delinquency. Those efforts include statement messages, formal letters and
telephone calls generated by Cards Business through its Southend processing
centre, which maintains an automated telephone dialling system for the purpose
of contacting delinquent accountholders. Once an account is recognised as
delinquent, a determination is made of the timing and type of initial contact
and frequency of subsequent contacts based upon the score assigned to such
account by the Triad 7.0 account management system and the severity of any
cardholder misuse, if any. The initial contact typically is made by telephone
between 1 and 20 days after an account becomes delinquent or, in certain cases,
by letter between 1 day and 20 days after an account becomes delinquent.
Customers who receive a favourable Triad score may be allowed to continue to
use their credit card for up to 20 days after the initial date of delinquency.
In addition, Cards Business uses an advanced computer system to attempt to
detect fraudulent transactions based on an analysis of card usage patterns.
Receivables are typically referred to a debt collection agency when they
become 90 days past due. The collection agency to which accounts most
frequently are referred is an affiliate of RBS and NatWest, however several
external collection agencies are used as well. In addition, in accordance with
its usual servicing procedures, Cards Business may sell charged-off accounts to
a third party in order to maximise recoveries on such accounts. An account is
charged-off on the 12th day of the first month in which such account is 365
days delinquent. Accounts will also be charged-off on confirmation of
bankruptcy or an IVA (Individual Voluntary Arrangement). Charged off accounts
can never be revived.
Cards Business manages its credit card portfolio within the "prime" sector
of the market and manages the portfolio with the goal of maximising net
profitability. Whilst the overall portfolio has more transactors than
borrowers, Cards Business believes that borrowers on RBS and MINT branded cards
carry higher interest-bearing balances than the industry average for this
sector. Higher balances result in higher aggregate losses for a given
percentage of defaulted accounts but also generate higher profits as a result
of the increased interest and fee income on those accounts. If the percentage
of defaulted accounts is controlled, this trade off can result in higher
overall profitability. As a result, Cards Business has been willing to tolerate
relatively higher levels of delinquencies and, ultimately, charge offs from a
given group of accounts to the extent its modelling suggests that it will also
achieve relatively higher overall returns from these accounts.
Each set of final terms will contain tables relating to the securitised
portfolio, as well as the historic contractual delinquencies of accounts in the
bank portfolio, broken down according to the number of days by which payments
are overdue and loss experience.
MATURITY ASSUMPTIONS
Each series supplement to the receivables trust deed and trust cash
management agreement will provide that the loan note issuer will not receive
distributions of principal collections from the receivables trustee, for
payment of principal on the corresponding loan note, until the scheduled
redemption date for such series, or earlier if a pay out event results in the
start of the regulated amortisation period or the rapid amortisation period.
On each distribution date during the controlled accumulation period an
amount equal to the controlled deposit amount will be deposited in the
principal funding account until the balance of the principal funding account
equals the initial investor interest. Although it is anticipated that principal
collections will be available on each distribution date during the controlled
accumulation period to make a deposit of the controlled deposit amount and that
the initial investor interest acquired by the loan note issuer in connection
with each series will be paid to the loan note issuer on the scheduled
redemption date for such series, thereby allowing the loan note issuer to
redeem the corresponding outstanding series loan note in full, no assurance can
be given that sufficient principal collections will be available. If the amount
required to pay the investor interest in respect of a series loan note in full
is not available on the scheduled redemption date of the corresponding series
of notes, a pay out event will occur and the rapid amortisation period will
begin with respect to such series of notes.
53
If a regulated amortisation trigger event occurs during the controlled
accumulation period in respect of a series, the regulated amortisation period
will begin. If any other pay out event with respect to such series of notes
occurs during the controlled accumulation period, the rapid amortisation period
will begin. In each case, any amount on deposit in the relevant principal
funding ledger of the principal funding account with respect to that series
will be withdrawn by the loan note issuer and paid to the issuing entity on the
first payment date falling after the commencement of the regulated amortisation
period or the rapid amortisation period. In addition, to the extent that the
adjusted investor interest in respect of a series loan note has not been
distributed in full, the issuing entity will be entitled to monthly
distributions of principal collections in respect of such adjusted investor
interest during the rapid amortisation period equal to the available investor
principal collections until such adjusted investor interest has been
distributed in full or, during the regulated amortisation period, an amount
equal to the controlled deposit amount until each adjusted investor interest
has been distributed in full. A pay out event occurs, either automatically or
after specified notice, after a trust pay out event or a series pay-out event
occurs. If a series pay-out event occurs, it will automatically trigger an
early redemption event under the corresponding loan note.
Each set of final terms will contain a table prepared by Cards Business in
unaudited form and presenting the highest and lowest cardholder monthly payment
rates for the bank portfolio during any month in the periods shown and the
average cardholder monthly payment rates for all months during the periods
shown. These are calculated as a percentage of total opening receivables
balances during the periods shown. The payment rates are based on amounts which
would be deemed payments of principal collections and finance charge
collections for the related accounts.
Collections may vary from month to month due to:
* seasonal variations;
* promotional offerings such as payment holidays;
* general economic conditions; and
* payment habits of cardholders.
There is no guarantee that the future monthly payment rates for the
securitised portfolio will be similar to the historical experience set forth in
the table in the relevant final terms or that there will be enough principal
collections to deposit the controlled deposit amount into the principal funding
account each month during the controlled accumulation period to redeem notes of
any series fully by the scheduled redemption date of such series. If a pay out
event occurs, the average life and maturity of your notes could be
significantly reduced, since you may start receiving principal distributions
before the scheduled redemption date.
The payment rate may slow to below the payment rates used to determine the
controlled deposit amount or a pay out event may occur which would start the
rapid amortisation period or the regulated amortisation period, so there is no
guarantee that the actual number of months elapsed from the issuance date of a
series to the final distribution date for your notes will equal the expected
number of months in that period. If the trust cash manager in consultation with
the servicer shortens the controlled accumulation period there is no guarantee
that there will be enough time to accumulate all amounts necessary to pay the
adjusted investor interest fully on the corresponding scheduled redemption
date.
RECEIVABLES YIELD CONSIDERATIONS
The finance charges and fees billed to accounts in the bank portfolio for
the most recent available periods will be presented in the relevant final
terms.
The historical yield figures in these tables are calculated on the basis of
the amounts billed to cardholders during the periods shown (which we shall
refer to as being on a "CHARGED BASIS"), and from interchange. Collections of
receivables included in the receivables trust will be on a cash basis and may
not be the same as historical yields set forth in the table. During periods of
increasing delinquencies or an increase in periodic payment deferral
programmes, yields calculated on a charged basis may exceed yields based on
cash amounts billed to and collected from cardholders. Conversely, as
delinquencies decrease or the use of periodic payment deferral programmes
decreases, cash yields may exceed yields calculated on a charged basis as
amounts collected in a current period may include amounts billed during prior
periods. However, the originators believe that during the periods referred to
in the table set forth in each set of final terms, the yield on a charged basis
will closely approximate the yield on a cash basis. The yield on both a charged
and a cash basis will be affected by many factors, including the monthly
periodic finance charges on the receivables,
54
the amount of the annual fees and other fees, changes in the delinquency rate
on the receivables and the percentage of cardholders who pay their balances in
full each month and do not incur monthly periodic finance charges. For example,
an originator could change the monthly interest rate applied to its accounts or
reduce or eliminate fees on its accounts. See "Risk Factors -- A change in the
terms of the designated accounts may adversely affect the amount or timing of
collections and may cause an early redemption on your notes and/or a loss on
your notes or a downgrade of your notes".
55
THE RECEIVABLES
TRANSFER OF RECEIVABLES TO THE RECEIVABLES TRUSTEE
Under the terms of a receivables securitisation deed dated 27 March 2000 --
which we will call the "RECEIVABLES SECURITISATION AGREEMENT" -- RBS and RBSA,
as the initial originators, offered on that date to the receivables trustee
assignments of, and in respect of receivables governed by Scots law, a
declaration of trust over, all receivables that had arisen or would arise in
all designated accounts as of 31 January 2000 -- called the "POOL SELECTION
DATE". RBSA transferred its originator interest in the receivables trust on 1
January 2004 to RBS. On 27 October 2005, NatWest acceded to the receivables
trust as a new originator beneficiary. An account of an originator is
designated as a designated account if the account has been originated under and
continues to conform to the credit card eligibility criteria described in this
base prospectus and has been flagged on the relevant originator's system as
being the subject of an offer. Only credit card accounts arising from the
originators' individual account holders may be designated. Each set of final
terms issued in connection with a series of notes will contain information on
the aggregate number of receivables in the securitised portfolio.
If for any reason any receivables from designated accounts cannot be
properly assigned to the receivables trustee or if the receivables are governed
by Scots law, the relevant originator will hold those receivables, and any
collections on those receivables, on trust for the receivables trustee. These
collections will be treated as if the receivables had been properly assigned.
For a discussion of the effect of the transfer, see "Material Legal Aspects of
the Receivables -- Transfer of Benefit of Receivables". For a discussion of
certain risks associated with the transfer, see "Risk Factors -- Commingling of
receivables trust's collections with originators' may delay or reduce payments
on your notes" and "Risk Factors -- Failure to notify cardholders of the
transfer of receivables could delay or reduce payments on your notes".
Under the terms of the receivables securitisation agreement, the originators
also have the right to select accounts that conform to the eligibility criteria
for designated accounts which are set out in "Representations" below, but which
have not yet been designated, and nominate them as designated accounts by
offering the receivables trustee an assignment of, and if appropriate, a
Scottish declaration of trust over, all future and existing receivables in
these accounts. These accounts are called "ADDITIONAL ACCOUNTS". Each date on
which additional accounts are selected is called an "ADDITIONAL SELECTION
DATE".
Under the terms of the receivables securitisation agreement, on 27 March
2000 the initial originators offered to the receivables trustee assignments of,
and a Scottish declaration of trust over, all future and existing receivables
in designated additional accounts. The offers and acceptances of all future and
existing receivables in additional accounts were conducted in accordance with
the conditions outlined in the paragraph below. The securitised portfolio now
consists of designated accounts selected in connection with the 2000 transfers
and in connection with subsequent transfers.
An additional account will be treated as a designated account from the date
on which its receivables are offered to the receivables trustee. This date is
called the "ADDITION DATE". When additional accounts are nominated the relevant
originator must, amongst other things:
* provide the receivables trustee with a certificate stating that it
is solvent;
* confirm, in the document that offers to assign or hold on trust
the receivables in the additional accounts to the receivables
trustee, that:
(1) the offer of the receivables in the additional accounts
meets the maximum addition amount criteria -- as set out
below; or
(2) if the offer does not meet the maximum addition amount
criteria, each rating agency then rating the notes has
confirmed that the designation of additional accounts will
not result in a reduction or withdrawal of the then current
rating of any outstanding debt that is secured directly or
indirectly by the receivables in the receivables trust,
including your notes; and
* obtain a legal opinion addressed to the receivables trustee and
satisfactory to the receivables trustee and each rating agency
then rating the notes concerning the enforceability of any
receivables arising on any designated accounts which have a
billing address in a jurisdiction outside the United Kingdom.
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The receivables trustee may waive any of these preconditions if the rating
agencies confirm in writing that the waiver will not result in the reduction or
withdrawal of their then current rating on the notes. At the time it is
nominated, each additional account must also meet the eligibility criteria as at
the time of its designation. These criteria are explained in "Representations"
below. Additional accounts may have been originated or purchased using
underwriting standards that are different from the underwriting standards used
by the originators in selecting the original designated accounts. As a result,
additional accounts may not have the same credit quality.
"MAXIMUM ADDITION AMOUNT" means, for any addition date, the number of
additional accounts nominated by the originators as additional accounts after
the pool selection date without prior rating agency confirmation and would be:
* for the three consecutive monthly periods starting with an addition
date where the rating agencies have confirmed the ratings of the
outstanding series of notes, no more than 15 per cent. of the
number of designated accounts as of the pool selection date; or
* thereafter for any twelve-month period, no more than 20 per cent.
of the designated accounts as of the later of the first day of such
twelve-month period, or an addition date where the rating agencies
have confirmed the ratings of the outstanding series of notes.
Every offer of receivables to the receivables trustee under the receivables
securitisation agreement will comprise an offer of the following:
* all existing receivables in the designated accounts;
* all future principal receivables under the designated accounts,
until the first to occur of (1) the time a designated account
becomes a redesignated account -- as defined below, (2) the
receivables trust is terminated or (3) an insolvency event -- as
defined below -- occurs;
* all future finance charge receivables under those designated
accounts that have accrued on receivables that have been assigned
to, or held on trust for, the receivables trustee as described in
the two prior bullet points;
* all amounts recoverable on the receivables described in the
preceding three bullet points -- including from the reassignment
of, or the removal from the Scottish trust over, receivables in
defaulted accounts to their originator;
* if capable of being assigned, the benefit of any guarantee or
insurance policy obtained by the relevant originator for any
obligations owed by a cardholder on a designated account; and
* in the case of the initial offer only, the benefit of all amounts
representing acquired interchange arising in respect of designated
accounts nominated in the initial offer and designated accounts
nominated in all further offers.
Every offer of receivables to the receivables trustee under the receivables
securitisation agreement will specify the aggregate amount of principal
receivables which are ineligible receivables and also identify any receivables
which the relevant originator has designated as ineligible which otherwise may
have been eligible receivables.
Throughout the term of the receivables trust, the accounts from which the
receivables will arise will be the designated accounts, excluding any
redesignated accounts.
Existing receivables and future receivables arising under the designated
accounts will be principal receivables or finance charge receivables.
"PRINCIPAL RECEIVABLES" are amounts owing by cardholders for the purchase of
merchandise or services and from cash advances, including foreign exchange
commissions charged for merchandise and services payable, or cash advances
denominated, in a currency other than sterling. The value of the principal
receivables on any designated account on any day is reduced by any credit
balance on that designated account on that day. The date on which the value of
the principal receivables in the designated accounts is determined is called
the "CUT-OFF DATE".
"FINANCE CHARGE RECEIVABLES" are amounts owing from cardholders for
transaction fees, periodic finance charges, charges for credit insurance,
special fees and annual fees -- see "Special Fees" and "Annual Fees" below --
and any interchange and discount option receivables.
Under the receivables securitisation agreement, the receivables trustee may
accept each offer of receivables (or future receivables) made by an originator
by paying the purchase price for the offered receivables (or for the contract
for the sale of future receivables) and/or by executing an assignment
57
and, if appropriate, a Scottish declaration of trust. If it wishes to accept
the offer, the receivables trustee must pay the applicable consideration no
later than the operating business day following the date on which the offer is
made. Alternatively, the parties can agree to a longer period of time for
payment. Upon future receivables becoming existing receivables, the receivables
trustee must pay the applicable consideration no later than two operating
business days after the date of processing of these existing receivables.
Alternatively, the parties can agree to a longer period if the rating agencies
consent. The payment on 27 March 2000 from the receivables trustee to the
originators also included payment for the assignment of or declaration of trust
over the benefit of acquired interchange to the receivables trustee for all
designated accounts now or in the future.
The receivables trustee accepted the initial offers of receivables made on
27 March 2000 by the initial originators on that same date and accepted all
further offers of receivables in additional accounts made on subsequent
transfers by the initial originators on the same date the offers were made.
The amount payable by the receivables trustee to an originator if it chooses
to accept an offer or to pay for any future receivables will be reduced by the
amount of any shortfall in the amount funded by trust property, provided that
the relevant originator's originator interest is increased accordingly.
The amounts required to be contributed by the originators for the initial
acceptance on 27 March 2000 and dates on which the further acceptances were
made were each reduced by the shortfall in the amount required to be paid by
the receivables trustee to the originators as part of the purchase price,
resulting in an increase of the relevant originator's originator interest.
REDESIGNATION AND REMOVAL OF ACCOUNTS
Each designated account will continue to be a designated account until such
time as (i) it becomes a cancelled account, zero balance account or defaulted
account, or (ii) the relevant originator reclassifies it as being no longer a
designated account (each of the foregoing a "REDESIGNATED ACCOUNT"). Each
originator will then ensure that, on the date that the account converted to a
redesignated account, the flag on the originator's computer system which
formerly identified the account as a designated account is removed.
A designated account becomes a redesignated account on the date specified by
the relevant originator to the receivables trustee (the "REMOVAL DATE"). No
designated account will become a redesignated account unless (1) it has become
a cancelled account, a defaulted account or a zero balance account (each as
defined below) or (2) the relevant originator delivers an officer's certificate
confirming the following conditions are satisfied:
* the redesignation will not in the reasonable belief of the
originator cause a pay out event to occur;
* the originator has represented and warranted that it does not
believe that its selection procedures for redesignated accounts
will have any material adverse effect on any investor beneficiary;
* the rating agencies have confirmed that the action will not result
in a downgrade or withdrawal of rating of any outstanding debt that
is secured directly or indirectly by the receivables in the
receivables trust; and
* the originators and the servicer can certify that collections equal
to the outstanding face amount of each principal receivable and the
outstanding balance of each finance charge receivable have been
received by the receivables trustee on all receivables assigned or
held on trust for that account other than any receivables charged-
off as uncollectable.
A "CANCELLED ACCOUNT" is a designated account that has had its charging
privileges permanently withdrawn. A "ZERO BALANCE ACCOUNT" is a designated
account that has had a nil balance of receivables for a considerable period of
time and has been identified by the servicer as a zero balance account under
the credit card guidelines, or the usual servicing procedures, of the servicer.
A "DEFAULTED ACCOUNT" is a designated account where all of the receivables have
been charged-off by the servicer as uncollectable in line with the credit card
guidelines, or the usual servicing procedures, of the servicer for similar
credit card accounts. The servicer may also designate a non-performing
designated account to be a defaulted account where the servicer is in a
position to sell that account to a third party to maximise recoveries of
receivables, in accordance with its usual servicing procedures.
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In the case of a cancelled account, a defaulted account or a zero balance
account, such account shall automatically become a redesignated account as at
the date on which it becomes a cancelled account, defaulted account or a zero
balance account, as the case may be. All principal receivables which come into
existence under a designated account prior to the date of redesignation thereof
(and which will have automatically been assigned to the receivables trustee)
will be paid for by the receivables trustee in accordance with the receivables
securitisation agreement. All future receivables which come into existence
under a designated account after the date of redesignation thereof which are
principal receivables or finance charge receivables in respect of receivables
which were not in existence prior to such date of redesignation will not be
transferred to the receivables trustee. All future receivables which are
finance charge receivables in respect of receivables which were in existence
prior to such date of redesignation, and which future receivables came into
existence on or following such date of redesignation, will continue to be
assigned to the receivables trustee. For the avoidance of doubt, no receivable
which has been assigned to or is held on trust for the receivables trustee will
be reassigned or retroceded to an originator except in the limited
circumstances referred to under the heading "Representations".
DISCOUNT OPTION RECEIVABLES
Each of the originators may, by giving at least thirty days' prior notice to
the servicer, the receivables trustee and the rating agencies, nominate a fixed
or variable percentage -- called the "DISCOUNT PERCENTAGE" -- of principal
receivables in the designated accounts. If a discount percentage has previously
been nominated for a fixed period, an extension to that period can be applied
for in the same manner. From the date and for the length of time stated in the
notice:
* the amount payable by the receivables trustee to accept an offer of
receivables will be reduced by a percentage amount equal to the
discount percentage; and
* a percentage of the principal receivables equal to the discount
percentage will be treated by the receivables trustee as finance
charge receivables. These are called "DISCOUNT OPTION RECEIVABLES".
The nomination of a discount percentage or increase in the time it is in
place will be effective only if the rating agencies confirm that the proposed
nomination or increase will not result in the downgrade or withdrawal of the
current rating of any debt that is secured directly or indirectly by the
receivables in the receivables trust, including your notes. The relevant
originator must also provide the receivables trustee with a certificate
confirming:
* that the performance of the portfolio of designated accounts, in
the reasonable opinion of the relevant originator, is not
generating adequate cash flows for the beneficiaries of the
receivables trust and the size of the discount percentage is not
intended solely to accelerate amounts payable as deferred
consideration; and
* that the relevant originator is solvent and will remain so
following the nomination or increase.
Various circumstances could lead an originator to designate a discount
percentage. The finance charge collections on the designated accounts may
decline for various reasons or may stay constant. The notes will have variable
interest rates which might increase. These circumstances could cause a series
pay-out event to occur based in part on the amount of finance charge
collections and the interest rate on the notes. An originator could avoid the
occurrence of such a series pay-out event by designating a discount percentage,
which would increase the amount of finance charge collections. Neither
originator, however, is under an obligation to designate a discount percentage
and we cannot assure you that the originators would designate a discount
percentage to avoid a series pay-out event.
SPECIAL FEES
Each of the originators may in the future charge special fees on its credit
card accounts. These special fees may be levied once or on an ongoing basis.
Any special fees that are charged on designated accounts will be regarded as
finance charge receivables and collections of these special fees will be
treated as finance charge collections. The originators may, however, by notice
to the servicer, the receivables trustee and the rating agencies, designate in
a certificate to the receivables trustee that special fees will be treated as
principal receivables. An originator can only do this if it certifies that it
has received legal advice that to do so will not give rise to certain adverse
UK tax effects.
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INTERCHANGE
Members participating in the VISA[R] and MasterCard[R] associations receive
fees called "INTERCHANGE" as partial compensation for, amongst other things,
taking credit risk and absorbing fraud losses. Under the VISA[R] and
MasterCard[R] systems, interchange is passed from the banks that clear the
transactions for merchants to card issuing banks. Interchange fees are
calculated as a percentage of the value of a credit card transaction for the
purchase of goods or services. This percentage varies from time to time.
On each distribution date each originator will deposit into the trustee
collection account an amount equal to the interchange it has received during
the preceding monthly period on designated accounts nominated. The aggregate
amount paid by the originators together is called the "ACQUIRED INTERCHANGE"
and is calculated as follows:
acquired interchange = A X B
where
A = total interchange paid or payable to the originators for that
period, and
B = total charges eligible for interchange in designated accounts for
that period
-----------------------------------------------------------------
total charges eligible for interchange in all card accounts owned
by the originators (including designated accounts) for that period
ANNUAL FEES
Receivables assigned to or held on trust for or to be assigned to or held on
trust for the receivables trustee include any annual fees charged on the
designated accounts. All annual fees are and will be treated as finance charge
receivables. An originator may, however, by notice to the servicer, the
receivables trustee and the rating agencies, designate in a certificate to the
receivables trustee that annual fees will be treated as principal receivables.
No designation of annual fees as principal receivables will be effective unless
the relevant originator has certified that it has received legal advice that to
do so will not give rise to certain adverse UK tax effects.
REDUCTIONS IN RECEIVABLES, EARLY COLLECTIONS AND CREDIT ADJUSTMENTS
If a principal receivable assigned to or held on trust for the receivables
trustee is reduced -- for reasons other than a credit adjustment or section 75
of the Consumer Credit Act, for which see "Material Legal Aspects of the
Receivables -- Consumer Credit Act 1974 -- Liability for Seller's
misrepresentation or breach of contract"-- after the offer date, because of
set-off, counterclaim or any other matter between the cardholder and the
originator which originated the receivable, and such originator has received a
benefit, then such originator will pay an amount equal to that reduction to the
receivables trustee. Similarly, if an existing receivable has already been
assigned or put into trust and its originator has received full or partial
payment of that receivable before the date that the receivable was purportedly
assigned or put into trust, then the originator will pay the amount of that
collection to the receivables trustee.
If any principal receivable assigned to or held on trust for the receivables
trustee is reduced for credit adjustment reasons after the offer date, then the
originator which originated it will pay an amount equal to such reduction to
the receivables trustee. The amount of a credit adjustment is the outstanding
face amount of a principal receivable that:
* was created by virtue of a sale of merchandise that was
subsequently refused or returned by a cardholder or against which
the cardholder has asserted any defence, dispute, set-off or
counterclaim;
* is reduced because the cardholder had received a rebate, refund,
charge-back or adjustment; or
* is fraudulent or counterfeit.
Alternatively, instead of paying these amounts to the receivables trustee,
the relevant originator can reduce its originator interest by the amount of the
credit adjustment, but not below zero.
REPRESENTATIONS
Each previous offer and all future offers of receivables to the receivables
trustee included or will include representations by the relevant originator
about the offer of the existing receivables and the future receivables which in
each case are eligible receivables. The representations for the existing
60
receivables will be given as of the pool selection date or an additional
selection date, as applicable, and the representations for the future
receivables will be given as of the date they are processed, and will include,
in each case, that:
* unless identified as an ineligible receivable, the receivable is an
eligible receivable and has arisen from an eligible account in the
amount specified in the offer or daily activity report, as
applicable;
* each assignment passes good and marketable title for that
receivable to the receivables trustee and each Scottish declaration
of trust is effective to hold good and marketable title for that
receivable on trust for the receivables trustee, in each case
together with the benefit of all collections and other rights in
connection with it, free from encumbrances of any person claiming
on it through its originator and (except in certain cases where a
court order may be required under the terms of the Consumer Credit
Act) nothing further needs to be done to enforce these rights in
the courts of England and Wales, Scotland or Northern Ireland, or
any permitted additional jurisdiction, without the participation of
its originator, except for execution of an assignation in respect
of Scots law governed receivables and giving a notice of assignment
to the relevant cardholder and subject to any limitations arising
on enforcement in the jurisdiction of the relevant cardholder;
* the assignment and the Scottish declaration of trust comply with
all applicable laws on, respectively, the date of assignment and
the date of the Scottish declaration of trust; and
* the relevant originator did not use any procedures adverse to the
beneficiaries of the receivables trust in selecting the designated
accounts from its portfolio of card accounts.
If a representation relating to the eligibility criteria given in connection
with any principal receivable proves to be incorrect when made, then the
originator of the receivable in question is obliged to pay the receivables
trustee an amount equal to the face value of that receivable on the following
operating business day. A receivable of this type will afterwards be treated as
an ineligible receivable. The "FACE VALUE" of a principal receivable means the
amount which is the outstanding balance thereof.
An originator's obligation to pay amounts due as a result of any breach of a
representation can be fulfilled, in whole or in part, by a reduction in the
amount of its originator interest. No originator interest, however, may be
reduced below zero. However, if its respective originator interest would be
reduced below zero, the relevant originator must make an equivalent payment in
immediately available funds to the receivables trustee under the receivables
trust deed and trust cash management agreement and the receivables
securitisation agreement. Once the relevant originator meets a payment
obligation arising from a breach of representation, the receivables trustee
will have no further claim against the originator for the breached
representation. However, a breach of a representation may result in a series
pay-out event.
The relevant originator will also represent, as of each pool selection date
or an additional selection date, as applicable, that no more than 1% of the
aggregate principal receivables are non-conforming receivables. A non-
conforming receivable will be treated as an ineligible receivable on the date
it is identified. Except for the contractual arrangements in relation to the
treatment of ineligible receivables described elsewhere, the receivables
trustee will have no further claim against the relevant originator if this
representation is breached.
The originators estimate that, on any pool selection date or additional
selection date, non-conforming receivables will represent less than 1 per cent.
of the aggregate principal receivables in the designated accounts.
A "NON-CONFORMING RECEIVABLE" is a receivable arising on a designated
account where the relevant credit agreement would be enforceable on an order of
the court only but where the court would not have discretion to grant an
enforcement order in respect of such credit agreement as of the applicable pool
selection date or additional selection date, as the case may be. A
non-conforming receivable will be treated as an ineligible receivable on the
date it is identified.
If:
* all principal receivables arising under a designated account become
ineligible;
* the designated account in which the ineligible principal
receivables arose has become a redesignated account; and
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* the relevant originator has complied with the payment obligations
for the ineligible principal receivables,
then the relevant originator can require the receivables trustee to reassign or
itself retrocede, as the case may be, all those receivables to it.
An "ELIGIBLE ACCOUNT" means, as of the pool selection date or an additional
selection date, as the case may be, a credit card account:
* which was in existence and maintained with an originator before it
became a designated account;
* which is payable in sterling or the currency of the permitted
additional jurisdiction where the account is in a permitted
additional jurisdiction, as applicable;
* which is governed by one of the originator's standard form credit
card agreements or, if it was acquired by an originator, was
originated on contractual terms not materially different from that
standard form;
* which is governed in whole or in part by the Consumer Credit Act
and creates legal, valid and binding obligations between the
relevant originator and the cardholder which, except in the case of
an account on which non-conforming receivables arise, are
enforceable, subject to bankruptcy laws, general principles of
equity and limitations on enforcement in any cardholder
jurisdiction, and which was otherwise created and complies with all
other applicable laws;
* where the cardholder is an individual;
* where the cardholder's most recent billing address is located in
England, Wales, Scotland, or Northern Ireland and/or a permitted
additional jurisdiction or a restricted additional jurisdiction;
* which has not been classified by the relevant originator as
counterfeit, cancelled, fraudulent, stolen or lost;
* which has been originated or purchased by an originator;
* which has been operated in all material respects in accordance with
its originator's policies and procedures and usual practices for
the operation of its credit card business; and
* the receivables in respect of which have not been charged-off by
the relevant originator on the date the account is specified as a
designated account.
If not all these conditions have been satisfied, then an account may still
be an eligible account if each rating agency confirms that the inclusion of
such account in the receivables trust will not result in a withdrawal or
reduction of the then current rating of any outstanding debt secured directly
or indirectly on the property of the receivables trust.
An "ELIGIBLE RECEIVABLE" means a receivable that:
* has arisen under an eligible account;
* was originated under one of the originators' standard form credit
card agreements and is governed, in whole or in part, by the
Consumer Credit Act, or else, if the related account was acquired
by an originator, under contractual terms that are materially the
same as the standard form credit card agreements and are governed,
in whole or in part, by the Consumer Credit Act;
* was otherwise created in compliance with all other applicable laws;
* was originated in accordance with the originator's policies and
procedures and usual practices for its credit card business;
* is not a defaulted receivable as at the offer date or addition
date, as applicable;
* is free of any encumbrances exercisable against an originator
arising under or through such originator or any of its affiliates;
* to which an originator has good marketable title;
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* is the legal obligation of the cardholder, enforceable (except in
the case of a non-conforming receivable) in accordance with the
terms of the credit card agreement under which it was originated,
subject to bankruptcy, general principles of equity and limitations
on enforcement in the relevant cardholder's jurisdiction of
residence; and
* is not currently subject to any defence, dispute, event, set-off,
counterclaim or enforcement order.
As is market practice in the United Kingdom for credit card securitisation
transactions, principal receivables that are delinquent will still constitute
eligible receivables if they comply with the eligibility requirements. See the
table captioned "Delinquency Experience-Bank Portfolio" in "Bank Portfolio
Information" in the relevant final terms for data showing the percentage of
delinquent receivables.
A "DEFAULTED RECEIVABLE" means a receivable in a defaulted account.
An "INELIGIBLE RECEIVABLE" means a receivable which arises under a
designated account but which does not comply with all the criteria set out in
the definition of an eligible receivable as at the offer date, an addition
date, date of processing or date the receivables trustee acquires the
receivable, as applicable, or an eligible receivable which the relevant
originator has designated as an ineligible receivable and has identified as an
ineligible receivable in the relevant offer.
A "NOTICE OF ASSIGNMENT" means a notice given to a cardholder of the
assignment or assignation of the receivables or insurance policies -- and the
benefit of any guarantees -- to the receivables trustee.
A "PERMITTED ADDITIONAL JURISDICTION" is a jurisdiction other than England
and Wales, Scotland, or Northern Ireland agreed by the originators and the
receivables trustee, and in respect of which each rating agency has confirmed
in writing that its inclusion as a permitted additional jurisdiction will not
result in a withdrawal or reduction of the then current rating on any
outstanding debt which is secured directly or indirectly by the receivables in
the receivables trust including your notes.
A "RESTRICTED ADDITIONAL JURISDICTION" is a jurisdiction other than England
and Wales, Scotland, or Northern Ireland and/or a permitted additional
jurisdiction which together with each other jurisdiction other than England,
Wales, Scotland or Northern Ireland and/or a permitted additional jurisdiction
represents less than 5 per cent. of outstanding receivables measured by the
outstanding receivables balance at any date.
The receivables trustee has not made and will not make any initial or
periodic examination of the receivables to determine if they are eligible
receivables or if the originators' representations and warranties are true.
AMENDMENTS TO CREDIT CARD AGREEMENTS AND CREDIT CARD GUIDELINES
Each of the originators may amend the terms and conditions of its standard
form credit card agreements or change its policies and procedures and usual
practices for its general credit card business -- which we call its credit card
guidelines. These amendments may include reducing or increasing the amount of
monthly minimum required payments or may involve changes to periodic finance
charges or other charges that would apply to the designated accounts. See "Risk
Factors -- A Change in the Terms of the Designated Accounts May Adversely
Affect the Amount or Timing of Collections and May Cause an Early Redemption on
Your Notes and/or a Loss on Your Notes or a Downgrade of Your Notes".
OVERVIEW OF SECURITISED PORTFOLIO
Each set of final terms issued in connection with the issuance of a series
of notes will contain tables summarising information in relation to designated
accounts on which receivables that have been assigned to the receivables
trustee arise. The tables will contain information in relation to the various
criteria as of a particular date that is relevant to such final terms. Tables
will indicate, among other things, composition by account balance, composition
by credit limit, composition by period of delinquency, composition by account
age and geographic distribution of accounts.
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THE RECEIVABLES TRUST
GENERAL LEGAL STRUCTURE
The receivables trust was constituted on 27 March 2000 and consists of
trusts declared under English law by the receivables trustee. The receivables
trust was declared for the finance transactions that occurred in connection
with the issuance of the 2000 loan notes and for any similar transactions in
the future involving the issuance of notes. The terms and conditions of the
receivables trust are contained in the receivables trust deed and trust cash
management agreement. The receivables trust is governed by English law. This
section will describe the material terms of the receivables trust and the
receivables trust deed and trust cash management agreement. The terms of the
receivables trust deed and trust cash management agreement may be varied or
added to and new interests in the receivables trust may be created by the
execution of a supplement -- but the supplement will not affect the beneficial
interests created by other supplements. A precondition to the receivables
trustee entering into a supplement is obtaining confirmation from the rating
agencies that entering into that supplement will not result in any rating
agency withdrawing or downgrading its then current rating of any debt that is
secured directly or indirectly by the receivables in the receivables trust,
including your notes. Under the receivables trust deed and trust cash
management agreement, the receivables trustee holds all of the receivables
trust's property on trust for:
* the initial beneficiaries of the trust; and
* any other person who becomes an additional originator beneficiary
or an additional investor beneficiary of the receivables trust in
the manner set out in the receivables trust deed and trust cash
management agreement. An investor beneficiary may include any
investor beneficiary subordinate to another investor beneficiary as
a provider of credit enhancement.
The originators are not beneficiaries under the receivables trust as to
available spread but are contractually entitled to receive payments from the
receivables trustee by way of additional consideration for the sale of the
receivables from monies received from the investor beneficiaries in an amount
equal to available spread distributed to the investor beneficiaries under the
receivables trust in the manner set out in the relevant supplement.
The beneficiaries will enter into a deed (the "BENEFICIARIES DEED") that
sets out the contractual arrangement amongst them in respect of certain
commercial decisions (relating to authorisations, consents, waivers or other
acts of the beneficiaries) to be made from time to time in respect of the
receivables trust deed and trust cash management agreement and any supplement
thereto. However, the terms of the beneficiaries deed make clear that it is in
no way intended to prejudice the absolute entitlement that each beneficiary has
to trust property as described in this base prospectus and as set out under the
terms of the receivables trust deed and trust cash management agreement and any
supplement thereto.
ENHANCEMENT PROVIDER
No provider of enhancement will be a beneficiary of the receivables trust
unless it is an investor beneficiary. However, enhancement providers may have
rights in respect of a series as specified in a series supplement.
ACQUISITIONS
On 27 March 2000, the date the receivables trust was legally constituted,
the initial beneficiaries of the receivables trust were RBS and RBSA as
originator beneficiaries and the loan note issuer as investor beneficiary. Any
additional originator that, with the prior written consent of all existing
beneficiaries of the receivables trust, accedes to the receivables
securitisation agreement and the documents constituting the receivables trust
will, upon its accession, become an additional originator beneficiary of the
receivables trust. NatWest acceded to the receivables trust and became an
originator beneficiary on 27 October 2005.
Other persons can become additional beneficiaries or increase their existing
interest in the receivables trust, if the consent of all existing beneficiaries
is obtained, in one of three ways:
* Firstly, a person can become an additional beneficiary or an
existing beneficiary can increase its beneficial interest by making
payments to the receivables trustee as a contribution to the
receivables trust's property, as set out in the receivables trust
deed and trust cash management agreement, in connection with a
series.
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* Secondly, an originator beneficiary, upon receiving payment from a
new series, may sell some of its entitlement to receivables trust
property to new or existing investor beneficiaries. Upon such sale
taking place the originator certificate of the originator
beneficiary will be surrendered and the receivables trustee will
annotate the originator certificate to evidence that originator
beneficiary's reduced beneficial interest in the receivables trust.
* Thirdly, the existing beneficiaries of the receivables trust may
agree between themselves to another method of an additional
beneficiary becoming a beneficiary of the receivables trust and
jointly direct the receivables trustee to implement such method
provided that the receivables trustee shall not issue an investor
or originator certificate, as the case may be, to such additional
beneficiary unless the requirements set out below (including
written confirmation from the rating agencies) are met.
In each of these situations each additional beneficiary will be given a
certificate evidencing a beneficial interest in the receivables trust to show
that it is a beneficiary. This process is called an "ACQUISITION," the
certificate issued to an originator beneficiary is called an "ORIGINATOR
CERTIFICATE" and the certificate issued to an investor beneficiary is called an
"INVESTOR CERTIFICATE". When an acquisition takes place the receivables trustee
will give a notice to the existing beneficiaries that will list the parties to
the acquisition and anyone who is providing credit enhancement for the new
series of beneficial interests, called an "ENHANCEMENT PROVIDER". A new
supplement to the receivables trust deed and trust cash management agreement
will govern each new series of financial transactions contemplated by the
receivables trust that is created, including any new beneficial interests.
An investor beneficiary may be a beneficiary in respect of more than one
series investor interest. If an investor beneficiary is to become a beneficiary
in respect of more than one series investor interest, it would do so by, from
time to time, enlarging its beneficial interest by making further contributions
to the receivables trustee and entering into a new supplement in respect of
each such series investor interest. On surrender of that investor beneficiary's
investor certificate, the receivables trustee will annotate the investor
certificate to evidence that investor beneficiary's enlarged beneficial
interest in the receivables trust.
It is intended that the proceeds from the issue of each series loan note
will be utilised by the loan note issuer on the closing date to increase its
beneficial interest in the receivables trust as described under the first
bullet point above.
The receivables trustee will authenticate and deliver an investor
certificate, or annotate an existing investor certificate, in respect of a
series only when it has first received:
* a supplement signed by the receivables trustee and the parties to
the new series investor interest, including the receivables trustee
and the originator beneficiaries, specifying the principal terms of
the series;
* written confirmation by the receivables trustee and all the
beneficiaries that they consent to the new series and any new
investor beneficiary introduced in the series;
* written confirmation that the investor beneficiary and the
enhancement provider -- if any -- either resides outside the United
Kingdom or has provided a legal opinion from legal counsel in
England that payments made pursuant to the investor interest will
not be subject to withholding tax in the United Kingdom;
* the credit enhancement, if any, and any agreement by which an
enhancement provider agrees to provide credit enhancement;
* a solvency certificate from the originators and any additional
originators;
* written confirmation from the rating agencies that the proposed
acquisition will not result in the reduction or withdrawal of their
ratings on any notes issued by the issuing entity or any other debt
issued by any other issuing entity that is secured directly or
indirectly by the receivables in the receivables trust -- called
"RELATED BENEFICIARY DEBT";
* the existing originator certificates and, if an existing investor
beneficiary is enlarging its aggregate entitlement, the applicable
investor certificate currently held by that investor beneficiary;
* an officer's certificate provided by the originators certifying
either:
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(1) that:
* each class of related beneficiary debt issued as
part of the acquisition and described in the related
supplement will be the subject of a legal opinion
prepared by US tax counsel with respect to tax
treatment of that debt in the United States;
* each investor beneficiary -- other than any
enhancement provider -- will have associated with
it, either directly or indirectly, one or more
classes of related beneficiary debt; and
* the enhancement for that series will be provided by
any combination of subordination, a letter of
credit, a cash collateral loan, a surety bond, an
insurance policy, financial guarantee or a spread or
reserve account funded from excess finance charge
collections ultimately being paid to the originators
by the receivables trustee as additional
consideration to the extent not utilised as
enhancement, but through no other means; or
(2) that it has determined that, based on legal advice, the
acquisition is in the best interests of the originator
beneficiaries.
Each supplement to the receivables trust deed and trust cash management
agreement will specify the principal terms for its series, including the
accumulation period or amortisation period for the payment of principal. For
each series the accumulation period or amortisation period may be of different
lengths and begin on different dates. Credit enhancement, if any, is specific
to each class or sub-class and will be held and used by the receivables trustee
only for the benefit of the relevant class. For the purposes of calculation,
certain series may be subordinated to other series, and notional classes and
notional sub-classes established for calculation purposes within a series may
have different priorities. Whether or not a series or class or sub-class is
subordinated in this way will be set out in the related supplement. There will
be no limit on the number of acquisitions that may be performed.
The receivables trustee will not be able to arrange for additional
supplements without obtaining the consent of all the beneficiaries of the
receivables trust in respect of each existing series. Even if the receivables
trustee receives all these consents, no acquisition will be effective unless
the rating agencies confirm that execution of the relevant additional
supplement will not result in the reduction or withdrawal of their rating of
any debt secured directly or indirectly by the receivables in the receivables
trust, including your notes.
THE RECEIVABLES TRUST'S PROPERTY
The property of the receivables trust will be held by the receivables
trustee on trust either on an undivided basis for all beneficiaries or on trust
on a segregated basis for certain beneficiaries only as specified in a
supplement to the receivables trust deed and trust cash management agreement.
The property of the receivables trust currently includes and will, in
future, continue to include all present and future receivables arising under
all MasterCard[R] and VISA[R] credit card accounts of individual cardholders
with an originator that have been flagged as designated accounts and that are
denominated in sterling with a billing address in England, Wales, Scotland and/
or a permitted additional jurisdiction or a restricted additional jurisdiction
- -- see "The Receivables -- Representations". The receivables have been and will
continue to be assigned to, or in the case of receivables governed by Scots
law, held on trust for, the receivables trustee under the receivables
securitisation agreement and each Scottish declaration of trust between the
relevant originator and the receivables trustee. The receivables securitisation
agreement is governed by English law and each Scottish declaration of trust is
governed by Scots law. Occasionally some accounts may be removed from the pool
of designated accounts.
The originators are required to ensure that any credit card accounts that
are to be included in an offer to the receivables trustee under the receivables
securitisation agreement or that are to be removed from the pool of designated
accounts are identified on the relevant originator's computer system prior to
the date of offer or the date of removal.
The property of the receivables trust currently includes and will continue
to include:
* all present and future receivables arising under the designated
accounts;
* all monies due in payment of the receivables under the designated
accounts from time to time;
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* all proceeds of the receivables and proceeds of any guarantees and
insurance policies for the receivables to the extent that they are
capable of transfer including proceeds of disposals by the
receivables trustee of charged-off receivables to their originator;
* the benefit of any acquired interchange -- see "The Receivables --
Interchange";
* all monies on deposit in the trust accounts including any permitted
investments in which the monies are invested;
* any credit enhancement for the benefit of any class of beneficiary;
and
* all monies provided by beneficiaries of the receivables trust to
fund the purchase of receivables, until these monies are applied as
intended.
The receivables are divided into eligible receivables and ineligible
receivables. Each investor beneficiary and each originator beneficiary is
beneficially entitled to an undivided interest in the pool of eligible
receivables.
The originator beneficiaries are beneficially entitled to the entire pool of
ineligible receivables and are solely entitled to all collections on ineligible
receivables.
For the purposes of calculation in respect of amounts held by the
receivables trustee for an investor beneficiary on an undivided basis, the
total principal amount of the interest of that investor beneficiary in respect
of a series is called the "SERIES INVESTOR INTEREST" of that series and
reflects the total amount of the proportional entitlement to principal
receivables calculated as available to that series. As an investor beneficiary
may be a member of a number of series, each investor beneficiary's aggregate
entitlement under the receivables trust will be called the "AGGREGATE INVESTOR
INTEREST" of that investor beneficiary and will comprise the aggregate of each
entitlement conferred under any series supplement.
Similarly, for the purposes of calculation in respect of amounts held by the
receivables trustee for each originator beneficiary on an undivided basis, the
principal amount of the interest of each originator beneficiary in the
receivables trust is called an "ORIGINATOR INTEREST" and will, in effect, equal
that portion of the total amount of principal receivables not held on an
undivided basis for the investor beneficiaries in respect of any outstanding
series. RBS' beneficial entitlement as originator beneficiary under the
receivables trust in respect of property held on an undivided basis will be
called the "RBS ORIGINATOR INTEREST", and NatWest's beneficial entitlement as
originator beneficiary in respect of property held on an undivided basis will
be called the "NATWEST ORIGINATOR INTEREST". NatWest acceded to the receivables
trust on 27 October 2005. After the accession by NatWest, the aggregate
originator interest became the sum of the RBS originator interest and the
NatWest originator interest. The originator interest formerly held by RBS
Advanta was acquired by RBS as originator beneficiary on 1 January 2004.
GENERAL ENTITLEMENT OF BENEFICIARIES TO RECEIVABLES TRUST PROPERTY
Amounts may be held under the receivables trust in bank accounts on a
segregated basis for particular beneficiaries and may be held in respect of
particular series only. The beneficiaries of the receivables trust are each
beneficially entitled to share in the receivables trust's property either on an
undivided basis, in respect of property (including eligible receivables,
collections of eligible receivables and acquired interchange) held on an
undivided basis, or on a segregated basis, in respect of property held on a
segregated basis. Each beneficiary has, or will acquire, interests in the pool
of eligible receivables called the "ELIGIBLE RECEIVABLES POOL". Some of the
receivables trust's property that will constitute credit enhancement may be
specified as being held on separate trust on a segregated basis for particular
beneficiaries or particular series only. See "Sources of Funds to Pay the Loan
Notes" for a description of the beneficial entitlement of the loan note issuer
to receivables and for a description of the manner in which calculations will
be made and collections will be distributed to the loan note issuer.
The originators have no beneficial entitlement under the receivables trust
as to available spread but are contractually entitled to receive payments of
amounts of available spread from amounts distributed to investor beneficiaries.
This right to receive payment from the receivables trustee in respect of
amounts distributed to the investor beneficiaries is called the "EXCESS
INTEREST". The excess interest consists of a right to payment in an amount
calculated as equal to the beneficial entitlement of the investor beneficiaries
to the finance charge collections and acquired interchange for each monthly
period in respect of any series less the amount of finance charge collections
and acquired interchange actually distributed to each investor beneficiary in
respect of that series or group of
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series, if applicable, which have been used to pay the funding costs of the
investor beneficiaries, to make payments to any enhancement provider and to
satisfy any other amounts payable in accordance with the detailed calculation
provisions set out in the supplement for each series. These payments will be
calculated to include amounts deemed to represent finance charge collections as
stated in the supplement for the series.
To understand the beneficial entitlement of the originator beneficiaries you
have to understand the definition of "ORIGINATOR PERCENTAGE" for each
outstanding series.
The originator percentage is the percentage equivalent of a fraction:
x
-------
x + y
where
x = the aggregate originator interest and
y = the aggregate adjusted investor interest
The "AGGREGATE ADJUSTED INVESTOR INTEREST" is the aggregate of each investor
beneficiary's adjusted investor interest. The adjusted investor interest for a
series is such series investor interest, being the proceeds of the loan note
issuance paid to the receivables trustee on the creation of such series, as
reduced by the aggregate of:
* principal collections distributed to the loan note issuer in
respect of such series (to include those held on segregated trust
on a segregated basis for the loan note issuer in respect of such
series only);
* those principal collections used by the loan note issuer in respect
of such series as utilised principal collections as reduced by
refunded utilised principal collections referable to such series;
* the loan note issuer's share of default amounts referable to such
series as reduced by loss make-up (default) referable to such
series; and
* the total amount of investor charge-offs outstanding from any prior
period referable to such series as reduced by loss make-up (charge-
off) referable to such series.
In addition, all ineligible receivables that are within the receivables
trust are held by the receivables trustee on separate segregated trusts for the
benefit of the originators and the receivables trustee in respect of certain
rights in respect of dealings with receivables trust property. The originators
are absolutely entitled to any ineligible collections.
The aggregate beneficial entitlement of the originator beneficiaries at any
time consists of the following:
* the originator percentage of eligible principal receivables;
* the originator percentage of finance charge receivables; and
* ineligible receivables.
The originators are not beneficiaries of the receivables trust as to
investment earnings on permitted investments made using monies deposited in
those trust accounts and ledgers held on separate trust on a segregated basis
for a particular investor beneficiary only. However, each originator has a
right to payments from the receivables trustee from monies distributed to the
investor beneficiaries in an amount equal to investment earnings on permitted
investments made using monies deposited in those trust accounts, unless the
supplement for a particular series states otherwise as specified in the
relevant final terms.
The "AGGREGATE ORIGINATOR INTEREST" is the aggregate of the outstanding face
amount of all the eligible principal receivables sold by the originators as
eligible principal receivables to the receivables trustee as reduced by the
aggregate of:
* the consideration received by the originators in cash for the
eligible principal receivables. For this purpose the consideration
received by the originators does not include any additional
consideration paid by the receivables trustee as described below;
* principal collections distributed to the originators;
* the originators' proportionate share of principal receivables in a
defaulted account;
* that part of the additional consideration paid by investor
beneficiaries to the receivables trustee as is identified as
refunded utilised principal collections and loss make-up; and
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* reductions in respect of the originator's payment obligations
arising from a breach of representation or in respect of a credit
adjustment.
"PERMITTED INVESTMENTS" means -- excluding the spread account -- the
following:
* demand and/or time deposits, certificates of deposit and other
short-term unsecured debt obligations at or of any institution
outside the United Kingdom that has unsecured and unguaranteed
short-term debt obligations rated A-1+, F-1+ and P-1 by Standard &
Poor's, Fitch Ratings (if the institution is publicly rated by
Fitch Ratings) and Moody's, respectively; and
* short-term unsecured debt obligations-including commercial paper-
issued or guaranteed by any body corporate outside the United
Kingdom whose unsecured and unguaranteed short-term debt
obligations are rated A-1+, F-1+ and P-1 by Standard & Poor's,
Fitch Ratings (if the institution is publicly rated by Fitch
Ratings) and Moody's, respectively.
For details on permitted investments with respect to the spread account, see
"Sources of Funds to Pay the Loan Notes -- Spread Account".
The beneficial entitlement of the originator beneficiaries to any other
receivables trust property at any time is as stated in a supplement for a
series. Each originator beneficiary's entitlement to the originator interest is
equal to its proportionate share described in the originator certificates.
APPLICATION OF COLLECTIONS
The following accounts were opened prior to 27 March 2000 by the receivables
trustee at RBSI:
* a collection account called the "TRUSTEE COLLECTION ACCOUNT," which
is where principal collections, finance charge collections and
acquired interchange are to be credited; and
* an acquisition account called the "TRUSTEE ACQUISITION ACCOUNT,"
which is where amounts are to be credited that can be used to
purchase receivables.
These accounts may be moved in the future to another bank which meets rating
agency approval.
The trustee acquisition account, the trustee collection account and any
additional bank accounts of the receivables trust that the receivables trustee
may open for particular beneficiaries are collectively called "TRUST ACCOUNTS".
The receivables trustee has legal title to the funds on deposit in each trust
account. All trust accounts are currently held in Jersey.
Collections from cardholders for designated accounts and cardholders for
other card accounts of the originators are initially paid to the bank account
of the relevant originator before being cleared on a same-day basis to a bank
account of that originator called the "RBS SECURITISATION OPERATING ACCOUNT"
(in the case of RBS) and the "NATWEST SECURITISATION OPERATING ACCOUNT" (in the
case of NatWest) (and together each of the operating accounts of each of RBS
and NatWest will be referred to in this prospectus as the "CARD OPERATING
ACCOUNTS"). RBS declared a trust over its card operating account in favour of
the receivables trustee on 27 March 2000 and NatWest declared a trust over its
card operating account in favour of the receivables trustee on 9 December 2005.
All money in the card operating accounts representing receivables trust
property is held on trust by each of the originators respectively for the
receivables trustee and transferred to the trustee collection account within
two operating business days after processing. All money in the trustee
collection account is and will continue to be treated as collections from
receivables of designated accounts unless it has been incorrectly paid into the
account. Incorrect payments will be deducted from the appropriate collections
on the operating business day on which the error is notified to the receivables
trustee.
Amounts incorrectly categorised as principal collections of eligible
receivables but which are in fact collections of ineligible receivables are and
will continue to be given back to the relevant originator beneficiary, after
making adjustments for errors but before utilising amounts of principal
collections that are the property of the receivables trust. The receivables
trustee treats and will continue to treat all money deposited in the trustee
collection account as property of the receivables trust unless notified
otherwise by the trust cash manager.
Adjustments to the receivables trust property are and will continue to be
made to correct the errors made.
Where an account becomes a defaulted account, the entitlements of the
beneficiaries of the receivables trust to eligible principal receivables in
that defaulted account are determined in
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accordance with their respective beneficial entitlements to the property of the
receivables trust at the time the account becomes a defaulted account and are
not changed after this. Each beneficiary's interest is reduced by its
respective share of the defaulted principal receivables except that each
investor beneficiary's interest can be reinstated to the extent of loss make-
up.
Collections that are the property of the receivables trust are categorised
as:
* principal collections;
* finance charge collections; or
* ineligible collections.
If a discount percentage is nominated by an originator, the discount
percentage of principal collections is treated as finance charge collections.
Neither originator currently intends to nominate a discount percentage and
would be unlikely to do so other than in exceptional circumstances -- see "The
Receivables -- Discount Option Receivables".
If the related supplement says so, the investor beneficiary in respect of
the relevant series will also be entitled to a portion of acquired interchange.
Each series is entitled to varying percentages of principal collections,
finance charge collections and losses in respect of receivables in defaulted
accounts. The originator beneficiaries are entitled to their applicable
originator percentage of principal collections and finance charge collections
and losses in respect of receivables in defaulted accounts.
The originators have a right to receive as additional consideration from the
receivables trustee, finance charge collections and acquired interchange
distributed in respect of a series that are not required to be used by:
* that series or required to be paid to any other beneficiary,
whether or not a member of that series; or
* any enhancement provider, as set out in the supplement relating to
that series.
Each supplement will set out, for its series, the entitlement of each
investor beneficiary to principal collections, finance charge collections and
acquired interchange, if any.
Each originator may fulfil any of its respective obligations to make
payments to the receivables trustee for principal receivables for which it has
breached a warranty by:
* reducing its respective originator interest-but not below zero; and
* increasing its respective originator ineligible interest.
However, if its respective originator interest would be reduced below zero,
the relevant originator must make an equivalent payment in immediately
available funds to the receivables trustee under the receivables trust deed and
trust cash management agreement and the receivables securitisation agreement.
The loan note issuer will pay to the receivables trustee an amount equal to
the trust cash management fee and the receivables trustee shall use this amount
to pay the trust cash management fee to the trust cash manager. The loan note
issuer shall make this payment from amounts of finance charge collections.
The receivables trustee will transfer money daily -- or identify and credit
to separate ledgers in the trustee collection account -- from the trustee
collection account in the following priority:
(1) the amount of any incorrect payments notified to the receivables
trustee not previously distributed as collections to the card
operating accounts, after which the originator beneficiaries will
own the money absolutely;
(2) the amount of ineligible collections notified to the receivables
trustee and not previously distributed as principal collections to
a bank account opened in the name of the originators to deposit the
cash payment in respect of the purchase price of the receivables,
called the "CARD PROCEEDS ACCOUNT", after which the originator
beneficiaries will own the money absolutely;
(3) the total amount of principal collections to be distributed to the
investor beneficiaries in respect of any outstanding series from
the ledger of the trustee collection account for principal
collections, called the "PRINCIPAL COLLECTIONS LEDGER", to the
segregated ledger or account specified in the supplement for that
series (which may or may not be a trust
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account). To the extent that this amount is held in a trust
account, it will be held on a segregated basis on a separate trust
for the relevant series for each investor beneficiary only;
(4) the cash available for acquisition needed on that day from the
principal collections ledger of the trustee collection account to
the trustee acquisition account;
(5) the excess, if any, of cash available for acquisition on that day
over the amount transferred in accordance with (4) to the card
proceeds account, or as the originators may direct, after which the
originator beneficiaries will own the money absolutely, provided
this transfer does not result in the originator interest reducing
to zero;
(6) for each respective originator beneficiary, the originator
percentage of finance charge collections and of the amount of
acquired interchange deposited in the trustee collection account
from the ledger of the trustee collection account for finance
charge collections, called the "FINANCE CHARGE COLLECTIONS LEDGER,"
to the card proceeds account, or as the originator beneficiaries
may direct, after which the money will be owned by the originator
beneficiaries; and
(7) the total amount of finance charge collections and all acquired
interchange to be distributed to the investor beneficiaries in
respect of any outstanding series from the finance charge
collections ledger to any account or ledger that may be specified
in the supplement for that series (which may or may not be a trust
account). To the extent that this amount is held in a trust
account, it will be held on a segregated basis on a separate trust
for the relevant series for each investor beneficiary only.
ACQUIRING ADDITIONAL ENTITLEMENTS TO RECEIVABLES TRUST PROPERTY AND PAYMENTS
FOR RECEIVABLES
To understand what a revolving period is, see "Sources of Funds to Pay the
Loan Notes -- Distribution of Principal Collections to the Loan Note Issuer".
During the revolving period for a series, the receivables trustee will use
the principal collections which are available to fund the acquisition of
eligible receivables to pay in turn for the purchase of further eligible
receivables. These available principal collections are called "CASH AVAILABLE
FOR ACQUISITION". No cash available for acquisition will be used to make
payments in respect of ineligible receivables.
If on any day during the revolving period the cash available for acquisition
exceeds the amount needed to purchase eligible receivables on that day, then
the excess will be distributed to each originator beneficiary according to its
respective beneficial entitlement or, if allowed under its supplement, investor
beneficiaries in respect of other series (which may include the investor
beneficiary of the series in question). Any such distribution will reduce the
beneficial entitlement of the relevant beneficiaries. Any money left over will
be used to fund acquisitions on subsequent operating business days.
If on any day the cash available for acquisition is less than the amount
needed to make payments in respect of eligible receivables on that day, the
originator beneficiaries will fund the amount payable by the receivables
trustee for all the existing and future receivables that cannot be funded by
cash available for acquisition, plus the amount of any ineligible receivables
that need to be funded. Consequently, the amount payable by the receivables
trustee to the originators for all existing and future receivables it is
purchasing on any operating business day will be funded first by cash available
for acquisition and then by the originator beneficiaries to the extent of
shortfall in cash available for acquisition.
Other adjustments to the originator interest are explained in "The
Receivables Trust -- Application of Collections".
NON-PETITION UNDERTAKING
Each beneficiary of the receivables trust -- including RBS and NatWest as
originator beneficiaries and the loan note issuer as investor beneficiary --
and the originators, the servicer and any successor servicer and the trust cash
manager and any successor trust cash manager, by entering into a supplement,
will agree with the receivables trustee for itself and as trustee that it will
not attempt to take any action or legal proceedings for the winding-up,
dissolution or re-organisation of, or for the appointment of a receiver,
administrator, administrative receiver, trustee, liquidator, sequestrator or
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similar officer of or for, any investor beneficiary, the receivables trustee or
the receivables trust. These parties will also agree not to seek to enforce any
judgments against any of those persons.
TRUST PAY-OUT EVENTS
The following is a list of what we refer to in this base prospectus as the
"TRUST PAY-OUT EVENTS":
(1) any originator beneficiary consents or takes any corporate action
to appoint a receiver, administrator, administrative receiver,
liquidator, trustee or similar officer of it or over all or
substantially all of its revenues and assets;
(2) proceedings are started against any originator beneficiary under
any applicable liquidation, insolvency, composition or re-
organisation or similar laws for its winding-up, dissolution,
administration or reorganisation and such steps or proceedings are
not discharged within 60 days, or a receiver, administrator,
administrative receiver, liquidator, trustee or similar officer of
it or relating to all or substantially all of its revenues and
assets is legally and validly appointed and is not discharged
within 14 days;
(3) a duly authorised officer of any originator beneficiary admits in
writing that such originator beneficiary is unable to pay its debts
when they fall due within the meaning of section 123(1) of the UK
Insolvency Act 1986 or any originator beneficiary makes a general
assignment for the benefit of or a composition with its creditors
or voluntarily suspends payment of its obligations to readjust or
reschedule its debt;
(4) any originator cannot transfer receivables in the designated
accounts to the receivables trust in the manner described in the
receivables securitisation agreement;
(5) any originator stops being either a resident in the United Kingdom
for tax purposes or subject to UK corporation tax; or
(6) either:
* a change in law or its interpretation or administration results
in the receivables trustee becoming liable to make any payment
on account of tax; or
* any tax authority asserts a tax liability or takes other
actions against RBS or any of its affiliates in relation to the
securitisation programme which would have an adverse effect on
them which is more than trivial, and RBS obtains an opinion of
counsel stating that the tax liability would be due. This event
will be treated as occurring when either of RBS or NatWest, as
an originator beneficiary, gives written notice of it to the
receivables trustee.
The trust pay-out events in paragraphs (1), (2) and (3) are called
"INSOLVENCY EVENTS". If an insolvency event occurs, a pay out event will occur
for each series investor interest, each beneficiary in respect of a series loan
note and for the originator beneficiaries. If any other trust pay out event
occurs, a pay out event will occur for each series and each beneficiary in
respect of each series. Trust pay out events will occur without any notice
(other than in the case of paragraph (6) above) or other action on the part of
the receivables trustee or any beneficiary, as soon as the event happens.
A "PAY-OUT EVENT" for a series investor interest means a trust pay out event
or one of the events listed as a "SERIES PAY-OUT EVENT" in the supplement for
that series.
After an insolvency event, future receivables, other than finance charge
receivables accruing in respect of principal receivables that have already been
assigned to or held on trust for the receivables trustee, will no longer be
assigned to or held on trust for the receivables trustee. The receivables
trustee will not be entitled to accept any more offers of receivables after an
insolvency event. Finance charge receivables accruing on principal receivables
that have been assigned to or held on trust for the receivables trustee before
the insolvency event will still be part of the receivables trust's property and
finance charge collections from them will continue to be allocated and applied
as set out in the receivables trust deed and trust cash management agreement
and each supplement.
The receivables trustee will notify each beneficiary if an insolvency event
occurs and will dispose of the receivables on commercially reasonable terms,
unless within 60 days of that notice, investor beneficiaries representing more
than 50 per cent. of the aggregate investor interest in respect of every
series, the originator beneficiaries -- in each case, if not subject to an
insolvency event -- and every other person identified for this purpose in any
supplement disapproves of the liquidation of the receivables and wishes the
receivables trustee to continue accepting offers and purchasing receivables
under the receivables securitisation agreement. Money from this sale will be
treated as collections on
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the receivables and will be distributed in accordance with the provisions of
the receivables trust deed and trust cash management agreement and each
supplement.
TERMINATION OF THE RECEIVABLES TRUST
If the receivables trust has not already been dissolved -- for example,
because an insolvency event has occurred -- then all of the originator
beneficiaries acting together can, with the consent of all the other
beneficiaries of the receivables trust, instruct the receivables trustee to
dissolve the receivables trust when:
* the total amount of the aggregate investor interest is reduced to
zero;
* there are no finance charge collections or other receivables trust
property to which any beneficiary other than the originator
beneficiaries is entitled; and
* no beneficiary is committed to fund payments to the originators for
purchases of receivables by the receivables trust.
After the receivables trust is dissolved, all of the receivables trust's
property will be paid to the beneficiaries according to their entitlements and
the receivables securitisation agreement will be terminated.
For the purposes of section 1 of the UK Perpetuities and Accumulations Act
1964, the duration of the perpetuity period for the receivables trust's
property will be a period ending not later than 80 years from the date of
execution of the receivables trust deed and trust cash management agreement.
Any property of the receivables trust after this period will vest in the then
current beneficiaries in accordance with their entitlements to the receivables
trust's property at that date.
AMENDMENTS TO THE RECEIVABLES TRUST DEED AND TRUST CASH MANAGEMENT AGREEMENT
The receivables trust deed and trust cash management agreement may be
amended with the prior consent of each beneficiary affected. No amendment will
be effective unless each rating agency has confirmed that the amendment will
not result in a reduction or withdrawal of its then current rating of any
outstanding related beneficiary debt.
No investor beneficiary will consent to any proposed amendment unless
instructed to do so by loan noteholders holding in total not less than two-
thirds of the principal amount of the loan note then outstanding of each
outstanding series adversely affected. No investor beneficiary may consent to
any proposed amendment that would:
* reduce or delay required distributions to any investor beneficiary
in respect of the affected series;
* change the definition or the manner of calculating the aggregate
investor interest, the investor percentage or the investor default
amount of the affected series or any calculation in respect of any
notional class or notional sub-class of the affected series; or
* reduce the percentage required to consent to any amendment, unless
instructed to do so by all the noteholders of the loan notes then
outstanding of the affected series.
DISPOSALS
Beneficiaries may not transfer or dispose of their beneficial entitlements
in the receivables trust or create any encumbrance over their beneficial
entitlement except that:
* an originator beneficiary may transfer all or a portion only of its
originator interest by transferring all or substantially all of its
properties and assets to any person, if that person enters into an
agreement with the other beneficiaries of the receivables trust,
the effect of which is that such person expressly assumes the
duties and obligations of that originator and originator
beneficiary under the relevant documents; after the transfer, the
new person will be the person used to determine if an insolvency
event has occurred;
* an originator beneficiary may transfer a portion of its originator
interest to the other originatorr beneficiaries provided that such
transfer will not cause a pay out event;
* an originator beneficiary may transfer or create any encumbrance
over the whole or any part of its originator interest with the
consent of investor beneficiaries representing in total more than
one-half of the total investor interest of each series; however,
the rating
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agencies must first confirm that the transfer or encumbrance will
not result in a downgrade or withdrawal of its then current rating
of any outstanding debt that is secured, directly or indirectly, by
the receivables in the receivables trust; and
* any beneficiary -- except the originator beneficiaries -- may
transfer all or any part of its beneficial entitlement or grant an
encumbrance over its beneficial entitlement with the prior written
consent of the originator beneficiaries, which consent will not be
unreasonably withheld.
The receivables trustee is authorised to reassign to, or remove from the
Scottish trust declared by, RBS or NatWest the beneficial interest in
receivables for a purchase price equal to the amount received or recovered, if
any, by RBS or NatWest from those receivables in defaulted accounts less the
fees, costs and expenses incurred by RBS or NatWest in the recovery of that
amount.
TRUSTEE PAYMENT AMOUNT
The receivables trustee will be paid by the investor beneficiaries its
properly incurred fees, costs and expenses -- including any value added tax on
such amounts, and any expense properly incurred from being indemnified under
the receivables trust deed and trust cash management agreement -- out of the
property of the receivables trust distributed to the investor beneficiaries.
The receivables trustee will be paid monthly in arrear on each distribution
date the amounts certified by the trust cash manager to the receivables trustee
by the end of any monthly period as being due to it for that monthly period.
This payment is called the "TRUSTEE PAYMENT AMOUNT". The allocation of the
trustee payment amount to each series and to the loan note issuer is described
in "Sources of Funds to Pay the Loan Notes --- Trustee Payment Amount".
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SERVICING OF RECEIVABLES AND TRUST CASH MANAGEMENT
GENERAL -- SERVICING
RBS, acting through Cards Business, has been the servicer since 27 March
2000 when it was appointed by the initial beneficiaries of the receivables
trust as initial servicer under the terms of a servicing agreement (the
"BENEFICIARIES SERVICING AGREEMENT"). Pursuant to the beneficiaries servicing
agreement and the NatWest deed of accession, NatWest as an additional
beneficiary also appointed RBS as the servicer. The servicer carries out all
servicing in relation to the receivables and (insofar as the interests of the
beneficiaries are affected) the designated accounts in accordance with its
credit card guidelines and its customary and usual procedures and in accordance
with normal market practice (so far as consistent with its credit card
guidelines). The servicer may also be directed by all the beneficiaries
together (including the originator beneficiaries) to take actions in accordance
with their instructions.
Among other things, the servicer's functions include crediting and debiting
cardholders' accounts as appropriate.
The servicer is at all times required to take all practicable steps to:
* ensure that payments made to the originators by or on behalf of
cardholders are received into the card operating accounts;
* identify any funds in the card operating accounts which are
required to be transferred to the trustee collection account for
the benefit of the beneficiaries; and
* ensure that such funds are so transferred when required.
The servicer also deposits collections on the receivables into the trustee
collection account maintained for the receivables trust, calculates amounts
from those collections to be allocated to each series investor interest and
prepares monthly reports.
The servicer will not resign from its obligations and duties as servicer
under the beneficiaries servicing agreement unless its performance of its
obligations and duties is no longer permitted under applicable law and there is
no reasonable action that it can take to remedy the situation. The servicer's
resignation will not be effective until a successor servicer has been properly
appointed. The servicer is entitled to delegate or sub-contract its duties and
obligations, in accordance with its usual practices, to a third party as long
as it remains the principal obligor under the beneficiaries servicing agreement
and, if the third party is not part of the RBS group, the servicer has notified
the rating agencies. Cards Business, as initial servicer, performs its
functions in-house, but has sub-contracted some services relating to the credit
cards. For example, data scanning services are currently provided by Graphic
Data Limited and Experian Limited and certain processing functions are
subcontracted to TSYS -- see "The Credit Card Portfolio".
The servicer will indemnify each beneficiary against all reasonable loss,
liability, expense, damage or injury caused by the servicer's fraud, wilful
misconduct or gross negligence in performing its servicing functions. However,
the servicer will not indemnify any beneficiary:
* for any loss arising from the negligence, fraud or wilful
misconduct of that beneficiary or its agents;
* for any liabilities, costs or other expenses of the receivables
trust for any action taken by the receivables trustee at the
request of any beneficiary of any series to which that beneficiary
belongs;
* for any loss or other claims that are incurred by such beneficiary
acting in its capacity as beneficiary, including those resulting
from defaulted accounts; or
* for any liabilities or other costs arising under any tax law or any
penalties or interest caused by a failure to comply with any tax
law, payable by it in connection with the beneficiaries servicing
agreement to any tax authority.
The directors, officers and other employees and agents of the servicer and
the servicer itself will not be under any liability to the receivables trustee,
the receivables trust, the originator beneficiaries, the investor
beneficiaries, any enhancement provider or any other person under the
beneficiaries servicing agreement or any related provider except in the case of
fraud, wilful misconduct or gross negligence in performing its duties under the
beneficiaries servicing agreement.
Any person into which the servicer may be merged or consolidated, or any
person succeeding to or acquiring the business of the servicer in whole or in
part, after executing a supplemental
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agreement to the beneficiaries servicing agreement and the delivery of a legal
opinion, will become the successor to the servicer or co-servicer with the
servicer under the beneficiaries servicing agreement.
The servicer will certify on an annual basis that, to the best of its
knowledge, it has fully performed all its obligations under the beneficiaries
servicing agreement with respect to the preceding year and no default in the
performance of such obligations has occurred or is continuing except as
otherwise disclosed.
SERVICER COMPENSATION
The servicer is entitled to receive a fee from the beneficiaries of the
receivables trust for each month. This fee is called the servicing fee and is
payable monthly on each distribution date, to the extent that those monies are
available. Any amounts payable by the investor beneficiaries in respect of the
servicing fee will be inclusive of VAT, if any. The "SERVICING FEE" will be
equal to one-twelfth of the product of:
* the weighted average of the percentages specified in each
supplement as being the series servicing fee percentage for each
outstanding series -- weighted by the investor interest for each
series; and
* the average daily total outstanding face amount of principal
receivables during that monthly period.
The portion of the servicing fee payable by the investor beneficiary to the
servicer in respect of each series on any distribution date is called the
"INVESTOR SERVICING FEE" and will be equal to:
* one-twelfth of the product of:
(1) 0.75 per cent.; or
(2) another percentage agreed with the investor beneficiaries
(and disclosed in the relevant final terms) as long as RBS,
acting through Cards Business, is the servicer, provided
that each of the rating agencies confirms in writing that
the new percentage will not cause them to reduce or
withdraw their then current rating on any debt that is
secured directly or indirectly on the receivables in the
receivables trust, including your notes; and
* the adjusted investor interest as at the last day of the monthly
period before that distribution date.
The balance of the servicing fee not payable by the investor beneficiaries
in respect of any series will be payable by the originators and is called the
"ORIGINATOR SERVICING FEE". If the servicer is also an originator beneficiary
in any monthly period, the originator servicing fee for that monthly period
will not be paid.
SERVICER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
The servicer made customary representations, warranties and covenants on the
establishment of the receivables trust. The representations and warranties
included:
* the servicer is a corporation duly incorporated under the laws of
Scotland with full corporate power, authority and legal right to
own its assets and conduct its business, and with power to enter
into the relevant documents to which it is a party as servicer and
all corporate and other action required to authorise its execution
of each such relevant document and its performance of its
obligations thereunder in such capacity has been duly taken;
* all acts, conditions and things required to be done, fulfilled and
performed in order (i) to enable it lawfully to enter into,
exercise its rights under and perform and comply with the
obligations expressed to be assumed by it in its capacity as
servicer, (ii) to ensure that such obligations are legal, valid
and binding on it, and (iii) to make each relevant document
admissible in evidence in England have been done save for the
payment of stamp duty in the United Kingdom;
* the obligations assumed by it in each [relevant document] to which
it is a party are legal and valid obligations binding on it and
enforceable against it in accordance with its terms, subject to
applicable bankruptcy laws, general equitable principles and other
limitations on enforcement in the jurisdiction of an obligor;
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* the execution and delivery of each relevant document to which it
is a party and the exercise of its rights and the performance of
its obligations thereunder in such capacity will not conflict with
or violate any requirement of law;
* there are no proceedings or investigations pending or, to the best
of its knowledge, threatened against the servicer before any
court, regulatory body, arbitral tribunal or public or
administrative body or agency asserting the invalidity of any
relevant document to which it is a party, seeking to prevent the
entering into of any of the transactions contemplated by any
relevant document, seeking any determination or ruling that, in
the reasonable opinion of the servicer, would materially and
adversely affect the performance by it of its obligations under
any relevant document to which it is a pary or seeking any
determination or ruling what would materially and adversely affect
the validity or enforceability of any relevant document to which
it is a party; and
* the execution and delivery of each relevant document to which it
is a party and the exercise by the servicer of its rights and the
performance of its obligations thereunder will not conflict with,
result in any breach of the material terms and provisions of, or
constitute (with or without notice or lapse of time or both) a
material default under, any agreement, indenture, contract,
mortgage, trust deed or other instrument to which it is a party or
by which it or any of its assets is otherwise bound.
The covenants require the servicer:
* to satisfy all obligations on its part to be fulfilled under or in
connection with each receivable and each designated account, and
maintain in effect all qualifications required under requirements
of law in order to service properly each receivable and each
designated account and to comply in all material respects with all
other requirements of law in connection with servicing each
receivable and each designated account the failure to comply with
which would have a material adverse effect on the interests of any
investor beneficiary or enhancement provider;
* on or before 31 December of each calendar year, to cause a firm of
internationally recognised independent auditors (which may also
render other services to the servicer) to furnish a report to the
investor beneficiaries, any enhancement provider and each rating
agency to the effect that:
(a) such firm has made a study and evaluation, in accordance
with generally accepted auditing standards in the United
Kingdom, of the servicer's internal accounting controls
relating to the servicing of designated accounts under the
beneficiaries servicing agreement; and
(b) on the basis of such study and evaluation, such firm is of
the opinion (assuming the accuracy of any reports generated
by the servicer) that the system of internal accounting
controls in effect on the date specified in such report,
relating to servicing procedures performed by the servicer,
taken as a whole, was sufficient for the prevention and
detection of errors and irregularities in amounts that
would be material to the financial statements relating to
the receivables prepared by the servicer; and
(c) such servicing was conducted in compliance with the
provisions of the beneficiaries servicing agreement during
the period covered by such report, except for such
exceptions, errors or irregularities as such firm shall
believe to be immaterial to the financial statements of the
servicer and such other exceptions, errors or
irregularities as shall be set forth in such report.
* on or before 31 December of each calendar year, to cause a firm of
internationally recognised independent auditors to furnish a
report, prepared using generally accepted auditing standards in
the United Kingdom to the investor beneficiaries and each rating
agency to the effect that:
(a) they have compared the mathematical calculations of each
amount set forth in the monthly trust cash manager's
reports during the period covered by such report with the
servicer's computer reports which were the source of such
amounts; and
77
(b) on the basis of such comparison, such firm is of the
opinion that such amounts are in agreement, except for such
exceptions as it believes to be immaterial to the financial
statements of the servicer and such other exceptions as
shall be set forth in such report;
* to inform the beneficiaries of the existence of any non-conforming
receivables and corresponding non-conforming accounts on the
redesignation date;
* to maintain insurance coverage against losses through wrongdoing
of its officers and employees who are involved in the servicing of
credit card receivables covering such actions and in such amounts
as it believes to be reasonable from time to time;
* to at all times take all practicable steps to:
(a) ensure that payments made to a transferor or, if
applicable, an additional transferor, by obligors are
received into the operating account of such transferor or
additional transferor;
(b) identify any funds in each operating account which are
required to be transferred to the trustee collection
account for the benefit of the beneficiaries; and
(c) ensure that such funds are so transferred when required;
* not to consolidate with or merge into any other corporation or
convey or transfer its properties and assets substantially as an
entirety to any Person unless:
(a) the corporation formed by such consolidation or into which
the servicer is merged shall expressly assume the
performance of the obligations of the servicer; or
(b) the servicer shall have delivered notice to the
beneficiaries from each rating agency then rating any notes
that such consolidation, merger, conveyance or transfer
will not result in the reduction or withdrawal of the
then-current rating of such notes.
EVIDENCE AS TO COMPLIANCE
The fiscal year for the issuing entity will end on 31 December of each year.
The servicer will file with the SEC an annual report on Form 10-K on behalf of
the issuing entity, 90 days after the end of its fiscal year.
If required, by the supplemental beneficiaries servicing agreement, the
servicer will deliver to the transferor, the rating agencies or the
beneficiaries, as applicable, and file with the SEC as part of an annual report
on Form 10-K filed on behalf of the issuing entity the following documents:
* a report regarding its assessment of compliance during the
preceding fiscal year with all applicable servicing criteria set
forth in relevant SEC regulations with respect to asset-backed
securities transactions taken as a whole involving the servicer
that are backed by the same types of assets as those backing the
notes;
* with respect to each assessment report described immediately
above, a report by a registered public accounting firm that
attests to, and reports on, the assessment made by the asserting
party, as set forth in relevant SEC regulations; and
* a servicer compliance certificate, signed by an authorised officer
of the servicer, to the effect that:
(i) a review of the servicer's activities during the reporting
period and of its performance under the beneficiary
servicing agreement has been made under such officer's
supervision; and
(ii) to the best of such officer's knowledge, based on such
review, the servicer has fulfilled all of its obligations
under the beneficiaries servicing agreement in all material
respects throughout the reporting period or, if there has
been a failure known to such officer, the nature and status
thereof.
The servicer's obligation to deliver any servicing assessment report or
attestation report and, if required, to file the same with the SEC, is limited
to those reports prepared by the servicer and, in the case of reports prepared
by any other party, those reports actually received by the servicer.
Copies of all statements, certificates and reports may be obtained by any
beneficiary and any person nominated by a beneficiary by a request in writing
delivered to the servicer. Except as described above or as described in this
base prospectus or the related prospectus supplement, there
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will not be any independent verification that any duty or obligation to be
performed by any transaction party -- including the servicer -- has been
performed by that party.
TERMINATION OF APPOINTMENT OF SERVICER
The appointment of RBS, acting through Cards Business, as servicer under the
beneficiaries servicing agreement and the appointment of any person to replace
anyone then acting as the servicer --- called a "SUCCESSOR SERVICER" --- will
terminate after a servicer default occurs.
"SERVICER DEFAULT" means any one of the following events:
(1) failure on the part of the servicer duly to observe or perform in
any respect any other covenant or agreement of the servicer
contained in the beneficiaries servicing agreement, or any other
relevant document, that has a material adverse effect on the
interests of the investor beneficiaries of any outstanding series;
this failure will constitute a servicer default only if it remains
unremedied and continues to have an adverse effect on the interests
of the investor beneficiaries for 60 days after the receipt of a
notice of the failure is given; the notice of the failure will be
given by either: (1) the receivables trustee to the servicer, or
(2) the investor beneficiaries to the receivables trustee and the
servicer; if the notice is given by the investor beneficiaries it
will be on the instruction of a group of holders of the loan notes
representing more than fifty per cent. of the total face value of
the loan note outstanding of any outstanding series adversely
affected;
(2) delegation by the servicer of its duties under the beneficiaries
servicing agreement to any other entity, except as permitted by the
beneficiaries servicing agreement;
(3) any relevant representation, warranty or certification made by the
servicer in the beneficiaries servicing agreement or in any
certificate delivered under the beneficiaries servicing agreement
was incorrect when made, which has a material adverse effect on the
interests of the investor beneficiaries of any outstanding series;
this failure will only be a servicer default if it remains
unremedied and continues to have an adverse effect on the interests
of the investor beneficiaries for 60 days after the receipt of a
notice of the failure is given; the notice of the failure will be
given by either: (1) the receivables trustee to the servicer, or
(2) the investor beneficiaries to the receivables trustee and the
servicer; if the notice is given by the investor beneficiaries it
will be on the instruction of a group of holders of the loan note
representing more than fifty per cent. of the total face value of
the loan notes outstanding of any outstanding series adversely
affected;
(4) the servicer agrees to or takes any corporate action to appoint a
receiver, administrator, administrative receiver, trustee or
similar officer of it or of all of its revenues and assets;
(5) an order of the court is made for its winding-up, dissolution,
administration or re-organisation that has remained in force
undischarged or unstayed for 60 days;
(6) a receiver, administrator, administrative receiver, trustee or
similar officer of it or all of its revenues and assets, is
appointed;
(7) a duly authorised officer of the servicer admits in writing that
the servicer is unable to pay its debts as they fall due within the
meaning of section 123(1) of the Insolvency Act 1986; or
(8) the servicer makes a general assignment for the benefit of or a
composition with its creditors or it voluntarily suspends payment
of its obligations with a view to the general readjustment or
rescheduling of its indebtedness.
Each grace period referred to in (1), (3) and (5) represents the extra
number of days before a servicer default can be called, allowing the servicer
time to remedy an event which would otherwise be a servicer default. In
addition, if an event has been caused by so-called acts of God or
uncontrollable circumstances, then it will not be a servicer default. These
circumstances are called force majeure events and are listed in the
beneficiaries servicing agreement.
Within two operating business days after the servicer becomes aware of any
servicer default, the servicer must notify the beneficiaries, each rating
agency, the security trustee and any enhancement provider as soon as possible
in writing. The beneficiaries must give each rating agency and the security
trustee notice of any removal of the servicer and appointment of a successor
servicer.
After the servicer receives a termination notice from the beneficiaries and
a successor servicer is appointed, the duties of acting as servicer of the
receivables under the beneficiaries servicing
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agreement will pass from the then servicer to the successor servicer. The
beneficiaries servicing agreement contains the requirements for the transfer of
the servicing role, including the transfer of authority over collections, the
transfer of electronic records and the disclosure of information.
After it receives a termination notice, the servicer will continue to act as
servicer until the date agreed by it and the beneficiaries. The beneficiaries
must try to appoint a successor servicer that is an "ELIGIBLE SERVICER".
If the beneficiaries cannot appoint a successor servicer and the servicer
delivers a certificate that says it cannot in good faith cure the servicer
default, then the receivables trustee will start the process of selling the
receivables. The beneficiaries will notify any enhancement providers of the
proposed sale of the receivables by the receivables trustee to a third party
and will provide each enhancement provider an opportunity to bid on purchasing
the receivables.
The proceeds of the sale will be deposited in the trust accounts for
distribution to the beneficiaries as set out in the beneficiaries servicing
agreement and the series supplements.
An eligible servicer means an entity that, when it is servicer:
* is servicing a portfolio of consumer revolving credit card accounts
or other consumer credit accounts;
* is legally qualified and has the capacity to service the designated
accounts;
* is qualified or licensed to use the software that the servicer is
then currently using to service the designated accounts or obtains
the right to use, or has its own, software that is adequate to
perform its duties under the beneficiaries servicing agreement; and
* has, in the opinion of each rating agency, demonstrated the ability
to service, professionally and competently, a portfolio of accounts
similar to the designated accounts in accordance with customary
standards of skill and care.
Neither the note trustee nor the security trustee shall be in any way
responsible for the appointment or termination of the servicer.
GENERAL -- TRUST CASH MANAGEMENT
RBS, acting through Cards Business, was appointed on 27 March 2000 by the
receivables trustee as initial trust cash manager under the terms of the
receivables trust deed and trust cash management agreement. It is intended that
RBS, acting through both Cards Business and GBM, will continue to act as trust
cash manager of the receivables trustee in connection with the programme.
The trust cash manager gives such advice as may be necessary to enable the
receivables trustee to effect all transfers in relation to the distributions
referred to in the receivables trust deed and trust cash management agreement
and the supplement for each series. The trust cash manager also undertakes any
other trust cash management or related functions necessary to enable the
receivables trustee to exercise its rights and perform its duties and
obligations under the receivables trust deed and trust cash management
agreement. In carrying out its duties and obligations under the receivables
trust deed and trust cash management agreement, the trust cash manager will
follow any instructions, relating to the exercise of its power and authority,
as the receivables trustee may give. However, the trust cash manager is not an
agent of the receivables trustee.
The trust cash manager's functions include advising the receivables trustee
to transfer moneys between the trust accounts, to make credits and debits to
the various ledgers (held on an undivided or on a segregated basis) and make
withdrawals and payments from the trust accounts as required by the receivables
trust deed and trust cash management agreement.
At the trust cash manager's written request, the receivables trustee will
execute any documents prepared by the originators and acceptable to the
receivables trustee which are reasonably necessary to enable the trust cash
manager to carry out its trust cash management duties.
The trust cash manager will not resign from its obligations and duties as
trust cash manager under the receivables trust deed and trust cash management
agreement unless it cannot legally perform its duties and there is no
reasonable action that it can take to remedy the situation. The trust cash
manager's resignation will not be effective until a successor trust cash
manager has been properly appointed.
The trust cash manager will indemnify the receivables trustee and the
receivables trust against all reasonable loss, liability, expense, damage or
injury caused by its fraud, wilful misconduct or
80
gross negligence in performing its cash management functions. However, the
trust cash manager will not indemnify the receivables trustee:
* if any acts or omissions are caused by the negligence, fraud or
wilful misconduct of the receivables trustee or its agents;
* for any liabilities, costs or other expenses of the receivables
trust for any action taken by the receivables trustee at the
request of any investor beneficiary of any series to which that
investor beneficiary belongs; or
* for any liabilities or other costs of it or the receivables trust
arising under any tax law or any penalties or interest caused by a
failure to comply with any tax law, payable by it or the
receivables trust in connection with the receivables trust deed and
trust cash management agreement to any tax authority.
The directors, officers and other employees and agents of the trust cash
manager and the trust cash manager itself will not be under any liability to
the receivables trustee or the receivables trust or any other person under the
receivables trust deed and trust cash management agreement except in the case
of fraud, wilful misconduct or gross negligence in performing their or its
respective duties under the receivables trust deed and trust cash management
agreement.
Any person into which the trust cash manager may be merged or consolidated,
or any person succeeding to or acquiring the business of the trust cash manager
in whole or in part, after executing a supplemental agreement to the
receivables trust deed and trust cash management agreement and the delivery of
a legal opinion, will become the successor to the trust cash manager or co-
trust cash manager under the receivables trust deed and trust cash management
agreement.
TRUST CASH MANAGER COMPENSATION
The trust cash manager is entitled to receive a fee from the receivables
trustee for each monthly period. This fee is called the "TRUST CASH MANAGEMENT
FEE" and is payable monthly on each distribution date, to the extent that the
receivables trustee has sufficient funds. Any amounts payable for the trust
cash management fee will be inclusive of VAT, if any. The trust cash management
fee will be equal to one-twelfth of the product of the sum of the annual fees
specified in each supplement as being the investor trust cash management fees
for each series.
The investor beneficiary of each series agrees to indemnify the receivables
trustee for a portion of the trust cash management fee, as set out in each
supplement. The portion of the trust cash management fee for which the investor
beneficiary on behalf of a series agrees to indemnify the receivables trustee
on any distribution date is called the "INVESTOR TRUST CASH MANAGEMENT FEE".
The trust cash management fee can be any amount that the receivables trustee
may agree to as long as RBS, acting through both Cards Business and GBM, is the
trust cash manager provided that the rating agencies confirm in writing that
the new amount will not cause them to reduce or withdraw their then current
rating on any related beneficiary debt.
The balance of the trust cash management fee not referable to any series of
notes will be the portion for which the originators agree to indemnify the
receivables trustee and is called the "ORIGINATOR TRUST CASH MANAGEMENT FEE".
If the trust cash manager is also an originator beneficiary in any monthly
period, the originator trust cash management fee for that monthly period will
not be paid.
TERMINATION OF APPOINTMENT OF TRUST CASH MANAGER
The appointment of RBS as trust cash manager under the receivables trust
deed and trust cash management agreement and the appointment of any person as
joint trust cash manager or to replace anyone then acting as the trust cash
manager -- called a "SUCCESSOR TRUST CASH MANAGER"-- will terminate when a
trust cash manager default occurs.
"TRUST CASH MANAGER DEFAULT" means any one of the following events:
(1) any failure by the trust cash manager to give advice or notice to
the receivables trustee pursuant to an agreed schedule of
collections and distributions or to advise the receivables trustee
to make any required drawing, withdrawal or payment pursuant to the
receivables trust deed and trust cash management agreement or any
other relevant document; these events will be considered failures
if they do not happen within five operating business days after the
date that they were supposed to happen under the terms of the
receivables trust deed and trust cash management agreement or any
other relevant document;
81
(2) failure on the part of the trust cash manager duly to observe or
perform in any respect any other covenant or agreement of the trust
cash manager contained in the receivables trust deed and trust cash
management agreement or any other relevant documents, that has a
material adverse effect on the interests of the investor
beneficiaries of any outstanding series; this failure will
constitute a trust cash manager default only if it remains
unremedied and continues to have a material adverse effect on the
interests of the investor beneficiaries for 60 days after the
receipt of a notice of the failure is given; the notice of the
failure will be given by either (1) the receivables trustee to the
trust cash manager, or (2) the investor beneficiaries to the
receivables trustee and the trust cash manager; if the notice is
given by the investor beneficiaries it will be on the instruction
of a group of holders of the loan note representing more than fifty
per cent. of the face value of the loan note outstanding of any
outstanding series adversely affected;
(3) delegation by the trust cash manager of its duties under the
receivables trust deed and trust cash management agreement to any
other entity, except as permitted by the receivables trust deed and
trust cash management agreement;
(4) any relevant representation, warranty or certification made by the
trust cash manager in the receivables trust deed and trust cash
management agreement or in any certificate delivered under the
receivables trust deed and trust cash management agreement was
incorrect when made, which has a material adverse effect on the
interests of the investor beneficiaries of any outstanding series;
this failure will only be a trust cash manager default if it
remains unremedied and continues to have a material adverse effect
on the interests of the investor beneficiaries for 60 days after
the receipt of a notice of the failure is given; the notice of the
failure will be given by either (1) the receivables trustee to the
trust cash manager, or (2) the investor beneficiaries to the
receivables trustee and the trust cash manager; if the notice is
given by the investor beneficiaries it will be on the instruction
of a group of holders of the loan note representing more than fifty
per cent. of the total face value of the loan note outstanding of
any outstanding series adversely affected;
(5) any of the following:
* the trust cash manager agrees to or takes any corporate action
to appoint a receiver, administrator, administrative receiver,
liquidator, trustee or similar officer of it or of all of its
revenues and assets; or
* an order of the court is made for its winding-up, dissolution,
administration or re-organisation that has remained in force
undischarged or unstayed for 60 days; or
* a receiver, administrator, administrative receiver, liquidator,
trustee or similar officer of it or all of its revenues and
assets is appointed; and
(6) any of the following:
* a duly authorised officer of the trust cash manager admits in
writing that the trust cash manager is unable to pay its debts
as they fall due within the meaning of section 123(1) of the UK
Insolvency Act 1986; or
* the trust cash manager makes a general assignment for the
benefit of, or a composition with, its creditors it voluntarily
suspends payment of its obligations with a view to the general
readjustment or rescheduling of its indebtedness.
Each grace period referred to in (1), (2), (3) and (4) above represents the
extra number of days before a trust cash manager default can be called,
allowing the trust cash manager time to remedy an event which would otherwise
be a trust cash manager default. In addition, if an event is a force majeure
event, then it will not be a cash manager default.
Within two operating business days after the trust cash manager becomes
aware of any trust cash manager default, the trust cash manager must notify the
receivables trustee, each rating agency, each beneficiary and any enhancement
provider as soon as possible in writing. The receivables trustee must give each
beneficiary and rating agency notice of any removal of the trust cash manager
or appointment of a successor trust cash manager. The receivables trustee must
give each rating agency notice of any removal of the trust cash manager.
Investor beneficiaries acting on the instructions of a group representing in
total more than two-thirds of the total face value of the loan notes then
outstanding of each series adversely affected by
82
any default by the trust cash manager, or the originators in the performance of
their obligations under the receivables trust deed and trust cash management
agreement and any other relevant documents, may waive the default unless it is
a failure to make any required deposits, or payments of interest or principal,
for the adversely affected series.
After the trust cash manager receives a termination notice and a successor
trust cash manager is appointed, the duties of acting as trust cash manager of
the receivables under the receivables trust deed and trust cash management
agreement will pass from the then trust cash manager to the successor trust
cash manager. The receivables trust deed and trust cash management agreement
contains the requirements for the transfer of the cash management role,
including the transfer of authority over collections, the transfer of
electronic records and the disclosure of information.
After it receives a termination notice, the trust cash manager will continue
to act as cash manager until a date agreed by the receivables trustee and the
trust cash manager. The receivables trustee must try to appoint a successor
trust cash manager that is an eligible trust cash manager.
If the receivables trustee cannot appoint a successor trust cash manager and
the trust cash manager delivers a certificate that says it cannot in good faith
cure the trust cash manager default, then the receivables trustee will start
the process of selling the receivables. The receivables trustee will notify
each enhancement provider of the proposed sale of the receivables by the
receivables trustee to a third party and will provide each enhancement provider
an opportunity to bid on purchasing the receivables.
The proceeds of the sale will be deposited in the trust accounts for
distribution to the beneficiaries as set out in the receivables trust deed and
trust cash management agreement and series supplements.
An "ELIGIBLE TRUST CASH MANAGER" means an entity that, when it is trust cash
manager:
* is legally qualified and has the capacity to carry out the cash
management functions as set forth in the receivables trust deed and
trust cash management agreement;
* is qualified or licensed to use the software that the trust cash
manager is then currently using to carry out cash management of the
receivables or obtains the right to use, or has its own, software
that is adequate to perform its duties under the receivables trust
deed and trust cash management agreement; and
* has, in the opinion of each rating agency, demonstrated the ability
professionally and competently to act as a cash manager in
accordance with customary standards of skill and care.
Neither the note trustee nor the security trustee shall be in any way
responsible for the appointment or termination of the trust cash manager.
83
SOURCES OF FUNDS TO PAY THE LOAN NOTES
GENERAL
The loan note issuer is an investor beneficiary of the receivables trust.
Its initial beneficial entitlement under the receivables trust was conferred in
connection with the 2000 transfers. The loan note issuer may increase its
beneficial entitlement from time to time under the receivables trust by issuing
further loan notes which will be constituted pursuant to a loan note supplement
and named in the relevant final terms. Each loan note supplement relates to
distributions that will be made to the loan note issuer in respect of that
particular series loan note. The parties to each loan note supplement will be
the receivables trustee, RBS and NatWest as the originator beneficiaries and
the originators, RBS, acting through Cards Business, as the servicer and acting
through Cards Business and GBM as the trust cash manager and the loan note
issuer as the investor beneficiary.
The loan note issuer's aggregate investor interest will comprise all of the
beneficial entitlements conferred on it under all loan note supplements.
The loan note issuer became the first investor beneficiary of the
receivables trust by contributing a sterling amount equivalent to
$1,600,000,000 (being $600,000,000 in respect of Series 00-A and $1,000,000,000
in respect of Series 00-B converted at the then agreed rate of exchange of
sterling to US dollars under the relevant swap agreements) to the receivables
trustee on 27 March 2000, and subsequently increased its beneficial interest
through the issuance of the Series 00-C loan note. The 2000 loan notes have now
all been redeemed.
On the execution of each loan note supplement on the date of issue of each
series loan note, the loan note issuer will increase its beneficial entitlement
as investor beneficiary by contributing a sterling amount (converted under one
or more swap agreements, if required) to the receivables trustee on the date of
issue of the relevant loan note. See "Receivables -- Assignment of the
Receivables to the Receivables Trustee" and "The Receivables Trust --
Acquisitions".
It is anticipated that each series investor interest of the loan note issuer
will be included in group one. See "Sources of Funds to Pay the Loan Notes --
Shared Principal Collections" for the ramifications of a series being included
in group one.
BENEFICIAL ENTITLEMENT OF THE LOAN NOTE ISSUER TO RECEIVABLES TRUST PROPERTY
The part of the loan note issuer's beneficial entitlement to the different
categories of receivables trust property held on an undivided basis which is
referable to each series will be determined by applying the "INVESTOR
PERCENTAGE" for that series. On this basis the beneficial entitlement of a
series investor interest to receivables trust property held on an undivided
basis is the percentage equivalent of a fraction being:
a
---------
a + x + y
where:
* a is the adjusted investor interest in respect of the relevant
series investor interest;
* x is the adjusted investor interest in respect of the other
outstanding series investor interests; and
* y is the aggregate originator interests.
Distributions of finance charge collections and acquired interchange will be
determined by applying the "FLOATING INVESTOR PERCENTAGE" for the relevant
series. Distributions of principal collections will be determined by applying
the "FLOATING INVESTOR PERCENTAGE" for the relevant series if the series is in
the revolving period, or the "FIXED INVESTOR PERCENTAGE" for the relevant
series during the controlled accumulation, regulated amortisation and rapid
amortisation periods.
The floating investor percentage will be applied to determine the loan note
issuer's entitlement to distributions of finance charge collections and
acquired interchange for the relevant series when that series is in its
revolving period.
During the revolving period, principal collections will only be transferred
to the loan note issuer to the extent there is a shortfall in finance charge
collection distributions in respect of the relevant series. The maximum amount
of principal collections that can be distributed in respect of that series in
any month during the revolving period is determined by reference to the
floating investor
84
percentage. In periods other than the revolving period, distributions of
principal collections to be made to the loan note issuer will be calculated by
reference to the fixed investor percentage.
If a series' beneficial entitlement to principal receivables at any time is
zero, then the floating investor percentage for that series and the fixed
investor percentage for that series will each become zero.
BENEFICIAL ENTITLEMENT OF LOAN NOTE ISSUER TO FINANCE CHARGE COLLECTIONS
The amount credited on a daily basis during any calendar monthly period to
each series finance charge collections ledger on the trustee collection account
for the loan note issuer will be transferred on a distribution date to the
relevant loan note issuer distribution account for the relevant series. From
that account, amounts will be applied to meet payments to be made by the loan
note issuer (including amounts representing further interest) to the issuing
entity in respect of each relevant series loan note held by the issuing entity.
For each series, the issuing entity will pay to the loan note issuer certain
deferred subscription amounts in respect of each series loan note. The loan
note issuer will pay any deferred subscription price amounts it has received in
respect of a series to the receivables trustee as additional consideration for
the grant of the loan note issuer's interest in the receivables trust. See
"Series Collection Account", "Available Spread", "The Loan Notes -- Cashflows
of the Loan Note Issuer" and "The Trust Deed and Trust Deed Supplements --
Cashflows of the issuing entity".
The "LOAN NOTE ISSUER DISTRIBUTION ACCOUNT" is, with respect to each series,
each bank account in the name of the loan note issuer, at RBSI at its branch
located at Royal Bank House, 71 Bath Street, St. Helier, Jersey, JE4 8PJ, that
will be used to distribute amounts relating to each series received by the loan
note issuer which are paid to the loan note issuer in accordance with its
beneficial entitlement under the relevant series supplement. The loan note
issuer will continue to maintain each such account with respect to each series
with RBSI or with another bank which meets rating agency approval.
At the beginning of each month the receivables trustee will deliver to the
loan note issuer calculations and information regarding the receivables trust
including calculations and information about the trust distributions and
movements of monies between the undivided trust, the segregated trust and to
the loan note issuer for the prior month and the relevant distribution date. In
relation to calculations made at the receivables trust level, a "DAY" means a
business day in London.
In order to understand these calculations and information delivered by the
receivables trustee you will need to understand the following definitions.
----------
The "ADJUSTED INVESTOR INTEREST" referable to each series means at any time
an amount equal to the initial investor interest for that series as reduced by
the aggregate of:
(1) principal collections distributed to the loan note issuer in
respect of that series (to include those held on separate trust on
a segregated basis for the loan note issuer in respect of that
series only);
(2) those retained principal collections, then distributed and used by
the loan note issuer in respect of that series as utilised
principal collections, as subsequently reduced by refunded utilised
principal collections referable to that series;
(3) the loan note issuer's share of default amounts referable to that
series as reduced by loss make-up (default) referable to that
series; and
(4) the aggregate amount of investor charge-offs referable to that
series as reduced by loss make-up (charge-off) referable to that
series (excluding, for the avoidance of doubt, any default amounts
made good by loss make-up (default) referable to that series),
all calculated as at that time.
The aggregate of the class A adjusted investor interest, the class B
adjusted investor interest and the class C adjusted investor interest on any
distribution date will be equal to the adjusted investor interest at the close
of business on the last day of the preceding monthly period for the relevant
series.
Item (1) will include amounts transferred to the relevant series principal
funding ledger.
85
The "CLASS A ADJUSTED INVESTOR INTEREST" means an amount equal to the class A
investor interest minus the balance credited to the relevant series principal
funding ledger but not more than the class A investor interest.
The "CLASS A FLOATING PERCENTAGE," the "CLASS B FLOATING PERCENTAGE" and the
"CLASS C FLOATING PERCENTAGE" will each be calculated the same way and will be
equal to, for each class of each series (comprised, if applicable, of all sub-
classes thereof), in any monthly period, the following fraction expressed as a
percentage:
adjusted investor interest for the relevant class
-----------------------------------------------------------------
adjusted investor interest for the relevant series of such class
where these amounts are calculated on the close of business on the last day of
such monthly period prior to the distribution date.
The "CLASS A INVESTOR CHARGE-OFF" means a reduction in the class A investor
interest on any distribution date by the amount, if any, by which the class A
investor default amount exceeds the total amount of class A available funds,
available spread, reallocated class B principal collections, reallocated class
C principal collections, the class C investor interest and the class B investor
interest calculated on that distribution date as funding the class A investor
default amount.
The "CLASS A INVESTOR INTEREST" means, at any time and with respect to the
relevant series, an amount equal to:
(1) the class A initial investor interest, minus
(2) the total principal payments made to the loan note issuer referable
to the class A investor interest from the property of the
receivables trust, minus
(3) the total amount of class A investor charge-offs for all prior
distribution dates, plus
(4) the total amount of any reimbursements of those class A investor
charge-offs on those prior distribution dates.
All calculations will be carried out on the basis that the class A investor
interest may not be reduced below zero.
The "CLASS B ADJUSTED INVESTOR INTEREST" means, at any time, an amount equal
to the class B investor interest minus the balance on deposit in the relevant
series principal funding ledger in excess of the class A investor interest, but
not more than the class B investor interest.
The "CLASS B INVESTOR CHARGE-OFF" means a reduction in the class B investor
interest on any distribution date by the amount, if any, by which the class B
investor default amount exceeds the total amount of available spread,
reallocated class C principal collections and the class C investor interest
calculated on that distribution date as funding the class B investor default
amount.
The "CLASS B INVESTOR INTEREST" means, at any time and with respect to the
relevant series, an amount equal to:
(1) the class B initial investor interest, minus
(2) the total principal payments made to the loan note issuer referable
to the class B investor interest from the property of the
receivables trust, minus
(3) the total amount of class B investor charge-offs for all prior
distribution dates, minus
(4) the total amount of reallocated class B principal collections
distributed on all prior distribution dates that have been used to
fund the class A required amount, excluding any reallocated class B
principal collections that have resulted in a reduction in the
class C investor interest, minus
(5) any reductions in the class B investor interest to cover the class
A investor default amounts, plus
(6) the total amount of available spread allocated and available on all
prior distribution dates to reimburse amounts deducted under (3),
(4) and (5) above.
All calculations will be carried out on the basis that the class B investor
interest may not be reduced below zero.
The "CLASS C ADJUSTED INVESTOR INTEREST" means, at any time, an amount equal
to the class C investor interest minus the balance on deposit in the relevant
series principal funding ledger in excess
86
of the sum of the class A investor interest and the class B investor interest,
but not more than the class C investor interest.
The "CLASS C INVESTOR CHARGE-OFF" means a reduction in the class C investor
interest on any distribution date by the amount, if any, by which the class C
investor default amount exceeds the amount of available spread calculated on
that distribution date as funding the class C investor default amount.
The "CLASS C INVESTOR INTEREST" means at any time and with respect to the
relevant series an amount equal to:
(1) the class C initial investor interest, minus
(2) the total principal payments made to the loan note issuer referable
to the class C investor interest from the property of the
receivables trust, minus
(3) the total amount of class C investor charge-offs for all prior
distribution dates, minus
(4) the total amount of reallocated class B principal collections and
reallocated class C principal collections referable to the class C
investor interest that have been used to fund the class A required
amount or the class B required amount on all prior distribution
dates, minus
(5) any reductions in the class C investor interest to fund class A
investor default amounts and class B investor default amounts, plus
(6) the total amount of available spread allocated and available on all
prior distribution dates to reimburse amounts deducted under (3),
(4) and (5) above.
All calculations will be carried out on the basis that the class C investor
interest may not be reduced below zero.
The "INITIAL INVESTOR INTEREST" referable to each series will be further
described in the relevant final terms. The "CLASS A INITIAL INVESTOR INTEREST",
the "CLASS B INITIAL INVESTOR INTEREST" and the "CLASS C INITIAL INVESTOR
INTEREST" referable to each class of each series (or, if applicable, to all
sub-classes of such class in an aggregate amount) will be further described in
the relevant final terms.
The "INVESTOR INTEREST" referable to a series means at any time an amount
equal to the initial investor interest referable to that series as reduced by
the aggregate of:
* those principal collections distributed to the loan note issuer
from the receivables trust property in respect of the relevant
series investor interest; and
* those retained principal collections, then distributed and used by
the loan note issuer in respect of that series as utilised
principal collections, as subsequently reduced by refunded utilised
principal collections referable to that series;
* the loan note issuer's share of default amounts referable to that
series as reduced by loss make-up (default) referable to that
series; and
* the aggregate amount of investor charge-offs referable to that
series as reduced by loss make-up (charge-off) referable to that
series (excluding, for the avoidance of doubt, any default amounts
made good by loss make-up (default) referable to that series),
all calculated as at that time.
----------
The beneficial entitlement of the loan note issuer as the investor
beneficiary for the relevant series to eligible principal receivables -- and
also to principal collections that are held in the receivables trust on an
undivided basis (which excludes the amount credited to the relevant series
principal funding ledger) -- is calculated as equal to the proportion that the
adjusted investor interest bears to the amount of eligible principal
receivables assigned or purported to be assigned to or held on trust for the
receivables trust at any time. However, the calculation by the receivables
trustee for distributions in respect of each class of notes will not exceed the
class A adjusted investor interest, the class B adjusted investor interest or
the class C adjusted investor interest at any time.
The amount of finance charge collections to be distributed to the relevant
series finance charge collections ledger on any day during any monthly period
is equal to the floating investor percentage for that series applied to finance
charge collections for that day.
The loan note issuer will be entitled in respect of any series investor
interest to the benefit of any enhancement for the relevant series only.
87
For each series the loan note issuer will be solely beneficially entitled to
all monies held in any trust account that are expressly segregated -- by
separate account or by ledger entry or otherwise -- as being held on separate
trust by the receivables trustee for the loan note issuer in respect of that
specific series.
CALCULATION AND DISTRIBUTION OF FINANCE CHARGE COLLECTIONS AND ACQUIRED
INTERCHANGE TO THE LOAN NOTE ISSUER
On each day on which finance charge collections and/or acquired interchange
are transferred to the trustee collection account during the revolving period,
the controlled accumulation period and, if applicable, the regulated
amortisation period or the rapid amortisation period, the receivables trustee
will credit an amount to the relevant series finance charge collections ledger
- -- determined by applying the floating investor percentage as set out below to
such finance charge collections and/or acquired interchange. The amount of
acquired interchange distributed to a series investor interest for any monthly
period will be the product of the amount of acquired interchange and the
floating investor percentage. This amount of acquired interchange will be
credited to that series' finance charge collections ledger for the benefit of
that series investor beneficiary.
The amount credited to the relevant series finance charge collections ledger
with respect to each series will be transferred on a monthly basis to the
relevant loan note issuer distribution account of such series from which it
will be applied to meet the loan note issuer's obligations for the relevant
period.
Each day the receivables trustee will credit to the relevant series finance
charge collections ledger an amount calculated as follows:
A x B
where:
A = the floating investor percentage for that series; and
B = the total amount of finance charge collections and/or acquired
interchange processed on that date.
The "FLOATING INVESTOR PERCENTAGE" for each series investor interest means,
for any monthly period, the following fraction expressed as a percentage:
A
------
B + C
where:
A = the adjusted investor interest for that series;
B = the aggregate originator interests; and
C = the aggregate adjusted investor interests.
Item A will be calculated for any monthly period -- other than the first
monthly period -- as of the last day of the prior monthly period (and, for the
purposes of this calculation, A will take into account all amounts on the
relevant series principal collections ledger).
Items B and C will be calculated for any monthly period -- other than the
first monthly period -- as of the last day of the prior monthly period (and for
the purposes of this calculation, the sum of B + C will be reduced to the
amount of retained principal collections). For the first monthly period, each
of A, B and C will be calculated as of the closing date.
However, if the sum of the numerators used to calculate the investor
percentages for distributions of finance charge collections and acquired
interchange for all outstanding series for any month is greater than B + C, the
floating investor percentage will be the percentage equivalent of:
A
-------
A + D
where:
A = the definition used above; and
D = the sum of the numerators used to calculate the investor
percentages for distributions of finance charge collections and
acquired interchange for all outstanding series (excluding the
relevant series investor interest in question) for that month.
88
Accordingly, the floating investor percentage will never exceed 100
per cent.
Notwithstanding the above, for a monthly period in which an addition date
occurs:
B in the fraction used to calculate the floating investor percentage above
will be:
* for the period from the first day of the monthly period to the
addition date, the aggregate originator interests on the last day
of the prior monthly period; and
* for the period from the addition date to the last day of the
monthly period, the aggregate originator interests on the addition
date, taking into account the eligible principal receivables added
to the receivables trust; and
C in the fraction used to calculate the floating investor percentage above
will be:
* for the period from the last day of the monthly period to the
addition date, the sum of the adjusted investor interests used to
calculate the floating investor percentages for all outstanding
series (including the relevant series investor interest in
question) on the last day of the monthly period; and
* for the period from the addition date to the last day of the
monthly period, the sum of the adjusted investor interest used to
calculate the floating investor percentages for all outstanding
series (including the relevant series investor interest in
question) on the addition date, taking into account the eligible
principal receivables added to the receivables trust.
If, on any day, the investor interest falls to zero-unless it has fallen as
a result of defaults -- no further distributions will be made on the
distribution date for that monthly period.
CLASS A INVESTOR INTEREST
To understand the calculations and information delivered by the receivables
trustee with respect to the amount of finance charge collections and acquired
interchange distributed to the loan note issuer that will ultimately be used
for payments on the class A notes (and all sub-classes thereof, if any) on any
distribution date or payment date, you need to understand the following
definitions and cash flows.
----------------------------
The "APPLICABLE LIBOR RATE" for each finance period will be determined by
the trust cash manager in the manner specified in each supplement to the
receivables trust deed and cash management agreement.
The "CALCULATION PERIOD" means, for any distribution date, the period from
and including the previous distribution date or, in the case of the first
distribution date, from and including the closing date to, but excluding, that
distribution date.
The "CLASS A ADDITIONAL FINANCE AMOUNT" means the amount calculated as
follows:
days in any unpaid class A
calculation period class A LN rate plus deficiency amounts
X X
365 2.0 per cent on the prior payment date
The "CLASS A AVAILABLE FUNDS" for a series investor interest for any monthly
period equals the sum of the following amounts credited to that series' finance
charge collections ledger for that monthly period:
* the class A floating percentage of finance charge collections
distributed to that series investor interest;
* the class A floating percentage of acquired interchange distributed
to that series investor interest;
* for any monthly period during the controlled accumulation period
before payment in full of the class A investor interest, the
principal funding investment proceeds up to a maximum amount equal
to the class A covered amount; see "Principal Funding Account"; and
* any amounts withdrawn from that series' reserve ledger and credited
to that series' finance charge collections ledger on the related
distribution date; see "Reserve Account".
The "CLASS A CASH MANAGEMENT FEE" is that portion of the trust cash
management fee attributable to class A (on a pro rata basis).
89
The "CLASS A DEBT AMOUNT" means the class A initial investor interest minus the
total principal payments made to the loan note issuer as of the distribution
date preceding the relevant distribution date, calculated as principal payments
referable to the class A investor interest from the property of the receivables
trust. On the relevant series investor interest termination date, the class A
debt amount will be zero.
The "CLASS A DEFICIENCY AMOUNT" is the excess, if any, of the class A
monthly required expense amount for the prior distribution date -- disregarding
for this purpose the class A trustee payment amount and the loan note issuer
costs amount -- over the amounts actually deposited as the class A monthly
distribution amount and credited to the relevant loan note issuer distribution
account for payment on that distribution date.
The "CLASS A LN RATE" for each finance period will be the applicable LIBOR
rate plus or minus a margin as specified in the relevant final terms and, in
the case of any sub-classes with respect to class A, such rate shall be
calculated as a blended rate;
The "CLASS A MONTHLY DISTRIBUTION AMOUNT" means an amount equal to the sum
of the class A monthly finance amount, the class A deficiency amount and the
class A additional finance amount;
The "CLASS A MONTHLY FINANCE AMOUNT" means the amount calculated as follows:
(days in
calculation
period
- ------------ X class A LN rate X class A debt amount) + issuer costs amount
365
The "CLASS A MONTHLY REQUIRED EXPENSE AMOUNT" for any distribution date will
be the sum of the following items:
* the class A trustee payment amount plus any unpaid class A trustee
payment amounts from previous distribution dates; see "Trustee
Payment Amount";
* the loan note issuer costs amount;
* the class A monthly finance amount;
* the class A deficiency amount; and
* the class A additional finance amount.
The "CLASS A SERVICING FEE" is that portion of the servicing fee
attributable to class A (on a pro rata basis).
The first "DISTRIBUTION DATE" in respect of each series will be further
described in the final terms for that series and each subsequent distribution
date will be the 15th day of each calendar month thereafter, or if that day is
not a business day, the next business day after the 15th, or any other date as
may be specified in the relevant final terms.
The "FINANCE PERIOD" means, with respect to any payment date, the period
from and including the previous payment date or, in the case of the first
payment date, from and including the closing date to, but excluding, the next
payment date. However, in the case of a finance period that commences in the
revolving period and ends in the controlled accumulation period, the regulated
amortisation period or the rapid amortisation period, that finance period will
end on the originally scheduled payment date.
The "ISSUER COSTS AMOUNT" means the amounts required to pay all and any
legal fees, fees, costs, charges, expenses, indemnities, losses, damages,
claims and liabilities incurred by the issuing entity accrued due and payable
on or before a payment date to a third party incurred in the course of the
issuing entity's business excluding any income taxes or other similar taxes
payable to any taxation authority. This amount includes the legal fees, fees,
costs, charges, expenses, losses, damages, claims and liabilities of the note
trustee and any receiver appointed by it, such amount to be paid in priority to
any other amount contemplated by this definition, and any legal fees, fees,
costs, charges, expenses, indemnities, losses, damages, claims and liabilities
remaining unpaid for previous distribution dates together with any VAT payable
on any of the above items. Where relevant, the costs of the issuing entity may
be apportioned among each outstanding series by reference to the outstanding
principal balance of each series.
The "LOAN NOTE ISSUER COSTS AMOUNT" means the amounts required to pay all
and any legal fees, fees, costs, charges, expenses, indemnities, losses,
damages, claims and liabilities incurred by the
90
loan note issuer accrued due and payable on or before a distribution date to a
third party incurred in the course of the loan note issuer's business excluding
any income taxes or other similar taxes payable to any taxation authority. This
amount includes legal fees, fees, costs, charges, expenses, indemnities,
losses, damages, claims and liabilities of the security trustee and any
receiver appointed by it, such amount to be paid in priority to any other
amount contemplated by this definition, and any legal fees, fees, costs,
charges, expenses, losses, damages, claims and liabilities remaining unpaid for
previous distribution dates together with any VAT payable on any of the above
items, where relevant. Where relevant, the costs of the loan note issuer may be
apportioned among each outstanding series loan note by reference to the
outstanding principal balance of each series loan note.
The first "PAYMENT DATE" in the case of each series loan note and the
related series of notes will be more particularly described in the final terms
for that series. Each subsequent payment date during the revolving period and
the controlled accumulation period will also be more particularly described in
the final terms for that series. During the regulated amortisation period and
the rapid amortisation period each subsequent payment date will be the same
date as a distribution date.
----------
On each distribution date, the amount of class A available funds held for
the loan note issuer in a specified series finance charge collections ledger
will be used to make the following payments (in respect of that series only) in
the following order:
(1) an amount equal to the class A trustee payment amount plus any
unpaid class A trustee payment amounts from prior distribution
dates will be paid first to the relevant loan note issuer
distribution account of the series and then to the receivables
trustee by the loan note issuer as additional consideration for the
grant of the loan note issuer's interest in the receivables trust,
such payment being identified as the trustee payment amount
referable to the relevant series;
(2) an amount equal to the loan note issuer costs amount to be
transferred to the relevant loan note issuer distribution account,
such payment being identified as the loan note issuer costs amount;
(3) an amount equal to the class A monthly distribution amount will be
deposited in the relevant loan note issuer distribution account;
(4) an amount equal to the class A servicing fee and any due and unpaid
class A servicing fees from prior distribution dates will be paid
first to the relevant loan note issuer distribution account and
then to the servicer, such payment being identified as the
servicing fee payment amount, and an amount equal to the class A
cash management fee and any due and unpaid class A cash management
fees from prior distribution dates will be paid first to the
relevant loan note issuer distribution account and then to the
receivables trustee by the loan note issuer as additional
consideration for the grant of the loan note issuer's interest in
the receivables trust, such payment being identified as the cash
management fee payment amount referable to the relevant series;
(5) an amount equal to the class A investor default amount will be paid
first to the relevant loan note issuer distribution account and
then to the receivables trustee by way of additional consideration
for the grant of the loan note issuer's interest in the receivables
trust, such payment being identified as loss make-up (default); and
(6) the balance -- called "CLASS A AVAILABLE SPREAD" -- will be part of
available spread and will be dealt with as described in "Available
Spread".
On each distribution date, the loan note issuer, acting through the
receivables trustee, will withdraw an amount on deposit in the specified series
finance charge collections ledger equal to the class A monthly distribution
amount, and will deposit such amount into the relevant loan note issuer
distribution account (in respect of that series only). This deposit will be
used by the loan note issuer (when added to the class B monthly distribution
amount and the class C monthly distribution amount) to pay interest due on the
series loan note that is linked to that series investor interest. Interest
payments received on the relevant series loan note will be used by the issuing
entity, acting through the Jersey bank account operator, to pay the swap
counterparty under the relevant swap agreement (if applicable). Corresponding
amounts in the relevant currency of the related note class or sub-class that
are paid by the swap counterparty (if applicable) to the issuing entity will be
used by the issuing entity to pay interest on the notes on the payment date.
91
To the extent necessary, the receivables trustee will be authorised to make
these payments on the loan note issuer's behalf.
CLASS B INVESTOR INTEREST
To understand the calculations and information delivered by the receivables
trustee with respect to the amount of finance charge collections and acquired
interchange distributed to the loan note issuer that will ultimately be used
for payments on the class B notes (and all sub-classes thereof, if any) on any
distribution date or payment date, you need to understand the following
definitions and cash flows.
The "CLASS B ADDITIONAL FINANCE AMOUNT" means the amount calculated as
follows:
days in
calculation
period the class B LN rate plus any unpaid class B deficiency
- ----------- X X
365 2.0 per cent. amounts on the prior payment date
The "CLASS B AVAILABLE FUNDS" for a series investor interest for any monthly
period equals the sum of the following amounts credited to that series' finance
charge collection ledger for that monthly period:
* the class B floating percentage of finance charge collections
distributed to that series investor interest; and
* the class B floating percentage of acquired interchange distributed
to that series investor interest.
The "CLASS B CASH MANAGEMENT FEE" is that portion of the trust cash
management fee attributable to class B (on a pro rata basis).
The "CLASS B DEBT AMOUNT" means the class B initial investor interest minus
the total principal payments made to the loan note issuer as of the payment
date preceding the relevant distribution date, calculated as principal payments
referable to the class B investor interest from the property of the receivables
trust. On the series termination date, the class B debt amount will be zero.
The "CLASS B DEFICIENCY AMOUNT" is the excess, if any, of the class B
monthly required expense amount for the prior distribution date -- disregarding
for this purpose the class B trustee payment amount -- over the amounts
actually deposited as the class B monthly distribution amount into the relevant
loan note issuer distribution account for payment on that distribution date.
The "CLASS B LN RATE" for each finance period will be the applicable LIBOR
rate plus or minus a margin as specified in the relevant final terms and, in
the case of any sub-classes with respect to class B, such rate shall be
calculated as a blended rate;
The "CLASS B MONTHLY DISTRIBUTION AMOUNT" means an amount equal to the sum
of the class B monthly finance amount, the class B deficiency amount and the
class B additional finance amount;
The "CLASS B MONTHLY FINANCE AMOUNT" means the amount calculated as follows:
days in calculation period
- -------------------------- X class B LN rate X class B debt amount
365
The "CLASS B MONTHLY REQUIRED EXPENSE AMOUNT" for any distribution date will
be the sum of the following items:
* the class B trustee payment amount plus any unpaid class B trustee
payment amounts from previous distribution dates; see "Trustee
Payment Amount";
* the class B monthly finance amount;
* the class B deficiency amount; and
* the class B additional finance amount.
The "CLASS B SERVICING FEE" is that portion of the servicing fee
attributable to class B (on a pro rata basis).
----------
92
On each distribution date, the amount of class B available funds held for the
loan note issuer in a specified series finance charge collections ledger will
be used to make the following payments (in respect of that series only) in the
following order:
(1) an amount equal to the class B trustee payment amount plus any
unpaid class B trustee payment amounts from prior distribution
dates will be paid first to the relevant loan note issuer
distribution account of the series and then to the receivables
trustee by the loan note issuer as additional consideration for the
grant of the loan note issuer's interest in the receivables trust,
such payment being identified as the trustee payment amount
referable to the relevant series;
(2) an amount equal to the class B monthly distribution amount will be
deposited in the relevant loan note issuer distribution account;
(3) an amount equal to the class B servicing fee and any due and unpaid
class B servicing fees from prior distribution dates will be paid
first to the relevant loan note issuer distribution account and
then to the servicer, such payment being identified as the
servicing fee payment amount, and an amount equal to the class B
cash management fee and any due and unpaid class B cash management
fees from prior distribution dates will be paid first to the
relevant loan note issuer distribution account and then to the
receivables trustee by the loan note issuer as additional
consideration for the grant of the loan note issuer's interest in
the receivables trust, such payment being identified as the cash
management fee payment amount referable to the relevant series; and
(4) the balance -- called "CLASS B AVAILABLE SPREAD" -- will be part of
available spread and will be dealt with as described in "Available
Spread".
On each distribution date, the loan note issuer, acting through the
receivables trustee, will withdraw an amount on deposit in the specified series
finance charge collections ledger equal to the class B monthly distribution
amounts, and will deposit such amount into the relevant loan note issuer
distribution account (in respect of that series only). This deposit will be
used by the loan note issuer (when added to the class A monthly distribution
amount and the class C monthly distribution amount) to pay interest due on the
series loan note that is linked to that series investor interest. Interest
payments received on the relevant series loan note will be used by the issuing
entity to pay the swap counterparty under the swap agreement (if applicable).
Corresponding amounts in the relevant currency of the related note class that
are paid by the swap counterparty (if applicable) to the issuing entity will be
used by the issuing entity to pay interest on the notes on the payment date.
To the extent necessary the receivables trustee will be authorised to make
these payments on the loan note issuer's behalf.
CLASS C INVESTOR INTEREST
To understand the calculations and information delivered by the receivables
trustee with respect to the amount of finance charge collections distributable
to the loan note issuer that will ultimately be used for payments on the class
C notes (and all sub-classes thereof, if any) on any distribution date or
payment date, you need to understand the following definitions and cash flows.
----------
The "CLASS C ADDITIONAL FINANCE AMOUNT" means the amount calculated as
follows:
days in
calculation
period class C LN rate any unpaid class C deficiency amounts on
- ------------ X X
365 plus 2.0 per cent. the prior payment date
The "CLASS C AVAILABLE FUNDS" for a series investor interest for any monthly
period equals the sum of the following amounts credited to that series' finance
charge collections ledger for that monthly period:
* the class C floating percentage of finance charge collections
distributed to that series investor interest; and
* the class C floating percentage of acquired interchange allocated
to that series investor interest.
The "CLASS C CASH MANAGEMENT FEE" is that portion of the trust cash
management fee attributable to class C (on a pro rata basis).
93
The "CLASS C DEBT AMOUNT" means the class C initial investor interest minus
the total principal payments made to the loan note issuer as of the payment date
preceding the relevant distribution date, calculated as principal payments
referable to the class C investor interest from the property of the receivables
trust. On the series termination date, the class C debt amount will be zero.
The "CLASS C DEFICIENCY AMOUNT" is the excess, if any, of the class C
monthly required expense amount for the prior distribution date -- disregarding
for this purpose the class C trustee payment amount and the monthly expenses
loan amount and the issuer profit amount -- over the amounts actually deposited
as the class C monthly distribution amount into the relevant loan note issuer
distribution account of the series and for payment on that distribution date.
The "CLASS C LN RATE" for each finance period will be the applicable LIBOR
rate plus or minus a margin as specified in the relevant final terms and, in
the case of any sub-classes with respect to class C, such rate shall be
calculated as a blended rate;
The "CLASS C MONTHLY FINANCE AMOUNT" means the amount calculated as follows:
days in calculation period
- -------------------------- X class C LN rate X class C debt amount
365
The "CLASS C MONTHLY REQUIRED EXPENSE AMOUNT" for any distribution date will
be the sum of the following items:
* the class C trustee payment amount plus any unpaid class C trustee
payment amounts from previous distribution dates; see "Trustee
Payment Amount";
* the class C monthly finance amount;
* the class C deficiency amount; and
* the class C additional finance amount.
The "CLASS C SERVICING FEE" is that portion of the servicing fee
attributable to class C (on a pro rata basis).
----------
On each distribution date the amount of class C available funds held for the
loan note issuer in a specified series finance charge collections ledger will
be used to make the following payments (in respect of that series only) in the
following order:
(1) an amount equal to the class C trustee payment amount plus any
unpaid class C trustee payment amounts from prior distribution
dates will be paid first to the relevant loan note issuer
distribution account of the series and then to the receivables
trustee by the loan note issuer as additional consideration for the
grant of the loan note issuer's interest in the receivables trust,
such payment being identified as trustee payment referable to the
relevant series;
(2) an amount equal to the class C servicing fee and any due and unpaid
class C servicing fees from prior distribution dates will be paid
first to the relevant loan note issuer distribution account and
then to the servicer, such payment being identified as the
servicing fee payment amount, and an amount equal to the class C
cash management fee and any due and unpaid Class C cash management
fees from prior distribution dates will be paid first to the
relevant loan note issuer distribution account and then to the
receivables trustee by the loan note issuer as additional
consideration for the grant of the loan note issuer's interest in
the receivables trust, such payment being identified as the cash
management fee payment amount referable to the relevant series; and
(3) the balance -- called "CLASS C AVAILABLE SPREAD" -- will be part of
available spread and will be dealt with as described in "Available
Spread".
On each distribution date, the loan note issuer, acting through the
receivables trustee, will withdraw an amount on deposit in the specified series
finance charge collections ledger equal to the class C monthly distribution
amounts (as defined below in "Available Spread"), and will deposit such amount
into the relevant loan note issuer distribution account (in respect of that
series only). This deposit will be used by the loan note issuer (when added to
the class A monthly distribution amount and the class B monthly distribution
amount) to pay interest due on the series loan note. Interest payments received
on the relevant series loan note will be used by the issuing entity to pay the
swap counterparty (if applicable) under the swap agreement. Corresponding
amounts in the relevant
94
currency or interest rate of the related note class that is paid by the swap
counterparty (if applicable) to the issuing entity will be used by the issuing
entity to pay interest on the notes on the payment date.
To the extent necessary, the receivables trustee will be authorised to make
these payments on the loan noteholder's behalf.
DISTRIBUTIONS OF PRINCIPAL COLLECTIONS TO THE LOAN NOTE ISSUER
The amount of principal transferred on a daily basis (see "The Receivables
Trust -- Application of Collections") during any monthly period to the
principal collections ledger of the trustee collection account will only be
transferred and credited to the relevant specified series principal collections
ledger in the series collection account (held as a separate trust on a
segregated basis for the loan note issuer by the receivables trustee for the
specific series) after making the calculations set out below. These
calculations and the amounts actually transferred differ depending upon whether
a series investor interest is in the revolving period, the controlled
accumulation period, the regulated amortisation period or the rapid
amortisation period.
REVOLVING PERIOD
The "REVOLVING PERIOD" for a series investor interest is the period from the
closing date to the start of the controlled accumulation period or, if earlier,
the start of the regulated amortisation period or the rapid amortisation
period.
During the revolving period, principal collections credited daily to the
principal collections ledger in the trustee collection account will not be
distributed to the loan note issuer in respect of its relevant series investor
interest except from the retained specified percentage of principal collections
as provided for below. Available principal collections will be used by the
receivables trustee as shared principal collections and, to the extent not used
as shared principal collections, transferred to the trustee acquisition account
to make payments to the originators:
* to accept new offers of receivables made by the originators to the
receivables trustee,
* for future receivables assigned or entrusted by the originators to
the receivables trustee by offers that have already been made and
accepted; and
* as distributions of principal collections but not if such
distributions would cause the originator interest to be reduced to
zero.
For calculation purposes, the available principal collections described in
the previous paragraph are those principal collections calculated as allocable
- -- using the class A floating percentage -- to the class A investor interest.
A specified percentage of principal collections will be retained within the
receivables trust and may be deposited in the relevant loan note issuer
distribution account of a particular series, as applicable, on a distribution
date to meet certain payments or distributions of the loan note issuer in
respect of the relevant series which it is not able to satisfy out of finance
charge collections and acquired interchange distributed to it. We call
principal collections which are retained within the receivables trust and which
may be distributed to the loan note issuer to help meet certain of its payments
or distributions "RETAINED PRINCIPAL COLLECTIONS" and principal collections
which are actually distributed to the loan note issuer to help meet certain of
its payments or distributions "UTILISED PRINCIPAL COLLECTIONS".
Retained principal collections -- to the extent they are not required to be
used to cover income deficiencies -- will be calculated as allocable to the
class B investor interest (using the class B floating percentage) and the class
C investor interest (using the class C floating percentage) and will be used by
the receivables trustee -- as described in the paragraph above describing the
use of available principal collections -- on the next following distribution
date.
For calculation purposes, utilised principal collections are divided into
reallocated class B principal collections and reallocated class C principal
collections.
CONTROLLED ACCUMULATION PERIOD
The "CONTROLLED ACCUMULATION PERIOD" commencement date for each series
investor interest will be specified in the relevant final terms and will end
when the relevant series investor interest is paid in full, unless a pay out
event occurs and the regulated amortisation period or the rapid amortisation
period begins. If the regulated amortisation period or rapid amortisation
period begins before the start
95
of the controlled accumulation period, there will not be a controlled
accumulation period for the relevant series. The start of the controlled
accumulation period may be delayed until no later than the close of business on
the day specified in the relevant final terms. See "Postponement of Controlled
Accumulation Period".
During the controlled accumulation period, the amount of principal
collections to which the loan note issuer is entitled under the relevant series
supplement will be credited on a daily basis to the specified series principal
collections ledger (held by the receivables trustee on a segregated basis on a
separate trust for the loan note issuer in respect of relevant series only) --
until the amount credited in any monthly period equals the controlled deposit
amount for that monthly period -- and then transferred on a monthly basis to
the principal funding account -- and credited to the relevant series principal
funding ledger -- for payment or transfer to the relevant loan note issuer
distribution account of such series on the relevant payment date -- called the
"SERIES SCHEDULED REDEMPTION DATE" and specified in the final terms for that
series. Principal collections in excess of the controlled deposit amount will
be used by the receivables trustee first as shared principal collections and
then to make payments to the originators as described above under "Revolving
Period".
As in the revolving period, a specified percentage of principal collections
may be retained within the receivables trust (as retained principal
collections) and on a monthly basis may be utilised by the loan note issuer to
help meet certain of its expenses in respect of a relevant series. For
calculation purposes this use of amounts by the loan note issuer will be
described as reallocated class B principal collections and as reallocated class
C principal collections, or otherwise to meet the controlled deposit amount.
The "CONTROLLED DEPOSIT AMOUNT" for each series for any distribution date
during the controlled accumulation period or the regulated amortisation period
will be specified in the relevant final terms for that series. The controlled
deposit amount will equal the initial investor interest for that series divided
by a factor specified in the relevant final terms, or for the controlled
accumulation period or a regulated amortisation period, if greater, may be an
amount not exceeding the product of (1) the reciprocal of this factor (set out
in the final terms) and (2) the sum of: (i) all initial investor interests of
all series in group one -- except companion series (as defined below) -- that
are scheduled to be in their revolving periods, and (ii) the relevant series
initial investor interest in question. If the start of the controlled
accumulation period is delayed as described in "Postponement of Controlled
Accumulation Period," the controlled deposit amount will be greater than the
amount that has been specified in the relevant final terms. In any case, during
the controlled accumulation period, the controlled deposit amount will be the
amount that, if deposited in the principal funding account on each distribution
date for the controlled accumulation period, will cause the balance of that
series principal funding ledger to equal the relevant series investor interest
on the scheduled redemption date. The controlled deposit amount for any
distribution date will include the amount of any shortfall in payment of the
controlled deposit amount for the previous distribution date.
REGULATED AMORTISATION PERIOD
A "REGULATED AMORTISATION PERIOD" will start on the day, if there is one,
that a regulated amortisation trigger event, as defined in "Series Pay-Out
Events" below, occurs.
The regulated amortisation period will continue until the earlier of:
* the start of the rapid amortisation period; and
* the relevant series termination date, as defined below under the
heading "Rapid Amortisation Period".
During the regulated amortisation period, the amount of principal
collections to which the loan note issuer is entitled under each series
supplement will be credited on a daily basis to the specified relevant series
principal collections ledger for only the series that is subject to
amortisation until the amount credited in any monthly period equals the
controlled deposit amount for that monthly period -- and then transferred on a
monthly basis and credited to the relevant loan note issuer distribution
account of the series until the specified relevant series termination date, as
defined below under the heading "Rapid Amortisation Period". Principal
collections in excess of the controlled deposit amount will be used by the
receivables trustee first as shared principal collections and then to make
payments to the originators as described above under "Revolving Period".
As in the revolving and controlled accumulation periods, a specified
percentage of principal collections may be retained within the receivables
trust (as retained principal collections) and on a monthly basis may be
utilised by the loan note issuer to help meet certain of its expenses in
respect
96
of the relevant series. To the extent not to be utilised by the loan note
issuer these principal collections may be used as available principal
collections. For calculation purposes, this utilisation of principal amounts by
the loan note issuer will be described as reallocated class B principal
collections and as reallocated class C principal collections.
RAPID AMORTISATION PERIOD
A "RAPID AMORTISATION PERIOD" will start on the first day of the monthly
period next following the day on which any pay out event other than a regulated
amortisation trigger event occurs.
The rapid amortisation period will continue until the earlier of:
* the specified relevant series termination date, as defined below;
or
* the dissolution of the receivables trust following the occurrence
of an insolvency event; see "The Receivables Trust: Trust Pay Out
Events".
During the rapid amortisation period, the amount of principal collections to
which the loan note issuer is entitled under the specified relevant series
supplement will be credited on a daily basis to the relevant series principal
collections ledger (held by the receivables trustee on segregated trust for the
sole benefit of the loan note issuer in respect of that series) and then
transferred on a monthly basis and credited to the relevant loan note issuer
distribution account of the series until the relevant series termination date.
The "SERIES TERMINATION DATE" is the earlier of the distribution date on
which the series adjusted investor interest has been reduced to zero -- unless
on such date it was reduced as a result of defaults -- and the distribution
date identified as such in the final terms for such series.
As in other periods, a specified percentage of principal collections may be
retained within the receivables trust (i.e. retained principal collections) and
on a distribution date may be distributed to the loan note issuer to help meet
certain of its expenses in respect of the relevant series. The balance of
principal collections will on that distribution date be transferred to the
relevant series principal collections ledger.
CALCULATION OF PRINCIPAL COLLECTIONS TO BE DISTRIBUTED TO THE LOAN NOTE ISSUER
IN RESPECT OF EACH SERIES
During the revolving period, the calculation of amounts available for
distribution to the loan note issuer in respect of principal collections will
be determined on the basis of the floating investor percentage. In respect of
each relevant series the amount of principal collections available to the loan
note issuer will be calculated:
* during the revolving period, by reference to the floating investor
percentage for the relevant series; and
* during the controlled accumulation period, the regulated
amortisation period and the rapid amortisation period, by reference
to the fixed investor percentage for the relevant series.
The "FIXED INVESTOR PERCENTAGE" for a series means, for any monthly period,
the following calculation expressed as a percentage:
A
-----
B + C
where:
A = the adjusted investor interest for that series;
B = the aggregate originator interests; and
C = the sum of the adjusted investor interests for all outstanding
series (including the relevant series in question).
Item A will be calculated as of the close of business on the last day of the
revolving period (and for the purposes of this calculation, A will take into
account all amounts on the relevant series principal collections ledger).
Items B and C above will be calculated for any monthly period -- other than
the first monthly period -- as of the last day of the prior monthly period (and
for the purposes of this calculation the sum of B + C will be reduced by the
amount of retained principal collections). For the first monthly period, each
of B and C will be calculated as of the relevant closing date.
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However, if the sum of the numerators used to calculate the investor
percentages for distributions of principal collections or shared principal
collections for all outstanding series for any month is greater than B + C, the
fixed investor percentage will be the percentage equivalent of:
A
-------
A + D
where:
A = the definition used above; and
D = the sum of the numerators used to calculate the investor
percentages for distributions of principal collections or
shared principal collections for all outstanding series
(excluding the relevant series in question) for that month.
Accordingly, the fixed investor percentage will never exceed 100 per cent.
Notwithstanding the above, for a monthly period in which an addition date
occurs:
"B" in the fraction used to calculate the fixed investor percentage above
will be:
* for the period from the first day of the monthly period to the
addition date, the aggregate originator interests on the last day
of the prior monthly period; and
* for the period from the addition date to the last day of the
monthly period, the aggregate originator interests on the addition
date, taking into account the eligible principal receivables added
to the receivables trust; and
"C" in the fraction used to calculate the fixed investor percentage above
will be:
* for the period from the last day of the monthly period to the
addition date, the sum of the adjusted investor interests used to
calculate the floating investor percentages for all outstanding
series (including the relevant series in question) on the last day
of the monthly period; and
* for the period from the addition date to the last day of the
monthly period, the sum of the adjusted investor interests used to
calculate the floating investor percentages for all outstanding
series (including the relevant series in question) on the addition
date, taking into account the eligible principal receivables added
to the receivables trust.
If, on any day, the investor interest falls to zero -- unless it has fallen
as a result of defaults -- no further distributions will be made on the
distribution date for that monthly period.
The "AVAILABLE INVESTOR PRINCIPAL COLLECTIONS" means, for any monthly
period:
* the investor principal collections; minus
* the cash available for acquisition that has been calculated as
being available to be used during that monthly period; minus
* the reallocated class C principal collections that are required to
fund the class A required amount or the class B required amount;
minus
* the reallocated class B principal collections for that monthly
period that are required to fund the class A required amount; plus
* the shared principal collections from other series in group one
that are distributed in respect of the relevant series; plus
* for a monthly period in which the rapid amortisation period starts,
any previously identified investor cash available for acquisition
that was not used to acquire receivables.
The "CLASS A FIXED PERCENTAGE", the "CLASS B FIXED PERCENTAGE" and the
"CLASS C FIXED PERCENTAGE" will each be calculated the same way and will be
equal to, for each class with respect to each series and for any monthly period
after the end of the revolving period, the following fraction expressed as a
percentage:
the investor interest for the relevant class
---------------------------------------------
the series investor interest
This percentage, never to exceed 100 per cent., will be calculated using
these amounts on the close of business on the last day of the revolving period.
On each operating business day during the revolving period which is not a
distribution date, the investor principal collections available for that day
will be distributed in the following priority:
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* applied as shared principal collections and distributed to other
outstanding series in group one; see "Shared Principal Collections";
and
* the balance remaining will be applied as cash available for
acquisition in the manner described in "The Receivables Trust --
Acquiring Additional Entitlements to Receivables Trust Property and
Payments for Receivables".
The "CLASS A MONTHLY PRINCIPAL AMOUNT" is the least of:
* the available investor principal collections standing to the credit of
the relevant series principal collections ledger on that distribution
date and any retained principal collections in respect of that series
on that distribution date -- excluding available investor principal
collections identified as loss make-up (default), loss make-up
(charge-off) or refunded utilised principal collections standing to
the credit of the relevant series finance charge collections ledger;
* for each distribution date in the controlled accumulation period or
the regulated amortisation period, the controlled deposit amount for
that distribution date; and
* the class A adjusted investor interest -- adjusted to account for any
unreimbursed class A investor charge-offs.
The first distribution date (1) for the controlled accumulation period, on
which an amount equal to the class A investor interest has been deposited in
the principal funding account for credit to the relevant series principal
funding ledger, or (2) during the regulated amortisation period or the rapid
amortisation period, on which the class A investor interest is paid in full, is
called the "CLASS B PRINCIPAL COMMENCEMENT DATE".
Starting with the class B principal commencement date, to the extent there
are funds remaining after distributing the class A monthly principal amount,
the receivables trustee will withdraw the class B monthly principal amount from
the relevant series principal collections ledger and:
* for a distribution date for the controlled accumulation period,
deposit it into the principal funding account for credit to the
relevant series principal funding ledger; or
* for a distribution date during the regulated amortisation period or
the rapid amortisation period, deposit it in the relevant loan note
issuer distribution account of the series.
The "CLASS B MONTHLY PRINCIPAL AMOUNT" is the lesser of:
* the available investor principal collections standing to the credit of
the relevant series principal collections ledger on that distribution
date and any retained principal collections in respect of that series
on that distribution date -- excluding available investor principal
collections identified as loss make-up (default), loss make-up
(charge-off) or refunded utilised principal collections standing to
the credit of the relevant series finance charge collections ledger
minus, if applicable, the class A monthly principal amount;
* for each distribution date in the controlled accumulation period or
the regulated amortisation period, the controlled deposit amount for
that distribution date -- after taking into account the class A
monthly principal amounts; and
* the class B adjusted investor interest -- adjusted to account for any
unreimbursed reductions in the class B investor interest for reasons
other than principal payments.
The first distribution date (1) for the controlled accumulation period, on
which an amount equal to the sum of the class A investor interest and the class
B investor interest has been deposited in the principal funding account for
credit to the relevant series principal funding ledger, or (2) during the
regulated amortisation period or the rapid amortisation period, on which the
class B investor interest is paid in full, is called the "CLASS C PRINCIPAL
COMMENCEMENT DATE".
Starting with the class C principal commencement date, to the extent there
are funds remaining after distributing the class A monthly principal amount and
the class B monthly principal amount, as applicable, the receivables trustee
will withdraw the class C monthly principal amount from the relevant series
principal collections ledger and:
* for a distribution date for the controlled accumulation period,
deposit it into the principal funding account for credit to the
relevant series principal funding ledger; or
* for a distribution date during the regulated amortisation period or
the rapid amortisation period, deposit it in the relevant loan note
issuer distribution account of the series.
99
The "CLASS C MONTHLY PRINCIPAL AMOUNT" is the lesser of:
* the available investor principal collections standing to the credit of
the relevant series principal collections ledger on that distribution
date and any retained principal collections in respect of that series
on that distribution date -- excluding available investor principal
collections identified as loss make-up (default), loss make-up
(charge-off) or refunded utilised principal collections standing to
the credit of the relevant series finance charge collections ledger
minus, if applicable, the class A monthly principal amount and the
class B monthly principal amount;
* for each distribution date in the controlled accumulation period or
the regulated amortisation period, the controlled deposit amount for
that distribution date -- after taking into account the class A
monthly principal amount and the class B monthly principal amount; and
* the class C adjusted investor interest -- adjusted to account for any
unreimbursed reductions in the class C investor interest for reasons
other than principal payments.
The "INVESTOR PRINCIPAL COLLECTIONS" means, for any monthly period the sum
of:
* principal collections credited to the principal collections ledger
identified for the specified relevant series, during the controlled
accumulation period, the regulated amortisation period and the rapid
amortisation period; plus
* amounts treated as investor principal collections equal to the class A
investor default amount and distributed out of class A available
funds, available spread, reallocated class C principal collections and
reallocated class B principal collections; plus
* amounts treated as investor principal collections equal to the class B
investor default amount and distributed out of available spread and
reallocated class C principal collections; plus
* amounts treated as investor principal collections up to the class C
investor default amount and distributed out of available spread; plus
* available spread treated as investor principal collections used to
reimburse class A investor charge-offs, any reductions in the class B
investor interest and any reductions in the class C investor interest;
plus
* unavailable principal collections credited to the principal
collections ledger identified for the relevant series and to be
treated as investor principal collections; see "Unavailable Principal
Collections".
The "REINVESTED INVESTOR PRINCIPAL COLLECTIONS" means, for any operating
business day:
* principal collections credited to the principal collections ledger
identified for the specified relevant series, after adjustments for
unavailable principal collections during the controlled accumulation
period, the regulated amortisation period and the rapid amortisation
period -- for any day called the "DAILY INVESTOR PRINCIPAL
COLLECTIONS"; minus
* an amount equal to the product of the class B floating percentage and
the daily investor principal collections; minus
* an amount equal to the product of the class C floating percentage and
the daily investor principal collections.
On each distribution date for the controlled accumulation period, the
regulated amortisation period or the rapid amortisation period, the receivables
trustee will transfer the class A monthly principal amount from the relevant
series principal collections ledger and:
* for a distribution date in the controlled accumulation period, deposit
it into the principal funding account for credit to the relevant
series principal funding ledger; or
* for a distribution date during the regulated amortisation period or
rapid amortisation period, deposit it in the relevant loan note issuer
distribution account of the series.
On the earlier of (1) the first distribution date during the regulated
amortisation period or the rapid amortisation period and (2) the relevant
series scheduled redemption date specified in the relevant series final terms,
and on each distribution date after that, the receivables trustee will be
authorised to distribute the following amounts in the following manner:
(1) from the relevant series principal funding ledger, an amount equal to
the lesser of:
100
* the amount on deposit in the relevant series principal funding
ledger; and
* the class A investor interest;
will be deposited in the relevant loan note issuer distribution
account of the series. The loan note issuer will use this amount to
redeem the relevant series loan note;
(2) from the relevant loan note issuer distribution account an amount
equal to the lesser of:
* the amount deposited into the relevant loan note issuer
distribution account (in respect of the relevant series in
question); and
* the class A investor interest, after taking into account the
amount described in paragraph (1) above;
will be used by the loan note issuer to redeem the related relevant
series loan note.
Starting on the earlier of (1) if the amount on deposit in the relevant
series principal funding ledger exceeds the class A investor interest, the
relevant series scheduled redemption date specified in the relevant series
final terms and (2) during the regulated amortisation period or the rapid
amortisation period, the class B principal commencement date, and on each
distribution date after that, the receivables trustee will be authorised to
distribute the following amounts in the following manner:
(1) from the relevant series principal funding ledger, an amount equal to
the lesser of:
* the amount on deposit in that series' principal funding ledger in
excess of the class A investor interest; and
* the class B investor interest;
will be deposited to the relevant loan note issuer distribution
account. The loan note issuer will use this amount to redeem that
series loan note;
(2) from the relevant loan note issuer distribution account an amount
equal to the lesser of:
* the amount deposited in to the relevant loan note issuer
distribution account (in respect of the relevant series in
question); and
* the class B investor interest, after taking into account the
amount described in paragraph (1) above;
will be used by the loan note issuer to redeem the related relevant
loan note.
Starting on the earlier of (1) if the amount on deposit in the relevant
series principal funding ledger exceeds the sum of the class A investor
interest and the class B investor interest, the relevant series scheduled
redemption date specified in the relevant series final terms, and (2) during
the regulated amortisation period or the rapid amortisation period, the class C
principal commencement date and on each distribution date after that, the
receivables trustee will be authorised to distribute the following amounts in
the following manner:
(1) from the relevant series principal funding ledger, an amount equal to
the lesser of:
* the amount on deposit in that series' principal funding ledger in
excess of the sum of the class A investor interest and the class
B investor interest; and
* the class C investor interest;
will be deposited in the relevant loan note issuer distribution
account. The loan note issuer will use this amount to redeem that part
of the related relevant loan note referable to the class C investor
interest in whole, if the amount distributed is equal to the class C
investor interest, or to repay principal outstanding on that part of
the related relevant loan note referable to the class C investor
interest if the amount is less.
(2) from the relevant loan note issuer distribution account, an amount
equal to the lesser of:
* the amount deposited in the relevant loan note issuer
distribution account (in respect of the relevant series in
question); and
* the class C investor interest after taking into account the
amount described in paragraph (1) above;
will be used by the loan note issuer to redeem the related relevant
loan note.
101
POSTPONEMENT OF CONTROLLED ACCUMULATION PERIOD
The date on which the controlled accumulation period is scheduled to begin
for a specific series will be disclosed in the related final terms for that
series. If the controlled accumulation period length, which is explained in the
next paragraph, is less than the number of months set out in the final terms,
the revolving period may be extended and the start of the controlled
accumulation period will be postponed. The controlled accumulation period for a
series will, in any event, begin no later than the date disclosed in the
relevant final terms.
On the determination date immediately before the distribution date that is
prior to the distribution date on which a controlled accumulation period is
scheduled to commence, and on each determination date after that, until the
controlled accumulation period begins, the servicer will determine the
"CONTROLLED ACCUMULATION PERIOD LENGTH". This is the number of months that the
servicer expects will be needed to fully fund the relevant series in question's
principal funding ledger no later than that series' scheduled redemption date.
This calculation is based on:
* the expected monthly principal collections that the servicer
calculates will be available to the adjusted investor interests of all
series in group one -- other than companion series -- assuming a
principal payment rate no greater than the lowest monthly principal
payment rate on the receivables for the twelve months before; and
* the amount of principal expected to be distributable to the investor
interests of all series in group one -- other than companion series --
that are not expected to be in their revolving periods during the
controlled accumulation period.
If the controlled accumulation period length is less than the number of
months set out in the final terms, the servicer may, at its option, postpone
the start of the controlled accumulation period such that the number of
calendar months in the controlled accumulation period will be at least equal to
the controlled accumulation period length.
The effect of this is to permit the reduction of the length of the
controlled accumulation period based on the investor interests of future series
that are scheduled to be in their revolving periods during the controlled
accumulation period and taking into account changes in the principal payment
rate occurring after the closing date. The length of the controlled
accumulation period will not be less than one month.
UNAVAILABLE PRINCIPAL COLLECTIONS
If on any day:
(1) the sum of the aggregate adjusted investor interest and the aggregate
originator interests is zero; and
(2) a principal collection arises/becomes available,
it will be called an "UNAVAILABLE PRINCIPAL COLLECTION" and will be held for
the originators.
SHARED PRINCIPAL COLLECTIONS
Each series investor interest under the programme is expected to be in group
one. This means that each outstanding series shares principal collections with
other series in group one. The "SHARED PRINCIPAL COLLECTIONS" for group one are
calculated as the aggregate of the floating investor percentage of principal
collections for those series in their revolving periods plus the aggregate of
the amount if any by which the fixed investor percentage of principal
collections for each series in a period other than a revolving period exceeds
the following amounts in respect of each series:
* until the relevant series scheduled redemption date, for any
monthly period during the controlled accumulation period, deposits
of the controlled deposit amount to the relevant series principal
funding ledger;
* during the regulated amortisation period, deposits of the
controlled deposit amount to the loan note issuer distribution
account for the relevant series; and
* during the controlled accumulation period, on the relevant series
scheduled redemption date, and during the regulated amortisation
period and the rapid amortisation period, payments for the relevant
series.
The receivables trustee will utilise the shared principal collections to
cover any scheduled or permitted principal distributions to beneficiaries, and
deposits to principal funding ledgers, if any, for any series in group one that
have not been covered out of the principal collections distributed to that
102
series. These uncovered principal distributions and deposits are called
"PRINCIPAL SHORTFALLS". Shared principal collections will not be used to cover
investor charge-offs for any class of any series.
If principal shortfalls exceed shared principal collections for any monthly
period, shared principal collections will be allocated in proportion among the
outstanding series in group one based on the amounts of principal shortfalls
for each series. To the extent that shared principal collections exceed
principal shortfalls, the balance will continue to be held on an undivided
basis and will in the normal course be paid to the originator beneficiaries.
DEFAULTED RECEIVABLES; INVESTOR CHARGE-OFFS
On each distribution date, the receivables trustee will calculate the
investor default amount for the previous monthly period. The "INVESTOR DEFAULT
AMOUNT" for a series investor interest will be the total of the product of the
floating investor percentage for that series and the default amount of each
defaulted account in each case for the previous monthly period.
The "DEFAULT AMOUNT" for any defaulted account will be the amount of
eligible principal receivables in the defaulted account on the day the account
became a defaulted account.
The investor default amount will be notionally allocated in calculations to
each notional class (comprised, if applicable, of all notional sub-classes
thereof) of a series investor interest based on its floating percentage
calculation during the monthly period. These calculations for a series investor
interest will be called the "CLASS A INVESTOR DEFAULT AMOUNT," the "CLASS B
INVESTOR DEFAULT AMOUNT" and the "CLASS C INVESTOR DEFAULT AMOUNT".
On each distribution date, if the class A investor default amount for a
specific series investor interest for the prior monthly period exceeds the sum
of:
* class A available funds;
* available spread;
* reallocated class C principal collections; and
* reallocated class B principal collections,
in each case, to the extent available to cover the class A investor default
amount, then the class C investor interest will be reduced by the amount of the
excess, but not by more than the remaining class A investor default amount.
This reduction to the class C investor interest will be made only after giving
effect to reductions to the class C investor interest for any class C investor
charge-offs, any reallocated class B principal collections and any reallocated
class C principal collections.
If this reduction would cause the class C investor interest to be a negative
number, it will be reduced to zero. In this case, the class B investor interest
will be reduced by the amount by which the class C investor interest would have
been reduced below zero, but not by more than the remaining class A investor
default amount not covered by a reduction in the class C investor interest.
This reduction in the class B investor interest will be made only after giving
effect to reductions for any class B investor charge-offs and any reallocated
class B principal collections not covered by a reduction in the class C
investor interest.
If this reduction would cause the class B investor interest to be a negative
number, the class B investor interest will be reduced to zero. In this case,
the class A investor interest will be reduced by the amount by which the class
B investor interest would have been reduced below zero, but not by more than
the remaining class A investor default amount not covered by a reduction in the
class C investor interest or the class B investor interest. For a series
investor interest this is called a "CLASS A INVESTOR CHARGE-OFF" and may have
the effect of slowing or reducing the return of principal to the loan note
issuer referable for calculation purposes to the class A investor interest for
that specific series.
If the class A investor interest for that specific series has been reduced
by any class A investor charge-offs, it will be reimbursed on any distribution
date by the amount of available spread utilised for that purpose, but not by
more than the total amount by which the class A investor interest has been
reduced. See "Available Spread".
On each distribution date, if the class B investor default amount for a
specific series investor interest for the prior monthly period exceeds the sum
of:
* available spread; and
* reallocated class C principal collections,
103
in each case to the extent available to cover the class B investor default
amount, then the class C investor interest will be reduced by the amount of the
excess, but not by more than the remaining class B investor default amount.
This reduction to the class C investor interest will be made only after giving
effect to any reductions to the class C investor interest for any class C
investor charge-offs, any reallocated class B principal collections, any
reallocated class C principal collections and any reductions in the class C
investor interest to cover the class A investor default amount.
If this reduction would cause the class C investor interest to be a negative
number, it will be reduced to zero. In this case, the class B investor interest
will be reduced by the amount by which the class C investor interest would have
been reduced below zero, but not by more than the remaining class B investor
default amount not covered by a reduction to the class C investor interest. For
each series this is called a "CLASS B INVESTOR CHARGE-OFF" and may have the
effect of slowing or reducing the return of principal to the loan note issuer
referable for calculation purposes to the class B investor interest.
If the class B investor interest has been reduced for any reasons other than
the payment of principal, it will be reimbursed on any distribution date by the
amount of available spread utilised for that purpose, but not by more than the
total amount by which the class B investor interest has been reduced. See
"Available Spread".
On each distribution date, if the class C investor default amount for the
prior monthly period exceeds the amount of available spread available to cover
the class C investor default amount, the class C investor interest will be
reduced by the amount of the excess, but not by more than the remaining class C
investor default amount. For a series investor interest this is called a "CLASS
C INVESTOR CHARGE-OFF", which may have the effect of slowing or reducing the
return of principal to the loan note issuer referable for calculation purposes
to the class C investor interest.
If the class C investor interest has been reduced for any reason other than
the payment of principal, it will be reimbursed on any distribution date by the
amount of available spread allocated and available for that purpose, but not by
more than the total amount by which the class C investor interest has been so
reduced. See "Available Spread".
The "REALLOCATED CLASS B PRINCIPAL COLLECTIONS" for a series investor
interest means, for any distribution date, an amount calculated as referable to
the class B investor interest for the related monthly period in an amount not
to exceed the class A required amount, after applying available spread and
reallocated class C principal collections to cover the class A required amount.
Reallocated class B principal collections cannot exceed the class B investor
interest after giving effect to any unreimbursed class B investor charge-offs.
Reallocated class B principal collections not covered by a reduction in the
class C investor interest will reduce the class B investor interest.
The "REALLOCATED CLASS C PRINCIPAL COLLECTIONS" for a series investor
interest means, for any distribution date, an amount calculated as referable to
the class C investor interest for the related monthly period in an amount not
to exceed the class A required amount and the class B required amount after
applying available spread to cover the class A required amount and the class B
required amount. Reallocated class C principal collections cannot exceed the
class C investor interest after giving effect to any unreimbursed class C
investor charge-offs. Reallocated class C principal collections will reduce the
class C investor interest.
However the sum of reallocated class B principal collections and reallocated
class C principal collections will not exceed the retained principal
collections for the related monthly period.
The "CLASS A REQUIRED AMOUNT" for a series investor interest on any
distribution date will be the amount, if any, by which the sum of:
* an amount equal to the class A monthly required expense amount;
* an amount equal to the total amount of class A servicing fee for
the relevant monthly period and any due and unpaid class A
servicing fee from prior distribution dates and an amount equal to
the class A cash management fee for the relevant monthly period and
any due and unpaid cash management fees from prior distribution
dates; and
* an amount equal to the class A investor default amount,
exceeds class A available funds.
The "CLASS B REQUIRED AMOUNT" for a series investor interest on any
distribution date will be the sum of (1) the amount, if any, by which the sum
of:
* an amount equal to the class B monthly required expense amount; and
104
* an amount equal to the total amount of class B servicing fee for
the relevant monthly period and any due and unpaid class B
servicing fees and an amount equal to the class B cash management
fee for the relevant monthly period and any due and unpaid cash
management fees from prior distribution dates,
exceeds the class B available funds, and (2) the class B investor default
amount.
AVAILABLE SPREAD
The "AVAILABLE SPREAD" for a series investor interest on any distribution
date will be the sum of class A available spread, class B available spread and
class C available spread.
On each distribution date, the receivables trustee, acting on the advice of
the trust cash manager, will be obliged to apply available spread to make the
following payments in the following priority:
(1) an amount equal to the class A required amount, if any, will be
used to make such payments as will reduce the class A required
amount to zero; if the class A required amount is more than the
amount of available spread, available spread will be applied in the
order of priority in which class A available funds are to be
distributed on any distribution date;
(2) an amount equal to the total amount of class A investor charge-offs
that have not been previously reimbursed will be paid to the
receivables trustee by way of additional consideration for the
grant of the loan note issuer's interest in the receivables trust
to reinstate the class A investor interest, such payment being
identified as loss make-up (charge-offs);
(3) an amount equal to the class B required amount -- excluding the
class B investor default amount -- will be used to make such
payments as will reduce the class B required amount to zero; if the
class B required amount -- excluding the class B investor default
amount -- is more than the amount of available spread, available
spread will be applied first in the order of priority with which
class B available funds are to be distributed on any distribution
date. Then to pay to the receivables trustee by way of additional
consideration for the grant of the loan note issuer's interest in
the receivables trust an amount not exceeding the class B investor
default amount such payment being identified as loss make-up
(default);
(4) an amount equal to the total amount by which the class B investor
interest has been reduced below the class B initial investor
interest for reasons other than the payment of principal -- but not
in excess of the aggregate amount of such reductions which have not
been previously reimbursed -- will be paid to the receivables
trustee by way of additional consideration for the grant of the
loan note issuer's interest in the receivables trust such payment
being identified as loss make-up (charge-off) or as being in
respect of refunded utilised principal collections, as appropriate;
(5) an amount equal to the sum of the class C monthly finance amount,
the class C deficiency amount and the class C additional finance
amount for the relevant series -- called, together with items (10)
and (12)(B) below, the "CLASS C MONTHLY DISTRIBUTION AMOUNT" --
will be credited to the relevant loan note issuer distribution
account of the series;
(6) an amount equal to the class C investor default amount will be paid
to the receivables trustee by way of additional consideration for
the grant of the loan note issuer's interest in the receivables
trust such payment being identified as loss make-up (default);
(7) an amount equal to the total amount by which the class C investor
interest has been reduced below the class C initial investor
interest for reasons other than the payment of principal -- but not
in excess of the total amount of the reductions that have not been
previously reimbursed -- will be paid to the receivables trustee by
way of additional consideration for the grant of the loan note
issuer's interest in the receivables trust to reinstate the class C
investor interest such payment being identified as loss make-up
(charge-off) or as being in respect of refunded utilised principal
collections, as appropriate;
105
(8) on each distribution date from and after the reserve account
funding date, but before the date on which the reserve account for
the relevant series terminates, an amount up to the excess, if any,
of the required reserve account amount for the relevant series over
the amount on deposit in the reserve account, for the relevant
series will be deposited into the reserve account for the relevant
series;
(9) on each distribution date prior to the class C release date, an
amount up to the excess, if any, of the required spread account
amount for the relevant series over the available spread account
amount for the relevant series will be deposited into the spread
account for the relevant series;
(10) on each distribution date, the monthly expenses loan amount will be
deposited in the relevant loan note issuer distribution account of
the series and will be considered part of the class C monthly
distribution amount;
(11) an amount equal to any investor indemnity amount for the relevant
series (as defined below) will be paid to the receivables trustee
by way of additional consideration for the grant of the loan note
issuer's interest in the receivables trust such payment being
identified as the investor indemnity amount for the relevant
series;
(12) on each distribution date -- in no order of priority between them
but in proportion to the respective amounts due -- an amount equal
to: (A) the loan note issuer return for the relevant series will be
deposited in the relevant loan note issuer distribution account,
and (B) an amount equal to the issuer profit amount will be
deposited in the relevant loan note issuer distribution account and
will be considered part of the class C monthly distribution amount;
and
(13) the balance, if any, after giving effect to the payments made under
paragraphs (1) through (12) above will be paid to the loan note
issuer, such payment being identified as "EXCESS SPREAD".
The "ISSUER PROFIT AMOUNT" in respect of a particular series means the
amount each month equal to:
days in calculation period x annual series issuer profit
amount (as specified in the final terms)
--------------------------------------------------------
365
to be earned by the issuing entity annually until that series' scheduled
maturity date.
The "LOAN NOTE ISSUER RETURN" on any distribution date for the relevant
series means an amount equal to:
days in calculation period investor interest for
- -------------------------- X 0.01 per cent. X
365 the relevant series
The "MONTHLY EXPENSES LOAN AMOUNT" means the amount equal to any monthly
interest accrual and any scheduled principal payment due and repayable
(including any amount outstanding in respect of any previous distribution
dates), if any, on any series expense loan drawing in respect of any obligation
to pay expenses related to the issue of a series of notes on the relevant
closing date.
AGGREGATE INVESTOR INDEMNITY AMOUNT
By each distribution date, the receivables trustee will calculate the
aggregate investor indemnity amount for each outstanding series. The "AGGREGATE
INVESTOR INDEMNITY AMOUNT" is the sum of all investor indemnity amounts for all
series for the related monthly period.
An "INVESTOR INDEMNITY AMOUNT" means for any series, the amount of any
originator section 75 liability claimed from the receivables trustee by the
originators under the trust section 75 indemnity allocated to that series,
calculated as follows:
originator section 75 liability X floating investor percentage for that series
The "ORIGINATOR SECTION 75 LIABILITY" for any series is the liability that
the originators have for any designated account because of section 75 of the
Consumer Credit Act. The originator section 75 liability cannot exceed the
original outstanding face amount of the principal receivable relating to the
transaction giving rise to the liability. See "Risk Factors -- Application of
the Consumer Credit Act 1974 may impede collection efforts and could cause
early redemption of your notes and/or a loss on your notes".
106
The portion of the aggregate investor indemnity amount allocable to a series
investor interest will be payable only if amounts are available from available
spread to pay it. See "Available Spread". If available spread available on any
distribution date is not enough to pay the portion of the aggregate investor
indemnity amount allocable to a series investor interest otherwise payable on
that date, the excess will be carried forward and paid on subsequent
distribution dates to the extent amounts of available spread are available to
pay them.
PRINCIPAL FUNDING ACCOUNT
The receivables trustee established prior to 27 March 2000 a principal
funding account at RBSI at its branch located at Royal Bank House, 71 Bath
Street, St. Helier, Jersey, JE4 8PJ and will continue to maintain such account
with RBSI or with another bank which meets rating agency approval -- on a
segregated basis on separate trust for the loan note issuer. The receivables
trustee also established and maintains within the principal funding account,
principal funding ledgers for each series, and shall maintain such a ledger for
each newly created series investor interest, which we shall call the "SERIES
PRINCIPAL FUNDING LEDGER". During the controlled accumulation period for a
series, the receivables trustee will transfer the amounts described under
"Calculation of Principal Collections to be Distributed to the Loan Note Issuer
in Respect of Each Series" to the relevant series principal funding ledger.
Funds on deposit in a specific series' principal funding ledger will be
invested until the following distribution date by the receivables trustee in
permitted investments. Investment earnings, net of investment losses and
expenses, on funds on deposit in a series principal funding ledger are called
"PRINCIPAL FUNDING INVESTMENT PROCEEDS".
Principal funding investment proceeds for a series will be used to pay the
class A covered amount.
The "CLASS A COVERED AMOUNT" for a series is calculated as follows:
days in
calculation
period class A LN the amounts on deposit in the relevant series
- ------------ X X
365 rate principal funding ledger
where the amount on deposit in the relevant series principal funding ledger is
calculated as of the last day of the monthly period before the monthly period
in which the relevant distribution date occurs.
Principal funding investment proceeds up to the class A covered amount will
be transferred to the relevant series collection account by each distribution
date and credited to the relevant series finance charge collections ledger and
regarded as class A available funds.
If on any distribution date during the controlled accumulation period, the
principal funding investment proceeds exceeds the class A covered amount, the
loan note issuer will be obligated to pay that excess to the receivables
trustee as additional consideration for the grant of the loan note issuer's
interest in the receivables trust, such payment being identified as "SURPLUS
INVESTMENT INCOME". If the principal funding investment proceeds are less than
the class A covered amount, a withdrawal will be made from the reserve account,
in respect of that specific series investor interest -- to the extent funds are
available -- and will be transferred and credited to the relevant series
finance charge collections ledger -- and the amount withdrawn will be added to
class A available funds. The amount of this withdrawal will be reduced to the
extent available spread would be available for deposit in the reserve account
for that specific series investor interest. See "Reserve Account" and
"Available Spread".
During the regulated amortisation period and the rapid amortisation period
the amount of principal collections credited to the relevant series principal
collections ledger will be transferred each month to the loan note issuer
distribution account for that specific series investor interest first for the
class A investor interest, second for the class B investor interest and third
for the class C investor interest until that specific series investor interest
termination date.
RESERVE ACCOUNT
The receivables trustee established prior to 27 March 2000 a reserve account
at RBSI at its branch located at Royal Bank House, 71 Bath Street, St. Helier,
Jersey, JE4 8PJ and will continue to maintain such account with RBSI or with
another bank which meets rating agency approval -- on a segregated basis on
separate trust for the loan note issuer. The receivables trustee also
established
107
and maintains within the reserve account, reserve ledgers for each series, and
shall maintain such a ledger for each new series being created, which we shall
call the "SERIES RESERVE LEDGER". The series reserve ledger will be established
to assist with the loan note issuer's payment of the class A monthly finance
amounts during the controlled accumulation period.
On each distribution date from and after the reserve account funding date,
but before the termination of the relevant series reserve ledger, the loan note
issuer will be contractually obliged to apply available spread in the order of
priority described in "Available Spread" to increase the amount on deposit in
the relevant series reserve ledger, up to the required reserve amount for that
series investor interest.
The "RESERVE ACCOUNT FUNDING DATE" will be the distribution date that starts
no later than three months before the start of the controlled accumulation
period.
The "REQUIRED RESERVE AMOUNT" for any series for any distribution date on or
after the reserve account funding date will be:
* such amount as is specified in the relevant final terms; or
* subject to the conditions described in the next paragraph, any
other amount designated by the originator beneficiaries.
If, on or before the reserve account funding date for your series, the
originator beneficiaries designate a lesser amount, they must provide the trust
cash manager and the receivables trustee with evidence that each rating agency
has notified the originators, the trust cash manager and the receivables
trustee that the lesser amount will not result in the rating agency reducing or
withdrawing its then existing rating of any outstanding related beneficiary
debt. Also, the originator beneficiaries must deliver to the receivables
trustee an officer's certificate to the effect that, based on the facts known
to that officer at that time, in the reasonable belief of the originator
beneficiaries, the designation will not cause a pay out event to occur or an
event that, after the giving of notice or the lapse of time, would cause a pay
out event to occur.
On each distribution date, after giving effect to any deposit to be made to,
and any withdrawal to be made from, the relevant series reserve ledger on that
distribution date, the loan note issuer will withdraw from the relevant series
reserve ledger an amount equal to the excess, if any, of the amount on deposit
in the relevant series reserve ledger over the required reserve amount. The
loan note issuer will pay this amount to the receivables trustee by way of
additional consideration for the grant of the loan note issuer's interest in
the receivables trust, such payment being identified as the "SERIES RESERVE
LEDGER SURPLUS" for the relevant series.
To the extent required, the receivables trustee will be authorised to make
these payments on the loan note issuer's behalf.
All amounts on deposit in the series reserve ledger on any distribution date
will be invested by the receivables trustee in permitted investments until the
following distribution date. This will be done after giving effect to any
deposits to, or withdrawals from, the series reserve ledger to be made on that
distribution date. The interest and other income -- net of investment expenses
and losses -- earned on the investments will be retained in the series reserve
ledger if the amount on deposit in the series reserve ledger is less than the
required reserve amount for the relevant series. If the amount on deposit is
equal to or more than the required reserve amount, it will be credited to the
relevant series finance charge collection ledger (to which the series reserve
ledger relates) to be included in class A available funds.
On each distribution date in the controlled accumulation period before the
relevant series scheduled redemption date and on the first distribution date
during the regulated amortisation period or the rapid amortisation period, the
receivables trustee will withdraw an amount from the relevant series reserve
ledger and deposit it in that series' collection account for credit to that
relevant series finance charge collections ledger to be included in class A
available funds. This amount will be equal to the lesser of:
* the available amount on deposit in that series' reserve ledger; and
* the amount, if any, by which the class A covered amount is greater
than the principal funding investment proceeds.
The amount of this withdrawal will be reduced to the extent available spread
would be available for deposit in the relevant series reserve ledger.
A series reserve ledger will be terminated following the earlier to occur
of:
108
* the termination of the receivables trust; and
* the earlier of the first distribution date after the start of the
regulated amortisation period or the rapid amortisation period and
the distribution date right before that series' scheduled
redemption date.
When a series reserve ledger terminates, all amounts still on deposit in
that series' reserve ledger will be distributed to the receivables trustee by
way of additional consideration for the grant of the loan note issuer's
interest in receivables trust, such payment being identified as "SERIES RESERVE
LEDGER SURPLUS".
To the extent required, the receivables trustee will be authorised to make
these payments on the loan note issuer's behalf.
SPREAD ACCOUNT
The receivables trustee established prior to 27 March 2000 on a segregated
basis on separate trust for the loan note issuer a spread account at RBSI at
its branch located at Royal Bank House, 71 Bath Street, St. Helier, Jersey, JE4
8PJ (the "SPREAD ACCOUNT") and will continue to maintain such account with RBSI
or with another bank which meets rating agency approval. The receivables
trustee also established and maintains within the spread account, spread
ledgers for each series, and shall maintain such a ledger for each new series
created, which we shall call the "SERIES SPREAD LEDGER". Under the receivables
trust and trust cash management agreement, amounts that are deposited by the
loan note issuer in the series spread ledger will be used to fund shortfalls in
any of the class C monthly required expense amounts in respect of that specific
series. Amounts deposited in the series spread ledger will also be used to fund
the excess, if any, of the class C debt amount over the class C investor
interest, on the earlier of the date on which the class A investor interest and
the class B investor interest are being reduced to zero or the relevant series
termination date (the "CLASS C RELEASE DATE").
No amounts will be deposited into a series spread ledger on the issue date
of any series of notes (unless otherwise specified in the relevant final
terms), but instead each series spread ledger will be funded by available
spread transferred to the loan note issuer in respect of a series by
transferring available spread to that series spread ledger on any distribution
date to the extent that the funds on deposit in that series spread ledger (the
"AVAILABLE SPREAD ACCOUNT AMOUNT") are less than the required spread account
amount on that distribution date.
The "QUARTERLY EXCESS SPREAD PERCENTAGE" means, with respect to any
determination date, an amount equal to the percentage sum of the average
portfolio yield for the immediately preceding three monthly periods minus the
average expense rate for the immediately preceding three monthly periods unless
otherwise specified in the relevant final terms.
The "REQUIRED SPREAD ACCOUNT AMOUNT" for the relevant series will be
determined each month, and will be the result of the product of (i) the spread
account percentage (defined below) in effect on that date, and (ii) during (A)
the revolving period or the controlled accumulation period, the adjusted
investor interest, and (B) the regulated amortisation period or the rapid
amortisation period, the adjusted investor interest as of the last day of the
revolving period or, as the case may be, controlled accumulation period.
However, under no circumstances will the required spread account amount ever be
allowed to exceed the class C debt amount -- after taking into account any
payments to be made on the related distribution date.
The "SPREAD ACCOUNT PERCENTAGE" shall be determined by the amount of
quarterly excess spread percentage as specified in each set of final terms for
a particular series.
The available spread account amount may be invested at the direction of the
receivables trustee in permitted investments. For the purposes of the spread
account, reference in the definition of permitted investments to a rating in
the "HIGHEST RATING CATEGORY" shall be modified to require a rating from any
one of the following rating agencies of at least A-2 by Standard & Poor's, P-2
by Moody's or (if such investment is publicly rated by Fitch Ratings) F-2 by
Fitch Ratings. Earnings (net of losses and investment expenses) will, except as
otherwise indicated herein, not be deposited into the relevant series spread
ledger and will be paid by the loan note issuer to the receivables trustee by
way of additional consideration for the grant of the loan note issuer's
interest in the receivables trust such payment being identified as "INVESTMENT
PROCEEDS" referable to relevant series.
If, on any distribution date, the class C monthly required expense amount
exceeds the amount of available spread available for payment in respect of a
specific series investor interest, the loan
109
note issuer shall withdraw from the relevant series spread ledger the lesser of
(i) the available spread account amount (including investment earnings to the
extent necessary to fund such excess) on such distribution date, and (ii) the
amount of such excess. The loan note issuer shall deposit this amount that it
has withdrawn into the relevant series finance charge collections ledger, and
use this amount to meet the class C monthly required expense amount.
On and after the class C release date, if the class C investor default
amount on a distribution date exceeds the amount of available spread, to the
extent available for the funding thereof, the receivables trustee shall
withdraw from the relevant series spread ledger (after giving effect to any
withdrawals to be made pursuant to the two preceding paragraphs) on such
distribution date the lesser of (i) the available spread account amount
(including investment earnings to the extent necessary to fund such excess) and
(ii) the amount of such excess, and shall apply such amounts as provided in
paragraph (7) under "Series Available Spread".
The available spread account amount on any distribution date in excess of
the required spread account amount on such date will be paid to the loan note
issuer who will then pay such amounts to the receivables trustee by way of
additional consideration for the grant of the loan note issuer's interest in
the receivables trust, such payment being identified as "SPREAD ACCOUNT
SURPLUS" referable to a specific series. On the date on which all amounts
required to be distributed to the relevant loan note issuer distribution
account by the receivables trustee from the spread account have been paid in
full, all amounts, if any, then remaining in the relevant series spread ledger
shall be distributed to the loan note issuer who will then pay such amounts to
the receivables trustee by way of additional consideration for the grant of the
loan note issuer's interest in the receivables trust, such payment being
identified as "SPREAD ACCOUNT SURPLUS" referable to a specific series.
To the extent necessary, the receivables trustee will be authorised to make
these payments on the loan note issuer's behalf.
SERIES COLLECTION ACCOUNT
The receivables trustee established on 27 March 2000 a series collection
account at RBSI at its branch located in Royal Bank House, 71 Bath Street, St.
Helier, Jersey, JE4 8PJ and will continue to maintain such account with RBSI or
with another bank which meets rating agency approval -- on separate trust on a
segregated basis for the loan note issuer (the "SERIES COLLECTION ACCOUNT").
The series collection account will contain two separate ledgers in respect of
each newly created series, consisting of the series finance charge collections
ledger and the series principal collections ledger.
TRUSTEE PAYMENT AMOUNT
The share of the trustee payment amount payable on any distribution date in
respect of a series investor interest -- called the "INVESTOR TRUSTEE PAYMENT"
- -- will be calculated as follows:
investor interest for relevant series trustee
- --------------------------------------------------- X
total-of-investor-interests-of-series-for-which the payment amount
trustee payment amount was incurred
The share of the investor trustee payment as notionally calculated for each
class (including all notional sub-classes thereof (if any)) under a specific
series investor interest is equal to the product of:
* the floating percentage for the relevant class; and
* the investor trustee payment.
For each series this will be called the "CLASS A TRUSTEE PAYMENT AMOUNT,"
the "CLASS B TRUSTEE PAYMENT AMOUNT" and the "CLASS C TRUSTEE PAYMENT AMOUNT,"
respectively.
The investor trustee payment for any class will be paid out of amounts
segregated by the receivables trustee for the relevant loan note issuer in
respect of that series and calculated as constituting available funds for that
purpose for that class. See "Calculation and Distribution of Finance Charge
Collections and Acquired Interchange to the Loan Note Issuer" and "Available
Spread".
The portion of the trustee payment amount not allocated to each series will
be paid from cashflows under the receivables trust allocated to other
outstanding series, and in no event will a specific series be liable for these
payments.
110
QUALIFIED INSTITUTIONS
If the bank or banks at which any of the accounts listed below are held
ceases to be a qualified institution, then the receivables trustee will, within
10 operating business days, establish a new account to replace the affected
account or accounts, and will transfer any cash and interest to that new
account or accounts. The accounts referred to above are the:
* trustee collection account;
* trustee acquisition account;
* series collection account;
* reserve account; and
* principal funding account.
The receivables trustee may in its discretion elect to move any or all of
these accounts and the amounts credited to them from the qualified institution
at which they are kept as at the date of this base prospectus to another
qualified institution.
A "QUALIFIED INSTITUTION" means (1) an institution outside the United
Kingdom which at all times has a short-term unsecured debt rating of at least
A-1+ by Standard & Poor's and P-1 by Moody's or (2) an institution acceptable
to each rating agency.
SERIES PAY-OUT EVENTS
The events described below are called "SERIES PAY-OUT EVENTS" and will apply
to each series investor interest unless otherwise disclosed in the relevant
final terms:
(1) failure on the part of either of the originators:
* to make any payment or deposit required by the terms of the
receivables securitisation agreement within five operating
business days after the date that the payment or deposit is
required to be made; or
* duly to observe or perform any covenants or agreements in the
receivables securitisation agreement or the relevant series
supplement that has a material adverse effect on the interests of
the loan note issuer in respect of that specific series and which
continues unremedied for a period of 60 days after the date on
which written notice of the failure, requiring it to be remedied,
is given to the originators by the receivables trustee, or is
given to the originators and the receivables trustee by the loan
note issuer acting on the instructions of the holder of the
specific series loan note, and which unremedied, continues during
that 60 day period to have a material adverse effect on the
interests of the loan note issuer in respect of that specific
series for that period;
(2) any representation or warranty made by the originators in the
receivables securitisation agreement or the relevant series
supplement, or any information contained in a computer file or
microfiche list required to be delivered by the originators under the
receivables securitisation agreement:
* proves to have been incorrect in any material respect when made
or when delivered and continues to be incorrect in any material
respect for a period of 60 days after the date on which written
notice of the error, requiring it to be remedied, is given to the
originators by the receivables trustee, or is given to the
originators and the receivables trustee by the loan note issuer
acting on the instructions of the holder of the specific series
loan note; and
* as a result of which there is a material adverse effect on the
interests of the loan note issuer in respect of that series and
which continues unremedied during that 60 day period to have a
material adverse effect for that period;
(3) the average portfolio yield for any three consecutive monthly periods
is less than the average expense rate for those periods or, on any
determination date before the end of the third monthly period from the
closing date, the portfolio yield is less than the average expense
rate for that period;
111
(4) either:
* over any period of thirty consecutive days, either of the
originator interests averaged over that period is less than the
minimum originator interest for that period and the relevant
originator interest does not increase on or before the tenth
operating business day following that thirty day period to an
amount so that the average of the relevant originator interest as
a percentage of the average principal receivables transferred by
the relevant originator for such thirty day period, computed by
assuming that the amount of the increase of the relevant
originator interest by the last day of the ten operating business
day period, as compared to the relevant originator interest on
the last day of the thirty day period, would have existed in the
receivables trust during each day of the thirty day period, is at
least equal to the relevant minimum originator interest; or
* on the last day of any monthly period the total balance of
eligible receivables is less than the minimum aggregate principal
receivables, adjusted for any series having a companion series as
described in the supplement for that series, and the total
balance of eligible receivables fails to increase to an amount
equal to or greater than the minimum aggregate principal
receivables on or before the tenth operating business day
following that last day;
(5) any servicer default or cash manager default occurs that would have a
material adverse effect on the loan note issuer in respect of the
relevant series;
(6) the series investor interest is not reduced to zero on the relevant
series scheduled redemption date;
(7) where the notes to be issued by the issuer for a particular series
have the benefit of a swap agreement, the early termination, without
replacement, of the swap agreement as described in this base
prospectus under "Description of the Swap Agreement";
(8) the loan note issuer is required to withhold or deduct any amounts for
or on account of tax on the payment of any principal or interest in
respect of the relevant series loan note.
The events described in paragraphs (3) and (4) are "REGULATED AMORTISATION
TRIGGER EVENTS", and all other events comprise "RAPID AMORTISATION TRIGGER
EVENTS ".
If any event described in paragraphs (1), (2) or (5) occurs then, after the
applicable grace period, either (i) the receivables trustee or (ii) the loan
note issuer may declare that a series pay-out event has occurred in relation to
the specific series in question if the correct notice has been given. If the
loan note issuer declares that a series pay-out event has occurred, it must
have acted on the instructions of the holder of the relevant series loan note.
The loan note issuer must give a written notice to the originators, the
servicer and the receivables trustee that a series pay-out event has occurred.
If the receivables trustee declares that a series pay-out event has occurred it
must give a written notice to this effect to the originators, the servicer, the
loan note issuer and the trust cash manager. A series pay-out event will be
effective as of the date of the relevant notice. If any event in paragraphs
(3), (4), (6), (7) or (8) occurs, a series pay-out event will occur without any
notice or other action on the part of the receivables trustee or the loan note
issuer.
Unless described otherwise in the relevant final terms, the "PORTFOLIO
YIELD" for each series means, for any monthly period:
(A + B -- C) x 12
---------------- x 100%
D
where:
A = the finance charge collections distributed to that relevant
series;
B = acquired interchange distributed to that relevant series;
C = the investor default amount calculated as relevant to that
relevant series; and
D = the relevant series adjusted investor interest.
Unless described otherwise in the relevant final terms, the "EXPENSE RATE"
for each series means, for any distribution date:
(A -- B -- C + D + E) x 12
-------------------------- x 100%
F
112
where:
A = the sum of the class A monthly required expense amount, the
class B monthly required expense amount and the class C monthly
required expense amount for that relevant series;
B = principal funding investment proceeds up to the class A covered
amount;
C = the amount, if any, to be withdrawn from the reserve account
that is included in class A available funds;
D = the investor servicing fee;
E = the investor trust cash management fee; and
F = the relevant series adjusted investor interest.
Unless described otherwise in the relevant final terms, the "MINIMUM
ORIGINATOR INTEREST" in relation to each originator means 6 per cent. of the
average principal receivables transferred during a period of thirty consecutive
days by the relevant originator. The originators may reduce the minimum
originator interest in the following circumstances:
* upon 30 days prior notice to the receivables trustee, each rating
agency and any enhancement provider entitled to receive notice
under its supplement;
* upon written confirmation from each rating agency that the
reduction will not result in the reduction or withdrawal of the
ratings of the rating agency for any outstanding related
beneficiary debt, including, for the purposes of a particular
series, the notes; and
* delivery to the receivables trustee and each enhancement provider
of an officer's certificate stating that each originator reasonably
believes that the reduction will not, based on the facts known to
the officer at the time of the certification, cause, at that time
or in the future, a pay out event to occur for any investor
beneficiary.
The minimum originator interest in relation to each originator will never be
less than 2 per cent. of the average principal receivables transferred during a
period of thirty consecutive days by the relevant originator.
Unless described otherwise in the relevant final terms, the "MINIMUM
AGGREGATE PRINCIPAL RECEIVABLES" means, an amount equal to the sum of the
numerators used in the calculation of the investor percentages for principal
collections for all outstanding series on that date. For any series in its
controlled accumulation period, as defined in its supplement, with an investor
interest as of the date of determination equal to the balance on deposit in the
principal funding account for that series, the numerator used in the
calculation of the investor percentage for principal collections for that
eligible series will, only for the purpose of the definition of minimum
aggregate principal receivables, be zero.
The "AVERAGE PRINCIPAL RECEIVABLES" means, for any period of thirty
consecutive days, an amount equal to:
* the sum of the total balance of eligible principal receivables at
the end of each day during that period divided by;
* the number of days in that period.
The "COMPANION SERIES" means:
* each series that has been paired with another series so that the
reduction of the investor interest of the paired series results in
the increase of the investor interest of the other series, as
described in the related supplements; and
* the other series.
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THE SECURITY TRUST DEED
The principal agreement governing the loan notes will be the security trust
deed. The security trust deed is a framework document, which is modified for
each series by a supplement --- which we will call a loan note supplement. The
security trust deed, together with the loan note supplement for a series, has
six primary functions:
* it constitutes the loan note for the relevant series;
* it sets out the covenants of the loan note issuer in relation to
that loan note;
* it creates the security for that loan note;
* it sets out the pre-enforcement and post-enforcement procedures
relating to that loan note;
* it contains provisions necessary to comply with the Trust Indenture
Act; and
* it sets out the appointment of the security trustee, its powers and
responsibilities and the limitations on those responsibilities.
Each function is summarised below.
CONSTITUTION OF LOAN NOTES
The security trust deed, when supplemented by a loan note supplement, sets
out the form of the loan note, the terms and conditions of the loan note and
the conditions for the cancellation of any loan note. It also stipulates the
name of the registered holder of each loan note.
COVENANTS OF THE LOAN NOTE ISSUER
The security trust deed also contains covenants made by the loan note issuer
in favour of the security trustee on trust for each loan noteholder. The main
covenant is that the loan note issuer will pay interest and repay principal on
each loan note when due. Covenants are included to ensure that the loan note
issuer remains insolvency remote, and to give the security trustee access to
all information and reports that it may need in order to discharge its
responsibilities in relation to the loan noteholders.
LOAN NOTE SECURITY
The security trust deed and the loan note supplement together create the
security for a loan note. The security trust deed creates security for all
series of the loan note issuance programme, comprising:
* an assignment by way of first fixed security of the loan note
issuer's right, title and interest in the administration agreement;
and
* a floating charge granted by the loan note issuer over all of its
business and assets not otherwise secured under any loan note
supplement in favour of the security trustee.
Each loan note supplement will create separate security interests in respect
of each loan note. The security created in each series loan note supplement
includes an assignment by way of first fixed security of all of the loan note
issuer's right, title and interest:
* as the investor beneficiary of the receivables trust in respect of
such series;
* to any agreement relating to that series;
* to any sums of money standing to the credit of the loan note issuer
distribution account in respect of such series or any other bank
account of the loan note issuer which has not been expressly
charged in favour of another series;
* to any permitted investments in respect of such series; and
* to any amounts credited in respect of such series to any of the
bank accounts of the receivables trust.
The series loan note supplement also creates Jersey security interests in
relation to assets of the loan note issuer which are situated in Jersey.
ENFORCEMENT AND PRIORITY OF PAYMENTS
The security trust deed sets out the general procedures by which the
security trustee may take steps to enforce the security created by the loan
note issuer so that the security trustee can protect the interests of each of
the loan noteholders in accordance with the terms and conditions of the loan
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note. The security trust deed gives the security trustee a general discretion
to enforce the security situated outside Jersey, but also provides for the
security trustee to be instructed by the note trustee to take action in
relation to the enforcement of the loan note and security in Jersey. The
security trustee anticipates that it will always consult the note trustee prior
to taking any enforcement action in respect of secured assets situated outside
Jersey. The note trustee expects that it will always consult the noteholders
before taking any action. The security trustee is not, however, obliged to act
on the note trustee's directions unless it is indemnified and/or secured to its
satisfaction.
The security trust deed and the loan note supplement together set out the
priority in which the security trustee will pay out any monies that it receives
under the loan note before and after the security is enforced.
TRUST INDENTURE ACT COMPLIANCE
The security trust deed includes certain provisions required by the US Trust
Indenture Act of 1939 (the "US TRUST INDENTURE ACT"). Generally, these
provisions outline the duties, rights and responsibilities of the security
trustee and the loan note issuer and the rights of the loan noteholders.
Specifically these include, but are not limited to:
* the maintenance of a list of loan noteholders by the security
trustee;
* the provision of financial statements and other information by the
loan note issuer to the security trustee;
* the duty of the security trustee to use the same degree of care in
exercising its responsibilities as would be exercised by a prudent
person conducting its own affairs;
* the duty of the security trustee to notify all loan noteholders of
any events of default of which it has actual knowledge;
* the right of the security trustee to resign at any time by
notifying the loan note issuer in writing, and the ability of the
loan note issuer to remove the security trustee under certain
circumstances; and
* the requirement that the loan note issuer provide an annual
certificate to the note trustee as to the loan note issuer's
compliance with the conditions and covenants contained in the
security trust deed.
The security trust deed contains a provision that, if any other provision of
the security trust deed limits, qualifies or conflicts with another provision
which is required to be included in the security trust deed, and is not subject
to contractual waiver under the Trust Indenture Act, the Trust Indenture Act
will prevail.
APPOINTMENT, POWERS, RESPONSIBILITIES AND LIABILITY OF THE SECURITY TRUSTEE
The security trust deed also sets out the terms on which the security
trustee is appointed, the indemnification of the security trustee, the payment
it receives and the extent of the security trustee's authority to act beyond
its powers under English law. It also contains provisions limiting or excluding
liability in certain circumstances. The security trustee is also given the
ability to appoint a delegate or agent in the execution of any of its duties
under the security trust deed. The security trust deed also sets out the
circumstances in which the security trustee may resign or retire.
The security trust deed states that the security trustee is entitled to be
indemnified and/or secured and relieved from responsibility in certain
circumstances including, without restriction, in relation to taking action to
enforce security or debt which it holds. The security trustee is also entitled
to be paid its properly incurred costs and expenses in priority to the claims
of the loan noteholders.
The security trustee is not responsible for any liability which may be
suffered because any assets comprised in the security, or any deeds or
documents of title to such assets are inadequately insured or are held by
custodians on behalf of the security trustee. The security trustee is not bound
or concerned to examine or enquire into or be liable for any defect or failure
in the right or title of the loan note issuer to all or any of the property in
respect of which the loan note issuer has created security. The security
trustee is not liable for any failure, omission or defect in perfecting,
protecting or further assuring the security.
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The security trustee and its related companies are entitled to enter into
business transactions with the issuing entity, the loan note issuer, RBS,
NatWest or related companies of any of these, without accounting for any profit
resulting from those transactions.
The security trustee is relieved of liability for making searches or other
enquiries in relation to the assets comprising the security. The security
trustee has no responsibility in relation to the legality and the
enforceability of the trust arrangements and the connected security. The
security trustee will not be obliged to take any action which might result in
its incurring personal liabilities. The security trustee is not obliged to
monitor or investigate the performance of any other person under the documents
relating to the issuing entity, the loan note issuer or the documents relating
to the receivables trust and shall be entitled to assume, until it has actual
notice to the contrary, that all such persons are properly performing their
duties and that no pay out event has occurred, unless it receives express
notice to the contrary.
The security trustee may agree, without the consent of the issuing entity,
to (a) (except in relation to a basic terms modification (as defined in the
security trust deed)) any modification of, or to the waiver or authorisation of
any breach or proposed breach of the loan note, loan note supplement or
security trust deed, which is not, in the opinion of the security trustee,
materially prejudicial to the interests of the issuing entity or (b) any
modification of the loan note, loan note supplement or security trust deed,
which in the security trustee's opinion is to correct a manifest error or is of
a formal minor or technical nature. Any such modification, waiver,
authorisation or determination shall be binding on the issuing entity and,
unless the security trustee agrees otherwise, any such modification shall be
notified to the issuing entity in accordance with the terms and conditions of
the notes.
The security trustee is neither responsible for any deficiency which may
arise because it is liable to tax in respect of the proceeds of security, nor
for checking the calculations contained in or otherwise verifying any
information coming into its possession in relation to the receivables trust nor
for monitoring whether a loan event of default or event of default has
occurred.
The security trustee may resign at any time. The relevant secured creditors
may by direction in writing addressed to the security trustee and the loan note
issuer remove the security trustee. The loan note issuer may also remove the
security trustee if the security trustee is no longer eligible to act as
security trustee under the security trust deed or if the security trustee is
adjudged insolvent. In all circumstances, the loan note issuer must appoint a
successor security trustee for the loan notes. Any resignation or removal of
the security trustee and appointment of a successor security trustee will not
become effective until the successor security trustee accepts the appointment.
The security trust deed will be governed by English law and, to the extent
that it relates to security interests over assets in Jersey, by Jersey law.
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THE LOAN NOTES
On the relevant issue date of a series of notes, the loan note issuer will
issue an interest bearing loan note to the issuing entity designated with the
same series reference as your notes. That series loan note will mature for
redemption on the relevant series scheduled redemption date specified in the
final terms applicable to your notes. The Bank of New York at One Canada
Square, London E14 5EY will act as security trustee and registered holder in
relation to each series loan note.
A loan note issued in respect of one series may differ from loan notes
issued in respect of other series as to principal, interest and recourse to
security, as set out in the loan note supplement which constitutes that loan
note. See "The Security Trust Deed". The loan note issuer will only issue loan
notes denominated in sterling. The loan notes will be issued in registered form
and governed by English law. The loan notes will be listed on the Channel
Islands Stock Exchange or such other stock exchange as the loan note issuer may
choose.
The loan note issuer will pay the proceeds of each series loan note to the
receivables trustee and thereby increase its beneficial entitlement in the
receivables trust in respect of the relevant series. See "The Receivables
Trust" and "Use of Proceeds". The principal amount of the undivided beneficial
interest which vests with the loan note issuer as a result of its contribution
to the receivables trust on the closing date is the series investor interest.
See "Sources of Funds to Pay the Loan Notes --- General".
As an investor beneficiary of the receivables trust, the loan note issuer
will be entitled to receive payment, at specified times, of a portion of
collections of the receivables assigned or entrusted by the originators to the
receivables trustee. These payments will be used by the loan note issuer in and
towards redemption of the relevant series loan note.
The ability of the loan note issuer to meet its obligations to repay the
principal of and interest on each series loan note will be entirely dependent
on the receipt by it of funds from the receivables trust.
The loan note issuer and the security trustee will have no recourse to RBS,
NatWest or any of their affiliates other than:
* against the originators under the receivables securitisation
agreement for any breach of representations and obligations in
respect of the receivables; and
* against RBSI as administrator under the administration agreement
for any breach of its obligations as administrator.
The loan note of each series shall be redeemed on the scheduled redemption
date of the notes of such series unless a rapid amortisation period or a
regulated amortisation period commences with respect to such series whereupon
the series loan note shall be redeemed on the earlier of such time as the
relevant loan note has been repaid in full and the relevant series termination
date. If relevant the loan note has not been previously redeemed on the
scheduled redemption date or following any amortisation period, the relevant
loan note will be redeemed at its then principal amount outstanding on the
final redemption date together with all accrued and unpaid interest, deferred
interest and additional interest.
LIMITED RECOURSE
The obligations of the loan note issuer and certain other rights of the loan
note issuer under each series loan note and under the documents relating to
them, will be secured under the security trust deed by security interests over
the corresponding series investor interest. The security for each series will
be granted by the loan note issuer in favour of the security trustee. If the
net proceeds of the enforcement of security for a series following a mandatory
redemption after meeting the expenses of the security trustee, the registered
holder and any receiver are insufficient to make all payments due on the loan
note of that series, the assets of the loan note issuer securing other series
loan notes will not be available for payment of that shortfall.
SECURITY
If the security granted under the security trust deed is enforced following
a loan note event of default (as defined below), the monies paid to the loan
note issuer by the receivables trustee on each distribution date will be
applied in accordance with the priority of payments set out in the section
entitled "Cashflows of the Loan Note Issuer".
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CASHFLOWS OF THE LOAN NOTE ISSUER
Each series loan note supplement sets out how money is distributed under the
relevant series loan note to the loan noteholder (which will typically be the
issuing entity). Payments made from the relevant ledger in the relevant loan
note issuer distribution account with respect to each series will be made
monthly on a distribution date.
On each distribution date, the amount of funds held by the loan note issuer
in the relevant ledgers of the relevant loan note issuer distribution account
with respect to each series will be used to make the following payments in the
following order. The order of priority as set by each series loan note
supplement is the same both prior to and after the enforcement of security:
(1) an amount equal to the trustee payment amount referable to the
relevant series will be paid by the loan note issuer to the
receivables trustee as additional consideration for the grant of
the loan note issuer's interest in the receivables trust;
(2) an amount equal to the servicing fee payment amount referable to
the relevant series will be paid by the loan note issuer to the
servicer, and an amount equal to the cash management fee payment
amount will be paid by the loan note issuer to the receivables
trustee as additional consideration for the grant of the loan note
issuer's interest in the receivables trust;
(3) in no order of priority between them but in proportion to the
respective amounts due, the loan note issuer costs amount in
respect of the relevant series;
(4) an amount equal to the sum of the class A monthly distribution
amount, class B monthly distribution amount and class C monthly
distribution amount will be used by the loan note issuer to pay
interest due and unpaid on the relevant series loan note allocated
to each notional class or sub-class thereof (if any) with respect
to the relevant series;
(5) on a payment date during the regulated amortisation period or the
rapid amortisation period, or on the relevant series scheduled
redemption date, towards payment of principal amounts due and
unpaid on the loan note as allocated to each notional class or sub-
class thereof (if any) with respect to the relevant series;
(6) an amount equal to the loss make-up (default) and loss make-up
(charge-off) amounts plus refunded utilised principal collections
amount will be paid by the loan note issuer to the receivables
trustee as additional consideration for the grant of the loan note
issuer's interest in the receivables trust;
(7) an amount equal to the investor indemnity amount for the relevant
series will be paid by the loan note issuer to the receivables
trustee as additional consideration for the grant of the loan note
issuer's interest in the receivables trust;
(8) an amount equal to the loan note issuer return for the relevant
series will be transferred by the loan note issuer to the loan note
issuer profit ledger in respect of the relevant series;
(9) amounts remaining after distribution in accordance with the
payments made pursuant to items (1) to (8) above, if any, shall be
identified as excess spread and be paid in respect of each series
as further interest to the issuing entity ("FURTHER INTEREST"); and
(10) an amount equal to the deferred subscription price, if any,
received by the loan note issuer on that distribution date from the
issuing entity in respect of a particular series, ("DEFERRED
SUBSCRIPTION PRICE AMOUNT") shall be paid to the receivables
trustee in respect of that series, identified as additional
consideration for the grant of the loan note issuer's interest in
the receivables trust.
INTEREST AND PAYMENTS
The interest rate for any interest period on the relevant series loan note
will be determined by the cash manager of the loan note issuer in accordance
with the conditions of that series loan note. The interest amount in respect of
each series loan note for each interest period will be calculated as follows:
Y = A + B + C + D
where:
Y = interest amount on the relevant series loan note
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During any period:
A = class A monthly distribution amount
B = class B monthly distribution amount
C = class C monthly distribution amount
D = further interest
The interest rate for the first interest period of a loan note will be
determined on the date of issue of the relevant series of notes. Subsequently,
interest on each series loan note will be paid by the loan note issuer monthly
on each distribution date.
Payments due to be made under any series loan note are to be reduced in the
event that any amounts paid to the loan note issuer in respect of the investor
interest referable to that series are insufficient to fund in full payments due
on that series loan note. This is to prevent that amount being payable by the
receivables trustee in respect of the investor interest referable to that
series before it receives the corresponding amount in respect of collections
from cardholders. There will be a corresponding increase in the amounts payable
by the loan note issuer to make up this shortfall if the deferred amount is
subsequently received by the loan note issuer. The loan note issuer will be
liable to pay deferred interest on any such deferred amount. You should be
aware that if withholding tax is levied on any payments made under any series
loan note, payments by the loan note issuer will be reduced accordingly. Such
reduced payments will not be treated as deferred amounts and, accordingly,
would not bear interest and the loan note issuer is not obliged to make up the
shortfall.
If any withholding or deduction for any taxes, duties, assessments or
government charges is imposed, levied, collected, withheld or assessed on
payments of principal or interest on the loan note of any series by any
jurisdiction or any political subdivision or authority in or of any
jurisdiction having power to tax, none of the loan note issuer, the Jersey bank
account operator or the security trustee will be required to make any
additional payments to the holders of the loan notes for that withholding or
deduction.
LOAN NOTE EVENTS OF DEFAULT
Unless otherwise disclosed in the relevant final terms and loan note
supplement, for each series loan note, the occurrence and continuation of the
following events is called a loan note event of default:
* the loan note issuer fails to pay to, or to the order of, the
issuing entity any amount that it has received from the receivables
trustee in respect of principal or interest on the relevant series
loan note on its due date for payment; or
* the loan note issuer fails to perform or observe any of its other
obligations under the relevant series loan note, the relevant
series loan note supplement or the security trust deed and, except
where the failure is incapable of remedy, it remains unremedied for
30 days, in either case, after the security trustee has given
written notice to the loan note issuer, certifying any amount owed
to The Bank of New York in any of its capacities or to its
successors, that the failure is, in the opinion of the security
trustee, materially prejudicial to the interests of the holders of
the relevant series loan note; or
* where the issuing entity has entered into a swap agreement in
respect of your class or sub-class of notes in a series, the early
termination, without replacement within 30 days of such
termination, of the swap agreement as described in this base
prospectus under "Description of the Swap Agreement"; or
* a judgment or order for the payment of any amount is given against
the loan note issuer and continues unsatisfied and unstayed for a
period of 30 days after the date it is given or the date specified
for payment, if later; or
* a secured party takes possession or a receiver, administrative
receiver, administrator, examiner, manager or other similar officer
is appointed, over the whole or any part of the undertaking, assets
and revenues of the loan note issuer or an enforcement action is
begun or execution levied against any of the assets of the loan
note issuer; or
* the loan note issuer becomes insolvent or is unable to pay its
debts as they fall due or an administrator or liquidator of the
loan note issuer over the whole or any part of its business, assets
and revenues is appointed, or application for any appointment is
made, or the loan note issuer takes any action for a readjustment
or deferment of any of its
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obligations or makes a general assignment or an arrangement or
composition with, or for the benefit of, its creditors or declares
a moratorium in respect of any of its indebtedness or any guarantee
of indebtedness given by it or ceases or threatens to cease to
carry on all or any substantial part of its business; or
* an order is made or an effective resolution is passed for the
winding-up, liquidation or dissolution of the loan note issuer; or
* any action, condition or thing at any time required to be taken,
fulfilled or carried out in order to (1) enable the loan note
issuer lawfully to enter into, exercise its rights and perform and
comply with, its obligations under and in respect of the relevant
series loan note and the documents relating to it or (2) to ensure
that those obligations are legal, valid, binding and enforceable,
except as the enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganisation or other similar
laws affecting the enforcement of the rights of creditors generally
and as that enforceability may be limited by the effect of general
principles of equity, is not taken, fulfilled or, as the case may
be, carried out; or
* it is or will become unlawful for the loan note issuer to perform
or comply with any of its obligations under or in respect of the
relevant series loan note or the documents relating to it; or
* all or any substantial part of the business, assets and revenues of
the loan note issuer is condemned, seized or otherwise appropriated
by any person acting under the authority of any national, regional
or local government or the loan note issuer is prevented by such a
person from exercising normal control over all or any substantial
part of its business assets and revenues.
If a loan note event of default occurs then the security trustee shall be
bound to give an enforcement notice called a loan note enforcement notice ---
if it is indemnified and/or secured to its satisfaction and it is instructed to
do so by the holder of the relevant series loan note.
A "LOAN NOTE ENFORCEMENT NOTICE" is a written notice to the loan note issuer
declaring the relevant series loan note to be immediately due and payable. When
it is given, that series loan note will become immediately due and payable at
its principal amount outstanding together with accrued interest without further
action or formality. The security trustee shall promptly notify the issuing
entity that it has given a loan note enforcement notice to the loan note
issuer. A declaration that a series loan note has become immediately due and
payable will not, of itself, accelerate the timing or amount of redemption of
that series loan note.
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THE TRUST DEED AND TRUST DEED SUPPLEMENTS
GENERAL
Each series of notes issued by the issuing entity will be governed by the
trust deed made between the note trustee and the issuing entity. For each issue
of a series, the trust deed will be varied and supplemented upon the issue date
of such series by a supplemental trust deed for that series (each called a
"TRUST DEED SUPPLEMENT"). Under the trust deed, the issuing entity declares in
favour of the note trustee that it (i) assigns by way of security its rights,
title and interest in the programme documents and any documents specified in
the relevant final terms and (ii) creates a floating charge over the whole of
its undertaking and assets (other than those assets situated in Jersey) not
charged by any fixed charge upon the security trust set out in the trust deed
(as varied and supplemented by any trust deed supplement). The trust deed
supplement for a series will also secure, in respect of that series, the rights
of the issuing entity in and to the specific series loan note issued by the
loan note issuer in favour of the issuing entity which supports the series in
question. Together, the terms of the trust deed with the terms of a particular
trust deed supplement for a series will set out the following:
* the constitution of the notes for that series;
* the applicable covenants, representations and warranties of the
issuing entity in relation to that series;
* the security for that series;
* the pre-enforcement and post-enforcement payment priorities and
enforcement procedures relating to that series; and
* the appointment of the note trustee, its powers and
responsibilities and the limitations on those responsibilities.
CONSTITUTION OF THE NOTES
The trust deed, when supplemented by a particular trust deed supplement,
sets out the form of each note for the relevant series. It also sets out the
terms and conditions of each note and the conditions for the cancellation of
any note of that series.
COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE ISSUING ENTITY
The note trustee holds the benefit of the issuing entity covenants on trust
for the noteholders. The covenants are set out in the trust deed. Covenants
given by the issuing entity include compliance with and performance of all its
obligations under the conditions, the payment of interest and repayment of
principal on each note when due, and the provision to the note trustee of
access to all information and reports that it may need in order to discharge
its responsibilities in relation to the holders of the notes.
NOTE SECURITY
Each trust deed supplement will create a segregated security interest held
on trust by the note trustee for the benefit of, among others, the holders of
notes of that series and this security will be separate and distinct from the
security created by any other trust deed supplement.
The trust deed and each trust deed supplement creates Jersey security
interests (to the extent permitted by Jersey law) in relation to those of the
above assets of the issuing entity which support the series in question and
which are situated in Jersey (including the security taken over the bank
accounts of the issuing entity located in Jersey). All other security is
created under English law.
ENFORCEMENT AND PRIORITY OF PAYMENTS
The terms and provisions of the trust deed and each trust deed supplement
also set out the general procedures by which the note trustee may take steps to
enforce the security created thereunder so that the note trustee may protect
the interests of each of the noteholders (and any other secured parties) in
accordance with the terms and conditions of each series.
THE NOTES
As the holder of loan notes, the issuing entity will be entitled to receive
payments of interest and principal, at specified times, as well as certain
other amounts. These payments will be received
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by the issuing entity in respect of each relevant series and utilised in and
towards payment of interest on and redemption of the relevant series as well as
payments to the swap counterparty under any swap agreement (if one is entered
into in relation to any class or sub-class of notes) and payment of certain
other expenses. See "Cashflows of the issuing entity", "Description of the Swap
Agreements", "Interest and Payments" and "Scheduled redemption of a series"
below.
See also "The Loan Notes" for further information on the cashflows relating
to the loan notes utilised to pay interest on and to redeem the notes.
The ability of the issuing entity to meet its obligations to repay the
principal of, and to pay interest on, each series will depend on the receipt by
it of funds from the loan note issuer and receipt by it of amounts from a swap
counterparty under the swap agreement if one is entered into in relation to a
particular class or sub-class. See "Risk Factors" and "Description of the Swap
Agreements".
RECOURSE
It should be noted that if the net proceeds of the enforcement of security
in respect of a particular series following a mandatory redemption after
meeting the expenses of the note trustee and any receiver are insufficient to
make all payments due on the notes of that series, the assets of the issuing
entity already secured under a charge for the benefit of other series will not
be available for payment of that shortfall.
The issuing entity and the note trustee will have no recourse to RBS,
NatWest or any of their affiliates.
APPOINTMENT, POWERS, RESPONSIBILITIES AND LIABILITY OF THE NOTE TRUSTEE
The trust deed sets out, amongst other things, the terms upon which the note
trustee is appointed, the indemnification of the note trustee, the payment it
receives and the extent of the note trustee's authority to act beyond its
powers as a trustee under English law. It also contains provisions limiting or
excluding liability of the note trustee in certain circumstances. The note
trustee is also given the ability to appoint a delegate or agent in the
execution of any of its duties under the trust deed. The trust deed also sets
out the circumstances in which the note trustee may resign or retire.
The trust deed states that the note trustee is entitled to be indemnified
and/or secured and relieved from responsibility in certain circumstances
including, without restriction, in relation to taking action to enforce
security or debt which it holds. The note trustee is also entitled to be paid
its costs and expenses in priority to the claims of the noteholders.
The note trustee is not responsible for any liability which may be suffered
because any assets comprised in the security or any deeds or documents of title
to such assets, are inadequately insured or are held by custodians on behalf of
the note trustee.
The note trustee and its related companies are entitled to enter into
business transactions with the issuing entity, loan note issuer, RBS, NatWest
or related companies of any of these without accounting for any profit
resulting from those transactions.
The note trustee is relieved of liability for making searches or other
enquiries in relation to the assets comprising the security. The note trustee
has no responsibility in relation to the legality and the enforceability of the
trust arrangements and the connected security. The note trustee will not be
obliged to take any action which might result in its incurring personal
liabilities. The note trustee is not obliged to monitor or investigate the
performance of any other person under the documents relating to the issuing
entity, the loan note issuer or the documents relating to the receivables trust
and shall be entitled to assume, until it has actual notice to the contrary,
that all such persons are properly performing their duties and that no pay out
event has occurred, unless it receives express notice to the contrary.
The note trustee may agree, without the consent of the issuing entity, to
(a) (except in relation to a basic terms modification (as defined in the trust
deed)) any modification of, or to the waiver or authorisation of any breach or
proposed breach of the notes, trust deed supplement or trust deed which is not,
in the opinion of the note trustee, materially prejudicial to the interests of
the holders of the most senior class of outstanding notes or (b) any
modification of the notes, trust deed supplement or trust deed, which, in the
note trustee's opinion, is to correct a manifest error or is of a formal, minor
or technical nature. Any such modification, waiver, authorisation or
determination shall
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be binding on the noteholders and, unless the note trustee agrees otherwise,
any such modification shall be notified to the noteholders in accordance with
the terms and conditions of the notes.
The note trustee is not responsible for any deficiency which may arise in
relation to checking the calculations contained in or otherwise verifying any
information coming into its possession in relation to the receivables trust.
The trust deed will be governed by English law and, to the extent that it
relates to security interests over assets situated in Jersey, by Jersey law.
The note trustee is not bound or concerned to examine or enquire into or be
liable for any defect or failure in the right or title of the issuing entity to
all or any of the property in respect of which the issuing entity has created
security. The note trustee is not liable for any failure, omission or defect in
perfecting, protecting or further assuring the security. The note trustee is
not responsible for investigating, monitoring or supervising the observance or
performance by any person in respect of the charged property or otherwise. The
note trustee is not under any obligation to insure any of the security or any
deed or documents of title. The note trustee is not responsible for any
deficiency which may arise because it is liable to tax in respect of the
proceeds of security. The note trustee shall not be responsible for monitoring
whether a loan note event of default or event of default has occurred.
The note trustee may resign at any time. The noteholders shall together have
the power, exercisable by extraordinary resolution to remove the note trustee.
In all circumstances, the issuing entity must appoint a successor note trustee
for the notes. Any resignation or removal of the note trustee and appointment
of a successor note trustee will not become effective unless there remains a
note trustee (being a trust corporation) in office after such resignation or
removal.
THE US TRUST INDENTURE ACT
The trust deed includes certain provisions required by the US Trust
Indenture Act. Generally, these provisions outline the duties, rights and
responsibilities of the note trustee and the issuing entity and the rights of
the noteholders. Specifically these include, but are not limited to:
* the maintenance of a list of noteholders by the note trustee;
* the provision of financial statements and other information by the
issuing entity to the note trustee;
* the duty of the note trustee to use the same degree of care in
exercising its responsibilities as would be exercised by a prudent
person conducting its own affairs;
* the duty of the note trustee to notify all noteholders of any
events of default of which it has actual knowledge;
* the right of the note trustee to resign at any time by notifying
the issuing entity in writing, and the ability of the issuing
entity to remove the note trustee under certain circumstances; and
* the requirement that the issuing entity provide an annual
certificate to the note trustee as to the issuing entity's
compliance with the conditions and covenants contained in the trust
deed.
The trust deed contains a provision that, if any other provision of the
trust deed limits, qualifies or conflicts with another provision which is
required to be included in the trust deed by, and is not subject to contractual
waiver under, the Trust Indenture Act, the Trust Indenture Act provision will
prevail.
The note trustee will not be responsible for checking the calculations in or
otherwise verifying any information coming into its possession in relation to
the receivables trust.
The trust deed and each trust deed supplement will be governed by English
law and, where they relate to security interests over assets in Jersey, by
Jersey law to the extent of security in Jersey.
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CASHFLOWS OF THE ISSUER
Each series loan note sets out how money is distributed under that series
loan note to the issuing entity as the holder. For each series, the payment
made from the account of the loan note issuer to the relevant issuer
distribution account of the issuing entity will be made monthly on a
distribution date, which will also be the monthly interest payment date in
respect of the notes during any amortisation period and any notes which have a
monthly rate of interest.
Other payments, in particular, payments of interest on the notes prior to
any amortisation period, will be made on an interest payment date which falls
at the end of an annual period, with respect to the notes that earn a fixed
rate of interest, or at the end of a quarterly or monthly interest period, with
respect to notes that earn a floating rate of interest (see "Annual, quarterly
or monthly payments" and "Monthly payments" below). For a description of
principal payments, see "Scheduled redemption of a series" below.
AMOUNTS TRANSFERRED BY THE LOAN NOTE ISSUER RELATING TO THE ISSUER DISTRIBUTION
ACCOUNT
Amounts will be transferred by the loan note issuer and credited to the
relevant class or sub-class distribution ledger in the relevant issuer
distribution account with respect to the relevant series and class or sub-
class, from time to time, as specified in the relevant series loan note. These
payments and the utilisation thereof by the issuing entity are described in
detail in, respectively, "Monthly payments" below, "Interest and payments"
below and "Scheduled redemption of a series" below.
MONTHLY PAYMENTS
On each distribution date the aggregate of all amounts (including revenue
and principal) with respect to the relevant series and class or sub-class
thereof, will be transferred by the loan note issuer to the issuing entity and
credited to the issuer costs ledger, the excess spread ledger, the issuer
profit ledger, the expenses loan ledger or the relevant class or sub-class
distribution ledger (as applicable). Cash received on that distribution date
relating to the relevant series (but excluding amounts paid by the interest
rate swap counterparty relating to quarterly or annual payments during a period
which is not an amortisation period), including, if an amortisation period has
commenced since the previous interest payment date, any monthly distribution
amounts previously retained in the relevant class or sub-class distribution
ledger since the previous interest payment date, shall be applied, together
with any interest earned or investment proceeds on each relevant ledger, in the
following manner:
(1) an amount equal to the issuer costs amount for the series for such
distribution date shall be used or retained in the issuer costs ledger
for payment of each item of the issuer costs amount;
(2) in respect of the class A notes and each and every sub-class thereof,
in respect of a distribution date falling in any period that is not in
an amortisation period, an amount equal to the class A monthly
distribution amount (excluding such amount of the class A monthly
distribution amount which has been credited to the issuer costs
ledger) or each and every part thereof corresponding to each and every
sub-class, shall be used or retained in the relevant class or
sub-class distribution ledger, or paid to any relevant swap
counterparty (if required), in each case as described in "Annual,
quarterly or monthly payments" below;
(3) in respect of the class A notes and each and every sub-class thereof,
in respect of the scheduled redemption date, if this falls in a period
that is not an amortisation period, an amount equal to the principal
amount referable to the class or sub-class shall be paid by the
issuing entity from the relevant class or sub-class distribution
ledger to the noteholders of the relevant class or sub-class in
accordance with the terms and conditions of the notes (but only after
exchange of such amount to the relevant currency by a swap
counterparty pursuant to any relevant currency swap agreement entered
into with respect to such class or sub-class);
(4) in respect of the class A notes and each and every sub-class thereof,
in respect of a distribution date falling in any period that is in an
amortisation period, amounts (other than termination amounts) due to
the interest rate swap counterparty from the relevant class or
sub-class distribution ledger;
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(5) in respect of the class A notes and each and every sub-class thereof
(if any), in respect of a distribution date falling in any period that
is in an amortisation period, if the swap agreement has not
terminated, or there is no swap agreement for the class or sub-class,
to pay from the relevant class or sub-class distribution ledger the
amount equal to the class A monthly distribution amount (excluding
such amount of the class A monthly distribution amount which has been
credited to the issuer costs ledger) and amounts identified as class A
principal or each and every part thereof corresponding to each and
every sub-class to the noteholders of the relevant class or sub-class
in accordance with the terms and conditions of the notes (but only
after exchange of such amount to the relevant currency by a swap
counterparty pursuant to any relevant currency swap agreement entered
into with respect to such class or sub-class);
(6) in respect of the class A notes and each and every sub-class thereof
(if any) in respect of a distribution date falling in an amortisation
period, if the swap agreement has been terminated, the following
payments shall be made from the relevant class or sub-class
distribution ledger pari passu and in no priority between each item
but in proportion to the respective amounts due:
(A) in and towards any issuer fault swap termination amount for the
class A notes or any sub-class thereof (if any); and
(B) in and towards payments of amounts due and unpaid in respect of
the class A notes or any sub-class thereof (if any) in priority,
first to interest (such monies to be applied first to the payment
of any interest amount, then any outstanding deferred interest
and, thereafter, any additional interest) and secondly to
principal;
(7) in respect of the class B notes and each and every sub-class thereof,
in respect of a distribution date falling in any period that is not in
an amortisation period, an amount equal to the class B monthly
distribution amount or each and every part thereof corresponding to
each and every sub-class, shall be used or retained in the relevant
class or sub-class distribution ledger, or paid to any relevant swap
counterparty (if required), in each case as described in "Annual,
quarterly or monthly payments" below;
(8) in respect of the class B notes and each and every sub-class thereof
in respect of the scheduled redemption date, if this falls in a period
that is not an amortisation period, an amount equal to the principal
amount referable to the class or sub-class shall be paid by the
issuing entity from the relevant class or sub-class distribution
ledger to the noteholders of the relevant class or sub-class in
accordance with the terms and conditions of the notes (but only after
exchange of such amount to the relevant currency by a swap
counterparty pursuant to any relevant currency swap agreement entered
into with respect to such class or sub-class);
(9) in respect of the class B notes and each and every sub-class thereof,
in respect of a distribution date falling in any period that is in an
amortisation period, amounts (other than termination amounts) due to
the interest rate swap counterparty from the relevant class or
sub-class distribution ledger;
(10) in respect of the class B notes and each and every sub-class thereof
(if any), in respect of a distribution date falling in any period that
is in an amortisation period, if the swap agreement has not
terminated, or there is no swap agreement for the class or sub-class,
to pay from the relevant class or sub-class distribution ledger the
amount equal to the class B monthly distribution amount and amounts
identified as class B principal or each and every part thereof
corresponding to each and every sub-class to the noteholders of the
relevant class or sub-class in accordance with the terms and
conditions of the notes (but only after exchange of such amount to the
relevant currency by a swap counterparty pursuant to any relevant
currency swap agreement entered into with respect to such class or
sub-class);
(11) in respect of the class B notes and each and every sub-class thereof
(if any) in respect of a distribution date falling in an amortisation
period, if the swap agreement has been terminated, the following
payments shall be made from the relevant class or sub-class
distribution ledger pari passu and in no priority between each item
but in proportion to the respective amounts due:
(A) in and towards any issuer fault swap termination amount for the
class B notes or any sub-class thereof (if any); and
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(B) in and towards payments of amounts due and unpaid in respect of
the class B notes or any sub-class thereof (if any) in priority,
first to interest (such monies to be applied first to the payment
of any interest amount, then any outstanding deferred interest
and, thereafter, any additional interest) and secondly to
principal;
(12) in respect of the class C notes and each and every sub-class thereof,
in respect of a distribution date falling in any period that is not an
amortisation period, an amount equal to the class C monthly
distribution amount (excluding amounts therein which have been
credited to the expenses loan ledger and the issuer profit ledger) or
each and every part thereof corresponding to each and every sub-class,
shall be used or retained in the relevant class or sub-class
distribution ledger, or paid to any relevant swap counterparty (if
required) in each case as described in "Annual, quarterly or monthly
payments" below;
(13) in respect of the class C notes and each and every sub-class thereof,
in respect of the scheduled redemption date, if this falls in a period
that is not an amortisation period, an amount equal to the principal
amount referable to the class or sub class shall be paid by the
issuing entity to the noteholders of the relevant class or sub-class
from the relevant class or sub-class distribution ledger in accordance
with the terms and conditions of the notes (but only after exchange of
such amount to the relevant currency by a swap counterparty pursuant
to any relevant currency swap agreement entered into with respect to
such class or sub-class);
(14) in respect of the class C notes and each and every sub-class thereof,
in respect of a distribution date falling in any period that is in an
amortisation period, amounts (other than termination amounts) due to
the interest rate swap counterparty from the relevant class or
sub-class distribution ledger;
(15) in respect of the class C notes and each and every sub-class thereof
(if any), in respect of a distribution date falling in any period that
is in an amortisation period, if the swap agreement has not
terminated, or there is no swap agreement for the class or sub class,
to pay from the relevant class or sub-class distribution ledger the
amount equal to the class C monthly distribution amount (excluding
amounts therein which have been credited to the expenses loan ledger
and the issuer profit ledger) and amounts identified as class C
principal or each and every part thereof corresponding to each and
every sub-class to the noteholders of the relevant class or sub-class
in accordance with the terms and conditions of the notes (but only
after exchange of such amount to the relevant currency by a swap
counterparty pursuant to any relevant currency swap agreement entered
into with respect to such class or sub-class);
(16) in respect of the class C notes and each and every sub-class thereof
(if any) in respect of a distribution date falling in an amortisation
period, if the swap agreement has been terminated, the following
payments shall be made from the relevant class or sub-class
distribution ledger pari passu and in no priority between each item
but in proportion to the respective amounts due:
(A) in and towards any issuer fault swap termination amount for the
class C notes or any sub-class thereof (if any); and
(B) in and towards payments of amounts due and unpaid in respect of
the class C notes or any sub-class thereof (if any) in priority,
first to interest (such monies to be applied first to the payment
of any interest amount, then any outstanding deferred interest
and, thereafter, any additional interest) and secondly to
principal;
(17) if the issuing entity has entered into a swap agreement for the
class A notes or any sub-class thereof (if any), in and towards
any counterparty fault swap termination amount from the relevant
class or sub-class distribution ledger;
(18) if the issuing entity has entered into a swap agreement for the
class B notes or any sub-class thereof (if any), in and towards
any counterparty fault swap termination amount from the relevant
class or sub-class distribution ledger;
(19) if the issuing entity has entered into a swap agreement for the
class C notes or any sub-class thereof (if any), in and towards
any counterparty fault swap termination amount from the relevant
class or sub-class distribution ledger;
(20) any investment proceeds and interest earned on any amounts
retained in any ledger shall be credited to the excess spread
ledger;
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(21) in or towards payment of any sums due from (or required to be
provided for by) the issuing entity to meet its liabilities to
any taxation authority from the issuer profit ledger;
(22) any amounts due and unpaid in respect of the relevant series
expense loan drawing shall be paid to the lender of the relevant
series expense loan from the expenses loan ledger;
(23) the amount identified as issuer profit in respect of the relevant
series shall be retained in the issuer profit ledger; and
(24) the remainder (if any) including sums on the excess spread ledger
shall be paid to the loan note issuer as deferred subscription
price for that distribution date in respect of that series in an
amount equal to the amount of further interest received by the
issuing entity in respect of each class and sub-class of the
relevant series on that distribution date and not otherwise
utilised to make any of the payments in items (1) to (23) above.
Where the full amount of any revenue payments described in "Monthly
Payments" above, "Annual, quarterly or monthly payments" below cannot be made
due to insufficiency in the funds credited to the relevant class or sub-class
distribution ledger which are available to make such payment, that payment will
not be payable to that extent. However, any such shortfall may be deferred to
the next and succeeding distribution dates or interest payment dates, as
applicable, but only if such a deferral is expressly contemplated above or is
contemplated otherwise in the relevant documents for that series.
ANNUAL, QUARTERLY OR MONTHLY PAYMENTS
On each distribution date that is not an interest payment date, while the
relevant series is not in an amortisation period, the issuing entity will
retain monthly distribution amounts in the relevant class or sub-class
distribution ledger of such series. However, if the issuing entity has entered
into a swap agreement for any class or sub-class, the issuing entity may be
required pursuant to the relevant swap agreement not to retain on each
distribution date the relevant monthly distribution amount or such part thereof
corresponding to the relevant class or sub-class subject to the swap agreement
but to pay on such date such amount to the swap counterparty. Otherwise, on
each annual or quarterly or monthly interest payment date (as applicable) of a
class or sub-class (if any) in a period that is not an amortisation period, the
aggregate of each amount that has been previously retained in the relevant
class or sub-class distribution ledger on the twelve (in the case of annual
payments) or three (in the case of quarterly payments) or one (in the case of
monthly payments) distribution dates immediately prior to and including such
interest payment date, together with any payment (excluding termination
payments and amounts received as a consequence of entering an amortisation
period) previously received from any interest rate swap counterparty relating
to such class or sub-class (if applicable), shall be paid by the issuing entity
firstly to any interest rate swap counterparty (if applicable), and then to the
relevant class or sub-class of noteholders in accordance with the terms and
conditions of the notes (but only after exchange of such amount to the relevant
currency by a swap counterparty pursuant to any relevant currency swap
agreement entered into with respect to such class or sub-class).
INTEREST AND PAYMENTS
Each class or sub-class of each series will bear interest for a period equal
to an interest period under the notes at a rate determined in accordance with
the relevant trust deed supplement and the terms and conditions of the notes to
be paid by, or on behalf of, the issuing entity and as set out in the relevant
final terms.
INTEREST PAYMENT DATES
The first interest payment date for each series will be specified in the
relevant final terms.
During any period that is not an amortisation period, interest on the notes
will be paid monthly, quarterly or annually (depending on the note terms and
conditions) on the interest payment date in accordance with the relevant note
terms and conditions after making any necessary payments described in "Monthly
Payments" above. During the regulated amortisation period or the rapid
amortisation period, interest will only be paid monthly.
WITHHOLDING OR DEDUCTION
If any withholding or deduction for, or on account of, any taxes, duties,
assessments or government charges of whatever nature is imposed, levied,
collected, withheld or assessed on
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payments of principal or interest on any note by any jurisdiction or any
political subdivision or authority in or of any jurisdiction having power to
tax, payments by the issuing entity to the holder of the relevant note will be
reduced accordingly and neither the issuing entity nor the note trustee will be
required to make any additional payments to the holders of the notes for that
withholding or deduction. Such reduced payments will not be treated as deferred
interest and, accordingly, will not bear additional interest. As at the date of
this base prospectus, there is no obligation under Jersey tax law on the
issuing entity to make any deduction or withhold any amount on payments made
under the notes. See "Material United Kingdom Tax consequences" for information
on the United Kingdom withholding tax treatment of payments under the notes.
SCHEDULED REDEMPTION OF A SERIES
Unless the regulated amortisation period or the rapid amortisation period
has earlier commenced (see "Mandatory redemption of a series" below), each
class or sub-class of note will be redeemed on its relevant scheduled
redemption date to the extent of the principal amount which has on that day
been credited to the relevant class or sub-class distribution ledgers of the
relevant series in the issuer distribution account by the loan note issuer
(after exchange of such amount to the relevant currency by a swap counterparty
pursuant to any relevant currency swap agreement entered into with respect to
that class or sub-class), as the case may be, in accordance with the provisions
of the relevant loan note in respect of amounts owing under the relevant loan
note. See also "Description of the Swap Agreements."
MANDATORY REDEMPTION OF A SERIES
If either the regulated amortisation period or the rapid amortisation period
commences prior to or on the relevant series scheduled redemption date, then
the principal amounts will be credited monthly to the relevant class or sub-
class distribution ledgers of the relevant series in the relevant issuer
distribution account by the loan note issuer and, on each monthly interest
payment date, principal amounts will be applied in accordance with the terms
and conditions of the relevant class or sub-class of notes until the earlier of
(A) redemption of the class or sub-class of notes in full or (B) the
distribution date falling on the final redemption date of the notes. See also
"Terms and conditions of the Notes."
JERSEY BANK ACCOUNT OPERATING AGREEMENT
The issuing entity and the loan note issuer have entered into a bank account
operating agreement in Jersey (the "JERSEY BANK ACCOUNT OPERATING AGREEMENT")
with the Jersey bank account operator. Under the terms of the Jersey bank
account operating agreement, the Jersey bank account operator agrees to
exercise certain rights and powers in relation to the bank accounts of the loan
note issuer and the issuing entity on behalf of each of them in accordance with
the instructions and directions of the loan note issuer and the issuing entity.
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THE NOTES AND THE GLOBAL NOTES
The issue of all series of notes under the programme will be authorised by a
resolution of the board of directors of the issuing entity, passed on or prior
to the date of the first issue of notes. Each series of notes will be
constituted by a trust deed supplement to be dated on or about the relevant
issue date, between the issuing entity and the note trustee, as trustee for,
among others, the holders for the time being of the notes. The trust deed
includes provisions which enable it to be modified or supplemented and any
reference to the trust deed is a reference also to the document as modified or
supplemented in accordance with its terms.
The statements set out below include summaries of, and are subject to, the
detailed provisions of the trust deed and the relevant trust deed supplement
for a series, which will contain the forms of the global note certificates and
the individual note certificates. The issuing entity has entered into, for the
benefit of the programme, an agency agreement between the issuing entity and
The Bank of New York as principal paying agent, note trustee, paying agent,
registrar, transfer agent and agent bank which will regulate how payments will
be made on all series of notes and how determinations and notifications will be
made. It will be dated on or prior to the date of the first issue.
As an investor in the notes, you will be entitled to the benefit of, will be
bound by and will be deemed to have notice of, all the provisions of the trust
deed, the relevant trust deed supplement and the agency agreement. You can see
copies of these agreements at the principal office for the time being of the
note trustee, which is, as of the date of this base prospectus, One Canada
Square, London E14 5AL and at the office for the time being of the principal
paying agent.
Each class or sub-class of notes will be represented initially by a global
note certificate in registered form, in the principal amount specified in the
relevant final terms. The amount of notes represented by each global note
certificate is evidenced by the register maintained for that purpose by the
registrar. Together, the notes represented by the global note certificates and
any outstanding individual note certificates will equal the aggregate principal
amount of the notes outstanding at any time. However, except in exceptional
circumstances, individual note certificates will not be issued.
THE CLEARING SYSTEMS
The global note certificates of classes or sub-classes of notes denominated
in US dollars will be deposited with The Bank of New York, as the depository
for, and registered in the name of Cede & Co. as nominee of, DTC. On
confirmation from the depository that it holds the global note certificates,
DTC will record book-entry interests to your account or the participant account
through which you hold your interests in the notes. These book-entry interests
will represent the beneficial owner's or participant's beneficial interest in
the relevant notes represented by such global note certificate.
The global note certificates of classes or sub-classes of notes denominated
in euro or in sterling will be deposited with a common depository for
Clearstream and Euroclear, as the depository for, and in the name of the common
depository. On confirmation from the common depository that it holds the global
note certificates, Clearstream and/or Euroclear, as applicable, will record
book-entry interests in your account or the participant account through which
you hold your interests in the notes. These book-entry interests will represent
the beneficial owner's or participant's beneficial interest in the relevant
notes represented by such global note certificate.
Beneficial owners may hold their interest in the notes represented by each
global note certificate, in the case of notes denominated in US dollars only
through DTC, and in the case of notes denominated in euro or sterling, in
Clearstream or Euroclear, as applicable, or indirectly through organisations
that are participants in any of those systems. Ownership of these beneficial
interests in notes represented by each global note certificate will be shown
on, and the transfer of that ownership will be effected only through, records
maintained by DTC, Clearstream or Euroclear (with respect to interests of their
participants) and the records of their participants (with respect to interests
of other persons). By contrast, ownership of direct interests in a global note
certificate will be shown on, and the transfer of that ownership will be
effected through, the register maintained by the registrar. Because of this
holding structure of the notes, beneficial owners of notes may look only to
DTC, Clearstream or Euroclear, as applicable, or their respective participants
for their beneficial entitlement to those notes. The issuing entity expects
that DTC, Clearstream and Euroclear will take any action permitted to be taken
by a beneficial owner of notes only in accordance with its rules and at the
direction of one or more participants to whose account the interests in a
global note
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certificate are credited and only in respect of that portion of the aggregate
principal amount of notes as to which that participant or those participants
has or have given that direction.
PAYMENT
Principal and interest payments on the notes will be made, in the case of
notes denominated in US dollars via the paying agents to, or to the order of,
DTC or its nominee or, in the case of notes denominated in euro or sterling,
via the paying agents to, or to the order of, Euroclear or Clearstream or their
nominee, as the registered holder of the relevant global note certificate.
DTC's practice is to credit its participants' accounts on the applicable
payment date according to their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payment on that
payment date.
Payments by DTC, Clearstream and Euroclear participants to the beneficial
owners of notes will be governed by standing instructions, customary practice
and any statutory or regulatory requirements as may be in effect from time to
time, as is now the case with securities held by the accounts of customers
registered in street name. These payments will be the responsibility of the
DTC, Clearstream and Euroclear participant and not of DTC, Clearstream,
Euroclear, their other participants, any paying agent, the note trustee or the
issuing entity. None of the issuing entity, the note trustee, any dealer or any
paying agent will have the responsibility or liability for any aspect of the
records of DTC, Clearstream or Euroclear on account of beneficial interests in
the global note certificates or for maintaining, supervising or reviewing any
records of DTC, Clearstream or Euroclear relating to those beneficial
interests.
The laws of some states of the United States require that certain persons
take physical delivery of securities in definitive form. Consequently the
ability to transfer interests in a global note certificate to such persons may
be limited. Because DTC, Euroclear and Clearstream, Luxembourg can only act on
behalf of participants, who in turn act on behalf of indirect participants, the
ability of a person having an interest in a global note certificate to pledge
such interest to persons or entitles which do not participate, directly or
indirectly, in the relevant clearing system, or otherwise take actions in
respect of such interest, may be affected by the lack of a physical certificate
in respect of such interest.
DTC
DTC has advised us, the arranger and the dealers, that it is:
* a limited-purpose trust company organised under the New York
Banking Law;
* a "banking organisation" within the meaning of the New York Banking
Law;
* a member of the Federal Reserve System;
* a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
* a "clearing agency" registered under the provisions of section 17A
of the US Securities and Exchange Act of 1934 --- which we will
call the "EXCHANGE ACT".
DTC holds securities for its participants and facilitates the clearance and
settlement among its participants of securities transactions, including
transfers and pledges, in deposited securities through electronic book-entry
changes in its participants' accounts. This eliminates the need for physical
movement of securities certificates. DTC is owned by a number of its
participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. DTC
participants include securities brokers and dealers, banks, trust companies,
clearing corporations (including Euroclear and Clearstream) and other
organisations. Indirect access to the DTC system is also available to others
including securities brokers and dealers, banks, and trust companies that clear
through or maintain a custodial relationship with a participant, either
directly or indirectly. The rules applicable to DTC and its participants are on
file with the SEC.
Transfers between participants on the DTC system will occur under DTC rules.
Transfers between participants on the Clearstream system and participants on
the Euroclear system will occur under each of their rules and operating
procedures.
Because of time-zone differences, credits of securities in Clearstream or
Euroclear as a result of a transaction with a DTC participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date. The credits for any transactions in these
securities settled during this processing will be reported to the relevant
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Clearstream participant or Euroclear participant on that business day. Cash
received in Clearstream or Euroclear as a result of sales of securities by or
through a Clearstream participant or a Euroclear participant to a DTC
participant will be received and available on the DTC settlement date. However,
it will not be available in the relevant Clearstream or Euroclear cash account
until the business day following settlement in DTC.
Purchases of notes under the DTC system must be made by or through DTC
participants (which includes Euroclear and Clearstream), which will receive a
credit for the notes on DTC's records. The ownership interest of each actual
investor is in turn to be recorded on the DTC participants' and indirect
participants' records. Investors will not receive written confirmation from DTC
of their purchase. However, investors are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the DTC participant or indirect participant
through which the investor entered into the transaction. Transfers of ownership
interests in the notes are to be accomplished by entries made on the books of
DTC participants acting on behalf of investors. Investors will not receive
certificates representing their ownership interest in the notes unless use of
the book-entry system for the notes is discontinued.
Conveyance of notices and other communications by DTC to DTC participants,
by DTC participants to indirect participants, and by DTC participants and
indirect participants to noteholders will be governed by arrangements among
them and by any statutory or regulatory requirements in effect from time to
time.
CLEARSTREAM, LUXEMBOURG AND EUROCLEAR
Clearstream is incorporated under the laws of Luxembourg as a professional
registrar. Clearstream holds securities for its participating organisations and
facilitates the clearance and settlement of securities transactions between
Clearstream participants through electronic book-entry changes in accounts of
Clearstream participants, thereby eliminating the need for physical movement of
notes. Transactions may be settled in Clearstream in any of 38 currencies,
including US dollars, euro and sterling.
Clearstream participants are financial institutions around the world,
including dealers, securities brokers and dealers, banks, trust companies and
clearing corporations. Indirect access to Clearstream is also available to
others, including banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a Clearstream participant,
either directly or indirectly.
The Euroclear system was created in 1968 to hold securities for its
participants and to clear and settle transactions between Euroclear
participants through simultaneous electronic book-entry delivery against
payment. This eliminates the need for physical movement of certificates.
Transactions may be settled in any of 32 currencies, including US dollars, euro
and sterling.
The Euroclear System is operated by Morgan Guaranty Trust Company of New
York, Brussels office, the Euroclear operator, under contract with Euroclear
Clearance System, Societe Cooperative, a Belgian co-operative corporation, the
Euroclear co-operative. All operations are conducted by the Euroclear operator.
All Euroclear securities clearance accounts and Euroclear cash accounts are
accounts with the Euroclear operator, not the Euroclear co-operative. The board
of the Euroclear co-operative establishes policy for the Euroclear System.
Euroclear participants include banks-including central banks -- securities
brokers and dealers and other professional financial intermediaries. Indirect
access to the Euroclear System is also available to other firms that maintain a
custodial relationship with a Euroclear participant, either directly or
indirectly.
Securities clearance accounts and cash accounts with the Euroclear operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System. These terms and
conditions govern transfers of securities and cash within the Euroclear System,
withdrawal of securities and cash from the Euroclear System, and receipts of
payments for securities in the Euroclear System. All securities in the
Euroclear system are held on a fungible basis without attribution of specific
certificates to specific securities clearance accounts. The Euroclear operator
acts under these terms and conditions only on behalf of Euroclear participants
and has no record of or relationship with persons holding through Euroclear
participants.
Distributions on the notes held indirectly through Clearstream or Euroclear
will be credited to the cash accounts of Clearstream participants or Euroclear
participants according to the relevant system's rules and procedures, to the
extent received by its registrar. These distributions may need to be reported
for tax purposes under US tax laws and regulations. Clearstream or the
Euroclear
131
operator, as the case may be, will take any other action permitted to be taken
by a noteholder on behalf of its participants only as permitted by its rules
and procedures and only if its registrar is able to take these actions on its
behalf.
Although DTC, Clearstream and Euroclear have agreed to these procedures to
facilitate transfers of notes among participants of DTC, Clearstream and
Euroclear, they are not obligated to perform these procedures. Additionally,
these procedures may be discontinued at any time.
So long as the registrar or its nominees is the holder of the global notes
underlying the book-entry interests, it or its nominees will be the global
noteholder under the trust deed. Because of this, each person holding a book-
entry interest must rely on the procedures of the registrar, DTC, Euroclear
and/or Clearstream or other intermediary though which the interests are held,
to exercise any rights and obligations of noteholders under the trust deed and
the relevant trust deed supplement.
As the holder of book-entry interests, you will not have the right under the
trust deed to act on solicitations by the issuing entity for action by
noteholders. You will only be able to act to the extent that you receive the
appropriate proxies to do so from DTC, Euroclear or Clearstream. No assurances
are made about these procedures or their adequacy for ensuring timely exercise
of remedies under the trust deed.
You and other holders of book-entry interests will be entitled to receive
individual note certificates, in the form and under the circumstances set out
in the trust deed and the terms and conditions of the notes. In the event that
a global note certificate is exchanged for individual note certificates, such
individual note certificates shall be issued in denominations of [e]50,000 (or
the equivalent in another currency) only. Noteholders who hold notes in the
relevant clearing system in amounts that are not integral multiples of
[e]50,000 may need to purchase or sell, on or before the relevant exchange
date, a principal amount of notes such that their holding is an integral
multiple of [e]50,000.
Tradable amount: So long as the notes are represented by a global note
certificate and Euroclear and/or Clearstream, Luxembourg and/or any other
relevant clearing system so permits, the notes shall be tradable only in
principal amounts of at least [e]50,000 or its equivalent in another currency
or as otherwise specified in the related final terms (as applicable to the
currency of each particular series) and integral multiples of the tradable
amount provided for in the final terms.
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TERMS AND CONDITIONS OF THE NOTES
The terms and conditions applicable to any note in global form will differ
from those terms and conditions which would apply to the note were it in
definitive form to the extent described under "The Notes and the Global Notes"
above. References in these terms and conditions to "notes" are to the notes of
a particular series only and not to all notes that may be issued under the
programme.
1. INTRODUCTION
PROGRAMME
Arran Funding Limited (the "ISSUING ENTITY") has established an Arran
Funding Medium Term Note Programme (the "PROGRAMME") for the issuance of
up to US$7,500,000,000 in aggregate principal amount of notes (the
"NOTES"). The notes are constituted and secured by a trust deed (the
"TRUST DEED") between the issuing entity and The Bank of New York in
London (the "NOTE TRUSTEE"), (which expression includes the trustee or
trustees for the time being of the trust deed) and a supplement to the
trust deed (the "TRUST DEED SUPPLEMENT") in respect of notes issued in
each series. References to the trust deed include reference to the
relevant trust deed supplement where the context admits.
FINAL TERMS
Notes issued under the programme are issued in series (each a "SERIES")
and each series comprises three classes of notes. A series will normally
be constituted by class A notes, class B notes and class C notes. Each
class may comprise sub-classes of notes, which may be denominated in any
of sterling, US dollars or euro (each a "SUB-CLASS"). The sub-classes
within each class of notes will rank pari passu and with no priority or
preference among them. Each series is the subject of a set of final terms
(the "FINAL TERMS") which supplements these terms and conditions (the
"CONDITIONS"). The terms and conditions applicable to any particular
series are these conditions as supplemented, amended and/or replaced by
the relevant final terms. In the event of any inconsistency between these
conditions and the relevant final terms, the relevant final terms shall
prevail.
AGENCY AGREEMENT
The notes are the subject of an agency agreement (the "AGENCY AGREEMENT")
between, among others, the issuing entity, The Bank of New York as
principal paying agent (the "PRINCIPAL PAYING AGENT"), the paying agents
named in the agency agreement (the "PAYING AGENTS"), the agent bank named
in the agency agreement (the "AGENT BANK") and the registrar and transfer
agent named in the agency agreement (the "REGISTRAR" and the "TRANSFER
AGENT") respectively. The expression "principal paying agent" and the
"paying agents" includes any successor to such person in such capacity.
THE NOTES
All subsequent references in these conditions to "notes" are to the notes
which are the subject of the relevant final terms. Copies of the relevant
final terms are available for inspection by you the noteholders during
normal business hours at the specified office of the principal paying
agent, the initial specified office of which is set out below.
SUMMARIES
Certain provisions of these conditions are summaries of the trust deed
and the agency agreement and are subject to their detailed provisions.
The holders of the notes (the "NOTEHOLDERS") are bound by, and are deemed
to have notice of, all the provisions of the trust deed, the trust deed
supplement, the final terms and the agency agreement applicable to them.
Copies of the trust deed, the final terms and the agency agreement are
available for inspection by noteholders during normal business hours at
the specified offices of each of the paying agents, the initial specified
offices of which are set out below.
2. INTERPRETATION
(A) DEFINITIONS
In these conditions the following expressions have the following
meanings:
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"ACCOUNT BANK AGREEMENTS" means the relevant issuer distribution
account bank agreement with respect to the series and the Jersey
bank account operating agreement and "ACCOUNT BANK AGREEMENT"
means either one of them;
"ADDITIONAL BUSINESS CENTRE(S)" means the city or cities specified
as such in the relevant final terms;
"ADDITIONAL FINANCIAL CENTRE(S) " means the city or cities
specified as such in the relevant final terms;
"ADDITIONAL INTEREST MARGIN" has the meaning given in the relevant
final terms (if applicable);
"AMORTISATION PERIOD" means the regulated amortisation period and
the rapid amortisation period or such other period specified as an
amortisation period in the relevant final terms;
"BASIC TERMS MODIFICATION" means any change to any date fixed for
payment of principal or interest in respect of the notes of any
class or sub-class, to reduce the amount of principal or interest
payable on any date in respect of the notes of any class or sub-
class, to alter the method of calculating the amount of any
payment in respect of the notes of any class or sub-class or the
date for any such payment, (except in accordance with the terms
and conditions of notes and the trust deed) to effect the
exchange, conversion or substitution of the notes of any class or
sub-class for, or the conversion of such notes into, shares, bonds
or other obligations or securities of the issuing entity or any
other person or body corporate formed or to be formed, to alter
the priority of payment of interest or principal in respect of the
notes, to change the currency of any payment under the notes of
any class or sub- class, to change the quorum requirements
relating to meetings or the majority required to pass an
extraordinary resolution or to amend this definition;
"BUSINESS DAY", unless otherwise specified in the final terms,
means in relation to any sum payable in any currency, a TARGET
settlement day and a day on which commercial banks and foreign
exchange markets settle payments generally in London, England,
Jersey, Channel Islands, Edinburgh, Scotland and New York, New
York, the principal financial centre of the relevant currency and
in each (if any) additional business centre;
"BUSINESS DAY CONVENTION", in relation to any particular date, has
the meaning given in the relevant final terms and, if so specified
in the relevant final terms, may have different meanings in
relation to different dates and, in this context, the following
expressions shall have the following meanings:
(i) "FOLLOWING BUSINESS DAY CONVENTION" means that the relevant
date shall be postponed to the first following day that is
a business day;
(ii) "MODIFIED FOLLOWING BUSINESS DAY CONVENTION" or "MODIFIED
BUSINESS DAY CONVENTION" means that the relevant date shall
be postponed to the first following day that is a business
day unless that day falls in the next calendar month in
which case that date will be the first preceding day that
is a business day;
(iii) "NO ADJUSTMENT" means that the relevant date shall not be
adjusted in accordance with any business day convention;
and
(iv) "PRECEDING BUSINESS DAY CONVENTION" means that the relevant
date shall be brought forward to the first preceding day
that is a business day;
"CALCULATION AGENT" means the agent bank or such other person
specified in the relevant final terms as the party responsible for
calculating the rate(s) of interest and interest amount(s) and/or
such other amount(s) as may be specified in the relevant final
terms;
"CLASS A NOTES" means notes of any series designated as such in
the relevant final terms;
"CLASS B NOTES" means notes of any series designated as such in
the relevant final terms;
"CLASS C NOTES" means notes of any series designated as such in
the relevant final terms;
"CLOSING DATE" has the meaning given in the relevant final terms;
"CONTROLLED ACCUMULATION PERIOD" for any series has the meaning
defined in the base prospectus of the issuing entity and as
specified in the relevant final terms;
"CONTROLLED ACCUMULATION PERIOD COMMENCEMENT DATE" has the meaning
given in the relevant final terms;
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"COUNTERPARTY FAULT SWAP TERMINATION AMOUNT" means any termination
payment under a swap agreement where the swap agreement is
terminated as a result of a swap counterparty swap event of
default;
"DAY COUNT FRACTION" means, in respect of the calculation of an
amount for any period of time (the "CALCULATION PERIOD"), such day
count fraction as may be specified in these conditions or the
relevant final terms and:
(i) if "ACTUAL/ACTUAL (ICMA)" is so specified, means
(a) where the calculation period is equal to or shorter
than the regular period during which it falls, the
actual number of days in the calculation period
divided by the product of (1) the actual number of
days in such regular period and (2) the number of
regular periods in any year; and
(b) where the calculation period is longer than one
regular period, the sum of:
(A) the actual number of days in such calculation
period falling in the regular period in which
it begins divided by the product of (1) the
actual number of days in such regular period
and (2) the number of regular periods in any
year; and
(B) the actual number of days in such calculation
period falling in the next regular period
divided by the product of (a) the actual
number of days in such regular period and (2)
the number of regular periods in any year;
(ii) if "ACTUAL/365" or "ACTUAL/ACTUAL (ISDA)" is so specified,
means the actual number of days in the calculation period
divided by 365 (or, if any portion of the calculation
period falls in a leap year, the sum of (A) the actual
number of days in that portion of the calculation period
falling in a leap year divided by 366 and (B) the actual
number of days in that portion of the calculation period
falling in a non-leap year divided by 365);
(iii) if "ACTUAL/365 (FIXED)" is so specified, means the actual
number of days in the calculation period divided by 365;
(iv) if "ACTUAL/360" is so specified, means the actual number of
days in the calculation period divided by 360; and
(v) if "30/360" is so specified, means the number of days in
the calculation period divided by 360 (the number of days
to be calculated on the basis of a year of 360 days with 12
30-day months (unless (i) the last day of the calculation
period is the 31st day of a month but the first day of the
calculation period is a day other than the 30th or 31st day
of a month, in which case the month that includes that last
day shall not be considered to be shortened to a 30-day
month, or (ii) the last day of the calculation period is
the last day of the month of February, in which case the
month of February shall not be considered to be lengthened
to a 30-day month));
"DEALER AGREEMENT" means the agreement between the issuing entity,
the arranger and certain dealers (as named therein) concerning the
subscription and purchase of notes to be issued pursuant to the
programme as amended from time to time or any restatement thereof
for the time being in force;
"DISTRIBUTION DATE" means the 15th day in each month or, if such
day is not a business day, as the same may be adjusted in
accordance with the relevant business day convention, or any other
date as may be specified in the relevant final terms;
"DISTRIBUTION LEDGER" means a ledger within the relevant issuer
distribution account of a particular series of notes;
"EXTRAORDINARY RESOLUTION" has the meaning given in the trust
deed;
"FINAL REDEMPTION DATE" means the date specified as such in, or
determined in accordance with the provisions of, the relevant
final terms, and where the final redemption date is not a business
day, as the same may be adjusted in accordance with the relevant
business day convention;
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"FIRST INTEREST PAYMENT DATE" means the date specified as such in,
or determined in accordance with the provisions of, the relevant
final terms, and where the first interest payment date is not a
business day, as the same may be adjusted in accordance with the
relevant business day convention;
"FLOATING RATE COMMENCEMENT DATE" is specified in the relevant
final terms as either the distribution date of the first month
falling in the regulated amortisation period or the rapid
amortisation period (or if such date has passed, the immediately
following distribution date) or the scheduled redemption date;
"INDEBTEDNESS" means any indebtedness of any person for money
borrowed or raised including (without limitation) any indebtedness
for or in respect of:
(i) amounts raised by acceptance under any acceptance credit
facility;
(ii) amounts raised under any note purchase facility;
(iii) the amount of any liability in respect of leases or hire
purchase contracts which would, in accordance with
applicable law and generally accepted accounting
principles, be treated as finance or capital leases;
(iv) the amount of any liability in respect of any purchase
price for assets or services, the payment of which is
deferred for a period in excess of 60 days; and
(v) amounts raised under any other transaction (including,
without limitation, any forward sale or purchase agreement)
having the commercial effect of a borrowing;
"INITIAL RATE" has the meaning given in the relevant final terms;
"INTEREST AMOUNT" means, in relation to a note and an interest
period (as defined in condition 6), the amount of interest payable
in respect of that note for that interest period;
"INTEREST COMMENCEMENT DATE" means the issue date of the notes or
such other date as may be specified as the interest commencement
date in the relevant final terms;
"INTEREST DETERMINATION DATE" has the meaning given herein, unless
otherwise specified in the relevant final terms;
"INTEREST PAYMENT DATE" has the relevant meaning given to it in
conditions 6(a), (b), (c) or (d) (as applicable);
"INVESTOR BENEFICIARY" means RBS Cards Securitisation Funding
Limited;
"ISDA DEFINITIONS" means the 2000 ISDA definitions (as amended and
updated as at the date of issue of the first notes of the relevant
series (as specified in the relevant final terms) as published by
the International Swaps and Derivatives Association, Inc.);
"ISSUE DATE" has the meaning given in the relevant final terms for
a series;
"ISSUER DISTRIBUTION ACCOUNT" means, with respect to each series,
the account at RBSI at its branch located at Royal Bank House, 71
Bath Street, St. Helier JE4 8PJ opened pursuant to the relevant
issuer distribution account bank agreement in relation to all
notes of a particular series issued by the issuing entity;
"ISSUER FAULT SWAP TERMINATION AMOUNT" means any termination
payment under a swap agreement where the swap agreement is
terminated otherwise than as a result of a swap counterparty swap
event of default;
"LOAN NOTE" means each series loan note issued by the loan note
issuer under the programme as set out in the relevant final terms;
"MARGIN" has the meaning given in the relevant final terms;
"NOTICES" means any notices that are required to be given under
the terms and conditions of the notes;
"PARTICIPATING MEMBER STATE" means a member state of the European
Community which adopts the euro as its lawful currency in
accordance with the treaty;
"PAYMENT BUSINESS DAY" means, unless otherwise specified in the
final terms, a business day;
"PERSON" means any individual, company, corporation, firm,
partnership, joint venture, association, organisation, state or
agency of a state or other entity, whether or not having separate
legal personality;
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"PRINCIPAL AMOUNT OUTSTANDING" means, in relation to a note on any
date, the aggregate amount outstanding of that note on the issue
date less the aggregate amount of all principal payments in
respect of that note that have become due and payable (and paid)
by the issuing entity to the noteholder concerned by virtue of the
issuing entity having received funds in respect thereof from the
loan note issuer as described in condition 8;
"PRINCIPAL FINANCIAL CENTRE" means, in relation to sterling,
London, in relation to US dollars, New York and in relation to
euro, it means the principal financial centre of such member state
of the European Community as is selected (in the case of a
payment) by the payee or (in the case of a calculation) by the
calculation agent;
"RAPID AMORTISATION PERIOD" means, for any series, for the
purposes of these conditions, the period commencing on the day on
which a rapid amortisation trigger event is deemed to occur for
the related series investor interest pursuant to the provisions of
the relevant trust deed supplement to the receivables trust deed
and cash management agreement, and ending on the earlier of (i)
the day on which the outstanding principal amount of the related
series investor interest is reduced to zero and (ii) the final
redemption date of the relevant series of notes;
"RATE OF INTEREST" means the rate or rates (expressed as a
percentage per year) of interest payable in respect of the notes
specified in the relevant final terms or calculated or determined
in accordance with the provisions of these conditions and/or the
relevant final terms;
"RECEIVABLES TRUST" means the trusts constituted pursuant to the
receivables trust and cash management agreement;
"REFERENCE BANKS" means the principal London office of each of
Bank of America N.T. and S.A., Barclays Bank plc, Deutsche Bank
AG, London and The Royal Bank of Scotland plc or any duly
appointed substitute reference bank(s) as may be appointed by the
issuing entity;
"REGULAR INTEREST PAYMENT DATES" has the meaning given herein
unless otherwise specified in the relevant final terms;
"REGULAR PERIOD" means unless specified otherwise in a condition
containing a specific provision or the relevant final terms:
(i) in the case of notes where interest is scheduled to be paid
only by means of regular payments, each period from and
including the interest commencement date to, but excluding
the first interest payment date, and each successive period
from and including one interest payment date to, but
excluding the next interest payment date;
(ii) in the case of notes where, apart from the first interest
period, interest is scheduled to be paid only by means of
regular payments, each period from and including a regular
date falling in any year to, but excluding the next regular
date, where "REGULAR DATE" means the day and month (but not
the year) on which any interest payment date falls; and
(iii) in the case of notes where, apart from one interest period
other than the first interest period, interest is scheduled
to be paid only by means of regular payments, each period
from and including a regular date falling in any year, to
but excluding the next regular date, where "REGULAR DATE"
means the day and month (but not the year) on which any
interest payment date falls other than the interest payment
date falling at the end of the irregular interest period.
"REGULATED AMORTISATION PERIOD" means, for any series, for the
purposes of these note conditions, the period commencing on the
day on which a regulated amortisation trigger event is deemed to
occur for the related series investor interest pursuant to the
provisions of the relevant trust deed supplement to the
receivables trust deed and cash management agreement, and ending
on the earlier of (i) the day on which the outstanding principal
amount of the related series investor interest is reduced to zero
(ii) the commencement of a rapid amortisation period for the
related loan note and (iii) the final redemption date of the
notes;
"RELATED LOAN NOTE" means, for any series, the loan note specified
in the relevant final terms as the loan note the subject of first
fixed security to collateralise that series of notes;
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"RELEVANT DATE" means in relation to any payment whichever is the
later of (a) the date on which the payment in question first
becomes due and (b) if the full amount payable has not been
received in London by the principal paying agent or the note
trustee on or prior to such due date, the date on which (the full
amount having been so received) notice to that effect has been
given to the noteholders in accordance with condition 16;
"RELEVANT INDEBTEDNESS" means any indebtedness which is in the
form of or represented by any bond, note, debenture, debenture
stock, loan stock, certificate or other instrument which is, or is
capable of being, listed, quoted or traded on any stock exchange
or in any securities market (including, without limitation, any
over-the- counter market);
"RELEVANT SCREEN page" means the page of the Reuters screen or
such other medium for the electronic display of data as may be
approved by the note trustee and notified to the noteholders of a
relevant series;
"REVOLVING PERIOD" means for any series, for the purposes of these
note conditions, any period which is not a controlled accumulation
period or an amortisation period for that series;
"SCHEDULED REDEMPTION DATE" has the meaning given in the relevant
final terms;
"SECURITY INTEREST" means any mortgage, charge, pledge, lien or
other security interest including, without limitation, anything
analogous to any of the foregoing under the laws of any
jurisdiction;
"SERIES" means those notes with the same terms and conditions
issued in accordance with a particular set of final terms;
"SERIES INVESTOR INTEREST" means the total principal amount of the
interest of the investor beneficiary in respect of a series and
reflects the total amount of the proportional entitlement to
principal receivables under the receivables trust calculated as
available to that series held by the receivables trustee;
"SPECIFIED CURRENCY" has the meaning given in the relevant final
terms; "SPECIFIED DENOMINATION(S)" has the meaning given in the
relevant final terms; "SPECIFIED OFFICE" has the meaning given in
the agency agreement;
"SUBSIDIARY" means, in relation to any person (the "FIRST PERSON")
at any particular time, any other person (the "SECOND PERSON"):
(i) whose affairs and policies the first person controls or has
the power to control, whether by ownership of share
capital, contract, the power to appoint or remove members
of the governing body of the second person or otherwise; or
(ii) whose financial statements are, in accordance with
applicable law and generally accepted accounting
principles, consolidated with those of the first person;
"SWAP COUNTERPARTY SWAP EVENT OF DEFAULT" means the event of
default specified in the relevant swap agreement and pertaining to
the swap counterparty;
"TARGET SETTLEMENT DAY" means any day on which the Trans-European
Automated Real-Time Gross Settlement Express Transfer (TARGET)
system is open; and
"TREATY" means the treaty establishing the European Community, as
amended.
INTERPRETATION
In these conditions:
(i) any reference to principal shall be deemed to include the
redemption amount and any other amount in the nature of principal
payable pursuant to these conditions;
(ii) any reference to interest shall be deemed to include any other
amount in the nature of interest payable pursuant to these
conditions;
(iii) references to notes being "outstanding" shall be construed in
accordance with the agency agreement and the trust deed;
(iv) if an expression is stated in condition 2(a) to have the meaning
given in the relevant final terms, but the relevant final terms
gives no such meaning or specifies that such expression is "not
applicable" then such expression is not applicable to the notes;
and
138
(v) any reference to the agency agreement and the trust deed shall be
construed with respect to any series of notes as a reference to
the agency agreement or the trust deed, as the case may be, as
amended and/or supplemented up to and including the issue date of
the notes of that series.
3. FORM, DENOMINATION AND TITLE
The notes will be issued in registered form ("REGISTERED NOTES"), in a
specified denomination (as specified in the relevant final terms) or an
integral multiple thereof provided that in the case of any notes which are to
be admitted to trading on a regulated market within the European Economic Area
or offered to the public in a Member State of the European Economic Area in
circumstances which require the publication of a prospectus under the
Prospectus Directive, the minimum denomination shall be [e]50,000 (or its
equivalent in any other currency as at the date of issue of those notes).
References in these conditions to "notes" include registered notes and all
applicable classes and sub-classes (if any) in the series.
(a) Register: The registrar will maintain a register (the "REGISTER")
in respect of the notes in accordance with the provisions of the
agency agreement. The "HOLDER" of a note means the person in whose
name such note is for the time being registered in the register
(or, in the case of a joint holding, the first named thereof) and
"NOTEHOLDER" shall be construed accordingly.
(b) Title: The registered holder of each note shall (except as
otherwise required by law) be treated as the absolute owner of
such note for all purposes (whether or not it is overdue and
regardless of any notice of ownership, trust or any other interest
therein, any writing on the note certificate relating thereto
(other than the endorsed form of transfer) or any notice of any
previous loss or theft of such note certificate) and no person
shall be liable for so treating such holder. No person shall have
any right to enforce any term or condition of the notes or the
trust deed under the Contracts (Rights of Third Parties) Act 1999.
There are no limitations on the right of holders of the notes who
are not resident in Jersey to hold the notes.
(c) Transfers: Subject to paragraphs (f) ("Closed Periods") and (g)
("Regulations concerning transfers and registration") below, a
note may be transferred upon surrender of the relevant note
certificate, with the endorsed form of transfer duly completed, at
the specified office of the registrar or any transfer agent,
together with such evidence as the registrar or (as the case may
be) such transfer agent may reasonably require to prove the title
of the noteholder and the authority of the individuals who have
executed the form of transfer; provided, however, that a note may
not be transferred unless the principal amount of notes
transferred and (where not all of the notes held by a holder are
being transferred) the principal amount of the balance of notes
not transferred are an authorised denomination or multiple
thereof. Where not all the notes represented by the surrendered
note certificate are the subject of the transfer, a new note
certificate in respect of the balance of the notes will be issued
to the noteholder.
So long as the notes are represented by a global note certificate
and the relevant clearing system(s) so permit, the notes shall be
tradable only in principal amounts of at least [e]50,000 (or its
equivalent in any other currency as at the date of issue of those
notes) and integral multiples of the tradable amount in excess
thereof provided in the relevant final terms.
(d) Registration and delivery of note certificates: Within five
business days of the surrender of a note certificate in accordance
with paragraph (c) (Transfers) above, the registrar will register
the transfer in question and deliver a new note certificate of a
like principal amount to the Notes transferred to each relevant
holder at its specified office or (as the case may be) the
specified office of any transfer agent or (at the request and risk
of any such relevant holder) by uninsured first class mail
(airmail if overseas) to the address specified for the purpose by
such relevant holder.
(e) No charge: The transfer of a note will be effected without charge
by or on behalf of the issuing entity, the registrar or any
transfer agent but against such indemnity as the registrar or (as
the case may be) such transfer agent may require in respect of any
tax or other duty of whatsoever nature which may be levied or
imposed in connection with such transfer.
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(f) Closed periods: Noteholders may not require transfers to be
registered during the period of 15 days ending on the due date for
any payment of principal or interest in respect of the notes.
(g) Regulations concerning transfers and registration: All transfers
of notes and entries on the register are subject to the detailed
regulations concerning the transfer of notes scheduled to the
agency agreement. The regulations may be changed by the issuing
entity with the prior written approval of the note trustee and the
registrar. A copy of the current regulations will be mailed (free
of charge) by the registrar to any noteholder who requests in
writing a copy of such regulations.
4. STATUS, SECURITY AND PRIORITY OF PAYMENTS
STATUS
Each class and sub-class (if any) of notes in each series are direct,
secured and unconditional obligations of the issuing entity which will at all
times rank pari passu and pro rata without preference or priority amongst
themselves. Each class may comprise sub-classes of notes, which may be
denominated in any of sterling, US dollars or euro (each a "SUB-CLASS"). The
sub-classes of each class of notes will rank pari passu and with no priority or
preference among them.
In these conditions, the "MOST SENIOR CLASS" means the class A notes while
they remain outstanding and thereafter the class B notes while they remain
outstanding and thereafter the class C notes. If any proposed action or
inaction affects a particular sub-class of notes, this term shall mean the
specific sub-class of notes with the greatest amount outstanding of the most
senior class of notes.
The note trust deed contains provisions requiring the note trustee to have
regard to the interests of the noteholders equally as a single class as regards
all rights, powers, trusts, authorities, duties and discretions of the note
trustee (except where expressly provided otherwise) but where there is, in the
note trustee's opinion, a conflict among the interests of the classes of
noteholders, the note trustee is required to have regard only to the interests
of the holders of the most senior class of notes then outstanding.
The class A notes will rank in priority to the class B notes and the class C
notes, and the class B notes will rank in priority to the class C notes.
The note trust deed contains provisions limiting the powers of the class B
noteholders and/or the class C noteholders to request or direct the note
trustee to take any action or to pass an extraordinary resolution which may
affect the interests of each of the other classes of notes ranking equally or
senior to such class. Except in certain circumstances, the note trust deed
contains no such limitation on the powers of the holders of the most senior
class of notes then outstanding, the exercise of which will be binding on all
classes of notes, irrespective of the effect thereof on their interests.
SECURITY
As security for the payment of all monies payable in respect of the notes of
a series under the trust deed (including the remuneration, expenses and any
other claims of the note trustee and any receiver appointed under the trust
deed), the issuing entity will, pursuant to the trust deed and the trust deed
supplement, for each series of notes create the following security (the
"SECURITY") in favour of the note trustee for itself and on trust for, among
others, the noteholders of each series:
(i) an assignment by way of security interest under Jersey law of the
issuer Jersey secured property (as defined in the trust deed and
the relevant trust deed supplement) (including the issuing
entity's rights, title, interests and benefit in and to all monies
credited in respect of the relevant issuer distribution account,
the related loan note for that series and the security interest
created in favour of the security trustee by the loan note issuer
in respect of the related loan note for that series, to the extent
such rights, title and interests constitute assets situate in
Jersey);
(ii) an assignment by way of first fixed security under English law of
the issuing entity's right, title, interest and benefit in and to
the related loan note for that series, save to the extent that
such right, title and interest constitutes assets situate in
Jersey;
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(iii) an assignment by way of first fixed security under English law of
the issuing entity's right, title and interest in the security
interest created in favour of the security trustee by the loan
note issuer in respect of the related loan note (to the extent it
relates to such series of notes), save to the extent that such
right, title and interest constitute assets situate in Jersey;
(iv) an assignment by way of first fixed security under English law of
the issuing entity's right, title, interest and benefit in and to
any agreements or documents to which the issuing entity is a party
(and sums received or recoverable thereunder) save to the extent
that such right, title and interest constitute assets situate in
Jersey; and
(v) a first floating charge under English law over the whole of the
issuing entity's undertaking and assets present and future (to the
extent not situated in Jersey),
all as more particularly described in the trust deed and the trust deed
supplement.
APPLICATION OF PROCEEDS UPON ENFORCEMENT
The trust deed and each supplement thereto will contain provisions
regulating the priority of application of amounts prior to the enforcement of
security relating to the relevant series. Following the service of an
enforcement notice in respect of a series of notes, all monies received
relating to the relevant series and held in any ledger of the issuer
distribution account of the relevant series shall be applied in the following
order of priority:
(i) first, in no order of priority among the respective amounts then
due but proportionally to such amounts, to pay any outstanding
issuer costs amount and any remuneration then due to any receiver
or the note trustee and all amounts due in respect of legal fees
and other costs, charges, liabilities, expenses, losses,
indemnities, damages, proceedings, claims and demands then
incurred by the note trustee under and in respect of the
conditions for such series and related documents (as defined in
condition 5(ii)(A) but excluding the dealer agreement) and in
enforcing the security created by or pursuant to the trust deed
and the relevant supplement thereto or in perfecting title to the
security, together with interest thereon as provided in any such
document;
(ii) secondly, in priority, (A) (to the extent not met by (i) above) in
payment or satisfaction of all amounts referable to such series
then due and unpaid to the note trustee and/or any appointee of
the note trustee under the trust deed and the supplement for the
series thereto, and (B) in payment or satisfaction of all amounts
referable to such series then due and unpaid under the corporate
services agreement;
(iii) thirdly, pro rata and pari passu, in respect of the class A notes
and each and every sub-class thereof (if any), and in no order of
priority among the following amounts but proportionally to the
respective amounts then due:
(A) if the issuing entity has entered into a swap agreement for
the class A notes or any sub-class thereof (if any), in and
towards any issuer fault swap termination amount in
relation to the class A notes or any sub-class thereof; and
(B) in or towards payment of amounts due and unpaid in respect
of such notes in priority, first to interest, (such monies
to be applied first to the payment of any interest amount,
then any outstanding deferred interest and, thereafter, any
additional interest on the class A notes or any sub-class
thereof (if any)), and secondly to principal;
(iv) fourthly, pro rata and pari passu, in respect of the class B notes
and each and every sub-class thereof (if any) and in no order of
priority among the following amounts but proportionally to the
respective amounts then due:
(A) if the issuing entity has entered into a swap agreement for
the class B notes or any sub-class thereof (if any), in and
towards any issuer fault swap termination amount in
relation to the class B notes or any sub-class thereof; and
(B) in or towards payment of amounts due and unpaid in respect
of such notes in priority, first to interest, (such monies
to be applied first to the payment of any interest amount,
any outstanding deferred interest and, thereafter, any
additional interest on the class B notes or any sub-class
thereof (if any)) and secondly to principal;
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(v) fifthly, pro rata and pari passu, in respect of the class C notes
and each and every sub-class thereof (if any) and in no order of
priority among the following amounts but proportionally to the
respective amounts then due:
(A) if the issuing entity has entered into a swap agreement for
the class C notes or any sub-class thereof, in and towards
any issuer fault swap termination amount in relation to the
class C notes or any sub-class thereof; and
(B) in or towards payment of amounts due and unpaid in respect
of such notes in priority first to interest (such monies to
be applied first to the payment of any interest amount,
then outstanding deferred interest and, thereafter, any
additional interest on the class C notes or any sub-class
thereof (if any)) and secondly to principal;
(vi) sixthly, if the issuing entity has entered into a swap agreement
for the class A notes or any sub-class thereof (if any), in and
towards any counterparty fault swap termination amount;
(vii) seventhly, if the issuing entity has entered into a swap agreement
for the class B notes or any sub-class thereof (if any), in and
towards any counterparty fault swap termination amount;
(viii) eighthly, if the issuing entity has entered into a swap agreement
for the class C notes or any sub-class thereof (if any), in and
towards any counterparty fault swap termination amount;
(ix) ninthly, in or towards payment of any sums due from (or required
to be provided for by) the issuing entity to meet its liabilities
to any taxation authority;
(x) tenthly, towards payment of any amounts due and unpaid to the
lender under the terms of the relevant series expense loan
drawing; and
(xi) eleventhly, in payment of the balance (if any) of the aggregate
amount remaining from the proceeds of the first fixed security
granted in favour of each relevant series, after the payment of
the items set out above and any sums due to third parties under
obligations incurred in the course of the issuing entity's
business, to the loan note issuer identified as deferred
subscription price in respect of the relevant loan note.
5. NEGATIVE COVENANTS OF THE ISSUING ENTITY
So long as any of the notes remains outstanding the issuing entity shall
not, save to the extent permitted by the related documents or with the prior
written consent of the note trustee:
(i) create or permit to subsist any mortgage, charge, pledge, lien or
other security interest including, without limitation, anything
analogous to any of the foregoing under the laws of any
jurisdiction upon the whole or any part of its present or future
undertaking, assets or revenues (including uncalled capital);
(ii) carry on any business other than as described in this base
prospectus and any final terms relating to the issue of any series
of notes and in respect of that business shall not engage in any
activity or do anything whatsoever except:
(A) preserve and/or exercise and/or enforce any of its rights
and perform and observe its obligations under the notes,
the trust deed and each supplement thereto, the agency
agreement, the dealer agreement, each swap agreement, the
loan notes, each set of final terms and each account bank
agreement and any bank mandate regarding the issuer
distribution account (together, the "RELATED DOCUMENTS");
(B) use, invest or dispose of any of its property or assets
except in the manner provided in or contemplated by the
related documents; and
(C) perform any act incidental to or necessary in connection
with paragraphs (A) or (B) above;
(iii) have or form, or cause to be formed, any subsidiaries or
subsidiary undertakings or undertakings of any other nature or
have any employees or premises or have an interest in a bank
account other than the account;
(iv) create, incur or suffer to exist any indebtedness (other than
indebtedness permitted to be incurred under the terms of its
articles of association and pursuant to or as contemplated in any
of the related documents) or give any guarantee or indemnity in
respect of any obligation of any person;
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(v) repurchase any shares of its capital stock or declare or pay any
dividend or other distribution to its shareholders other than a
lawful dividend under Jersey law of amounts not exceeding issuer
profit amounts from time to time received by it (after payment of
any applicable taxes thereon);
(vi) waive, modify or amend, or consent to any waiver, modification or
amendment of, any of the provisions of the related documents
without the prior written consent of the note trustee (and, in the
case of the notes, of (i) the rate of interest, or (ii) any
interest period, without the prior written consent of the
originator beneficiaries);
(vii) offer to surrender to any company any amounts which are available
for surrender by way of group relief; or
(viii) consolidate or merge with any other persons or convey or transfer
its properties or assets substantially as an entirety to any other
person.
6. INTEREST
(A) SPECIFIC PROVISION: FLOATING RATE STERLING NOTES
This condition 6(a) is applicable to the notes if the specified
currency is sterling and the notes are issued as floating rate
notes.
Each note bears interest at a floating rate on its principal amount
outstanding from (and including) the interest commencement date.
Interest in respect of the notes is payable in arrear in sterling
on each interest payment date.
"INTEREST PAYMENT DATE" means the following dates:
(i) during any period that is not an amortisation period, the
first interest payment date and each regular interest
payment date (being every third distribution date following
the preceding interest payment date unless specified in the
final terms); and
(ii) during an amortisation period, each distribution date.
Each period beginning on (and including) the interest commencement
date or any interest payment date and ending on (but excluding) the
next interest payment date is herein called an "INTEREST PERIOD";
provided, however, that with respect to an interest period that
commences during any period that is not an amortisation period and
ends during either the regulated amortisation period or the rapid
amortisation period, such interest period will end on the
originally scheduled interest payment date (and for the avoidance
of doubt, in the case of an interest period which commences on the
interest payment date which falls at the end of the interest period
during which the rapid amortisation period or regulated
amortisation period begins, the interest period shall end on the
next distribution date). The first interest payment will be made on
the first interest payment date in respect of the interest period
from (and including) the interest commencement date to the first
interest payment date.
The rate of interest applicable to each note (the "RATE OF
INTEREST") for each interest period will be determined by the agent
bank as the sum of the margin and LIBOR for the relevant interest
period (or, in the case of the first interest period, a linear
interpolation of the LIBOR rates for such periods as specified in
the relevant final terms).
LIBOR shall be determined on the following basis:
(i) on the interest commencement date in respect of the first
interest period and thereafter on each "DETERMINATION
DATE", namely the first day of the interest period for
which the rate will apply, the agent bank will determine
the offered quotation to leading banks in the London
interbank market, in respect of the first interest period
from (and including) the interest commencement date to (but
excluding) the first interest payment date, a linear
interpolation of the rates for sterling deposits for such
periods as specified in the relevant final terms and for
each interest period thereafter, for sterling deposits for
the relevant interest period, by reference to the display
designated as the British Bankers Association LIBOR Rates
as quoted on the Moneyline Telerate Monitor as Moneyline
Telerate Screen No. 3750 or (aa) such other page as may
replace Moneyline Telerate Screen No. 3750 on that service
for the purposes of displaying such information or (bb) if
that service ceases to display such information, such page
as displays such information on such service (or, if more
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than one, that one previously approved in writing by the
note trustee) as may replace the Moneyline Telerate Monitor
as at or about 11.00 a.m. (London time) on that date, (the
"SCREEN RATE");
(ii) if, on any determination date, the screen rate is
unavailable, the agent bank will:
(1) request the reference banks to provide the agent
bank with its offered quotation to leading banks in
the London interbank market, in respect of the first
interest period from (and including) the interest
commencement date to (but excluding) the first
interest payment date, a linear interpolation of the
rates for such periods as specified in the relevant
final terms and for each interest period thereafter,
for sterling deposits for the relevant interest
period, as at approximately 11.00 a.m. (London time)
on the LIBOR determination date in question and in
an amount that is representative for a single
transaction in that market at that time; and
(2) determine the arithmetic mean (rounded upwards to
four decimal places) of such quotations;
(iii) if, on any determination date, the screen rate is
unavailable and two or three only of the reference banks
provide offered quotations, LIBOR for the relevant interest
period shall be determined in accordance with the
provisions of paragraph (ii) on the basis of the arithmetic
mean (rounded upwards to four decimal places) of the
offered quotations of those reference banks providing the
offered quotations; and
(iv) if fewer than two such quotations are provided by the
reference banks as requested, the agent bank will determine
the arithmetic mean (rounded upwards to four decimal
places) of the rates quoted by major banks in London,
selected by the agent bank, at approximately 11.00 a.m.
(London time) on the first day of the relevant interest
period for loans in sterling to leading European banks for
a period equal to the relevant interest period and in an
amount that is representative for a single transaction in
that market at that time,
provided that if the agent bank is unable to determine LIBOR in
accordance with the above provisions in relation to any interest
period, the rate of interest applicable to such note during such
interest period will be the sum of the margin in respect of such
note and LIBOR last determined in relation to such note in respect
of the preceding interest period.
The agent bank will, as soon as practicable after the
determination date in relation to each interest period, calculate
the amount of interest (the "INTEREST AMOUNT") payable in respect
of each note for such interest period.
The interest amount in respect of each note will be calculated by
applying the relevant rate of interest for such interest period to
the principal amount outstanding of such note during such interest
period, multiplying by the relevant day count fraction and
rounding the resulting figure to the nearest penny (half a penny
rounded upwards).
(B) SPECIFIC PROVISION: FLOATING RATE EURO NOTES
This condition 6(b) is applicable to the notes if the specified
currency is euro and the notes are designated to be floating rate
notes.
Each note bears interest at a floating rate on its principal
amount outstanding from (and including) the interest commencement
date. Interest in respect of the notes is payable in arrear in
euros on each interest payment date.
"INTEREST PAYMENT DATE" means the following dates:
(i) during any period that is not an amortisation period, the
first interest payment date and each regular interest
payment date (being the third distribution date following
the preceding interest payment date unless specified in the
final terms); and
(ii) during an amortisation period, each distribution date.
Each period beginning on (and including) the interest commencement
date or any interest payment date and ending on (but excluding)
the next interest payment date is herein called an "INTEREST
PERIOD"; provided, however, that with respect to an interest
period that commences during any period that is not an
amortisation period and ends during the regulated amortisation
period or the rapid amortisation period, such interest period will
144
end on the originally scheduled interest payment date (and for the
avoidance of doubt, in the case of an interest period which
commences on the interest payment date which falls at the end of
the interest period during which the rapid amortisation period or
regulated amortisation period begins, the interest period shall
end on the next distribution date).
The rate of interest applicable to each note (the "RATE OF
INTEREST") for each interest period will be determined by the
agent bank as the sum of the margin and EURIBOR for the relevant
interest period (or, in the case of the first interest period, a
linear interpolation of the EURIBOR rates for such periods as
specified in the relevant final terms).
EURIBOR shall be determined on the following basis:
(i) on the second TARGET Settlement Day before the interest
commencement date in respect of the first interest period
and thereafter on each "DETERMINATION DATE", namely 11.00
a.m. (Brussels time) on the second TARGET Settlement Day
before the first day of the interest period for which the
rate will apply, the agent bank will determine the offered
quotation to prime banks in the Euro-Zone Inter-bank
market, in respect of the first interest period from (and
including) the interest commencement date to (but
excluding) the first interest payment date, a linear
interpolation of the rates for euro deposits for such
periods as specified in the relevant final terms and for
each interest period thereafter, for euro deposits for the
relevant interest period, by reference to (aa) on the
display page designated 248 on the Dow Jones Telerate
Service (or such other page as may replace that page on
that service, or such other service as may be nominated by
the agent bank as the information vendor, for the purpose
of displaying comparable rates) as of the determination
date or (bb) if that service ceases to display such
information, such page as displays such information on such
service (or, if more than one, that one previously approved
in writing by the note trustee) as may replace the Dow
Jones Telerate Monitor as at or about 11.00 a.m. (Brussels
time) on that date (the "SCREEN RATE");
(ii) if, on any determination date, the screen rate is
unavailable, the agent bank will:
(1) request the reference banks to provide a quotation
of the rate at which deposits in euro are offered by
it at approximately 11.00 a.m. (Brussels time) on
the determination date to prime banks in the
Euro-Zone Interbank market for a period equal to the
relevant interest period and in an amount that is
representative for a single transaction in that
market at that time; and
(2) determine the arithmetic mean (rounded, if
necessary, to the nearest one hundred thousandth of
a percentage point, 0.000005 being rounded upwards)
of such quotations; and
(iii) if fewer than two such quotations are provided as
requested, the agent bank will determine the arithmetic
mean (rounded, if necessary, as aforesaid) of the rates
quoted by major banks in the euro-zone, selected by the
agent bank, at approximately 11.00 a.m. (Brussels time) on
the determination date for loans in euro to leading
European banks for a period equal to the relevant interest
period and in an amount that is representative for a single
transaction in that market at that time,
provided that if the agent bank is unable to determine EURIBOR in
accordance with the above provisions in relation to any interest
period, the rate of interest applicable to the notes during such
interest period will be the sum of the margin and the EURIBOR last
determined in relation to such notes in respect of the preceding
Interest Period.
The agent bank will, as soon as practicable after the
determination date in relation to each interest period, calculate
the amount of interest (the "INTEREST AMOUNT") payable in respect
of each note for such interest period. The interest amount in
respect of each note will be calculated by applying the relevant
rate of interest for such interest period to the principal amount
outstanding of such note during such interest period and
multiplying the product by the relevant day count fraction and
rounding the resulting figure to the nearest euro 0.01 (half of a
cent being rounded upwards).
(C) SPECIFIC PROVISION: FIXED RATE STERLING NOTES
This condition 6(c) is applicable to the notes if the specified
currency is sterling and the notes are designated to be fixed rate
notes.
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Each note bears interest on its principal amount outstanding from
(and including) the interest commencement date. Interest in
respect of the notes is payable in arrear in sterling on each
interest payment date.
"INTEREST PAYMENT DATE" means the following dates:
(i) during any period that is not an amortisation period, the
first interest payment date and each regular interest
payment date (as specified in the final terms); and
(ii) during an amortisation period, each distribution date.
Each period beginning on (and including) the interest commencement
date or any interest payment date and ending on (but excluding)
the next interest payment date is herein called an "INTEREST
PERIOD"; provided however, that, where the floating rate
commencement is a date falling prior to the scheduled redemption
date with respect to an interest period that commences during the
revolving period or the accumulation period and ends during the
regulated amortisation period or the rapid amortisation period,
such interest period will end on, and exclude, the floating rate
commencement date. The first interest payment will be made on the
first interest payment date in respect of the interest period from
(and including) the interest commencement date to the first
interest payment date.
Subject to the following paragraph, each note bears interest at
the initial rate on its principal amount outstanding during the
period from (and including) the interest commencement date to, but
excluding, the floating rate commencement date (the "INITIAL
PERIOD"). Interest in respect of such note during the initial
period is payable in arrear in sterling on each regular interest
payment date and the final interest payment date during the
initial period shall be the scheduled redemption date.
The amount of the interest payable (the "INTEREST AMOUNT") in
respect of each note for any interest period during the initial
period shall be calculated by applying the initial rate to the
principal amount outstanding of such note, multiplying the
resulting product by the relevant day count fraction, and rounding
the resultant figure to the nearest sterling 0.01 (half of a penny
being rounded upwards). The interest amount in respect of each
note for any period which is not an interest period shall be
calculated by applying the initial rate to the principal amount
outstanding of such note, multiplying the product by the relevant
day count fraction and rounding the resultant figure to the
nearest sterling 0.01 (half of a penny being rounded upwards). In
respect of any period which is not an interest period (including
the period commencing on the interest commencement date), "DAY
COUNT FRACTION" shall be determined in accordance with the
following provisions:
(i) each interest payment date shall be called a "REGULAR DATE"
and each period from and including a regular date in each
year to but excluding the next regular date shall be called
a "REGULAR PERIOD";
(ii) the first "REGULAR DATE" for the purposes of the first
interest period shall be the distribution date falling the
same number of months as a regular period prior to the
first interest payment date so that the first regular
period begins on such date and ends on the first interest
payment date provided that if the interest commencement
date is earlier than such first regular date, the first
regular period for the purposes of this condition 6(c)
shall be deemed to be the period commencing on the
distribution date falling the same number of months as a
regular period prior to such first regular date and ending
on such first regular date and the second regular period
shall commence on such first regular date and end on the
first interest payment date;
(iii) if the relevant period falls during a regular period, the
relevant day count fraction will be the number of days in
the relevant period divided by the number of days in the
regular period in which the relevant period falls; and
(iv) if the relevant period begins in one regular period and
ends in the next succeeding regular period, the relevant
day count fraction will be the sum of: (A) the number of
days in the relevant period falling within the first such
regular period divided by the number of days in the first
such regular period; and (B) the number of days in the
relevant period falling within the second such regular
period divided by the number of days in the second such
regular period.
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Provided that for the purposes of this condition 6(c), the number
of days in any period during the initial period which is not a
regular period shall be calculated on the basis of the number of
days from and including the first day of the relevant period to
but excluding the last day of the regular period and on the basis
of the day count fraction applicable to an interest period.
However, in the event that the regulated amortisation period or
the rapid amortisation period has commenced, then from and
including the floating rate commencement date to, but excluding,
the final redemption date (the "REDEMPTION PERIOD"), each note
bears interest at a floating rate on its principal amount
outstanding to be determined in accordance with the provisions
below, payable in arrear on each distribution date. During the
redemption period, each period beginning on, and including, a
distribution date to but excluding the next distribution date is
called an "INTEREST PERIOD".
The rate of interest applicable to each note the subject of this
condition 6(c) (the "REDEMPTION RATE") for each interest period
during the redemption period will be determined by the agent bank
as the sum of the margin and LIBOR for the relevant interest
period.
LIBOR shall be determined on the following basis:
(i) on the floating rate commencement date in respect of the
first interest period during the redemption period and
thereafter on each "DETERMINATION DATE", namely the first
day of the interest period for which the redemption rate
will apply, the agent bank will determine the offered
quotation to leading banks in the London interbank market,
for sterling deposits for the relevant interest period, by
reference to the display designated as the British Bankers
Association LIBOR Rates as quoted on the Moneyline Telerate
Monitor as Moneyline Telerate Screen No. 3750 or (aa) such
other page as may replace Moneyline Telerate Screen No.
3750 on that service for the purposes of displaying such
information or (bb) if that service ceases to display such
information, such page as displays such information on such
service (or, if more than one, that one previously approved
in writing by the note trustee) as may replace the
Moneyline Telerate Monitor as at or about 11.00 a.m.
(London time) on that date, (the "SCREEN RATE");
(ii) if, on any determination date, the screen rate is
unavailable, the agent bank will:
(1) request the reference banks to provide the agent
bank with its offered quotation to leading banks in
the London interbank market, for sterling deposits
for the relevant interest period, as at
approximately 11.00 a.m. (London time) on the LIBOR
determination date in question and in an amount that
is representative for a single transaction in that
market at that time; and
(2) determine the arithmetic mean (rounded upwards to
four decimal places) of such quotations;
(iii) if on any determination date the screen rate is unavailable
and two or three only of the reference banks provide
offered quotations, LIBOR for the relevant interest period
shall be determined in accordance with the provisions of
paragraph (ii) on the basis of the arithmetic mean (rounded
upwards to four decimal places) of the offered quotations
of those reference banks providing the offered quotations;
and
(iv) if fewer than two such quotations are provided by the
reference banks as requested, the agent bank will determine
the arithmetic mean (rounded upwards to four decimal
places) of the rates quoted by major banks in London,
selected by the agent bank, at approximately 11.00 a.m.
(London time) on the first day of the relevant interest
period for loans in sterling to leading European banks for
a period equal to the relevant interest period and in an
amount that is representative for a single transaction in
that market at that time,
provided that if the agent bank is unable to determine LIBOR in
accordance with the above provisions in relation to any interest
period, the redemption rate applicable to the such note in respect
of such interest period during the redemption period will be the
sum of the margin in respect of such note and LIBOR last
determined in relation to such note in respect of the preceding
interest period.
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During the redemption period, the agent bank will, as soon as
practicable after the determination date in relation to each
interest period during the redemption period, calculate the amount
of interest (the "INTEREST AMOUNT") payable in respect of each
note for such interest period.
The interest amount will be calculated by applying the redemption
rate for such interest period to the principal amount outstanding
of such note during such interest period and multiplying the
product by the relevant day count fraction, and rounding the
resulting figure to the nearest penny (half of a penny being
rounded upwards).
(D) SPECIFIC PROVISION: FLOATING RATE US DOLLAR NOTES
This condition 6(d) is applicable to the notes if the specified
currency is US dollars and the notes are designated as floating
rate notes.
Each note bears interest at a floating rate on its principal
amount outstanding from (and including) the interest commencement
date. Interest in respect of the each note is payable in arrear in
US dollars on each interest payment date.
"INTEREST PAYMENT DATE" means the following dates:
(i) during any period that is not an amortisation period, the
first interest payment date and each regular interest
payment date (being either each distribution date in the
case of one-month LIBOR and the third distribution date
following and including the preceding interest payment date
in the case of three-month LIBOR (unless specified in the
final terms)); and
(ii) during an amortisation period, each distribution date.
Each period beginning on (and including) the interest commencement
date or any interest payment date and ending on (but excluding)
the next interest payment date is herein called an "INTEREST
PERIOD"; provided, however, that with respect to an interest
period that commences during any period that is not an
amortisation period and ends during the regulated amortisation
period or the rapid amortisation period, such interest period will
end on the originally scheduled interest payment date (and for the
avoidance of doubt, in the case of an interest period which
commences on the interest payment date which falls at the end of
the interest period during which the rapid amortisation period or
regulated amortisation period begins, the interest period shall
end on the next distribution date). The first interest payment
will be made on the first interest payment date in respect of the
interest period from (and including) the interest commencement
date to the first interest payment date.
The rate of interest applicable to each note of each class for
each interest period will be determined by the agent bank as the
sum of the margin and LIBOR for the relevant interest period (or,
in the case of the first interest period, a linear interpolation
of the LIBOR rates for such periods as specified in the relevant
final terms).
LIBOR shall be determined on the following basis:
(i) on each quotation date until the first quotation date
during the regulated amortisation period or the rapid
amortisation period, the agent bank will determine the
offered quotation to leading banks in the London interbank
market for one-month US dollar deposits or three-month US
dollar deposits (in accordance with the relevant interest
period specified in the final terms). In the case of the
first interest period the agent bank will determine LIBOR
based upon the linear interpolation of LIBOR for US dollar
deposits as specified in the final terms. On each quotation
date during the regulated amortisation period or the rapid
amortisation period, the agent bank will determine the
offered quotation to leading banks in the London interbank
market for one-month US dollar deposits.
This will be determined by reference to the British Bankers
Association LIBOR Rates display as quoted on the Bridge
Telerate monitor as Telerate Screen No. 3750. If the
Telerate Screen No. 3750 stops providing these quotations,
the replacement service for the purposes of displaying this
information will be used. If the replacement service stops
displaying the information, any page showing this
information will be used. If there is more than one service
displaying the information, the one approved in writing by
the note trustee in its sole discretion will be used.
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In each case above, the determination will be made as at or
about 11.00 a.m. (London time), on that date. These are
called the screen rates for the respective classes.
A quotation date means the second London business day
before the first day of an interest period.
(ii) if, on any quotation date, a screen rate is unavailable,
the agent bank will:
* request reference banks to provide the agent bank
with its offered quotation to leading banks of the
equivalent of that screen rate on that quotation
date in an amount that represents a single
transaction in that market at that time; and
* calculate the arithmetic mean rounded upwards to
four decimal places, of those quotations;
(iii) if, on any quotation date, the screen rate is unavailable
and only two or three of the reference banks provide
offered quotations, the rate of interest for that interest
period will be the arithmetic mean of the quotations
provided by those two or three reference banks calculated
in the manner described in (ii) above; and
(iv) if fewer than two reference banks provide quotations, the
agent bank will determine (in its absolute discretion) the
arithmetic mean (rounded upwards to four decimal places) of
the leading rates quoted by major banks in London ---
selected by the agent bank at approximately 11.00 a.m.
(London time) on the relevant quotation date --- to leading
European banks for a period equal to the relevant interest
period and in an amount that is representative for a single
transaction in that market at that time, for loans in US
dollars.
The agent bank will, as soon as practicable after the
determination date in relation to each interest period,
calculate the amount of interest (the "INTEREST AMOUNT")
payable in respect of each note for such interest period.
The interest amount in respect of each note will be
calculated by applying the relevant rate of interest for
such interest period to the principal amount outstanding of
such note during such interest period and multiplying the
product by the relevant day count fraction and rounding the
resulting figure to the nearest US dollars 0.01 (half of a
cent being rounded upwards).
(E) GENERAL PROVISION: DEFERRED INTEREST AND ADDITIONAL INTEREST
To the extent that the monies which are deposited in the
distribution ledger of the issuer distribution account for a class
or sub-class (if any) of a series by the loan note issuer on an
interest payment date in accordance with the provisions of the
related loan note are insufficient to pay the full amount of
interest on any notes of a class or sub-class (if any) of such
series on such interest payment date, payment of the interest
shortfall ("DEFERRED INTEREST"), which will be borne by each note
of the relevant class or sub-class (if any) in a proportion equal
to the proportion that the principal amount outstanding of the
note of the relevant class or sub-class (if any) bears to the
aggregate principal amount outstanding of the relevant notes of
the relevant class or sub-class (if any) (as determined on the
interest payment date on which such deferred interest arises),
will be deferred until the interest payment date occurring
thereafter on which funds are available to the issuing entity (by
being deposited to the credit of the relevant distribution ledger
of the issuer distribution account for that class or sub-class (if
any) by the loan note issuer on such interest payment date in
accordance with the provisions of the related loan note) to pay
such deferred interest to the extent of such available funds. Such
deferred interest will accrue interest ("ADDITIONAL INTEREST") at
the then current rate of interest (or in the case of a fixed rate
note, the initial rate (during the initial period) or the
redemption rate (during the redemption period)), and payment of
any additional interest will also be deferred until the interest
payment date thereafter on which funds are available to the
issuing entity (by being deposited to the credit of the class or
sub-class distribution ledger of the issuer distribution account
for a series by the loan note issuer on such interest payment date
in accordance with the provisions of the related loan note) to pay
such additional interest to the extent of such available funds.
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(F) GENERAL PROVISION: CALCULATION OF INTEREST AMOUNT
On each interest payment date, the agent bank shall determine the
actual amount of interest which will be paid on the notes on that
interest payment date and the amount of deferred interest (if any)
on the notes in respect of the related interest period and the
amount of additional interest (if any) which will be paid on such
interest payment date. The amount of additional interest shall be
calculated by applying the then current relevant rate of interest
for the class or sub-class of notes to the deferred interest and
any additional interest from prior interest periods which remains
unpaid, multiplying such sum by the relevant day count fraction.
In the event that, on any interest payment date, the amount of
monies which are deposited to the series distribution ledger for a
class or sub-class (if any) by the loan note issuer on such day in
accordance with the provisions of the related loan note is
insufficient to pay in full the interest amount, any outstanding
deferred interest and any additional interest due on such interest
payment date in respect of such class or sub-class (if any) of
notes, such monies will be applied first to the payment of any
interest amount, secondly to the payment of any outstanding
deferred interest and thereafter to the payment of any additional
interest in respect of the relevant class or sub-class (if any).
(G) GENERAL PROVISION: INTEREST CEASES TO ACCRUE
Interest will cease to accrue on any part of the principal amount
outstanding of a note from the scheduled redemption date unless,
upon due presentation, payment of principal is improperly withheld
or refused, in which case it will continue to bear interest in
accordance with this condition (after as well as before judgment)
until whichever is the earlier of (i) the day on which all sums
due in respect of such note up to that day are received by or on
behalf of the relevant noteholder and (ii) the day which is seven
days after the principal paying agent or the note trustee has
notified the relevant noteholders either in accordance with
condition 16 or individually that it has received all sums due in
respect of the relevant notes up to such seventh day (except to
the extent that there is any subsequent default in payment).
(H) GENERAL PROVISION: FAILURE OF AGENT BANK
If the agent bank fails at any time to determine a rate of
interest or to calculate an interest amount or amount of deferred
interest (if any) or amount of additional interest (if any), the
note trustee, or its appointed agent without any liability
therefor, will determine such rate of interest as it considers
fair and reasonable in the circumstances (having such regard as it
thinks fit to the other provisions of these conditions or (as the
case may be) calculate such interest amount or amount of deferred
interest (if any) or amount of additional interest (if any), in
accordance with the paragraph entitled "Deferred Interest and
Additional Interest" above, and each such determination or
calculation shall be deemed to have been made by the agent bank.
(I) GENERAL PROVISION: PUBLICATION
The agent bank will cause each rate of interest, interest amount,
amount of deferred interest (if any) and amount of additional
interest (if any) determined by it, together with the relevant
interest payment date, to be notified to the issuing entity, the
paying agents, the note trustee and (for so long as the respective
notes are admitted to trading on the regulated market of the
London Stock Exchange plc (the "REGULATED MARKET OF THE LONDON
STOCK EXCHANGE")), as soon as practicable after such
determination, but in any event not later than the seventh day
thereafter or such earlier day as the regulated market of the
London Stock Exchange may require, and the agent bank will cause
the same to be published in accordance with condition 16 as soon
as possible thereafter. The agent bank will be entitled to
recalculate any interest amount and amount of additional interest
(on the basis of the foregoing provisions) without notice in the
event of an extension or shortening of the relevant interest
period.
(J) GENERAL PROVISION: NOTIFICATIONS ETC.
All notifications, opinions, determinations, certificates,
calculations, quotations and decisions given, expressed, made or
obtained for the purposes of this condition 6, whether by the
agent bank or the note trustee will (in the absence of wilful
default, bad faith or
150
manifest error) be binding on the issuing entity, the paying
agents, the note trustee, the agent bank and the noteholders and
no liability to any such person will attach to the agent bank or
the note trustee in connection with the exercise or non-exercise
by them or any of them of their powers, duties and discretions for
such purposes.
7. REDEMPTION AND PURCHASE
(A) SCHEDULED REDEMPTION
Unless previously redeemed and cancelled or unless an amortisation
period has earlier commenced, the notes of a class or sub-class
will be redeemed on the interest payment date which falls on the
scheduled redemption date specified in the relevant final terms
for the series to which the class or sub-class belongs as follows
and to the following extent:
(i) if, on the scheduled redemption date, the loan note issuer
deposits into the relevant class or sub-class distribution
ledger in the relevant issuer distribution account (in
accordance with the provisions of the loan note related to
the series to which the class or sub-class belongs) an
amount identified as principal equal to the principal
amount outstanding of such class or sub-class, then the
notes of such class or sub-class will be redeemed pro rata
to the extent of that amount (after exchange of such
principal amount to the relevant currency pursuant to the
relevant swap agreement, if such a currency swap agreement
has been entered into); and
(ii) if, on the scheduled redemption date, the loan note issuer
deposits into the relevant class or sub-class distribution
ledger in the relevant issuer distribution account (in
accordance with the provisions of the loan note related to
the series to which the class or sub-class belongs) an
amount identified as principal which is less than the
principal amount outstanding of such class or sub-class,
then the notes of such class or sub-class will be redeemed
pro rata in part to the extent of the amount which is so
deposited (after exchange of such principal amount to the
relevant currency pursuant to the relevant swap agreement,
if such a currency swap has been entered into), and the
rapid amortisation period will commence with effect from
the scheduled redemption date.
If the rapid amortisation period for a series of notes commences
in the circumstances referred to in (ii) above, then on each
interest payment date which thereafter occurs during the
amortisation period, the notes will be redeemed in whole or, as
the case may be, pro rata in part to the extent of the amount
(after exchange of such amount to the relevant currency at the
rate of exchange applicable to such series under the swap
agreement or if there is no longer a swap agreement then at a spot
rate of exchange, if such series is not denominated in sterling)
which, if any, is deposited to the relevant class or sub-class
distribution ledger in the relevant issuer distribution account on
such day in accordance with the provisions of the related loan
note until the earlier of (a) such time as the series of notes is
redeemed in full or (b) the final redemption date specified in the
relevant final terms for such series of note.
The principal paying agent will cause each principal payment and
principal amount outstanding to be notified to the issuing entity,
the paying agents, the note trustee and (for so long as the notes
are admitted to trading on the regulated market of the London
Stock Exchange), the regulated market of the London Stock
Exchange, as soon as practicable after such determination, but in
any event not later than the seventh day thereafter or such
earlier day as the regulated market of the London Stock Exchange
may require and will cause the same to be published in accordance
with condition 16 as soon as possible thereafter. All
notifications, opinions, determinations, certificates,
calculations, quotations and decisions given, expressed, made or
obtained for the purposes of this condition by the principal
paying agent will (in the absence of wilful default, bad faith or
manifest error) be binding on the issuing entity, the paying
agents, the note trustee and the noteholders and (subject as
aforesaid) no liability to any such person will attach to the
principal paying agent in connection with the exercise or
non-exercise by it of its powers, duties and discretions for such
purposes.
If the agent bank fails at any time to determine a principal
payment or principal amount outstanding as set out below, the note
trustee, or its appointed agent without accepting liability
therefore, shall calculate such principal payment or principal
amount outstanding
151
in accordance with the above provisions of this condition, and
each such determination or calculation shall be deemed to have
been made by the agent bank. Any such determination or calculation
will be binding on the issuing entity, the paying agents, the note
trustee and the noteholders.
(B) MANDATORY EARLY REDEMPTION
If an amortisation period commences prior to the scheduled
redemption date with respect to any series of notes (or, if the
issuing entity has entered into a swap agreement in respect of any
class or sub-class of the notes, an amortisation period commences
(or is continuing) on or after the scheduled redemption date),
then on each interest payment date (including the scheduled
redemption date), which thereafter occurs during such amortisation
period, each class or sub-class of notes that belongs to the
relevant series now subject to an amortisation period will be
redeemed pro rata in part to the extent of the amount (being the
"AVAILABLE REDEMPTION FUNDS") which is deposited into the relevant
corresponding class or sub-class distribution ledger (in respect
of the relevant series) by the loan note issuer on each such date
in accordance with the provisions of the loan note related to the
relevant series to which the class or sub-class belongs until the
earlier of (a) such time as each class or sub-class of the
relevant series is redeemed in full (b) such date prior to the
final redemption date (if any) specified in the relevant final
terms and (c) the final redemption date specified in the relevant
final terms; provided that if the issuing entity has entered into
a swap agreement in respect of any class or sub-class of notes,
then on each interest payment date which occurs on and after the
scheduled redemption date, the notes will be redeemed pro rata in
part to the extent of the available redemption funds (after
exchange of such amount to the relevant currency pursuant to the
relevant currency swap agreement, if such a currency swap has been
entered into) until the earlier of (a) such time as each class or
sub-class of the relevant series is redeemed in full, and (b) the
final redemption date specified in the relevant final terms.
On each interest payment date, the agent bank shall determine (i)
the amount of each "PRINCIPAL PAYMENT" payable on each note, which
will be the pro rata share of that note in the available
redemption funds (converted into the relevant currency if the
relevant class or sub-class is not denominated in sterling)
calculated by dividing such available redemption funds by the
number of notes in the relevant class or sub-class then
outstanding, and (ii) the principal amount outstanding of each
note on the first day of the next following interest period (after
deducting any principal payment due to be made in respect of each
note on the interest payment date).
(C) FINAL REDEMPTION
If the notes have not previously been cancelled or redeemed in
full pursuant to conditions 7(a), 7(b) or 10 (including any case
where any interest (including deferred interest and additional
interest) thereon has not earlier been paid), the notes will be
finally redeemed at their then principal amount outstanding,
together with accrued interest (including deferred interest and
additional interest) thereon on the final redemption date
specified in the relevant final terms.
(D) OTHER REDEMPTION
The issuing entity shall not be entitled to redeem the notes
otherwise than as provided in paragraphs (a), (b) and (c) above.
(E) PURCHASE
The issuing entity may not, at any time, purchase the notes in the
open market or otherwise.
(F) CANCELLATION
All notes redeemed pursuant to the foregoing provisions shall be
cancelled forthwith and may not be reissued or resold.
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8. PAYMENTS
(a) Principal in Euro: Payments of principal shall be made by euro
cheque drawn on, or, upon application by a holder of a note to the
specified office of the principal paying agent not later than the
fifteenth day before the due date for any such payment, by
transfer to a euro account (or other account to which euro may be
credited or transferred) maintained by the payee with, a bank in a
city in which banks have access to the TARGET system and (in the
case of redemption) upon surrender (or, in the case of part
payment only, endorsement) of the relevant note certificates at
the specified office of any paying agent.
(b) Interest in Euro: Payments of interest shall be made by euro
cheque drawn on, or, upon application by a holder of a note to the
specified office of the principal paying agent not later than the
fifteenth day before the due date for any such payment, by
transfer to a euro account (or other account to which euro may be
credited or transferred) maintained by the payee with, a bank in a
city in which banks have access to the TARGET system and (in the
case of interest payable on redemption) upon surrender (or, in the
case of part payment only, endorsement) of the relevant note
certificates at the specified office of any paying agent.
(c) Principal in US dollars: Payments of principal shall be made by US
dollar cheque drawn on, or, upon application by a holder of a note
to the specified office of the principal paying agent not later
than the fifteenth day before the due date for any such payment,
by transfer to a US dollar account (or other account to which US
dollars may be credited or transferred) maintained by the payee
with, a bank in New York City and (in the case of redemption) upon
surrender (or, in the case of part payment only, endorsement) of
the relevant note certificates at the specified office of any
paying agent.
(d) Interest in US dollars: Payments of interest shall be made by US
dollar cheque drawn on, or, upon application by a holder of a note
to the specified office of the principal paying agent not later
than the fifteenth day before the due date for any such payment,
by transfer to a US dollar account (or other account to which US
dollars may be credited or transferred) maintained by the payee
with, a bank in New York City and (in the case of interest payable
on redemption) upon surrender (or, in the case of part payment
only, endorsement) of the relevant note certificates at the
specified office of any paying agent.
(e) Principal in Sterling: Payments of principal shall be made by
sterling cheque drawn on, or, upon application by a holder of a
note to the specified office of the principal paying agent not
later than the fifteenth day before the due date for any such
payment, by transfer to a sterling account (or other account to
which sterling may be credited or transferred) maintained by the
payee with, a bank in a city in which banks have access to the
TARGET system and (in the case of redemption) upon surrender (or,
in the case of part payment only, endorsement) of the relevant
note certificates at the specified office of any paying agent.
(f) Interest in Sterling: Payments of interest shall be made by
sterling cheque drawn on, or, upon application by a holder of a
note to the specified office of the principal paying agent not
later than the fifteenth day before the due date for any such
payment, by transfer to a sterling account (or other account to
which sterling may be credited or transferred) maintained by the
payee with, a bank in a city in which banks have access to the
TARGET system and (in the case of interest payable on redemption)
upon surrender (or, in the case of part payment only, endorsement)
of the relevant note certificates at the specified office of any
paying agent.
PAYMENTS SUBJECT TO FISCAL LAWS
All payments in respect of the notes are subject in all cases to any
applicable fiscal or other laws and regulations in the place of payment,
but without prejudice to the provisions of condition 9 (Taxation). No
commissions or expenses shall be charged to the noteholders in respect of
such payments. In addition, there are no particular applicable Jersey
laws, decrees or regulations that affect the remittance of interest and
other payments to holders of the notes who are not resident in Jersey.
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PAYMENTS ON BUSINESS DAYS
If the due date for payment of any amount in respect of any note is not a
payment business day in the place of presentation, the holder shall not
be entitled to payment in such place of the amount due until the next
succeeding payment business day in such place and shall not be entitled
to any further interest or other payment in respect of any such delay.
(a) Partial payments: If a paying agent makes a partial payment in
respect of any note, the issuing entity shall procure that the
amount and date of such payment are noted on the register and, in
the case of partial payment upon presentation of a note
certificate, that a statement indicating the amount and the date
of such payment is endorsed on the relevant note certificate.
(b) Record date: Each payment in respect of a note will be made to the
person shown as the holder in the register at the opening of
business in the place of the registrar's specified office on the
fifteenth day before the due date for such payment (the "RECORD
DATE"). Where payment in respect of a note is to be made by
cheque, the cheque will be mailed to the address shown as the
address of the holder in the register at the opening of business
on the relevant record date.
PAYING AGENT
The issuing entity reserves the right, subject to the prior written
approval of the note trustee, at any time to vary or terminate the
appointment of the principal paying agent and to appoint additional or
other paying agents. The issuing entity will at all times maintain (i) a
paying agent with a specified office in London (so long as the notes are
admitted to the Official List of the Financial Services Authority in its
capacity as the UK Listing Authority (the "UKLA") and/or admitted to
trading on the regulated market of the London Stock Exchange) and (ii) a
paying agent in a European Union member state that will not be obliged to
withhold or deduct tax payments pursuant to European Council Directive
2003/48/EC or any other directive implementing the conclusions of the
ECOFIN Council meeting of 26-27 November 2000 or any law implementing or
complying with, or introduced in order to conform to, such directive.
9. TAXATION
All payments of principal and interest in respect of the notes by or on
behalf of the issuing entity shall be made free and clear of, and without
withholding or deduction for or on account of, any and all present and future
taxes, duties, assessments or governmental charges of whatever nature imposed,
levied, collected, withheld or assessed by or on behalf of Jersey, the United
Kingdom, Luxembourg or any other jurisdiction to whose tax laws such payments
may be subject or any political subdivision therein or any authority in or of
any of the foregoing having power to tax, unless the withholding or deduction
of such taxes, duties, assessments, or governmental charges is required by law.
In that event, the issuing entity or the paying agents shall make such payment
after such withholding or deduction of such amounts has been made and shall
account to the relevant authorities for the amount so required to be withheld
or deducted. Neither the issuing entity nor the paying agents will be required
to make any additional payments to any noteholder in respect of any amounts
deducted or withheld as mentioned in this condition 9.
10. EVENTS OF DEFAULT
If any of the following events (each, an "EVENT OF DEFAULT") occurs in
respect of a series:
(A) NON-PAYMENT
the issuing entity fails to pay any amount of principal in respect
of a class or sub-class (if any) of the relevant series of notes
within seven days of the due date for payment thereof, or fails to
pay any amount of interest in respect of a class or sub-class (if
any) of the relevant series of notes within fifteen days of the
due date for payment thereof; or
(B) BREACH OF OTHER OBLIGATIONS
the issuing entity defaults in the performance or observance of
any of its other obligations under or in respect of the relevant
series of notes, the trust deed (other than in such case, any
obligation for the payment of any principal or interest on the
notes) or the agency agreement and (except where such default is
incapable of remedy) such default remains
154
unremedied for 30 days after written notice thereof by the note
trustee, addressed to the issuing entity, certifying that such
default is, in the opinion of the note trustee, materially
prejudicial to the interests of the most senior class outstanding
of notes of such series; or
(C) UNSATISFIED JUDGMENT
one or more judgment(s) or order(s) for the payment of any amount
is rendered against the issuing entity and continue(s) unsatisfied
and unstayed for a period of 30 days after the date(s) thereof or,
if later, the date therein specified for payment; or
(D) SECURITY ENFORCED
a secured party takes possession, or a receiver, manager or other
similar officer is appointed, of the whole or any part of the
undertaking, assets and revenues of the issuing entity or an
enforcement action is begun or a distress or execution is levied
against any assets of the issuing entity; or
(E) INSOLVENCY, ETC.
(i) the issuer becomes insolvent or is unable to pay its debts
as they fall due, (ii) an administrator or liquidator of
the issuing entity or the whole or any part of the
undertaking, assets and revenues of the issuing entity is
appointed (or application for any such appointment is made),
(iii) the issuing entity takes any action for a
readjustment or deferment of any of its obligations or
makes a general assignment or an arrangement or composition
with or for the benefit of its creditors or declares a
moratorium in respect of any of its indebtedness or any
guarantee of indebtedness given by it or (iv) the issuing
entity ceases or threatens to cease to carry on all or any
substantial part of its business; or
(F) WINDING-UP, ETC.
an order is made or an effective resolution is passed for the
winding-up, liquidation or dissolution of the issuing entity; or
(G) ANALOGOUS EVENT
any event occurs which under the laws of England and Wales has an
analogous effect to any of the events referred to in paragraphs
(c) to (f) above; or
(H) FAILURE TO TAKE ACTION, ETC.
any action, condition or thing at any time required to be taken,
fulfilled or done in order (i) to enable the issuing entity
lawfully to enter into, exercise its respective rights and perform
and comply with its respective obligations under and in respect of
the notes and the related documents (ii) to ensure that those
obligations are legal, valid, binding and enforceable (except as
such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganisation or other similar laws
affecting the enforcement of the rights of creditors generally and
as such enforceability may be limited by the effect of general
principles of equity) and (iii) to make the notes and the related
documents admissible in evidence in the courts of England and
Wales is not taken, fulfilled or done; or
(I) UNLAWFULNESS
it is or will become unlawful for the issuing entity to perform or
comply with any of its obligations under or in respect of the
relevant series of notes; or
(J) GOVERNMENT INTERVENTION
(A) all or any substantial part of the undertaking, assets and
revenues of the issuing entity is condemned, seized or otherwise
appropriated by any person acting under the authority of any
national, regional or local government or (B) the issuing entity
is prevented by any such person from exercising normal control
over all or any substantial part of its undertaking, assets and
revenues; or
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(K) SWAP TERMINATION
if the issuing entity has entered into, in respect of the relevant
class or sub-class of notes, a swap agreement, an early
termination of such swap agreement without replacement within 30
days,
then, the note trustee may at its discretion and, if so required
by holders of at least one-quarter of the aggregate principal amount
outstanding of the most senior class outstanding of notes of such series
or if so directed by an extraordinary resolution (as defined in the
trust deed) of the noteholders of the most senior class outstanding of
notes of such series (subject in each case to being indemnified and/or
secured to its satisfaction), shall be bound to, give written notice (an
"ENFORCEMENT NOTICE") to the issuing entity declaring all of the notes
of the relevant series to be immediately due and payable, whereupon they
shall become immediately due and payable at their principal amount
outstanding together with accrued interest (including deferred interest
and additional interest) without further action or formality and the
security shall become enforceable. Notice of any such declaration shall
promptly be given to all the noteholders of the relevant series by the
issuing entity.
11. PRESCRIPTION
Claims for principal and interest on redemption shall become void unless the
relevant note certificates are surrendered for payment within ten years of the
appropriate relevant date.
12. NOTE TRUSTEE AND AGENTS
The note trustee is entitled to be indemnified and/or secured and relieved
from responsibility in certain circumstances and to be paid its costs and
expenses in priority to the claims of the noteholders.
In the exercise of its powers and discretions under these note conditions
and the trust deed, the note trustee will have regard to the interests of the
noteholders as a class and will not be responsible for any consequence
(including any tax consequence) for individual holders of notes as a result of
such holders being connected in any way with a particular territory or taxing
jurisdiction.
In acting under the agency agreement, and in connection with the notes, the
paying agents act solely as agents of the issuing entity and (to the extent
provided therein) the note trustee and do not assume any obligations towards or
relationship of agency or trust for or with any of the noteholders.
If in the opinion of the note trustee there is a conflict between the
interests of the holders of any of the classes or sub-classes of notes, the
note trustee shall in the exercise of its duties, powers and discretions, have
regard solely to the interests of the class which ranks most senior and which
is still outstanding.
The note trustee is relieved of liability for making searches or other
enquiries in relation to the assets comprising the security. The note trustee
has no responsibility in relation to the legality and the enforceability of the
trust arrangements and the connected security. The note trustee will not be
obliged to take any action which might result in its incurring personal
liabilities. The note trustee is not obliged to monitor or investigate the
performance of any other person under the documents relating to the loan note
issuer or the documents relating to the receivables trust and shall be entitled
to assume, until it has actual notice to the contrary, that all such persons
are properly performing their duties and that no pay out event has occurred,
unless it receives express notice to the contrary.
The note trustee is not responsible for any deficiency which may arise
because it is liable to tax in respect of the proceeds of security.
The note trustee is not responsible for checking the calculations contained
in or otherwise verifying any information coming into its possession in
relation to the receivables trust. Neither shall the note trustee be
responsible for monitoring or determining whether or not any or all of the
issuance tests in respect of the related loan note for a series are satisfied
prior to or at the time of any issue of a series and its related loan note or
any increase of the outstanding principal amount of an existing series and its
related loan note by the loan note issuer.
The note trustee and its related companies are entitled to enter into
business transactions with the issuing entity, RBS, NatWest and/or related
companies of any of them without accounting for any profit resulting therefrom.
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The initial paying agents and their initial specified offices are listed below.
The initial agent bank is specified in the relevant final terms. Subject to the
provisions of the agency agreement, the issuing entity reserves the right at
any time to vary or terminate the appointment of any paying agent and to
appoint successor or additional paying agents or a successor agent bank,
provided, however, that:
(a) the issuing entity shall at all times maintain a principal paying
agent; and
(b) the issuing entity will ensure that it maintains a paying agent in
a European Union member state such that the paying agent will not
be obliged to withhold or deduct tax pursuant to European Council
Directive 2003/48/EC or any other directive implementing the
conclusions of the ECOFIN Council meeting of 26-27 November 2000 or
any law implementing or complying with, or introduced to conform
to, such directive; and
(c) if a calculation agent is specified in the relevant final terms,
the issuing entity shall at all times maintain a calculation agent;
and
(d) if and for so long as the notes are admitted to listing, trading
and/or quotation by any listing authority, stock exchange and/or
quotation system which requires the appointment of a paying agent
in any particular place, the issuing entity shall maintain a paying
agent having its specified office in the place required by such
listing authority, stock exchange and/or quotation system.
Notice of any change in any of the paying agents or in their specified
offices shall promptly be given to the noteholders.
13. REPLACEMENT OF NOTE CERTIFICATES
If any note certificate is lost, stolen, mutilated, defaced or destroyed, it
may be replaced at the specified office of the registrar, subject to all
applicable laws and stock exchange requirements, upon payment by the claimant
of the expenses incurred in connection with such replacement and on such terms
as to evidence, security, indemnity and otherwise as the issuing entity or
registrar may reasonably require. Mutilated or defaced note certificates must
be surrendered before replacements will be issued.
14. MEETINGS OF NOTEHOLDERS; MODIFICATION AND WAIVER
MEETINGS OF NOTEHOLDERS
The trust deed contains provisions for convening meetings of noteholders to
consider matters relating to the notes of a series, including the modification
of any provision of these conditions or the trust deed. Any such modification
may be made if sanctioned by an extraordinary resolution of the relevant
noteholders.
The note trust deed provides that:
(a) an extraordinary resolution which, in the opinion of the note
trustee affects the notes of only one class or sub-class, shall be
transacted at a separate meeting of the noteholders of that class
or sub-class;
(b) an extraordinary resolution which, in the opinion of the note
trustee affects the noteholders of more than one class or sub-class
of notes, but does not give rise to an actual or potential conflict
of interest between the noteholders of one class or sub-class of
notes and the holders of another class or sub-class of notes, shall
be transacted either at separate meetings of the noteholders of
each such class or sub-class or at a single meeting of the
noteholders of all such classes or sub-classes of notes as the note
trustee shall determine in its absolute discretion; and
(c) an extraordinary resolution which, in the opinion of the note
trustee affects the noteholders of more than one class or sub-class
and gives rise to any actual or potential conflict of interest
between the noteholders of one class or sub-class of notes and the
noteholders of any other class or sub-class of notes, shall be
transacted at separate meetings of the noteholders of each such
class or sub-class.
The quorum for an extraordinary resolution, other than regarding a basic
terms modification, relating to a meeting of a particular class or classes or
sub-class or sub-classes of notes will be two or more persons holding or
representing a majority of the principal amount outstanding of the outstanding
notes in that class or those classes or sub-class or sub-classes or, at any
adjourned meeting, two or more persons being or representing noteholders of
that class or those classes or sub-
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class or sub-classes, whatever the principal amount outstanding of the
outstanding notes so held or represented in such class or classes or sub-class
or sub-classes.
The quorum for an extraordinary resolution relating to a basic terms
modification (which must be proposed separately to each class or sub-class of
noteholders) will be two or more persons holding or representing in the
aggregate 75 per cent. of the principal amount outstanding of the outstanding
notes in the relevant class or classes or sub-class or sub-classes or, at any
adjourned meeting, two or more persons holding or representing not less than in
the aggregate 33 per cent. of the principal amount outstanding of the
outstanding notes in the relevant class or classes or sub-class or sub-classes.
In relation to each class or sub-class of notes:
(a) no extraordinary resolution involving a basic terms modification
that is passed by the holders of one class or sub-class of notes
shall be effective unless it is sanctioned by an extraordinary
resolution of the holders of each of the other classes or sub-
classes of notes (to the extent that there are outstanding notes in
each such other classes or sub-classes);
(b) no extraordinary resolution to approve any matter other than a
basic terms modification of any class or sub-class of notes shall
be effective unless it is sanctioned by an extraordinary resolution
of the holders of each of the other classes or sub-classes of notes
ranking senior to such class or sub-class (to the extent that there
are outstanding notes ranking senior to such class or sub-class)
unless the note trustee considers that none of the holders of each
of the other classes of notes ranking senior to such class or sub-
class would be materially prejudiced by the absence of such
sanction; and
(c) any resolution passed at a meeting of noteholders of one or more
classes or sub-classes of notes duly convened and held in
accordance with the note trust deed shall be binding upon all
noteholders of such class or classes or sub-class or sub-classes,
whether or not present at such meeting and whether or not voting
and, except in the case of a meeting relating to a basic terms
modification, any resolution passed at a meeting of the holders of
the most senior class or sub-class of notes duly convened and held
as aforesaid shall also be binding upon the holders of all the
other classes or sub-classes of notes.
MODIFICATION AND WAIVER
The note trustee may agree, without the consent of the noteholders (i) to
any modification (except a basic terms modification) of, or to the waiver or
authorisation of any breach or proposed breach of, the notes or any series
thereof (including these note conditions) or any other related document, the
loan notes in respect of a series, the trust deed and the trust deed supplement
which is not, in the opinion of the note trustee, materially prejudicial to the
interests of the holders of the most senior class or sub-classes of outstanding
notes or (ii) to any modification of any of the provisions of these note
conditions or any of the related documents which, in the opinion of the note
trustee, is of a formal, minor or technical nature or is to correct a manifest
error. The note trustee shall not waive or authorise (i) in contravention of
any express direction by an extraordinary resolution of the holders of the most
senior class of outstanding notes (but so that no such direction or request
shall affect any authorisation, waiver or determination previously given or
made); or (ii) any such proposed breach or breach relating to a basic terms
modification.
Any such modification, authorisation or waiver shall be binding on the
relevant noteholders and, unless the note trustee agrees otherwise, shall be
notified by the issuing entity to the noteholders in accordance with condition
16 as soon as practicable thereafter. Notwithstanding that none of the note
trustee and the noteholders may have the right of recourse against each of
Standard & Poor's, Moody's and Fitch Ratings in respect of confirmation given
by them and relied upon by the note trustee, the note trustee shall be entitled
but not bound to assume, for the purposes of exercising any powers, authority
or discretion under or in relation to the notes or the trust deed or any other
related document that such exercise will not be materially prejudicial to the
interests of the holders of the most senior class or sub-classes of outstanding
notes if each of Standard & Poor's, Moody's and Fitch Ratings which is then
rating the relevant series of notes after having been informed of such proposed
exercise has not informed the note trustee that the then current rating of the
relevant class or sub-class of notes would be adversely affected by such
exercise.
SUBSTITUTION
As more fully set forth in the trust deed (and subject to the conditions and
more detailed provisions which are contained therein), subject to such
amendment of the trust deed and such other
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conditions as the note trustee may require, but without the consent of the
noteholders, the note trustee may also agree to the substitution of any other
body corporate in place of the issuing entity (the "SUBSTITUTED ISSUER") as
principal debtor under the trust deed and the notes and in the case of such a
substitution the note trustee may agree, without the consent of the
noteholders, to a change of the law governing the notes and/or the security
trust deed, provided that such change would not in the opinion of the note
trustee be materially prejudicial to the interests of the holders of the most
senior class of outstanding notes. Any such substitution or addition shall be
notified to the noteholders in accordance with condition 16 as soon as
practicable thereafter.
15. ENFORCEMENT
At any time after the notes of a series become due and repayable and,
without prejudice to its rights of enforcement in relation to the security, the
note trustee may, at its discretion and without notice, institute such
proceedings as it thinks fit to enforce payment of the notes of the relevant
series only (including the right to repayment of the relevant series of notes
together with accrued interest thereon and including enforcing the security in
relation to the relevant series only) and shall be bound to do so if (and only
if):
(a) it shall have been so directed by holders of at least one-quarter
of the aggregate principal amount outstanding of the holders of the
most senior class of outstanding notes or by an extraordinary
resolution of the holders of the most senior class of outstanding
notes; and
(b) it shall have been indemnified or provided with security to its
satisfaction.
No noteholder may institute any proceedings against the issuing entity to
enforce its rights under or in respect of the notes or the trust deed unless
(i) the note trustee has become bound to institute proceedings and has failed
to do so within a reasonable time and (ii) such failure is continuing. The note
trustee may only enforce the outstanding floating charge given to it if it
shall have been so directed by one-quarter in aggregate principal amount of the
holders of the most senior class of outstanding notes of each and every series.
16. NOTICES
Notices to the noteholders shall be valid if published in a leading English
language daily newspaper published in London (which is expected to be the
Financial Times). Any such notice shall be deemed to have been given on the
date of first publication.
Until such time as any definitive note certificates are issued, there may,
so long as the global note certificate(s) is or are held in its or their
entirety on behalf of Euroclear and Clearstream, be substituted for such
publication in such newspaper the delivery of the relevant notice to Euroclear
and Clearstream, for communication by them to the holders of the notes. Any
such notice shall be deemed to have been given to the holders of the relevant
notes on the seventh day after the day on which such notice was given to
Euroclear and Clearstream.
Any notices specifying the rate of interest, the redemption rate, an
interest amount, an amount of additional interest or of deferred interest, a
principal payment or a principal amount outstanding shall be deemed to have
been duly given if the information contained in such notice appears on the
relevant page of the Reuters Screen or such other medium for the electronic
display of data as may be approved by the note trustee and notified to the
relevant class of noteholders (the "RELEVANT SCREEN"). Any such notice shall be
deemed to have been given on the first date on which such information appeared
on the relevant screen. If it is impossible or impracticable to give notice in
accordance with this paragraph, then notice of the matters referred to in this
condition shall be given in accordance with the preceding paragraph.
Copies of all notices given in accordance with these provisions shall be
sent to the London Stock Exchange and Euroclear and Clearstream.
17. CURRENCY INDEMNITY
If any sum due from the issuing entity in respect of the notes or any order
or judgment given or made in relation thereto has to be converted from the
currency (the "FIRST CURRENCY") in which the same is payable under these
conditions or such order or judgment into another currency (the "SECOND
CURRENCY") for the purpose of (a) making or filing a claim or proof against the
issuing entity, (b) obtaining an order or judgment in any court or other
tribunal or (c) enforcing any order or judgment given or made in relation to
the notes, the issuing entity shall indemnify each noteholder, on the written
demand of such noteholder addressed to the issuing entity and delivered to the
issuing
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entity or to the specified office of the principal paying agent, against any
loss suffered as a result of any discrepancy between (i) the rate of exchange
used for such purpose to convert the sum in question from the first currency
into the second currency and (ii) the rate or rates of exchange at which such
noteholder may in the ordinary course of business purchase the first currency
with the second currency upon receipt of a sum paid to it in satisfaction, in
whole or in part, of any such order, judgment, claim or proof.
This indemnity constitutes a separate and independent obligation of the
issuing entity and shall give rise to a separate and independent cause of
action.
18. ROUNDING
For the purposes of any calculations referred to in these conditions (unless
otherwise specified in these conditions or the relevant final terms), (a) all
percentages resulting from such calculations will be rounded, if necessary, to
the nearest one hundred-thousandth of a percentage point (with 0.000005 per
cent. being rounded up to 0.00001 per cent.), (b) all United States dollar
amounts used in or resulting from such calculations will be rounded to the
nearest cent (with one half cent being rounded up), and (c) all amounts
denominated in any other currency used in or resulting from such calculations
will be rounded to the nearest two decimal places in such currency, with 0.005
being rounded upwards.
19. REDENOMINATION, RENOMINALISATION AND RECONVENTIONING
APPLICATION
This condition 19 is applicable to the notes only if it is specified in the
relevant final terms as being applicable.
NOTICE OF REDENOMINATION
If the country of the specified currency becomes, or announces its intention
to become, a participating member state, the issuing entity may, without the
consent of the noteholders, on giving at least 30 days' prior notice to the
noteholders and the paying agents, designate a date (the "REDENOMINATION
DATE"), being an interest payment date under the notes falling on or after the
date on which such country becomes a participating member state.
REDENOMINATION
Notwithstanding the other provisions of these conditions, with effect from
the redenomination date:
(i) the notes shall be deemed to be redenominated into euro in the
denomination of euro 0.01 with a principal amount outstanding for
each note equal to the principal amount outstanding of that note in
the specified currency, converted into euro at the rate for
conversion of such currency into euro established by the Council of
the European Union pursuant to the treaty (including compliance
with rules relating to rounding in accordance with European
Community regulations); provided, however, that, if the issuing
entity determines, with the agreement of the principal paying
agent, then market practice in respect of the redenomination into
euro 0.01 of internationally offered securities is different from
that specified above, such provisions shall be deemed to be amended
so as to comply with such market practice and the issuing entity
shall promptly notify the noteholders, each listing authority,
stock exchange and/or quotation system (if any) by which the notes
have then been admitted to listing, trading and/or quotation and
the paying agents of such deemed amendments;
(ii) if notes have been issued in definitive form:
(A) the payment obligations contained in all notes denominated
in the specified currency will become void on the
redenomination date but all other obligations of the
issuing entity thereunder (including the obligation to
exchange such notes in accordance with this condition 19)
shall remain in full force and effect; and
(B) new notes denominated in euro will be issued in exchange
for notes denominated in the specified currency in such
manner as the principal paying agent may specify and as
shall be notified to the noteholders; and
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(iii) all payments in respect of the notes (other than, unless the
redenomination date is on or after such date as the specified
currency ceases to be a sub-division of the euro, payments of
interest in respect of periods commencing before the redenomination
date) will be made solely in euro by cheque drawn on, or by credit
or transfer to a euro account (or any other account to which euro
may be credited or transferred) maintained by the payee with a bank
in the principal financial centre of any member state of the
European Community.
Any definitive notes issued pursuant to such redenomination shall have a
minimum denomination of [e]50,000 (or its equivalent in another currency).
INTEREST
Following redenomination of the notes pursuant to this condition 19, where
notes have been issued in definitive form, the amount of interest due in
respect of the notes will be calculated by reference to the aggregate
outstanding principal amount of the notes.
INTEREST DETERMINATION DATE
If the floating rate note provisions are specified in the relevant final
terms as being applicable and screen rate determination is specified in the
relevant final terms as the manner in which the rate(s) of interest is/are to
be determined, with effect from the redenomination date, the interest
determination date shall be deemed to be the second TARGET settlement day
before the first day of the relevant interest period.
20. GOVERNING LAW AND JURISDICTION
GOVERNING LAW
The notes and all matters arising from or connected with the notes are
governed by, and shall be construed in accordance with, English law.
ENGLISH COURTS
The courts of England have exclusive jurisdiction to settle any dispute (a
"DISPUTE") arising from or connected with the notes.
APPROPRIATE FORUM
The issuing entity agrees that the courts of England are the most
appropriate and convenient courts to settle any dispute and, accordingly, that
it will not argue to the contrary.
RIGHTS OF THE NOTE TRUSTEE TO TAKE PROCEEDINGS OUTSIDE ENGLAND
Condition 20 (English courts) is for the benefit of the note trustee only.
As a result, nothing in this condition 20 (Governing law and jurisdiction)
prevents the note trustee from taking proceedings relating to a dispute
("PROCEEDINGS") in any other courts with jurisdiction. To the extent allowed by
law, the note trustee may take concurrent proceedings in any number of
jurisdictions.
THE TRUST DEED
The trust deed provides for the courts of England and Wales to have
exclusive jurisdiction in connection with the notes.
PROCESS AGENT
The issuing entity agrees that the documents which start any proceedings and
any other documents required to be served in relation to those proceedings may
be served on it by being delivered to Clifford Chance Secretaries Limited at 10
Upper Bank Street, London E14 5JJ or, if different, its registered office for
the time being or at any address of the issuing entity in Great Britain at
which process may be served on it in accordance with Part XXIII of the
Companies Act 1985. If such person is not or ceases to be effectively appointed
to accept service of process on behalf of the issuing entity, the issuing
entity shall, on the written demand of any noteholder addressed and delivered
to the issuing entity or to the specified office of the principal paying agent,
appoint a further person in England to accept service of process on its behalf
and, failing such appointment within 15 days, any noteholder shall be entitled
to appoint such a person by written notice addressed to the issuing entity and
delivered to the issuing entity or to the specified office of the principal
paying agent. Nothing in this paragraph shall affect the right of any
noteholder to serve process in
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any other manner permitted by law. This condition applies to proceedings in
England and to proceedings elsewhere.
CONSENT TO ENFORCEMENT ETC.
The issuing entity consents generally in respect of any proceedings to the
giving of any relief or the issue of any process in connection with such
proceedings, including (without limitation) the making, enforcement or
execution against any property whatsoever (irrespective of its use or intended
use) of any order or judgment which is made or given in such proceedings.
21. THIRD PARTY RIGHTS
No person shall have any right to enforce any term or condition of the notes
or the security trust deed under the Contracts (Rights of Third Parties) Act
1999.
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DESCRIPTION OF THE SWAP AGREEMENTs
GENERAL
The issuing entity may enter into swap agreements with one or more
counterparties for each class or sub-class of notes. Under separate ISDA master
agreements (and the schedules and confirmations relating thereto) for any such
class or sub-class requiring a swap, as the same may be amended and/or
supplemented each between the issuing entity and the swap counterparty, the
issuing entity will (i) in respect of a currency swap agreement pay to the swap
counterparty (a) on the closing date of a series issuance, certain initial
payments in the currency denomination of that class or sub-class and (b)
thereafter sterling sums equal to the payments required under such currency
swap agreement and (ii) in respect of an interest rate swap agreement will pay
to the swap counterparty after the relevant issue date sterling sums equal to
the payments required under such interest rate swap agreement (if any).
Further details of the swap counterparty will be set out in the applicable
final terms.
IN RELATION TO CURRENCY SWAP AGREEMENTS ONLY
In the event that the regulated amortisation period or the rapid
amortisation period commences on the series scheduled redemption date, and on
or prior to the series scheduled redemption date there have been credited to
the issuing entity's class or sub-class distribution ledger insufficient funds
to redeem the relevant class or sub-class in full (any such event, a
"REDEMPTION TRIGGER"), then the following provisions shall apply:
The period from and including the series scheduled redemption date to the
redemption period end date is called the "REDEMPTION PERIOD". The "REDEMPTION
PERIOD END DATE" is the interest payment date as set out in the relevant final
terms. From the occurrence of the redemption trigger, the termination date
under the relevant swap agreement shall be amended to be the redemption period
end date. During the redemption period, on each payment date, the notional
amount applicable in respect of payments to be made by the issuing entity under
the relevant swap agreement shall be reduced (for the next following
calculation period for the issuing entity) by an amount equal to the amount
identified as principal credited to the relevant class or sub-class
distribution ledger, during the period from (and including) the immediately
preceding payment date to (but excluding) such payment date (the amount of such
reduction, the "ISSUER AMORTISATION AMOUNT"). During the redemption period, on
each interest payment date, the notional amount applicable in respect of
payments to be made by the swap counterparty under the relevant swap agreement
shall be reduced (for the next following calculation period for the swap
counterparty) by an amount (the "COUNTERPARTY AMORTISATION AMOUNT") calculated
as specified below:
B
The counterparty amortisation amount is equal to A x -
C
where:
A = the notional amount applicable to the swap counterparty pursuant to
the relevant swap agreement and calculated on the effective date under
such swap agreement
B = the issuer amortisation amount applicable on the relevant payment
date
C = the notional amount applicable to payments to be made by the issuing
entity pursuant to the relevant swap agreement and calculated on the
effective date under such swap agreement.
EARLY TERMINATION
Each swap agreement for any class or sub-class may be terminated early in
the following circumstances:
(a) at the option of one party, after the expiration of any applicable
grace period, if there is a failure by the other party to pay any
amounts due under the swap agreement;
(b) pursuant to the occurrence of an event of default under condition
10 of the note conditions and the notes becoming repayable;
(c) upon the occurrence of certain other events with respect to either
party to the swap agreement, including an insolvency, merger
without an assumption of the obligations in respect of the swap
agreement, or changes in law resulting in illegality; and
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(d) in the event that there is a withholding tax imposed (1) in
relation to the issuing entity's payments under the swap agreement
(2) in relation to the swap counterparty's payments under the swap
agreement (following, broadly, expiry of any period during which
the swap counterparty is required to mitigate against the
imposition of such withholding tax) and if determined, in
accordance with condition 14 of the note conditions as a basic
terms modification, by an extraordinary resolution of the
noteholders of the relevant class or sub-class.
Upon any such early termination of a swap agreement, the issuing entity or
the swap counterparty may be liable to make a termination payment to the other.
The amount of any such termination payment will be based on the market value of
the swap computed in accordance with the relevant swap agreement, generally on
the basis of market quotations of the cost of entering into a swap transaction
with the same terms and conditions that would have the effect of preserving the
respective full payment obligations of the parties, in accordance with the
procedures set forth in the relevant swap agreement. Any such termination
payment could, if interest rates and/or the relevant currency exchange rate had
changed significantly, be substantial.
Upon termination of a swap agreement and no replacement swap counterparty
being arranged within the required time, the security under the trust deed (and
the supplement to the trust deed) in respect of the relevant series will become
enforceable. If such security is enforced, the proceeds thereof will be applied
in payment of amounts under the order of priority of payments set forth in the
conditions of the notes of such series. In the event that a swap agreement with
respect to a specific class or sub-class is terminated not as a result of a
swap counterparty swap event of default (as defined below), then any
termination payment to be paid to the swap counterparty by the issuing entity
in accordance with the early termination provisions of such swap agreement
shall rank pari passu with only those payments to be made with respect to the
relevant class or sub-class of notes corresponding to the relevant swap
agreement.
Certain events including, without limitation, failure to pay or deliver,
misrepresentation, insolvency or bankruptcy pertaining to the swap counterparty
(a "SWAP COUNTERPARTY SWAP EVENT OF DEFAULT") may result in the early
termination of the relevant swap agreement. In the event that a swap agreement
is terminated as a result of a swap counterparty swap event of default, then
any termination payment to be paid to the swap counterparty by the issuing
entity in accordance with the early termination provisions of such swap
agreement shall be subordinated to any payments to be made under the relevant
notes.
TAXATION
Neither the issuing entity nor the swap counterparty is obliged under any of
the swap agreements to gross up if withholding taxes are imposed on payments
made under such swap agreement.
In the event that any withholding tax is imposed on payments due to the
issuing entity and which are referable to the relevant class or sub-class, or
payments by the issuing entity under any swap agreement (and subject to the
provisions of the following paragraph), the swap counterparty shall be entitled
to deduct amounts in the same proportion (as calculated in accordance with such
swap agreement) from the corresponding payment due from it. In such event,
payments on the relevant series will be subject to deferral in proportion to
the amount so deducted. In the event that any withholding tax is imposed on
payments due by the swap counterparty under a swap agreement, the issuing
entity shall not be entitled to deduct amounts from subsequent payments due
from it and (subject to the provisions of the following paragraph) payments on
the relevant series will be subject to deferral in proportion to the amount so
withheld.
Under the circumstances described in each of the swap agreements, if at any
time the swap counterparty would on the next date for payment be required by
any relevant taxing authority or court of competent jurisdiction by operation
of law to withhold or account for or deduct any amount in respect of tax, the
swap counterparty will inform the issuing entity and the note trustee. The swap
counterparty will use its best endeavours (provided that using its best
endeavours will not require it to incur any loss (including additional capital
costs), excluding immaterial, incidental expenses) to arrange the substitution
of an affiliate incorporated in another jurisdiction to act as the swap
counterparty under the relevant swap agreement or to change the office through
which it acts as swap counterparty, but not so as in any event to (i) result in
the ratings of the relevant series by Standard & Poor's, Fitch Ratings or
Moody's being reduced or adversely affected by reference to the ratings which
would otherwise have applied to such series if such circumstances described
above
164
had not occurred or (ii) otherwise prejudice the position of the issuing entity
under the relevant swap agreement. If the swap counterparty is unable to
arrange such substitution or change, the swap counterparty shall so inform the
issuing entity and the security trustee and shall use its best endeavours
(provided that using its best endeavours will not require it to incur any loss
(including additional capital costs), excluding immaterial, incidental
expenses) to arrange the substitution of another company incorporated in
another jurisdiction to act as the swap counterparty under the relevant swap
agreement but not so as in any event to (i) result in the ratings of the
relevant series by Standard & Poor's, Fitch Ratings or Moody's to be reduced or
adversely affected by reference to the ratings which would otherwise have
applied to such series if such circumstances described above had not occurred
or (ii) otherwise prejudice the position of the issuing entity under the
relevant swap agreement.
RATING DOWNGRADE OR WITHDRAWAL
Each swap agreement provides that, in the event that the rating of the swap
counterparty in the case of the particular swap agreement is downgraded below a
prescribed level or withdrawn by Standard & Poor's, Fitch Ratings or Moody's
and as a direct consequence of such rating downgrade or withdrawal, the then
current rating of the relevant series could be adversely affected, the swap
counterparty will be obliged to take one or more of the following actions: (a)
obtaining a third party, acceptable to Standard & Poor's, Fitch Ratings and
Moody's, to guarantee the obligations of the swap counterparty under the swap
agreement or to whom the obligations may be transferred, (b) posting collateral
in an amount determined pursuant to a credit support annex between the swap
counterparty and the issuing entity (the "CREDIT SUPPORT ANNEX"), (c) procure a
replacement counterparty, who is appropriately rated, who agrees to take a
transfer of, or enter into, a replacement swap, (d) any other action as the
swap counterparty may agree with Standard & Poor's, Fitch Ratings or Moody's,
as the case may be, as will result in maintaining the rating of such class or
sub-class or, in the event that the ratings of such class of sub-class have
been downgraded or withdrawn, in restoring the rating of such series to the
levels that existed immediately prior to the rating downgrade or withdrawal.
The timing and extent of such action required to be taken may vary, based on
the individual requirements of the relevant rating agency(ies) and the level to
which the rating of the swap counterparty has been downgraded.
GENERAL
Except as stated under "Taxation" above, or as otherwise permitted under the
swap agreements and as provided below, neither the issuing entity nor the swap
counterparty is, save for the assignment by way of security in favour of the
note trustee under the supplement to the trust deed, permitted to assign,
novate or transfer as a whole or in part any of its rights, obligations or
interests under the swap agreements without the consent of the other party, the
security trustee or the rating agencies. The swap counterparty may transfer its
rights and obligations under each swap agreement (but not its rights only) to
another of its offices, branches or affiliates on ten business days' prior
written notice to the issuing entity, note trustee and the security trustee,
provided that (i) the swap counterparty delivers an opinion of independent
counsel of recognised standing in form and substance satisfactory to the note
trustee confirming that as at such date of transfer the transferee will not, as
a result of such transfer, be required to withhold or deduct on account of tax
under the swap agreement, (ii) a termination event or event of default does not
occur under the swap agreement as a result of such transfer and (iii) the then
current ratings of the relevant class or sub-class of notes by Standard &
Poor's, Fitch Ratings or Moody's are not adversely affected as a result of such
transfer.
In the event that the swap counterparty makes a permitted transfer of its
rights and obligations under any swap agreement other than to another of such
swap counterparty's offices, branches or affiliates, the issuing entity shall
forthwith give notice of such fact to the note trustee.
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MATERIAL LEGAL ASPECTS OF THE RECEIVABLES
CONSUMER CREDIT ACT 1974
This section, entitled "Consumer Credit Act 1974," contains a discussion of
the material consequences of the Consumer Credit Act for the designated
accounts. A significant number of the credit transactions that occur on a
designated account will be subject to the Consumer Credit Act because they have
a credit limit of up to [GBP]25,000. The Consumer Credit Act applies to these
credit transactions and, in whole or in part, the credit card agreement
establishing each designated account. This has certain consequences for the
designated accounts, including the following:
ENFORCEMENT OF IMPROPERLY EXECUTED OR MODIFIED CREDIT CARD AGREEMENTS
If a credit card agreement has not been executed or modified in accordance
with the Consumer Credit Act, then it may be unenforceable against a cardholder
without a court order and in some instances may be completely unenforceable. As
is common with many other UK credit card issuers, the originators' credit card
agreements may not in all circumstances comply in all respects with the
Consumer Credit Act or other related legislation. As a result, these agreements
may be unenforceable by the relevant originator against a cardholder without a
court order. The originators give no guarantee that a court order could be
obtained if required. With respect to those credit card agreements which are
not enforceable under the Consumer Credit Act or other related legislation such
that a court order could not be obtained, the originators estimate that this
will, on any pool selection date or additional selection date, represent less
than 1 per cent. of the aggregate principal receivables in the designated
accounts. Any resultant losses arising on these accounts will be written off
and borne by the investor beneficiaries and originator beneficiaries based on
their respective interests in the receivables trust. However, the credit card
agreements that do not comply with the Consumer Credit Act are still legal,
valid and binding obligations of the relevant cardholder and it will still be
possible to collect payments from cardholders willing to pay their debt and
demand arrears from cardholders who are falling behind with their payments.
Further, it is unlikely that an originator will have an obligation to repay or
account to a cardholder for any payments received by that originator
notwithstanding any such non-compliance with the Consumer Credit Act.
LIABILITY FOR SUPPLIER'S MISREPRESENTATION OR BREACH OF CONTRACT
Transactions involving the use of a credit card in or outside the United
Kingdom may constitute transactions under debtor-creditor-supplier agreements.
A debtor-creditor-supplier agreement includes an agreement where the creditor,
in accordance with pre-existing arrangements or in contemplation of future
arrangements between the creditor and a supplier, advances funds to finance a
purchase by the debtor of goods or services from that supplier.
Section 75 of the Consumer Credit Act provides that, if the supplier is in
breach of the contract (whether such contract is express or implied by law)
between the supplier and a cardholder in a debtor-creditor-supplier agreement
or if the supplier has made a misrepresentation about that contract, the
creditor may also be liable to the cardholder for the breach or
misrepresentation. The liability of an originator for a designated account in
the circumstances described above is called the "ORIGINATOR SECTION 75
LIABILITY". In these circumstances the cardholder may have the right to reduce
the amount owed to the originator under his or her credit card account. This
right would survive the sale of the receivables to the receivables trustee. As
a result, the receivables trustee may not receive payments from that originator
that it might otherwise expect to receive. However, an originator will not be
liable where the cash price of the item or service supplied concerning the
claim is less than [GBP]100 or greater than [GBP]30,000.
The receivables trustee has agreed to indemnify the originators for any loss
suffered by the originators arising from an originator section 75 liability.
This indemnity cannot exceed the original outstanding principal balance of the
affected charge on the designated account.
The receivables trustee's indemnity will be payable from available spread on
the receivables. Any amounts that an originator recovers from the supplier will
reduce that originator's loss for purposes of the receivables trustee's
indemnity. The originators will have rights of indemnity against suppliers
under section 75 of the Consumer Credit Act. The originators may also be able
to charge-back the transaction in dispute to the supplier under the operating
regulations of VISA[R] or MasterCard[R].
166
If an originator's loss for purposes of the receivables trustee's indemnity
exceeds the available spread available to satisfy the loss, the amount of the
excess will reduce the relevant originator interest accordingly.
TRANSFER OF BENEFIT OF RECEIVABLES
The transfer by each originator to the receivables trustee of the benefit of
the receivables is governed by both English law and by Scots law, as
applicable, and takes effect in equity only, except in the case of receivables
which are governed by Scots law, in which case the transfer takes effect under
a declaration of trust which is governed by Scots law pursuant to which the
beneficial interest in the trust property is vested in the receivables trustee.
The receivables trustee has agreed that, as regards receivables that are
governed by English law, notices of assignment will not be given to cardholders
of the assignment of the benefit of such receivables and, as regards
receivables that are governed by Scots law, a full assignation followed by
notice of assignment will not be required, in each case, unless RBS's long-term
senior unsecured indebtedness as rated by Moody's, Standard & Poor's or Fitch
Ratings were to fall below Baa2, BBB or BBB respectively. The lack of
assignation and notices of assignment has several legal consequences.
Until notice of assignment is given to the cardholders (which will be
following an assignation occurring in the case of receivables governed by Scots
law), each cardholder will discharge his or her obligations under the
designated account by making payment to the relevant originator. Giving notice
of assignment to cardholders (and following an assignation in the case of
receivables governed by Scots law), would mean that cardholders should no
longer make payment to the originators as creditors under the credit card
agreements, but should instead make payment to the receivables trustee as
assignee of the receivables. If notice of assignment is given (and following an
assignation in the case of receivables governed by Scots law), and a cardholder
ignores it and makes payment to the relevant originator for its own account,
that cardholder would nevertheless still be bound to make payment to the
receivables trustee. The originators, having transferred only the equitable
benefit or the beneficial interest of the securitised receivables to the
receivables trustee (by way of assignment or Scottish declaration of trust),
are the bare trustees of the receivables trustee for the purposes of the
collection of the receivables that are the property of the receivables trust
and are accountable to the receivables trustee accordingly.
Until notice of assignment is given to a cardholder (which will be following
an assignation occurring in the case of receivables governed by Scots law) who
is a depositor or other creditor of RBS or NatWest, equitable set-offs may
accrue in favour of that cardholder against his or her obligation to make
payments under the credit card agreement to that originator. These rights of
set-off may result in the receivables trustee receiving less monies than
anticipated from the receivables.
The transfer of the benefit of the receivables to the receivables trustee
has been and will continue to be subject both to any prior equities that have
arisen in favour of the cardholder and to any equities that may arise in the
cardholder's favour after the transfer. Where a notice of assignment is given
to a cardholder (and following an assignation in the case of receivables
governed by Scots law), certain rights of set-off may not arise after the date
of the notice of assignment.
Under the terms of the receivables securitisation agreement, RBS and NatWest
represent that each receivable assigned to or held on trust for the receivables
trustee is an eligible receivable unless the receivable is specified as being
an ineligible receivable. The eligibility criteria require that each receivable
constitutes the legal, valid and binding obligations of the cardholder
enforceable unless they are not in compliance with the Consumer Credit Act, in
which case they may only be enforceable with a court order and, in a small
number of cases, may be unenforceable against the cardholder in accordance with
its terms. The eligibility criteria also require that each receivable is not,
save as specifically contemplated by any rule of English law or Scots law,
currently subject to any defence, dispute, set-off or counterclaim or
enforcement orders apart from in the limited cases described in the previous
sentence.
Notice of assignment to the cardholder and, in respect of any receivables
transferred after the closing date pursuant to an English law governed contract
for assignment not in written form, a written assignment in respect of those
English law governed receivables or, in the case of Scots law governed
receivables the subject of a Scottish declaration of trust, an actual
assignation followed by a notice of assignment to cardholders, would be
necessary to perfect the transfer so that the receivables
167
trustee would take priority over any interest of a later encumbrancer or
transferee of the relevant originator's rights who has no notice of the
transfer to the receivables trustee.
Notice to the cardholder and, where necessary, assignation followed by a
notice of assignment to cardholders would prevent the credit card agreement
from being amended by the relevant originator or the cardholder without the
consent of the receivables trustee.
As regards receivables that are governed by English law, lack of notice to
the cardholder means that, for procedural purposes, the receivables trustee
will have to join the relevant originator as a party to any legal action that
the receivables trustee may want to take against any cardholder.
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MATERIAL UNITED KINGDOM TAX CONSEQUENCES
The comments below are of a general nature based on current United Kingdom
law and practice as of the date of this prospectus and are subject to any
change in law that may take effect after this date. They are made on the
assumption that there will be no substitution of the issuing entity and do not
consider the tax consequences of any such substitution. The comments do not
purport to be a complete analysis of all UK tax considerations relating to the
notes. They relate only to the position of persons who are the absolute
beneficial owners of their notes and may not apply to certain classes of
persons such as dealers. They do not necessarily apply where the income is
deemed for tax purposes to be income of any other person. ANY NOTEHOLDERS WHO
ARE IN DOUBT AS TO THEIR TAX POSITION SHOULD CONSULT THEIR PROFESSIONAL
ADVISERS.
Noteholders who may be liable to taxation in jurisdictions other than the
United Kingdom in respect of their acquisition, holding or disposal of the
notes are particularly advised to consult their professional advisers as to
whether they are so liable (and, if so, under the laws of which jurisdictions),
since the following comments relate only to certain United Kingdom taxation
aspects of payments in respect of the notes. In particular, noteholders should
be aware that they may be liable to taxation under the laws of other
jurisdictions in relation to payments in respect of the notes even if such
payments may be made without withholding or deduction for or on account of
taxation under the laws of the United Kingdom.
UK WITHHOLDING TAX
The notes issued by the issuing entity will constitute "QUOTED EUROBONDS"
provided they are and continue to be listed on a recognised stock exchange
within the meaning of section 841 of the Income and Corporation Taxes Act 1988.
The London Stock Exchange is a recognised stock exchange for these purposes.
Under HM Revenue and Customs published practice, securities will be treated as
listed on the London Stock exchange if they are admitted to the Official List
by the United Kingdom Listing Authority and are admitted to trading on the
London Stock Exchange. Whilst the notes are and continue to be quoted
Eurobonds, payments of interest on the notes may be made without withholding or
deduction for or on account of United Kingdom income tax.
In all cases falling outside the exemption described above, interest on the
notes may be paid under deduction of United Kingdom income tax at the lower
rate (currently 20 per cent.) subject to such relief as may be available, for
example under the provisions of any applicable double taxation treaty.
PROVISION OF INFORMATION
Noteholders who are individuals should note that where any interest on notes
is paid to them (or to any person acting on their behalf) by the issuing entity
or any person in the United Kingdom acting on behalf of the issuing entity (a
"PAYING AGENT"), or is received by any person in the United Kingdom acting on
behalf of the relevant noteholder (other than solely by clearing or arranging
the clearing of a cheque) (a "COLLECTING AGENT"), then the issuing entity, the
paying agent or the collecting agent (as the case may be) may, in certain
cases, be required to supply to the United Kingdom HM Revenue and Customs
details of the payment and certain details relating to the noteholder
(including the noteholder's name and address). These provisions will apply
whether or not the interest has been paid subject to withholding or deduction
for or on account of United Kingdom income tax and whether or not the
noteholder is resident in the United Kingdom for United Kingdom taxation
purposes. Where the noteholder is not so resident, the details provided to the
United Kingdom HM Revenue and Customs may, in certain cases, be passed by the
United Kingdom HM Revenue and Customs to the tax authorities of the
jurisdiction in which the noteholder is resident for taxation purposes.
DISCOUNT
Notes may be issued at an issue price of less than 100 per cent. of their
principal amount. Any discount element on any such notes will not be subject to
any United Kingdom withholding tax pursuant to the provisions mentioned above,
but may be subject to reporting requirements as outlined above.
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EU DIRECTIVE ON THE TAXATION OF SAVINGS INCOME
Under EC Council Directive 2003/48/EC on the taxation of savings income,
each member state is required, from 1 July 2005, to provide to the tax
authorities of another member state details of payments of interest or other
similar income paid by a person within its jurisdiction to, or collected by
such a person for, an individual resident in that other member state; however,
for a transitional period, Austria, Belgium and Luxembourg may instead apply a
withholding system in relation to such payments, deducting tax at rates rising
over time to 35 per cent. The transitional period is to terminate at the end of
the first fiscal year following agreement by certain non-EU countries to the
exchange of information relating to such payments.
Also with effect from 1 July 2005, a number of non-EU countries, and certain
dependent or associated territories of certain member states (including
Jersey), have agreed to adopt similar measures (either provision of information
or transitional withholding) in relation to payments made by a person within
its jurisdiction to, or collected by such a person for, an individual resident
in a member state. In addition, the member states have entered into reciprocal
provision of information or transitional withholding arrangements with certain
of those dependent or associated territories in relation to payments made by a
person in a member state to, or collected by such a person for, an individual
resident in one of those territories.
GENERAL ISSUES
The references to "Interest" above mean "INTEREST" as understood in United
Kingdom tax law. The statements above do not take any account of any different
definitions of "interest" or "principal" which may prevail under any other law
or which may be created by the terms and conditions of the notes or any related
documentation.
UK TAX OVERVIEW FOR US NOTEHOLDERS
A US noteholder will not be considered to be resident in the United Kingdom
for United Kingdom tax purposes or otherwise subject to United Kingdom taxation
on its income from the notes (other than tax withheld at source as discussed
above) solely by reason of its holding of notes.
UK TAX OVERVIEW FOR NOTEHOLDERS WITHIN THE CHARGE TO UK TAX
Noteholders who are within the charge to UK corporation tax, income tax,
capital gains tax or inheritance tax will generally be subject to tax in
respect of their notes in accordance with the applicable legislation.
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MATERIAL JERSEY TAX CONSEQUENCES
GENERAL
Mourant du Feu & Jeune, as "JERSEY TAX COUNSEL", are of the opinion that,
subject to finalisation of documents -- including those which are exhibits to
the registration statement of which this base prospectus forms a part -- in a
form which is satisfactory to them and not inconsistent with the descriptions
in the body of this base prospectus and based on certain assumptions which
cannot be verified before closing, the following discussion is true in all
material respects in relation to the matters expressly addressed. The
discussion is based on an interpretation of laws, regulations, rulings and
decisions, including certain letters from the Comptroller of Income Tax in
Jersey and the Jersey Financial Services Commission, all of which are currently
in effect and are subject to change. Any such change may be applied
retroactively and may adversely affect the Jersey tax consequences described in
this base prospectus. In this section, unless otherwise noted, the term "note"
refers to both the actual global notes and any interest in the global notes
held indirectly through DTC, Clearstream or Euroclear.
GENERAL OVERVIEW
As explained more fully below:
* each of the issuing entity, the loan note issuer and the
receivables trustee will, provided they satisfy the conditions set
out in Article 123A of the Income Tax (Jersey) Law 1961, as
amended, and for so long as such status exists, qualify as an
"exempt company" under the Income Tax (Jersey) Law 1961; and
* based upon the fact that each of the issuing entity, the loan note
issuer and the receivables trustee qualify as exempt companies, for
so long as they have such status, none of these companies will be
subject to Jersey income tax and no Jersey withholding tax will be
deducted from interest and other amounts paid by the loan note
issuer on the loan notes or by the issuing entity on the notes.
INCOME TAXES
Each of the issuing entity, the loan note issuer and the receivables trustee
will qualify as an "exempt company" under Article 123A of the Income Tax
(Jersey) Law 1961 as amended (the "1961 LAW") so long as it makes the returns
of information and pays the fees (currently [GBP]600 per annum) required by
that Article and, subject to the concession referred to below, as long as no
Jersey resident has a beneficial interest (for purposes of the 1961 Law) in the
issuing entity, the loan note issuer or the receivables trustee, as the case
may be. As an exempt company, each of the issuing entity, the loan note issuer
and the receivables trustee will be treated for purposes of the 1961 Law as not
resident in Jersey and will pay no Jersey income tax other than on income
arising in Jersey (but, by long standing concession, excluding bank and
building society deposit interest arising in Jersey) and on profits of its
trade (if any) carried on through an established place of business in Jersey.
For purposes of the 1961 Law, the Comptroller of Income Tax in Jersey, among
other things, has with respect to the issuing entity: (i) confirmed that the
holding of shares in Arran Holdings Limited, the holding company of the issuing
entity, by or on behalf of Mourant & Co. Trustees Limited as trustees of the
Arran Charitable Trust will not prejudice the exempt company status of Arran
Holdings Limited and that, on the basis that Arran Holdings Limited will be
entitled to exempt company status, the issuing entity as a wholly-owned
subsidiary of Arran Holdings Limited will also be entitled to exempt company
status, (ii) granted a concession to the effect that the holders of notes will
not be regarded as holders of a beneficial interest (for the purposes of
Article 123A of the 1961 Law) in the issuing entity, (iii) confirmed that the
income to be generated by the activities undertaken by the issuing entity as
described in this base prospectus (other than any interest arising from Jersey
bank deposits, which is discussed in the preceding paragraph) will not be
treated as income arising in Jersey, and (iv) confirmed that the administration
in and from Jersey of the business undertaken by the issuing entity, as
described in this base prospectus, will not constitute the carrying on of a
trade through an established place of business in Jersey. Accordingly, based
upon the foregoing, in the opinion of Jersey tax counsel, the issuing entity
will not be subject to Jersey income tax whilst it has exempt company status.
For the purposes of the 1961 Law the Comptroller of Income Tax in Jersey,
among other things, has with respect to the loan note issuer: (i) confirmed
that the beneficial ownership of any shares of
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RBS (which, in turn, owns the entire issued share capital of the loan note
issuer) by Jersey residents will not prejudice the exempt company status of the
loan note issuer, (ii) confirmed that the income to be generated by the
activities of the loan note issuer as described in this base prospectus (other
than any interest arising from Jersey bank deposits, as discussed above) will
not be treated as income arising in Jersey, and (iii) confirmed that the
administration in and from Jersey of the business undertaken by the loan note
issuer, as described in this base prospectus, will not constitute that carrying
on of a trade through an established place of business in Jersey. Accordingly,
based upon the foregoing, in the opinion of Jersey tax counsel, the loan note
issuer will not be subject to Jersey income tax whilst it has exempt company
status.
For the purposes of the 1961 Law the Comptroller of Income Tax in Jersey,
among other things, has with respect to the receivables trustee: (i) confirmed
that the holding of the shares in the capital of the receivables trustee by or
on behalf of Mourant & Co. Trustees Limited as trustees of the South Gyle
Charitable Trust will not prejudice the exempt company status of the
receivables trustee, (ii) confirmed that the administration in and from within
Jersey of the business undertaken by the receivables trustee as trustee of the
receivables trust as described in this base prospectus will not constitute the
carrying on of a trade through an established place of business in Jersey,
(iii) confirmed that the receivables trustee as trustee of the receivables
trust will not be assessed to Jersey income tax on the payments, income and
gains arising from the property held under the receivables trust including, by
long standing concession, any interest arising from Jersey bank deposits held
by the receivables trustee as trustee, and (iv) confirmed that distributions
made by the receivables trustee in respect of the certificates issued to
beneficiaries of the receivables trust may be made by the receivables trustee
free of any Jersey withholding tax. Accordingly, based upon the foregoing, in
the opinion of Jersey tax counsel, the receivables trustee will not be subject
to Jersey income tax whilst it has exempt company status.
On 3 June 2003, the European Union Council of Economic and Finance Ministers
reached political agreement on the adoption of a Code of Conduct on Business
Taxation. Jersey is not a member of the EU, however, the Policy & Resources
Committee of the State of Jersey has announced that, in keeping with Jersey's
policy of constructive international engagement, it intends to propose
legislation to replace the Jersey exempt company regime by the end of 2008 with
a general zero rate of corporate tax.
TAXATION OF THE RECEIVABLES TRUST
The receivables trust is not a legal entity for Jersey tax purposes and
therefore it will not be subject to Jersey corporation tax or Jersey income
tax.
WITHHOLDING TAXES
In general, Jersey imposes a withholding tax at the rate of 20 per cent. on
interest and other amounts paid to non-residents of Jersey with respect to a
debt obligation of a company resident in Jersey. However, no such withholding
tax is imposed with respect to an exempt company (as defined above).
Accordingly, based upon the qualification of the loan note issuer and the
issuing entity as exempt companies, in the opinion of Jersey tax counsel, no
Jersey withholding tax will be deducted from interest and other amounts paid by
the loan note issuer on the loan notes or by the issuing entity on the notes on
account of Jersey taxes.
In the event that any Jersey withholding tax is imposed on payments on the
notes, noteholders should note that there is no income tax treaty between the
United States and Jersey that would apply to reduce or eliminate such
withholding. Noteholders should note further that the issuing entity will not
be obligated under the terms of the notes to make any additional payments in
respect of any such withholding tax. Accordingly, in the event that withholding
were to be required on account of Jersey taxes, distributions to noteholders
may be less than those which would be made on the notes in the absence of any
such withholding tax.
JERSEY AND THE EU DIRECTIVE ON THE TAXATION OF SAVINGS INCOME
As part of an agreement reached in connection with the European Union
directive on the taxation of savings income in the form of interest payments,
and in line with steps taken by other relevant third countries, Jersey
introduced with effect from 1 July 2005 a retention tax system in respect of
payments of interest, or other similar income, made to an individual beneficial
owner resident in the EU Member State by a paying agent established in Jersey.
The retention tax system applies for a transitional period prior to the
implementation of a system of automatic communication
172
to EU Member States of information regarding such payments. During this
transitional period, such an individual beneficial owner resident in an EU
Member State will be entitled to request a paying agent not to retain tax from
such payments but instead to apply a system by which the details of such
payments are communicated to the tax authorities of the EU Member State in
which the beneficial owner is resident.
The retention tax system in Jersey is implemented by means of bilateral
agreements with each of the EU Member States, the Taxation (Agreements with
European Union Member States) (Jersey) Regulations 2005 and Guidance Notes
issued by the Policy & Resources Committee of the States of Jersey. Based on
these provisions and what is understood to be the current practice of the
Jersey tax authorities, the issuing entity would not be obliged to levy
retention tax in Jersey under these provisions in respect of interest payments
made by it to a paying agent established outside Jersey.
OTHER TAXES
There is no taxation of capital gains (other than with respect to certain
tax avoidance transactions) in Jersey. As a result, the capital gains of
noteholders on a sale or transfer of their notes will not be subject to
taxation in Jersey. There is no value added tax, corporation tax or other
relevant taxation in Jersey. No stamp duty, stamp duty reserve tax or issue,
documentary, registration or other similar tax imposed by any government
department or other taxing authority of or in Jersey is payable in connection
with the creation, initial issue, delivery or transfer between noteholders of
the notes.
In the event that on the death of a sole individual holder of notes who is a
non-resident of Jersey, such notes are situated in Jersey (by virtue of their
being held on a register in Jersey or in bearer form and held in Jersey at the
date of death or otherwise deemed to be situated under applicable rules of
private international law), a grant of probate or letters of administration
would have to be obtained in Jersey and a duty of up to 1 per cent. of the
value of assets of the deceased situated in Jersey would be payable.
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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following overview describes the material US federal income tax
consequences of the purchase, ownership and disposition of the notes. This
overview has been prepared and reviewed by Clifford Chance US LLP, special US
federal income tax counsel to the issuing entity (which we call special US tax
counsel). It is based upon the provisions of the Internal Revenue Code of 1986
as amended, which we will refer to as the Code, Treasury regulations
promulgated thereunder, published rulings by the Internal Revenue Service
("IRS") and court decisions currently in effect. These authorities are subject
to change or differing interpretations, possibly with retroactive effect.
The discussion does not address the US federal income tax consequences
applicable to all categories of investors and is directed solely at US holders
who acquire notes in the original offering and hold the notes as capital assets
within the meaning of the Code. In particular, this discussion does not address
the US federal income tax laws that may be important to a US holder of notes in
the light of its particular investment circumstances or to certain types of
holders of the notes subject to special treatment under the federal income tax
laws, such as:
* financial institutions;
* insurance companies;
* tax-exempt organisations;
* dealers in securities or currencies;
* persons whose functional currency is not the US dollar; or
* persons that own, actually or contractually 10 per cent. or more of
the combined voting power of the issuing entity;
* persons holding notes as part of a hedging, integrated, conversion
or constructive sale transaction or straddle.
In addition, this overview does not address alternative minimum tax
consequences or any tax consequences of purchase, ownership or disposition of
the notes under the tax laws of any state, locality or foreign jurisdiction.
Investors considering an investment in the notes should consult their own tax
advisors regarding such tax consequences. The issuing entity suggests that each
prospective investor consult its own tax advisors in determining the US
federal, state, local and foreign and any other tax consequences to them of an
investment in the notes and the purchase, ownership and disposition thereof.
For the purposes of this overview, a "US HOLDER" means a beneficial owner of
notes who or which is for US federal income tax purposes:
* a citizen or resident of the United States;
* a corporation, partnership or other entity created or organised in,
or under the laws of, the United States or any political
subdivision thereof;
* an estate whose income from sources outside the United States may
be included in gross income for US federal income tax purposes
regardless of its connection with the conduct of a trade or
business within the United States; or
* a trust, if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or
more United States persons have the authority to control all
substantial decisions of the trust.
A "NON-US HOLDER" means a beneficial owner of notes who is not a US holder.
OVERVIEW OF SPECIAL US TAX COUNSEL'S OPINIONS
Special US tax counsel has prepared and reviewed this overview of material
US federal income tax consequences, and is of the opinion that it is correct in
all material respects. Special US tax counsel also opines that, as described
below, although the matter is not free from doubt due to the lack of governing
authority and the highly factual nature of the analysis, based upon the
contemplated activities and certain covenants of each of the receivables
trustee, the loan note issuer and the issuing entity, none of the receivables
trustee, the loan note issuer and the issuing entity will be treated as engaged
in a trade or business within the United States for US federal income tax
purposes and therefore, that none of these entities will be subject to United
States federal income tax
174
on their net income. Special US tax counsel further opines that, as described
below, although there is no directly governing authority addressing the
classification of securities similar to the notes, under current law, the class
A notes, class B notes and class C notes will be treated as debt for US federal
income tax purposes. Except as set forth in the preceding sentences, special US
tax counsel will render no other opinions about the purchase, ownership and
disposition of the notes. Further, an opinion of special US tax counsel is not
binding on the IRS or the courts, and no ruling on any of the consequences or
issues discussed below will be sought from the IRS. Moreover, there are no
authorities on similar transactions involving securities issued by an entity
with terms similar to those of the notes. Accordingly, the issuing entity
suggests that persons considering the purchase of notes consult their own tax
advisors about the US federal income tax consequences of an investment in the
notes and the application of US federal tax laws, as well as the laws of any
state, local or foreign taxing jurisdictions, to their particular situations.
TAX TREATMENT OF THE RECEIVABLES TRUSTEE, THE RECEIVABLES TRUST, THE LOAN NOTE
ISSUER AND THE ISSUING ENTITY
In the opinion of special US tax counsel, although the matter is not free
from doubt due to a lack of governing authority and the highly factual nature
of the analysis, based on contemplated activities and certain covenants of the
receivables trustee, the loan note issuer and the issuing entity, none of the
receivables trustee, the receivables trust, the loan noteissuer and the
issuing entity will be engaged in a trade or business in the United States
under current US federal income tax law and, therefore, none of them will be
subject to US federal income tax on their net income (including the branch
profits tax). An opinion of legal advisers is not binding on the IRS and it is
possible that the IRS could disagree with special US tax counsel's conclusion.
If the issuing entity were deemed to be engaged in a United States trade or
business, it would be subject to US federal income tax on its taxable income
effectively connected to such United States trade or business (and possibly to
the 30 per cent. branch profits tax as well) and distributions to non-US
holders on any notes treated as equity for US federal income tax purposes (in
particular, the class C notes) would be subject to US withholding tax to the
extent such distributions were from earnings and profits of the issuing entity
and were not effectively connected to a United States trade or business.
US HOLDERS
TAX TREATMENT OF THE NOTES AS INDEBTEDNESS
The issuing entity will treat the notes as debt for US federal income tax
purposes. Each holder of notes, by acceptance of such notes, will also agree to
treat the notes as indebtedness for US federal income tax purposes. Special US
tax counsel has advised that in its opinion, although there is no directly
governing authority addressing the classification of securities similar to the
notes, under current law, the class A notes, class B notes and class C notes
will be treated as indebtedness for US federal income tax purposes. Such
agreement and opinion are not binding on the IRS and, as stated above, no
assurance can be given that the characterisation of the notes as indebtedness
would prevail if the issue were challenged by the IRS. The IRS might attempt to
treat the notes for US federal income tax purposes as equity interests in a
corporation. As discussed below, treatment of the notes as equity interests
could have adverse tax consequences for US holders. The issuing entity suggests
US holders of the notes consult their tax advisors as to whether they should
make any of the elections described below on a protective basis.
The discussion below assumes the notes are treated as indebtedness for US
federal income tax purposes.
PAYMENTS OF INTEREST ON THE NOTES
Prospective US holders of notes should note that, because interest on the
notes is not unconditionally payable in money on each payment date, all of the
stated interest payments on the notes will be treated as original issue
discount ("OID"). The OID rules of the Code may require US holders of notes to
recognise taxable income on such notes without the receipt of an equivalent
amount of cash. It is anticipated, and the remainder of this discussion
assumes, that the notes will not be issued with OID other than any such
"deemed" OID attributable to the accrual of the stated interest payment on the
notes or OID which is de minimis.
A US holder of a note will be required to accrue and include in gross income
the sum of the "daily portions" of total OID on the note for each day during
the taxable year on which the US holder held a note, generally under a constant
yield method, regardless of such US holder's usual
175
method of tax accounting and without regard to the timing of actual payments on
the note. Such income will be treated as interest income from sources outside
the United States. The amount of OID to be accrued over the term of the note
will be based initially on the floating rate in effect for the first accrual
period of the note. To the extent such rate varies with respect to any accrual
period, such variation shall be reflected in an increase or decrease of the
amount of OID accrued for such period. As a result of the complexity of the OID
rules, the issuing entity suggests each US holder of a note consult its own tax
advisor regarding the impact of the OID rules on its purchase, ownership or
disposition of a note.
INTEREST PAYABLE IN A CURRENCY OTHER THAN THE US DOLLAR
A US holder of a note the interest of which is payable in a currency other
than the US dollar will recognise interest income in an amount equal to the US
dollar value of the interest income that has accrued or is otherwise required
to be taken into account with respect to such note in accordance with the
constant yield method above, determined in accordance with either of two
methods. Under the first method, the amount of accrued interest income will be
based upon the average exchange rate in effect during the interest accrual
period (or, in the case of an accrual period that spans two taxable years of a
US holder, the part of the period within the taxable year).
Under the second method, a US holder may elect to determine the amount of
accrued interest income on the basis of the exchange rate in effect on the last
day of the accrual period (or, in the case of an accrual period that spans two
taxable years, the exchange rate in effect on the last day of the part of the
period within the taxable year). If the last day of an accrual period is within
five business days of the date of receipt of the accrued interest, an electing
US holder may instead translate the accrued interest into dollars at the
exchange rate in effect on the day of actual receipt. Any such election will
apply to all debt instruments held by the US holder at the beginning of the
first taxable year to which the election applies or thereafter acquired by the
US holder, and will be irrevocable without the consent of the IRS.
Upon receipt of an interest payment in sterling (including a payment
attributable to accrued but unpaid interest upon the sale or retirement of a
note), a US holder will recognise exchange gain or loss (which will be treated
as ordinary income or loss) measured by the difference, if any, between:
* the exchange rate used to accrue income pursuant to one of the two
above methods; and
* the exchange rate in effect on the date of receipt, regardless of
whether the payment is in fact converted into dollars.
SALE, EXCHANGE OR REDEMPTION OF A NOTE
Upon the sale, exchange or redemption of a note, a US holder generally will
recognise taxable gain or loss equal to the difference between:
* the amount realised on the sale, exchange, or redemption, less
amounts representing accrued and unpaid interest that the US holder
has not included in gross income, which will be taxable as such (if
the amount is denominated in a foreign currency, then its US dollar
equivalent as determined at the spot rate on the date of sale or
other disposition); and
* such US holder's adjusted tax basis in the note (as determined in
US dollars).
A US holder's adjusted tax basis in a note generally will equal such US
holder's purchase price of such note, increased by the amount of OID previously
included in income and decreased by the amount of principal payments previously
received on the note. Such gain or loss will generally be long-term capital
gain or loss if the note has been held for more than one year at the time of
such sale, exchange, or redemption.
ALTERNATIVE TREATMENT OF NOTES
If the IRS were to successfully assert that any of the notes are not debt
for US federal income tax purposes, those notes could be treated as equity
interests in a passive foreign investment company ("PFIC"). If the notes were
treated as equity interests in a PFIC, any gain on sale or other disposition of
the notes would be subject to tax at ordinary income rates, both gain and
payments received on the notes might be subject to additional tax and a US
holder would be subject to additional form filing requirements. A US holder
that has treated the notes as debt for book accounting purposes also might be
required specifically to disclose items arising from the notes on its tax
return under reportable transaction regulations.
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NON-US HOLDERS
In general, subject to the discussion below of backup withholding:
* payments of principal and interest by the issuing entity or any
paying agent to a non-US holder will not be subject to US federal
income or withholding tax; and
* gain realised by a non-US holder on the sale, exchange or
redemption of a note will not be subject to US federal income tax
or withholding tax, provided that such non-US holder is not (i)
engaged in a US trade or business, (ii) a former citizen or long-
term resident of the US, a CFC, (a "FOREIGN PERSONAL HOLDING
COMPANY" a corporation which accumulates earnings to avoid US
federal income tax, or a certain type of foreign charitable
organisation or (iii) present in the US for 183 days or more during
a taxable year and meets certain other conditions.
The issuing entity suggests non-US holders consult their US tax advisors
before purchasing notes.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Payments of principal, interest and OID on the notes, and the proceeds of
sale or other disposition of the notes, payable to a US or US connected holder
by a US or US connected paying agent or other US intermediary will be subject
to information reporting requirements. Backup withholding at a rate of 28 per
cent. will also apply to these payments if the US holder fails to provide an
accurate taxpayer identification number or certification of exempt status or
fails to report all interest and dividends required to be shown on its US
federal income tax return. No information reporting or backup withholding will
be required with respect to payment made by a US paying agent or other US
intermediary to certain exempt US holders, such as corporations.
No information reporting or backup withholding will be required with respect
to payments made to a non-US holder for whom the payer has a properly executed
form W-8BEN or W-8ECI. If information reporting requirements apply to a US
Holder, interest on the US holder's notes will be reported to the IRS and to
the US holder as may be required under applicable regulations. Any amount
withheld under the backup withholding rules will be allowed as a refund or
credit against a holder's US federal income tax liability provided the required
information is furnished to the IRS.
CERTAIN STATE, LOCAL AND OTHER TAX CONSEQUENCES
The issuing entity suggests potential investors consult their own tax
advisors regarding whether the purchase of the notes, either alone or in
conjunction with an investor's other activities, may subject a US holder to any
state or local taxes based, for example, on an assertion that the investor is
either "DOING BUSINESS" in, or deriving income from a source located in any
state or local jurisdiction. Additionally, potential investors should consider
the state, local and other tax consequences of purchasing, owning or disposing
of a note. State and local tax laws may differ substantially from the
corresponding federal tax law, and the foregoing discussion does not purport to
describe any aspect of the tax laws of any state or other jurisdiction.
The US federal, state, local and other tax consequences set forth above do
not address the tax consequences that may be important to a holder of notes in
light of its particular circumstance, and thus, may not be applicable depending
upon the particular tax situation of a holder of notes. The issuing entity
suggests that prospective purchasers consult their tax advisors with respect to
the tax consequences to them of the purchase, ownership and disposition of the
notes, including the tax consequences under state, local, foreign and other tax
laws.
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ERISA CONSIDERATIONS
The US Employee Retirement Income Security Act of 1974, as amended-called
ERISA, and Section 4975 of the Code impose requirements on employee benefit
plans and some other plans and arrangements, including individual retirement
accounts and annuities, Keogh plans and certain collective investment funds or
insurance company general or separate accounts in which these plans, accounts
or arrangements are invested, that are subject to the fiduciary responsibility
provisions of ERISA or Section 4975 of the Code. We call these entities
"PLANS". ERISA also imposes requirements on persons who are fiduciaries of
Plans for the investment of assets of any Plan. ERISA generally imposes on Plan
fiduciaries certain general fiduciary requirements, including those of
investment prudence and diversification and the requirement that a Plan's
investments be made in accordance with the documents governing the Plan.
GENERAL
Section 406 of ERISA and Section 4975 of the Code prohibit a broad range of
transactions involving Plan assets and persons-called "PARTIES IN INTEREST"
(or, technically under the Code, "DISQUALIFIED PERSONS") who have specified
relationships to a Plan or its assets, unless an exemption is available.
Parties in interest that participate in a prohibited transaction may be subject
to a penalty imposed under ERISA or an excise tax imposed under Section 4975 of
the Code, unless an exemption is available or an exemption applies under the
Plan Asset Regulation. The details of these prohibited transactions are
contained in Section 406 of ERISA and Section 4975 of the Code.
Subject to the considerations described below, you may purchase notes with
assets of any Plan.
US Department of Labor (called DOL) Regulation Section 2510.3-101 (called
the "PLAN ASSET REGULATION") generally treats the assets of an entity in which
a Plan holds an equity interest as assets of such Plan unless one or more of
the exceptions in the Plan Asset Regulation applies. If the notes are treated
as equity interests and you use Plan assets to purchase the notes, the assets
of the issuing entity and the receivables trust would be treated as Plan assets
of the investing Plan unless an exception applies -- see "EQUITY TREATMENT"
below. Among other things, this would subject the issuing entity and the
receivables trust's assets to the fiduciary rules of ERISA and the prohibited
transaction rules of ERISA and Section 4975 of the Code and could result in
penalties and excise taxes under those rules. The term "EQUITY INTEREST" is
defined under the Plan Asset Regulation as any interest in an entity other than
an instrument which is treated as indebtedness under applicable local law and
has no substantial equity features.
If you are considering whether to purchase notes with assets of any Plan,
you should determine whether the purchase would result in a non-exempt
prohibited transaction under ERISA or Section 4975 of the Code because any of
The Royal Bank of Scotland plc, the issuing entity, the servicer, the
receivables trustee or any other party may be a Party in Interest as to the
investing Plan and may be deemed to be benefiting from the issuance of notes.
If The Royal Bank of Scotland plc, the issuing entity or the servicer is a
Party in Interest as to Plan assets you are investing, we suggest that you
should consult with your counsel about the availability of exemptive relief
under one or more DOL Prohibited Transaction Class Exemptions (each called a
"PTCE").
You should be aware, however, that even if you meet the conditions specified
in one or more PTCEs, the scope of the exemptive relief provided by the
exemption might not cover all acts that might be construed as prohibited
transactions. You will be deemed by your purchase and holding of a note to have
represented that such purchase and holding will not constitute a non-exempt
prohibited transaction under Section 406 of ERISA or Section 4975 of the Code.
EQUITY TREATMENT
If the notes are treated as equity (rather than debt) interests under the
Plan Asset Regulation despite the agreement of the issuing entity and the note
holders to treat the notes as debt instruments, the assets of the issuing
entity would be treated as assets of the investing Plans for purposes of ERISA
and Section 4975 of the Code and result in non-exempt prohibited transactions
unless an exception under the Plan Asset Regulation would apply. Consistent
with the discussion above -- see "TAX CONSIDERATIONS" -- the issuing entity
intends to take the position that a holder of a note will be treated as owning
a debt obligation of the issuing entity for purposes of the Plan Asset
Regulation. However, no assurance is given as to whether the assets of the
issuing entity would be deemed to be the assets of Plans that become holders of
a note.
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FURTHER CONSIDERATIONS
In light of the above discussion, if you are considering the purchase of
notes with assets of any Plan, you should consult your own counsel regarding
whether the assets of the issuing entity represented by the notes would be
considered Plan assets, the consequences that would apply if the issuing
entity's assets were considered Plan assets, the availability of exemptive
relief from the prohibited transaction rules under a PTCE -- whether or not the
issuing entity's assets are considered Plan assets and the applicability of an
exception under the Plan Asset Regulation. In any case you should also consider
the fiduciary standards under ERISA or other applicable law in the context of
the Plan's particular circumstances before authorising an investment of Plan
assets in the notes. Among other factors, you should consider whether the
investment (1) satisfies the diversification requirement of ERISA or other
applicable law, (2) is consistent with the Plan's governing instruments, and
(3) is prudent in light of the "Risk Factors" and other factors discussed in
this base prospectus.
You must not purchase the notes with assets of any Plan, if, for example,
any of the issuing entity, The Royal Bank of Scotland plc, the servicer, the
receivables trustee or any of their affiliates (1) has investment or
administrative discretion for those Plan assets; (2) has authority or
responsibility to give, or regularly gives, investment advice for those Plan
assets for a fee and under an agreement or understanding that the advice will
serve as a primary basis for investment decisions for the Plan assets and will
be based on the particular investment needs of the Plan; or (3) unless a PTCE
is applicable, is an employer maintaining or contributing to the Plan. As
stated above under "General" you will be deemed to have represented by your
purchase and holding of a note that such purchase and holding will not
constitute a non-exempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code.
Some employee benefit plans, such as governmental plans -- as defined in
Section 3(32) of ERISA -- and some church plans -- as defined in Section 3(33)
of ERISA -- are not subject to the requirements of ERISA or Section 4975 of the
Code. Accordingly, assets of these plans may be invested in the notes without
regard to the ERISA considerations described in this base prospectus, but
subject to the provisions of other applicable federal, state, local and foreign
law. However, any of these plans that are qualified and exempt from taxation
under Sections 401 (a) and 501 (a) of the Code may be subject to the prohibited
transaction rules set forth in Section 503 of the Code.
The issuing entity suggests that, prior to making an investment in notes,
prospective employee benefit plan investors (whether or not subject to ERISA or
Section 4975 of the Code) consult with their legal and other advisors
concerning the impact of ERISA and the Code (and, particularly in the case of
non-ERISA plans and arrangements, any additional state, local and foreign law
considerations), as applicable, and the potential consequences in their
specific circumstances of an investment in notes.
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ENFORCEMENT OF FOREIGN JUDGMENTS IN JERSEY OR ENGLAND AND WALES
The issuing entity is incorporated with limited liability in Jersey, Channel
Islands. Any final and conclusive judgment of either a New York state or US
Federal court that has jurisdiction recognised by Jersey or England and Wales
regarding obligations of the issuing entity under the notes, which judgment is
for a debt or a fixed sum of money and which has not been stayed or fully
satisfied, can be enforced by action against the issuing entity in the courts
of Jersey or England and Wales without re-examining the merits of the issues
determined by the proceedings unless:
* the proceedings in New York State or the US Federal court involved
a denial of the principles of natural justice;
* the judgment goes against the public policy of Jersey or England
and Wales;
* the judgment was obtained by fraud, duress or was based on a clear
mistake of fact;
* the judgment is a penal or revenue judgment; or
* there has been an earlier judgment in another court between the
same parties on the same issues as are dealt within the judgment to
be enforced.
A judgment by a court may sometimes be given in sterling. The issuing entity
expressly submits to the jurisdiction of New York State and the US Federal
courts sitting in the Borough of Manhattan in the City of New York for the
purpose of any suit, action or proceedings arising out of this offering. CT
Corporation System, 111 Eighth Avenue, 13th Floor, New York, NY 10011,
telephone +1 800 624 0909 have been appointed to receive legal documents for
the issuing entity, the originators, the servicer and the trust cash manager.
All of the directors and executive officers of the issuing entity and some
of the experts named in this base prospectus live outside the United States.
Most of their assets are located outside the United States. Because of this,
the holders of the notes may not be able to effect service of process within
the United States on them or to enforce US judgments obtained in such courts
predicated upon the civil liability provisions of the Federal securities laws
of the United States against them. The issuing entity has been advised by its
English counsel, Linklaters, and by its Jersey counsel, Mourant du Feu & Jeune,
that because of this, they may not be able to enforce in England and Wales or
Jersey, in original actions solely or in actions for enforcement of judgments
of US courts, civil liabilities based on the Federal securities laws of the
United States.
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PLAN OF DISTRIBUTION
The issuing entity has entered into an agreement (the "DEALER AGREEMENT")
with The Royal Bank of Scotland plc, Global Banking & Markets and RBS Greenwich
Capital (each, a "DEALER" collectively, together with any other dealer that may
in the future become a party to the dealer agreement as provided therein, the
"DEALERS") in connection with the future distribution of series of notes to be
issued under the programme. The dealer agreement does not impose any obligation
on the dealers to purchase, or on the issuing entity to issue, any notes, but
provides the general terms and conditions under which the issuing entity and
one or more dealers may agree to the issuance by the former and the purchase by
the latter of one or more series of notes.
In addition, because the provisions of the dealer agreement are not
exclusive, the issuing entity may offer and sell the notes in any of three
ways:
* directly to one or more purchasers;
* through agents; or
* through dealers.
Any dealer or agent that offers the notes may be an affiliate of the issuing
entity, RBS and/or NatWest, and offers and sales of notes may include secondary
market transactions by these affiliates. These affiliates may act as principal
or agent in secondary market transactions. Secondary market transactions will
be made at prices related to prevailing market prices at the time of sale.
A prospectus supplement to this base prospectus containing the set of final
terms will specify the terms of each offering, including:
* the name or names of any dealers or agents,
* the public offering or purchase price,
* the net proceeds to the issuing entity from the sale,
* any underwriting discounts and other items constituting
underwriters' compensation,
* any discounts and commissions allowed or paid to dealers,
* any commissions allowed or paid to agents, and
* the securities exchanges, if any, on which the notes will be
listed.
If any notes are sold through dealers, the final terms will describe the
nature of the obligation of the dealers to purchase the notes. The notes may be
offered to the public either through syndicates represented by one or more
dealers or directly by one or more firms acting alone. The dealer or dealers
for a particular offering of notes will be named in the final terms relating to
that offering, and, if a syndicate is used, the managing dealer or dealers will
be set forth on the cover of the final terms. Unless otherwise described in the
final terms, the obligation of the dealers to purchase any notes will be
subject to various conditions precedent.
The final terms for any notes offered other than through dealers will
contain information regarding the nature of the offering and any agreements to
be entered into between the issuing entity and the participants in the
distribution of the notes.
Dealer trading may take place in some of the notes, including notes not
listed on any securities exchange. Direct sales may be made on a national
securities exchange or otherwise. If the issuing entity, directly or through
agents, solicits offers to purchase notes, the issuing entity reserves the sole
right to accept and, together with its agents, to reject in whole or in part
any proposed purchase of notes.
The issuing entity may change any initial public offering price and any
discounts or concessions allowed or re-allowed or paid to dealers. If indicated
in the final terms to this base prospectus, the issuing entity will authorise
dealers or agents to solicit offers by certain institutions to purchase
securities from the issuing entity pursuant to delayed delivery contracts
providing for payment and delivery at a future date.
Any dealer or agent participating in the distribution of securities,
including notes offered by this base prospectus, may be deemed to be an
underwriter of those securities under the Securities Act of 1933 and any
discounts or commissions received by them and any profit realised by them on
the sale or resale of the securities may be deemed to be underwriting discounts
and commissions.
181
The issuing entity may agree to indemnify dealers, agents and their controlling
persons against certain civil liabilities, including liabilities under the
Securities Act of 1933 in connection with their participation in the
distribution of the issuing entity's notes.
The issuing entity anticipates that the notes will be sold to institutional
and retail investors. Purchasers of notes, including dealers, may, depending on
the facts and circumstances of the purchases, be deemed to be "UNDERWRITERS"
within the meaning of the Securities Act of 1933 in connection with re-offers
and sales of the notes by them. Noteholders should consult with their legal
advisors in this regard prior to any re-offer or sale.
Dealers and agents participating in the distribution of the securities, and
their controlling persons, may engage in transactions with and perform services
for the originators, the issuing entity or their affiliates in the ordinary
course of business.
RBS will be an originator, originator beneficiary, servicer, trust cash
manager, arranger, a dealer and the lender under the expense loan facility. RBS
owns 100 per cent. of the issued share capital of the loan note issuer. RBS
Greenwich Capital is an affiliate of the originators and may participate in one
or more offerings of the issuing entity's securities.
UNITED KINGDOM
Each dealer has represented and agreed, and each further dealer appointed
under the programme will be required to represent and agree, that:
(i) NO DEPOSIT-TAKING: in relation to any notes which have a maturity of less
than one year:
(i) it is a person whose ordinary activities involve it in acquiring,
holding, managing or disposing of investments (as principal or
agent) for the purposes of its business; and
(ii) it has not offered or sold and will not offer or sell any notes
other than to persons:
(A) whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or as agent)
for the purposes of their businesses; or
(B) who it is reasonable to expect will acquire, hold, manage or
dispose of investments (as principal or agent) for the purposes
of their businesses,
where the issue of the notes would otherwise constitute a contravention of
Section 19 of the FSMA by the issuing entity;
(ii) FINANCIAL PROMOTION: it has only communicated or caused to be
communicated and will only communicate or cause to be communicated an
invitation or inducement to engage in investment activity (within the
meaning of Section 21 of the FSMA) received by it in connection with the
issue or sale of any notes in circumstances in which Section 21(1) of the
FSMA does not apply to the issuing entity; and
(iii) GENERAL COMPLIANCE: it has complied and will comply with all applicable
provisions of the FSMA with respect to anything done by it in relation to
any notes in, from or otherwise involving the United Kingdom.
JERSEY
The notes may not be offered to, sold to or purchased by persons resident
for income tax purposes in Jersey other than financial institutions in the
normal course of business.
GENERAL
Other than with respect to the admission to listing, trading and/or
quotation by such one or more listing authorities, stock exchanges and/or
quotation systems as may be specified in the relevant final terms, no action
has been or will be taken in any country or jurisdiction by the issuing entity
or the dealers that would permit a public offering of notes, or possession or
distribution of any offering material in relation thereto, in any country or
jurisdiction where action for that purpose is required. Persons into whose
hands this base prospectus or any set of final terms comes, are required by the
issuing entity and the dealers to comply with all applicable laws and
regulations in each country or jurisdiction in or from which they purchase,
offer, sell or deliver notes or have in their possession or distribute such
offering material, in all cases at their own expense.
The dealer agreement provides that the dealers shall not be bound by any of
the restrictions relating to any specific jurisdiction (set out above) to the
extent that such restrictions shall, as a result of change(s) or change(s) in
official interpretation, after the date hereof, of applicable laws and
182
regulations, no longer be applicable but without prejudice to the obligations
of the dealers described in the immediately preceding paragraph above.
Selling restrictions may be supplemented or modified with the agreement of
the issuing entity. Any such supplement or modification will be set out in the
relevant base prospectus or final terms (in the case of a supplement or
modification relevant only to a particular series of notes).
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RATINGS OF THE NOTES
Notes offered by this base prospectus and the applicable final terms will
be:
* assigned a rating by at least one of Standard & Poor's, Moody's and
Fitch Ratings, and
* identified in the final terms in one of the four highest rating
categories of such nationally recognised statistical rating
organisation (which is referred to as "INVESTMENT GRADE").
The ratings of the notes should be evaluated independently from similar
ratings on other types of securities. A rating is not a recommendation to buy,
sell or hold the notes. A rating may be suspended, lowered or withdrawn at any
time. The rating does not address the expected schedule of principal payments
other than to say that principal will be returned no later than the final
maturity date.
Rating agencies other than those requested could assign a rating to the
notes, and its rating could be lower than any rating assigned by a rating
agency chosen by the issuing entity.
184
EXPERTS
[The financial statements for Arran Funding Limited and RBS Cards
Securitisation Funding Limited respectively, included in this base prospectus,
have been audited by [__], an independent registered public accounting firm, as
stated in their reports appearing herein, and are included in reliance upon the
reports of such firm given upon their authority as experts in accounting and
auditing.]
185
LEGAL MATTERS
Matters of UK law relating to the validity of the issuance of the notes will
be passed upon for the arranger and dealers by Clifford Chance Limited
Liability Partnership. Legal matters will be passed upon for the arranger and
dealers by Clifford Chance US LLP who will also act as counsel to the issuing
entity as to US tax matters.
Linklaters have advised the issuing entity as to matters of English law.
Matters of Jersey law and tax relating to the validity of the issuance of
the notes will be passed upon for the issuing entity by Mourant du Feu & Jeune.
186
GOVERNING LAW
* The programme documents are governed by the laws of England and
Wales and, where they relate to security interests over assets in
Jersey, by Jersey law.
* The United Kingdom and UK are abbreviated references to the United
Kingdom of Great Britain and Northern Ireland. The UK comprises
three distinct legal systems, namely those of England (which
includes Wales), Scotland and Northern Ireland, each with its own
judicial process. However, leaving aside devolution of certain
powers to Scottish and Northern Irish legislative bodies, the
legislative body for each of these three jurisdictions is the UK
Parliament. Accordingly, references to UK law are to laws
promulgated by the UK Parliament but which are binding on the
United Kingdom.
* The sale of receivables where the relevant card accountholder is
resident in Scotland is governed by Scots law. The consequences of
this Scots law sale are discussed under the caption "Material Legal
Aspects of the Receivables -- Transfer of Benefit of Receivables".
* Provisions of the transaction documents which grant security over
certain intangible assets situated in Jersey are, in order to be
effective as a matter of Jersey law, governed by Jersey law.
Jersey, an island in the Channel Islands off the coast of England,
has an entirely separate legislative and judicial system. However,
in certain areas, such as corporate law, the Jersey courts
customarily follow English common law precedent.
187
REPORTS TO NOTEHOLDERS
The servicer and the trust cash manager will respectively prepare monthly
and annual reports for the receivables trustee and each rating agency that will
contain information about the receivables. The financial information contained
in the reports will not be prepared in accordance with generally accepted
accounting principles. No reports will be sent to you.
Enquiries and requests for information in relation to the notes from
noteholders in the United Kingdom may be directed to the London office of the
note trustee, which is located at One Canada Square, London, E14 5AL. The note
trustee, from its London office, will be able to respond to all enquiries and
requests for information regarding the notes and to refer any calls requiring
any action on the part of the registrar to the registrar's New York office to
liaise with the relevant holder of the notes. In performing these functions,
the note trustee is procuring that the equivalent services that would be
available at a London paying agent are available to holders of notes in London
(excluding any payment of principal or interest or any other payment on the
notes) to enable these noteholders to exercise all their rights, in particular,
being informed of meetings which they are entitled to attend and exercising
their right to vote.
188
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement for the notes with the SEC. This base
prospectus is part of the registration statement, but the registration
statement includes additional information.
The servicer will file with the SEC all required annual, monthly and special
SEC reports and other information about the notes.
You may read and copy any reports, statements or other information we file
at the SEC's public reference room at 100 F Street, N.E., in Washington,
D.C. 20549. You can request copies of these documents, upon payment of a
duplicating fee, by writing to the SEC. Please call the SEC at (800) SEC-0330
for further information on the operation of the public reference rooms. Our SEC
filings also are available to the public on the SEC internet site (http://
www.sec.gov).
The SEC allows us to "incorporate by reference" information we file with the
SEC, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this base prospectus. Information that we file later with the SEC
will automatically update the information in this base prospectus. In all
cases, you should rely on the later information over different information
included in this base prospectus or the applicable final terms. We incorporate
by reference any future annual, monthly and special reports until the
termination of the offering of the notes. As a recipient of this base
prospectus, you may request a copy of any document we incorporate by reference,
except exhibits to the document (unless exhibits are specifically incorporated
by reference), at no cost, by writing or calling us at: 22 Grenville Street,
St. Helier, Jersey JE4 8PX (+44 1534 609 000, Ref: Arran Funding Limited).
At such time as may be required under relevant SEC rules and regulations, we
will provide static pool information in response to Item 1105 of Regulation AB
through a website. If we determine to do so, the applicable final terms will
disclose the specific website address where the information is provided.
189
LISTING AND GENERAL INFORMATION
We have made an application to the UKLA to admit the notes to the Official
List and to the regulated market of the London Stock Exchange to admit the
notes to trading. The listing of the notes on the regulated market of the
London Stock Exchange will be expressed as a percentage of their principal
amount (exclusive of accrued interest). Each class of this series of notes
intended to be admitted to listing on the Official List of the UKLA and
admitted to trading on the regulated market of the London Stock Exchange will
be so admitted to listing and trading upon submission to the UKLA and the
regulated market of the London Stock Exchange of this base prospectus and any
other information required by the UKLA and the regulated market of the London
Stock Exchange, subject in each case to the issue of the relevant notes. Prior
to official listing, dealings will be permitted by the regulated market of the
London Stock Exchange in accordance with its rules. Transactions will normally
be effected for delivery on the third working day in London after the day of
the transaction.
However, notes may be issued pursuant to the programme which will not be
admitted to listing, trading and/or quotation by the UKLA or the regulated
market of the London Stock Exchange or any other listing authority, stock
exchange and/or quotation system or which will be admitted to listing, trading
and/or quotation by such listing authority, stock exchange and/or quotation
system as the issuing entity and the relevant dealer(s) may agree.
Application will be made for the notes to be accepted for clearance through
Euroclear and Clearstream, Luxembourg. The appropriate common code and the
International Securities Identification Number ("ISIN") in relation to the
Notes of each series will be specified in the final terms relating thereto. The
relevant final terms shall specify any other clearing system as shall have
accepted the relevant notes for clearance together with any further appropriate
information.
The establishment of the programme was authorised by board resolutions of
the issuing entity passed on 9 November 2005. The issuing entity has obtained
or will obtain from time to time all necessary consents, approvals and
authorisations in connection with the issue and performance of the notes.
An investment in the notes is only suitable for financially sophisticated
investors who are capable of evaluating the merits and risks of such investment
and who have sufficient resources to be able to bear any losses which may
result from such investment. If you are in any doubt about the contents of this
base prospectus or the relevant final terms, you should consult your
stockbroker, bank manager, solicitor, accountant or other financial adviser.
The issuing entity confirms that the securitised assets backing the issue of
this series of notes have characteristics that demonstrate capacity to produce
funds to service any payments due and payable on this series of notes. However,
investors are advised that this confirmation is based on the information
available to the issuing entity at the date of the base prospectus and the
relevant final terms and may be affected by future performance of such
securitised assets. Consequently, investors are advised to review carefully the
disclosure in the base prospectus together with any amendments or supplements
thereto and other documents incorporated by reference in the base prospectus
and, in relation to any series, the relevant final terms.
The loan note issuer neither is nor has been involved in any governmental,
legal or arbitration proceedings (including any such proceedings which are
pending or threatened of which the loan note issuer is aware) during the 12
months before the date of this base prospectus which may have, or have had in
the recent past, significant effects on the loan note issuer's financial
position or profitability.
Save as disclosed in this prospectus, there has been no significant change
in the financial or trading position of the loan note issuer since the date of
its incorporation and, since such date, there has been no material adverse
change in the financial position or prospects of the loan note issuer.
The issuing entity neither is nor has been involved in any governmental,
legal or arbitration proceedings (including any such proceedings which are
pending or threatened of which the issuing entity is aware) during the 12
months before the date of this base prospectus which may have, or have had in
the recent past, significant effects on the issuing entity's financial position
or profitability.
The issuing entity has not traded since its incorporation on 7 September
2004.
190
There has been no material adverse change in the issuing entity's financial
position or prospects since its date of incorporation and, since such date,
there has been no significant change in the financial or trading position of
the issuing entity.
It should be remembered that the price of securities and the income from
them can go down as well as up.
There is no intention to accumulate surpluses in the issuing entity, loan
note issuer or receivables trustee.
A copy of this base prospectus will be delivered to the Registrar of
Companies within 14 days of the date hereof in accordance with the provisions
of the consent issued pursuant to Article 5 of the Companies (General
Provisions) (Jersey) Order 2002 in connection with the circulation by the
issuing entity of the final terms.
The Jersey Financial Services Commission has given, and has not withdrawn,
its consent under Article 4 of the Control of Borrowing (Jersey) Order 1958 to
the issue of the notes.
It must be distinctly understood that, in giving these consents, neither the
Registrar of Companies nor the Jersey Financial Services Commission takes any
responsibility for the financial soundness of the issuing entity or for the
correctness of any statements made, or opinions expressed, with regard to it.
The auditors of the issuing entity are Deloitte & Touche LLP, Registered
Auditor. Deloitte & Touche LLP audited the financial statements of the issuing
entity, without qualification, in accordance with relevant Jersey legal
regulatory requirements and United Kingdom accounting standards, for the period
ending 31 August 2005. Going forward, Deloitte & Touche LLP is expected to audit
the financial statements of the issuing entity in accordance with relevant
Jersey legal regulatory requirements and United Kingdom accounting standards.
The auditors of the loan note issuer are Deloitte & Touche LLP, Registered
Auditor. Deloitte & Touche LLP audited the financial statements of the loan note
issuer, without qualification, in accordance with relevant Jersey legal
regulatory requirements and United Kingdom accounting standards, for the year
ending 31 December 2004. Going forward, Deloitte & Touche LLP is expected to
audit the financial statements of the loan note issuer in accordance with
relevant Jersey legal regulatory requirements and United Kingdom accounting
standards.
The financial statements included in this base prospectus are included only
to comply with the listing requirements of the UKLA. Prospective investors in a
particular series of notes will find the relevant information regarding the
originators' portfolio and the securitised portfolio in the final terms
corresponding to such series.
[__] have given and not withdrawn their consent to inclusion of their
reports on the balance sheet and financial statements of Arran Funding Limited,
as set out in this base prospectus, and have authorised the contents of such
references for the purposes of paragraph 6(l)(e) of the Financial Services and
Markets Act 2000 (Official Listing of Securities) Regulations 2001.
Deloitte & Touche LLP is regulated by a number of authorities, but primarily
by The Institute of Chartered Accountants in England & Wales in respect of
audit. Regulation of the audit of listed companies is in the process of being
passed from the Institute of Chartered Accountants in England & Wales to the
Financial Reporting Council. In addition, Deloitte & Touche LLP is authorised
and regulated by the Financial Services Authority in respect of activities
regulated by the Financial Services and Markets Act 2000.
The address of Deloitte & Touche LLP is Saltire Court, 20 20 Castle Street,
Edinburgh, EH1 2DB.
191
Documents available for inspection
For so long as the base prospectus is in effect, copies and, where
appropriate, English translations of the following documents may be inspected
during normal business hours at the specified office of the paying agent and
from the registered office of the issuing entity, namely:
(a) the memorandum and articles of association of the issuing entity;
(b) the memorandum and articles of association of the loan note issuer;
(c) the memorandum and articles of association of the receivables
trustee;
(d) the current listing particulars in relation to the programme,
together with any amendments;
(e) the agency agreement;
(f) the dealer agreement and the relevant subscription agreement;
(g) any set of final terms relating to notes which are admitted to
listing, trading and/or quotation by any listing authority, stock
exchange and/or quotation system. (In the case of any notes which
are not admitted to listing, trading and/or quotation by any
listing authority, stock exchange and/or quotation system, copies
of the relevant final terms will only be available for inspection
by the relevant noteholders);
(h) the master framework agreement including amendments thereto;
(i) the receivables securitisation agreement;
(j) the receivables trust deed and trust cash management agreement and
trust supplement;
(k) the trust section 75 indemnity;
(l) beneficiaries deed;
(m) beneficiaries servicing agreement and supplemental beneficiaries
servicing agreement;
(n) the expenses loan agreement;
(o) the security trust deed and loan note supplement;
(p) the Arran Funding Limited trust deed;
(q) the relevant series trust deed supplement;
(r) the Arran Funding Limited master framework agreement;
(t) the issuer corporate services agreement;
(u) the accountants' report of the loan note issuer;
(v) the accountants' report of the issuing entity;
(w) the swap agreement (if any); and
(x) the various account bank agreements.
192
INDEX OF APPENDICES
The appendices are an integral part of this base prospectus.
Page
----
A Report of Independent Accountants For Arran
Funding Limited....................................................... 194
B Balance Sheet of Arran Funding Limited................................ 195
C Notes to Financial Statements......................................... 196
D Report of Independent Accountants for RBS Cards Securitisation
Funding Limited....................................................... 197
E Profit and Loss Account of RBS Cards Securitisation Funding Limited... 198
F Notes to Financial Statements......................................... 200
G Form of Final Terms................................................... 201
193
APPENDIX A
REPORT OF INDEPENDENT ACCOUNTANTS FOR ARRAN FUNDING LIMITED*
- ------
* To be filed by amendment.
194
APPENDIX B
ARRAN FUNDING LIMITED
BALANCE SHEET*
195
APPENDIX C
NOTES TO FINANCIAL STATEMENTS*
PERIOD ENDED 31 DECEMBER 2005
196
APPENDIX D
[Included below is the audit opinion on the financial statements of RBS Cards
Securitisation Funding Limited for the year ended 31 December 2005. The
financial statements for the year ended 31 December 2004 have not been
reproduced here as 2004 comparatives are included in the 2005 financial
statements below.]
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF RBS CARDS SECURITISATION FUNDING
LIMITED*
197
APPENDIX E
RBS CARDS SECURITISATION FUNDING LIMITED*
PROFIT AND LOSS ACCOUNT
YEAR ENDED 31 DECEMBER 2005
198
BALANCE SHEET
YEAR ENDED 31 DECEMBER 2005
199
APPENDIX F
NOTES TO FINANCIAL STATEMENTS*
YEAR ENDED 31 DECEMBER 2005
200
APPENDIX G
FINAL TERMS
DATED [*]
(Prospectus supplement to the base prospectus dated [*] 2006)
ARRAN FUNDING LIMITED
(incorporated in Jersey with limited liability under registered number 88474)
Issue of [$] [[e]] [[GBP]][[*]],000,000 principal amount of Series 200[*]-[*],
Class A Notes
[$][[e]][[GBP]][*],000,000 principal amount of Series 200[*]-[*], Class B Notes
[$][[e]][[GBP]][*],000,000 principal amount of Series 200[*]-[*], Class C Notes
(together, the "Series [*] -- [*] Notes")
under the $[*],000,000,000 Arran Funding Medium Term Note Programme
(ultimately backed by trust property in the South Gyle Receivables Trust held
by
South Gyle Receivables Trustee Limited)
The Royal Bank of Scotland plc
originator and servicer
National Westminster Bank Plc
originator
RBS Cards Securitisation Funding Limited
depositor
The issuing entity will issue Class [A] Notes Class [B] Notes Class [C] Notes
Principal amount [$][[e]][[GBP]] [*],000,000 [$][[e]][[GBP]] [*],000,000 [$][[e]][[GBP]] [*],000,000
[*]% per annum plus [*] rate [*]% per annum plus [*] rate [*]% per annum plus [*] rate
Interest rate of relevant interest period of relevant interest period of relevant interest period
During the revolving period During the revolving period During the revolving period
and the controlled and the controlled and the controlled
accumulation period prior to accumulation period prior to accumulation period prior to
the scheduled redemption the scheduled redemption the scheduled redemption
date, the [*] day of [[*], [*], date, the [*] day of [[*], [*], date, the [*] day of [[*], [*],
[*] and [*]]/[each month], [*] and [*]]/[each month], [*] and [*]]/[each month],
beginning [*] and during any beginning [*] and during any beginning [*] and during any
amortisation period, the [*] amortisation period, the [*] amortisation period, the [*]
day of each month, in each day of each month, in each day of each month, in each
case subject to adjustment for case subject to adjustment for case subject to adjustment for
Interest payment dates non-business days non-business days non-business days
Scheduled redemption date [*], 20[*] [*], 20[*] [*], 20[*]
Final redemption date [*], 20[*] [*], 20[*] [*], 20[*]
[$][[e]][[GBP]] [*],000,000 (or [$][[e]][[GBP]] [*],000,000 (or [$][[e]][[GBP]] [*],000,000 (or
Price to public [*]%) [*]%) [*]%)
[$][[e]][[GBP]][*],000,000 (or [$][[e]][[GBP]][*],000,000 (or [$][[e]][[GBP]][*],000,000 (or
Underwriting discount [*]%) [*]%) [*]%)
[$][[e]][[GBP]][*],000,000 (or [$][[e]][[GBP]][*],000,000 (or [$][[e]][[GBP]][*],000,000 (or
Proceeds to originators [*]%) [*]%) [*]%)
Payments on the class B notes are subordinated to payments on the class A
notes of the same series. Payments on the class C notes are subordinated to
payments on the class A and class B notes of the same series.
PLEASE REVIEW AND CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 19
OF THE BASE PROSPECTUS AND ANY ADDITIONAL RISK FACTORS ON PAGE [*] OF THIS SET
OF FINAL TERMS BEFORE YOU PURCHASE ANY NOTES.
You should read this set of final terms and the base prospectus carefully
before you invest. A note is not a deposit and neither the notes nor the
underlying receivables are insured or guaranteed by The Royal Bank of Scotland
plc, National Westminster Bank Plc or by any United Kingdom or United States
governmental agency. The notes offered in this set of final terms and the base
prospectus will be obligations of the issuing entity only. The issuing entity
will only have a limited pool of assets to satisfy its obligations under the
notes. The notes will not be obligations of The Royal Bank of Scotland plc,
National Westminster Bank Plc or any of their affiliates.
Neither the United States Securities and Exchange Commission nor any state
securities commission has approved or disapproved the notes or determined that
this set of final terms or the base prospectus is truthful or complete. Any
representation to the contrary is a criminal offence.
DEALERS
[TO BE INSERTED]
201
IMPORTANT NOTICES
In the event that any withholding or deduction for any taxes, duties,
assessments or government charges of whatever nature is imposed, levied,
collected, withheld or assessed on payments of principal or interest in respect
of the notes by Jersey, the United Kingdom, or any other jurisdiction or any
political subdivision or any authority in or of such jurisdiction having power
to tax, the issuing entity or the paying agents shall make such payments after
such withholding or deduction and neither the issuing entity nor the paying
agents will be required to make any additional payments to holders of notes in
respect of such withholding or deduction.
This document constitutes a set of final terms for the purposes of article
5.4 of the prospectus directive and is supplemental to and must be read in
conjunction with the base prospectus. Full information on the issuing entity
and the offer of the notes is only available on the basis of the combination of
this set of final terms and the base prospectus. The base prospectus is
available for viewing at www.rbsmarkets.com and www.rbos.com and copies may be
obtained from the registered office of the issuing entity.
The issuing entity has confirmed to the dealers named under "Plan of
Distribution" below that this set of final terms, when read in conjunction with
the base prospectus, contains all information which is (in the context of the
programme, the issue, offering and sale of the notes) material; that such
information is true and accurate in all material respects and is not misleading
in any material respect; that any opinions, predictions or intentions expressed
in this set of final terms are honestly held or made and are not misleading in
any material respect; that this set of final terms does not omit to state any
material fact necessary to make such information, opinions, predictions or
intentions (in the context of the programme, the issue and offering and sale of
the notes) not misleading in any material respect; and that all proper
enquiries have been made to verify the foregoing.
No person has been authorised to give any information or to make any
representation not contained in or not consistent with this set of final terms
or any other document entered into in relation to the programme or any
information supplied by the issuing entity or such other information as is in
the public domain and, if given or made, such information or representation
should not be relied upon as having been authorised by the issuing entity or
any dealer.
No representation or warranty is made or implied by the dealers or any of
their respective affiliates, and neither the dealers nor any of their
respective affiliates makes any representation or warranty or accepts any
responsibility as to the accuracy or completeness of the information contained
in this set of final terms. Neither the delivery of this set of final terms nor
the offering, sale or delivery of any note shall, in any circumstances, create
any implication that the information contained in this set of final terms is
true subsequent to the date hereof or the date upon which any future final
terms (in relation to any future issue of other notes) is produced or that
there has been no adverse change, or any event reasonably likely to involve any
adverse change, in the condition (financial or otherwise) of the issuing entity
since the date thereof or, if later, the date upon which any future final terms
(in relation to any future issue of other notes) is produced or that any other
information supplied in connection with the programme is correct at any time
subsequent to the date on which it is supplied or, if different, the date
indicated in the document containing the same. No request has been made for a
certificate permitting public offers of the notes in other member states of the
European Union.
The distribution of this set of final terms and the offering, sale and
delivery of the notes in certain jurisdictions may be restricted by law.
Persons in possession of the final terms are required by the issuing entity and
the dealers to inform themselves about and to observe any such restrictions.
For a description of certain restrictions on offers, sales and deliveries of
notes and on the distribution of this set of final terms and other offering
material relating to the notes, see "Plan of Distribution" in the base
prospectus.
Until a date that is 90 days after the date of this set of final terms, all
dealers effecting transactions in this series of notes, whether or not
participating in this distribution, may be required to deliver the appropriate
final terms and the base prospectus. This is in addition to the obligation of
dealers to deliver a set of final terms and base prospectus when acting as the
underwriter of the notes and with respect to their unsold allotment or
subscription.
An investment in the notes is only suitable for financially sophisticated
investors who are capable of evaluating the merits and risks of such investment
and who have sufficient resources to be able to bear any losses which may
result from such investment.
202
The maximum aggregate principal amount of notes outstanding at any one time
under the programme will not exceed $7,500,000,000 (and for this purpose, any
notes denominated in another currency shall be translated into U.S. dollars at
the date of the agreement to issue such notes). The maximum aggregate principal
amount of notes which may be outstanding at any one time under the programme
may be increased from time to time, subject to compliance with the relevant
provisions of the dealer agreement as defined under "Plan of Distribution" in
the base prospectus.
Certain figures included in this set of final terms have been subject to
rounding adjustments; accordingly, figures shown for the same category
presented in different tables may vary slightly and figures shown as totals in
certain tables may not be an arithmetic aggregation of the figures which
precede them.
203
CONTENTS
Transaction Features....................................................... 206
Loan Note Supporting Series................................................ 207
Series Investor Interest Supporting Loan Note.............................. 208
Parties.................................................................... 209
Other Series Issued........................................................ 210
Additional Risk Factors.................................................... 211
Bank Portfolio Information................................................. 212
Receivables Information.................................................... 216
Plan Of Distribution....................................................... 218
Listing Application........................................................ 219
Responsibility............................................................. 219
General Information........................................................ 220
204
The information about these series 200[*]-[*] notes appears in two separate
documents: a base prospectus and a set of final terms. The base prospectus
provides general information about each series of notes issued under the Arran
Funding Medium Term Note Programme, some of which may not apply to the series
200[*]-[*] notes described in this set of final terms. With respect to the
series 200[*]-[*] notes, this set of final terms is the "relevant final terms"
or the "applicable final terms" referred to in the base prospectus.
This set of final terms may be used to offer and sell the series 200[*]-[*]
notes only if accompanied by the base prospectus.
This set of final terms may supplement the disclosure in the base
prospectus. If the terms in this set of final terms differ from the terms in
the base prospectus, the terms in this set of final terms will apply to the
series 200[*]-[*] notes.
You should rely only on the information in this set of final terms and the
base prospectus, including information incorporated by reference. We have not
authorized anyone to provide you with different information.
205
TRANSACTION FEATURES
This set of final terms may supplement the disclosure in the base
prospectus. If the terms in this set of final terms differ from the terms in the
base prospectus, the terms in this set of final terms will apply to the series
200[*]-[*] notes. Unless otherwise indicated, words and expressions defined in
the base prospectus shall have the same meanings below.
$ Equivalent Initial
[Class/Sub-Class] of Notes Initial Principal Balance Principal Balance % of Total
- -------------------------- ------------------------- -------------------- -----------
[A/B/C] [1/2/3] $(e)(GPB) [ ] $
[A/B/C] [1/2/3] $(e)(GPB) [ ] $
[A/B/C] [1/2/3] $(e)(GPB) [ ] $
$100%
SERIES OF NOTES ISSUED
SERIES NUMBER: Series 200[*]-[*]
[CLASS/SUB-CLASS] OF NOTES: [A/B/C] [1/2/3] [A/B/C] [1/2/3] [A/B/C] [1/2/3]
ANTICIPATED RATINGS: [*] [*] [*]
RATING AGENCIES: [*] [*] [*]
ISSUE DATE: [*] [*] [*]
ISSUE PRICE: [*] per cent. [*] per cent. [*] per cent.
PROCEEDS: [*] [*] [*]
SPECIFIED CURRENCY: [Class/Sub-Class] [Class/Sub-Class] [Class/Sub-Class]
[*] notes are to be [*] notes are to be [*] notes are to be
denominated in [*] denominated in [*] denominated in [*]
SPECIFIED DENOMINATION: [*] [*] [*]
FIXED OR FLOATING DESIGNATION: [*] [*] [*]
SCHEDULED REDEMPTION DATE: [*] [*] [*]
FINAL REDEMPTION DATE: [*] [*] [*]
INITIAL RATE (IF APPLICABLE): [*] [*] [*]
MARGIN: [*] [*] [*]
LIBOR/EURIBOR (IN THE CASE OF THE
FIRST INTEREST PERIOD): [*] [*] [*]
DAY COUNT FRACTION[S]: [*] [*] [*]
INTEREST COMMENCEMENT DATE: [*] [*] [*]
FLOATING RATE COMMENCEMENT DATE (IF APPLICABLE): [*] [*] [*]
INTEREST PAYMENT DATES: [*] [*] [*]
FIRST INTEREST PAYMENT DATE: [*] [*] [*]
INTEREST RATE CALCULATIONS: [*] [*] [*]
LISTING: [*] [*] [*]
ADDITIONAL BUSINESS CENTRE: [*] [*] [*]
ADDITIONAL FINANCIAL CENTRE: [*] [*] [*]
ADDITIONAL INTEREST MARGIN: [*] [*] [*]
EXPENSES LOAN AMOUNT: [*]
EXPENSES LOAN INTEREST RATE: [*]
ANNUAL SERIES ISSUER PROFIT AMOUNT: [*]
SUBORDINATION: [*]
CLEARING AND SETTLEMENT: [*]
BUSINESS DAY CONVENTION: [*]
ERISA ELIGIBILITY: [*]
206
LOAN NOTE SUPPORTING SERIES
The series 200[*] -- [*] notes will be collateralised by the series 200[*]
- -- [*] loan note (the "RELATED LOAN NOTE") which shall have the following terms
as set out in the series 200[*] -- [*] loan note supplement.
DESIGNATION FOR THE PURPOSES OF THE
SECURITY TRUST DEED: Series 200[*] -- [*]
ISSUANCE DATE: [*]
INITIAL PRINCIPAL AMOUNT: [*]
LOAN NOTE FIRST INTEREST PAYMENT DATE: [*]
LOAN NOTE INTEREST PAYMENT DATE: [*]
LOAN NOTE INTEREST PERIOD: [*]
REQUIRED RESERVE AMOUNT: [*]
SERIES SCHEDULED REDEMPTION DATE: [*]
SERIES TERMINATION DATE: [*]
ADDITIONAL EARLY REDEMPTION EVENTS: [None]/[*]
LISTING [*]
INITIAL INVESTOR INTEREST [*]
CLASS A INITIAL INVESTOR INTEREST [*]
CLASS B INITIAL INVESTOR INTEREST [*]
CLASS C INITIAL INVESTOR INTEREST [*]
207
SERIES INVESTOR INTEREST SUPPORTING LOAN NOTE
The series 200[*] -- [*] loan note will be collateralised by the series
200[*] -- [*] investor interest (the "SERIES INVESTOR INTEREST") which shall
have the following terms as set out in the series 200[*]- [*] trust supplement.
DESIGNATION FOR THE PURPOSES OF THE
RECEIVABLES TRUST DEED SUPPLEMENT: Series 200[*] -- [*]
ISSUANCE DATE: [*]
INITIAL PRINCIPAL AMOUNT: [*]
FIRST DISTRIBUTION DATE/PAYMENT DATE: [*]
CLASS A LN RATE [*]
CLASS B LN RATE [*]
CLASS C LN RATE [*]
SERIES SCHEDULED REDEMPTION DATE: [*]
CONTROLLED DEPOSIT AMOUNT: [*]
NUMBER OF MONTHS IN CONTROLLED ACCUMULATION PERIOD: [*]
SERIES TERMINATION DATE: [*]
ADDITIONAL EARLY REDEMPTION EVENTS: [None]/[*]
SERIES INITIAL INVESTOR INTEREST [*]
The controlled accumulation period commencement date in respect of series
200[*] -- [*] investor interest will be the first business day of [*] provided,
however, that if on [*] the controlled accumulation period length is determined
to be less than [*] months, the revolving period may be extended and the start
of the controlled accumulation period will be postponed. The controlled
accumulation period will, in any event, begin no later than [*].
The "spread account percentage" shall be determined by the amount of
quarterly excess spread percentage as set forth below:
Quarterly excess spread percentage on Spread account percentage on
a given date is - same date will be
- -------------------------------------------------- ----------------------------
[*] above [*] per cent. [*] per cent.
[*] above [*] per cent. but equal to or
below [*] per cent. [*] per cent.
[*] above [*] per cent. but equal to or
below [*] per cent. [*] per cent.
[*] above [*] per cent. but equal to or
below [*] per cent. [*] per cent.
[*] above [*] per cent. but equal to or
below [*] per cent. [*] per cent.
[*] above [*] per cent. but equal to or
below [*] per cent. [*] per cent.
[*] equal to or below [*] per cent. [*] per cent.
After the spread account percentage has been increased above [*] per cent.
as specified in the table above, the spread account percentage will remain at
that percentage until either: (1) it is further increased to a higher required
percentage as specified in the table above, or (2) the date on which the
quarterly excess spread percentage has increased to a level above that for the
then current spread account percentage. The spread account percentage will be
decreased to the appropriate percentage as stated above.
208
PARTIES
Lead Dealer(s): [*]
Dealers: [*]
Issuing Entity: Arran Funding Limited.
Note Trustee: Bank of New York at its specified office in
London. The note trustee's address in London
is, at the date of this set of final terms,
One Canada Square, London E14 5AL.
Principal Paying Agent, Paying The Bank of New York at its specified office
Agent, Registrar and Agent in New York and London. The principal paying
Bank for the Notes: agent will make payments of interest and
principal when due on the notes. The agent
bank will calculate the interest rates
applicable to each class of notes. The Bank of
New York's address in London is One Canada
Square, London E14 5AL and its address in New
York is 101 Barclay Street, Floor 21 West, New
York, New York 10286. Its telephone number in
London is +44 20 7570 1784 and its telephone
number in New York is +1 212 495 1784.
Receivables Trustee: South Gyle Receivables Trustee Limited.
Loan Note Issuer: RBS Cards Securitisation Funding Limited.
Originator and Originator RBS and Nat West
Beneficiary:
Servicer: The Royal Bank of Scotland plc acting through
its division Retail Markets Division -- Cards
Business.
Security Trustee: The Bank of New York.
Swap Counterparty: [*]
Cash Manager: The Royal Bank of Scotland plc acting through
its division Retail Markets Division -- Cards
Business and Global Banking Markets Business.
SWAP AGREEMENTS
[Describe name, organisational form and general character of
the business of the derivative counterparty.]
[Describe operation and material terms of the derivative agreement,
including limits on the timing or amounts of payments or any conditions to
payments.]
[Describe any material provisions regarding substitution of the derivative
agreement.]
[Based on a reasonable good faith estimate of probable exposure, the
significance percentage of the derivative agreement is [less than 10%] [*]%.]
[If the significance percentage of the derivative agreement is 10% or more, but
less than 20%, include selected financial data complying with Item 1115(b)(1) of
Regulation AB in the prospectus supplement.]
[If the significance percentage of the derivative agreement is 20% or more,
include financial statements complying with Item 1115(b)(2) of Regulation AB
in the prospectus supplement.]
209
OTHER SERIES ISSUED
ARRAN FUNDING LIMITED
Scheduled Final
Issuance Tranche Redemption Redemption
Series and [Class/Sub-Class] Date Size Date Date
- -------------------------------- ---------- ---------- ---------- ----------
[*] [*] [*] [*] [*]
RBS CARDS SECURITISATION FUNDING LIMITED
Scheduled Final
Issuance Tranche Redemption Redemption
Series and [Class/Sub-Class] Date Size Date Date
- -------------------------------- ---------- ---------- ---------- ----------
[*] [*] [*] [*] [*]
210
ADDITIONAL RISK FACTORS
[NONE]
211
BANK PORTFOLIO INFORMATION
RECEIVABLE YIELD CONSIDERATIONS
The following table sets forth the gross revenues from finance charges and
fees billed to cardholder accounts and from interchange in the bank portfolio
for each of the years ended [*], [*] and [*] and for the [*] months ended [*].
Each table has been provided by Cards Business and has not been audited. These
revenues vary for each account based on the type and volume of activity for each
account. The historical yield figures in these tables are calculated on the
basis of amounts billed to cardholders during the periods shown. Collections of
receivables included in the South Gyle Receivables Trust will be on a cash basis
and may not reflect the historical yield experience in the table. For further
detail, please see the base prospectus.
BANK PORTFOLIO YIELD
[*]
Months
Ended Year Ended
---------- ----------------------------------
[*] [*] [*] [*]
---------- ---------- ---------- ----------
Average Receivables Outstanding(1) [*] [*] [*] [*]
Finance Charges and Fees Billed(2) [*] [*] [*] [*]
Interchange....................... [*] [*] [*] [*]
Yield from Finance Charges
and Fees(3)..................... [*] [*] [*] [*]
Yield from Interchange(3)......... [*] [*] [*] [*]
Total Yield from Charges, Fees
and Interchange(3).............. [*] [*] [*] [*]
---------- ---------- ---------- ----------
Notes:
(1) Average Receivables Outstanding is the average of the month end balances for
the period indicated.
(2) Finance Charges and Fees are comprised of monthly periodic charges and other
credit card fees net of adjustments made pursuant to RBS's normal servicing
procedures, including removal of incorrect or disputed monthly periodic
finance charges.
(3) Yield percentages for the [*] months ending [*] are presented on an
annualised basis.
[Discussion of information presented in table to follow]
STATIC POOL INFORMATION
[Static pool information regarding the performance of the receivables in the
receivables trust is being provided through a website at http:// .] [Static pool
information regarding the performance of the receivables in the receivables
trust is being provided by the filing of a periodic report on Form 8-K dated
[*][*], [*]. Such Form 8-K is incorporated by reference into these final terms.]
See "Where You Can Find More Information" in the base prospectus. All static
pool information regarding the performance of those receivables [on such
website] [contained in such report filed on form 8-K] for periods prior to 1
January 2006 will not form a part of these final terms or the base prospectus
relating to the notes. Static pool information for periods prior to [*] is not
available and cannot be obtained without unreasonable expense or effort.]
DELINQUENCY AND LOSS EXPERIENCE
The following tables set forth the delinquency and loss experience for each
of the periods shown for the bank portfolio of credit card accounts. Each table
has been provided by Cards Business and has not been audited. The bank
portfolio's delinquency and loss experience is comprised of segments which may,
when taken individually, have delinquency and loss characteristics different
from those of the overall bank portfolio of credit card accounts. Because the
securitised portfolio is only a portion of the bank portfolio, actual
delinquency and loss experience with respect to the receivables comprised
therein may be different from that set forth below for the bank portfolio. There
can be no assurance that the delinquency and loss experience for the securitised
portfolio in the future will be similar to the historical experience of the bank
portfolio set forth below. For further information, please see the base
prospectus.
212
DELINQUENCY EXPERIENCE
BANK PORTFOLIO
* * * *
------------------------ ------------------------ ------------------------ ------------------------
% of Total % of Total % of Total % of Total
Receivables Receivables Receivables Receivables Receivables Receivables Receivables Receivables
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Receivables outstanding...... * * * * * * * *
Receivables delinquent....... * * * * * * * *
Up to 29 Days................ * * * * * * * *
30-59 Days................... * * * * * * * *
60-89 Days................... * * * * * * * *
90-119 Days.................. * * * * * * * *
120-149 Days................. * * * * * * * *
150-179 Days................. * * * * * * * *
180 Days or more * * * * * * * *
Total 30 Days of
more Delinquent............ * * * * * * * *
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
*
------------------------
% of Total
Receivables Receivables
----------- -----------
Receivables outstanding...... * *
Receivables delinquent....... * *
Up to 29 Days................ * *
30-59 Days................... * *
60-89 Days................... * *
90-119 Days.................. * *
120-149 Days................. * *
150-179 Days................. * *
180 Days or more * *
Total 30 Days of
more Delinquent............ * *
----------- -----------
Note:
The receivables outstanding on the accounts consist of all amounts due from
obligors as posted to the accounts as of the date above.
[Discussion of information presented in table to follow]
213
NET CHARGE-OFF EXPERIENCE
BANK PORTFOLIO
[*]
Months
Ended Year Ended
---------- ---------------------------------- ---------
[*] [*] [*] [*] [*]
---------- ---------- ---------- ---------- ---------
Average receivables outstanding(1) [*] [*] [*] [*] [*]
Total gross charge-offs(2)....... [*] [*] [*] [*] [*]
Recoveries(3).................... [*] [*] [*] [*] [*]
Total net charge-offs............ [*] [*] [*] [*] [*]
Total net charge-offs as a [*] [*] [*] [*] [*]
percentage of average
receivables outstanding........ [*] [*] [*] [*] [*]
---------- ---------- ---------- ---------- ---------
Notes:
(1) Average receivables outstanding is the average of the month end balances
during the period indicated.
(2) Total net charge-offs are total principal and interest charge-offs before
recoveries and do not include the amount of any reductions in average
receivables outstanding due to fraud, returned goods, customer disputes or
other miscellaneous credit adjustments.
(3) Recoveries are payments received in respect of accounts which have been
previously charged off.
(4) All percentages shown above are annualised.
[Discussion of information presented in table to follow]
214
MATURITY ASSUMPTIONS
The following table sets forth the highest and lowest cardholder monthly
payment rate for the bank portfolio during any month in the periods shown and
the average cardholder monthly payment rates for all months during the periods
shown, in each case calculated as a percentage of total opening monthly
receivables outstanding during the periods shown. Payment rates shown in the
table are based on amounts which would be deemed payments of principal
receivables and finance charge receivables with respect to the related credit
card accounts.
CARDHOLDER MONTHLY PAYMENTS RATES
BANK PORTFOLIO
[*]
Months
Ended Year Ended
---------- ----------------------------------------------
[*] [*] [*] [*] [*]
---------- ---------- ---------- ---------- ----------
Lowest Month........ [*] [*] [*] [*] [*]
Highest Month....... [*] [*] [*] [*] [*]
Monthly Average..... [*] [*] [*] [*] [*]
---------- ---------- ---------- ---------- ----------
For further information, please see the base prospectus.
215
RECEIVABLES INFORMATION
As at [*]
The following tables summarise the securitised portfolio by various criteria
as of the beginning of the day on [*]. Each table has been provided by Cards
Business and has not been audited. Because the future composition of the
securitised portfolio may change over time, these tables are not necessarily
indicative of the composition of the securitised portfolio at any time
subsequent to [*].
COMPOSITION BY ACCOUNT BALANCE
SECURITISED PORTFOLIO
Percentage of Percentage
Total Number Total Number of Total
Account Balance Range of Accounts of Accounts Receivables Receivables
- --------------------------- ------------- ------------ ------------ ------------
Credit Balance............. [*] [*]% [GBP][*] [*]%
No Balance................. [*] [*]% [GBP][*] [*]%
0.01---5,000.00............ [*] [*]% [GBP][*] [*]%
5,000.01--- 10,000.00...... [*] [*]% [GBP][*] [*]%
10,000.01---15,000.00...... [*] [*]% [GBP][*] [*]%
15,000.01---20,000.00...... [*] [*]% [GBP][*] [*]%
20,000.01---25,000.00...... [*] [*]% [GBP][*] [*]%
25,000.01 or more.......... [*] [*]% [GBP][*] [*]%
---------- ---------- ---------- ----------
TOTAL...................... [*] 100.0% [GBP][*] 100/0%
========== ========== ========== ==========
Average Account Balance.... [*]
COMPOSITION BY CREDIT LIMIT
SECURITISED PORTFOLIO
Percentage of Percentage
Total Number Total Number of Total
Credit Limit Range of Accounts of Accounts Receivables Receivables
- --------------------------- ------------- ------------ ------------ ------------
Less than 5,000.01......... [*] [*]% [GBP][*] [*]%
5,000.01---10,000.00....... [*] [*]% [GBP][*] [*]%
10,000.01--- 15,000.00..... [*] [*]% [GBP][*] [*]%
15,000.01---20,000.00...... [*] [*]% [GBP][*] [*]%
20,000.01---25,000.00...... [*] [*]% [GBP][*] [*]%
25,000.01 or more.......... [*] [*]% [GBP][*] [*]%
---------- ---------- ---------- ----------
TOTAL...................... [*] 100.0% [GBP][*] 100.0%
========== ========== ========== ==========
Average Credit Limit....... [*]
COMPOSITION BY PAYMENT BEHAVIOUR
SECURITISED PORTFOLIO
Percentage of Percentage
Total Number Total Number of Total
Payment Behaviour of Accounts of Accounts Receivables Receivables
- --------------------------- ------------- ------------ ------------ ------------
Accounts with minimum
payment made............. [*] [*]% [GBP][*] [*]%
Accounts with full
payment made............. [*] [*]% [GBP][*] [*]%
Accounts with other
or no payments made...... [*] [*]% [GBP][*] [*]%
---------- ---------- ---------- ----------
TOTAL...................... [*] 100.0% [GBP][*] 100.0%
========== ========== ========== ==========
216
COMPOSITION BY PERIOD OF DELINQUENCY
SECURITISED PORTFOLIO
Percentage of Percentage
Period of Delinquency (Days Total Number Total Number of Total
Contractually Delinquent) of Accounts of Accounts Receivables Receivables
- --------------------------- ------------- ------------ ------------ ------------
Not Delinquent............. [*] [*]% [GBP][*] [*]%
Up to 29 Days.............. [*] [*]% [GBP][*] [*]%
30 to 59 Days.............. [*] [*]% [GBP][*] [*]%
60 to 89 Days.............. [*] [*]% [GBP][*] [*]%
90-179 Days................ [*] [*]% [GBP][*] [*]%
180 or More Days........... [*] [*]% [GBP][*] [*]%
---------- ---------- ---------- ----------
TOTAL...................... [*] 100.0% [GBP][*] 100.0%
========== ========== ========== ==========
COMPOSITION BY ACCOUNT AGE
SECURITISED PORTFOLIO
Percentage of Percentage
Total Number Total Number of Total
Account Age of Accounts of Accounts Receivables Receivables
- --------------------------- ------------- ------------ ------------ ------------
Not more than 1 year....... [*] [*]% [GBP][*] [*]%
Over 1 to 2 years.......... [*] [*]% [GBP][*] [*]%
Over 2 to 3 years.......... [*] [*]% [GBP][*] [*]%
Over 3 to 4 years.......... [*] [*]% [GBP][*] [*]%
Over 4 to 8 years.......... [*] [*]% [GBP][*] [*]%
Over 8 years............... [*] [*]% [GBP][*] [*]%
---------- ---------- ---------- ----------
TOTAL...................... [*] 100.0% [GBP][*] 100.0%
========== ========== ========== ==========
GEOGRAPHIC DISTRIBUTION OF ACCOUNTS
SECURITISED PORTFOLIO
Percentage of Percentage
Total Number Total Number of Total
Region of Accounts of Accounts Receivables Receivables
- --------------------------- ------------- ------------ ------------ ------------
East Anglia................ [*] [*]% [GBP][*] [*]%
East Midlands.............. [*] [*]% [GBP][*] [*]%
Greater London............. [*] [*]% [GBP][*] [*]%
Northern Ireland........... [*] [*]% [GBP][*] [*]%
North...................... [*] [*]% [GBP][*] [*]%
North West................. [*] [*]% [GBP][*] [*]%
Scotland................... [*] [*]% [GBP][*] [*]%
South East Excl London..... [*] [*]% [GBP][*] [*]%
South West................. [*] [*]% [GBP][*] [*]%
Wales...................... [*] [*]% [GBP][*] [*]%
West Midlands.............. [*] [*]% [GBP][*] [*]%
Yorks and Humber........... [*] [*]% [GBP][*] [*]%
Unknown.................... [*] [*]% [GBP][*] [*]%
---------- ---------- ---------- ----------
TOTAL...................... [*] 100.0% [GBP][*] 100.0%
========== ========== ========== ==========
217
PLAN OF DISTRIBUTION
Names of Dealers: [Give details]
Stabilising Dealer (if any): [Give name]
Additional Selling Restrictions: [Give details]
Class A Class B Class C
------------ ------------ ------------
CUSIP:................................... [*] [*] [*]
COMMON CODE:............................. [*] [*] [*]
For the purposes of the U.S. federal securities laws, dealers engaged in the
distribution of these series 200[*] -- [*] notes may be deemed to be
``underwriters''. Subject to the terms and conditions of the dealer agreement as
supplemented by the relevant subscription agreement for these Series 200[*] --
[*] notes, the issuing entity has agreed to sell to each of the dealers named
below, and each of those dealers has severally agreed to purchase, the principal
amount of these Series 200[*] -- [*] notes set forth opposite its name:
Aggregate
Dealers Class A Class B Class C Amount
- ---------------------------- ------------ ------------ ------------ ------------
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
------------
TOTAL $ ________
============
The several dealers have agreed, subject to the terms and conditions of the
dealer agreement and the applicable subscription agreement, to purchase all $[*]
aggregate principal amount of these series 200[*] -- [*] notes.
The dealers have advised the issuing entity that the several dealers propose
initially to offer these series 200[*] -- [*] notes to the public at the public
offering price set forth on the cover page of this set of final terms.
After the public offering, the public offering price and other selling terms
may be changed by the dealers.
In connection with the sale of these series 200[*] -- [*] notes, the dealers
may engage in:
* over-allotments, in which members of the syndicate selling these series
200[*] -- [*] notes sell more notes than the issuing entity actually
sold to the syndicate, creating a syndicate short position;
* stabilizing transactions, in which purchases and sales of these series
200[*] -- [*] notes may be made by the members of the selling syndicate
at prices that do not exceed a specified maximum; and
* syndicate covering transactions, in which members of the selling
syndicate purchase these series 200[*] -- [*] notes in the open market
after the distribution has been completed in order to cover syndicate
and short positions.
These stabilizing transactions and syndicate covering transactions may cause
the price of these series 200[*] -- [*] to be higher than it would otherwise be.
These transactions, if commenced, may be discontinued at any time.
The issuing entity has agreed to indemnify the dealers against certain
liabilities, including liabilities under applicable securities laws.
The gross proceeds of the issue of the notes will be $[*]. The sum of the
fees and commissions payable on the issue of the notes is estimated to be [*].
The fees and commissions payable on the issue of the notes will not be deducted
from the gross proceeds of the issue. The issuing entity will use its reasonable
endeavours to make a drawing of at least an amount equal to such fees and
commissions under the expenses loan agreement to pay such fees and commissions.
The proceeds of the issue of the notes after exchanging such amounts into
sterling pursuant to the relevant swap agreement will be applied by the issuing
entity, to purchase the series 200[*] -- [*] loan note issued
218
by the loan note issuer on the closing date. The proceeds of the issue of
the class A notes will be [*]. The proceeds of the class B notes will be [*] and
the proceeds of the class C notes will be [*].
RBS Greenwich Capital is an affiliate of the originators and may participate
in one or more offerings of the issuing entity's securities.
This set of final terms and the base prospectus may be used by RBS Greenwich
Capital and/or other affiliates of the originators in connection with offers and
sales related to market making transactions in these series 200[*]-[*] notes.
These affiliates may act as principal or agent in these market making
transactions. Market making sales will be made at prices related to the
prevailing market prices at the time of sale.
LISTING APPLICATION
This document comprises the final terms required to list the issue of notes
described herein pursuant to the Arran Funding Medium Term Note Programme of the
issuing entity.
RESPONSIBILITY
The issuing entity accepts responsibility for the information contained in
this set of final terms.
Signed on behalf of the issuing entity:
By:__________________________
duly authorised
219
GENERAL INFORMATION
The admission of the programme to listing on the Official List of the UKLA
and to trading on the regulated market of the London Stock Exchange took effect
on 18 November 2005. The listing of the notes on the regulated market of the
London Stock Exchange will be expressed as a percentage of their principal
amount (exclusive of accrued interest). Each class of this series of notes
intended to be admitted to listing on the Official List of the UKLA and admitted
to trading on the regulated market of the London Stock Exchange will be so
admitted to listing and trading upon submission to the UKLA and the regulated
market of the London Stock Exchange of this set of final terms and any other
information required by the UKLA and the regulated market of the London Stock
Exchange, subject in each case to the issue of the relevant notes. Prior to
official listing, dealings will be permitted by the regulated market of the
London Stock Exchange in accordance with its rules. Transactions will normally
be effected for delivery on the third working day in London after the day of the
transaction.
However, notes may be issued pursuant to the programme which will not be
admitted to listing, trading and/or quotation by the UKLA or the regulated
market of the London Stock Exchange or any other listing authority, stock
exchange and/or quotation system or which will be admitted to listing, trading
and/or quotation by such listing authority, stock exchange and/or quotation
system as the issuing entity and the relevant dealer(s) may agree.
The issuing entity confirms that the securitised assets backing the issue of
this series of notes have characteristics that demonstrate capacity to produce
funds to service any payments due and payable on this series of notes. However,
investors are advised that this confirmation is based on the information
available to the issuing entity at the date of the base prospectus and the
relevant final terms and may be affected by future performance of such
securitised assets. Consequently, investors are advised to review carefully the
disclosure in the base prospectus together with any amendments or supplements
thereto and other documents incorporated by reference in the base prospectus
and, in relation to any series, the relevant final terms.
An investment in the notes is only suitable for financially sophisticated
investors who are capable of evaluating the merits and risks of such investment
and who have sufficient resources to be able to bear any losses which may result
from such investment. If you are in any doubt about the contents of this set of
final terms, you should consult your stockbroker, bank manager, solicitor,
accountant or other financial adviser.
Save as disclosed in this set of final terms, there has been no significant
change and no significant new matter has arisen since publication of the base
prospectus.
There are no, nor have there been any legal or arbitration proceedings
against or affecting the issuing entity or any of its assets or revenues, nor is
the issuing entity aware of any pending or threatened proceedings of such kind,
which may have or have had during the months since the base prospectus was first
filed to the date of this set of final terms a significant effect on the
financial position of the issuing entity.
There are no, nor have there been any, legal or arbitration proceedings
against or affecting the loan note issuer or any of its assets or revenues, nor
is the loan note issuer aware of any pending or threatened proceedings of such
kind, which may have or have had during the months since the base prospectus was
first filed to the date of this set of final terms a significant effect on the
financial position of the loan note issuer.
There are no, nor have there been any, legal or arbitration proceedings
against or affecting the receivables trustee or any of its assets or revenues,
nor is the receivables trustee aware of any pending or threatened proceedings of
such kind, which may have or have had during the months since the base
prospectus was first filed to the date of this set of final terms a significant
effect on the financial position of the receivables trustee.
Save as disclosed in this set of final terms, there has been no significant
change in the financial or trading position of the issuing entity and, save as
disclosed in this set of final terms, there has been no material adverse change
in the financial position or prospects of the issuing entity.
Save as disclosed in this set of final terms, there has been no significant
change in the financial or trading position of the loan note issuer and, since
such date, save as disclosed in this set of final terms, there has been no
material adverse change in the financial position or prospects of the loan note
issuer.
220
Save as disclosed in this set of final terms, there has been no significant
change in the financial or trading position of the receivables trustee and,
since such date, save as disclosed in this set of final terms, there has been no
material adverse change in the financial position or prospects of the
receivables trustee.
A copy of this set of final terms has been provided to the Registrar of
Companies for England and Wales.
A copy of this set of final terms will be delivered to the Registrar of
Companies within 14 days of the date hereof in accordance with the provisions of
the consent issued pursuant to Article 5 of the Companies (General Provisions)
(Jersey) Order 2002 in connection with the circulation by the issuing entity of
the final terms.
The Jersey Financial Services Commission has given, and has not withdrawn,
its consent under Article 4 of the Control of Borrowing (Jersey) Order 1958 to
the issue of the notes.
It must be distinctly understood that, in giving these consents, neither the
Registrar of Companies nor the Jersey Financial Services Commission takes any
responsibility for the financial soundness of the issuing entity or for the
correctness of any statements made, or opinions expressed, with regard to it.
It should be remembered that the price of securities and the income from
them can go down as well as up.
DOCUMENTS AVAILABLE FOR INSPECTION
For so long as the base prospectus is in effect, copies and, where
appropriate, English translations of the following documents may be inspected
during normal business hours at the specified office of the paying agent and
from the registered office of the issuing entity, namely:
(a) the memorandum and articles of association of the issuing entity;
(b) the memorandum and articles of association of the loan note issuer;
(c) the memorandum and articles of association of the receivables trustee;
(d) the current listing particulars in relation to the programme, together with
any amendments;
(e) the agency agreement;
(f) the dealer agreement and the relevant subscription agreement;
(g) any set of final terms relating to notes which are admitted to listing,
trading and/or quotation by any listing authority, stock exchange and/or
quotation system. (In the case of any notes which are not admitted to
listing, trading and/or quotation by any listing authority, stock exchange
and/or quotation system, copies of the relevant final terms will only be
available for inspection by the relevant noteholders);
(h) the master framework agreement including amendments thereto;
(i) the receivables securitisation agreement;
(j) the receivables trust deed and trust cash management agreement and trust
supplement;
(k) the trust section 75 indemnity;
(l) the beneficiaries deed;
(m) the beneficiaries servicing agreement and supplemental beneficiaries
servicing agreement;
(n) the expenses loan agreement;
(o) the security trust deed and loan note supplement;
(p) the Arran Funding Limited trust deed;
(q) the relevant series trust deed supplement;
(r) the Arran Funding Limited master framework agreement;
(s) the corporate services agreement;
(t) the swap agreement (if any); and
(u) the various account bank agreements.
221
ISSUING ENTITY
ARRAN FUNDING LIMITED
22 Grenville Street
St Helier
Jersey JE4 8PX
Channel Islands
ORIGINATOR, SERVICER AND CASH ORIGINATOR
MANAGER
THE ROYAL BANK OF SCOTLAND PLC NATIONAL WESTMINSTER BANK PLC
36 St. Andrew Square 135 Bishopsgate
Edinburgh EH2 2YB London EC2M 3UR
Scotland
LOAN NOTE ISSUER RECEIVABLES TRUSTEE
RBS CARDS SECURITISATION FUNDING LIMITED SOUTH GYLE RECEIVABLES TRUSTEE LIMITED
71 Bath Street 22 Grenville Street
St. Helier St. Helier
Jersey JE4 8PJ Jersey JE4 8PX
Channel Islands Channel Islands
NOTE TRUSTEE AND PRINCIPAL PAYING AGENT AND REGISTRAR
SECURITY TRUSTEE
BANK OF NEW YORK BANK OF NEW YORK
One Canada Square 101 Barclay Street, Floor 21 West
London E14 5AL New York, New York 10286
United Kingdom United States
LEGAL ADVISERS
To the issuing entity, loan note To the arranger and dealers, To the arranger and dealers as to
issuer and receivables trustee security trustee and the note US Law
as to matters of Jersey law trustee as to English law CLIFFORD CHANCE US
MOURANT DU FEU & JEUNE CLIFFORD CHANCE LLP
22 Grenville Street LIMITED LIABILITY PARTNERSHIP 31 West 52nd Street
St. Helier 10 Upper Bank Street New York, New York 10019
Jersey JE4 8PX London E14 5JJ United States
Channel Islands United Kingdom
To the issuing entity and To the issuing entity and To the issuing entity and
originators as to originators as to originators as to
English law US law Scots law
LINKLATERS LINKLATERS DUNDAS & WILSON CS LLP
One Silk Street One Silk Street Saltire Court
London EC2Y 8HQ London EC2Y 8HQ 20 Castle Terrace
United Kingdom United Kingdom Edinburgh EH1 2EN
AUDITORS
To the receivables trustee, the
loan note issuer and the issuing entity
DELOITTE & TOUCHE LLP
Saltire Court
20 Castle Street
Edinburgh EH1 2DB
INDEX OF TERMS IN THE BASE PROSPECTUS
$.............................................................................35
[GPB].........................................................................35
1961 Law.....................................................................171
2000 loan notes...............................................................11
2000 transfers................................................................10
2005 loan notes...............................................................11
30/360.......................................................................135
account bank agreement.......................................................134
account bank agreements......................................................134
acquired interchange..........................................................60
acquisition...................................................................60
actual/360....................................................................65
actual/365...................................................................135
actual/365 (fixed)...........................................................135
actual/365 or actual/actual (ISDA)...........................................135
actual/actual (ICMA).........................................................135
addition date................................................................135
additional accounts...........................................................56
additional business centre(s)................................................134
additional financial centre(s)...............................................134
additional interest..........................................................149
additional interest margin...................................................134
additional selection date.....................................................56
adjusted investor interest....................................................85
administration agreement......................................................40
administrator.................................................................40
agency agreement.............................................................133
agent bank...................................................................133
aggregate adjusted investor interest..........................................68
aggregate investor indemnity amount..........................................106
aggregate investor interest...............................................15, 67
aggregate originator interest.................................................68
amortisation period..........................................................134
applicable final terms....................................................8, 210
applicable LIBOR rate.........................................................89
APR...........................................................................23
available investor principal collections......................................98
available redemption funds...................................................152
available spread.............................................................105
available spread account amount..............................................109
average principal receivables................................................113
bank portfolio................................................................26
basic terms modification.....................................................134
beneficiaries deed............................................................64
beneficiaries servicing agreement.............................................75
book-entry note...............................................................17
business day.................................................................134
business day convention......................................................134
calculation agent............................................................134
calculation period.......................................................89, 135
cancelled account.............................................................58
card operating accounts.......................................................69
card proceeds account.........................................................70
Cards Business................................................................10
cash available for acquisition................................................71
charged basis.................................................................54
charged-off receivables.......................................................20
class A additional finance amount.............................................89
class A adjusted investor interest............................................86
class A available funds.......................................................89
class A available spread......................................................91
class A cash management fee...................................................89
class A covered amount.......................................................107
class A debt amount...........................................................90
class A deficiency amount.....................................................90
223
class A fixed percentage......................................................98
class A floating percentage...................................................86
class A initial investor interest.............................................87
class A investor charge-off..............................................86, 103
class A investor default amount..............................................103
class A investor interest.....................................................86
class A LN rate...............................................................90
class A montly distribution amount............................................90
class A monthly finance amount................................................90
class A monthly principal amount..............................................99
class A monthly required expense amount.......................................90
class A noteholder............................................................19
class A notes................................................................134
class A required amount......................................................104
class A servicing fee.........................................................90
class A trustee payment amount...............................................110
class B additional finance amount.............................................92
class B adjusted investor interest............................................86
class B available funds.......................................................92
class B available spread......................................................93
class B cash management fee...................................................92
class B debt amount...........................................................92
class B deficiency amount.....................................................92
class B fixed percentage......................................................98
class B floating percentage...................................................86
class B initial investor interest.............................................87
class B investor charge-off..............................................86, 104
class B investor default amount..............................................103
class B investor interest.....................................................86
class B LN rate...............................................................92
class B monthly distribution amount...........................................92
class B monthly finance amount................................................92
class B monthly principal amount..............................................99
class B monthly required expense amount.......................................92
class B noteholder............................................................20
class B notes................................................................134
class B principal commencement date...........................................99
class B required amount......................................................104
class B servicing fee.........................................................92
class B trustee payment amount...............................................110
class C additional finance amount.............................................93
class C adjusted investor interest............................................86
class C available funds.......................................................93
class C available spread......................................................94
class C cash management fee...................................................93
class C debt amount...........................................................94
class C deficiency amount.....................................................94
class C fixed percentage......................................................98
class C floating percentage...................................................86
class C initial investor interest.............................................87
class C investor charge-off..............................................87, 104
class C investor default amount..............................................103
class C investor interest.....................................................87
class C LN rate...............................................................94
class C monthly distribution amount..........................................105
class C monthly finance amount................................................94
class C monthly principal amount.............................................100
class C monthly required expense amount.......................................94
class C noteholder............................................................20
class C notes................................................................134
class C principal commencement date...........................................99
class C release date.........................................................109
class C servicing fee.........................................................94
class C trustee payment amount...............................................110
Clearstream...................................................................16
closing date.................................................................134
collecting agent.............................................................169
companion series.............................................................113
224
conditions...................................................................133
Consumer Credit Act...........................................................22
Consumer Credit Act 2006......................................................22
controlled accumulation period...........................................95, 134
controlled accumulation period commencement date.............................134
controlled accumulation period length........................................102
controlled deposit amount.....................................................96
corporate services agreement..................................................37
counterparty amortisation amount.............................................163
counterparty fault swap termination amount...................................135
credit support annex.........................................................165
cut-off date..................................................................57
daily investor principal collections.........................................100
day...........................................................................85
day count fraction......................................................135, 146
dealer.......................................................................182
dealer agreement.............................................................135
dealers......................................................................182
default amount...........................................................58, 103
defaulted account.............................................................58
defaulted receivable..........................................................63
deferred interest............................................................149
deferred subscription price amount...........................................118
depositor servicing fee.......................................................76
designated account............................................................21
determination date.................................................143, 145, 147
discount option...............................................................30
discount option receivables...................................................59
discount percentage...........................................................59
dispute......................................................................161
Disqualified Persons.........................................................178
distribution date....................................................17, 19, 135
distribution ledger..........................................................135
dollars.......................................................................35
DTC...........................................................................16
DTI...........................................................................23
eligible account..............................................................62
eligible receivable...........................................................62
eligible receivables pool.....................................................67
eligible servicer.............................................................80
eligible trust cash manager...................................................83
enforcement notice...........................................................156
enhancement provider..........................................................65
equity interest..............................................................178
Euroclear.....................................................................16
equity treatment.............................................................179
event of default.............................................................154
excess interest...............................................................67
excess spread................................................................106
Exchange Act.................................................................130
exempt company................................................................33
expenses loan agreement.......................................................38
expense loan facility.........................................................38
expense rate.................................................................112
Experian......................................................................50
extraordinary resolution.....................................................135
face value....................................................................61
final redemption date........................................................135
final terms..................................................................133
finance charge collections ledger.............................................71
finance charge receivables....................................................57
finance period................................................................90
first currency...............................................................159
first interest payment date..................................................136
first person.................................................................138
Fitch Ratings.................................................................18
fixed investor percentage.................................................84, 97
225
floating investor percentage..............................................84, 88
floating rate commencement date..............................................136
following business day convention............................................134
foreign personal holding company.............................................177
FSMA...........................................................................1
further interest.............................................................118
GD............................................................................52
GD contract...................................................................52
GBM...........................................................................10
group.........................................................................45
highest rating category......................................................109
holder.......................................................................139
indebtedness.................................................................136
ineligible receivable.........................................................63
initial investor interest.....................................................87
initial period...............................................................146
initial rate.................................................................136
insolvency events.............................................................72
interchange...................................................................60
interest.....................................................................170
interest amount.....................................136, 144, 145, 146, 148, 149
interest commencement date...................................................136
interest determination date..................................................136
interest payment date....................................136, 143, 144, 146, 148
interest period......................................18, 143, 144, 146, 147, 148
investment grade.............................................................184
investment proceeds..........................................................109
investor beneficiary.....................................................10, 136
investor certificate..........................................................65
investor default amount......................................................103
investor indemnity amount....................................................106
investor interest.............................................................87
investor percentage...........................................................84
investor principal collections...............................................100
investor servicing fee........................................................76
investor trust cash management fee............................................81
investor trustee payment.....................................................110
IRS......................................................................33, 174
ISDA definitions.............................................................136
ISIN.........................................................................190
issue date...................................................................136
issuing entity...........................................................10, 133
issuer amortisation amount...................................................163
issuer costs amount...........................................................90
issuer distribution account..................................................136
issuer fault swap termination amount.........................................136
issuer profit amount.........................................................106
Jersey bank account operating agreement......................................128
Jersey tax counsel...........................................................171
loan note....................................................................136
loan note enforcement notice.................................................120
loan note issuer..............................................................10
loan note issuer costs amount.................................................90
loan note issuer distribution account.........................................85
loan note issuer return......................................................106
loan notes....................................................................10
London Stock Exchange..........................................................1
margin.......................................................................136
maximum addition amount.......................................................57
minimum aggregate principal receivables......................................113
minimum originator interest..................................................113
MMF...........................................................................27
modified business day convention.............................................134
modified following business day convention...................................134
monthly expenses loan amount.................................................106
Moody's.......................................................................18
most senior class............................................................140
NatWest...................................................................10, 45
226
NatWest deed of accession.....................................................10
NatWest securitisation operating account......................................69
NatWest originator interest...................................................67
no adjustment................................................................134
non-conforming receivable.....................................................61
non-US holder................................................................174
note trustee.................................................................133
noteholder...................................................................139
noteholders..................................................................133
notes........................................................................133
notice of assignment..........................................................63
notices......................................................................136
OFT...........................................................................24
OID..........................................................................175
operating business day........................................................29
originator beneficiaries......................................................10
originator beneficiary........................................................10
originator certificate........................................................65
originator interest...........................................................67
originator percentage.........................................................68
originator section 75 liability.........................................106, 166
originator servicing fee......................................................76
originator trust cash management fee..........................................81
originators...................................................................10
participating member state...................................................136
Parties in Interest..........................................................178
pay out event.................................................................72
paying agent.................................................................169
paying agents................................................................133
payment business day.........................................................136
payment date..................................................................91
permitted additional jurisdiction.............................................63
permitted investments.........................................................69
person.......................................................................136
PFIC.........................................................................176
Plan Asset Regulation........................................................177
Plans........................................................................177
pool selection date..........................................................177
portfolio yield..............................................................112
pounds.......................................................................135
preceding business day convention............................................134
principal amount outstanding.................................................137
principal collections ledger..................................................70
principal financial centre...................................................137
principal funding investment proceeds........................................107
principal paying agent.......................................................107
principal payment............................................................152
principal receivables........................................................113
principal shortfalls.........................................................103
proceedings..................................................................161
programme....................................................................133
prospectus directive...........................................................7
PTCE.........................................................................178
QEF...........................................................................33
qualified institution........................................................111
quarterly excess spread percentage...........................................109
quoted Eurobonds.............................................................169
rapid amortisation period................................................97, 137
rapid amortisation trigger events............................................112
rate of interest...................................................137, 143, 145
rating agencies...............................................................18
RBS.......................................................................10, 45
RBS originator interest.......................................................67
RBS securitisation operating account..........................................69
RBSA..........................................................................10
RBSG..........................................................................45
RBSI..........................................................................41
reallocated class B principal collections....................................104
227
reallocated class C principal collections....................................104
receivables...................................................................10
receivables securitisation agreement..........................................56
receivables trust........................................................10, 137
receivables trust deed and trust cash management agreement....................14
receivables trustee...........................................................10
recognised stock exchange.....................................................33
record date..................................................................154
redemption period.......................................................147, 163
redemption period end date...................................................163
redemption rate..............................................................147
redemption trigger...........................................................163
redenomination date..........................................................160
redesignated account..........................................................58
reference banks..............................................................137
register.....................................................................139
registered notes.............................................................139
registrar....................................................................133
regular date............................................................137, 146
regular interest payment dates...............................................137
regular period..........................................................137, 146
regulated amortisation period............................................96, 137
regulated amortisation trigger events........................................112
regulated market of the London Stock Exchange.............................1, 150
reinvested investor principal collections....................................100
related beneficiary debt......................................................65
related documents............................................................142
related loan note.......................................................137, 212
relevant date................................................................138
relevant documents............................................................43
relevant final terms...........................................................8
relevant indebtedness........................................................138
relevant screen..............................................................159
relevant screen page.........................................................138
removal date..................................................................58
required reserve amount......................................................108
required spread account amount...............................................109
reserve account funding date.................................................108
restricted additional jurisdiction............................................63
retained principal collections................................................95
revolving period.........................................................95, 138
scheduled redemption date....................................................138
screen rate........................................................144, 145, 147
second currency..............................................................159
second person................................................................138
securitised portfolio.........................................................23
security.....................................................................140
security interest............................................................138
security trust deed...........................................................13
security trustee..............................................................13
series..................................................................133, 138
series collection account....................................................110
series expense loan drawing...................................................38
series investor interest........................................15, 67, 138, 213
series pay-out event.....................................................72, 111
series pay-out events........................................................111
series principal funding ledger..............................................107
series reserve ledger........................................................108
series reserve ledger surplus...........................................108, 109
series scheduled redemption date..............................................96
series spread ledger.........................................................109
series termination date.......................................................97
series trust deed supplement..................................................16
servicer......................................................................10
servicer default..............................................................79
servicing fee.................................................................76
shared principal collections.................................................102
SO............................................................................27
228
special Jersey tax counsel....................................................33
special US tax counsel........................................................33
specified currency...........................................................138
specified denomination(s)....................................................138
specified office.............................................................138
spread account...............................................................109
spread account percentage...............................................109, 213
spread account surplus.......................................................110
Standard & Poor's.............................................................18
sterling......................................................................35
sub-class...............................................................133, 140
subsidiary...................................................................138
substituted issuer...........................................................159
successor servicer............................................................79
successor trust cash manager..................................................81
surplus investment income....................................................107
swap agreement................................................................15
swap counterparty.............................................................15
swap counterparty swap event of default.................................138, 163
TARGET settlement day........................................................138
teaser rates..................................................................26
transfer......................................................................10
transfer agent...............................................................133
transferred...................................................................10
transfers.....................................................................10
treaty.......................................................................138
trust accounts................................................................69
trust cash management fee.....................................................81
trust cash manager............................................................10
trust cash manager default....................................................81
trust deed...................................................................133
trust deed supplement...................................................121, 133
trust pay out events..........................................................72
trustee acquisition account...................................................69
trustee collection account....................................................69
trustee payment amount........................................................74
TSYS..........................................................................51
TSYS contract.................................................................51
UKLA......................................................................1, 154
unavailable principal collection.............................................102
underwriters............................................................182, 223
US dollars....................................................................35
US holder....................................................................174
US Trust Indenture Act.......................................................115
US$...........................................................................35
UTCCRs........................................................................24
utilised principal collections................................................95
we............................................................................10
withholding taxes.............................................................31
zero balance account..........................................................58
229
ISSUING ENTITY
ARRAN FUNDING LIMITED
22 Grenville Street
St. Helier, Jersey JE4 8PX
DEPOSITOR DEPOSITOR, SERVICER AND TRUST RECEIVABLES TRUSTEE
CASH MANAGER SOUTH GYLE RECEIVABLES
NATIONAL WESTMINSTER BANK PLC THE ROYAL BANK OF SCOTLAND PLC TRUSTEE LIMITED
135 Bishopsgate 36 St Andrew Square 22 Grenville Street
London EC2M 3UR Edinburgh EH2 2YB St. Helier, Jersey JE4 8PX
NOTE TRUSTEE AND SECURITY TRUSTEE PRINCIPAL PAYING AGENT
THE BANK OF NEW YORK THE BANK OF NEW YORK
One Canada Square 101 Barclay Street
London E14 5AL Floor 21 West
New York
New York 10286
LEGAL ADVISERS
To the Arranger and Dealers, To the Arranger and Dealers To the Arranger and Dealers
Security Trustee and Note Trustee as to US law as to Scots law
as to English law CLIFFORD CHANCE US LLP DUNDAS & WILSON CS LLP
CLIFFORD CHANCE LLP 31 West 52nd Street Saltire Court
10 Upper Bank Street New York Castle Terrace
London E14 5JJ New York 10019 Edinburgh EH1 2EN
To the Issuing Entity To the Issuing Entity To the Issuing Entity, Loan
and Originators as and Originators as Note Issuer and Receivables
to English law to US law Trustee as to
LINKLATERS LINKLATERS Jersey law
One Silk Street One Silk Street MOURANT DU FEU & JEUNE
London EC2Y 8HQ London EC2Y 8HQ 22 Grenville Street
St. Helier, Jersey JE4 8PX
AUDITORS LISTING AGENT
To the Issuer, Loan Note Issuer THE ROYAL BANK OF SCOTLAND PLC
and Receivables Trustee 135 Bishopsgate
DELOITTE & TOUCHE LLP London EC2M 3UR
Saltire Court, 20 Castle Street
Edinburgh EH1 2DB
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is an itemized list of the estimated expenses (expressed
in U.S. dollars on an exchange rate of (pound)[ ] to U.S.$l.00) to be
incurred in connection with the issuance and distribution of the securities
registered under this registration statement, other than underwriting discounts
and commissions.
Registration Fee ...................................................... $882,632
*Printing and Engraving Expenses ...................................... $[ ]
*Trustee's Fees and Expenses .......................................... $[ ]
*Legal Fees and Expenses .............................................. $[ ]
*Accountants' Fees and Expenses ....................................... $[ ]
*Rating Agency Fees ................................................... $[ ]
*Listing Fees ......................................................... $[ ]
*Miscellaneous Fees and Expenses ...................................... $[ ]
Total ............................................................ $[ ]
*To be provided by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The issuer's Articles of Association provide that insofar as the
Companies (Jersey) Law 1991 allows, every present or former officer of the
issuer shall be indemnified out of the assets of the issuer against any loss or
liability incurred by him by reason of being or having been such an officer.
Article 77 of the Companies (Jersey) Law 1991 permits Jersey companies to
indemnify each director and officer for, inter alia, (a) any liabilities
incurred in defending any proceedings (whether civil or criminal) (i) in which
judgment is given in his favor or he is acquitted, (ii) which are discontinued
except in circumstances where the proceedings are discontinued for some benefit
conferred by him (or on his behalf) or for some detriment suffered by him, or
(iii) which are settled on terms which include such benefit or detriment and, in
the opinion of a majority of the directors of the company (excluding any
director who conferred such benefit or on whose behalf such benefit was
conferred or who suffered such detriment), the director or officer was
substantially successful on the merits in his resistance to the proceedings, and
(b) any liability incurred otherwise than to the company if he acted in good
faith with a view to the best interests of the company.
The loan note issuer's Articles of Association provide that insofar as
the Companies (Jersey) Law 1991 allows, every present or former officer of the
loan note issuer shall be indemnified out of the assets of the loan note issuer
against any loss or liability incurred by him by reason of being or having been
such an officer. Article 77 of the Companies (Jersey) Law 1991 permits Jersey
companies to indemnify each director and officer for, inter alia, (a) any
liabilities incurred in defending any proceedings (whether civil or criminal)
(i) in which judgment is given in his favor or he is acquitted, (ii) which are
discontinued except in circumstances where the proceedings are discontinued for
some benefit conferred by him (or on his behalf) or for some detriment suffered
by him, or (iii) which are settled on terms which include such benefit or
detriment and, in the opinion of a majority of the directors of the company
(excluding any director who conferred such benefit or on whose behalf such
benefit was conferred or who suffered such detriment), the director or officer
was substantially successful on the merits in his resistance to the
II-3
proceedings, and (b) any liability incurred otherwise than to the company if he
acted in good faith with a view to the best interests of the company.
The receivables trustee's Articles of Association provide that insofar as
the Companies (Jersey) Law 1991 allows, every present or former officer of the
receivables trustee shall be indemnified out of the assets of the receivables
trustee against any loss or liability incurred by him by reason of being or
having been such an officer. Article 77 of the Companies (Jersey) Law 1991
permits Jersey companies to indemnify each director and officer for, inter alia,
(a) any liabilities incurred in defending any proceedings (whether civil or
criminal) (i) in which judgment is given in his favor or he is acquitted, (ii)
which are discontinued except in circumstances where the proceedings are
discontinued for some benefit conferred by him (or on his behalf) or for some
detriment suffered by him, or (iii) which are settled on terms which include
such benefit or detriment and, in the opinion of a majority of the directors of
the company (excluding any director who conferred such benefit or on whose
behalf such benefit was conferred or who suffered such detriment), the director
or officer was substantially successful on the merits in his resistance to the
proceedings, and (b) any liability incurred otherwise than to the company if he
acted in good faith with a view to the best interests of the company.
DIRECTORS AND OFFICERS' LIABILITY INSURANCE
Directors serving at the behest of RBS are covered under an insurance
policy to the extent of claims made against them for any of the following:
actual or alleged breach of duty, error, neglect, mis-statement, misleading
statement, omission, breach of trust, breach of warranty or authority or other
act wrongfully committed or attempted by any director in that capacity. This
cover operates only in excess of any payment from any other valid insurance
policy covering such loss (unless such other insurance is written only as
specific excess insurance over the limits of liability provided in this cover),
subject to an aggregate cap of [GBP]400 million for the policy as a whole
covering all directors.
DIRECTORS AND OFFICERS' INDEMNITY AGREEMENTS
The directors of the issuer, the loan note issuer and the receivables
trustee who are affiliated with the Mourant group each have the benefit of an
indemnity from RBS. Under each indemnity, each director is covered to the extent
of claims made against him or her arising from acts or omissions taken or
committed by such director in that capacity in good faith and which such
director considers to be in the best interests of the company of which he or she
is acting as director, or necessary to satisfy any applicable legal or
regulatory requirements. However, such acts or omissions may not involve on the
part of such director any of the following: fraud, dishonesty, wilful default,
any profit advantage to which he or she is not legally entitled, libel or
slander, bodily injury or death of any person, damage or destruction of tangible
property, invasion of privacy, mental anguish or emotional distress of any
person, any personal guarantee (other than a warranty of authority) by such
director, or any transaction or arrangement in which such director has an
interest.
ITEM 16. EXHIBITS.
1.1 Form of Dealer Agreement.**
3.1 Memorandum and Articles of Association of Arran Funding Limited.*
3.2 Certificate of Incorporation of Arran Funding Limited.*
3.3 Consent to Issue Shares of Arran Funding Limited, Granted by the Jersey
Financial Commission Pursuant to the Control of Borrowing (Jersey) Order,
1958, as amended.*
3.4 Memorandum and Articles of Association of RBS Cards Securitisation
Funding Limited.*
3.5 Certificate of Incorporation of RBS Cards Securitisation Funding
Limited.*
II-4
3.6 Consent to Issue Shares of RBS Cards Securitisation Funding Limited,
Granted by the Jersey Financial Commission Pursuant to the Control of
Borrowing (Jersey) Order, 1958, as amended.*
3.7 Memorandum and Articles of Association of South Gyle Receivables Trustee
Limited.*
3.8 Certificate of Incorporation of South Gyle Receivables Trustee Limited.*
3.9 Consent to Issue Shares of South Gyle Receivables Trustee Limited,
Granted by the Jersey Financial Commission Pursuant to the Control of
Borrowing (Jersey) Order, 1958, as amended.*
4.1 Receivables Trust Deed and Trust Cash Management Agreement.*
4.2 Security Trust Deed.*
4.3 Arran Funding Note Trust Deed.*
4.4 Agency Agreement relating to Arran Funding Medium Term Note Programme.*
4.5 Arran Funding Master Framework Agreement.*
4.6 Form of Global Note (included as Schedule 1 to the Arran Funding Note
Trust Deed filed as Exhibit 4.3 to this Registration Statement).*
4.7 Form of Series Loan Note (included as Schedule 1 to the Security Trust
Deed filed as Exhibit 4.2 to this Registration Statement).*
4.8 Beneficiaries Deed.*
4.9 Beneficiaries Servicing Agreement.*
4.10 Supplemental Beneficiaries Servicing Agreement.
4.11 Corporate Services Agreement.
5.1 Opinion of Clifford Chance Limited Liability Partnership with respect to
legality.*
8.1 Opinion of Clifford Chance US LLP with respect to US tax matters.*
8.2 Opinion of Clifford Chance Limited Liability Partnership with respect
to UK tax matters.*
8.3 Opinion of Mourant du Feu & Jeune with respect to Jersey tax matters.*
10.1 Receivables Securitisation Deed.*
10.2 Expenses Loan Agreement.*
10.3 Master Framework Agreement.*
10.4 Trust Section 75 Indemnity Agreement.*
10.5 Issuer Distribution Account Bank Agreement.*
10.6 Jersey Bank Account Operating Agreement.*
10.7 Loan Note Issuer Distribution Account Bank Agreement.*
23.1 Consent of Clifford Chance Limited Liability Partnership (included in
Exhibits 5.1 and 8.2).*
23.2 Consent of Clifford Chance US LLP (included in Exhibit 8.1).*
II-5
23.3 Consent of Independent Auditors.*
23.4 Consent of Mourant du Feu & Jeune (included in Exhibit 8.3).*
23.5 Consent of Linklaters.*
24.1 Powers of Attorney.*
25.1 Statement of Eligibility of Note Trustee (form T-1).*
25.2 Statement of Eligibility of Security Trustee (form T-1).*
*Previously filed.
**To be filed by an amendment.
ITEM 17. UNDERTAKINGS.
Each of the undersigned registrants hereby undertakes:
(a) (1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the efffective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information
set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low
or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the ''Calculation of
Registration Fee'' table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, That:
(A) Paragraphs (a)(1)(i) and (a)(1)(ii) of this section do not apply if
the registration statement is on Form S-8, and the information required to be
included in a post-effective amendment by those paragraphs is contained in
reports filed with or furnished to the commission by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C.
78m or 78o(d)) that are incorporated by reference in the registration statement;
and
(B) Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do
not apply if the registration statement is on Form S-3 or Form F-3 and the
information required to be included in a post-effective amendment by those
paragraphs is contained in reports filed with or furnished to the Commission by
the registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement, or is contained in a form of prospectus filed pursuant to rule 424(b)
that is part of the registration statement.
(C) Provided further, however, that paragraphs (a)(1)(i) and (a)(1)(ii)
do not apply if the registration statement is for an offering of asset-backed
securities on Form S-1 or Form S-3, and the information required to be included
in a post-effective amendment is provided pursuant to Item 1100(c) of Regulation
AB.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) If the registrant is a foreign private issuer, to file a
post-effective amendment to the registration statement to include any financial
statements required by Item 8.A. of Form 20-F at the start of any delayed
offering or throughout a continuous offering. Financial statements and
information otherwise required by Section 10(a)(3) of the Act need not be
furnished, provided, that the registrant includes in the prospectus, by means of
a post-effective amendment, financial statements required pursuant to this
paragraph (a)(4) and other informtion necessary to ensure that all other
information in the prospectus is at least as current as the date of those
financial statements. Notwithstanding the foregoing, with respect to
registration statements on Form F-3, a post-effective amendment need not be
filed to include fnancial statements and information required by Section
10(a)(3) of the Act or Rule 3-19 of this chapter if such financial statements
and information are contained in periodic reports filed with or furnished to the
Commission by the the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the Form
F-3.
(5) That, for the purpose of determining liability under the Securities
Act of 1933 to any purchaser;
(i) If the registrant is relying on Rule 430B:
(A) Each prospectus filed by the regisrrant pursuant to rule
424(b)(3) shall be deemed to be part of the registration statement as
of the date the filed prospectus was deemed part of and included in
the registration statement; and
(B) Each prospectus required to be filed pursuant to Rule
424(b)(2), (b)(5), or (b)(7) as part of a registration statement in
reliance on Rule 430B relating to an offering made pursuant to Rule
415(a)(1)(i), (vii), or (x) for the purpose of providing the
information required by section 10(a) of the Securities Act of 1933
shall be deemed to be part of and included in the registration
statement as of the earlier of the date such form of prospectus is
first used after effectiveness or the date of the first contract of
sale of securities in the offering described in the prospectus. As
provided in Rule 430B, for liability purposes of the issuer and any
person that is at that date an underwriter, such date shall be deemed
to be a new effective date of the registration statement relating to
the securities in the registration statement to which that prospectus
relates, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof. Provided,
however, that no statement made in a registration statement or
prospectus that is part of the registration statement or made in a
document incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the registration
statement will, as to a purchaser with a time of contract of sale
prior to such effective date, supersede or modify any statement that
was made in the registration statement or prospectus that was part of
the registration statement or made in any such document immediately
prior to such effective date; or
(ii) If the registrant is subject to Rule 430C, each prospectus filed
pursuant to rule 424(b) as part of a registration statement relating to
an offering, other than registration statements relying on Rule 430B or
other than prospectuses filed in reliance on Rule 430A, shall be deemed
to be part of and included in the registration statement as of the date
it is first used after effectiveness. Provided, however, that no
statement made in a registration statement or prospectus that is part of
the registration statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a
time of contract of sale prior to such first use, supersede or modify any
statement that was made in the registration statement or prospectus that
was part of the registration statement or made in any such document
immediately prior to such date of first use.
(6) That, for the purpose of determining liability of the registrant
under the Securities Act of 1933 to any purchaser in the initial distribution of
the securities:
The undersigned registrant undertakes that in a primary offering of
securities of the undersigned registrant pursuant to this registration statement
regardless of the underwriting method used to sell the securities to the
purchaser, if the securities are offered or sold to such purchaser by means of
any of the following communications, the undersigned registrant will be a seller
to the purchaser and will be considered to offer or sell such securities to such
purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned
registrant relating to the offering required to be filed pursuant to Rule 424
({section}230.424 of this chapter);
(ii) Any free writing prospectus relating to the offering prepared by or
on behalf of the undersigned registrant or used or referred to by the
undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the
offering containing material information about the undersigned registrant or its
securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the
undersigned registrant to the purchaser.
II-6
(b) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of such registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrants pursuant to the foregoing provisions, or otherwise,
the registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by a registrant
of expenses incurred or paid by a director, officer or controlling person of
such registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the registrants will, unless in the opinion of
their counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
them is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
(d) (1) That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrants pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part
of this registration statement as of the time it was declared effective.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(e) To file an application for the purpose of determining the eligibility
of the trustee to act under subsection (a) of Section 310 of the Trust Indenture
Act in accordance with the rules and regulations prescribed by the Commission
under Section 305(b)(2) of the Act.
(f) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the annual report pursuant to section 13(a) or
section 15(d) of the Securities Exchange Act of 1934 of a third party that is
incorporated by reference in the registration statement in accordance with Item
1100(c)(1) of Regulatuion AB (17 CFR 229.1100(c)(1)) shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(g) That, except as otherwise provided by Item 1105 of Regulation AB (17
CFR 229.1105), information provided in response to that Item pursuant to Rule
312 of Regulation S-T (17 CFR 232.312) through the specified Internet address in
the prospectus is deemed to be a part of the prospectus included in the
registration statement. In addition, the undersigned registrant hereby
undertakes to provide to any person without charge, upon request, a copy of the
information provided in response to Item 1105 of Regulation AB pursuant to Rule
312 of Regulation S-T through the specified address as of the date of the
prospectus included in the registration statement if a subsequent update or
change is made to the information.
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3, reasonably believes that the
security rating requirement contained in Transaction Requirement B.5(a)(i) of
Form S-3 will be met at the time of sale of the securities registered hereunder,
and has duly caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in Greenwich, CT, on [ ],
2006.
ARRAN FUNDING LIMITED
(as issuer of the notes
and co-registrant)
By: /s/ Helen Grant*
-------------------
Name: Helen Grant
Title: Director
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE CAPACITY DATE
- ------------------------------------- ------------------------------------- -------------------------------------
/s/ Helen Grant* Director, Principal Executive May 11, 2006
-------------------- Officer, Principal Financial Officer
Helen Grant and Principal Accounting Officer
/s/ Gareth Essex-Cater* Director May 11, 2006
--------------------
Gareth Essex-Cater
/s/ Louise Kerhoat* Director May 11, 2006
--------------------
Louise Kerhoat
/s/ Lynn Ann Cleary* Director May 11, 2006
--------------------
Lynn Ann Cleary
/s/ Daniel McGarvey Authorized Representative in the May 11, 2006
-------------------- United States
Daniel McGarvey
*By:/s/ Daniel McGarvey
--------------------
Daniel McGarvey
Attorney in Fact
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3, reasonably believes that the
security rating requirement contained in Transaction Requirement B.5(a)(i) of
Form S-3 will be met at the time of sale of the securities registered hereunder,
and has duly caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in Greenwich, CT, on [ ],
2006.
SOUTH GYLE RECEIVABLES TRUSTEE
LIMITED
(as receivables trustee and
co-registrant)
By: /s/ Helen Grant*
----------------------
Name: Helen Grant
Title: Director
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE CAPACITY DATE
- ------------------------------------- ------------------------------------- -------------------------------------
/s/ Helen Grant* Director, Principal Executive May 11, 2006
---------------------- Officer, Principal Financial Officer
Helen Grant and Principal Accounting Officer
/s/ Gareth Essex-Cater* Director May 11, 2006
----------------------
Gareth Essex-Cater
/s/ Louise Kerhoat* Director May 11, 2006
----------------------
Louise Kerhoat
/s/ Daniel McGarvey Authorized Representative in the May 11, 2006
---------------------- United States
Daniel McGarvey
*By:/s/ Daniel McGarvey
--------------------
Daniel McGarvey
Attorney in Fact
II-9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3, reasonably believes that the
security rating requirement contained in Transaction Requirement B.5(a)(i) of
Form S-3 will be met at the time of sale of the securities registered hereunder,
and has duly caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in Greenwich, CT, on [ ],
2006.
RBS CARDS SECURITISATION FUNDING
LIMITED
(as loan note issuer and
co-registrant)
By: /s/ Helen Grant*
----------------------
Name: Helen Grant
Title: Director
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE CAPACITY DATE
- ------------------------------------- ------------------------------------- -------------------------------------
/s/ Helen Grant* Director, Principal Executive May 11, 2006
---------------------- Officer, Principal Financial Officer
Helen Grant and Principal Accounting Officer
/s/ Mark Hansford* Director May 11, 2006
----------------------
Mark Hansford
/s/ Lynn Ann Cleary* Director May 11, 2006
----------------------
Lynn Ann Cleary
/s/ Daniel McGarvey Authorized Representative in the May 11, 2006
---------------------- United States
Daniel McGarvey
*By:/s/ Daniel McGarvey
--------------------
Daniel McGarvey
Attorney in Fact
POWER OF ATTORNEY
Richard Le Breton whose signature appears below hereby constitutes Helen
Grant, Mark Hansford, Lynn Cleary and Daniel McGarvey, and each of them singly,
his true and lawful attorneys-in-fact with full power to sign on behalf of him,
in the capacities indicated below, any and all amendments to this registration
statement and any subsequent related registration statement filed pursuant to
Rule 462(b) under the Securities Act of 1933, and generally to do all such
things in the name and on behalf of him, in the capacities indicated below, to
enable the registrant to comply with the provisions of the Securities Act of
1933 and all requirements of the Securities and Exchange Commission thereunder,
hereby ratifying and conforming the signature of such person as it may be signed
by said attorneys-in-fact, or any of them, on any and all amendments to this
registration statement or any such subsequent related registration statement.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE CAPACITY DATE
- ------------------------------------- ------------------------------------- -------------------------------------
/s/ Richard Le Breton Director May 12, 2006
----------------------
Richard Le Breton
II-10
<page>
Exhibit Index
1.1 Form of Dealer Agreement.**
3.1 Memorandum and Articles of Association of Arran Funding Limited.*
3.2 Certificate of Incorporation of Arran Funding Limited.*
3.3 Consent to Issue Shares of Arran Funding Limited, Granted by the Jersey
Financial Commission Pursuant to the Control of Borrowing (Jersey) Order,
1958, as amended.*
3.4 Memorandum and Articles of Association of RBS Cards Securitisation
Funding Limited.*
3.5 Certificate of Incorporation of RBS Cards Securitisation Funding
Limited.*
3.6 Consent to Issue Shares of RBS Cards Securitisation Funding Limited,
Granted by the Jersey Financial Commission Pursuant to the Control of
Borrowing (Jersey) Order, 1958, as amended.*
3.7 Memorandum and Articles of Association of South Gyle Receivables Trustee
Limited.*
3.8 Certificate of Incorporation of South Gyle Receivables Trustee Limited.*
3.9 Consent to Issue Shares of South Gyle Receivables Trustee Limited,
Granted by the Jersey Financial Commission Pursuant to the Control of
Borrowing (Jersey) Order, 1958, as amended.*
4.1 Receivables Trust Deed and Trust Cash Management Agreement.*
4.2 Security Trust Deed.*
4.3 Arran Funding Note Trust Deed.*
4.4 Agency Agreement relating to Arran Funding Medium Term Note Programme.*
4.5 Arran Funding Master Framework Agreement.*
4.6 Form of Global Note (included as Schedule 1 to the Arran Funding Note
Trust Deed filed as Exhibit 4.3 to this Registration Statement).*
4.7 Form of Series Loan Note (included as Schedule 1 to the Security Trust
Deed filed as Exhibit 4.2 to this Registration Statement).*
4.8 Beneficiaries Deed.*
4.9 Beneficiaries Servicing Agreement.*
4.10 Supplemental Beneficiaries Servicing Agreement.
4.11 Corporate Services Agreement.
5.1 Opinion of Clifford Chance Limited Liability Partnership with respect to
legality.*
8.1 Opinion of Clifford Chance US LLP with respect to US tax matters.*
8.2 Opinion of Clifford Chance Limited Liability Partnership with
respect to UK tax matters.*
8.3 Opinion of Mourant du Feu & Jeune with respect to Jersey tax matters.*
10.1 Receivables Securitisation Deed.*
10.2 Expenses Loan Agreement.*
10.3 Master Framework Agreement.*
10.4 Trust Section 75 Indemnity Agreement.*
10.5 Issuer Distribution Account Bank Agreement.*
10.6 Jersey Bank Account Operating Agreement.*
10.7 Loan Note Issuer Distribution Account Bank Agreement.*
23.1 Consent of Clifford Chance Limited Liability Partnership (included in
Exhibits 5.1 and 8.2).*
23.2 Consent of Clifford Chance US LLP (included in Exhibit 8.1).*
23.3 Consent of Independent Auditors.*
23.4 Consent of Mourant du Feu & Jeune (included in Exhibit 8.3).*
23.5 Consent of Linklaters.*
24.1 Powers of Attorney.*
25.1 Statement of Eligibility of Note Trustee (form T-1).*
25.2 Statement of Eligibility of Security Trustee (form T-1).*
*Previously filed.
**To be filed by an amendment.
II-11