EXHIBIT 4.5.1
FUNDING 2 DEED OF CHARGE
[*] 2006
PERMANENT FUNDING (NO. 2) LIMITED
AND
PERMANENT MASTER ISSUER PLC
AND
THE BANK OF NEW YORK
AND
PERMANENT MORTGAGES TRUSTEE
AND
HALIFAX PLC
AND
STRUCTURED FINANCE MANAGEMENT LIMITED
AND
THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND
XXXXX & XXXXX
XXXXX & XXXXX LLP
CONTENTS
CLAUSE PAGE
1. Interpretation.........................................................2
2. Funding 2's Security...................................................3
3. Acknowledgements.......................................................5
4. Release of Funding 2 Charged Property..................................6
5. Continuance of Security................................................7
6. Declaration of Trust...................................................7
7. Funding 2's Share of Mortgages Trust and Related Matters...............7
8. Enforcement............................................................9
9. Exercise of Certain Rights............................................13
10. General Covenants and Warranties......................................14
11. Security Trustee and Events of Default................................16
12. Security Trustee's Powers.............................................17
13. Receiver..............................................................17
14. Powers of Receiver....................................................19
15. Protection of Third Parties...........................................21
16. Protection of Security Trustee and Receiver...........................21
17. Expenses and Indemnity................................................22
18. Protection of Charges.................................................23
19. Power of Attorney, etc................................................23
20. Other Security, etc...................................................24
21. Set-Off...............................................................25
22. Execution of Documents................................................25
23. Supplements to the Trustee Acts.......................................26
24. Supplemental Provisions Regarding the Security Trustee................30
25. Remuneration of the Security Trustee..................................34
26. Appointment of New Security Trustee and Removal of Security Trustee...36
27. Retirement of Security Trustee........................................37
28. Trust Indenture Act Prevails..........................................37
29. Notices and Demands...................................................37
30. Further Provisions....................................................39
SCHEDULE
1. Form of Security Power of Attorney....................................42
2. Form of Accession Undertaking.........................................44
3. Funding 2 Priority of Payments........................................52
Part 1 Funding 2 Pre-Enforcement Revenue Priority of Payments.......52
Part 2 Funding 2 Principal Priorities of Payments...................55
Part 3 Funding 2 Post-Enforcement Priority of Payments..............62
Signatories..................................................................64
THIS DEED OF CHARGE is dated [*] 2006
BETWEEN:
(1) PERMANENT FUNDING (NO. 2) LIMITED (registered number 04441772), a
private limited company incorporated under the laws of England and
Wales, whose registered office is at Xxxxxxxxx House, Guildhall Yard,
London EC2V 5AE (FUNDING 2);
(2) PERMANENT MASTER ISSUER PLC (registered number 5922774), a public
limited company incorporated in England and Wales, whose registered
office is at Xxxxxxxxx House, Guildhall Yard, London EC2V 5AE (the
MASTER ISSUER);
(3) THE BANK OF NEW YORK, a New York banking corporation acting through its
offices at 00xx Xxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxx X00 0XX, acting in its
capacity as SECURITY TRUSTEE;
(4) HALIFAX PLC (registered number 2367076), a public limited company
incorporated under the laws of England and Wales, whose registered
office is at Trinity Road, Halifax, West Yorkshire HX1 2RG acting in its
capacity as CASH MANAGER;
(5) THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND, established by an Act
of the Parliament of Scotland in 1695, as amended, acting through its
office situated at 000 Xxxxxxxxxx Xxxxxx, Xxxxx XX0 0XX, Xxxxxxx acting
in its capacity as ACCOUNT BANK;
(6) HALIFAX PLC (registered number 2367076), a public limited company
incorporated under the laws of England and Wales, whose registered
office is at Trinity Road, Halifax, West Yorkshire HX1 2RG acting in its
capacity as FUNDING 2 GIC PROVIDER, FUNDING 2 SWAP PROVIDER and FUNDING
2 START-UP LOAN PROVIDER; and
(7) STRUCTURED FINANCE MANAGEMENT LIMITED (registered number 3853947), a
private limited company incorporated under the laws of England and
Wales, whose registered office is at Xxxxxxxxx House, Guildhall Yard,
London EC2V 5AE acting in its capacity as the Funding 2 Corporate
Services Provider.
WHEREAS:
(A) Pursuant to the terms of the Master Intercompany Loan Agreement of even
date herewith, the Master Issuer has agreed to make available from time
to time Loan Tranches to Funding 2.
(B) The Cash Manager has agreed to provide certain cash management services
to Funding 2 on the terms set out in the Cash Management Agreement.
(C) The Account Bank has agreed to provide certain banking services to
Funding 2 on the terms set out in the Bank Account Agreement and the
Funding 2 Guaranteed Investment Contract.
(D) The Funding 2 Swap Provider has agreed to provide the Funding 2 Swap to
Funding 2 on the terms set out in the Funding 2 Swap Agreement.
(E) The Corporate Services Provider has agreed to provide certain corporate
services to Funding 2 on the terms set out in the Corporate Services
Agreement.
(F) The Funding 2 Start-Up Loan Provider has agreed to make available the
Start-Up Loans from time to time to Funding 2 on the terms set out in
the Funding 2 Start-Up Loan Agreement.
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(G) Funding 2 has agreed to provide security in respect of Funding 2's
obligations under the Funding 2 Agreements to which it is a party,
subject to and in accordance with the terms thereof and hereof.
(H) Funding 2 has agreed to provide the Security Trustee with the benefit of
the security described in this Deed to secure Funding 2's obligations
under the Funding 2 Agreements, upon and subject to the terms hereof.
The Security Trustee shall hold such security on trust for the benefit
of the Funding 2 Secured Creditors.
(I) Pursuant to the terms of the Master Issuer Deed of Charge dated of even
date herewith, the Master Issuer will grant security to the Security
Trustee (as security trustee for the Master Issuer Secured Creditors) in
and to all of its right, title, interest and benefit, present and
future, under this Deed to secure the Master Issuer's obligations to the
Master Issuer Secured Creditors upon and subject to the terms thereof.
IT IS AGREED AS FOLLOWS:
1. INTERPRETATION
1.1 DEFINITIONS FUNDING 2 BANK ACCOUNT AGREEMENT
The amended and restated master definitions and construction schedule
signed by, amongst others, the parties to this Agreement and dated [*]
2006 (as the same may be amended, varied or supplemented from time to
time with the consent of the parties to this Agreement) (the MASTER
DEFINITIONS AND CONSTRUCTION SCHEDULE) is expressly and specifically
incorporated into this Agreement and, accordingly, the expressions
defined in the Master Definitions and Construction Schedule (as so
amended, varied or supplemented from time to time) shall, except where
the context otherwise requires and save where otherwise defined herein,
have the same meanings in this Agreement, including the Recitals hereto
and this Agreement shall be construed in accordance with the
interpretation provisions set out in clause 2 of the Master Definitions
and Construction Schedule.
1.2 CONSTRUCTION
In this Deed, except where the context otherwise requires:
(a) the terms of the other Transaction Documents are incorporated in
this Deed to the extent required to give effect thereto and/or
to ensure that any purported disposition contained in this Deed
is a valid disposition in accordance with Section 2(1) of the
Law of Property (Miscellaneous Provisions) Act 1989;
(b) if the Security Trustee (acting reasonably) considers that an
amount paid by Funding 2 to a Funding 2 Secured Creditor and/or
the Security Trustee and/or the Receiver under or pursuant to
the Funding 2 Agreements or this Deed is capable of being
avoided or otherwise set aside on the liquidation or
administration of Funding 2 or otherwise and that there is a
reasonable prospect of such liquidation or administration
occurring and of such payment being so avoided or set aside,
then that amount shall not be considered to have been
irrevocably paid for the purposes of this Deed;
(c) a reference in this Deed to any property, assets, undertakings
or rights includes, unless the context otherwise requires,
present and future property, assets, undertakings or rights; and
(d) THIS DEED means this Funding 2 Deed of Charge and all the
Schedules hereto (as from time to time modified and/or
supplemented in accordance with the provisions set out herein)
and all Accession Undertakings entered into pursuant to this
Funding 2 Deed of Charge and each
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other document or deed entered into pursuant hereto (as from
time to time modified and/or supplemented as aforesaid) and
expressed to be supplemental hereto.
2. FUNDING 2'S SECURITY
2.1 GENERAL
All the Funding 2 Security:
(a) is created in favour of the Security Trustee for itself and as
trustee on behalf of the other Funding 2 Secured Creditors;
(b) is created over the present and future assets of Funding 2;
(c) is security for the payment or discharge of the Funding 2
Secured Obligations; and
(d) is made with full title guarantee.
The term ALL OF ITS RIGHTS as used in this Clause includes, unless the
context requires otherwise:
(i) the benefit of all covenants, undertakings, representations,
warranties and indemnities;
(ii) all powers and remedies of enforcement and/or protection;
(iii) all rights to receive payment of all amounts assured or payable
(or to become payable), all rights to serve notices and/or make
demands, and all rights to take such steps as are required to
cause payment to become due and payable; and
(iv) all causes and rights of action in respect of any breach and all
rights to receive damages or obtain other relief in respect
thereof,
in each case, in respect of the relevant Funding 2 Charged Property.
2.2 TRUST PROPERTY
Funding 2, by way of first fixed security for the payment or discharge
of the Funding 2 Secured Obligations, subject to Clause 4 (Release of
Funding 2 Charged Property), hereby assigns to the Security Trustee all
of its right, title, interest and benefit in, to and under the Funding 2
Share of the Trust Property including all rights to receive payment of
any amounts which may become payable to Funding 2 thereunder and all
payments received by it thereunder including, without limitation, all
rights to serve notices and/or make demands thereunder and/or to take
such steps as are required to cause payments to become due and payable
thereunder and all rights of action in respect of any breach thereof and
all rights to receive damages or obtain relief in respect thereof, TO
HOLD the same unto the Security Trustee absolutely.
2.3 CONTRACTUAL RIGHTS
Funding 2 assigns by way of first fixed security (and, to the extent not
assigned, charges by way of a first fixed charge) all of its rights,
title, benefit and interest, present and future in, to and under the
Funding 2 Charged Documents including all rights to receive payment of
any amounts which may become payable to it thereunder and all payments
received by it thereunder including, without limitation, all rights to
serve notices and/or make demands thereunder and/or to take such steps
as are required to cause payments to become due and payable thereunder
and all rights of action in
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respect of any breach thereof and all rights to receive damages or
obtain relief in respect thereof, TO HOLD the same unto the Security
Trustee absolutely.
2.4 ACCOUNTS
Funding 2 charges by way of first fixed charge in favour of the Security
Trustee all of its rights, interest and benefit, present and future, in
and to all monies now or at any time hereafter standing to the credit
of:
(a) the Funding 2 GIC Account;
(b) the Funding 2 Transaction Account; and
(c) each other account (if any) in which Funding 2 may at any time
have or acquire any right, title, benefit or interest,
and the debts represented by them together with all rights relating or
attached thereto (including the right to interest), TO HOLD the same
unto the Security Trustee absolutely.
2.5 AUTHORISED INVESTMENTS
Funding 2 charges by way of first fixed charge to the Security Trustee
all of its right, title, interest and benefit in, to and under any
Authorised Investment purchased using monies standing to the credit of
the Funding 2 Bank Accounts for the time being owned by it, including
all monies, income and proceeds payable thereunder and all rights in
respect of or ancillary to such Authorised Investments, TO HOLD the same
unto the Security Trustee absolutely.
2.6 FLOATING CHARGE
(a) Funding 2 charges by way of a first floating charge all of its
undertaking and all its property and assets (including without
limitation its uncalled capital) other than any property or
assets at any time otherwise effectively charged or assigned by
way of fixed charge or assignment under this Clause 2 (but
excluding from the foregoing all such property, assets and
rights situated in Scotland or the rights to which are governed
by Scots law, all of which are and shall remain subject to such
floating security).
(b) Except as provided below, the Security Trustee may by notice to
Funding 2 convert the floating charge created under this
Subclause into a fixed charge as regards any of Funding 2's
assets (and, in the case of property, assets and rights situated
in Scotland or rights which are governed by Scots law, to the
extent permitted by Scots law) subject to the floating charge
specified in that notice, if:
(i) a Master Intercompany Loan Event of Default has occurred;
(ii) the Security Trustee considers those assets or any part
thereof to be in danger of being seized or sold under any
form of distress, attachment, execution or other legal
process or to be otherwise in jeopardy; and/or
(iii) a circumstance occurs which the Security Trustee considers
to (or to be likely to) prejudice, imperil or threaten the
Funding 2 Security.
Except as provided below, the floating charge created by this Subclause
will automatically convert (and, in the case of property, assets and
rights situated in Scotland or rights which are governed by Scots law,
to the extent permitted by Scots law) into a fixed charge as regards:
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(A) all of Funding 2's assets subject to the floating
charge, upon the service of a Master Intercompany
Loan Acceleration Notice; and/or
(B) any assets of Funding 2 subject to the floating
charge, if those assets (contrary to the covenants
and undertakings contained in the Transaction
Documents):
I. are or become subject to a Security Interest in
favour of any person other than the Security
Trustee; or
II. are or become the subject of a sale, transfer or
other disposition,
immediately prior to that Security Interest arising or that
sale, transfer or other disposition being made.
The floating charge created by this Subclause may not be
converted into a fixed charge solely by reason of:
(a) the obtaining of a moratorium; or
(b) anything done with a view to obtaining a moratorium,
under the Insolvency Act 2000.
The floating charge created by this Subclause is a QUALIFYING FLOATING
CHARGE for the purpose of paragraph 14 of Schedule B1 to the Insolvency
Act 1986.
3. ACKNOWLEDGEMENTS
3.1 FUNDING 2 SECURITY
(a) The execution of this Deed and/or any Deed of Accession by each
Funding 2 Secured Creditor shall constitute express notice to
such Funding 2 Secured Creditor of the assignments, charges and
any other Security Interests made by Funding 2 pursuant to this
Deed.
(b) By executing this Deed and/or any Deed of Accession, each
Funding 2 Secured Creditor acknowledges that it has notice of
and consents to the Funding 2 Security and confirms that as of
the date of this Deed it has not received from any other person
notice of any assignment or charge of any Funding 2 Charged
Property.
(c) Each Funding 2 Secured Creditor acknowledges the Funding 2
Security and covenants to the Security Trustee not to do
anything inconsistent with the Funding 2 Security or knowingly
to prejudice that security or any of the Funding 2 Charged
Property (or the Security Trustee's interest in those assets)
provided that, subject to Clause 9 (Exercise of Certain Rights),
this Deed does not limit the rights of any of the Funding 2
Secured Creditors under the Transaction Documents.
3.2 SECURITY TRUSTEE'S DISCRETION
Subject to Clause 24.2 (Delegation), without prejudice to the rights of
the Security Trustee after the security created under this Deed has
become enforceable, Funding 2 hereby authorises the Security Trustee,
prior to the security created by this Deed becoming enforceable, to
exercise, or refrain from exercising, all rights, powers, authorities,
discretions and remedies of Funding 2 under or in respect
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of the Funding 2 Charged Documents referred to in Clause 2.3
(Contractual Rights) in such manner as the Security Trustee in its
absolute discretion shall think fit. For the avoidance of doubt, the
Security Trustee shall not be required to have regard to the interests
of Funding 2 in the exercise or non-exercise of any such rights, powers,
authorities, discretions and remedies or to comply with any direction
given by Funding 2 in relation thereto.
4. RELEASE OF FUNDING 2 CHARGED PROPERTY
4.1 RELEASE, REASSIGNMENT OR DISCHARGE ON PAYMENT OR DISCHARGE OF FUNDING 2
SECURED OBLIGATIONS
Upon the irrevocable and unconditional payment or discharge (or any
combination of the foregoing) of all the Funding 2 Secured Obligations,
the Security Trustee shall, at the written request and cost of Funding
2, release, reassign or discharge all the relevant Funding 2 Charged
Property to, or to the order of, Funding 2.
4.2 DISPOSAL OF AUTHORISED INVESTMENTS
Upon the Cash Manager, on behalf of Funding 2 and the Security Trustee,
making a disposal of any Authorised Investment charged pursuant to
Clause 2.5 (Authorised Investments), the Security Trustee shall, if so
requested in writing by and at the sole cost and expense (on an
indemnity basis) of Funding 2, but without being responsible for any
loss, costs, claims or liabilities whatsoever occasioned and howsoever
arising by so acting upon such request, release, reassign or discharge
from the encumbrances constituted by or pursuant to this Deed the
relevant Authorised Investments, provided that the proceeds of such
disposal are paid by Funding 2 into the Funding 2 Bank Account from
which the monies to make such Authorised Investment were originally
drawn, subject to and in accordance with the provisions of the Funding 2
Guaranteed Investment Contract, the Cash Management Agreement and this
Deed.
4.3 WITHDRAWALS FROM FUNDING 2 BANK ACCOUNTS
Subject to and in accordance with this Deed and the other Funding 2
Agreements, Funding 2 or the Cash Manager on behalf of Funding 2, is
permitted pursuant to Clause 7 (Funding 2's Share of Mortgages Trust and
Related Matters) from time to time to withdraw amounts from the Funding
2 Bank Accounts in order to apply such amounts in accordance with the
relevant Funding 2 Priorities of Payments. Any amount so withdrawn and
paid to a third party in accordance with the relevant Funding 2
Priorities of Payments shall be released from the Security Interests
created under or pursuant to this Deed provided that such amount is
applied in accordance with and subject to the relevant Funding 2
Priorities of Payments.
4.4 TRUST PROPERTY
On the repurchase by the Seller from the Mortgages Trustee of any Loan
together with its Related Security pursuant to and in accordance with
the terms of the Mortgage Sale Agreement, such Loan and its Related
Security shall no longer form part of the Trust Property and shall
automatically be released from any Security Interest created under or
pursuant to this Deed in respect of the Funding 2 Share of the Trust
Property.
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5. CONTINUANCE OF SECURITY
5.1 CONTINUING SECURITY
The charges and assignments and other Security Interests contained in or
granted pursuant to this Deed:
(a) shall be without prejudice and in addition to and shall not
merge with any other security whatsoever which may be held by
the Funding 2 Secured Creditors or the Security Trustee on
behalf of the Funding 2 Secured Creditors from Funding 2 or any
other person for or in respect of the whole or part of the
Funding 2 Secured Obligations;
(b) shall remain in force as continuing security for the Funding 2
Secured Creditors notwithstanding any settlement of account or
the existence at any time of a credit balance on any current or
other account or any other act, event or matter whatsoever; and
(c) are made for securing Loan Tranches advanced from time to time
by the Master Issuer and Funding 2's obligations that may arise
from time to time to any person (including, without limitation,
a new Funding 2 Swap Provider or a new Funding 2 Start-Up Loan
Provider) who (subject to the terms of the Transaction
Documents) has delivered a duly completed Accession Undertaking
to the Security Trustee in accordance with Clause 5.5 (Accession
Undertaking) hereof, but not otherwise.
5.2 ACKNOWLEDGEMENT
Funding 2 hereby acknowledges the assignments, charges and other
Security Interests made or granted by the foregoing provisions of this
Deed and undertakes to the Security Trustee not to do anything
inconsistent with the security given under or pursuant to this Deed or
knowingly to prejudice the security granted to the Security Trustee
pursuant to this Deed or the Funding 2 Charged Property or the Security
Trustee's interest therein.
6. DECLARATION OF TRUST
Each of the Funding 2 Secured Creditors declares the Security Trustee,
and the Security Trustee hereby declares itself, trustee for the Funding
2 Secured Creditors of all the covenants, undertakings, representations,
charges, assignments and other Security Interests made or given to it or
to be made or given to it under or pursuant to this Deed and any other
Funding 2 Agreement, upon and subject to the terms and conditions of
this Deed.
7. FUNDING 2'S SHARE OF MORTGAGES TRUST AND RELATED MATTERS
7.1 FUNDING 2 BANK ACCOUNTS
At all times during the subsistence of the Funding 2 Security, Funding 2
shall:
(a) save as otherwise provided in the Funding 2 Agreements or unless
the Security Trustee otherwise agrees in writing (and then only
on such terms and in such manner as the Security Trustee may in
its absolute discretion require) procure that any distribution
of Mortgages Trustee Available Revenue Receipts to Funding 2 and
any distribution of Principal Receipts to Funding 2 under the
Mortgages Trust shall be paid into the Funding 2 GIC Account;
and
(b) save as permitted pursuant to Clause 7.2, not be entitled to
withdraw or transfer from the Funding 2 GIC Account any monies
standing to the credit thereof or direct any payment to be made
therefrom to any person without the Security Trustee's prior
written consent.
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7.2 WITHDRAWALS FROM FUNDING 2 GIC ACCOUNT; AUTHORISED INVESTMENTS
(a) Funding 2 covenants with the Security Trustee that the amounts
standing to the credit of the Funding 2 GIC Account may only be
withdrawn in accordance with this Clause 7 or otherwise with the
Security Trustee's prior written consent.
(b) On any day during an Interest Period but prior to the issue of a
Master Intercompany Loan Acceleration Notice, the Security
Trustee shall at all times consent to the transfer by the Cash
Manager of monies from the Funding 2 GIC Account to the Funding
2 Transaction Account where such monies are to be applied to
meet any amounts then due and payable by Funding 2 or the Master
Issuer to third parties, the Account Bank or the Master Issuer
Account Bank in accordance with items [*] of the Funding 2
Pre-Enforcement Revenue Priority of Payments (as the same may be
amended from time to time).
(c) On each Funding 2 Interest Payment Date prior to the issue of a
Master Intercompany Loan Acceleration Notice, the Security
Trustee shall at all times consent to the transfer from the
Funding 2 GIC Account to the Funding 2 Transaction Account of
such amounts of Funding 2 Available Principal Receipts and
Funding 2 Available Revenue Receipts as may be necessary on such
date to be applied to meet Funding 2's payment obligations in
accordance with the Funding 2 Pre-Enforcement Revenue Priority
of Payments and the relevant Funding 2 Principal Priorities of
Payments (as the same may be amended or varied from time to
time).
(d) The Cash Manager may, prior to the service of a Master
Intercompany Loan Acceleration Notice, make withdrawals from the
relevant Funding 2 Bank Account for the purposes of acquiring
Authorised Investments. All amounts received in respect of the
Authorised Investments (including earnings thereon) shall as
soon as practicable upon receipt be deposited into the relevant
Funding 2 Bank Account from which they were originally drawn.
(e) Save as otherwise provided in the Transaction Documents or
unless the Security Trustee otherwise agrees, Funding 2 shall
procure that all proceeds from a Loan Tranche which are to be
applied in or towards repayment of another Loan Tranche are,
pending such repayment, deposited in the Funding 2 GIC Account.
7.3 APPLICATION OF FUNDING 2 AVAILABLE REVENUE RECEIPTS
On each Funding 2 Interest Payment Date prior to the service of a Master
Intercompany Loan Acceleration Notice, the Security Trustee hereby
authorises Funding 2 or the Cash Manager on its behalf to withdraw
Funding 2 Available Revenue Receipts from the Funding 2 Transaction
Account and to apply such monies in accordance with the Funding 2 Pre
Enforcement Revenue Priority of Payments set out in Part 1 of Schedule 3
to this Deed.
7.4 APPLICATION OF FUNDING 2 AVAILABLE PRINCIPAL RECEIPTS
On each Funding 2 Interest Payment Date prior to the service of a Master
Intercompany Loan Acceleration Notice, the Security Trustee hereby
authorises Funding 2 or the Cash Manager on its behalf to withdraw
Funding 2 Available Principal Revenues from the Funding 2 Transaction
Account and to apply such monies in accordance with the Funding
Principal Priorities of Payments set out in Part 2 of Schedule 3 hereto.
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8. ENFORCEMENT
8.1 PRIOR NOTIFICATION
The Security Trustee shall, if reasonably practicable, give prior
written notification to the Seller, the Cash Manager and each Funding 2
Secured Creditor of the Security Trustee's intention to enforce the
security created by this Deed. However, the failure of the Security
Trustee to provide such notification shall not prejudice the ability of
the Security Trustee to enforce any of the security created by this
Deed.
8.2 SERVICE OF MASTER INTERCOMPANY LOAN ACCELERATION NOTICE
Subject to the provisions of the Transaction Documents, in the event
that a Master Intercompany Loan Acceleration Notice has been served (and
not withdrawn) by the Security Trustee on Funding 2, the Security
Trustee shall as soon as is reasonable thereafter (which, in the case of
a London Business Day, shall mean upon giving not less than three hours
notice expiring during normal business hours) serve a copy of the Master
Intercompany Loan Acceleration Notice on the Funding 2 Secured
Creditors.
8.3 GENERAL
(a) For the purposes of all powers implied by statute, the Funding 2
Secured Obligations are deemed to have become due and payable on
the date of this Deed.
(b) Section 103 of the 1925 Act (restricting the powers of sale) and
Section 93 of the 1925 Act (restricting the right of
consolidation) do not apply to the Security Interests comprised
in the Funding 2 Security.
8.4 PRIVILEGES
(Except in relation to property or assets situation in Scotland) each
Receiver and the Security Trustee is entitled to all the rights, powers,
privileges and immunities conferred by the 1925 Act, except that Section
103 of the 1925 Act does not apply.
8.5 ENFORCEABLE
The Funding 2 Security will become immediately enforceable upon the
service of a Master Intercompany Loan Acceleration Notice or, if there
are no Loan Tranches outstanding under the Master Intercompany Loan
Agreement, upon notice from any other Funding 2 Secured Creditor of the
failure by Funding 2 to pay any other Funding 2 Secured Obligation on
its due date (subject to any applicable grace period).
8.6 POWER OF SALE
The power of sale and other powers conferred by Section 101 of the 1925
Act, as extended and varied by this Deed, will be immediately
exercisable at any time after the Funding 2 Security has become
enforceable.
8.7 DISCRETIONARY ENFORCEMENT
Subject to the provisions of this Deed, the Security Trustee may at any
time, at its discretion and without notice, take such proceedings and/or
other action as it may think fit against, or in relation to, Funding 2
or any other party to any of the Funding 2 Agreements to enforce their
obligations under any of the Funding 2 Agreements. Subject to the
provisions of this Deed, at any time after the
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Funding 2 Security has become enforceable in accordance with Clause 8.5
(Enforceable), the Security Trustee may, at its discretion and without
notice, take such steps as it may think fit to enforce the security
created pursuant to this Deed.
8.8 MANDATORY ENFORCEMENT
The Security Trustee shall not be bound to take any steps or institute
any proceedings or to take any other action under or in connection with
any of the Funding 2 Agreements (including, without limitation,
enforcing the security constituted by this Deed) unless:
(a) (i) it shall have been directed to do so by the Master Issuer
Security Trustee acting in accordance with the provisions of
this Deed; or
(ii) if there are no Loan Tranches outstanding, it shall have
been directed to do so by the Funding 2 Secured Creditor
who ranks highest in the order or priority of payments set
out in Clause 8.12 (Priorities of Payment - After Service
of a Master Intercompany Loan Acceleration Notice); or
(iii) it is required to do so under any express provision of
this Deed; and
(b) it shall have been indemnified and/or secured to its
satisfaction against all liabilities, actions, proceedings,
claims and demands to which it may be or become liable and all
costs, charges, damages and expenses which may be incurred by it
in connection therewith, and the terms of such indemnity may
include the provision of a fighting fund, non recourse loan or
other similar arrangement.
8.9 EXTENSION OF THE 1925 ACT
(Except in relation to property or assets situated in Scotland) the
statutory powers of sale and the other powers conferred on the Security
Trustee by Section 101(1) and (2) of the 1925 Act are extended in
relation to Funding 2 so as to authorise the Security Trustee (upon such
terms as the Security Trustee may think fit and in accordance with the
terms of this Deed) at any time following service of a Master
Intercompany Loan Acceleration Notice and subject to the Security
Trustee being indemnified and/or secured to its satisfaction to:
(a) make demand in the name of the other Funding 2 Secured Creditors
or in its own right for any moneys and liabilities in respect of
the Funding 2 Charged Property; and
(b) to sell, transfer, convey, vary or otherwise dispose of the
Funding 2 Charged Property and to do so for any shares,
debentures or other securities including, without limitation,
any Authorised Investments whatsoever comprising part thereof,
or in consideration of an agreement to pay all or part of the
purchase price at a later date or dates, or an agreement to make
periodical payments, whether or not the agreement is secured by
an Encumbrance or a guarantee, or for such other consideration
whatsoever as the Security Trustee may in its absolute
discretion think fit, and also to grant any option to purchase,
and to effect exchanges of, the whole or any part of the Funding
2 Charged Property (and nothing shall preclude any such disposal
being made to a Funding 2 Secured Creditor);
(c) with a view to or in connection with the sale of the Funding 2
Charged Property, to carry out any transaction, scheme or
arrangement which the Security Trustee may, in its absolute
discretion, consider appropriate;
(d) to insure the Funding 2 Charged Property against such risks and
for such amounts as the Security Trustee may in its absolute
discretion consider prudent; and
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(e) to do all or any of the things or exercise all or any of the
powers which are mentioned or referred to in Clause 14 (Powers
of Receiver) as if each of them was expressly conferred on the
Security Trustee by this Deed and which may not be included in
paragraphs (a) to (d) above.
8.10 DISPOSAL OF FUNDING 2 CHARGED PROPERTY
Notwithstanding the foregoing provisions of this Clause 8 and Clause 12
(Security Trustee's Powers), if the Funding 2 Security has become
enforceable otherwise than by reason of a default in payment of any
amount due in respect of any AAA Loan Tranche, the Security Trustee will
not be entitled to dispose of all or part of the Funding 2 Charged
Property unless either:
(a) a sufficient amount would be realised to allow a full and
immediate discharge of all amounts owing under all AAA Loan
Tranches of the Master Issuer and all prior ranking amounts due
by Funding 2 in accordance with the Funding 2 Priorities of
Payments; and
(b) the Security Trustee is of the sole opinion, which shall be
binding on the Funding 2 Secured Creditors, reached after
considering at any time and from time to time the advice of any
financial or such other professional advisers selected by the
Security Trustee in its absolute discretion (acting reasonably)
for the purpose of giving such advice, that the cash flow
prospectively receivable by Funding 2 will not (or that there is
a significant risk that it will not) be sufficient, having
regard to any other relevant actual, contingent or prospective
liabilities of Funding 2, to discharge in full in due course all
amounts owing in respect of each AAA Loan Tranche and all prior
ranking amounts due by Funding 2. The fees and expenses of the
aforementioned financial adviser or such other professional
adviser selected by the Security Trustee shall be paid by
Funding 2.
8.11 SERVICE OF MASTER INTERCOMPANY LOAN ACCELERATION NOTICE
From and including the time when the Security Trustee serves a Master
Intercompany Loan Acceleration Notice (which has not been withdrawn) on
Funding 2:
(a) no amount may be withdrawn from the Funding 2 Bank Accounts
(which accounts shall be identified in the relevant Master
Intercompany Loan Acceleration Notice) except with the prior
written consent of the Security Trustee; and
(b) (provided that the Mortgages Trustee and the Cash Manager have
been notified of the service of a Master Intercompany Loan
Acceleration Notice) no action whatsoever may be taken by the
Mortgages Trustee in relation to or in respect of the Funding 2
Charged Property without the prior written consent of the
Security Trustee save for any action required to preserve or
protect the Mortgages Trustee's right, title or interest in the
Funding 2 Charged Property.
8.12 PRIORITIES OF PAYMENT - AFTER SERVICE OF A MASTER INTERCOMPANY LOAN
ACCELERATION NOTICE
All monies received or recovered by the Security Trustee (or a Receiver
appointed on its behalf) following service of a Master Intercompany Loan
Acceleration Notice shall be applied by the Security Trustee (save to
the extent required otherwise by law) in the order of priority set out
in Part 3 of Schedule 3 hereto.
8.13 APPLICATION OF MONIES RECEIVED AFTER MASTER INTERCOMPANY LOAN
ACCELERATION NOTICE
Each Funding 2 Secured Creditor undertakes to pay to the Security
Trustee or the Receiver, as the case may be, all monies received or
recovered by it (including by way of set-off or otherwise)
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subsequent to the service of a Master Intercompany Loan Acceleration
Notice in order that such amounts can be applied in accordance with
Clause 8.12 (Priorities of Payment - After Service of a Master
Intercompany Loan Acceleration Notice).
8.14 RETENTION ACCOUNT
If the Security Trustee enforces the security created under this Deed at
a time when either no amounts or not all amounts owing in respect of the
Funding 2 Secured Obligations have become due and payable, the Security
Trustee (or a Receiver, as the case may be,) may, for so long as no such
amounts or not all such amounts have become due and payable, pay any
monies referred to in Clause 8.12 (Priorities of Payment - After Service
of a Master Intercompany Loan Acceleration Notice), as the case may be,
into, and retain such monies in, an interest-bearing account (a
RETENTION ACCOUNT) to be held by it as security and applied by it in
accordance with Clause 8.12 (Priorities of Payment - After Service of a
Master Intercompany Loan Acceleration Notice) as and when any of the
amounts referred to therein become due and payable.
8.15 ACKNOWLEDGEMENT OF FUNDING 2 SECURED CREDITORS
Without prejudice to the generality of Clause 30.8 (Funding 2 Secured
Creditors), each of the Funding 2 Secured Creditors hereby acknowledges
and concurs with the provisions of Clause 8.8 (Mandatory Enforcement)
and Clause 24.8 (Modification to Transaction Documents) and each of them
agrees that it shall have no claim against the Security Trustee as a
result of the application thereof.
9. EXERCISE OF CERTAIN RIGHTS
9.1 NO ENFORCEMENT AGAINST MASTER ISSUER
Each party to this Deed undertakes to the Master Issuer and each of the
Funding 2 Secured Creditors (including the Security Trustee in its
capacity as such under this Deed) that unless and until all amounts
payable pursuant to the Funding 2 Secured Obligations have been
satisfied in full, it shall not:
(a) take any steps or pursue any action whatsoever for the purpose of
recovering any debts due or owing to it by the Master Issuer; or
(b) take any steps or legal proceedings for the winding-up,
dissolution or reorganisation of, or the institution of insolvency
proceedings against the Master Issuer or for the appointment of a
receiver, administrator, administrative receiver, liquidator or
similar officer of the Master Issuer in respect of any or all of
its revenues and assets.
9.2 NO ENFORCEMENT BY FUNDING 2 SECURED CREDITORS
Each of the Funding 2 Secured Creditors (other than the Security Trustee
and any Receiver) hereby agrees with Funding 2 and the Security Trustee
that:
(a) only the Security Trustee may enforce the security created in
favour of the Security Trustee by this Deed in accordance with
the provisions hereof;
(b) notwithstanding any other provision of this Deed or any other
Transaction Document (other than clause 5.2 (Shortfall on Final
Repayment Date) of the Master Intercompany Loan Agreement), no
sum due or owing to any Funding 2 Secured Creditor or to the
Security Trustee (whether for itself or on behalf of the Funding
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2 Secured Creditors) from or by Funding 2 under this Deed or any
other Transaction Document shall be payable by Funding 2 except
to the extent that Funding 2 has sufficient funds available or
(following enforcement of the Funding 2 Security) the Security
Trustee has realised sufficient funds from the Funding 2
Security to pay such sum subject to and in accordance with the
relevant Funding 2 Priorities of Payments and provided that all
liabilities of Funding 2 required to be paid in priority thereto
or pari passu therewith pursuant to such Funding 2 Priorities of
Payments have been paid, discharged and/or otherwise provided
for in full; and
(c) it shall not take any steps for the purpose of recovering any of
the Funding 2 Secured Obligations (including, without
limitation, by exercise any rights of set-off) or enforcing any
rights arising out of the Transaction Documents against Funding
2 and it shall not take any steps or legal proceedings for the
winding-up, dissolution or reorganisation of, or the institution
of insolvency proceedings against Funding 2 or for the
appointment of a receiver, administrator, administrative
receiver, liquidator or similar officer of Funding 2 in respect
of any or all of its revenues and assets
unless (i) a Master Intercompany Loan Acceleration Notice shall have
been served or the Security Trustee, having become bound to serve a
Master Intercompany Loan Acceleration Notice, and/or (ii) whether or not
a Master Intercompany Loan Acceleration Notice has been served, having
become bound to take any steps or proceedings to enforce the said
security pursuant to this Deed, fails to do so within 30 days of
becoming so bound and that failure is continuing (in which case each of
such Funding 2 Secured Creditors shall be entitled to take any such
steps and proceedings as it shall deem necessary other than the
presentation of a petition for or making of an application for the
winding up, dissolution, reorganisation of, or the institution of
insolvency proceedings against Funding 2 or the appointment of a
receiver, administrator, administrative receiver, liquidator or similar
officer of Funding 2).
9.3 KNOWLEDGE OF SECURITY TRUSTEE OF MASTER INTERCOMPANY LOAN EVENT OF
DEFAULT
The Security Trustee will not be deemed to have knowledge of the
occurrence of a Master Intercompany Loan Event of Default unless the
Security Trustee has received written notice from the Master Issuer
stating that a Master Intercompany Loan Event of Default has occurred
and describing that Master Intercompany Loan Event of Default.
10. GENERAL COVENANTS AND WARRANTIES
10.1 TITLE
(a) Funding 2 represents to the Security Trustee that it is the
beneficial owner of the Funding 2 Charged Property and the
Funding 2 Charged Property is free of any Security Interests
(except for those created by or under this Deed) and any other
rights or interests (including any licences) in favour of third
parties.
(b) Funding 2 represents to the Security Trustee that, as at the
Funding 2 Programme Date, none of its assets and/or undertaking
are subject to any restriction (whether contractual or
otherwise) that may render the Security Interests granted by
Funding 2 under this Deed ineffective or which otherwise
prohibit the grant of such Security Interests.
10.2 NATURE OF SECURITY
Funding 2 represents to the Security Trustee that this Deed creates
those Security Interests it purports to create and is not liable to be
amended or otherwise set aside on its liquidation or administration or
otherwise.
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10.3 FUNDING 2 ACCOUNTS
Funding 2 hereby undertakes that, for so long as any Funding 2 Secured
Obligations remain outstanding, it shall not (without the prior written
consent of the Security Trustee):
(a) open or maintain any bank account or deposit account with any
bank or any other financial institution other than the Funding 2
Bank Accounts; or
(b) close the Funding 2 Bank Accounts,
other than in accordance with the Bank Account Agreement and this Deed.
10.4 CONSENTS
Funding 2 hereby represents and warrants to the Security Trustee (for
itself and on trust for the other Funding 2 Secured Creditors) that,
save for registration of certain of the Transaction Documents with the
Registrar of Companies in accordance with the provisions of Chapter I of
Part XII of the Companies Act 1985, no authorisation, approval, consent,
licence, exemption, registration, recording, filing or notarisation and
no payment of any duty or tax and no other action whatsoever is
necessary to ensure the validity, legality or enforceability of the
liabilities and obligations of Funding 2 or the rights of the Funding 2
Secured Creditors and the Security Trustee in respect of Funding 2 under
this Deed.
10.5 REGISTRAR OF COMPANIES
Funding 2 undertakes to the Funding 2 Secured Creditors to file or
procure the filing with the Registrar of Companies pursuant to Chapter I
of Part XII of the Companies Act 1985 of duly completed Forms 395
together with an executed original of this Deed within 21 days after the
date of this Deed.
10.6 NEGATIVE PLEDGE
Funding 2 shall not, save for the Funding 2 Security, or with the prior
written consent of the Security Trustee, or unless otherwise permitted
under any of the Transaction Documents, create or permit to subsist any
mortgage, sub-mortgage, charge, sub-charge, pledge, lien or other
security interest whatsoever, however created or arising (unless arising
by operation of law) over any of its property, assets or undertakings
present or future (including any uncalled capital) or any interest,
estate, right, title or benefit therein or use, invest or dispose of,
including by way of sale or the grant of any security interest of
whatsoever nature or otherwise deal with, or agree or attempt or purport
to sell or otherwise dispose of (in each case whether by one or a series
of transactions) or grant any option or right to acquire any such
property, assets or undertaking present or future.
10.7 UNITED STATES ACTIVITIES
Funding 2 represents and covenants that it will not engage in any
activities in the United States (directly or through agents), will not
derive any income from United States sources as determined under United
States income tax principles and will not hold any property if doing so
would cause it to be engaged or deemed to be engaged in a trade or
business within the United States as determined under United States tax
principles.
10.8 ADDITIONAL POSITIVE COVENANTS
Funding 2 covenants and undertakes with the Security Trustee for the
benefit of the Funding 2 Secured Creditors as follows:
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(a) to cause to be prepared and certified by its auditors in respect
of each Financial Year accounts in such form as will comply with
relevant legal and accounting requirements for the time being;
(b) at all times to keep or procure the keeping of proper books of
account and records as may be necessary to comply with all
applicable laws and so as to enable financial statements to be
prepared and to allow the Security Trustee and any person or
persons appointed by the Security Trustee to whom Funding 2
shall have no reasonable objection free access to such books of
account and records at all times during normal business hours
upon reasonable notice in writing provided that such inspection
shall only be for the purposes of carrying out its duties under
this Deed and any information so obtained shall only be used and
passed on to any other person for the purpose of the Security
Trustee carrying out its duties under this Deed;
(c) to give notice in writing to the Security Trustee of the
occurrence of any Master Intercompany Loan Event of Default,
Potential Master Intercompany Loan Event of Default and/or
service of a Master Intercompany Loan Acceleration Notice (which
has not been served by the Security Trustee) (such notice to be
effective by the delivery of a copy of the Master Intercompany
Loan Acceleration Notice to the Security Trustee) immediately
upon becoming aware thereof and without waiting for the Security
Trustee to take any further action;
(d) give to the Security Trustee (i) within 14 days after demand by
the Security Trustee therefor and (ii) (without the necessity
for any such demand) promptly after the publication of its
audited accounts in respect of each Financial Year and in any
event not later than the date required by statute to file or
publish (whichever is earlier) such audited accounts after the
end of each such Financial Year a certificate signed by two
directors of Funding 2 to the effect that as at a date not more
than seven days before delivering such certificate (the
CERTIFICATION DATE) there did not exist and had not existed
since the certification date of the previous certificate (or in
the case of the first such certificate the date hereof) any
Master Intercompany Loan Event of Default or any Potential
Master Intercompany Loan Event of Default (or if such then
exists or existed specifying the same) and that during the
period from and including the certification date of the last
such certificate (or in the case of the first such certificate
the date hereof) to and including the certification date of such
certificate Funding 2 has complied, to the best of their
knowledge and belief, with all its obligations contained in this
Deed and each of the other Funding 2 Agreements or (if such is
not the case) specifying the respects in which it has not so
complied;
(e) at all times to execute all such further documents and do all
such further acts and things as may in the reasonable opinion of
the Security Trustee be necessary at any time or times to give
effect to the terms and conditions of this Deed and the other
Funding 2 Agreements;
(f) at all times to comply with the obligations and provisions
binding upon it under and pursuant to this Deed and the other
Funding 2 Agreements; and
(g) duly and promptly to pay and discharge all Taxes imposed upon it
or its assets unless such Taxes are, in the opinion of the
Security Trustee, being contested in good faith by Funding 2.
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11. SECURITY TRUSTEE AND EVENTS OF DEFAULT
11.1 SECURITY TRUSTEE RIGHTS AND OBLIGATIONS
For the period commencing upon the service of a Master Intercompany Loan
Acceleration Notice and terminating upon the notification to the Funding
2 Secured Creditors by the Security Trustee that all Funding 2 Secured
Obligations have been satisfied in full and save as otherwise provided
in this Deed:
(a) all payments under or arising from this Deed shall be made to
the Security Trustee or to its order;
(b) all rights or remedies provided for by this Deed or available at
law or in equity to the Funding 2 Secured Creditors are
exercisable only by the Security Trustee;
(c) all rights to compel performance of the Transaction Documents
are exercisable only by the Security Trustee; and
(d) all payments in respect of the Funding 2 Secured Obligations
shall operate in satisfaction pro tanto of Funding 2's covenants
to the Funding 2 Secured Creditors.
11.2 FUNDING 2 SECURED CREDITOR OBLIGATIONS
For the avoidance of doubt, this Clause 11 (Security Trustee and Events
of Default) shall not impose any obligation on the Security Trustee to
perform any of the obligations of the Funding 2 Secured Creditors under
this Deed. The Funding 2 Secured Creditors shall remain liable to
perform such obligations.
12. SECURITY TRUSTEE'S POWERS
12.1 DELEGATION TO RECEIVER
In addition and without prejudice to any of its statutory powers, the
Security Trustee may at any time by deed delegate to any Receiver all or
any of the extended powers of leasing, surrendering or accepting
surrenders of leases conferred on the Security Trustee by this Deed.
12.2 ADDITIONAL POWERS
The Security Trustee shall have the power to insure against any
liabilities or obligations arising:
(a) as a result of the Security Trustee acting or failing to act in
a certain way (other than which may arise from its negligence or
wilful default or that of its officers or employees);
(b) as a result of any act or failure to act by any person or
persons to whom the Security Trustee has delegated any of its
trusts, rights, powers, duties, authorities or discretions, or
appointed as its agent (other than which may arise from such
person's negligence or wilful default);
(c) in connection with the Funding 2 Charged Property; or
(d) in connection with or arising from the enforcement of the
security created by this Deed.
The Security Trustee shall not be under any obligation to insure in
respect of such liabilities and/or obligations or require any other
persons to maintain insurance, but to the extent that it does so,
Funding 2 shall quarterly and on written request pay all insurance
premiums and expenses which the
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Security Trustee may properly incur in relation to such insurance. If
Funding 2 fails to pay such premiums or expenses or to reimburse the
Security Trustee therefor, the Security Trustee shall be entitled to be
indemnified out of the Funding 2 Charged Property in respect thereof,
and in the case of a Master Intercompany Loan Acceleration Notice having
been served, the indemnification of the Security Trustee in respect of
all such insurance premiums and expenses shall be payable in priority to
payments to the Funding 2 Secured Creditors and otherwise in accordance
with this Deed.
12.3 AUTHORISED INVESTMENTS
Any monies which under the trusts of this Deed ought to or may be
invested by the Security Trustee (or by the Cash Manager on its behalf)
after the service of a Master Intercompany Loan Acceleration Notice may
be invested in the name of the Security Trustee or in the name of any
nominee on its behalf and under the control of the Security Trustee in
any Authorised Investments and the Security Trustee may at any time vary
or transfer (or direct the Cash Manager to vary or transfer) any of such
Authorised Investments for or into other such Authorised Investments as
the Security Trustee at its absolute discretion may determine, and shall
not be responsible (save where any loss results from the Security
Trustee's fraud, wilful default or negligence or that of its officers or
employees) for any loss occasioned by reason of any such investments
whether by depreciation in value or otherwise, provided that such
Authorised Investments were made in accordance with the foregoing
provisions.
13. RECEIVER
13.1 APPOINTMENT OF RECEIVER
(a) Except as provided below, the Security Trustee may appoint any
one or more persons to be a Receiver of all or any part of the
Funding 2 Charged Property if the Funding 2 Security has become
enforceable.
(b) Any appointment under paragraph (a) above may be by deed, under
seal or in writing under its hand.
(c) Except as provided below, any restriction imposed by law on the
right of a mortgagee to appoint a Receiver (including under
section 109(1) of the 1925 Act) does not apply to this Deed.
(d) The Security Trustee is not entitled to appoint a Receiver
solely as a result of:
(i) the obtaining of a moratorium; or
(ii) anything done with a view to obtaining a moratorium,
under the Insolvency Act 2000.
13.2 REMOVAL
The Security Trustee may by writing under its hand (subject to any
requirement for an order of the court in the case of an administrative
receiver) remove any Receiver appointed by it and may, whenever it
thinks fit, appoint a new Receiver in the place of any Receiver whose
appointment may for any reason have terminated. The Security Trustee may
apply to the court for an order removing an administrative receiver.
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13.3 REMUNERATION
The Security Trustee may fix the remuneration of any Receiver appointed
by it and the maximum rate specified in Section 109(6) of the 1925 Act
will not apply. Funding 2 will pay the remuneration of any Receiver in
accordance with the terms and in the manner agreed from time to time
between the relevant Receiver and the Security Trustee, subject to the
terms and conditions of this Deed and the Funding 2 Priorities of
Payments.
13.4 AGENT OF FUNDING 2
(a) The Receiver will be deemed to be the agent of Funding 2 for all
purposes and accordingly will be deemed to be in the same
position as a Receiver duly appointed by a mortgagee under the
1925 Act. Funding 2 alone is responsible for the contracts,
engagements, acts, omissions, defaults and losses of a Receiver
and for liabilities incurred by a Receiver.
(b) If a liquidator of Funding 2 is appointed, the Receiver will act
as principal and not as agent of the Security Trustee.
(c) The Security Trustee will not incur any liability (either to
Funding 2 or to any other person) by reason of the appointment
of a Receiver.
13.5 RELATIONSHIP WITH SECURITY TRUSTEE
To the fullest extent allowed by law, any right, power or discretion
conferred by this Deed (either expressly or impliedly) or by law on a
Receiver may after the Funding 2 Security becomes enforceable be
exercised by the Security Trustee in relation to any Funding 2 Charged
Property without first appointing a Receiver and notwithstanding the
appointment of a Receiver.
14. POWERS OF RECEIVER
14.1 GENERAL
(a) A Receiver has all of the rights, powers and discretions set out
below in this Clause in addition to those conferred on it by any
law; this includes:
(i) in the case of an administrative receiver, all the rights,
powers and discretions conferred on an administrative
receiver under the Insolvency Act 1986; and
(ii) otherwise, all the rights, powers and discretions
conferred on a receiver (or a receiver and manager) under
the 1925 Act and the Insolvency Act 1986.
(b) If there is more than one Receiver holding office at the same
time, each Receiver may (unless the document appointing him
states otherwise) exercise all of the powers conferred on a
Receiver under this Deed individually and to the exclusion of
any other Receiver.
14.2 POSSESSION
A Receiver may take immediate possession of, get in and collect any
Funding 2 Charged Property.
14.3 CARRY ON BUSINESS
A Receiver may carry on any business of Funding 2 in any manner he
thinks fit.
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14.4 EMPLOYEES
(a) A Receiver may appoint and discharge managers, officers, agents,
accountants, servants, workmen and others for the purposes of
this Deed upon such terms as to remuneration or otherwise as he
thinks fit.
(b) A Receiver may discharge any person appointed by Funding 2.
14.5 BORROW MONEY
A Receiver may raise and borrow money either unsecured or on the
security of any Funding 2 Charged Property either in priority to the
Funding 2 Security or otherwise and generally on any terms and for
whatever purpose which he thinks fit.
14.6 SALE OF ASSETS
(a) A Receiver may sell, exchange, convert into money and realise
any Funding 2 Charged Property by public auction or private
contract and generally in any manner and on any terms which he
thinks fit.
(b) The consideration for any such transaction may consist of cash,
debentures or other obligations, shares, stock or other valuable
consideration and any such consideration may be payable in a
lump sum or by instalments spread over any period which he
thinks fit.
14.7 COMPROMISE
A Receiver may settle, adjust, refer to arbitration, compromise and
arrange any claim, account, dispute, question or demand with or by any
person who is or claims to be a creditor of Funding 2 or relating in any
way to any Funding 2 Charged Property, provided that, any such claim has
priority to or ranks pari passu with this Deed.
14.8 LEGAL ACTIONS
A Receiver may bring, prosecute, enforce, defend and abandon any action,
suit or proceedings in relation to any Funding 2 Charged Property which
he thinks fit.
14.9 RECEIPTS
A Receiver may give a valid receipt for any moneys and execute any
assurance or thing which may be proper or desirable for realising any
Funding 2 Charged Property.
14.10 SUBSIDIARIES
A Receiver may form a subsidiary of Funding 2 and transfer to that
subsidiary any Funding 2 Charged Property.
14.11 DELEGATION
A Receiver may delegate his powers in accordance with this Deed.
14.12 PROTECTION OF ASSETS
A Receiver may do any act which Funding 2 might do in the ordinary
conduct of its business to protect or improve any Funding 2 Charged
Property as he thinks fit.
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14.13 UNCALLED CAPITAL
A Receiver may call up or require the directors of Funding 2 to call up
any uncalled capital of Funding 2.
14.14 PAYMENT OF EXPENSES
A Receiver may pay and discharge, out of the profits and income of the
Funding 2 Charged Property and any moneys made by it in carrying on the
business of Funding 2, the expenses incurred by it in connection with
the carrying on and management of that business or in the exercise of
any of the powers conferred by this Clause or otherwise in respect of
the Funding 2 Charged Property and all other expenses which it shall
think fit to pay and will apply the residue of those profits and income
in accordance with the terms and conditions of this Deed.
14.15 OTHER POWERS
A Receiver may:
(a) do all other acts and things which he may consider desirable or
necessary for realising any Funding 2 Charged Property or
incidental or conducive to any of the rights, powers or
discretions conferred on a Receiver under or by virtue of this
Deed or law;
(b) exercise in relation to any Funding 2 Charged Property all the
powers, authorities and things which he would be capable of
exercising if he were the absolute beneficial owner of that
Funding 2 Charged Property; and
(c) use the name of Funding 2 for any of the above purposes.
15. PROTECTION OF THIRD PARTIES
15.1 ENQUIRY
No purchaser from, or other person dealing with, the Security Trustee or
a Receiver shall be concerned to enquire whether any of the powers
exercised or purported to be exercised under this Deed has arisen or
become exercisable, whether the Funding 2 Secured Obligations remain
outstanding or have become payable, whether such Receiver is authorised
to act or as to the propriety or validity of the exercise or purported
exercise of any power; and the title of such a purchaser and the
position of such a person shall not be impeachable by reference to any
of those matters and the protections afforded to purchasers from a
mortgagee by Sections 104 to 107 of the 1925 Act and to persons dealing
with an administrative receiver by Section 42(3) of the Insolvency Act
1986 shall apply to any person purchasing from or dealing with a
Receiver or the Security Trustee.
15.2 RECEIPTS
Upon any dealing or transaction under this Deed, the receipt of the
Security Trustee or a Receiver, as the case may be, shall be an absolute
and a conclusive discharge to a purchaser or such other person and shall
relieve it of any obligation to see to the application of any monies
paid to or by the direction of the Security Trustee or such Receiver.
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16. PROTECTION OF SECURITY TRUSTEE AND RECEIVER
16.1 LIABILITY
Neither the Security Trustee nor any Receiver shall be liable to Funding
2, in the absence of wilful default or negligence on their part or that
of their employees or officers or breach by the Security Trustee of its
obligations under this Deed, in respect of any loss or damage which
arises out of the exercise or the attempted or purported exercise of or
failure to exercise any of their respective powers.
16.2 POSSESSION
Without prejudice to the generality of Clause 16.3 (Mortgagee in
possession), entry into possession of the Funding 2 Charged Property or
any part thereof shall not render the Security Trustee or the Receiver
of that company liable to account as mortgagee in possession. If and
whenever the Security Trustee or the Receiver enters into possession of
the Funding 2 Charged Property, it shall be entitled at any time to go
out of such possession.
16.3 MORTGAGEE IN POSSESSION
Neither the Security Trustee nor the other Funding 2 Secured Creditors
shall, by reason of any assignment or other security made under this
Deed, be or be deemed to be a mortgagee creditor in possession nor shall
they take any action (other than, in the case of the other Funding 2
Secured Creditors, with the Security Trustee's prior written consent)
which would be likely to lead to the Funding 2 Secured Creditors or the
Security Trustee becoming a mortgagee in possession in respect of any
property referred to in this Deed. The Security Trustee, in its absolute
discretion, may at any time serve a written notice on the Funding 2
Secured Creditors requiring the Funding 2 Secured Creditors from the
date such notice is served to obtain the Security Trustee's prior
written consent before taking any action which would be likely to lead
to the Funding 2 Secured Creditors or the Security Trustee becoming a
mortgagee in possession in respect of any property referred to in this
Deed.
17. EXPENSES AND INDEMNITY
17.1 EXPENSES
Funding 2 covenants with the Security Trustee to reimburse or pay to the
Security Trustee and any Receiver of Funding 2 (on the basis of a full
indemnity) the amount of all costs (including legal costs), charges and
expenses (including insurance premiums) properly incurred or sustained
by the Security Trustee or any Receiver (including, for the avoidance of
doubt, any such costs, charges and expenses arising from any act or
omission of, or proceedings involving, any third person) in connection
with:
(a) the exercise or the attempted exercise, or the consideration of
the exercise by or on behalf of the Security Trustee or any
Receiver of any of the powers of the Security Trustee or such
Receiver, and the enforcement, preservation or attempted
preservation of this Deed (or any of the Security Interests
contained in or granted pursuant to it) or any of the Funding 2
Charged Property or any other action taken by or on behalf of
the Security Trustee or such Receiver with a view to or in
connection with the recovery by the Security Trustee or such
Receiver of the Funding 2 Secured Obligations; or
(b) the carrying out of any other act or matter which the Security
Trustee or any Receiver may reasonably consider to be necessary
for the preservation or benefit of the Funding 2 Charged
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Property and which Funding 2 is required to do pursuant to any
of the Transaction Documents to which it is a party but which it
has not done.
17.2 INDEMNITY
Funding 2 agrees to indemnify the Security Trustee and any Receiver, on
an after Tax basis, from and against all losses, actions, claims, costs
(including legal costs), expenses (including insurance premiums),
demands and liabilities whether in contract, tort, delict or otherwise
now or hereafter properly sustained or incurred by the Security Trustee
or such Receiver and their respective officers and employees or by any
person for whose liability, act or omission the Security Trustee or the
Receiver may be answerable, in connection with anything done or omitted
to be done under or pursuant to this Deed or any other Transaction
Document to which such entity is a party, or in the exercise or
purported exercise of the powers herein contained, or occasioned by any
breach by Funding 2 of any of its covenants or other obligations to the
Security Trustee, or in consequence of any payment in respect of the
Funding 2 Secured Obligations (whether made by Funding 2, a relevant
Issuer or a third person) being declared void or impeached for any
reason whatsoever, save where the same arises as the result of the
fraud, negligence, wilful misconduct or wilful default or breach of the
terms of this Deed by the Security Trustee or such Receiver or their
respective officers or employees.
17.3 TAXES
(a) All sums payable by Funding 2 under this Deed are deemed to be
exclusive of any amount in respect of VAT. If, pursuant to any
provision of this Deed, the Security Trustee or any Receiver
makes any taxable or deemed taxable supply to Funding 2, then
Funding 2 shall pay to the Security Trustee or such Receiver of
Funding 2 (as the case may be) (in addition to the consideration
for the supply) an amount equal to the VAT charged in respect of
such taxable or deemed taxable supply against production of a
valid VAT invoice.
(b) If the Security Trustee or any Receiver shall make any payment
for a taxable or deemed taxable supply to it pursuant to or in
connection with this Deed and any such payment shall bear VAT
which is Irrecoverable VAT, Funding 2 shall indemnify the
Security Trustee or such Receiver (as the case may be) on demand
for an amount equal to such Irrecoverable VAT so far as it has
not been taken into account in computing the amount of any
payment made by Funding 2 to the Security Trustee or such
Receiver under any other indemnity contained in this Deed.
17.4 INTEREST
All sums payable by Funding 2 under Clause 17.1 (Expenses), Clause 17.2
(Indemnity), Clause 17.3 (Taxes) or Clause 25 (Remuneration of the
Security Trustee) shall be payable on demand and:
(a) in the case of payments actually made by the Security Trustee
prior to the demand, shall carry interest at the rate per annum,
which is 1% per annum higher than the mean base rate from time
to time of the Reference Banks from the date of the same being
demanded to the date of actual payment (provided that such
demand shall be made on a Business Day, otherwise interest shall
be payable from the second Business Day following the date of
the demand to the date of actual payment); and
(b) in all other cases, shall carry interest at such rate from the
date 14 days after the date of the same being demanded or (where
the demand specifies that payment by the Security Trustee
22
will be made on an earlier date provided such earlier date is a
Business Day) from such earlier date (not being earlier than the
date of such demand) to the date of actual payment.
Any amounts payable pursuant to Clauses 25.1 (Remuneration) and 25.2
(Increased Remuneration) shall carry interest at the aforesaid rate from
the due date thereof to the date of actual payment.
18. PROTECTION OF CHARGES
Funding 2 further covenants with and undertakes to the Security Trustee
from time to time (notwithstanding that the Security Trustee may not
have served a Master Intercompany Loan Acceleration Notice) upon demand
to execute, at Funding 2's cost, any document or do any act or thing
(other than any amendment hereto) which the Security Trustee or the
Receiver may specify acting reasonably:
(a) with a view to registering, protecting, improving or perfecting
any charge or security created or intended to be created by or
pursuant to this Deed (including the perfecting of the
conversion of any floating charge to a fixed charge) subject to
first having obtained all necessary consents; or
(b) with a view to facilitating the exercise or the proposed
exercise of any of their powers or duties or the realisation of
any of the Funding 2 Charged Property; or
(c) with a view to protecting the Encumbrances created by or
pursuant to this Deed.
19. POWER OF ATTORNEY, ETC.
19.1 EXECUTION OF POWER OF ATTORNEY
Immediately upon execution of this Deed, Funding 2 shall execute and
deliver to the Security Trustee a power of attorney in or substantially
in the form set out in Schedule 1. For the avoidance of doubt, the
Security Trustee confirms that it may only exercise the powers conferred
under such power of attorney in the circumstances set out in paragraph 1
of the Power of Attorney.
19.2 FUNDING 2 CHARGED PROPERTY ON TRUST
To the extent that it is permitted to do so under the Transaction
Documents, for the purpose of giving effect to this Deed, Funding 2
hereby declares that, after service of a Master Intercompany Loan
Acceleration Notice, it will hold all of the Funding 2 Charged Property
(subject to the right of redemption) upon trust to convey, assign or
otherwise deal with such Funding 2 Charged Property in such manner and
to such person as the Security Trustee shall direct pursuant to this
Deed, and declares that it shall be lawful for the Security Trustee to
appoint a new trustee or trustees of the Funding 2 Charged Property in
place of Funding 2.
20. OTHER SECURITY, ETC.
20.1 NO MERGER
The Security Interests contained in or created pursuant to this Deed are
in addition to, and shall neither be merged in, nor in any way exclude
or prejudice any other Encumbrance, right of recourse, set off or other
right whatsoever which the Security Trustee or any Funding 2 Secured
Creditor may now or at any time hereafter hold or have (or would apart
from this Deed or any charge contained or created pursuant to this Deed
hold or have) as regards any of Funding 2 or any other person in respect
of the Funding 2 Secured Obligations, and neither the Security Trustee
nor any Funding 2 Secured Creditor shall be under any obligation to take
any steps to call in or to enforce any security
23
for the Funding 2 Secured Obligations, and shall not be liable to
Funding 2 for any loss arising from any omission on the part of the
Security Trustee or any Funding 2 Secured Creditor to take any such
steps or for the manner in which the Security Trustee or any Funding 2
Secured Creditor shall enforce or refrain from enforcing any such
security.
20.2 RULING OFF
If the Security Trustee receives notice of any Encumbrance affecting the
whole or any part of the Funding 2 Charged Property or any Security
Interests created under this Deed in contravention of the provisions
hereof:
(a) the Security Trustee may open a new account in the name of
Funding 2 and, if it does not, it shall nevertheless be deemed
to have done so at the time it received such notice; and
(b) all payments made by Funding 2 to the Security Trustee after the
Security Trustee receives such notice shall be credited or
deemed to have been credited to the new account, and in no
circumstances whatsoever shall operate to reduce the Funding 2
Secured Obligations as at the time the Security Trustee received
such notice.
20.3 CHANGE OF NAME, ETC.
This Deed shall remain valid and enforceable notwithstanding any change
in the name, composition or constitution of the Security Trustee or
Funding 2 or any amalgamation or consolidation by the Security Trustee
or Funding 2, with any other corporation (whether, in the case of
Funding 2, permitted under the Transaction Documents or not).
20.4 AVOIDANCE OF PAYMENTS
(a) If an amount paid to the Security Trustee or any of the other
Funding 2 Secured Creditors under a Transaction Document is
capable of being avoided or reduced by virtue of any provisions
or enactments relating to bankruptcy, insolvency or liquidation
for the time being in force or otherwise, then that amount will
not be considered to have been irrevocably paid for the purposes
of this Deed.
(b) Any settlement, discharge or release between Funding 2 and the
Security Trustee (or any Receiver) will be conditional upon no
security or payment granted or made to the Security Trustee (or
any Receiver, as the case may be) by Funding 2 or any other
person being avoided or reduced by virtue of any provisions or
enactments relating to bankruptcy, insolvency or liquidation for
the time being in force.
(c) If any security or payment is avoided or reduced in the
circumstances described in paragraph (a) above, then the
Security Trustee (or any Receiver, as the case may be) will be
entitled to recover the value or amount of such security or
payment from Funding 2 as if the relevant settlement, discharge
or release had not occurred.
20.5 RETENTION OF CHARGES
(a) If the Security Trustee has grounds for believing that Funding 2
may be unable to pay its debts as they fall due as at the date
of any payment made by Funding 2 to the Security Trustee or any
of the other Funding 2 Secured Creditors then the Security
Trustee may retain the Funding 2 Security until the expiry of a
period of (subject to paragraph (b) below) one month plus the
statutory period within which any assurance, security, guarantee
or payment can be avoided or invalidated after the payment and
discharge in full of all Funding 2 Secured Obligations
notwithstanding any release, settlement, discharge or
arrangement
24
which may be given or made by the Security Trustee on, or as a
consequence of, such payment or discharge of liability.
(b) If, at any time within the period referred to in paragraph (a)
above, any person presents a petition, or files documents with a
court or any registrar for the winding-up or administration of
Funding 2 or any analogous proceedings are commenced by or
against Funding 2, the Security Trustee may continue to retain
the Funding 2 Security for such further period as it may
determine and the Funding 2 Security will be deemed to continue
to be held as security for the payment and discharge to the
Security Trustee of all of the Funding 2 Secured Obligations.
21. SET-OFF
The Security Trustee may at any time following the service of a Master
Intercompany Loan Acceleration Notice without notice and notwithstanding
any settlement of account or other matter whatsoever combine or
consolidate all or any existing accounts of Funding 2 whether in its own
name or jointly with others and held by it or any Funding 2 Secured
Creditor and may set-off or transfer all or any part of any credit
balance or any sum standing to the credit of any such account (whether
or not the same is due to Funding 2 from the Security Trustee or
relevant Funding 2 Secured Creditor and whether or not the credit
balance and the account in debit or the Funding 2 Secured Obligations
are expressed in the same currency in which case the Security Trustee is
hereby authorised to effect any necessary conversions at its prevailing
rates of exchange) in or towards satisfaction of any of the Funding 2
Secured Obligations but subject always to the Funding 2 Priorities of
Payments and may in its absolute discretion estimate the amount of any
liability of Funding 2 which is contingent or unascertained and
thereafter set-off such estimated amount and no amount shall be payable
by the Security Trustee to Funding 2 unless and until all Funding 2
Secured Obligations have been ascertained and fully repaid or
discharged.
22. EXECUTION OF DOCUMENTS
Any document required to be executed as a deed by the Security Trustee
under or in connection with this Deed shall be validly executed if
executed as a deed by a duly authorised attorney of the Security
Trustee.
23. SUPPLEMENTS TO THE TRUSTEE ACTS
23.1 POWERS OF SECURITY TRUSTEE
Section 1 of the Trustee Act 2000 shall not apply to the duties of the
Security Trustee in relation to the trusts constituted by these
presents. Where there are any in consistencies between the Trustee Acts
and the provisions of these presents, the provisions of these presents
shall, to the extent allowed by law, prevail and, in the case of any
such inconsistency with the Trustee Act 2000, the provisions of these
presents shall constitute a restriction or exclusion for the purposes of
that Act.
By way of supplement it is expressly declared as follows:
(a) the Security Trustee may in relation to this Deed or any of the
other Transaction Documents act on the opinion or advice of, or
a certificate or any information obtained from, any lawyer,
banker, valuer, surveyor, securities company, broker,
auctioneer, accountant or other expert or adviser in the United
Kingdom or elsewhere (including, without limitation, any
certificate or confirmation from the Rating Agencies), whether
obtained by the Security Trustee or any Receiver, and shall not
be responsible for any loss occasioned by so acting;
25
(b) any such opinion, advice, certificate or information may be sent
or obtained by letter, telegram, telex, facsimile reproduction
or in any other form and the Security Trustee shall not be
liable for acting in good faith on any opinion, advice,
certificate or information purporting to be so conveyed although
the same shall contain some error or shall not be authentic
provided that such error or lack of authenticity is not
manifest;
(c) the Security Trustee shall (save as expressly otherwise provided
in this Deed or any of the other Transaction Documents) as
regards all rights, powers, authorities and discretions vested
in it by this Deed or any of the other Transaction Documents, or
by operation of law, have absolute and uncontrolled discretion
as to, and save as otherwise provided in this Deed shall not be
liable for any loss, liability, costs, expenses or inconvenience
arising as a result of, the exercise or non exercise thereof;
(d) the Security Trustee shall be at liberty to place this Deed and
all deeds and other documents relating to this Deed with any
bank or banking company, or lawyer or firm of lawyers believed
by it to be of good repute, in any part of the world, and the
Security Trustee shall not be responsible for or be required to
insure against any loss incurred in connection with any such
deposit and Funding 2 shall pay all sums required to be paid on
account of or in respect of any such deposit;
(e) the Security Trustee may, in the conduct of its trust business,
instead of acting personally, employ and pay, on such terms as
it in its absolute discretion deems fit, an agent to transact or
conduct, or concur in transacting or conducting, any business
and to do or concur in doing all acts required to be done by the
Security Trustee (including the receipt and payment of monies).
The Security Trustee shall not be responsible for any misconduct
or default on the part of any person appointed by it in good
faith hereunder or be bound to supervise the proceedings or acts
of any such persons;
(f) where it is necessary or desirable for any purpose in connection
with this Deed to convert any sum from one currency to another
it shall (unless otherwise provided by this Deed or required by
law) be converted at such rate or rates in accordance with such
method and as at such date for the determination of such rate of
exchange, as may be specified by the Security Trustee in its
absolute discretion but having regard to current rates of
exchange if available and the Security Trustee shall not be
liable for any loss occasioned by the said conversion under this
paragraph (f);
(g) subject to Clause 24.6 (Consent of Security Trustee), any
consent given by the Security Trustee for the purposes of this
Deed or any of the other Transaction Documents may be given on
such terms and subject to such conditions (if any) as the
Security Trustee in its absolute discretion thinks fit and,
notwithstanding anything to the contrary contained in this Deed
or any of the other Transaction Documents, may be given
retrospectively;
(h) the Security Trustee shall be entitled to rely (without further
investigation or inquiry) upon a certificate, reasonably
believed by it to be genuine, of Funding 2 or any other person
in respect of every matter and circumstance for which a
certificate is expressly provided for under this Deed or the
other Transaction Documents and to call for and rely upon a
certificate of Funding 2 or any other person reasonably believed
by it to be genuine as to any other fact or matter prima facie
within the knowledge of Funding 2 or such person as sufficient
evidence thereof and the Security Trustee shall not be bound in
any such case to call for further evidence or be responsible for
any loss, liability, costs, damages, expenses or inconvenience
that may be caused by it failing to do so;
26
(i) the Security Trustee shall be entitled to rely (without further
investigation or inquiry) upon any document, reasonably believed
by it to be genuine, provided to it by Funding 2, the Mortgages
Trustee or the Cash Manager in respect of every matter and
circumstance prima facie within the knowledge of Funding 2, the
Mortgages Trustee or the Cash Manager and the Security Trustee
shall not be bound in any such case to call for further evidence
or be responsible for any loss, liability, costs, damages,
expenses or inconvenience that may be caused by it failing to do
so;
(j) the Security Trustee shall not be liable for any error of
judgment made in good faith by any officer or employee of the
Security Trustee assigned by the Security Trustee to administer
its corporate trust matters unless it shall be proved that the
Security Trustee was negligent in ascertaining the pertinent
facts;
(k) no provision of this Deed or any other Transaction Document
shall require the Security Trustee to do anything which may be
illegal or contrary to applicable law or regulation or expend or
risk its own funds or otherwise incur any financial liability in
the performance of any of its duties or in the exercise of any
of its rights or powers or otherwise in connection with this
Deed or any other Transaction Document (including, without
limitation, forming any opinion or employing any legal,
financial or other adviser), if it shall believe that repayment
of such funds or adequate indemnity against such risk or
liability is not assured to it;
(l) in connection with the exercise by it of any of its trusts,
powers, authorities or discretions under these presents
(including, without limitation, any modification, waiver,
authorisation or determination), the Security Trustee shall have
regard to the general interests of the Funding 2 Secured
Creditors as a class but shall not have regard to any interests
arising from circumstances particular to any individual Funding
2 Secured Creditor and, in particular but without limitation,
shall not have regard to the consequences of such exercise for
any individual Funding 2 Secured Creditor resulting from their
being for any purpose domiciled or resident in, or otherwise
connected with, or subject to the jurisdiction of, any
particular territory or any political sub-division thereof and
the Security Trustee shall not be entitled to require, nor shall
any Funding 2 Secured Creditor be entitled to claim, from
Funding 2 or any other person any indemnification or payment in
respect of any tax consequence of any such exercise upon any
individual Funding 2 Secured Creditor;
(m) the Security Trustee shall not (unless and to the extent ordered
to do so by a court of competent jurisdiction) be required to
disclose to any Funding 2 Secured Creditor any information made
available to the Security Trustee by Funding 2 in connection
with the trusts of this Deed or the Transaction Documents and no
Funding 2 Secured Creditor shall be entitled to take any action
to obtain from the Security Trustee any such information; and
(n) the Security Trustee may appoint and pay any person to act as a
custodian or nominee on any terms in relation to such assets of
the trust as the Security Trustee may determine, including for
the purpose of depositing with a custodian this Deed or any
documents relating to the trusts created hereunder. The Security
Trustee shall not be responsible for any misconduct or default
on the part of any person appointed by it in good faith
hereunder or be bound to supervise the proceedings or acts of
any such persons.
23.2 REPRESENTATIONS AND WARRANTIES, ETC.
The Security Trustee shall not be responsible for any recitals or
statements or warranties or representations of any party (other than the
Security Trustee) contained herein or in any other Transaction Document
or any other document entered into in connection therewith and shall
assume
27
the accuracy and correctness thereof and shall not be responsible for
the execution, legality, effectiveness, adequacy, genuineness, validity
or enforceability or admissibility in evidence of any such agreement or
other document or any trust or security thereby constituted or
evidenced. The Security Trustee may accept without enquiry, requisition
or objection such title as Funding 2 may have to the Funding 2 Charged
Property or any part thereof from time to time and shall not be required
to investigate or make any enquiry into the title of Funding 2 to the
Funding 2 Charged Property or any part thereof from time to time whether
or not any default or failure is or was known to the Security Trustee or
might be, or might have been, discovered upon examination, inquiry or
investigation and whether or not capable of remedy. Notwithstanding the
generality of the foregoing, each Funding 2 Secured Creditor shall be
solely responsible for making its own independent appraisal of and
investigation into the financial condition, creditworthiness, condition,
affairs, status and nature of Funding 2, and the Security Trustee shall
not at any time have any responsibility for the same and each Funding 2
Secured Creditor shall not rely on the Security Trustee in respect
thereof.
23.3 PERFECTION
The Security Trustee shall not be bound to give notice to any person of
the execution of this Deed nor shall it be liable for any failure,
omission or defect in perfecting the security intended to be constituted
hereby including, without prejudice to the generality of the foregoing:
(a) failure to obtain any licence, consent or other authority for
the execution of the same;
(b) failure to register the same in accordance with the provisions
of any of the documents of title of Funding 2 to any of the
Funding 2 Charged Property; and
(c) failure to effect or procure registration of or otherwise
protect any of the Transaction Documents by registering the same
under any registration laws in any territory, or by registering
any notice, caution or other entry prescribed by or pursuant to
the provisions of the said laws.
23.4 ENFORCEABILITY, ETC.
The Security Trustee shall not be responsible for the genuineness,
validity or effectiveness or suitability of any of the Transaction
Documents or any other documents entered into in connection therewith or
any other document or any obligations or rights created or purported to
be created thereby or pursuant thereto or any security or the priority
thereof constituted or purported to be constituted by or pursuant to
this Deed or any of the other Transaction Documents, nor shall it be
responsible or liable to any person because of any invalidity of any
provision of such documents or the unenforceability thereof, whether
arising from statute, law or decision of any court and (without
prejudice to the generality of the foregoing) the Security Trustee shall
not have any responsibility for or have any duty to make any
investigation in respect of or in any way be liable whatsoever for:
(a) the title, ownership, value, sufficiency, enforceability or
existence of any Funding 2 Charged Property or any security
(howsoever described) relating thereto;
(b) the nature, status, creditworthiness or solvency of Funding 2;
(c) the execution, legality, validity, adequacy, admissibility in
evidence or enforceability of this Deed or any other Transaction
Document relating to the Funding 2 Charged Property or any other
document entered into in connection therewith;
(d) the registration, filing, protection or perfection of any
security relating to this Deed or the other Transaction
Documents relating to the Funding 2 Charged Property or the
priority of
28
the security thereby created whether in respect of any initial
advance or any subsequent advance or any other sums or
liabilities;
(e) the scope or accuracy of any representations, warranties or
statements made by or on behalf of Funding 2 or any other person
or entity at any time provided in any Transaction Document
relating to the Funding 2 Charged Property or in any document
entered into in connection therewith;
(f) the performance or observance by Funding 2 or any other person
with any provisions of this Deed or any other Transaction
Document relating to the Funding 2 Charged Property or in any
document entered into in connection therewith or the fulfilment
or satisfaction of any conditions contained therein or relating
thereto or as to the existence or occurrence at any time of any
default, event of default or similar event contained therein or
any waiver or consent which has at any time been granted in
relation to any of the foregoing;
(g) the existence, accuracy or sufficiency of any legal or other
opinions, searches, reports, certificates, valuations or
investigations delivered or obtained or required to be delivered
or obtained at any time in connection with the Funding 2 Charged
Property;
(h) the title of Funding 2 to any of the Funding 2 Charged Property;
(i) the failure to effect or procure registration of or to give
notice to any person in relation to or otherwise protect the
security created or purported to be created by or pursuant to
this Deed or other documents entered into in connection
herewith;
(j) the failure to call for delivery of documents of title to or
require any transfers, legal mortgages, charges or other further
assurances in relation to any of the assets the subject matter
of any of this Deed or any other document;
(k) the failure to prevent, whether by act or omission, a fixed
charge granted under this Deed from becoming a floating charge;
or
(l) any other matter or thing relating to or in any way connected
with this Deed or the Funding 2 Charged Property or any document
entered into in connection therewith whether or not similar to
the foregoing.
23.5 NO SUPERVISION
The Security Trustee shall be under no obligation to monitor or
supervise the functions of any other person under or pursuant to any of
the other Transaction Documents.
23.6 NO LIABILITY
The Security Trustee shall not be liable or responsible for any loss,
cost, damage, expense or inconvenience which may result from anything
done or omitted to be done by it under this Deed or under any of the
other Transaction Documents save where the same arises as a result of
the Security Trustee's fraud, wilful default or negligence.
23.7 CONCLUSIVE AND BINDING DETERMINATIONS
The Security Trustee as between itself and the Funding 2 Secured
Creditors shall have full power to determine all questions and doubts
arising in relation to any of the provisions of this Deed and the other
Transaction Documents and every such determination, whether made upon a
question actually
29
raised or implied in the acts or proceedings of the Security Trustee,
shall be conclusive and shall bind the Security Trustee and the Funding
2 Secured Creditors.
23.8 USE OF PROCEEDS
The Security Trustee shall not be responsible for the receipt or
application by Funding 2 of the proceeds of any Loan Tranche or any
Funding 2 Start-Up Loan.
23.9 NO INDEMNITY
None of the provisions of this Deed shall, in any case in which the
Security Trustee has failed to show the degree of care and diligence
required of it as security trustee under this Deed, having regard to the
provisions of this Deed and any of the other Transaction Documents to
which the Security Trustee is a party conferring on the Security Trustee
any powers, authorities or discretions, relieve or indemnify the
Security Trustee against any liabilities which by virtue of any rule of
law would otherwise attach to it in respect of any negligence, default,
breach of duty or breach of trust of which it may be guilty in relation
to its duties under this Deed.
23.10 DEFICIENCY OR ADDITIONAL PAYMENT
The Security Trustee shall have no responsibility whatsoever to any
Funding 2 Secured Creditor as regards any deficiency or additional
payment, as the case may be, which might arise because the Security
Trustee is subject to any Tax in respect of the Funding 2 Charged
Property or any part thereof or any income therefrom or any proceeds
thereof or is required by law to make any withholding or deduction from
any payment to any Funding 2 Secured Creditor.
24. SUPPLEMENTAL PROVISIONS REGARDING THE SECURITY TRUSTEE
24.1 ASSUMPTION OF NO DEFAULT
Except as herein otherwise expressly provided, the Security Trustee
shall be and is hereby authorised to assume without enquiry, and it is
hereby declared to be the intention of the Security Trustee that it
shall assume without enquiry, that Funding 2 and each of the other
parties thereto is duly performing and observing all the covenants and
provisions contained in this Deed and the other Transaction Documents
and on its part to be performed and observed and that no event has
occurred which constitutes a Potential Master Intercompany Loan Event of
Default or Master Intercompany Loan Event of Default or which would
cause a right or remedy to become excisable, whether by Funding 2 or the
Security Trustee, under or in respect of any of the Transaction
Documents.
24.2 DELEGATION
The Security Trustee may, in the execution of all or any of the trusts,
powers, authorities and discretions vested in it by this Deed or any of
the other Transaction Documents, act by responsible officers or a
responsible officer for the time being of the Security Trustee. The
Security Trustee may also, whenever it thinks expedient in the interests
of the Funding 2 Secured Creditors, whether by power of attorney or
otherwise, delegate to any person or persons all or any of the trusts,
rights, powers, duties, authorities and discretions vested in it by this
Deed or any of the other Transaction Documents. Any such delegation may
be made upon such terms and conditions and subject to such regulations
(including power to sub delegate) as the Security Trustee may think fit
in the interests of the Funding 2 Secured Creditors or any of them,
provided that the Security Trustee shall have exercised reasonable care
in the selection of such delegate and, where a power to sub delegate has
been given, shall oblige the delegate to exercise reasonable care in the
selection of any sub delegate. The
30
Security Trustee shall not be bound to supervise the proceedings of, or
be responsible for any loss incurred by any misconduct or default on the
part of, such delegate or sub delegate. The Security Trustee shall give
prompt notice to Funding 2 of the appointment of any delegate as
aforesaid and shall procure that any delegate shall also give prompt
notice of the appointment of any sub delegate to Funding 2.
24.3 COMMERCIAL TRANSACTIONS
The Security Trustee shall not, and no director, officer or employee of
any corporation being a Security Trustee hereof shall by reason of the
fiduciary position of the Security Trustee be in any way precluded from
making any commercial contracts or entering into any commercial
transactions with Funding 2, the Master Issuer, Holdings or any
subsidiary of Holdings or any other party to the Transaction Documents,
whether directly or through any subsidiary or associated company, or
from accepting the trusteeship of any other debenture stock, debentures
or securities of Funding 2, the Master Issuer, Holdings or any
subsidiary of Holdings or any other party to the Transaction Documents,
and without prejudice to the generality of these provisions, it is
expressly declared that such contracts and transactions include any
contract or transaction in relation to the placing, underwriting,
purchasing, subscribing for or dealing with or lending monies upon or
making payments in respect of or any stock, shares, debenture stock,
debentures or other securities of Funding 2, the Master Issuer, Holdings
or any subsidiary of Holdings or any other party to the Transaction
Documents or any contract of banking or insurance with Funding 2, the
Master Issuer, Holdings or any subsidiary of Holdings or any other party
to the Transaction Documents and neither the Security Trustee nor any
such director, officer or employee shall be accountable to any Funding 2
Secured Creditor or to Funding 2 or the Master Issuer for any profit,
fees, commissions, interest, discounts or share of brokerage earned,
arising or resulting from any such contracts or transactions, and the
Security Trustee and any such director, officer or employee shall also
be at liberty to retain the same without accounting therefor.
24.4 ADDITIONAL POWERS
The powers conferred by this Deed upon the Security Trustee shall be in
addition to any powers which may from time to time be vested in it by
general law.
24.5 DUTIES AND RESPONSIBILITIES OF SECURITY TRUSTEE
The Security Trustee has no duties or responsibilities except those
expressly set out in this Deed or in the Transaction Documents.
24.6 CONSENT OF SECURITY TRUSTEE
If a request in writing is made to the Security Trustee to give its
consent to any event, matter or thing, then:
(a) if any Transaction Document specifies that the Security Trustee
is required to give its consent to that event, matter or thing
if certain specified conditions are satisfied in relation to
that event, matter or thing, then the Security Trustee shall
give its consent to that event, matter or thing upon being
satisfied acting reasonably that those specified conditions have
been satisfied; and
(b) in any other case, the Security Trustee may give its consent if
to do so would not, in its opinion, be materially prejudicial to
the interests of the Funding 2 Secured Creditors.
24.7 INTERESTS OF FUNDING 2 SECURED CREDITORS
The Security Trustee shall, in connection with the exercise by it of any
of its trusts, duties, rights, powers, authorities and discretions under
this Deed and the other Transaction Documents, be entitled
31
to assume that such exercise will not be materially prejudicial to the
interests of the Funding 2 Secured Creditors if each Funding 2 Secured
Creditor has confirmed in writing to the Security Trustee that such
exercise would not be materially prejudicial to the interests of such
Funding 2 Secured Creditor, and in each case the Security Trustee shall
be entitled to rely on such confirmation.
24.8 MODIFICATION TO TRANSACTION DOCUMENTS
(a) Without prejudice to Clause 24.6 (Consent of Security Trustee),
the Security Trustee may from time to time and at any time
without any consent or sanction of the Funding 2 Secured
Creditors concur with any person in making or sanctioning any
modification to any of the Transaction Documents:
(i) whilst any Loan Tranche remains outstanding under the
Master Intercompany Loan Agreement, if it shall be
directed to do so by the Master Issuer Security Trustee;
(ii) if there are no Loan Tranches outstanding under the Master
Intercompany Loan Agreement, (A) provided that the
Security Trustee is of the opinion, acting reasonably,
that such modification will not be materially prejudicial
to the interests of the Funding 2 Secured Creditors or, if
it is not of that opinion in relation to any Funding 2
Secured Creditor, such Funding 2 Secured Creditor has
given its written consent to such modification or (B)
which in the Security Trustee's opinion is made to correct
a manifest error or is of a formal, minor or technical
nature.
(b) Without prejudice to Clause 24.6 (Consent of Security Trustee)
and subject to paragraph (c) below, the Security Trustee shall
be required to give its consent to any modifications to [the
Mortgage Sale Agreement, the Servicing Agreement, the Cash
Management Agreement, the Funding 2 Deed of Charge, the Funding
2 Swap Agreement, the Master Intercompany Loan Agreement, the
Funding 2 Bank Account Agreement and the Master Definitions and
Construction Schedule that are requested by Funding 2 or the
Cash Manager, provided that (i) the Funding 2 Swap Provider [and
each of the Master Issuer Swap Providers] [CONFIRM] provide
written confirmation to the Security Trustee consenting to such
modification of any and all of those documents listed under this
paragraph (b) to which they are, respectively, a party (such
consent not to be unreasonably withheld) and in any event such
consent shall be deemed to be given by each of the Funding 2
Swap Provider and [the Master Issuer Swap Provider] (as the case
may be) if no written response is received by the Security
Trustee from each party, respectively, by the tenth Business Day
after the Security Trustee's request for such consent and (ii)
Funding 2 or the Cash Manager, as the case may be, has certified
to the Security Trustee in writing that such modifications are
required in order to accommodate:
(i) the entry by Funding 2 into new intercompany loan
agreements, the issue of new types of notes by new issuers
and/or the addition of other relevant creditors to the
Transaction Documents;
(ii) the assignment of New Loan Types to the Mortgages Trustee;
(iii) the inclusion of a [Further Funding Beneficiary] of the
Mortgages Trust;
(iv) changes to the Funding 2 Reserve Required Amount, the
Funding 2 Liquidity Reserve Required Amount and/or the
manner in which the Funding 2 General Reserve Fund or the
Funding 2 Liquidity Reserve Required Amount is funded;
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(v) different Interest Payment Dates and/or Interest Periods
for any New Notes to be issued by the Master Issuer
(including modification of the Interest Payment Dates
and/or Interest Periods and/or the basis for the
calculation of interest in respect of any outstanding
Notes and/or the Funding 2 Interest Payment Date and/or
the Interest Period and/or the basis for the calculation
of interest in respect of any outstanding Loan Tranches
under the Master Intercompany Loan Agreement); and/or
(vi) changes to be made to the definitions of Asset Trigger
Event and Non-Asset Trigger Event.
(c) The Security Trustee shall only be required to make the
modifications set out in paragraph (b) above if the Security
Trustee is satisfied that:
(i) in respect of the matter set out in paragraphs (b)(ii),
the conditions precedent to the assignment of New Loans to
the Mortgages Trustee (as set out in Clause 4 of the
Mortgage Sale Agreement), have been satisfied; and
(ii) in respect of the matters set out in paragraphs (b)(i) to
(b)(v) inclusive, the Security Trustee has received
written confirmation from each of the Rating Agencies that
the relevant modifications will not adversely affect the
then current ratings of the Notes of the Master Issuer.
(d) Each Funding 2 Secured Creditor hereby acknowledges that the
Security Trustee is required to make the modifications set out
in paragraph (b) above (subject to paragraph (c)), and each
Funding 2 Security Creditor further acknowledges that such
modifications may adversely affect the manner in which the
Mortgages Trustee allocates monies to Funding 2 and/or the
amount of monies available to the Funding 2 to meet the Funding
2 Secured Obligations. Each Funding 2 Secured Creditor agrees
that such modifications shall be binding on it and unless the
Security Trustee otherwise agrees, notice thereof shall be given
by the Cash Manager to the Funding 2 Secured Creditors as soon
as practicable after the modifications have been made.
(e) Each of the Funding 2 Secured Creditors agrees from time to time
to do and perform such other and further acts and execute and
deliver any and all such other documents and instruments as may
be required by law or requested by the other party at the other
party's expense to establish, maintain and protect the rights
and remedies of the other party and carry out and effect the
intent and purpose of this Clause 24.8 (Modification to
Transaction Documents).
24.9 AUTHORISATION OR WAIVER OF BREACH
Subject to the terms of the Master Intercompany Loan Agreement, the
Security Trustee may, without the consent of the Funding 2 Secured
Creditors, and without prejudice to its right in respect of any further
or other breach, from time to time and at any time, (a) whilst any Loan
Tranche remains outstanding under the Master Intercompany Loan
Agreement, if it shall be directed to do so by the Master Issuer
Security Trustee and (b) if there are no Loan Tranches outstanding under
the Master Intercompany Loan Agreement, if and in so far as in its
opinion the interests of the Funding 2 Secured Creditors will not be
materially prejudiced thereby, authorise or waive, on such terms and
conditions (if any) as shall seem expedient to it, any proposed or
actual breach of any of the covenants or provisions contained in or
arising pursuant to any of the Transaction Documents. Any such
authorisation or waiver shall be binding on the Funding 2 Secured
Creditors and, unless the
33
Security Trustee otherwise agrees, notice thereof shall be given by
Funding 2 to the Funding 2 Secured Creditors as soon as practicable
thereafter.
25. REMUNERATION OF THE SECURITY TRUSTEE
25.1 REMUNERATION
(a) Funding 2 shall (subject as hereinafter provided) pay to the
Security Trustee annually a fee of such amount and payable on
such dates as shall from time to time be agreed in writing by
Funding 2 and the Security Trustee. All such remuneration shall
be payable in accordance with the Funding 2 Pre-Enforcement
Revenue Priority of Payments or, as the case may be, the Funding
2 Post Enforcement Priority of Payments. Such remuneration shall
accrue from day to day and shall be payable up to and including
the date when all of the Funding 2 Secured Obligations have been
paid or discharged and the Security Trustee has released,
reassigned and/or discharged the Funding 2 Charged Property as
provided in Clause 4 (Release of Funding 2 Charged Property).
(b) Funding 2 shall pay to the Security Trustee an amount equal to
the amount of any VAT chargeable in respect of its remuneration
under this Deed subject to the Security Trustee's issuing to
Funding 2 a proper VAT invoice in respect thereof.
25.2 INCREASED REMUNERATION
In the event of a Master Intercompany Loan Event of Default or Potential
Master Intercompany Loan Event of Default occurring or in the event of
the Security Trustee finding it expedient or being required to undertake
any duties of an exceptional nature or otherwise outside the scope of
the normal duties of the Security Trustee under this Deed, the rate of
remuneration in force immediately prior thereto shall be increased by
such amount as shall be agreed between Funding 2 and the Security
Trustee, such increased remuneration to be calculated from such date as
shall be agreed as aforesaid.
25.3 DISPUTES
In the event of the Security Trustee and Funding 2 failing to agree upon
the amount of any remuneration from time to time pursuant to Clause 25.1
(Remuneration) or to agree in a case to which Clause 25.2 above
(Increased Remuneration) applies upon whether such duties are outside
the scope of the normal duties of the Security Trustee hereunder or upon
the amount of such additional remuneration, such matters shall be
determined by an investment bank (acting as an expert and not as an
arbitrator) selected by the Security Trustee and approved by Funding 2
or, failing such approval, nominated by the President for the time being
of the Law Society of England and Wales, the expenses being involved in
such nomination and the fees of such investment bank being payable by
Funding 2 and the decision of any such investment bank shall be final
and binding on Funding 2 and the Security Trustee.
25.4 EXPENSES
In addition to remuneration hereunder, Funding 2 shall on written
request, pay (on an indemnity basis) all other costs, charges and
expenses which the Security Trustee may properly incur in relation to
the negotiation, preparation and execution of, the exercise of its
powers and the performance of its duties under, and in any other manner
in relation to, this Deed and any of the other Transaction Documents to
which the Security Trustee is a party including but not limited to
travelling and legal expenses and any stamp, issue, registration,
documentary and other Taxes (other than Taxes on its income, profits or
gains) or duties paid or payable by the Security Trustee in connection
with any action taken or contemplated by or on behalf of the Security
Trustee for enforcing, or resolving any
34
doubt concerning, or for any other purpose in relation to, this Deed or
any of the other Transaction Documents.
25.5 INDEMNITY
Without prejudice to the right of indemnity by law given to trustees,
Funding 2 shall indemnify the Security Trustee, on an after Tax basis,
in respect of all proceedings (including claims and liabilities in
respect of taxes other than on its own overall net income), claims and
demands and all costs, charges, expenses (including, without prejudice
to the generality of the foregoing, legal and travelling expenses), and
liabilities to which it (or any person appointed by it to whom any
trust, power, authority or discretion may be delegated by it in the
execution or purported execution of the trusts, powers, authorities or
discretions vested in it by or pursuant to this Deed and any of the
other Transaction Documents to which the Security Trustee is a party)
may be or become liable or which may be properly incurred by it (or any
such person as aforesaid) in the execution or purported execution of any
of its trusts, powers, authorities and discretions hereunder or its
functions under any such appointment or in respect of any other matter
or thing done or omitted in any way relating to this Deed and any of the
other Transaction Documents to which the Security Trustee is a party
shall be entitled to be indemnified out of the Funding 2 Charged
Property in respect thereof, save where the same arises as a result of
the fraud, negligence or wilful default by the Security Trustee or
breach by the Security Trustee of the terms of this Deed, its officers
or employees. The Security Trustee shall not be entitled to be
indemnified twice in respect of the same matter pursuant to this Clause
and the indemnity contained in Clause 17.2 (Indemnity) of this Deed.
25.6 SURVIVAL
Unless otherwise specifically stated in any discharge of this Deed, the
provisions of Clauses 17 (Expenses and Indemnity) and 25 (Remuneration
of the Security Trustee) shall continue in full force and effect
notwithstanding such discharge.
25.7 STAMP DUTIES
Funding 2 shall, to the extent permitted by applicable United Kingdom
law, pay all stamp duties and other duties or taxes of a similar nature,
including for the avoidance of doubt any duty levied under the Stamp Act
1891 as amended and supplemented, (if any) payable on or arising out of
or in consequence of:
(a) the creation of the security constituted by or pursuant to this
Deed; and
(b) the execution and delivery of this Deed and documents executed
pursuant hereto and the other Funding 2 Agreements (except where
the obligation to pay all stamp duties and other duties or taxes
of a similar nature is expressed to be the obligation of a
person other than Funding 2).
26. APPOINTMENT OF NEW SECURITY TRUSTEE AND REMOVAL OF SECURITY TRUSTEE
26.1 POWERS OF FUNDING 2
(a) The power of appointing a new Security Trustee and removing the
Security Trustee or any new Security Trustee shall be vested in
Funding 2 but such appointment or removal must be approved in
writing by each of the Funding 2 Secured Creditors (such
approval not to be unreasonably withheld or delayed). Any
appointment of a new Security Trustee and any retirement of an
existing Security Trustee hereof shall as soon as practicable
thereafter be notified by Funding 2 to the Funding 2 Secured
Creditors.
35
(b) Any new Security Trustee must (i) meet the requirements of
section 26(a)(1) of the US Investment Company Act of 1940; (ii)
not be an affiliate (as defined in Rule 405 of the US Securities
Act of 1933, as amended) of any relevant Issuer or of any person
involved in the organisation or operation of any relevant
Issuer; (iii) not offer or provide credit or credit enhancement
to any relevant Issuer; and (iv) execute an agreement or
instrument concerning the Notes containing provisions to the
effect set forth in section 26(a)(3) of the US Investment
Company Act of 1940. [US COUNSEL TO CONFIRM]
26.2 POWERS OF SECURITY TRUSTEE
Notwithstanding the provisions of Clause 26.1 (Powers of Funding 2), the
Security Trustee may (as attorney for Funding 2) upon giving prior
written notice to Funding 2 but without the consent of Funding 2 or the
Funding 2 Secured Creditors appoint any person established or resident
in any jurisdiction (whether a trust corporation or not) to act either
as a separate trustee or as a co-trustee jointly with the Security
Trustee:
(a) if the Security Trustee reasonably considers such appointment to
be in the interests of the Funding 2 Secured Creditors (or any
of them); or
(b) for the purposes of conforming to any legal requirement,
restrictions or conditions in any jurisdiction in which any
particular act or acts are to be performed or any Funding 2
Charged Property is or is to be located; or
(c) for the purposes of obtaining a judgment in any jurisdiction or
the enforcement in any jurisdiction of either a judgment already
obtained or any of the provisions of this Deed or any of the
other Transaction Documents to which the Security Trustee is a
party or obligations arising pursuant thereto or any of the
security constituted by or pursuant to this Deed.
Funding 2 hereby irrevocably appoints the Security Trustee to be its
attorney in its name and on its behalf to execute any such instrument of
appointment. Such a person shall (subject always to the provisions of
this Deed or any of the other Transaction Documents to which the
Security Trustee is a party) have such trusts, powers, authorities and
discretions (not exceeding those conferred on the Security Trustee by
this Deed or any of the other Transaction Documents to which the
Security Trustee is a party) and such duties and obligations as shall be
conferred or imposed on it by the instrument of appointment. The
Security Trustee shall have power in like manner to remove any such
person. Such proper remuneration as the Security Trustee may pay to any
such person, together with any attributable costs, charges and expenses
incurred by it in performing its function as such separate trustee or
co-trustee, shall for the purposes of this Deed be treated as costs,
charges and expenses incurred by the Security Trustee.
26.3 MULTIPLE TRUSTEES
Whenever there shall be more than two security trustees hereof, the
majority of such trustees shall be competent to execute and exercise all
the trusts, powers, authorities and discretions vested by this Deed and
any of the other Transaction Documents in the Security Trustee
generally.
27. RETIREMENT OF SECURITY TRUSTEE
Any trustee for the time being of this Deed may retire at any time upon
giving not less than three calendar months' prior notice in writing to
Funding 2 without assigning any reason therefor and without being
responsible for any costs resulting from such retirement. Provided,
however, that the retirement or removal of any security trustee shall
not become effective unless there remains at least one security trustee
hereof in office upon such retirement or removal. Funding 2 covenants
that, in
36
the event of a security trustee (being a sole trustee) giving notice
under this Clause or being removed as referred to in Clause 26.1 (Powers
of Funding 2) it shall use its best endeavours to procure a new trustee
of this Deed to be appointed as soon as reasonably practicable
thereafter (for the avoidance of doubt, in the same terms as this Deed).
If within 60 days of having given notice of its intention to retire,
Funding 2 has failed to appoint a replacement Security Trustee, the
outgoing Security Trustee will be entitled to appoint its successor
(provided that such successor is acceptable to the Rating Agencies and
will agree to the terms of this Deed) and that the Rating Agencies
confirm in writing that the current ratings of the Notes shall not be
either downgraded, reviewed or withdrawn as a result of such
appointment).
28. TRUST INDENTURE ACT PREVAILS
If any provision of this Deed limits, qualifies or conflicts with
another provision which is required to be included in this Deed by, and
is not subject to a contractual waiver under, the U.S. Trust Indenture
Act of 1939, as amended, the required provision of that act shall
prevail. [US COUNSEL TO CONFIRM]
29. NOTICES AND DEMANDS
29.1 SERVICE OF NOTICES
Any notices to be given pursuant to this Deed to any of the parties
hereto shall be in writing and shall be sufficiently served if sent to
the addresses given in Clause 29.2 (Addresses) by prepaid first class
post, by hand or facsimile transmission and shall be deemed to be given
(in the case of facsimile transmission) when despatched, (where
delivered by hand) on the day of delivery if delivered before 17.00
hours on a Business Day or on the next Business Day if delivered
thereafter or on a day which is not a Business Day or (in the case of
first class post) when it would be received in the ordinary course of
the post.
29.2 ADDRESSES
The addresses referred to in this Clause 29 (Notices and Demands) are as
follows: [ADDRESSES TO BE CONFIRMED]
(a) in the case of Funding 2, to Permanent Funding (No. 2) Limited
c/o Blackwell House, Guildhall Yard, London EC2V 5AE (facsimile
number x00 (0) 00 0000 0000) for the attention of the Directors
with a copy to HBOS Treasury Services plc, 00 Xxx Xxxxx Xxxxxx,
Xxxxxx XX0X 0XX (facsimile number x00 (0) 00 0000 0000) for the
attention of the Head of Capital Markets and Securitisation;
(b) in the case of the Master Issuer, to Permanent Master Issuer
PLC, Xxxxxxxxx House, Guildhall Yard, London EC2V 5AE (facsimile
number x00 (0) 00 0000 0000) for the attention of the Directors
with a copy to HBOS Treasury Services plc, 00 Xxx Xxxxx Xxxxxx,
Xxxxxx XX0X 0XX (facsimile number x00 (0) 00 0000 0000) for the
attention of the Head of Capital Markets and Securitisation;
(c) in the case of the Seller, to Halifax plc, Trinity Road,
Halifax, West Yorkshire HX1 2RG (facsimile number +44 (0) 1422
391299) for the attention of the Head of Mortgage Marketing and
Securitisation;
(d) in the case of the Cash Manager, to Halifax plc, Trinity Road,
Halifax, West Yorkshire HX1 2RG (facsimile number +44 (0) 1422
391 777) for the attention of the Mortgage Securitisation
Manager with a copy to HBOS Treasury Services plc, 00 Xxx Xxxxx
Xxxxxx,
37
London EC2N 1HZ (facsimile number x00 (0) 00 0000 0000) for the
attention of the Head of Capital Markets and Securitisation;
(e) in the case of the Funding 2 Account Bank, to The Governor and
Company of the Bank of Scotland, 000 Xxxxxxxxxx Xxxxxx, Xxxxx
XX0 0XX (facsimile number x00 (0) 0000 000000) for the attention
of the Associate Director with copies to: (i) Bank of Scotland
plc, c/o Halifax plc, Bradford Business Centre, 00 Xxxx Xxxxxx,
Xxxxxxxx XX0 0XX (facsimile number x00 (0) 0000 000000 for the
attention of the Associate Director; (ii) Halifax plc, Trinity
Road, Halifax, West Yorkshire HX1 2RG (facsimile number +44 (0)
1422 391777) for the attention of Mortgage Securitisation
Manager; and (iii) HBOS Treasury Services plc, 00 Xxx Xxxxx
Xxxxxx, Xxxxxx XX0X 0XX (facsimile number x00 (000) 0000 0000)
for the attention of Head of Capital Markets and Securitisation;
(f) in the case of the Funding 2 Swap Provider, to Halifax plc,
Trinity Road, Halifax, West Yorkshire HX1 2RG (facsimile number
x00 (0) 0000 000 000) for the attention of the Mortgage
Securitisation Manager with a copy to HBOS Treasury Services
plc, 00 Xxx Xxxxx Xxxxxx, Xxxxxx XX0X 0XX (facsimile number +44
(0) 00 0000 0000) for the attention of the Head of Capital
Markets and Securitisation;
(g) in the case of the Funding 2 Corporate Services Provider, to
Structured Finance Management Limited, Xxxxxxxxx House,
Guildhall Yard, London EC2V 5AE (facsimile number +44 (0) 20
7556 0975) for the attention of the Directors;
(h) in the case of the Funding 2 GIC Provider, to Halifax plc,
Trinity Road, Halifax, West Yorkshire HX1 2RG (facsimile number
x00 (0) 0000 000 000) for the attention of the Mortgage
Securitisation Manager with a copy to HBOS Treasury Services
plc, 00 Xxx Xxxxx Xxxxxx, Xxxxxx XX0X 0XX (facsimile number +44
(0) 00 0000 0000) for the attention of the Head of Capital
Markets and Securitisation;
(i) in the case of the Funding 2 Start-Up Loan Provider, to Halifax
plc, Trinity Road, Halifax, West Yorkshire HX1 2RG (facsimile
number x00 (0) 0000 000 000) for the attention of the Mortgage
Securitisation Manager with a copy to HBOS Treasury Services
plc, 00 Xxx Xxxxx Xxxxxx, Xxxxxx XX0X 0XX (facsimile number +44
(0) 00 0000 0000) for the attention of the Head of Capital
Markets and Securitisation;
(j) in the case of the Security Trustee, to the Bank of New York,
48th Floor, Xxx Xxxxxx Xxxxxx, Xxxxxx X00 0XX (facsimile number
+ 00 (0)00 0000 0000 or + 00 (0)00 0000 0000, for the attention
of Global Structured Finance - Corporate Trust);
(k) in the case of Xxxxx'x, to Xxxxx'x Investor Services, 0 Xxxxxxx
Xxxxx, Xxxxxxx Xxxx, Xxxxxx XX0X 0XX (facsimile number +44 (0)
20 7772 5400) for the attention of Asset Backed Finance;
(l) in the case of S&P, to Standard & Poor's, Garden House, 00
Xxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX (facsimile number +44 (0) 20
7826 3598) for the attention of the Structured Finance
Surveillance Group; and
(m) in the case of Fitch, to Fitch Ratings Limited, Xxxxx House, 0
Xxxxx Xxxxxx, Xxxxxx XX0X 0XX (facsimile number: +44 (0) 20 7417
6262) for the attention of European Structured Finance,
or to such other address or facsimile number or for the attention of
such other person or entity as may from time to time be notified by any
party to the others by written notice in accordance with the provisions
of this Clause 29 (Notices and Demands).
38
30. FURTHER PROVISIONS
30.1 EVIDENCE OF INDEBTEDNESS
In any action, proceedings or claim relating to this Deed or the
Security Interests contained in this Deed, a statement as to any amount
due to any Funding 2 Secured Creditor or of the Funding 2 Secured
Obligations or any part thereof or a statement of any amounts which have
been notified to the Security Trustee as being amounts due to any
Funding 2 Secured Creditor which is certified as being correct by an
officer of the Security Trustee or an officer of the relevant Funding 2
Secured Creditor shall, save in the case of manifest error, be
conclusive evidence that such amount is in fact due and payable.
30.2 RIGHTS CUMULATIVE, WAIVERS
The respective rights of the Security Trustee, the Funding 2 Secured
Creditors and any Receiver are cumulative, and may be exercised as often
as they consider appropriate and are in addition to their respective
rights under the general law. The respective rights of the Security
Trustee, the Funding 2 Secured Creditors and any Receiver in relation to
this Deed (whether arising under this Deed or under the general law)
shall not be capable of being waived or varied otherwise than by express
waiver or variation in writing and, in particular, any failure to
exercise or any delay in exercising any such rights shall not operate as
a variation or waiver of that or any other such right; any defective or
partial exercise of such rights shall not preclude any other or further
exercise of that or any other such right; and no act or course of
conduct or negotiation on their part or on their behalf shall in any way
preclude them from exercising any such right or constitute a suspension
or any variation of any such right.
30.3 INVALIDITY OF ANY PROVISION
If any of the provisions of this Deed become invalid, illegal or
unenforceable in any respect under any law, the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired.
30.4 LIABILITY
All the liabilities and obligations of Funding 2 under or by virtue of
this Deed shall not be impaired by:
(a) any failure of this Deed to be legal, valid, binding and
enforceable as regards Funding 2 whether as a result of a lack
of corporate powers or of directors' authority, defective
execution or for any other reason whatsoever;
(b) any giving of time, forbearance, indulgence or waiver as regards
Funding 2;
(c) a discharge or release of Funding 2; or
(d) any other matter or event whatsoever whether similar to the
foregoing or not which might have the effect of impairing all or
any of its liabilities or obligations except proper and valid
payment or discharge of all Funding 2 Secured Obligations and
amounts whatsoever which this Deed provides are to be paid by
Funding 2 or an absolute discharge or release of Funding 2
signed by the Funding 2 Secured Creditors and the Security
Trustee.
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30.5 SEVERABILITY
Any provision of this Deed which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, Funding 2 hereby waives any provision of
law but only to the extent permitted by law which renders any provision
of this Deed prohibited or unenforceable in any respect.
30.6 VARIATION
No variation of any provision(s) of this Deed shall be effective unless
it is in writing and signed by (or by a person duly authorised by) each
of the parties hereto.
30.7 COUNTERPARTS
This Deed may be executed in any number of counterparts (including
facsimile counterparts) each of which, when executed and delivered,
shall constitute an original, but all the counterparts shall together
constitute but one and the same instrument provided, however, that this
Deed shall have no force or effect until it is executed by the last
party to execute the same and shall be deemed to have been executed and
delivered in the place where such last party executed this Deed.
30.8 FUNDING 2 SECURED CREDITORS
Each Funding 2 Secured Creditor shall be bound by the provisions of this
Deed as if it contained covenants by each Funding 2 Secured Creditor in
favour of the Security Trustee and every other Funding 2 Secured
Creditor to observe and be bound by all the provisions of this Deed
expressed to apply to Funding 2 Secured Creditors.
30.9 ASSIGNMENT
Neither Funding 2 nor any of the Funding 2 Secured Creditors may assign,
encumber or transfer all or any part of its rights or benefits and/or
transfer its obligations under this Deed without the prior written
consent of the Security Trustee, save that the Master Issuer may assign
its rights under this Deed without such consent to the Security Trustee
under the Master Issuer Deed of Charge.
30.10 EXCLUSION OF THIRD PARTY RIGHTS
The parties to this Deed do not intend that any term of this Deed should
be enforced, by virtue of the Contracts (Rights of Third Parties) Act
1999, by any person who is not a party to this Deed.
30.11 SUBMISSION TO JURISDICTION
Each party to this Deed hereby irrevocably submits to the non-exclusive
jurisdiction of the English courts in any action or proceeding arising
out of or relating to this Deed, and hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard and
determined by such courts. Each party to this Deed hereby irrevocably
waives, to the fullest extent it may possibly do so, any defence or
claim that the English courts are an inconvenient forum for the
maintenance or hearing of such action or proceeding.
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30.12 GOVERNING LAW
This Deed is governed by and shall be construed in accordance with
English law.
XXXX EXECUTED AND DELIVERED AS A DEED by each of the parties hereto or on its
behalf on the date appearing on page 1.
41
SCHEDULE 1
FORM OF SECURITY POWER OF ATTORNEY
THIS POWER OF ATTORNEY is made on [*] 2006 by Permanent Funding (No. 2) Limited
(registered number [*]), a private limited company incorporated in England and
Wales, whose registered office is at Xxxxxxxxx House, Guildhall Yard, London
EC2V 5AE (the PRINCIPAL).
WHEREAS
(1) By virtue of a Deed (the FUNDING 2 DEED OF CHARGE) dated [*] 2006
between, among others, Permanent Funding (No. 2) Limited, the Seller,
the Cash Manager, the Funding 2 Account Bank, the Funding 2 Swap
Provider, the Funding 2 GIC Provider, the Funding 2 Corporate Services
Provider, the Funding 2 Start Up Loan Provider and the Security Trustee,
provision was made for the execution by the Principal of this Power of
Attorney.
(2) Words and phrases in this Power of Attorney shall (save where expressed
to the contrary) have the same meanings respectively as the words and
phrases in the Funding 2 Deed of Charge.
NOW THIS POWER OF ATTORNEY WITNESSETH
1. The Principal hereby irrevocably and by way of security for the
performance of the covenants, conditions, obligations and undertakings
on the part of the Principal contained in the Funding 2 Deed of Charge
(and the other Transaction Documents to which the Principal is a party
from time to time) appoints The Bank of New York and any other person or
persons for the time being the Security Trustee or Security Trustees of
and under the Funding 2 Deed of Charge (the ATTORNEY) and any receiver
including any administrative receiver and any manager (the RECEIVER)
and/or administrator (the ADMINISTRATOR) appointed from time to time by
the Attorney or on its behalf its true and lawful attorney for and in
the Principal's name or otherwise jointly and severally to do any act
matter or thing which the Attorney, Receiver or Administrator considers
in each case to be necessary for the protection or preservation of the
Attorney's and the Funding 2 Secured Creditors' interests and rights (as
described in the Funding 2 Deed of Charge) in and to the Funding 2
Charged Property or which ought to be done under the covenants,
undertakings and provisions contained in the Funding 2 Deed of Charge
and the other Transaction Documents to which Funding 2 is a party from
time to time on or at any time after the service of a Master
Intercompany Loan Acceleration Notice or in any other circumstances
where the Attorney has become entitled to take any of the steps referred
to in the Funding 2 Deed of Charge including (without limitation) any or
all of the following:
(a) to do every act or thing which the Attorney, Receiver or
Administrator may deem to be necessary, proper or expedient for
fully and effectually vesting, transferring or assigning the
Funding 2 Charged Property or any part thereof and/or the
Principal's estate, right, title, benefit and/or interest
therein or thereto in or to the Attorney and its successors in
title or other person or persons entitled to the benefit thereof
in the same manner and as fully and effectually, vesting,
transferring or charging, as the case may be, in all respects as
the Principal could have done;
(b) the power by writing under its hand by an officer of the
Attorney (including every Receiver appointed under the Funding 2
Deed of Charge) from time to time to appoint a substitute
attorney (each a SUBSTITUTE) who shall have power to act on
behalf of the Principal as if that Substitute shall have been
originally appointed Attorney by this Power of Attorney and/or
to revoke any such appointment at any time without assigning any
reason therefor.
42
2. In favour of the Attorney, any Receiver and/or Administrator and/or
Substitute, or a person dealing with any of them and the successors and
assigns of such a person, all acts properly done and documents executed
or signed by the Attorney, a Receiver, an Administrator or a Substitute
in the purported exercise of any power conferred by this Power of
Attorney shall for all purposes be valid and binding on the Principal
and its successors and assigns.
3. The Principal irrevocably and unconditionally undertakes to indemnify
the Attorney and each Receiver and/or Administrator and/or Substitute
appointed from time to time by the Attorney and their respective estates
(each an INDEMNIFIED PARTY) against all actions, proceedings, claims,
costs, expenses and liabilities of every description arising from the
exercise, or the purported exercise, of any of the powers conferred by
this Power of Attorney, save where the same arises as the result of the
fraud, negligence or wilful default of the relevant Indemnified Party or
its officers or employees.
4. The provisions of Clause 3 (Funding 2 Security) shall continue in force
after the revocation or termination, howsoever arising, of this Power of
Attorney.
5. The laws of England and Wales shall apply to this Power of Attorney and
the interpretation thereof and to all acts of the Attorney and each
Receiver and/or Administrator and/or Substitute carried out or purported
to be carried out under the terms hereof.
6. The Principal hereby agrees at all times hereafter to ratify and confirm
whatsoever the said Attorney or its attorney or attorneys or any
Receiver or Administrator or Substitute shall properly and lawfully do
or cause to be done in and concerning the Funding 2 Charged Property.
IN WITNESS whereof this Power of Attorney has been executed as a deed by the
Principal the day and year first before written.
EXECUTED as a DEED by Director
PERMANENT FUNDING (NO. 2) LIMITED )
in the presence of: Director/Secretary
Signature:
Name:
Address:
43
SCHEDULE 2
FORM OF ACCESSION UNDERTAKING
THIS DEED is made on [ ]
BETWEEN
(1) PERMANENT FUNDING (NO. 2) LIMITED (registered number [*]), a private
limited company incorporated under the laws of England and Wales, whose
registered office is at Xxxxxxxxx House, Guildhall Yard, London EC2V 5AE
(FUNDING 2);
(2) PERMANENT MASTER ISSUER PLC (registered number [*]), a public limited
company incorporated in England and Wales, whose registered office is at
Xxxxxxxxx House, Guildhall Yard, London EC2V 5AE (the MASTER ISSUER);
(3) THE BANK OF NEW YORK, a New York banking corporation acting through its
offices at 00xx Xxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxx X00 0XX (the SECURITY
TRUSTEE);
(4) HALIFAX PLC (registered number 2367076), a public limited company
incorporated under the laws of England and Wales, whose registered
office is at Trinity Road, Halifax, West Yorkshire HX1 2RG acting in its
capacity as CASH MANAGER;
(5) HALIFAX PLC (registered number 2367076), a public limited company
incorporated under the laws of England and Wales, whose registered
office is at Trinity Road, Halifax, West Yorkshire HX1 2RG acting in its
capacity as FUNDING 2 ACCOUNT BANK;
(6) HALIFAX PLC (registered number 2367076), a public limited company
incorporated under the laws of England and Wales, whose registered
office is at Trinity Road, Halifax, West Yorkshire HX1 2RG acting in its
capacity as FUNDING 2 GIC PROVIDER;
(7) HALIFAX PLC (registered number 2367076), a public limited company
incorporated under the laws of England and Wales, whose registered
office is at Trinity Road, Halifax, West Yorkshire HX1 2RG acting in its
capacity as FUNDING 2 SWAP PROVIDER;
(8) HALIFAX PLC (registered number 2367076), a public limited company
incorporated under the laws of England and Wales, whose registered
office is at Trinity Road, Halifax, West Yorkshire HX1 2RG acting in its
capacity as FUNDING 2 START-UP LOAN PROVIDER;
(9) STRUCTURED FINANCE MANAGEMENT LIMITED (registered number 3853947), a
private limited company incorporated under the laws of England and
Wales, whose registered office is at Xxxxxxxxx House, Guildhall Yard,
London EC2V 5AE acting in its capacity as FUNDING 2 CORPORATE SERVICES
PROVIDER;
(10) [Any other additional secured creditor of Funding 2.]
(11) [ ] (the NEW FUNDING 2 SECURED CREDITOR).
44
NOW THIS DEED WITNESSES AS FOLLOWS
WHEREAS
(A) Pursuant to the terms of a [describe agreement] (the AGREEMENT) dated
[ ] made between Funding 2 and the New Funding 2 Secured Creditor,
Funding 2 has agreed to [describe nature of the obligations of Funding 2
under the Agreement].
(J) Funding 2 has agreed to provide the Security Trustee with the benefit of
the security described in the Funding 2 Deed of Charge to secure Funding
2's obligations to the Funding 2 Secured Creditors.
(K) The terms of the Funding 2 Deed of Charge permit Funding 2 to secure its
obligations to a New Funding 2 Secured Creditor thereunder.
(L) The New Funding 2 Secured Creditor has agreed to enter into this Deed to
accede to the provisions of the Funding 2 Deed of Charge.
(M) The Funding 2 Secured Creditors have agreed to enter into this Deed to,
among other things, acknowledge and agree to such accession and to
permit any consequential changes to the Funding 2 Priority of Payments
set out in Part 1 Part 2 and Part 3 of Schedule 3 of the Funding 2 Deed
of Charge as are required and any other amendment as may be required to
give effect to this Accession Undertaking.
1. INTERPRETATION
The amended and restated master definitions and construction schedule
signed by, amongst others, the parties to this Agreement and dated [*]
2006 (as the same may be amended, varied or supplemented from time to
time with the consent of the parties to this Agreement) (the MASTER
DEFINITIONS AND CONSTRUCTION SCHEDULE) is expressly and specifically
incorporated into this Agreement and, accordingly, the expressions
defined in the Master Definitions and Construction Schedule (as so
amended, varied or supplemented from time to time) shall, except where
the context otherwise requires and save where otherwise defined herein,
have the same meanings in this Agreement, including the Recitals hereto
and this Agreement shall be construed in accordance with the
interpretation provisions set out in clause 2 of the Master Definitions
and Construction Schedule.
2. REPRESENTATIONS AND WARRANTIES
The New Funding 2 Secured Creditor hereby represents and warrants to the
Security Trustee and each of the Funding 2 Secured Creditors in respect
of itself that as of the date of this Deed:
(a) pursuant to the terms of the Agreement, Funding 2 has agreed to
pay to the New Funding 2 Secured Creditor the amount (if any)
[describe in relation to the Agreement]; and
(b) the Agreement expressly provides that all amounts due from
Funding 2 thereunder are to be secured by the Funding 2 Deed of
Charge.
3. ACCESSION
In consideration of the New Funding 2 Secured Creditor being accepted as
a Funding 2 Secured Creditor for the purposes of the Funding 2 Deed of
Charge by the parties thereto as from the date of this Deed, the New
Funding 2 Secured Creditor:
(a) confirms that as from [date], it intends to be a party to the
Funding 2 Deed of Charge as a Funding 2 Secured Creditor;
45
(b) undertakes to comply with and be bound by all of the provisions
of the Master Definitions and Construction Schedule (as the same
may be amended, varied or restated from time to time) and the
Funding 2 Deed of Charge in its capacity as a Funding 2 Secured
Creditor, as if it had been an original party thereto;
(c) undertakes to perform comply with and be bound by all of the
provisions of the Funding 2 Deed of Charge in its capacity as a
Funding 2 Secured Creditor, as if it had been an original party
thereto as provided in Clause 30.8 (Funding 2 Secured Creditors)
(including without limitation Clauses 8.12 (Priorities of
Payment - After Service of a Master Intercompany Loan
Acceleration Notice), 8.13 (Application of Monies Received After
Master Intercompany Loan Acceleration Notice) and 9.2 (No
Enforcement by Funding 2 Secured Creditors)); and
(d) agrees that the Security Trustee shall be the Security Trustee
of the Funding 2 Deed of Charge for all Funding 2 Secured
Creditors upon and subject to the terms set out in the Funding 2
Deed of Charge.
4. SCOPE OF THE FUNDING 2 DEED OF CHARGE
Funding 2, the New Funding 2 Secured Creditor and the Security Trustee
hereby agree that for relevant purposes under the Funding 2 Deed of
Charge and the Master Definitions and Construction Schedule:
(a) the Agreement shall be treated as a Funding 2 Agreement; and
(b) the New Funding 2 Secured Creditor shall be treated as an
Funding 2 Secured Creditor.
5. AMENDMENT TO THE FUNDING 2 PRIORITY OF PAYMENTS
The Funding 2 Secured Creditors agree to amend and restate the Funding 2
Priority of Payments set out in Part 1 and Part 2 of Schedule 3 of the
Funding 2 Deed of Charge in accordance with Appendix 1 hereto.
6. APPLICATION
Prior to and following enforcement of the Funding 2 Security all amounts
at any time held by Funding 2, the Cash Manager or the Security Trustee
in respect of the security created under this Deed shall be held and/or
applied by such person subject to and in accordance with the relevant
provisions of the Funding 2 Deed of Charge.
7. NOTICES AND DEMANDS
Any notice or communication under or in connection with this Deed, the
Funding 2 Deed of Charge or the Master Definitions Schedule shall be
given in the manner and at the times set out in Clause 29 (Notices and
Demands) of the Funding 2 Deed of Charge to the addresses given in this
Clause or at such other address as the recipient may have notified to
the other parties hereto and/or thereto in writing.
The address referred to in this Clause 7 for the New Funding 2 Secured
Creditor is:
46
[ ]
For the attention of: [ ]
Telephone: [ ]
Facsimile: [ ]
or such other address and/or numbers as the New Issuer may notify to the
parties to the Funding 2 Deed of Charge in accordance with the
provisions thereof.
8. CHOICE OF LAW
This Deed is governed by and shall be construed in accordance with
English law.
XXXX EXECUTED AND DELIVERED AS A DEED by each of the parties hereto or on its
behalf on the date appearing on page 1.
NEW FUNDING 2 SECURED CREDITOR
EXECUTED as a DEED by )
[ ] )
acting by two )
directors/a director and the secretary )
Director
Director/Secretary
FUNDING 2
EXECUTED as a DEED by )
PERMANENT FUNDING (NO. 2) )
LIMITED acting by two )
directors/a director and the secretary )
Director
Director/Secretary
MASTER ISSUER
EXECUTED as a DEED by )
PERMANENT MASTER ISSUER )
PLC acting by two )
directors/a director and the secretary )
Director
47
Director/Secretary
SELLER
EXECUTED as a DEED by )
HALIFAX plc )
IN ITS CAPACITY AS SELLER )
acting by its attorney )
in the presence of )
Witness:
Name:
Address:
CASH MANAGER
EXECUTED as a DEED by )
HALIFAX plc )
IN ITS CAPACITY AS CASH MANAGER )
acting by its attorney )
in the presence of )
Witness:
Name:
Address:
FUNDING 2 ACCOUNT BANK
EXECUTED as a DEED by )
THE GOVERNOR AND COMPANY OF )
THE BANK OF SCOTLAND )
in its capacity as Funding 2 Account Bank )
acting by two directors/a director )
and the secretary )
Director
Director/Secretary
48
FUNDING 2 SWAP PROVIDER
EXECUTED as a DEED by )
HALIFAX plc )
in its capacity as Funding 2 Swap Provider )
acting by its attorney )
in the presence of )
Witness:
Name:
Address:
FUNDING 2 GIC PROVIDER
EXECUTED as a DEED by )
HALIFAX plc )
IN ITS CAPACITY AS FUNDING 2 GIC PROVIDER )
acting by its attorney )
in the presence of )
Witness:
Name:
Address:
FUNDING 2 CORPORATE SERVICES PROVIDER
EXECUTED as a DEED by )
STRUCTURED FINANCE )
MANAGEMENT LIMITED )
acting by two Directors/a director )
and the secretary )
Director
Director/Secretary
49
FUNDING 2 START-UP LOAN PROVIDER
EXECUTED as a DEED by )
HALIFAX plc )
IN ITS CAPACITY AS FIRST START-UP )
LOAN PROVIDER )
acting by its attorney )
in the presence of )
Witness:
Name:
Address:
SECURITY TRUSTEE
EXECUTED as a DEED by )
THE BANK OF NEW YORK )
acting by its authorised signatory )
Authorised Signatory:
50
51
SCHEDULE 3
FUNDING 2 PRIORITY OF PAYMENTS
PART 1
FUNDING 2 PRE-ENFORCEMENT REVENUE PRIORITY OF PAYMENTS
1. CALCULATION OF FUNDING 2 AVAILABLE REVENUE RECEIPTS
1.1 On the day falling four London Business Days prior to each Funding 2
Interest Payment Date, the Cash Manager will calculate the amount of
Funding 2 Available Revenue Receipts that available to be applied on the
next Funding 2 Interest Payment Date in accordance with the Funding 2
Pre-Enforcement Revenue Priority of Payments.
1.2 Subject to paragraph 1.3 below, if there would be insufficient Funding 2
Available Revenue Receipts to meet Funding 2's obligations on the next
Funding 2 Interest Payment Date under the Funding 2 Pre-Enforcement
Revenue Priority of Payments, then Funding 2 (or the Cash Manager on its
behalf) shall pay or provide for that deficit by applying amounts then
standing to the credit of (i) the Funding 2 Principal Ledger, if any,
and (ii) any amounts standing to the credit of the Funding 2 Cash
Accumulation Ledger after deducting the amounts standing to the credit
of the Funding 2 Principal Ledger (if any) from such ledger, and the
Cash Manager shall make a corresponding entry in the relevant Funding 2
Principal Deficiency Ledger.
1.3 Funding 2 Principal Receipts may not be used to pay interest on any Loan
Tranche if and to the extent that would result in a deficiency being
recorded or an existing deficiency being increased, on a Funding 2
Principal Deficiency Sub-Ledger relating to a higher ranking Loan
Tranche.
2. DISTRIBUTION OF FUNDING 2 AVAILABLE REVENUE RECEIPTS PRIOR TO THE
SERVICE OF A MASTER INTERCOMPANY LOAN ACCELERATION NOTICE ON FUNDING 2
2.1 This section sets out the order of priority of payments of Funding 2
Available Revenue Receipts as at the Programme Date.
2.2 Except for (i) amounts due to third parties by the Master Issuer and/or
Funding 2 under paragraph (a) or amounts due to the Account Bank, or the
Master Issuer Account Bank, which shall be paid when due on each Funding
2 Interest Payment Date prior to the service of a Master Intercompany
Loan Acceleration Notice, the Cash Manager will apply (iii) the Funding
2 Available Revenue Receipts for such date and (iv) if Funding 2
Available Revenue Receipts for such date are insufficient to pay items
(a) to (d), (f), (h), (j), and (l) below amounts standing to the credit
of the Funding 2 Principal Ledger the Funding 2 Cash Accumulation
Ledger, in the following order of priority (being the FUNDING 2
PRE-ENFORCEMENT REVENUE PRIORITY OF PAYMENTS):
(a) without priority among them, but in proportion to the respective
amounts due, to pay amounts due to:
(i) the Funding 2 Security Trustee (together with interest
and any amount in respect of VAT on those amounts) and
to provide for any amounts due or to become due in the
immediately following Funding 2 Interest Period to the
Funding 2 Security Trustee under the Funding 2 Deed of
Charge;
(ii) to pay amounts due to the Issuer in respect of the
Issuer's obligations specified in items (a) to (c)
inclusive of the Issuer Pre-Enforcement Revenue Priority
of
52
Payments or, as the case may be, items (a) and (b) of
the Issuing Post-Enforcement Priority of Payments; and
(iii) any third party creditors of Funding 2 (other than those
referred to later in this paragraph 2.2, which amounts
have been incurred without breach by Funding 2 of the
Transaction Documents to which it is a party and to
provide for any of these amounts expected to become due
and payable in the immediately following Funding 2
Interest Period by Funding 2 and to pay or discharge any
liability of Funding 2 for corporation tax on any
chargeable income or gain of Funding 2;
(b) without priority among them but in proportion to the respective
amounts due, towards payment of amounts (if any) by Funding 2 to
the Corporate Services Provider under the Corporate Services
Agreement and to the PECOH Corporate Services Provider under the
PECOH Corporate Services Agreement;
(c) towards payment of amounts (if any) due to the Funding 2 Swap
Provider under the Funding 2 Swap Agreement (including
termination payments but excluding any Funding 2 Swap Excluded
Termination Amount;
(d) without priority among them, but in proportion to the respective
amounts due, towards payments of interest due and payable on the
AAA Loan Tranches;
towards a credit to the Funding 2 AAA Principal Deficiency
Sub-Ledger in an amount sufficient to eliminate any debit on
that ledger;
(e) without priority among them, but in proportion to the respective
amounts due, towards payments of interest due and payable on the
AA Loan Tranches;
(f) towards a credit to the Funding 2 AA Principal Deficiency
Sub-Ledger in an amount sufficient to eliminate any debit on
that ledger;
(g) without priority among them, but in proportion to the respective
amounts due, towards payments of interest due and payable on the
A Loan Tranches;
(h) towards a credit to the Funding 2 A Principal Deficiency
Sub-Ledger in an amount sufficient to eliminate any debit on
that ledger;
(i) without priority among them, but in proportion to the respective
amounts due, towards payments of interest due and payable on the
BBB Loan Tranches;
(j) towards a credit to the Funding 2 BBB Principal Deficiency
Sub-Ledger in an amount sufficient to eliminate any debit on
that ledger;
(k) without priority among them, but in proportion to the respective
amounts due, towards payments of interest due and payable on the
BB Loan Tranches;
(l) towards a credit to the Funding 2 BB Principal Deficiency
Sub-Ledger in an amount sufficient to eliminate any debit on
that ledger;
(m) towards payment of any amounts due to the Master Issuer in
respect of the Master Issuer's obligations (if any) to make a
termination payment to an Master Issuer Swap Provider (but
excluding any payment due to a Master Issuer Swap Provider as a
result of the [Master Issuer Swap Provider Default]);
53
(n) towards a credit to the Funding 2 General Reserve Ledger to the
extent the amount standing to the credit thereof is less than
the Funding 2 Reserve Required Amount, taking into account any
net replenishment of the Funding 2 General Reserve Fund on that
Funding 2 Interest Payment Date from the Funding 2 Available
Principal Receipts;
(o) if the Liquidity Reserve Fund Rating Event has occurred and is
continuing, towards a credit to the Funding 2 Liquidity Reserve
Ledger to the extent the amount standing to the credit thereof
is less than the Funding 2 Liquidity Reserve Fund Required
Amount, taking into account any net replenishment of the Funding
2 Liquidity Reserve Fund on that Funding 2 Interest Payment Date
from the Funding 2 Available Principal Receipts;
(p) without priority among them but in proportion to the respective
amounts due, to pay (without double counting):
(i) the Master Issuer in respect of the Master Issuer's
obligations to make any termination paymentto a Master
Issuer Swap Provider as a result of the Master Issuer
Swap Provider Default;
(ii) the Master Issuer in respect of any other amounts due and
payable under the Master Issuer Intercompany Loan
Agreement and not otherwise provided for in this order of
priorities; and
(i) after the occurrence of the Funding 2 Swap Provider
Default or the Funding 2 Swap Provider Downgrade
Termination Event, any TERMINATION AMOUNT due and
payable to Funding 2 Swap Provider by Funding 2 under
the Funding 2 Swap Agreement;
(q) without priority among them but in proportion to the amounts
then due, towards payment of amounts to the Start-Up Loan
Provider under each Start-Up Loan Agreement.
(r) towards payment to Funding 2 of an amount equal to 0.01 per
cent. of the Funding 2 Available Revenue Receipts;
(s) towards payment to the Seller of any [Deferred Consideration];
and
(t) the balance (if any) to Funding 2.
54
PART 2
FUNDING 2 PRINCIPAL PRIORITIES OF PAYMENTS
1. DUE AND PAYABLE DATES OF LOAN TRANCHE
1.1 A Loan Tranche shall become DUE AND PAYABLE on the earlier to occur of:
(a) any date specified in relation to such Loan Tranche in the
applicable Loan Tranche Supplement;
(b) the date upon which a Trigger Event occurs;
(c) the date upon the Security Trustee serves a Note Acceleration
Notice on the Master Issuer; and
(d) the date upon the Security Trustee serves a Master Intercompany
Loan Acceleration Notice on Funding 2.
1.2 If there are insufficient Funding 2 Available Principal Receipts
available to repay a Loan Tranche when that Loan Tranche is due and
payable (either in full or up to its Scheduled Amortisation Amount),
then the shortfall will be repaid on subsequent Funding 2 Interest
Payment Dates from Funding 2 Available Principal Receipts until that
Loan Tranche is fully repaid or, as applicable, the Scheduled
Amortisation Amount is fully repaid.
2. REPAYMENT OF LOAN TRANCHES PRIOR TO THE OCCURRENCE OF A TRIGGER EVENT
AND PRIOR TO THE SERVICE ON FUNDING 2 OF A MASTER INTERCOMPANY LOAN
ACCELERATION NOTICE OR THE SERVICE ON THE MASTER ISSUER OF A NOTE
ACCELERATION NOTICE
2.1 On each Funding 2 Interest Payment date prior to the occurrence of a
Trigger Event or the service on Funding 2 of a Master Intercompany Loan
Acceleration Notice or the service on the Master Issuer of a Note
Acceleration Notice, the Cash Manager shall apply Funding 2 Available
Principal Receipts in the following priority:
(A) to the extent only that monies have been drawn from the Funding
2 General Reserve Fund to make Funding 2 Reserve Principal
Payments, towards a credit to the Funding 2 General Reserve
Ledger to the extent the amount standing to the credit thereof
is less than the Funding 2 Reserve Required Amount;
(B) if a Liquidity Reserve Fund Rating Event has occurred and is
continuing, (i) to the extent only that monies have been drawn
from the Funding 2 Liquidity Reserve Fund in order to make
Funding 2 Liquidity Reserve Principal Payments or (ii) to the
extent that the Funding 2 Liquidity Reserve Fund has not been
fully funded, towards a credit to the Funding 2 Liquidity
Reserve Ledger to the extent the amount standing to the credit
thereof is less than the Funding 2 Liquidity Reserve Fund
Required Amount;
(C) in order of their Final Repayment Dates, beginning with the
earliest such date (and, if two or more AAA Loan Tranches have
the same Final Repayment Date, in proportion to the respective
amounts due) to repay the principal amounts due (if any) on such
Funding 2 Interest Payment Date on the AAA Loan Tranches, in
each case subject to Rules (1) and (2) below;
(D) in no order of priority among them, but in proportion to the
respective amounts due, to repay the principal amounts due (if
any) on such Funding 2 Interest Payment Date on the AA Loan
Tranches, in each case subject to Rules (1) and (2) below;
55
(E) in no order of priority among them, but in proportion to the
respective amounts due, to repay the principal amounts due (if
any) on such Funding 2 Interest Payment Date on the A Loan
Tranches, in each case subject to Rules (1) and (2) below;
(F) in no order of priority among them, but in proportion to the
respective amounts due, to repay the principal amounts due (if
any) on such Funding 2 Interest Payment Date on the BBB Loan
Tranches, in each case subject to Rules (1) and (2) below;
(G) in no order of priority among them, but in proportion to the
respective amounts due, to repay the principal amounts due (if
any) on such Funding 2 Interest Payment Date on the BB Loan
Tranches, in each case subject to Rules (1) and (2) below;
(H) towards a credit to the Funding 2 Cash Accumulation Ledger until
the balance is equal to Funding 2's Cash Accumulation Liability
(as calculated after any payments are made at item (C) of this
priority of payments); and
(I) the remainder to be credited to the Funding 2 Principal Xxxxxx.
In the applicable circumstances, the following Rules apply in determining the
amounts to be paid under items (C), (D), (E), (F) and (G) of the priority of
payments set out above and below:
RULE (1) -REPAYMENT DEFERRALS
(A) If on a Funding 2 Interest Payment Date:
(1) there is a debit balance on the BB Principal Deficiency Sub-Ledger, the
BBB Principal Deficiency Sub-Ledger, the A Principal Deficiency
Sub-Ledger or the AA Principal Deficiency Sub-Ledger, after application
of the Funding 2 Available Revenue Receipts on that Funding 2 Interest
Payment Date; or
(2) the Adjusted Funding 2 General Reserve Fund Level is less than the
Funding 2 General Reserve Fund Threshold; or
(3) the aggregate Outstanding Principal Balance of Loans in the Mortgages
Trust, in respect of which the aggregate amount in arrears is more than
three times the Monthly Payment then due, is more than [5] per cent. of
the aggregate Outstanding Principal Balance of Loans in the Mortgages
Trust,
then until the relevant circumstance as described in sub-paragraphs (1),
(2) or (3) above has been cured or otherwise ceases to exist, if:
(a) any AAA Loan Tranche (whether or not such AAA Loan Tranche is
then due and payable) remains outstanding after making the
payments under item (C) of the above priority of payments, then
the AA Loan Tranches will not be entitled to principal
repayments under item (D) of the above priority of payments;
(b) any AAA Loan Tranche or any AA Loan Tranche (whether or not such
AAA Loan Tranche or AA Loan Tranche is then due and payable)
remains outstanding after making the payments under items (C)
and/or (D) of the above priority of payments, then the A Loan
Tranches will not be entitled to principal repayments under item
(E) of the priority of payments set out above;
56
(c) any AAA Loan Tranche, any AA Loan Tranche or any A Loan Tranche
(whether or not such AAA Loan Tranche, AA Loan Tranche or A Loan
Tranche is then due and payable) remains outstanding after
making the payments under items (C), (D) and/or (E) of the above
priority of payments, then the BBB Loan Tranches will not be
entitled to principal repayments under item (F) of the priority
of payments set out above; and/or
(d) any AAA Loan Tranche, any AA Loan Tranche, any A Loan Tranche or
any BBB Loan Tranche (whether or not such AAA Loan Tranche, AA
Loan Tranche, A Loan Tranche or BBB Loan Tranche is then due and
payable) remains outstanding after making the payments under
items (C), (D), (E) and/or (F) of the above priority of
payments, then the BB Loan Tranches will not be entitled to
principal repayments under item (G) of the priority of payments
set out above.
(B) If on a Funding 2 Interest Payment Date:
(1) one or more Bullet Loan Tranches are within a Cash Accumulation Period
at that time; and
(2) either:
(a) the Quarterly CPR is less than [10] per cent.; or
(b) both:
(i) the Quarterly CPR is equal to or greater than [10] per
cent., but less than [15] per cent., and
(ii) the Annualised CPR is less than [10] per cent.;
then on or before their Step-Up Dates, the Scheduled Amortisation Loan Tranches
will be entitled to principal repayments under items (C), (D), (E), (F) and (G)
of the priority of payments set out above only to the extent permitted under
the Scheduled Amortisation Repayment Restrictions.
(C) If on a Funding 2 Interest Payment Date:
(1) one or more Bullet Loan Tranches and/or Scheduled Amortisation
Instalments are within a Cash Accumulation Period at that time;
(2) the Quarterly CPR is less than [15] per cent.; and
(3) there is a Cash Accumulation Shortfall at that time,
then, on or before their Step-Up Dates, the Original Pass-Through Loan Tranches
will be entitled to principal repayments under items (C), (D), (E), (F) and (G)
of the priority of payments above only to the extent permitted under the
Pass-Through Repayment Restrictions.
RULE (2) - REPAYMENT OF PAYABLE PASS-THROUGH LOAN TRANCHES AFTER A STEP-UP DATE
Following the occurrence of the Step-Up Date under a Loan Tranche (LOAN TRANCHE
A) and provided that the Funding 2 Share of the Trust Property is greater than
zero, the aggregate amount repaid on a Funding 2 Interest Payment Date in
relation to Loan Tranches (other than Bullet Loan Tranches or Scheduled
Amortisation Instalments) under that Loan Tranche A under items (C), (D), (E),
(F) and (G) of the priority of payments set out above shall be limited to an
amount calculated as follows:
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Outstanding Principal Balance of Loan Tranche A
Funding 2 Principal Funds x --------------------------------------------------
Aggregate Outstanding Principal
Balance of all Loan Tranches
where FUNDING 2 PRINCIPAL FUNDS means in respect of any Funding 2 Interest
Payment Date the sum of:
(A) the aggregate of the following amount for each Calculation Period which
has ended in the period from the previous Funding 2 Interest Payment
Date to the most recent Normal Calculation Date, such amount being the
product of:
(1) the Funding 2 Share Percentage as calculated at the start of the
relevant Calculation Period; and
(2) the aggregate amount of Principal Receipts received by the
Mortgages Trustee in the relevant Calculation Period;
(B) the amount credited to the Funding 2 Principal Deficiency Ledger on the
relevant Funding 2 Interest Payment Date; and
(C) the amount, if any, credited to the Funding 2 Principal Ledger pursuant
to item (I) of the above Funding 2 Pre-Enforcement Principal Priority Of
Payments on the immediately preceding Funding 2 Interest Payment Date.
ALLOCATIONS INVOLVING RULE (2)
Where Rule (2) applies at a level of any priority of payments, the funds
available for making payments at that level shall first be allocated without
reference to Rule (2). However, if the amount so allocated to one or more Loan
Tranches exceeds the amount permitted under Rule (2) to be paid in respect of
those Loan Tranches (the CAPPED LOAN TRANCHES), the excess shall then be
reallocated among any other relevant Loan Tranches at that level using the
method of allocation as applies at that level but without reference to the
Capped Loan Tranches in calculating such reallocation. If a further such excess
arises as a result of the reallocation process, the reallocation process shall
be repeated at that level in relation to each such further excess that arises
until no further funds can be allocated at that level following which the
remaining excess shall then be applied at the next level of that priority of
payments.
3. REPAYMENT OF LOAN TRANCHES FOLLOWING THE OCCURRENCE OF A NON-ASSET
TRIGGER EVENT BUT PRIOR TO THE SERVICE ON FUNDING 2 OF MASTER
INTERCOMPANY LOAN ACCELERATION NOTICE OR THE SERVICE ON THE MASTER
ISSUER OF A NOTE ACCELERATION NOTICE.
Following the occurrence of a Non-Asset Trigger Event (where no Asset Trigger
Event has occurred) under the Mortgages Trust Deed but prior to the service on
Funding 2 of a Master Intercompany Loan Acceleration Notice or the service on
the Master Issuer of a Note Acceleration Notice, the Bullet Loan Tranches and
the Scheduled Amortisation Loan Tranches will be deemed to be Pass-Through Loan
Tranches and on each Funding 2 Interest Payment Date Funding 2 will be required
to apply Funding 2 Available Principal Receipts in the following priority:
(A) to the extent only that monies have been drawn from the Funding 2
General Reserve Fund to make Funding 2 Reserve Principal Payments,
towards a credit to the Funding 2 General Reserve Ledger to the extent
the amount standing to the credit thereof is less than the Funding 2
Reserve Required Amount;
(B) if a Liquidity Reserve Fund Rating Event has occurred and is continuing,
(i) to the extent only that monies have been drawn from the Funding 2
Liquidity Reserve Fund in order to make Funding 2 Liquidity Reserve
Principal Payments or (ii) to the extent that the Funding 2 Liquidity
Reserve Fund
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has not been fully funded, towards a credit to the Funding 2 Liquidity
Reserve Ledger to the extent the amount standing to the credit thereof
is less than the Funding 2 Liquidity Reserve Fund Required Amount;
(C) in order of their Final Repayment Dates, beginning with the earliest
such date (and if two or more AAA Loan Tranches have the same final
repayment date, in proportion to the respective amounts due) to repay
the AAA Loan Tranches until the AAA Loan Tranches are fully repaid;
(D) in order of their Final Repayment Dates, beginning with the earliest
such date (and if two or more AA Loan Tranches have the same final
repayment date, in proportion to the respective amounts due) to repay
the AA Loan Tranches until the AA Loan Tranches are fully repaid;
(E) in order of their Final Repayment Dates, beginning with the earliest
such date (and if two or more A Loan Tranches have the same Final
Repayment Date, in proportion to the respective amounts due) to repay
the A Loan Tranches until the A Loan Tranches are fully repaid;
(F) in order of their Final Repayment Dates, beginning with the earliest
such date (and if two or more BBB Loan Tranches have the same Final
Repayment Date, in proportion to the respective amounts due) to repay
the BBB Loan Tranches until the BBB Loan Tranches are fully repaid; and
(G) in order of their Final Repayment Dates, beginning with the earliest
such date (and if two or more BB Loan Tranches have the same Final
Repayment Date, in proportion to the respective amounts due) to repay
the BB Loan Tranches until the BB Loan Tranches are fully repaid.
4. REPAYMENT OF LOAN TRANCHES FOLLOWING THE OCCURRENCE OF AN ASSET TRIGGER
EVENT BUT PRIOR TO THE SERVICE ON FUNDING 2 OF A MASTER INTERCOMPANY
LOAN ACCELERATION NOTICE OR THE SERVICE ON THE MASTER ISSUER OF A NOTE
ACCELERATION NOTICE
Following the occurrence of an Asset Trigger Event (whether or not a Non-Asset
Trigger Event occurs or has occurred) but prior to the service on Funding 2 of
a Master Intercompany Loan Acceleration Notice or the service on the Master
Issuer of a Note Acceleration Notice, the Bullet Loan Tranches and the
Scheduled Amortisation Loan Tranches will be deemed to be Pass-Through Loan
Tranches and on each Funding 2 Interest Payment Date Funding 2 will be required
to apply Funding 2 Available Principal Receipts in the following priority:
(A) to the extent only that monies have been drawn from the Funding 2
General Reserve Fund to make Funding 2 Reserve Principal Payments,
towards a credit to the Funding 2 General Reserve Ledger to the extent
the amount standing to the credit thereof is less than the Funding 2
Reserve Required Amount;
(B) if a Liquidity Reserve Fund Rating Event has occurred and is continuing,
(i) to the extent only that monies have been drawn from the Funding 2
Liquidity Reserve Fund in order to make Funding 2 Liquidity Reserve
Principal Payments or (ii) to the extent that the Funding 2 Liquidity
Reserve Fund has not been fully funded, towards a credit to the Funding
2 Liquidity Reserve Ledger to the extent the amount standing to the
credit thereof is less than the Funding 2 Liquidity Reserve Fund
Required Amount;
(C) without priority among them, but in proportion to the amounts due, to
repay the AAA Loan Tranches until the AAA Loan Tranches are fully
repaid;
(D) without priority among them, but in proportion to the amounts due, to
repay the AA Loan Tranches until the AA Loan Tranches are fully repaid;
59
(E) without priority among them, but in proportion to the amounts due, to
repay the A Loan Tranches until the A Loan Tranches are fully repaid;
(F) without priority among them, but in proportion to the amounts due, to
repay the BBB Loan Tranches until the BBB Loan Tranches are fully
repaid; and
(G) without priority among them, but in proportion to the amounts due, to
repay the BB Loan Tranches until the BB Loan Tranches are fully repaid.
5. REPAYMENT OF LOAN TRANCHES AFTER ACCELERATION OF THE NOTES BUT PRIOR TO
MASTER INTERCOMPANY LOAN ACCELERATION
If a Note Acceleration Notice is served on the Master Issuer, then that will
not result in automatic enforcement of the Funding 2 Security under the Funding
2 Deed Of Charge. In those circumstances, however, the Bullet Loan Tranches and
any Scheduled Amortisation Loan Tranches will be deemed to be Pass-Through Loan
Tranches and on each Funding 2 Interest Payment Date Funding 2 will be required
to apply Funding 2 Available Principal Receipts in the following priority:
(A) to the extent only that monies have been drawn from the Funding 2
General Reserve Fund to make Funding 2 Reserve Principal Payments,
towards a credit to the Funding 2 General Reserve Ledger to the extent
the amount standing to the credit thereof is less than the Funding 2
Reserve Required Amount;
(B) if a Liquidity Reserve Fund Rating Event has occurred and is continuing,
(i) to the extent only that monies have been drawn from the Funding 2
Liquidity Reserve Fund in order to make the Funding 2 Liquidity Reserve
Principal Payments or (ii) to the extent that the Funding 2 Liquidity
Reserve Fund has not been fully funded, towards a credit to the Funding
2 Liquidity Reserve Ledger to the extent the amount standing to the
credit thereof is less than the Funding 2 Liquidity Reserve Fund
Required Amount;
(C) without priority among them, but in proportion to the amounts due, to
repay the AAA Loan Tranches until the AAA Loan Tranches are fully
repaid;
(D) without priority among them, but in proportion to the amounts due, to
repay the AA Loan Tranches until the AA Loan Tranches are fully repaid;
(E) without priority among them, but in proportion to the amounts due, to
repay the A Loan Tranches until the A Loan Tranches are fully repaid;
(F) without priority among them, but in proportion to the amounts due, to
repay the BBB Loan Tranches until the BBB Loan Tranches are fully
repaid; and
(G) without priority among them, but in proportion to the amounts due, to
repay the BB Loan Tranches until the BB Loan Tranches are fully repaid.
6. REPAYMENT OF LOAN TRANCHES WHEN FUNDING 2 RECEIVES AN AMOUNT OUTSTANDING
UNDER THE MASTER INTERCOMPANY LOAN
If either:
(A) Funding 2 receives a payment from the Seller and/or Funding 1 in the
circumstances set out in clause [*] of the Mortgages Trust Deed; or
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(B) the proceeds of a [New Loan Tranche] or a New Intercompany Loan are to
be used to refinance another Loan Tranche in the circumstances set out
in clause [*] of [the Master Intercompany Loan Agreement/ Funding 2
Intercompany Loan Agreements];
then Funding 2 will not apply the relevant payment as described in paragraphs 2
to 5 above. Instead, Funding 2 will apply the full repayment amount to repay
the relevant Loan Tranche.
PART 3
FUNDING 2 POST-ENFORCEMENT PRIORITY OF PAYMENTS
All monies received or recovered by the Security Trustee or the Receiver in
respect of the Funding 2 Security subsequent to the Security Trustee serving a
Master Intercompany Loan Acceleration Notice on Funding 2, will be applied
(save to the extent required by law) by the Security Trustee or the Receiver on
each Funding 2 Interest Payment Date in accordance with the following order of
priority (in each case only and to the extent that payments or provision of a
higher priority have been made in full):
(A) without priority among them, but in proportion to the respective amounts
due, to pay amounts due to:
(i) the Security Trustee and any Receiver appointed by the Security
Trustee, together with interest and any amount in respect of VAT
on those amounts, and to provide for any amounts due or to
become due to the Security Trustee and the Receiver in the
following Funding 2 Interest Period under the Funding 2 Deed Of
Charge; and
(ii) the Master Issuer in respect of the Master Issuer's obligations
specified in items [(A) and (B)] of the Master Issuer
Post-Enforcement Priority of Payments;
(B) without priority among them but in proportion to the respective amounts
due, towards payment of amounts (if any) due by Funding 2 to the
Corporate Services Provider under the Corporate Services Agreement and
to the PECOH Corporate Services Provider under the PECOH Corporate
Services Agreement;
(C) towards payment of amounts (if any) due to the Funding 2 Swap Provider
under the Funding 2 Swap Agreement (including any termination payment
but excluding any Funding 2 Swap Excluded Termination Amount);
(D) without priority among them, but in proportion to the respective amounts
due, towards payments of interest, principal and fees due and payable on
the AAA Loan Tranches;
(E) without priority among them, but in proportion to the respective amounts
due, towards payments of interest, principal and fees due and payable on
the AA Loan Tranches;
(F) without priority among them, but in proportion to the respective amounts
due, towards payments of interest, principal and fees due and payable on
the A Loan Tranches;
(G) without priority among them, but in proportion to the respective amounts
due, towards payments of interest, principal and fees due and payable on
the BBB Loan Tranches;
(H) without priority among them, but in proportion to the respective amounts
due, towards payments of interest, principal and fees due and payable on
the BB Loan Tranches;
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(I) towards payment of any amounts due to the Master Issuer in respect of
its obligations (if any) to make a termination payment to the Master
Issuer Swap Provider (but excluding any Master Issuer Swap Excluded
Termination Amount);
(J) without priority among them but in proportion to the respective amounts
due, to pay (without double counting):
(i) the Master Issuer in respect of the Master Issuer's obligations
(if any) to pay any [Master Issuer Swap Excluded Termination
Amount] to a Master Issuer Swap Provider as a result of a
[Master Issuer Swap Provider Default] or a [Master Issuer Swap
Provider Downgrade Termination Event] (as appropriate);
(ii) the Master Issuer in respect of any other amounts due and
payable under the Master Intercompany Loan Agreement and not
otherwise provided for earlier in this priority of payments; and
(iii) after the occurrence of the Funding 2 Swap Provider Default or
the Funding 2 Swap Provider Downgrade Termination Event, any
termination amount due to and payable to the Funding 2 Swap
Provider by Funding 2 under the Funding 2 Swap Agreement;
(K) without priority among them but in proportion to the amounts then due,
towards payment of amounts due to the Start-Up Loan Provider under each
Start-Up Loan Agreement; and
(L) towards payment to the Seller of any Deferred Consideration.
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SIGNATORIES
FUNDING 2
EXECUTED as a DEED by )
PERMANENT FUNDING (NO. 2) )
LIMITED acting by two )
directors/a director and the secretary )
Director
Director/Secretary
MASTER ISSUER
EXECUTED as a DEED by )
PERMANENT MASTER ISSUER )
PLC acting by two )
directors/a director and the secretary )
Director
Director/Secretary
SELLER
EXECUTED as a DEED by )
HALIFAX plc )
IN ITS CAPACITY AS SELLER )
acting by its attorney )
in the presence of )
Witness:
Name:
Address:
CASH MANAGER
EXECUTED as a DEED by )
HALIFAX plc )
IN ITS CAPACITY AS CASH MANAGER )
acting by its attorney )
in the presence of )
Witness:
Name:
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Address:
ACCOUNT BANK
EXECUTED as a DEED by )
THE GOVERNOR AND COMPANY OF )
THE BANK OF SCOTLAND )
in its capacity as Funding 2 Account Bank )
acting by two directors/a director )
and the secretary )
Director
Director/Secretary
FUNDING 2 SWAP PROVIDER
EXECUTED as a DEED by )
HALIFAX plc )
IN ITS CAPACITY AS FUNDING 2 SWAP PROVIDER )
acting by its attorney )
in the presence of )
Witness:
Name:
Address:
FUNDING 2 GIC PROVIDER
EXECUTED as a DEED by )
HALIFAX plc )
IN ITS CAPACITY AS FUNDING 2 GIC PROVIDER )
acting by its attorney )
in the presence of )
Witness:
Name:
Address:
FUNDING 2 CORPORATE SERVICES PROVIDER
EXECUTED as a DEED by )
STRUCTURED FINANCE )
MANAGEMENT LIMITED )
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acting by two Directors/a director )
and the secretary )
Director
Director/Secretary
FIRST START-UP LOAN PROVIDER
EXECUTED as a DEED by )
HALIFAX plc )
IN ITS CAPACITY AS )
FUNDING 2 START-UP LOAN PROVIDER )
acting by its attorney )
in the presence of )
Witness:
Name:
Address:
SECURITY TRUSTEE
EXECUTED as a DEED by )
THE BANK OF NEW YORK )
acting by its authorised signatory )
Authorised Signatory:
