REGISTRATION NOS. 333-[_], 333-[_], AND 333-[_]
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 20, 2007.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GRACECHURCH CARD PROGRAMME FUNDING GRACECHURCH RECEIVABLES TRUSTEE BARCLAYCARD FUNDING PLC
LIMITED LIMITED (Depositor and MTN Issuing Entity)
(Issuing entity in respect of the (Receivables Trustee)
Notes)
(Exact name of each Registrant as specified in its charter)
JERSEY, CHANNEL ISLANDS JERSEY, CHANNEL ISLANDS ENGLAND AND WALES
(State or other jurisdictions of incorporation or organization)
NONE
(I.R.S. Employer Identification Numbers)
26 NEW STREET 26 NEW STREET 1 CHURCHILL PLACE
ST. HELIER, JERSEY JE2 3RA ST. HELIER, JERSEY JE2 3RA LONDON E14 5HP
CHANNEL ISLANDS CHANNEL ISLANDS UNITED KINGDOM
+44 1534 814814 +44 1534 814814 +44 (0) 207 6995000
(Address, including zip code, and telephone number, including area code, of Registrants' principal executive offices)
GIUSEPPE PAGANO
200 PARK AVENUE
NEW YORK, NEW YORK 10166
UNITED STATES OF AMERICA
+1 (212) 412 4000
(Name, address, including zip code, and telephone number, including area code, of agent for service)
WITH COPIES TO:
LEWIS RINAUDO COHEN, ESQ. MICHAEL BRADY, ESQ. ROBERT TREFNY, ESQ.
CLIFFORD CHANCE US LLP WEIL, GOTSHAL & MANGES LLP CLIFFORD CHANCE LLP
31 WEST 52ND STREET ONE SOUTH PLACE 10 UPPER BANK STREET
NEW YORK, NY 10019 LONDON EC2M 2WG LONDON E14 5JJ
UNITED STATES OF AMERICA UNITED KINGDOM UNITED KINGDOM
+1 (212) 878 3144 + 44 (0) 20 7903 1000 + 44 (0) 20 7006 1000
Approximate date of commencement of proposed sale to the public: From time to
time after this Registration Statement becomes effective as determined by market
conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
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: |_|
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. |_|
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. |_|
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. |_|
CALCULATION OF REGISTRATION FEE
- ------------------------------ ----------------- ----------------------- ----------------------- ---------------------
Title of each class Amount to be Proposed maximum Proposed maximum Amount of
of securities to be registered(2) offering price per aggregate offering registration fee
registered(1) unit price(3)
- ------------------------------ ----------------- ----------------------- ----------------------- ---------------------
Notes $1,000,000 100% $1,000,000 $30.70
- ------------------------------ ----------------- ----------------------- ----------------------- ---------------------
Medium Term Note Certificates $1,000,000 -- -- --
- ------------------------------ ----------------- ----------------------- ----------------------- ---------------------
Investor Certificates $1,000,000 -- -- --
- ------------------------------ ----------------- ----------------------- ----------------------- ---------------------
Total -- -- $1,000,000 $30.70
- ------------------------------ ----------------- ----------------------- ----------------------- ---------------------
NOTES TO THE "CALCULATION OF REGISTRATION FEE" TABLE
(1) Gracechurch Receivables Trustee Limited is the registrant for the principal
amount of the investor certificate; Barclaycard Funding PLC is the
registrant for the medium term note certificates and Gracechurch Card
Programme Funding Limited is the registrant for the notes to be issued from
time to time. The investor certificate will be annotated from time to time
to reflect the amendments to the principal amounts thereof. The medium term
note certificates will be issued to Gracechurch Card Programme Funding
Limited from time to time and will be the primary sources of payments on
the notes. The medium term note certificates and the investor certificate
are not being offered directly to investors.
(2) With respect to any securities issued with original issue discount, the
amount to be registered is calculated on the basis of the initial public
offering price of such securities. With respect to securities denominated
in a currency other than U.S. dollars, the amount to be registered is the
U.S. dollar equivalent thereof based on the prevailing exchange rate at the
time such securities are first offered.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act. No additional
consideration will be paid for the medium term note certificates or the
investor certificate.
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 the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
EXPLANATORY NOTE
This Registration Statement includes (i) a base prospectus and (ii) an
illustrative form of prospectus supplement/final terms for use in the offering
of each series of credit card-backed notes. Appropriate modifications will be
made to the form of prospectus supplement/final terms 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 will be accompanied by a prospectus supplement/final terms (in either
preliminary or final form).
GRACECHURCH CARD PROGRAMME FUNDING LIMITED
issuing entity
BARCLAYCARD FUNDING PLC
depositor and MTN issuing entity
BARCLAYS BANK PLC
sponsor, originator, servicer and trust cash manager
$[__] medium term note programme
of which $[1,000,000] has been registered with the United States Securities and
Exchange Commission
(ultimately backed by trust property in the receivables trust)
- -------------------------------------------------------------------------------
Gracechurch Card Programme Funding Limited (the "ISSUING ENTITY") has
established 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 U.S. dollars, sterling, euro or such other currency as specified
in the relevant prospectus supplement/final terms. Notes will be issued in
series, each with up to four classes of notes identified, respectively, as
class A, class B, class C and class D notes (the class B, class C and class D
notes, collectively, the "SUBORDINATED NOTES"). The class D notes have not been
registered with the United States Securities and Exchange Commission and may be
offered or sold in the United States only in transactions exempt from, or not
subject to the registration requirements of, the Securities Act. The maximum
aggregate principal amount of notes outstanding under the programme at any time
may not exceed $[__] (or its equivalent in other currencies).
The ultimate source of payment on the notes will be collections on consumer
credit and charge card accounts owned by Barclays Bank PLC acting through its
business division, Barclaycard, ("BARCLAYCARD") and opened in the United
Kingdom.
No notes may be issued under the programme which have a minimum denomination
of less than $100,000 or its equivalent or as specified in the related
prospectus supplement/final terms (as applicable to the currency of each
particular series).
In the case of each class or sub-class of notes denominated in a currency
other than sterling, a separate currency and interest rate swap transaction
will be entered into by the issuing entity to convert the sterling amounts
received into such other currency for payments to that class or sub-class.
PLEASE CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE [20] IN THIS
BASE PROSPECTUS BEFORE YOU PURCHASE ANY NOTES.
THE NOTES WILL BE OBLIGATIONS OF THE ISSUING ENTITY ONLY. THEY WILL NOT BE
OBLIGATIONS OF, NOR WILL THEY BE GUARANTEED BY, ANY OTHER PARTY, INCLUDING
BARCLAYS BANK PLC IN ANY OF ITS CAPACITIES, BARCLAYS CAPITAL, BARCLAYCARD
FUNDING PLC, GRACECHURCH RECEIVABLES TRUSTEE LIMITED OR ANY OF THEIR AFFILIATES
OR ADVISERS, SUCCESSORS OR ASSIGNS. THE ISSUING ENTITY WILL ONLY HAVE A LIMITED
POOL OF ASSETS TO SATISFY ITS OBLIGATIONS ON THE NOTES.
You should read this base prospectus and the applicable prospectus
supplement/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
Barclays Bank PLC or by any United Kingdom or United States governmental
agency.
The offer of a series of notes will be made through this base prospectus and
a prospectus supplement/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 United Kingdom 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 1993/22/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 related
prospectus supplement/final terms will be delivered to the regulated market of
the London Stock Exchange on or before the date of issue of those notes.
NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE "SEC") NOR
ANY STATE SECURITIES COMMISSION IN THE UNITED STATES HAS APPROVED OR
DISAPPROVED THESE NOTES OR DETERMINED IF THIS BASE PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE IN THE
UNITED STATES.
- --------------------------------------------------------------------------------
Arranger
BARCLAYS CAPITAL
Dealers
BARCLAYS CAPITAL
[__], 2007
You should be aware that it is necessary to consider this base prospectus
and any prospectus supplement/final terms in their entirety, and in particular,
the following sections: "Risk Factors", "The Receivables", "The Receivables
Trust", "Securitisation Cashflows", "The Medium Term Note Certificate", "The
Trust Deed", "Servicing of Receivables and Trust Cash Management", "The Notes",
"Terms and Conditions of the Notes", "The Swap Agreements", "Material Legal
Aspects of the Receivables" and all sections in the relevant prospectus
supplement/final terms in order to consider whether the issuing entity holds
assets the characteristics of which demonstrate a capacity to service any
payments due on the notes issued by the issuing entity.
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 during the first 12 months
following the date of this base prospectus.
GOVERNING LAW
The programme documents are governed by the laws of England and Wales and
(including specifically where they relate to security interests over assets in
Jersey) by Jersey law.
The "UNITED KINGDOM" and "U.K." are abbreviated references to the United
Kingdom of Great Britain and Northern Ireland. The United Kingdom 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 U.K. Parliament. Accordingly, references to U.K. law are to laws
promulgated by the U.K. Parliament but which are binding on the United Kingdom.
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 France, has an entirely separate legislative and
judicial system.
IMPORTANT NOTICES
This document constitutes a "BASE PROSPECTUS" for the purposes of article
5(4) of the Directive 2003/71/EC (the "PROSPECTUS DIRECTIVE") for the purposes
of giving information with regard to the issue of notes under the programme
during the period of 12 months after the date of this base prospectus.
In this base prospectus, we will refer to Barclays Bank PLC as "BARCLAYS",
we will refer to Barclays acting through its investment management division,
Barclays Capital, as "BARCLAYS CAPITAL" and we will refer to Barclays acting
through its business division, Barclaycard in its capacity as the originator
and acquirer of accounts and as originator of receivables as "BARCLAYCARD" and
as the sponsor of the programme, as the "SPONSOR". "WE" or "WE" means
Gracechurch Card Programme Funding Limited, Barclaycard Funding PLC and
Gracechurch Receivables Trustee Limited. Where we refer to these companies
separately, we will identify them specifically. We will refer to Gracechurch
Receivables Trustee Limited, a special purpose vehicle incorporated in Jersey,
Channel Islands, as the "RECEIVABLES TRUSTEE", Barclaycard Funding PLC, a
special purpose vehicle incorporated in England and Wales, as the "MTN ISSUING
ENTITY" and to Gracechurch Card Programme Funding Limited, a special purpose
vehicle incorporated in Jersey, as the "ISSUING ENTITY".
We include cross-references to captions in this base prospectus where you
can find further related discussions. The table of contents, below, provides
the pages on which these captions are located.
You can find an index beginning on page [206] under the caption "Index of
Defined Terms For Base Prospectus" which lists where some terms used in this
document are explained.
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 PROSPECTUS SUPPLEMENT/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 DUE IN RESPECT OF THE RELEVANT SERIES) OR EFFECT
TRANSACTIONS WITH A VIEW TO SUPPORTING THE 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 A STABILISING
MANAGER(S)) WILL UNDERTAKE SUCH STABILISATION ACTION. ANY STABILISATION ACTION
MAY BEGIN AT ANY TIME AFTER THE ADEQUATE PUBLIC DISCLOSURE OF THE PROSPECTUS
SUPPLEMENT/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.
ii
FORWARD-LOOKING STATEMENTS
This base prospectus contains statements which constitute forward-looking
statements within the meaning of the United States Private Securities
Litigation Reform Act of 1995. Such statements appear in a number of places in
this base prospectus and reflect significant assumptions and subjective
judgments by the issuing entity that may or may not prove to be correct. Such
statements may be identified by reference to a future period or periods and the
use of forward-looking terminology such as "may", "will", "could", "believes",
"expects", "anticipates", "continues", "intends", "plans", or similar terms.
Consequently, future results may differ from the issuing entity's expectations
due to a variety of factors, including (but not limited to) the economic
environment in the United Kingdom. Moreover, past financial performance should
not be considered a reliable indicator of future performance and prospective
purchasers of the notes are cautioned that any such statements are not
guarantees of performance and involve risks and uncertainties, many of which
are beyond the control of the issuing entity.
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, 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.
When delivered in the United States, this base prospectus must be
accompanied by a prospectus supplement/final terms pursuant to which the series
of notes referred to therein will be offered. Such prospectus supplement/final
terms constitute, with respect to the series of notes offered thereby, the
"relevant prospectus supplement/final terms" or the "applicable prospectus
supplement/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 such documents should be directed
to the specified office of any paying agent.
The issuing entity intends to provide certain post-issuance transaction
information to rating agencies regarding the notes to be admitted to trading
and the performance of any underlying collateral on a monthly basis.
iii
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 Barclays Bank PLC has been accurately reproduced
from information provided by Barclays Bank PLC. So far as the issuing entity is
aware and/or is able to ascertain from information provided by Barclays Bank
PLC, no facts have been omitted which would render the reproduced information
materially misleading.
The information relating to Barclaycard Funding plc and Gracechurch
Receivables Trustee Limited has been accurately reproduced from information
provided by Barclaycard Funding plc and Gracechurch Receivables Trustee
Limited, respectively. So far as the issuing entity is aware and/or is able to
ascertain from information provided by Barclaycard Funding plc and Gracechurch
Receivables Trustee Limited, no facts have been omitted which would render the
reproduced information materially misleading.
iv
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
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.
CONTENTS
PAGE
TRANSACTION OVERVIEW.......................................................................................................... 1
Program Structural Summary.................................................................................................... 1
STRUCTURAL DIAGRAM OF BARCLAYS BANK PLC SECURITISATION PROGRAMME.............................................................. 2
OVERVIEW OF THE GRACECHURCH CARD PROGRAMME FUNDING LIMITED MEDIUM TERM NOTE PROGRAMME......................................... 3
Initial Programme Amount...................................................................................................... 3
Issuance of Notes In Series................................................................................................... 3
Prospectus Supplement/Final Terms............................................................................................. 3
THE PARTIES................................................................................................................... 4
Underwriters.................................................................................................................. 4
The Issuing Entity............................................................................................................ 4
The Note Trustee, Registrar, Transfer Agent, Principal Paying Agent, U.S. Paying Agent and Agent Bank......................... 4
The Depositor, MTN Issuing Entity and Initial Investor Beneficiary............................................................ 4
The Medium Term Note Certificate.............................................................................................. 5
The Security Trustee.......................................................................................................... 5
The Receivables............................................................................................................... 5
The Initial Originator, Sponsor, Servicer, Trust Cash Manager, MTN Issuing Entity Cash Manager and Excess Interest Beneficiary 6
The Receivables Trustee....................................................................................................... 6
The Receivables Trust......................................................................................................... 7
The Investor Certificate...................................................................................................... 7
The Swap Counterparty......................................................................................................... 7
Swap Agreements............................................................................................................... 7
THE NOTES OVERVIEW............................................................................................................ 9
The Notes..................................................................................................................... 9
Previous Series of Notes...................................................................................................... 9
Listing....................................................................................................................... 12
Clearing Systems.............................................................................................................. 12
Status, Security and Priority of Payments of the Notes........................................................................ 12
Form of Notes................................................................................................................. 13
No Registration Under Investment Company Act.................................................................................. 13
Currencies.................................................................................................................... 14
Issue Price................................................................................................................... 14
Maturities.................................................................................................................... 14
Interest...................................................................................................................... 14
Denominations................................................................................................................. 14
Negative Covenants............................................................................................................ 14
Credit Enhancement............................................................................................................ 14
Enforcement of Notes in Global Form........................................................................................... 14
v
Governing Law.................................................................................................................. 14
Scheduled Redemption........................................................................................................... 14
Optional Early Redemption...................................................................................................... 15
Mandatory Early Redemption and Priority of Payments............................................................................ 15
Final Redemption............................................................................................................... 15
Notices........................................................................................................................ 15
Ratings of the Notes........................................................................................................... 15
Selling Restrictions........................................................................................................... 15
Taxation....................................................................................................................... 15
Transaction Fees............................................................................................................... 15
TAX CONSIDERATIONS............................................................................................................. 17
U.K. Tax Status................................................................................................................ 17
Jersey Tax Status.............................................................................................................. 17
European Union Directive on the Taxation of Savings Income..................................................................... 18
European Union Code of Conduct on Business Taxation............................................................................ 19
United States Federal Income Tax Status........................................................................................ 19
ERISA Considerations for Investors............................................................................................. 19
RISK FACTORS................................................................................................................... 20
U.S. DOLLAR AND STERLING EXCHANGE RATE......................................................................................... 45
Dollar/Sterling Exchange Rate History(1)....................................................................................... 45
THE ISSUING ENTITY............................................................................................................. 46
Directors and Secretary........................................................................................................ 46
Bankruptcy Matters Relating to the Issuing Entity.............................................................................. 47
Capitalisation and Indebtedness................................................................................................ 47
THE DEPOSITOR AND MTN ISSUING ENTITY........................................................................................... 49
Capitalisation and Indebtedness................................................................................................ 49
Directors and Secretary........................................................................................................ 50
Litigation..................................................................................................................... 51
THE RECEIVABLES TRUSTEE........................................................................................................ 52
Directors and Secretary........................................................................................................ 52
Management and Activities...................................................................................................... 53
Litigation..................................................................................................................... 54
THE NOTE TRUSTEE AND SECURITY TRUSTEE.......................................................................................... 55
Litigation..................................................................................................................... 55
BARCLAYS BANK PLC.............................................................................................................. 56
Business....................................................................................................................... 56
Litigation..................................................................................................................... 57
AFFILIATIONS AND CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................................................ 58
CREDIT CARD USAGE IN THE UNITED KINGDOM........................................................................................ 59
Barclaycard and the Barclaycard Card Portfolio................................................................................. 59
General........................................................................................................................ 59
Description of Processing...................................................................................................... 60
Billing and Payment............................................................................................................ 60
Delinquency and Loss Experience................................................................................................ 61
THE RECEIVABLES................................................................................................................ 63
Assignment of Receivables to the Receivables Trustee........................................................................... 63
Redesignation and Removal of Accounts.......................................................................................... 65
vi
Discount Option Receivables.................................................................................................... 66
Special Fees and Annual Fees................................................................................................... 67
Interchange.................................................................................................................... 67
Reductions in Receivables, Early Collections and Credit Adjustments............................................................ 67
Representations................................................................................................................ 68
Amendments to Card Agreements and Card Guidelines.............................................................................. 70
Overview of Securitised Portfolio.............................................................................................. 71
MATURITY ASSUMPTIONS........................................................................................................... 72
RECEIVABLES YIELD CONSIDERATIONS............................................................................................... 73
THE RECEIVABLES TRUST.......................................................................................................... 74
General Legal Structure........................................................................................................ 74
The Receivables Trust's Property............................................................................................... 76
General Entitlement of Beneficiaries to Trust Property......................................................................... 77
Allocation and Application of Collections...................................................................................... 78
Acquiring Additional Entitlements to Trust Property and Payments for Receivables............................................... 80
Non-Petition Undertaking of Beneficiaries...................................................................................... 81
Trust Pay Out Events........................................................................................................... 81
Termination of the Receivables Trust........................................................................................... 82
Amendments to the Declaration of Trust and Trust Cash Management Agreement..................................................... 82
Disposals...................................................................................................................... 83
Trustee Payment Amount......................................................................................................... 83
SERVICING OF RECEIVABLES AND TRUST CASH MANAGEMENT............................................................................. 84
General -- Servicing........................................................................................................... 84
General -- Trust Cash Management............................................................................................... 85
Servicer and Trust Cash Manager Compensation................................................................................... 86
Evidence as to Compliance...................................................................................................... 87
Termination of Appointment of Servicer......................................................................................... 87
Termination of Appointment of Trust Cash Manager............................................................................... 89
SECURITISATION CASHFLOWS....................................................................................................... 92
General........................................................................................................................ 92
Definitions.................................................................................................................... 92
Beneficial Entitlement of the MTN Issuing Entity to Trust Property Other Than in Respect of the Excess Interest................ 102
Allocation, Calculation and Distribution of Finance Charge Collections to the MTN Issuing Entity............................... 103
Allocation of Principal Collections to the Investor Interest................................................................... 106
Revolving Period............................................................................................................... 106
Controlled Accumulation Period................................................................................................. 108
Regulated Amortisation Period.................................................................................................. 108
Rapid Amortisation Period...................................................................................................... 109
Postponement of Controlled Accumulation Period................................................................................. 113
Unavailable Principal Collections.............................................................................................. 113
Shared Principal Collections................................................................................................... 114
Defaulted Receivables; Investor Charge-Offs.................................................................................... 115
Extra Amount................................................................................................................... 117
Aggregate Investor Indemnity Amount............................................................................................ 117
Principal Funding Account...................................................................................................... 117
Yield Reserve Account.......................................................................................................... 118
vii
Series Cash Reserve Account.................................................................................................... 119
Distribution Ledgers........................................................................................................... 121
Trustee Payment Amount......................................................................................................... 121
Qualified Institutions......................................................................................................... 121
Series Pay Out Events.......................................................................................................... 122
Entitlement of MTN issuing entity to Series Excess Interest.................................................................... 123
Your Payment Flows............................................................................................................. 123
THE TRUST DEED................................................................................................................. 129
THE NOTES...................................................................................................................... 131
Payment........................................................................................................................ 132
Individual Note Certificates................................................................................................... 134
TERMS AND CONDITIONS OF THE NOTES.............................................................................................. 136
THE SWAP AGREEMENTS............................................................................................................ 171
General........................................................................................................................ 171
THE MEDIUM TERM NOTE CERTIFICATE............................................................................................... 172
MATERIAL LEGAL ISSUES.......................................................................................................... 176
Insolvency Act 2000............................................................................................................ 176
The Enterprise Act............................................................................................................. 176
MATERIAL LEGAL ASPECTS OF THE RECEIVABLES...................................................................................... 177
Consumer Credit Act 1974....................................................................................................... 177
Transfer of Benefit of Receivables............................................................................................. 178
UNITED KINGDOM TAXATION TREATMENT OF THE NOTES................................................................................. 179
Overview....................................................................................................................... 179
Taxation of U.S. Residents..................................................................................................... 179
Taxation of Interest Paid -- United Kingdom Withholding Tax.................................................................... 179
Provision of Information....................................................................................................... 180
European Union Directive on the Taxation of Savings Income..................................................................... 180
Other Rules Relating to United Kingdom Withholding Tax......................................................................... 180
Taxation of Interest Paid -- Further United Kingdom Income Tax Issues.......................................................... 181
Ownership and Disposal, including Redemption, of the Notes by United Kingdom Tax Payers........................................ 181
Taxation of Issuing Entity and Receivables Trustee in Jersey................................................................... 182
European Union Code of Conduct on Business Taxation............................................................................ 183
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS....................................................................... 184
Overview....................................................................................................................... 184
Tax Status of the Receivables Trust, the MTN Issuing Entity and the Issuing Entity............................................. 185
United States Holders.......................................................................................................... 185
Non-United States Holders...................................................................................................... 189
Backup Withholding and Information Reporting................................................................................... 189
CERTAIN ERISA AND OTHER U.S. CONSIDERATIONS.................................................................................... 190
ENFORCEMENT OF FOREIGN JUDGMENTS IN JERSEY OR ENGLAND AND WALES................................................................ 192
PLAN OF DISTRIBUTION........................................................................................................... 193
United Kingdom................................................................................................................. 194
Jersey......................................................................................................................... 194
General........................................................................................................................ 195
Selling Restrictions........................................................................................................... 195
RATINGS OF THE NOTES........................................................................................................... 196
viii
EXPERTS........................................................................................................................ 197
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.................................................................................. 198
LEGAL MATTERS.................................................................................................................. 199
REPORTS TO NOTEHOLDERS......................................................................................................... 200
WHERE YOU CAN FIND MORE INFORMATION............................................................................................ 201
LISTING AND GENERAL INFORMATION................................................................................................ 202
Litigation and Change in Circumstances......................................................................................... 203
Significant or Material Change................................................................................................. 203
Documents Available for Inspection............................................................................................. 203
INDEX OF DEFINED TERMS FOR BASE PROSPECTUS..................................................................................... 206
INDEX OF APPENDICES............................................................................................................ 210
ix
TRANSACTION OVERVIEW
PROGRAM STRUCTURAL SUMMARY
The following is a brief summary description of the Gracechurch Card
Programme Funding Limited medium term note programme, of which your notes will
form a part.
Barclaycard has previously assigned all of its present and future beneficial
interest in receivables in designated revolving credit and charge card accounts
owned by Barclaycard and opened in the United Kingdom. Only the receivables
were assigned. The accounts were retained by Barclaycard.
The receivables were assigned to a special purpose company, incorporated in
Jersey, Channel Islands, acting as receivables trustee. The receivables trustee
holds the receivables on trust for Barclaycard, as originator beneficiary and
excess interest beneficiary, and a special purpose subsidiary of Barclays
called the "MTN ISSUING ENTITY", as investor beneficiary. Barclaycard will
transfer its entitlement to receive excess interest attributable to each series
to the MTN issuing entity.
The receivables trustee may issue multiple series of investor certificates
to the MTN issuing entity. Each series of investor certificates will represent
an undivided beneficial interest in the receivables trust. They will entitle
the MTN issuing entity to payments of interest and principal payable from
collections on the receivables.
The MTN issuing entity will finance its acquisition of an undivided
beneficial interest in the receivables trust, evidenced by the issuance of each
series of investor certificates, by issuing series of limited recourse medium
term note certificates to the issuing entity. The limited recourse nature of
the medium term note certificates will ensure that the MTN issuing entity is
only ever liable to the purchaser of any series of medium term note
certificates for payments in amounts equal to the payments of principal and
interest received by the MTN issuing entity from the receivables trustee under
the corresponding series of investor certificates.
The issuing entity, in turn, will finance the purchase of each series of
medium term note certificates by issuing series of notes to investors.
1
STRUCTURAL DIAGRAM OF BARCLAYS BANK PLC SECURITISATION PROGRAMME
VISIO DIAGRAM
1.Barclays Bank PLC will transfer excess interest attributable to each series
to the MTN issuing entity pursuant to an agreement between beneficiaries.
2.Series 99-1 was repaid in full on 15 November 2002. Series 03-2 was repaid in
full on 15 June 2006. Series 03-3 was repaid in full on 15 August 2006.
Series 04-1 was repaid in full on 15 February 2007.
3.An investor certificate is issued by the receivables trustee in relation to
each series.
2
OVERVIEW OF THE GRACECHURCH CARD PROGRAMME FUNDING LIMITED 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 prospectus supplement/final terms.
INITIAL PROGRAMME Up to $[__] (or its Equivalent in Other Currencies)
AMOUNT Aggregate Principal Amount of Notes Outstanding at any
one time.
ISSUANCE OF NOTES IN Notes issued under the programme will be issued in
SERIES series. Each series will comprise up to four classes
of notes issued on a single issue date. The notes of
the same class within a given series will all be
subject to identical terms and conditions in all
respects. Each class of notes within a series may be
comprised of sub- classes, each denominated in any of
sterling, U.S. Dollar, euro or such other currency as
specified in the relevant prospectus supplement/final
terms. 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 the date of final
maturity.
PROSPECTUS SUPPLEMENT/ Notes issued under the programme may be offered only
FINAL TERMS pursuant to this base prospectus and the relevant
prospectus supplement/final terms. The terms and
conditions applicable to any particular series or
class of notes are the terms and conditions of the
notes described in this base prospectus as
supplemented, amended and/or replaced by the relevant
prospectus supplement/final terms for that series or
class. The terms of the prospectus supplement/final
terms corresponding to a particular series or class of
notes supplement the terms and conditions of the notes
in this base prospectus, and must be read in
conjunction with this base prospectus.
3
THE PARTIES
UNDERWRITERS
Barclays Capital 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
agreements (see "Plan of Distribution").
Gracechurch Card Programme Funding Limited is a public limited company
incorporated in Jersey, Channel Islands with company number 98638. Its
registered office is at 26 New Street, St. Helier, Jersey and its principal
place of business in the United Kingdom is at 11 Old Jewry, London EC2R 8DU.
Its telephone number is +44 (0)1534 814814 or +44 (0)207 796 9348.
The issuing entity is a newly incorporated special purpose company. The
purpose of the issuing entity is to issue, from time to time, 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 MTN certificate issued by the MTN issuing entity. The issuing entity
will not engage in any activities which are not related to the issue of the
notes.
This base prospectus is given in compliance with the prospectus rules made
by the United Kingdom Listing Authority under the Financial Service and Markets
Act 2000, as amended by the Prospectus Regulations 2005 (the "PROSPECTUS
RULES") for the purposes of giving information about the issuing entity and the
notes. The issuing entity accepts responsibility for the information contained
in this document. To the best of the knowledge and belief of the issuing
entity, which has taken all reasonable care to ensure that such is the case,
the information contained in this document is in accordance with the facts and
does not omit anything likely to affect the import of such information. The
issuing entity accepts responsibility accordingly.
THE NOTE TRUSTEE, REGISTRAR, TRANSFER AGENT, PRINCIPAL PAYING AGENT, U.S.
PAYING AGENT AND AGENT BANK
The note trustee, registrar, transfer agent, principal paying agent, U.S.
paying agent and agent bank is The Bank of New York, acting through its London
branch. The note trustee will act as trustee for the noteholders under the
trust deed. The depository for a series of notes will hold the global note
certificates of each class of notes of such series. The transfer agent is
responsible for the transfers of the notes between noteholders. The principal
paying agent will make payments on the notes of each series. The agent bank
will calculate the interest rate on the notes. The Bank of New York, London
branch's address is One Canada Square, London E14 5AL, United Kingdom. Its
telephone number is +44 (0)207 570 1784. Its address in New York is 101 Barclay
Street, Floor 21 West, New York, New York 10286 and its telephone number is +1
212 495 1784.
THE DEPOSITOR, MTN ISSUING ENTITY AND INITIAL INVESTOR BENEFICIARY
The depositor, MTN issuing entity and the initial investor beneficiary is
Barclaycard Funding PLC, a public limited company incorporated in England and
Wales. Its registered office is located at 1 Churchill Place, London E14 5HP.
Its telephone number is +44 (0) 207 116 1000. The MTN issuing entity is a
subsidiary of Barclays.
The MTN issuing entity was established to issue series of secured limited
recourse medium term note certificates from time to time under a programme. The
MTN issuing entity becomes an investor beneficiary of the receivables trust in
respect of such medium term note certificates.
The MTN issuing entity does not have any employees. On 8 April 2003 the MTN
issuing entity entered into an agreement with Structured Finance Management
Limited, Barclays Bank plc among others, under which Structured Finance
Management agreed to provide administration services to the MTN issuing entity.
The MTN issuing entity will act as depositor with respect to the medium term
note certificates sold to the issuing entity.
4
THE MEDIUM TERM NOTE CERTIFICATE
On the closing date for each series, the MTN issuing entity will sell to the
issuing entity one interest bearing, limited recourse medium term note
certificate issued as a series under the Gracechurch Card Programme Funding
Limited medium term note programme. Each limited recourse medium term note
certificate will be called a "MEDIUM TERM NOTE CERTIFICATE". Each medium term
note certificate is governed by English law and is subject to the English
courts in the event of proceedings relating to the medium term note
certificate. No approval or notice to holders of the outstanding medium term
note certificates is necessary for the issuance of new certificates.
The issuing entity will make payments of interest and principal on the class
A notes, the class B notes, the class C notes and the class D notes from
payments of interest and principal made by the MTN issuing entity on the medium
term note certificates, including MTN issuing entity additional interest
payments, and from amounts paid by the swap counterparty. The issuing entity
will also make payment of the deferred subscription price in respect of the
medium term note certificates out of unutilised MTN issuing entity additional
interest payments received by it.
If an event of default occurs under a medium term note certificate, the
security trustee, on behalf of the issuing entity as holder of the medium term
note certificate, may appoint a receiver of the MTN issuing entity who would
continue to collect amounts paid on the investor certificate. The security
trustee would also be able to sell the investor certificate. In addition,
pursuant to the series supplement the security trustee may give an enforcement
notice to the MTN issuing entity declaring the medium term note certificate to
be immediately due and payable. A declaration that the medium term note
certificate has become immediately due and payable will not, of itself,
accelerate the timing or amount of redemption of the medium term note
certificate.
THE SECURITY TRUSTEE
The security trustee in relation to the MTN issuing entity is The Bank of
New York, acting through its London branch, whose principal place of business
is at One Canada Square, London E14 5AL, United Kingdom. Its telephone number
is +44 (0)207 570 1784. The Bank of New York has served and currently is
serving as note trustee, security trustee and trustee for numerous
securitisation transactions and programs involving pools of credit card
receivables. The security trustee will act as trustee for the holder of the
medium term note certificates under the security trust deed and MTN issuing
entity cash management agreement.
THE RECEIVABLES
The receivables consist of amounts charged by cardholders to designated
MasterCard* and VISA* revolving credit and charge card accounts of Barclaycard
originated or acquired in the United Kingdom by the sponsor for the acquisition
of merchandise, services and cash advances. The receivables also include the
periodic finance charges and fees charged to the credit and charge card
accounts and interchange.
As of [__] 2007, the aggregate face value of the principal receivables in
the securitised portfolio was [GBP][__]. The prospectus supplement/final terms
in respect of each series of notes will contain more detailed information
regarding the composition of the securitised portfolio at the time of the
offering of such series.
If a pay out event occurs, the rapid amortisation period or the regulated
amortisation period may begin, which could cause an early redemption of your
notes. If Barclaycard as the originator beneficiary or the excess interest
beneficiary were to become insolvent, the receivables trustee might be required
to liquidate the receivables. In addition, certain breaches of representations,
if made by the originator, will obligate the originator to repurchase the
receivables.
- --------------------
* MasterCard and VISA are U.S. federally registered servicemarks of MasterCard
International Inc. and VISA U.S.A Inc. respectively and are registered
trademarks in the United Kingdom of MasterCard International Inc. and VISA
International Service Association.
5
THE REVOLVING PERIOD
The revolving period for each series is the period from the relevant closing
date to the start of the controlled accumulation period (unless delayed) or, if
earlier, the start of the rapid amortisation period or the regulated
amortisation period.
During the revolving period, principal collections calculated as referable
to the required retained principal collections will be used by the receivables
trustee as shared principal collections and, to the extent not used as shared
principal collections, to make payments to the originator:
(i) to accept new offers of eligible receivables made by the originator to
the receivables trustee, and
(ii) to make payments to the originator for future receivables assigned by the
originator to the receivables trustee by offers that have already been
made and accepted.
THE INITIAL ORIGINATOR, SPONSOR, SERVICER, TRUST CASH MANAGER, MTN ISSUING
ENTITY CASH MANAGER AND EXCESS INTEREST BENEFICIARY
Barclays Bank PLC, sponsor of this programme, originates or acquires the
credit and charge card receivables through its business unit, Barclaycard.
Barclaycard's principal place of business is located at 1234 Pavilion Drive,
Northampton NN4 7SG, United Kingdom.
Barclaycard is the initial originator and sponsor of the receivables trust
and may from time to time purchase portfolios of revolving credit card
accounts. Barclaycard has transferred receivables to the receivables trustee
prior to the date of this base prospectus and may in the future transfer
additional receivables to the receivables trustee.
Barclaycard currently services the receivables in the receivables trust.
Barclaycard may not resign as servicer, but its appointment as servicer may be
terminated and a successor servicer may be appointed in its place if a servicer
default occurs. In the future additional originators, if any, may act as co-
servicers.
Barclaycard was also appointed as the initial trust cash manager to manage
the bank accounts of the receivables trustee for each series of investor
certificates. Barclaycard may not resign as trust cash manager, but its
appointment as trust cash manager may be terminated and a successor trust cash
manager may be appointed in its place if a trust cash manager default occurs.
In the future additional originators, if any, may act as co-trust cash
managers.
Barclaycard will be the excess interest beneficiary of the receivables
trust, but will transfer its entitlement to the portion of the excess interest
attributable to each series to the MTN issuing entity under an agreement
between beneficiaries. In return for the transfer of entitlement to the portion
of the excess interest attributable to each series, the MTN issuing entity will
agree to pay deferred consideration to Barclaycard in an amount equal to the
deferred subscription price which the MTN issuing entity receives from the
issuing entity in respect of each series' medium term note certificate.
Barclays Bank PLC has also been appointed as MTN issuing entity cash manager
pursuant to the security trust deed and the MTN issuing entity cash management
agreement dated 23 November 1999. The MTN issuing entity cash manager may not
resign unless its activities are no longer permissible under the applicable
law. No such resignation shall become effective until a successor MTN issuing
entity cash manager shall have assumed the responsibilities and obligations of
the MTN issuing entity cash manager.
Barclays Bank PLC is a bank incorporated in England and has a long term
unsecured debt rating of Aa1 by Moody's and AA by Standard and Poor's. Its head
office is located at 1 Churchill Place, London E14 5HP, United Kingdom. It is
regulated in the United Kingdom by the Financial Services Authority. Its
telephone number is +44 (0)207 116 1000. Barclays Bank PLC is described below
under "Barclays Bank PLC".
THE RECEIVABLES TRUSTEE
Gracechurch Receivables Trustee Limited, the receivables trustee, is a
private limited liability company incorporated under the laws of Jersey,
Channel Islands on 29 September 1999. Its registered office is located at 26
New Street, St. Helier, Jersey JE2 3RA. Its telephone number is +44 1534
814814.
6
The shares of the receivables trustee are held by bare nominees for a
professional trustee company, Bedell Trustees Limited -- not affiliated with
Barclays -- as trustee on trust for charitable purposes. This means that any
profits received by the receivables trustee, after income amounts have been
paid in meeting the costs and expenses of the receivables trustee, will be
available to be dividended to the trustee for distribution for charitable
purposes or to charities exclusively for charitable purposes selected at the
discretion of the trustee. The payments on your notes will not be affected by
this arrangement. The receivables trustee acts as trustee of the receivables
trust.
The receivables trustee has been established for the purpose of acquiring
credit and charge card receivables of Barclaycard and any additional
originators and to hold those receivables and the collections from them on
trust for the beneficiaries under the terms of the receivables trust set out in
the declaration of trust and trust cash management agreement and to make
payments on the investor certificates in accordance with the terms of such
agreement as supplemented from time to time. The receivables trustee may issue
other series of investor certificates, representing undivided beneficial
interests in the receivables trust, from time to time. The receivables trustee
may, from time to time, adjust the relative sizes of the undivided beneficial
interests in the receivables trust in accordance with the programme documents.
The receivables trustee may not engage in any unrelated activities.
THE RECEIVABLES TRUST
The receivables trust was established on 1 November 1999 under the terms of
a declaration of trust under which Barclays and the MTN issuing entity each
received an undivided interest in the trust property equal to the proportion of
their contributions to the receivables trust. The declaration of trust was
amended and restated by a declaration of trust and trust cash management
agreement on 23 November 1999. The declaration of trust and trust cash
management agreement has been and will be supplemented by series supplements
for each series of investor certificates issued from time to time by the
receivables trust.
THE INVESTOR CERTIFICATE
The depositor and MTN issuing entity will pay the proceeds of the medium
term note certificate to the receivables trustee to acquire a separate,
undivided beneficial interest in the receivables trust of which eight are
outstanding. Each undivided beneficial interest will be a new series of the
receivables trust and will be represented by the investor certificate. The
receivables trustee may issue other series of investor certificate(s) from time
to time.
The MTN issuing entity will make payments of principal and interest on the
medium term note certificate from payments of principal and interest received
from the receivables trustee on the investor certificate. The payments on the
investor certificate will be made from payments of principal and interest on
the receivables.
The receivables trustee will be entitled to use the proceeds of the investor
certificate paid to it by the MTN issuing entity -- together with monies paid
to it by the other beneficiaries of the receivables trust -- to accept an offer
by the originator to assign to the receivables trustee the present and future
receivables generated by the designated credit and charge card accounts of the
originator.
The investor certificate will entitle the MTN issuing entity to receive
payment of a designated portion of collections of the credit and charge card
receivables assigned by the originator to the receivables trustee in respect of
each series investor certificate. The MTN issuing entity will use those
collections for the redemption of the corresponding series medium term note
certificate.
THE SWAP COUNTERPARTY
The relevant prospectus supplement/final terms will identify the swap
counterparty for each series or class of notes (referred to herein as the "SWAP
COUNTERPARTY").
SWAP AGREEMENTS
The notes within a series to be issued by the issuing entity from time to
time may be denominated in either sterling, euro, U.S. dollars or other
currency as specified in the relevant prospectus supplement/final terms and
have a fixed or floating rate of interest (as specified in the relevant
prospectus supplement/final terms). The issuing entity may, in relation to
certain classes of notes, enter into an ISDA
7
master agreement and related schedule and confirmations (each, referred to
herein as a "SWAP AGREEMENT") with the relevant swap counterparty. Each
prospectus supplement/final terms will provide details of any swap agreement in
respect of a class of notes, including the name of the swap counterparty (see
"The Swap Agreements").
8
THE NOTES OVERVIEW
THE NOTES
The notes represent asset-backed debt obligations of the issuing entity. The
notes are secured by payments received by the issuing entity from the relevant
medium term note certificate and payments received from the relevant swap
counterparty. The issuing entity's ability to make these payments will
ultimately be dependent upon collections Barclaycard receives on the
receivables and from the swap counterparty, if any. No approval from or notice
to noteholders is required for a new issuance of notes.
We will issue the notes under the trust deed. The notes will also be subject
to a paying agency and agent bank agreement. The security for the notes will be
created under a deed of charge and a pledge agreement between the issuing
entity and the note trustee. The terms and conditions of the notes will be
contained in the trust deed.
The class B notes will be subordinated to the class A notes. The class C
notes will be subordinated to both the class A notes and the class B notes. The
class D notes, if a given series is specified as having class D notes, will be
subordinated to the class A notes, the class B notes and the class C notes.
If there is an event of default under the notes, the note trustee, on your
behalf, can appoint a receiver of the issuing entity who would continue to
collect amounts paid by the MTN issuing entity under the medium term note
certificate. The note trustee would also be able to sell the medium term note
certificate. In addition, pursuant to the trust deed, the note trustee may give
an enforcement notice to the issuing entity declaring the notes to be
immediately due and payable. A declaration that the notes have become
immediately due and payable will not, of itself, accelerate the timing or
amount of redemption of the notes.
In this base prospectus, we will refer to the owners of interests in the
class A notes, the class B notes, the class C notes and the class D notes as
the class A noteholders, the class B noteholders, the class C noteholders and
the class D noteholders, respectively, and together as the noteholders.
PREVIOUS SERIES OF NOTES
Twelve previous series of notes have been issued by 12 previous note issuing
entities, Gracechurch Card Funding (No. 1) PLC through Gracechurch Card Funding
(No. 11) PLC and Gracechurch Card Notes 2006-A PLC respectively, in relation to
the receivables trust. The first series, called series 99-1, was issued on 23
November 1999 and repaid in November 2002. The second series, called 02-1, was
issued on 24 October 2002. The third series, called 03-1, was issued on 8 April
2003. The fourth series, called 03-2, was issued on 13 June 2003 and repaid in
June 2006. The fifth series, called 03-3, was issued on 18 September 2003 and
repaid in August 2006. The sixth series, called 04-1, was issued on 11 March
2004 and repaid in February 2007. The seventh series, called 04-2 was issued on
23 November 2004. The eighth series, called 05-1, was issued on 21 June 2005.
The ninth series, called 05-2, was issued on 20 September 2005. The tenth
series, called 05-3, was issued on 20 October 2005. The eleventh series, called
05-4, was issued on 22 November 2005. The twelfth series, called 06-1, was
issued on 28 September 2006. Series 02-1, series 03-1, series 04-2, series 05-
1, series 05-2, series 05-3, series 05-4 and series 06-1 are described in more
detail at Appendix K.
The total principal amount of the interest of the investor beneficiary in a
series is called the "INVESTOR INTEREST" of that series and reflects that
series' entitlement to principal receivables. The investor beneficiaries'
aggregate entitlement under the receivables trust is called the "AGGREGATE
INVESTOR INTEREST" and comprises the aggregate of each entitlement under each
series supplement. The investor interest of a series is extinguished upon full
repayment of that series.
The proceeds of the series 99-1 notes were used by Gracechurch Card Funding
(No. 1) PLC to purchase, respectively, corresponding series of medium term note
certificates issued in three classes, which we shall refer to as the "series
99-1 medium term note certificates", issued by the MTN issuing entity. The
series 99-1 medium term note certificates issued by the MTN issuing entity were
called the class A medium term note, the class B medium term note and the class
C medium term note, respectively. The MTN issuing entity invested the proceeds
from the issue of the series 99-1 medium term note certificates in the
receivables trust by paying the proceeds to the receivables trustee and
becoming an
9
investor beneficiary with an aggregate investor interest in the receivables
trust. This aggregate investor interest entitles the MTN issuing entity to
payments arising out of its entitlement to receivables in the receivables
trust.
The class A medium term note, the class B medium term note and the class C
medium term note were each secured in favour of a trustee for the benefit of
the secured creditors in relation to the class A notes, the class B notes and
the class C notes of series 99-1. The security for each class of notes issued
for series 99-1 was the class A medium term note, the class B medium term note
and the class C medium term note, respectively. Series 99-1 was finally repaid
in full on the interest payment date falling in November 2002.
The proceeds of the series 02-1 notes were used by Gracechurch Card Funding
(No. 2) PLC to purchase a corresponding series medium term note certificate,
which we shall refer to as the "series 02-1 medium term note certificate",
issued by the MTN issuing entity. The MTN issuing entity invested the proceeds
from the issue of the series 02-1 medium term note certificate in the
receivables trust by paying the proceeds to the receivables trustee and
becoming an investor beneficiary with an aggregate investor interest in the
receivables trust. This aggregate investor interest entitles the MTN issuing
entity to payments arising out of its entitlement to receivables in the
receivables trust.
The series 02-1 medium term note certificate is secured in favour of a
trustee for the benefit of the secured creditors in relation to the class A
notes, the class B notes and the class C notes of series 02-1. The security for
each class of notes issued for series 02-1 is the series 02-1 medium term note
certificate. The security for the notes issued for series 02-1 will not be
cross-collateralised with the security for your notes.
The proceeds of the series 03-1 notes were used by Gracechurch Card Funding
(No. 3) PLC to purchase a corresponding series medium term note certificate,
which we shall refer to as the "series 03-1 medium term note certificate",
issued by the MTN issuing entity. The MTN issuing entity invested the proceeds
from the issue of the series 03-1 medium term note certificate in the
receivables trust by paying the proceeds to the receivables trustee and
becoming an investor beneficiary with an aggregate investor interest in the
receivables trust. This aggregate investor interest entitles the MTN issuing
entity to payments arising out of its entitlement to receivables in the
receivables trust.
The series 03-1 medium term note certificate is secured in favour of a
trustee for the benefit of the secured creditors in relation to the class A
notes, the class B notes and the class C notes of series 03-1. The security for
each class of notes issued for series 03-1 is the series 03-1 medium term note
certificate. The security for the notes issued for series 03-1 will not be
cross-collateralised with the security for your notes.
The proceeds of the series 03-2 notes were used by Gracechurch Card Funding
(No. 4) PLC to purchase a corresponding series medium term note certificate,
which we shall refer to as the "series 03-2 medium term note certificate",
issued by the MTN issuing entity. The MTN issuing entity invested the proceeds
from the issue of the series 03-2 medium term note certificate in the
receivables trust by paying the proceeds to the receivables trustee and
becoming an investor beneficiary with an aggregate investor interest in the
receivables trust. This aggregate investor interest entitles the MTN issuing
entity to payments arising out of its entitlement to receivables in the
receivables trust.
The series 03-2 medium term note certificate was charged in favour of a
trustee for the benefit of the noteholders in relation to the class A notes,
the class B notes and the class C notes of series 03-2. The security for each
class of notes issued for series 03-2 was the series 03-2 medium term note
certificate. Series 03-2 was finally repaid in full on the interest payment
date falling in June 2006.
The proceeds of the series 03-3 notes were used by Gracechurch Card Funding
(No. 5) PLC to purchase a corresponding series medium term note certificate,
which we shall refer to as the "series 03-3 medium term note certificate",
issued by the MTN issuing entity. The MTN issuing entity invested the proceeds
from the issue of the series 03-3 medium term note certificate in the
receivables trust by paying the proceeds to the receivables trustee and
becoming an investor beneficiary with an aggregate investor interest in the
receivables trust. This aggregate investor interest entitles the MTN issuing
entity to payments arising out of its entitlement to receivables in the
receivables trust.
10
The series 03-3 medium term note certificate was charged in favour of a
trustee for the benefit of the noteholders in relation to the class A notes,
the class B notes and the class C notes of series 03-3. The security for each
class of notes issued for series 03-3 was the series 03-3 medium term note
certificate. Series 03-3 was finally repaid in full on the interest payment
date falling in August 2006.
The proceeds of the series 04-1 notes were used by Gracechurch Card Funding
(No. 6) PLC to purchase a corresponding series medium term note certificate,
which we shall refer to as the "series 04-1 medium term note certificate",
issued by the MTN issuing entity. The MTN issuing entity invested the proceeds
from the issue of the series 04-1 medium term note certificate in the
receivables trust by paying the proceeds to the receivables trustee and
becoming an investor beneficiary with an aggregate investor interest in the
receivables trust. This aggregate investor interest entitles the MTN issuing
entity to payments arising out of its entitlement to receivables in the
receivables trust.
The series 04-1 medium term note certificate was charged in favour of a
trustee for the benefit of the noteholders in relation to the class A notes,
the class B notes and the class C notes of series 04-1. The security for each
class of notes issued for series 04-1 was the series 04-1 medium term note
certificate. Series 04-1 was finally repaid in full on the interest payment
date falling in February 2007.
The proceeds of the series 04-2 notes were used by Gracechurch Card Funding
(No. 7) PLC to purchase a corresponding series medium term note certificate,
which we shall refer to as the "series 04-2 medium term note certificate,"
issued by the MTN issuing entity. The MTN issuing entity invested the proceeds
from the issue of the series 04-2 medium term note certificate in the
receivables trust by paying the proceeds to the receivables trustee and
becoming an investor beneficiary with an aggregate investor interest in the
receivables trust. This aggregate investor interest entitles the MTN issuing
entity to payments arising out of its entitlement to receivables in the
receivables trust.
The series 04-2 medium term note certificate is charged in favour of a
trustee for the benefit of the noteholders in relation to the class A notes,
the class B notes and the class C notes of series 04-2. The security for each
class of notes issued for series 04-2 is the series 04-2 medium term note
certificate. The security for the notes issued for series 04-2 will not be
cross-collateralised with the security for your notes.
The proceeds of the series 05-1 notes were used by Gracechurch Card Funding
(No. 8) PLC to purchase a corresponding series medium term note certificate,
which we shall refer to as the "series 05-1 medium term note certificate,"
issued by the MTN issuing entity. The MTN issuing entity invested the proceeds
from the issue of the series 05-1 medium term note certificate in the
receivables trust by paying the proceeds to the receivables trustee and
becoming an investor beneficiary with an aggregate investor interest in the
receivables trust. This aggregate investor interest entitles the MTN issuing
entity to payments arising out of its entitlement to receivables in the
receivables trust.
The series 05-1 medium term note certificate is charged in favour of a
trustee for the benefit of the noteholders in relation to the class A notes,
the class B notes and the class C notes of series 05-1. The security for each
class of notes issued for series 05-1 is the series 05-1 medium term note
certificate. The security for the notes issued for series 05-1 will not be
cross-collateralised with the security for your notes.
The proceeds of the series 05-2 notes were used by Gracechurch Card Funding
(No. 9) PLC to purchase a corresponding series medium term note certificate,
which we shall refer to as the "series 05-2 medium term note certificate"
issued by the MTN issuing entity. The MTN issuing entity invested the proceeds
from the issue of the series 05-2 medium term note certificate in the
receivables trust by paying the proceeds to the receivables trustee and
becoming an investor beneficiary with an aggregate investor interest in the
receivables trust. This aggregate investor interest entitles the MTN issuing
entity to payments arising out of its entitlement to receivables in the
receivables trust.
The series 05-2 medium term note certificate is charged in favour of a
trustee for the benefit of the noteholders in relation to the class A notes,
the class B notes and the class C notes of series 05-2. The security for each
class of notes issued for series 05-2 is the series 05-2 medium term note
certificate. The security for the notes issued for series 05-2 will not be
cross-collateralised with the security for your notes.
11
The proceeds of the series 05-3 notes were used by Gracechurch Card Funding
(No. 10) PLC to purchase a corresponding series medium term note certificate,
which we shall refer to as the "series 05-3 medium term note certificate,"
issued by the MTN issuing entity. The MTN issuing entity invested the proceeds
from the issue of the series 05-3 medium term note certificate in the
receivables trust by paying the proceeds to the receivables trustee and
becoming an investor beneficiary with an aggregate investor interest in the
receivables trust. This aggregate investor interest entitles the MTN issuing
entity to payments arising out of its entitlement to receivables in the
receivables trust.
The series 05-3 medium term note certificate is charged in favour of a
trustee for the benefit of the noteholders in relation to the class A notes,
the class B notes and the class C notes of series 05-3. The security for each
class of notes issued for series 05-3 is the series 05-3 medium term note
certificate. The security for the notes issued for series 05-3 will not be
cross-collateralised with the security for your notes.
The proceeds of the series 05-4 notes were used by Gracechurch Card Funding
(No. 11) PLC to purchase a corresponding series medium term note certificate,
which we shall refer to as the "series 05-4 medium term note certificate,"
issued by the MTN issuing entity. The MTN issuing entity invested the proceeds
from the issue of the series 05-4 medium term note certificate in the
receivables trust by paying the proceeds to the receivables trustee and
becoming an investor beneficiary with an aggregate investor interest in the
receivables trust. This aggregate investor interest entitles the MTN issuing
entity to payments arising out of its entitlement to receivables in the
receivables trust.
The series 05-4 medium term note certificate is charged in favour of a
trustee for the benefit of the noteholders in relation to the class A notes,
the class B notes and the class C notes of series 05-4. The security for each
class of notes issued for series 05-4 is the series 05-4 medium term note
certificate. The security for the notes issued for series 05-4 will not be
cross-collateralised with the security for your notes.
The proceeds of the series 06-1 notes were used by Gracechurch Card Notes
2006-A PLC to purchase a corresponding series medium term note certificate,
which we shall refer to as the "series 06-1 medium term note certificate,"
issued by the MTN issuing entity. The MTN issuing entity invested the proceeds
from the issue of the series 06-1 medium term note certificate in the
receivables trust by paying the proceeds to the receivables trustee and
becoming an investor beneficiary with an aggregate investor interest in the
receivables trust. This aggregate investor interest entitles the MTN issuing
entity to payments arising out of its entitlement to receivables in the
receivables trust.
The series 06-1 medium term note certificate is charged in favour of a
trustee for the benefit of the noteholders in relation to the class A1 notes
and the class A2 notes of series 06-1. The security for each class of notes
issued for series 06-1 is the series 06-1 medium term note certificate. The
security for the notes issued for series 06-1 will not be cross-collateralised
with the security for your notes.
LISTING
The notes of 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 relevant underwriter(s) and specified in the relevant
prospectus supplement/final terms.
CLEARING SYSTEMS
Euroclear, Clearstream, DTC and/or, in relation to any series, any other
clearing system (each a "CLEARING SYSTEM") as may be specified in the relevant
prospectus supplement/final terms.
STATUS, SECURITY AND PRIORITY OF PAYMENTS OF THE NOTES
Each series of notes will be constituted by the trust deed and 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, U.S.
dollars, euro or any other currency, as specified in the prospectus supplement/
final terms. The sub-classes within a class of notes will rank pari passu among
12
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 medium term note certificate (see "Terms and Conditions of
the Notes", "The medium term note certificate" and "The Trust Deed").
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
"Securitisation Cashflows" 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 MTN issuing entity as payments of interest and
principal on the corresponding medium term note certificate (see "The medium
term note certificate").
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) towards payment of
amounts due and unpaid on the class A notes, to interest then to principal
after having paid any amounts due to the swap counterparty as specified in this
base prospectus and the relevant prospectus supplement/final terms, (c) towards
payment of amounts due and unpaid on the class B notes, to interest then to
principal after having paid any amounts due to the swap counterparty as
specified in this base prospectus and the relevant prospectus supplement/final
terms, (d) to make payments of interest due and unpaid under the terms of the
expenses loan agreement as specified in this base prospectus and relevant
prospectus supplement/final terms, (e) towards payment of amounts due and
unpaid on the class C notes, to interest then to principal after having paid
any amounts due to the swap counterparty as specified in this base prospectus
and the relevant prospectus supplement/final terms, (f) if the series is
specified as having class D notes, towards payment of amounts due and unpaid on
the class D notes, to interest then to principal after having paid any amounts
due to the swap counterparty as specified in this base prospectus and the
relevant prospectus supplement/final terms, (g) to make payments and retentions
of principal due and unpaid under the terms of the expenses loan agreement as
specified in this base prospectus and relevant prospectus supplement/final
terms and (h) 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
prospectus supplement/final terms.
FORM OF NOTES
Unless otherwise provided in the relevant series trust deed supplement, the
notes will be issued in registered form. The notes of each class or sub-class
will be represented by global note certificates registered in the name of
Clearstream, Euroclear and/or Cede & Co. as nominee of DTC, in relation to any
series, any other clearing system as may be specified in the relevant
prospectus supplement/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 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 or transfer,
with the form of transfer properly executed, at the office of the relevant
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
thereto before the transfer or exchange will be completed. The relevant
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.
NO REGISTRATION UNDER INVESTMENT COMPANY ACT
Neither the issuing entity nor the receivables trustee has been, nor will
they be registered under the United States Investment Company Act of 1940, as
amended (the "INVESTMENT COMPANY ACT").
13
CURRENCIES
Notes of each class or sub-class will be denominated in U.S. dollars,
sterling, euro or such other currency, as specified in the relevant prospectus
supplement/final terms.
ISSUE PRICE
Notes may be issued at any price as specified in the relevant prospectus
supplement/final terms.
MATURITIES
Notes may be issued with any maturity as specified in the relevant
prospectus supplement/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 prospectus supplement/final terms
for each series of notes. An interest payment date for each series will be
specified in the relevant prospectus supplement/final terms but may be subject
to change upon the commencement of a rapid amortisation period or regulated
amortisation period.
DENOMINATIONS
Notes will be issued in such denominations as may be specified in the
relevant prospectus supplement/final terms. Notes will be issued in minimum
denominations of at least $100,000 or its equivalent or as otherwise specified
in the related prospectus supplement/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 for a particular series of notes may be provided by a
series cash reserve account funded from excess finance charge collections. The
amount of cash available to a relevant series will be described in the relevant
prospectus supplement/final terms for such series (see "Securitisation
Cashflows ").
Each series of notes is entitled and subject to varying percentages of
principal collections and finance charge collections (and losses) in respect of
receivables. Any loss not covered by enhancements or credit support will be
borne in order of subordination of the different classes and sub-classes of
notes among themselves, as described in the relevant prospectus supplement/
final terms.
ENFORCEMENT OF NOTES IN GLOBAL FORM
In the case of each global note certificate in relation to a 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.
GOVERNING LAW
The notes will be governed by English law.
SCHEDULED REDEMPTION
Unless previously purchased and cancelled, each class will be redeemed on
the scheduled redemption date as specified in the relevant prospectus
supplement/final terms to the extent of the amount which has on that day been
credited to the relevant distribution ledger in the relevant series issuing
entity distribution account, in accordance with the provisions of the relevant
medium term note certificate.
14
OPTIONAL EARLY REDEMPTION
The issuing entity has the option to redeem all of the remaining notes when
their principal balance is reduced to less than 10 per cent. of their original
principal balance.
If an optional early redemption occurs, you will receive a final
distribution equal to the entire unpaid principal balance of your notes plus
any accrued and unpaid interest.
MANDATORY EARLY REDEMPTION AND PRIORITY OF PAYMENTS
Notes of a particular 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") as
further specified in this base prospectus and in the relevant prospectus
supplement/final terms.
FINAL REDEMPTION
If a series has not been redeemed in full as described in the "Series
Scheduled Redemption Date" section of the relevant prospectus supplement/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 prospectus supplement/final terms.
NOTICES
Any notices that are required to be given by the term of your notes will be
deemed to be validly given if they are published in the Financial Times or
another leading English language daily newspaper in London.
RATINGS OF THE NOTES
It is a condition to issuing each class of notes that they are on issue to
be assigned a rating by each of Standard & Poor's Rating Services, a division
of The McGraw-Hill Companies, Inc. ("STANDARD & POOR'S"), Moody's Investors
Service Inc. ("MOODY'S") and, if stated in the applicable prospectus
supplement/final terms, Fitch Ratings Ltd ("FITCH RATINGS", and, together with
Standard & Poor's and Moody's, the "RATING AGENCIES"). For the avoidance of
doubt, "rating agencies" shall only include Fitch Ratings in the event that
Fitch Ratings will be providing a rating to the relevant series. The ratings
expected to be assigned to each class of notes will be stated in the prospectus
supplement/final terms for that series.
It is a condition to issuing the class A notes that they be rated the
highest rating category by two of the rating agencies, that the class B notes
be rated at least "A" or its equivalent by two of the rating agencies, that the
class C notes be rated at least "BBB" or its equivalent by two of the rating
agencies and that the class D notes, if any, be rated at least "BB" or its
equivalent by two of the rating agencies. A credit rating is not a
recommendation to buy, sell or hold securities and may be subject to revision,
suspension or withdrawal at any time by the assigning rating agency.
SELLING RESTRICTIONS
Any selling restrictions applicable to a series will be as described in the
applicable prospectus supplement/final terms.
TAXATION
Payments of interest and principal will be made without making any
deductions for any tax imposed by any jurisdiction having power to tax unless a
deduction is required by the law of the relevant jurisdiction which has power
to tax. If a deduction for tax is made, the paying agent will account to the
relevant authority for the amount deducted. Neither the issuing entity nor any
paying agent is required to make any additional payments to noteholders for any
deductions made for tax.
TRANSACTION FEES
The following table summarises certain fees payable out of cashflows from
the receivables trust.
15
EXPENSE AMOUNT PRIORITY IN CASHFLOW FREQUENCY
Servicing fee Estimated $[__] each year In priority to class A, B, Each Distribution Date
C and D monthly
distribution amounts
Corporate expenses of Estimated $[__] each year In priority to class A, B, Each Distribution Date
receivables trustee C and D monthly
distribution amounts
Corporate expenses of Estimated $[__] each year In priority to class A, B, Each Distribution Date
the MTN issuing entity C and D monthly
distribution amounts
Corporate expenses of Estimated $[__] each year In priority to class A, B, Each Interest Payment
the issuing entity C and D monthly Date
distribution amounts
Fee payable by issuing Estimated $[__] each year In priority to class A, B, Each Interest Payment
entity to note trustee C and D monthly Date
distribution amounts
Fee payable by the Estimated $[__] each year In priority to class A, B, Each Distribution Date
MTN issuing entity to C and D monthly
security trustee distribution amounts
Total fee payable by Estimated $[__] each year In priority to class A, B, Each Interest Payment
issuing entity to C and D monthly Date
principal paying agent, distribution amounts
U.S. paying agent,
transfer agent, registrar
and agent bank
Interest and principal on As set forth in the Interest is subordinate Each Interest Payment
expenses loan facility relevant prospectus to the Class A and B Date
supplement/final terms monthly distribution
amounts. Principal is
subordinate to payment
of principal and interest
on all notes
Each of the above fees other than the servicing fee is exclusive of value
added tax ("VAT"), if any, which is currently assessed at 17.5 per cent. in the
United Kingdom. Each of the above fees is subject to change at any time without
notice to, or approval by, noteholders. Further, any of the above fees may be
changed in the event a successor transaction party is appointed pursuant to the
applicable transaction document.
16
TAX CONSIDERATIONS
U.K. TAX STATUS
Subject to important qualifications and conditions set out under "United
Kingdom Taxation Treatment of the Notes", including as to final documentation
and assumptions, Clifford Chance LLP, as special U.K. tax advisers, are of the
opinion that:
(i) U.S. persons who have no connection with the United Kingdom will not be
subject to United Kingdom taxation in respect of payment of principal and
interest on the notes as described more fully in the section of this base
prospectus headed "United Kingdom Taxation Treatment of the Notes";
(ii) If and for so long as the notes are included in the Official List of the
United Kingdom Listing Authority in accordance with the provisions of
Part B of the Financial Services and Markets Act 2000 and admitted to
trading on the London Stock Exchange no U.K. withholding in respect of
U.K. tax will be required in respect of payments on the notes; if these
conditions are not satisfied U.K. withholding tax at the current rate of
20 per cent. may be required in respect of these payments;
(iii) No U.K. stamp duty or stamp duty reserve tax is payable on the issue of
the global notes or on the issue or transfer of an individual note
certificate;
(iv) The MTN issuing entity and the issuing entity will be subject to U.K.
corporation tax, at a maximum rate of currently 30 per cent. (proposed to
be reduced to 28 per cent. with effect from April 2008). So long as the
MTN issuing entity and the issuing entity respectively are within the
application of the Taxation of Securitisation Companies Regulations 2006
(the "REGULATIONS"), their taxable profit will in each case be the
greater of [GBP]1200 per annum or the aggregate of [GBP]600 per series
outstanding during the course of the year;
(v) In order to fall within the application of the Regulations, a company
must fulfil certain conditions, including ones which relate to its
ongoing asset holdings (that the assets should be "financial assets"
according to applicable accounting practice) and its ongoing cash flow
management. These conditions are designed to ensure that the Regulations
will apply to a company which is genuinely established and operated as a
securitisation vehicle in a securitisation of money debts. So long as the
cash flows of the MTN issuing entity and the issuing entity continue to
be managed in the same way as they have been to date, they can be
expected as a factual matter to meet the relevant conditions;
(vi) The receivables trustee will have no U.K. tax liabilities and
accordingly, the receivables trustee will have no liability to U.K. tax
in relation to amounts which it receives on behalf of the MTN issuing
entity or amounts which it is obliged to pay to the MTN issuing entity;
(vii) The above description is based on the issuing entity being resident for
tax purposes in the United Kingdom. The issuing entity will be so
resident if and for so long as it is, as a matter of fact, centrally
managed and controlled in the United Kingdom.
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 satisfactory to them and which is not inconsistent with the descriptions
in this base prospectus, Clifford Chance LLP, as special U.K. tax advisers,
expect to give an opinion at closing by reference to the final documentation
and based on certain assumptions listed in that opinion, which will cover in
detail the matters referred to under this heading "- U.K. Tax Status". See
"Risk Factors: Taxable Nature of the MTN issuing entity or the issuing entity
Could Cause a Loss on Your Notes".
JERSEY TAX STATUS
The following summary of the anticipated tax treatment in Jersey of the
issuing entity is based on Jersey taxation law and practice in force at the
date of this document and does not constitute legal or tax advice. Prospective
investors should consult their professional advisers on the implications of
subscribing for, buying, holding, selling, redeeming or disposing of notes
under the laws of the
17
jurisdictions in which they may be liable to taxation. Prospective investors
should be aware that tax rules and practice and their interpretation may
change.
The issuing entity has been granted exempt company status within the meaning
of Article 123A of the Income Tax (Jersey) Law 1961, as amended for the current
calendar year. The effect of such special status is that the issuing entity is
treated as a non-resident company for the purposes of Jersey tax laws and is
therefore exempt from Jersey income tax on its profits arising outside Jersey
(and, by concession, on bank deposit interest arising in Jersey) and from any
obligation to withhold Jersey income tax from any interest or dividend payments
made by it. Such status is applied for on an annual basis (together with
payment of the required charge, currently [GBP]600). The retention of exempt
company status is conditional upon the Comptroller of Income Tax in Jersey
being satisfied that no Jersey resident has a beneficial interest in the
issuing entity, except as permitted by concessions granted by the Comptroller
of Income Tax.
As an exempt company, payments in respect of the notes will not be subject
to taxation in Jersey, no withholding will be required for or on account of
Jersey income tax on such payments to any holder of a note and gains derived
from the sale of notes will not be subject to Jersey income tax, in each case
in the hands of persons not resident for income tax purposes in Jersey. As at
the date of this Prospectus, Jersey has no capital gains tax and no inheritance
tax or gift tax.
No stamp duty or similar taxes are payable in Jersey in connection with the
issue, redemption or sale of the notes.
EUROPEAN UNION DIRECTIVE ON THE TAXATION OF SAVINGS INCOME
Under EU Council Directive 2003/48/EC on the taxation of savings income
(the "EU SAVINGS TAX DIRECTIVE"), each Member State has been 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 or
certain limited types of entity established 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%. The transitional period is to terminate at the end of
the first full fiscal year following agreement by certain non-EU countries to
the exchange of information relating to such payments.
A number of non-EU countries, and certain dependent or associated
territories of certain Member States (including Jersey), have also 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.
A number of non-EU countries, and certain dependent or associated
territories of certain Member States, have agreed to adopt similar measures (in
certain circumstances on a reciprocal basis) to those implemented by the EC
Savings Directive (see further the section entitled "United Kingdom Tax
Considerations" under the heading "European Union Directive on the Taxation of
Savings Income").
With effect from 6 April 2008 the provisions referred to above may also
apply, in certain circumstances, to payments made on redemption of any notes
where the amount payable on redemption is greater than the issue price of the
Notes.
Jersey is not subject to the EU Savings Tax Directive. However, in keeping
with Jersey's policy of constructive international engagement, the States of
Jersey has introduced a retention tax system in respect of payments of
interest, or other similar income, made to an individual beneficial owner
resident in an EU Member State by a paying agent situate in Jersey (the terms
"beneficial owner" and "paying agent" are defined in the EU Savings Tax
Directive). The retention tax system will apply for a transitional period prior
to the implementation of a system of automatic communication to EU Member
States of information regarding such payments. The transitional period will end
only after all EU Member States apply automatic exchange of information and the
EU Member States unanimously agree that the United States of America has
committed to exchange of information upon request. During this
18
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.
Under the implementation of the retention tax system in Jersey the issuing
entity will not be obliged to levy retention tax in respect of interest
payments made by it to a paying agent.
EUROPEAN UNION CODE OF CONDUCT ON BUSINESS TAXATION
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 (the "CODE"). 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 beginning of 2009 with a general zero rate of corporate tax.
UNITED STATES FEDERAL INCOME TAX STATUS
As is further described herein, Clifford Chance U.S. LLP, ("U.S. TAX
COUNSEL") is of the opinion that each of the receivables trust, the MTN issuing
entity and the issuing entity will not be subject to U.S. federal income tax.
The applicable prospectus supplement/final terms will indicate whether the
issuing entity will treat the notes that are offered for sale in the United
States ( the "U.S. OFFERED NOTES") as equity in the issuing entity or as debt
for U.S. federal income tax purposes. Each holder of a U.S. offered note, by
acceptance of such note, will agree to treat such note as either equity in the
issuing entity or debt for U.S. federal income tax purposes, as applicable.
If the applicable prospectus supplement/final terms indicates that the U.S.
offered notes will be treated as debt for U.S. federal income tax purposes,
then, although there is no authority addressing the characterisation of
securities with terms similar to the U.S. offered notes under current law, and
while not free from doubt, U.S. tax counsel, will render an opinion that such
notes will be treated as debt for U.S. federal income tax purposes.
The opinion of U.S. tax counsel is not binding on the IRS, and no assurance
can be given that the characterisation of the U.S. offered notes as debt would
prevail if the issue were challenged by the IRS. Prospective United Stated
holders should consult with their tax advisers as to the effect of a
recharacterisation of the U.S. offered notes as equity interests in the issuing
entity.
U.S. tax counsel has prepared and reviewed the summary of U.S. federal
income tax considerations in this base prospectus and renders the U.S. federal
income tax opinions contained in this base prospectus.
See "Material United States Federal Income Tax Considerations".
ERISA CONSIDERATIONS FOR INVESTORS
Subject to important considerations described under "Certain ERISA and Other
U.S. Considerations" in this base prospectus and unless otherwise stated in an
applicable prospectus supplement/final terms, the notes are eligible for
purchase by persons investing assets of employee benefit plans or individual
retirement accounts.
19
RISK FACTORS
The following is a summary of certain risks in connection with the Gracechurch
Card Programme Funding Limited medium term note programme and an investment in
the notes issued under such programme. This summary is not intended to be
exhaustive. You should carefully consider the following principal risk factors
and any additional risk factors set out in the applicable prospectus
supplement/final terms before deciding to invest in the notes offered by this
base prospectus and the applicable prospectus supplement/final terms.
YOU MAY NOT BE ABLE TO There currently is no secondary market for the notes.
SELL YOUR NOTES The underwriters expect, but are not obligated, to
make a market in the notes. If no secondary market
develops, you may not be able to sell your notes prior
to maturity. We cannot offer any assurance that one
will develop or, if one does develop, that it will
continue.
ALLOCATIONS OF We anticipate that the servicer will charge off or
CHARGED-OFF write off as uncollectible some of the receivables.
RECEIVABLES COULD Each class of investor interest in the receivables
REDUCE YOUR PAYMENTS trust will be allocated a portion of those charged-off
receivables. If the amount of charged-off receivables
allocated to the investor interest exceeds the amount
of funds available to cover those charge-offs, the
investor interest will be reduced. This could cause
the holders of the notes to not receive the full
amount of principal and interest due to them. Any loss
will be borne by the noteholders in the order of
subordination of the different classes of notes, with
the class D notes (if any) bearing the first losses,
followed by the class C notes, then the class B notes
and finally the class A notes as further described in
this base prospectus and in the relevant prospectus
supplement/final terms. See "Securitisation Cashflows:
Defaulted Receivables; Investor Charge-Offs";
"Barclaycard and the Barclaycard Card Portfolio:
Delinquency and Loss Experience."
THE ISSUING ENTITY'S The ability of the issuing entity to pay the principal
ABILITY TO MEET ITS of and interest on your notes will depend on the
OBLIGATIONS ON YOUR receipt by it of payments under the relevant medium
NOTES DEPENDS ON term note certificate issued by the MTN issuing
PAYMENTS UNDER THE entity.
RELEVANT MEDIUM TERM
NOTE CERTIFICATE
The issuing entity will be entitled to receive
interest payments under the relevant medium term note
certificate 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 on the notes to
noteholders (either directly or indirectly via
payments made to and received from swap
counterparties), (iii) to make any necessary payments
to a swap counterparty, (iv) to pay amounts
representing the earnings for the issuing entity, and
(v) 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 medium term note certificate which
will be applied in redeeming the notes (either
directly or indirectly via payments made to and
received from any swap counterparty).
If the issuing entity fails to receive sufficient
funds under the relevant series medium term note
certificate, then the payment of interest and/or the
repayment of principal on your notes may be delayed or
reduced.
20
The issuing entity's receipt of sufficient funds under
the relevant medium term note certificate 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
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
beneficiaries servicing agreement and paid to the
receivables trustee, (iii) distribution being made by
the receivables trustee to the MTN issuing entity of
amounts allocable to the MTN issuing entity in
accordance with the beneficiaries servicing agreement
in respect of the relevant medium term note
certificate, (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
MTN issuing entity in respect of its obligations to
the issuing entity under the relevant medium term note
certificate.
Amounts paid to the issuing entity by the MTN issuing
entity in respect of each medium term note certificate
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 amounts representing issuing entity
profit).
THE SUBORDINATED NOTES The class B notes are subordinated in right of payment
BEAR ADDITIONAL RISK of principal and interest to the class A notes in the
BECAUSE THEY ARE same series. Principal payments to the class B
SUBJECT TO THE PRIOR noteholders will not be made until the class A
PAYMENT OF AMOUNTS DUE noteholders are paid in full. On each payment date
ON NOTES SENIOR TO interest is paid to the class A noteholders before
THEM. payments of interest are made to the class B
noteholders. This could cause the class B noteholders
not to receive the full amount of principal or
interest due to them.
The class C notes are subordinated in right of payment
of principal and interest to the class A notes and the
class B notes in the same series. Principal payments
to the class C noteholders will not be made until the
class A noteholders and the class B noteholders are
paid in full. On each payment date interest is paid to
the class A noteholders and the class B noteholders
before payments of interest are made to the class C
noteholders. This could cause the class C noteholders
not to receive the full amount of principal or
interest due to them.
The class D notes are subordinated in right of payment
of principal and interest to the class A notes, the
class B notes and the class C notes in the same
series. Principal payments to the class D noteholders
will not be made until the class A noteholders, the
class B noteholders and the class C noteholders are
paid in full. On each payment date interest is paid to
the class A noteholders, the class B noteholders and
the class C noteholders before payments of interest
are made to the class D noteholders. This could cause
the class D noteholders not to receive the full amount
of principal or interest due to them.
21
THE ISSUING ENTITY HAS The issuing entity has no operating history and no
LIMITED OPERATING experience with the issuance of notes representing
HISTORY asset-backed debt obligations. As a recently
incorporated special-purpose vehicle, the issuing
entity will be subject to all of the business risks
and uncertainties associated with any new business,
including the risk that it will not achieve its
investment objective and that the value of a
noteholder's investment could decline substantially.
The issuing entity will not engage in any activities
which are not related to the issue of the notes.
INABILITY OF Some series pay out events with respect to a series of
NOTEHOLDERS TO RECEIVE notes issued under this base prospectus and the
THE FULL PERCENTAGE relevant prospectus supplement/final terms will cause
ALLOCATION OF the start of the regulated amortisation period rather
PRINCIPAL COLLECTIONS than the rapid amortisation period. During a regulated
DURING THE REGULATED amortisation period, not all of the principal
AMORTISATION PERIOD collections allocated to the investor interest may be
COULD DELAY PAYMENTS used to make payments of principal to the MTN issuing
ON YOUR NOTES OR CAUSE entity as they would be during a rapid amortisation
A LOSS ON YOUR NOTES period. Instead, principal payments to the MTN issuing
entity -- and thus ultimately on your notes -- will be
limited to the controlled deposit amount. This could
cause you to receive payments of principal more slowly
than you would during a rapid amortisation period.
Since some of the series pay out events, which are
described below in "Securitisation Cashflows -- Series
Pay Out Events", that result in the start of a
regulated amortisation period are caused by a
deterioration in the performance of the receivables, a
delay in the principal payments on your notes could
expose you to an increased risk of losses on your
notes or a delay in payment on your notes.
GROUPING OF THE MTN Contractual provisions are contained in the security
ISSUING ENTITY WITH trust deed and MTN issuing entity cash management
BARCLAYS FOR TAX agreement and the other agreements to which the MTN
PURPOSES COULD issuing entity is a party by which the other parties
JEOPARDISE THE to those agreements agree not to take any actions
BANKRUPTCY REMOTE against the MTN issuing entity that might lead to its
STATUS OF THE MTN bankruptcy. Furthermore, the MTN issuing entity is
ISSUING ENTITY CAUSING contractually restricted from undertaking any business
AN EARLY REDEMPTION OF other than in connection with the financings described
YOUR NOTES OR A LOSS in this base prospectus. In particular, the MTN
ON YOUR NOTES issuing entity is expressly prohibited from incurring
any additional indebtedness, having any employees,
owning any premises and establishing or acquiring any
subsidiaries. Together, these provisions ensure that
the likelihood of the MTN issuing entity becoming
insolvent or bankrupt is remote.
Notwithstanding the steps that have been and may be
taken to ensure that the insolvency of the MTN issuing
entity will be remote, the MTN issuing entity is
included in the Barclays Group registration for VAT
purposes. As a company included in that group
registration, broadly, it will be liable, on a joint
and several basis with all other companies in the VAT
group registration, for the VAT liability of the
representative member of the VAT group -- Barclays
Bank PLC -- arising only during the MTN issuing
entity's period of membership. Accordingly, these
secondary liabilities for VAT could increase the
likelihood of the MTN issuing entity becoming
insolvent. In addition, there are provisions in the
U.K. tax code that are designed to enable HMRC to
collect corporation tax from one member of a group
where another member of the
22
group has failed to discharge certain taxes due and
payable by it within a specified time period.
If the MTN issuing entity were required to pay any VAT
due from the representative member of the Barclays VAT
group or to become liable for corporation tax
liabilities of another member in the Barclays Group,
which the MTN issuing entity was unable to meet, HMRC
could seek to put the MTN issuing entity into
insolvency. This could cause an early redemption of
your notes or a loss on your notes.
ISSUANCE OF ADDITIONAL The MTN issuing entity has issued twelve previous
SERIES OF MEDIUM TERM series of medium term note certificates (of which
NOTE CERTIFICATES MAY eight remain outstanding as series 99-1 was repaid in
ADVERSELY AFFECT YOUR November 2002, series 03-2 in June 2006, series 03-3
RIGHTS BY DILUTING in August 2006 and series 04-1 in February 2007) and
YOUR VOTING POWER may issue additional series of medium term note
certificates in connection with the issuance of other
series of investor certificates. The holder of the
medium term note certificates of each series --
including the issuing entity -- may require the MTN
issuing entity, as investor beneficiary, to take
action or direct actions to be taken under the
declaration of trust and trust cash management
agreement or a supplement. However, the consent or
approval of holders of a percentage of the total
principal balance of the medium term note certificates
of all series might be necessary to require or direct
those actions. These actions include terminating the
appointment of the servicer under the beneficiaries
servicing agreement or the trust cash manager under
the declaration of trust and trust cash management
agreement. Thus, the holder of any new series of
medium term note certificates will have voting rights
that will reduce the percentage interest of the
issuing entity as holder of the medium term note
certificate. Holders of medium term note certificates
of other series -- or persons with the power to direct
their actions -- may have interests that do not
coincide with the interests of the issuing entity --
or the persons with the power to direct the issuing
entity. This may restrict your ability to ultimately
direct the MTN issuing entity to take the actions
referred to above.
THE ISSUANCE OF The issuing entity may issue additional series of
ADDITIONAL SERIES OF notes from time to time. Noteholders of a given series
NOTES FROM TIME TO may be entitled to instruct the note trustee to
TIME MAY, IN CERTAIN enforce their rights against the issuing entity. Under
CIRCUMSTANCES, the trust deed, the giving of some instructions to the
ADVERSELY AFFECT YOUR note trustee may only necessitate the vote of the
RIGHTS BY DILUTING noteholders of one particular series. However, the
YOUR VOTING POWER 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.
INSOLVENCY OF THE None of the MTN issuing entity, the receivables
ORIGINATOR MAY RESULT trustee, the issuing entity, the underwriter or the
IN AN INABILITY TO dealers has undertaken or will undertake any
REPURCHASE RECEIVABLES 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 this base
prospectus or any prospectus supplement/final terms --
or to establish the creditworthiness of any cardholder
on the designated accounts. The MTN
23
issuing entity, receivables trustee and the issuing
entity will rely solely on the representations given
by the originator to the receivables trustee about the
receivables, the cardholders on the designated
accounts, the designated accounts and the effect of
the assignment of the receivables.
If any representation made by the originator about the
receivables proves to have been incorrect when made,
the originator will be required to repurchase the
affected receivables from the receivables trustee. If
the originator becomes bankrupt or insolvent, the
receivables trustee may be unable to compel the
originator to repurchase receivables, and you could
incur a loss on your notes or an early redemption of
your notes.
INSOLVENCY OF THE The ability of each of the issuing entity, the MTN
ISSUING ENTITY, THE issuing entity and the receivables trustee to meet its
MTN ISSUING ENTITY OR obligations under the notes, the medium term note
THE RECEIVABLES certificate and the receivables securitisation
TRUSTEE COULD CAUSE AN agreement and the declaration of trust and trust cash
EARLY REDEMPTION OF management agreement will depend upon their continued
YOUR NOTES OR A LOSS solvency.
ON YOUR NOTES
A company that has assets in the United Kingdom will
be insolvent if its liabilities exceed its assets or
if it is unable to pay its debts as they fall due.
Each of the issuing entity, the MTN issuing entity and
the receivables trustee have been structured so that
the likelihood of their becoming insolvent is remote.
Each of these entities is contractually restricted
from undertaking any business other than in connection
with the financings described in this base prospectus.
They each are expressly prohibited from incurring any
additional indebtedness, having any employees, owning
any premises and establishing or acquiring any
subsidiaries. Contractual provisions are contained in
each of the agreements to which each of these entities
is a party which will prohibit the other parties to
those agreements from taking any actions against these
entities that might lead to their insolvency.
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 MTN issuing entity or the
receivables trustee could become insolvent. If this
were to occur, you could suffer a loss on your notes
or an early redemption of your notes.
APPLICATION OF THE There is an increasing volume of legislation that is
CONSUMER CREDIT ACT applicable to consumer credit in the United Kingdom.
1974, AS AMENDED BY In addition, there are proposals to amend existing
THE CONSUMER CREDIT legislation. Of particular importance are the Consumer
ACT 2006 AND OTHER Credit Act 1974, as amended by the Consumer Credit Act
LEGISLATION MAY IMPEDE 2006 (the "CONSUMER CREDIT ACT") and the related
COLLECTION EFFORTS AND Unfair Terms in Consumer Contracts Regulations 1999
COULD CAUSE EARLY and Consumer Credit (Cancellation Notices and Copies
REDEMPTION OF YOUR of Documents) Regulations 1983, as amended (the
NOTES OR A LOSS ON "REGULATIONS"). The Consumer Credit Act and
YOUR NOTES regulations are administered by, amongst others, the
Office of Fair Trading (the "OFT"). The Consumer
Credit Act and regulations apply, in whole or in part,
to the transactions occurring on the designated
accounts and to the credit or charge card agreements.
The effect of the application of the Consumer Credit
Act and the regulations on the relevant underlying
24
credit or charge card agreements may result in adverse
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 or
charge card agreement.
As is common with many other U.K. credit card issuers,
some of Barclaycard's credit and charge card
agreements do not comply in all respects with the
Consumer Credit Act, the regulations or other related
legislation.
In addition, Barclaycard, in common with many other
U.K. credit card issuers, has received and expects to
continue to receive correspondence from and to have
discussions with, the OFT in relation to concerns the
OFT may raise from time to time in respect of
compliance of Barclaycard's credit and charge card
agreements with the Consumer Credit Act, the
regulations or other related legislation, or any other
concerns that the OFT may have in respect of
Barclaycard's credit and charge card agreements or
Barclaycard's advertising, marketing or administration
thereof.
If a credit or charge card agreement has not been
executed or modified in accordance with the Consumer
Credit Act, it may be unenforceable against a
cardholder without a court order. The originator gives
no guarantee that a court order could be obtained if
required. The Consumer Credit Act has been amended by
the introduction of a concept of an "unfair
relationship" from April 2007. If a lender is found to
have conducted such a relationship with a borrower,
the borrower may apply to the court for the waiver of
its debts to the lender and the court has jurisdiction
to waive the repayment obligation.
With respect to those credit or charge card agreements
which may not be compliant, such that a court order
enforcing such agreement could not be obtained, the
originator estimates that this would apply to less
than 1 per cent. of the aggregate principal
receivables in the designated accounts on 31 December
2006. Barclaycard does not anticipate any material
increase in the percentage of these receivables in the
securitised portfolio. In respect of those accounts
that do not comply with the Consumer Credit Act it
will still be possible to collect payments and seek
arrears from cardholders who are falling behind with
their payments. The originator will have no obligation
to repay or account to a cardholder for any payments
received by a cardholder because of this non-
compliance with the Consumer Credit Act. However, if
losses arise on these accounts, they will be written
off and borne by the investor beneficiary and
originator beneficiary based on their interests in the
receivables trust. Accordingly, if this were to occur,
you could suffer a loss on your notes or an early
redemption on your notes.
Transactions involving the use of a credit card in the
United Kingdom may constitute transactions under
debtor-creditor-supplier agreements for the purposes
of section 75 of the Consumer Credit Act. A debtor-
creditor-supplier agreement includes an agreement by
which the creditor, with knowledge of its purpose,
advances funds to finance the debtor's purchase of
goods or services from a supplier.
25
Section 75 of the Consumer Credit Act provides that if
a supplier breaches a contract between the supplier
and a cardholder in a transaction under certain
debtor-creditor-supplier agreements, or if the
supplier makes a misrepresentation about the contract,
the creditor may also be liable to the cardholder for
the breach or misrepresentation. An example of a
supplier's breach of contract would include the
supplier selling the cardholder merchandise that is
defective or unsuitable for its purpose. In these
circumstances, the cardholder may have the right to
reduce the amount owed to the originator under his or
her credit or charge card account. This right would
survive the sale of the receivables to the receivables
trustee. As a result, the receivables trustee may not
receive the full amount otherwise owed by a
cardholder. However, the creditor will not be liable
where the cash price of the item or service supplied
underlying the claim is [GBP]100 or less, or greater
than [GBP]30,000.
The receivables trustee has agreed on a limited
recourse basis to indemnify the originator for any
loss suffered by the originator from a cardholder
claim under section 75 of the Consumer Credit Act.
This indemnity cannot exceed the original outstanding
principal balance of the affected charges on a
designated account.
The receivables trustee's indemnity will be payable
only from and to the extent of excess spread on the
receivables. Any amounts that the originator recovers
from the supplier will reduce the originator's loss
for purposes of the receivables trustee's indemnity.
This is described under "Securitisation Cashflows:
Aggregate Investor Indemnity Amount". The originator
will have rights of indemnity against suppliers under
section 75 of the Consumer Credit Act. The originator
may also be able to charge-back the transaction in
dispute to the supplier under the operating
regulations of VISA or MasterCard.
If the originator's loss for purposes of the
receivables trustee's indemnity exceeds the excess
spread available to satisfy the loss, the originator
interest in the receivables trust will be reduced by
the amount of the excess loss.
Satisfaction by the receivables trustee of any such
indemnity payment (as described above) could have the
effect of reducing or eliminating excess spread which
might otherwise have been available to the MTN issuing
entity. These consequences could result in you
incurring a loss on your investment or an early
redemption of your notes.
DEPARTMENT OF TRADE In its white paper dated December 2003, the DTI, the
AND INDUSTRY ("DTI") U.K. government department responsible for consumer
WHITE PAPER DATED credit, indicated that the government proposed to take
DECEMBER 2003 IN various actions to address matters of concern to it in
CONNECTION WITH ITS this area. Since then a number of changes have been
REVIEW OF CONSUMER made by subordinate legislation under the Consumer
CREDIT Credit Act and further legislative changes are coming
into effect in October 2007 and again in April and
October 2008.
26
CONSUMER CREDIT Two sets of regulations that are particularly
REGULATIONS AND THE pertinent to Barclaycard were made during 2004
ADVERTISEMENTS pursuant to the Consumer Credit Act. The Consumer
REGULATIONS COULD Credit (Advertisements) Regulations 2004
CAUSE EARLY REDEMPTION ("ADVERTISEMENTS REGULATIONS") were made in June 2004
OF YOUR NOTES OR A and came into force on 31 October 2004. They replace
LOSS ON YOUR NOTES regulations made in the period 1989-2000 in relation
to the advertising of consumer credit. The Consumer
Credit (Agreements) (Amendment) Regulations 2004
("AGREEMENTS REGULATIONS") were made in June 2004 and
came into force on 31 May 2005. The advertisements
regulations contain a new statutory regime governing
the content of marketing materials that promote
consumer credit. The advertisements regulations
require every credit advertisement to be made in plain
and intelligible language, be easily legible or
clearly audible as the case may require and specify
the name of the advertiser. The advertisements
regulations prescribe information that has to be
included in a credit advertisement. In addition, the
advertisements regulations provide certain assumptions
which must be applied when calculating a total charge
for credit and prescribe the manner in which the total
charge for credit and any stated annual percentage
rate must be disclosed.
The possible unenforceability of, or possible
liabilities for misrepresentation or breach of
contract, in relation to an underlying credit or
charge card agreement may result in unrecoverable
losses on accounts to which such agreements apply. If
losses arise on these accounts, they will be written
off and borne by the investor beneficiary and
originator beneficiary based on their interests in the
receivables trust. Accordingly, if this were to occur,
you could suffer a loss on your notes or an early
redemption on your notes.
THE AGREEMENTS The agreements regulations amend the Consumer Credit
REGULATIONS COULD (Agreements) Regulations 1983 ("1983 REGULATIONS").
CAUSE EARLY REDEMPTION The agreements regulations set out the order in which
OF YOUR NOTES OR A the prescribed content of documents comprising a
LOSS ON YOUR NOTES credit or charge card agreement (including any
variations to such agreements which create a modifying
agreement under section 82(3) of the Consumer Credit
Act) is to be given and the place of the signature and
separate boxes required under the 1983 regulations and
the agreements regulations. An additional form of
consent is required by the agreements regulations
where a cardholder purchases certain insurance
products on credit. In common with the advertisements
regulations, the agreements regulations contain new
prominence and legibility requirements and new
requirements in relation to the calculation and
description of an annual percentage rate.
The possible unenforceability of, or possible
liabilities for misrepresentation or breach of
contract, in relation to an underlying credit or
charge card agreement may result in unrecoverable
losses on accounts to which such agreements apply. If
losses arise on these accounts, they will be written
off and borne by the investor beneficiary and
originator beneficiary based on their interests in the
receivables trust. Accordingly, if this were to occur,
you could suffer a loss on your notes or an early
redemption on your notes.
CONSUMER CREDIT An Act to amend the Consumer Credit Act (the "CONSUMER
PROVISIONS COULD CAUSE CREDIT ACT 2006") became law in March 2006. The
EARLY REDEMPTION OF provisions of the Consumer Credit Act 2006 and related
YOUR NOTES OR A LOSS implementing regulations are coming into effect
ON YOUR NOTES between June 2006 and October 2008.
27
The Consumer Credit Act 2006 will, when implemented,
inter alia, give effect in the Consumer Credit Act to
a concept of an "unfair relationship". This appears to
be a broad concept. A court would be entitled to look
at any aspect of a credit relationship in order to
determine whether unfairness to the debtor exists.
Under the Consumer Credit Act 2006 amendments,
remedies would include requiring the creditor to pay
back sums to the debtor that had previously been paid
by the debtor to the creditor. These provisions of the
Consumer Credit Act 2006 amendments are intended to
apply to all credit agreements regardless of when
entered into with the exception of agreements made
before the commencement of the provisions and which
are completed before the end of any transitional
period which is specified.
The Consumer Credit Act 2006 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.
The possible unenforceability of, or possible
liabilities for misrepresentation or breach of
contract, in relation to an underlying credit or
charge card agreement may result in unrecoverable
losses on accounts to which such agreements apply. If
losses arise on these accounts, they will be written
off and borne by the investor beneficiary and
originator beneficiary based on their interests in the
receivables trust. Accordingly, if this were to occur,
you could suffer a loss on your notes or an early
redemption on your notes.
SECOND EU DIRECTIVE In May 2007, an agreement was reached at a meeting of
RELATING TO CONSUMER the Competitiveness (Internal Market Industry and
CREDIT ADOPTION Research) Council (an adjunct of the European Council
UNCERTAIN of Ministers), concerning a proposal for a second EU
directive relating to consumer credit. It was agreed
that this new EU directive should provide for the
adoption of common provisions for consumer credit
documentation in all EU member states. As such, it
will constitute a substantial piece of harmonisation
in the single European market for retail financial
services. The next step is for the EU Parliament to
decide whether it wishes to adopt the proposed
Directive in this form or propose amendments to it.
The Directive is expected to achieve its finally
settled text in the second half of 2007, after which
there will normally be a two year period for EU member
states to implement the Directive into the domestic
law of each state.
EU DIRECTIVE Directive 2005/29/EC concerning unfair business to
CONCERNING UNFAIR consumer commercial practices was made on 11 May 2005.
COMMERCIAL PRACTICES This is a directive of general application and is not
COULD CAUSE EARLY confined to consumer credit or other financial
REDEMPTION OF YOUR services. The directive will enter into U.K. law and
NOTES OR A LOSS ON take effect in the United Kingdom in 2007. The
YOUR NOTES 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. Any such changes
28
might have an adverse impact on the ability of credit
and charge card issuing entities, such as Barclaycard,
to promote their products and services.
The possible unenforceability of, or possible
liabilities for misrepresentation or breach of
contract, in relation to an underlying credit or
charge card agreement may result in unrecoverable
losses on accounts to which such agreements apply. If
losses arise on these accounts, they will be written
off and borne by the investor beneficiary and
originator beneficiary based on their interests in the
receivables trust. Accordingly, if this were to occur,
you could suffer a loss on your notes or an early
redemption on your notes.
FAILURE TO NOTIFY The transfer by the originator to the receivables
CARDHOLDERS OF THE trustee of the benefit of the receivables is governed
TRANSFER OF by English law and does not give the receivables
RECEIVABLES COULD trustee full legal title to the receivables. Notice to
DELAY OR REDUCE the cardholders of the transfer would perfect the
PAYMENTS ON YOUR NOTES legal title of the receivables trustee to the
receivables. 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 that notice of the
transfer will not be given to cardholders unless the
originator's long-term senior unsecured indebtedness
as rated by Moody's, Standard & Poor's or Fitch
Ratings (if Fitch Ratings is then rating a series of
notes) 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 the designated account by making payment to the
originator.
Prior to the insolvency of the originator, unless
notice was given to a cardholder who is a depositor or
other creditor of the originator, equitable set-offs
may accrue in favour of the cardholder against his or
her obligation to make payments to the originator
under the designated account. These rights may result
in the receivables trustee receiving reduced payments
on the 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
cardholder had 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 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 originator or the cardholder can amend the
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 a loss on your notes.
29
COMPETITION IN THE The credit and charge card industry in the United
U.K. CREDIT CARD Kingdom is highly competitive. There is increased
INDUSTRY COULD LEAD TO competitive use of advertising, target marketing and
EARLY REDEMPTION OF pricing competition in interest rates and cardholder
YOUR NOTES fees as both traditional and new card issuing entities
seek to expand their presence in or enter the U.K.
market and compete for customers.
New 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 ("TEASER RATES"). Also, in the last few
years a number of new card issuing entities have
entered the U.K. market from the United States and
have sought to build market share primarily through
aggressive pricing. As a result of this competition,
certain competitors offer cards to selected customers
with various cost reducing features or at lower
interest rates than those offered by Barclaycard.
This competitive environment may affect the
originator's ability to originate new accounts and
generate new receivables and may also affect the level
of retention of existing accounts. Some of the
recently originated or acquired accounts in the bank
portfolio of the originator 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. Recently, market attrition
rates for such accounts have been increasing. If the
rate at which new receivables are generated declines
significantly and if the originator is unable to
nominate additional accounts or product lines for the
receivables trust, a pay out event could occur with
respect to any series of notes issued under this base
prospectus and the relevant prospectus supplement/
final terms. Such a pay out event could result in an
early redemption of your notes.
SOCIAL, LEGAL, Changes in card use, payment patterns, amounts of
POLITICAL AND ECONOMIC yield on the card portfolio generally and the rate of
FACTORS AFFECT CREDIT defaults by cardholders may result from a variety of
CARD PAYMENTS AND ARE social, legal, political and economic factors in the
UNPREDICTABLE United Kingdom. Social factors include changes in
public confidence levels, attitudes toward incurring
debt and perception of the use of credit and charge
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. There is currently
significant political interest in the consumer credit
market and, in particular, credit cards. The OFT in
2003 commenced an investigation into the levels of
default charges applied by several credit card
lenders, including Barclaycard. With effect from 1
August 2006, Barclaycard introduced a default charge
fee of [GBP]12, in line with the OFT's public
statement in April 2006 of what the OFT considered to
be a reasonable amount for a default charge. 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, including the
above-noted OFT investigation and correspondence, will
affect the future use of credit, default
30
rates, the yield on the card portfolio generally or
cardholder repayment patterns.
In addition, in September 2005 the OFT received a
super-complaint from the Citizens Advice Bureau
relating to payment protection insurance. As a result
of its inquiries, the OFT commenced a market study on
payment protection insurance in April 2006. We are
unable to determine and have no basis on which to
predict accurately whether, or to what extent, the
outcome of the study and any subsequent action by the
OFT in respect of payment protection insurance would
affect the card portfolio generally or cardholder
repayment patterns.
REDUCTION IN THE RATE Barclaycard receives fees called "interchange" from
OF INTERCHANGE CAUSED the banks that clear transactions for merchants as
BY POTENTIAL ADVERSE partial compensation for amongst other things, taking
REGULATORY RULINGS MAY credit risk and absorbing fraud losses. See "The
ADVERSELY AFFECT Receivables."
PAYMENTS ON YOUR NOTES
The OFT has been conducting an examination of whether
the rates of interchange paid by retailers in respect
of MasterCard credit and charge cards in the United
Kingdom are too high. In connection with this
investigation, the OFT announced in September 2005 a
decision with respect to an agreement (which had been
terminated by mutual consent of the parties to that
agreement in November 2004) regarding the rate of
interchange for MasterCard credit and charge cards.
The OFT's decision indicated that the agreement
constituted an unlawful collective agreement on price
with respect to the level of interchange fees, and
also stated that the agreement resulted in the
unjustified recovery of certain costs. In June 2006,
the Competition Appeals Tribunal, with the consent of
the OFT, set aside the OFT's September 2005 decision.
The OFT has subsequently launched a new investigation
into the agreement that has replaced the agreement
terminated in November 2004 and which is currently in
effect with respect to rates of interchange to be paid
in respect of MasterCard credit cards and charge
cards. If an OFT decision similar to that originally
reached regarding the old agreement is reached with
respect to the current agreement, or if agreement is
reached on a lower rate of interchange, such decision
or agreement will adversely affect the yield on UK
credit card portfolios.
The OFT had previously also commenced an investigation
into the rates of interchange in respect of VISA cards
and issued a statement of objections. This was
withdrawn at the same time the original OFT decision
was set aside by the Competition Appeals tribunal in
the MasterCard case. The OFT has, as with MasterCard,
commenced a further investigation into the rates of
interchange on VISA cards.
The European Commission issued a decision on 24 July
2002 concluding that an examination of the level of
cross-border interchange within the European Union in
respect of VISA credit and charge cards was too high
and required VISA to undertake a phased reduction in
the rate of interchange to be paid by retailers in the
future. We note that the European Commission will be
free to re-examine this issue after 31 December 2007.
In addition, the European Commission is presently
investigating MasterCard's rules and agreement,
31
with a particular emphasis on the interchange fees. A
reduction in the rate of interchange as a result of
these findings could affect the future yield on the
card portfolio and adversely affect payment on your
notes.
SUPER-COMPLAINT TO THE On 1 April 2007, the UK Consumer Interest Association
OFT CONCERNING CREDIT known as Which? submitted a super-complaint to the OFT
CARD INTEREST CHARGES pursuant to the Enterprise Act 2002. The super-
complaint criticises the various ways in which credit
card companies calculate interest charges on credit
card accounts. On 26 June 2007, the OFT announced a
new program of work with the credit card industry and
consumer bodies in order to make the costs of credit
cards easier for consumers to understand. This OFT
decision follows the receipt by the OFT of the super-
compliant from Which? This new work will explore the
issues surrounding the costs of credit for credit
cards including purchases, cash advances, introductory
offers and payment allocation. The OFT's programme of
work is expected to take six months.
OFT MARKET STUDY The OFT announced a market study into personal current
RESULT UNCERTAIN accounts ("PCAS") in the U.K. on 26th April 2007. The
market study will look at: (i) whether the provision
of "free if in credit" PCAs delivers sufficiently high
levels of transparency and value for customers; (ii)
the implications for competition and consumers if
there were to be a shift away from "free if in credit"
PCAs; (iii) the fairness and impact on consumers
generally of the incidence, level and consequences of
account charges; and (iv) what steps could be taken to
improve customers' ability to secure better value for
money, in particular to help customers make more
informed current account choices and drive
competition.
The study will focus on PCAs but will include an
examination of other retail banking products, in
particular savings accounts, credit cards, personal
loans and mortgages in order to take into account the
competitive dynamics of UK retail banking.
FAILURE TO COMPLY WITH With effect from (for the most part) 21 August 2002,
THE ELECTRONIC the ECommerce Directive (the "ECD") has been effected
COMMERCE DIRECTIVE in the United Kingdom by a number of statutory
COULD RESULT IN instruments and implementing rules including, but not
DISCIPLINARY ACTION limited to, the Electronic Commerce (EC Directive)
Regulations 2002 (which apply to non-FSA regulated
entities), the Electronic Commerce Directive
(Financial Services and Markets) Regulations 2002, as
amended (which apply to FSA regulated entities) and
the creation of the Electronic Commerce Directive
sourcebook ("ECO") in the FSA Handbook.
In essence the ECD aims to free up cross-border
"information society services" by requiring member
states to apply the principle of "country of origin"
regulation to services provided using electronic
means. "Information society services" are defined as
"any service normally provided for remuneration, at a
distance by means of electronic equipment for the
processing (including digital compression) and storage
of data, and at the individual request of a recipient
of a service" and will therefore include (but are not
limited to) web-based online information. Under the
principle of "country of origin", a firm providing
cross-border "information society
32
services" must comply with the applicable rules in the
country from which it is providing the services and
the country into which it is providing the services
cannot impose additional restrictions. As such, in
providing "information society services" (whether in
the United Kingdom or in another EEA state), the
seller will be required to comply with applicable
rules in the United Kingdom (including, but not
limited to, the United Kingdom financial promotions
regime).
The ECD also requires member states to impose
disclosure and other rules on firms offering
"information society services" before any contract is
entered into. The information to be disclosed
includes, but is not limited to, contact details and
background information in respect of the service
provider, a variety of information which is required
to be provided in a clear and unambiguous manner and
disclosure of information to the recipient on how to
conclude contractual arrangements.
Failure to comply with the ECO rules could result in,
amongst other things, disciplinary action by the FSA
and possible claims under section 150 of FSMA for
breach of FSA rules. Under the Electronic Commerce (EC
Directive) Regulations 2002 the information disclosure
requirements are enforceable, at the suit of any
recipient of a service, by an action against the
service provider for damages for breach of statutory
duty. In addition, where a person has entered into a
contract to which the Electronic Commerce (EC
Directive) Regulations 2002 apply and the service
provider has not made available means of allowing him
to identify and correct input errors prior to
concluding the contract, the recipient will be
entitled to rescind the contract unless a court having
jurisdiction in respect of the particular contract
orders otherwise on the application of the service
provider. The Electronic Commerce (EC Directive)
Regulations 2002 also enable an application to be made
for a court order to stop an infringement of the
information disclosure requirements which harms the
collective interests of consumers.
A CHANGE IN THE TERMS Only the receivables arising under the designated
OF THE DESIGNATED accounts are transferred to the receivables trustee.
ACCOUNTS MAY ADVERSELY The originator will continue to own those accounts. As
AFFECT THE AMOUNT OR the owner of the accounts, the originator retains the
TIMING OF COLLECTIONS right to change the terms of the accounts. For
AND MAY CAUSE AN EARLY example, the originator could change the monthly
REDEMPTION OF YOUR interest rate, increase or reduce the credit limits on
NOTES OR A DOWNGRADE the accounts, reduce or eliminate fees on the accounts
OF YOUR NOTES or reduce the required minimum monthly payment.
The originator may change the terms of the accounts to
maintain its competitive position in the U.K. credit
and charge card industry. Changes in interest rates
and fees could lower the amount of finance charge
receivables generated by those 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 prospectus supplement/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.
33
PRINCIPAL ON YOUR The receivables in the receivables trust may be paid
NOTES MAY BE PAID at any time and we cannot assure you that new
EARLIER THAN EXPECTED receivables will be generated or will be generated at
- -- CREATING A levels needed to maintain the receivables trust. To
REINVESTMENT RISK TO prevent the early redemption of the notes, new
YOU -- OR LATER THAN receivables must be generated and added to the
EXPECTED receivables trust or new accounts must be originated
and nominated for the receivables trust. The
receivables trust is required to maintain a minimum
amount of receivables. The generation of new
receivables or receivables in new accounts is affected
by the originator's ability to compete in the then
current industry environment and by customers changing
borrowing 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 charges
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
prospectus supplement/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.
CREDIT ENHANCEMENT MAY Credit enhancement for your notes is limited and
BE INSUFFICIENT TO unless otherwise indicated in the corresponding
PREVENT A LOSS ON YOUR prospectus supplement/final terms, the notes will not
NOTES benefit from any external credit enhancement. The only
assets that will be available to make payment on your
notes are the assets of the issuing entity pledged to
secure payment of 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 swap counterparty 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.
ISSUANCE OF ADDITIONAL Twelve series have been created within the receivables
SERIES BY THE trust. Four series have been redeemed. As well, the
RECEIVABLES TRUSTEE ON second series, series 02-1, is expected to be redeemed
BEHALF OF THE in October 2007 and the seventh series, series 04-2,
RECEIVABLES TRUST MAY is expected to be redeemed in November 2007.
ADVERSELY AFFECT Additional series may from time to time be created
PAYMENTS ON YOUR NOTES within the receivables trust. Any new series of
investor certificates -- and medium term note
certificates and notes -- will also be payable from
the receivables in the receivables trust. The
principal terms of any new series of investor
certificates will be contained in a new series
supplement to the declaration of trust and trust cash
management agreement. The terms of a new series
contained in the new supplement to the declaration of
trust and trust cash management will not be subject to
your prior review or consent.
34
The principal 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 declaration of trust 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 investor
certificates 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 series of which your
notes are a part.
CREDIT QUALITY OF THE The originator may designate additional credit or
RECEIVABLES TRUST'S charge card accounts as designated accounts and offer
ASSETS MAY BE ERODED the receivables trustee an assignment of the
BY THE ADDITION OF NEW receivables arising under the additional accounts. The
ACCOUNTS WHICH COULD originator may be required at times to nominate
ADVERSELY AFFECT additional accounts as designated accounts. These
COLLECTIONS OF accounts may include accounts that were originated or
RECEIVABLES acquired using criteria that are different from those
applicable to the accounts from which receivables were
originally assigned to the receivables trustee before
the issuance of the series of notes issued pursuant to
this base prospectus and the relevant prospectus
supplement/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. If
this occurred you could suffer an early redemption of
or a loss on your notes.
INTEREST RATE PAYABLE In line with the rest of the U.K. market, Barclaycard
ON EACH MEDIUM TERM may apply differential interest rates to each product
NOTE CERTIFICATE MAY offering, some of which may be fixed for predetermined
INCREASE WITHOUT A periods. The majority of the designated accounts have
CORRESPONDING CHANGE monthly interest rates that are constant, except for
IN CARD INTEREST RATES Barclaycard's ability to change the interest rate at
POTENTIALLY CAUSING A its discretion. This affects the amount of finance
LOSS ON YOUR NOTES OR charge collections the receivables trustee can pay to
EARLY REDEMPTION OF the MTN issuing entity to fund interest payments on
YOUR NOTES the medium term note certificates then outstanding.
The interest rate paid on the medium term note
certificate will be based on the London interbank
offered rate for deposits in sterling, which changes
from time to time. Accordingly, the interest payable
on the medium term note certificate could increase
without a corresponding increase in the amount of
finance charge collections. If this occurred, you
could suffer a loss on your notes or a pay out event
could occur causing an early redemption of your notes.
35
COMMINGLING OF Collections from cardholders for the designated
COLLECTIONS WITH accounts and other Barclaycard cardholders of non-
ORIGINATOR MAY DELAY securitised accounts will initially be paid to an
OR REDUCE PAYMENTS ON operating account of the originator. The originator
YOUR NOTES has declared a trust over the operating account in
favour of the receivables trustee for collections that
are deposited in it. Collections on the designated
accounts will be transferred to the trustee collection
account within three business days of being
identified.
For the limited time that collections on the
designated accounts are in the operating account, they
may be commingled with other funds of the originator
or future beneficiaries and they may be untraceable.
Consequently, if the originator were to become
insolvent, there may be a delay in the transfer of
collections to the receivables trustee if the
originator -- or a liquidator or administrator of the
originator -- attempted to freeze the operation of the
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 ORIGINATOR OPTS The originator may opt to cause a percentage of
TO TREAT A PORTION OF receivables that would otherwise be treated as
PRINCIPAL RECEIVABLES principal receivables to be treated as finance charge
AS FINANCE CHARGE receivables. This is called a discount option (the
RECEIVABLES, AN EARLY "DISCOUNT OPTION"). If the originator were to exercise
REDEMPTION OF YOUR this discount option, it could prevent a pay out event
NOTES COULD OCCUR OR from occurring because of a reduction of the portfolio
COULD BE DELAYED yield, which could delay an early redemption of your
notes at a time when the performance of the
receivables is deteriorating. Once this discount
option is exercised, the originator may also reduce
the percentage or stop using the percentage at any
time. However, this discount option, if exercised,
will reduce the aggregate amount of principal
receivables, which may increase the likelihood that
the originator will be required to designate
additional accounts from which receivables will be
assigned to the receivables trustee. If the originator
were unable to designate additional accounts, a pay
out event could occur and you could receive payments
of principal on your notes before you expect them.
EXERCISE OF REGULATORY In the event of the occurrence of a regulatory call
CALL OPTION WILL event (as defined below), the regulatory call option
RESULT IN MANDATORY (as defined below) is required to be mandatorily
CALL ON THE exercised. If a regulatory call event occurs, the
SUBORDINATED NOTES issuing entity shall as soon as practicable following
the occurrence of such regulatory call event by not
less than thirty and not more than sixty days prior
notice to the note trustee and noteholders call all,
but not some only, of the class B notes, the class C
notes and the Class D Notes, such call to be
exercisable on the interest payment date following any
such notice. On such interest payment date following
any such notice, if you are a holder of class B notes,
class C notes and/or class D notes, you are required
to sell all of your class B notes, class C notes and/
or class D notes (as applicable) to the issuing entity
(or any assignee of the regulatory call option),
pursuant to the option granted to the issuing entity
by the note trustee on your behalf (see condition
number 7 of the notes). Such notice must confirm that
there will be sufficient funds available to satisfy
all obligations in connection with the exercise of
such call option. The regulatory call option is
granted to acquire all, but not some only, of the then
outstanding class B notes, class C notes and class D
notes, plus accrued interest (if any) on them, for a
purchase price equal to the then par value of the
class B notes, class C notes
36
and class D notes. This is called the "REGULATORY CALL
OPTION". A "REGULATORY CALL EVENT" means the delivery
to the issuing entity and the note trustee of a notice
from Barclays Bank PLC which states that the
regulatory capital treatment for Barclays Bank PLC
applicable in respect of the transaction to which the
issuance of the class B notes, class C notes and class
D notes relates has become materially impaired by the
implementation of the reform of the 1988 Capital
Accord (in conjunction with proposals put forward by
the Basel Committee on Banking Supervision and to be
implemented for credit institutions pursuant to the EU
Capital Adequacy Directive). Immediately following the
issuance of the notes, the issuing entity intends to
irrevocably novate its rights and obligations under
the regulatory call option to Barclays Bank PLC and
accordingly in the event of such assignment the
exercise of the regulatory call option will require
you to sell your class B notes and/or class C notes
(as applicable) to Barclays Bank PLC.
IF OPTIONAL EARLY When the total principal balance of the notes is
REDEMPTION OCCURS, IT reduced to less than 10 per cent. of their original
WILL RESULT IN AN principal balance, the issuing entity has the option
EARLY REDEMPTION OF to redeem the notes in full. This early redemption
YOUR NOTES CREATING A ("OPTIONAL EARLY REDEMPTION") may result in an early
REINVESTMENT RISK return of your investment. No premium will be paid in
the event of an exercise of the early redemption
option. If you receive principal on your notes earlier
than expected, you may not be able to reinvest the
principal at a rate of return similar to that on your
notes.
IF CARDHOLDERS ARE If the receivables trust has a high concentration of
CONCENTRATED IN A receivables from cardholders located in a single
GEOGRAPHIC REGION, region, an economic downturn in that region may have a
ECONOMIC DOWNTURN IN magnified adverse effect on the receivables trust
THAT REGION MAY because of that concentration. The relevant prospectus
ADVERSELY AFFECT supplement/final terms will contain a geographic
COLLECTIONS OF breakdown of accounts and the amount of receivables
RECEIVABLES generated in the regions of the United Kingdom. See
"Receivables Information: Geographic Distribution of
Accounts -- Securitised Portfolio".
Future adverse economic conditions affecting any of
these 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 EURO Before your notes have matured, the euro could become
BY THE UNITED KINGDOM the lawful currency of the United Kingdom. If that
WOULD HAVE UNCERTAIN were to happen, (i) all amounts payable on the medium
EFFECTS ON YOUR NOTES term note certificate may become payable in euro and
(ii) applicable provisions of law may allow the
issuing entity to redenominate each class of notes
denominated in sterling into euro and take additional
measures in respect of each class. If the medium term
note certificate is outstanding on the date, if any,
on which the euro becomes the lawful currency of the
United Kingdom, we intend to make payments on the
medium term note certificate and the swap agreements
according to the then market practice of payment on
debts or, as the case may be, swaps. We are uncertain
what effect, if any, the adoption of the euro by the
United Kingdom may have on your notes.
37
TAXABLE NATURE OF THE The MTN issuing entity and the issuing entity will be
MTN ISSUING ENTITY OR liable to UK corporation tax at the maximum rate of
THE ISSUING ENTITY currently 30 per cent (proposed to be reduced to 28
COULD CAUSE A LOSS ON per cent with effect from April 2008). So long as the
YOUR NOTES MTN issuing entity and the issuing entity respectively
are within the application of the Taxation of
Securitisation Companies Regulations 2006 (the
"REGULATIONS"), their taxable profit will in each case
be the greater of [GBP]1200 per annum or the aggregate
of [GBP]600 per series outstanding during the course
of the year.
In order to fall within the application of the
regulations, a company must fulfil certain conditions,
including ones which relate to its ongoing asset
holdings (that the assets should be "financial assets"
according to applicable accounting practice) and its
ongoing cash flow management. These conditions are
designed to ensure that the regulations will apply to
a company which is genuinely established and operated
as a securitisation vehicle in a securitisation of
money debts. So long as the cash flows of the MTN
issuing entity and the issuing entity continue to be
managed in the same way as they have been to date,
they can be expected as a factual matter to meet the
relevant conditions.
The regulations have only been in force since the
beginning of 2007 and the practices of the UK tax
authorities in implementing the regulations are still
evolving. However the UK tax authorities have worked
very closely with the securitisation industry on
developing the regulations and related practices, and
the regulations are designed to allow genuine
securitisation vehicle companies to be taxed on a
basis which is compatible with market and rating
requirements.
If the MTN issuing entity or the issuing entity failed
to satisfy any of the applicable conditions, and so
did not fall within the application of the
regulations, the taxable profits of the company in
question would be computed on the basis of generally
accepted accounting practice (as referred to in the
U.K. tax legislation) (subject to certain adjustments
and disallowances under the U.K. tax legislation).
This could potentially lead to the affected company
having taxable profits which were different from its
net cash position, giving rise to unfunded tax
liabilities for that company, and you could suffer
losses on your notes as a result.
The above description is based on the issuing entity
being resident for tax purposes in the U.K. It will be
so resident if and for so long as it is, as a matter
of fact, centrally managed and controlled in the U.K.
CHANGE IN THE TAXABLE If there is a relevant change of law in the United
NATURE OR BASIS OF Kingdom or Jersey, or change of practice of HMRC, this
TAXATION OF THE could result in the taxable profits of the MTN issuing
RECEIVABLES TRUSTEE, entity or the issuing entity being greater than
MTN ISSUING ENTITY OR expected and you could suffer losses on your notes as
ISSUING ENTITY COULD a result.
CAUSE A LOSS ON YOUR
NOTES
An opinion of U.K. tax advisers is not binding on HMRC
or the courts, and no specific transaction rulings on
this issue will be obtained from HMRC. In addition,
there is no case law authority on a number of features
of the transactions that raise difficult questions.
38
LIMITED NATURE OF Each credit rating assigned to your notes reflects the
CREDIT RATINGS rating agency's assessment only of the likelihood that
ASSIGNED TO YOUR NOTES interest and principal will be paid to you by the
final redemption date, not that it will be paid when
expected or scheduled. These ratings are based on the
rating agencies' determination of the value of the
receivables, the reliability of the payments on the
receivables, the creditworthiness of the swap
counterparty and the availability of credit
enhancement.
The ratings do not address the following:
(i) the likelihood that the principal or interest
on your notes will be redeemed or paid, as
expected, on the scheduled redemption dates;
(ii) the possibility of the imposition of United
Kingdom or European withholding tax;
(iii) the marketability of the notes, or any market
price; or
(iv) that an investment in the notes is a suitable
investment for you.
A rating is not a recommendation to purchase, hold or
sell notes.
RATINGS CAN BE LOWERED Any rating agency may lower its rating or withdraw its
OR WITHDRAWN AFTER YOU rating if, in the sole judgement of the rating agency,
PURCHASE YOUR NOTES the credit quality of the notes has declined or is in
question or for other tangible and intangible reasons.
If any rating assigned to your notes is lowered or
withdrawn, the market value of your notes may be
reduced.
CHANGE IN LAW MAY If any withholding taxes would be imposed -- by any
RESULT IN WITHHOLDING jurisdiction -- on payments to the issuing entity
TAXES ON THE MEDIUM under a medium term note certificate as a result of a
TERM NOTE CERTIFICATES change in applicable law, then the MTN issuing entity
AND THIS MAY REDUCE additional interest payments, to the extent available,
THE AMOUNT YOU ARE will be converted at the spot exchange rate in U.S.
PAID ON YOUR NOTES dollars to cover the shortfall in the amounts
available for payment to the noteholders caused by the
amount withheld. If the MTN issuing entity additional
interest payments are not sufficient to cover the
shortfall, then payments to first the class D
noteholders, second the class C noteholders, third the
class B noteholders and finally the class A
noteholders will be reduced by the amount withheld
that is not covered by the MTN issuing entity
additional interest payments.
If any withholding tax would be imposed -- by any
jurisdiction -- on any payments made or required to be
made by the swap counterparty to the issuing entity or
by the issuing entity to the swap counterparty under a
swap agreement as a result of a change in applicable
law and the obligation to deduct or withhold cannot be
avoided by the swap counterparty or the issuing
entity, then the amount to be paid by the other party
will be reduced also pro rata by any amount withheld
for any withholding taxes. In that event the MTN
issuing entity additional interest payments, to the
extent available, will be converted at the spot
exchange rate in U.S. dollars to cover the shortfall
in the amounts available for payment to the
noteholders caused by the amount withheld. If the MTN
39
issuing entity additional interest payments are not
sufficient to cover the shortfall, then payments to
first the class D noteholders, second the class C
noteholders, third to the class B noteholders and
finally the class A noteholders will be reduced by the
amount withheld that is not covered by the MTN issuing
entity additional interest payments.
Alternatively, the issuing entity may terminate the
swap agreement but only if it has been directed to do
so by the relevant noteholders, if such termination is
permitted under the relevant swap agreement.
CHANGE IN LAW MAY If any U.K. withholding taxes are imposed on any
RESULT IN WITHHOLDING payments made or required to be made by the issuing
TAXES ON YOUR NOTES entity or any paying agent on any class of notes, then
AND THIS MAY REDUCE payments to that class of noteholders will be reduced
THE AMOUNT YOU ARE pro rata by any amount withheld for any withholding
PAID ON YOUR NOTES taxes, and in addition, if the relevant noteholders so
elect to direct the issuing entity, the issuing entity
will terminate the swap. See "The Swap Agreements."
PAYMENT OF AN EARLY If a swap agreement is terminated before its scheduled
TERMINATION PAYMENT TO termination date, the issuing entity or the swap
THE SWAP COUNTERPARTY counterparty may be liable to make an early
MAY REDUCE PAYMENTS ON termination payment to the other party. The amount of
YOUR NOTES any early 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 early
termination payment could, if the sterling/dollar
exchange rate has changed significantly, be
substantial.
Any early termination payment made by the issuing
entity to the swap counterparty under a swap agreement
will be made first from MTN issuing entity additional
interest payments and second from repayments of
principal on the medium term note certificate equal to
the amount of principal repayments received by the
issuing entity on the medium term note certificate.
That could cause the sterling amounts available for
conversion to dollars, and possibly your payments, to
be reduced -- perhaps substantially. If the amount of
available MTN issuing entity additional interest
payments and repayments of principal on the medium
term note certificate is insufficient to pay the early
termination payment under the relevant swap agreement,
the balance of the early termination payment will be
paid to the extent that such amounts are available on
the next interest payment date together with interest.
YOU WILL NOT RECEIVE Unless the global note certificates are exchanged for
PHYSICAL NOTES, WHICH individual note certificates, which will only occur
MAY CAUSE DELAYS IN under a limited set of circumstances, your beneficial
DISTRIBUTIONS AND ownership of the notes will only be registered in
HAMPER YOUR ABILITY TO book-entry form with DTC, Euroclear or Clearstream,
PLEDGE OR RESELL THE Luxembourg. The lack of physical notes could, among
NOTES other things:
(i) result in payment delays on the notes because
we will be sending distributions on the notes
to DTC, Euroclear or Clearstream, Luxembourg
instead of directly to you;
40
(ii) make it difficult for you to pledge or
otherwise grant security over the notes if
physical notes are required by the party
demanding the pledge or other security; and
(iii) hinder your ability to resell the notes because
some investors may be unwilling to buy notes
that are not in physical form.
TERMINATION OF THE If the appointment of Barclaycard as servicer is
SERVICER MAY CAUSE terminated under the terms of the beneficiaries
DISRUPTIONS IN THE servicing agreement, it will be necessary for the
COLLECTION PROCESS receivables trustee to appoint a successor servicer to
THAT COULD AFFECT THE undertake the obligations and to perform the services
TIMELINESS OF YOUR of card services. See "Servicing of Receivables and
PAYMENTS ON YOUR NOTES 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 MTN issuing entity and the
issuing entity and, ultimately, in payments due on
your notes.
CHANGE OF LAW -- The Insolvency Act 2000 amends part I of the
INSOLVENCY ACT 2000 Insolvency Act 1986 so that the directors of a company
which meets certain eligibility criteria (an "ELIGIBLE
COMPANY") can take steps to obtain a moratorium the
effect of which, inter alia, would prevent any
creditor enforcing security or taking proceedings to
recover its debt for the period in which the
moratorium is in force (the "RELEVANT PROVISIONS").
The relevant provisions came into force on 1 January
2003. However, prior to bringing the provisions into
force, the Secretary of State amended the eligibility
criteria by way of statutory instrument to the effect
that special purpose vehicles such as the issuing
entity are not eligible companies.
A FINDING THAT THE Neither the issuing entity nor the receivables trustee
ISSUING ENTITY OR THE has registered with the SEC as an investment company
RECEIVABLES TRUSTEE pursuant to the United States Investment Company Act
SHOULD HAVE REGISTERED of 1940, as amended (the "INVESTMENT COMPANY ACT"). If
UNDER THE INVESTMENT the SEC or a court of competent jurisdiction were to
COMPANY ACT COULD find that the issuing entity or the receivables
MATERIALLY ADVERSELY trustee is required, but in violation of the
AFFECT SUCH ENTITY Investment Company Act, had failed to register as an
investment company, possible consequences include, but
are not limited to, the following: (i) the SEC could
apply to a district court to enjoin the violation;
(ii) investors in the issuing entity or the
receivables trustee could sue the issuing entity or
the receivables trustee and recover any damages caused
by the violation; and (iii) any contract to which the
issuing entity or the receivables trustee is party
that is made in, or whose performance involves, a
violation of the Investment Company Act would be
unenforceable by any party to the contract unless a
court were to find that under the circumstances
enforcement would produce a more equitable result than
non-enforcement and would not be inconsistent with the
purposes of the Investment Company Act. Should the
issuing entity or the receivables trustee be subjected
to any or all of the foregoing, such entity would be
materially and adversely affected.
41
THE ENTERPRISE ACT The provisions of the Enterprise Act 2002 (the
2002 -- APPOINTMENT OF "ENTERPRISE ACT") amending certain corporate
AN ADMINISTRATIVE insolvency provisions of the Insolvency Act 1986, came
RECEIVER REMAINS into force on 15 September 2003. As a result of the
POSSIBLE amendments made by the Enterprise Act, unless a
floating charge was created prior to 15 September
2003, or falls within one of the exceptions contained
in the Enterprise Act, the holder of a qualifying
floating charge will be prohibited from appointing an
administrative receiver to a company and,
consequently, the ability to prevent the appointment
of an administrator to such company will be lost.
Although the floating charge to be granted by the
issuing entity pursuant to the terms of the trust deed
is a qualifying floating charge for the purposes of
the Enterprise Act, it will fall within the "CAPITAL
MARKET ARRANGEMENT" exception to the prohibition on
appointment of an administrative receiver and
accordingly the note trustee will still be able to
appoint an administrative receiver pursuant to the
trust deed and any trust deed supplement.
CHANGE OF LAW -- EU Under EC Council Directive 2003/48/EC on the taxation
DIRECTIVE ON THE of savings income (the "EU SAVINGS TAX DIRECTIVE"),
TAXATION OF SAVINGS each member state is required to provide to the tax
INCOME 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 or certain
limited types of entity established 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 full fiscal year following agreement
by certain non-EU countries to the exchange of
information relating to such payments.
A number of non-EU countries, and certain dependent or
associated territories of certain Member States, have
agreed to adopt similar measures (in certain
circumstances on a reciprocal basis) to those
implemented by the EC Savings Directive (see further
the section entitled "United Kingdom Tax
Considerations" under the heading "European Union
Directive on the Taxation of Savings Income").
Jersey is not subject to the EU savings tax directive.
However, in keeping with Jersey's policy of
constructive international engagement, the State of
Jersey has introduced a retention tax system in
respect of payments of interest, or other similar
income, made to an individual beneficial owner
resident in an EU member state by a paying agent
situate in Jersey (the terms "BENEFICIAL OWNER" and
"PAYING AGENT" are defined in the EU savings tax
directive). The retention tax system will apply for a
transitional period prior to the implementation of a
system of automatic communication to EU member states
of information regarding such payments. The
transitional period will end only after all EU member
states apply automatic exchange of information and the
EU member states unanimously agree that the United
States of America has committed to exchange of
information upon request. During this transitional
period, such an individual beneficial owner
42
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.
UNLESS AND UNTIL Unless and until individual note certificates are
INDIVIDUAL NOTE issued, persons acquiring notes will not be the legal
CERTIFICATES ARE owners or holders of such notes but will have rights
ISSUED, PERSONS in their capacity as participants in accordance with
ACQUIRING NOTES WILL the rules and procedures of the relevant clearing
NOT BE THE LEGAL system and in the case of indirect participants, their
OWNERS OR HOLDERS OF agreements with direct participants (such rights,
SUCH NOTES, BUT WILL "BOOKENTRY INTERESTS"). After payment to the common
HOLD ONLY BOOK-ENTRY depositary and the DTC custodian, the issuing entity
INTERESTS will have no responsibility or liability for the
payment of interest, principal or other amounts to
Euroclear, Clearstream, the DTC custodian, the common
depositary or to holders of book-entry interests.
Either the common depositary or Cede & Co. as nominee
of DTC will be the registered holder and legal owner
of each class of notes for so long as such class is
represented by one or more global note certificates.
Accordingly, each person owning a book-entry interest
must rely on the relevant procedures of the common
depositary, the DTC custodian, Euroclear, Clearstream
and DTC and, if such person is an indirect participant
in such entities, on the procedures of the direct
participant through which such person holds its
interest, to exercise any rights of noteholders under
the trust deed. So long as the notes are in global
form, payments of principal and interest on, and other
amounts due in respect of, notes will be made to the
common depositary and to Cede & Co. as nominee of DTC.
Upon receipt of any payment, Euroclear, Clearstream
and DTC will promptly credit direct participants'
accounts with payments in amounts proportionate to
their respective ownership of book-entry interests, as
shown on their records. The issuing entity expects
that payments by direct participants or indirect
participants to owners of interests in bookentry
interests held through such participants or indirect
participants will be governed by standing customer
instructions and customary practices, as is now the
case with the securities held for the accounts of
customers in bearer form or registered in `street
name', and will be the responsibility of such direct
participants or indirect participants. None of the
issuing entity, the note trustee, the DTC custodian,
any paying agent or the registrar will have any
responsibility or liability for any aspect of the
records relating to, or payments made on account of,
the book-entry interests or for maintaining,
supervising or reviewing any records relating to such
book-entry interests.
Unlike holders of individual note certificates,
holders of the book-entry interests will not have
direct rights under the trust deed to act upon
solicitations of consents or requests by the issuing
entity for waivers or other actions from noteholders.
Instead, a holder of bookentry interests will be
permitted to act only to the extent it has received
appropriate proxies to do so from Euroclear,
Clearstream or DTC (as the case may be) and, if
applicable, direct participants. There can be no
assurance that procedures implemented for the granting
of such proxies will be sufficient to enable holders
of book-entry interests to vote on any requested
actions on a timely basis. Similarly,
43
upon the occurrence of an event of default, holders of
book-entry interests will be restricted to acting
through the Euroclear, Clearstream, DTC or the DTC
custodian (as the case may be) unless and until
individual note certificates are issued. There can be
no assurance that the procedures to be implemented by
the Euroclear, Clearstream, DTC and the DTC custodian
under such circumstances will be adequate to ensure
the timely exercise of remedies under the trust deed.
See "The Notes -- Clearance and Settlement".
Holders of beneficial interests in notes which are
denominated in sterling or euros and which are held
directly with DTC or through its participants must
give advance notice to the exchange agent 15 days
prior to each interest payment date that they wish
payments on such global note certificates to be made
to them in sterling or euro (as applicable) outside
DTC. If such instructions are not given, sterling or
euro payments on such notes will be exchanged for U.S.
dollars by the exchange agent prior to their receipt
by DTC and the affected holders will receive U.S.
dollars on the relevant interest payment date.
44
U.S. DOLLAR AND STERLING EXCHANGE RATE
References throughout this document to "[GBP]", "POUNDS", "STERLING" or
"POUNDS STERLING" are to the lawful currency of the United Kingdom of Great
Britain and Northern Ireland. References in this document to "U.S.$ ", "$"
"U.S. DOLLARS" or "DOLLARS" are to the lawful currency of the United States of
America. References in this document to "EURO" or "[E]" are to the single
currency introduced at the third stage of European Economic and Monetary Union
pursuant to the Treaty establishing the European Communities, as amended by the
Treaty on European Union.
The following table sets forth the history of the dollar/sterling exchange
rates for the [six most recent months] and for the five most recent years.
DOLLAR/STERLING EXCHANGE RATE HISTORY(1)
[__] [__] [__] [__] [__] [__]
2007 2007 2007 2007 2007 2007
---- ---- ---- ---- ---- ----
Last(2)...
Average(3)
High......
Low.......
YEAR ENDED 31 DECEMBER
----------------------------
2006 2005 2004 2003 2002
---- ---- ---- ---- ----
Last(2)...
Average(3)
High......
Low.......
Notes
(1) Data obtained from Bloomberg U.S.D-GBP "CRNCY" HP screen (Mid London
Composite).
(2) Last is the closing exchange rate on the last business day of each of the
periods indicated.
(3) Average is the average daily exchange rate during the periods indicated.
45
THE ISSUING ENTITY
The issuing entity was formed in Jersey, Channel Islands on 7 September 2007
under the name of Gracechurch Card Programme Funding Limited with registered
number 98638 as a public company with limited liability under the Companies
(Jersey) Law 1991, as amended, which is also the primary legislation under
which the issuing entity operates. Its registered office is at 26 New Street,
St. Helier, Jersey and its principal place of business in the United Kingdom is
located at 11 Old Jewry, London EC2R 8DU, United Kingdom (tel: +44 (0)207 796
9348). The issuing entity has no subsidiaries.
The issuing entity was incorporated with an authorised and issued share
capital of two ordinary shares of [GBP]1 each which were allotted for cash, and
fully paid, on incorporation and are held by bare nominees for a charitable
trustee under the terms of a share declaration of trust. It has a fiscal year
end date of 31 December. There is no loan capital, borrowing, other
indebtedness, contingent liabilities or guarantees as at the date of this base
prospectus in respect of this company. There has been no material change in the
capitalisation, indebtedness, guarantees and contingent liabilities and the
issuing entity has not traded since 7 September 2007.
The issuing entity was formed principally to:
(i) issue the notes from time to time;
(ii) enter into and perform its duties under all financial arrangements in
order to issue the notes in connection with the Gracechurch Card
Programme Funding Limited medium term note programme;
(iii) purchase each relevant medium term note certificate; and
(iv) enter into and perform its duties under all the documents necessary to
purchase each relevant medium term note certificate and issue each series
of notes as specified in the prospectus supplement/final terms.
The assets of the issuing entity consist of:
(i) each relevant MTN certificate; and
(ii) if applicable, swap agreements that the issuing entity enters into from
time to time to manage currency risk.
The issuing entity does not expect to have any other significant assets.
DIRECTORS AND SECRETARY
The following sets out the directors of the issuing entity and their
business addresses and principal activities. Because the issuing entity is
organised as a special purpose company and will be largely passive, it is
expected that the directors of the issuing entity in that capacity will
participate in its management to a limited extent.
NAME NATIONALITY BUSINESS ADDRESS PRINCIPAL ACTIVITIES AGE
- -------------- ----------- ------------------ -------------------- ---
Curt John Hess American 1 Churchill Place, Chief Financial 43
London E14 5HP Officer, Barclaycard
Geoffrey Simms British 11 Old Jewry, Banker 50
London EC2R 8DU
John Ventress British 11 Old Jewry, Lawyer 36
London EC2R 8DU
Geoffrey Simms and John Ventress are directors of Bedell Trust UK Limited
which along with Bedell Trust Company Limited, Bedell Secretaries Limited and
Bedell Trustees Limited is ultimately
46
owned by the partners for the time being of the Bedell group partnership --
John Ventress being one such partner.
Bedell Trust Company Limited will provide the issuing entity with general
secretarial and administration services. The fees of Bedell Trust Company
Limited for providing such services will be included in the MTN Issuing Entity
Costs Amounts. See "Securitisation Cashflows: Allocation, Calculation and
Distribution of Finance Charge Collections to the MTN Issuing Entity".
The secretary of the issuing entity is:
NAME BUSINESS ADDRESS
- -------------------------- --------------------------------
Bedell Secretaries Limited 26 New Street, St Helier, Jersey
For each series, the net proceeds of the sale of the notes converted into
sterling under the relevant swap agreement together with a drawing under the
Expenses Loan Agreement will be used by the issuing entity to purchase a medium
term note certificate. The issuing entity will be prohibited by the trust deed
and the terms and conditions of the notes from engaging in business other than:
(i) the business described in this base prospectus;
(ii) preserving and exercising its rights under the notes, the deed of charge,
the paying agency and agent bank agreement, the trust deed, the Expenses
Loan Agreement, the Swap Agreements, the corporate services agreement and
the underwriting agreements for the notes; and
(iii) purchasing medium term note certificates.
The issuing entity's ability to incur, assume or guarantee debt will also be
restricted by the trust deed and the terms and conditions of the notes.
Barclays does not own, directly or indirectly, any of the share capital of
the issuing entity.
BANKRUPTCY MATTERS RELATING TO THE ISSUING ENTITY
The issuing entity has been organized, and its activities are limited, to
minimize the likelihood of bankruptcy proceedings being commenced against the
issuing entity and to minimize the likelihood that there would be claims
against the issuing entity if bankruptcy proceedings were commenced against it.
The issuing entity has not engaged in and will not engage in any activity other
than the business and activities described or referred to in this base
prospectus.
CAPITALISATION AND INDEBTEDNESS
As at the date of this base prospectus, the issuing entity has no loan
capital outstanding or created but unissued, no term loans outstanding and no
other borrowings or indebtedness in the nature of borrowings guaranteed or
unguaranteed, secured or unsecured nor any contingent liabilities.
Two ordinary shares were allotted for cash, and fully paid, on
incorporation. There are no other outstanding securities, loans or
subscriptions, allotments or options in respect of the issuing entity.
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 the notes.
LITIGATION
There are no, nor since the issuing entity's incorporation on 7 September
2007 have there been any, governmental, legal or arbitration proceedings,
including any proceedings that are pending or threatened of which the issuing
entity is aware, which may have, or have had in the recent past, a significant
effect on the issuing entity's financial position or profitability.
47
THE ADMINISTRATOR
Bedell Trust Company Limited, which we will refer to as "the Administrator"
in this base prospectus, will provide company administration services to the
issuing entity and the receivables trustee under the relevant corporate
services agreements. Bedell Secretaries Limited will provide company
secretarial services to the issuing entity and the receivables trustee.
Bedell Trust Company Limited is a private limited company which was
incorporated in Jersey, Channel Islands on 3 April 1992 with registered number
52417. Its registered office is located at 26 New Street, St Helier, Jersey JE2
3RA, Channel Islands.
The Administrator is ultimately owned by the partners from time to time of
the Bedell Group Partnership.
The Administrator undertakes diversified offshore trust administration services
and is regulated by the Jersey Financial Services Commission under the
Financial Services (Jersey) Law 1998, for the purpose of carrying on trust
company business.
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 MTN issuing entity the
corresponding medium term note certificate of such value and on such terms as
further specified in the relevant prospectus supplement/final terms. The MTN
issuing entity will use the proceeds from the sale of such medium term note
certificate to purchase the investor certificate of the same series.
Alternatively, the MTN issuing entity may repay principal on a medium term note
certificate. Fees and commissions arising from the issue of each series of notes
will be covered by the issuing entity by making a drawing under the Expenses
Loan Agreement of an amount at least equal to the fees and commissions payable
on the notes.
SERIES EXPENSES LOAN DRAWINGS
On or prior to the closing date of the first series of notes to be issued by
the issuing entity, the issuing entity will enter into a revolving facility
under a loan agreement (the "EXPENSES LOAN AGREEMENT") made with Barclays as
lender, this facility being an "EXPENSES LOAN FACILITY". On the date of
issuance of each series of notes, the issuing entity -- as borrower -- may
request a drawing of a new advance under the Expenses Loan Facility in relation
to each Series under which Barclays, if it agrees to make such advance, will
lend to the issuing entity in respect of such series such amount (and any such
amount will be set out in the prospectus supplement/final terms corresponding
to such series). An advance made in respect of a Series will be used by the
issuing entity to meet its costs and expenses relating to issuing such series
of notes. Each such drawing under the Expenses Loan Facility is called a
"SERIES EXPENSES LOAN DRAWING". The amount outstanding under each Series
Expenses Loan Drawing will bear interest at the rate of one-month sterling
LIBOR plus a margin that will be specified in the relevant prospectus
supplement/final terms. The payment of interest under each Expenses Loan
Agreement will be paid monthly on each Distribution Date. The
payment of interest and repayment of any principal then specified as being due
and repayable under the Expenses Loan Agreement will be monthly on each
Distribution Date. To the extent the issuing entity has insufficient funds left
after making all payments of principal and interest on the notes, the amount of
that interest or any repayment of principal then due will be deferred until the
next Distribution Date.
48
THE DEPOSITOR AND MTN ISSUING ENTITY
The Depositor of the programme and the MTN issuing entity was formed in
England and Wales on 13 August 1990 as Barshelfco (No. 28) Limited, with
registered number 2530163, as a company with limited liability under the
Companies Acts 1985 and 1989, which is the primary legislation under which the
MTN issuing entity operates. It reregistered as a public limited company and
changed its name to Barclaycard Funding PLC on 19 October 1999. Its registered
office and principal place of business are located at 1 Churchill Place, London
E14 5HP, United Kingdom (tel: 0207 1161000).
The MTN issuing entity has a fiscal year end of 31 December. The statutory
financial statements of the MTN issuing entity for each period to 31 December
2004 were prepared in accordance with U.K. GAAP. The statutory financial
statements for the year ended 31 December 2006 have been prepared in accordance
with International Financial Reporting Standards ("IFRS") and the comparative
period ended 31 December 2006 has been restated.
For IFRS purposes, the MTN issuing entity is deemed to control Gracechurch
Card Programme Funding Limited which would be included in any consolidated
financial statements prepared by the MTN issuing entity. The MTN issuing entity
is exempt from having to prepare consolidated financial statements because it
is an intermediate parent undertaking whose owners do not object to it not
preparing consolidated financial statements, its debt and equity instruments
are not traded in a public market and its ultimate parent undertaking, Barclays
Bank PLC, produces consolidated financial statements available for public use
that apply IFRS.
The MTN issuing entity was formed principally to:
(i) issue medium term note certificates from time to time in series;
(ii) enter into and perform its duties under the financial arrangements to
issue the medium term note certificates in connection with the
Gracechurch Card Programme Funding Limited medium term note programme;
(iii) purchase each relevant series of investor certificates from time to time
representing a beneficial interest in the receivables trust; and
(iv) enter into the program documents and exercise its powers connected to the
above.
The MTN issuing entity has not engaged in any activities since its
incorporation other than the above.
The [GBP]12,502 called up share capital of the MTN issuing entity comprises
49,998 ordinary [GBP]1 shares that have been authorised, issued, quarter called
and paid and 2 ordinary [GBP]1 shares that have been authorised, issued and
fully paid up.
Barclays holds 75 per cent. of the issued share capital of the MTN issuing
entity, representing 51 per cent. of the issued voting share capital and a 49
per cent. entitlement to distributable profits. The remaining share capital is
held by Structured Finance Management Limited.
The annual accounts of the MTN issuing entity for the last three financial
years have been audited.
CAPITALISATION AND INDEBTEDNESS
Set out below is the audited capitalisation and indebtedness statement of
the MTN issuing entity as at the date of this base prospectus extracted without
material adjustment from its audited financial statements as at 31 December
2006 under IFRS.
SHARE CAPITAL
- --------------------------------------------------------------------------------------------
Total authorised and issued share capital (being 2 fully paid shares and [__] quarter paid A
ordinary shares and [__] quarter paid B ordinary shares).................................... [GBP][__]
MEDIUM TERM NOTE CERTIFICATE (ISSUED 18 OCTOBER 2002)***
[GBP]643,624,895 series 02-1 floating rate medium term note certificate due 2007............ [GBP][__]
MEDIUM TERM NOTE CERTIFICATE (ISSUED 8 APRIL 2003)***
[GBP]637,064,407 series 03-1 floating rate medium term note certificate due 2008............ [GBP][__]
49
MEDIUM TERM NOTE CERTIFICATE (ISSUED 23 NOVEMBER 2004)***
[GBP][__] series 04-2 floating rate medium term note certificate due 2007................... [__]
Accrued fees and charges.................................................................... [__]
Interest payable............................................................................ [__]
---------
MEDIUM TERM NOTE CERTIFICATE (ISSUED 21 JUNE 2005)***
[GBP]824,764,942 series 05-1 floating rate medium term note certificate due 2008............ [__]
MEDIUM TERM NOTE CERTIFICATE (ISSUED 20 SEPTEMBER 2005)***
[GBP]815,239,545* series 05-2 floating rate medium term note certificate due 2008........... [__]
MEDIUM TERM NOTE CERTIFICATE (ISSUED 20 OCTOBER 2005)***
[GBP]1,273,702,000 series 05-3 floating rate medium term note certificate due 2010.......... [__]
MEDIUM TERM NOTE CERTIFICATE (ISSUED 22 NOVEMBER 2005)*** [__]
[GBP][__]* series 05-4 floating rate medium term note certificate due 2008..................
MEDIUM TERM NOTE CERTIFICATE(ISSUED 22 SEPTEMBER 2006) ***............................. [GBP][__]
Series 06-1 floating rate medium term note certificate due 2010............................. [__]
---------
Capitalisation and indebtedness as at 31 December 2006.................................. [__]
=========
- ---------
* This amount is the sterling equivalent, converted using the exchange
rate referred to under "U.S. Dollar and Sterling Exchange Rate". The actual
sterling principal amount of the medium term note certificate will be the
sterling equivalent of $1,000,000,000, using the fixed exchange rate in the
Swap Agreements.
*** Under U.S. GAAP, the loan note certificates described above (series 02-1,
series 03-1, series 03-2, series 03-3, series 04-1, series 04-2, series 05-
1, series 05-2, series 05-3, series 05-4 and series 06-1) have been
derecognised in the balance sheet of the MTN issuing entity. Each of the
medium term note certificates is issued on a secured basis.
There are no other outstanding loans or subscriptions, allotments or options
in respect of the MTN issuing entity. Save as disclosed herein, as at the date
of this base prospectus, the MTN issuing entity has no loan capital
outstanding. There are no guarantees, other borrowings or indebtedness in the
nature of borrowings guaranteed or unguaranteed, secured or unsecured, no
unsecured or guaranteed issued loan capital or contingent liabilities in
respect of the MTN issuing entity.
There is no goodwill in the balance sheet of the MTN issuing entity, nor
will any goodwill need to be written off upon the issue of the medium term note
certificate.
The MTN issuing entity considers related parties to be entities which the
MTN issuing entity can significantly influence or has an ownership interest in
that allows it influence to an extent that the other party might be prevented
from fully pursuing its own separate interests. Examples of related parties
include affiliates of the company; entities for which investments are accounted
for by the equity method by the MTN issuing entity; trusts for the benefit of
employees, principal owners of the enterprise; its management; and members of
the immediate families of principal owners of the enterprise and its
management.
Parties are considered to be related if one party, directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with an enterprise.
The related party transactions of the MTN issuing entity comprise some
transfers in relation to the investor interest; derivative transactions; bank
accounts; and loan arrangements.
The MTN issuing entity's primary source of liquidity are payments of
principal and interest on each series of Investor Certificates.
DIRECTORS AND SECRETARY
The following sets out the directors of the MTN issuing entity and their
business addresses and principal activities. Because the MTN issuing entity is
organised as a special purpose company and will be largely passive, it is
expected that the directors of the MTN issuing entity in that capacity will
participate in its management to a limited extent.
NAME NATIONALITY BUSINESS ADDRESS PRINCIPAL ACTIVITIES AGE
- --------------------- --------------- --------------------- -------------------- ---------------------
Curt John Hess American 1 Churchill Place, Chief Financial 43
London E14 5HP Officer, Barclaycard
50
NAME NATIONALITY BUSINESS ADDRESS PRINCIPAL ACTIVITIES AGE
- --------------------- --------------- --------------------- -------------------- ---------------------
Tim George Jung American 1 Churchill Place, Financial Controller, 46
London E14 5HP Barclaycard
SFM Directors Limited British 35 Great St. Helen's, Director of special ---
London EC3A 6AP purpose companies
Jonathan Keighley, James Macdonald and Robert Berry are the directors of SFM
Directors Limited. SFM Directors Limited is also a director of the issuing
entity. Curt Hess is also a director of the issuing entity.
The secretary of the MTN issuing entity is:
NAME BUSINESS ADDRESS
- ---------------- ---------------------------------
Barcosec Limited 1 Churchill Place, London E14 5HP
The directors of Barcosec Limited are, Alison Bibby, Marie Smith, David
Blizzard, Clare Carson, Patrick Gonsalves, Frances Niven, Emma Johnson, Rebecca
Potts and Natalie Weedon. The business address of the directors of Barcosec
Limited is 1 Churchill Place, London E14 5HP. Barcosec Limited will provide the
MTN issuing entity with general secretarial, registrar and company
administration services. The fees of Barcosec Limited for providing such
services will be included in the MTN Issuing Entity Costs Amounts. The
directors of SFM Directors Limited are Jonathan Keighley, James Macdonald and
Robert Berry. The business address of the directors of SFM Directors Limited is
35 Great St. Helen's, London EC3A 6AP. See "Securitisation Cashflows:
Allocation, Calculation and Distribution of Finance Charge Collections to the
MTN issuing entity".
The initial subscription proceeds of the sale of each series' medium term
note certificate will be used by the MTN issuing entity to acquire a
certificate representing a beneficial interest in the Series of the receivables
trust -- called the "INVESTOR CERTIFICATE". The Deferred Subscription Price
payable for the medium term note certificate will be used by the MTN issuing
entity to pay deferred consideration to Barclaycard for the transfer of its
entitlement to receive Excess Interest attributable to the relevant Series.
LITIGATION
There are no, nor since the MTN issuing entity's incorporation on 13 August
1990 have there been any, governmental, legal or arbitration proceedings,
including any proceedings that are pending or threatened of which the MTN
issuing entity is aware, which may have, or have had in the recent past,
covering at least the previous 12 months, a significant effect on the MTN
issuing entity's financial position or profitability.
51
THE RECEIVABLES TRUSTEE
The receivables trustee was formed under the laws of Jersey, Channel Islands
on 29 September 1999. Its registered office is at 26 New Street, St Helier,
Jersey JE2 3RA and you can inspect its memorandum and articles of association
at the offices of Clifford Chance LLP at 10 Upper Bank Street, London E14 5JJ,
United Kingdom.
All of the issued share capital of the receivables trustee is held by bare
nominees for Bedell Trustees Limited, a company formed under the laws of
Jersey, which holds on the terms of a general charitable trust.
The receivables trustee was formed principally to:
(i) act as a trustee of the receivables trust;
(ii) purchase and accept transfer of the receivables from the originator;
(iii) issue series of Investor Certificates from time to time on behalf of the
receivables trust; and
(iv) enter into transaction documents incidental to or relating to those
activities.
DIRECTORS AND SECRETARY
Bedell Trust Company Limited, a company formed under the laws of Jersey,
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 company secretary is Bedell
Secretaries Limited, a company formed under the laws of Jersey.
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 company 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 require only a small amount of active management.
NAME NATIONALITY BUSINESS ADDRESS PRINCIPAL ACTIVITIES AGE
- ----------------------- ----------- ------------------ --------------------- ---
Curt John Hess American 1 Churchill Place, Chief Financial 43
London E14 5HP Officer, Barclaycard
Shane Michael Hollywood British 26 New Street, Advocate of the 39
St. Helier, Royal Court of Jersey
Jersey JE2 3RA
Richard Charles Gerwat British 26 New Street, Advocate of the 42
St. Helier, Royal Court of Jersey
Jersey JE2 3RA
Shane Michael Hollywood and Richard Charles Gerwat are also directors of
Bedell Trustees Limited, Bedell Secretaries Limited and Bedell Trust Company
Limited, partners in the Bedell Group Partnership (which ultimately owns the
aforesaid companies) and partners in the law firm Bedell Cristin.
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.
Barclays Bank PLC does not own, directly or indirectly, any of the share
capital of the receivables trustee.
52
MANAGEMENT AND ACTIVITIES
The receivables trustee has been established specifically to act as trustee
of the receivables trust. Its activities are restricted by the declaration of
trust and trust cash management agreement and the related supplements.
Since it was formed, the receivables trustee has:
(i) engaged in activities incidental to the declaration of the receivables
trust;
(ii) obtained the necessary consumer credit licence and data protection
registrations in the United Kingdom and/or Jersey;
(iii) authorised and executed the documents that it is a party to in order to
establish the receivables trust;
(iv) purchased and accepted transfers of the receivables from the originators;
(v) issued certificates to beneficiaries in respect of their interests in the
receivables trust;
(vi) established and maintained a register of the entitlements of
beneficiaries under the receivables trust;
(vii) engaged in activities incidental to the transfer to it of receivables
under the Designated Accounts; and
(viii) authorised and executed the other documents to which it is party.
The receivables trustee has not engaged in any activities since its
incorporation other than the above and matters incidental to the above.
The receivables trustee has made a number of covenants in the declaration of
trust and trust cash management agreement, including that it will not without
the prior written consent of each of the beneficiaries of the receivables
trust:
(i) 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 trust property of the
receivables trust and perform its obligations for the receivables
trust's property;
(2) preserve, exercise and enforce any of its rights and perform and
observe its obligations under the declaration of trust and trust
cash management agreement, the receivables securitisation
agreement, the master definitions schedule, each supplement and
each other related document, including any documents secured
directly or indirectly by a series of Investor Certificates issued
under the receivables trust, any mandate and other agreement about
a Trust Account 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 "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;
(ii) incur any debt other than debt that is described by this base prospectus
or a supplement or contemplated by the Relevant Documents;
(iii) give any guarantee or indemnity in respect of any debt;
53
(iv) 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;
(v) consolidate or merge with any other person or convey or transfer its
properties or assets to any person;
(vi) 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 declaration of trust and
trust cash management agreement or in any supplement; or
(vii) 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 Servicing Fee to the servicer or cash management fee
to the trust cash manager and the fee due and paid quarterly to Bedell
Trust Company Limited for the provision of corporate services to the
receivables trustee.
LITIGATION
There are no, nor since the receivables trustee's incorporation on 29
September 1999 have there been any, governmental, legal or arbitration
proceedings, including any proceedings that are pending or threatened of which
the receivables trustee is aware, which may have, or have had in the recent
past, covering at least the previous 12 months, a significant effect on the
receivables trustee's financial position or profitability.
54
THE NOTE TRUSTEE AND SECURITY TRUSTEE
The Bank of New York acts as initial note trustee and initial security
trustee in this transaction. The initial 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 Notes". The initial note
trustee will also hold the security for the notes of each series under the
terms of the security trust deed (and the relevant series security trust deed
supplement), as described below under "Terms and Conditions of the Notes").
The Bank of New York, a wholly owned subsidiary of The Bank of New York
Mellon Corporation, is incorporated, with limited liability by Charter, under
the Laws of the State of New York by special act of the New York State
Legislature, Chapter 616 of the Laws of 1871, with its Head Office situate at
One Wall Street, New York, NY 10286, USA and having a branch registered in
England & Wales with FC No 005522 and BR No 000818 with its principal office in
the United Kingdom situate at One Canada Square, London E14 5AL.
The Bank of New York is a leading provider of corporate trust and agency
services. Global Corporate Trust services $11 trillion in outstanding debt for
some 90,000 clients worldwide. The Bank is a recognized leader for trust
services in several debt products, including corporate and municipal debt,
mortgage-backed and asset-backed securities, derivative securities services and
international debt offerings.
The Bank of New York Mellon Corporation (NYSE: BK) is a global financial
services company focused on helping clients move and manage their financial
assets, operating in 37 countries and serving more than 100 markets. The
company is a leading provider of financial services for institutions,
corporations and high-net-worth individuals, providing superior asset and
wealth management, asset servicing, issuer services, and treasury services
through a worldwide client-focused team. It has more than $18 trillion in
assets under custody and administration and $1 trillion in assets under
management, and it services more than $11 trillion in outstanding debt.
Additional information is available at www.bnymellon.com.
For a description of The Bank of New York's duties and responsibilities
under the governing documents and applicable law, its functions, limitations of
its liability, indemnification and contractual provisions regarding its
replacement as note trustee, please see the section "The Trust Deed" below.
LITIGATION
There are no legal proceedings pending nor any proceedings known to be
contemplated by governmental authorities, against the security trustee or note
trustee (solely in their capacities as such trustees) that would be material to
a holder of notes.
55
BARCLAYS BANK PLC
Barclays Bank PLC acting through its business division, Barclaycard, will
perform the following roles in connection with the issuance of the notes:
(i) initial originator;
(ii) servicer;
(iii) sponsor;
(iv) cash manager for the receivables trust and the medium term note
certificates;
(v) originator beneficiary and excess interest beneficiary;
(vi) lender under Expenses Loan Agreement; and
(vii) underwriter.
Barclays Bank PLC has sponsored programmes in the United Kingdom of
securitisation of consumer credit receivables since 1999 through the
establishment of the Gracechurch Card Funding securitisation vehicles. Through
these vehicles, Barclays Bank PLC has, as at the date of this base prospectus,
sponsored the issuance of approximately [GBP]7.5bn of credit-card receivable-
backed securities over twelve separate transactions.
Barclays Bank PLC also has sponsored securitisation transactions backed by
other assets totalling approximately [GBP]25bn under the programmes listed
below:
* Gracechurch Mortgage Funding -- [GBP]4.5bn
* Gracechurch Mortgage Financing -- [GBP]12bn
* Gracechurch Corporate Loans Series -- [GBP]8.5bn
BUSINESS
Barclays Bank PLC is a public limited company registered in England and
Wales under number 1026167. The liability of the members of Barclays Bank PLC
is limited. It has its registered and head office at 1 Churchill Place, London
E14 5HP. Barclays Bank PLC was incorporated on 7 August 1925 under the Colonial
Bank Act 1925 and on 4 October 1971 was registered as a company limited by
shares under the Companies Acts 1948 to 1967. Pursuant to The Barclays Bank Act
1984, on 1 January 1985, Barclays Bank PLC was re-registered as a public
limited company and its name was changed from "Barclays Bank International
Limited" to "Barclays Bank PLC".
Barclays Bank PLC and its subsidiary undertakings (taken together, the
"GROUP") is a major global financial services provider engaged in retail and
commercial banking, credit cards, investment banking, wealth management and
investment management services. The whole of the issued ordinary share capital
of Barclays Bank PLC is beneficially owned by Barclays PLC which is the
ultimate holding company of the Group and one of the largest financial services
companies in the world by market capitalisation.
The short-term unsecured obligations of Barclays Bank PLC are rated A-1+ by
Standard and Poor's, P-1 by Moody's and F1+ by Fitch Ratings Limited and the
long-term obligations of Barclays Bank PLC are rated AA by Standard & Poor's,
Aa1 by Moody's and AA+ by Fitch Ratings Limited and AA (high) by Dominion Bond
Rating Service.
The Barclays Group's audited financial statements for the year ended 31
December 2006 were prepared in accordance with IFRS. On this basis, as at 31
December 2006, the Group had total assets of
56
[GBP]996,503 million, total net loans and advances(2) of [GBP]313,226 million,
total deposits(1) of [GBP]336,316 million and shareholders' funds of [GBP]27,106
million (including minority interests of [GBP]1,685 million). The profit before
tax under IFRS for the year ended 31 December 2006 was [GBP]7,197 million after
impairment charges on loans and advances and other credit provisions of
[GBP]2,154 million.
The annual report on Form 20-F for the year ended 31 December 2006 of
Barclays PLC and Barclays Bank PLC is on file with the Securities and Exchange
Commission. Barclays 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: Barclays Bank PLC, 1 Churchill Place, London E14 5HP, England, Attention:
Barclays Group Corporate Secretariat.
None of the class notes issued under the programme will be obligations of
Barclays Bank PLC or any of its affiliates.
LITIGATION
There are no legal proceedings pending nor any proceedings known to be
contemplated by governmental authorities, against the sponsor, depositor,
servicer or agent bank that would be material to a holder of notes.
- -------------------
1 Total deposits include deposits from bank and customer accounts.
2 Total net loans and advances include balances relating to both bank and
customer accounts.
57
AFFILIATIONS AND CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Barclays Bank PLC, acting through its business division, Barclaycard, will
serve as the sponsor, servicer and the originator of the receivables and (if
specified in the relevant prospectus supplement/final terms) the swap
counterparty in respect of classes or sub-classes of notes identified in the
relevant final terms as having the benefit of a swap agreement. Additionally,
Barclays Bank PLC is the parent of the MTN issuing entity.
58
CREDIT CARD USAGE IN THE UNITED KINGDOM
The United Kingdom credit card market is the largest and most developed in
Europe. The total population of the United Kingdom is approximately [__]
million with the adult population accounting for about [__] per cent. of this.
It is estimated that approximately two thirds of the adult British population
holds at least one credit card.
The number of cards issued has grown by [__] million since 1993 to about
[__] million today. Of these, about [__] per cent. carried the VISA service
mark and [__] per cent. the MasterCard service mark.
Credit and charge card purchases in the United Kingdom, in the twelve months
to June 2007, totalled almost [GBP][__] billion. U.K. credit card borrowings
have more than doubled since 1994, and were approximately [GBP][__] billion in
June 2007.
BARCLAYCARD AND THE BARCLAYCARD CARD PORTFOLIO
GENERAL
Barclaycard, a division of Barclays Bank PLC, is one of the leading credit
card businesses in Europe. In addition to its operations in the United Kingdom,
Barclaycard is active in Germany, Spain, the United States, Greece, France,
Italy, Portugal, Scandinavia, India, the UAE and across Africa. Barclaycard
offers a full range of credit card services to individual and corporate
customers, together with card payment facilities to retailers and other
businesses. Barclaycard is based in Northampton, England and has in excess of
8,300 employees worldwide. In 1966, Barclaycard issued the U.K.'s first credit
card and as of 30 June 2007 Barclaycard, on a managed basis, had [GBP]20,445
million of gross customer receivables in the United Kingdom and the rest of
Europe. Of this amount, [GBP]7,576 million were MasterCard and VISA credit and
charge card receivables originated in the United Kingdom and included in the
receivables trust. Barclaycard offers an extensive range of Barclaycard and co-
branded credit card products and services to individual and corporate
customers. The average U.K. customer has had a Barclaycard for approximately 10
years.
The receivables being securitised come from transactions made by MasterCard
and VISA card accountholders.
A cardholder may use his or her card for both purchases and cash advances. A
purchase is when cardholders use their cards to acquire goods or services. A
cash advance is when cardholders use their cards to get cash from a financial
institution or automated teller machine or use credit card cheques issued by
Barclaycard drawn against their credit lines.
See "Servicing of Receivables and Trust Cash Management" for a description
of how Barclaycard services receivables included in the securitisation.
Barclaycard undertakes all the processing and administering of accounts making
use of external suppliers as appropriate.
Barclaycard uses a brand led, value driven marketing strategy to focus new
origination campaigns. This process is assisted by the use of financial
forecasting models for each method it uses to solicit cardholders. Barclaycard
recruits a significant proportion of its customers by introductions from
Barclays branches. It also uses, among others, targeted mailing, media inserts
and the internet.
Credit application details are screened by a combination of system based
checking, external credit bureau data and manual verification, where
appropriate.
Barclaycard uses a range of application scorecards to assess the credit
quality of new account applications. Scorecards are derived using a combination
of factors including their Barclays account history, annual income, time at and
place of residence, current employment and credit bureau data. A proprietary
cash flow model is used to help determine the acceptance score levels for each
scorecard.
The initial limit of an account is determined using credit score and other
applicant characteristics including income matrices. Initial limits are set at
comparatively low levels. Limits are increased in a controlled and regular
manner using behaviour score and credit bureau data. Behaviour scoring was
introduced in 1989 and is one of the key tools used by Barclaycard in risk
management and underpins all risk decisions applied to accounts once they have
been opened.
59
Credit limits are adjusted based upon Barclaycard's continuing evaluation of
an account holder's credit behaviour and suitability using a range of
statistical models.
As part of the asset origination procedure, the processing and validation of
each credit card application is performed by RR Donnelley Global Document
Solutions Ltd ("RRD") based in Huntingdon, England, a wholly owned subsidiary
of RR Donnelley and Sons Company, unaffiliated with the Barclays Group.
Reference data for the credit scoring process is also provided by Experian
Ltd, a wholly owned subsidiary of Experian Group Ltd located in operational
headquarters in Nottingham, England, and Equifax Plc a company unaffiliated
with the Barclays Group based in London, England.
Barclays believes that should RRD, Experian or Equifax cease to provide any
of the above services to its card business, it will be able to contract for
comparable services from other qualified entities.
Each cardholder has a card agreement with Barclaycard governing the terms
and conditions of their MasterCard or VISA account. Under each card agreement,
Barclaycard is able, if it gives advance notice to the cardholder, to add or
change any terms, conditions, services or features of the MasterCard or VISA
accounts at any time. This includes increasing or decreasing periodic finance
charges, or minimum payment terms. Each card agreement enables Barclaycard to
apply charges to current outstanding balances as well as to future
transactions.
Barclaycard regularly reviews its credit and charge card agreement forms to
determine their compliance with applicable law and the suitability of their
terms and conditions. If they need to be updated or amended, this will be done
on a timetable consistent with the issues identified.
DESCRIPTION OF PROCESSING
Barclaycard settlement systems have links to VISA and MasterCard to enable
cardholder transactions to be transferred. Barclaycard also acquires
transactions from merchants. Transactions acquired in this way relating to
Barclaycard cardholders are passed to the card account processing systems
directly rather than via VISA or MasterCard.
BILLING AND PAYMENT
Barclaycard generates and mails monthly statements to cardholders which give
details of the transactions for that account, making use of one external
outsource partner in particular.
RRD carry out the printing of statements and also perform cardholder postal
payment processing.
Data files for monthly statement production are produced by the Triumph
cards system, and transmitted to RRD who carry out the printing of statements.
Printed statements are then returned to Barclaycard for insertion in envelopes
along with marketing and customer service material that may be of interest to
cardholders.
Cardholders receive up to 56 days interest free on purchases before they are
required to make a payment.
At the moment, cardholders must make a monthly minimum payment which is at
least equal to the greater of:
(i) 2 per cent. -- on platinum and gold, 2.5 per cent. -- on classic, 3 per
cent. -- on initial, student, graduate and choice -- of the statement
balance; and
(ii) the stated minimum payment, which is currently [GBP]5.
Notwithstanding the above, in the case of the Premier Card, Barclaycard's
charge card product, cardholders must pay the statement balance in full, which
is collected via direct debit 14 days after the date of the statement.
Certain eligible cardholders may be given the option to take a payment
holiday.
60
Barclaycard charges late and over-limit fees as well as charges for returned
cheques and returned direct debits. Charges may also be made, to a lesser
extent, for copy statements and copy vouchers. Whilst Barclaycard does not
charge an annual fee on all products, annual fees can be up to [GBP]150 on
those products on which an annual fee is charged. Barclaycard also assesses a
cash advance fee which ranges from 1.5 per cent. to 2.5 per cent., with minimum
charges of [GBP]5.
The finance charges on purchases assessed monthly are calculated by
multiplying the account's average daily purchase balance over the billing
period by the applicable monthly rate. Finance charges are calculated on
purchases from the date of the transaction. Monthly periodic finance charges
are not assessed on purchases if all balances shown in the billing statement
are paid by the date they are due. This is usually 25 days after the billing
date.
The finance charges on cash advances assessed monthly are calculated by
multiplying the account's average daily balance of cash advances over the
billing period by the applicable monthly rate. Finance charges are calculated
on cash advances from the date of the transaction -- except for cash advances
by use of credit card cheques, where finance charges are usually calculated
from the date the transaction is debited to the relevant account.
The interest rates on Barclaycard's credit card accounts may be changed by
Barclaycard and are not currently linked to any index. This is market practice
in the United Kingdom. At the moment, the standard annual percentage rate of
charge for purchases on accounts ranges from [__] to [__] per cent. (excluding
introductory offers). Barclaycard may sometimes offer temporary promotional
rates. Barclaycard also offers activation programs and other incentives.
Pricing decisions are based upon:
(i) actual and anticipated movements in underlying interest rates;
(ii) marketing strategies and recruitment campaigns; and
(iii) competitive environment.
English law does not prescribe a maximum rate that may be charged as
interest for a debt. However, the obligation to make interest payments will not
be enforceable to the extent that the interest rate is extortionate. An
interest rate will be extortionate if it requires the debtor or a relative of
the debtor to make payments -- whether unconditionally or on certain
contingencies -- which are grossly exorbitant, or which otherwise grossly
contravene ordinary principles of fair dealing. Barclaycard believes that the
interest rates charged on its cards do not contravene any laws relating to
extortionate credit agreements.
DELINQUENCY AND LOSS EXPERIENCE
An account is contractually delinquent if the minimum payment is not
received by the due date indicated on the customer's statement. An account does
not actually become delinquent until a new customer statement is sent following
a missed payment on the account. Once an account is recognised as delinquent,
the account is electronically flagged as delinquent. The basis upon which the
account is transferred to a collections team within Barclaycard may include the
product type, the age of the account, the amount outstanding, the past
performance and behaviour score, and any information that is available from
external credit bureaus or Barclays Bank. The collections team utilise a
strategic decision making process to determine the timing and type of contact
that will be made to the customer in respect of the delinquency.
Efforts to deal with delinquent receivables occur at each stage of
delinquency. Activities include statement messages, telephone calls, formal
letters, SMS Text Messages, calling cards and telemessages. Accounts are
automatically charged off at 180 days of delinquency unless there is specialist
activity in place. An account may be charged off before it is 180 days
delinquent. This decision is based upon an assessment of the likelihood of
recovery and rehabilitation of the individual account and may occur at any
point in the process. In certain circumstances, in particular bankruptcies are
charged off on notification and deaths are charged off 90 days after
notification. In addition, there are instances where accounts are not charged-
off after 180 days of delinquency because of the presence of "specialist
activities". Specialist activities include insurance claims, authorised user
disputes, voucher disputes and complaints. Barclaycard may reduce the minimum
repayment terms for an account and place the account on a
61
repayment program if it is believed that this would improve the likelihood of
returning the account to performing status.
As part of any recovery activity, accounts may be passed to external debt
collection agencies to seek recovery.
Once charged-off, a portion of the receivables are typically sold to debt
collection agencies to maximise recoveries. Post charge-off account
rehabilitation may occur where improved credit circumstances and significant
recovery occurs. However, charging privileges can only be re-instated once the
cardholder has been accepted for a new account.
In March 2007, Barclaycard performed a review of its financial and trust
reporting methods in order to increase transparency and comparability of
numbers.
The review highlighted an overly conservative approach to repayment plan
provisioning and a need to update to its delinquency reporting method to
improve consistency.
As such, at the end of March 2007 the following changes were made to
Barclaycard's trust reporting:
(a) Repayment plans that pay less than 1% ("<1% RPS") of the balance
outstanding per month:
(i) Previously all <1% RPs were forced to age through delinquency
to charge-offs whether they were paying as agreed or not.
(ii)As at the end of March 2007 Barclaycard's reporting policy was
updated such that only <1% RPs not making minimum payments are
reported as delinquent and flow through to charge-off.
(b) Repayment plans that pay greater than 1% (">1% RPS") of the balance
outstanding per month:
(i) Previously any >1% RPs that were not paying as agreed were not
reported as delinquent. However, they were reported correctly
as charge-offs when payments had not been made for 180 days or
more.
(ii)As at the end of March 2007 Barclaycard's reporting policy was
updated such that any >1% RPs not paying as agreed are reported
as delinquent.
Each prospectus supplement/final terms will contain tables which set forth
the delinquency and loss experience of Barclaycard's Securitised Portfolio of
VISA and MasterCard credit and charge card accounts denominated in pounds
sterling -- called the "SECURITISED PORTFOLIO" -- including the historic
contractual delinquencies of accounts in the Securitised Portfolio, broken down
according to the number of days by which payments are overdue, as well as loss
experience and provisions for bad and doubtful debt. The Securitised Portfolio
includes platinum, gold and classic VISA and MasterCard credit cards and the
Premier VISA charge card. The Securitised Portfolio currently does not include
the portfolio of credit card accounts acquired by Barclaycard with Barclays
PLC's purchase of Woolwich in October 2000 or the portfolio of credit card
accounts purchased from Providian's U.K. operations in April 2002 or the
portfolio of store card accounts purchased from Clydesdale Financial Services
in May 2003.
The delinquency statistics are obtained from billing cycle information as
opposed to month end positions.
62
THE RECEIVABLES
ASSIGNMENT OF RECEIVABLES TO THE RECEIVABLES TRUSTEE
Under the terms of a Receivables Securitisation Agreement dated 23 November
1999 and amended and restated on 7 July 2000 -- which we will call the
"RECEIVABLES SECURITISATION AGREEMENT" -- Barclaycard as the initial originator
offered on 23 November 1999 -- called the "INITIAL RELEVANT CLOSING DATE" -- to
the receivables trustee an assignment of all receivables that had arisen or
would arise in accounts originated under the designated product lines, where
such accounts were in existence on or before October 1999 -- called the "POOL
SELECTION DATE". Under the terms of a deed of assignment of receivables dated 7
July 2000, called the "FUTURE RECEIVABLES TRANSFER", Barclaycard as initial
originator assigned to the receivables trustee all receivables that would arise
on all accounts opened on or after 1 August 2000 on certain product lines
designated in the Future Receivables Transfer. An account of the initial
originator will be designated as a "DESIGNATED ACCOUNT" if the account has been
originated under and continues to conform to the credit card and charge card
products described in this base prospectus, comes within a product line named
in an accepted offer or transfer and has not been identified on the initial
originator's system as being excluded from such accepted offer or transfer.
Only credit and charge card products available to the originator's individual
account holders may be designated.
Under the terms of the Future Receivables Transfer whenever Barclaycard
creates a new product line, Barclaycard will be able, if it so chooses, to
allocate to that product line one of the codes referred to in the Future
Receivables Transfer, being a code which has not previously been allocated to
any product line. By allocating, or not allocating, one of those codes to the
new product line, Barclaycard will be able to choose whether or not to nominate
the receivables on that product line as being included in the sale to the
receivables trustee. If Barclaycard chooses to make a nomination, it will be
able to do so by allocating one of the relevant product line codes to the
product line in question. Once one of the relevant product line codes has been
attached to a particular product line, all receivables arising thereafter on
all accounts opened thereafter on that product line will be included in the
sale to the receivables trustee in accordance with the terms of the Receivables
Securitisation Agreement. Further, where Barclaycard acquires new portfolios of
credit card accounts, it can elect to transfer those portfolios onto one of the
product codes referred to in the Future Receivables Transfer, and if those
accounts are eligible, to designate those accounts and to include the
receivables arising on those accounts in the sale to the receivables trustee.
If for any reason there are receivables from Designated Accounts that cannot
be assigned to the receivables trustee, the 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.
Under the terms of the Receivables Securitisation Agreement, the originator
also has the right to select accounts that conform to the conditions in the
first paragraph above and that are not designated and nominate them to be
Designated Accounts by offering the receivables trustee an assignment of all
future and existing receivables in these accounts. These accounts are called
"ADDITIONAL ACCOUNTS". An additional account will be treated as a Designated
Account from the date on which its receivables are offered to the receivables
trustee, assuming that such offer is accepted. This date is called the
"ADDITION DATE". When Additional Accounts are nominated the originator must,
amongst other things:
(i) provide the receivables trustee with a certificate stating that it is
solvent;
(ii) confirm, in the document that offers to assign 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; or
(2) if the offer does not meet the Maximum Addition Amount criteria,
the rating agencies have confirmed that the designation of
Additional Accounts will not result in a reduction or withdrawal of
the current rating of any outstanding debt that is secured directly
or indirectly by the receivables in the receivables trust,
including your notes;
63
(iii) obtain a legal opinion addressed to the receivables trustee about any
receivables from a jurisdiction outside of the United Kingdom;
(iv) in relation to a nomination made in accordance with the terms of the
Future Receivables Transfer, obtain a legal opinion addressed to the
receivables trustee in respect of the Future Receivables Transfer in a
form satisfactory to the receivables trustee.
Any of these preconditions may be waived by the receivables trustee if the
rating agencies confirm in writing that the waiver will not result in the
reduction or withdrawal of their rating on any Related Beneficiary Debt. At the
time that 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 Barclaycard in selecting the original
Designated Accounts. As a result, Additional Accounts that are selected in
future may not have the same credit quality.
"MAXIMUM ADDITION AMOUNT" means, for any Addition Date, the number of
Additional Accounts originated by the originator after the Pool Selection Date
and nominated as Additional Accounts without prior rating agency confirmation
that would either:
(i) for any three consecutive monthly periods starting with the monthly
period beginning on the first day of the month before the Pool Selection
Date, exceed 15 per cent. of the number of Designated Accounts at the end
of the ninth monthly period before the start of such three monthly
periods;
(ii) for any twelve-month period, be equal to 20 per cent. of the Designated
Accounts as of the first day of the twelve-month period, or if later, as
of the Pool Selection Date.
Notwithstanding what we just said, if the total principal balance of
receivables in the Additional Accounts described in either of the two prior
bullet points is more than either:
(1) 15 per cent. of the total amount of eligible principal receivables
determined as of the later of the Pool Selection Date and the first
day of the third preceding monthly period, minus the amount of
eligible principal receivables in each additional account that was
nominated since the later of the Initial Relevant Closing Date and
the first day of the third preceding monthly period -- calculated
for each additional account on its Addition Date; or
(2) 20 per cent. of the total amount of eligible principal receivables
as of the later of the Initial Relevant Closing Date and the first
day of the calendar year in which the Addition Date occurs, minus
the total amount of eligible principal receivables in each
additional account that was nominated since the later of the
Initial Relevant Closing Date and the first day of the calendar
year, calculated for each additional account as of its Addition
Date,
then the Maximum Addition Amount will be the lesser of (1) or (2) above.
Every offer of receivables to the receivables trustee under the Receivables
Securitisation Agreement will comprise offers of the following:
(i) all existing receivables in the Designated Accounts;
(ii) all future principal receivables under the Designated Accounts, until the
first to occur of (1) the time a Designated Account becomes a
Redesignated Account, (2) the receivables trust is terminated or (3) an
Insolvency Event occurs;
(iii) all future finance charge receivables under those Designated Accounts
that have accrued on receivables that have been assigned to the
receivables trustee as described in the two prior bullet points;
(iv) if capable of being assigned, the benefit of any guarantee or insurance
policy obtained by the originator for any obligations owed by a
cardholder on a Designated Account; and
64
(v) the benefit of all amounts representing Acquired Interchange for the
relevant monthly period.
The originator will ensure that each Redesignated Account is identified on
the originator's computer system on the date that a Designated Account becomes
a Redesignated Account.
Throughout the term of the receivables trust, the Designated Accounts from
which the receivables will arise will be the Designated Accounts plus any
Additional Accounts designated by the originator from time to time, minus any
Redesignated Accounts.
Existing receivables and future receivables arising under the Designated
Accounts are either principal receivables or finance charge receivables.
"PRINCIPAL RECEIVABLES" are receivables that are not 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. They are reduced by
any credit balance on the Designated Account on that day.
"FINANCE CHARGE RECEIVABLES" are amounts owing from cardholders for
transaction fees, periodic finance charges, special fees and annual fees -- see
"-- Special Fees and Annual Fees" below -- and any Interchange and Discount
Option Receivables.
Under the Receivables Securitisation Agreement, each offer of receivables
made by the originator may be accepted by paying the purchase price for the
offered receivables. If the receivables trustee chooses to accept the offer,
payment for existing receivables has to be made no later than the Business Day
following the date on which the offer is made. Alternatively, the parties can
agree to a longer period of time for payment. Payment for future receivables
that become existing receivables must be made no later than two Business Days
after the date of processing for those receivables. Alternatively, the parties
can agree to a longer period if the rating agencies consent. Payment is made
monthly for the assignment of the benefit of Acquired Interchange to the
receivables trustee.
A "BUSINESS DAY" is a day other than a Saturday, a Sunday or a day on which
banking institutions in London, England, or New York, New York are authorised
or obliged by law or executive order to be closed.
It was agreed between the originator and the receivables trustee that, for
the purposes of the offer made on the Initial Relevant Closing Date:
(1) the receivables trustee was entitled to use the collections in the
Designated Accounts before the date that the offer was accepted as
if the offer had been accepted on the Initial Relevant Closing
Date;
(2) the amount paid on the Initial Relevant Closing Date for the
Designated Accounts equalled the outstanding face amount of all
existing principal receivables, together with an obligation of the
receivables trustee to pay for all future receivables generated on
the Designated Accounts that were part of the offer on an ongoing,
daily basis when those future receivables are generated.
The payments in (2) are net of any payments made in (1), subject to a
minimum of [GBP]1.
The amount payable by the receivables trustee to the originator if it
chooses to accept an offer or to make payment for any future receivables will
be reduced by the amount of any shortfall in the amount funded by the
originator as a beneficiary, PROVIDING THAT the Originator Interest is
increased accordingly.
REDESIGNATION AND REMOVAL OF ACCOUNTS
Each Designated Account will continue to be a Designated Account until such
time as the originator reclassifies it as being no longer a Designated Account-
called a "REDESIGNATED ACCOUNT".
65
A Designated Account becomes a Redesignated Account on the date specified by
the originator. No Designated Account will become a Redesignated Account this
way unless (1) it has become a Cancelled Account, a Defaulted Account or a Zero
Balance Account or (2) the originator delivers an officer's certificate
confirming the following conditions are satisfied:
(i) the redesignation will not cause a Pay Out Event to occur;
(ii) the originator has represented that its selection procedures for the
selection of Designated Accounts for redesignation are not believed to
have any material adverse effect on any investor beneficiary;
(iii) the rating agencies have confirmed that the action will not result in a
downgrade in rating of any outstanding debt that is secured directly or
indirectly by the receivables in the receivables trust; and
(iv) the originator 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 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 "DEFAULTED ACCOUNT" is a Designated Account
where the receivables have been charged off by the servicer as uncollectable in
line with the credit and charge card guidelines or the usual servicing
procedures of the servicer for similar credit and charge card accounts. 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 and charge card guidelines
or the usual servicing procedures of the servicer.
Redesignated Accounts include all accounts that become Cancelled Accounts,
Defaulted Accounts and Zero Balance Accounts from the date on which they are
redesignated in any of these ways. The principal receivables that exist before
the date of redesignation will be paid for by the receivables trustee. Any
future receivables that come into existence after that time will not be
assigned to the receivables trustee as set out in the Receivables
Securitisation Agreement. No receivable that has been assigned to the
receivables trustee will be reassigned to the originator except in the limited
circumstances described under the heading "-- Representations".
Until money has been received for the assigned receivables that have not
been charged off, a Redesignated Account will not be identified as having been
removed. The amount identified will be equal to the outstanding face amount of
each principal receivable and finance charge receivable. Once these payments
have been received or any reassignment has occurred, the account will be
identified to indicate that it has become a Redesignated Account.
DISCOUNT OPTION RECEIVABLES
The originator 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 been
nominated previously, an extension to the period for which it applies can be
applied for in the same way. From the date and for the length of time stated in
the notice:
(i) 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
(ii) 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".
66
The nomination of a Discount Percentage or increase in the time it is in
place will be effective only if the rating agencies consent to the proposed
nomination or increase and confirm that it 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 originator must also provide the receivables trustee with a certificate
confirming:
(i) that the performance of the portfolio of Designated Accounts, in their
reasonable opinion, 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 distributions to the
excess interest beneficiary; and
(ii) that the originator is solvent and will remain so following the
nomination or increase.
The originator may have different reasons to designate a Discount
Percentage. The finance charge collections on the Designated Accounts may
decline for various reasons or may stay constant. The notes have interest rates
that are variable and that could increase. Any of these variables could cause a
Pay Out Event to occur based in part on the amount of finance charge
collections and the interest rate on the notes. The originator could avoid the
occurrence of this Pay Out Event by designating a Discount Percentage, causing
an increase in the amount of finance charge collections. The originator,
however, is under no obligation to designate a Discount Percentage and we
cannot assure you that the originator would designate a Discount Percentage to
avoid a Pay Out Event.
SPECIAL FEES AND ANNUAL FEES
The originator charges special fees -- currently late and over limit fees --
on its credit or charge card accounts. These special fees as well as additional
special fees may be assessed at one time or on an ongoing basis. Certain of the
receivables assigned or to be assigned to the receivables trustee include
annual fees on a small number of the Designated Accounts. Any special fees and
annual fees that are charged on Designated Accounts are regarded as finance
charge receivables and collections of these special fees are treated as finance
charge collections. The originator may, however, decide that these special fees
or annual fees will be viewed as principal receivables and collections on them
will be allocated accordingly. This can be done only if the originator
certifies that it has an opinion from legal counsel that the special fees or
annual fees amount to repayment, for United Kingdom tax purposes, in whole or
in part of an advance to a cardholder.
INTERCHANGE
Members participating in the VISA and MasterCard associations receive fees
called "INTERCHANGE" as partial compensation, for amongst other things, taking
credit risk and absorbing fraud losses. Under the VISA and MasterCard 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
amount of a credit or charge card transaction for the purchase of goods or
services. This percentage varies from time to time.
On each transfer date the originator will deposit into the Trustee
Collection Account an amount equal to the Interchange received for the
preceding monthly period. This amount is called the "ACQUIRED INTERCHANGE".
Interchange is received by Barclaycard on a daily basis and is posted to the
general ledger with a flag identifying the product to which it relates. The
amount of Acquired Interchange applicable to the receivables in the trust is
arrived at monthly by interrogation of the general ledger. All Interchange
relating to products included in the trust is extracted and posted to the
Trustee Collection Account.
REDUCTIONS IN RECEIVABLES, EARLY COLLECTIONS AND CREDIT ADJUSTMENTS
If a principal receivable that has been assigned to the receivables trustee
is reduced -- for reasons other than because of Section 75 of the Consumer
Credit Act or a credit adjustment -- after the offer date because of set-off,
counterclaim or any other matter between the cardholder and the originator, and
the originator has received a benefit, then the originator will pay an amount
equal to that reduction to the receivables trustee. Similarly, if an existing
receivable has already been assigned and the originator has received full or
partial payment of that receivable before the date that the receivable was
purportedly assigned, then the originator will pay the amount of that
collection to the receivables trustee.
67
If any principal receivable assigned to the receivables trustee is reduced
for credit adjustment reasons after the offer date, then the originator will pay
that amount to the receivables trustee. A credit adjustment is the outstanding
face amount of a principal receivable that:
(i) 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;
(ii) is reduced because the cardholder had received a rebate, refund, charge-
back or adjustment; or
(iii) is fraudulent or counterfeit.
Alternatively, instead of paying these amounts to the receivables trustee,
the originator can reduce the Originator Interest by the amount of the credit
adjustment, but not below zero.
REPRESENTATIONS
Each offer of receivables to the receivables trustee under the Receivables
Securitisation Agreement and the Future Receivables Transfer includes
representations by the originator about the offer or transfer of the existing
receivables and the future receivables. The representations for the existing
receivables were or will be given as of the Pool Selection Date or an Addition
Date, as applicable, and the representations for the future receivables are
given on the date they are processed, and include, in each case, that:
(i) 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;
(ii) each assignment passes good and marketable title for that receivable to
the receivables trustee, together with the benefit of all collections and
other rights in connection with it, free from encumbrances of any person
claiming on it through the originator to the receivables and, unless such
receivable does not comply with 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 the originator, except for
payment of any United Kingdom stamp duty and giving a Notice of
Assignment to the cardholders and subject to any limitations arising on
enforcement in the jurisdiction of the relevant cardholder; and
(iii) the assignment complies with all applicable laws on the date of
assignment.
If a representation relating to the eligibility criteria given in connection
with any principal receivable proves to be incorrect when made, then the
originator is obliged to pay the receivables trustee an amount equal to the
face value of that receivable on the following Business Day. A receivable of
this type will afterwards be treated as an Ineligible Receivable.
The 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 the Originator Interest. The Originator Interest, however, may not be
reduced below zero. If the originator meets a payment obligation in this way,
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.
If:
(i) all principal receivables arising under a Designated Account become
ineligible as a result of incorrect representations;
(ii) that account has become a Redesignated Account; and
(iii) the originator has complied with the payment obligations for the
principal receivables;
then the originator can require the receivables trustee to reassign all those
receivables to the originator.
68
The receivables trustee has not made and will not make any initial or
periodic examination of the receivables to determine if they are Eligible
Accounts or if the originator's representations and warranties are true.
The term "ELIGIBLE ACCOUNT" means, as of the Pool Selection Date, an
Addition Date or date on which the account is opened, as applicable, a credit
or charge card account:
(i) where the cardholder is not a company or partnership for the purposes of
Section 349(2) of the Income and Corporation Taxes Act 1988;
(ii) which, except in the case of a future Designated Account as defined in
any offer or a relevant account as defined in the Future Receivables
Transfer, was in existence and maintained with the originator before it
became a Designated Account;
(iii) which is payable in pounds sterling or the currency of the Permitted
Additional Jurisdiction where the account is in a Permitted Additional
Jurisdiction, as applicable;
(iv) which is governed by one of the originator's standard form card
agreements or, if it was acquired by the originator, it is originated on
contractual terms not materially different from that standard form;
(v) which is governed in whole or in part by the Consumer Credit Act and
creates legal, valid and binding obligations between the originator and
the cardholder which, except in the case of an account on which
Restricted Eligible Receivables arise, is enforceable against the
cardholder in accordance with the relevant card agreement and the
Consumer Credit Act, subject to bankruptcy laws, general principles of
equity and limitations on enforcement in any cardholder jurisdiction and
was otherwise created and complies with all other applicable laws;
(vi) where the cardholder's most recent billing address is located in England,
Wales, Scotland, Northern Ireland, or a Permitted Additional Jurisdiction
or a Restricted Additional Jurisdiction;
(vii) which has not been classified by the originator as counterfeit,
cancelled, fraudulent, stolen or lost;
(viii) which has been originated or purchased by the originator;
(ix) which has been operated in all material respects in accordance with the
originator's policies and procedures and usual practices for the
operation of its credit and charge card business; and
(x) the receivables in respect of which have not been charged off by the
originator on the date the account is specified as a Designated Account.
If all these conditions have not been satisfied, then an account may still
be an Eligible Account if each rating agency gives their approval.
A "RESTRICTED ELIGIBLE RECEIVABLE" is a receivable arising on an Eligible
Account, the terms of which fail to comply with the Consumer Credit Act, such
that a court would have no discretion to grant a court order.
A "DEFAULTED RECEIVABLE" is any receivable in a Defaulted Account.
A "PERMITTED ADDITIONAL JURISDICTION" is a jurisdiction -- other than
England, Wales, Scotland and Northern Ireland -- agreed by the originator and
the receivables trustee, and which each rating agency has confirmed in writing
that its inclusion as a Permitted Additional Jurisdiction will not result in
its withdrawing or reducing its rating on any Related Beneficiary Debt.
A "RESTRICTED ADDITIONAL JURISDICTION" is a jurisdiction -- other than
England, Wales, Scotland and Northern Ireland or a Permitted Additional
Jurisdiction -- which together with each other account with a billing address
in that jurisdiction and any other jurisdiction other than England, Wales,
Scotland, Northern Ireland or a Permitted Additional Jurisdiction represent
less than 5 per cent. by outstanding receivables balance.
69
A "NOTICE OF ASSIGNMENT" means a notice given to a cardholder of the
assignment of the receivables -- and the benefit of any guarantees -- to the
receivables trustee.
An "ELIGIBLE RECEIVABLE" means a receivable that:
(i) has arisen under an Eligible Account;
(ii) was originated under one of the originator's standard form credit or
charge card agreements and is governed, in whole or in part, by the
Consumer Credit Act, or else, if the related account was acquired by the
originator, contractual terms that are materially the same as the
standard form credit or charge card agreements and are governed, in whole
or in part, by the Consumer Credit Act;
(iii) was otherwise created in compliance with all other applicable laws;
(iv) was originated in accordance with the originator's policies and
procedures and usual practices for its credit and charge card business;
(v) is not a Defaulted Receivable as at the offer date or Addition Date, as
applicable;
(vi) is free of any encumbrances exercisable against the originator arising
under or through the originator or any of its affiliates;
(vii) to which the originator has good and marketable title;
(viii) is the legal obligation of the cardholder, enforceable -- except in the
case of Restricted Eligible Receivables -- in accordance with the terms
of the credit or charge card agreement, subject to bankruptcy, general
principles of equity and limitations on enforcement in any cardholder
jurisdiction; and
(ix) 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 and charge 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 -- Securitised
Portfolio" in "Barclaycard and the Barclaycard Card Portfolio -- Delinquency
and Loss Experience" in the accompanying prospectus supplement/final terms for
data showing the percentage of delinquent receivables.
"INELIGIBLE RECEIVABLES" means principal receivables which arise under a
Designated Account but which do not comply with all the criteria set out in the
definition of Eligible Receivables as at the Pool Selection Date or an Addition
Date, as applicable.
AMENDMENTS TO CARD AGREEMENTS AND CARD GUIDELINES
The originator may amend the terms and conditions of its standard form card
agreements or change its policies and procedures and usual practices for its
general card business. 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 of Your Notes or a Downgrade of Your Notes".
70
OVERVIEW OF SECURITISED PORTFOLIO
Each prospectus supplement/final terms relating to 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 prospectus supplement/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.
71
MATURITY ASSUMPTIONS
On each transfer 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
investor interest. Although it is anticipated that principal collections will
be available on each transfer date during the Controlled Accumulation Period to
make a deposit of the Controlled Deposit Amount and that the investor interest
will be paid to the MTN issuing entity on the Series Scheduled Redemption Date,
allowing the MTN issuing entity to redeem the medium term note certificate
fully, no assurance can be given that sufficient principal collections will be
available. If the amount required to pay the investor interest in full is not
available on the Series Scheduled Redemption Date, a Series Pay Out Event will
occur and the Rapid Amortisation Period will begin.
If a Regulated Amortisation Trigger Event occurs during the Controlled
Accumulation Period, the Regulated Amortisation Period will begin. If any other
Pay Out Event occurs during the Controlled Accumulation Period, the Rapid
Amortisation Period will begin. In each case, any amount on deposit in the
Principal Funding Account will be paid to the MTN issuing entity for the
investor interest on the first payment date relating to the Regulated
Amortisation Period or the Rapid Amortisation Period. In addition, to the
extent that the investor interest for each class has not been distributed in
full, the MTN issuing entity will be entitled to monthly distributions of
principal collections during the Rapid Amortisation Period equal to the
Available Investor Principal Collections until the investor interest has been
distributed in full or, during the Regulated Amortisation Period, an amount
equal to the Controlled Deposit Amount until the 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.
See "The Receivables Trust: Trust Pay Out Events" and "Securitisation
Cashflows: Series Pay Out Events". If a Series Pay Out Event occurs, it will
automatically trigger an early redemption event under the medium term note
certificate.
Each prospectus supplement/final terms will contain a table that presents
the highest and lowest cardholder monthly payment rates for the bank portfolio
during any month in the period 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:
(i) seasonal variations;
(ii) promotional offerings -- such as payment holidays;
(iii) general economic conditions; and
(iv) payment habits of individual 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
each prospectus supplement/final terms or that there will be enough principal
collections to deposit the Controlled Deposit Amount into the Principal Funding
Account each month to fully redeem your notes by the Series Scheduled
Redemption Date. 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 Series Scheduled Redemption Date.
Because there may be a slowdown in the payment rate 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, there is no guarantee that the actual number of months elapsed from the
relevant closing date to the final Distribution Date for your notes will equal
the expected number of months. As described under "Securitisation Cashflows:
Postponement of Controlled Accumulation Period", if the servicer shortens the
Controlled Accumulation Period there is no guarantee that there will be enough
time to accumulate all amounts necessary to fully pay the investor interest on
the Series Scheduled Redemption Date. See "Risk Factors: Principal on your
Notes May Be Paid Earlier Than Expected Creating a Reinvestment Risk to You or
Later than Expected".
72
RECEIVABLES YIELD CONSIDERATIONS
The gross revenues from finance charges and fees billed to accounts in the
portfolio of credit and charge card accounts for the most recent available
periods will be presented in the relevant prospectus supplement/final terms.
Prior to the creation of the receivables trust, Barclaycard recorded yield
information on an accruals basis, which includes earned but not necessarily
paid finance charges and fees. A system change to allocate cash in priority
against finance charges ahead of principal was made in October 1999. This
resulted in increased yield in 2000. Cash yields from 2000 onwards include
principal and interest recovered on charged-off accounts, which typically
results in higher cash yields than accrual yields.
Yield information is calculated by allocating cash in priority against
finance charges ahead of principal in line with the Barclaycard standard
billing processes. The yield will be affected by many factors, including the
monthly periodic finance charges on the receivables, 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, the originator could
change the monthly interest rate applied to the accounts or reduce or eliminate
fees on the accounts. See "Risk Factor: A Change in the Terms of the
Receivables May Adversely Affect the Amount or Timing of Collections and May
Cause an Early Redemption or a Downgrade of Your Notes".
The table presented in the relevant prospectus supplement/final terms will
set forth the revenue for the Securitised Portfolio of card accounts. The
revenue is comprised of monthly periodic finance charges, card fees, special
fees, annual fees and Interchange. These revenues vary for each account based
on the type and volume of activity for each account. See "Barclaycard and the
Barclaycard Card Portfolio".
73
THE RECEIVABLES TRUST
GENERAL LEGAL STRUCTURE
The receivables trust was constituted on 1 November 1999 and is a trust
formed under English law by the receivables trustee as trustee and Barclays as
trust cash manager, initial originator, initial originator beneficiary and
excess interest beneficiary. The receivables trust was declared for the
financings described in this base prospectus. The terms and conditions of the
receivables trust are contained in the declaration of trust dated 1 November
1999 as amended and restated by the declaration of trust and trust cash
management agreement dated 23 November 1999, and supplemented by the series
supplements to the declaration of trust and trust cash management agreement,
which are governed by English law. This section will describe to you the
material terms of the receivables trust and declaration of trust and trust cash
management agreement. The terms of the declaration of trust and trust cash
management agreement may be varied or added to by executing a supplement -- but
only for the series of Investor Certificates issued under the supplement. A
precondition to the receivables trustee entering into a supplement is obtaining
confirmation from the rating agencies that entering into the supplement will
not result in any rating agency withdrawing or downgrading its rating of any
debt that is ultimately secured by the receivables in the receivables trust.
Under the declaration of trust and trust cash management agreement, the
receivables trustee holds all of the receivables trust's property on trust for:
(i) the initial originator beneficiary and the excess interest beneficiary as
the initial beneficiaries of the trust; and
(ii) for any other person who may become an additional originator beneficiary
or additional beneficiary of the trust as allowed by the declaration of
trust and trust cash management agreement.
Other than the excess interest beneficiary and an originator beneficiary,
the two categories of beneficiary are:
(i) an investor beneficiary, which may include any investor beneficiary
subordinate to another investor beneficiary as a provider of credit
enhancement; or
(ii) an enhancement provider for a series of Investor Certificates, if
provided for in the supplement for that series.
The excess interest beneficiary and the initial originator beneficiary are
the initial beneficiaries of the receivables trust. Any subsidiary of the
initial originator that, with the prior written consent of all existing
beneficiaries of the receivables trust, accedes to the Receivables
Securitisation Agreement as an additional originator will upon its accession
become an additional originator beneficiary of the receivables trust.
By making payments to the receivables trustee as a contribution to the
receivables trust's property, as set out in the declaration of trust and trust
cash management agreement, other persons can form a series of the receivables
trust. These persons are called additional beneficiaries. When payment is made,
the additional beneficiaries will be given a certificate evidencing a
beneficial interest in the receivables trust to show that they are an investor.
This process is called an acquisition and the certificate is called an Investor
Certificate. When an acquisition takes place a notice will be given that will
list the parties to the acquisition. A new supplement to the declaration of
trust and trust cash management agreement will govern each new series of the
receivables trust that is created.
Two types of acquisition may be made:
(i) the originator beneficiary may direct the receivables trustee, in
exchange for tendering the certificate it holds showing its entitlement
to the receivables trust's property -- called the "ORIGINATOR
CERTIFICATE" -- to issue a new series of Investor Certificates and to
reissue the Originator Certificate evidencing the originator's beneficial
entitlement to the receivables trust's property. This is known as a
"ORIGINATOR ACQUISITION". Twelve series of Investor Certificates have
been previously issued by the receivables trust and were created by an
Originator Acquisition. The first series Investor Certificate (for series
99-1) is no longer in existence as series 99-1 was fully paid out in
November 2002. The fourth series Investor Certificate (for series 03-2)
is no longer in existence as series 03-2 was fully paid out in June 2006.
The fifth series
74
Investor Certificate (for series 03-3) is no longer in existence as
series 03-3 was fully paid out in August 2006. The sixth series
Investor Certificate (for series 04-1) is no longer in existence as
series 04-1 was fully paid out in February 2007.
(ii) the second type of acquisition which may be made is an investor
acquisition where, if the supplement permits, an investor beneficiary
together with the originator beneficiary may direct the receivables
trustee, in exchange for tendering their Investor Certificates and the
Originator Certificate to issue one or more new Investor Certificates and
a reissued Originator Certificate.
The receivables trustee will authenticate and deliver a series of Investor
Certificates only when it has first received:
(i) a supplement signed by the parties to the new series, including the
receivables trustee and the originator beneficiary, specifying the
principal terms of the series;
(ii) a solvency certificate from the originator and any additional
originators;
(iii) 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 issuing
entity of any series of notes that is ultimately secured by the
receivables in the receivables trust -- called "RELATED BENEFICIARY
DEBT";
(iv) written confirmation from each additional beneficiary and enhancement
provider, if any, that:
(1) its usual place of abode is in the United Kingdom and it will be
within the charge to United Kingdom corporation tax for all amounts
regarded as interest for U.K. tax purposes received by it under the
transactions contemplated by the series of Investor Certificates;
or
(2) it is a bank, as defined for purposes of Section 349(3)(a) of the
Income and Corporation Taxes Act 1988, and it will be within the
charge to United Kingdom corporation tax for all amounts regarded
as interest for U.K. tax purposes received by it under the series
of Investor Certificates;
(v) the existing Originator Certificate and, if it is an investor
acquisition, the applicable Investor Certificates;
(vi) an officer's certificate provided by the originator certifying either:
(1) that:
(a) each class of Related Beneficiary Debt issued as part of the
acquisition and described in the related supplement will be
rated in one of the three highest rating categories by at least
one rating agency recognised in the United Kingdom;
(b) each investor beneficiary -- other than any enhancement
provider -- will have associated with it, either directly or
indirectly, a class of Related Beneficiary Debt; and
(c) the enhancement for each series will be provided by any
combination of subordination, a letter of credit, a cash
collateral loan, a surety bond, an insurance policy, or a
series cash reserve account funded from excess finance charge
collections ultimately reverting to the excess interest
beneficiary or originator to the extent not utilised as
enhancement, but through no other means; or
(2) it has determined that, based on legal advice, the acquisition is
in the best interests of the originator beneficiary and its
affiliates.
Each supplement to the declaration of trust and trust cash management
agreement will specify the principal terms for its series of Investor
Certificates, including the accumulation period or amortisation
75
period for the payment of principal. For each series these may be of different
lengths and begin on different dates. Enhancement is specific to each series
and will be held and used by the receivables trustee only for the benefit of
the relevant series. Certain series may be subordinated to other series, and
classes within a series may have different priorities. Whether or not a series
or class is subordinated 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 constituting
each existing series. Even if the receivables trustee receives all these
consents, no acquisition will be effective unless the rating agencies confirm
that the additional supplement will not result in the reduction or withdrawal
of their rating of any Related Beneficiary Debt.
THE RECEIVABLES TRUST'S PROPERTY
The property of the receivables trust will include all present and future
receivables located on the Triumph accounting system or any other accounting
system used by the originator from time to time, arising under all MasterCard
and VISA credit and charge card accounts of Barclaycard's individual
cardholders on designated product lines that have not been identified as non-
Designated Accounts and that are denominated in pounds sterling with a billing
address within England, Wales, Scotland, Northern Ireland or a Permitted
Additional Jurisdiction or a Restricted Additional Jurisdiction. We refer to
these accounts as the "DESIGNATED ACCOUNTS". See "The Receivables:
Representations". The receivables have been and will continue to be assigned to
the receivables trustee under the Receivables Securitisation Agreement between
Barclaycard as originator and the receivables trustee. The Receivables
Securitisation Agreement is governed by English law. Occasionally some accounts
may be removed from the pool of Designated Accounts. These accounts we refer to
in this base prospectus as the "REDESIGNATED ACCOUNTS".
Other than Ineligible Receivables (which are held separately, solely for the
benefit of the originator beneficiary as described below), the property of the
receivables trustee is held on trust on an undivided basis for all
beneficiaries.
The originator is required to ensure that any of Barclaycard's credit and
charge card accounts that are to be excluded from or otherwise outside the
scope of the offer or transfer to the receivables trustee under the Receivables
Securitisation Agreement or that are to be removed from the pool of Designated
Accounts are identified on its computer system prior to the date of offer or
the date of transfer.
The property of the receivables trust will also include:
(i) all monies due in payment of the receivables under Designated Accounts
from time to time;
(ii) all proceeds of the receivables and proceeds of any guarantees and
insurance policies for the receivables -- to the extent that they are
capable of assignment -- including proceeds of disposals by the
receivables trustee of charged-off receivables to Barclaycard;
(iii) the benefit of any Acquired Interchange; see "The Receivables:
Interchange";
(iv) all monies on deposit in the Trust Accounts;
(v) any credit enhancement for the benefit of any series or class of
beneficiary; and
(vi) 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, the excess interest beneficiary and the
originator beneficiary are beneficially entitled to interests in the pool of
Eligible Receivables.
The originator beneficiary is beneficially entitled to the entire pool of
Ineligible Receivables and is solely entitled to all collections of Ineligible
Receivables.
76
The total amount of the interest of the originator beneficiary in the
receivables trust is called the "ORIGINATOR INTEREST" and reflects the
originator beneficiary's entitlement to principal receivables not allocated to
each outstanding series.
GENERAL ENTITLEMENT OF BENEFICIARIES TO TRUST PROPERTY
The originator beneficiary and each investor beneficiary will acquire
undivided interests in the receivables trust by making payments in favour of
the receivables trustee. Some of the receivables trust's property that will
constitute credit enhancement may be specified as being the beneficial
entitlement of particular beneficiaries or particular series only. The
beneficiaries of the receivables trust are each beneficially entitled to share
in the receivables trust's property and each beneficiary, other than an
enhancement provider, has or will acquire interests in the pool of Eligible
Receivables -- called the "ELIGIBLE RECEIVABLES POOL". See "Securitisation
Cashflows" for a description of the beneficial entitlement of the issuing
entity to receivables and for a description of the manner in which collections
will be allocated to the issuing entity.
Under the receivables trust as originally created, the beneficial
entitlement of Barclaycard as the excess interest beneficiary to the property
of the receivables trust at any time was called the "EXCESS INTEREST". The
Excess Interest consisted of a beneficial entitlement to the residue of the
finance charge collections and Acquired Interchange for each monthly period
after amounts have been allocated to each beneficiary forming part of that
series or group of series, if applicable, and have been used to make payments
to the enhancement provider, if it is not a beneficiary. These payments will
include amounts deemed to represent finance charge collections as stated in the
supplement for the series.
Because Barclaycard will transfer its entitlement to the portion of the
Excess Interest attributable to each series to the MTN issuing entity, the
portion of the Excess Interest attributable to each series will be paid to the
MTN issuing entity.
To understand the beneficial entitlement of the originator beneficiary and
each additional originator beneficiary you have to understand the definition of
"ORIGINATOR PERCENTAGE". The Originator Percentage is the percentage equal to
100 per cent. less the sum of the applicable Investor Percentages of each
outstanding series.
The aggregate beneficial entitlement of the originator beneficiary at any
time consists of the following:
(i) the Originator Percentage of eligible principal receivables; the
Originator Percentage is calculated for this purpose using the Floating
Investor Percentage for the Investor Percentage of each series;
(ii) the Originator Percentage of finance charge receivables; the Originator
Percentage is calculated for this purpose using the Floating Investor
Percentage as the Investor Percentage for each series;
(iii) all Ineligible Receivables; and
(iv) all monies held in the Trust Accounts that represent investment earnings
on permitted investments made using monies deposited in those Trust
Accounts, unless something else is provided for in the supplement.
"PERMITTED INVESTMENTS" means the following:
(i) demand or time deposits, certificates of deposit and other short-term
unsecured debt obligations at or of any institution that has unsecured
and unguaranteed debt obligations of A-1+ and P-1 by Standard & Poor's
and Moody's; and
(ii) short-term unsecured debt obligations -- including commercial paper --
issued or guaranteed by any body corporate whose unsecured and
unguaranteed debt obligations are A-1+ and P-1 by Standard & Poor's and
Moody's.
The aggregate beneficial entitlement of the originator beneficiary to any
other trust property at any time is equal to the proportion that the Originator
Interest bears to the amount of eligible principal receivables at that time.
The initial originator beneficiary's and each additional originator
beneficiary's
77
entitlement to the aggregate beneficial entitlement of the originator
beneficiary is equal to its proportionate share described in the Originator
Certificate.
ALLOCATION AND APPLICATION OF COLLECTIONS
The following accounts have been opened by the receivables trustee at 1234
Pavilion Drive, Northampton, NN4 7SG, England:
(i) a collection account called the "TRUSTEE COLLECTION ACCOUNT", which is
where principal collections and finance charge collections are credited;
and
(ii) the acquisition account called the "TRUSTEE ACQUISITION ACCOUNT", which
is where amounts are credited that can be used to purchase beneficial
interests in receivables for the investor or originator beneficiaries.
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 will have legal title to the funds on deposit in each
Trust Account.
Collections from cardholders for Designated Accounts and cardholders for
other card accounts of Barclaycard are initially paid to Barclaycard's bank
accounts before being cleared on a same-day basis to a bank account called the
"BARCLAYCARD OPERATING ACCOUNT". The Barclaycard Operating Account is currently
held by Barclaycard at its branch located at 1234 Pavilion Drive, Northampton
NN4 7SG, England. The originator has declared a trust over the Barclaycard
Operating Account.
All money in the Barclaycard Operating Account will be held on trust for the
receivables trustee and transferred to the Trustee Collection Account within
three Business Days after processing. All money in the Trustee Collection
Account will 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 Business Day on which the
error is notified to the receivables trustee.
Amounts incorrectly categorised as principal collections of Eligible
Receivables but which are really collections of Ineligible Receivables will be
given back to the originator beneficiary, after making adjustments for errors
but before allocating amounts of principal collections that are property of the
receivables trust. The receivables trustee will treat all money deposited in
the Trustee Collection Account as property of the receivables trust unless
notified otherwise by the trust cash manager.
The Eligible Receivables Pool and the Originator Interest are increased or
decreased, as applicable, to account for the errors made.
Eligible principal receivables in Defaulted Accounts are allocated between
the originator beneficiary and each series of Investor Certificates in
accordance with their respective beneficial entitlements to the property of the
receivables trust at the time the account becomes a Defaulted Account. Credit
adjustments for principal receivables are allocated to the originator
beneficiary as a reduction of the Originator Interest until the Originator
Interest reaches zero. Ineligible principal receivables in Defaulted Accounts
reduce the originator's interest in Ineligible Receivables -- called the
"ORIGINATOR INELIGIBLE INTEREST" -- until it reaches zero.
Collections that are property of the receivables trust are categorised as:
(i) principal collections;
(ii) finance charge collections; or
(iii) ineligible collections.
If a Discount Percentage is nominated by the originator, the Discount
Percentage of principal collections will be treated as finance charge
collections. The originator has no current intention to nominate a Discount
Percentage. See "The Receivables: Discount Option Receivables".
78
If the related supplement says so, each series will also be entitled to a
portion of Acquired Interchange. To the extent that any Acquired Interchange is
not allocated to all those series, it will be allocated to the originator
beneficiary.
Each series will be entitled to receive varying percentages of principal
collections, finance charge collections and receivables in Defaulted Accounts.
Each of these percentages is called an "INVESTOR PERCENTAGE". The originator
beneficiary will be entitled to its applicable Originator Percentage of
principal collections and finance charge collections and receivables in
Defaulted Accounts. The excess interest beneficiary is entitled to finance
charge collections allocated to a series that are not allocated to:
(i) any other beneficiary, whether or not a member of that series; or
(ii) 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.
The originator may fulfil any obligation to make payments to the receivables
trustee for principal receivables for which it has breached a warranty by:
(i) reducing the Originator Interest -- but not below zero; and
(ii) increasing the Originator Ineligible Interest.
However, if the Originator Interest would be reduced below zero, the
originator must make a similar payment in immediately available funds to the
receivables trustee under the declaration of trust and trust cash management
agreement and the Receivables Securitisation Agreement.
The receivables trustee will pay the Trust Cash Management Fee (which is
inclusive of VAT) to the trust cash manager from payments made by the
beneficiaries and this amount will be deducted from the originator
beneficiary's and each series' portion of the finance charge collections.
The receivables trustee will transfer money daily from the Trustee
Collection Account in the following priority:
(1) the amount of any incorrect payments notified to the receivables
trustee not previously allocated as collections, to the Barclaycard
Operating Account, after which the originator beneficiary will own
the money absolutely;
(2) the amount of ineligible collections notified to the receivables
trustee not previously allocated as principal collections, to a
bank account opened in the name of the originator to deposit the
cash proceeds of the purchase price of the receivables, called the
"BARCLAYCARD PROCEEDS ACCOUNT", after which the originator
beneficiary will own the money absolutely;
(3) the total amount of principal collections allocated to the investor
interest of any outstanding series, minus the Investor Cash
Available for Acquisition of that series from the Principal
Collections Ledger to the account specified in the supplement for
that series;
(4) the total amount of Investor Cash Available for Acquisition and
Originator Cash Available for Acquisition needed on that day from
the ledger of the Trustee Collection Account for principal
collections -- called the "PRINCIPAL COLLECTIONS LEDGER" -- to the
Trustee Acquisition Account;
(5) the Originator Percentage of finance charge collections and the
amount of Acquired Interchange deposited in the Trustee Collection
Account not allocated to the investor interest of any outstanding
series, from the ledger of the Trustee Collection Account for
finance charge collections -- called the "FINANCE CHARGE
COLLECTIONS LEDGER" -- to the Barclaycard Proceeds Account, or as
the originator beneficiary may direct, after which the money will
be owned by the originator beneficiary absolutely; and
79
(6) each finance charge amount and all Acquired Interchange allocable
to any outstanding series, from the Finance Charge Collections
Ledger to any account that may be specified in the supplement for
that series.
ACQUIRING ADDITIONAL ENTITLEMENTS TO TRUST PROPERTY AND PAYMENTS FOR
RECEIVABLES
To understand what a revolving period is, see "Securitisation Cashflows:
Allocation, Calculation and Distribution of Principal Collections to the MTN
issuing entity".
During the revolving period for a series, the receivables trustee will use
the portion of principal collections allocated to the investor beneficiaries of
that series and which is available to fund the acquisition of the beneficial
entitlement to receivables to pay for the purchase of the beneficial
entitlement to receivables that are eligible. These available principal
collections are called "INVESTOR CASH AVAILABLE FOR ACQUISITION". No Investor
Cash Available for Acquisition will be used to fund Ineligible Receivables.
On any day a series may be allocated more money for acquisitions than is
needed to purchase existing or future receivables that are eligible and
available for a series to fund. In that case, that series will use the excess
Investor Cash Available for Acquisition to acquire available Originator
Interest from the originator beneficiary and, if allowed under its supplement,
investor interest from other designated series. Any money left over will be
used to fund acquisitions on subsequent Business Days.
The originator beneficiary will fund the amount payable by the receivables
trustee for all the existing and future receivables that all series are unable
to fund plus the amount of any Ineligible Receivables that need to be funded.
Consequently, the amount payable by the receivables trustee to the originator
for all existing and future receivables it is purchasing on any Business Day
will be funded first by the series to the extent of all of the Investor Cash
Available for Acquisition and then by the originator beneficiary to the extent
of the Originator Cash Available for Acquisition. "ORIGINATOR CASH AVAILABLE
FOR ACQUISITION" for any day means an amount equal to the Originator Percentage
of principal collections processed on that day.
On each Business Day after making all adjustments, the beneficial interest
of each series in the Eligible Receivables Pool:
(i) will be decreased by the amount of principal collections allocated to
that series that constitutes Investor Cash Available for Acquisition; and
(ii) will be increased by the amount of Investor Cash Available for
Acquisition used by the receivables trustee to pay for existing and
future receivables and the amount of Investor Cash Available for
Acquisition allocated to the Originator Interest or the investor interest
of other series to increase the proportion of the beneficial interest of
that series.
These changes will not affect the beneficial entitlement of:
(i) any beneficiary to monies credited to any Trust Account to which it is
beneficially entitled; or
(ii) any series to monies credited to any Trust Account to which the
beneficiaries constituting that series are together beneficially
entitled.
On each Business Day after making all adjustments, the beneficial interest
of the originator beneficiary in the Eligible Receivables Pool:
(i) will be decreased by the amount of principal collections and Investor
Cash Available for Acquisition allocated to the originator beneficiary;
and
(ii) will be increased by the amount of Originator Cash Available for
Acquisition and the increase in the Originator Interest resulting from
the decrease described in the prior bullet point.
However, any change in the beneficial interest of the originator beneficiary
in the Eligible Receivables Pool will not affect the beneficial entitlement of
the originator beneficiary to money credited to any Trust Account to which it
is beneficially entitled.
80
The investor interest of each series and the beneficial interest in the
receivables trust of each additional beneficiary will increase or decrease as
described in the related supplement.
On each Business Day, after making all adjustments, the Originator Interest:
(i) will be decreased by the amount of Originator Cash Available for
Acquisition not used to pay for new receivables and Investor Cash
Available for Acquisition transferred to the originator beneficiary by
credit to the Barclaycard Proceeds Account; and
(ii) will be increased by the purchase price payable to the originator by the
receivables trustee to be funded by the originator beneficiary.
These changes will not affect the beneficial entitlement of the originator
beneficiary to money credited to any Trust Account to which it is beneficially
entitled.
Other adjustments to the Originator Interest are explained in "The
Receivables Trust: Allocation and Application of Collections".
NON-PETITION UNDERTAKING OF BENEFICIARIES
Each beneficiary of the receivables trust, including Barclaycard as
originator beneficiary and excess interest beneficiary, the originator, 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 reorganisation of, or for the appointment of a
receiver, administrator, administrative receiver, trustee, liquidator,
sequestrator or similar officer 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) the originator 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 the originator under any applicable
liquidation, insolvency, composition or re-organisation or similar
laws for its winding up, dissolution, administration or re-
organisation and the 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 the originator admits in writing that
the originator beneficiary or excess interest beneficiary is unable
to pay its debts when they fall due within the meaning of Section
123(1) of the Insolvency Act 1986 or the originator makes a general
assignment for the benefit of or a composition with its creditors
or voluntarily suspends payment of its obligations to generally
readjust or reschedule its debt;
(4) the originator cannot transfer receivables in the Designated
Accounts to the receivables trust in the manner described in the
Receivables Securitisation Agreement;
(5) the originator stops being either a resident in the United Kingdom
for tax purposes or liable for United Kingdom corporation tax; or
(6) either:
(a) a change in law or its interpretation or administration results
in the receivables trustee becoming liable to make any payment
on account of tax -- other than stamp duty payable in the
United Kingdom for the transfer of receivables under the
Receivables Securitisation Agreement; or
81
(b) any tax authority asserts a tax liability or takes other
actions against Barclays or any of its subsidiaries in relation
to the transaction which would have an adverse affect on them
which is more than trivial, if Barclays obtains an opinion of
counsel stating that the tax liability would be due. This event
will be treated as occurring when Barclays, as 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, each beneficiary within a series and for the originator
beneficiary. If any other Trust Pay Out Event occurs, a Pay Out Event will
occur for each series and each beneficiary within a series. Trust Pay Out
Events will occur without any notice or other action on the part of the
receivables trustee or any beneficiary, as soon as the event happens.
A "PAY OUT EVENT" for each series means a Trust Pay Out Event or one of the
events listed in "Securitisation Cashflows: Series Pay Out Events".
After an Insolvency Event, future receivables, other than finance charge
receivables accruing for principal receivables that have been assigned to the
receivables trustee, will no longer be assigned to 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 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 declaration of trust 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 beneficiaries representing more than 50
per cent. of the investor interest of every series, both the originator
beneficiary and the excess interest beneficiary -- in each case, if not subject
to an Insolvency Event -- and every other person identified in any supplement
disapproves of the liquidation of the receivables and wishes to continue with
the receivables trustee accepting offers and purchasing receivables under the
Receivables Securitisation Agreement. Money from this sale will be treated as
collections on the receivables and will be distributed in accordance with the
provisions of the declaration of trust and trust cash management agreement and
each supplement. See "Securitisation Cashflows".
TERMINATION OF THE RECEIVABLES TRUST
If the receivables trust has not already been dissolved after an Insolvency
Event, then the originator beneficiary can instruct the receivables trustee to
dissolve the receivables trust when:
(i) the total amount of all of the investor interests is reduced to zero;
(ii) there are no finance charge collections or other trust property allocated
to any beneficiaries other than the originator beneficiary or the excess
interest beneficiary; and
(iii) no beneficiary is committed to fund payments to the originator for
purchases of receivables by the receivables trust.
After the receivables trust is dissolved, all of the receivables trust's
property will be controlled by the originator beneficiary as residual
beneficiary, and the Receivables Securitisation Agreement will be terminated.
For the purposes of Section 1 of the 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 declaration of trust and cash management agreement. Any
property of the receivables trust after this period will vest in the current
beneficiaries in accordance with their entitlements to the receivables trust's
property at that date.
AMENDMENTS TO THE DECLARATION OF TRUST AND TRUST CASH MANAGEMENT AGREEMENT
The declaration of trust and trust cash management agreement may be amended
with the prior consent of each related beneficiary. No amendment will be
effective unless each rating agency has
82
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 Noteholders holding in total not less than two thirds of
the medium term note certificates then outstanding of each outstanding series
adversely affected. The investor beneficiary may not consent to any proposed
amendment that would:
(i) reduce or delay required distributions to any investor beneficiary for
the affected series;
(ii) change the definition or the manner of calculating the investor interest,
the Investor Percentage or the investor Default Amount of the affected
series or any class of the affected series; or
(iii) reduce the percentage required to consent to any amendment, unless
instructed to do so by all the Noteholders of the medium term note
certificates 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 its beneficial
entitlement, except that:
(i) the originator beneficiary or the excess interest beneficiary may dispose
of the Originator Interest or the Excess Interest by transferring all or
substantially all of its properties and assets to any person, if that
person also expressly assumes the duties and obligations of the
originator, the originator beneficiary and the excess interest
beneficiary under the Relevant Documents; after the transfer, the new
person will be the person used to determine if an Insolvency Event has
occurred;
(ii) the originator beneficiary or the excess interest beneficiary may
transfer or create any encumbrance over the whole or any part of the
Originator Interest or the Excess 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 agencies must first
confirm that the transfer or encumbrance will not result in a downgrade
or withdrawal of its rating of any outstanding Related Beneficiary Debt;
and
(iii) any beneficiary -- except for the originator beneficiary or the excess
interest beneficiary -- may transfer all or any part of their beneficial
entitlement or grant an encumbrance over their beneficial entitlement
with the prior written consent of the originator beneficiary, which
consent will not be unreasonably withheld; however, the receivables
trustee must first receive confirmation in writing from the person to
whom the transfer will be made or for whom the encumbrance will be
granted or created, that it complies with the criteria referred to in the
fifth and sixth prerequisite to the completion of an issuance as referred
to on page [74] in "--General Legal Structure" above.
The receivables trustee will, upon the direction of all of the
beneficiaries, be authorised to reassign to Barclaycard the beneficial interest
in Defaulted Receivables for a purchase price equal to the amount received or
recovered, if any, by Barclaycard from those Defaulted Receivables less the
fees, costs and expenses incurred by Barclaycard in the recovery of that
amount.
TRUSTEE PAYMENT AMOUNT
The receivables trustee will be paid its remuneration, which is inclusive of
VAT (if any), and reimbursed and indemnified (under the terms of the
declaration of trust and trust cash management agreement) for any costs and
expenses incurred by it in connection with its duties and activities as
receivables trustee, including the part of these costs and expenses that
represents VAT (if any) out of the property of the receivables trust allocated
to the investor beneficiaries. The receivables trustee will be paid monthly in
arrears on each transfer 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 proportion of the Trustee Payment Amount to be paid by each series and the
MTN issuing entity is described in "Securitisation Cashflows: Trustee Payment
Amount".
83
SERVICING OF RECEIVABLES AND TRUST CASH MANAGEMENT
GENERAL -- SERVICING
Barclays Bank PLC was appointed on the Initial Relevant Closing Date by the
beneficiaries of the receivables trust as initial servicer under the terms of
the beneficiaries servicing agreement. Any additional originator beneficiary or
beneficiary must accede to the beneficiaries servicing agreement. The servicer
will service, administer and manage the receivables and request and receive
payments on the receivables using its usual procedures and normal market
practices for servicing credit and charge card receivables comparable to the
receivables in the Designated Accounts. The servicer has full power and
authority, acting alone or through any other party properly designated, to
undertake all actions concerning the servicing, administration and management
of the receivables it considers necessary or desirable.
The servicer's duties include carrying out all servicing, administration and
management functions in relation to the receivables and, insofar as the
interests of the beneficiaries are affected, the Designated Accounts in
accordance with Barclaycard's policies and procedures from time to time and in
accordance with normal market practice, insofar as consistent with
Barclaycard's policy and procedures. These functions include:
hidden
(i) carrying out valuations of receivables on Designated Accounts for the
purpose of determining whether any receivables should be charged off in
accordance with Barclaycard's credit and charge card guidelines;
(ii) ensuring that the interests of the beneficiaries are taken into account
in making decisions regarding the granting of credit to obligors;
(iii) on its own behalf, preparing and keeping its own records as regards all
of these matters, including in particular but without limitation, the
matters referred to in (i) and (ii) above;
(iv) monitoring payments by obligors and notifying obligors of overdue
payments; and
(v) crediting and debiting obligors' accounts as appropriate.
The servicer will at all times be required to take all practicable steps
to:
(i) ensure that payments made to the originator by obligors are received into
the Barclaycard Operating Account;
(ii) identify any funds in the Barclaycard Operating Account which are
required to be transferred to the trustee collection account for the
benefit of the beneficiaries; and
(iii) ensure that such funds are so transferred when required.
The servicer will not resign from its obligations and duties as servicer
under the beneficiaries servicing agreement unless its performance is no longer
permitted under applicable law and there is no reasonable action that it could
take to make it permissible. The servicer's resignation will not be effective
until a Successor Servicer has been properly appointed. Barclaycard, as initial
servicer, performs account processing and administration in-house, but has
subcontracted some cardholder payment processing services, which are undertaken
on Barclaycard's behalf by ASTRON (Business Processing Solutions).
The servicer will indemnify each investor beneficiary against all reasonable
loss, liability, expense, damage or injury caused by the servicer's fraud,
wilful misconduct or negligence in performing its servicing functions. However,
the servicer will not indemnify any investor beneficiary:
(i) if any acts or omissions are caused by the negligence, fraud or wilful
misconduct of that investor beneficiary or its agents;
(ii) for any liabilities, costs or 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;
84
(iii) for any loss, claims or damages that are incurred by any of them acting
in their capacity as beneficiaries, including those resulting from
Defaulted Accounts; or
(iv) for any liabilities, costs or expenses 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, employees or agents of the servicer and the
servicer itself will not be under any liability to the receivables trustee, the
receivables trust, the investor beneficiaries, any enhancement provider or any
other person under the beneficiaries servicing agreement or any related
provider except in the case of intentional wrongdoing, bad faith 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 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.
GENERAL -- TRUST CASH MANAGEMENT
Barclaycard was appointed on the Initial Relevant Closing Date by the
receivables trustee as initial trust cash manager under the terms of the
declaration of trust and trust cash management agreement. The trust cash
manager will carry out cash management functions in relation to the receivables
on behalf of the receivables trustee.
The trust cash manager's duties include but are not confined to:
(i) making calculations on the allocations of receivables; and
(ii) advising the receivables trustee to transfer money between the Trust
Accounts and to make withdrawals and payments from the Trust Accounts as
set forth in the declaration of trust and trust cash management
agreement.
The trust cash manager will not resign from its obligations and duties as
trust cash manager under the declaration of trust and trust cash management
agreement unless its performance is no longer permitted under applicable law
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, in each case including VAT, if any, caused by its fraud, wilful
misconduct or negligence in performing its cash management functions. However,
the trust cash manager will not indemnify the receivables trustee:
(i) if any acts or omissions are caused by the negligence, fraud or wilful
misconduct of the receivables trustee or its agents;
(ii) 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;
(iii) for any losses, claims or damages incurred by the receivables trustee in
its capacity as a beneficiary of the receivables trust; or
(iv) 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 declaration of trust 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
declaration of trust and trust cash management agreement except in the case of
85
intentional wrongdoing, bad faith or negligence in performing its duties under
the declaration of trust 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
declaration of trust 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 declaration of trust and trust cash management
agreement.
SERVICER AND TRUST CASH MANAGER COMPENSATION
The servicer is entitled to receive an annual fee from the beneficiaries for
each monthly period. This fee is called the "SERVICING FEE" and is payable
monthly on each transfer date, to the extent that those monies are available.
Any amounts payable 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:
hidden
(i) the weighted average of the percentages specified in each Series
Supplement as being the "SERIES SERVICING FEE PERCENTAGE" for each
outstanding series -- weighted by the Adjusted investor interest for each
series as at the last day of the relevant monthly period; and
(ii) the average daily total outstanding face amount of principal receivables
during that monthly period.
The share of the Servicing Fee payable by the receivables trustee to the
servicer for each series on any transfer date is called the "INVESTOR SERVICING
FEE" and will be equal to:
(i) one-twelfth of the product of:
(1) [0.75] per cent.; or
(2) another percentage agreed with the investor beneficiaries as long
as Barclaycard is the servicer PROVIDED THAT the rating agencies
confirm in writing that the new percentage will not cause them to
reduce or withdraw their then current rating on any Related
Beneficiary Debt; and
(ii) the Adjusted investor interest as at the last day of the monthly period
before that transfer date.
The balance of the Servicing Fee not payable in respect of each series or
any other series will be payable by the originator and is called the
"ORIGINATOR SERVICING FEE". If the servicer is also the originator beneficiary
in any monthly period, the Originator Servicing Fee for that monthly period
will not be payable.
The trust cash manager is entitled to receive a VAT inclusive fee from the
receivables trustee for each monthly period. This fee is called the "TRUST CASH
MANAGEMENT FEE" and is payable monthly on each transfer date. The Trust Cash
Management Fee will be equal to one-twelfth of the product of the sum of the
annual fees in each supplement as being the Investor Trust Cash Management Fees
for each series.
The share of the Trust Cash Management Fee payable by the receivables
trustee to the trust cash manager for each series on any transfer date for
which each series agrees to indemnify the receivables trustee is called the
"INVESTOR TRUST CASH MANAGEMENT FEE" and will be equal to one-twelfth of
[GBP][__]. The Trust Cash Management Fee can be any other amount that the
receivables trustee may agree to as long as Barclaycard 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, in respect of which the
receivables trustee is not indemnified by any series, will be payable by the
originator and is called the "ORIGINATOR TRUST CASH MANAGEMENT FEE". If the
trust cash manager is also the originator beneficiary in any monthly period,
the Originator Trust Cash Management Fee for that monthly period will not be
paid.
86
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 series supplement to declaration of trust and trust cash
management agreement, the servicer will deliver to the Receivables Trustee, the
originator, the rating agencies and each beneficiary, 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:
(i) 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;
(ii) 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
(iii) 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
Noteholder by a request in writing to the Receivables Trustee addressed to the
director. Except as described above or as described in this base prospectus or
the related prospectus supplement there 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 an originator as servicer under the beneficiaries
servicing agreement and the appointment of any person as joint servicer to
replace anyone then acting as the servicer -- called a "SUCCESSOR SERVICER" --
will terminate when a servicer default occurs and is continuing.
"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 by the investor beneficiaries to the
servicer; if the notice is given by the investor beneficiaries it
will be on the instruction of a group of holders of medium term
note certificates representing more than fifty per cent. of the
total face value of the medium term note certificates 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
87
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 holders of the medium term note
certificate representing more than fifty per cent. of the total
face value of the medium term note certificate outstanding of any
outstanding series adversely affected;
(4) any of the following:
(a) 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; or
(b) an order of the court is made for its winding-up, dissolution,
administration or reorganisation that has remained in force
undischarged or unstayed for 60 days; or
(c) a receiver, administrator, administrative receiver, trustee or
similar officer of it or all of its revenues and assets, is
appointed; and
(5) any of the following:
(a) 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
(b) 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.
In the case of (1), (2) or (3) above the grace period will be 60 Business
Days. The grace period is the extra number of days before a servicer default
can be called, allowing the servicer to remedy a servicer default that has been
caused by so-called acts of God or uncontrollable circumstances. These
circumstances are called force majeure events and are listed in the
beneficiaries servicing agreement.
Within two 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 notice of any removal of the
servicer or appointment of a Successor Servicer.
Investor beneficiaries acting on the instructions of holders of medium term
note certificates representing in total more than two-thirds of the total face
value of medium term note certificates then outstanding of each series
adversely affected by any default by the servicer or the originator in the
performance of its obligations under the beneficiaries servicing 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 servicer receives a termination notice and a Successor Servicer is
appointed, the duties of acting as servicer of the receivables under the
beneficiaries servicing 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 agreed by it and the beneficiaries. The beneficiaries must try
to appoint a Successor Servicer that is an Eligible Servicer.
If the receivables trustee 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
88
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 declaration of trust and
trust cash management agreement and the series supplements.
An "ELIGIBLE SERVICER" means an entity that, when it is servicer:
(i) is servicing a portfolio of consumer revolving credit or charge card
accounts or other consumer credit accounts;
(ii) is legally qualified and has the capacity to service the Designated
Accounts;
(iii) 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
(iv) has, in the opinion of each rating agency, demonstrated the ability to
service, professionally and competently, a portfolio of similar accounts
in accordance with customary standards of skill and care.
TERMINATION OF APPOINTMENT OF TRUST CASH MANAGER
The appointment of the originator as trust cash manager under the
declaration of trust 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 direct the making of any
payment, transfer or deposit or to give instructions or notice to
the receivables trustee pursuant to an agreed schedule of
collections and allocations; any failure by the trust cash manager
to advise the receivables trustee to make any required drawing,
withdrawal, or payment under any credit enhancement; these events
will be considered failures if they do not happen within five
Business Days after the date that they were supposed to happen
under the terms of the declaration of trust and trust cash
management agreement or any other relevant document;
(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 declaration of trust and trust cash
management 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 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 medium term note certificates representing more than fifty per
cent. of the total face value of the medium term note certificates
outstanding of any outstanding series adversely affected;
(3) delegation by the trust cash manager of its duties under the
declaration of trust and trust cash management agreement to any
other entity, except as permitted by the declaration of trust and
trust cash management agreement;
(4) any relevant representation, warranty or certification made by the
trust cash manager in the declaration of trust and trust cash
management agreement or in any certificate delivered under the
declaration of trust and trust cash management agreement was
89
incorrect when made, which has a material adverse effect on the
interests of the investor beneficiaries of any outstanding series;
this failure will be 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 holders of medium term note certificates representing more than
fifty per cent. of the total face value of the medium term note
certificates outstanding of any outstanding series adversely
affected;
(5) any of the following:
(a) 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
(b) an order of the court is made for its winding-up, dissolution,
administration or reorganisation that has remained in force
undischarged or unstayed for 60 days; or
(c) 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) 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
Insolvency Act 1986; or
(b) the trust cash manager 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.
In the case of (1) above the grace period will be 10 Business Days and in
the case of (2), (3) or (4) above it will be 60 Business Days. The grace period
is the extra number of days before a trust cash manager default will be
effective allowing the trust cash manager to remedy a trust cash manager
default that has been caused by so-called acts of God or uncontrollable
circumstances. These circumstances are called force majeure events and are
listed in the declaration of trust and trust cash management agreement.
Within two 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 investor beneficiary and any enhancement
provider as soon as possible in writing. The receivables trustee must give each
investor 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 holders of medium term
note certificates representing in total more than two-thirds of the total face
value of medium term note certificates then outstanding of each series
adversely affected by any default by the trust cash manager or the originator
in the performance of its obligations under the declaration of trust 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 declaration trust and trust cash management agreement
will pass from the then trust cash manager to the Successor Trust Cash Manager.
The declaration of trust and trust cash management agreement contains the
requirements for the transfer of the trust cash management role, including the
transfer of authority over collections, the transfer of electronic records and
the disclosure of information.
90
After it receives a termination notice, the trust cash manager will continue
to act as trust 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 declaration of trust and
trust cash management agreement and the series supplements.
An "ELIGIBLE TRUST CASH MANAGER" means an entity that, when it is trust cash
manager:
(i) is legally qualified and has the capacity to carry out the trust cash
management functions as set forth in the declaration of trust and trust
cash management agreement;
(ii) 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 declaration of trust and trust cash
management agreement; and
(iii) has, in the opinion of each rating agency, demonstrated the ability to
professionally and competently act as a trust cash manager in accordance
with customary standards of skill and care.
91
SECURITISATION CASHFLOWS
GENERAL
The MTN issuing entity is an investor beneficiary of the receivables trust.
Its initial beneficial interest was conferred under a series supplement called
the series 99-1 supplement (series 99-1 was fully repaid in November 2002) and
subsequent beneficial interests were conferred under series supplements called
the series 02-1, series 03-1, series 03-2 (series 03-2 was fully repaid in June
2006), series 03-3 (series 03-3 was fully repaid in August 2006), series 04-1
(series 04-1 was fully repaid in February 2007), series 04-2, series 05-1,
series 05-2, series 05-3, series 05-4 and series 06-1 supplements. The MTN
issuing entity will increase its entitlement under the receivables trust under
series supplements called the "SERIES SUPPLEMENTS". The parties to each Series
Supplement are the receivables trustee and Barclaycard as the originator
beneficiary, the Excess Interest Beneficiary, servicer, the trust cash manager
and the originator and the MTN issuing entity as the investor beneficiary.
The MTN issuing entity will increase its beneficial entitlement as investor
beneficiary by paying a sterling amount specified in each series' prospectus
supplement/final terms to the receivables trustee on each series' closing date;
we call this amount the "INITIAL INVESTOR INTEREST". For purposes of making
calculations about the performance of the undivided beneficial interest of each
series in the receivables trust, the investor interest will be referable to
notional classes called "CLASS A", "CLASS B", "CLASS C" and "CLASS D" (if
applicable).
The MTN issuing entity will receive an Investor Certificate in respect of
each series. This Investor Certificate will be evidence of the initial investor
beneficial interest for each series in the receivables trust, calculated as
referable to Class A, Class B, Class C and Class D, and will be governed by
English law.
The MTN issuing entity will confirm the following in each Series Supplement:
(i) that its usual place of abode is within the United Kingdom for the
purpose of Section 349 of the Income and Corporation Taxes Act 1988; and
(ii) that it has a business establishment, for the purposes of Section 9 of
the Value Added Tax Act 1994, in the United Kingdom which is either its
sole business establishment, with no other fixed establishment anywhere
else in the world, or is its business or other fixed establishment at
which any services received by it as contemplated in the Relevant
Documents are most directly used or to be used or, as the case may be,
its business or other fixed establishment which is most directly
concerned with any services supplied by it as contemplated in the
Relevant Documents.
Group one included series 99-1 (now repaid) and includes series 02-1, series
03-1, series 03-2 (now repaid), series 03-3 (now repaid), series 04-1 (now
repaid), series 04-2, series 05-1, series 05-2, series 05-3, series 05-04 and
series 06-1. Each series in group one will not be subordinated to any other
investor beneficiary or series. See "-- Shared Principal Collections" for the
ramifications of a series being included in group one.
Following execution of the Series Supplement the MTN issuing entity will
acquire from Barclays Bank PLC as Excess Interest Beneficiary that part of the
rights of Barclays Bank PLC to the Excess Interest attributable to the relevant
series.
DEFINITIONS
In order for you to understand the following description of the
securitisation cashflows, you will need to understand the following
definitions.
"ADJUSTED INVESTOR INTEREST" means the sum of the Class A Adjusted Investor
Interest, the Class B Adjusted Investor Interest, the Class C Adjusted Investor
Interest and the Class D Adjusted Investor Interest (if any).
"AVAILABLE INVESTOR PRINCIPAL COLLECTIONS" means, for any monthly period:
(i) the Investor Principal Collections; minus
92
(ii) the Investor Cash Available for Acquisition that has been calculated as
being available to be used during that monthly period; minus
(iii) if there are any Class D Notes in the relevant Series, the Reallocated
Class D Principal Collections that are required to fund the Class A
Required Amount, the Class B Required Amount and the Class C Required
Amount; minus
(iv) the Reallocated Class C Principal Collections that are required to fund
the Class A Required Amount and the Class B Required Amount; minus
(v) the Reallocated Class B Principal Collections for that monthly period
that are required to fund the Class A Required Amount; plus
(vi) the Shared Principal Collections from other series in [group one] that
are allocated to the relevant series; plus
(vii) 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.
"AVERAGE PRINCIPAL RECEIVABLES" means, for any period, an amount equal to:
(i) the sum of the total balance of eligible principal receivables at the end
of each day during that period divided by;
(ii) the number of days in that period.
`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 relevant closing date, to but
excluding the date specified in the relevant prospectus supplement/final terms.
The "CASH MANAGEMENT FEE" is that portion of the Trust Cash Management Fee
attributable to a particular series, as set out in the relevant prospectus
supplement/final terms.
"CLASS A ADDITIONAL FINANCE AMOUNT" means the amount calculated as follows:
Days in Calculation Period x The Class A Finance Rate x Any unpaid Class A
- -------------------------- plus 2.0 per cent. Deficiency Amount on the
365 (366 in a leap year) prior transfer date
"CLASS A ADJUSTED INVESTOR INTEREST" means at any time an amount equal to the
Class A Investor Interest minus the balance on deposit in the Principal Funding
Account, but not more than the Class A Investor Interest.
"CLASS A DEBT AMOUNT" means the Class A Initial Investor Interest minus the
total principal payments made to the MTN issuing entity referable to the Class
A Investor Interest from the property of the receivables trust. On the Series
Termination Date, the Class A Debt Amount will be zero.
"CLASS A DEFICIENCY AMOUNT" is the excess, if any, of the Class A Monthly
Required Expense Amount for the prior transfer date -- disregarding for this
purpose the MTN Issuing Entity Costs Amount -- over the funds referable to
Class A actually credited to the Series Distribution Ledger for payment of the
Class A Monthly Required Expense Amount on that transfer date.
The "CLASS A FINANCE RATE" for any Calculation Period will be specified in the
relevant prospectus supplement/final terms.
"CLASS A INITIAL INVESTOR INTEREST" means the sterling equivalent of the amount
set out in the relevant prospectus supplement/final terms using, if applicable,
the fixed exchange rate in the relevant Swap Agreements.
"CLASS A INVESTOR CHARGE-OFF" means, with reference to a particular series, a
reduction in the Class A Investor Interest on any transfer date by the amount,
if any, by which the Class A Investor Default Amount exceeds the total amount
of Available Funds, Reallocated Class B Principal Collections, Reallocated
Class C Principal Collections, Reallocated Class D Principal Collections (if
any), the Class D
93
Investor Interest (if any), the Class C Investor Interest and the Class B
Investor Interest, in each case available and allocated on that transfer date
to fund the Class A Investor Default Amount.
"CLASS A INVESTOR INTEREST" means at any time, with reference to a particular
series, an amount equal to:
(i) the Class A Initial Investor Interest, minus
(ii) the total principal payments made to the MTN issuing entity for the
purposes of calculation treated as referable to the Class A Investor
Interest from the property of the receivables trust, minus
(iii) the total amount of Class A Investor Charge-Offs for all prior transfer
dates, plus
(iv) the total amount of any reimbursements of Class A Investor Charge-Offs on
all prior transfer dates.
The Class A Investor Interest, however, may not be reduced below zero.
"CLASS A MONTHLY FINANCE AMOUNT>" means the amount calculated as follows:
Days in Calculation Period
- -------------------------- x The Class A Finance Rate x The Class A Debt Amount
365 (366 in a leap year)
The "CLASS A MONTHLY PRINCIPAL AMOUNT" is the least of:
(i) the Available Investor Principal Collections standing to the credit of
the Principal Collections Ledger on that transfer date;
(ii) for each transfer date for the Controlled Accumulation Period or the
Regulated Amortisation Period before the Series Scheduled Redemption
Date, the Controlled Deposit Amount for that transfer date; and
(iii) the Class A Adjusted Investor Interest -- adjusted to account for any
unreimbursed Class A Investor Charge-Offs.
The "CLASS A REQUIRED AMOUNT" for any transfer date will be the amount, if any,
by which the sum of:
(i) the Class A Monthly Required Expense Amount; and
(ii) the Class A Investor Default Amount,
exceeds the Available Funds allocated and available to meet such purposes.
The "CLASS A MONTHLY REQUIRED EXPENSE AMOUNT" for any transfer date will be the
sum of the following items:
(i) the MTN Issuing Entity Costs Amount;
(ii) the Class A Monthly Finance Amount;
(iii) the Class A Deficiency Amount;
(iv) the Class A Additional Finance Amount; and
(v) the Monthly Loan Expenses Amount.
"CLASS B ADDITIONAL FINANCE AMOUNT" means the amount calculated as follows:
Days in Calculation Period x The Class B Finance Rate x Any unpaid Class B
- -------------------------- plus 2.0 per cent. Deficiency Amount on the
365 (366 in a leap year) prior transfer date
94
"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 Principal Funding
Account in excess of the Class A Investor Interest, but not more than the Class
B Investor Interest.
"CLASS B DEBT AMOUNT" means the Class B Initial Investor Interest minus the
total principal payments made to the MTN issuing entity referable to the Class
B Investor Interest from the property of the receivables trust. On the each
series' termination date, the Class B Debt Amount will be zero.
"CLASS B DEFICIENCY AMOUNT" is the excess, if any, of the Class B Monthly
Required Expense Amount for the prior transfer date over the funds referable to
Class B actually credited to the Series Distribution Ledger for payment of the
Class B Monthly Required Expense Amount on that transfer date.
The "CLASS B FINANCE RATE" for any Calculation Period will be specified in the
relevant prospectus supplement/final terms.
"CLASS B INITIAL INVESTOR INTEREST" means the sterling equivalent of the amount
set out in the relevant prospectus supplement/final terms using, if applicable,
the fixed exchange rate in the relevant Swap Agreements.
"CLASS B INVESTOR CHARGE-OFF" means, with reference to a particular series, a
reduction in the Class B Investor Interest on any transfer date by the amount,
if any, by which the Class B Investor Default Amount exceeds the total amount
of Available Funds, Reallocated Class C Principal Collections, Reallocated
Class D Principal Collections (if any), the Class C Investor Interest and the
Class D Investor Interest (if any), in each case available and allocated on
that transfer date to fund the Class B Investor Default Amount.
"CLASS B INVESTOR INTEREST" means, at any time, with reference to a particular
series, an amount equal to:
(i) the Class B Initial Investor Interest, minus
(ii) the total principal payments made to the MTN issuing entity, for the
purposes of calculation treated as referable to the Class B Investor
Interest from the property of the receivables trust, minus
(iii) the total amount of Class B Investor Charge-Offs for all prior transfer
dates, minus
(iv) the total amount of Reallocated Class B Principal Collections allocated
on all prior transfer 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
(v) an amount equal to any reductions in the Class B Investor Interest on all
prior transfer dates to fund the Class A Investor Default Amount, plus
(vi) the total amount of Available Funds allocated and available on all prior
transfer dates to reimburse amounts deducted under (3), (4) and (5)
above.
The Class B Investor Interest, however, may not be reduced below zero.
The "CLASS B MONTHLY PRINCIPAL AMOUNT" is the least of:
(i) the Available Investor Principal Collections standing to the credit of
the Principal Collections Ledger on that transfer date minus, if
applicable, the Class A Monthly Principal Amount;
(ii) for each transfer date for the Controlled Accumulation Period or the
Regulated Amortisation Period before the Series Scheduled Redemption
Date, an amount equal to the Controlled Deposit Amount minus, if
applicable, the Class A Monthly Principal Amount; and
(iii) 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.
"CLASS B MONTHLY FINANCE AMOUNT" means the amount calculated as follows:
Days in Calculation Period x The Class B Finance Rate x The Class B Debt Amount
- --------------------------
365 (366 in a leap year)
95
The "CLASS B MONTHLY REQUIRED EXPENSE AMOUNT" for any transfer date will be the
sum of the following items:
(i) the Class B Monthly Finance Amount;
(ii) the Class B Deficiency Amount; and
(iii) the Class B Additional Finance Amount.
The "CLASS B REQUIRED AMOUNT" for any transfer date will be the sum of (1) the
amount, if any, by which the Class B Monthly Required Expense Amount exceeds
the Available Funds allocated and available for that purpose, and (2) the Class
B Investor Default Amount.
"CLASS C ADDITIONAL FINANCE AMOUNT" means the amount calculated as follows:
Days in Calculation Period x The Class C Finance Rate x Any unpaid Class C
- -------------------------- plus 2.0 per cent. Deficiency Amount on the
365 (366 in a leap year) prior transfer date
"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 Principal Funding
Account in excess of the sum of the Class A Investor Interest and the Class B
Investor Interest, but not more than the Class C Investor Interest.
"CLASS C DEBT AMOUNT" means the Class C Initial Investor Interest minus the
total principal payments made to the MTN issuing entity referable to the Class
C Investor Interest from the property of the receivables trust. On each series'
termination date, the Class C Debt Amount will be zero.
"CLASS C DEFICIENCY AMOUNT" is the excess, if any, of the Class C Monthly
Required Expense Amount for the prior transfer date over the funds allocable to
Class C actually credited to the Series Distribution Ledger for payment of the
Class C Monthly Required Expense Amount on that transfer date.
The "CLASS C FINANCE RATE" for any Calculation Period will be specified in the
relevant prospectus supplement/final terms.
"CLASS C INITIAL INVESTOR INTEREST" means the sterling equivalent of the amount
specified in the relevant prospectus supplement/final terms using, if
applicable, the fixed exchange rate in the relevant Swap Agreements.
"CLASS C INVESTOR CHARGE-OFF" means, with reference to a particular series, a
reduction in the Class C Investor Interest on any transfer date by the amount,
if any, by which the Class C Investor Default Amount exceeds the total amount
of Available Funds, Reallocated Class D Principal Collections (if any) and the
Class D Investor Interest (if any), in each case available and allocated on
that transfer date to fund the Class C Investor Default Amount.
"CLASS C INVESTOR INTEREST" means at any time, with reference to a particular
series, an amount equal to:
(i) the Class C Initial Investor Interest, minus
(ii) the total principal payments made to the MTN issuing entity for the
purposes of calculation treated as referable to the Class C Investor
Interest from the property of the receivables trust, minus
(iii) the total amount of Class C Investor Charge-Offs for all prior transfer
dates, minus
(iv) the total amount of Reallocated Class B Principal Collections allocable
to the Class C Investor Interest and Reallocated Class C Principal
Collections on all prior transfer dates that have been used to fund the
Class A Required Amount or the Class B Required Amount, minus
(v) an amount equal to any reductions in the Class C Investor Interest on all
prior transfer dates to fund the Class A Investor Default Amount and the
Class B Investor Default Amount, plus
96
(vi) the total amount of Available Funds allocated and available on all prior
transfer dates to reimburse amounts deducted under (3), (4) and (5)
above.
The Class C Investor Interest, however, may not be reduced below zero.
"CLASS C MONTHLY FINANCE AMOUNT" means the amount calculated as follows:
Days in Calculation Period x The Class C Finance Rate x The Class C Debt Amount
- --------------------------
365 (366 in a leap year)
The "CLASS C MONTHLY PRINCIPAL AMOUNT" is the lesser of:
(i) the Available Investor Principal Collections standing to the credit of
the Principal Collections Ledger on that transfer date minus, if
applicable, the Class A Monthly Principal Amount and the Class B Monthly
Principal Amount; and
(ii) 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 "CLASS C MONTHLY REQUIRED EXPENSE AMOUNT" will be the sum of the following
items:
(i) the Class C Monthly Finance Amount;
(ii) the Class C Deficiency Amount; and
(iii) the Class C Additional Finance Amount.
The "CLASS C REQUIRED AMOUNT" for any transfer date will be the sum of (1) the
amount, if any, by which the Class C Monthly Required Expense Amount exceeds
the Available Funds allocated and available for that purpose, and (2) the Class
C Investor Default Amount.
"CLASS D ADDITIONAL FINANCE AMOUNT" means the amount calculated as follows:
Days in Calculation Period x The Class D Finance Rate x Any unpaid Class D
- -------------------------- plus 2.0 per cent. Deficiency Amount on the
365 (366 in a leap year) prior transfer date
"CLASS D ADJUSTED INVESTOR INTEREST" means, at any time, an amount equal to the
Class D Investor Interest minus the balance on deposit in the Principal Funding
Account in excess of the sum of the Class A Investor Interest, the Class B
Investor Interest and the Class C Investor Interest, but not more than the
Class D Investor Interest.
"CLASS D DEBT AMOUNT" means the Class D Initial Investor Interest minus the
total principal payments made to the MTN issuing entity referable to the Class
D Investor Interest from the property of the receivables trust. On each series'
termination date, the Class D Debt Amount will be zero.
"CLASS D DEFICIENCY AMOUNT" is the excess, if any, of the Class D Monthly
Required Expense Amount for the prior transfer date over the funds allocable to
Class D actually credited to the Series Distribution Ledger for payment of the
Class D Monthly Required Expense Amount on that transfer date.
The "CLASS D FINANCE RATE" for any Calculation Period will be specified in the
relevant prospectus supplement/final terms.
"CLASS D INITIAL INVESTOR INTEREST" means the sterling equivalent of the amount
specified in the relevant prospectus supplement/final terms using, if
applicable, the fixed exchange rate in the Swap Agreements.
"CLASS D INVESTOR CHARGE-OFF" means, with reference to a particular series, a
reduction in the Class D Investor Interest on any transfer date by the amount,
if any, by which the Class D Investor Default Amount exceeds the amount of
Available Funds available and allocated on that transfer date to fund the Class
D Investor Default Amount.
"CLASS D INVESTOR INTEREST" means at any time, with reference to a particular
series, an amount equal to:
97
(i) the Class D Initial Investor Interest, minus
(ii) the total principal payments made to the MTN issuing entity for the
purposes of calculation treated as referable to the Class D Investor
Interest from the property of the receivables trust, minus
(iii) the total amount of Class D Investor Charge-Offs for all prior transfer
dates, minus
(iv) the total amount of Reallocated Class C Principal Collections allocable
to the Class D Investor Interest and Reallocated Class D Principal
Collections on all prior transfer dates that have been used to fund the
Class A Required Amount, the Class B Required Amount or the Class C
Required Amount, minus
(v) an amount equal to any reductions in the Class D Investor Interest on all
prior transfer dates to fund the Class A Investor Default Amount, the
Class B Investor Default Amount and the Class C Investor Default Amount,
plus
(vi) the total amount of Available Funds allocated and available on all prior
transfer dates to reimburse amounts deducted under (3), (4) and (5)
above.
The Class D Investor Interest, however, may not be reduced below zero.
"CLASS D MONTHLY FINANCE AMOUNT" means the amount calculated as follows:
Days in Calculation Period x The Class D Finance Rate x The Class D Debt Amount
- --------------------------
365 (366 in a leap year)
The "CLASS D MONTHLY PRINCIPAL AMOUNT" is the lesser of:
(i) the Available Investor Principal Collections standing to the credit of
the Principal Collections Ledger on that transfer date minus, if
applicable, the Class A Monthly Principal Amount, the Class B Monthly
Principal Amount and the Class C Monthly Principal Amount; and
(ii) the Class D Adjusted Investor Interest -- adjusted to account for any
unreimbursed reductions in the Class D Investor Interest for reasons
other than principal payments.
The "CLASS D MONTHLY REQUIRED EXPENSE AMOUNT" will be the sum of the following
items:
(i) the Class D Monthly Finance Amount;
(ii) the Class D Deficiency Amount; and
(iii) the Class D Additional Finance Amount.
The "CLASS D REQUIRED AMOUNT" for any transfer date will be the sum of (1) the
amount, if any, by which the Class D Monthly Required Expense Amount exceeds
the Available Funds allocated and available for that purpose, and (2) the Class
D Investor Default Amount.
"COMPANION SERIES" means:
(i) 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 Series Supplements; and
(ii) the other series.
"DAILY PRINCIPAL SHORTFALL" shall mean, on any date of determination, the
excess of the Shared Monthly Principal Payment for the monthly period relating
to such date over the amount of Principal Collections which are retained or to
be retained in the undivided Principal Collections Ledger in respect of
Principal Collections processed to date for such monthly period PROVIDED,
HOWEVER, that a reference to each series' pro rata share of the Daily Principal
Shortfall shall be an amount calculated as equal to the product of (a) a
fraction the numerator of which is the relevant series' investor interest and
the denominator of which is the aggregate investor interest of all outstanding
issuance and (b) the Daily Principal Shortfall.
98
A "DETERMINATION DATE" means the date falling two Business Days before a
transfer date.
The first "DISTRIBUTION DATE" or "INTEREST PAYMENT DATE" will be the date
specified in the relevant prospectus supplement/final terms and each subsequent
Distribution Date or Interest Payment Date will be the 15th day of each
calendar month, or if that day is not a Business Day, the next Business Day
after the 15th.
"EXPENSE RATE" means, for any transfer date:
A+B+C
------- x12
D
where:
A = the sum of the Class A Monthly Required Expense Amount, the Class B Monthly
Required Expense Amount, the Class C Monthly Required Expense Amount and
the Class D Monthly Required Expense Amount;
B = the Investor Servicing Fee;
C = the Investor Trust Cash Management Fee; and
D = the investor interest.
"INITIAL INVESTOR INTEREST" means, in relation to a particular series, the sum
of the Class A Initial Investor Interest, the Class B Initial Investor
Interest, the Class C Initial Investor Interest and the Class D Initial
Investor Interest (if any).
"INVESTOR INTEREST" means, in relation to a particular series, the sum of the
Class A Investor Interest, the Class B Investor Interest, the Class C Investor
Interest and the Class D Investor Interest (if any).
"INVESTOR PRINCIPAL COLLECTIONS" means, for any monthly period, the sum of:
(i) principal collections credited to the Principal Collections Ledger
identified for each series, after adjustments for Unavailable Principal
Collections during the Controlled Accumulation Period, the Regulated
Amortisation Period and the Rapid Amortisation Period; plus
(ii) amounts treated as Investor Principal Collections up to the Class A
Investor Default Amount and distributed out of Available Funds,
Reallocated Class D Principal Collections, Reallocated Class C Principal
Collections and Reallocated Class B Principal Collections; plus
(iii) amounts treated as Investor Principal Collections up to the Class B
Investor Default Amount and distributed out of Available Funds and
Reallocated Class D Principal Collections and Reallocated Class C
Principal Collections; plus
(iv) amounts treated as Investor Principal Collections up to the Class C
Investor Default Amount and distributed out of Available Funds and
Reallocated Class D Principal Collections; plus
(v) amounts treated as Investor Principal Collections up to the Class D
Investor Default Amount and distributed out of Available Funds; plus
(vi) Available Funds treated as Investor Principal Collections used to
reimburse Class A Investor Charge-Offs, any reductions in the Class B
Investor Interest, any reductions in the Class C Investor Interest and
any reductions in the Class D Investor Interest; plus
(vii) Unavailable Principal Collections credited to the Principal Collections
Ledger and to be treated as Investor Principal Collections; see "--
Unavailable Principal Collections".
The "ISSUING ENTITY ACCOUNT" is a bank account in the name of the issuing
entity that will be used to deposit amounts distributed to the issuing entity
on the medium term note certificate from the MTN issuing entity.
99
"MINIMUM ORIGINATOR INTEREST" means 5 per cent. of the Average Principal
Receivables. The originator may reduce the Minimum Originator Interest in the
following circumstances:
(i) upon 30 days prior notice to the receivables trustee, each rating agency
and any enhancement provider entitled to receive notice under its
supplement;
(ii) 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
relevant series, the notes; and
(iii) delivery to the receivables trustee and each enhancement provider of an
officer's certificate stating that the 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 will never be less than 2 per cent. of the
Average Principal Receivables.
"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 rapid accumulation period, as defined in its supplement, with an
investor interest as of that 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.
"MONTHLY LOAN EXPENSES AMOUNT" means, for any transfer date, the amount equal
to any monthly interest accrual which is due and payable, including any amount
outstanding in respect of previous transfer dates, if any, under the Expenses
Loan Agreement.
"MTN ISSUING ENTITY COSTS AMOUNT" means the amounts certified by the security
trustee as being required to pay the fees, costs and expenses of the MTN
issuing entity accrued and due and payable on a transfer date. This amount
includes the fees, costs and expenses of the security trustee and any receiver
appointed pursuant to the security trust deed and MTN issuing entity cash
management agreement, plus, any fees, costs and expenses remaining unpaid from
previous transfer dates including in each case, any part of such fees, costs
and expenses as represents VAT (if any).
"PORTFOLIO YIELD" means, for any monthly period:
(A+B+C+D) -- E
---------------- x12
F
where:
A = the finance charge collections allocable to the relevant series;
B = the Acquired Interchange allocable to the relevant series;
C = the Principal Funding Investment Proceeds up to the Covered Amount;
D = the amount, if any, to be withdrawn from the Yield Reserve Account that is
included in Available Funds;
E = the Investor Default Amount; and
F = the investor interest.
"QUALIFIED INSTITUTION" means (1) an institution which at all times has a
short-term unsecured debt rating of at least A-1+ by Standard & Poor's, P-1 by
Moody's and [__] by Fitch Ratings, should Fitch Ratings have issued ratings in
relation to the relevant Series, or (2) an institution acceptable to each
rating agency.
100
"REALLOCATED CLASS B PRINCIPAL COLLECTIONS" means, for any transfer date, the
principal collections allocable 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 Funds, amounts drawn under the Series Cash Reserve
Account 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 will reduce the
Class B Investor Interest.
"REALLOCATED CLASS C PRINCIPAL COLLECTIONS" means, for any transfer date, the
principal collections allocable 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 Funds, amounts drawn
under the Series Cash Reserve Account and Reallocated Class D Principal
Collections 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.
"REALLOCATED CLASS D PRINCIPAL COLLECTIONS" means, for any transfer date, the
principal collections allocable to the Class D Investor Interest for the
related monthly period in an amount not to exceed the Class A Required Amount,
the Class B Required Amount and the Class C Required Amount after applying
Available Funds and amounts drawn under the Series Cash Reserve Account to
cover the Class A Required Amount, the Class B Required Amount and the Class C
Required Amount. Reallocated Class D Principal Collections cannot exceed the
Class D Investor Interest after giving effect to any unreimbursed Class D
Investor Charge-Offs. Reallocated Class D Principal Collections will reduce the
Class D Investor Interest.
"REINVESTED INVESTOR PRINCIPAL COLLECTIONS" means, for any Business Day during
a monthly period:
(i) principal collections credited to the Principal Collections Ledger
identified for the 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
(ii) the amount specified in the prospectus supplement/final terms by
reference to the percentage of Notes that are not the most senior class
of Notes for such Series.
"RELEASE DATE" means the date specified as such in the relevant prospectus
supplement/final terms.
"REQUIRED RETAINED PRINCIPAL COLLECTIONS" means, those principal collections
retained in the undivided Principal Collections Ledger each month calculated by
reference to the Required Retained Principal Collections Percentage, that can
be utilised, if needed, as Utilised Required Retained Principal Collections.
"REQUIRED RETAINED PRINCIPAL COLLECTIONS PERCENTAGE" has the meaning given to
it in the relevant prospectus supplement/final terms.
The "REQUIRED YIELD RESERVE AMOUNT" for any transfer date on or after the Yield
Reserve Account Funding Date will be:
(i) [0.50] per cent. of the Class A Investor Interest; or
(ii) subject to the conditions described in the next paragraph, any other
amount designated by the originator beneficiary;
"RETAINED PRINCIPAL COLLECTIONS" means those principal collections retained in
the undivided Principal Collections Ledger each month in respect of principal
collections calculated by reference to all outstanding issuance that can be
utilised, if needed, as Shared Principal Collections to make distributions to
outstanding issuance on a transfer date and which are not Required Retained
Principal Collections for any Series.
"SERIES DEBT AMOUNT" means, in relation to a particular series, the sum of the
Class A Debt Amount, the Class B Debt Amount, the Class C Debt Amount and the
Class D Debt Amount (if any).
101
The "SERIES DISTRIBUTION ACCOUNT" is a bank account in the name of the MTN
issuing entity that will be used to deposit amounts distributed to the MTN
issuing entity for the relevant series Investor Certificates from the
receivables trust.
The "SERIES DISTRIBUTION LEDGER" is a ledger for a particular series in the
Trustee Collection Account. See "-- Distribution Ledgers".
The "SERIES TERMINATION DATE" is the earlier of the Distribution Date on which
the investor interest has been reduced to zero and the Distribution Date.
"SHARED MONTHLY PRINCIPAL PAYMENT" shall mean with respect to any monthly
period, for all outstanding issuance which is in an Amortisation Period, the
sum of:
(i) the controlled or regulated deposit amount for the related transfer date
for any outstanding issuance in a controlled accumulation period or
regulated amortisation period;
(ii) the relevant investor interest as of the end of the prior monthly period
taking into account any payments to be made on the following Distribution
Date for any outstanding issuance in a Rapid Amortisation Period; and
(iii) such other amounts as may be specified in the related Series Supplements
for all outstanding issuance.
"TRANSFER DATE" means the Business Day prior to the Distribution Date, unless
otherwise specified in the relevant prospectus supplement/final terms.
"UTILISED REQUIRED RETAINED PRINCIPAL COLLECTIONS" means amounts utilised as
Reallocated Class D Principal Collections, Reallocated Class C Principal
Collections or (as the case may be) as Reallocated Class B Principal
Collections.
The "YIELD RESERVE ACCOUNT FUNDING DATE" will be the transfer date that starts
no later than three months before the start of the Controlled Accumulation
Period. This date will be an earlier date if the Portfolio Yield decreases
below levels described in the Series Supplement. In any case, this date will be
no earlier than 12 months before the start of the Controlled Accumulation
Period.
BENEFICIAL ENTITLEMENT OF THE MTN ISSUING ENTITY TO TRUST PROPERTY OTHER THAN
IN RESPECT OF THE EXCESS INTEREST
The beneficial entitlement of the MTN issuing entity as the investor
beneficiary for each series to eligible principal receivables -- which includes
principal collections that are the property of the receivables trust but
excludes the amount on deposit in the Principal Funding Account -- is equal to
the proportion that the Adjusted investor interest bears to the amount of
eligible principal receivables assigned or purported to be assigned to the
receivables trust at any time. However, the beneficial entitlement for each
notional class will not exceed the Class A Adjusted Investor Interest, the
Class B Adjusted Investor Interest, the Class C Adjusted Investor Interest or
the Class D Adjusted Investor Interest, as applicable, at any time.
The beneficial entitlement of the MTN issuing entity as the investor
beneficiary for each series to finance charge collections during any monthly
period is equal to the proportion that the floating allocation for each
notional class bears to the investor percentage of finance charge collections
for such monthly period credited to the Finance Charge Collections Ledger from
time to time during that monthly period. However, the beneficial entitlement
will not exceed the sum of the monthly required expense amount, the Investor
Servicing Fee, the Investor Trust Cash Management Fee and the Investor Default
Amount for any notional class of each series during any monthly period.
The beneficial entitlement of the MTN issuing entity as the investor
beneficiary for each series at any time to any other property of the
receivables trust not separately held or segregated for any other beneficiary
or series will be equal to the proportion that the aggregate of the Class A
Adjusted Investor Interest, the Class B Adjusted Investor Interest, the Class C
Adjusted Investor Interest and the Class D Adjusted Investor Interest bears to
the amount of eligible principal receivables from time to time assigned or
purported to be assigned to the receivables trust. The MTN issuing entity will
not be entitled to the
102
benefit of any credit enhancement for any notional class available only for any
other beneficiary, series or classes within a series, except to the extent it
is an investor beneficiary for another series.
The MTN issuing entity will be beneficially entitled to all monies held in
any Trust Account other than:
(i) the Trustee Collection Account -- except for the distribution ledger for
each series; or
(ii) the Trustee Acquisition Account;
that are expressly segregated by separate account or by ledger entry or
otherwise, as allocated to the MTN issuing entity.
ALLOCATION, CALCULATION AND DISTRIBUTION OF FINANCE CHARGE COLLECTIONS TO THE
MTN ISSUING ENTITY
On each day on which collections 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 to the Finance Charge Collections Ledger
for each series an amount calculated as follows:
A x B Where:
A = the Floating Investor Percentage; and
B = the total amount of finance charge collections processed on
that date.
"FLOATING INVESTOR PERCENTAGE" means, for any monthly period, the following
fraction expressed as a percentage
A
-----------------------
the greater of B or C
Where:
A = the Adjusted investor interest;
B = the total balance of eligible principal receivables in the
receivables trust plus the Unavailable Principal
Collections standing to the credit of the Principal
Collections Ledger
C = the sum of the numerators used to calculate the floating
investor percentages for all outstanding series.
These amounts will be calculated for any monthly period other than the first
monthly period as of the last day of the prior monthly period. For the first
monthly period, they will be calculated as of the relevant closing date. 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
will be:
(i) for the period from the first day of the monthly period to the Addition
Date, the total balance of eligible principal receivables in the
receivables trust plus the Unavailable Principal Collections standing to
the credit of the Principal Collections Ledger at the close of business
on the last day of the prior monthly period; and
(ii) for the period from the Addition Date through the last day of the monthly
period, the total balance of eligible principal receivables in the
receivables trust plus the Unavailable Principal Collections standing to
the credit of the Principal Collections Ledger on the Addition Date --
taking into account the eligible principal receivables added to the
receivables trust.
If, in any monthly period the investor interest would be zero if the
payments to be made on the Distribution Date in that monthly period were made
on the last day of the prior monthly period, the Floating Investor Percentage
will be zero.
AVAILABLE FUNDS
103
"AVAILABLE FUNDS" for any monthly period equals the sum of the following
amounts credited to the Finance Charge Collections Ledger for that monthly
period:
(i) the finance charge collections allocated to the relevant series;
(ii) the Acquired Interchange allocated to the relevant series;
(iii) for any monthly period during the Controlled Accumulation Period before
payment in full of the investor interest, the Principal Funding
Investment Proceeds -- up to a maximum amount equal to the Covered
Amount; see "-- Principal Funding Account";
(iv) any amounts withdrawn from the Yield Reserve Account; see "-- Yield
Reserve Account"; and
(v) any amounts withdrawn from the Series Cash Reserve Account; see "--
Series Cash Reserve Account".
The amount of Acquired Interchange allocated to the relevant series for any
monthly period will be the product of the Acquired Interchange and the Floating
Investor Percentage. This allocated Acquired Interchange will be credited to
the Finance Charge Collections Ledger.
APPLICATION OF AVAILABLE FUNDS
On each transfer date, the receivables trustee will withdraw the Available
Funds from the Finance Charge Collections Ledger, and they will be distributed
in the following order:
(1) the Investor Trustee Payment Amount plus any unpaid Investor
Trustee Payment Amounts from prior transfer dates will be used by
the receivables trustee to satisfy the Investor Trustee Payment
Amounts;
(2) the MTN Issuing Entity Costs Amounts will be credited to the Series
Distribution Ledger;
(3) the Servicing Fee and Cash Management Fee and any due and unpaid
Servicing Fees or Cash Management Fees from prior transfer dates
will be distributed to the servicer or trust cash manager, as
applicable;
(4) the sum of the Class A Monthly Finance Amount, the Class A
Deficiency Amount and the Class A Additional Finance Amount will be
credited to the Series Distribution Ledger;
(5) the Monthly Loan Expenses Amount will be credited to the Series
Distribution Ledger;
(6) the sum of the Class B Monthly Finance Amount, the Class B
Deficiency Amount and the Class B Additional Finance Amount --
called the "CLASS B MONTHLY DISTRIBUTION AMOUNT" -will be credited
to the Series Distribution Ledger;
(7) an amount equal to the Class A Investor Default Amount will be
allocated to Class A and treated as a portion of Investor Principal
Collections referable to Class A and credited to the Principal
Collections Ledger;
(8) an amount equal to the total amount of Class A Investor Charge-Offs
that have not been previously reimbursed will be used to reinstate
the Class A Investor Interest, treated as a portion of Investor
Principal Collections allocated to Class A and credited to the
Principal Collections Ledger;
(9) to fund the Class B Investor Default Amount; any amount available
to pay the Class B Investor Default Amount will be allocated to
Class B and treated as a portion of Investor Principal Collections
allocated to Class B and credited to the Principal Collections
Ledger;
(10) 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
104
been previously reimbursed -- will be used to reinstate the Class B
Investor Interest, treated as a portion of Investor Principal
Collections and credited to the Principal Collections Ledger;
(11) 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 -- called the "CLASS C MONTHLY DISTRIBUTION AMOUNT" -- will
be credited to the Series Distribution Ledger;
(12) an amount equal to the Class C Investor Default Amount will be
allocated to Class C and treated as a portion of Investor Principal
Collections allocated to Class C and credited to the Principal
Collections Ledger;
(13) an amount equal to the total amount by which the Class C Investor
Interest has been reduced below the Class C 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 used to reinstate the Class C Investor
Interest, treated as a portion of Investor Principal Collections
and credited to the Principal Collections Ledger;
(14) an amount equal to the sum of the Class D Monthly Finance Amount,
the Class D Deficiency Amount and the Class D Additional Finance
Amount -- called the "CLASS D MONTHLY DISTRIBUTION AMOUNT" -- will
be credited to the Series Distribution Ledger;
(15) if a series is specified as having a Class D, then an amount equal
to the Class D Investor Default Amount will be allocated to Class D
and treated as a portion of Investor Principal Collections
allocated to Class D and credited to the Principal Collections
Ledger;
(16) if a series is specified as having a Class D, then an amount equal
to the total amount by which the Class D Investor Interest has been
reduced below the Class D 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 used to reinstate the Class D Investor Interest, treated as a
portion of Investor Principal Collections and credited to the
Principal Collections Ledger;
(17) on each transfer date from and after the Yield Reserve Account
Funding Date, but before the date on which the Yield Reserve
Account terminates, an amount up to the excess, if any, of the
Required Yield Reserve Account Amount over the amount on deposit in
the Yield Reserve Account will be deposited into the Yield Reserve
Account;
(18) on each Distribution Date prior to the Release Date, if the
available amount on deposit in the Series Cash Reserve Account is
less than the Required Series Cash Reserve Account Amount, an
amount up to any excess will be deposited into the Series Cash
Reserve Account;
(19) an amount equal to any Aggregate Investor Indemnity Amount for the
relevant series will be paid to the originator and will then cease
to be property of the receivables trust;
(20) the Series Extra Amount will be paid into the Series Distribution
Account and will be owned by the MTN issuing entity;
(21) on any Distribution Date, an amount equal to the principal
calculated as payable in accordance with the Expenses Loan
Agreement will be paid into the Series Distribution Account; and
(22) the balance, if any, after giving effect to the payments made under
paragraphs (1) through (21) above will be paid to the MTN issuing
entity as assignee of the excess interest beneficiary and will then
cease to be property of the receivables trust.
On each Distribution Date, all amounts credited to the Series Distribution
Ledger for the amounts in (2), (3) and (4) above will be deposited in the
Series Distribution Account. The amount in (2), (3) and (4) above are called
the "CLASS A MONTHLY DISTRIBUTION AMOUNT".
105
ALLOCATION, CALCULATION AND DISTRIBUTION OF PRINCIPAL COLLECTIONS TO THE MTN
ISSUING ENTITY
The amount of principal collections transferred on a daily basis (see "The
Receivables Trust-Allocation and Application of Collections") during any
monthly period to the Principal Collections Ledger of the Trustee Collection
Account will only be transferred and distributed to the MTN issuing entity as
investor beneficiary (to the extent of its beneficial interest) after making
the calculations described below. These calculations and the amounts actually
transferred differ depending upon whether a particular series is in the
Revolving Period, the Controlled Accumulation Period, the Regulated
Amortisation Period or the Rapid Amortisation Period.
ALLOCATION OF PRINCIPAL COLLECTIONS TO THE INVESTOR INTEREST
During the Revolving Period, principal collections will be allocated to the
investor interest on the basis of the Floating Investor Percentage. During the
Controlled Accumulation Period, the Regulated Amortisation Period and the Rapid
Amortisation Period, principal collections will be allocated to the investor
interest on the basis of the Fixed Investor Percentage. The amount of principal
collections allocated to the investor interest and available to the MTN issuing
entity at any time will be credited to the Principal Collections Ledger for the
relevant series. The principal collections credited to the Principal
Collections Ledger from time to time that will be allocated to the MTN issuing
entity will be determined in accordance with the relevant prospectus
supplement/final terms.
"FIXED INVESTOR PERCENTAGE" means, for any monthly period, the following
calculation expressed as a percentage:
A
-------------------------
the greater of B or C
Where:
A = the investor interest calculated at close of business on
the last day of the Revolving Period;
B = the total balance of eligible principal receivables in the
receivables trust plus the Unavailable Principal
Collections standing to the credit of the Principal
Collections Ledger; and
C = the sum of the numerators used to calculate the fixed
investor percentages for all outstanding series.
Items B and C above will be calculated for any monthly period as of the last
day of the prior monthly period. For the first monthly period, they will be
calculated as of the relevant closing date. 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:
(i) for the period from the first day of the monthly period to the Addition
Date, the total balance of eligible principal receivables in the
receivables trust plus the Unavailable Principal Collections standing to
the credit of the Principal Collections Ledger at the close of business
on the last day of the prior monthly period; and
(ii) for the period from the Addition Date to the last day of the monthly
period, the total balance of eligible principal receivables in the
receivables trust plus the Unavailable Principal Collections standing to
the credit of the Principal Collections Ledger on the Addition Date,
taking into account the eligible principal receivables added to the
receivables trust.
If in any monthly period the investor interest would be zero if the payments
to be made on the Distribution Date during that monthly period were made on the
last day of the prior monthly period, the Fixed Investor Percentage will be
zero.
REVOLVING PERIOD
The "REVOLVING PERIOD" for each series is the period from the relevant
closing date to the start of the Controlled Accumulation Period or, if earlier,
the start of the Rapid Amortisation Period or the Regulated Amortisation
Period, the triggers for which are described in "Securitisation Cashflows".
106
During the Revolving Period, principal collections calculated as referable
daily to the Class A Investor Interest will be used by the receivables trustee
as Shared Principal Collections and, to the extent not used as Shared Principal
Collections, to make payments to the originator:
(i) to accept new offers of Eligible Receivables made by the originator to
the receivables trustee, and
(ii) to make payments to the originator for future receivables assigned by the
originator to the receivables trustee by offers that have already been
made and accepted.
For a further description, please see "The Receivables".
Principal collections calculated as referable to the Class B Investor
Interest, the Class C Investor Interest and the Class D Investor Interest will
be used by the receivables trustee as described in the previous paragraph on
the next following transfer date to the extent not required to fund shortfalls
for the Class A Investor Interest and -- for principal collections calculated
as referable to the Class C Investor Interest -- the Class B Investor Interest
and -- for principal collections calculated as referable to the Class D
Investor Interest -- the Class C Investor Interest.
During the Revolving Period, Principal Collections credited daily to the
Principal Collections Ledger in the Trustee Collection Account will not be
distributed to the MTN issuing entity as the investor beneficiary but a
specified percentage of Principal Collections will be retained for calculation
purposes in the Principal Collections Ledger and held on an undivided basis
(the Retained Principal Collections and the Required Retained Principal
Collections, each as defined below) as provided for below. Amounts of Principal
Collections that are retained in this way as Retained Principal Collections
will be used by the Receivables Trustee as Shared Principal Collections (see
"--Shared Principal Collections" below) and, to the extent not used as Shared
Principal Collections, will be used to make payments to the originator:
(i) to accept new offers of Eligible Receivables made by the originator to
the receivables trustee, and
(ii) to make payments to the originator for future receivables assigned by the
originator to the receivables trustee by offers that have already been
made and accepted.
For a further description, please see "The Receivables".
Principal collections calculated as referable to the Class B investor
Interest, the Class C Investor Interest and the Class D Investor Interest will
be used by the receivables trustee as described in the previous paragraph on
the next following transfer date to the extent not required to fund shortfalls
for the Class A Investor Interest and -- for principal collections calculated
as referable to the Class C Investor Interest -- the Class B Investor Interest
and -- for principal collections calculated as referable to the Class D
Investor Interest -- the Class C Investor Interest.
As noted above, a specified percentage of principal collections calculated
by reference to the notes of each series which are not the most senior class,
specified as the Required Retained Principal Collections Percentage of such
principal collections will be retained within the Trustee Collection Account of
the Receivables Trust and may be used to meet certain payments or distributions
to the MTN issuing entity on a transfer date in respect of each relevant series
which it is not able to satisfy from finance charge collections distributed as
described above under "--Allocation, Calculation and Distribution of Finance
Charge Collections to the MTN Issuing Entity". Any Required Retained Principal
Collections not utilised shall be available to meet any Controlled Deposit
Amount, Shared Principal Collections and any such amounts remaining may flow to
the originator.
For calculation purposes, to the extent amounts of Required Retained
Principal Collections are distributed to the MTN issuing entity to help it make
certain of its payments or distributions, these amounts are defined as
"UTILISED REQUIRED RETAINED PRINCIPAL COLLECTIONS".
For calculation purposes, Utilised Required Retained Principal Collections
are divided into amounts utilised as Reallocated Class D Principal Collections,
Reallocated Class C Principal Collections or (as the case may be) as
Reallocated Class B Principal Collections. See "--Defaulted Receivables;
Investor Charge-offs" below for further information on Reallocated Class B
Principal Collections, Reallocated Class C Principal Collections and
Reallocated Class D Principal Collections.
107
CONTROLLED ACCUMULATION PERIOD
The "CONTROLLED ACCUMULATION PERIOD" for each series is the period scheduled
to begin on the date specified in the relevant prospectus supplement/final
terms and ending when the 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 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 date specified in the relevant prospectus supplement/
final terms. See "-- Postponement of Controlled Accumulation Period".
During the Controlled Accumulation Period the principal collections
allocated to the investor interest for the relevant series less any Required
Retained Principal Collections, up to the Controlled Deposit Amount, will be
accumulated by the receivables trustee in a trust account called the "PRINCIPAL
FUNDING ACCOUNT" for distribution to the MTN issuing entity as the investor
beneficiary for the relevant series on the Distribution Date -- called the
"SERIES SCHEDULED REDEMPTION DATE". Any principal collections allocated to the
investor interest for the relevant series over the amount that will be
deposited in the Principal Funding Account will be used by the receivables
trustee first as Shared Principal Collections and then to make payments to the
originator as described above under "-- Revolving Period".
As in the Revolving Period, during each monthly period during the Controlled
Accumulation Period, a specified percentage of Principal Collections as
calculated by reference to each series equal to the Required Retained Principal
Collections Percentage of such Principal Collections will be retained within
the Trustee Collection Account of the receivables trustee and may be used on a
transfer date to make certain payments or distributions to the MTN issuing
entity in respect of the relevant series which it is not able to satisfy from
finance charge collections distributed as described under "--Allocation,
Calculation and Distribution of Finance Charge Collections to the MTN Issuing
Entity". For calculation purposes, these amounts of Utilised Required Retained
Principal Collections are divided into amounts utilised as Reallocated Class D
Principal Collections, Reallocated Class C Principal Collections or (as the
case may be) Reallocated Class B Principal Collections. See "--Defaulted
Receivables; Investor Charge-offs" below for further information on Reallocated
Class D Principal Collections, Reallocated Class C Principal Collections and
Reallocated Class B Principal Collections.
The "CONTROLLED DEPOSIT AMOUNT" for any transfer date for the Controlled
Accumulation Period or the Regulated Amortisation Period will be the sterling
equivalent of the amount specified in the relevant prospectus supplement/final
terms, using, if applicable, the fixed exchange rate in the Swap Agreements,
which equals the Initial Investor Interest divided by 12, or for a Regulated
Amortisation Period, if greater, may be an amount not exceeding 1/12 of the
total sum of all investor interests of all series in group one -- except
Companion Series -- that are scheduled to be in their revolving periods. 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 sterling equivalent of the amount specified in the
relevant prospectus supplement/final terms. This higher amount will be
determined by the servicer based on the principal payment rates on the
Designated Accounts and on the investor interests of series in group one --
except Companion Series -- that are scheduled to be in their revolving periods.
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 transfer date for the Controlled Accumulation Period, will cause the
balance of the Principal Funding Account to equal the investor interest on the
Series Scheduled Redemption Date. The Controlled Deposit Amount for any
transfer date will include the amount of any shortfall in payment of the
Controlled Deposit Amount for the previous transfer date.
REGULATED AMORTISATION PERIOD
A "REGULATED AMORTISATION PERIOD" will start on the day, if there is one,
that any of the following Series Pay Out Events occur, each of which we refer
to as a "REGULATED AMORTISATION TRIGGER EVENT":
(i) 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
relevant closing date, the Portfolio Yield is less than average Expense
Rate for that period; or
108
(ii) either:
(1) over any period of thirty consecutive days, the Originator Interest
averaged over that period is less than the Minimum Originator
Interest for that period and the Originator Interest does not
increase on or before the tenth Business Day following that thirty
day period to an amount so that the average of the Originator
Interest as a percentage of the Average Principal Receivables for
such thirty day period, computed by assuming that the amount of the
increase of the Originator Interest by the last day of that ten
Business Day period, as compared to the 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 Minimum Originator Interest; or
(2) on the last day of any monthly period the total balance of eligible
principal 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 Companion
Series, and the total balance of eligible principal receivables
fails to increase to an amount equal to or greater than the Minimum
Aggregate Principal Receivables on or before the tenth Business Day
following that last day.
The Regulated Amortisation Period will continue until the earlier of:
(i) the start of the Rapid Amortisation Period; and
(ii) the Series Termination Date.
During the Regulated Amortisation Period the amount of principal collections
allocated to the investor interest for the relevant series less any Required
Retained Principal Collections, up to the Controlled Deposit Amount, will be
paid each month to the MTN issuing entity first for the Class A Investor
Interest, second for the Class B Investor Interest, third for the Class C
Investor Interest and fourth for the Class D Investor Interest until the Series
Termination Date. Any principal collections allocated to the investor interest
for the series over the Controlled Deposit Amount paid to the MTN issuing
entity will be used by the receivables trustee first as Shared Principal
Collections and then to make payments to the originator as described above
under "-- Revolving Period".
As in the Revolving Period and the Controlled Accumulation Period, during
each monthly period during the Regulated Amortisation Period, a specified
percentage of Principal Collections as calculated by reference to the relevant
series equal to the Required Retained Principal Collections Percentage of such
Principal Collections will be retained within the Trustee Collection Account of
the receivables trust and may be used on a transfer date to make certain
payments or distributions to the MTN issuing entity in respect of the relevant
series which it is not able to satisfy from finance charge collections
distributed as described under "--Allocation, Calculation and Distribution of
Finance Charge Collections to the MTN Issuing Entity". For calculation
purposes, these amounts of Utilised Required Retained Principal Collections are
divided into amounts utilised as Reallocated Class D Principal Collections,
Reallocated Class C Principal Collections or (as the case may be) Reallocated
Class B Principal Collections. See "--Defaulted Receivables; Investor Charge-
offs" below for further information on Reallocated Class D Principal
Collections, Reallocated Class C Principal Collections and Reallocated Class B
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:
(i) the Series Termination Date; or
(ii) 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, principal collections allocable to the
investor interest of the relevant series will be paid each month to the MTN
issuing entity first for the Class A Investor
109
Interest, second for the Class B Investor Interest, third for the Class C
Investor Interest and fourth for the Class D Investor Interest until the Series
Termination Date.
As in the Revolving Period, the Controlled Accumulation Period and the
Regulated Amortisation Period, during each monthly period during the Regulated
Amortisation Period, a specified percentage of Principal Collections as
calculated by reference to the relevant series equal to the Required Retained
Principal Collections Percentage of such Principal Collections will be retained
within the Trustee Collection Account of the receivables trust and may be used
on a transfer date to make certain payments or distributions to the MTN issuing
entity in respect of the relevant series which it is not able to satisfy from
finance charge collections distributed as described under "--Allocation,
Calculation and Distribution of Finance Charge Collections to the MTN Issuing
Entity". For calculation purposes, these amounts of Utilised Required Retained
Principal Collections are divided into amounts utilised as Reallocated Class D
Principal Collections, Reallocated Class C Principal Collections or (as the
case may be) Reallocated Class B Principal Collections. See "--Defaulted
Receivables; Investor Charge-offs" below for further information on Reallocated
Class D Principal Collections, Reallocated Class C Principal Collections and
Reallocated Class B Principal Collections.
DISTRIBUTION OF REINVESTED INVESTOR PRINCIPAL COLLECTIONS
On each Business Day during the Revolving Period which is not a transfer
date, the Reinvested Investor Principal Collections for that day will be
distributed in the following priority:
(i) the Reinvested Investor Principal Collections will be applied as Shared
Principal Collections and allocated to other outstanding series in group
one; see "-- Shared Principal Collections"; and
(ii) the balance remaining will be applied as Investor Cash Available for
Acquisition in the manner described in "The Receivables Trust: Acquiring
Additional Entitlements to Trust Property and Payments for Receivables".
On each transfer date for the Controlled Accumulation Period, the Regulated
Amortisation Period or the Rapid Amortisation Period, the receivables trustee
will withdraw the Class A Monthly Principal Amount from the Principal
Collections Ledger and:
(i) for a transfer date for the Controlled Accumulation Period, deposit it
into the Principal Funding Account; or
(ii) for a transfer date during the Rapid Amortisation Period or Regulated
Amortisation Period, credit it to the Series Distribution Ledger.
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, or (2) during the Rapid Amortisation Period or
the Regulated 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 Principal Collections Ledger and:
(i) for a transfer date for the Controlled Accumulation Period, deposit it
into the Principal Funding Account; or
(ii) for a transfer date during the Rapid Amortisation Period or the Regulated
Amortisation Period, credit it to the Series Distribution Ledger.
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, or (2)
during the Rapid Amortisation Period or the Regulated 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
110
applicable, the receivables trustee will withdraw the Class C Monthly Principal
Amount from the Principal Collections Ledger and:
(i) for a transfer date for the Controlled Accumulation Period, deposit it
into the Principal Funding Account; or
(ii) for a transfer date during the Rapid Amortisation Period or the Regulated
Amortisation Period, credit it to the Series Distribution Ledger.
The first Distribution Date (1) for the Controlled Accumulation Period, on
which an amount equal to the sum of the Class A Investor Interest, the Class B
Investor Interest and the Class C Investor Interest has been deposited in the
Principal Funding Account, or (2) during the Rapid Amortisation Period or the
Regulated Amortisation Period, on which the Class C Investor Interest is paid
in full, is called the "CLASS D PRINCIPAL COMMENCEMENT DATE".
Starting with the Class D Principal Commencement Date, to the extent there
are funds remaining after distributing the Class A Monthly Principal Amount,
the Class B Monthly Principal Amount and the Class C Monthly Principal Amount,
as applicable, the receivables trustee will withdraw the Class D Monthly
Principal Amount from the Principal Collections Ledger and:
(i) for a transfer date for the Controlled Accumulation Period, deposit it
into the Principal Funding Account; or
(ii) for a transfer date during the Rapid Amortisation Period or the Regulated
Amortisation Period, credit it to the Series Distribution Ledger.
On the earlier of (1) the first Distribution Date during the Rapid
Amortisation Period or the Regulated Amortisation Period and (2) the Series
Scheduled Redemption Date, and on each Distribution Date after that, the
receivables trustee will distribute the following amounts in the following
priority:
(1) from the Principal Funding Account, an amount equal to the lesser
of:
(a) the amount on deposit in the Principal Funding Account; and
(b) the Class A Investor Interest;
will be deposited in the Series Distribution Account for Class
A and will be owned by the MTN issuing entity. The MTN issuing
entity will use this amount to repay principal outstanding on
the medium term note certificate;
(2) from the Series Distribution Ledger an amount equal to the lesser
of :
(a) the amount credited to the Series Distribution Ledger; and
(b) the Class A Investor Interest, after taking into account the
amounts described in clause (1) above;
will be deposited to the Series Distribution Account for Class
A and will be owned by the MTN issuing entity. The MTN issuing
entity will use this amount to repay principal outstanding on
the medium term note certificate.
DISTRIBUTION OF PRINCIPAL COLLECTIONS
Starting on the earlier of (1) if the amount on deposit in the Principal
Funding Account exceeds the Class A Investor Interest, the Series Scheduled
Redemption Date and (2) during the Rapid Amortisation Period or the Regulated
Amortisation Period, the Class B Principal Commencement Date, and on each
Distribution Date after that, the receivables trustee will distribute the
following amounts in the following priority:
(1) from the Principal Funding Account, an amount equal to the lesser
of:
(a) the amount on deposit in the Principal Funding Account in
excess of the Class A Investor Interest; and
111
(b) the Class B Investor Interest:
will be deposited to the Series Distribution Account for Class
B and will be owned by the MTN issuing entity. The MTN issuing
entity will use this amount to repay principal outstanding on
the medium term note certificate;
(2) from the Series Distribution Ledger an amount equal to the lesser
of:
(a) the amount credited to the Series Distribution Ledger; and
(b) the Class B Investor Interest, after taking into account the
amount described in clause (1) above;
this amount will be deposited in the Series Distribution
Account for Class B and will be owned by the MTN issuing
entity. The MTN issuing entity will use this amount to repay
principal outstanding on the medium term note certificate.
Starting on the earlier of (1) if the amount on deposit in the Principal
Funding Account exceeds the sum of the Class A Investor Interest and the Class
B Investor Interest, the Series Scheduled Redemption Date, and (2) during the
Rapid Amortisation Period or the Regulated Amortisation Period, the Class C
Principal Commencement Date, and on each Distribution Date after that, the
receivables trustee will distribute the following amounts in the following
priority:
(1) from the Principal Funding Account, an amount equal to the lesser
of:
(a) the amount on deposit in the Principal Funding Account in
excess of the sum of the Class A Investor Interest and the
Class B Investor Interest; and
(b) the Class C Investor Interest;
will be deposited in the Series Distribution Account for Class
C and will be owned by the MTN issuing entity. The MTN issuing
entity will use this amount to repay principal outstanding on
the medium term note certificate.
(2) from the Series Distribution Ledger, an amount equal to the lesser
of;
(a) the amount credited to the Series Distribution Ledger; and
(b) the Class C Investor Interest after taking into account the
amount described in clause (1) above;
will be deposited to the Series Distribution Account for Class
C and will be owned by the MTN issuing entity. The MTN issuing
entity will use this amount to repay principal outstanding on
the Medium term Note Certificate.
Starting on the earlier of (1) if the amount on deposit in the Principal
Funding Account exceeds the sum of the Class A Investor Interest, the Class B
Investor Interest and the Class C Investor Interest, the Series Scheduled
Redemption Date, and (2) during the Rapid Amortisation Period or the Regulated
Amortisation Period, the Class D Principal Commencement Date, and on each
Distribution Date after that, the receivables trustee will distribute the
following amounts in the following priority:
(1) from the Principal Funding Account, an amount equal to the lesser
of:
(a) the amount on deposit in the Principal Funding Account in
excess of the sum of the Class A Investor Interest, the Class B
Investor Interest and the Class C Investor Interest; and
(b) the Class D Investor Interest;
will be deposited in the Series Distribution Account for Class
D and will be owned by the MTN issuing entity. The MTN issuing
entity will use this amount to repay principal outstanding on
the medium term note certificate.
112
(2) from the Series Distribution Ledger, an amount equal to the lesser
of;
(a) the amount credited to the Series Distribution Ledger; and
(b) the Class D Investor Interest after taking into account the
amount described in clause (1) above;
will be deposited to the Series Distribution Account for Class
D and will be owned by the MTN issuing entity. The MTN issuing
entity will use this amount to repay principal outstanding on
the medium term note certificate.
POSTPONEMENT OF CONTROLLED ACCUMULATION PERIOD
The Controlled Accumulation Period is scheduled to begin on the date
specified in the relevant prospectus supplement/final terms (the "CONTROLLED
ACCUMULATION PERIOD COMMENCEMENT DATE"). If the Controlled Accumulation Period
Length, which is explained in the next paragraph, is less than 12 months, the
Revolving Period may be extended and the start of the Controlled Accumulation
Period will be postponed.
On the Determination Date right before the commencement of the Controlled
Accumulation Period for a potential series, 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 Principal
Funding Account no later than the Series Scheduled Redemption Date. This
calculation is based on:
(i) the expected monthly principal collections that the servicer calculates
will be available to the investor interests of all series other than
excluded series, assuming a principal payment rate no greater than the
lowest monthly principal payment rate on the receivables for the twelve
months before; and
(ii) 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 twelve months, 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 interest of future series
that are scheduled to be in their revolving periods during the Controlled
Accumulation Period and on increases in the principal payment rate occurring
after the relevant closing date. The length of the Controlled Accumulation
Period will not be less than one month.
UNAVAILABLE PRINCIPAL COLLECTIONS
If:
(i) during the Controlled Accumulation Period or the Regulated Amortisation
Period, the amount credited to the Principal Collections Ledger
identified for the relevant series during any monthly period minus the
amount of Investor Cash Available for Acquisition calculated the relevant
series for that monthly period, exceeds the sum of:
(1) the Adjusted investor interest as of the last day of the prior
monthly period, after taking into account any deposits to be made
to the Principal Funding Account on the transfer date for that
monthly period, any unreimbursed Investor Charge-Offs for any class
and any other adjustments to the investor interest for that monthly
period; and
(2) any Reallocated Class B Principal Collections, Reallocated Class C
Principal Collections or Reallocated Class D Principal Collections
on the transfer date for that monthly period; or
113
(ii) during the Rapid Amortisation Period, the amount credited to the
Principal Collections Ledger identified for the relevant series during
any monthly period exceeds the sum of:
(1) the investor interest as of the last day of the prior monthly
period, after taking into account any deposits to be made to the
Series Distribution Account on the transfer date for that monthly
period, any unreimbursed Investor Charge-Offs for any class and any
other adjustments to the investor interest for that monthly period;
and
(2) any Reallocated Class B Principal Collections, Reallocated Class C
Principal Collections or Reallocated Class D Principal Collections
on the transfer date for that monthly period
the amount of any excess will be allocated and transferred to the originator
beneficiary only to the extent that the Originator Interest on that date is
greater than zero. If the Originator Interest on that date is not greater than
zero, the amount will be identified as unavailable originator principal
collections credited to the Principal Collections Ledger. This sum, together
with any unavailable investor principal collections that have been credited to
the Principal Collections Ledger, will be identified as "UNAVAILABLE PRINCIPAL
COLLECTIONS". Unavailable investor principal collections are principal
collections identified for the originator beneficiary but not transferred to
the originator beneficiary because the Originator Interest at the relevant date
is not greater than zero.
Unavailable Principal Collections will, to the extent they arise during the
Revolving Period, be allocated to the originator beneficiary but will be
transferred to the originator beneficiary only if and to the extent that the
Originator Interest at that time is greater than zero. On each transfer date
for the Controlled Accumulation Period, Regulated Amortisation Period or the
Rapid Amortisation Period, any Unavailable Principal Collections which arise
after the end of the Revolving Period which are credited to the Principal
Collections Ledger will be allocated to the investor beneficiary and included
as Investor Principal Collections to be distributed as Available Investor
Principal Collections.
SHARED PRINCIPAL COLLECTIONS
Principal collections for any monthly period allocated to the investor
interest of each series, which are not required as Reallocated Class B
Principal Collections, Reallocated Class C Principal Collections or Reallocated
Class D Principal Collections will first be used to cover:
(i) until the Series Scheduled Redemption Date, for any monthly period during
the Controlled Accumulation Period, deposits of the Controlled Deposit
Amount to the Principal Funding Account;
(ii) during the Regulated Amortisation Period, deposits of the Controlled
Deposit Amount to the relevant Series Distribution Account; and
(iii) during the Controlled Accumulation Period, on the Series Scheduled
Redemption Date and during the Rapid Amortisation Period, payments to the
MTN issuing entity for the relevant series.
The receivables trustee will determine the amount of principal collections
for any monthly period allocated to the investor interest remaining after
covering required distributions to the MTN issuing entity for each class of the
relevant series and any similar amount remaining for any other outstanding
series in group one. These remaining principal collections are called "SHARED
PRINCIPAL COLLECTIONS". The receivables trustee will allocate the Shared
Principal Collections to cover any scheduled or permitted principal
distributions to beneficiaries, and deposits to principal funding accounts, if
any, for any series in group one that have not been covered out of the
principal collections allocable to that 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 in the normal course be paid to the
originator beneficiary.
114
DEFAULTED RECEIVABLES; INVESTOR CHARGE-OFFS
On each transfer date, the receivables trustee will calculate the Investor
Default Amount for the previous monthly period. The "INVESTOR DEFAULT AMOUNT"
will be the total of, for each Defaulted Account, the product of the Floating
Investor Percentage and the Default Amount.
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 calculated for each notional class of
the relevant series based on its floating allocation during the monthly period.
These allocations will be called the "CLASS A INVESTOR DEFAULT AMOUNT", the
"CLASS B INVESTOR DEFAULT AMOUNT", the "CLASS C INVESTOR DEFAULT AMOUNT" and
the "CLASS D INVESTOR DEFAULT AMOUNT".
On each transfer date, if the Class A Investor Default Amount for the prior
monthly period exceeds the sum of:
(i) Available Funds;
(ii) Reallocated Class D Principal Collections;
(iii) Reallocated Class C Principal Collections; and
(iv) Reallocated Class B Principal Collections;
in each case, to the extent available to cover the Class A Investor Default
Amount, then the Class D 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 D Investor Interest will be made only after giving
effect to reductions to the Class D Investor Interest for any Class D Investor
Charge- Offs, any Reallocated Class B Principal Collections, Reallocated Class
C Principal Collections and Reallocated Class D Principal Collections.
If this reduction would cause the Class D Investor Interest to be a negative
number, it will be reduced to zero. In this case, the Class C 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 Class B Investor Default
Amount not covered by a reduction in the Class D Investor Interest. This
reduction in the Class C Investor Interest will be made only after giving
effect to reductions for any Class C Investor Charge-Offs and Reallocated Class
C Principal Collections not covered by a reduction in the Class D Investor
Interest.
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 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 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. This is called a
"CLASS A INVESTOR CHARGE-OFF" and may have the effect of slowing or reducing
the return of principal to the MTN issuing entity calculated in respect of
Class A.
If the Class A Investor Interest has been reduced by any Class A Investor
Charge-Offs, it will be reimbursed on any transfer date by the amount of
Available Funds allocated and available for that purpose, but not by more than
the total amount by which the Class A Investor Interest has been reduced. See
"-- Finance Charge Waterfall".
115
On each transfer date, if the Class B Investor Default Amount for the prior
monthly period exceeds the sum of:
(i) Available Funds;
(ii) Reallocated Class D Principal Collections; and
(iii) Reallocated Class C Principal Collections,
in each case, to the extent available to cover the Class B Investor Default
Amount, then the Class D 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 D Investor Interest will be made only after giving
effect to reductions to the Class D Investor Interest for any Class D Investor
Charge- Offs, any Reallocated Class C Principal Collections and Reallocated
Class D Principal Collections.
If this reduction would cause the Class D Investor Interest to be a negative
number, it will be reduced to zero. In this case, the Class C Investor Interest
will be reduced by the amount by which the Class D Investor Interest would have
been reduced below zero, but not by more than the Class B Investor Default
Amount not covered by a reduction in the Class D Investor Interest. This
reduction in the Class C Investor Interest will be made only after giving
effect to reductions for any Class C Investor Charge-Offs and Reallocated Class
C Principal Collections not covered by a reduction in the Class D Investor
Interest.
If this reduction would cause the Class C Investor Interest to be a negative
number, the Class C Investor Interest 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 in the
Class D Investor Interest or the Class C Investor Interest. This is called a
"CLASS B INVESTOR CHARGE- OFF" and may have the effect of slowing or reducing
the return of principal to the MTN issuing entity calculated in respect of
Class A.
If the Class B Investor Interest has been reduced by any Class B Investor
Charge-Offs, it will be reimbursed on any transfer date by the amount of
Available Funds allocated and available for that purpose, but not by more than
the total amount by which the Class A Investor Interest has been reduced. See
"-- Finance Charge Waterfall".
On each transfer date, if the Class C Investor Default Amount for the prior
monthly period exceeds the sum of:
(i) Available Funds; and
(ii) Reallocated Class D Principal Collections,
in each case to the extent available to cover the Class C Investor Default
Amount, then the Class D Investor Interest will be reduced by the amount of the
excess, but not by more than the remaining Class C Investor Default Amount.
This reduction to the Class D Investor Interest will be made only after giving
effect to any reductions to the Class D Investor Interest for any Class D
Investor Charge-Offs, any Reallocated Class C Principal Collections, any
Reallocated Class D Principal Collections and any reductions in the Class D
Investor Interest to cover the Class A Investor Default Amount and Class B
Investor Default Amount.
If this reduction would cause the Class D Investor Interest to be a negative
number, it will be reduced to zero. In this case, the Class C Investor Interest
will be reduced by the amount by which the Class D Investor Interest would have
been reduced below zero, but not by more than the remaining Class C Investor
Default Amount not covered by a reduction to the Class D Investor Interest.
This is called a "CLASS C INVESTOR CHARGE-OFF" and may have the effect of
slowing or reducing the return of principal to the MTN issuing entity
calculated in respect of Class C.
If the Class C Investor Interest has been reduced for any reasons other than
the payment of principal, it will be reimbursed on any transfer date by the
amount of Available Funds allocated and available for that purpose, but not by
more than the total amount by which the Class C Investor Interest has been
reduced. See "-- Finance Charge Waterfall".
116
On each transfer date, if the Class D Investor Default Amount for the prior
monthly period exceeds the amount of Available Funds available to cover the
Class D Investor Default Amount, the Class D Investor Interest will be reduced
by the amount of the excess, but not by more than the Class D Investor Default
Amount. This is called a "CLASS D INVESTOR CHARGE-OFF", which may have the
effect of slowing or reducing the return of principal to the MTN issuing entity
calculated in respect of Class D.
If the Class D Investor Interest has been reduced for any reasons other than
the payment of principal, it will be reimbursed on any transfer date by the
amount of Available Funds allocated and available for that purpose, but not by
more than the total amount by which the Class D Investor Interest has been so
reduced. See "-- Finance Charge Waterfall ".
EXTRA AMOUNT
The relevant "SERIES EXTRA AMOUNT" is calculated as follows:
hidden
(i) for any transfer date where the relevant Series investor interest is less
than or equal to [GBP]250,000,000, an amount equal to:
Days in Calculation Period
- -------------------------- x 0.02 per cent. x The relevant investor interest
365 (366 in a leap year)
(ii) for any transfer date where the relevant Series investor interest is
greater than [GBP]250,000,000, an amount equal to the aggregate of A plus
B, where:
Days in Calculation Period
A = -------------------------- x 0.02 per cent. x [GBP]250,000,000
365 (366 in a leap year
Days in Calculation Period (The relevant Series
B = -------------------------- x 0.002 per cent. x investor interest
365 (366 in a leap year -- [GBP]250,000,000)
AGGREGATE INVESTOR INDEMNITY AMOUNT
By each transfer 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 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
originator 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" is the liability that the originator
has 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 the
Notes or a Loss on your Notes".
Aggregate Investor Indemnity Amounts for each series will be payable only if
amounts are available from Available Funds to pay them. See "-- Finance Charge
Waterfall". If Available Funds available on any transfer date is not enough to
pay the Aggregate Investor Indemnity Amount for the relevant series otherwise
payable on that date, the excess will be carried forward and paid on subsequent
transfer dates to the extent amounts of Available Funds are available to pay
them.
PRINCIPAL FUNDING ACCOUNT
The receivables trustee will establish and maintain the Principal Funding
Account at a Qualified Institution -- currently Barclays Bank PLC at its branch
located at 1234 Pavilion Drive Northampton NN4 7SG -- as a segregated Trust
Account held for the benefit of the MTN issuing entity as the investor
117
beneficiary for the relevant series and the originator beneficiary. During the
Controlled Accumulation Period, the receivables trustee will transfer the
amounts described under "-- Allocation, Calculation and Distribution of
Principal Collections to the MTN issuing entity" to the Principal Funding
Account.
Funds on deposit in the Principal Funding Account will be invested to the
following transfer date by the receivables trustee in permitted investments.
Investment earnings, net of investment losses and expenses, on funds on deposit
in the Principal Funding Account are called "PRINCIPAL FUNDING INVESTMENT
PROCEEDS".
Principal Funding Investment Proceeds will be used to pay the Covered
Amount.
The "COVERED AMOUNT" is calculated as follows:
Days in the Calculation Period The amount equal to the
- ------------------------------ x The Class A Finance Rate x amount on deposit in the
365 (366 in a leap year) Principal Funding Account
where the amount on deposit in the Principal Funding Account is calculated as
of the last day of the monthly period before the monthly period in which the
relevant transfer date occurs.
Where the amount on deposit in the Principal Funding Account is calculated
as of the last day of the monthly period before the monthly period in which the
relevant transfer date occurs.
Principal Funding Investment Proceeds up to the Covered Amount will be
transferred to the Trustee Collection Account by each transfer date and
credited to the Finance Charge Collections Ledger for application as Available
Funds.
If on any transfer date during the Controlled Accumulation Period, the
Principal Funding Investment Proceeds exceed the Covered Amount, that excess
will be paid to the originator beneficiary. If the Principal Funding Investment
Proceeds are less than the Covered Amount, a withdrawal will be made from the
Yield Reserve Account -- to the extent funds are available -- and will be
deposited in the Finance Charge Collections Ledger, for application as
Available Funds. The amount of this withdrawal will be reduced to the extent
Available Funds would be available for deposit in the Yield Reserve Account.
See "-- Yield Reserve Account" and "-- Finance Charge Waterfall".
YIELD RESERVE ACCOUNT
The receivables trustee will establish and maintain a yield reserve account
at a Qualified Institution -- currently, Barclays Bank PLC at its branch
located at 1 Churchill Place, London E14 5HP -- as a Trust Account segregated
for the benefit of each series. This account is called the "YIELD RESERVE
ACCOUNT". The Yield Reserve Account will be established to assist with the
payment distribution of the Class A Monthly Finance Amount to the MTN issuing
entity during the Controlled Accumulation Period.
On each transfer date from and after the Yield Reserve Account Funding Date,
but before the termination of the Yield Reserve Account, the receivables
trustee will apply Available Funds in the order of priority described in "--
Finance Charge Waterfall" to increase the amount on deposit in the Yield
Reserve Account, up to the Required Yield Reserve Amount.
If, on or before the Yield Reserve Account Funding Date, the originator
beneficiary designates a lesser amount, it must provide the servicer and the
receivables trustee with evidence that each rating agency has notified the
originator, the servicer and the receivables trustee that that 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
beneficiary 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 beneficiary, 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. Further, this designation
will not be effective without the prior written agreement of all the other
beneficiaries.
On each transfer date, after giving effect to any deposit to be made to, and
any withdrawal to be made from, the Yield Reserve Account on that transfer
date, the receivables trustee will withdraw from the Yield Reserve Account an
amount equal to the excess, if any, of the amount on deposit in the Yield
118
Reserve Account over the Required Yield Reserve Amount. The receivables trustee
will distribute this amount to the originator beneficiary and it will cease to
be the property of the receivables trust.
All amounts on deposit in the Yield Reserve Account on any transfer date
will be invested by the receivables trustee in permitted investments to the
following transfer date. This will be done after giving effect to any deposits
to, or withdrawals from, the Yield Reserve Account to be made on that transfer
date. The interest and other income -- net of investment expenses and losses --
earned on the investments will be retained in the Yield Reserve Account if the
amount on deposit in the Yield Reserve Account is less than the Required Yield
Reserve Amount. If the amount on deposit is equal to or more than the Required
Yield Reserve Amount, it will be credited to the Finance Charge Collections
Ledger to be included in the Available Funds.
On each transfer date for the Controlled Accumulation Period before the
Series Scheduled Redemption Date and on the first transfer date during the
Regulated Amortisation Period or the Rapid Amortisation Period, the receivables
trustee will withdraw an amount from the Yield Reserve Account and deposit it
in the Trustee Collection Account for credit to the Finance Charge Collections
Ledger to be included, in Available Funds. This amount will be equal to the
lesser of:
(i) the available amount on deposit in the Yield Reserve Account; and
(ii) the amount, if any, by which the Covered Amount is greater than the
Principal Funding Investment Proceeds.
The amount of this withdrawal will be reduced to the extent Available Funds
would be available for deposit in the Yield Reserve Account.
The Yield Reserve Account will be terminated following the earliest to occur
of:
(i) the termination of the receivables trust;
(ii) the earlier of the first transfer date after the start of the Regulated
Amortisation Period or the Rapid Amortisation Period; and
(iii) the Series Termination Date.
When the Yield Reserve Account terminates, all amounts still on deposit in
the Yield Reserve Account will be treated as part of the Excess Interest
attributable to the relevant series and will be paid to the MTN issuing entity
and will no longer be the property of the receivables trust.
SERIES CASH RESERVE ACCOUNT
The receivables trustee will establish and maintain for each series a series
cash reserve account at a Qualified Institution -- currently Barclays Bank PLC
at its branch located at 1234 Pavilion Drive, Northampton NN4 7SG -- as a
segregated Trust Account held for the benefit of the MTN issuing entity as the
investor beneficiary and the originator beneficiary.
Each series cash reserve account is called the "SERIES CASH RESERVE
ACCOUNT". The Series Cash Reserve Account will be used to fund shortfalls in
Available Funds available to pay in priority the Class A Required Amount, the
Class B Required Amount, the Class C Required Amount and the Class D Required
Amount; and
No amounts will be deposited into the Series Cash Reserve Account on the
relevant closing date, but if the amount on deposit in a Series Cash Reserve
Account is less than the Required Series Cash Reserve Account Amount, then the
Series Cash Reserve Account will be funded by Available Funds as described
above in item [(18)] under "--Finance Charge Waterfall".
The "REQUIRED SERIES CASH RESERVE ACCOUNT AMOUNT" will be determined monthly
and will be equal to the Series Cash Reserve Account Percentage times:
(i) during the Revolving Period or the Controlled Accumulation Period, the
current Adjusted investor interest, or
119
(ii) during the Regulated Amortisation Period or the Rapid Amortisation
Period, the Adjusted investor interest as of the last day of the
Revolving Period or, if the Controlled Accumulation Period has started,
as of the last day of the Controlled Accumulation Period.
The Required Series Cash Reserve Account Amount, however, will never exceed
the Series Debt Amount.
The "SERIES CASH RESERVE ACCOUNT PERCENTAGE" shall mean, in respect of any
series, the quarterly excess spread percentage specified in the prospectus
supplement/final terms for the related series.
The quarterly excess spread percentage will be calculated on each
Determination Date and will be a percentage equal to the average of the
Portfolio Yields for the three prior months less the average of the Expense
Rates for the same three months.
The quarterly excess spread percentage for the first Determination Date will
be calculated using the Portfolio Yield for the prior month divided by the
Expense Rate for the same month. The quarterly excess spread percentage for the
second Determination Date will be calculated using the average of the Portfolio
Yields for the prior two months divided by the average of the Expense Rates for
the same two months.
All amounts on deposit in the Series Cash Reserve Account on any transfer
date will be invested by the receivables trustee in permitted investments to
the next transfer date. For purposes of the Series Cash Reserve Account,
permitted investments will include investments rated A-2 by Standard & Poor's,
and P-2 by Moody's. This will be done after giving effect to any deposits to,
or withdrawals from, the Series Cash Reserve Account made on that transfer
date. The interest and other investment income -- net of investment expenses
and losses -- earned on the investments will be retained in the Series Cash
Reserve Account if the amount on deposit in the Series Cash Reserve Account is
less than the Required Series Cash Reserve Account Amount. If the amount on
deposit in the Series Cash Reserve Account is at least equal to the Required
Series Cash Reserve Account Amount then it will be paid to the originator
beneficiary.
If any of the Class A Monthly Distribution Amount, the Class B Monthly
Distribution Amount, the Class C Monthly Distribution Amount and the Class D
Monthly Distribution Amount is not fully paid from Available Funds on any
transfer date, the receivables trustee will withdraw from available funds on
deposit in the Series Cash Reserve Account an amount equal to the shortfall and
credit it to the Series Distribution Ledger.
On the Release Date, the lesser of:
(i) the available amount on deposit in the Series Cash Reserve Account, and
(ii) the amount, if any, by which the Series Debt Amount exceeds the investor
interest,
will be withdrawn by the receivables trustee and paid to the MTN issuing entity
as the investor beneficiary and treated as principal paid that is referable to
the investor interest. This withdrawal will be made only after giving effect to
any withdrawal made for the purposes described in the preceding paragraph.
Beginning on the Release Date, if the Investor Default Amount is not fully
funded from Available Funds on any transfer date, the receivables trustee will
withdraw from available funds on deposit in the Series Cash Reserve Account an
amount equal to the shortfall and these funds will be calculated by reference
to the relevant series and treated as a portion of Investor Principal
Collections that is referable to the relevant investor interest and credited to
the Principal Collections Ledger. This withdrawal will be made only after
giving effect to any withdrawal made for the purposes described in the two
preceding paragraphs.
120
Any amount on deposit in the Series Cash Reserve Account that exceeds the
Required Series Cash Reserve Account Amount will be withdrawn by the
receivables trustee and will be treated as part of the Excess Interest
attributable to the relevant series and will be paid to the MTN issuing entity.
Also, on the earlier of:
(i) the termination of the receivables trust; and
(ii) the Series Termination Date,
any amounts still on deposit in either the Series Cash Reserve Account, after
making any deposit or withdrawal described above, will be withdrawn by the
receivables trustee and treated as part of the Excess Interest attributable to
the relevant series and will be paid to the MTN issuing entity.
DISTRIBUTION LEDGERS
The receivables trustee will establish distribution ledgers for each series
in the Trustee Collection Account. On each transfer date it will credit and
debit amounts to these ledgers as described throughout this section of this
base prospectus. All amounts credited to the Series Distribution Ledger will be
regarded as being segregated for the benefit of the MTN issuing entity.
TRUSTEE PAYMENT AMOUNT
The share of the Trustee Payment Amount payable on any transfer date that is
allocable to each series -- called the "INVESTOR TRUSTEE PAYMENT AMOUNT" --
will be calculated as follows:
investor interest for the relevant series
- --------------------------------------------------- x Trustee
Total of investor interests of series for which the Payment Amount
Trustee Payment Amount was incurred
The Investor Trustee Payment Amount for any class will be payable from
amounts available for distribution for that purpose out of Available Funds. See
"--Allocation, Calculation and Distribution of Finance Charge Collections to
the MTN issuing entity" and "-- Finance Charge Waterfall".
The portion of the Trustee Payment Amount not allocated to the relevant
series will be paid from cashflows under the receivables trust allocated to
other outstanding series, and in no event will the relevant series be liable
for these payments.
QUALIFIED INSTITUTIONS
If the bank or banks at which any of the accounts listed below are held
cease to be a Qualified Institution, then the receivables trustee will, within
10 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:
(i) Trustee Collection Account;
(ii) Trustee Acquisition Account;
(iii) Yield Reserve Account;
(iv) Series Cash Reserve Account;
(v) Principal Funding Account; and
(vi) Series Distribution 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 document to another or other
Qualified Institutions.
121
SERIES PAY OUT EVENTS
The events described below are called "SERIES PAY OUT EVENTS":
(1) failure on the part of the originator:
(a) to make any payment or deposit required by the terms of the
Receivables Securitisation Agreement within five Business Days
after the date that the payment or deposit is required to be
made; or
(b) duly to observe or perform any covenants or agreements of the
originator in the Receivables Securitisation Agreement or the
Series Supplement that has a material adverse effect on the
interests of the MTN issuing entity in respect of the relevant
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 originator by the
receivables trustee, or is given to the originator and the
receivables trustee by the investor beneficiary for the
relevant series acting on the instructions of holders of the
relevant medium term note certificate representing together 50
per cent. or more of the total balance of the relevant medium
term note certificate outstanding at that time, and which
unremedied continues during that 60 day period to have a
material adverse effect on the interests of the MTN issuing
entity in respect of the relevant series for that period;
(2) any representation or warranty made by the originator in the
Receivables Securitisation Agreement or the Series Supplement, or
any information contained in a computer file or microfiche list
required to be delivered by the originator under the Receivables
Securitisation Agreement:
(a) 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 originator by the receivables trustee, or is given to the
originator and the receivables trustee by the investor
beneficiary for the relevant series acting on the instructions
of holders of the relevant medium term note certificate
representing together 50 per cent. or more of the total balance
of the relevant medium term note certificate outstanding; and
(b) as a result of which there is a material adverse effect on the
interests of the MTN issuing entity in respect of the relevant
series and which unremedied continues during that 60 day period
to have a material adverse effect for that period;
Notwithstanding the above, no Series Pay-Out Event in relation to (2)
shall be deemed to have occurred if the originator has complied with its
obligations for a breach of warranty as set out in the Receivables
Securitisation Agreement.
(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 relevant closing date the Portfolio Yield is less
than the average Expense Rate for that period;
(4) either:
(a) over any period of thirty consecutive days, the Originator
Interest averaged over that period is less than the Minimum
Originator Interest for that period and the Originator Interest
does not increase on or before the tenth Business Day following
that thirty day period to an amount so that the average of the
Originator Interest as a percentage of the Average Principal
Receivables for such thirty day period, computed by assuming
that the amount of the increase of the Originator Interest by
the last day of the ten Business Day period, as compared to the
Originator Interest on the last day of the thirty day period,
122
would have existed in the receivables trust during each day of
the thirty day period, is at least equal to the Minimum
Originator Interest; or
(b) 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 Business
Day following that last day;
(5) any servicer default or trust cash manager default occurs that
would have a material adverse effect on the MTN issuing entity in
respect of the relevant series;
(6) the investor interest is not reduced to zero on the Series
Scheduled Redemption Date;
(7) the early termination, without replacement, of any of the Swap
Agreements as described in the relevant prospectus supplement/final
terms;
(8) the MTN issuing entity 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 medium term note certificate.
If any event described in paragraphs (1), (2) or (5) occurs then, after the
applicable grace period, either (1) the receivables trustee or (2) the investor
beneficiary may declare that a Series Pay Out Event has occurred if the correct
notice has been given. If the investor beneficiary declares that a Series Pay
Out Event has occurred, it must have acted on the instructions of holders of
the medium term note certificate representing, together, 50 per cent. or more
of the medium term note certificate outstanding at that time. The investor
beneficiary must give a written notice to the originator, 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 originator, the servicer 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 investor beneficiary.
ENTITLEMENT OF MTN ISSUING ENTITY TO SERIES EXCESS INTEREST
Barclays Bank PLC will enter into an "AGREEMENT BETWEEN BENEFICIARIES" with
the MTN issuing entity under which Barclays Bank PLC will transfer its Excess
Interest entitlement attributable to each series to the MTN issuing entity. The
portion of the Excess Interest so transferred will form part of the investor
interest. The MTN issuing entity will pay amounts of Excess Interest
attributable to each series which it receives pursuant to the agreement between
the beneficiaries to the issuing entity as "MTN ISSUING ENTITY ADDITIONAL
INTEREST PAYMENTS".
In return for the transfer of the entitlement to the portion of the Excess
Interest relating to each series the MTN issuing entity will agree to pay
deferred consideration to Barclays Bank PLC. We will refer to this deferred
consideration as "EXCESS ENTITLEMENT CONSIDERATION". The amount of the Excess
Entitlement Consideration in respect of each series will be equal to the amount
of Deferred Subscription Price which the MTN issuing entity receives from the
issuing entity in respect of the medium term note certificate from time to
time.
The issuing entity will apply any MTN issuing entity additional interest
payments received by it in meeting its due and payable obligations. Any sums
remaining following satisfaction of all amounts due and payable by the issuing
entity, which we will refer to as "UNUTILISED EXCESS SPREAD", will be paid to
the MTN issuing entity as Deferred Subscription Price for the medium term note
certificate for as long as the medium term note certificate is in issue.
YOUR PAYMENT FLOWS
On each Distribution Date, the receivables trustee will transfer from
available funds in the Trustee Collection Account the sum of:
(i) the Class A Monthly Distribution Amount;
123
(ii) the Class B Monthly Distribution Amount;
(iii) the Class C Monthly Distribution Amount;
(iv) the Class D Monthly Distribution Amount;
(v) on the Series Termination Date, an amount equal to the principal
calculated as payable in accordance with the Expenses Loan Agreement; and
(vi) the Excess Interest attributable to the relevant series;
and deposit that sum into the Series Distribution Account held by the MTN
issuing entity.
The MTN issuing entity will credit the amount received in respect of the
monthly distribution amounts for each class and the portion of the Excess
Interest attributable to the relevant series to the MTN issuing entity coupon
ledger and will record for calculational purposes the amounts treated as
referable to each class.
The MTN issuing entity will then transfer from the Series Distribution
Account to the extent there are sufficient funds on deposit:
(i) first, the costs and expenses of the MTN issuing entity for the relevant
monthly period;
(ii) second, the lesser of (1) the amounts credited to the MTN issuing entity
coupon ledger, after paying or reserving for the MTN issuing entity's
costs and expenses described in the first bullet point above and (2) the
interest due and payable on the medium term note certificate, excluding
the MTN issuing entity additional interest payments, will be deposited in
the Issuing Entity Account;
(iii) third, an amount equal to the Monthly Loan Expenses Amount plus, on the
Series Termination Date, an amount equal to the principal calculated as
payable in accordance with the Expenses Loan Agreement will be deposited
in the Issuing Entity Account;
(iv) fourth, an amount equal to 1/2 of the Series Extra Amount will be paid to
the MTN issuing entity;
(v) fifth, an amount equal to 1/2 of the Series Extra Amount will be
deposited in the Issuing Entity Account;
(vi) sixth, an amount equal to the MTN issuing entity additional interest
payments will be deposited in the Issuing Entity Account.
Note coupon ledgers will be established for each class of notes in the
Issuing Entity Account.
On each Interest Payment Date the issuing entity will credit:
(i) to the class A notes coupon ledger an amount equal to the lesser of (1)
the amount deposited in the Issuing Entity Account and (2) the sum of the
Class A Monthly Finance Amount, the Class A Deficiency Amount and the
Class A Additional Finance Amount;
(ii) to the class B notes coupon ledger an amount equal to the lesser of, (1)
the amount deposited in the Issuing Entity Account minus the amount
credited to the class A notes coupon ledger and (2) the Class B Monthly
Distribution Amount;
(iii) to the class C notes coupon ledger an amount equal to the lesser of (1)
the amount deposited in the Issuing Entity Account minus the amount
credited to the class A notes coupon ledger and the class B notes coupon
ledger and the Monthly Loan Expenses Amount and (2) the Class C Monthly
Distribution Amount; and
(iv) to the class D notes coupon ledger, if applicable, an amount equal to the
lesser of (1) the amount deposited in the Issuing Entity Account minus
the amount credited to the class A notes coupon ledger, the class B notes
coupon ledger, the class C notes coupon ledger and the Monthly Loan
Expenses Amount and (2) the Class D Monthly Distribution Amount.
124
In addition, the MTN issuing entity will pay amounts equal to any amounts
received from the issuing entity as Deferred Subscription Price to Barclays
Bank PLC pursuant to an Agreement Between Beneficiaries, to the extent not
required by the MTN issuing entity to make other payments on that date.
Before the termination of any Swap Agreements in relation to a particular
series, on each Interest Payment Date, the issuing entity will pay:
(i) first, from MTN issuing entity additional interest, the costs and
expenses of the issuing entity for the relevant monthly period will be
paid or reserved for within the issuing entity;
(ii) second, the costs and expenses of the issuing entity for the relevant
monthly period remaining after the first item will be paid or reserved
for within the issuing entity proportionately to the class A notes', the
class B notes', the class C notes' and the class D notes' share, if any,
for such payment to be used to pay, or reserve for, the costs and
expenses of the issuing entity;
(iii) third, from the class A notes coupon ledger, the lesser of (1) the amount
credited to the class A notes coupon ledger after paying or reserving for
the class A notes' proportionate share of the issuing entity's costs and
(2) other than amounts payable under the twelfth item below, expenses and
the amounts due and payable, if applicable, to a swap counterparty under
a class A swap agreement for the relevant Calculation Period, to the
relevant swap counterparty and upon payment to the issuing entity by the
swap counterparty in exchange therefor, to the holder of a class A note
(or, to the extent that a class A swap agreement has been terminated and
not replaced, the lesser of (i) the spot United States dollar equivalent
of (1) above and (ii) the amount due under a class A note to the holder
of the class A note);
(iv) fourth, from the class B notes coupon ledger, the lesser of (1) the
amount credited to the class B notes coupon ledger after paying or
reserving for the class B notes' proportionate share of the issuing
entity's costs and (2) other than amounts payable under the thirteenth
item below, the amounts due and payable, if applicable, to a swap
counterparty under a class B swap agreement for the relevant Calculation
Period, to the relevant swap counterparty and upon payment to the issuing
entity by the swap counterparty in exchange therefor, to the holder of a
class B note (or, to the extent that a class B swap agreement has been
terminated and not replaced, the lesser of (i) the spot United States
dollar equivalent of (1) above and (ii) the amount due under a Class B
note to the holder of the class B note;
(v) fifth, the lesser of the remaining amount on deposit in the Issuing
Entity Account and an amount equal to the Monthly Loan Expenses Amount
will be paid to the lender under the Expenses Loan Agreement;
(vi) sixth, from the class C notes coupon ledger, the lesser of (1) the amount
credited to the class C notes coupon ledger after paying or reserving for
the class C notes' proportionate share of the issuing entity's costs and
(2) other than amounts payable under the fifteenth item below, the
amounts due and payable, if applicable, to a swap counterparty under a
class C swap agreement in respect of the relevant Calculation Period, to
the relevant swap counterparty and upon payment to the issuing entity by
the swap counterparty in exchange therefor to the holder of a class C
note (or, to the extent a class C swap agreement has been terminated and
not replaced, the lesser of (i) the spot United States dollar equivalent
of (1) above and (ii) the amount due under a Class C note to the holder
of the class C note;
(vii) seventh, from the class D notes coupon ledger, if applicable, the lesser
of (1) the amount credited to the class D notes coupon ledger after
paying or reserving for the class D notes' proportionate share of the
issuing entity's costs and (2) other than amounts payable under the
fifteenth item below, the amounts due and payable, if applicable, to the
swap counterparty under a class D swap agreement in respect of the
relevant Calculation Period, to the relevant swap counterparty and upon
payment to the issuing entity by the swap counterparty in exchange
therefor to the holder of a class D note, if any, (or, to the extent a
class D swap agreement has been terminated and not replaced, the lesser
of (i) the spot United States dollar equivalent of (1) above and (ii) the
amount due under a Class D note to the holder of the class D note;
125
(viii) eighth, the lesser of the remaining amount on deposit in the Issuing
Entity Account and an amount equal to the principal calculated as payable
in accordance with the Expenses Loan Agreement will be paid to the lender
under the Expenses Loan Agreement;
(ix) ninth, the lesser of the remaining amount on deposit in the Issuing
Entity Account and an amount equal to 1/2 of the Series Extra Amount,
will be paid to the issuing entity;
(x) tenth, any amounts due from or required to be provided for by the issuing
entity to meet its liabilities to any taxation authority;
(xi) eleventh, any amounts due to third parties under obligations incurred in
the course of the issuing entity's business;
(xii) twelfth, an amount equal to the lesser of the amount on deposit in the
Issuing Entity Account and the amount needed to cover any shortfall with
respect to the notes caused by the imposition of withholding taxes on
payments made under the medium term note certificate or the Swap
Agreements;
(xiii) thirteenth, the amount equal to any termination payment due and payable
to a swap counterparty pursuant to a class A swap agreement where the
class A swap agreement has been terminated as a result of a default by
the swap counterparty;
(xiv) fourteenth, the amount equal to any termination payment due and payable
to a swap counterparty pursuant to a class B swap agreement where the
class B swap agreement has been terminated as a result of a default by
the swap counterparty;
(xv) fifteenth, the amount equal to any termination payment due and payable to
a swap counterparty pursuant to a class C swap agreement where the class
C swap agreement has been terminated as a result of a default by the swap
counterparty;
(xvi) sixteenth, if applicable, the amount equal to any termination payment due
and payable to the swap counterparty pursuant to a class D swap agreement
where the class D swap agreement has been terminated as a result of a
default by the swap counterparty;
(xvii) seventeenth, any amounts remaining will constitute Deferred Subscription
Price and will be paid to the MTN issuing entity.
Under the terms of each swap agreement, each swap counterparty will pay to
the principal Paying Agent on each Interest Payment Date an amount equal to the
interest on the applicable class of notes, converted, if applicable, into
another currency as set out in the relevant swap agreement, subject to the
deferral of interest as described in "Terms and Conditions of the Notes" and
"The Swap Agreements" section of the relevant prospectus supplement/final
terms.
After the termination of the Swap Agreements, the note trustee will withdraw
the amounts on deposit in the class A notes coupon ledger, the class B notes
coupon ledger, the class C notes coupon ledger and the class D notes coupon
ledger, if any, and convert those amounts into the relevant currency at the
then prevailing spot exchange rate in London, England and distribute these
amounts to the Paying Agent to make payments of interest on the class A notes,
the class B notes, the class C notes and, if applicable, the class D notes,
respectively.
On the earlier of (1) the Series Scheduled Redemption Date and (2) the first
Distribution Date for the Regulated Amortisation Period or the Rapid
Amortisation Period, and on each Distribution Date after that, the receivables
trustee will transfer the following amounts and deposit them into the Series
Distribution Account:
(i) from the Principal Funding Account, the lesser of (1) the amount in the
Principal Funding Account on that date and (2) the Class A Investor
Interest; and
(ii) from the Series Distribution Ledger, the lesser of (1) during the Rapid
Amortisation Period, the amount in the Series Distribution Ledger or,
during the Regulated Amortisation Period, the Controlled Deposit Amount,
and (2) the Class A Investor Interest -- after taking into account the
amount distributed from the Principal Funding Account as described above.
126
On the later to occur of the Class B Principal Commencement Date and the
Series Scheduled Redemption Date and each Distribution Date after, the
receivables trustee will transfer the following amounts and deposit them into
the Series Distribution Account:
(i) from the Principal Funding Account, the lesser of (1) the amount on
deposit in the Principal Funding Account in excess of the Class A
Investor Interest and (2) the Class B Investor Interest; and
(ii) from the Series Distribution Ledger, the lesser of the amount on deposit
in the Series Distribution Ledger and the Class B Investor Interest --
after taking into account the amount distributed from the Principal
Funding Account as described above.
On the later to occur of the Class C Principal Commencement Date and the
Series Scheduled Redemption Date and each Distribution Date after, the
receivables trustee will transfer the following amounts and deposit them into
the Series Distribution Account:
(i) from the Principal Funding Account, the lesser of (1) the amount on
deposit in the Principal Funding Account in excess of the sum of the
Class A Investor Interest and the Class B Investor Interest and (2) the
Class C Investor Interest; and
(ii) from the Series Distribution Ledger, the lesser of the amount on deposit
in the Series Distribution Ledger and the Class C Investor Interest --
after taking into account the amount distributed from the Principal
Funding Account as described above.
If any series provides for class D notes, on the later to occur of the Class
D Principal Commencement Date and the Series Scheduled Redemption Date and each
Distribution Date after, the receivables trustee will transfer the following
amounts and deposit them into the Series Distribution Account:
(i) from the Principal Funding Account, the lesser of (1) the amount on
deposit in the Principal Funding Account in excess of the sum of the
Class A Investor Interest, the Class B Investor Interest and the Class C
Investor Interest and (2) the Class D Investor Interest; and
(ii) from the Series Distribution Ledger, the lesser of the amount on deposit
in the Series Distribution Ledger and the Class D Investor Interest --
after taking into account the amount distributed from the Principal
Funding Account as described above.
The MTN issuing entity will credit the amount received for each class of
investor interest to the MTN issuing entity Principal Ledger.
On the earlier of (1) the Series Scheduled Redemption Date and (2) the first
Distribution Date for the Regulated Amortisation Period or the Rapid
Amortisation Period, and each Distribution Date after, the MTN issuing entity
will transfer for same day value from the Series Distribution Account the
amount in the MTN issuing entity Principal Ledger and deposit it into the
Issuing Entity Account.
The issuing entity will credit each amount received from the MTN issuing
entity Principal Ledger to the appropriate notes principal ledger.
If applicable, before the termination of any Swap Agreements related to a
particular series, on the earlier of (1) the Series Scheduled Redemption Date
and (2) the first Interest Payment Date for the Regulated Amortisation Period
or the Rapid Amortisation Period, and each Interest Payment Date after, the
issuing entity will pay:
(i) from the class A notes principal ledger, an amount equal to the lesser of
(1) the amount in the class A notes principal ledger; and (2) the
sterling equivalent of the principal due on the class A notes, to the
relevant swap counterparty, if any;
(ii) from the class B notes principal ledger, an amount equal to the lesser of
(1) the amount in the class B notes principal ledger and (2) the sterling
equivalent of the principal due on the class B notes, to the relevant
swap counterparty, if any;
127
(iii) from the class C notes principal ledger, an amount equal to the lesser of
(1) the amount in the class C notes principal ledger and (2) the sterling
equivalent of the principal due on the class C notes, to the relevant
swap counterparty, if any; and
(iv) from the class D notes principal ledger, if applicable, an amount equal
to the lesser of (1) the amount in the class D notes principal ledger and
(2) the sterling equivalent of the principal due on the class D notes, to
the relevant swap counterparty, if any.
Such swap counterparty will pay to the principal Paying Agent, in the
relevant currency for such particular series, principal for distribution to the
Noteholders converted into such currency, at the fixed exchange rate.
After the termination of such Swap Agreements, the note trustee will
withdraw the amounts on deposit in the class A notes principal ledger, the
class B notes principal ledger, the class C notes principal ledger and the
class D notes principal ledger and, to the extent necessary, the amounts on
deposit in the Issuing Entity Account representing MTN issuing entity
additional interest payments and convert those amounts into the relevant
currency for such particular series at the then prevailing spot exchange rate
in London, England and distribute those amounts to the Paying Agent to make
payments of principal first on the class A notes, then the class B notes, then
the class C notes and finally the class D notes, as further described in the
relevant Swap Agreements.
128
THE TRUST DEED
The principal agreement governing the notes will be the trust deed. The
trust deed has five primary functions:
(i) it constitutes the notes;
(ii) it sets out the covenants of the issuing entity in relation to the notes;
(iii) it sets out the enforcement and post-enforcement procedures relating to
the notes;
(iv) it contains provisions necessary to comply with the U.S. Trust Indenture
Act of 1939 (the "TRUST INDENTURE ACT"); and
(v) it sets out the appointment, powers and responsibilities of the note
trustee as well as certain limitations on its responsibilities and
liabilities.
Each function is summarised below.
The trust deed sets out the form of the notes. It also sets out the terms
and conditions of the notes, and the conditions for the issue of individual
Note Certificates and/or the cancellation of any notes. It stipulates that the
Paying Agents, the registrar, the transfer agents and the agent bank will be
appointed. The detailed provisions regulating these appointments are contained
in the paying agency and agent bank agreement.
The trust deed also contains covenants made by the issuing entity in favour
of the note trustee and the Noteholders. The main covenants are that the
issuing entity will pay interest and repay principal on each of the notes when
due. Covenants are included to ensure that the issuing entity remains
insolvency remote, and to give the note trustee access to all information and
reports that it may need in order to discharge its responsibilities in relation
to the Noteholders. Some of the covenants also appear in the terms and
conditions of the notes, see "Terms and Conditions of the Notes". The issuing
entity also covenants that it will do all things necessary to maintain the
listing of the notes on the Official List of the United Kingdom Listing
Authority and admission to trading on the London Stock Exchange and to keep in
place a registrar, a transfer agent, a Paying Agent and an agent bank.
The trust deed sets out the general procedures by which the note trustee may
take steps to enforce the security created by the issuing entity in the deed of
charge so that the note trustee can protect the interests of the Noteholders in
accordance with the terms and conditions. The trust deed gives the note trustee
a general discretion to enforce the security, but also provides for meetings of
the Noteholders at which the Noteholders can determine the action taken by the
note trustee in relation to the enforcement of the notes. The trust deed
provides that the class A Noteholders' interests take precedence for so long as
the class A notes are outstanding, after that, the interests of the class B
Noteholders take precedence over the interests of class C Noteholders, until no
more class B notes remain outstanding, and after that, the interests of the
class C Noteholders take precedence over the interests of class D Noteholders,
until no more class C notes remain outstanding. Certain basic terms of each
class of notes may not be amended without the consent of the majority of the
holders of that class of note. This is described further in the "Terms and
Conditions of the Notes".
The trust deed also sets out the priority in which the note trustee will pay
out any monies that it receives under the notes after the security has been
enforced. This is also set out in the deed of charge and the priority of
payments is summarised in the terms and conditions of the notes.
The trust deed also sets out the terms on 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 statutory powers
under English law. 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.
129
Finally, the trust deed includes certain provisions mandated by the 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:
(i) the maintenance of a Noteholder list by the note trustee;
(ii) the provision of reports and other information by the issuing entity to
the note trustee;
(iii) 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;
(iv) the duty of the note trustee to notify all Noteholders of any events of
default of which it has actual knowledge; and
(v) the right of the note trustee to resign at any time by providing the
issuing entity with not less than 30 days prior written notice without
assigning any reason and without being responsible for any costs
occasioned by such retirement, the ability of the issuing entity to
remove the note trustee under certain circumstances and the right of the
Noteholders by Extraordinary Resolution to remove any note trustee (such
removal or resignation shall not become effective until a successor
trustee is appointed); and the obligation of the issuing entity to use
all reasonable endeavours to procure a new note trustee.
The trust deed contains a provision that, if any other provision of the
trust deed limits, qualifies or conflicts with another provision that 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 terms of the trust deed supersede the provisions of the Trustee Act 2000
of England and Wales.
The trust deed is governed by English law.
130
THE NOTES
The issue of the notes will be authorised by a resolution of the board of
directors of the issuing entity passed prior to the relevant closing date. The
notes will be constituted by a trust deed to be dated the relevant closing 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 material terms of the notes are described in this base prospectus.
However, the statements set out in this section with regard to the notes and
the Global Note Certificates representing the notes are subject to the detailed
provisions of the trust deed. The trust deed will include the forms of the
Global Note Certificates and the forms of the individual Note Certificates. A
Paying agency and agent bank agreement between the issuing entity, the note
trustee, The Bank of New York in London as "PRINCIPAL PAYING AGENT", the other
Paying Agents -- together with the Principal Paying Agent, called the "PAYING
AGENTS" -- the transfer agent, the registrar and the agent bank, regulates how
payments will be made on the notes and how determinations and notifications
will be made. It will be dated as of the relevant closing date and the parties
will include, on an ongoing basis, any successor party appointed in accordance
with its terms.
Each class of notes will be represented initially by a Global Note
Certificate in registered form. The notes will initially be offered and sold
pursuant to a registration statement, of which this base prospectus forms a
part, filed with the United States Securities and Exchange Commission. The
Global Note Certificates representing the notes offered by this base prospectus
- -- called the "GLOBAL NOTE CERTIFICATES" -- will be deposited with The Bank of
New York in New York, as the depository for, and registered in the name of,
Cede & Co. as nominee of, The Depository Trust Company, referred to in this
base prospectus as, "DTC". On confirmation from the depository that it holds
the Global Note Certificates, DTC will record Book-Entry Interests in the
beneficial owner's account or the participant account through which the
beneficial owner holds its interests in the notes. These bookentry interests
will represent the beneficial owner's or participant's beneficial interest in
the relevant Global Note Certificates.
The amount of notes represented by each Global Note Certificate is evidenced
by the register maintained for that purpose by the registrar in Jersey, Channel
Islands. The register maintained by the registrar is the sole evidence of
entitlement to the Global Note Certificate. 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 as described under "- Individual Note Certificates", individual
Note Certificates will not be issued.
Beneficial owners may hold their interests in the Global Note Certificates
only through DTC, Clearstream, Luxembourg or Euroclear, as applicable, or
indirectly through organisations that are participants in any of those systems.
Ownership of these beneficial interests in a global Note Certificate will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by DTC, Clearstream, Luxembourg or Euroclear (with respect
to interests of their participants) and the records of their participants (with
respect to interests of persons other than their participants). 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 in Jersey, Channel Islands. Because of this holding
structure of the notes, beneficial owners of notes may look only to DTC,
Clearstream, Luxembourg or Euroclear, as applicable, or their respective
participants for their beneficial entitlement to those notes. The issuing
entity expects that DTC, Clearstream, Luxembourg or Euroclear will take any
action permitted to be taken by a beneficial owner of notes only at the
direction of one or more participants to whose account the interests in a
global Note Certificate is 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.
Beneficial owners 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 and the
paying agency and agent bank agreement. Beneficial owners 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 document, The Bank of New York in
London and at the specified office for the time being of each of the Paying
Agents. Pursuant to its obligations under the Listing Rules made by the United
Kingdom Listing Authority, the issuing entity will maintain a Paying Agent in
the United Kingdom until the date on which the notes are finally redeemed.
131
PAYMENT
Principal and interest payments on the notes will be made via the Paying
Agents to DTC or its nominee, as the registered holder of the offered Global
Note Certificates. 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, Luxembourg 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, Luxembourg or Euroclear participant and not of DTC,
Clearstream, Luxembourg, Euroclear, any Paying Agent, the note trustee or the
issuing entity. None of the issuing entity, the note trustee, any underwriter
nor any Paying Agent will have the responsibility or liability for any aspect
of the records of DTC, Clearstream, Luxembourg or Euroclear relating to or
payments made by DTC, Clearstream, Luxembourg or Euroclear on account of
beneficial interests in the Global Note Certificates or for maintaining,
supervising or reviewing any records of DTC, Clearstream, Luxembourg or
Euroclear relating to those beneficial interests.
CLEARANCE AND SETTLEMENT
The Clearing Systems
DTC. DTC has advised us and the underwriters that it intends to follow the
following procedures:
DTC will act as securities depository for the Global Note Certificates. The
notes represented by the Global Note Certificates will be issued as securities
registered in the name of Cede & Co., DTC's nominee.
DTC has advised us that it is a:
(i) limited-purpose trust company organized under New York Banking Law;
(ii) banking organisation within the meaning of New York Banking Law;
(iii) member of the Federal Revenue System;
(iv) clearing corporation within the meaning of the New York Uniform
Commercial Code; and
(v) clearing agency registered under the provisions of Section 17A of 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 participants include securities
brokers and dealers, banks, trust companies, clearing corporations and other
organisations. Indirect access to 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, Luxembourg system and
participants in the Euroclear system will occur under their rules and operating
procedures.
Purchases of notes under the DTC system must be made by or through DTC
participants, which will receive a credit for the note on DTC's records. The
ownership interest of each actual beneficial owner is in turn to be recorded on
the DTC participants' and indirect participants' records. Beneficial owners
will not receive written confirmation from DTC of their purchase. However,
beneficial owners 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 beneficial
owner entered into the transaction. Transfer of ownership interests in the
offered notes are to be
132
accomplished by entries made on the books of DTC participants acting on behalf
of beneficial owners. Beneficial owners will not receive certificates
representing their ownership interest in notes unless use of the book-entry
system for the notes described in this section is discontinued.
To facilitate subsequent transfers, all Global Note Certificates deposited
with DTC are registered in the name of DTC's nominee, Cede & Co. The deposit of
these Global Note Certificates with DTC and their registration in the name of
Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of
the ultimate beneficial owners of the notes. DTC's records reflect only the
identity of the DTC participants to whose accounts the beneficial interests are
credited, which may or may not be the actual beneficial owners of the notes.
The DTC participants will remain responsible for keeping account of their
holdings on behalf of their customers.
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 beneficial owners will be governed by arrangements
among them and by any statutory or regulatory requirements in effect from time
to time.
Redemption notices for the notes represented by the Global Note Certificates
will be sent to DTC. If less than all of those notes are being redeemed by
investors, DTC's practice is to determine by lot the amount of the interest of
each participant in those notes to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the notes.
Under its usual procedures, DTC will mail an omnibus proxy to the issuing
entity as soon as possible after the Record Date, which assigns the consenting
or voting rights of Cede & Co. to those DTC participants to whose accounts the
Book-Entry Interests are credited on the Record Date, identified in a list
attached to the proxy.
The issuing entity understands that under existing industry practices, when
the issuing entity requests any action of Noteholders or when a beneficial
owner desires to give or take any action which a Noteholder is entitled to give
or take under the trust deed, DTC generally will give or take that action, or
authorize the relevant participants to give or take that action, and those
participants would authorize beneficial owners owning through those
participants to give or take that action or would otherwise act upon the
instructions of beneficial owners through them.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the issuing entity believes to be reliable,
but the issuing entity takes no responsibility for the accuracy thereof.
Clearstream, Luxembourg and Euroclear. Clearstream, Luxembourg and Euroclear
each hold securities for their participating organisations and facilitate the
clearance and settlement of securities transactions between their respective
participants through electronic book-entry changes in accounts of those
participants, thereby eliminating the need for physical movement of securities.
Clearstream, Luxembourg and Euroclear provide various services including
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Clearstream, Luxembourg and
Euroclear also deal with domestic securities markets in several countries
through established depository and custodial relationships. Clearstream,
Luxembourg and Euroclear have established an electronic bridge between their
two systems across which their respective participants may settle trades with
each other. Transactions may be settled in Clearstream, Luxembourg and
Euroclear in any of numerous currencies, including U.S. dollars.
Clearstream, Luxembourg is incorporated under the laws of Luxembourg as a
professional depository. Clearstream, Luxembourg participants are financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies and clearing corporations. Indirect access to
Clearstream, Luxembourg is also available to others, including banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Clearstream, Luxembourg 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. The Euroclear system is operated by Euroclear Bank S.A./N.V., called
the "EUROCLEAR
133
OPERATOR". All operations are conducted by the Euroclear operator. All
Euroclear securities clearance accounts and Euroclear cash accounts are
accounts with the Euroclear operator.
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.
As the holders of Book-Entry Interests, beneficial owners will not have the
right under the trust deed to act on solicitations by the issuing entity for
action by Noteholders. Beneficial owners will only be able to act to the extent
they receive the appropriate proxies to do so from DTC, Clearstream, Luxembourg
or Euroclear or, if applicable, their respective participants. No assurances
are made about these procedures or their adequacy for ensuring timely exercise
of remedies under the trust deed.
No beneficial owner of an interest in a note represented by a global Note
Certificate will be able to transfer that interest except in accordance with
applicable procedures, in addition to those provided for under the trust deed,
of DTC, Clearstream, Luxembourg and Euroclear, as applicable. The laws of some
jurisdictions require that some purchasers of securities take physical delivery
of those securities in definitive form. These laws and limitations may impair
the ability to transfer beneficial interests in a note represented by a global
Note Certificate.
Initial Settlement
The Global Note Certificates will be delivered on the relevant closing date
to The Bank of New York in New York, as depository for DTC. Customary
settlement procedures will be followed for participants of each system on the
relevant closing date. Notes will be credited to investors' securities accounts
on the relevant closing date against payment in same-day funds.
Secondary Trading
Secondary market sales of Book-Entry Interests in notes between DTC
participants will occur in the ordinary way in accordance with DTC rules and
will be settled using the procedures applicable to conventional United States
corporate debt obligations.
Although DTC, Clearstream, Luxembourg and Euroclear have agreed to these
procedures to facilitate transfers of interests in securities among
participants of DTC, Clearstream, Luxembourg and Euroclear, they are not
obliged to perform these procedures. Additionally, these procedures may be
discontinued at any time. None of the issuing entity, any agent, the
underwriters or any affiliate of any of the foregoing, or any person by whom
any of the foregoing is controlled for the purposes of the U.S. Securities Act
of 1933, as amended (the "SECURITIES ACT") will have any responsibility for the
performance by DTC, Clearstream, Luxembourg, Euroclear or their respective
direct or indirect participants or accountholders of their respective
obligations under the rules and procedures governing their operations or for
the sufficiency for any purpose of the arrangements described in this base
prospectus.
INDIVIDUAL NOTE CERTIFICATES
Beneficial owners of notes will only be entitled to receive individual Note
Certificates if the notes become immediately due and repayable by reason of an
Event of Default or DTC notifies the issuing entity that it is unwilling or
unable to hold the Global Note Certificates or is unwilling or unable to
continue as, or has ceased to be, a clearing agency registered under the
Exchange Act and, in each case, the issuing entity cannot appoint a successor
within 90 days of such notification.
134
In no event will individual Note Certificates in bearer form be issued. Any
individual Note Certificate will be issued in registered form in minimum
denominations of $1,000. Any individual Note Certificates will be registered in
that name or those names as the registrar shall be instructed by DTC,
Clearstream, Luxembourg and Euroclear, as applicable. It is expected that these
instructions will be based upon directions received by DTC, Clearstream,
Luxembourg and Euroclear from their participants reflecting the ownership of
Book-Entry Interests. To the extent permitted by law, the issuing entity, the
note trustee and any Paying Agent shall be entitled to treat the person in
whose names any individual Note Certificate is registered as the absolute owner
thereof. The paying agency and agent bank agreement contains provisions
relating to the maintenance by a registrar of a register reflecting ownership
of the notes and other provisions customary for a registered debt security.
Any person receiving individual Note Certificates will not be obligated to
pay or otherwise bear the cost of any transfer tax or governmental charge or
any cost or expense relating to insurance, postage, transportation or any
similar charge in connection with the delivery of such individual Note
Certificates, which will be solely the responsibility of the issuing entity. No
service charge will be made for any registration of transfer or exchange of any
individual Note Certificates.
135
TERMS AND CONDITIONS OF THE NOTES
The following is the text of the terms and conditions which, subject to
completion and as supplemented, amended and/or replaced in accordance with the
provisions of the relevant Trust Deed Supplement and as rejected in the
relevant prospectus supplement/final terms, will be endorsed on each Note
issued under the Programme in definitive form. 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.
(A) Introduction
PROGRAMME
Gracechurch Card Programme Funding Limited (the "ISSUING ENTITY") has
established a medium term note programme (the "PROGRAMME") under which the
maximum aggregate principal amount of notes outstanding at any time may not
exceed [__]. The notes of a particular series (the "NOTES") are constituted and
secured by a trust deed (the "TRUST DEED") between the issuing entity and The
Bank of New York (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.
PROSPECTUS SUPPLEMENT/FINAL TERMS
Notes issued under the Programme are issued in series (each a "SERIES") and
each Series comprises up to four classes of Notes (each a "CLASS"). A Series
will be constituted by class A notes, class B notes, class C notes and, if
applicable, class D notes. Each Class may comprise Sub-Classes of Notes (each a
"SUB-CLASS"), which may be denominated in any of sterling, US dollar or euro.
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 prospectus
supplement/final terms (the "PROSPECTUS SUPPLEMENT/FINAL TERMS"). The terms and
conditions applicable to any particular Series are these terms and conditions
(the "CONDITIONS") as supplemented, amended and/or replaced by the relevant
Trust Deed Supplement and as rejected in the relevant prospectus supplement/
final terms. In the event of any inconsistency between these Conditions and the
Conditions as rejected in the relevant prospectus supplement/final terms, the
Conditions as rejected in the relevant prospectus supplement/final terms shall
prevail.
PAYING AGENCY AND AGENT BANK AGREEMENT
The Notes are the subject of a Paying Agency and Agent Bank Agreement (the
"PAYING AGENCY AND AGENT BANK AGREEMENT") between, among others, the issuing
entity, the Note Trustee, The Bank of New York as Principal Paying Agent (the
"PRINCIPAL PAYING AGENT") and as US Paying Agent (the "US PAYING AGENT"), the
Paying Agents named in the Paying Agency and Agent Bank Agreement (together
with the Principal Paying Agent and the US Paying Agent, the "Paying Agents",
and in each case, the expressions "Principal Paying Agent", "US Paying Agent"
and "PAYING AGENTS" include any successor to such Person in such capacity), the
Agent Bank named in the Paying Agency and Agent Bank Agreement (the "AGENT
BANK" which expression includes any successor to such Person in such capacity),
the Transfer Agents named in the Paying Agency and Agent Bank Agreement (each a
"TRANSFER AGENT", which expression includes any successor to such Person in
such capacity), and the Registrars named in the Paying Agency and Agent Bank
Agreement (each, a "REGISTRAR" which expression 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 prospectus supplement/final terms. Copies
of the relevant prospectus supplement/final terms are available for inspection
by you the holders of the Notes (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 Paying Agency and Agent Bank Agreement and are subject to their detailed
provisions. The holders of the Notes (the
136
"NOTEHOLDERS") are bound by, and are deemed to have notice of, all the
provisions of the Trust Deed, the Trust Deed Supplement, the prospectus
supplement/final terms and the Paying Agency and Agent Bank Agreement
applicable to them. Copies of the Trust Deed, the Trust Deed Supplement, the
prospectus supplement/final terms and the Paying Agency and Agent Bank
Agreement are available for inspection by Noteholders during normal business
hours at the Specified Office of each of the Paying Agents, the initial
Specified Offices of which are set out below.
(1) INTERPRETATION
DEFINITIONS
Unless otherwise defined in these Conditions or the context requires otherwise,
capitalised terms used in these Conditions have the meanings and constructions
ascribed to them in the Master Definitions Schedule which is dated on or about
[__] and signed for the purpose of identification by, amongst others, the
issuing entity and the Note Trustee.
In these Conditions the following expressions have the following meanings:
"ACCOUNT BANK AGREEMENT" means the relevant Series Issuing Entity Distribution
Account Bank Agreement opened in the name of the issuing entity;
"ADDITIONAL BUSINESS CENTRE(S)" means the city or cities specified as such in
the relevant prospectus supplement/final terms;
"ADDITIONAL FINANCIAL CENTRE(S)" means the city or cities specified as such in
the relevant prospectus supplement/final terms;
"ADDITIONAL INTEREST MARGIN" has the meaning given in the relevant prospectus
supplement/final terms (if applicable);
"ADMINISTRATOR" means Bedell Trust Company Limited.
"AMORTISATION PERIOD" means the Regulated Amortisation Period and the Rapid
Amortisation Period or such other period specified as an Amortisation Period in
the relevant prospectus supplement/final terms;
"BANK MANDATE" means any bank mandate in relation to the Issuing Entity Bank
Accounts;
"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 Conditions and the
Trust Deed) to effect the exchange, conversion or substitution of the Notes of
any 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 relevant prospectus
supplement/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;
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 prospectus supplement/final terms and, if so specified in
the relevant prospectus supplement/final terms, may have different meanings in
relation to different dates and, in this context, the following expressions
shall have the following meanings:
(a) "FOLLOWING BUSINESS DAY CONVENTION" means that the Relevant Date shall be
postponed to the first following day that is a Business Day;
137
(b) "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;
(c) "NO ADJUSTMENT" means that the Relevant Date shall not be adjusted in
accordance with any Business Day Convention; and
(d) "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 prospectus supplement/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 prospectus supplement/final
terms, including any successor thereto;
"CLASS" means, in respect of a Series, the Notes of such Series designated in
the relevant prospectus supplement/final terms as being in the same class;
"CLASS A NOTES" means Notes of any Series designated as such in the relevant
prospectus supplement/final terms and, where applicable, a reference to "Class
A Notes" shall be construed mutatis mutandis as a reference to a relevant Sub-
Class thereof;
"CLASS B NOTES" means Notes of any Series designated as such in the relevant
prospectus supplement/final terms and, where applicable, a reference to "Class
B Notes" shall be construed mutatis mutandis as a reference to a relevant Sub-
Class thereof;
"CLASS C NOTES" means Notes of any Series designated as such in the relevant
prospectus supplement/final terms and, where applicable, a reference to "Class
C Notes" shall be construed mutatis mutandis as a reference to a relevant Sub-
Class thereof;
"CLASS D NOTES" means Notes of any Series designated as such in the relevant
prospectus supplement/final terms and, where applicable, a reference to "Class
D Notes" shall be construed mutatis mutandis as a reference to a relevant Sub-
Class thereof;
"CLOSING DATE" has the meaning given in the relevant Series Supplement;
"CONTROLLED ACCUMULATION PERIOD" for any Series has the meaning defined in the
relevant Series Supplement;
"CONTROLLED ACCUMULATION PERIOD COMMENCEMENT DATE" has the meaning given in the
relevant prospectus supplement/final terms;
"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 "DAY COUNT CALCULATION PERIOD"), such Day Count Fraction as
may be specified in these Conditions or the relevant prospectus supplement/
final terms and:
(a) if "ACTUAL/ACTUAL (ICMA)" is so specified, means
(i) where the Day Count Calculation Period is equal to or shorter
than the Regular Period during which it falls, the actual
number of days in the Day Count 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
(ii)where the Day Count Calculation Period is longer than one
Regular Period, the sum of:
138
(A) the actual number of days in such Day Count 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 Day Count 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;
(b) if "ACTUAL/365" or "ACTUAL/ACTUAL (ISDA)" is so specified, means
the actual number of days in the Day Count Calculation Period
divided by 365 (or, if any portion of the Day Count Calculation
Period falls in a leap year, the sum of (A) the actual number of
days in that portion of the Day Count Calculation Period falling in
a leap year divided by 366 and (B) the actual number of days in
that portion of the Day Count Calculation Period falling in a non-
leap year divided by 365);
(c) if "ACTUAL/365/366" is so specified, means the actual number of
days in the Day Count Calculation Period divided by 365 (or, if the
Day Count Calculation Period ends in a leap year, 366);
(d) if "ACTUAL/365 (FIXED)" is so specified, means the actual number
of days in the Day Count Calculation Period divided by 365;
(e) if "ACTUAL/360" is so specified, means the actual number of days in
the Day Count Calculation Period divided by 360; and
(f) if "30/360" is so specified, means the number of days in the Day
Count 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 Day Count Calculation Period is the
31st day of a month but the first day of the Day Count 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 Day Count 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));
"DISTRIBUTION LEDGER" means a ledger within the relevant Series Distribution
Account in relation to a specific Series and Class or Sub-Class of Notes;
"EXPENSES LOAN DRAWING" means a drawing under the expenses loan agreement in
relation to a specific Series to be dated on or about each Issue Date between
the issuing entity and Barclays;
"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 prospectus supplement/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;
"FIRST INTEREST PAYMENT DATE" means the date specified as such in, or
determined in accordance with the provisions of, the relevant prospectus
supplement/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 prospectus
supplement/final terms as either the Payment 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 Payment Date) or the Scheduled
Redemption Date;
"GLOBAL NOTE CERTIFICATE" means a note certificate in global form;
139
"INDEBTEDNESS" means any indebtedness of any Person for money borrowed or
raised including (without limitation) any indebtedness for or in respect
of:
(a) amounts raised by acceptance under any acceptance credit facility;
(b) amounts raised under any note purchase facility;
(c) 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;
(d) 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
(e) amounts raised under any other transaction (including, without
limitation, any forward sale or purchase agreement) having the
commercial effect of a borrowing;
"INDIVIDUAL NOTE CERTIFICATE" means an individual note certificate issued in
the circumstances set out in the Trust Deed;
"INITIAL RATE" has the meaning given in the relevant prospectus supplement/
final terms;
"INTEREST AMOUNT" means, in relation to a Note and an Interest Period, 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
prospectus supplement/final terms;
"INTEREST DETERMINATION DATE" has the meaning given herein, unless otherwise
specified in the relevant prospectus supplement/final terms;
"INTEREST PAYMENT DATE" has the relevant meaning given to it in Condition 6(a),
(b), (c), (d), (e), (f), (g), (h), (i), (j) or (k) (as applicable);
"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 prospectus supplement/final terms) as published by the
International Swaps and Derivatives Association, Inc.;
"ISSUE DATE" has the meaning given in the relevant prospectus supplement/final
terms for a Series;
"ISSUING ENTITY BANK ACCOUNTS" means the relevant Series Distribution Account;
"ISSUING ENTITY 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;
"MARGIN" has the meaning given in the relevant prospectus supplement/final
terms;
"NOTE CERTIFICATE" means a Global Note Certificate or an Individual Note
Certificate;
"NOTICES" means any notices that are required to be given to Noteholders under
these Conditions;
"PARTICIPATING MEMBER STATE" means a member state of the European Communities
which adopts the euro as its lawful currency in accordance with the Treaty;
"PAYMENT BUSINESS DAY" means, unless otherwise specified in the prospectus
supplement/final terms, a Business Day;
"PAYMENT 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
prospectus supplement/final terms;
140
"PAY OUT COMMENCEMENT DATE" shall, in respect of a particular Series, have the
meaning specified in the Series Supplement;
"PAY OUT EVENT" means in respect of a particular Series a "Trust Pay Out Event"
as defined in "The Receivables Trust -- Trust Pay Out Events" as modified in
respect of such Series by the relevant Series Supplement of one of the events
listed in "Securitisation Cashflows -- Series Pay Out Events";
"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;
"PRINCIPAL AMOUNT OUTSTANDING" means, in relation to a Note on any date, the
principal amount 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
by the issuing entity to the Noteholder concerned by virtue of the issuing
entity having received funds in respect thereof from the MTN issuing entity
(whether or not such principal payments have been paid to such Noteholder)
prior to such date in accordance with the terms and conditions of the related
medium term note certificate;
"PRINCIPAL FINANCIAL CENTRE" means, in relation to sterling, London, in
relation to US dollars, New York and in relation to euro, the principal
financial centre of such member state of the European Communities 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 Series Supplement, 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;
"RAPID AMORTISATION TRIGGER EVENT" shall mean in respect of a particular
Series, the "Pay Out Commencement Date" for that Series (as determined under
the relevant Series Supplement) other than a Pay Out Commencement Date
resulting solely from a Regulated Amortisation Trigger Event;
"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
prospectus supplement/final terms or calculated or determined in accordance
with the provisions of these Conditions and/or the relevant prospectus
supplement/final terms;
"REFERENCE BANKS" means the principal London office of each of HSBC, Royal Bank
of Scotland plc, Deutsche Bank AG London and Barclays Bank plc or any duly
appointed substitute reference bank(s) as may be appointed by the issuing
entity to provide the Agent Bank with its offered quotation to leading banks in
the London interbank market;
"REGULAR INTEREST PAYMENT DATES" has the meaning given herein unless otherwise
specified in the relevant prospectus supplement/final terms;
"REGULAR PERIOD" means unless specified otherwise in a Condition
containing a specific provision or the relevant prospectus supplement/
final terms:
(a) 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;
(b) 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
(c) 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
141
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 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 Series Supplement, 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 medium term note
certificate and (iii) the Final Redemption Date of the Notes;
"REGULATED AMORTISATION PERIOD" means, for any Series, for the purposes of
these 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 Series Supplement, 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 medium term note
certificate and (iii) the Final Redemption Date of the Notes;
"REGULATED AMORTISATION TRIGGER EVENT" means any Regulated Amortisation Trigger
Event as set out in the relevant Series Supplement;
"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 10;
"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 the relevant Series;
"REVOLVING PERIOD" means for any Series, for the purposes of these Conditions,
any period which is not a Controlled Accumulation Period or a Regulated
Amortisation Period or a Rapid Amortisation Period for such Series;
"SCHEDULED REDEMPTION DATE" has the meaning given in the relevant prospectus
supplement/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 prospectus supplement/final terms;
"SERIES INVESTOR INTEREST" means the total principal amount of the interest (in
respect of amounts held by the Receivables Trustee on an undivided basis) of an
Investor Beneficiary in respect of a particular Series and reflects the total
amount of the proportional entitlement to Principal Receivables calculated as
available to that Series;
"SERIES DISTRIBUTION ACCOUNT" means the accounts, at Barclays at its offices in
London or with another bank which meets Rating Agency approval, opened pursuant
to the relevant Series Distribution Account Bank Agreement in relation to all
Notes issued by the comprising any of a euro account, a US dollar account and a
sterling account;
"SERIES DISTRIBUTION ACCOUNT BANK AGREEMENT" means the agreement between the
issuing entity and the Account Bank to be entered into in connection with each
series;
"SPECIFIED CURRENCY" has the meaning given in the relevant prospectus
supplement/final terms;
"SPECIFIED DENOMINATION(S)" has the meaning given in the relevant prospectus
supplement/final terms;
142
"SPECIFIED OFFICE" has the meaning given in the Paying Agency and Agent Bank
Agreement;
"SUB-CLASS" has the meaning given in Condition 3(a);
"SUBSIDIARY" means, in relation to any Person (the "FIRST PERSON") at any
particular time, any other Person (the "SECOND PERSON"):
(a) 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
(b) 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 either (i) an event of default
specified in the relevant Swap Agreement and pertaining to the Swap
Counterparty, or (ii) a termination by the issuing entity of the Swap Agreement
as a result of a downgrade occurring with respect to the rating of the Swap
Counterparty which downgrade is not cured by the Swap Counterparty, during the
requisite cure period pursuant to the terms of the Swap Agreement.
"TARGET SETTLEMENT DAY" means any day on which the TARGET System is open;
"TARGET SYSTEM" means the Trans-European Automated Real-Time Gross Settlement
Express Transfer (TARGET) System; and
"TREATY" means the Treaty establishing the European Communities, as amended.
INTERPRETATION
In these Conditions:
(a) any reference to principal shall be deemed to include the
redemption amount, any premium (excluding interest) payable to the
holder in respect of a Note and any other amount in the nature of
principal payable pursuant to these Conditions;
(b) any reference to interest shall be deemed to include any other
amount in the nature of interest payable pursuant to these
Conditions;
(c) references to Notes being "outstanding" shall be construed in
accordance with the Paying Agency and Agent Bank Agreement and the
Trust Deed;
(d) if an expression is stated in Condition 1 to have the meaning given
in the relevant prospectus supplement/final terms, but the relevant
prospectus supplement/final terms gives no such meaning or
specifies that such expression is "not applicable" then such
expression is not applicable to the Notes; and
(e) any reference to the Paying Agency and Agent Bank Agreement and the
Trust Deed shall be construed with respect to any Series of Notes
as a reference to the Paying Agency and Agent Bank 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.
(2) FORM, DENOMINATION AND TITLE
Unless otherwise specified in the relevant Trust Deed Supplement, the
Notes will be issued in registered form ("REGISTERED NOTES"), in a
specified denomination (as specified in the relevant prospectus
supplement/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 such amount as shall be at
least equal to its equivalent in any other currency as at the date of
issue of those Notes as specified in the relevant
143
prospectus supplement/final terms). References in these Conditions to
"Notes" include Registered Notes and all applicable Classes and Sub-
Classes (if any) in the Series.
(a) Register: The relevant Registrar will maintain a register (a
"REGISTER") in Jersey, Channel Islands, 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 maintained by the
relevant Registrar (or, in the case of a joint holding, the first
named thereof) and "Noteholder" shall be construed accordingly.
(b) Title: The 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. A Certificate (each, a "NOTE CERTIFICATE") will be
issued to each Noteholder in respect of its registered holding.
Each Note Certificate will be numbered serially with an identifying
number which will be recorded in the Register maintained by the
relevant Registrar. The register maintained by the Registrar is the
sole evidence of entitlement to the notes.
(c) Transfers: Subject to paragraphs (g) (Closed periods) and (h)
(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 relevant Registrar or any Transfer Agent, together
with such evidence as such Registrar or, as the case may be, such
Transfer Agent may reasonably require to prove the title of the
originator 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 originator.
(d) Tradeable amount: So long as the Notes are represented by a Global
Note Certificate and the relevant clearing system(s) so permit, the
Notes shall be tradeable only in principal amounts of at least
[e]50,000 (or such amount as shall be at least equal to its
equivalent in any other currency as at the date of issue of those
Notes as specified in the relevant prospectus supplement/final
terms) and integral multiples of the tradeable amount as specified
in the relevant prospectus supplement/ final terms.
(e) 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 relevant 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. For the avoidance of doubt, the Transfer
Agents shall not act as agents of the Registrar with respect to
maintenance of the Register. Any records maintained by the Transfer
Agents do not constitute evidence of entitlement to notes (whether
or not such records are consistent with those maintained by the
Registrar itself).
(f) No charge: The transfer of a Note will be effected without charge
by or on behalf of the issuing entity, the relevant Registrar or
any Transfer Agent but against such indemnity as such 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.
144
(g) 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.
(h) Regulations concerning transfers and registration: All transfers of
Notes and entries on the relevant 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
relevant Registrar. A copy of the current regulations will be
mailed (free of charge) by the relevant Registrar to any Noteholder
who requests in writing a copy of such regulations.
(3) STATUS, SECURITY AND PRIORITY OF PAYMENTS
(a) 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 (each a "SUB-CLASS"),
which may be denominated in any of sterling, US dollars or euro. The Sub-
Classes of each Class of Notes will rank pari passu and with no priority or
preference among them.
In these Conditions, "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 while they remain outstanding and
thereafter the Class D 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 aggregate Principal Amount Outstanding of the Most
Senior Class of Notes.
The 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 Trust Deed contains provisions limiting the powers of the Class B
Noteholders or the Class C Noteholders or the Class D Noteholders (if relevant)
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 senior to such Class. Except in certain circumstances,
the 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.
(b) 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 first fixed security of the issuing
entity's right, title and interest in and to the medium term
note certificate to the extent not pledged in (6) below;
(ii)a charge by way of first fixed sub-charge of all of the issuing
entity's right, title and interest in the security interest
created by the MTN issuing entity in favour of the security
trustee in respect of the medium term note certificate;
(iii an assignment by way of first fixed security of the issuing
entity's right, title, interest and benefit in and to the
Issuing Entity Related Documents except the trust deed and
the deed of charge;
145
(iv)an assignment by way of first fixed security of the issuing
entity's right, title, interest and benefit in and to all
monies credited to the Issuing Entity Account or to any bank or
other account in which the issuing entity may at any time have
any right, title, interest or benefit;
(v) a first floating charge over the issuing entity's business and
assets not charged under (1), (2), (3) or (4) above or pledged
under the pledge referred to in (6) below; and
(vi)a pledge over the medium term note certificate pursuant to a
pledge agreement between the issuing entity and the note
trustee.
The security is described in detail in the deed of charge and the pledge
agreement.
The deed of charge sets out how money is distributed between the secured
parties if the security is enforced. The order of priority in respect of
liabilities of a particular series that it sets out is as follows:
(a) in no order of priority between them but in proportion to the respective
amounts due, to pay fees which are due to any receiver appointed under
the deed of charge and all amounts due for legal fees and other costs,
charges, liabilities, expenses, losses, damages, proceedings, claims and
demands which have been incurred by the note trustee under the Issuing
Entity Related Documents and/or in enforcing or perfecting title to the
security together with interest due on these amounts;
(b) towards payment of amounts due and unpaid on the class A notes, to
interest then to principal after, subject to the twelfth item below,
having paid any amounts due to a swap counterparty, if applicable, under
the terms of any class A swap agreement;
(c) towards payment of amounts due and unpaid on the class B notes, to
interest then to principal after, subject to the thirteenth item below,
having paid any amounts due to a swap counterparty, if applicable, under
the terms any class B swap agreement;
(d) towards payment of amounts of interest due and unpaid under the terms of
the Expenses Loan Agreement;
(e) towards payment of amounts due and unpaid on the class C notes, to
interest then to principal after, subject to the fourteenth item below,
having paid any amounts due to a swap counterparty, if applicable under
the terms of any class C swap agreement;
(f) if the series is specified as having class D notes, towards payment of
amounts due and unpaid on the class D notes, to interest then to
principal after, subject to the fifteenth item below, having paid any
amounts due to a swap counterparty, if applicable, under the terms of any
class D swap agreement;
(g) towards payment of amounts of interest due and unpaid under the terms of
the Expenses Loan Agreement;
(h) towards re-payment of amounts of principal then due and unpaid under the
terms of the Expenses Loan Agreement;
(i) towards payment of any sums that the issuing entity must pay to any tax
authority;
(j) towards payment of any sums due to third parties under obligations
incurred in the course of the issuing entity's business;
(k) towards payment of the Deferred Subscription Price in respect of the
medium term note certificate;
(l) towards payment of any dividends due and unpaid to shareholders of the
issuing entity;
146
(m) towards payment of the amount equal to any termination payment due and
payable to a swap counterparty, if applicable, pursuant to a class A swap
agreement, where the class A swap agreement has been terminated as a
result of a default by the swap counterparty;
(n) towards payment of the amount equal to any termination payment due and
payable to a swap counterparty, if applicable, pursuant to a class B swap
agreement where the class B swap agreement has been terminated as a
result of a default by the swap counterparty;
(o) towards payment of the amount equal to any termination payment due and
payable to a swap counterparty, if applicable, pursuant to a class C swap
agreement where the class C swap agreement has been terminated as a
result of a default by the swap counterparty;
(p) if the series is specified as having class D notes, towards payment of
the amount equal to any termination payment due and payable to a swap
counterparty, if applicable pursuant to a class D swap agreement where
the class D swap agreement has been terminated as a result of a default
by the swap counterparty; and
(q) in payment of the balance, if any, to the liquidator of the issuing
entity.
The security becomes enforceable when an Event of Default occurs. These
events are described in condition number 10 below. If an Event of Default
occurs, the redemption of notes will not necessarily be accelerated as
described in condition number 7 below.
(4) SWAP AGREEMENTS
The issuing entity may enter into numerous Swap Agreements, as may be
necessary, in respect of each series, the material terms of which are described
under the heading "The Swap Agreements" in this base prospectus and in the
relevant prospectus supplement/final terms.
(5) NEGATIVE COVENANTS OF THE ISSUING ENTITY
If any note is outstanding, the issuing entity will not, unless it is
permitted by the terms of the Issuing Entity Related Documents or by the
written consent of the note trustee:
(i) create or permit to subsist any mortgage, charge, pledge, lien or other
security interest, including anything which amounts to any of these
things under the laws of any jurisdiction, on the whole or any part of
its present or future business, assets or revenues, including uncalled
capital;
(ii) carry on any business other than relating to the issue of the notes, as
described in this base prospectus; in carrying on that business, the
issuing entity will not engage in any activity or do anything at all
except:
(1) preserve, exercise or enforce any of its rights and perform and
observe its obligations under the notes, the deed of charge, the
paying agency and agent bank agreement, the trust deed, the
Expenses Loan Agreement, each swap agreement, the medium term note
certificate and the related purpose trust, the corporate services
agreement, the underwriting agreement, the bank agreement and any
bank mandate regarding the Issuing Entity Account -- collectively
called the "ISSUING ENTITY RELATED DOCUMENTS".
(2) use, invest or dispose of any of its property or assets in the
manner provided in or contemplated by the Issuing Entity Related
Documents; or
(3) perform any act incidental to or necessary in connection with (1)
or (2) above.
(iii) have any subsidiaries, subsidiary business, business of any other kind,
employees, premises or interests in bank accounts other than the Issuing
Entity Account unless the account is charged to the note trustee on
acceptable terms;
(iv) have any indebtedness, other than indebtedness permitted under the terms
of its articles of association or any of the Issuing Entity Related
Documents;
(v) give any guarantee or indemnity for any obligation of any person;
147
(vi) repurchase any shares of its capital stock or declare or pay any dividend
or other distributions to its shareholders except as otherwise is
permitted by law;
(vii) consolidate with or merge with or into any person or liquidate or
dissolve on a voluntary basis;
(viii) be a member of any group of companies for the purposes of value added
tax;
(ix) waive or consent to the modification or waiver of any of the provisions
of the Issuing Entity Related Documents without the prior written consent
of the note trustee; or
(x) offer to surrender to any company any amounts which are available for
surrender by way of group relief.
(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 a Regulated Amortisation Period or a
Rapid Amortisation Period, the First Interest Payment Date and each
Regular Interest Payment Date (being the third Payment Date
following the preceding Interest Payment Date (unless otherwise
specified in the relevant prospectus supplement/final terms)); and
(ii) during an Amortisation Period or a Rapid Amortisation Period, each
Payment 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 or a Rapid Amortisation Period and ends during the
Regulated 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 a Rapid Amortisation Period or Regulated begins, the
Interest Period shall end on the next Payment 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 the Notes (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 prospectus supplement/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 "INTEREST 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 period as
specified in the relevant prospectus supplement/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
Reuters Screen (as Reuters Screen No. [__] or (aa) such other page
as may replace Reuters Screen No. [__] on that service for the
purposes of displaying such
148
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 Reuters Screen) as at or about
11.00 a.m. (London time) on that date, (the "SCREEN RATE"); if, on
any Interest Determination Date, the Screen Rate is unavailable,
the Agent Bank will:
(ii) if on any Interest Determination Date the Screen Rate is
unavailable, the Agent Bank will:
(A) request each Reference Bank 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 prospectus
supplement/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 Interest
Determination Date in question and in an amount that is
representative for a single transaction in that market at that
time; and
(B) determine the arithmetic mean (rounded upwards to four decimal
places) of such quotations;
(iii) if on any Interest 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 Notes in respect of such Interest
Period.
The Agent Bank will, as soon as practicable after the Interest
Determination Date in relation to each Interest Period, calculate the
amount of interest (the "INTEREST AMOUNT") payable in respect of the
Notes for such Interest Period.
The Interest Amount in respect of the Notes will be calculated by
applying the relevant Rate of Interest for such Interest Period to the
Principal Amount Outstanding of the Notes 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 Provisions: Floating Rate US Dollar Notes
This Condition 6(b) 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 Notes 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 or a Rapid
Amortisation Period, the First Interest Payment Date and each
Regular Interest Payment Date (being the third
149
Payment Date following the preceding Interest Payment Date (unless
otherwise specified in the relevant prospectus supplement/final
terms)); and
(ii) during an Amortisation Period or a Rapid Amortisation Period, each
Payment 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 or a Rapid 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 or a Rapid
Amortisation Period begins, the Interest Period shall end on the next
Payment 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 the Notes 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 interpretation of the LIBOR rates for such
periods as specified in the relevant prospectus supplement/final terms).
LIBOR shall be determined on the following basis:
(i) on each Quotation Date (as defined below) 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 -- called
LIBOR -- for one-month US dollar deposits or three-month US dollar
deposits (in accordance with the relevant Interest Period specified
in the relevant prospectus supplement/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 relevant prospectus supplement/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.
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".
A "QUOTATION DATE" means the second 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:
(A) request each Reference Bank to provide the Agent Bank with its
offered quotation to leading banks in the London interbank
market 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
(B) determine the arithmetic mean rounded upwards to four decimal
places, of those quotations;
150
(iii) if, on any quotation date, the Screen Rate is unavailable and two
or three only 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 Reference Banks
calculated in the manner described in (ii) above;
(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 Quotation
Date in relation to each Interest Period, calculate the amount of
interest (the "INTEREST AMOUNT") payable in respect of the Notes for
such Interest Period. The Interest Amount in respect of the Notes will
be calculated by applying the relevant rate of interest for such Interest
Period to the Principal Amount Outstanding of the Notes during such
Interest Period and multiplying the product by the relevant Day Count
Fraction and rounding the resulting figure to the nearest US dollar 0.01
(half of a cent being rounded upwards).
(c) Specific Provision: Floating Rate Euro Notes
This Condition 6(c) 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 or a Rapid
Amortisation Period, the First Interest Payment Date and each
Regular Interest Payment Date (being the third Payment Date
following the preceding Interest Payment Date (unless otherwise
specified in the relevant prospectus supplement/final terms)); and
(ii) during an Amortisation Period or a Rapid Amortisation Period, each
Payment 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 or a Rapid 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 Payment 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 the Notes (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 prospectus supplement/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 "INTEREST 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
151
will determine the offered quotation to prime banks in the Euro-
Zone 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 euro deposits for such period as specified in the
relevant prospectus supplement/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 Interest
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 Interest Determination Date, the Screen Rate is
unavailable, the Agent Bank will:
(A) request the principal euro-zone office of each of four major
banks in the Euro-Zone interbank market 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 Interest
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
(B) 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 interbank market, selected by the Agent Bank, at
approximately 11.00 a.m. (Brussels time) on the Interest
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 a preceding Interest Period.
The Agent Bank will, as soon as practicable after the Interest
Determination Date in relation to each Interest Period, calculate the
amount of interest (the "INTEREST AMOUNT") payable in respect of the
Notes for such Interest Period. The Interest Amount in respect of the
Notes will be calculated by applying the relevant Rate of Interest for
such Interest Period to the Principal Amount Outstanding of the Notes
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).
(d) Specific Provision: Fixed Rate Sterling Notes (Option 1)
This Condition 6(d) is applicable to the Notes if the Specified
Currency is sterling and the Notes are designated to be fixed rate Notes
(Option 1).
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 or a Rapid
Amortisation Period, the First Interest Payment Date and each
Regular Interest Payment Date (as specified in the relevant
prospectus supplement/final terms); and
152
(ii) during an Amortisation Period or a Rapid Amortisation Period, each
Payment Date.
Each period beginning on (and including) the Interest Commencemen
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 Date is a date falling
prior to the Scheduled Redemption Date, with respect to an Interest
Period that commences during the Revolving Period or the Controlled
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.
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 the Notes 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 earlier of the
Scheduled Redemption Date or the Payment Date of the first month falling
in the Regulated Amortisation Period or the Rapid Amortisation Period.
The amount of the interest payable (the "INTEREST AMOUNT") in
respect of the Notes for any Interest Period during the Initial Period
shall be calculated by applying the Initial Rate to the Principal Amount
Outstanding of the Notes, 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).
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 Payment Date.
During the Redemption Period, each period beginning on, and including, a
Payment Date to but excluding the next Payment Date is called an
"INTEREST PERIOD".
The rate of interest applicable to the Notes which are the subject
of this Condition 6(d) (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
"INTEREST 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 Reuters Screen (as
Reuters Screen No. [__] or (aa) such other page as may replace
Reuters Screen No. [__] 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 Reuters Screen) as
at or about 11.00 a.m. (London time) on that date, (the "SCREEN
RATE");
(ii) if, on any Interest Determination Date, the Screen Rate is
unavailable, the Agent Bank will:
(A) request each Reference Bank 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 Interest
Determination Date in question and in an amount that is
representative for a single transaction in that market at that
time; and
153
(B) determine the arithmetic mean (rounded upwards to four decimal
places) of such quotations;
(iii) if, on any Interest Determination Date the Screen Rate is
unavailable and two or three 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 Notes in respect of such Interest
Period during the Redemption Period will be sum of the Margin in respect
of the Notes and LIBOR last determined in relation to the Notes in
respect of the preceding Interest Period.
During the Redemption Period, the Agent Bank will, as soon as
practicable after the Interest Determination Date in relation to each
Interest Period during the Redemption Period, calculate the amount of
interest (the "INTEREST AMOUNT") payable in respect of the Notes 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 the Notes during such Interest Period and multiplying the
product by the relevant Day Count Fraction, and rounding the resulting
figure to the nearest sterling 0.01 (half of a penny being rounded
upwards).
(e) Specific Provision: Fixed Rate Dollar Notes (Option 1)
This Condition 6(e) is applicable to the Notes if the Specified
Currency is US dollars and the Notes are designated to be fixed rate
Notes (Option 1).
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 US dollars on each Interest Payment
Date.
"INTEREST PAYMENT DATE" means the following dates:
(i) during any period that is not an Amortisation Period or a Rapid
Amortisation Period, the First Interest Payment Date and each
Regular Interest Payment Date (as specified in the relevant
prospectus supplement/final terms); and
(ii) during an Amortisation Period or a Rapid Amortisation Period, each
Payment Date. (ii)
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 Date is a date
falling prior to the Scheduled Redemption Date, with respect to an
Interest Period that commences during the Revolving Period or the
Controlled 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.
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 US
dollars on each Regular Interest Payment Date and the Final Interest
Payment Date during the Initial Period shall be the Scheduled Redemption
Date.
154
The amount of the interest payable (the "INTEREST AMOUNT") in
respect of the Notes for any Interest Period during the Initial Period
shall be calculated by applying the Initial Rate to the Principal Amount
Outstanding of the Notes, multiplying the resulting product by the
relevant Day Count Fraction, and rounding the resultant figure to the
nearest US dollar 0.01 (half of a cent being rounded upwards).
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 Payment Date.
During the Redemption Period, each period beginning on, and including, a
Payment Date to but excluding the next Payment Date is called an
"INTEREST PERIOD".
The rate of interest applicable to the Notes which are the subject
of this Condition 6(e) (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 each Quotation Date during the Redemption Period, the Agent
Bank will determine the offered quotation to leading banks in
the London interbank market -- called LIBOR -- 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.
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".
A "QUOTATION DATE" means the second London Business Day before the
Floating Rate Commencement Date in respect of the first Interest
Period during the Redemption Period and thereafter the second
London Business Day before the first day of an Interest Period. if,
on any Quotation Date, a Screen Rate is unavailable, the Agent Bank
will:
(ii)if, on any Quotation Date, a Screen Rate is unavailable, the
Agent Bank will:
(1) request each Reference Bank 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
(2) determine 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, LIBOR for that Interest Period will be
the arithmetic mean of the quotations provided by those
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
155
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.
During the Redemption Period, the Agent Bank will, as soon as
practicable after the Quotation Date in relation to each Interest
Period during the Redemption Period, calculate the amount of interest
(the "INTEREST AMOUNT") payable in respect of the Notes 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 the Notes during such Interest Period and multiplying the
product by the relevant Day Count Fraction, and rounding the resulting
figure to the nearest US dollar 0.01 (half of a cent being rounded
upwards).
(f) Specific Provision: Fixed Rate Euro Notes (Option 1)
This Condition 6(f) is applicable to the Notes if the Specified
Currency is euro and the Notes are designated to be fixed rate Notes
(Option 1).
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 euro on each Interest Payment Date.
"INTEREST PAYMENT DATE" means the following dates:
(i) during any period that is not an Amortisation Period or a Rapid
Amortisation Period, the First Interest Payment Date and each
Regular Interest Payment Date (as specified in the relevant
prospectus supplement/final terms); and
(ii) during an Amortisation Period or a Rapid Amortisation Period, each
Payment 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 Date is a date
falling prior to the Scheduled Redemption Date, with respect to an
Interest Period that commences during the Revolving Period or the
Controlled 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.
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
euro 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 the Notes for any Interest Period during the Initial Period
shall be calculated by applying the Initial Rate to the Principal Amount
Outstanding of the Notes, multiplying the resulting product by the
relevant Day Count Fraction, and rounding the resultant figure to the
nearest euro 0.01 (half of a cent being rounded upwards).
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 Payment Date.
During the Redemption Period, each period beginning on, and including,
a Payment Date to but excluding the next Payment Date is called an
"INTEREST PERIOD".
The rate of interest applicable to the Notes which are the subject
of this Condition 6(f) (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 EURIBOR for the relevant Interest Period.
156
EURIBOR shall be determined on the following basis:
(i) on the second TARGET Settlement Day before the Floating Rate
Commencement Date in respect of the first Interest Period
during the Redemption Period and thereafter on each "INTEREST
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 interbank market 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 Interest 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 Interest Determination Date, the Screen Rate is
unavailable, the Agent Bank will:
(1) request the principal Euro-Zone office of each of four
major banks in the Euro-Zone interbank market 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
Interest 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 interbank market,
selected by the Agent Bank, at approximately 11.00 a.m.
(Brussels time) on the Interest 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 Redemption Rate applicable to the Notes during such Interest Period
will be the sum of the Margin and EURIBOR last determined in relation to
such Notes in respect of the preceding Interest Period.
During the Redemption Period, the Agent Bank will, as soon as
practicable after the Interest Determination Date in relation to each
Interest Period during the Redemption Period, calculate the amount of
interest (the "INTEREST AMOUNT") payable in respect of the Notes 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 the Notes 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).
(g) Specific Provision: Fixed Rate Sterling Notes (Option 2)
This Condition 6(g) is applicable to the Notes if the Specified
Currency is sterling and the Notes are designated to be fixed rate Notes
(Option 2).
157
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 First Interest Payment Date and
each Regular Interest Payment Date (as specified in the relevant
prospectus supplement/final terms).
Each period beginning on (and including) any Interest Payment Date
and ending on (but excluding) the next Interest Payment Date is herein
called an "INTEREST PERIOD".
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. Interest in respect of
such Note is payable in arrear in sterling on each Regular Interest
Payment Date.
The amount of the interest payable (the "INTEREST AMOUNT") in
respect of the Notes for any Interest Period shall be calculated by
applying the Initial Rate to the Principal Amount Outstanding of the
Notes, multiplying the resulting product by the relevant Day Count
Fraction, and rounding the resultant figure to the nearest sterling 0.01
(half of a pence being rounded upwards).
(h) Specific Provision: Fixed Rate Dollar Notes (Option 2)
This Condition 6(h) is applicable to the Notes if the Specified
Currency is US dollars and the Notes are designated to be fixed rate
Notes (Option 2).
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 US dollars on each Interest Payment
Date.
"INTEREST PAYMENT DATE" means the First Interest Payment Date and
each Regular Interest Payment Date (as specified in the relevant
prospectus supplement/final terms).
Each period beginning on (and including) any Interest Payment Date
and ending on (but excluding) the next Interest Payment Date is herein
called an "INTEREST PERIOD".
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. Interest in respect of
the such Note is payable in arrear in US dollars on each Regular Interest
Payment Date.
The amount of the interest payable (the "INTEREST AMOUNT") in
respect of the Notes for any Interest Period shall be calculated by
applying the Initial Rate to the Principal Amount Outstanding of the
Notes, multiplying the resulting product by the relevant Day Count
Fraction, and rounding the resultant figure to the nearest US dollar 0.01
(half of a cent being rounded upwards).
(i) Specific Provision: Fixed Rate Euro Notes (Option 2)
This Condition 6(i) is applicable to the Notes if the Specified
Currency is euro and the Notes are designated to be fixed rate Notes
(Option 2).
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 euro on each Interest Payment Date.
"INTEREST PAYMENT DATE" means the First Interest Payment Date and
each Regular Interest Payment Date (as specified in the relevant
prospectus supplement/final terms).
Each period beginning on (and including) any Interest Payment Date
and ending on (but excluding) the next Interest Payment Date is herein
called an "INTEREST PERIOD".
158
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. Interest in respect of
the such Note is payable in arrear in euro on each Regular Interest
Payment Date.
The amount of the interest payable (the "INTEREST AMOUNT") in
respect of the Notes for any Interest Period shall be calculated by
applying the Initial Rate to the Principal Amount Outstanding of the
Notes, multiplying the resulting product by the relevant Day Count
Fraction, and rounding the resultant figure to the nearest euro 0.01
(half of a cent being rounded upwards).
(j) Specific Provision: Fixed Rate Dollar Notes (Option 3)
This Condition 6(j) is applicable to the Notes if the Specified
Currency is US dollars and the Notes are designated to be fixed rate
Notes (Option 3).
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 US dollars on each Interest Payment
Date.
"INTEREST PAYMENT DATE" means the following dates:
(i) during any period that is not an Amortisation Period or a Rapid
Amortisation Period, the First Interest Payment Date and each
Regular Interest Payment Date (as specified in the relevant
prospectus supplement/final terms); and
(ii) during an Amortisation Period or a Rapid Amortisation Period, each
Payment 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 Date is a date
falling prior to the Scheduled Redemption Date with respect to an
Interest Period that commences during the Revolving Period or the
Controlled 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.
Subject to the second 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 the such Note during the Initial Period is payable in arrear
in US dollars 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 the Notes for any Interest Period during the Initial Period
shall be calculated by applying the Initial Rate to the Principal Amount
Outstanding of the Notes, multiplying the resulting product by the
relevant Day Count Fraction, and rounding the resultant figure to the
nearest US dollar 0.01 (half of a cent being rounded upwards).
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 on its Principal
Amount Outstanding in accordance with this Condition 6(j), but subject as
provided in the following paragraph, payable in arrear on each Payment
Date. During the Redemption Period, each period beginning on, and
including, a Payment Date to but excluding the next Payment Date is
called an "INTEREST PERIOD". For the avoidance of doubt, a fixed rate of
interest shall be payable throughout the Redemption Period.
During the Redemption Period, the obligations of the Issuing Entity
to pay interest on the Principal Amount Outstanding of the Notes on each
Payment Date shall be satisfied in full by the Issuing Entity paying to
the Principal Paying Agent amounts equal to all interest amounts standing
to the credit of the relevant Distribution Ledger for the Notes on such
Payment Date.
159
Interest will be payable on the relevant Notes by the relevant Paying
Agent in accordance with the provisions of the Agency Agreement.
(k) Specific Provision: Fixed Rate Euro Notes (Option 3)
This Condition 6(k) is applicable to the Notes if the Specified
Currency is euro and the Notes are designated to be fixed rate Notes
(Option 3).
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 euro on each Interest Payment Date.
"INTEREST PAYMENT DATE" means the following dates:
(i) during any period that is not an Amortisation Period or a Rapid
Amortisation Period, the First Interest Payment Date and each
Regular Interest Payment Date (as specified in the relevant
prospectus supplement/final terms); and
(ii) during an Amortisation Period or a Rapid Amortisation Period, each
Payment 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 Date is a date
falling prior to the Scheduled Redemption Date, with respect to an
Interest Period that commences during the Revolving Period or the
Controlled 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.
Subject to the second 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 the such Note during the Initial Period is payable in arrear
in euro 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 the Notes for any Interest Period during the Initial Period
shall be calculated by applying the Initial Rate to the Principal Amount
Outstanding of the Notes, multiplying the resulting product by the
relevant Day Count Fraction, and rounding the resultant figure to the
nearest euro 0.01 (half of a cent being rounded upwards).
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 on its Principal
Amount Outstanding in accordance with this Condition 6(k), but subject as
provided in the following paragraph, payable in arrear on each Payment
Date. During the Redemption Period, each period beginning on, and
including, a Payment Date to but excluding the next Payment Date is
called an "INTEREST PERIOD". For the avoidance of doubt, a fixed rate of
interest shall be payable throughout the Redemption Period.
During the Redemption Period, the obligations of the Issuing Entity
to pay interest on the Principal Amount Outstanding of the Notes on each
Payment Date shall be satisfied in full by the Issuing Entity paying to
the Principal Paying Agent amounts equal to all interest amounts standing
to the credit of the relevant Distribution Ledger for the Notes on such
Payment Date. Interest will be payable on the relevant Notes by the
relevant Paying Agent in accordance with the provisions of the Agency
Agreement.
(l) General Provision: Deferred Interest and Additional Interest
To the extent that the monies which are deposited in the relevant
Series Issuing Entity Distribution Account to the credit of the relevant
Distribution Ledger for a Series by the medium term note certificate on
an Interest Payment Date in accordance with the provisions of the related
160
medium term note certificate are insufficient to pay the full amount of
interest on the relevant Class or Sub-Class of Notes of such Series on
such Interest Payment Date, payment of the interest shortfall ("DEFERRED
INTEREST"), which will be borne by each Note of that class or sub-class
of the relevant Series in a proportion equal to the proportion that the
Principal Amount Outstanding of the Note of the relevant Class or Sub-
Class of such Series bears to the aggregate Principal Amount Outstanding
of the relevant Notes of the relevant Series (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
relevant Series Issuing Entity Distribution Account to the credit of the
Distribution Ledger of the relevant Class or Sub-Class for that Series by
the MTN issuing entity on such Interest Payment Date) 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 which may become a
floating rate Note, the Initial Rate (during the Initial Period) or the
Redemption Rate (during the Redemption Period)) applicable to that Class
or Sub-Class, 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 relevant
Series Issuing Entity Distribution Account to the credit of the
Distribution Ledger of the relevant Class or Sub-Class for such a Series
by the MTN issuing entity 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.
(m) 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, Initial Rate or, as the case
may be, Redemption Rate for the Notes to the sum of the Deferred Interest
and any Additional Interest from prior Interest Periods which remains
unpaid and 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 Issuing Entity Distribution
Account for a Series by the MTN issuing entity 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 any
Class or Sub-Class 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.
(n) General Provision: Interest cease 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 or
default is otherwise made in the payment thereof, in which case it will
continue to bear interest in accordance with this Condition (as well
after as before judgement) 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 17
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).
(o) 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, may determine such
Rate of Interest as it considers fair and reasonable in the circumstances
(having such regard as it thinks to the other provisions of these
Conditions, including paragraph (l) or (n) above (as applicable))
161
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 paragraph (m) above, and each such determination or
calculation shall be deemed to have been made by the Agent Bank.
(p) 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"), 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 notified to the Noteholders in
accordance with Condition 17 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.
(q) General Provision: Notifications etc.
All notifications, opinions, determinations, certificates,
calculations, quotations and decisions given, expressed, made or obtained
for the purposes of this Condition 7, whether by the Agent Bank or the
Note Trustee will (in the absence of wilful default, bad faith or
manifesterror) 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 of them of their
powers, duties and discretions for such purposes.
(7) REDEMPTION AND PURCHASE
The issuing entity is only entitled to redeem the notes as provided in
paragraphs (a), (b), (c) and (d) below.
(a) Scheduled Redemption
Class A notes:
Unless previously purchased and cancelled or unless the Regulated
Amortisation Period or Rapid Amortisation Period has already started, all class
A notes will be redeemed on the relevant Series Scheduled Redemption Date,
unless there is a shortfall between the amount in the Issuing Entity Account
and the total amount payable to the swap counterparty under the class A swap
agreement. If there is such a shortfall, the class A notes will be redeemed
proportionately with the amount in the Issuing Entity Account after being
exchanged under the terms of the class A swap agreement. The Rapid Amortisation
Period will then begin. The payments will be made in no order of preference and
proportionately between all class A notes.
Class B notes:
Unless previously purchased and cancelled or unless the Regulated
Amortisation Period or the Rapid Amortisation Period has already started, the
class B notes will be redeemed on the relevant Series Scheduled Redemption Date
unless there is a shortfall between the amount in the Issuing Entity Account,
after payment of all interest and principal due and payable on the class A
notes, and the amount due and payable to the swap counterparty under the class
B swap agreement. If there is such a shortfall, the class B notes will be
redeemed proportionately with the amount in the Issuing Entity Account after
being exchanged under the terms of the class B swap agreement. The Rapid
Amortisation Period will then begin. The payments will be made, in no order of
preference and proportionately between all class B notes.
162
Class C notes:
Unless previously purchased and cancelled or unless the Regulated
Amortisation Period or the Rapid Amortisation Period has already started, the
class C notes will be redeemed on the Series Scheduled Redemption Date unless
there is a shortfall between the amount in the Issuing Entity Account, after
payment of all interest and principal due and payable on the class A notes and
the class B notes, and the amount due and payable to the swap counterparty
under the class C swap agreement. If there is such a shortfall, the class C
notes will be redeemed proportionately with the amount in the Issuing Entity
Account after being exchanged under the terms of the class C swap agreement.
The Rapid Amortisation Period will then begin. The payments will be made, in no
order of preference and proportionately between all class C notes.
Class D notes:
Unless previously purchased and cancelled or unless the Regulated
Amortisation Period or the Rapid Amortisation Period has already started, the
class D notes will be redeemed on the Series Scheduled Redemption Date unless
there is a shortfall between the amount in the Issuing Entity Account, after
payment of all interest and principal due and payable on the class A notes, the
class B notes and the class C notes, and the amount due and payable to the swap
counterparty under the class D swap agreement. If there is such a shortfall,
the class D notes will be redeemed proportionately with the amount in the
Issuing Entity Account after being exchanged under the terms of the class D
swap agreement. The Rapid Amortisation Period will then begin. The payments
will be made, in no order of preference and proportionately between all class D
notes.
If the Rapid Amortisation Period begins as a result of there being
insufficient funds to repay principal and pay interest on the class A notes,
the class B notes, the class C notes or the class D notes, as described above,
then on each Interest Payment Date after that, first the class A notes, second
the class B notes, third the class C notes and fourth the class D notes, will
be redeemed, to the extent of amounts available to the issuing entity, after
being exchanged under the Swap Agreements, for each note of a class in the
proportion that the principal amount outstanding of that note bears to the
total Principal Amount Outstanding of the notes of that class. This will happen
until the earlier of the time when each class of notes has been paid in full
and the Interest Payment Date.
On each Interest Payment Date, the agent bank will determine for each class
of notes the following:
(i) the amount of principal repayable on each note of that class; and
(ii) the Principal Amount Outstanding of each note of that class on the first
day of the next interest period, after deducting any principal payment
due to be made on each note of that class on that Interest Payment Date.
The amounts and dates determined by the agent bank will be notified to the
issuing entity, the Paying Agents and the note trustee and published in
accordance with condition number 15 as soon as possible after these parties
have been notified.
The issuing entity, the Paying Agents, the note trustee and the Noteholders
will be bound by the determinations properly made as described above and
neither the agent bank nor the note trustee will be liable for the exercise or
non-exercise by it of its powers, duties and discretions for those purposes.
If the agent bank fails to make a determination as described above, the note
trustee will calculate the principal payment or Principal Amount Outstanding as
described above, and each of these determinations or calculations will be
deemed to have been made by the agent bank. If this happens, the determination
will be deemed to have been made by the agent bank.
(b) Mandatory Early Redemption or Mandatory Sale of Class B notes, Class C
notes and Class D notes to the issuing entity
If the Regulated Amortisation Period or the Rapid Amortisation Period begins
before the Series Scheduled Redemption Date, on each subsequent Interest
Payment Date to such event each class A note will be redeemed, then each class
B note will be redeemed, then each class C note will be redeemed and lastly
each class D note will be redeemed, in the proportion that its Principal Amount
Outstanding bears
163
to the total Principal Amount Outstanding of the notes of that class, to the
extent of the amount which is deposited into the Issuing Entity Account towards
redemption of the medium term note certificate -- after the amount has been
exchanged for dollars under the relevant swap agreement or by the note trustee
in the spot exchange market if the relevant swap agreement has been terminated.
This will happen until the earliest of:
(i) the date on which the relevant class of notes has been redeemed in full;
or
(ii) the Interest Payment Date.
In addition, if a Regulatory call event occurs, the issuing entity (or any
assignee or novatee of the Regulatory call option) shall as soon as practicable
following the occurrence of such Regulatory call event by not less than thirty
and not more than sixty days prior notice to the note trustee and Noteholders
call all, but not some only, of the class B notes, the class C notes and the
class D notes, such call to be exercisable on the Interest Payment Date
following any such notice. On such Interest Payment Date following any such
notice, if you are a holder of class B notes, class C notes and/or class D
notes, you are required to sell all of your class B notes, class C notes and/or
class D notes (as applicable) to the issuing entity (or any assignee or novatee
of the Regulatory call option), pursuant to the option granted to the issuing
entity by the note trustee on your behalf. Such notice must confirm that there
will be sufficient funds available to satisfy all obligations in connection
with exercise of such call option. The Regulatory call option is granted to
acquire all, but not some only, of the then outstanding class B notes, class C
notes and class D notes, plus accrued interest (if any) on them, for a purchase
price equal to the then par value of the class B notes, class C notes and class
D notes. This is called the regulatory call option. A regulatory call event
means the delivery to the issuing entity and the note trustee of a notice from
Barclays Bank PLC which states that the regulatory capital treatment for
Barclays Bank PLC applicable in respect of the transaction to which the
issuance of the class B notes, the class C notes and the class D notes, if
applicable, relates has become materially impaired by the implementation of the
reform of the 1988 Capital Accord (in conjunction with proposals put forward by
the Basel Committee on Banking Supervision and to be implemented for credit
institutions pursuant to the EU Capital Adequacy Directive).
(c) Optional Redemption
The issuing entity may by not less than thirty and not more than sixty days
prior notice to the trustee and without the need to obtain the prior consent of
the note trustee or the Noteholders redeem all of the remaining notes on the
next following Interest Payment Date together with all accrued interest,
deferred interest and additional interest if any if the principal balance of
the remaining notes is less than 10 per cent. of their original principal
balance and the note trustee is satisfied that the issuing entity will have
funds available to it to make the required payment on that Interest Payment
Date.
(d) Final Redemption
If the notes have not previously been purchased and cancelled or redeemed in
full as described in this condition number 7, the notes will be finally
redeemed at their then Principal Amount Outstanding on the Interest Payment
Date, together with, in each case, all accrued and unpaid interest, shortfall
and interest on shortfall, if any.
If, on the Final Redemption Date of a Note, the issuing entity is unable to
pay all amounts then due under the relevant Class of Notes having used all
funds available to it in accordance with the applicable issuing entity priority
of payments, the issuing entity's obligation to pay any amount left outstanding
to the Noteholders under the relevant Class of Notes and any claim that the
Noteholders may have against the issuing entity in respect of such outstanding
amounts will be extinguished. If there is a shortfall in interest, principal
and/or fee payments then due and payable pursuant to the terms of a Class of
Note, the issuing entity may not have sufficient funds to make payments on the
relevant Class of Note and the Noteholders may incur a loss on interest,
principal or other amounts which would otherwise be then due and payable on the
relevant Class of Notes.
(8) PAYMENTS
Payments of principal and interest in respect of the notes will be made to
the persons in whose names the Global Note Certificates are registered on the
register at the opening of business in the place of
164
the registrar's specified office on the fifteenth day before the due date for
such payment. Such date is called the "RECORD DATE". Payments will be made by
wire transfer of immediately available funds, if the registered holder has
provided wiring instructions no less than five Business Days prior to the
Record Date, or otherwise by check mailed to the address of the registered
holder as it appears in the register at the opening of business on the Record
Date. In the case of the final redemption, and PROVIDED THAT payment is made in
full, payment will only be made against surrender of those Global Note
Certificates to the registrar.
The note trustee will not be responsible for any deficiency which may arise
because it is liable to tax in respect of the proceeds of any security.
Similar provisions in respect of the indemnification of the security trustee
are set out in the transaction documents.
(9) TAXATION
(a) Principal and Interest
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 present or 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
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 10.
(b) General Tax Treatment of Notes
Each holder of Notes, by acceptance of such Notes, agrees to treat the Notes
as indebtedness of the issuing entity and to report all income (or loss) in
accordance with such treatment, and to take no action inconsistent with such
treatment, except as otherwise required by any taxing authority under
applicable law.
(10) EVENTS OF DEFAULT
If any of the following events occurs and is continuing it is called an
"EVENT OF DEFAULT":
(i) the issuing entity fails to pay any amount of principal on the notes
within 7 days of the date payment is due or fails to pay any amount of
interest on the notes within 15 days of the date payment is due; or
(ii) the issuing entity fails to perform or observe any of its other
obligations under the notes, the trust deed, the deed of charge or the
paying agency and agent bank agreement other than any obligation to pay
any principal or interest on the notes, and, except where that failure is
incapable of remedy, it remains unremedied for 30 days after the note
trustee has given written notice of it to the issuing entity, certifying
that the default is, in its opinion, materially prejudicial to the
interests of the Noteholders; or
(iii) the early termination, without replacement, of any of the Swap Agreements
as described in the relevant prospectus supplement/final terms; or
(iv) a judgment or order for the payment of any amount is given against the
issuing entity and continues unsatisfied and unstayed for a period of 30
days after it is given or, if a later date is specified for payment, from
that date; or
(v) a secured party or encumbrancer takes possession or a receiver,
administrative receiver, administrator, examiner, manager or other
similar officer is appointed, of the whole or any part of
165
the business, assets and revenues of the issuing entity or an enforcement
action is begun for unpaid rent or execution is levied against any of the
assets of the issuing entity; or
(vi) the issuing entity becomes insolvent or is unable to pay its debts as
they fall due; or
(vii) an administrator or liquidator of the issuing entity or the whole or any
part of the business, assets and revenues of the issuing entity is
appointed, or an application for an appointment is made; or
(viii) 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
(ix) the issuing entity stops or threatens to stop carrying on all or any
substantial part of its business; or
(x) an order is made or an effective resolution is passed for the winding up,
liquidation or dissolution of the issuing entity; or
(xi) any action, condition or thing at any time required to be taken,
fulfilled or done in order:
(1) to enable the issuing entity lawfully to enter into, exercise its
rights and perform and comply with its obligations under and in
respect of the notes and the Issuing Entity Related Documents; or
(2) to ensure that those obligations are legal, valid, binding and
enforceable, except as that enforceability may be limited by
applicable bankruptcy, insolvency, moratorium, reorganisation or
other similar laws affecting the enforcement of the rights of
creditors generally and that that enforceability may be limited by
the effect of general principles of equity,
is not taken, fulfilled or done; or
(xii) 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 notes or the
related documents; or
(xiii) all or any substantial part of the business, 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
(xiv) the issuing entity is prevented by any person acting under the authority
of any national, regional or local government from exercising normal
control over all or any substantial part of its business, assets and
revenues.
If an Event of Default occurs then the note trustee may give an Enforcement
Notice or appoint a receiver if it chooses and if it is indemnified to its
satisfaction.
If an Event of Default occurs then the note trustee shall be bound to give
an Enforcement Notice if it is indemnified to its satisfaction and it is:
(i) required to by the swap counterparty;
(ii) required to by holders of at least one-quarter of the aggregate Principal
Amount Outstanding of the class A notes, if any remain outstanding, and
if none remain outstanding, the class B notes, and if none of these
remain outstanding, the class C notes, and if none of these remain
outstanding, the class D notes; or
(iii) directed by an extraordinary resolution, as defined in the trust deed, of
holders of outstanding class A notes, and if there are none, of holders
of outstanding class B notes, and if there are none, of holders of
outstanding class C notes, and if there are none, of holders of
outstanding class D notes.
166
An "ENFORCEMENT NOTICE" is a written notice to the issuing entity declaring
the notes to be immediately due and payable. When it is given, the notes will
become immediately due and payable at their Principal Amount Outstanding
together with accrued interest without further action or formality. Notice of
the receipt of an Enforcement Notice shall be given to the Noteholders as soon
as possible. A declaration that the notes have become immediately due and
payable will not, of itself, accelerate the timing or amount of redemption of
the notes as described in condition number 7.
(11) PRESCRIPTION
Your notes will become void if they are not presented within the time limit
for payment. That time limit is ten years from their due date. If there is a
delay in the Principal Paying Agent receiving the funds, the due date, for the
purposes of this time limit, is the date on which it notifies you, in
accordance with condition number 15, that it has received the relevant payment.
(12) REPLACEMENT OF NOTE CERTIFICATES
If any Note Certificates are lost, stolen, mutilated, defaced or destroyed,
you can replace them at the specified office of the registrar. You will be
required to both pay the expenses of producing a replacement and comply with
the issuing entity's reasonable requests for evidence, security and indemnity.
You must surrender any defaced or mutilated Note Certificates before
replacements will be issued.
(13) NOTE TRUSTEE AND AGENTS
The note trustee is entitled to be indemnified and relieved from
responsibility in certain circumstances and to be paid its costs and expenses
in priority to your claims.
In the exercise of its powers and discretions under the conditions and the
trust deed, the note trustee will consider the interests of the Noteholders as
a class and will not be responsible for any consequence to you individually as
a result of you being connected in any way with a particular territory or
taxing jurisdiction.
In acting under the paying agency and agent bank agreement, and in
connection with your notes, the Paying Agents and the agent bank act only as
agents of the issuing entity and the note trustee and do not assume any
obligations towards or relationship of agency or trust for or with you.
The note trustee and its related companies are entitled to enter into
business transactions with the issuing entity, Barclays Bank PLC or related
companies of either of them without accounting for any profit resulting from
those transactions.
The issuing entity can, at any time, vary or terminate the appointment of any
Paying Agent or the agent bank and can appoint successor or additional Paying
Agents or a successor agent bank. If the issuing entity does this it must
ensure that it maintains the following:
(i) a Principal Paying Agent;
(ii) a Paying Agent in New York and, if and for so long as any of the notes
are listed on the Official List of the United Kingdom Listing Authority
and admitted to trading on the London Stock Exchange, in London;
(iii) an agent bank; and
(iv) a registrar.
Notice of any change in the Paying Agents, agent bank, registrar or their
specified offices shall be promptly given to you in accordance with condition
number 15.
167
(14) MEETINGS OF NOTEHOLDERS, MODIFICATION AND WAIVER, SUBSTITUTION AND
ADDITION AND ENFORCEMENT
Meetings of Noteholders
The Trust Deed contains provisions for convening meetings of Noteholders of
each Class or Sub-Class of any Series to consider matters relating to the Notes
of that 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 Noteholders of the relevant Class or Sub-Class.
The 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 a meeting of a particular Class or Classes or Sub-Class or Sub-
Classes of Notes to vote on an Extraordinary Resolution, other than regarding a
Basic Terms Modification, will be two or more Persons holding or representing a
clear 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-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 a meeting of a particular Class or Classes or Sub-Class or Sub-
Classes of Notes to vote on 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 not less than 75 per cent. of the Principal Amount Outstanding of
the outstanding Notes in the relevant Class or Classes, Sub-Class or Sub-
Classes or, at any adjourned meeting, two or more Persons holding or
representing not less than in the aggregate 331/3 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 Extraordinary 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 Trust Deed shall
168
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 Extraordinary 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, (1) 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 other
related agreement, which is not, in the opinion of the note trustee, materially
prejudicial to the interests of the Noteholders or (2) to any modification of
any of the provisions of the terms and conditions or any of the related
agreements which, in the opinion of the note trustee, is of a formal, minor or
technical nature or is to correct a manifest or proven error. Any of those
modifications, authorisations or waivers will be binding on the Noteholders
and, unless the note trustee agrees otherwise, shall be promptly notified by
the issuing entity to the Noteholders in accordance with condition number 15.
Substitution and Addition
The note trustee may also agree to the substitution of any other body
corporate in place of the issuing entity as principal debtor under the trust
deed and the notes and in the case of such a substitution or addition the note
trustee may agree, without the consent of the Noteholders, to a change of the
law governing the notes and/or the trust deed PROVIDED THAT such change would
not in the opinion of the trustee be materially prejudicial to the interests of
the Noteholders. Any such substitution or addition will be promptly notified to
the Noteholders in accordance with condition number 15.
Enforcement
At any time after the notes 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, including the right to repayment of the
notes together with accrued interest thereon, and shall be bound to do so only
if it has been so directed by an extraordinary resolution of the Noteholders of
the relevant class and it has been indemnified to its satisfaction against all
fees, costs, expenses and other liabilities which it may incur by so acting.
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
(1) the note trustee has become bound to institute proceedings and has failed
to do so within a reasonable time and (2) the failure is continuing.
Notwithstanding the previous sentence and notwithstanding any other provision
of the trust deed, the right of any Noteholder to receive payment of principal
of and interest on its notes on or after the due date for the principal or
interest, or to institute suit for the enforcement of payment of that interest
or principal, may not be impaired or affected without the consent of that
Noteholder.
(15) NOTICES
Any notice to you will be deemed to have been validly given if published in
a leading English language daily newspaper in London -- which is expected to be
the Financial Times - and will be deemed to have been given on the day it is
first published.
Any notice specifying a rate of interest, an interest amount, an amount of
shortfall or interest on it, principal payment or a Principal Amount
Outstanding will be treated as having been duly given if the information
contained in that notice appears on the relevant page of the Reuters Screen or
other similar service approved by the note trustee and notified to you. The
notice will be deemed given when it first appears on the screen. If it cannot
be displayed in this way, it will be published as described in the previous
paragraph.
Copies of all notices given in accordance with these provisions will be sent
to the London Stock Exchange Company Announcements Office, Clearstream,
Luxembourg, Euroclear and DTC.
169
(16) CURRENCY INDEMNITY
You can be indemnified against losses you suffer from the use of an exchange
rate to convert sums recovered by you in litigation against the issuing entity,
which is different to the rate you ordinarily use. You must request this
indemnity in writing from the issuing entity.
This indemnity constitutes a separate and independent obligation of the
issuing entity and shall give rise to a separate and independent cause of
action.
(17) GOVERNING LAW AND JURISDICTION
The Notes, any Swap Agreements and the Trust Deed are governed by English
law and the English courts have non-exclusive jurisdiction in connection with
the notes.
170
THE SWAP AGREEMENTS
GENERAL
The issuing entity may enter into swap agreements, the "SWAP AGREEMENTS",
with one or more swap counterparties for each class or sub-class of notes.
Under separate Swap Agreements for any such class or sub-class requiring a
swap, as the same may be amended and/or supplemented between the issuing entity
and the swap counterparty, the issuing entity will (i) in respect of a foreign
exchange swap agreement pay to the swap counterparty (a) on the relevant
closing date certain initial principal payments in the currency in which such
class or sub-class is denominated and (b) thereafter sterling sums equal to the
payments required under such foreign exchange swap agreement (unless such
payments are deferred) and (c) on or prior to termination of the swap, certain
final principal payments denominated in sterling [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]. The significance percentage of the swap
counterparty in respect of any swap agreement will be determined based on a
reasonable good faith estimate of maximum probable exposure, made in
substantially the same manner as that used in the sponsor's internal risk
management process in respect of similar instruments. The sponsor's internal
risk management process permits the posting of collateral by a counterparty to
mitigate exposure under derivative instruments in certain circumstances
pursuant a credit support annex. Further details regarding the swap
counterparty, the swap agreements and the credit support annex, if any,
relating to a series or class of notes will be set out in the applicable
prospectus supplement/final terms.
171
THE MEDIUM TERM NOTE CERTIFICATE
On each closing date the MTN issuing entity will issue one interest bearing
medium term note certificate to the issuing entity. The medium term note
certificate will mature for redemption on the Series Scheduled Redemption Date.
The Bank of New York in London will act as trustee, depositary, issue agent and
Principal Paying Agent in relation to the medium term note certificate.
The medium term note certificates are issued in bearer form under a security
trust deed and MTN issuing entity cash management agreement. Under the terms of
the security trust deed and MTN issuing entity cash management agreement,
Barclays, acting through its corporate lending division at 1 Churchill Place,
London E14 5HP, was appointed as cash manager for the medium term note
certificates and certificates -- called the "MTN ISSUING ENTITY CASH MANAGER".
The medium term note certificates will be issued on a non-syndicated
continuous basis in series. Previously the MTN issuing entity issued the series
99-1 medium term note certificates (which were repaid in November 2002), the
series 02-1, the series 03-1, the series 03-2 (which were repaid in June 2006),
the series 03-3 (which were repaid in August 2006), the series 04-1 (which were
repaid in February 2007), the series 04-2, the series 05-1, the series 05-2,
the series 05-3 medium term notes, the series 05-4 medium term notes and the
series 06-1 medium term notes. Medium term note certificates issued in respect
of any series may differ as to principal, interest and recourse to security.
Each series must be constituted by a supplemental deed to the security trust
deed and MTN issuing entity cash management agreement.
Each new series may differ from any other series in its principal terms and
the manner, timing and amounts of distributions made to the holders of that
series of medium term note certificates. The MTN issuing entity will not issue
any further medium term note certificates in respect of an existing series
without the prior consent of the holders of the existing medium term note
certificates in that series, unless the further medium term note certificates
are fungible with the existing ones.
The medium term note certificates will be issued at par with a right of the
MTN issuing entity to receive further payments of subscription price as
deferred consideration, which we call "DEFERRED SUBSCRIPTION PRICE". The MTN
issuing entity will pay an amount equal to the initial consideration received
for the medium term note certificates to the receivables trustee for the
purpose of the receivables trust which will permit the MTN issuing entity to
acquire an undivided beneficial interest in the receivables trust. See "The
Receivables Trust" and "Use of Proceeds". The initial principal amount of each
undivided beneficial interest acquired is the initial investor interest for
each class of Investor Certificates. These will be issued to the MTN issuing
entity by the receivables trustee. See "Securitisation Cashflows: General".
The ability of the MTN issuing entity to meet its obligations to pay
principal of and interest on the medium term note certificate will be entirely
dependent on the receipt by it of funds from the relevant Investor Certificates
and Excess Interest attributable to the relevant series.
The MTN issuing entity and the security trustee will have no recourse to
Barclays other than:
(i) against Barclaycard as originator under the Receivables Securitisation
Agreement for any breach of representations and obligations in respect of
the receivables; and
(ii) against Barclaycard as MTN Issuing Entity Cash Manager under the security
trust deed and MTN issuing entity cash management agreement for any
breach of obligations of the MTN Issuing Entity Cash Manager.
On the relevant closing date, the MTN issuing entity will declare an English
law express purpose trust in respect of any funds received by it from each
relevant Investor Certificate and Excess Interest attributable to each series.
This trust will create a right in equity in favour of the holder of the medium
term note certificate to require these funds to be applied in making payments
on the medium term note certificate.
The obligations of the MTN issuing entity and certain other rights of the
MTN issuing entity under each series of medium term note certificates and under
the documents relating to them, will be secured under the security trust deed
and MTN issuing entity cash management agreement, by security interests over
each relevant Investor Certificate. The security for each series will be
granted by the MTN
172
issuing entity 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 Paying Agents, the depository
and any receiver -- are insufficient to make all payments due on the medium
term note certificates of that series, the assets of the MTN issuing entity
securing other series of medium term note certificates will not be available
for payment of that shortfall.
If the security trust deed and MTN issuing entity cash management agreement
is enforced, the monies paid to the MTN issuing entity by the receivables
trustee on each transfer date will be applied:
(i) first to meet payments due to any receiver appointed under it or to the
security trustee and all amounts due for legal fees and other costs,
charges, liabilities, expenses, losses, damages, proceedings, claims and
demands which have been incurred under the Relevant Documents and in
enforcing the security, together with interest due on these amounts; then
(ii) to the extent not met above, to meet the costs, charges, liabilities,
expenses, losses, damages, proceedings, claims and demands of the
security trustee; then
(iii) to meet payments of premium (if any), interest and principal on the
relevant series of medium term note certificates; then
(iv) to meet payments due by the MTN issuing entity to any taxation authority;
then
(v) to meet payment of sums due to third parties under obligations incurred
in the course of the MTN issuing entity's business; then
(vi) to meet payment of any dividends due and unpaid to shareholders of the
MTN issuing entity; then
(vii) to pay all amounts of MTN issuing entity additional interest payments (if
any);
(viii) to pay all amounts of Excess Entitlement Consideration; then
(ix) to pay any balance to the liquidator of the MTN issuing entity.
The interest rate on the medium term note certificate will be determined by
the agent bank in accordance with the medium term note certificate conditions
and as specified in the relevant prospectus supplement/final terms. The margin
for the medium term note certificate will be the percentage specified in the
relevant prospectus supplement/final terms. The interest rate for the first
interest period will be determined on the relevant closing date. Interest in
respect of the medium term note certificate will be payable in arrear in
sterling on each Interest Payment Date. Interest on the medium term note
certificate will be paid monthly on each Distribution Date falling during or
upon the expiry of each quarterly interest period.
Excess Interest received by the MTN issuing entity under the Agreement
Between Beneficiaries will be paid as MTN issuing entity additional interest
payments on the medium term note certificate concurrently with the interest
payments on the medium term note certificate.
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, including MTN issuing entity additional
interest, on the medium term note certificate by any jurisdiction or any
political subdivision or authority in or of any jurisdiction having power to
tax, neither the MTN issuing entity nor the Principal Paying Agent will be
required to make any additional payments to holders of the medium term note
certificate for that withholding or deduction.
The occurrence and continuation of the following events is called an MTN
issuing entity Event of Default:
(i) the MTN issuing entity fails to pay any amount of principal of the medium
term note certificate within 7 days of the due date for its payment or
fails to pay any amount of interest on the medium term note certificate
within 15 days of its due date; or
173
(ii) the MTN issuing entity fails to perform or observe any of its other
obligations under the medium term note certificate, the MTN issuing
entity supplement, or the security trust deed and MTN issuing entity cash
management agreement 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 MTN issuing entity,
certifying that the failure is, in the opinion of the security trustee,
materially prejudicial to the interests of the medium term note
certificate holders; or
(iii) the early termination, without replacement, of any of the Swap Agreements
as described in this base prospectus under "The Swap Agreements: Common
Provisions of the Swap Agreements"; or
(iv) a judgment or order for the payment of any amount is given against the
MTN issuing entity 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
(v) a secured party takes possession or a receiver, administrative receiver,
administrator, examiner, manager or other similar officer is appointed,
of the whole or any part of the undertaking, assets and revenues of the
MTN issuing entity or an enforcement action is begun for unpaid rent or
executions levied against any of the assets of the MTN issuing entity; or
(vi) the MTN issuing entity becomes insolvent or is unable to pay its debts as
they fall due or an administrator or liquidator of the MTN issuing entity
or the whole or any part of its business, assets and revenues is
appointed, or application for any appointment is made, or the MTN 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 ceases or threatens to cease to carry on all
or any substantial part of its business; or
(vii) an order is made or an effective resolution is passed for the winding up,
liquidation or dissolution of the MTN issuing entity; or
(viii) any action, condition or thing at any time required to be taken,
fulfilled or carried out in order to (i) enable the MTN issuing entity
lawfully to enter into, exercise its rights and perform and comply with
its obligations under and in respect of the medium term note certificates
and the documents relating to them or (ii) 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
(ix) it is or will become unlawful for the MTN issuing entity to perform or
comply with any of its obligations under or in respect of the medium term
note certificates or the documents relating to them; or
(x) all or any substantial part of the business, assets and revenues of the
MTN issuing entity is condemned, seized or otherwise appropriated by any
person acting under the authority of any national, regional or local
government or the MTN issuing entity is prevented by any of these people
from exercising normal control over all or any substantial part of its
business assets and revenues,
If an MTN issuing entity Event of Default occurs then the security trustee
will be bound to give an Enforcement Notice if it is indemnified to its
satisfaction and it is:
(i) required to by holders of at least one-quarter of the aggregate principal
amount outstanding of the medium term note certificate; or
(ii) directed by an extraordinary resolution, as defined in the security trust
deed and MTN issuing entity cash management agreement, of holders of the
medium term note certificate.
An MTN issuing entity Enforcement Notice is a written notice to the MTN
issuing entity declaring the medium term note certificate to be immediately due
and payable. When it is given, the medium term note certificate will become
immediately due and payable at its principal amount outstanding together with
accrued interest without further action or formality. Notice of the receipt of
an
174
MTN issuing entity Enforcement Notice shall be given to the holders of the
medium term note certificate as soon as possible. A declaration that the medium
term note certificate has become immediately due and payable will not, of
itself, accelerate the timing or amount of redemption of the medium term note
certificate.
When reference is made to the MTN Issuing Entity Cash Manager it includes
any successor to Barclays as MTN Issuing Entity Cash Manager. The security
trust deed and MTN issuing entity cash management agreement provides that, as
MTN Issuing Entity Cash Manager, Barclays will service and administer the
Distribution Account.
Barclays, and any successor MTN Issuing Entity Cash Manager to the MTN
issuing entity, will be entitled to receive the fee inclusive of VAT, if any,
for acting as MTN Issuing Entity Cash Manager, payable by the MTN issuing
entity from amounts received as MTN Issuing Entity Costs Amounts from the
Distribution Account.
The MTN Issuing Entity Cash Manager may not resign, apart from in certain
circumstances. The resignation of the MTN Issuing Entity Cash Manager shall
only become effective once a replacement has assumed all of the
responsibilities of the MTN Issuing Entity Cash Manager set out in the security
trust deed and MTN issuing entity cash management agreement.
The security trust deed and MTN issuing entity cash management agreement
also outlines the duties, rights and responsibilities of the security trustee.
Specifically these include, but are not limited to:
(i) the duty, if an Insolvency Event occurs, to, by written notice to the
issuing entity declare all of the Notes in respect of all series to be
immediately repayable and the security to become enforceable and to
appoint an administrative receiver;
(ii) the maintenance of proper books of account in respect of its duties as
trustee of the secured property in respect of each series;
(iii) the duty of the security trustee, once the security has become
enforceable, to act promptly to exercise its rights under any bank
mandate relating to an issuing entity account in respect of which it is a
beneficiary of a trust declared over such account to prevent monies
representing security property being paid from such account to an
overdrawn account;
The security trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of any
secured creditor.
The security trustee may resign at any time by providing the issuing entity
with written notice. The secured creditors of all series may at any time by
direction signed by all the secured creditors in writing addressed to the
security trustee remove the security trustee. Upon such removal or resignation,
the issuing entity shall be vested with the power to appoint a successor
security trustee. Such removal or resignation shall not become effective until
a successor trustee is appointed.
The security trust deed and MTN issuing entity cash management agreement is
governed by English law.
175
MATERIAL LEGAL ISSUES
INSOLVENCY ACT 2000
The U.K. Insolvency Act 2000 received Royal Assent on 30 November 2000. The
Act amends Part I of the U.K. Insolvency Act 1986 so that the directors of a
company which meets certain eligibility criteria can take steps to obtain a
moratorium preventing any creditor from enforcing security or taking
proceedings to recover its debt for the period in which the moratorium is in
force.
The relevant provisions of the Act came into force on 1 January 2003.
However, prior to bringing the provisions into force, the Secretary of State of
the United Kingdom amended the eligibility criteria by way of statutory
instrument in such a way that special purpose vehicles such as the issuing
entity and the MTN issuing entity can no longer be considered to be eligible
companies.
THE ENTERPRISE ACT
The U.K. Enterprise Act received Royal Assent on 7 November 2002 and came
into force on 15 September 2003. Pursuant to the U.K. Enterprise Act, unless a
floating charge was created prior to 15 September 2003, or falls within one of
the exemptions contained in the U.K. Enterprise Act, the holder of a qualifying
floating charge will be prohibited from appointing an administrative receiver
to a company and consequently, the ability to prevent the appointment of an
administrator to such company will be lost.
A floating charge that the issuing entity and the MTN issuing entity will
grant pursuant to the terms of the Deed of Charge and the Security Trust Deed
respectively is a qualifying floating charge for the purposes of the U.K.
Enterprise Act and will be entered into after 15 September 2003 and as such,
unless excepted, the trustee will be prevented from appointing an
administrative receiver in respect of the issuing entity and/or the MTN issuing
entity. However, this qualifying floating charge will fall within the "CAPITAL
MARKET ARRANGEMENT" exception to the prohibition of the appointment of an
administrative receiver and accordingly the trustee will still be able to
appoint an administrative receiver pursuant to the Security Trust Deed in
respect of the MTN issuing entity and pursuant to the Deed of Charge in respect
of the issuing entity.
176
MATERIAL LEGAL ASPECTS OF THE RECEIVABLES
CONSUMER CREDIT ACT 1974
A significant number of the credit transactions that occur on a Designated
Account will be for items of credit extended to a cardholder for an amount up
to [GBP]25,000. The Consumer Credit Act applies to these transactions and, in
whole or in part, the credit or charge card agreement establishing each
Designated Account. This has certain consequences for the Designated Accounts,
including the following:
Enforcement of improperly executed or modified card agreements
If a credit or charge card agreement has not been executed or modified in
accordance with the Consumer Credit Act, 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 U.K. credit and charge card issuing
entities, some of Barclaycard's credit and charge card agreements do not comply
in all respects with the Consumer Credit Act or other related legislation. As a
result, these agreements may be unenforceable by Barclaycard against the
cardholders. The originator gives no guarantee that a court order could be
obtained if required. With respect to those credit or charge card agreements
which may not be compliant, such that a court order could not be obtained,
Barclaycard estimates that this would apply to less than [__] per cent. of the
aggregate principal receivables in the Designated Accounts on 30 June 2007.
Barclaycard does not anticipate any material increase in this percentage of
receivables in the Securitised Portfolio. In respect of those accounts that do
not comply with the Consumer Credit Act it will still be possible to collect
payments and seek arrears from cardholders who are falling behind with their
payments. The originator will have no obligation to repay or account to a
cardholder for any payments received by a cardholder because of this non-
compliance with the Consumer Credit Act. However, if losses arise on these
accounts, they will be written off and borne by the investor beneficiary and
originator beneficiary based on their respective interests in the receivables
trust.
Liability for supplier's misrepresentation or breach of contract
Transactions involving the use of a credit or charge card in the United
Kingdom may constitute transactions under debtor-creditor-supplier agreements.
A debtor-creditor-supplier agreement includes an agreement where the creditor,
with knowledge of its purpose, advances funds to finance a purchase by the
debtor of goods or services from a 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 certain debtor-creditor-supplier
agreements 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 the originator for a Designated Account is
called a "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 or charge 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 cardholders that it might otherwise
expect to receive. As a result, the receivables trustee may not receive the
full amount otherwise owed by a cardholder. However, the creditor will not be
liable where the cash price of the item or service supplied concerning the
claim is [GBP]100 or less, or greater than [GBP]30,000.
The receivables trustee has agreed to indemnify the originator for any loss
suffered by the originator arising from any claim under section 75 of the
Consumer Credit Act. This indemnity cannot exceed the original outstanding
principal balance of the affected charges on the Designated Account.
The receivables trustee's indemnity will be payable from Available Funds on
the receivables. Any amounts that Barclaycard recovers from the supplier will
reduce Barclaycard's loss for purposes of the receivables trustee's indemnity.
Barclaycard will have rights of indemnity against suppliers under section 75 of
the Consumer Credit Act. Barclaycard may also be able to charge-back the
transaction in dispute to the supplier under the operating regulations of VISA
or Mastercard.
If Barclaycard's loss for purposes of the receivables trustee's indemnity
exceeds the Available Funds available to satisfy the loss, the amount of the
excess will reduce the Originator Interest accordingly.
177
TRANSFER OF BENEFIT OF RECEIVABLES
The transfer by the originator to the receivables trustee of the benefit of
the receivables is governed by English law and takes effect in equity only.
Notice to the cardholders of the assignment to the receivables trustee would
perfect the legal title of the receivables trustee to the receivables. The
receivables trustee has agreed that notice will not be given to cardholders,
unless the originator's long-term senior unsecured indebtedness as rated by
Moody's or Standard & Poor's were to fall below Baa2, BBB or BBB respectively.
The lack of notice has several legal consequences.
Until notice is given to the cardholders, each cardholder will discharge his
or her obligations under the Designated Account by making payment to the
originator. Notice to cardholders would mean that cardholders should no longer
make payment to the originator as creditor under the card agreement but should
instead make payment to the receivables trustee as assignee of the receivables.
If notice is given, and a cardholder ignores it and makes payment to the
originator for its own account, that cardholder would nevertheless still be
bound to make payment to the receivables trustee. The originator, having
transferred the benefit of the receivables to the receivables trustee, is the
bare trustee of the receivables trustee for the purposes of the collection of
the receivables that are the property of the receivables trust and is
accountable to the receivables trustee accordingly.
Before the insolvency of the originator, until notice is given to a
cardholder who is a depositor or other creditor of the originator, equitable
set-offs may accrue in favour of that cardholder against his or her obligation
to make payments under the card agreement to the 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 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 assignment. Where notice of the assignment is
given to a cardholder, certain rights of set-off may not arise after the date
of the notice.
Under the terms of the Receivables Securitisation Agreement, the originator
represents that each receivable assigned to the receivables trust is an
Eligible Receivable -- unless the receivable is specified as being an
Ineligible Receivable. The eligibility criteria include 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. They also include that each receivable is not, save as
specifically contemplated by any rule of English 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 to the cardholder would perfect the transfer so that the receivables
trustee would take priority over any interest of a later encumbrancer or
transferee of the originator's rights who has no notice of the transfer to the
receivables trustee.
Notice to the cardholder would prevent the card agreement from being amended
by the originator or the cardholder without the consent of the receivables
trustee.
Lack of notice to the cardholder means that, for procedural purposes, the
receivables trustee will have to join the originator as a party to any legal
action that the receivables trustee may want to take against any cardholder.
178
UNITED KINGDOM TAXATION TREATMENT OF THE NOTES
OVERVIEW
United Kingdom legal advisers, Clifford Chance LLP, have filed an opinion
that, subject to finalisation of documents including those which are exhibits
to the registration statement of which this base prospectus forms a part, and
those relating specifically to each Series, 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 with
respect to any given Series before closing of that Series, the following
summary is true in all material respects in relation to the matters expressly
addressed. The summary set out below describes certain United Kingdom
withholding tax, income tax, corporation tax, inheritance tax, capital gains
tax, stamp duty and stamp duty reserve tax consequences of acquiring, holding
and disposing of the notes.
The comments below are based on United Kingdom law and practice at the date
of this base prospectus. They relate only to the position of persons who are
the absolute beneficial owners (for English law purposes) of their notes and
may not apply to certain classes of persons, including dealers and persons who
own the notes as trustee, nominee or otherwise on behalf of another person, but
otherwise will, subject to the following paragraph, apply to United States
holders who beneficially own the notes.
The comments below do not necessarily apply where the interest or any other
income on the notes is deemed for United Kingdom tax purposes to be the income
of a person other than the absolute beneficial owner of the notes in question,
for example where a person ordinarily resident in the United Kingdom transfers
assets to a non-resident company for the purpose of avoiding United Kingdom
tax.
It is suggested that any Noteholders who are in any doubt as to their
position consult their professional advisers.
In the following paragraphs, "HMRC" means HM Revenue and Customs, which is
the central United Kingdom taxing authority.
TAXATION OF U.S. RESIDENTS
Subject to the comments below, under the terms of the Convention of 24 July
2001 between the United Kingdom and the United States of America, called the
"CONVENTION", a person who is a U.S. resident for the purposes of the
Convention, called a "U.S. NOTEHOLDER", will not be subject to United Kingdom
tax on any coupon beneficially owned by him, unless he carries on business in
the United Kingdom through a permanent establishment situated in the United
Kingdom, or performs in the United Kingdom independent personal services from a
fixed base situated therein, and the notes are effectively connected with such
permanent establishment or fixed base, or in certain other circumstances
specified in the Convention where relief is not available. However, this
general position is subject to the application of extensive anti-avoidance
provisions which may affect the ability of U.S. Noteholders to claim relief
under the Convention.
TAXATION OF INTEREST PAID -- UNITED KINGDOM WITHHOLDING TAX
The notes will constitute "QUOTED EUROBONDS" in those cases where they are
listed on a recognised stock exchange and so long as they continue to be so
listed. (Not all Series issued pursuant to this base prospectus will
necessarily be so listed). Securities will be treated as listed on a recognised
stock exchange if (and only if) they are admitted to trading on that exchange
and either they are included in the United Kingdom official list (within the
meaning of Part 6 of the Financial Services and Markets Act 2000) in accordance
with the provisions of that part or they are officially listed, in accordance
with provisions corresponding to those generally applicable in European
Economic Area states, in a country outside the United Kingdom in which there is
a recognised stock exchange. The London Stock Exchange has been designated as a
recognised Stock Exchange for these purposes. Whilst the notes are and continue
to be Quoted Eurobonds, payments of interest on the notes may be made without
deduction or withholding for or on account of United Kingdom income tax
irrespective of whether the notes are in global or definitive form.
In all cases falling outside the exemption described above, interest on the
notes may fall to be paid under deduction of United Kingdom income tax at the
savings rate, currently 20 per cent., subject to
179
such relief as may be available under the provisions of any applicable double
taxation treaty or to any other exemption which may apply.
PROVISION OF INFORMATION
Holders 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, called a "PAYING AGENT",
or is received by any person in the United Kingdom acting on behalf of the
relevant holder, other than solely by clearing or arranging the clearing of a
cheque, called a "COLLECTING AGENT", then the issuing entity, the Paying Agent
or the Collecting Agent as the case may be, may in certain circumstances be
required to supply to HMRC details of the payment and certain details relating
to the holder, including the holder'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
holder is resident in the United Kingdom for United Kingdom taxation purposes.
The details provided to HMRC, in certain cases, may be passed by HMRC to the
tax authorities of certain other jurisdictions.
With effect from 6 April 2008 the provisions referred to above may also
apply, in certain circumstances, to payments made on redemption of any notes
where the amount payable on redemption is greater than the issue price of the
Notes.
EUROPEAN UNION DIRECTIVE ON THE TAXATION OF SAVINGS INCOME
Under EU Council Directive 2003/48/EC on the taxation of savings income (the
"EU SAVINGS TAX DIRECTIVE"), each Member State is required 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 or certain limited types of entity
established 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%. The
transitional period is to terminate at the end of the first full fiscal year
following agreement by certain non-EU countries to the exchange of information
relating to such payments.
A number of non-EU countries, and certain dependent or associated
territories of certain Member States (including Jersey), have also 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 or certain
limited types of entity established 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 or certain limited types
of entity established in one of those territories.
OTHER RULES RELATING TO UNITED KINGDOM WITHHOLDING TAX
1. Where interest has been paid under deduction of United Kingdom income
tax, holders who are not resident in the United Kingdom may be able to
recover all or part of the tax deducted if there is an appropriate
provision in any applicable double taxation treaty.
2. 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.
3. The above description of the United Kingdom withholding tax position
assumes that there will be no substitution of the issuing entity and does
not consider the tax consequences of any such substitution.
4. The notes may be issued at an issue price of less than 100 per cent. of
their principal amount. Any discount element on any of these 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.
180
TAXATION OF INTEREST PAID -- FURTHER UNITED KINGDOM INCOME TAX ISSUES
Interest on the notes may be subject to United Kingdom income tax even where
paid without withholding. However, interest received without deduction or
withholding for or on account of United Kingdom income tax will not be
chargeable to United Kingdom income tax in the hands of a Noteholder (other
than certain trustees) who is not resident for tax purposes in the United
Kingdom unless that Noteholder carries on a trade, profession or vocation in
the United Kingdom through a branch or agency (in the case of an individual) or
a permanent establishment (in the case of a company) in the United Kingdom in
connection with which the interest is received or to which the notes are
attributable. There are exemptions for interest received by certain categories
of agent (such as some brokers and investment managers). The provisions of an
applicable double taxation treaty may also be relevant for such Noteholders.
OWNERSHIP AND DISPOSAL, INCLUDING REDEMPTION, OF THE NOTES BY UNITED KINGDOM
TAX PAYERS
1. CORPORATE NOTEHOLDERS
Noteholders which are entities within the charge to United Kingdom
corporation tax -- other than investment trusts, venture capital trusts,
authorised unit trusts and open ended investment companies and certain
securitisation companies, as to which see below -- will normally be taxed on
their returns from the notes, including interest and returns attributable to
movements in value, and foreign exchange gains and losses, whether income or
capital in nature, as income, which is calculated on the basis of the statutory
accounts except when otherwise required by tax legislation. Relief may be
available for related expenses on a similar basis.
Noteholders that are authorised investment trusts, capital trusts, unit
trusts or open ended investment companies will be subject to the same taxation
treatment in respect of the notes as other Noteholders that are within the
charge to United Kingdom corporation tax, other than, in each case, with
respect to profits, gains or losses which are treated for tax purposes as being
of a capital nature in respect of these notes. A Noteholder which is a
securitisation company may in certain circumstances be treated as having
taxable profits limited to any cash margin that it retains.
2. OTHER NOTEHOLDERS
A Noteholder who is not within the charge to United Kingdom corporation tax
but who is resident or ordinarily resident in the United Kingdom or who carries
on a trade, profession or vocation in the United Kingdom through a branch or
agency to which the notes are attributable may be treated as realising a
chargeable gain or an allowable loss for capital gains tax purposes on a
disposal -- including redemption -- of the notes. In calculating any gain or
loss on disposal of a note, sterling values are compared at acquisition and
disposal. Accordingly, a taxable profit can arise even where a non-sterling
amount received on a disposal is less than or the same as an amount in the same
currency which is paid for or in respect of the acquisition of the note. In
addition, on disposal of the notes by a Noteholder, an amount which is treated
as reflecting interest to which the Noteholder is treated as having become
entitled since the last Interest Payment Date may be chargeable to tax as
income under the rules known as the Accrued Income Scheme contained in Chapter
2 of Part 12 of the Income Tax Act 2007, if that Noteholder is not a dealer in
securities and is not within the charge to United Kingdom corporation tax but
is resident or ordinarily resident in the United Kingdom or carries on a trade
in the United Kingdom through a branch or agency to which the notes are
attributable. There are provisions to prevent any particular gain or loss from
being charged or relieved at the same time under the provisions of the Taxation
of Chargeable Gains Act 1992 and also under the provisions of the "accrued
income scheme" described in this paragraph.
For further information in this regard, Noteholders should seek their own
professional advice. HMRC issued a consultation paper inviting views on various
options for change to the Accrued Income Scheme and their response is currently
awaited to views received. However, this paper does not alter the rules
described above.
181
3. UNITED KINGDOM INHERITANCE TAX
Where a note is held by an individual there may be a charge to United
Kingdom inheritance tax on the individual's death or on certain transfers of
the note, including gifts to some settlements and gifts made within seven years
of the death of the individual.
These provisions are subject to any relief provided by any applicable double
tax convention relating to estate and gift taxes.
4. STAMP DUTY AND STAMP DUTY RESERVE TAX
No United Kingdom stamp duty or stamp duty reserve tax is payable on the
issue or transfer of a note PROVIDED THAT the note does not at any time carry
(1) a right to interest, the amount of which exceeds a reasonable commercial
return on the nominal amount of the capital of the note or (2) a right on
repayment to an amount which exceeds the nominal amount of the capital of the
note and is not reasonably comparable with what is generally repayable, in
respect of a similar nominal amount of capital, under the terms of issue of
loan capital listed on the Official List of the United Kingdom Listing
Authority and admitted to trading on the London Stock Exchange.
5. TAXATION OF THE MTN ISSUING ENTITY AND THE ISSUING ENTITY
The MTN issuing entity and the issuing entity will be liable to UK
corporation tax at the maximum rate of currently 30 per cent (proposed to be
reduced to 28% with effect from April 2008). So long as the MTN issuing entity
and the issuing entity respectively are within the application of the Taxation
of Securitisation Companies Regulations 2006 (the "REGULATIONS"), their taxable
profits will in each case be limited to amounts their taxable profit will in
each case be the greater of [GBP]1200 per annum or the aggregate of [GBP]600
per series outstanding during the course of the year.
In order to fall within the application of the Regulations, a company must
fulfil certain conditions, including ones which relate to its ongoing asset
holdings (that the assets should be "financial assets" according to applicable
accounting practice) and its ongoing cash flow management. These conditions are
designed to ensure that the Regulations will apply to a company which is
genuinely established and operated as a securitisation vehicle in a
securitisation of money debts. So long as the cash flows of the MTN issuing
entity and the issuing entity continue to be managed in the same way as they
have been to date, they can be expected as a factual matter to meet the
relevant conditions.
The Regulations have only been in force since the beginning of 2007 and the
practices of the UK tax authorities in implementing the Regulations are still
evolving. However, the UK tax authorities have worked very closely with the
securitisation industry on developing the Regulations and related practices,
and the Regulations are designed to allow genuine securitisation vehicle
companies to be taxed on a basis which is compatible with market and rating
requirements.
6. TAXATION OF RECEIVABLES TRUSTEE
The receivables trustee will have no United Kingdom tax liabilities, and
accordingly, the receivables trustee will have no liability to United Kingdom
tax in relation to amounts which it receives on behalf of the MTN issuing
entity or amounts which it is obliged to pay the MTN issuing entity.
TAXATION OF ISSUING ENTITY AND RECEIVABLES TRUSTEE IN JERSEY
The following summary of the anticipated tax treatment in Jersey of the
issuing entity and Receives Trustee is based on Jersey taxation law and
practice in force at the date of this document and does not constitute legal or
tax advice. Prospective investors should consult their professional advisers on
the implications of subscribing for, buying, holding, selling, redeeming or
disposing of notes under the laws of the jurisdictions in which they may be
liable to taxation. Prospective investors should be aware that tax rules and
practice and their interpretation may change.
The issuing entity and the Receivables Trustee have each been granted exempt
company status within the meaning of Article 123A of the Income Tax (Jersey)
Law 1961, as amended for the current calendar year. The effect of such special
status is that the issuing entity and the Receivables Trustee are treated as a
non-resident company for the purposes of Jersey tax laws and are therefore
exempt from Jersey income tax on their profits arising outside Jersey (and, by
concession, on bank deposit interest
182
arising in Jersey) and from any obligation to withhold Jersey income tax from
any interest or dividend payments made by them. Such status is applied for
on an annual basis (together with payment of the required charge, currently
[GBP]600). The retention of exempt company status is conditional upon the
Comptroller of Income Tax in Jersey being satisfied that no Jersey resident has
a beneficial interest in the issuing entity or Receivables Trustee, except as
permitted by concessions granted by the Comptroller of Income Tax.
As the issuing entity is an exempt company, payments in respect of the notes
will not be subject to taxation in Jersey, no withholding will be required for
or on account of Jersey income tax on such payments to any holder of a note and
gains derived from the sale of notes will not be subject to Jersey income tax,
in each case in the hands of persons not resident for income tax purposes in
Jersey. As at the date of this Prospectus, Jersey has no capital gains tax and
no inheritance tax or gift tax.
No stamp duty or similar taxes are payable in Jersey in connection with the
issue, redemption or sale of the notes.
Jersey is not subject to the EU Savings Tax Directive. However, in keeping
with Jersey's policy of constructive international engagement, the States of
Jersey has introduced a retention tax system in respect of payments of
interest, or other similar income, made to an individual beneficial owner
resident in an EU Member State by a paying agent situate in Jersey (the terms
"beneficial owner" and "paying agent" are defined in the EU Savings Tax
Directive). The retention tax system will apply for a transitional period prior
to the implementation of a system of automatic communication to EU Member
States of information regarding such payments. The transitional period will end
only after all EU Member States apply automatic exchange of information and the
EU Member States unanimously agree that the United States of America has
committed to exchange of information upon request. 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.
Under the implementation of the retention tax system in Jersey neither the
issuing entity nor the Receivables Trustee will be obliged to levy retention
tax in respect of interest payments made by it to a paying agent.
EUROPEAN UNION CODE OF CONDUCT ON BUSINESS TAXATION
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 beginning of
2009 with a general zero rate of corporate tax.
183
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
OVERVIEW
The following summary describes the material U.S. federal income tax
considerations of acquiring, holding and disposing of the notes that are
offered for sale in the United States (the "U.S. OFFERED NOTES"). This summary
has been prepared and reviewed by Clifford Chance U.S. LLP -- called "U.S. TAX
COUNSEL".
This summary does not discuss all aspects of U.S. federal tax law. In
particular, except as specifically indicated in this summary, it addresses only
purchasers in the original offering that purchase U.S. offered notes at their
original issue price and hold the U.S. offered notes as "CAPITAL ASSETS" within
the meaning of Section 1221 of the U.S. Internal Revenue Code of 1986, called
the "CODE". It does not address special U.S. federal income tax considerations
that may be important to particular investors in light of their individual
investment circumstances or to certain types of investors subject to special
tax rules -- e.g. financial institutions, insurance companies, regulated
investment companies, tax-exempt institutions, dealers in securities or
currencies, securities traders that elect mark-to-market tax accounting,
certain U.S. expatriates or investors holding the U.S. offered notes as part of
a conversion transaction, hedge, integrated transaction, constructive sale
transaction or as a position in a straddle for tax purposes, or persons whose
functional currency, as defined in Code Section 985, is not the U.S. dollar.
Further, this discussion does not address alternative minimum tax consequences
or any tax considerations to holders of interests in a Noteholder. In addition,
this summary does not discuss any foreign, state, local or other tax
considerations. This summary is based on the Code, and administrative and
judicial authorities, all as in effect on the date of this base prospectus and
all of which are subject to change, possibly on a retroactive basis.
U.S. Tax Counsel has prepared and reviewed this summary of material U.S.
federal income tax considerations, and is of the opinion that it is correct in
all material respects. U.S. Tax Counsel also opines that, as described below,
each of the receivables trust, the MTN issuing entity and the issuing entity
will not be treated as engaged in a trade or business within the United States
for U.S. federal income tax purposes and will not be subject to U.S. federal
income tax on its net income. U.S. Tax Counsel further opines that, as
described below, although there is no directly governing authority addressing
the classification of securities similar to the U.S. offered notes, under
current law, the U.S. offered notes will be treated as debt for U.S. federal
income tax purposes. Except as set forth in the preceding sentences, U.S. Tax
Counsel will render no other opinions about the acquisition, holding and
disposition of the U.S. offered notes. Further, an opinion of U.S. 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 U.S. offered notes. Accordingly,
the issuing entity suggests that persons considering the purchase of U.S.
offered notes consult their own tax advisors about the U.S. federal income tax
consequences of an investment in the U.S. offered notes and the application of
U.S. federal tax laws, as well as the laws of any state, local or foreign
taxing jurisdictions, to their particular situations.
For the purposes of this summary, a "UNITED STATES HOLDER" means a
beneficial owner of U.S. offered notes that is a "UNITED STATES PERSON" as
described in Section 7701(a)(30) of the Code, generally including:
(i) an individual who is a citizen or resident of the United States for U.S.
federal income tax purposes;
184
(ii) a corporation or other entity treated as a corporation for U.S. federal
income tax purposes created in or under the laws of the United States,
any state or any political subdivision of any state -- including the
District of Columbia;
(iii) an estate whose income is includible in gross income for U.S. federal
income tax purposes without regard to source; and
(iv) 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 (as defined in the Code) have the authority to control all
substantial decisions of the trust.
A "NON-UNITED STATES HOLDER" means a beneficial owner of U.S. offered notes
that is not a United States Holder.
If an entity treated as a partnership for U.S. federal income tax purposes
holds the U.S. offered notes, the U.S. federal income tax treatment of a
partner in the partnership will generally depend on the status of the partner
and the activities of the partnership.
TAX STATUS OF THE RECEIVABLES TRUST, THE MTN ISSUING ENTITY AND THE ISSUING
ENTITY
It is presently contemplated that each of the receivables trust, the MTN
issuing entity and the issuing entity will conduct their respective activities,
including activities undertaken on their behalf, such as servicing activities,
entirely outside of the United States. In that regard, assuming that the
activities of each of the receivables trust, the MTN issuing entity and the
issuing entity are, as contemplated, conducted entirely outside of the United
States, and assuming each of these entities makes no investments that are
subject to withholding of U.S. federal income tax, U.S. Tax Counsel is of the
opinion that, although no transaction closely comparable to that contemplated
herein has been the subject of a Treasury regulation, revenue ruling or
judicial decision and hence the matter cannot be free from doubt, each of the
receivables trust, the MTN issuing entity and the issuing entity will not be
treated as engaged in a trade or business within the United States for U.S.
federal income tax purposes and that each of these entities will not be subject
to U.S. federal income tax on its net income.
Prospective investors should understand that such determination of whether a
person is engaged in a U.S. trade or business is based on a highly factual
analysis, there is no direct guidance as to which activities constitute being
engaged in a trade or business within the United States, and it is unclear how
a court would construe the existing indirect authorities. A foreign corporation
deemed to be so engaged would be subject to U.S. federal income tax, as well as
the branch profits tax, on its income which is treated as effectively connected
with the conduct of that trade or business. Such income tax, if imposed, would
be based on effectively connected income computed in a manner generally
analogous to that applied to the income of a domestic corporation, except that
a foreign corporation would be entitled to deductions and credits for a taxable
year only if it files, on a timely basis, a U.S. federal income tax return for
that year which none of the receivables trust, MTN issuing entity and issuing
entity intend to do, even as a protective measure. The maximum U.S. federal
income tax rates are currently 35 per cent. for a corporation's effectively
connected income and 30 per cent. for the branch profits tax, resulting in an
effective maximum U.S. federal income tax rate of 54.5 per cent. The branch
profits tax is imposed each year on a corporation's effectively connected
earnings and profits, with certain adjustments, deemed repatriated out of the
United States.
UNITED STATES HOLDERS
TAX TREATMENT OF THE U.S. OFFERED NOTES. The applicable prospectus
supplement/final terms will indicate whether the issuing entity will treat the
U.S. offered notes as equity in the issuing entity or as debt for U.S. federal
income tax purposes. Each holder of a note, by acceptance of such note, will
agree to treat such note as either equity in the issuing entity or debt for
U.S. federal income tax purposes, as applicable. If the applicable prospectus
supplement/final terms indicates that the issuing entity will treat one or more
classes of U.S. offered notes as equity for U.S. federal income tax purposes,
then U.S. holders of such notes will be taxed in the manner below under the
heading (see "Tax Treatment of U.S. Offered Notes as Equity").
If the applicable prospectus supplement/final terms indicates that the U.S.
offered notes will be treated as debt for U.S. federal income tax purposes,
then, although there is no authority addressing the characterisation of
securities with terms similar to the U.S. offered notes under current law, and
while not
185
free from doubt, U.S. Tax Counsel will render an opinion that such notes will
be treated as debt for U.S. federal income tax purposes.
The opinion of U.S. Tax Counsel is not binding on the IRS, and no assurance
can be given that the characterisation of the U.S. offered notes as debt would
prevail if the issue were challenged by the IRS. Prospective United States
Holders should consult with their tax advisers as to the effect of a
recharacterisation of the U.S. offered notes as equity interests in the issuing
entity.
As discussed below, treatment of the U.S. offered notes as equity interests
could have adverse tax consequences for United States Holders.
Except as indicated, the discussion below assumes the U.S. offered notes are
treated as indebtedness for U.S. federal income tax purposes.
INTEREST PAYMENTS AND DISTRIBUTIONS. The U.S. offered notes may be treated
as having been issued with original issue discount -- "OID" -- for U.S. federal
income tax purposes, in which case the OID will be taxed as described below.
However, in the absence of any OID on the U.S. offered notes, interest on the
U.S. offered notes will be taxable to a United States Holder as ordinary income
at the time it is received or accrued, in accordance with the holder's regular
method of accounting for U.S. federal income tax purposes.
The total amount of OID on a note is the excess of its stated redemption
price at maturity over its issue price. The issue price for the U.S. offered
notes is the price -- including any accrued interest -- at which a substantial
portion of the relevant U.S. offered notes are first sold to the public. In
general, the stated redemption price at maturity of a note is the sum of all
payments made on the note other than payments of interest that (1) are payable
at least annually over the entire life of the note and (2) are based on a
single fixed rate or variable rate -- or certain combinations of fixed and
variable rates.
If any of the U.S. offered notes are issued at a discount of an amount equal
to or greater than 0.25 per cent. of that note's stated redemption price at
maturity multiplied by the note's weighted average maturity, called its "WAM",
then that note will be deemed to bear OID. The WAM of a note is computed based
on the number of full years each distribution of principal -- or other amount
included in the stated redemption price at maturity -- is scheduled to be
outstanding. Further, the IRS could take the position based on U.S. Treasury
regulations that none of the interest payable on a note is unconditionally
payable and so that all of that interest should be included in the note's
stated redemption price at maturity.
A United States Holder -- including a cash basis holder -- of a note deemed
to bear OID generally would be required to accrue OID on the relevant note for
U.S. federal income tax purposes on a constant yield basis. This would require
the inclusion of OID in income in advance of the receipt of cash attributable
to that income. Under Section 1272(a)(6) of the Code, special provisions apply
to debt instruments on which payments may be accelerated due to prepayments of
other obligations securing those debt instruments. However, no regulations have
been issued interpreting those provisions, and the manner in which those
provisions would apply to the U.S. offered notes is unclear.
Sourcing: Interest payments or distributions on a note generally will
constitute foreign source income for U.S. federal income tax purposes. Subject
to certain limitations, U.K. withholding tax, if any, imposed on these payments
will generally be treated as foreign tax eligible for credit against a United
States Holder's U.S. federal income tax. For purposes of the foreign tax credit
limitation, foreign source income, until December 31, 2006, is classified in
one of several "baskets", and the credit for foreign taxes on income in any
basket is limited to U.S. federal income tax allocable to that income. Interest
and OID generally will constitute foreign source income in the "high
withholding tax interest" basket if the U.S. offered notes are subject to
United Kingdom withholding tax at a rate of 5 per cent. or higher. If the U.S.
offered notes are not subject to such a withholding tax, interest and OID
generally will be in the "passive income" basket. Since a United States Holder
may be required to include OID on the U.S. offered notes in its gross income in
advance of any withholding of United Kingdom income taxes from payments
attributable to the OID (which would generally occur when the note is repaid or
redeemed), a United States Holder may not be entitled to a credit or deduction
for these United Kingdom income taxes in the year the OID is included in the
United States Holder's gross income, and may be limited in its ability to
credit or deduct in full the United Kingdom taxes in the year those taxes are
actually withheld by the issuing entity. Recently enacted legislation effective
after December 31, 2006, will limit the foreign tax credit limitation
categories to "passive category income" and "general category income."
Prospective
186
purchasers should consult their tax advisers concerning the foreign tax credit
implications of the payment of any United Kingdom taxes.
DISPOSITION OR RETIREMENT OF INVESTMENT. Subject to the discussion of the
PFIC rules below, upon the sale, exchange or retirement of a note -- including
pursuant to a redemption by the issuing entity prior to its maturity date -- a
United States Holder will recognise gain or loss equal to the difference
between the amount realised and the United States Holder's "ADJUSTED TAX BASIS"
in the relevant note. In general, a United States Holder's Adjusted Tax Basis
in an OID debt instrument is equal to the United States Holder's cost for such
debt instrument, plus any OID accrued and less the amount of any payments
received by the holder that are not "qualified stated interest" payments under
applicable U.S. Treasury regulations.
A United States Holder's Adjusted Tax Basis in a debt instrument with no OID
is generally equal to the holder's cost less the amount of any principal
payments made before the date of disposition. A United States Holder's Adjusted
Tax Basis in stock is generally equal to the United States Holder's cost for
the stock. In general, any gain or loss realised by the holder will be capital
gain or loss. Under certain circumstances, capital gains derived by individuals
are taxed at preferential rates. The deductibility of capital losses is subject
to limitations. If a United States Holder's basis in a note includes accrued
but unpaid OID, the holder may be required specifically to disclose any loss
above certain thresholds under regulations on tax shelter transactions.
Sourcing: Gain or loss realised by a United States Holder on the sale,
exchange or retirement of a note generally will be treated as a United States
source. Exceptions to the application of the sourcing provisions include
exceptions for certain losses attributable to foreign exchange fluctuations,
accrued but unpaid interest, and foreign offices of U.S. residents, among
others. Some other exceptions to the general rule apply to U.S. offered notes
treated as equity in the issuing entity. The issuing entity suggests that
United States Holders consult their own tax advisors about the availability of
and limitations on any foreign tax credit.
TAX TREATMENT OF U.S. OFFERED NOTES AS EQUITY. The applicable prospectus
supplement/final terms will indicate whether the U.S. offered notes are treated
as equity for U.S. federal income tax purposes.
INVESTMENT IN A PASSIVE FOREIGN INVESTMENT COMPANY. Because of the nature of
the income of the issuing entity, the issuing entity would constitute a passive
foreign investment company -- or "PFIC". Accordingly, United States Holders of
any class of U.S. offered notes treated as equity would be shareholders in a
PFIC.
In general, United States Holders treated as shareholders of a PFIC would be
subject to special tax rules on Excess Distributions made to them by the
issuing entity, including a rateable inclusion of "EXCESS DISTRIBUTIONS" in the
United States Holder's gross income as ordinary income taxable at the highest
marginal rates applicable to current and prior years during the holding period
(and not as qualified dividend income taxable at the long-term capital gain
rates in the hands of non-corporate United States Holders) and requirement for
the payment of an Interest Charge on tax that is deemed to have been deferred
on these Excess Distributions. Excess distributions would generally include (1)
certain distributions on a United States shareholder's equity interest in the
issuing entity for a taxable year, if the total of those amounts exceeds 125
per cent. of the average amount of distributions from the issuing entity made
during a specified base period, and (2) gain from the disposition, or deemed
disposition, of the equity interest in the issuing entity. United States
Holders generally might avoid these unfavourable consequences if they made
either of two specific elections available under the Code with respect to
shares in a PFIC, but it is uncertain whether either election would be
available to a United States holder for the U.S. offered notes.
The first such mitigating election is a "QUALIFIED ELECTING FUND", or "QEF",
election pursuant to Code Section 1295. If a United States Holder made a QEF
election with respect to a note treated as equity, that United States Holder
generally would be required to include its pro rata share of the issuing
entity's ordinary income and net capital gains in income for each taxable year
and pay tax on it, even if such income and gain were not distributed to the
United States Holder. Further, any losses of the issuing entity would not be
deductible by the United States Holder. If the issuing entity later distributed
the income or gain on which a United States Holder had already paid tax,
amounts so distributed would not be further taxable to the United States
Holder. A United States Holder's tax basis in such a note would be
187
increased by the amount so included and decreased by the amount of non-taxable
distributions thereon. In general, a United States Holder making a QEF election
would recognize, on a disposition of its U.S. offered notes, capital gain or
loss equal to the difference, if any, between the amount realized upon such
disposition and the tax basis in such U.S. offered notes. In general, a QEF
election would be required to be made on or before the due date for filing a
United States Holder's U.S. federal income tax return for the first taxable
year for which it holds a note. The QEF election would be effective only if
certain required information were made available by the issuing entity to an
investor. The issuing entity, however, does not intend to provide holders with
this information and, accordingly, no assurance can be given to investors that
any QEF election made with respect to U.S. offered notes would be effective.
A United States Holder that held marketable stock in a PFIC might, in lieu
of making a QEF election, also avoid certain unfavourable consequences of the
PFIC rules by electing to mark the PFIC stock to market as of the close of each
taxable year pursuant to code section 1296. A United States Holder that made
the "mark to market election" would be required to include in income each year
as ordinary income an amount equal to the excess, if any, of the fair market
value of the stock at the close of the year over the United States Holder's
Adjusted Tax Basis in the stock. For this purpose, a United States Holder's
adjusted basis would generally be the holder's cost for the stock, increased by
the amount previously included in the holder's income pursuant to this mark to
market election and decreased by any amount previously allowed to the United
States Holder as a deduction pursuant to this election. If, at the close of the
year, the United States Holder's Adjusted Tax Basis exceeded the fair market
value of the stock, then the United States Holder could deduct any of this
excess ordinary income, but only to the extent of net mark to market gains
previously included in income. Any gain from the actual sale of the PFIC stock
would be treated as ordinary income, and any loss would be treated as ordinary
loss to the extent of net mark to market gains previously included in income.
Stock would be considered marketable if it were regularly traded on an exchange
that the IRS determined to be qualified for these purposes. Although the
issuing entity believes that each class of U.S. offered notes will be listed on
a qualified exchange, pursuant to U.S. Treasury regulations, a class of stock
is regularly traded for any calendar year during which it is traded, other than
in de minimis quantities, on at least 15 days during each calendar quarter.
Accordingly, there is uncertainty as to whether any class of U.S. offered notes
will be regularly traded and hence, there can be no assurance -- and no
representation is made -- that the U.S. offered notes would be eligible for the
mark to market election.
Because the issuing entity does not expect the QEF election to be available
to an investor to mitigate the effect of the PFIC provisions, and it is unclear
whether mark to market would be available either, United States Holders should
be aware of the potentially adverse tax consequences arising under the PFIC
provisions discussed above should any U.S. offered notes be treated as equity.
First, an excess distribution (see " - Investment in a Passive Foreign
Investment Company -- ") with respect to a Note would be taxable as though it
had been earned rateably during the period in which the United States holder
owned the note. Second, the amount deemed earned by the United States holder in
prior tax years would be taxable at the highest rate of tax in effect for such
tax years and the amount deemed earned in the current tax year would be taxable
as ordinary income. Third, the United States holder would owe interest on the
increases in tax as if the increases had been due in such years but had not
been paid.
Certain additional adverse consequences could flow to indirect investors in
a PFIC. More specifically, the ownership of the U.S. offered notes by a Non-
United States Holder might be attributed to a United States Holder
notwithstanding that such United States Holder held no note and received no
cash in respect of a note. Code Section 1298(a) generally treats U.S. offered
notes held directly or indirectly by a foreign partnership, corporation, trust
or estate as owned by such entity's partners, shareholders or beneficiaries, as
applicable; it also may treat any of various option arrangements as conferring
ownership of U.S. offered notes on United States Holders. Hence, a United
States Holder treated as owning U.S. offered notes held by a Non-United States
Holder generally would be subject to tax on indirect gains and distributions
attributable to the U.S. offered notes in the manner described above.
Finally, an investor who pledged shares in a PFIC as security for a loan
should be aware that such a pledge would be treated as a disposition of the
related shares, and any gain would be subject to the rules applicable to
distributions and gains with respect to shares in a PFIC described above.
Sourcing: For sourcing of payments for a note treated as stock in the
issuing entity and gain or loss on sale of an interest in this stock, see "-
Interest Payments and Distributions -- Sourcing" and "- Disposition or
Retirement of Investment -- Sourcing" above.
188
CONTROLLED FOREIGN CORPORATION STATUS. Should the U.S. offered notes be
treated as equity, it is possible that the issuing entity might be treated as a
controlled foreign corporation for U.S. federal income tax purposes. In this
event, United States Holders of equity interests that were treated as owning 10
per cent. or more of the combined voting power of the issuing entity would be
required to include in income their pro rata share of the earnings and profits
of the issuing entity, and generally would not be subject to the rules
described above about PFICs. Additionally, an IRS Form 5471 may be required to
be filed.
REPORTING REQUIREMENTS. If any United States Holder were treated as owning
an equity interest in the issuing entity for U.S. federal income tax purposes,
it would be required file IRS Form 8621 for each tax year in which it held such
an interest. In addition, if a United States Holder were treated as owning 5
per cent. or more of an equity interest of the issuing entity, certain
additional reporting requirements would be required.
Under Section 6038B of the Code -- relating to reporting requirements
incident to the transfer of property, including cash, to a foreign corporation
by U.S. persons or entities -- in general, a United States Holder, including a
tax-exempt entity, that purchased any U.S. offered notes treated as equity for
U.S. federal income tax purposes would be required to file an IRS Form 926 or
similar form with the IRS if such United States Holder were treated as owning,
directly or by attribution, immediately after the transfer at least 10 per
cent. by vote or value of the issuing entity, or the purchase, when aggregated
with all purchases made by such United States Holder -- or any related person
thereto -- within the preceding 12 month period, exceeded $100,000. If a United
States Holder fails to file any such required form, the United States Holder
could be required to pay a penalty equal to 10 per cent. of the gross amount
paid for the U.S. offered notes, subject to a maximum penalty of $100,000,
except in cases involving intentional disregard.
NON-UNITED STATES HOLDERS
Subject to the discussion of backup withholding below, an investment in the
U.S. offered notes by Non-United States Holders generally will not give rise to
any U.S. federal income tax to these holders, unless the income received on, or
any gain recognised on the sale or other disposition of their U.S. offered
notes is:
(i) treated as effectively connected with the conduct of a trade or business
in the United States; or
(ii) in the case of gain recognised by an individual, the individual is
present in the United States for 183 days or more and certain conditions
are met.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Payments of principal and interest, as well as payments of proceeds from the
sale, retirement or disposition of a note, may be subject to "backup
withholding" tax under Section 3406 of the Code if a recipient of such payments
fails to furnish to the payor certain identifying information. Any amounts
deducted and withheld would be allowed as a credit against such recipient's
U.S. federal income tax, provided appropriate proof is provided under rules
established by the IRS. Furthermore, certain penalties may be imposed by the
IRS on a recipient of payments that is required to supply information but that
does not do so in the proper manner. Backup withholding will not apply with
respect to payments made to certain exempt recipients, such as corporations and
financial institutions. Information may also be required to be provided to the
IRS concerning payments, unless an exemption applies. Holders of the U.S.
offered notes should consult their tax advisors regarding their qualification
for exemption from backup withholding and information reporting and the
procedure for obtaining such an exemption.
189
CERTAIN ERISA AND OTHER U.S. CONSIDERATIONS
The U.S. 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, insurance company general or separate accounts or other
entities 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 "plan assets" of any
Plan -- called "PLAN ASSETS". 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.
ERISA and Section 4975 of the Code prohibit a broad range of transactions
involving Plan Assets and persons -- called "PARTIES IN INTEREST" -- who have
specified relationships to a Plan or its Plan 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. The details of
these prohibited transaction rules are contained in Section 406 of ERISA and
Section 4975 of the Code.
Subject to the considerations described below and unless otherwise stated in
a Prospectus Supplement/Final Terms, you may purchase the notes with Plan
Assets of any Plan.
Any fiduciary or other Plan investor considering whether to purchase the
notes with Plan Assets of any Plan should determine whether that purchase is
consistent with its fiduciary duties and whether that purchase would constitute
or result in a non-exempt prohibited transaction under ERISA and/or Section
4975 of the Code because any of Barclays Bank PLC, the issuing entity, the
receivables trustee, the MTN issuing entity, the servicer, the note trustee,
the security trustee or any other party may be or might become Parties in
Interest with respect to the investing Plan and may be deemed to be benefiting
from the issuance of the notes. If Barclays Bank PLC, the issuing entity, the
receivables trustee, the MTN issuing entity, the servicer, the note trustee or
the security trustee is a Party in Interest with respect to the prospective
Plan investor, the issuing entity suggests that any fiduciary or other Plan
investor considering whether to purchase or hold the notes consult with its
counsel regarding the availability of exemptive relief under U.S. Department of
Labor -- "DOL" -- Prohibited Transaction Class Exemptions, or any other
prohibited transactions exemption issued by the DOL. A purchaser of the notes
should be aware, however, that even if the conditions specified in one or more
of the above-referenced exemptions are met, 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 to have represented and agreed by your purchase and
holding of the notes that (1) (a) no part of the funds being used to pay the
purchase price for those notes constitutes Plan Assets of any Plan or will
constitute Plan Assets while you hold those notes, and that you are not, and
for so long as you hold the notes will not be, a Plan, or (b) the purchase and
holding of such notes do not and will not constitute, result in or otherwise
involve a non-exempt prohibited transaction under ERISA or Section 4975 of the
Code; and (2) if, at any time while those notes are purchased or held by you,
you are or will be another employee benefit plan subject to any U.S. Federal
State or local or non-U.S. law substantially similar to Section 406 of ERISA or
Section 4975 of the Code, the purchase and holding of those notes do not and
will not violate any such substantially similar law.
In addition, under DOL Regulation Section 2510.3-101 -- called the "PLAN
ASSET REGULATION" -- the purchase with Plan Assets of equity interests in the
issuing entity could, in certain circumstances, cause the medium term note
certificate and other assets of the issuing entity to be deemed Plan Assets of
the investing Plan which, in turn, would subject the issuing entity and its
assets to the fiduciary responsibility provisions of ERISA and the prohibited
transaction provisions of ERISA and Section 4975 of the Code. Thus, if the
underlying assets of the issuing entity are deemed to be Plan Assets, the
obligations and other responsibilities of Plan sponsors, Plan fiduciaries and
Plan administrators, and of Parties in Interest, under Parts 1 and 4 of
Subtitle B of Title I of ERISA and Section 4975 of the Code, as applicable, may
be expanded, and there may be an increase in their liability under these and
other provisions of ERISA and the Code (except to the extent (if any) that a
favourable statutory or administrative exemption or exception applies). In
addition, various providers of fiduciary or other services to the issuing
entity, and any other parties with authority or control with respect to the
entity,
190
could be deemed to be Plan fiduciaries or otherwise Parties in Interest by
virtue of their provision of such services (and there could be an improper
delegation of authority to such providers). Nevertheless, consistent with the
expectation indicated above that the issuing entity will proceed on the basis
that the notes will be treated as indebtedness for U.S. federal income tax
purposes, and the opinion of U.S. Tax Counsel to that effect -- see "Material
United States Federal Income Tax Considerations - United States Holders - Tax
Treatment of the U.S. Offered Notes as Indebtedness", the issuing entity will
proceed based on the position that the notes should not be treated as equity
investments for purposes of the Plan Asset Regulation and, therefore, the notes
may be purchased by Plans. The issuing entity's position is also based, in
part, upon the traditional debt features of the notes, including the reasonable
expectation of purchasers of the notes that the notes will be repaid when due,
as well as the absence of conversion rights, warrants and other typical equity
features.
The notes may not be purchased or held by any Plan, or any person investing
Plan Assets of any Plan, if any of Barclays Bank PLC, the issuing entity, the
receivables trustee, the MTN issuing entity, the servicer, the note trustee,
security trustee or any of their respective affiliates (a) has investment or
administrative discretion with respect to the Plan Assets used to effect the
purchase; (b) has authority or responsibility to give, or regularly gives,
investment advice with respect to the Plan Assets, for a fee and pursuant to an
agreement or understanding that the advice (1) will serve as a primary basis
for investment decisions for the Plan Assets and (2) will be based on the
particular investment needs of that Plan; or (c) unless Prohibited Transaction
Class Exemption 95-60, 91-38 or 90-1 is applicable, is an employer maintaining
or contributing to that Plan. Each purchaser or holder of the notes or any
interest in the notes will be deemed to have represented by its purchase and
holding of them that it is not subject to the foregoing limitation.
ACCORDINGLY, THE ISSUING ENTITY SUGGESTS THAT PROSPECTIVE EMPLOYEE BENEFIT
PLAN INVESTORS, WHETHER OR NOT SUBJECT TO ERISA OR SECTION 4975 OF THE CODE,
CONSULT WITH THEIR OWN LEGAL AND OTHER ADVISORS CONCERNING THE IMPACT OF ERISA
AND THE CODE AND, PARTICULARLY IN THE CASE OF EMPLOYEE BENEFIT PLANS NOT
SUBJECT TO ERISA, ANY ADDITIONAL U.S. STATE AND LOCAL LAW OR NON-U.S. LAW
CONSIDERATIONS, AS APPLICABLE.
191
ENFORCEMENT OF FOREIGN JUDGMENTS IN JERSEY OR ENGLAND AND WALES
The MTN issuing entity is incorporated with limited liability in England and
Wales under the Companies Act 1985 and the issuing entity and the Receivables
Trustee in Jersey under the Companies (Jersey) Law 1991, as amended. Any final
and conclusive judgment of either a New York state or United States Federal
court that has jurisdiction recognised by England and Wales regarding
obligations of the issuing entity for the notes, which 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 England and Wales without
re-examining the merits of the issues determined by the proceedings unless:
(i) the proceedings in New York state or the United States Federal court
involved a denial of the principles of natural justice;
(ii) the judgment goes against the public policy of England and Wales;
(iii) the judgment was obtained by fraud, duress or was based on a clear
mistake of fact;
(iv) the judgment is a penal or revenue judgment; or
(v) 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 be sometimes given in pounds sterling. The issuing
entity expressly submits to the jurisdiction of New York state and the United
States 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. The following parties have been appointed to receive legal documents
for the issuing entity and the originator, servicer and trust cash manager.
(i) for the issuing entity:
CT Corporation Systems
111 Eighth Avenue
New York, NY 10011
+1 212 590 9009
(ii) for the originator, servicer and trust cash manager:
Office of the General Counsel
Barclays Capital Inc.
200 Park Avenue
New York, New York 10166
+1 212 412 1392
Most of the directors of the issuing entity and some of the experts named in
this base prospectus live outside the United States. Additionally, some or all
of the underwriters may be domiciled 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 on them or to enforce
judgments obtained in United States 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, Clifford Chance
LLP, and by its Jersey counsel, Bedell Cristin that because of this, the
holders of the notes may not be able to enforce in England and Wales or Jersey,
in original actions or in actions for enforcement of judgments of United States
courts, civil liabilities based on the Federal securities laws of the United
States.
192
PLAN OF DISTRIBUTION
On [__] the issuing entity entered into an underwriting agreement with
Barclays Bank PLC, in its capacity as underwriter together with any other
underwriter that may in the future become a party to the underwriting agreement
as provided therein in connection with the distribution of notes issued under
the programme. The underwriting agreement does not impose any obligation on the
underwriters 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 underwriters may agree to the issuance by the former and the
purchase by the latter of one or more series of notes, in accordance with a
subscription agreement based on a form set out in the underwriting agreement or
such other form as may be agreed between the issuing entity and the relevant
underwriter or underwriters.
In addition, because the provisions of the underwriting agreement are not
exclusive, the issuing entity may offer and sell the notes in any of three
ways:
(i) directly to one or more purchasers;
(ii) through agents; or
(iii) through underwriters.
Any underwriter or agent that offers the notes may be an affiliate of the
issuing entity and/or Barclays, 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/final terms in relation to this base prospectus will
specify the terms of each offering, including:
(i) the name or names of any underwriters or agents;
(ii) the public offering or purchase price;
(iii) the net proceeds to the issuing entity from the sale;
(iv) any underwriting discounts and other items constituting underwriters'
compensation;
(v) any discounts and commissions allowed or paid to underwriters;
(vi) any commissions allowed or paid to agents; and
(vii) the securities exchanges, if any, on which the notes will be listed.
If any notes are sold through underwriters, the prospectus supplement/final
terms will describe the nature of the obligation of the underwriters to
purchase the notes. The notes may be offered to the public either through
syndicates represented by one or more underwriters or directly by one or more
firms acting alone. The underwriter or underwriters for a particular offering
of notes will be named in the prospectus supplement/final terms relating to
that offering, and, if a syndicate is used, the managing underwriter or
underwriters will be set forth on the cover of the prospectus supplement/final
terms. Unless otherwise described in the prospectus supplement/final terms, the
obligation of the underwriters to purchase any notes will be subject to various
conditions precedent.
The prospectus supplement/final terms for any notes offered other than
through underwriters 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.
Underwriter 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.
193
The issuing entity may change any initial public offering price and any
discounts or concessions allowed or reallowed or paid to underwriters. If
indicated in a prospectus supplement/final terms in relation to this base
prospectus, the issuing entity will authorise underwriters 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.
Purchasers of notes, including underwriters, may, depending on the facts and
circumstances of the purchases, be deemed to be "Underwriters" within the
meaning of the Securities Act 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.
Underwriters and agents participating in the distribution of the securities,
and their controlling persons, may engage in transactions with and perform
services for the sponsor, the issuing entity or their affiliates in the
ordinary course of business.
Barclaycard will be the sponsor, originator beneficiary, servicer and the
lender under the Expenses Loan Agreement.
UNITED KINGDOM
Each underwriter has represented and agreed with the issuing entity that:
(i) it has complied and will comply with all applicable provisions of the
Financial Services and Markets Act 2000, called the "FSMA" with respect
to anything done by it in relation to the notes in, from or otherwise
involving the United Kingdom; and
(ii) it has only communicated or caused to be communicated, and will only
communicate or cause to be communicated, any 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 the notes,
in circumstances in which Section 21(1) of the FSMA does not apply to the
issuing entity.
JERSEY
The notes may not be:
(i) 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; and
(ii) transferred to a person resident for income tax purposes in Jersey (other
than a financial institution in the normal course of business) unless the
registrar of the notes is satisfied that the beneficial owner thereof is
not resident in Jersey for income tax purposes.
Each underwriter has acknowledged its cognisance of the terms of the consent
issued to the issuing entity pursuant to Article 5 of the Companies (General
Provisions) (Jersey) Order 2002 (the "GPO CONSENT") relating to the base
prospectus and each prospectus supplement/final terms and their circulation and
acknowledged that prior to the issuance of such GPO consent and compliance with
its terms its has not been provided with any prospectus (as defined in any
applicable securities legislation) or any similar document in connection with
its subscription for the notes which has been approved or authorised for
circulation by the issuing entity.
Each underwriter has represented, warranted and agreed that:
(i) it is not a resident of Jersey, Channel Islands for income tax purposes;
(ii) it is financially sophisticated investor who is capable of evaluating the
merits and risk of such investment and who has sufficient resources to be
able to bear any losses which may result from such investment in the
notes; and
(iii) it will not knowingly transfer the notes to any person who is not a
financially sophisticated investor capable of evaluating the merits and
risks of such investment and who has sufficient resources to be able to
bear any losses which may result from such investment in the notes or to
194
any person it knows to be a resident of Jersey, Channel Islands for
income tax purposes (other than a financial institution acting in the
ordinary course of its business).
The notes may not be offered to, sold to, transferred to or purchased by
persons resident for income tax purposes in Jersey other than financial
institutions in the normal course of business.
GENERAL
The underwriters have represented and agreed that they have complied and
will comply with all applicable laws and regulations in force in any
jurisdiction in which they purchase, offer, sell or deliver notes or possess
them or distribute the base prospectus and will obtain any consent, approval or
permission required by them for the purchase, offer, sale or delivery by them
of notes under the laws and regulations in force in any jurisdiction to which
they are subject or in which they make such purchases, offers, sales or
deliveries and the issuing entity shall have no responsibility for them.
Furthermore, they will not directly or indirectly offer, sell or deliver any
notes or distribute or publish any prospectus, form of application, offering
circular, advertisement or other offering material except under circumstances
that will, to the best of their knowledge and belief, result in compliance with
any applicable laws and regulations, and all offers, sales and deliveries of
notes by them will be made on the same terms.
The underwriters have agreed that no invitation may be made to the public in
Jersey to subscribe for the notes.
Neither the issuing entity nor the underwriters represent that notes may at
any time lawfully be sold in compliance with any application registration or
other requirements in any jurisdiction, or pursuant to any exemption available
thereunder, or assume any responsibility for facilitating such sale.
With regard to each issue of notes, the underwriters will be required to
comply with such other additional or modified restrictions, if any, as the
issuing entity and the underwriters shall agree.
The underwriters will, unless prohibited by applicable law, furnish to each
person to whom they offer or sell notes a copy of the base prospectus and
prospectus supplement/final terms as then amended or supplemented or, unless
delivery of the prospectus is required by applicable law, inform each such
person that copies will be made available upon request. The underwriters are
not authorised to give any information or to make any representation not
contained in the prospectus in connection with the offer and sale of notes to
which the prospectus relates.
Barclays Bank PLC may act as principal or agent in offers and sales related
to market-making transactions in the notes. These sales will be made at prices
relating to prevailing market prices at the time of sale. Barclays Bank PLC has
no obligation to make a market in the notes, and any market-making may be
discontinued at any time without notice.
For the avoidance of doubt, Barclays Capital is the same legal entity as
Barclays Bank PLC.
Barclays Bank PLC will be the initial originator, the servicer, the cash
manager for the receivables trust and the medium term note certificate, the
originator beneficiary and excess interest beneficiary, the swap counterparty
and the lender under the Expenses Loan Agreement.
SELLING RESTRICTIONS
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 prospectus supplement/final terms.
195
RATINGS OF THE NOTES
It is a condition to issuing the class A notes that they be rated in the
highest rating category by two internationally recognised rating agencies.
It is a condition to issuing the class B notes that they be rated at least
"A" or its equivalent by two internationally recognised rating agencies.
It is a condition to issuing the class C notes that they be rated at least
"BBB" or its equivalent by two internationally recognised rating agencies.
It is a condition to issuing the class D notes that they be rated at least
"BB" or its equivalent by two internationally recognised rating agencies.
Any rating of your notes by a rating agency will indicate:
(i) its view on the likelihood that you will receive timely interest payments
and principal payments by the relevant termination date; and
(ii) its evaluation of the receivables and the availability of the credit
enhancement for your notes.
What a rating will not indicate is:
(i) the likelihood that principal payments will be paid on a Series Scheduled
Redemption Date before the relevant termination date;
(ii) the likelihood that a Pay Out Event will occur;
(iii) the likelihood that a withholding tax will be imposed on Noteholders;
(iv) the marketability of your notes;
(v) the market price of your notes; or
(vi) whether your notes are an appropriate investment for you.
A rating will not be a recommendation to buy, sell or hold the notes. A
rating may be lowered or withdrawn at any time.
The issuing entity will request a rating of the notes from two
internationally recognized rating agencies. Rating agencies other than those
requested could assign a rating to the notes, and their rating could be lower
than any rating assigned by a rating agency chosen by the issuing entity.
196
EXPERTS
The financial statements of Barclaycard Funding PLC and subsidiary at 31
December 2006 and 31 December 2005 and for the year ended 31 December 2006, the
year ended 31 December 2005 and for the year ended 31 December 2004 included in
this base prospectus have been so included in reliance on the report of [__],
independent registered public accounting firm, given on the authority of said
firm as experts in auditing and accounting.
The balance sheet of Gracechurch Card Programme Funding Limited as at [__]
2007 included in this base prospectus, has been so included in reliance on the
report of [__], independent registered public accounting firm, given on the
authority of said firm as experts in auditing and accounting. [__] is a member
of the Institute of Chartered Accountants in England and Wales.
[__] has given, and not withdrawn, its consent to the inclusion in this
document of its report on the balance sheet of Gracechurch Card Programme
Funding Limited as at [__] 2007 and its report on the consolidated financial
statements of Barclaycard Funding PLC and its Subsidiary at 31 December 2006
and 31 December 2005, and for the year ended 31 December 2006, the year ended
31 December 2005 and the year ended 31 December 2004 in the form and context in
which they are included and has authorised the contents of these parts of this
base prospectus which comprise their reports for the purposes of paragraph
5.5.4R(2)(f) of the Prospectus Rules. [__] is responsible for its above
mentioned reports dated [__] 2007 and [__] 2007, respectively, as part of this
base prospectus and declare that it has taken all reasonable care to ensure
that the information contained in these reports are, to the best of its
knowledge, in accordance with the facts and contains no omission likely to
affect its import. This declaration is included in the prospectus in compliance
with item 1.2 of Annex VII and item 1.2 of Annex IX of the Prospectus Rules.
Clifford Chance LLP has given and not withdrawn its written consent to the
inclusion in this document of their opinions in the form and context in which
they are included, as set out in the prospectus, declare that it has taken all
reasonable care to ensure that the information contained in these opinions are,
to the best of its knowledge in accordance with the facts and contain no
omission likely to affect its import and have authorised the contents of those
parts of the listing particulars, for the purposes of Regulation 6(1)(e) of the
United Kingdom Financial Services and Markets Act 2000 (Official Listing of
Securities) Regulations 2001.
Bedell Cristin has given and not withdrawn its written consent to the
inclusion in this document of their opinions in the form and context in which
they are included, as set out in the prospectus, declare that it has taken all
reasonable care to ensure that the information contained in these opinions are,
to the best of its knowledge in accordance with the facts and contain no
omission likely to affect its import and have authorised the contents of those
parts of the listing particulars, for the purposes of Regulation 6(1)(e) of the
United Kingdom Financial Services and Markets Act 2000 (Official Listing of
Securities) Regulations 2001.
197
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
With respect to the unaudited consolidated financial information of
Barclaycard Funding PLC and its subsidiary at [__] 2006, included in this base
prospectus, [__] reported that it has applied limited procedures in accordance
with professional standards for a review of such information. Its separate
report dated [__] appearing herein states that it did not audit and it does not
express an opinion on that unaudited financial information. Accordingly, the
degree of reliance on its report on such information should be restricted in
light of the limited nature of the review procedures applied.
[__] is not subject to the liability provisions of Section 11 of the
Securities Act for its report on the unaudited financial information because
that report is not a "report" or a "part" of the registration statement
prepared or certified by [__] within the meaning of Sections 7 and 11 of the
Securities Act.
Subject to this, [__] has given, and not withdrawn, its consent to the
inclusion in this base prospectus of its report on that unaudited consolidated
financial information in the form and context in which they are included and
has authorized the contents of these parts of this base prospectus which
comprise its report for the purposes of paragraph 5.5.4R(2)(f) of the
Prospectus Rules. In compliance with item 1.2 of Annex VII and item 1.2 of
Annex IX of the Prospectus Rules, [__] is responsible for its above mentioned
report as part of this base prospectus and declares that it has taken all
reasonable care to ensure that the information contained in this report is, to
the best of its knowledge, in accordance with the facts and contains no
omission likely to affect its import.
198
LEGAL MATTERS
Matters of English law relating to the validity of the issuance of the notes
will be passed upon for the issuing entity by Clifford Chance LLP, London,
England. Clifford Chance US LLP will act as special US tax counsel to the
issuing entity. Bedell Cristin will act as special Jersey tax counsel to the
issuing entity. Weil, Gotshal & Manges has acted as counsel to the underwriters
with respect to the offering of the notes pursuant to this base prospectus.
199
REPORTS TO NOTEHOLDERS
The servicer will prepare monthly and annual reports that will contain
information about the notes. The financial information contained in that part
of the listing particulars will not be prepared in accordance with generally
accepted accounting principles. Unless and until individual Note Certificates
are issued, the reports will be sent to the depository as holder of the notes.
No reports will be sent to you.
200
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 filed with the SEC, but the
registration statement includes additional information that has not been
reviewed or approved by the UKLA. The issuing entity will file with the SEC
under the name "Gracechurch Card Programme Funding Limited" (CIK: 0001412315)
all required distribution and annual SEC reports and other information about
the notes (including any material changes that may occur in the solicitation,
credit-granting, underwriting, origination, acquisition or pool selection
criteria or procedures used to originate, acquire or select new designated
accounts).
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 for SEC purposes only. Information that we
file later with the SEC will automatically update the information in this base
prospectus for SEC purposes only. 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 us at c/o
Bedell Trust Company Limited, 26 New Street, St. Helier, Jersey or calling at
+44 (0)1534 814814.
We are in the process of developing a website, which will make available the
annual, monthly and special reports filed with the SEC. This website may also
include static pool information in response to Item 1105 of Regulation AB. If
we determine to include static pool information on this website, the prospectus
supplement/final terms accompanying this base prospectus will disclose the
specific Internet address where the information is posted. We anticipate that
this website will be [__].
201
LISTING AND GENERAL INFORMATION
We have made an application (i) to the UKLA to admit the notes to the
Official List and (ii) to the London Stock Exchange to admit the notes to
trading on the Regulated Market of the London Stock Exchange. 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 each 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 underwriter(s) may agree.
The establishment of the programme was authorised by board resolutions of
the issuing entity passed on or about 19 September 2007. 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.
A copy of this base prospectus has been delivered to the Registrar of
Companies in accordance with Article 5 of the Companies (General Provisions)
(Jersey) Order 2002 and he has given, and has not withdrawn, his consent to its
circulation.
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.
If you are in any doubt about the contents of this base prospectus you
should consult your stockbroker, bank manager, solicitor, accountant or other
financial adviser.
It should be remembered that the price of securities and the income from
them can go down as well as up.
Application will be made for the notes to be accepted for clearance through
Euroclear, Clearstream and DTC. The appropriate common code and the
International Securities Identification Number ("ISIN/CUSIP") in relation to
the notes of each series will be specified in the prospectus supplement/final
terms relating thereto. The relevant prospectus supplement/final terms shall
specify any other clearing system as shall have accepted the relevant notes for
clearance together with any further appropriate information.
The trust cash manager's functions include producing the monthly investor
reports required by the series supplement to the declaration of trust and trust
cash management agreement. These monthly investor reports will be available on
Bloomberg and will be disclosed to the issuing entity and the MTN issuing
entity.
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 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 prospectus together with any amendments or supplements thereto and other
202
documents incorporated by reference in the prospectus and, in relation to any
series, the relevant final terms.
The MTN issuing entity confirms that the securitised assets backing the
issue of this series of medium term note certificates have characteristics that
demonstrate capacity to produce funds to service any payments due and payable
on this series of medium term note certificates. However, investors are advised
that this confirmation is based on the information available to the MTN issuing
entity at the date of the 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 prospectus
together with any amendments or supplements thereto and other documents
incorporated by reference in the prospectus and, in relation to any series, the
relevant final terms.
Barclaycard Funding PLC has produced financial statements for year ended 31
December 2006 and the period ended 30 June 2007 which have been prepared in
accordance with IFRS. Pursuant to section 228(1)(b) of the Companies Act 1985,
these financial statements are non-consolidated financial statements of
Barclaycard Funding PLC.
LITIGATION AND CHANGE IN CIRCUMSTANCES
The issuing entity is not, nor has it 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) which may have, or
have had since 7 September 2007 (being the date of incorporation of the issuing
entity) a significant effect on its financial position or profitability.
The MTN issuing entity is not, nor has it 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) which may
have, or have had for the twelve months preceding the date of this base
prospectus a significant effect on its financial position or profitability.
SIGNIFICANT OR MATERIAL CHANGE
There has been (i) no significant change in the financial or trading
position of the issuing entity and (ii) no material adverse change in the
financial position or prospects of the issuing entity, since the issuing
entity's date of incorporation on 7 September 2007.
Save as described in the section herein called "The Depositor and MTN
Issuing Entity" at page [49] (with respect to the prospective issuance of the
medium term note certificate), there has been (i) no significant change in the
financial or trading position and (ii) no material adverse change in the
financial position or prospects of the MTN issuing entity, since 31 December
2006.
There has been (i) no significant change in the financial or trading
position of the receivables trustee and (ii) no material adverse change in the
financial position or prospects of the receivables trustee, since 29 September
1999.
DOCUMENTS AVAILABLE FOR INSPECTION
For so long as this base prospectus is in effect, copies and, where
appropriate, English translations of the following documents may be inspected
at the offices of Clifford Chance LLP, 10 Upper Bank Street, London E14 5JJ,
England during usual business hours on any weekday, apart from Saturdays,
Sundays and public holidays, by electronic means:
(i) master definitions schedule;
(ii) Receivables Securitisation Agreement;
(iii) declaration of trust and trust cash management agreement;
(iv) the current base prospectus in relation to the programme, together with
any amendments;
(v) any prospectus supplement/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,
203
stock exchange and/or quotation system, copies of the relevant prospectus
supplement/final terms will only be available for inspection by the
relevant Noteholders);
(vi) form of Series Supplement to declaration of trust and trust cash
management;
(vii) beneficiaries servicing agreement;
(viii) Agreement Between Beneficiaries;
(ix) trust section 75 indemnity;
(x) security trust deed and MTN issuing entity cash management agreement;
(xi) MTN issuing entity supplement to security trust deed and MTN issuing
entity cash management agreement;
(xii) Expenses Loan Agreement;
(xiii) [corporate officers agreement;]
(xiv) underwriting agreement;
(xv) paying agency and agent bank agreement;
(xvi) trust deed;
(xvii) deed of charge;
(xviii)pledge agreement;
(xix) form of class A global Note Certificate;
(xx) form of class B global Note Certificate;
(xxi) form of class C global Note Certificate;
(xxii) form of class D global Note Certificate;
(xxiii)form of class A individual Note Certificate;
(xxiv) form of class B individual Note Certificate;
(xxv) form of class C individual Note Certificate;
(xxvi) form of class D individual Note Certificate;
(xxvii)memorandum and articles of association of the issuing entity;
(xxviii)report of independent registered public accounting firm on the
issuing entity;
(xxix) memorandum and articles of association of the MTN issuing entity;
(xxx) [deed of novation;]
(xxxi) report of the independent registered public accounting firm on the MTN
issuing entity;
(xxxii)memorandum and articles of association of the receivables trustee;
(xxxiii)audited accounts of the MTN issuing entity for each of the three
years preceding the publication of this base prospectus; and
(xxxiv) U.S. tax opinion of Clifford Chance LLP, if applicable.
204
ISSUING ENTITY
GRACECHURCH CARD PROGRAMME FUNDING LIMITED
26 New Street
St. Helier, Jersey JE2 3RA
INITIAL ORIGINATOR SERVICER AND TRUST CASH MANAGER RECEIVABLES TRUSTEE
BARCLAYS BANK PLC GRACECHURCH RECEIVABLES TRUSTEE LTD
1234 Pavilion Drive 26 New Street
Northampton NN4 7SG St. Helier, Jersey JE2 3RA
DEPOSITOR AND MTN ISSUING ENTITY
BARCLAYCARD FUNDING PLC
1 Churchill Place
London E14 5HP
NOTE TRUSTEE AND SECURITY TRUSTEE
THE BANK OF NEW YORK
One Canada Square
London E14 5AL
PRINCIPAL PAYING AGENT OTHER PAYING AGENTS
THE BANK OF NEW YORK THE BANK OF NEW YORK
One Canada Square One Wall Street
London E14 5AL New York, New York 10286
REGISTRAR
THE BANK OF NEW YORK
One Wall Street
New York, New York 10286
LEGAL ADVISERS
To the issuing entity, To the issuing entity, To the issuing entity,
the MTN issuing entity, the Receivables Trustee and Barclays as to US law the Receivables Trustee and Barclays as to
the Receivables Trustee and Jersey law
Barclays as to English law
CLIFFORD CHANCE LLP CLIFFORD CHANCE U.S. LLP BEDELL CRISTIN
10 Upper Bank Street 31 West 52nd Street 26 New Street
London E14 5JJ New York, New York 10019 St. Helier, Jersey JE2 3RA
United States
To the underwriters as to English law and United To the Note Trustee and the Security Trustee as to
States law English law and United States law
WEIL, GOTSHAL & MANGES LOVELLS LLP
One South Place Atlantic House
London EC2M 2WG Holborn Viaduct
London EC1A 2FG
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the issuing entity and the MTN issuing entity To the Receivables Trustee
[__] [__]
AUTHORISED ADVISOR
BARCLAYS BANK PLC
5 The North Colonnade
Canary Wharf
London E14 4BB
205
INDEX OF DEFINED TERMS FOR BASE PROSPECTUS
$ ............................................................................45
<1% RPs ......................................................................62
>1% RPs ......................................................................62
[GBP] ................................... ....................................45
[e] .................................... .....................................45
1983 regulations .............................................................27
30/360 ......................................................................139
Account Bank Agreement ......................................................137
Acquired Interchange .........................................................67
Actual/360 ..................................................................139
Actual/365 ..................................................................139
Actual/365 (fixed) ..........................................................139
Actual/365/366 ..............................................................139
Actual/Actual (ICMA) ........................................................138
Actual/Actual (ISDA) ........................................................139
Addition Date ................................................................63
Additional Accounts ..........................................................63
Additional Business Centre(s) ...............................................137
Additional Financial Centre(s) ..............................................137
Additional Interest .........................................................161
Additional Interest Margin ..................................................137
Adjusted investor interest ...................................................92
Adjusted Tax Basis ..........................................................187
Administrator ...............................................................137
advertisements regulations ...................................................27
Agent Bank ..................................................................136
Aggregate Investor Indemnity Amount .........................................117
aggregate investor interest ...................................................9
Agreement Between Beneficiaries .............................................123
agreements regulations .......................................................27
Amortisation Period .........................................................137
Available Funds .............................................................104
Available Investor Principal Collections .....................................92
Average Principal Receivables ................................................93
Bank Mandate ................................................................137
Barclaycard ...............................................................i, ii
Barclaycard Operating Account ................................................78
Barclaycard Proceeds Account .................................................79
Barclays .....................................................................ii
Barclays Portfolio ..........................................................225
base prospectus ..............................................................ii
Basic Terms Modification ....................................................137
beneficial owner .............................................................42
bookentry interests ..........................................................43
book-entry note ..............................................................13
Business Day ............................................................65, 137
Business Day Convention .....................................................137
Calculation Agent ...........................................................138
Calculation Period ...........................................................93
Cancelled Account ............................................................66
Capital Assets ..............................................................184
capital market arrangement ...................................................42
Capital Market Arrangement ..................................................176
Cash Management Fee ..........................................................93
Class ..................................................................136, 138
Class A ......................................................................92
Class A Additional Finance Amount ............................................93
Class A Adjusted Investor Interest ...........................................93
Class A Debt Amount ..........................................................93
Class A Deficiency Amount ....................................................93
Class A Finance Rate .........................................................93
Class A Initial Investor Interest ............................................93
Class A Investor Charge- Off ................................................115
Class A Investor Charge-Off ..................................................93
Class A Investor Default Amount .............................................115
Class A Investor Interest ....................................................94
Class A Monthly Distribution Amount .........................................105
Class A Monthly Finance Amount ...............................................94
Class A Monthly Principal Amount .............................................94
Class A Monthly Required Expense Amount ......................................94
Class A Notes ...............................................................138
Class A Required Amount ......................................................94
Class B ......................................................................92
Class B Additional Finance Amount ............................................94
Class B Adjusted Investor Interest ...........................................95
Class B Debt Amount ..........................................................95
Class B Deficiency Amount ....................................................95
Class B Finance Rate .........................................................95
Class B Initial Investor Interest ............................................95
Class B Investor Charge- Off ................................................116
Class B Investor Charge-Off ..................................................95
Class B Investor Default Amount .............................................115
Class B Investor Interest ....................................................95
Class B Monthly Distribution Amount .........................................104
Class B Monthly Finance Amount ...............................................95
Class B Monthly Principal Amount .............................................95
Class B Monthly Required Expense Amount ......................................96
Class B Notes ...............................................................138
Class B Principal Commencement Date .........................................110
Class B Required Amount ......................................................96
Class C ......................................................................92
Class C Additional Finance Amount ............................................96
Class C Adjusted Investor Interest ...........................................96
Class C Debt Amount ..........................................................96
Class C Deficiency Amount ....................................................96
Class C Finance Rate .........................................................96
Class C Initial Investor Interest ............................................96
Class C Investor Charge-Off .............................................96, 116
Class C Investor Default Amount .............................................115
Class C Investor Interest ....................................................96
Class C Monthly Distribution Amount .........................................105
Class C Monthly Finance Amount ...............................................97
Class C Monthly Principal Amount .............................................97
Class C Monthly Required Expense Amount ......................................97
Class C Notes ...............................................................138
Class C Principal Commencement Date .........................................110
Class C Required Amount ......................................................97
Class D ......................................................................92
Class D Additional Finance Amount ............................................97
Class D Adjusted Investor Interest ...........................................97
Class D Debt Amount ..........................................................97
Class D Deficiency Amount ....................................................97
Class D Finance Rate .........................................................97
Class D Initial Investor Interest ............................................97
Class D Investor Charge-Off .............................................97, 117
Class D Investor Default Amount .............................................115
206
Class D Investor Interest ....................................................97
Class D Monthly Distribution Amount .........................................105
Class D Monthly Finance Amount ...............................................98
Class D Monthly Principal Amount .............................................98
Class D Monthly Required Expense Amount ......................................98
Class D Notes ...............................................................138
Class D Principal Commencement Date .........................................111
Class D Required Amount ......................................................98
clearing system ..............................................................12
Closing Date ................................................................138
Code ....................................................................19, 184
Collecting Agent ............................................................180
Companion Series .............................................................98
Conditions ..................................................................136
Consumer Credit Act ..........................................................24
Consumer Credit Act 2006 .....................................................27
Controlled Accumulation Period .........................................108, 138
Controlled Accumulation Period Commencement Date .......................113, 138
Controlled Accumulation Period Length .......................................113
Controlled Deposit Amount ...................................................108
Convention ..................................................................179
Counterparty Fault Swap Termination Amount ..................................138
Covered Amount ..............................................................118
Daily Investor Principal Collections ........................................101
Daily Principal Shortfall ....................................................98
Day Count Calculation Period ................................................138
Day Count Fraction ..........................................................138
Default Amount ..............................................................115
Defaulted Account ............................................................66
Defaulted Receivable .........................................................69
Deferred Interest ...........................................................161
Deferred Subscription Price .................................................172
Designated Account ...........................................................63
Designated Accounts ..........................................................76
Determination Date ...........................................................99
discount option ..............................................................36
Discount Option Receivables ..................................................66
Discount Percentage ..........................................................66
Distribution Date ............................................................99
Distribution Ledger .........................................................139
DOL .........................................................................190
dollars ......................................................................45
DTC .........................................................................131
DTI ..........................................................................26
ECD ..........................................................................32
ECO ..........................................................................32
Eligible Account .............................................................69
eligible company .............................................................41
Eligible Receivable ..........................................................70
Eligible Receivables Pool ....................................................77
Eligible Servicer ............................................................89
Eligible Trust Cash Manager ..................................................91
Enforcement Notice ..........................................................167
Enterprise Act ...............................................................42
ERISA .......................................................................190
EU savings tax directive .....................................................42
EU Savings Tax Directive ................................................18, 180
euro .........................................................................45
Euroclear operator ..........................................................133
Event of Default ............................................................165
Excess Distributions ........................................................187
Excess Entitlement Consideration ............................................123
Excess Interest ..............................................................77
Expense Rate .................................................................99
Expenses Loan Agreement ......................................................48
Expenses Loan Drawing .......................................................139
Expenses Loan Facility .......................................................48
Extraordinary Resolution ....................................................139
Final Redemption Date .......................................................139
Finance Charge Collections Ledger ............................................79
Finance Charge Receivables ...................................................65
First Interest Payment Date .................................................139
First Person ................................................................143
Fitch Ratings ................................................................15
Fixed Investor Percentage ...................................................106
Floating Investor Percentage ................................................103
Floating Rate Commencement Date .............................................139
Following Business Day Convention ...........................................137
FSMA .....................................................................i, 194
Future Receivables Transfer ..................................................63
Global Note Certificate .....................................................139
Global Note Certificates ....................................................131
GPO Consent .................................................................194
Group ........................................................................56
HMRC ........................................................................179
IFRS .........................................................................49
Indebtedness ................................................................140
Individual Note Certificate .................................................140
Ineligible Receivables .......................................................70
Initial Investor Interest ................................................92, 99
Initial Period ...............................................153, 156, 159, 160
Initial Period" .............................................................154
Initial Rate ................................................................140
Initial Relevant Closing Date ................................................63
Insolvency Events ............................................................82
Interchange ..................................................................67
interest ....................................................................180
Interest Amount ...........140, 149, 151, 152, 153, 154, 155, 156, 157, 158, 159
Interest Commencement Date ..................................................140
Interest Determination Date .............................140, 148, 151, 153, 157
Interest Payment Date ......99, 140, 148, 149, 151, 152, 154, 156, 158, 159, 160
Interest Period .....................148, 150, 153, 154, 155, 156, 158, 159, 160
Interest Period .............................................................151
Investment Company Act ...................................................13, 41
Investor Cash Available for Acquisition ......................................80
Investor Certificate .........................................................51
Investor Default Amount .....................................................115
Investor Indemnity Amount ...................................................117
investor interest .........................................................9, 99
Investor Percentage ..........................................................79
Investor Principal Collections ...............................................99
Investor Servicing Fee .......................................................86
Investor Trust Cash Management Fee ...........................................86
Investor Trustee Payment Amount .............................................121
207
ISDA Definitions ............................................................140
ISIN/CUSIP ..................................................................202
Issue Date ..................................................................140
issuing entity .......................................................i, ii, 136
Issuing Entity Account .......................................................99
Issuing Entity Bank Accounts ................................................140
Issuing Entity Fault Swap Termination Amount ................................140
Issuing Entity Related Documents ............................................147
Jersey .......................................................................ii
London Stock Exchange .........................................................i
Margin ......................................................................140
Maximum Addition Amount ......................................................64
medium term note certificate ..................................................5
Minimum Aggregate Principal Receivables .....................................100
Minimum Originator Interest .................................................100
Modified Following Business Day Convention ..................................138
Monthly Loan Expenses Amount ................................................100
Moody's ......................................................................15
Most Senior Class ...........................................................145
MTN issuing entity ........................................................ii, 1
MTN issuing entity additional interest payments .............................123
MTN Issuing Entity Cash Manager .............................................172
MTN Issuing Entity Costs Amount .............................................100
No Adjustment ...............................................................138
Non-United States Holder ....................................................185
Note Certificate .......................................................140, 144
Note Trustee ................................................................136
Noteholders ............................................................136, 137
Notes .......................................................................136
Notice of Assignment .........................................................70
Notices .....................................................................140
OFT ..........................................................................24
OID .........................................................................186
optional early redemption ....................................................37
Originator Acquisition .......................................................74
Originator Cash Available for Acquisition ....................................80
Originator Certificate .......................................................74
Originator Ineligible Interest ...............................................78
Originator Interest ..........................................................77
Originator Percentage ........................................................77
Originator Section 75 Liability ........................................117, 177
Originator Servicing Fee .....................................................86
Originator Trust Cash Management Fee .........................................86
Participating Member State ..................................................140
Parties in Interest .........................................................190
Pay Out Commencement Date ...................................................141
Pay Out Event ...........................................................82, 141
Paying Agency and Agent Bank Agreement ......................................136
paying agent .................................................................42
Paying Agent ................................................................180
Paying Agents ..........................................................131, 136
Payment Business Day ........................................................140
Payment Date ................................................................140
PCAs .........................................................................32
Permitted Additional Jurisdiction ............................................69
Permitted Investments ........................................................77
Person ......................................................................141
PFIC ........................................................................187
Plan Asset Regulation .......................................................190
Plan Assets .................................................................190
Plans .......................................................................190
Pool Selection Date ..........................................................63
Portfolio Yield .............................................................100
pounds .......................................................................45
pounds sterling ..............................................................45
Preceding Business Day Convention ...........................................138
Principal Amount Outstanding ................................................141
Principal Collections Ledger .................................................79
Principal Financial Centre ..................................................141
Principal Funding Account ...................................................108
Principal Funding Investment Proceeds .......................................118
Principal Paying Agent .................................................131, 136
Principal Receivables ........................................................65
Principal Shortfalls ........................................................114
Programme ...................................................................136
prospectus directive .........................................................ii
prospectus rules ..............................................................4
prospectus supplement/final terms ...........................................136
QEF .........................................................................187
Qualified Electing Fund .....................................................187
Qualified Institution .......................................................100
Quotation Date .........................................................150, 155
Quoted Eurobonds ............................................................179
Rapid Amortisation Period ..............................................109, 141
Rapid Amortisation Trigger Event ............................................141
Rate of Interest ..................................................141, 148, 151
rating agencies ..............................................................15
Reallocated Class B Principal Collections ...................................101
Reallocated Class C Principal Collections ...................................101
Reallocated Class D Principal Collections ...................................101
Receivables Securitisation Agreement .........................................63
receivables trustee ..........................................................ii
Record Date .................................................................165
Redemption Period .......................................153, 155, 156, 159, 160
Redemption Rate ...................................................153, 155, 156
Redesignated Account .........................................................65
Redesignated Accounts ........................................................76
Reference Banks .............................................................141
Register ....................................................................144
Registered Notes ............................................................143
Registrar ...................................................................136
Regular Date ................................................................141
Regular Interest Payment Dates ..............................................141
Regular Period ..............................................................141
Regulated Amortisation Period ...............................................108
Regulated Amortisation Trigger Event ...................................108, 142
regulated market of the London Stock Exchange .................................i
Regulated Market of the London Stock Exchange ...............................162
regulations ..............................................................24, 37
Regulations .............................................................17, 182
regulatory call event ........................................................36
regulatory call option .......................................................36
Reinvested Investor Principal Collections ...................................101
Related Beneficiary Debt .....................................................75
Related Medium Term Note ....................................................219
208
Release Date ................................................................101
Relevant Date ...............................................................142
Relevant Documents ...........................................................53
Relevant Indebtedness .......................................................142
relevant provisions ..........................................................41
Relevant Screen Page ........................................................142
Required Retained Principal Collections .....................................101
Required Retained Principal Collections Percentage ..........................101
Required Series Cash Reserve Account Amount .................................119
Required Yield Reserve Amount ...............................................101
Restricted Additional Jurisdiction ...........................................69
Restricted Eligible Receivable ...............................................69
Retained Principal Collections ..............................................101
Revolving Period .......................................................106, 142
Scheduled Redemption Date ...................................................142
Screen Rate ..................................................149, 152, 153, 157
Screen Rates ...........................................................150, 155
SEC ...........................................................................i
Securities Act ..............................................................134
Securitised Portfolio ...................................................62, 225
Security ....................................................................145
Security Interest ...........................................................142
Series .................................................................136, 142
Series Cash Reserve Account .................................................119
Series Cash Reserve Account Percentage .................................120, 220
Series Debt Amount ..........................................................101
Series Distribution Account ............................................102, 142
Series Distribution Account Bank Agreement ..................................142
Series Distribution Ledger ..................................................102
Series Expenses Loan Drawing .................................................48
Series Extra Amount .........................................................117
Series investor interest ...............................................142, 220
Series Pay Out Events .......................................................122
Series Scheduled Redemption Date ............................................108
Series Servicing Fee Percentage ..............................................86
Series Supplements ...........................................................92
Series Termination Date .....................................................102
series trust deed supplement .................................................12
Servicer Default .............................................................87
Servicing Fee ................................................................86
Shared Monthly Principal Payment ............................................102
Shared Principal Collections ................................................114
Specified Currency ..........................................................142
Specified Denomination(s) ...................................................142
Specified Office ............................................................143
sponsor ......................................................................ii
Standard & Poor's ............................................................15
sterling .....................................................................45
Sub-Class .........................................................136, 143, 145
subordinated notes ............................................................i
Subsidiary ..................................................................143
Successor Servicer ...........................................................87
Successor Trust Cash Manager .................................................89
swap agreement ................................................................8
Swap Agreements .............................................................171
swap counterparty .............................................................7
Swap Counterparty Swap Event of Default .....................................143
TARGET Settlement Day .......................................................143
TARGET System ...............................................................143
teaser rates .................................................................30
The MTN Issuing Entity ......................................................203
Transfer Agent ..............................................................136
Treaty ......................................................................143
Trust Accounts ...............................................................78
Trust Cash Management Fee ....................................................86
Trust Cash Manager Default ...................................................89
Trust Deed ..................................................................136
Trust Deed Supplement .......................................................136
Trust Indenture Act .........................................................129
Trust Pay Out Events .........................................................81
Trustee Acquisition Account ..................................................78
Trustee Collection Account ...................................................78
Trustee Payment Amount .......................................................83
U.K. .........................................................................ii
U.S. dollars .................................................................45
U.S. Noteholder .............................................................179
U.S. offered notes ......................................................19, 184
U.S. tax counsel .............................................................19
U.S. Tax Counsel ............................................................184
U.S.$ ........................................................................45
UKLA ..........................................................................i
Unavailable Principal Collections ...........................................114
United Kingdom ...............................................................ii
United States Holder ........................................................184
United States person ........................................................184
Unutilised Excess Spread ....................................................123
US Paying Agent .............................................................136
Utilised Required Retained Principal Collections .......................102, 107
VAT ..........................................................................16
WAM .........................................................................186
we ...........................................................................ii
We ...........................................................................ii
Yield Reserve Account .......................................................118
Yield Reserve Account Funding Date ..........................................102
Zero Balance Account .........................................................66
209
INDEX OF APPENDICES
The appendices are an integral part of this base prospectus.
PAGE
----
A Form of Prospectus Supplement/Final Terms 211
B Report of Independent Registered Public Accounting Firm for Gracechurch Card
Programme Funding Limited 245
C Balance Sheet of Gracechurch Card Programme Funding Limited 247
D Notes to Financial Statement 248
E Report of Independent Registered Public Accounting Firm for Barclaycard Funding
PLC and subsidiary 249
F Unaudited Financial Statements of Barclaycard Funding PLC and subsidiary for the six
months ended 30 June 2007 250
G Notes to the Financial Statements for the six months ended 30 June 2007 251
H Report of Independent Registered Public Accounting Firm for Barclaycard Funding
PLC and subsidiary 252
I Financial Statements of Barclaycard Funding PLC and subsidiary for the year ended 31
December 2006, the year ended 31 December 2005 and the year ended 31 December
2004 253
J Notes to Financial Statements for the year ended 31 December 2006, the year ended 31
December 2005 and the year ended 14 December 2004 254
K Other Series Issued and Outstanding 255
210
[The information in this prospectus supplement 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. The prospectus
supplement and the accompanying prospectus are not an offer to sell these
securities and are not seeking an offer to buy these securities in any state
where the offer or sale is not permitted. The document does not constitute an
invitation to acquire, or an offer to sell, or an offer of the subscription,
purchase or otherwise of any shares, debentures or securities of the issuing
entity for the purposes of the United Kingdom Companies Act 1985 or in any
state where the offer or sale is not permitted or otherwise. This document does
not compromise final terms or Securities Note given in compliance with the
listing rules made under Part VI of the Financial Services and Markets Act 2000
of the United Kingdom nor has it been approved by the London Stock Exchange plc
or delivered to the Registrar of Companies in England or Wales. This document
may only be issued or passed on in the United Kingdom to a person who is of a
kind described in Article 19 and Article 49 of the Financial Services and
Market Act (Financial Promotion Order) 2001 (as amended) or is a person to whom
the document may otherwise lawfully be issued or (to the base prospectus
Dated[o]) passed on for the purpose of making arrangements for the syndication,
underwriting or marketing of an intermediaries offer of the Notes.]
APPENDIX A
FORM OF PROSPECTUS SUPPLEMENT/FINAL TERMS
PROSPECTUS SUPPLEMENT/FINAL TERMS DATED __
(to the base prospectus Dated [__], 2007)
GRACECHURCH CARD PROGRAMME FUNDING LIMITED
ISSUING ENTITY
(incorporated in Jersey, Channel Islands with limited liability under
registered number __)
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
under the $[__] Gracechurch Card Programme Funding Limited medium term note
programme
(ultimately backed by trust property in the receivables trust)
Barclays Bank PLC
sponsor, originator, trust cash manager and servicer
Barclaycard Funding plc
depositor and MTN issuing entity
The issuing entity class A notes class B notes class C notes
will issue
Principal Amount $[e][GBP] __,000,000 $[e][GBP] __,000,000 $[e][GBP] __,000,000
Interest rate __ __ __
Interest Payment __ __ __
Dates
Scheduled __, 20____ __, 20____ __, 20____
Redemption Date
Final Redemption __, 20____ __, 20____ __, 20____
Date
Price to public $[e][GBP] ,000,000 (or __%) $[e][GBP] ,000,000 (or __%) $[e][GBP] ,000,000 (or __%)
Underwriting $[e][GBP] ,000,000 (or __%) $[e][GBP] ,000,000 (or __%) $[e][GBP] ,000,000 (or __%)
discount or fee
Proceeds to Sponsor $[e][GBP] ,000,000 (or __%) $[e][GBP] ,000,000 (or __%) $[e][GBP] ,000,000 (or __%)
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. [The series
2000__-__ includes $[e]__,000,000 principal amount of class D notes which are
not offered hereby. Payments on the class D notes are subordinated to payments
on the class A, class B and class C notes. Information regarding the class D
notes is included in this prospectus supplement/final terms to assist
prospective investors understand the class A, class B and class C notes. ]
Class[es] __ will have the benefit of a __ swap between the issuing entity
and __ as swap counterparty.
211
NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE NOTES OR DETERMINED
IF THIS PROSPECTUS SUPPLEMENT/FINAL TERMS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.
[INSERT ADDITIONAL LEGENDS AS APPROPRIATE]
PLEASE REVIEW AND CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE [20]
OF THE BASE PROSPECTUS AND ANY ADDITIONAL RISK FACTORS ON PAGE __ OF THIS
PROSPECTUS SUPPLEMENT/FINAL TERMS BEFORE YOU PURCHASE ANY NOTES.
THE ULTIMATE SOURCE OF PAYMENT ON THE NOTES WILL BE COLLECTIONS ON CONSUMER
CREDIT AND CHARGE CARD ACCOUNTS ORIGINATED OR ACQUIRED IN THE UNITED KINGDOM BY
BARCLAYS BANK PLC ACTING THROUGH ITS BARCLAYCARD DIVISION.
THE NOTES OFFERED IN THIS BASE PROSPECTUS WILL BE OBLIGATIONS OF THE ISSUING
ENTITY ONLY. THEY WILL NOT BE OBLIGATIONS OF, NOR WILL THEY BE GUARANTEED BY,
ANY OTHER PARTY, INCLUDING BARCLAYS BANK PLC IN ANY OF ITS CAPACITIES, BARCLAYS
CAPITAL, BARCLAYCARD FUNDING PLC, GRACECHURCH RECEIVABLES TRUSTEE LIMITED OR
ANY OF THEIR AFFILIATES OR ADVISERS, SUCCESSORS OR ASSIGNS. THE ISSUING ENTITY
WILL ONLY HAVE A LIMITED POOL OF ASSETS TO SATISFY ITS OBLIGATIONS ON THE
NOTES.
You should read this prospectus supplement/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 Barclays Bank
PLC or by any United Kingdom or United States governmental agency.
Underwriter and Arranger
Barclays Bank PLC
U.S. Distributor
[__]
212
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 or the coupons 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 prospectus supplement/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 prospectus supplement/final terms and the base prospectus.
The base prospectus is available for viewing at [address] and [website] and
copies may be obtained from [address].
The issuing entity has confirmed to the underwriters named under
"Underwriting" below that this prospectus supplement/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 prospectus supplement/final terms are honestly
held or made and are not misleading in any material respect; that this
prospectus supplement/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 prospectus
supplement/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 underwriter.
Neither the delivery of this prospectus supplement/final terms nor the
offering, sale or delivery of any note shall, in any circumstances, create any
implication that the information contained in this prospectus supplement/final
terms is true subsequent to the date hereof or the date upon which any future
prospectus supplement/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 prospectus supplement/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 prospectus supplement/final terms and the offering,
sale and delivery of the notes in certain jurisdictions may be restricted by
law. Persons in possession of the prospectus supplement/final terms are
required by the issuing entity and the underwriters 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
prospectus supplement/final terms and other offering material relating to the
notes, see "Underwriting" 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 of their unsold allotment or
subscription.
213
The maximum aggregate principal amount of notes outstanding at any one time
under the programme will not exceed $[__] (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 (calculated in accordance with the
provisions of the underwriting agreements)). 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 underwriting agreements.
Certain figures included in this prospectus supplement/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.
The information about the series 200[__]-[__] notes appears in two separate
documents: a base prospectus and this prospectus supplement/final terms. The
base prospectus provides general information about each series of Notes issued
under the Gracechurch Card Programme Funding Limited medium term note
programme, some of which may not apply to the series 200[__]-[__] notes
described in this prospectus supplement/final terms. With respect to the series
200[__]-[__] notes, this prospectus supplement/final terms is the "relevant
prospectus supplement/final terms" or the "applicable prospectus supplement/
final terms" referred to in the base prospectus.
This prospectus supplement/final terms may be used to offer and sell the
series 200[__]-[__] notes only if accompanied by the base prospectus.
This prospectus supplement/final terms supplements, with respect to the
series 200[__]-[__] notes, the disclosure in the base prospectus.
You should rely only on the information in this prospectus supplement/final
terms and the base prospectus, including information incorporated by reference.
We have not authorised anyone to provide you with different information.
214
CONTENTS
PAGE
Transaction Features........................................ 216
MTN Note Supporting Series.................................. 219
Series investor interest Supporting Medium Term Note........ 220
Parties..................................................... 221
Swap Agreements............................................. 222
Other Series of Notes and MTN Notes Issued.................. 223
Additional Risk Factors Applying only to Series 200[__]-[__] 224
Portfolio Information....................................... 225
Delinquency and Loss Experience............................. 225
Maturity Assumptions........................................ 229
Receivables Information..................................... 230
Plan of Distribution........................................ 237
Listing Application......................................... 239
Responsibility.............................................. 240
General Information......................................... 241
215
TRANSACTION FEATURES
This prospectus supplement/final terms may supplement the disclosure in the
base prospectus. The series 200__-__ notes will be governed, to the extent not
described in this prospectus supplement/final terms, by the applicable
provisions of the base prospectus. Unless otherwise indicated, words and
expressions defined in the base prospectus shall have the same meanings below.
INITIAL PRINCIPAL $ EQUIVALENT INITIAL
CLASS OF NOTES BALANCE PRINCIPAL BALANCE % OF TOTAL
----------------- -------------------- ----------
A $[e][GBP]__ $__ __
B $[e][GBP]__ $__ __
C $[e][GBP]__ $__ __
[D (not offered hereby) $[e][GBP]__ $__ __]
--------------------------------
$__ 100%
SERIES OF NOTES ISSUED
SERIES NUMBER: SERIES 200__-__
CLASS OF NOTES: A B C
ANTICIPATED RATINGS: __ __ __
RATING AGENCIES: __ __ __
ISSUE DATE: __ __ __
ISSUE PRICE: __ per cent. __ per cent. __ per cent.
NET PROCEEDS: __ __ __
Class __ notes Class __ notes Class __ notes
are to be are to be are to be
SPECIFIED CURRENCY: denominated in __ denominated in __ denominated in __
MINIMUM DENOMINATION: __ __ __
SPECIFIED DENOMINATION(S): __ __ __
FIXED OR FLOATING
DESIGNATION: __ __ __
SERIES SCHEDULED REDEMPTION
DATE: __ __ __
FINAL REDEMPTION DATE: __ __ __
INITIAL RATE (IF APPLICABLE): __ __ __
MARGIN: __ __ __
LIBOR/EURIBOR __ __ __
DAY COUNT FRACTIONS: __ __ __
INTEREST COMMENCEMENT
DATE: __ __ __
FLOATING RATE COMMENCEMENT DATE
(IF APPLICABLE): __ __ __
216
SERIES NUMBER: SERIES 200__-__
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 MARGIN: __
ADDITIONAL DETAILS OF RELATED
SWAP AGREEMENT (IF ANY): __ __ __
INTERNAL CREDIT SUPPORT-
SUBORDINATION: __ __ __
217
PAYMENT PRIORITIES AND Within series 200[__]-[__], amounts received by the
ALLOCATION OF FUNDS: issuing entity from the MTN issuing entity will be
applied, pre-enforcement of the trust deed and the
relevant trust deed supplement, in a manner whereby
notes of each class and sub-class will rank pari passu
and pro rata among themselves without preference or
priority among themselves. However, the class B notes
(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)) while the class C notes (and every
subclass 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))
[while the class D notes (and every subclass 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)), the class B notes (and
every sub-class thereof (if any)) and the class C
notes (and every sub-class thereof (if any))].
Payments due to swap counterparties (if any) will be
subordinate to payments of interest on the Notes with
payments to a swap counterparty for a swap with
respect to the class B notes (and every sub-class
thereof) being subordinate in right to the payments to
a swap counterparty for a swap with respect to the
class A notes (and every sub-class thereof) and with
payments to a swap counterparty for a swap with
respect to the class C notes (and every sub-class
thereof) being subordinate in right to the payments to
a swap counterparty for a swap with respect to the
class A notes (and every sub-class thereof) and the
class B notes (and every sub-class thereof) [and with
payments to a swap counterparty for a swap with
respect to the class D notes (and every sub-class
thereof) being subordinate in right to the payments to
a swap counterparty for a swap with respect to the
class A notes (and every sub-class thereof), the class
B notes (and every sub-class thereof) and the class C
notes (and every sub-class thereof)]. Following
enforcement of the trust deed and the relevant trust
deed supplement, interest and principal in respect of
each class of notes will be paid pari passu and pro
rata so that the most senior class will have all
accrued interest and all principal paid before any
subordinated class.
Please see the section entitled "Securitisation
Cashflows" on page [92] of the base prospectus and
"The Notes -- Payment" on page [132] of the base
prospectus.
CLEARING AND
SETTLEMENT: __
BUSINESS DAY
CONVENTION: __
ESTIMATED TOTAL
EXPENSES RELATED TO
ADMISSION TO TRADING: __
[ERISA]: __
REQUIRED RETAINED
PRINCIPAL COLLECTIONS
PERCENTAGE: __
CASH MANAGEMENT FEE: __
218
MTN NOTE SUPPORTING SERIES
The series 200__-__ notes will be collateralised by the series 200__-__ Medium
Term Note (the "RELATED MEDIUM TERM NOTE") which shall have the following terms
as set out in the series 200__-__ medium term note supplement.
DESIGNATION FOR THE PURPOSES OF THE SECURITY TRUST
DEED AND MTN ISSUING CASH MANAGEMENT
AGREEMENT: SERIES 200__-__
ISSUANCE DATE: __
INITIAL PRINCIPAL AMOUNT: __
MEDIUM TERM NOTE CERTIFICATE FIRST INTEREST
PAYMENT DATE: __
MEDIUM TERM NOTE CERTIFICATE INTEREST PAYMENT
DATE: __
MEDIUM TERM NOTE CERTIFICATE INTEREST PERIOD: __
REQUIRED YIELD 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: __
[CLASS D INITIAL INVESTOR INTEREST: __]
MEDIUM TERM NOTE CERTIFICATE INTEREST RATE:
219
SERIES INVESTOR INTEREST SUPPORTING MEDIUM TERM NOTE
The series 200__-__ medium term 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__-__ supplement to the
declaration of trust and trust cash management agreement.
Designation for the purposes of the Receivables Trust
Deed Supplement: Series 200__-__
Issuance Date: __
Initial Principal Amount: __
First Payment Date: __
Class A Finance Rate: __
Class B Finance Rate: __
Class C Finance Rate: __
[Class D Finance Rate: __]
Series Scheduled Redemption Date: __
Controlled Deposit Amount: __
Series Termination Date: __
Additional Early Redemption Events: None/ __
Series Initial Investor Interest: [GBP]__
Release Date: __
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 12 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 "SERIES CASH RESERVE ACCOUNT PERCENTAGE" will be determined on each
Determination Date by the level of the quarterly excess spread percentage as
follows:
QUARTERLY EXCESS SPREAD PERCENTAGE SERIES CASH RESERVE ACCOUNT PERCENTAGE
- ----------------------------------------------------- --------------------------------------
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 Series Cash Reserve Account Percentage has been increased above 0 per
cent. as specified in the table above, the Series Cash Reserve Account
Percentage will remain at that percentage until: (1) either 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 Series Cash Reserve Account Percentage.
The Series Cash Reserve Account Percentage will be decreased to the appropriate
percentage as stated above.
220
PARTIES
Lead underwriter(s): Barclays Bank PLC
Underwriters: [to be completed]
U.S. Distributor: [to be completed]
Issuing Entity: Gracechurch Card Programme Funding Limited.
Note Trustee: The Bank of New York, acting through its London
branch. The Note Trustee's address, at the date of
this prospectus supplement/final terms, is One Canada
Square, London E14 5AL, United Kingdom.
Principal Paying Agent, The Bank of New York, acting through its London
U.K. Registrar and Agent branch. The Principal Paying Agent will make payments
Bank for the Notes: 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, United Kingdom.
U.S. Registrar and U.S. The Bank of New York, acting through its New York
Paying Agent: branch. The Bank of New York's address in New York is
One Wall Street, New York, New York 10286, United
States.
Receivables Trustee: Gracechurch Receivables Trustee Limited
MTN Issuing Entity, Barclaycard Funding plc
Investor Beneficiary and
Depositor:
Sponsor, Originator and Barclays Bank PLC
Originator Beneficiary:
Servicer: Barclays Bank PLC
Security Trustee: The Bank of New York, acting through its London
Branch
Swap Counterparty for [___]
Series 200[__]-[__]:
221
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 made in
substantially the same manner as that used in the sponsor's internal risk
management process in respect of credit card receivables, the significance
percentage of the derivative counterparty in respect of the derivative
agreement is [less than 10%] [__]%.]
[If the significance percentage of the derivative counterparty in respect of
the derivative agreement is 10% or more, but less than 20%, include or
incorporate by reference selected financial data complying with Item 1115(b)(1)
of Regulation AB in the prospectus supplement.]
[If the significance percentage of the derivative counterparty in respect of
the derivative agreement is 20% or more, include or incorporate by reference
financial statements complying with Item 1115(b)(2) of Regulation AB in the
prospectus supplement.]
222
OTHER SERIES OF NOTES AND MTN NOTES ISSUED
NOTES -- GRACECHURCH CARD PROGRAMME FUNDING LIMITED AND PREDECESSORS
Series Ratings Issuance Tranche Note Scheduled Final
Date Size Interest Redemption Redemption
Rate Date Date
__ __ __ __ __ __ __
MEDIUM TERM NOTE CERTIFICATES -- BARCLAYCARD FUNDING PLC
Series Issuance Date Tranche Size Note Interest Scheduled Final
Rate Redemption Redemption
Date Date
__ __ __ __ __ __
223
ADDITIONAL RISK FACTORS APPLYING ONLY TO SERIES 200[__]-[__]
224
PORTFOLIO INFORMATION
The following tables show information relating to the portfolios. The first set
of tables show the historic performance of Eligible Accounts originated using
Barclays' underwriting criteria (the "BARCLAYS PORTFOLIO"). Certain of the
receivables from these accounts will ultimately back the notes. The second set
of tables show certain information regarding the receivables that comprise the
receivables trust (the "SECURITISED PORTFOLIO").
STATIC POOL INFORMATION
[Static pool information regarding the performance of the receivables in the
receivables trust since [__] Quarter 200[__] is being provided through a
website at http://[*].] See "Where You Can Find More Information" in the base
prospectus.
RECEIVABLE YIELD CONSIDERATIONS
The following table sets forth the gross revenues from finance charges and fees
billed to accounts in the Barclays Portfolio, for each of the years ended __,
__, __, __, and __ and for the __ months ended __. Each table has been provided
by Barclaycard 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 an accrual basis. Collections of
receivables included in the 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.
BARCLAYS PORTFOLIO YIELD
(non percentage amounts are expressed in sterling)
__ MONTHS
ENDED __ YEAR ENDED
--------- -----------------------
Average Receivables Outstanding(1)(2)............ __ __ __ __ __ __
Finance Charges(3)............................... __ __ __ __ __ __
Fees(3).......................................... __ __ __ __ __ __
Interchange...................................... __ __ __ __ __ __
Yield from Finance Charges(4).................... __ __ __ __ __ __
Yield from Fees(4)............................... __ __ __ __ __ __
Yield from Interchange(4)........................ __ __ __ __ __ __
Total Yield from Charges, Fees and Interchange(4)
Notes:
(1) The receivables outstanding on the accounts consist of amounts due from
obligors as posted to the accounts as of the date above.
(2) Average receivables outstanding is the average of the month end balances
for the period indicated.
(3) Finance charges and fees are comprised of monthly periodic charges and
other credit card fees net of adjustments made pursuant to Barclays' normal
servicing procedures, including removal of incorrect or disputed monthly
periodic finance charges.
(4) Yield percentages for the __ months ending __ 200__ are presented on an
annualised basis.
[Discussion of information presented in table to follow]
DELINQUENCY AND LOSS EXPERIENCE
The following tables set forth the delinquency and loss experience for each of
the periods shown for the Barclays Portfolio of credit card accounts as well as
provisions for bad and doubtful debt. The Barclays 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
Barclays Portfolio of credit card accounts. Because the Securitised Portfolio
is only a portion of the Barclays Portfolio, actual delinquency and loss
experience with respect to the Receivables comprised therein may be different
from that set forth below for the Barclays 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
225
experience of the Barclays Portfolio set forth below. For further information,
please see the base prospectus.
226
DELINQUENCY AND LOSS EXPERIENCE
BARCLAYS PORTFOLIO
(non percentage amounts are expressed in sterling)
__ __
__ __ __ __
-------------------------- -------------------------- -------------------------- -----------
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
TOTAL TOTAL TOTAL
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 or more
Delinquent ......... __ __ __ __ __ __ __
__
__ __ __
------------- -------------------------- --------------------------
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
TOTAL TOTAL TOTAL
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 or more
Delinquent ......... __ __ __ __ __
Note:
The Receivables Outstanding on the accounts consist of all amounts due from
account holders as posted to the accounts as of the respective dates set forth
above.
227
NET CHARGE-OFF EXPERIENCE
BARCLAYS PORTFOLIO
(non percentage amounts are expressed in sterling)
__ __
-------------------------- -------------------------------------------------------------------
__ __ __ __
-------------------------- -------------------------- -------------------------- -----------
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
TOTAL TOTAL TOTAL
RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES
----------- ------------- ----------- ------------- ----------- ------------- -----------
Average
Receivables
Outstanding (1) (4) __ __ __ __ __ __ __
Total Gross
Charge-Offs (2)
(4)................ __ __ __ __ __ __ __
Recoveries (3) (4).. __ __ __ __ __ __ __
Total Net Charge-
Offs(4)............ __ __ __ __ __ __ __
Total Net
Charge-Offs as
a percentage of
Average
Receivables
Outstanding(4)..... __ __ __ __ __ __ __
__
---------------------------------------------------------------------
__ __ __
------------- -------------------------- --------------------------
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
TOTAL TOTAL TOTAL
RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES
------------- ----------- ------------- ----------- -------------
Average
Receivables
Outstanding (1) (4) __ __ __ __ __
Total Gross
Charge-Offs (2)
(4)................ __ __ __ __ __
Recoveries (3) (4).. __ __ __ __ __
Total Net Charge-
Offs(4)............ __ __ __ __ __
Total Net
Charge-Offs as
a percentage of
Average
Receivables
Outstanding(4)..... __ __ __ __ __
Notes:
(1) Average receivables outstanding is the average of the month end balances
during the period indicated.
(2) Total gross charge-offs are total principal and fee 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. See "The Receivables" in the
accompanying base prospectus.
(3) Recoveries are payments received in respect of principal and fee amounts on
accounts which have been previously written off.
(4) All percentages shown above are annualised.
[Discussion of information presented in table to follow]
228
MATURITY ASSUMPTIONS
The following table sets forth the highest and lowest cardholder monthly
payment rates for the Barclays 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 PAYMENT RATES
BARCLAYS PORTFOLIO
__ YEAR ENDED
--- -----------------------
__ __ __ __ __ __
--- --- --- --- --- ---
Lowest Month... __ __ __ __ __ __
Highest Month.. __ __ __ __ __ __
Monthly Average __ __ __ __ __ __
[Discussion of information presented in table to follow]
229
RECEIVABLES INFORMATION
As at [__]
SECURITISED PORTFOLIO YIELD
(non percentage amounts are expressed in sterling)
__ MONTHS
ENDED __ YEAR ENDED
--------- -----------------------
Average Receivables Outstanding(1)(2) __ __ __ __ __ __
Finance Charges(3)................... __ __ __ __ __ __
Fees(3).............................. __ __ __ __ __ __
Interchange.......................... __ __ __ __ __ __
Yield from Finance Charges(4)........ __ __ __ __ __ __
Yield from Fees(4)................... __ __ __ __ __ __
Yield from Interchange(4)............ __ __ __ __ __ __
Total Yield from Charges, Fees and
Interchange(4) .....................
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 Barclays
normal servicing procedures, including removal of incorrect or disputed
monthly periodic finance charges.
(3) Yield percentages for the [__] months ended [__] and for the [__] months
ended [__] are presented on an annualised basis.
DELINQUENCY AND LOSS EXPERIENCE
The following tables set forth the delinquency and loss experience of
Barclaycard's securitised portfolio of VISA and MasterCard credit and charge
card accounts denominated in pounds sterling -- the Securitised Portfolio --
for each of the periods shown. The Securitised Portfolio includes platinum,
gold and classic VISA and MasterCard credit cards and the Premier VISA charge
card. The Securitised Portfolio currently does not include the portfolio of
credit card accounts acquired by Barclaycard with Barclays PLC's purchase of
Woolwich in October 2000 or the portfolio of credit card accounts purchased
from Providian's U.K. operations in April 2002 or the portfolio of store card
accounts purchased from Clydesdale Financial Services in May 2003. Because the
economic environment may change, we cannot assure you that the delinquency and
loss experience of the securitised portfolio will be the same as the historical
experience set forth below.
The delinquency statistics are obtained from billing cycle information as
opposed to month end positions.
230
DELINQUENCY AND LOSS EXPERIENCE
SECURITISED PORTFOLIO
__ MONTHS ENDED YEAR ENDED
-------------------------- ----------------------------------------------------------------------------------
__ __ __ __
-------------------------- -------------------------- -------------------------- --------------------------
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
TOTAL TOTAL TOTAL 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 or __ __ __ __ __ __ __ __
more Delinquent __ __ __ __ __ __ __ __
YEAR ENDED
------------------------------------------------------
__ __
-------------------------- --------------------------
PERCENTAGE OF PERCENTAGE OF
TOTAL TOTAL
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 or __ __ __ __
more Delinquent __ __ __ __
Note:
Note 1 Receivable delinquent balances are as at the latest billing date before
the dates shown. The percentages are computed as a percentage of receivables as
at the dates shown.
Note 2 Includes accounts on repayment programmes
[Discussion of information presented in table to follow]
231
NET CHARGE-OFF EXPERIENCE
SECURITISED PORTFOLIO
__ MONTHS ENDED YEAR ENDED
-------------------------- ----------------------------------------------------------------------------------
__ __ __ __
-------------------------- -------------------------- -------------------------- --------------------------
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
TOTAL TOTAL TOTAL TOTAL
RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES
----------- ------------- ----------- ------------- ----------- ------------- ----------- -------------
Average......... __ __ __ __ __ __ __ __
Receivables
Outstanding ... __ __ __ __ __ __ __ __
Total Gross..... __ __ __ __ __ __ __ __
Charge-Offs..... __ __ __ __ __ __ __ __
Recoveries...... __ __ __ __ __ __ __ __
Total Net....... __ __ __ __ __ __ __ __
Charge-Offs..... __ __ __ __ __ __ __ __
Total Net....... __ __ __ __ __ __ __ __
Charge-Offs as a __ __ __ __ __ __ __ __
percentage of... __ __ __ __ __ __ __ __
Average......... __ __ __ __ __ __ __ __
Receivables..... __ __ __ __ __ __ __ __
Outstanding..... __ __ __ __ __ __ __ __
YEAR ENDED
------------------------------------------------------
__ __
-------------------------- --------------------------
PERCENTAGE OF PERCENTAGE OF
TOTAL TOTAL
RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES
----------- ------------- ----------- -------------
Average......... __ __ __ __
Receivables
Outstanding ... __ __ __ __
Total Gross..... __ __ __ __
Charge-Offs..... __ __ __ __
Recoveries...... __ __ __ __
Total Net....... __ __ __ __
Charge-Offs..... __ __ __ __
Total Net....... __ __ __ __
Charge-Offs as a __ __ __ __
percentage of... __ __ __ __
Average......... __ __ __ __
Receivables..... __ __ __ __
Outstanding..... __ __ __ __
Notes:
(1) Average receivables outstanding is the average monthly receivable balance
during the periods indicated.
(2) Receivables are total receivables generated from the portfolio, including
finance charges and principal.
[Discussion of information presented in table to follow]
232
MATURITY ASSUMPTIONS
The following table sets forth the highest and lowest cardholder monthly
payment rates for the Securitised 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.
CARDHOLDER MONTHLY PAYMENT RATES
SECURITISED PORTFOLIO
__ MONTHS ENDED YEAR ENDED
-------------------------- ----------------------------------------------------------------------------------
__ __ __ __
-------------------------- -------------------------- -------------------------- --------------------------
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
TOTAL TOTAL TOTAL TOTAL
RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES
----------- ------------- ----------- ------------- ----------- ------------- ----------- -------------
Lowest......... __ __ __ __ __ __ __ __
Highest Month.. __ __ __ __ __ __ __ __
Monthly Average __ __ __ __ __ __ __ __
YEAR ENDED
------------------------------------------------------
__ __
-------------------------- --------------------------
PERCENTAGE OF PERCENTAGE OF
TOTAL TOTAL
RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES
----------- ------------- ----------- -------------
Lowest......... __ __ __ __
Highest Month.. __ __ __ __
Monthly Average __ __ __ __
For further information, please see "Maturity Assumptions" in the base
prospectus.
233
The following tables summarise the Securitised Portfolio by various criteria as
of the billing dates of accounts in the month ending on [__]. Each table has
been provided by Barclays Bank PLC 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 __.
For an indication of the credit quality of the cardholders whose receivables
are included in the Securitised Portfolio, investors may refer to the
discussion under "Barclaycard and the Barclaycard Card Portfolio" in the
accompanying base prospectus (page [59]), and to the historical performance of
the Securitised Portfolio included in this set of final terms and of the
historical performance of the Barclays Portfolio available as set forth under
"Portfolio Information -- Static Pool Information". In particular, significant
indicatives of the credit quality are the accountholders' payment behaviour
summarized in the table "Composition by Payment Behaviour -- Securitised
Portfolio" (page [236]) and the delinquency profile of the Securitised
Portfolio set forth in the tables "Composition by Period of Delinquency --
Securitised Portfolio" (page [235]) and "Delinquency and Loss Experience --
Securitised Portfolio" (page [231]).
COMPOSITION BY ACCOUNT BALANCE
SECURITISED PORTFOLIO
PERCENTAGE
TOTAL OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF OF TOTAL
ACCOUNT BALANCE RANGE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- -------------------------- --------- ---------- ----------- -----------
__ __% [GBP]__ __%
Credit Balance............ __ __% [GBP]__ __%
No Balance................ __ __% [GBP]__ __%
[GBP]1 -- [GBP]499........ __ __% [GBP]__ __%
[GBP]500 -- [GBP]999...... __ __% [GBP]__ __%
[GBP]1,000 -- [GBP]1,999.. __ __% [GBP]__ __%
[GBP]2,000 -- [GBP]2,999.. __ __% [GBP]__ __%
[GBP]3,000 -- [GBP]3,999.. __ __% [GBP]__ __%
[GBP]4,000 -- [GBP]4,999.. __ __% [GBP]__ __%
[GBP]5,000 -- [GBP]5,999.. __ __% [GBP]__ __%
[GBP]6,000 -- [GBP]6,999.. __ __% [GBP]__ __%
[GBP]7,000 -- [GBP]7,999.. __ __% [GBP]__ __%
[GBP]8,000 -- [GBP]8,999.. __ __% [GBP]__ __%
[GBP]9,000 -- [GBP]9,999.. __ __% [GBP]__ __%
[GBP]10,000 -- [GBP]10,999 __ __% [GBP]__ __%
[GBP]11,000 -- [GBP]11,999 __ __% [GBP]__ __%
[GBP]12,000 -- [GBP]12,999 __ __% [GBP]__ __%
[GBP]13,000 -- [GBP]13,999 __ __% [GBP]__ __%
[GBP]14,000 -- [GBP]14,999 __ __% [GBP]__ __%
[GBP]15,000 -- [GBP]19,999 __ __% [GBP]__ __%
[GBP]20,000 or more....... __ __% [GBP]__ __%
TOTAL..................... __ 100.0% [GBP]__ 100.0%
========= ========== =========== ===========
234
COMPOSITION BY CREDIT LIMIT
SECURITISED PORTFOLIO
PERCENTAGE
TOTAL OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF OF TOTAL
CREDIT LIMIT RANGE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- -------------------------- --------- ---------- ----------- -----------
[GBP]0 -- [GBP]999.... __ __% [GBP]__ __%
[GBP]1,000 -- [GBP]1,999.. __ __% [GBP]__ __%
[GBP]2,000 -- [GBP]2,999.. __ __% [GBP]__ __%
[GBP]3,000 -- [GBP]3,999.. __ __% [GBP]__ __%
[GBP]4,000 -- [GBP]4,999.. __ __% [GBP]__ __%
[GBP]5,000 -- [GBP]5,999.. __ __% [GBP]__ __%
[GBP]6,000 -- [GBP]6,999.. __ __% [GBP]__ __%
[GBP]7,000 -- [GBP]7,999.. __ __% [GBP]__ __%
[GBP]8,000 -- [GBP]8,999.. __ __% [GBP]__ __%
[GBP]9,000 -- [GBP]9,999.. __ __% [GBP]__ __%
[GBP]10,000 -- [GBP]10,999 __ __% [GBP]__ __%
[GBP]11,000+.............. __ __% [GBP]__ __%
TOTAL..................... __ 100.0% [GBP]__ 100.0%
========= ========== =========== ===========
COMPOSITION BY PERIOD OF DELINQUENCY
SECURITISED PORTFOLIO
TOTAL PERCENTAGE PERCENTAGE
PERIOD OF DELINQUENCY (DAYS NUMBER OF OF TOTAL NUMBER OF OF TOTAL
CONTRACTUALLY DELINQUENT) ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- --------------------------- --------- ------------------ ----------- -----------
Not Delinquent............. __ __% [GBP]__ __%
Up-29 days................. __ __% [GBP]__ __%
30-59 days................. __ __% [GBP]__ __%
60 to 89 days.............. __ __% [GBP]__ __%
90-119 days................ __ __% [GBP]__ __%
120-149 days............... __ __% [GBP]__ __%
150-179 days............... __ __% [GBP]__ __%
180 or more days........... __ __% [GBP]__ __%
TOTAL...................... __ 100.0% [GBP]__ 100.0%
========= ================== =========== ===========
COMPOSITION BY ACCOUNT AGE
SECURITISED PORTFOLIO
PERCENTAGE
TOTAL OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF OF TOTAL
ACCOUNT AGE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- ----------------- --------- ---------- ----------- -----------
0 -- 6 months.... __ __% [GBP]__ __%
7 -- 18 months... __ __% [GBP]__ __%
19 -- 30 months.. __ __% [GBP]__ __%
31 -- 42 months.. __ __% [GBP]__ __%
43 -- 54 months.. __ __% [GBP]__ __%
55 -- 66 months.. __ __% [GBP]__ __%
67 -- 78 months.. __ __% [GBP]__ __%
79 -- 90 months.. __ [GBP]__ __%
91 -- 102 months. __ __% [GBP]__ __%
103 -- 114 months __ __% [GBP]__ __%
115 -- 149 months __ __% [GBP]__ __%
150 -- 199 months __ __% [GBP]__ __%
200 -- 249 months __ __% [GBP]__ __%
250 -- 299 months __ __% [GBP]__ __%
300 -- 349 months __ __% [GBP]__ __%
350+ months...... __ __% [GBP]__ __%
TOTAL............ __ 100.0% [GBP]__ 100.0%
========= ========== =========== ===========
235
COMPOSITION BY PAYMENT BEHAVIOUR
SECURITISED PORTFOLIO
PERCENTAGE
TOTAL OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF OF TOTAL
PAYMENT BEHAVIOUR ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- ------------------------------- --------- ---------- ----------- -----------
Receivables Accounts with
minimum payment made......... __ __% [GBP]__ __%
Accounts with full payment made __ __% [GBP]__ __%
GEOGRAPHIC DISTRIBUTION OF ACCOUNTS
SECURITISED PORTFOLIO
PERCENTAGE
TOTAL OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF OF TOTAL
REGION ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- ------------------- --------- ---------- ----------- -----------
[Border]........... __ __% [GBP]__ __%
[Central Scotland]. __ __% [GBP]__ __%
[East of England].. __ __% [GBP]__ __%
[Lancashire]....... __ __% [GBP]__ __%
[London]........... __ __% [GBP]__ __%
[Midlands]......... __ __% [GBP]__ __%
[North East]....... __ __% [GBP]__ __%
[Northern Scotland] __ __% [GBP]__ __%
[South West]....... __ __% [GBP]__ __%
[Southern]......... __ __% [GBP]__ __%
[Wales and West]... __ __% [GBP]__ __%
[Yorkshire]........ __ __% [GBP]__ __%
[Northern Ireland]. __ __% [GBP]__ __%
[Null Postcode].... __ __% [GBP]__ __%
TOTAL.............. __ 100.0% [GBP]__ 100.0%
========= ========== =========== ===========
236
PLAN OF DISTRIBUTION
NAMES OF UNDERWRITERS: [GIVE NAMES]
STABILISING MANAGER (IF ANY): [Give names]
ADDITIONAL SELLING RESTRICTIONS: [Give Details]
CLASS A CLASS B CLASS C
-------------- ------- -------
ISIN: __ __ __
COMMON CODE: __ __ __
CUSIP: __ __ __
Subject to the terms and conditions of the underwriting agreements as
supplemented by the relevant subscription agreement for these series 200__-__
notes, the issuing entity has agreed to sell to each of the underwriters named
below, and each of those underwriters has severally agreed to purchase, the
Principal Amount of these series 200__-__ notes set forth opposite its name:
UNDERWRITERS CLASS A CLASS B CLASS C AGGREGATE AMOUNT
- ------------ ------- ------- ------- ----------------
__.......... __ __ __ __
__.......... __ __ __ __
------- ------- ------- ----------------
Total....... $
======= ======= ======= ================
The several underwriters have agreed, subject to the terms and conditions of
the underwriting agreements, to purchase all [GBP]/[e]/$__ aggregate principal
amount of the series 200__-__ class A, class B and class C notes if any of such
notes are purchased. [Purchase of the class A, class B and class C note of the
series 200__-__ is also subject to the sale by the issuing entity of [GBP]/[e]/
$__ aggregate principal amount of class D Notes of the same series.]
After the public offering, the public offering price and other selling terms
may be changed by the underwriters.
In connection with the sale of these series 200__-__ notes, the underwriters
may engage in:
* over-allotments, in which members of the syndicate selling these series
200__-__ notes sell more notes than the issuing entity actually sold to
the syndicate, creating a syndicate short position;
* stabilising transactions, in which purchases and sales of these series
200__-__ notes may be made by the members of the selling syndicate at
prices that do not exceed a specified maximum;
* syndicate covering transactions, in which members of the selling
syndicate purchase these series 200__-__ notes in the open market after
the distribution has been completed in order to cover syndicate short
positions; and
* penalty bids, by which underwriters reclaim a selling concession from a
syndicate member when any of these series 200__-__ notes originally sold
by that syndicate member are purchased in a syndicate covering
transaction to cover syndicate short positions.
These stabilising transactions, syndicate covering transactions and penalty
bids may cause the price of these series 200__-__ to be higher than it would
otherwise be. These transactions, if commenced, may be discontinued at any
time.
The issuing entity has agreed to indemnify the underwriters against certain
liabilities, including liabilities under applicable securities laws.
[The gross proceeds of the issue of the notes will be [GBP]/[e]/$__. 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__-__ medium term note issued
by the MTN issuing entity on
237
the relevant closing date. The net proceeds of the issue of the class A notes
will be __, the net proceeds of the class B notes will be __, the net proceeds
of the class C notes will be __ [and the net proceeds of the class D notes will
be __].]
238
LISTING APPLICATION
This section comprises the prospectus supplement/final terms required to list
the issue of notes described herein pursuant to the Gracechurch Card Programme
Funding Limited medium term note programme of the issuing entity.
239
RESPONSIBILITY
The issuing entity accepts responsibility for the information contained in this
prospectus supplement/final terms.
Signed on behalf of the issuing entity:
By:
duly authorised
240
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
__. 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 prospectus supplement/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 underwriter(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 prospectus supplement/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 prospectus supplement/final terms.
The issuing entity has approved the issue of these securities by board
resolution dated __.
A copy of the base prospectus has been delivered to the Registrar of Companies
in accordance with Article 5 of the Companies (General Provisions) (Jersey)
Order 2002 and he has given, and has not withdrawn, his consent to its
circulation and the circulation of this prospectus supplement/final terms
PROVIDED THAT a copy will be delivered to the Registrar of Companies within 14
days of the date hereof.
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.
If you are in any doubt about the contents of the base prospectus or this
prospectus supplement/final terms you should consult your stockbroker, bank
manager, solicitor, accountant or other financial adviser.
It should be remembered that the price of securities and the income from them
can go down as well as up.
Save as disclosed in this prospectus supplement/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, governmental, 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 prospectus supplement/
final terms significant effects on the financial position or profitability of
the issuing entity.
There are no, nor have there been any, governmental, legal or arbitration
proceedings against or affecting the MTN issuing entity or any of its assets or
revenues, nor is the MTN issuing entity aware of any pending or threatened
proceedings of such kind, which may have or have had during the months since
the
241
base prospectus was first filed to the date of this prospectus supplement/final
terms significant effects on the financial position or profitability of the MTN
issuing entity.
There are no, nor have there been any, governmental, 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 prospectus supplement/
final terms significant effects on the financial position or profitability of
the Receivables Trustee.
There has been no significant change in the financial or trading position of
the issuing entity and there has been no material adverse change in the
financial position or prospects of the issuing entity since [date].
There has been no significant change in the financial or trading position of
the MTN issuing entity and there has been no material adverse change in the
financial position or prospects of the MTN issuing entity since [date].
There has been no significant change in the financial or trading position of
the Receivables Trustee and there has been no material adverse change in the
financial position or prospects of the Receivables Trustee since [date].
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 at the offices
of Clifford Chance LLP, 10 Upper Bank Street, London E14 5JJ, England during
usual business hours on any weekday, apart from Saturdays, Sundays and public
holidays, by electronic means:
(i) master definitions schedule;
(ii) Receivables Securitisation Agreement;
(iii) declaration of trust and trust cash management agreement;
(iv) the current base prospectus in relation to the programme, together with
any amendments;
(v) any prospectus supplement/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
prospectus supplement/final terms will only be available for inspection
by the relevant Noteholders);
(vi) form of series supplement to declaration of trust and trust cash
management;
(vii) beneficiaries servicing agreement;
(viii) Agreement Between Beneficiaries;
(ix) trust section 75 indemnity;
(x) security trust deed and MTN issuing entity cash management agreement;
(xi) MTN issuing entity supplement to security trust deed and MTN issuing
entity cash management agreement;
(xii) Expenses Loan Agreement;
(xiii) the forms of Swap Agreements;
(xiv) [corporate officers agreement;]
(xv) underwriting agreement;
(xvi) paying agency and agent bank agreement;
242
(xvii) trust deed;
(xviii)deed of charge;
(xix) pledge agreement;
(xx) form of class A global Note Certificate;
(xxi) form of class B global Note Certificate;
(xxii) form of class C global Note Certificate;
(xxiii)form of class D global Note Certificate;
(xxiv) form of class A individual Note Certificate;
(xxv) form of class B individual Note Certificate;
(xxvi) form of class C individual Note Certificate;
(xxvii)form of class D individual Note Certificate;
(xxviii)memorandum and articles of association of the issuing entity;
(xxix) report of independent registered public accounting firm on the issuing
entity;
(xxx) memorandum and articles of association of the MTN issuing entity;
(xxxi) report of the independent registered public accounting firm on the MTN
issuing entity;
(xxxii)memorandum and articles of association of the receivables trustee;
(xxxiii)consolidated audited accounts of the MTN issuing entity for each of
the three years preceding the publication of this base prospectus;
and
(xxxiv) U.S. tax opinion of Clifford Chance LLP, if applicable.
243
ISSUING ENTITY
GRACECHURCH CARD PROGRAMME FUNDING LIMITED
26 New Street
St. Helier, Jersey JE2 3RA
INITIAL ORIGINATOR SERVICER AND TRUST CASH MANAGER RECEIVABLES TRUSTEE
BARCLAYS BANK PLC GRACECHURCH RECEIVABLES TRUSTEE LTD
1234 Pavilion Drive 26 New Street
Northampton NN4 7SG St. Helier, Jersey JE2 3RA
DEPOSITOR AND MTN ISSUING ENTITY
BARCLAYCARD FUNDING PLC
1 Churchill Place
London E14 5HP
NOTE TRUSTEE AND SECURITY TRUSTEE
THE BANK OF NEW YORK
One Canada Square
London E14 5AL
PRINCIPAL PAYING AGENT OTHER PAYING AGENTS
THE BANK OF NEW YORK THE BANK OF NEW YORK
One Canada Square One Wall Street
London E14 5AL New York, New York 10286
REGISTRAR
THE BANK OF NEW YORK
One Wall Street
New York, New York 10286
LEGAL ADVISERS
To the issuing entity, To the issuing entity, To the issuing entity,
the MTN issuing entity, the Receivables Trustee and Barclays as to US law the Receivables Trustee and Barclays as to
the Receivables Trustee and Jersey law
Barclays as to English law
CLIFFORD CHANCE LLP CLIFFORD CHANCE U.S. LLP BEDELL CRISTIN
10 Upper Bank Street 31 West 52nd Street 26 New Street
London E14 5JJ New York, New York 10019 St. Helier, Jersey JE2 3RA
United States
To the underwriters as to English law and United To the Note Trustee and the Security Trustee as to
States law English law and United States law
WEIL, GOTSHAL & MANGES LOVELLS LLP
One South Place Atlantic House
London EC2M 2WG Holborn Viaduct
London EC1A 2FG
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the issuing entity and the MTN issuing entity To the Receivables Trustee
[__] [__]
Southwark Towers Twenty Two Colomberie
32 London Bridge Street St Helier,
London SE1 9SY Jersey JE1 4XA
AUTHORISED ADVISOR
BARCLAYS BANK PLC
5 The North Colonnade
Canary Wharf
London E14 4BB
244
APPENDIX B
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR GRACECHURCH CARD
PROGRAMME FUNDING LIMITED
GRACECHURCH CARD PROGRAMME FUNDING LIMITED
BALANCE SHEET
AS AT [__] 2007
TOGETHER WITH THE REPORT OF THE INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
245
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
246
APPENDIX C
GRACECHURCH CARD PROGRAMME FUNDING LIMITED
BALANCE SHEET AS AT [__] 2007
247
APPENDIX D
NOTES TO FINANCIAL STATEMENT
248
APPENDIX E
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR BARCLAYCARD FUNDING
PLC AND SUBSIDIARY
249
APPENDIX F
UNAUDITED FINANCIAL STATEMENTS OF BARCLAYCARD FUNDING PLC AND SUBSIDIARY FOR
THE SIX MONTHS ENDED 30 JUNE 2007
250
APPENDIX G
NOTES TO THE FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2007
251
APPENDIX H
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR BARCLAYCARD FUNDING
PLC AND SUBSIDIARY
252
APPENDIX I
FINANCIAL STATEMENTS OF BARCLAYCARD FUNDING PLC AND SUBSIDIARY FOR THE YEAR
ENDED 31 DECEMBER 2006, THE YEAR ENDED 31 DECEMBER 2005 AND THE YEAR ENDED 31
DECEMBER 2004
253
APPENDIX J
NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006, THE YEAR
ENDED 31 DECEMBER 2005 AND THE YEAR ENDED 31 DECEMBER 2004
254
APPENDIX K
OTHER SERIES ISSUED AND OUTSTANDING
The table below sets forth the principal characteristics of the other series
previously issued by other issuing entities, in connection with the receivables
trust and the receivables assigned by the originator. For more information with
respect to any series, any prospective investor should contact Barclays
Capital, 5 The North Colonnade, Canary Wharf, London E14 4BB, United Kingdom,
Attention Securitisation Group. Barclaycard will provide, without charge, to
any prospective purchaser of the notes, a copy of the disclosure document for
any such other publicly-issued series.
SERIES 02-1
CLASS PRINCIPAL BALANCE STERLING EQUIVALENT3 INTEREST RATE
- ---------------------------- ----------------- -------------------- ----------------------------
Class A..................... $900,000,000 [GBP]579,262,406 One month U.S.D LIBOR + 0.12%
Class B..................... $50,000,000 [GBP]32,181,245 One month U.S.D LIBOR + 0.45%
Class C..................... $50,000,000 [GBP]32,181,245 One month U.S.D LIBOR + 1.15%
----------------- --------------------
TOTAL....................... $1,000,000,000 [GBP]643,624,896
================= ====================
relevant Closing Date: 24 October, 2002
Scheduled Redemption Date: 15 October 2007
Legal Final Redemption Date: 15 October 2009
SERIES 03-1
CLASS PRINCIPAL BALANCE STERLING EQUIVALENT4 INTEREST RATE
- ---------------------------- ----------------- -------------------- ----------------------------
Class A..................... $900,000,000 [GBP]573,357,966 One month U.S.D LIBOR + 0.11%
Class B..................... $50,000,000 [GBP]31,853,220 One month U.S.D LIBOR + 0.37%
Class C..................... $50,000,000 [GBP]31,853,220 One month U.S.D LIBOR + 1.27%
----------------- --------------------
TOTAL....................... $1,000,000,000 [GBP]643,624,896
================= ====================
relevant Closing Date: 8 April 2003
Scheduled Redemption Date: 15 March 2008
Legal Final Redemption Date: 15 March 2010
SERIES 04-2
CLASS PRINCIPAL BALANCE STERLING EQUIVALENT10 INTEREST RATE
- ---------------------------- ----------------- --------------------- ----------------------------
Class A..................... $675,000,000 [GBP]364,864,865 One month U.S.D LIBOR + 0.02%
Class B..................... $37,500,000 [GBP]20,270,270 One month U.S.D LIBOR + 0.19%
Class C..................... $37,500,000 [GBP]20,270,270 One month U.S.D LIBOR + 0.39%
----------------- ---------------------
TOTAL....................... $750,000,000 [GBP]405,405,405
================= =====================
relevant Closing Date: 17 November 2004
Scheduled Redemption Date: 15 November 2007
Legal Final Redemption Date: 16 November 2009
SERIES 05-1
CLASS PRINCIPAL BALANCE STERLING EQUIVALENT11 INTEREST RATE
- ---------------------------- ----------------- --------------------- ----------------------------
Class A..................... $1,350,000,000 [GBP]742,288,448 One month U.S.D LIBOR + [.]%
Class B..................... $75,000,000 [GBP]41,238,247 One month U.S.D LIBOR + 0.14%
Class C..................... $75,000,000 [GBP]41,238,247 One month U.S.D LIBOR + 0.33%
----------------- ---------------------
TOTAL....................... $1,500,000,000 [GBP]824,764,942
================= =====================
relevant Closing Date: 21 June 2005
Scheduled Redemption Date: 15 June 2008
Legal Final Redemption Date: 15 June 2010
255
SERIES 05-2
CLASS PRINCIPAL BALANCE STERLING EQUIVALENT12 INTEREST RATE
- ---------------------------- ----------------- --------------------- ----------------------------
Class A..................... $1,350,000,000 [GBP]733,715,591 One month U.S.D LIBOR + [.]%
Class B..................... $75,000,000 [GBP]40,761,977 One month U.S.D LIBOR + [.]%
Class C..................... $75,000,000 [GBP]40,761,977 One month U.S.D LIBOR + 0.31%
----------------- ---------------------
TOTAL....................... $1,500,000,000 [GBP]815,239,545
================= =====================
relevant Closing Date: 20 September 2005
Scheduled Redemption Date: 15 September 2008
Legal Final Redemption Date: 15 September 2010
256
SERIES 05-3
CLASS PRINCIPAL BALANCE STERLING EQUIVALENT13 INTEREST RATE
- ---------------------------- ----------------- --------------------- -----------------------------
Class A1.................... [e]650,000,000 [GBP]444,600,000 One month EURIBOR + 0.08%
Class A2.................... [GBP]700,000,000 [GBP]700,000,000 3 Month Sterling LIBOR + 0.08%
Class B1.................... [e]72,500,000 [GBP]49,590,000 3 Month EURIBOR + 0.25%
Class B2.................... [GBP]15,000,000 [GBP]15,000,000 3 Month Sterling LIBOR + 0.25%
Class C1.................... [e]68,000,000 [GBP]46,512,000 3 Month EURIBOR + 0.45%
Class C2.................... [GBP]18,000,000 [GBP]18,000,000 3 Month Sterling LIBOR + 0.45%
----------------- ---------------------
TOTAL....................... [__] [GBP]1,273,702,000
================= =====================
relevant Closing Date: 20 October 2005
Scheduled Redemption Date: 15 October 2010
Legal Final Redemption Date: 15 October 2012
SERIES 05-4
CLASS PRINCIPAL BALANCE STERLING EQUIVALENT12 INTEREST RATE
- ---------------------------- ----------------- --------------------- ----------------------------
Class A..................... $900,000,000 [GBP][__] One month U.S.D LIBOR + 0.01%
Class B..................... $50,000,000 [GBP][__] One month U.S.D LIBOR + 0.15%
Class C..................... $50,000,000 [GBP][__] One month U.S.D LIBOR + 0.28%
----------------- ---------------------
TOTAL....................... $1,000,000,000 [GBP][__]
================= =====================
relevant Closing Date: 28 November 2005
Scheduled Redemption Date: 17 November 2008
Legal Final Redemption Date: 15 November 2010
SERIES 06-1
CLASS PRINCIPAL BALANCE STERLING EQUIVALENT12 INTEREST RATE
- ---------------------------- ----------------- --------------------- ----------------------------
Class A1.................... [e]60,000,000 [GBP][.] One month EURIBOR + 2.45%
Class A2.................... [GBP]71,500,000 [GBP][.] 1 Month Sterling LIBOR +2.45%
----------------- ---------------------
TOTAL....................... $[.] [GBP][.]
================= =====================
relevant Closing Date: 28 September 2006
Scheduled Redemption Date: 15 October 2010
Legal Final Redemption Date: 15 October 2012
1 sterling equivalent obtained by converting dollars to sterling at the
exchange rate of [GBP]0.60705 to $1.
2 series 99-1 was repaid in full on 15 November 2002
3 sterling equivalent obtained by converting dollars to sterling at the
exchange rate of [GBP]0.643625 to $1.
4 sterling equivalent obtained by converting dollars to sterling at the
exchange rate of $1.5697 to [GBP]1.
5 series 03-2 was repaid in full on 15 June 2006
6 sterling equivalent obtained by converting dollars to sterling at the
exchange rate of $1.592 to [GBP]1.
7 series 03-3 was repaid in full on 15 August 2006
8 sterling equivalent obtained by converting dollars to sterling at the
exchange rate of $1.855 to [GBP]1.
9 series 04-1 was repaid in full on 15 February 2007
10sterling equivalent obtained by converting dollars to sterling at the
exchange rate of $1.85 to [GBP]1.
11sterling equivalent obtained by converting dollars to sterling at the
exchange rate of $1.8187 to [GBP]1.
12sterling equivalent obtained by converting dollars to sterling at the
exchange rate of $1.83995 to [GBP]1.
13sterling equivalent obtained by converting euros to sterl ing at the exchange
rate of 1[e] = [GBP]0.684.
257
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.$1.00) to be incurred in
connection with the issuance and distribution of the securities being registered
under this registration statement, other than underwriting discounts and
commissions.
Securities and Exchange Commission Registration Fee .................... $ 30.70
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
GRACECHURCH CARD PROGRAMME FUNDING LIMITED (the "issuing entity")
Pursuant to Section 27 of the Memorandum and Articles of Association of
Gracechurch Card Programme Funding Limited, every secretary, agent, servant and
employee of the issuing entity shall be indemnified by the issuing entity
against and it shall be the duty of the directors out of the funds of the
issuing entity to pay the costs, charges, losses, liabilities, damages and
expenses which any such person may incur in the course of the discharge by him
of his duties as secretary, agent, servant or employee of the issuing entity as
the case may be provided that this indemnity shall not be applicable in
circumstances where any such person has incurred such costs, charges, losses,
liabilities, damages and expenses through his own fraud wilful misconduct or
gross negligence.
In so far as the law allows every present or former officer of the issuing
entity shall be indemnified out of the assets of the issuing entity 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 favour 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.
BARCLAYCARD FUNDING PLC (the "MTN issuing entity")
Under the laws which govern the organization of the MTN issuing entity, the MTN
issuing entity has the power and in some instances may be required to provide an
agent, including an officer or director, who was or is a party or is threatened
to be made a party to certain proceedings, with indemnification against certain
expenses, judgements, fines, settlements and other amounts under certain
circumstances.
Pursuant to section 44 of the Articles of Association of Barclaycard Funding
PLC, each person who is or was a director, alternate director or secretary of
the MTN issuing entity must be indemnified out of the assets of the MTN
II-1
issuing entity against all costs, charges, losses and liabilities incurred by
him in the proper execution of his duties or the proper exercise of his powers,
authorities and discretions. This includes a liability incurred:
(a) defending proceedings, whether civil or criminal, in which judgement is
given in his favor or in which he is acquitted, or which are otherwise
disposed of without a finding or admission of material breach of duty
on his part; or
(b) in connection with any application in which relief is granted to him by
the court from liability for negligence, default, breach of duty or
breach of trust in relation to the affairs of the MTN issuing entity.
Pursuant to section 45 of the Articles of Association of Barclaycard Funding
PLC, the board of directors may exercise all the powers of the MTN issuer to
purchase and maintain insurance for the benefit of a person who is or was:
(a) a director, alternate director, secretary or auditor of the MTN issuing
entity or of a company which is or was a subsidiary undertaking of the
MTN issuing entity or in which the MTN issuing entity has or had an
interest whether direct or indirect; or
(b) trustee of a retirement benefits scheme or other trust in which a
person referred to in the preceding paragraph is or has been
interested;
indemnifying him against liability for negligence, default, breach of duty or
breach of trust or other liability which may lawfully be insured against by the
MTN issuing entity.
GRACECHURCH RECEIVABLES TRUSTEE LIMITED (the "receivables trustee")
Pursuant to section 27 of the Articles of Association of Gracechurch Receivables
Trustee Limited, in so far as the law allows, every present or former officer of
the receivables trustee will 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 an officer.
Barclays Bank PLC ("Barclays") has agreed to indemnify the directors of the
receivables trustee and all officers, employees, servants or duly appointed
agents of Bedell Trust Company Limited against any and all actions, proceedings,
accounts, claims, demands, liabilities or losses, including all and any costs
and expenses incurred in connection with them, which may be brought, made or
threatened by any person against any of them directly or indirectly in
connection with the approval and/or signing of this registration statement on
Form S-3, to the extent that the actions, proceedings, accounts, claims,
demands, liabilities or losses relate to information contained in this
registration statement on Form S-3 directly relating to Barclays, its
Barclaycard division and the underlying credit card receivables pool.
Section 27 of the Articles of Association of the receivables trustee provides
that (a) every secretary, agent servant and employee of the receivables trustee
shall be indemnified by the receivables trustee against the costs, charges,
losses liabilities damages and expenses which any such person may incur in the
course of the discharge by him of his duties as secretary, agent, servant or
employee of the receivables trustee (as the case may be), provided that this
indemnity shall not be applicable in circumstances where any such person has
incurred such costs charges losses liabilities damages and expenses through his
own fraud, wilful misconduct or gross negligence; and (b) in so far as the law
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 favour 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
II-2
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 OFFICER'S LIABILITY INSURANCE
Barclays has obtained directors' and officers' liability insurance coverage
which, subject to policy terms and limitations, includes coverage for directors
and officers of Barclays group companies and to reimburse Barclays for amounts
paid to directors or officers by way of lawful indemnity. This coverage extends
in certain circumstances to employees of Barclays who sit on companies outside
of the Barclays group.
ITEM 16. EXHIBITS
A list of exhibits filed herewith or incorporated by reference is contained in
the Exhibit Index which is incorporated herein by reference.
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 effective 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 a 20% 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.
II-3
(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 information 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 financial 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 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 registrant 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:
II-4
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;
(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.
(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) 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
(the "Act") in accordance with the rules and regulations prescribed by the
Commission under Section 305(b)(2) of the Act.
(e) 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 Regulation AB 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.
(f) That, except as otherwise provided by Item 1105 of Regulation AB,
information provided in response to that Item pursuant to Rule 312 of Regulation
S-T 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-5
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 the City of London, England, on
September 19, 2007.
Gracechurch Receivables Trustee Limited
(as receivables trustee and co-registrant)
By: /s/ Curt Hess
---------------------------------------
Name: Curt Hess
Title: Director
POWER OF ATTORNEY
Each of the persons whose signature appears below hereby constitutes Curt Hess,
Shane Michael Hollywood, Richard Charles Gerwat and Giuseppe Pagano, and each of
them singly, her or his true and lawful attorneys-in-fact with full power to
sign on behalf of such person, 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 confirming 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 or amendment thereto has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE CAPACITY DATE
By: /s/ Curt Hess Director (Principal Executive September 19, 2007
-----------------------------
Name: Curt Hess Officer, Principal Financial Officer
and Principal Accounting Officer)
By: /s/ Shane Michael Hollywood Director September 19, 2007
---------------------------
Name: Shane Michael Hollywood
By: /s/ Richard Charles Gerwat Director September 19, 2007
-----------------------------
Name: Richard Charles Gerwat
By: /s/ Giuseppe Pagano Authorized Representative of September 19, 2007
-----------------------------
Name: Giuseppe Pagano Gracechurch Receivables Trustee
Limited in the United States
(Additional signature page follows.)
II-6
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 the City of London, England, on
September 19, 2007.
Barclaycard Funding PLC
(as depositor, MTN issuing entity with respect to the medium
term note certificates, and co-registrant)
By: /s/ Curt Hess
---------------------------------------
Name: Curt Hess
Title: Director
POWER OF ATTORNEY
Each of the persons whose signature appears below hereby constitutes Curt Hess,
J-P Nowacki and Giuseppe Pagano and each of them singly, her or his true and
lawful attorneys-in-fact with full power to sign on behalf of such person, 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 confirming 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 or amendment thereto has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE CAPACITY DATE
By: /s/ Curt Hess Director (Principal Executive Officer, September 19, 2007
-----------------------------
Name: Curt Hess Principal Financial Officer and
Principal Accounting Officer)
By: /s/ J-P Nowacki Director September 19, 2007
-----------------------------
Name: J-P Nowacki
(As the duly authorized representative of
SFM Directors Limited)
By: /s/ Giuseppe Pagano Authorized Representative of Barclaycard September 19, 2007
-----------------------------
Name: Giuseppe Pagano Funding PLC in the United States
II-7
EXHIBIT INDEX
1.1 Form of Dealer Agreement for the Class A Notes, Class B Notes and the Class C Notes.*
1.2 Form of Series Subscription Agreement* (included as Schedule [_] to the Form of Dealer Agreement,
filed as Exhibit 1.1 to this registration statement).
3.1 Memorandum and Articles of Association of Gracechurch Card Programme Funding Limited.
3.2 Certificate of Incorporation of Gracechurch Card Programme Funding Limited.
3.3 Memorandum and Articles of Association of Barclaycard Funding PLC (incorporated by reference to
Exhibit 3.2 to Amendment No. 1 to the Registration Statement on Form F-1 (Registration No.
333-10970)).
3.4 Certificate of Incorporation of Barclaycard Funding PLC.
3.5 Memorandum and Articles of Association of Gracechurch Receivables Trustee Limited (incorporated by
reference to Exhibit 3.3 to Amendment No. 2 to the Registration Statement on Form F-1 (Registration
No. 333-10970)).
3.6 Certificate of Incorporation of Gracechurch Receivables Trustee Limited.
3.7 Consent to Issue Shares of Gracechurch Receivables Trustee Limited, Granted by the Jersey Financial
Commission Pursuant to the Control of Borrowing (Jersey) Order, 1958, as amended.
4.1 Declaration of Trust and Trust Cash Management Agreement (incorporated by reference to Exhibit 4.1
to Amendment No. 1 to the Registration Statement on Form F-1 (Registration No. 333-125212)).
4.2 Form of Series Supplement to Declaration of Trust and Trust Cash Management Agreement.*
4.3 Security Trust Deed and MTN Cash Management Agreement (incorporated by reference to Exhibit 4.3 of
the Registration Statement on Form F-1 (Registration No. 333-125212)).
4.4 Form of MTN issuing entity Supplement to Security Trust Deed and MTN Cash Management Agreement*
4.5 Trust Deed.*
4.6 Form of Series Trust Deed Supplement*
4.7 Deed of Charge.*
4.8 Form of Paying Agency and Agent Bank Agreement.*
4.9 Form of Class A Global Note Certificate* (included as Schedule [ ] to the Trust Deed filed as
Exhibit 4.5 to this registration statement).
4.10 Form of Class B Global Note Certificate* (included as Schedule [ ] to the Trust Deed filed as
Exhibit 4.5 to this registration statement).
4.11 Form of Class C Global Note Certificate* (included as Schedule [ ] to the Trust Deed filed as
Exhibit 4.5 to this registration statement).
4.12 Form of Class A Individual Note Certificate* (included as Schedule [ ] to the Trust Deed filed as
Exhibit 4.5 to this registration statement).
4.13 Form of Class B Individual Note Certificate* (included as Schedule [ ] to the Trust Deed filed as
Exhibit 4.5 to this registration statement).
4.14 Form of Class C Individual Note Certificate* (included as Schedule [ ] to the Trust Deed filed as
Exhibit 4.5 to this registration statement).
4.15 Form of Series Medium Term Note Certificate.*
4.16 Form of Series MTN Supplement.*
4.17 Beneficiaries Servicing Agreement*
4.18 Agreement between Beneficiaries.*
4.19 Pledge Agreement*
4.20 Master Definitions Schedule*
5.1 Opinion of Clifford Chance Limited Liability Partnership with respect to legality.*
8.1 Form of Opinion of Clifford Chance US LLP with respect to U.S. tax matters.*
8.2 Form of Opinion of Clifford Chance Limited Liability Partnership with respect to U.K. tax matters.*
8.3 Opinion of Bedell Cristin with respect to Jersey tax matters.*
10.1 Receivables Securitisation Agreement (incorporated by reference to Exhibit 10.1 to Amendment No. 1
to the Registration Statement on Form F-1 (Registration No. 333-125212)).
10.2 Deed of Assignment of Receivables.*
10.3 Form of Class A Swap Agreement.*
10.4 Form of Class B Swap Agreement.*
10.5 Form of Class C Swap Agreement*
10.6 Form of Expenses Loan Agreement.*
10.7 Trust Section 75 Indemnity Agreement*
10.8 Administration Agreement*
10.9 Issuer Account Bank Agreement*
10.10 MTN issuing entity's corporate services agreement*
10.11 Issuing entity's corporate services 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 [__].*
23.4 Consent of Bedell Cristin (included in Exhibit 8.3).*
24.1 Powers of Attorney (included on the signature pages to this registration statement).
25.1 Statement of Eligibility of Note Trustee (form T-1).
25.2 Statement of Eligibility of Security Trustee (form T-1).
*To be filed by amendment.