REG - Atlas Funding 2025-1 - Publication of a Prospectus
23/04/2025 14:30
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RNS Number : 8993F Atlas Funding 2025-1 PLC 23 April 2025
IMPORTANT NOTICE
NOT FOR DISTRIBUTION TO ANY U.S. PERSON OR TO ANY PERSON OR ADDRESS IN THE
U.S.
IMPORTANT: YOU MUST READ THE FOLLOWING BEFORE CONTINUING. THE FOLLOWING
APPLIES TO THE PROSPECTUS FOLLOWING THIS PAGE, AND YOU ARE THEREFORE ADVISED
TO READ THIS CAREFULLY BEFORE READING, ACCESSING OR MAKING ANY OTHER USE OF
THE PROSPECTUS. IN ACCESSING THE PROSPECTUS, YOU AGREE TO BE BOUND BY THE
FOLLOWING TERMS AND CONDITIONS, INCLUDING ANY MODIFICATIONS TO THEM ANY TIME
YOU RECEIVE ANY INFORMATION FROM US AS A RESULT OF SUCH ACCESS.
NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY THE SECURITIES OF THE ISSUER IN THE UNITED
STATES OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE
SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES
LAWS OR "BLUE SKY" LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED
STATES AND THE SECURITIES MAY NOT BE OFFERED OR SOLD WITHIN THE U.S. OR TO, OR
FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN REGULATION S UNDER
THE SECURITIES ACT ("REGULATION S") EXCEPT PURSUANT TO AN EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND ANY APPLICABLE STATE OR LOCAL SECURITIES LAWS.
THE SELLER, AS SPONSOR UNDER THE U.S. RISK RETENTION RULES, DOES NOT INTEND TO
RETAIN AT LEAST 5 PER CENT. OF THE CREDIT RISK OF THE SECURITIZED ASSETS FOR
PURPOSES OF COMPLIANCE WITH THE FINAL RULES PROMULGATED UNDER SECTION 15G OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "U.S. RISK RETENTION
RULES"), BUT RATHER INTENDS TO RELY ON AN EXEMPTION PROVIDED FOR IN SECTION
__.20 OF THE U.S. RISK RETENTION RULES REGARDING NON-U.S. TRANSACTIONS.
EXCEPT WITH THE PRIOR WRITTEN CONSENT OF THE SELLER (A "U.S. RISK RETENTION
CONSENT") AND WHERE SUCH SALE FALLS WITHIN THE EXEMPTION PROVIDED BY SECTION
__.20 OF THE U.S. RISK RETENTION RULES, THE NOTES AND THE RESIDUAL
CERTIFICATES OFFERED AND SOLD BY THE ISSUER MAY NOT BE PURCHASED BY, OR FOR
THE ACCOUNT OR BENEFIT OF, ANY "U.S. PERSON" AS DEFINED IN THE U.S. RISK
RETENTION RULES ("RISK RETENTION U.S. PERSONS"). PROSPECTIVE INVESTORS
SHOULD NOTE THAT THE DEFINITION OF "U.S. PERSON" IN THE U.S. RISK RETENTION
RULES IS SUBSTANTIALLY SIMILAR TO, BUT NOT IDENTICAL TO, THE DEFINITION OF
"U.S. PERSON" IN REGULATION S. EACH PURCHASER OF THE NOTES AND THE RESIDUAL
CERTIFICATES, OR A BENEFICIAL INTEREST THEREIN ACQUIRED IN THE INITIAL
SYNDICATION OF THE NOTES AND THE RESIDUAL CERTIFICATES BY ITS ACQUISITION OF
THE NOTES AND THE RESIDUAL CERTIFICATES OR A BENEFICIAL INTEREST THEREIN, WILL
BE DEEMED TO HAVE MADE CERTAIN REPRESENTATIONS AND AGREEMENTS, INCLUDING THAT
IT (1) EITHER (i) IS NOT A RISK RETENTION U.S. PERSON OR (ii) HAS OBTAINED A
U.S. RISK RETENTION CONSENT FROM THE SELLER, (2) IS ACQUIRING SUCH NOTE OR
RESIDUAL CERTIFICATE OR A BENEFICIAL INTEREST THEREIN FOR ITS OWN ACCOUNT AND
NOT WITH A VIEW TO DISTRIBUTE SUCH NOTE OR RESIDUAL CERTIFICATE, AND (3) IS
NOT ACQUIRING SUCH NOTE OR RESIDUAL CERTIFICATE OR A BENEFICIAL INTEREST
THEREIN AS PART OF A SCHEME TO EVADE THE REQUIREMENTS OF THE U.S. RISK
RETENTION RULES (INCLUDING ACQUIRING SUCH NOTE OR RESIDUAL CERTIFICATE THROUGH
A NON-RISK RETENTION U.S. PERSON, RATHER THAN A RISK RETENTION U.S. PERSON, AS
PART OF A SCHEME TO EVADE THE 10 PER CENT. RISK RETENTION U.S. PERSON
LIMITATION IN THE EXEMPTION PROVIDED FOR IN SECTION __.20 OF THE U.S. RISK
RETENTION RULES). ANY RISK RETENTION U.S. PERSON THAT IS A PROSPECTIVE
INVESTOR IN THE NOTES OR RESIDUAL CERTIFICATES MUST INFORM THE SELLER AND THE
JOINT LEAD MANAGERS THAT IT IS A RISK RETENTION U.S. PERSON.
THE FOLLOWING PROSPECTUS MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER
PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER, AND IN PARTICULAR,
MAY NOT BE FORWARDED TO ANY U.S. PERSON OR TO ANY U.S. ADDRESS. ANY
FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART
IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A
VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS.
THE PROSPECTUS HAS BEEN DELIVERED TO YOU ON THE BASIS THAT YOU ARE A PERSON
INTO WHOSE POSSESSION THE PROSPECTUS MAY BE LAWFULLY DELIVERED IN ACCORDANCE
WITH THE LAWS OF THE JURISDICTION IN WHICH YOU ARE LOCATED. BY ACCESSING THE
PROSPECTUS, YOU SHALL BE DEEMED TO HAVE CONFIRMED AND REPRESENTED TO US THAT
(A) YOU HAVE UNDERSTOOD AND AGREE TO THE TERMS SET OUT HEREIN, (B) YOU CONSENT
TO DELIVERY OF THE PROSPECTUS BY ELECTRONIC TRANSMISSION, (C) YOU ARE NOT A
U.S. PERSON (WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT) OR
ACTING FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON AND THE ELECTRONIC MAIL
ADDRESS THAT YOU HAVE GIVEN TO US AND TO WHICH THIS EMAIL HAS BEEN DELIVERED
IS NOT LOCATED IN THE UNITED STATES, ITS TERRITORIES AND POSSESSIONS
(INCLUDING PUERTO RICO, THE U.S. VIRGIN ISLANDS, GUAM, AMERICAN SAMOA, WAKE
ISLAND AND THE NORTHERN MARIANA ISLANDS) OR THE DISTRICT OF COLUMBIA AND (D)
IF YOU ARE A PERSON IN THE UNITED KINGDOM, THEN YOU ARE A PERSON WHO (I) HAS
PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS OR (II) IS A HIGH
NET WORTH ENTITY FALLING WITHIN ARTICLES 49(2)(A) TO (D) OF THE FINANCIAL
SERVICES AND MARKETS ACT (FINANCIAL PROMOTION) ORDER 2005 (ALL SUCH PERSONS
TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). ANY INVESTMENT OR
INVESTMENT ACTIVITY TO WHICH THIS PROSPECTUS RELATES IS AVAILABLE ONLY TO
RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS.
The prospectus has been sent to you in an electronic form. You are reminded
that documents transmitted via this medium may be altered or changed during
the process of electronic transmission and consequently none of Atlas Funding
2025-1 PLC, Lendco Limited, Banco Santander, S.A., Lloyds Bank Corporate
Markets PLC, BNP Paribas, HSBC Bank plc, nor any person who controls any such
person nor any director, officer, employee or agent of any such person or
affiliate of any such person accepts any liability or responsibility
whatsoever in respect of any difference between the prospectus distributed to
you in electronic format and the hard copy version available to you on request
from Banco Santander, S.A., Lloyds Bank Corporate Markets PLC or BNP Paribas
or HSBC Bank plc.
ATLAS FUNDING 2025-1 PLC
(Incorporated in England and Wales with limited liability, registered number
16284619)
Legal entity identifier (LEI) number: 635400YENQ7FY7ZJJS32
Class of Notes Initial Principal Amount Issue Price Reference Rate/ Fixed Rate Margin (payable up to and including the Optional Redemption Date) Relevant Step-Up Margin (payable after the Optional Redemption Date) Ratings (S&P / DBRS) Final Maturity Date
Class A Notes £271,601,000 100% Compounded Daily SONIA 0.800% per annum 1.200% per annum AAA (sf) / AAA (sf) The Interest Payment Date falling in July 2062
Class B Notes £21,380,000 100% Compounded Daily SONIA 1.250% per annum 1.875% per annum AA (sf) / AA (high) (sf) The Interest Payment Date falling in July 2062
Class C Notes £11,086,000 100% Compounded Daily SONIA 1.650% per annum 2.475% per annum A+ (sf) / A (high) (sf) The Interest Payment Date falling in July 2062
Class D Notes £7,919,000 100% Compounded Daily SONIA 2.000% per annum 3.000% per annum BBB (sf) / BBB (high) (sf) The Interest Payment Date falling in July 2062
Class E Notes £4,752,000 100% Compounded Daily SONIA 4.000% per annum 5.000% per annum BB (sf) / BB (high) (sf) The Interest Payment Date falling in July 2062
Class X Notes £3,168,000 100% Compounded Daily SONIA 4.000% per annum N/A BBB (sf) / BBB (high) (sf) The Interest Payment Date falling in July 2062
RC1 Residual Certificates N/A N/A N/A N/A N/A Not rated N/A
RC2 Residual Certificates N/A N/A N/A N/A N/A Not rated N/A
The Optional Redemption Date is the Interest Payment Date falling in February
2030.
From the Collection Period Start Date immediately preceding the Optional
Redemption Date, the Option Holder has the right to exercise the Call Option
in relation to the Portfolio, which would result in an early redemption of the
Notes.
JOINT ARRANGERS
BNP PARIBAS HSBC
JOINT LEAD MANAGERS
BNP PARIBAS HSBC Lloyds Bank Corporate Markets Santander Corporate & Investment Banking
The date of this Prospectus is 22 April 2025
Issue Date The Issuer will issue the Notes in the classes set out above and the Residual
Certificates on or about 24 April 2025 (the "Closing Date").
Standalone/programme issuance Standalone issuance.
Listing This document comprises a prospectus (the "Prospectus"), for the purposes of
Regulation (EU) 2017/1129 as it forms part of domestic law by virtue of the
European Union (Withdrawal) Act 2018 (as amended by the European Union
(Withdrawal Agreement) Act 2020) as amended, varied, superseded or substituted
from time to time ("EUWA") (the "UK Prospectus Regulation"). This Prospectus
has been approved by the Financial Conduct Authority (the "FCA") as competent
authority under the UK Prospectus Regulation. The FCA only approves this
Prospectus as meeting the standard of completeness, comprehensibility and
consistency imposed by the UK Prospectus Regulation. Such approval should
not be considered as an endorsement of the Issuer or of the quality of the
Notes that are the subject of this Prospectus. Investors should make their
own assessment as to the suitability of investing in the Notes or the Residual
Certificates (as applicable).
Application has been made for the Notes to be admitted to the official list of
the FCA (the "Official List") and to trading on the main market of the London
Stock Exchange. The London Stock Exchange's main market is a UK regulated
market for the purposes of Regulation (EU) No 600/2014 on markets in financial
instruments as it forms part of domestic law by virtue of the EUWA ("UK
MiFIR").
References in this Prospectus to the Notes being listed (and all related
references) shall mean that such Notes have been admitted to trading on the
London Stock Exchange's main market and have been admitted to the Official
List.
The Residual Certificates will neither be listed on the London Stock
Exchange's main market nor be admitted to the Official List.
Underlying Assets The Issuer will make payments on the Notes and, where applicable, the Residual
Certificates from, inter alia, payments of principal and revenue received from
a portfolio comprising buy-to-let mortgage loans and their related security
originated by Lendco Limited ("Lendco") secured over residential properties
located in England and Wales and sold by Lendco (in its capacity as the
seller, the "Seller") to the Issuer on the Closing Date (the "Closing
Portfolio") and, in the case of Permitted Fee Capitalisation Amounts, on the
relevant Switch Date, and together with any further Additional Mortgage Loans
and their Related Security, the "Portfolio"). The Issuer confirms that the
assets backing the issue of the Notes and the Residual Certificates and the
Notes and Residual Certificates are not part of a re-securitisation. The
Closing Portfolio may include any Additional Closing Portfolio Mortgage Loans.
"Additional Closing Portfolio Mortgage Loans" means Loans and their Related
Security that are originated by Lendco following the Cut-Off Date but before
the Closing Date and sold to the Issuer on the Closing Date as part of the
Closing Portfolio.
On any date following the Closing Date (such date an "Additional Mortgage Loan
Purchase Date") up to (and including) the Calculation Date immediately
preceding the First Interest Payment Date (the "Final Additional Mortgage Loan
Purchase Date"), the Issuer may purchase further Additional Mortgage Loans and
their Related Security subject to certain conditions being satisfied
(including the Additional Mortgage Loan Conditions).
"Additional Mortgage Loans" means (i) the Additional Closing Portfolio
Mortgage Loans and (ii) any Mortgage Loans which are sold to the Issuer by the
Seller on any Additional Mortgage Loan Purchase Date up to (and including) the
Final Additional Mortgage Loan Purchase Date.
See the sections entitled "Transaction Overview - Portfolio and Servicing",
"The Loans" and "Characteristics of the Provisional Portfolio" for further
details.
Notes Credit Enhancement Credit enhancement of the Notes is provided in the following manner (subject
to the distribution of the Pre-Funding Unused Amount):
· in relation to any class of the Notes (other than the
Class X Notes), the relevant over-collateralisation funded by Notes ranking
junior to such Class of Notes in the Priority of Payments (if any);
· in relation to each Class of Notes, the amount by which
Available Revenue Receipts received during the relevant Collection Period
exceed the amounts required to pay interest and all other amounts ranking in
priority thereto on the relevant Class of Notes in accordance with the
Pre-Enforcement Revenue Priority of Payments;
· following service of an Enforcement Notice, all amounts
credited to the Class A and B Liquidity Reserve Fund, subject to application
in accordance with the Post-Enforcement Priority of Payments; and
· on each Interest Payment Date up to but excluding the
Class B Redemption Date, the Class A and B Liquidity Reserve Fund Excess
Amount will be applied as Available Revenue Receipts.
See the sections entitled "Transaction Overview - Credit Structure and
Cashflow" and "Credit Structure" for further details.
Liquidity Support for the Notes Liquidity support for the Notes is provided in the following manner:
· the subordination in payment of those Classes of Notes
ranking junior in the relevant Priority of Payments and the Residual
Certificates;
· in respect of the Most Senior Class of Notes only, the
availability of Principal Addition Amounts;
· in respect of items (a) to (g) and (i) of the
Pre-Enforcement Revenue Priority of Payments, amounts standing to the credit
of the Class A and B Liquidity Reserve Fund; and
· in respect of items (a) to (g) of the Pre-Enforcement
Revenue Priority of Payments, the availability of the Liquidity Facility.
See the sections entitled "Transaction Overview - Credit Structure and
Cashflow" and "Credit Structure" for further details. In relation to the
Class A and B Liquidity Reserve Fund and Class A and B Liquidity Reserve Fund
Account, see the section entitled "Credit Structure - Class A and B Liquidity
Reserve Fund and Class A and B Liquidity Reserve Fund Account". In relation to
the Liquidity Facility, see the section entitled "Credit Structure - Liquidity
Facility" and see "Summary of the Key Transaction Documents - The Liquidity
Facility Agreement" below for a summary of these.
Swap Arrangements The Issuer will enter into
(a) one or more interest rate swap transactions (each an "HSBC Swap
Transaction"), which will be governed by a 2002 ISDA Master Agreement
(together with a schedule and Swap Credit Support Annex thereto) to be entered
into between the Issuer and the HSBC Swap Provider on or around the Closing
Date (the "HSBC Swap Agreement"); and
(b) one or more interest rate swap transactions (each a "Santander Swap
Transaction"), which will be governed by a 2002 ISDA Master Agreement
(together with a schedule and Swap Credit Support Annex thereto) to be entered
into between the Issuer and the Santander Swap Provider on or around the
Closing Date (the "Santander Swap Agreement"),
(the HSBC Swap Transactions and the Santander Swap Transactions together, the
"Swap Transactions" and the HSBC Swap Agreement and the Santander Swap
Agreement together, the "Swap Agreements"), in order to provide a hedge, to a
certain extent, against the possible variance between the fixed rates of
interest payable on certain of the Loans in the Closing Portfolio and the
floating rates of interest on the Class A Notes, the Class B Notes, the Class
C Notes, the Class D Notes, the Class E Notes and the Class X Notes, which are
calculated by reference to Compounded Daily SONIA.
Each Swap Transaction shall be entered into by way of (i) transferring by way
of novation and amendment one or more interest rate swap transactions
("Warehouse Swaps") entered into between (as applicable) Talworth Ltd or
Talworth No. 3 Ltd (the "Warehouse Borrowers") and HSBC Bank plc or Banco
Santander, S.A. (each a "Warehouse Swap Provider"); (ii) transferring by way
of novation and amendment one or more interest rate swap transactions entered
into by the Seller in conjunction with its origination pipeline; and/or (iii)
new interest rate swap transactions entered into between the Issuer and a Swap
Provider, as required.
See the section entitled "Credit Structure - Interest Rate Risk for the Notes"
for further details.
Notes Redemption Provisions Information on any mandatory redemption of the Notes is summarised in the
section entitled "Transaction Overview - Summary of the Terms and Conditions
of the Notes and the Residual Certificates" and set out in full in Condition 8
(Redemption) of the terms and conditions of the Notes (the "Conditions").
Benchmarks Regulation Amounts payable on the Class A Notes, the Class B Notes, the Class C Notes,
the Class D Notes, the Class E Notes and the Class X Notes are calculated by
reference to the daily compounded Sterling Overnight Index Average
("SONIA"). As at the date of this prospectus, the administrator of SONIA is
not included in the FCA's register of administrators under Article 36 of
Regulation (EU) No 2016/1011 as it forms part of domestic law by virtue of the
EUWA ("UK Benchmarks Regulation"). The Bank of England, as administrator of
SONIA, is exempt under Article 2 of the UK Benchmarks Regulation but has
issued a statement of compliance with the principles for financial benchmarks
issued in 2013 by the International Organisation of Securities Commissions.
Credit Rating Agencies DBRS Ratings Limited ("DBRS") and S&P Global Ratings UK Limited
("S&P") (each a "Rating Agency" and together, the "Rating Agencies"). As
of the date of this Prospectus, each of the Rating Agencies is a credit rating
agency established in the United Kingdom (the "UK") and is registered under
Regulation (EU) No 1060/2009 as it forms part of domestic law by virtue of the
EUWA (the "UK CRA Regulation"). As such, both DBRS and S&P are included
in the list of credit rating agencies published by the FCA on its website,
http://www.fca.org.uk in accordance with the UK CRA Regulation. DBRS and
S&P are not established in the European Union and have not applied for
registration under Regulation (EC) No. 1060/2009 (as amended) (the "EU CRA
Regulation"). The ratings issued by DBRS and S&P have been endorsed by
DBRS Ratings GmbH and S&P Global Ratings Europe Limited, respectively, in
accordance with the EU CRA Regulation. Each of DBRS Ratings GmbH and S&P
Global Ratings Europe Limited is included in the list of credit rating
agencies published by the European Securities and Markets Authority on its
website (at http://www.esma.europa.eu/page/List-registered-and-certified-CRAs)
in accordance with the EU CRA Regulation.
Credit Ratings The ratings assigned to the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes and the Class X Notes by each of
DBRS and S&P (the "Notes") address, inter alia, the likelihood of (a) full
and timely payment to the holders of the Most Senior Class of Notes (other
than the Class X Notes) of all payments of interest on each Interest Payment
Date; and (b) (i) (in respect of the ratings assigned by S&P) full and
ultimate payment to the holders of the Notes of principal and (in relation to
the Class B Notes, the Class C Notes, the Class D Notes, the Class E Notes and
the Class X Notes while they are not the Most Senior Class of Notes) of
interest on or prior to the Final Maturity Date and (ii) (in respect of the
ratings assigned by DBRS) full and ultimate payment to the holders of the
Notes of principal and (in relation to the Class B Notes, the Class C Notes,
the Class D Notes, and the Class E Notes (while they are not the Most Senior
Class of Notes) and the Class X Notes) of interest on or prior to the Final
Maturity Date.
Ratings are expected to be assigned to each Class of Notes on or before the
Closing Date. The assignment of a rating to any Class of Notes by any Rating
Agency is not a recommendation to invest in any Class of Notes or to buy, sell
or hold securities and may be subject to revision, suspension or withdrawal at
any time by the assigning Rating Agency.
The Residual Certificates will not be rated.
Obligations The Notes and the Residual Certificates will be obligations of the Issuer
alone and will not be guaranteed or supported by, or be the responsibility of,
any other entity named in the Prospectus.
UK Risk Retention On the Closing Date, the Seller will, as originator for the purposes of the UK
Securitisation Framework, retain on an ongoing basis a material net economic
interest of not less than 5 per cent. in the securitisation (the "UK Retained
Interest") as required by SECN 5.2.1R (the "UK Risk Retention Requirements").
As at the Closing Date, such interest will be satisfied by the Seller holding
no less than 5 per cent. of the nominal value of each Class of Notes sold to
investors (with the exception of the Class X Notes), in accordance with SECN
5.2.8R(1)(a). See the section entitled "Regulatory Disclosures" for more
information.
After the Closing Date, the Seller (in its capacity as holder of the UK
Retained Interest) may enter into financing arrangements in respect of the UK
Retained Interest. See further "Risk Factors - Legal Risks and Regulatory
Risks - Certain risks in respect of the potential financing of the Retained
Interest by the Seller".
EU Risk Retention On the Closing Date, the Seller will, as originator for the purposes of the EU
Securitisation Regulation, retain on an ongoing basis a material net economic
interest of not less than 5 per cent. in the securitisation (the "EU Retained
Interest" and together with the UK Retained Interest, the "Retained Interest")
as required by Article 6(1) of the EU Securitisation Regulation as if it were
applicable to it (the "EU Risk Retention Requirements").
As at the Closing Date, such interest will be satisfied by the Seller holding
no less than 5 per cent. of the nominal value of each Class of Notes sold to
investors (with the exception of the Class X Notes), as determined in
accordance with Article 6(3)(a) of the EU Securitisation Regulation as
required for the purposes of Article 5(1)(d) of the EU Securitisation
Regulation. See the section entitled "Regulatory Disclosures" for more
information.
After the Closing Date, the Seller (in its capacity as holder of the EU
Retained Interest) may enter into financing arrangements in respect of the EU
Retained Interest. See further "Risk Factors - Legal Risks and Regulatory
Risks - Certain risks in respect of the potential financing of the Retained
Interest by the Seller".
"EU Securitisation Regulation" means Regulation (EU) 2017/2402, as amended,
including (i) relevant regulatory and/or implementing technical standards or
delegated regulation, or other applicable national implementing measures in
relation thereto (including any applicable transitional provisions); and/or
(ii) any relevant guidance and policy statements in relation thereto published
by the European Banking Authority, the ESMA, the European Insurance and
Occupational Pensions Authority, the European Commission and/or the European
Central Bank.
U.S. Risk Retention The Seller, as the sponsor under the final rules promulgated under Section 15G
of the Securities Exchange Act of 1934, as amended (the "U.S. Risk Retention
Rules"), does not intend to retain at least 5 per cent. of the credit risk of
the securitised assets for purposes of compliance with, but rather intends to
rely on an exemption provided for in Section 20 of the U.S. Risk Retention
Rules regarding non-U.S. transactions. Except with the prior written consent
of the Seller, and where such sale falls within the exemption provided by
Section __.20 of the U.S. Risk Retention Rules, the Notes and the Residual
Certificates offered and sold by the Issuer may not be purchased by, or for
the account or benefit of, any Risk Retention U.S. Persons.
Each prospective Noteholder or Certificateholder is required to independently
assess and determine the sufficiency of the information described in the
preceding paragraphs for the purposes of complying with the UK Securitisation
Framework and the EU Securitisation Regulation and any corresponding national
measures which may be relevant and none of the Seller, the Issuer, nor the
Joint Arrangers, nor the Joint Lead Managers, nor the parties to the
Transaction Documents (each a "Transaction Party" and collectively
"Transaction Parties") make any representation that the information described
above or in this Prospectus is sufficient in all circumstances for such
purposes. See further "Risk Factors - Legal Risks and Regulatory Risks -
U.S. Risk Retention Requirements".
The Volcker Rule The Issuer was structured so as not to constitute a "covered fund" as defined
in the regulations codified under Section 13 of the Bank Holding Company Act
of 1956, as amended, commonly known as the "Volcker Rule" (the Volcker
Rule). Any prospective investor in the Notes or the Residual Certificates,
including a U.S. or foreign bank or a subsidiary or other affiliate thereof,
should consult its own legal advisers regarding such matters and other effects
of the Volcker Rule. See the section entitled "Risk Factors - Legal Risks
and Regulatory Risks - Effects of the Volcker Rule on the Issuer".
ERISA Considerations in respect of the Notes The Notes (and any interest therein) may not be purchased or held by, or on
behalf of, any "employee benefit plan" as defined in Section 3(3) of the U.S.
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), which
is subject thereto, or any "plan" as defined in Section 4975(e)(1) of the U.S.
Internal Revenue Code of 1986, as amended (the "Code"), to which Section 4975
of the Code applies, or by any person any of the assets of which are, or are
deemed for purposes of ERISA or Section 4975 of the Code to be, assets of such
an "employee benefit plan" or a "plan", or by any governmental, church or
non-U.S. plan which is subject to any federal, state, local or non-U.S. law or
regulation that is substantially similar to the prohibited transaction
provisions of Section 406 of ERISA or Section 4975 of the Code ("Similar
Law"), and each purchaser of the Notes (or any interest therein) will be
deemed to have represented, warranted and agreed that it is not, and for so
long as it holds the Notes (or any interest therein) will not be, such an
"employee benefit plan", "plan", person or governmental, church or non-U.S.
plan subject to Similar Law.
Distribution of the Notes The Notes have not been and will not be registered under the United States
Securities Act of 1933, as amended (the "Securities Act"), or the securities
laws or "blue sky" laws of any state or other jurisdiction of the United
States and, accordingly, the Notes may not be offered or sold within the
United States or to, or for the account or benefit of, U.S. persons except
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and any applicable state and
federal securities laws. The Notes are being offered and sold outside the
United States to persons other than U.S. persons pursuant to Regulation S
under the Securities Act ("Regulation S"). The Issuer is not, and will not
be, registered as an investment company under the U.S. Investment Company Act
of 1940, as amended (the "Investment Company Act"). For a description of
certain further restrictions on offers, sales and transfers of Notes in this
Prospectus, see "Transfer Restrictions and Investor Representations" herein.
Residual Certificates In addition to the Notes, the Issuer will issue the Residual Certificates to
the Seller on the Closing Date. The Residual Certificates represent the
right to receive deferred consideration for the purchase of the Portfolio
(consisting of the RC1 Payments and the RC2 Payments). See the sections
entitled "Terms and Conditions of the Residual Certificates" for further
details.
Significant Investor On the Closing Date, Lendco will purchase 5 per cent. of the aggregate
principal amount of each of the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes and the Class E Notes. On the Closing Date, the
Issuer will issue the Residual Certificates to the Seller.
The Notes have not been approved or disapproved by the United States
Securities and Exchange Commission (the "SEC"), any state securities
commission in the United States or any other United States regulatory
authority, nor have any of the foregoing authorities passed upon the accuracy
or adequacy of this Prospectus. Any representation to the contrary is a
criminal offence.
THE "RISK FACTORS" SECTION CONTAINS DETAILS OF CERTAIN RISKS AND OTHER FACTORS
THAT SHOULD BE GIVEN PARTICULAR CONSIDERATION BEFORE INVESTING IN THE NOTES
AND/OR THE RESIDUAL CERTIFICATES. PROSPECTIVE INVESTORS SHOULD BE AWARE OF
THE ISSUES SUMMARISED IN THE SECTION.
IMPORTANT INFORMATION
THE NOTES AND THE RESIDUAL CERTIFICATES WILL BE OBLIGATIONS OF THE ISSUER
ONLY. NEITHER THE NOTES NOR THE RESIDUAL CERTIFICATES WILL BE OBLIGATIONS
OF, OR THE RESPONSIBILITY OF, OR GUARANTEED BY, ANY PERSON OTHER THAN THE
ISSUER. IN PARTICULAR, NEITHER THE NOTES NOR THE RESIDUAL CERTIFICATES WILL
BE OBLIGATIONS OF, OR THE RESPONSIBILITY OF, OR GUARANTEED BY, ANY OF THE
SELLER, THE SWAP PROVIDERS, THE JOINT ARRANGERS, THE JOINT LEAD MANAGERS, THE
SERVICER, THE SERVICING FACILITATOR, THE LIQUIDITY FACILITY PROVIDER, THE CASH
MANAGER, THE BACK-UP SERVICING FACILITATOR, THE ISSUER ACCOUNT BANK, HOLDINGS,
THE CORPORATE SERVICES PROVIDER, THE PRINCIPAL PAYING AGENT, THE AGENT BANK,
THE REGISTRAR, THE NOTE TRUSTEE, THE SECURITY TRUSTEE (EACH AS DEFINED
HEREIN), ANY COMPANY IN THE SAME GROUP OF COMPANIES AS ANY SUCH ENTITIES OR
ANY OTHER PARTY TO THE TRANSACTION DOCUMENTS (TOGETHER, THE "RELEVANT
PARTIES"). NO LIABILITY WHATSOEVER IN RESPECT OF ANY FAILURE BY THE ISSUER
TO PAY ANY AMOUNT DUE UNDER THE NOTES OR THE RESIDUAL CERTIFICATES SHALL BE
ACCEPTED BY ANY OF THE RELEVANT PARTIES OR BY ANY PERSON OTHER THAN THE
ISSUER.
The Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes,
the Class E Notes and the Class X Notes, will each be represented on issue by
a global note certificate in registered form (a "Global Note"). The Class A
Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E
Notes and the Class X Notes may be issued in definitive registered form under
certain circumstances.
The RC1 Residual Certificates and the RC2 Residual Certificates will each be
represented on issue by a global residual certificate in registered form (a
"Global Residual Certificate"). The RC1 Residual Certificates and the RC2
Residual Certificates may be issued in definitive registered form under
certain circumstances.
THE DISTRIBUTION OF THIS PROSPECTUS AND THE OFFERING OF THE NOTES AND THE
RESIDUAL CERTIFICATES IN CERTAIN JURISDICTIONS MAY BE RESTRICTED BY LAW. NO
REPRESENTATION IS MADE BY THE ISSUER OR BY ANY RELEVANT PARTY THAT THIS
PROSPECTUS MAY BE LAWFULLY DISTRIBUTED, OR THAT THE NOTES OR RESIDUAL
CERTIFICATES MAY BE LAWFULLY OFFERED, IN COMPLIANCE WITH ANY APPLICABLE
REGISTRATION OR OTHER REQUIREMENTS IN ANY SUCH JURISDICTION, OR PURSUANT TO AN
EXEMPTION AVAILABLE THEREUNDER, AND NONE OF THEM ASSUMES ANY RESPONSIBILITY
FOR FACILITATING ANY SUCH DISTRIBUTION OR OFFERING. IN PARTICULAR, SAVE FOR
OBTAINING THE APPROVAL OF THIS PROSPECTUS AS A PROSPECTUS FOR THE PURPOSES OF
THE UK PROSPECTUS REGULATION BY THE FINANCIAL CONDUCT AUTHORITY, NO ACTION HAS
BEEN OR WILL BE TAKEN BY THE ISSUER OR BY ANY RELEVANT PARTY WHICH WOULD
PERMIT A PUBLIC OFFERING OF THE NOTES OR THE RESIDUAL CERTIFICATES OR
DISTRIBUTION OF THIS PROSPECTUS IN ANY JURISDICTION WHERE ACTION FOR THAT
PURPOSE IS REQUIRED. ACCORDINGLY, NEITHER THE NOTES NOR THE RESIDUAL
CERTIFICATES MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, AND NEITHER THIS
PROSPECTUS NOR ANY ADVERTISEMENT OR OTHER OFFERING MATERIAL MAY BE DISTRIBUTED
OR PUBLISHED, IN ANY JURISDICTION, EXCEPT UNDER CIRCUMSTANCES THAT WILL RESULT
IN COMPLIANCE WITH ANY APPLICABLE LAWS AND REGULATIONS. PERSONS INTO WHOSE
POSSESSION THIS PROSPECTUS COMES ARE REQUIRED BY THE SELLER, THE ISSUER, THE
JOINT ARRANGERS AND THE JOINT LEAD MANAGERS TO INFORM THEMSELVES ABOUT, AND TO
OBSERVE, ANY SUCH RESTRICTIONS.
THE NOTES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES
LAWS OR "BLUE SKY" LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED
STATES AND THEREFORE MAY NOT BE OFFERED, SOLD OR DELIVERED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN
REGULATION S UNDER THE SECURITIES ACT ("REGULATION S")) ("U.S. PERSONS")
EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS. ACCORDINGLY, THE NOTES ARE BEING OFFERED AND SOLD OUTSIDE
THE UNITED STATES TO PERSONS OTHER THAN U.S. PERSONS PURSUANT TO REGULATION S
UNDER THE SECURITIES ACT. FOR A DESCRIPTION OF CERTAIN RESTRICTIONS ON
RESALES OR TRANSFERS, SEE "TRANSFER RESTRICTIONS AND INVESTOR
REPRESENTATIONS".
THE SELLER, AS SPONSOR UNDER THE U.S. RISK RETENTION RULES, DOES NOT INTEND TO
RETAIN AT LEAST 5 PER CENT. OF THE CREDIT RISK OF THE SECURITIZED ASSETS FOR
PURPOSES OF COMPLIANCE WITH THE FINAL RULES PROMULGATED UNDER SECTION 15G OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "U.S. RISK RETENTION
RULES"), BUT RATHER INTENDS TO RELY ON AN EXEMPTION PROVIDED FOR IN SECTION
__.20 OF THE U.S. RISK RETENTION RULES REGARDING NON-U.S. TRANSACTIONS.
EXCEPT WITH THE PRIOR WRITTEN CONSENT OF THE SELLER (A "U.S. RISK RETENTION
CONSENT") AND WHERE SUCH SALE FALLS WITHIN THE EXEMPTION PROVIDED BY SECTION
__.20 OF THE U.S. RISK RETENTION RULES, THE NOTES AND THE RESIDUAL
CERTIFICATES OFFERED AND SOLD BY THE ISSUER MAY NOT BE PURCHASED BY, OR FOR
THE ACCOUNT OR BENEFIT OF, ANY "U.S. PERSON" AS DEFINED IN THE U.S. RISK
RETENTION RULES ("RISK RETENTION U.S. PERSONS"). PROSPECTIVE INVESTORS
SHOULD NOTE THAT THE DEFINITION OF "U.S. PERSON" IN THE U.S. RISK RETENTION
RULES IS SUBSTANTIALLY SIMILAR TO, BUT NOT IDENTICAL TO, THE DEFINITION OF
"U.S. PERSON" IN REGULATION S. EACH PURCHASER OF THE NOTES AND THE RESIDUAL
CERTIFICATES OR A BENEFICIAL INTEREST THEREIN ACQUIRED IN THE INITIAL
SYNDICATION OF THE NOTES AND THE RESIDUAL CERTIFICATES BY ITS ACQUISITION OF
THE NOTES OR THE RESIDUAL CERTIFICATES OR IN EACH CASE A BENEFICIAL INTEREST
THEREIN, WILL BE DEEMED TO HAVE MADE CERTAIN REPRESENTATIONS AND AGREEMENTS,
INCLUDING THAT IT (1) EITHER (i) IS NOT A RISK RETENTION U.S. PERSON OR (ii)
HAS OBTAINED A U.S. RISK RETENTION CONSENT FROM THE SELLER, (2) IS ACQUIRING
SUCH NOTE OR RESIDUAL CERTIFICATE OR A BENEFICIAL INTEREST THEREIN FOR ITS OWN
ACCOUNT AND NOT WITH A VIEW TO DISTRIBUTE SUCH NOTE OR RESIDUAL CERTIFICATE,
AND (3) IS NOT ACQUIRING SUCH NOTE OR RESIDUAL CERTIFICATE OR A BENEFICIAL
INTEREST THEREIN AS PART OF A SCHEME TO EVADE THE REQUIREMENTS OF THE U.S.
RISK RETENTION RULES (INCLUDING ACQUIRING SUCH NOTE OR RESIDUAL CERTIFICATE
THROUGH A NON-RISK RETENTION U.S. PERSON, RATHER THAN A RISK RETENTION U.S.
PERSON, AS PART OF A SCHEME TO EVADE THE 10 PER CENT. RISK RETENTION U.S.
PERSON LIMITATION IN THE EXEMPTION PROVIDED FOR IN SECTION __.20 OF THE U.S.
RISK RETENTION RULES). ANY RISK RETENTION U.S. PERSON THAT IS A PROSPECTIVE
INVESTOR IN THE NOTES OR THE RESIDUAL CERTIFICATES MUST INFORM THE SELLER AND
THE JOINT LEAD MANAGERS THAT IT IS A RISK RETENTION U.S. PERSON.
There is no undertaking to register the Notes under U.S. state or federal
securities laws. Until 40 days after the later of the commencement of the
offering of the Notes and the Closing Date, an offer or sale of the Notes
within the United States by any dealer (whether or not participating in this
offering) may violate the registration requirements of the Securities Act if
such offer or sale is made otherwise than pursuant to an exemption from the
registration requirements of the Securities Act.
Each initial and subsequent purchaser of the Notes or Residual Certificates
will be deemed by its acceptance of such Notes or Residual Certificates to
have made certain acknowledgements, representations and agreements intended to
restrict the resale or other transfer of the Notes or Residual Certificates as
set out in the Subscription Agreement and described in this Prospectus and, in
connection therewith, may be required to provide confirmation of its
compliance with such resale and other transfer restrictions in certain
cases. See "Transfer Restrictions and Investor Representations".
None of the Issuer nor any Relevant Party makes any representation to any
prospective investor or purchaser of the Notes or Residual Certificates
regarding the legality of investment therein by such prospective investor or
purchaser under applicable legal investment or similar laws or regulations.
The Issuer accepts responsibility for the information contained in this
Prospectus. To the best of its knowledge, the information contained in this
Prospectus is in accordance with the facts and the Prospectus does not omit
anything likely to affect the import of such information. Any information
sourced from third parties contained in this Prospectus has been accurately
reproduced (and is clearly sourced where it appears in this Prospectus) and,
as far as the Issuer is aware and is able to ascertain from information
published by that third party, no facts have been omitted which would render
the reproduced information inaccurate or misleading.
Lendco accepts responsibility for the information set out in the sections
headed "The Seller, the Servicing Facilitator and the Risk Retainer", "The
Loans" and "Characteristics of the Provisional Portfolio". To the best of
the knowledge of Lendco, the information contained in the section referred to
in this paragraph is in accordance with the facts and does not omit anything
likely to affect the import of such information.
None of the Joint Arrangers or the Joint Lead Managers are responsible for any
obligation of Lendco or the Issuer for compliance with the requirements
(including existing or ongoing reporting requirements) of FCA Transparency
Rules or Article 7 of the EU Securitisation Regulation or any corresponding
national measures which may be relevant.
The Servicer accepts responsibility for the information set out in the section
headed "Servicer". To the best of the knowledge of the Servicer, the
information contained in the section referred to in this paragraph is in
accordance with the facts and does not omit anything likely to affect the
import of such information.
Each of the Agent Bank, the Principal Paying Agent, the Cash Manager and the
Issuer Account Bank accepts responsibility for the information set out in the
section headed "The Agent Bank, the Principal Paying Agent, the Cash Manager
and the Issuer Account Bank". To the best of the knowledge of the Agent
Bank, the Principal Paying Agent, the Cash Manager and the Issuer Account Bank
the information contained in the section referred to in this paragraph is in
accordance with the facts and does not omit anything likely to affect the
import of such information.
Each of the Note Trustee and the Security Trustee accepts responsibility for
the information set out in the section headed "The Note Trustee and Security
Trustee". To the best of the knowledge of the Note Trustee and the Security
Trustee, the information contained in the section referred to in this
paragraph is in accordance with the facts and does not omit anything likely to
affect the import of such information.
The HSBC Swap Provider accepts responsibility for the information set out in
the section headed "The HSBC Swap Provider". To the best of the knowledge of
the HSBC Swap Provider, the information contained in the section referred to
in this paragraph is in accordance with the facts and does not omit anything
likely to affect the import of such information.
The Santander Swap Provider accepts responsibility for the information set out
in the section headed "The Santander Swap Provider and the Liquidity Facility
Provider". To the best of the knowledge of the Santander Swap Provider, the
information contained in the section referred to in this paragraph is in
accordance with the facts and does not omit anything likely to affect the
import of such information.
Each of the Corporate Services Provider and the Back-Up Servicing Facilitator
accepts responsibility for the information set out in the section headed "The
Corporate Services Provider and Back-Up Servicing Facilitator". To the best
of the knowledge of the Corporate Services Provider and the Back-Up Servicing
Facilitator, the information contained in the section referred to in this
paragraph is in accordance with the facts and does not omit anything likely to
affect the import of such information.
The Liquidity Facility Provider accepts responsibility for the information set
out in the section headed "The Santander Swap Provider and the Liquidity
Facility Provider". To the best of the knowledge of the Liquidity Facility
Provider, the information contained in the section referred to in this
paragraph is in accordance with the facts and does not omit anything likely to
affect the import of such information.
No representation, warranty or undertaking, express or implied, is made and no
responsibility or liability is accepted by Lendco, the Servicer, the Back-Up
Servicing Facilitator, the Liquidity Facility Provider, the Agent Bank, the
Principal Paying Agent, the Cash Manager, the Issuer Account Bank, the Note
Trustee, the Security Trustee, the Joint Arrangers or Joint Lead Managers, the
Swap Providers or the Corporate Services Provider as to the accuracy or
completeness of any information contained in this Prospectus (other than in
the sections referred to above and not specifically excluded therein) or any
other information supplied in connection with the Notes or their distribution.
No person is or has been authorised by the Issuer to give any information or
to make any representation not contained in or not consistent with this
Prospectus or any other information supplied in connection with the Notes or
the Residual Certificates and, if given or made, such information or
representation must not be relied upon as having been authorised by the
Issuer, Lendco, the Note Trustee, the Security Trustee, the Joint Arrangers,
the Joint Lead Managers or any of their respective affiliates or advisers.
Neither this Prospectus nor any other information supplied in connection with
the Notes or the Residual Certificates (a) is intended to provide the basis of
any credit or other evaluation or (b) should be considered as a recommendation
by the Issuer, Lendco, the Note Trustee, the Security Trustee, the Joint
Arrangers or the Joint Lead Managers that any recipient of this Prospectus or
any other information supplied in connection with the Notes or Residual
Certificates should purchase any Notes or Residual Certificates. Each
investor contemplating purchasing any Notes or Residual Certificates should
make its own independent investigation of the financial condition and affairs,
and its own appraisal of the creditworthiness of the Issuer. Neither this
Prospectus nor any other information supplied in connection with the issue of
any Notes or Residual Certificates constitutes an offer or invitation by or on
behalf of the Issuer, Lendco, the Note Trustee, the Security Trustee, the
Joint Arrangers or the Joint Lead Managers to any person to subscribe for or
to purchase any Notes or Residual Certificates.
The information on the websites to which this Prospectus or any applicable
supplement refers does not form part of this Prospectus or any applicable
supplement and has not been scrutinised or approved by the FCA.
Neither the delivery of this Prospectus nor the offering, sale or delivery of
any Notes or Residual Certificates shall in any circumstances imply that the
information contained in it concerning the Issuer is correct at any time
subsequent to its date.
In connection with this new issue of the Notes and Residual Certificates as
described in this Prospectus (the "Transaction") Banco Santander, S.A., BNP
Paribas, HSBC Bank plc and Lloyds Bank Corporate Markets PLC are acting
exclusively for the Issuer. Accordingly, in connection with the Transaction,
Banco Santander, S.A., BNP Paribas, HSBC Bank plc and Lloyds Bank Corporate
Markets PLC will not be responsible to anyone other than the Issuer for
providing the protections afforded to its clients or for the giving of advice
in relation to the Transaction. Banco Santander, S.A., BNP Paribas, HSBC
Bank plc and Lloyds Bank Corporate Markets PLC will be paid a fee by the
Issuer in respect of the placement of the securities.
MIFID II PRODUCT GOVERNANCE/PROFESSIONAL INVESTORS AND ECPS ONLY TARGET MARKET
- Solely for the purposes of each manufacturer's product approval process, the
target market assessment in respect of the Notes in the European Economic Area
("EEA") has led to the conclusion that: (i) the target market for the Notes is
eligible counterparties and professional clients only, each as defined in
Directive 2014/65/EU (as amended, "MiFID II"); and (ii) all channels for
distribution of the Notes to eligible counterparties and professional clients
are appropriate. Any person subsequently offering, selling or recommending
the Notes (a "distributor") should take into consideration the manufacturers'
target market assessment; however, a distributor subject to MiFID II is
responsible for undertaking its own target market assessment in respect of the
Notes (by either adopting or refining the manufacturers' target market
assessment) and determining appropriate distribution channels.
UK MiFIR PRODUCT GOVERNANCE/PROFESSIONAL INVESTORS AND ECPS ONLY TARGET MARKET
- Solely for the purposes of each manufacturer's product approval process, the
target market assessment in respect of the Notes in the UK has led to the
conclusion that: (i) the target market for the Notes is only eligible
counterparties, as defined in the FCA Handbook Conduct of Business Sourcebook
("COBS"), and professional clients, as defined in Regulation (EU) No 600/2014
as it forms part of domestic law by virtue of EUWA ("UK MiFIR"); and (ii) all
channels for distribution of the Notes to eligible counterparties and
professional clients are appropriate. Any person subsequently offering,
selling or recommending the Notes (a "distributor") should take into
consideration the manufacturers' target market assessment; however, a
distributor subject to the FCA Handbook Product Intervention and Product
Governance Sourcebook (the "UK MiFIR Product Governance Rules") is responsible
for undertaking its own target market assessment in respect of the Notes (by
either adopting or refining the manufacturers' target market assessment) and
determining appropriate distribution channels.
PROHIBITION OF SALES TO EEA RETAIL INVESTORS - The Notes are not intended to
be offered, sold or otherwise made available to and should not be offered,
sold or otherwise made available to any retail investor in the EEA. For
these purposes, a "retail investor" means a person who is one (or more) of:
(i) a retail client as defined in point (11) of MiFID II; or (ii) a customer
within the meaning of Directive (EU) 2016/97 (the "Insurance Distribution
Directive"), where that customer would not qualify as a professional client as
defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified
investor as defined in the Regulation (EU) 2017/1129. Consequently no key
information document required by Regulation (EU) No 1286/2014 (as amended, the
"PRIIPs Regulation") for offering or selling the Notes or otherwise making
them available to retail investors in the EEA has been prepared and therefore
offering or selling the Notes or otherwise making them available to any retail
investor in the EEA may be unlawful under the PRIIPs Regulation.
PROHIBITION OF SALES TO UK RETAIL INVESTORS - The Notes are not intended to be
offered, sold or otherwise made available to and should not be offered, sold
or otherwise made available to any retail investor in the UK. For these
purposes, a "retail investor" means a person who is one (or more) of: (i) a
retail client, as defined in point (8) of Article 2 of Regulation (EU) No
2017/565 as it forms part of domestic law by virtue of the EUWA; or (ii) a
customer within the meaning of the provisions of the FSMA and any rules or
regulations made under the FSMA to implement Directive (EU) 2016/97, where
that customer would not qualify as a professional client, as defined in point
(8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of
domestic law by virtue of the EUWA; or (iii) not a qualified investor as
defined in Article 2 of Regulation (EU) 2017/1129 as it forms part of domestic
law by virtue of the EUWA. Consequently no key information document required
by Regulation (EU) No 1286/2014 as it forms part of domestic law by virtue of
the EUWA (the "UK PRIIPs Regulation") for offering or selling the Notes or
otherwise making them available to retail investors in the UK has been
prepared and therefore offering or selling the Notes or otherwise making them
available to any retail investor in the UK may be unlawful under the UK PRIIPs
Regulation.
RESTRICTIONS OF SALES TO U.S. PERSONS (AS DEFINED IN REGULATION S) - The Notes
have not been and will not be registered under the Securities Act or any U.S.
State securities laws and may not be offered or sold in the United States or
to, or for the account or the benefit of, U.S. persons as defined in
Regulation S under the Securities Act unless an exemption from the
registration requirements of the Securities Act is available and in accordance
with all applicable securities laws of any state of the United States and any
other jurisdiction.
RESTRICTIONS OF SALES TO U.S. PERSONS (AS DEFINED IN THE U.S. RISK RETENTION
RULES) - Except with the prior written consent of the Seller (a "U.S. Risk
Retention Consent") and where such sale falls within the exemption provided by
Section __.20 of the final rules promulgated under Section 15G of the
Securities Exchange Act of 1934, as amended (the "U.S. Risk Retention Rules"),
the Notes and the Residual Certificates offered and sold by the Issuer may not
be purchased by, or for the account or benefit of, any "U.S. Person" as
defined in the U.S. Risk Retention Rules ("Risk Retention U.S. Persons").
Prospective investors should note that the definition of "U.S. Person" in the
U.S. Risk Retention Rules is substantially similar to, but not identical to,
the definition of "U.S. Person" in Regulation S. Each purchaser of the Notes
or Residual Certificates, or a beneficial interest therein, acquired in the
initial syndication of the Notes and the Residual Certificates, by its
acquisition of the Notes and the Residual Certificates or a beneficial
interest therein will be deemed to have made certain representations and
agreements, including that it (1) either (i) is not a Risk Retention U.S.
Person or (ii) it has obtained a U.S. Risk Retention Consent from the Seller,
(2) is acquiring such Note or Residual Certificate or a beneficial interest
therein for its own account and not with a view to distribute such Note or
Residual Certificate, and (3) is not acquiring such Note or Residual
Certificate or a beneficial interest therein as part of a scheme to evade the
requirements of the U.S. Risk Retention Rules (including acquiring such Note
or Residual Certificate through a non-Risk Retention U.S. Person, rather than
a Risk Retention U.S. Person, as part of a scheme to evade the 10 per cent.
Risk Retention U.S. Person limitation in the exemption provided for in Section
__.20 of the U.S. Risk Retention Rules).
IMPORTANT INFORMATION RELATING TO THE USE OF THIS PROSPECTUS AND OFFERS OF
NOTES GENERALLY
This Prospectus does not constitute an offer to sell or the solicitation of an
offer to buy any Notes or any Residual Certificates in any jurisdiction to any
person to whom it is unlawful to make the offer or solicitation in such
jurisdiction. The distribution of this Prospectus and the offer or sale of
Notes or Residual Certificates may be restricted by law in certain
jurisdictions. The Issuer, Lendco, the Note Trustee, the Security Trustee,
the Joint Arrangers and the Joint Lead Managers do not represent that this
Prospectus may be lawfully distributed, or that any Notes or Residual
Certificates may be lawfully offered, in compliance with any applicable
registration or other requirements in any such jurisdiction, or pursuant to an
exemption available thereunder, or assume any responsibility for facilitating
any such distribution or offering. In particular, no action has been taken
by the Issuer, Lendco, the Note Trustee, the Security Trustee, the Joint
Arrangers or the Joint Lead Managers which is intended to permit a public
offering of any Notes or Residual Certificates or distribution of this
Prospectus in any jurisdiction where action for that purpose is required.
Accordingly, no Notes or Residual Certificates may be offered or sold,
directly or indirectly, and neither this Prospectus nor any advertisement or
other offering material may be distributed or published in any jurisdiction,
except under circumstances that will result in compliance with any applicable
laws and regulations. Persons into whose possession this Prospectus or any
Notes or Residual Certificates may come must inform themselves about, and
observe, any such restrictions on the distribution of this Prospectus and the
offering and sale of Notes or Residual Certificates. In particular, there
are restrictions on the distribution of this Prospectus and the offer or sale
of Notes or Residual Certificates in the United States, the EEA and the UK;
see "Subscription and Sale".
CERTAIN DEFINED TERMS AND CONVENTIONS
Capitalised terms which are used but not defined in any particular section of
this Prospectus will have the meaning attributed to them in "Terms and
Conditions of the Notes", "Terms and Conditions of the Residual Certificates"
or any other section of this Prospectus. In addition, the following terms as
used in this Prospectus have the meanings defined below:
In this Prospectus, all references to:
· "U.S. dollars", "U.S.$" and "$" refer to United States
dollars;
· "Sterling", "pounds", "GBP" and "£" refer to pounds
sterling;
· "euro" and "€" refer to the currency introduced at the
start of the third stage of European Economic and Monetary Union pursuant to
the Treaty on the Functioning of the European Union, as amended; and
· "FCA" are to the United Kingdom Financial Conduct
Authority and all references to the "PRA" are to the United Kingdom Prudential
Regulation Authority, which together replaced the Financial Services Authority
(the "FSA") pursuant to the provisions of the UK Financial Services Act 2012
(as amended).
References to a "billion" are to a thousand million.
Certain figures and percentages included in this Prospectus have been subject
to rounding adjustments; accordingly, figures shown in the same category
presented in different tables may vary slightly and figures shown as totals in
certain tables may not be an arithmetic aggregation of the figures which
precede them.
In this Prospectus, words denoting the singular number only shall include the
plural number and vice versa and words denoting one gender shall include the
other genders, as the context may require. A defined term in the plural
which refers to a number of different items or matters may be used in the
singular or plural to refer to any (or any set) of those items or matters.
The information on the websites to which this Prospectus refers does not form
part of this Prospectus and has not been scrutinised or approved by the FCA.
None of the Joint Arrangers nor the Joint Lead Managers has independently
verified (i) the information contained herein (ii) any statement,
representation, or warranty, or compliance with any covenant, of the Issuer
contained in the Notes or the Residual Certificates or any other agreement or
document relating to the Notes or Residual Certificates or (iii) the
execution, legality, effectiveness, adequacy, genuineness, validity,
enforceability or admissibility in evidence of the Notes or Residual
Certificates, the Transaction Documents or any other document relating to the
Notes. No representation, warranty or undertaking, express or implied, is
made and no responsibility or liability is accepted by the Joint Arrangers or
the Joint Lead Managers as to (a) the accuracy or completeness of the
information contained or incorporated by reference in this Prospectus or any
other information provided by the Issuer in connection with this Prospectus or
(b) the execution, legality, effectiveness, adequacy, genuineness, validity,
enforceability or admissibility in evidence of the Notes or Residual
Certificates, the Transaction Documents or any other document relating to the
Notes or Residual Certificates.
The Joint Arrangers and the Joint Lead Managers do not accept any
responsibility for the compliance of the Issuer, the Seller or any other
Transaction party with requirements of the UK Securitisation Framework or the
EU Securitisation Regulation.
The Notes and Residual Certificates are complex financial instruments. A
prospective investor should not invest in the Notes or Residual Certificates
unless it has the expertise (either alone or with a financial adviser) to
evaluate how the Notes or Residual Certificates will perform under changing
conditions, the resulting effects on the value of the Notes or Residual
Certificates and the impact this investment will have on the prospective
investor's overall investment portfolio.
FORWARD-LOOKING STATEMENTS
Certain matters contained herein are forward-looking statements. Such
statements appear in a number of places in this Prospectus, including with
respect to assumptions on prepayment and certain other characteristics of the
Loans, and reflect significant assumptions and subjective judgements by the
Issuer that may not prove to be correct. Such statements may be identified
by reference to a future period or periods and the use of forward-looking
terminology such as "may", "will", "could", "believes", "expects",
"anticipates", "continues", "intends", "plans" or similar terms.
Consequently, future results may differ from the Issuer's expectations due to
a variety of factors, including (but not limited to) the economic environment
and regulatory changes in the residential mortgage industry in the United
Kingdom (including, without limitation, the buy-to-let industry). Moreover,
past financial performance should not be considered a reliable indicator of
future performance and prospective purchasers of the Notes or Residual
Certificates are cautioned that any such statements are not guarantees of
performance and involve risks and uncertainties, many of which are beyond the
control of the Issuer.
This Prospectus also contains certain tables and other statistical analyses
(the "Statistical Information") which have been prepared in reliance on
information provided by the Issuer. Numerous assumptions have been used in
preparing the Statistical Information, which may or may not be reflected in
the material. As such, no assurance can be given as to the Statistical
Information's accuracy, appropriateness or completeness in any particular
context, or as to whether the Statistical Information and/or the assumptions
upon which they are based reflect present market conditions or future market
performance. The Statistical Information should not be construed as either
projections or predictions or as legal, tax, financial or accounting advice.
The average life of or the potential yields on any security cannot be
predicted, because the actual rate of repayment on the underlying assets, as
well as a number of other relevant factors, cannot be determined. No
assurance can be given that the assumptions on which the possible average
lives of or yields on the securities are made will prove to be realistic.
None of the Note Trustee, the Security Trustee, the Joint Arrangers, the Joint
Lead Managers or the Seller has attempted to verify any forward-looking
statements or Statistical Information, nor does it make any representations,
express or implied, with respect thereto. Prospective purchasers should
therefore not place undue reliance on any of these forward-looking statements
or Statistical Information. None of the Issuer, the Note Trustee, the
Security Trustee, the Joint Arrangers, the Joint Lead Managers or the Seller
assumes any obligation to update these forward-looking statements or
Statistical Information or to update the reasons for which actual results
could differ materially from those anticipated in the forward-looking
statements or Statistical Information as applicable.
SUITABILITY OF INVESTMENT
The Notes or the Residual Certificates may not be a suitable investment for
all investors. Each potential investor in the Notes or the Residual
Certificates must determine the suitability of that investment in light of its
own circumstances. In particular, each potential investor may wish to
consider, either on its own or with the help of its financial and other
professional advisers, whether it:
(a) has sufficient knowledge and experience to make a meaningful
evaluation of the Notes or the Residual Certificates, the merits and risks of
investing in the Notes or the Residual Certificates and the information
contained or incorporated by reference in this Prospectus or any applicable
supplement;
(b) has access to, and knowledge of, appropriate analytical
tools to evaluate, in the context of its particular financial situation, an
investment in the Notes or the Residual Certificates and the impact the Notes
or the Residual Certificates will have on its overall investment portfolio;
(c) has sufficient financial resources and liquidity to bear all
of the risks of an investment in the Notes or the Residual Certificates,
including Notes where the currency for principal or interest payments is
different from the potential investor's currency;
(d) understands thoroughly the terms of the Notes and the
Residual Certificates and is familiar with the behaviour of financial markets;
and
(e) is able to evaluate possible scenarios for economic,
interest rate and other factors that may affect its investment and its ability
to bear the applicable risks.
Legal investment considerations may restrict certain investments. The
investment activities of certain investors are subject to investment laws and
regulations, or review or regulation by certain authorities. Each potential
investor should consult its legal advisers to determine whether and to what
extent (1) Notes or the Residual Certificates are legal investments for it,
(2) Notes or the Residual Certificates can be used as collateral for various
types of borrowing and (3) other restrictions apply to its purchase or pledge
of any Notes or the Residual Certificates. Financial institutions should
consult their legal advisers or the appropriate regulators to determine the
appropriate treatment of Notes or the Residual Certificates under any
applicable risk-based capital or similar rules.
TABLE OF CONTENTS
Risk
Factors.........................................................................................................................................
11
Structure
Diagrams..............................................................................................................................
53
Transaction
Overview.........................................................................................................................
56
Transaction Overview - Portfolio and
Servicing.................................................................................
60
Transaction Overview - Summary of the Terms and Conditions of the Notes and
the Residual Certificates 67
Full Capital Structure of the Notes and the Residual
Certificates......................................................... 67
Transaction Overview - Overview of the Characteristics of the Notes and the
Residual Certificates.. 70
Transaction Overview - Rights of Noteholders and Certificateholders and
Relationship with other Secured
Creditors............................................................................................................................................................
75
Transaction Overview - Credit Structure and
Cashflow......................................................................
83
Transaction Overview - Triggers
Tables..............................................................................................
94
Transaction Overview -
Fees............................................................................................................
109
Regulatory
Disclosures......................................................................................................................
110
Weighted Average Lives of the
Notes...............................................................................................
115
Early Redemption of the
Notes.........................................................................................................
118
Use of
Proceeds................................................................................................................................
121
Ratings..............................................................................................................................................
122
The
Issuer..........................................................................................................................................
123
Holdings............................................................................................................................................
126
The Seller, the Servicing Facilitator and the Risk
Retainer................................................................. 128
Servicer.............................................................................................................................................
129
The Agent Bank, the Principal Paying Agent, the Cash Manager and the Issuer
Account Bank......... 130
The Note Trustee and Security
Trustee..............................................................................................
131
The santander Swap Provider and the Liquidity Facility
Provider...................................................... 132
The HSBC Swap
Provider.................................................................................................................
133
The Corporate Services Provider and Back-Up Servicing
Facilitator................................................. 134
The
Loans.........................................................................................................................................
135
Characteristics of the Provisional
Portfolio........................................................................................
146
Information Relating to the Regulation of Mortgages in the
UK........................................................ 155
Summary of the Key Transaction
Documents...................................................................................
164
Credit
Structure.................................................................................................................................
216
Cashflows.........................................................................................................................................
229
Description of the Global
Notes........................................................................................................
244
Description of the Global
Certificates...............................................................................................
249
Terms and Conditions of the
Notes...................................................................................................
254
Terms and Conditions of the Residual
Certificates............................................................................
291
Taxation............................................................................................................................................
317
Subscription and
Sale........................................................................................................................
319
Transfer Restrictions and Investor
Representations...........................................................................
322
General
Information..........................................................................................................................
325
Index of
Terms..................................................................................................................................
330
Risk Factors
In purchasing the Notes and the Residual Certificates, investors assume the
risk that the Issuer may become insolvent or otherwise be unable to make all
payments due in respect of the Notes and the Residual Certificates. There is
a wide range of factors which individually or together could result in the
Issuer becoming unable to make all payments due. The Issuer has identified
in this Prospectus a number of factors which could materially adversely affect
its business and ability to make payments due.
An investment in the Notes and the Residual Certificates is only suitable for
investors experienced in financial matters who are in a position to fully
assess the risks relating to such an investment and who have sufficient
financial means to suffer any potential loss stemming therefrom.
The Issuer believes that the material risks inherent in investing in the Notes
and the Residual Certificates are described below, but the Issuer may be
unable to pay interest, principal or other amounts on or in connection with
the Notes and the Residual Certificates for other reasons, and the Issuer does
not represent that the statements below regarding the risks of holding the
Notes and the Residual Certificates are exhaustive. Additional risks or
uncertainties not presently known to the Issuer or that the Issuer currently
considers immaterial may also have an adverse effect on the Issuer's ability
to pay interest, principal or other amounts in respect of the Notes and the
Residual Certificates. Prospective investors should also read the detailed
information set out elsewhere in this Prospectus and reach their own views
prior to making any investment decision.
The purchase of the Notes and the Residual Certificates involves substantial
risks and is suitable only for sophisticated investors who have the knowledge
and experience in financial and business matters necessary to enable them to
evaluate the risks and the merits of an investment in the Notes and the
Residual Certificates. Before making an investment decision, prospective
purchasers of the Notes and the Residual Certificates should (i) ensure that
they understand the nature of the Notes and the Residual Certificates and the
extent of their exposure to risk, (ii) consider carefully, in the light of
their own financial circumstances and investment objectives (and those of any
accounts for which they are acting) and in consultation with such legal,
financial, regulatory and tax advisers as they deem appropriate, all the
information set out in this Prospectus so as to arrive at their own
independent evaluation of the investment and (iii) confirm that an investment
in the Notes and the Residual Certificates is fully consistent with their
respective financial needs, objectives and any applicable investment
restrictions and is suitable for them. The Notes and the Residual
Certificates are not a conventional investment and carry various unique
investment risks, which prospective investors should understand clearly before
investing in them. In particular, an investment in the Notes and the
Residual Certificates involves the risk of a partial or total loss of
investment.
1. Risks relating to the availability of funds to make
payments on the Notes
1.1 The Issuer has a limited set of resources available to make
payments on the Notes and the Residual Certificates
The ability of the Issuer to meet (i) its obligations to pay principal and
interest on the Notes and amounts due on the Residual Certificates and (ii)
its operating and administrative expenses will be dependent upon the receipt
by it in full of (a) monies received or recovered on the Loans (whether by way
of receipt from the Borrowers under the Loans or payments of principal and
interest, or by way of enforcement or disposal of the Loans and their Related
Security in the Portfolio), (b) interest income on the Issuer Accounts (other
than amounts representing interest earned on any Swap Collateral) and any
Authorised Investments (other than any amount of income received in respect of
the Swap Collateral), (c) funds available in the Class A and B Liquidity
Reserve Fund and/or receipt of funds (if available to be drawn) under the
Liquidity Facility Agreement (subject to application in accordance with the
relevant Priority of Payments). The Issuer may make a Liquidity Drawing under
the Liquidity Facility Agreement in an amount equal to any Class A Liquidity
Deficit (after the application of any Principal Addition Amounts) which exists
on each Interest Payment Date prior to the Class A Redemption Date, provided
certain conditions are met (please see the sections entitled "Credit Structure
- Class A and B Liquidity Reserve Fund and Class A and B Liquidity Reserve
Fund Account" and "Credit Structure - Liquidity Facility")) and (d) the net
receipts under each Swap Agreement. Other than the foregoing, the Issuer is
not expected to have any other funds available to it to meet its obligations
under the Notes and the Residual Certificates and/or any other payment
obligation of the Issuer under the applicable Priority of Payments.
As of the Optional Redemption Date, the margin applicable to the Notes (other
than with respect to the Class X Notes) will be increased. There will,
however, be no additional receipts or other sources of funds available to the
Issuer as of the Optional Redemption Date, nor is it expected that any of the
sources of income available to the Issuer prior to the Optional Redemption
Date will be increased. If such funds are insufficient, any such
insufficiency will be borne by the Noteholders, the Certificateholders and the
other Secured Creditors, subject to the applicable Priority of Payments.
1.2 The Notes and the Residual Certificates will be limited
recourse obligations of the Issuer
The Notes and the Residual Certificates will be limited recourse obligations
of the Issuer. Other than the sources of funds referred to in the foregoing
paragraph, the Issuer is not expected to have any other funds available to it
to meet its payment obligations under the Notes and the Residual
Certificates. Upon enforcement of the Security by the Security Trustee, if:
(a) there are no Charged Assets remaining which are capable of
being realised or otherwise converted into cash;
(b) all amounts available from the Charged Assets have been
applied to meet or provide for the relevant obligations specified in, and in
accordance with, the provisions of the Deed of Charge; and
(c) there are insufficient amounts available from the Charged
Assets to pay in full, in accordance with the provisions of the Deed of
Charge, amounts outstanding under the Notes (including payments of principal
and interest),
then the Secured Creditors (which include the Noteholders and the
Certificateholders) shall have no further claim against the Issuer or its
directors, shareholders, officers or successors in respect of any amounts
owing to them which remain unpaid (in the case of the Noteholders, principally
payments of principal and interest in respect of the Notes, and in the case of
Certificateholders, Residual Payments in respect of the Residual Certificates)
and such unpaid amounts shall be deemed to be discharged in full and any
relevant payment rights shall be extinguished.
1.3 The yield to maturity on the Notes may be affected by, among
other things, prepayments made by Borrowers on their Loans
The yield to maturity of the Notes of each Class will depend on, among other
things, whether amounts in the Pre-Funding Reserve are applied, in full or at
all, and (to the extent there are insufficient funds standing to the credit of
the Pre-Funding Reserve for such purpose) any Principal Receipts available to
the Issuer up until the Calculation Date immediately prior to the First
Interest Payment Date, in the purchase of Additional Mortgage Loans or whether
such amounts are applied, on or after the Final Additional Mortgage Loan
Purchase Date to repay the Notes early, the amounts and timing of payment of
principal and interest (including prepayments, sale proceeds arising on
enforcement of a Loan and repurchases of Loans required to be made under the
Mortgage Sale Agreement) on the Loans and the price paid by the holders of the
Notes of each class for such Notes. Such yield may be adversely affected by,
among other things, a higher or lower than anticipated rate of prepayment on
the Loans. Furthermore, if the conditions for the purchase of Permitted Fee
Capitalisation Amounts by the Issuer are not met, then the Issuer will not be
able to fund the purchase of such Permitted Fee Capitalisation Amounts which
may result in Principal Receipts in the form of repurchase proceeds payable by
the Seller instead being used to prematurely repay the Notes. Any Loan
subject to a Product Switch will remain in the Portfolio unless the Issuer
subsequently determines that the relevant Product Switch/Permitted Fee
Capitalisation Amount Conditions are not satisfied as at the last day of the
calendar month in which such Product Switch is made (subject to a 30 day grace
period to remedy such breach), or that any Loan Warranty made with respect to
such Loan was materially untrue or determines that the Loan does not meet the
Loan Warranties as at the relevant Switch Date. In these circumstances, the
Seller will be required to offer to repurchase the relevant Loan and its
Related Security from the Issuer. See also "Risks Relating to the Underlying
Assets- Additional Mortgage Loans " and "Risks relating to the structure -
Product Switches and Permitted Fee Capitalisation Amounts".
On the Closing Date, the Issuer will credit an amount equal to approximately
£0 to the Pre-Funding Reserve. Prior to the Final Additional Mortgage Loan
Purchase Date, the Issuer will only be entitled to apply the Pre-Funding
Reserve and (to the extent there are insufficient funds standing to the credit
of the Pre-Funding Reserve for such purpose) any Principal Receipts available
to the Issuer up until the Calculation Date immediately prior to the First
Interest Payment Date to purchase Additional Mortgage Loans which satisfy
certain conditions. If the conditions for the purchase of Additional
Mortgage Loans by the Issuer are not met prior to the Final Additional
Mortgage Loan Purchase Date, then the Issuer will not be able to purchase such
Additional Mortgage Loans, or may not be able to purchase Additional Mortgage
Loans in an amount so as to fully utilise the Pre-Funding Reserve set aside on
the Closing Date or (to the extent there are insufficient funds standing to
the credit of the Pre-Funding Reserve for such purpose) utilise any Principal
Receipts available to the Issuer up until the Calculation Date immediately
prior to the First Interest Payment Date for that purpose. On the Interest
Payment Date falling in July 2025 (the First Interest Payment Date), the
Pre-Funding Unused Amount will be applied in accordance with item (a) of the
Pre-Enforcement Principal Priority of Payments as pro rata repayment of the
Collateralised Notes. (For more information, see the section entitled "The
Loans").
Based on assumed rates of prepayment, the approximate average lives and
principal payment windows of each Class of Notes are set out in the section
entitled "Weighted Average Lives of the Notes". However, the rate of
prepayment of the Loans cannot be predicted and is influenced by a wide
variety of economic and other factors, including prevailing interest rates,
the buoyancy of the finance market, the availability of alternative financing
and local and regional economic conditions. Because these and other relevant
factors are not within the control of the Issuer, no assurance can be given as
to the level of prepayments that the Portfolio will experience. Further, if
the Seller is required to repurchase any Loans, the payment received by the
Issuer will have the same effect as a prepayment in full of the relevant
Loan.
Payments and prepayments of principal on the Loans and any proceeds of
repurchased Loans will be applied as Available Principal Receipts in
accordance with the Pre-Enforcement Principal Priority of Payments (see
"Cashflows" below). The rate of any prepayments will affect the yield to
maturity on the Notes and their weighted average life. In addition should a
Borrower elect, subject to the agreement of the Seller and Servicer, to change
the terms of their Loan from an interest only loan to a repayment loan, the
Issuer would (subject to satisfaction of the Product Switch/Permitted Fee
Capitalisation Amount Conditions) receive principal payments in respect of the
relevant Loan earlier than would otherwise be anticipated.
If the Call Option is exercised by the Option Holder, the Issuer will redeem
the Notes in full on or following the Optional Redemption Date, which is
likely to limit the market value of the Notes. Following the Optional
Redemption Date, the market value of those Notes generally will not rise
substantially above the price at which they can be redeemed. This also may
be true prior to any redemption period. See "Early Redemption of the Notes"
below for more information relating to the Call Option.
2. Risks Relating to the Underlying Assets
2.1 Delinquencies or Default by Borrowers in paying amounts due on
their Loans
As noted above, the ability of the Issuer to meet its obligations to pay
principal and interest on the Notes is dependent on receipts from the Loans in
the Portfolio. As such, if Borrowers make payments on their Loans late, the
Issuer may have insufficient funds on any Interest Payment Date to make
payments of interest on the Notes. Further, if Borrowers fail to repay some
or all of the interest and/or principal due on their Loans and the enforcement
procedures fail to realise or recover sufficient funds to discharge all
amounts due and owing by the relevant Borrower, the Issuer may have
insufficient funds to make payments of interest and/or principal on the Notes.
Borrowers may fail to make payments when due on their Loans for a variety of
reasons including, without limitation:
· changes in the local, national or international
macroeconomic climate, political developments and government policies such as
the ongoing war between Russia and Ukraine. The economy of the UK, and each
geographic region within the UK is dependent on a different mixture of
industries and other factors. Any downturn in the local or national economy
or particular industry may adversely affect the regional or national
employment levels and consequently the repayment ability of the Borrowers
and/or the tenants of Borrowers in that region or nationally, or the region
that relies most heavily on that industry. It is not possible to accurately
predict the ultimate extent or duration of any such downturn or the impact it
could have on the repayment ability of the Borrowers;
· a deterioration in economic conditions in a particular
area or region, which may adversely affect the regional employment levels (and
consequently the ability of the tenants of Borrowers in that area or region to
make payments of rent to such Borrowers) and/or house prices and as a result,
the repayment ability of such Borrowers. To the extent that specific
geographic regions within the UK have experienced, or may experience in the
future, weaker regional economic conditions (due to local, national and/or
global macroeconomic factors) and weaker housing markets than other regions in
the UK, a concentration of Loans financing Properties in one region may be
expected to exacerbate such risks. An overview of the geographical
distribution of the Loans in the Provisional Portfolio is set out in the table
in the section "Characteristics of the Provisional Portfolio";
· any natural disasters or widespread health crises (such
as the lasting effects of the global response to the COVID-19 pandemic),
government policies in response to such crises or such potential crises
(including, but not limited to, COVID-19 (or any strain of the foregoing))
and/or the fear of any such crises in a particular region or nationwide may
weaken economic conditions, and negatively impact the ability of the tenants
of Borrowers to make payments of such rent to such Borrowers, and may reduce
house prices and/or restrict the ability of Borrowers to sell a Property in a
timely manner and consequently negatively impact the repayment ability of
Borrowers within the United Kingdom;
· an increase in the prevailing market interest rate,
which, for those Loans subject to a variable rate of interest, would increase
a Borrower's monthly payment. Borrowers may seek to avoid any increased
monthly payments by refinancing such Loans, as to which see the Risk Factor
entitled "Macroeconomic and Market Risks";
· decline in property values due to, among other things, to
local, national and/or global macroeconomic factors;
· in respect of interest-only loans, the failure of a
Borrower to sell the relevant property or refinance the relevant Loan at
maturity;
· a Borrower's or a Borrower's tenants' individual,
personal or financial circumstances, for example unemployment, loss of
earnings, illness (including any illness arising in connection with an
epidemic), divorce and other similar factors. If the timing and repayment of
the Loans is adversely affected by any of the risks described herein, then
payments on the Notes could be reduced and/or delayed and could ultimately
result in losses on the Notes; and
· a lack of availability of buyers for a Property and/or a
decline in value of a Property, which may affect the ability of a Borrower to
sell a Property given as security for a Loan at a price sufficient to repay
the amounts outstanding under that Loan.
Given the unpredictable effect that the factors may have on the local,
national or global economy, no assurance can be given as to the impact of any
such matters and, in particular, no assurance can be given that such matters
would not adversely affect the ability of the Issuer to satisfy its
obligations under the Notes. These risks are mitigated to an extent by
certain credit enhancement features and liquidity support, as described in the
section entitled "Credit Structure" below. However, no assurance can be
given as to the effectiveness of such credit enhancement features and
liquidity support, or that Noteholders will be protected from all risk of loss
and/or delayed payment.
2.2 Payment Holidays may result in a shortfall in interest
receipts and/or principal receipts
The Seller may permit suspension of monthly payments other than as a result of
a repayment plan or option, in which case the relevant Borrower will pay such
interest and any reduced monthly payment as the Seller may require as a
condition of the suspension. At the end of the suspension period, subsequent
monthly payments must be sufficient to pay off the arrears. To the extent
that the Seller (or the Servicer on its behalf) permits Borrowers to suspend
monthly payments, this may result in a shortfall in interest receipts and/or
principal receipts.
2.3 Seller to initially retain legal title to the Loans and risks
relating to set-off
Initially, legal title to the Loans and their Related Security in the
Portfolio will be held by the Seller and the sale by the Seller to the Issuer
of the Loans and their Related Security takes effect in equity only.
Legal title to the Loans and their Related Security in the Portfolio will
remain with the Seller until a Perfection Event occurs, and this presents the
following risks:
· a bona fide purchaser from the Seller for value of any of
such Loans and their Related Security without notice of any of the interests
of the Issuer or the Security Trustee might obtain a good title free of any
such interest;
· the Issuer or the Security Trustee would not be able to
enforce any Borrower's obligations under a Loan or Related Security itself but
would have to join the Seller as a party to any legal proceedings. Prior to
perfection of legal title, the Issuer will have power of attorney to act in
the name of the Seller and the Seller will undertake that it will lend its
name to, and take such other steps as may reasonably be required by the Issuer
in relation to, any legal proceedings in respect of the relevant Loans and
their Related Security; and
· a Borrower may be entitled to exercise certain set-off
rights, including equitable set-off rights, which may arise in connection with
a transaction connected with a Loan. An equitable right of set-off could
arise, for example, where the Seller is in breach of contract under the
relevant Loan.
If any of the risks described above were to occur then the realisable value of
the Portfolio and/or the ability of the Issuer to make payments under the
Notes may be affected.
2.4 The value of the Related Security in respect of the Loans may
be affected by, among other things, a decline in the residential property
values in the United Kingdom
The value of the Related Security in respect of the Loans may be affected by,
among other things, a decline in the residential property values in the United
Kingdom or a specific region thereof (as has, in certain cases, happened since
the date of origination of the Loans) or downturns in the performance of the
United Kingdom economy (due to the local, national and/or global macroeconomic
factors) generally, which may in each case have a negative effect on the
housing market. In addition, any natural disasters, or widespread health
crises (such as a pandemic or epidemic), government policies, action or
inaction in response to such crises or such potential crises (including, but
not limited to, COVID-19 (or any strain of the foregoing)), and/or the fear of
any such crises whether in the United Kingdom or in any other jurisdiction,
may lead to a deterioration of economic conditions in the United Kingdom and
also globally and may reduce the value of the affected Properties. If the
residential property market in the United Kingdom experiences an overall
decline in property values, such a decline could in certain circumstances
result in the value of the Related Security being significantly reduced and,
in the event that the Related Security is required to be enforced, may result
in an adverse effect on payments on the Notes.
Borrowers may have insufficient equity in their properties to refinance their
Loans with lenders other than the Seller and may (as a result of the
circumstances described in "Delinquencies or Default by Borrowers in paying
amounts due on their Loans" or "Payment Holidays may result in a shortfall in
interest receipts and/or principal receipts" or otherwise) have insufficient
resources to pay amounts in respect of their Loans as and when they fall
due. This could lead to higher delinquency rates, Defaults and losses which
in turn may adversely affect payments on the Notes.
There is a risk that house price growth will continue to accelerate faster
than earnings, stretching affordability and leaving households more vulnerable
to shocks, such as increases in interest rates that could ultimately lead to
higher loan losses. There is potential for activity and prices to decline
should the labour market situation deteriorate, if strains in the financial
system re-emerge and impair the flow of credit to the wider economy or other
factors (including but not limited to COVID-19 or any strain of the foregoing)
cause a deterioration in economic conditions. This risk is particularly
relevant to interest-only mortgage loans, such as the Loans comprised in the
Portfolio.
2.5 There is no guarantee that the Provisional Portfolio will be
the Closing Portfolio
The information in the section headed "Characteristics of the Provisional
Portfolio" has been extracted from the systems of the Servicer as at 28
February 2025 (the "Portfolio Reference Date"). The Provisional Portfolio
has been selected from a pool of the Seller's Buy-to-Let Loans using a system
containing defined data on each of the qualifying loans. This system allows
the setting of exclusion criteria among others corresponding to relevant Loan
Warranties that the Seller will make in the Mortgage Sale Agreement in
relation to the Loans. Once the criteria have been determined, the system
identifies all loans owned by the Seller that are consistent with the
criteria. The loans selected for the Provisional Portfolio are
representative of the Seller's portfolio of Buy-to-Let Loans meeting the
selection criteria which the Seller holds immediately prior to the sale of the
Closing Portfolio. As at the Portfolio Reference Date, the Provisional
Portfolio comprised of 852 loans with an aggregate current balance of
£316,735,321.24. The characteristics of the Closing Portfolio will vary
from those set out in the tables in this Prospectus as a result of, inter
alia, repayments and redemptions of loans, the removal of any loans from the
Portfolio that do not comply with the Loan Warranties as at the Cut-Off Date
and inclusion of the Additional Closing Portfolio Mortgage Loans that meet the
Loan Warranties. Neither the Seller nor the Servicer has provided any
assurance that there will be no material change in the characteristics of the
Closing Portfolio between the Portfolio Reference Date and the Closing Date.
2.6 Risk of Losses Associated with Interest-only Loans
Each Loan in the Portfolio is repayable on an interest-only basis, and as such
there is no scheduled amortisation of principal in respect of any of the
Loans.
Where a Borrower is only required to pay interest during the term of the Loan,
with the principal being repaid in a lump sum at the end of the term, it is
generally recommended that Borrowers ensure that some repayment mechanism is
put in place to ensure that funds will be available to repay the principal at
the end of the term. The Seller does not have and the Issuer shall not have
the benefit of any investment policies taken out by Borrowers.
The ability of such Borrower to repay a Loan at maturity will often depend on
such Borrower's ability to refinance or sell the Property or to obtain funds
from another source such as pension policies, personal equity plans ("PEPs"),
new individual savings accounts ("NISAs") or endowment policies or by selling
other assets (including other properties) owned by such Borrower.
However, the only security that exists in relation to a Loan in the Portfolio
will be the Mortgage covering the Property. The ability of a Borrower to
refinance the Property will be affected by a number of factors, including the
value of the Property, the Borrower's equity in the Property, the Borrower's
age and employment status, the financial condition and payment history of the
Borrower, tax laws and prevailing general economic conditions. In recent
times, mortgage lenders have maintained stricter conditions to the advancing
of interest-only loans (and other loans) which are mortgages. The inability
of the Borrowers to sell their respective Properties or refinance their
respective Loans may ultimately result in a reduction of amounts available to
the Issuer and adversely affect its ability to make payments under the Notes.
Borrowers of interest-only loans may not make payment of the premiums due on
any relevant investment or life policy taken out in relation to repayment of
the relevant interest only mortgages in full or on time, which policies may
therefore lapse, and/or no further benefits may accrue thereunder. In
certain cases, the policy may be surrendered but not necessarily in return for
a cash payment and any cash received by the Borrower may not be applied in
paying amounts due under the Loan. Thus the ability of such a Borrower to
repay a Loan at maturity without resorting to the sale of the underlying
Property depends on such Borrower's responsibility in ensuring that sufficient
funds are available from a given source such as pension policies, PEPs, NISAs
or endowment policies, as well as the financial condition of the Borrower, tax
laws and general economic conditions at the time. If a Borrower cannot repay
a Loan and a loss occurs, this may affect repayments on the Notes if the
resulting Principal Deficiency Ledger entry cannot be cured from Available
Revenue Receipts being applied for such purpose in accordance with the
Pre-Enforcement Revenue Priority of Payments.
2.7 Buy-to-Let Loans
All of the Loans in the Portfolio are residential loans intended to be taken
out by a Borrower in relation to the purchase or re-mortgage of a Property for
residential letting purposes ("Buy-to-Let Loans"). The Borrower's ability to
service such Loans is likely to depend on the Borrower's ability to lease the
relevant Properties on appropriate terms. There can be no assurance that
each such Property will be the subject of an existing tenancy when the
relevant Loan is acquired by the Issuer or that any tenancy which is granted
will subsist throughout the life of the Loan and/or that the rental income
from such tenancy will be sufficient (whether or not there is any default of
payment in rent) to provide the Borrower with sufficient income to meet the
Borrower's interest obligations or principal repayments in respect of the
Loan. Upon enforcement of a Mortgage in respect of a Property which is the
subject of an existing tenancy, the Servicer or the Seller may not be able to
obtain vacant possession of the Property until the end of the tenancy, in
which case the Servicer or the Seller will only be able to sell the Property
as an investment property with one or more sitting tenants. This may affect
the amount which the Servicer or the Seller could realise upon enforcement of
the Mortgage and the sale of the Property. In such a situation, amounts
received in rent may not be sufficient to cover all amounts due in respect of
the Loan, although the existence of any such tenant paying rent in full on a
timely basis may not have an adverse effect on the amount of such
realisation. Depending on the remaining term of the tenancy, a tenanted
property may be vacated sooner than an owner-occupied property. However,
enforcement procedures in relation to such Mortgages include appointing a
receiver of rent, in which case such a receiver must collect any rents payable
in respect of the Property and apply them accordingly in payment of any
interest and arrears accruing under the Loan. See further at the section
entitled "Risks relating to the availability of funds to make payments on the
Notes - The yield to maturity on the Notes may be affected by, among other
things, prepayments made by Borrowers on their Loans" above.
2.8 Insurance Policies
While the Mortgage Conditions require Borrowers to have buildings insurance
for the relevant property, it will be difficult in practice for the Servicer
and/or the Issuer to determine whether the relevant Borrower has valid
insurance in place at any time. The Seller has assigned the benefit of its
Title Indemnity Policies, which will give the Issuer certain protection should
the relevant Borrower not have any valid insurance in place. However, no
assurance can be given that the Issuer will always receive the benefit of any
claims made under any applicable buildings insurance contracts or contingent
insurance contracts or that the amounts received in respect of a successful
claim will be sufficient to reinstate the affected Property. This could
adversely affect the Issuer's ability to make payment of interest and/or
principal in respect of the Notes.
2.9 Searches, Investigations and Warranties in Relation to the
Loans
The Seller will give certain warranties to each of the Issuer and the Security
Trustee regarding the Loans and their Related Security sold to the Issuer on
the Closing Date (see "Summary of the Key Transaction Documents - Mortgage
Sale Agreement" below for a summary of these).
Neither the Note Trustee, the Security Trustee, the Joint Arrangers, the Joint
Lead Managers, the Issuer nor any other party has undertaken, or will
undertake, any investigations, searches or other actions of any nature
whatsoever in respect of any Loan or its Related Security in the Portfolio and
each relies instead on the warranties given in the Mortgage Sale Agreement by
the Seller. As such, the Loans may be subject to matters which would have
been revealed by a full investigation of title and which may have been
remedied or, if incapable of remedy, may have resulted in the Related Security
not being accepted as security for a Loan had such matters been revealed.
The primary remedy of the Issuer against the Seller if any of the warranties
made by the Seller is materially breached or proves to be materially untrue as
at the Closing Date or, as the case may be, the relevant Testing Date, or the
relevant Switch Date, will be to require the Seller to repurchase any relevant
Loan and its Related Security in accordance with the repurchase provisions in
the Mortgage Sale Agreement. In addition, the Seller will be required to
repurchase a loan that is subject to a Product Switch (including any related
Permitted Fee Capitalisation Amount capitalised on the loan in connection with
the relevant Product Switch) if the relevant Product Switch/Permitted Fee
Capitalisation Amount Conditions are not satisfied as at the last day of the
calendar month in which such Product Switch is made (the "Testing Date") and
such breach is not remedied within 30 days of receipt by the Issuer of a
notice from the Seller that such Product Switch/Permitted Fee Capitalisation
Amount Conditions are not satisfied. However, there can be no assurance that
the Seller will have the financial resources to honour such obligations under
the Mortgage Sale Agreement. In each case, none of the Issuer, the Security
Trustee or the Note Trustee will have recourse to any other person in the
event that the Seller, for whatever reason, fails to meet such obligations.
Furthermore, although the Seller and the Servicer have undertaken, pursuant to
the Mortgage Sale Agreement and Servicing Agreement, to notify the Issuer
(and, if applicable, the Servicer) upon becoming aware of a material breach of
any Loan Warranty, there shall be no obligation on the part of the Seller or
the Servicer to monitor compliance of the Loans with the Loan Warranties
following the Closing Date or in the case of any Loan subject to a Product
Switch (including a related Permitted Fee Capitalisation Amount), the relevant
Testing Date. This may affect the quality of the Loans and their Related
Security in the Portfolio and accordingly the ability of the Issuer to make
payments due on the Notes.
2.10 Lending Criteria
The Loans have been underwritten generally in accordance with the underwriting
standards described in the section entitled "The Loans - Lending Criteria".
Those underwriting standards consider, among other things, a Borrower's credit
history, status, repayment ability, as well as the value of the relevant
Property and the value of the related rental stream.
While each Loan was originated by the Seller pursuant to underwriting
standards that are no less stringent than those that the Seller applied at the
time of origination to similar exposures that are not securitised, there can
also be no assurance that these underwriting standards were applied in all
cases or that Loans originated under different criteria have not been included
in the Portfolio.
2.11 Loans are subject to certain legal and regulatory risks
The Loans are subject to certain risks relating to the law and regulation of
mortgages in the United Kingdom. No assurance can be given that additional
legislative and/or regulatory changes (by any legislative body, the FCA or any
other regulatory authority) will not arise with regard to the mortgage market
in the United Kingdom generally, the Seller's particular sector in that market
or specifically in relation to the Seller. Any such action or developments,
including any further changes arising from the FCA's mortgage market review,
or the FSMA arising from HM Treasury's proposals to change mortgage regulation
or changes in the regulatory structure or the Financial Services Act 2012, or
the costs of complying with any such changes may have a material adverse
effect on the Loans, the Seller, the Issuer, the Servicer and their respective
businesses and operations. This may adversely affect the Issuer's ability to
make payments in full on the Notes when due. Further detail on certain
considerations in relation to the regulation of mortgages in the UK is set out
in the section headed "Information Relating to the Regulation of Mortgages in
the UK" below and certain specific risks are set out below:
(a) Regulation of buy-to-let mortgage loans. If any of the
Loans in the Portfolio are Regulated Mortgage Loans, then breach of the
relevant regulations could give rise to a number of consequences (as
applicable), including but not limited to: unenforceability of the Loans,
interest payable under the Loans being irrecoverable for certain periods of
time, or borrowers being entitled to claim damages for losses suffered and
being entitled to set off the amount of their claims against the amount owing
by the borrower under the Loans, all of which may adversely affect the ability
of the Issuer to make payments in full on the Notes when due. Further detail
is included in the section headed "Information Relating to the Regulation of
Mortgages in the UK - Regulation of buy-to-let mortgage loans" below.
(b) Consumer buy-to-let loans. If any of the Loans in the
Portfolio are Consumer Buy-to-Let Loans, then the Seller will be subject to a
number of conduct standards. The FCA has supervisory and enforcement powers
in respect of such conduct standards. The exercise of such supervisory and
enforcement powers by the FCA may adversely affect the Issuer's ability to
make payments on the Notes.
(c) Unfair Relationships. If a court determined that there was
an unfair relationship between the lender and borrowers in respect of any of
the Loans and ordered that financial redress was made in respect of such
Loans, such redress may adversely affect the ultimate amount received by the
Issuer in respect of the relevant Loans, and the realisable value of the
Portfolio and/or the ability of the Issuer to make payments under the Notes.
Further detail is included in the section headed "Information Relating to the
Regulation of Mortgages in the UK - Unfair relationships" below.
(d) Distance Marketing. The Financial Services (Distance
Marketing) Regulations 2004 allow, in certain specified circumstances, a
borrower to cancel a credit agreement it has entered into with lenders. If a
significant portion of the Loans are characterised as being cancellable under
these regulations, then there could be an adverse effect on the Issuer's
receipts in respect of the Loans, affecting the Issuer's ability to make
payments in full on the Notes when due. Further detail is included in the
section headed "Information Relating to the Regulation of Mortgages in the UK
- Distance Marketing" below.
(e) CRA. The CRA provide that a consumer may, in certain
circumstances, challenge a term in an agreement on the basis that it is
unfair. The extremely broad and general wording of the CRA makes any
assessment of the fairness of terms largely subjective and makes it difficult
to predict whether or not a term would be held by a court to be unfair. It
is therefore possible that any Loans which have been made to Borrowers covered
by the CRA may contain unfair terms which may result in the possible
unenforceability of the terms of the underlying loans.
If any term of the Loans is found to be unfair for the purpose of the CRA,
this may reduce the amounts available to meet the payments due in respect of
the Notes. No assurance can be given that any changes in legislation,
guidance or case law on unfair terms will not have a material adverse effect
on the Seller, the Issuer and/or the Servicer and their respective businesses
and operations. No assurance can be given that any such changes in guidance
on the CRA, or reform of the CRA, will not affect the Loans and will not have
a material adverse effect on the Issuer's ability to make payments on the
Notes. Further detail in relation to both the CRA is included in the section
headed "Information Relating to the Regulation of Mortgages in the UK -
Consumer Rights Act 2015" below.
(f) Consumer Protection from Unfair Trading Regulations 2008.
The CPUTR prohibits certain practices which are deemed unfair within the terms
of the CPUTR. Breach of the CPUTR does not (of itself) render an agreement
void or unenforceable, but is a criminal offence punishable by a fine and/or
imprisonment. Under the terms of the CPUTR, the possible liabilities for
misrepresentation or breach of contract in relation to the underlying credit
agreements may result in irrecoverable losses on amounts to which such
agreements apply and which may adversely affect the ability of the Issuer to
satisfy its obligations under the Notes. In May 2024 some parts of the Digital
Markets, Competition and Consumers Act 2024 came into force. Once fully in
force, the Digital Markets, Competition and Consumers Act 2024 will revoke the
CPUTR rules and recreate their effect, with some amendments. The new regime
will introduce new rules on consumer reviews, drip pricing and consumer
vulnerability, new powers to expand the list of automatically unfair practices
and a new enforcement regime. While the new unfair commercial practices regime
under the Digital Markets, Competition and Consumers Act 2024 will apply to
acts or omissions which take place on or after the commencement date (to be
determined by secondary legislation) the possibility of having an adverse
impact on the Loans cannot be excluded. Further detail in relation to the
CPUTR is included in the section headed "Information Relating to the
Regulation of Mortgages in the UK - Consumer Protection from Unfair Trading
Regulations 2008" below.
(g) Mortgage repossessions. The protocols for mortgage
repossession and the Mortgage Repossessions (Protection of Tenants etc.) Act
2010 may have adverse effects in relation to the ability of the Seller to
repossess properties in markets experiencing above-average levels of
possession claims. Delays in the initiation of responsive action in respect
of the Loans may result in lower recoveries and may adversely affect the
ability of the Issuer to make payments to Noteholders. Further detail is
included in the section headed "Information Relating to the Regulation of
Mortgages in the UK - Mortgage repossession" below.
(h) Financial Ombudsman Service. Under the FSMA, the Financial
Ombudsman Service (the "Ombudsman") is required to make decisions on, among
other things, complaints relating to activities and transactions under its
jurisdiction. The Ombudsman is required to make decisions on the basis of,
among other things, the principles of fairness, and may order a money award to
a borrower. Given the way the Ombudsman makes its decisions, it is not
possible to predict how any future decision of the Ombudsman would affect the
ability of the Issuer to make payments to Noteholders. Further detail is
included in the section headed "Information Relating to the Regulation of
Mortgages in the UK - Financial Ombudsman Service" below.
(i) FCA Consumer Duty. The FCA has published final rules on
the introduction of a new consumer duty on regulated firms (the "Consumer
Duty"), which aims to set a higher level of consumer protection in retail
financial markets. It is unclear, despite the guidance from the FCA, how the
Consumer Duty will operate. If (for example) the obligations relating to fair
value or not causing harm are not met in relation to the Portfolio, it could
adversely affect the amounts received or recoverable in relation to the
Portfolio. This may adversely affect the ability of the Issuer to make
payments in full on the Notes when due. Further detail is included in the
section headed "Information Relating to the Regulation of Mortgages in the UK
- Consumer duty" below.
(j) Assured Shorthold Tenancy (AST). Depending on the level
of ground rent payable at any one time it is possible that a long leasehold
may also be an Assured Tenancy ("AT") or Assured Shorthold Tenancy ("AST")
under the Housing Act 1988 ("HA 1988"). There is a risk that in certain
circumstances, where a long lease is also an AT/AST due to the level of the
ground rent, the long lease will come to an end and the landlord will be able
to re-enter the relevant property. This may adversely affect the realisable
value of the Portfolio, and/or the ability of the Issuer to make payments in
full on the Notes when due. Further detail is included in the section headed
"Information Relating to the Regulation of Mortgages in the UK - Assured
Shorthold Tenancy (AST)" below.
(k) Renting Homes Act. The Renting Homes Act (which only has
effect in Wales) does not contain an equivalent mandatory ground for
possession that a lender had under the Housing Act 1988 where a property was
subject to a mortgage granted before the beginning of the tenancy and the
lender required possession in order to dispose of the property with vacant
possession. The Renting Homes Act may result in lower recoveries in relation
to buy-to-let mortgage loans over Properties in Wales. Further detail is
included in the section headed "Information Relating to the Regulation of
Mortgages in the UK - The Renting Homes (Wales) Act 2016" below.
2.12 Additional Mortgage Loans
The Additional Mortgage Loans will be originated by the Seller prior to or
after the Cut-Off Date and, in some cases, the first loan payment may not have
been made on or before the Cut-Off Date.
Additional Mortgage Loans may be sold to the Issuer on each Additional
Mortgage Loan Purchase Date. Any Additional Mortgage Loan is required as at
the date of its acquisition by the Issuer to comply with the representations
and warranties specified in the Mortgage Sale Agreement.
There can be no certainty that, following the acquisition of any Additional
Mortgage Loans by the Issuer on each Additional Mortgage Loans Purchase Date,
the Portfolio will have similar proportions or similar concentration
characteristics as set out in the tables in the section entitled
"Characteristics of the Provisional Portfolio" below in relation to the
Mortgage Loans constituting the Closing Portfolio (although certain mitigants
in this regard are contained in the criteria relating to the sale of the
Additional Mortgage Loans, including the Additional Mortgage Loan Conditions).
Whether or not such loans are sold, the quantity of loans sold and the timing
of the sale would affect the amount of Revenue Receipts and/or Principal
Receipts received by the Issuer in respect of any such Additional Mortgage
Loans which in turn may affect the yield to maturity and weighted average
lives of the Notes and the ability of the Issuer to make payments due on the
Notes.
3. Risks relating to the structure
3.1 Deferral of Interest Payments on the Notes
If, on any Interest Payment Date, the Issuer has insufficient funds to make
payment in full of all amounts of interest (including any accrued interest
thereon) that would otherwise be payable absent the deferral provisions
applicable in respect of any Class of Notes after having paid or provided for
items of higher priority in the Pre-Enforcement Revenue Priority of Payments,
or by means of the application of any Class A and B Liquidity Reserve Fund
Release Amounts, Principal Addition Amounts or Liquidity Drawings under the
Liquidity Facility Agreement then the Issuer will, unless such Class of Notes
is the then Most Senior Class of Notes, be entitled under Condition 17
(Subordination by Deferral) to defer payment of that amount (to the extent of
the insufficiency) until the following Interest Payment Date or such earlier
date on which the relevant Class of Notes becomes due and payable in full in
accordance with the Conditions. Any such deferral in accordance with the
Conditions will not constitute an Event of Default.
For the avoidance of doubt, no such deferral of interest shall be permitted in
relation to the then Most Senior Class of Notes, and failure to pay timely
interest on the Most Senior Class of Notes shall constitute an Event of
Default under the Notes which may result in the Security Trustee enforcing the
Security.
3.2 Availability of Liquidity Facility
Pursuant to the terms of the Liquidity Facility Agreement, the Issuer will
make and apply the drawings under the Liquidity Facility Agreement to meet any
Class A Liquidity Deficit as more fully described in the section "Summary of
the Key Transaction Documents - The Liquidity Facility Agreement". The
amount available to be drawn under the Liquidity Facility on any Interest
Payment Date may be less than the Issuer would have received had full and
timely payments been made in respect of all amounts owing to the Issuer during
the related Interest Period. In addition, the Issuer is exposed to the risk
of the Liquidity Facility Provider becoming insolvent. In such
circumstances, insufficient funds may be available to the Issuer to pay in
full interest due on the Notes.
Following the earliest to occur of (i) the LF Cancellation Date and (ii) a
Liquidity Facility Event of Default, no more Liquidity Drawings can be made.
The amount available for drawdown under the Liquidity Facility as of the
Closing Date is £2,929,810.00 and thereafter will decrease as amounts
standing to the credit of the Class A and B Liquidity Reserve Fund increase
and/or the Principal Amount Outstanding of the Notes decreases, as set out
under "Summary of the Key Transaction Documents - The Liquidity Facility
Agreement".
3.3 Subordination of the Class B Notes, the Class C Notes, the
Class D Notes, the Class E Notes, the Class X Notes and the Residual
Certificates
Pursuant to the Priorities of Payments, certain junior Classes of Notes are
subordinated in right of payment to more senior Classes of Notes.
Subject to the distribution of the Pre-Funding Unused Amount on the First
Interest Payment Date, the Class A Notes rank pro rata and pari passu without
preference or priority among themselves in relation to payment of interest and
principal at all times, as provided in the Conditions and the Transaction
Documents.
Subject to the distribution of the Pre-Funding Unused Amount on the First
Interest Payment Date, the Class B Notes rank pro rata and pari passu without
preference or priority among themselves in relation to payment of interest and
principal at all times, but subordinate to the Class A Notes, as provided in
the Conditions and the Transaction Documents.
Subject to the distribution of the Pre-Funding Unused Amount on the First
Interest Payment Date, the Class C Notes rank pro rata and pari passu without
preference or priority among themselves in relation to payment of interest and
principal at all times, but subordinate to the Class A Notes and the Class B
Notes, as provided in the Conditions and the Transaction Documents.
Subject to the distribution of the Pre-Funding Unused Amount on the First
Interest Payment Date, the Class D Notes rank pro rata and pari passu without
preference or priority among themselves in relation to payment of interest and
principal, but subordinate to the Class A Notes, the Class B Notes and the
Class C Notes, as provided in the Conditions and the Transaction Documents.
Subject to the distribution of the Pre-Funding Unused Amount on the First
Interest Payment Date, the Class E Notes rank pro rata and pari passu without
preference or priority among themselves in relation to payment of interest and
principal, but subordinate to the Class A Notes, the Class B Notes, the Class
C Notes and the Class D Notes, as provided in the Conditions and the
Transaction Documents.
The Class X Notes rank pro rata and pari passu without preference or priority
among themselves in relation to payment of interest and principal, but
subordinate to the Class A Notes, the Class B Notes, the Class C Notes, the
Class D Notes and the Class E Notes, as provided in the Conditions and the
Transaction Documents provided however, that, on each Interest Payment Date,
Available Revenue Receipts will be applied towards repayment of principal
amounts outstanding on the Class X Notes pursuant to the Pre-Enforcement
Revenue Priority of Payments.
In addition to the above, payments on the Notes and Residual Certificates are
subordinate to payments of certain fees, costs and expenses payable to the
other Secured Creditors (including, among others, the Note Trustee, the
Security Trustee, the Issuer Account Bank, any Custodian, the Servicer, the
Liquidity Facility Provider, the Back-Up Servicing Facilitator, the Cash
Manager, the Paying Agents, the Registrar, the Corporate Services Provider,
the Swap Providers and the Agent Bank) and certain third parties. For
further information on the likely costs payable to such Secured Creditors,
please see "Transaction Overview - Fees".
To the extent that the Issuer does not have sufficient funds to satisfy its
obligations to all its creditors, the holders of the lower ranking Notes and
the Residual Certificates will be the first to see their claims against the
Issuer unfulfilled. However, there is no assurance that these subordination
provisions will protect the holders of the more senior classes of Notes
(including the Most Senior Class of Notes) from all or any risk of loss.
The priority of the Notes are further set out in "Cashflows - Application of
Available Revenue Receipts prior to the service of an Enforcement Notice on
the Issuer" and "Cashflows - Distributions following the service of an
Enforcement Notice on the Issuer".
There is no assurance that these subordination rules will protect the holders
of Notes from all risk of loss.
3.4 Product Switches and Permitted Fee Capitalisation Amounts
A Loan and its Related Security may be required to be repurchased where a
Product Switch (including any related Permitted Fee Capitalisation Amount made
in connection with the relevant Product Switch) is made in the circumstances
and for the consideration set out in "Summary of the Key Transaction Documents
- Mortgage Sale Agreement". There can be no assurance that the Seller will
have the financial resources to honour its repurchase obligations under the
Mortgage Sale Agreement. This may affect the quality of the Loans and their
Related Security in the Portfolio and accordingly the ability of the Issuer to
make payments on the Notes. The yield to maturity of the Notes may be
affected by the repurchase of Loans subject to Product Switches and/or
Permitted Fee Capitalisation Amounts.
The number of Permitted Fee Capitalisation Amount and Product Switch requests
received by the Seller and/or the Servicer may affect both the timing of
principal amounts received by the Issuer from the Borrowers and, as Available
Principal Receipts will be used to pay amounts to the Seller in respect of
consideration for such Permitted Fee Capitalisation Amounts, the amount of
Available Principal Receipts available to meet payments of principal and (in
the event of a shortfall) interest on the Notes.
4. Risks relating to changes to the structure and documents
4.1 Meetings of Noteholders and Certificateholders, Modification
and Waivers
The Conditions and the Residual Certificates Conditions contain provisions for
calling meetings of Noteholders and Certificateholders to consider matters
affecting their interests generally. These provisions permit defined
majorities to bind all Noteholders and Certificateholders, (including
Noteholders and Certificateholders who did not attend and vote at the relevant
meeting and Noteholders and Certificateholders who voted in a manner contrary
to the majority). Other than in relation to a Basic Terms Modification,
which additionally requires an Extraordinary Resolution of the holders of each
affected Class or Classes of Notes and/or Residual Certificates then in issue,
as applicable, an Extraordinary Resolution of a Class of Notes shall be
binding on all other Class of Notes which are subordinate to such Class of
Notes in the Post-Enforcement Priority of Payments and on the Residual
Certificates, irrespective of the effect upon them. No Extraordinary
Resolution of any other Class of Noteholders or of the Certificateholders
shall take effect for any purpose while the Most Senior Class remains
outstanding unless it shall have been sanctioned by an Extraordinary
Resolution of the holders of the Most Senior Class and, in the case of the
Residual Certificates, all Notes ranking in priority thereto, or the Note
Trustee and/or Security Trustee (acting on the direction of the Note Trustee)
is of the opinion it would not be materially prejudicial to the interests of
the holders of the Most Senior Class.
The Conditions also provide that the Note Trustee may agree, and may direct
the Security Trustee to agree, without the consent of the Noteholders,
Certificateholders or the other Secured Creditors (but with the written
consent of the Liquidity Facility Provider (prior to the LF Cancellation Date)
and the Secured Creditors which are a party to the relevant Transaction
Document), to (i) (other than in respect of a Basic Terms Modification) any
modification of the Conditions or any of the Transaction Documents which is
not, in the opinion of the Note Trustee, materially prejudicial to the
interests of the Noteholders of any Class and (ii) (including in relation to a
Basic Terms Modification) any modification which, in the Note Trustee's
opinion, is of a formal, minor or technical nature or to correct a manifest
error. For so long as there are any Notes outstanding, the Note Trustee may,
and may direct the Security Trustee to, without the consent of the Noteholders
or the other Secured Creditors, if it is of the opinion that such
determination, waiver or authorisation will not be materially prejudicial to
the interests of the Most Senior Class of Notes determine that an Event of
Default shall not, or shall not subject to any specified conditions, be
treated as such or waive or authorise any breach or proposed breach of the
Conditions or any of the Transaction Documents. See Condition 13 (Meetings
of Noteholders, Modification, Waiver and Substitution) and Residual
Certificates Condition 12 (Meetings of Certificateholders, Modification,
Waiver and Substitution).
There is no guarantee that any changes made to the Transaction Documents, the
Conditions and/or the Residual Certificates Conditions pursuant to the
discretions vested the Note Trustee, as described above, would not be
prejudicial to the Noteholders or the Certificateholders.
The Conditions and the Residual Certificates Conditions also specify that
certain categories of amendments (including changes to the majorities required
to pass resolutions or quorum requirements) would be classified as Basic Terms
Modifications. Investors should note that a Basic Terms Modification is
required to be sanctioned by an Extraordinary Resolution of the holders of
each affected Class or Classes of Notes and/or Residual Certificates then in
issue, as applicable, which is or are affected by such Basic Terms
Modifications.
Further, the Note Trustee and/or the Security Trustee (as the case may be) may
also be obliged, in certain circumstances, to agree to amendments to the
Conditions and/or the Transaction Documents for the purpose of (i) complying
with, or implementing or reflecting, any change in the criteria of one or more
of the Rating Agencies which may be applicable from time to time, (ii)
complying with the UK Securitisation Framework and/or the EU Securitisation
Regulation, including as a result of the adoption of any secondary legislation
or official guidance in relation to the UK Securitisation Framework and/or the
EU Securitisation Regulation (including in respect of risk retention), (iii)
enabling the Notes to be (or to remain) listed on the Official List and
admitted to trading on the main market of the London Stock Exchange, (iv)
enabling the Issuer or any of the other Transaction Parties to comply with
Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, any
regulations or agreements thereunder, any official interpretations thereof, or
any law implementing an intergovernmental approach thereto ("FATCA"), (v)
complying with, or implementing or reflecting, any changes in the manner in
which the Notes are held which will allow compliance with the Bank of
England's sterling monetary framework, (vi) complying with any changes in the
requirements of the UK CRA Regulation or the EU CRA Regulation after the
Closing Date, (vii) changing the base rate on the Notes from SONIA to an
Alternative Base Rate (and such other amendments as are necessary or advisable
in the reasonable judgment of the Issuer (or the Seller on its behalf) to
facilitate such change) to the extent there has been or there is reasonably
expected to be a material disruption or cessation to SONIA in accordance with
the detailed provisions of Condition 13.6(a)(vii)(A) (Additional Right of
Modification), (viii) changing the base floating rate that then applies in
respect of any Swap Transactions to an alternative base rate as is necessary
or advisable in the commercially reasonable judgment of the Issuer (or the
Seller on its behalf) and any Swap Provider in respect of that Swap Agreement
solely as a consequence of a Base Rate Modification and solely for the purpose
of aligning the base rate of that Swap Agreement to the base rate of the Notes
following such Base Rate Modification and making any associated amendment or
(ix) to comply with any requirements which apply to it under the European
Market Infrastructure Regulation (EU) No 648/2012 of the European Parliament
and Council on OTC derivatives, central counterparties and trade repositories
dated 4 July 2012 (including, without limitation, any associated regulatory
technical standards and advice, guidance or recommendations from relevant
supervisory regulators) as amended by Regulation (EU) No 2019/834 (and as
further amended from time to time) ("EU EMIR") or the European Market
Infrastructure Regulation (EU) No 648/2012 of the European Parliament and
Council of 4 July 2012 on OTC derivatives, central counterparties and trade
repositories as it forms part of English law ("UK EMIR") (each a "Proposed
Amendment"), without the consent of Noteholders, pursuant to and in accordance
with the detailed provisions of Condition 13.6 (Additional Right of
Modification) and Residual Certificates Condition 12.6 (Additional Right of
Modification).
In relation to any such Proposed Amendment, the Issuer is required to give at
least 30 calendar days' notice to the Certificateholders and the Noteholders
of each Class of the proposed modification in accordance with Residual
Certificates Condition 15 (Notice to Residual Certificateholders) and
Condition 16 (Notice to Noteholders), respectively and by publication on
Bloomberg on the "Company News" screen relating to the Notes. However,
Noteholders should be aware that, in relation to each Proposed Amendment,
unless Noteholders representing at least 10 per cent. of the aggregate
Principal Amount Outstanding of the Most Senior Class of Notes then
outstanding have contacted the Issuer and the Note Trustee in writing (or
otherwise in accordance with the then current practice of any applicable
clearing system through which such Notes may be held) within such notification
period notifying the Issuer that such Noteholders do not consent to the
modification, the modification will be passed without Noteholder consent.
If Noteholders representing at least 10 per cent. of the aggregate Principal
Amount Outstanding of the Most Senior Class of Notes then outstanding have
notified the Issuer and the Note Trustee in writing (or otherwise in
accordance with the then current practice of any applicable clearing system
through which such Notes may be held) within the notification period referred
to above that they do not consent to the modification, then such modification
will not be made unless an Extraordinary Resolution of the holders of the Most
Senior Class of Notes then outstanding is passed in favour of such
modification in accordance with Condition 13 (Meetings of Noteholders,
Modification, Waiver and Substitution). See Condition 13 (Meetings of
Noteholders, Modification, Waiver and Substitution) and Residual Certificates
Condition 12 (Meetings of Certificateholders, Modification, Waiver and
Substitution).
Investors should also be aware that the Seller will, on the Closing Date,
purchase the Notes comprising the Retained Interest in order to comply with EU
Risk Retention Requirements and UK Risk Retention Requirements. The Seller
or its affiliates are under no obligation to consider the interests of other
Noteholders when exercising their rights under the Notes comprising the
Retained Interest (with respect to not only such Notes but also any other
Notes which they may own) and may exercise voting rights in respect of the
Notes held by it in a manner that may be prejudicial to other Noteholders.
There can be no assurance that the effect of such modifications to the
relevant documents will not adversely affect the interests of the holders of
one or more or all Classes of Notes and/or the Certificateholders.
The full requirements in relation to the modifications discussed above are set
out in Condition 13.6 (Additional Right of Modification) and Residual
Certificates Condition 12.6 (Additional Right of Modification).
4.2 Swap Provider to consent to Modification and Waivers
Prior consent of the relevant Swap Provider is required in respect of any
amendment, modification, variation, supplement, consent or waiver of any of
the Transaction Documents where: (A) such amendment, modification, variation,
supplement, waiver or consent would adversely affect each Swap Provider's
rights or obligations under, or interests in respect of: (I) the Priorities of
Payment or the Swap Collateral Account Priority of Payments; (II) the timing
or amount of any payments or deliveries due from (x) the Issuer to each Swap
Provider or (y) each Swap Provider to the Issuer; (III) each Swap Provider's
status as a Secured Creditor or the relevant Swap Provider's rights in
relation to any Security (howsoever described, and including as a result of
changing the nature or the scope of, or releasing such Security granted by the
Issuer in favour of the Security Trustee on behalf of the Secured Creditors);
(IV) any requirement to obtain each Swap Provider's prior consent (written or
otherwise) in respect of any matter; or (B) such amendment, modification,
variation, supplement, waiver or consent relates to Condition 8 (Redemption)
of the Notes or any additional redemption rights in respect of the Notes and
such amendment, modification, variation, supplement, waiver or consent would
prejudice each Swap Provider.
There can be no assurance that the effect of such modifications to the
relevant documents will not adversely affect the interests of the holders of
one or more or all Classes of Notes and/or the Certificateholders.
The full requirements in relation to the modifications discussed above are set
out in Condition 13.6 (Additional Right of Modification) and Residual
Certificates Condition 12.6 (Additional Right of Modification).
4.3 The Note Trustee and the Security Trustee are not obliged to
act in certain circumstances
Upon the occurrence of an Event of Default, the Note Trustee in its absolute
discretion may, and if so directed in writing by the holders of not less than
25 per cent. in aggregate Principal Amount Outstanding (or, in the case of a
Class of Residual Certificates, 25 per cent. in number of the holders of such
Class then in issue) of the Most Senior Class or if so directed by an
Extraordinary Resolution of the holders of the Most Senior Class then
outstanding or (in the case of a Class of Residual Certificates) in issue
shall (subject, in each case, to being indemnified and/or prefunded and/or
secured to its satisfaction), give an Enforcement Notice to the Issuer that
all classes of the Notes are immediately due and repayable at their respective
Principal Amount Outstanding, together with accrued interest thereon as
provided in a trust deed between the Issuer and the Note Trustee (the "Trust
Deed").
Each of the Note Trustee and the Security Trustee may, at any time, at their
absolute discretion and without notice, take such proceedings, actions or
steps against the Issuer or any other party to any of the Transaction
Documents as it may think fit to enforce the provisions of (in the case of the
Note Trustee) the Notes, the Certificates or the Trust Deed (including the
Conditions and the Residual Certificates Conditions) or (in the case of the
Security Trustee) the Deed of Charge or (in either case) the other Transaction
Documents to which it is a party or in respect of which (in the case of the
Security Trustee) it holds security. In respect of and at any time after the
service of an Enforcement Notice, the Security Trustee may, at its discretion
and without notice, take such steps as it may think fit to enforce the
Security. However, neither the Note Trustee nor the Security Trustee shall
be bound to take any such proceedings or steps (in the case of the Note
Trustee including, but not limited to, the giving of an Enforcement Notice in
accordance with Condition 11 (Events of Default) or Residual Certificates
Condition 10 (Events of Default)) unless the Note Trustee shall have been
directed, or shall have been directed to direct the Security Trustee, to do so
by an Extraordinary Resolution of the holders of the Most Senior Class or
directed in writing by the holders of not less than 25 per cent. in aggregate
Principal Amount Outstanding (or, in the case of a Class of Residual
Certificates, 25 per cent. in number of the holders of such Class then in
issue) of the Most Senior Class and the Security Trustee and/or Note Trustee
(as applicable) shall have been indemnified and/or secured and/or prefunded to
its satisfaction.
If neither the Note Trustee nor the Security Trustee exercises its discretion
where it has not been directed as described above, it may adversely affect the
ability of the Issuer to make payments on the Notes following the service of
an Enforcement Notice.
See further Condition 12 (Enforcement) and Residual Certificates Condition 11
(Enforcement) below.
In addition, each of the Note Trustee and the Security Trustee benefit from
indemnities given to them by the Issuer pursuant to the Transaction Documents
which rank in priority to the payments of interest and principal on the Notes.
In relation to the covenant to be given by the Seller to the Issuer and the
Security Trustee in the Mortgage Sale Agreement in accordance with the UK
Securitisation Framework and the EU Securitisation Regulation regarding the
material net economic interest to be retained by the Seller in the
securitisation and as to certain requirements to provide investor information
in connection therewith, neither the Note Trustee nor the Security Trustee
will be under any obligation to monitor the compliance by the Seller with such
covenant and will not be under any obligation to take any action in relation
to non-compliance with such covenant (unless otherwise directed to do so in
accordance with the Transaction Documents).
5. Counterparty and Third Party Risks
5.1 The Servicer
Lendco Mortgage Servicing Limited will be appointed by the Issuer as Servicer
to service the Loans and their Related Security. If the Servicer breaches
the terms of the Servicing Agreement, then (prior to the service of an
Enforcement Notice and with the prior written consent of the Security Trustee)
the Issuer or (after the service of an Enforcement Notice) the Security
Trustee will be entitled to terminate the appointment of the Servicer in
accordance with the terms of the Servicing Agreement. If the Servicer's
appointment is terminated, the Back-Up Servicing Facilitator shall use best
efforts to identify, on behalf of the Issuer, and assist the Issuer in the
appointment of a suitable substitute servicing facilitator and/or substitute
servicer in accordance with the Servicing Agreement.
If a Servicer Termination Event occurs, there can be no assurance that a
substitute servicer with sufficient experience of servicing the Loans and
their Related Security would be found who would be willing and able to service
the Loans and their Related Security on the terms, or substantially similar
terms, set out in the Servicing Agreement. Further, it may be that the terms
on which a substitute servicer may be appointed are substantially different
from those set out in the Servicing Agreement and the terms may be such that
the Noteholders may be adversely affected. In addition, as described below,
any substitute servicer will be required, inter alia, to be authorised under
the FSMA in order to service Loans and their Related Security. The ability
of a substitute servicer to fully perform the required services would depend,
among other things, on the information, software and records available at the
time of the appointment. Any delay or inability to appoint a substitute
servicer may affect payments on the Loans and hence the Issuer's ability to
make payments when due on the Notes.
5.2 Ratings of the Notes
The ratings assigned to the Notes by DBRS and S&P address, inter alia (a)
the likelihood of full and timely payment to the holders of the Most Senior
Class of Notes (other than the Class X Notes) of all payments of interest on
each Interest Payment Date, and (b)(i) (in respect of the ratings assigned by
S&P) the likelihood of full and ultimate payment to the holders of the
Notes of principal and (in relation to the Class B Notes, the Class C Notes,
the Class D Notes, the Class E Notes and the Class X Notes while they are not
the Most Senior Class of Notes) of interest on or prior to the Final Maturity
Date and (ii) (in respect of the ratings assigned by DBRS) the likelihood of
full and ultimate payment to the Noteholders of principal in relation to the
Notes and (in relation to the Class B Notes, the Class C Notes, the Class D
Notes and the Class E Notes (while they are not the Most Senior Class of
Notes) and the Class X Notes) of interest on or prior to the Final Maturity
Date.
The expected ratings of the Notes to be assigned on the Closing Date are set
out under "Ratings". The ratings assigned to the Notes by each Rating Agency
have been provided on the basis that funds standing to the credit of the
Pre-Funding Reserve Ledger or (to the extent there are insufficient funds
standing to the credit of the Pre-Funding Reserve for such purpose) any
Principal Receipts available to the Issuer up until the Calculation Date
immediately prior to the First Interest Payment Date will be utilised to
purchase Additional Mortgage Loans on or after the Closing Date. A rating is
not a recommendation to buy, sell or hold securities and may be subject to
revision, suspension or withdrawal at any time by the assigning rating agency
including if, in its judgement, circumstances in the future so warrant
(including a reduction in the perceived creditworthiness of third parties,
including a reduction in the credit rating of a Swap Provider and/or the
Collection Account Bank and/or the Issuer Account Bank). See also "Rating
Agency confirmation in relation to the Notes in respect of certain actions"
below.
At any time, any Rating Agency may revise its relevant rating methodology,
with the result that any rating assigned to any Class of the Notes may be
withdrawn, lowered or qualified.
Further, rating agencies other than the Rating Agencies could seek to rate the
Notes, and if such unsolicited ratings are lower than the comparable ratings
assigned to the Notes by the Rating Agencies, those unsolicited ratings could
have an adverse effect on the value of any Class of the Notes. For the
avoidance of doubt and unless the context otherwise requires, any reference to
"ratings" or "rating" in this Prospectus is to the ratings assigned by the
Rating Agencies only. Neither the Issuer nor any other person or entity will
have any duty to notify you if any other rating agencies issue, or deliver
notice of its intention to issue, unsolicited ratings on one or more Classes
of the Notes after the Closing Date.
As highlighted above, the ratings assigned to each class of the Notes by each
Rating Agency are based on, among other things, (in the case of DBRS) the COR
or the long-term unsecured, unguaranteed and unsubordinated debt ratings of
the Issuer Account Bank, the Collection Account Bank and the Swap Providers
(as applicable) or (in the case of S&P) the short-term unsecured,
unguaranteed and unsubordinated debt rating and/or the long-term unsecured,
unguaranteed and unsubordinated debt rating deposit rating, senior unsecured
debt ratings of the Issuer Account Bank, the Collection Account Bank and the
Swap Providers (as applicable). In the event one or more of these
transaction parties are downgraded below the requisite ratings trigger, there
can be no assurance that a replacement to that counterparty will be found
which has the ratings required to maintain the then current ratings of the
Notes. If a replacement counterparty with the requisite ratings cannot be
found, this is likely to have an adverse impact on the rating of the Notes
and, as a consequence, the resale price of the Notes in the market and the
prima facie eligibility of the Notes for use in certain liquidity schemes
established by, inter alios, the Bank of England.
5.3 Rating Agency confirmation in relation to the Notes in respect
of certain actions
The terms of certain Transaction Documents provide that certain actions to be
taken by the Issuer and/or the other parties to the Transaction Documents are
contingent on such actions not having an adverse effect on the ratings
assigned to the Notes. In such circumstances, the Note Trustee or the
Security Trustee may require the Issuer to seek confirmation from the Rating
Agencies that this would be the case (such confirmation being a "Rating Agency
Confirmation"). A Rating Agency Confirmation does not confirm that any
proposed action or inaction (i) is permitted by the terms of the Transaction
Documents, or (ii) is in the best interests of, or not prejudicial to, the
Noteholders of the Notes. No actual or contingent liability is imposed or
extended on the Rating Agencies to the Noteholders or other Secured Creditors
by providing a Rating Agency Confirmation, nor does it create any legal
relationship (by way of contract or otherwise) between the Rating Agencies,
the Issuer and the Noteholders or other Secured Creditors. The Note Trustee
and/or the Security Trustee may, but is not required to, have regard to any
Rating Agency Confirmation. Any such Rating Agency Confirmation may or may
not be given at the sole discretion of each Rating Agency. Certain Rating
Agencies have indicated that they will no longer provide Rating Agency
Confirmations as a matter of policy (including, but not limited to, in respect
of the purchase by the Issuer of the Additional Mortgage Loans from the
Seller, under which circumstances the Seller may confirm in writing to the
Security Trustee (upon which certificate the Security Trustee will be entitled
to rely on absolutely and without enquiry or liability) that it has notified
such Rating Agency of the proposed purchase and such Rating Agency has not
raised any objections thereto).
To the extent that a Rating Agency Confirmation cannot be obtained, whether or
not a proposed action will ultimately take place will be determined in
accordance with the provisions of the relevant Transaction Documents and
specifically the relevant modification and waiver provisions.
Where the Transaction Documents allow the Issuer, the Note Trustee or the
Security Trustee to seek a Rating Agency Confirmation and a written request
for such Rating Agency Confirmation or response is delivered to each Rating
Agency by or on behalf of the Issuer and (i)(A) one Rating Agency (such Rating
Agency, a "Non-Responsive Rating Agency") indicates that it does not consider
such Rating Agency Confirmation or response necessary in the circumstances or
that it does not, as a matter of practice or policy, provide such Rating
Agency Confirmation or response, or (B) within 30 days of delivery of such
request, no Rating Agency Confirmation or response is received and/or such
request elicits no statement by such Rating Agency that such Rating Agency
Confirmation or response could not be given, and (ii) one Rating Agency gives
such Rating Agency Confirmation or response based on the same facts, then such
condition to receive a Rating Agency Confirmation or response from each Rating
Agency shall be modified so that there shall be no requirement for the Rating
Agency Confirmation or response from the Non-Responsive Rating Agency if the
Issuer provides to the Note Trustee and the Security Trustee a certificate
signed by two directors certifying and confirming that each of the events in
item (i)(A) or (B) above and (iii) has occurred and the Note Trustee and the
Security Trustee shall be entitled to rely on such certificate without further
enquiry or liability, the Issuer having sent a written request to each Rating
Agency.
If no such Rating Agency Confirmation is forthcoming within 30 days of such a
request and two directors of the Issuer have certified the same in writing to
the Security Trustee, the Cash Manager and the Note Trustee (an "Issuer
Certificate"), upon which Issuer Certificate the Note Trustee and the Security
Trustee shall be entitled to rely absolutely without liability to any person
for so doing, the Note Trustee and the Security Trustee shall be entitled (but
not obliged) to assume that such proposed action:
(a) (while any of the Notes remain outstanding) has been
notified to the Rating Agencies;
(b) would not adversely impact the Issuer's ability to make
payment when due in respect of the Notes;
(c) would not affect the legality, validity and enforceability
of any of the Transaction Documents or any Security; and
(d) (while any of the Notes remain outstanding) the then current
rating of the relevant Classes of Notes would not be reduced, qualified,
adversely affected or withdrawn.
It is agreed and acknowledged by the Note Trustee and the Security Trustee
that this does not impose or extend any actual or contingent liability for
each of the Rating Agencies to the Security Trustee, the Note Trustee, the
Noteholders or any other person or create any legal relations between each of
the Rating Agencies and the Security Trustee, the Note Trustee, the
Noteholders or any other person, whether by way of contract or otherwise.
Where a Rating Agency Confirmation is a condition to any action or step under
any Transaction Document and it is deemed to be modified as a result of a
Non-Responsive Rating Agency not having responded to the relevant request from
the Issuer within 30 days, there remains a risk that such Non-Responsive
Rating Agency may subsequently downgrade, qualify or withdraw the then current
ratings of the Notes as a result of the action or step. Such a downgrade,
qualification or withdrawal to the then current ratings of the Notes may have
an adverse effect on the value of the Notes.
5.4 Issuer Reliance on Other Third Parties
The Issuer is party to contracts with a number of other third parties who have
agreed to perform services in relation to the Issuer and/or Notes and/or
Residual Certificates. In the event that any of the counterparties to the
Transaction Documents were to fail to perform their obligations under the
respective agreements to which they are a party (including any failure arising
from circumstances beyond their control, such as epidemics, pandemics and
natural disasters) and/or are removed or if such a party resigns without a
sufficiently experienced substitute or any substitute being appointed in their
place promptly thereafter, collections on the Portfolio and/or payments to
Noteholders and/or Certificateholders may be disrupted and Noteholders and/or
Certificateholders may be adversely affected. A third party may be unable to
perform its obligations under the agreements to which it is a party as a
result of factors outside of its control, including disruptions due to
technical difficulties and local, national and/or global macroeconomic factors
(such as epidemics and pandemics (including COVID-19)) the ultimate extent,
duration and impact of which cannot be accurately predicted.
In particular, the Issuer has appointed the Servicer to service the Loans and
their Related Security. It should be noted that the aggregate liability of
the Servicer in respect of any claim arising out of or in connection with the
Servicing Agreement shall (subject to certain exceptions) in any twelve (12)
month period not exceed one times the aggregate amount of fees paid and
payable to the Servicer during that twelve (12) month period. If the
Servicer is liable to the Issuer for any loss as a result of a claim relating
to the Servicer's duties or obligations under the Servicing Agreement, any
loss over and above the liability cap may be irrecoverable by the Issuer.
This may result in less proceeds being available to meet the obligations of
the Issuer in respect of the Notes.
Further, if the appointment of the Servicer and/or the Servicing Facilitator
were to be terminated in accordance with the Servicing Agreement, there can be
no assurance that a substitute servicer and/or servicing facilitator with
sufficient experience of servicing the Loans and their Related Security would
be found who would be willing and able to service the Loans and their Related
Security on the terms, or substantially similar terms, set out in the
Servicing Agreement. Any delay or inability to appoint a substitute servicer
and/or servicing facilitator may affect payments on the Loans and hence the
Issuer's ability to make payments when due on the Notes.
With the increased use of technologies such as the internet and the dependence
on computer systems to perform necessary business functions, the Servicer may
be exposed to operational and information security risks resulting from
cyber-attacks. In general, cyber-attacks result from deliberate attacks, but
unintentional events may have effects similar to those caused by
cyber-attacks. Cyber-attacks include, among other behaviours, stealing or
corrupting data maintained online or digitally, denial-of-service attacks on
websites, the unauthorised release of confidential information and causing
operational disruption. Successful cyber-attacks against, or security
breakdowns of, the Servicer and/or other third-party service providers may
adversely impact the Servicer's ability to service the Loans. The Servicer
may also incur substantial costs for cyber security risk management in order
to prevent any cyber incidents in the future. With respect to any business
continuity plans and systems designed to prevent such cyber-attacks, there are
inherent limitations in such plans and systems, including the possibility that
certain risks have not been identified.
For further details on the arrangements with the Servicer and the Servicing
Facilitator, please see "Summary of the Key Transaction Documents - Servicing
Agreement" below.
5.5 Conflicts of Interest
Certain of the Relevant Parties and their respective affiliates are acting in
a number of capacities in connection with the transaction described herein.
Those Relevant Parties and any of their respective affiliates acting in such
capacities will have only the duties and responsibilities expressly agreed by
each such entity in the relevant capacity and will not, by reason of it or any
of its affiliates acting in any other capacity, be deemed to have other duties
or responsibilities or be deemed to be held to a standard of care other than
as expressly provided with respect to each such capacity. In no event shall
such Transaction Parties or any of their respective affiliates be deemed to
have any fiduciary obligations to any person by reason of their respective
affiliates acting in any capacity.
In addition to the interests described in this Prospectus, the Joint Arrangers
and the Joint Lead Managers and their respective related entities, associates,
officers or employees (each a "Lead Manager Related Person"):
(a) may, from time to time, be a Noteholder and/or
Certificateholder or have other interests with respect to the Notes or
Residual Certificates and they may also have interests relating to other
arrangements with respect to a Noteholder or a Note, a Certificateholder or a
Residual Certificate;
(b) may receive (and will not have to account to any person for)
fees, brokerage and commission or other benefits and act as principal with
respect to any dealing with respect to any Notes or Residual Certificates;
(c) may purchase all or some of the Notes or the Residual
Certificates and resell them in individually negotiated transactions with
varying terms;
(d) may be or have been involved in a broad range of
transactions including, without limitation, banking, lending, advisory,
dealing in financial products, credit derivative and liquidity transactions,
investment management, corporate and investment banking and research in
various capacities in respect of the Notes, the Residual Certificates, the
Issuer or any other Transaction party or any related entity, both on its own
account and for the account of other persons. In this regard, as at the
Closing Date one of the Joint Lead Managers or one of their affiliates is
acting as the Liquidity Facility Provider; and
(e) may have positions in or may have arranged financing in
respect of the Notes or the Loans in the Portfolio prior to their transfer to
the Issuer and may have provided or may be providing investment banking
services and other services to the other Transaction Parties or the Seller.
In this regard, prospective investors should note that certain Lead Manager
Related Persons have provided financing indirectly to Lendco Limited through
certain warehousing vehicles. As such, the proceeds of the issuance of the
Notes will be used on or about the Closing Date to refinance such financing by
Lendco Limited using a portion of the initial consideration in respect of the
Closing Portfolio to purchase the relevant Loans from the relevant warehousing
vehicles before on-selling such part of the Closing Portfolio to the Issuer.
The warehousing vehicles will ultimately use such funds to repay certain Lead
Manager Related Persons. Other than where required in accordance with
applicable law, the Lead Manager Related Persons have no obligation to act in
any particular manner as a result of their prior indirect involvement with the
Portfolio and any information in relation thereto. With respect to the
refinancing, each of the Lead Manager Related Persons will act in its own
commercial interest.
Prospective investors should be aware that:
(i) each Lead Manager Related Person in the course of its
business (including in respect of interests described above) may act
independently of any other Lead Manager Related Person or Relevant Party;
(ii) to the maximum extent permitted by applicable law, the
duties of each Lead Manager Related Person in respect of the Notes and/or
Residual Certificates are limited to the relevant contractual obligations set
out in the Transaction Documents (if any) and, in particular, no advisory duty
or fiduciary duty is owed to any person. No Lead Manager Related Person
shall have any obligation to account to the Issuer, any Relevant Party or any
Noteholder for any profit as a result of any other business that it may
conduct with either the Issuer or any Relevant Party;
(iii) a Lead Manager Related Person may have or come into
possession of information not contained in this Prospectus that may be
relevant to any Noteholder or Certificateholder or to any decision by a
potential investor to acquire the Notes or Residual Certificates and which may
or may not be publicly available to potential investors ("Relevant
Information");
(iv) to the maximum extent permitted by applicable law, no Lead
Manager Related Person is under any obligation to disclose any Relevant
Information to any other Lead Manager Related Person, to any Relevant Party or
to any potential investor, and this Prospectus and any subsequent conduct by a
Lead Manager Related Person should not be construed as implying that such Lead
Manager Related Person is not in possession of such Relevant Information; and
(v) each Lead Manager Related Person may have various potential
and actual conflicts of interest arising in the ordinary course of its
businesses, including in respect of the interests described above. For
example, a Lead Manager Related Person's dealings with respect to a Note
and/or a Residual Certificate, the Issuer or a Relevant Party may affect the
value of a Note.
These interests may conflict with the interests of a Noteholder or
Certificateholder and the Noteholder or Certificateholder may suffer loss as a
result. To the maximum extent permitted by applicable law, a Lead Manager
Related Person is not restricted from entering into, performing or enforcing
its rights in respect of the Transaction Documents, the Notes, the
Certificates or the interests described above and may otherwise continue or
take steps to further or protect any of those interests and its business, even
where to do so may be in conflict with the interests of the Noteholders or the
Certificateholders and the Lead Manager Related Persons in so doing act in its
own commercial interests and without notice to, and without regard to, the
interests of any such person.
5.6 Interest Rate Risk
Certain of the Loans in the Portfolio pay or will pay a fixed rate of interest
for an initial period of time, but the Notes pay a rate of interest based on
Compounded Daily SONIA, and as such the Issuer is subject to the risk of a
mismatch between the two.
To mitigate this risk in respect of the Notes, the Issuer will enter into one
or more interest rate swap transactions with the HSBC Swap Provider and the
Santander Swap Provider on the Closing Date under the respective Swap
Agreements whereby, in respect of each Swap Calculation Period under each Swap
Transaction, (i) the Issuer will pay to the relevant Swap Provider an amount
equal to the notional amount specified in respect of that Swap Calculation
Period under the relevant Swap Transaction multiplied by a fixed rate
applicable to that Swap Calculation Period and the relevant day count fraction
and (ii) that Swap Provider will pay to the Issuer an amount equal to the
notional amount specified in respect of that Swap Calculation Period under
that Swap Transaction multiplied by Compounded Daily SONIA (provided that, for
the purposes of that Swap Agreement, Compounded Daily SONIA shall be
determined on the relevant Swap Floating Rate Determination Date (as defined
below) and calculated by that Swap Provider in its capacity as calculation
agent under that Swap Agreement) and the relevant day count fraction, although
these two payments may be netted against each other.
However, it should be noted that:
· a Swap Provider may default on its obligations to make
such payments to the Issuer, which would expose the Issuer to possible
variances between the fixed rates payable on the Loans in the Portfolio and
Compounded Daily SONIA;
· the notional amount of each Swap Transaction will reduce
in line with a pre-agreed amortisation profile, which may be different to the
actual rate at which the Loans in the Portfolio prepay;
· in respect of each Swap Calculation Period, if the total
aggregate notional amount of outstanding Swap Transactions is less than the
Principal Amount Outstanding on the Notes, the Issuer would receive less from
the Swap Providers than the interest due and payable on the Notes; and
· the fixed rate applicable to the amounts payable by the
Issuer is not an exact match of interest rates that the Issuer receives in
respect of the Fixed Rate Loans. As such, the amount payable by the Issuer
under the relevant Swap Transactions may exceed the amount that the Issuer
receives in respect of the Fixed Rate Loans, which may result in insufficient
funds being made available for the Issuer to make payments on the Notes.
Further, upon the occurrence of certain events, a Swap Transaction may be
terminated and an Early Termination Amount (as defined in the relevant Swap
Agreement) may be payable by the Issuer or the relevant Swap Provider in
accordance with the terms of the relevant Swap Agreement to which that Swap
Transaction relates. Any such Early Termination Amount (as defined in the
relevant Swap Agreement) due by the Issuer (other than (where applicable) in
respect of any Hedge Subordinated Amounts), to the extent such Early
Termination Amount (as defined in the relevant Swap Agreement) is not
satisfied by amounts standing to the credit of the relevant Swap Collateral
Account in respect of that Swap Provider which are available to meet such
Early Termination Amount (as defined in the relevant Swap Agreement) in
accordance with the relevant Swap Collateral Account Priority of Payments,
will rank in priority to payments in respect of the Notes and may lead to a
shortfall in amounts available to make payments on the Notes. In addition,
the Issuer and each Swap Provider may, at any time, agree to reduce the
Notional Amount of all Swap Transactions (on a pro rata basis) under each Swap
Agreement respectively in respect of any Swap Calculation Period two Local
Business Days (as defined in the relevant Swap Agreement) prior to a Reduction
Date (as defined in the relevant Swap Agreement), subject to certain
conditions being met. For more information on the exercise of a Partial Swap
Unwind see the section entitled "Credit Structure - Interest Rate Risk for the
Notes - Swap Agreement
5.7 Change of counterparties
Any parties to the Transaction Documents who receive and hold monies or
provide support to the transaction pursuant to the terms of such documents
(such as the Issuer Account Bank, the Collection Account Bank and the Swap
Providers) are required to satisfy certain criteria in order for them to
continue to be a counterparty to the Issuer, including the requirement to hold
certain ratings assigned by the Rating Agencies. If the party concerned
ceases to satisfy the applicable criteria, then the Issuer may be required to
replace that party with another entity which does satisfy the applicable
criteria. In these circumstances, the terms agreed with the replacement
entity may not be as favourable as those agreed with the original party
pursuant to the relevant Transaction Document and the cost to the Issuer may
therefore increase. In addition, it may not be possible to find an entity
with the ratings prescribed in the relevant Transaction Document who would be
willing to act in the role. This may reduce amounts available to the Issuer
to make payments of interest and principal on the Notes and/or lead to a
downgrade in the ratings of the Notes.
6. Macroeconomic and Market Risks
6.1 Changes or uncertainty in respect of SONIA may affect the
value, liquidity and payment of interest under the Loans and/or the Notes
Interest rates and indices which are deemed to be "benchmarks" (including
SONIA) are the subject of national and international regulatory guidance and
proposals for reform, including Regulation (EU) 2016/1011 (as it forms part of
domestic law by virtue of the EUWA) (the "UK Benchmarks Regulation"). These
reforms may cause such benchmarks to perform differently than in the past (as
a result of a change in methodology or otherwise), disappear entirely, create
disincentives for market participants to continue to administer or participate
in certain benchmarks or have other consequences which cannot be predicted.
Any such consequence could have a material adverse effect on any Notes
referencing such a benchmark.
Under the UK Benchmarks Regulation, in general, certain requirements will
apply with respect to the provision of a wide range of benchmarks, the
contribution of input data to a benchmark and the use of a benchmark. In
particular, the UK Benchmarks Regulation, among other things, (i) requires
benchmark administrators to be authorised or registered (or, if non-UK-based,
to benefit from an equivalence decision adopted by the UK) and to comply with
extensive requirements in relation to the administration of benchmarks, and
(ii) prevents certain uses by UK-supervised entities of benchmarks of
administrators that are not authorised or registered (or, if non-UK-based,
that do not benefit from an equivalence decision adopted by the UK).
Based on the foregoing, prospective investors should in particular be aware
that:
(a) any of these reforms or pressures described above or any
other changes to a relevant interest rate benchmark (including SONIA) could
affect the level of the published rate, including to cause it to be lower
and/or more volatile than it would otherwise be;
(b) under the Mortgage Conditions, unless 3 month Term SONIA is
discontinued or otherwise unavailable on the basis specified in the Mortgage
Conditions, 3 month Term SONIA is required to be used in the calculation of
the rate of interest on any Loan following the expiry of any fixed-rate
interest period;
(c) if 3 month Term SONIA is discontinued or is otherwise
unavailable, then:
(i) following the expiry of any fixed-rate interest period in
respect of any Loan, the rate of interest on such Loan may be determined by
reference to any other reference rate selected by the Seller in its absolute
discretion under the Mortgage Conditions, although such provisions may not
operate as intended depending on (A) whether the unfettered discretion to
select the replacement reference rate is unfair and therefore not binding on
Borrowers (to the extent that the Borrowers are consumers to whom the Consumer
Rights Act 2015 applies), and (B) market circumstances and the availability of
rates information at the time; and
(ii) it may impact upon the determination of the rate of
interest payable on such Loan, which may impact the availability of revenue
receipts and could affect the ability of the Issuer to make payments under the
Notes;
(d) while an amendment may be made under Condition 13.6
(Additional Right of Modification), to change the SONIA rate on the Notes to
an alternative base rate under certain circumstances broadly related to SONIA
disruption or discontinuation and subject to certain conditions, there can be
no assurance that any such amendment will be made or, if made, that it will
(i) fully or effectively mitigate interest rate risks or result in an
equivalent methodology for determining the interest rates on the Notes, or
(ii) be made prior to any date on which any of the risks described in this
risk factor may become relevant; and
(e) if SONIA is discontinued, and whether or not an amendment is
made under Condition 13.6 (Additional Right of Modification) to change the
SONIA rate on the Notes as described in paragraph (d) above, there can be no
assurance that the applicable fall-back provisions under the Swap Agreements
would operate so as to ensure that the floating rate used to determine
payments under any Swap Transaction is the same as that used to determine
interest payments under the Notes, or that any such amendment made under
Condition 13.6 (Additional Right of Modification) would allow the relevant
Swap Transactions to fully or effectively mitigate interest rate risk on the
Notes. This, in turn, could cause a risk of mismatch of interest and reduced
payments on the Notes.
Investors should note the various circumstances under which a Base Rate
Modification may be made, which are specified in Condition 13.6 (Additional
Right of Modification). As noted above, these events broadly relate to
SONIA's disruption or discontinuation, but also include, inter alia, any
public statements by the SONIA administrator or its supervisor to that effect,
and a Base Rate Modification may also be made if the Seller (on behalf of the
Issuer) reasonably expects any of these events to occur within six months of
the proposed effective date of such Base Rate Modification. A Base Rate
Modification may also be made if an alternative means of calculating a
SONIA-based base rate is introduced which becomes a standard means of
calculating interest for similar transactions. Investors should also note
the various options permitted as an Alternative Base Rate as set out in
Condition 13.6 (Additional Right of Modification), which include, inter alia,
a base rate utilised in a publicly-listed new issue of sterling-denominated
asset backed floating rate notes where the originator of the relevant assets
is an affiliate of the Seller, or such other base rate as the Seller (on
behalf of the Issuer) reasonably determines. Investors should also note the
negative consent requirements in relation to a Base Rate Modification (as to
which, see "Risks relating to changes to the structure and documents -
Meetings of Noteholders and Certificateholders, Modification and Waivers"
above).
When implementing any Base Rate Modification, the Note Trustee shall not
consider the interests of the Noteholders, any other Secured Creditor or any
other person, and shall, subject to Condition 13.6 (Additional Right of
Modification), act and rely solely and without investigation or liability on
any certificate (including, but not limited to, a Base Rate Modification
Certificate) or evidence (including, but not limited to, a Rating Agency
Confirmation) provided to them by the Issuer or the relevant Transaction
Party, as the case may be, pursuant to Condition 13.6 (Additional Right of
Modification) and shall not be liable to the Noteholders, any other Secured
Creditor or any other person for so acting or relying, irrespective of whether
any such modification is or may be materially prejudicial to the interests of
any such person.
More generally, any of the above matters (including an amendment to change the
SONIA rate as described in paragraph (e) above) or any other significant
change to the setting or existence of SONIA could affect the ability of the
Issuer to meet its obligations under the Notes and/or the Swap Agreements
and/or could have a material adverse effect on the value or liquidity of, and
the amount payable under, the Notes. Changes in the manner of administration
of SONIA could result in an adjustment to the Conditions and the Swap
Agreements, early redemption, delisting or other consequences in relation to
the Notes. No assurance may be provided that relevant changes will not be
made to SONIA or any other relevant benchmark rate and/or that such benchmarks
will continue to exist. Investors should consider these matters when making
their investment decision with respect to the Notes.
Investors should consult their own independent advisers and make their own
assessment about the potential risks imposed by the UK Benchmarks Regulation,
or any of the international or national reforms, and the possible application
of the benchmark replacement provisions of the Notes in making any investment
decision with respect to the Notes.
6.2 Absence of secondary market or lack of liquidity in the
secondary market may affect the market value of the Notes
There is currently a limited secondary market for the Notes, and no assurance
is provided that an active and liquid secondary market for the Notes will
develop further. Therefore, investors may not be able to sell their Notes
easily or at prices that will provide them with a yield comparable to similar
investments that have a developed secondary market. Any investor in the
Notes must be prepared to hold their Notes until the Final Maturity Date.
Whilst central bank schemes such as, amongst others, the Bank of England's
Sterling Monetary Framework, the Funding for Lending Scheme, the Term Funding
Scheme or the European Central Bank's liquidity scheme provide an important
source of liquidity in respect of eligible securities, further restrictions in
respect of the relevant eligibility criteria for eligible collateral which
applies and will apply in future are likely to adversely impact secondary
market liquidity for mortgage backed securities in general, regardless of
whether the Notes are eligible securities. The Notes may, either upon issue
or at any time prior to redemption in full, not satisfy all or any of the
requirements for such central bank schemes. Any potential investor in the
Notes should make their own conclusions and seek their own advice with respect
to whether or not the Notes constitute eligible collateral for such central
bank schemes, including whether and how such eligibility may be impacted by
the UK withdrawal from the EU and the UK no longer being part of the EEA.
6.3 Bank of England funding scheme eligibility
Certain investors in the Notes may wish to consider the use of the Notes as
eligible securities for the purposes of schemes such as the Bank of England's
Discount Window Facility or Sterling Monetary Framework. Recognition of the
Notes as eligible securities for the purposes of these schemes will depend
upon satisfaction of the eligibility criteria as specified by the Bank of
England and at the discretion of the Bank of England. If the Notes do not
satisfy such criteria, there is a risk that the Notes will not be eligible
collateral under such schemes. The Notes may, either upon issue, or at any
time during their life, not satisfy all or any requirements for eligibility
and be recognised as eligible collateral for such schemes. Any potential
investor in the Notes should make its own determinations and seek its own
advice with respect to whether or not the Notes constitute eligible collateral
for such schemes, and no assurance can be given that any of the relevant
parties have taken any steps to register such collateral.
6.4 Increases in prevailing market interest rates may adversely
affect the performance and market value of the Notes
Any increase in interest rates may adversely affect the ability of Borrowers
to pay interest or repay principal on their Loans. Borrowers with a Loan
subject to a variable rate of interest or a Loan for which the related
interest rate adjusts following an initial fixed rate, or low introductory
rate, as applicable, may be exposed to increased monthly payments if the
related mortgage interest rate adjusts upward (or, in the case of a Loan with
an initial fixed rate or low introductory rate, at the end of the relevant
fixed or introductory period). This increase in Borrowers' monthly payments,
which (in the case of a Loan with an initial fixed rate or low introductory
rate) may be compounded by any further increase in the related mortgage
interest rate during the relevant fixed or introductory period, may ultimately
result in higher delinquency rates, Defaults and losses in the future.
Borrowers seeking to avoid increased monthly payments (caused by, for example,
the expiry of an initial fixed rate or low introductory rate, or a rise in the
related mortgage interest rates) by refinancing their Loans may no longer be
able to find available replacement loans at comparably low interest rates.
Any decline in housing prices may also leave Borrowers with insufficient
equity in their Properties to permit them to refinance. These events, alone
or in combination, may contribute to higher delinquency rates, Defaults,
slower prepayment speeds and higher losses which could have an adverse effect
on the Issuer's ability to make payments under the Notes.
6.5 The market continues to develop in relation to SONIA as a
reference rate in the capital markets
Investors should be aware that the market continues to develop in relation to
SONIA as a reference rate in the capital markets and its adoption as an
alternative to LIBOR. In particular, market participants and relevant
working groups are exploring alternative reference rates based on SONIA,
including term SONIA reference rates (which seek to measure the market's
forward expectation of an average SONIA rate over a designated term). As a
result, the market or a significant part thereof may adopt an application of
SONIA that differs significantly from that set out in the Conditions and used
in relation to Notes that reference a SONIA rate issued under this
Prospectus. Interest on Notes which reference a SONIA rate is only capable
of being determined at the end of the relevant Observation Period and
immediately prior to the relevant Interest Payment Date. It may be difficult
for investors in the Notes which reference a SONIA rate to reliably estimate
the amount of interest which will be payable on such Notes.
7. Legal Risks and Regulatory Risks
7.1 Regulatory initiatives may have an adverse impact on the
regulatory treatment of the Notes
In Europe, the U.S. and elsewhere there is increased political and regulatory
scrutiny of the asset backed securities industry. This has resulted in
multiple measures for increased regulation which are at various stages of
implementation and which may have an adverse impact on the regulatory position
of certain investors in securitisation exposures and/or on the incentives for
certain investors to hold asset backed securities, and may thereby affect the
liquidity of such securities. None of the Issuer, the Joint Lead Managers,
the Joint Arrangers or the Seller make any representation to any prospective
investor or purchaser of the Notes regarding the regulatory treatment of their
investment on the Closing Date or at any time in the future.
Such regulatory initiatives could adversely impact the regulatory position of
Noteholders and the market value and/or liquidity of the Notes in the
secondary market.
7.2 Prudential regulation reforms under Basel or other frameworks
may have an adverse impact on the regulatory capital treatment of the Notes
Investors should note in particular that the Basel Committee on Banking
Supervision ("BCBS") has approved a series of significant changes to the Basel
framework for prudential regulation (such changes being referred to by the
BCBS as Basel III, and referred to, colloquially, as Basel III in respect of
reforms finalised prior to 7 December 2017 and Basel IV in respect of reforms
finalised on or following that date). The Basel III/IV reforms, which
include revisions to the credit risk framework in general and the
securitisation framework in particular, may result in increased regulatory
capital and/or other prudential requirements in respect of securitisation
positions. The BCBS continues to work on new policy initiatives. National
implementation of the Basel III/IV reforms may vary those reforms and/or their
timing. It should also be noted that changes to prudential requirements have
been made for insurance and reinsurance undertakings through participating
jurisdiction initiatives, such as the Solvency II frameworks in Europe and the
UK, both of which are under review and subject to further reform. Investors
in the Notes are responsible for analysing their own regulatory position and
prudential regulation treatment applicable to the Notes and should consult
their own advisers in this respect.
Such reforms could adversely affect the regulatory treatment of the Notes and
the market value and/or liquidity of the Notes in the secondary market.
7.3 Non-compliance with the securitisation regulation regimes in
the UK and/or the EU, as applicable, may have an adverse impact on the
regulatory treatment of the Notes and/or decrease the liquidity of the Notes
The EU Securitisation Regulation applies in general (subject to certain
grandfathering) from 1 January 2019 and, from 9 April 2021, the EU
Securitisation Regulation applies as amended by Regulation (EU) 2021/557.
However, some legislative measures necessary for the full implementation of
the EU Securitisation Regulation regime have not yet been finalised or have
not yet entered into force, and compliance with certain requirements may be
subject to the application of transitional provisions. In addition, further
amendments are expected to be introduced to the EU Securitisation Regulation
regime as a result of its periodic wider review. In this regard it should be
noted that in October 2024 the European Commission published a consultation on
various policy options for the wide reforms to the prudential and
non-prudential regulation of securitisation, including, among other things,
reforms aimed at potentially reducing the regulatory burden in relation to the
investor due diligence and transparency requirements under the EU
Securitisation Regulation. On 31 March 2025, the Joint Committee of the
European Supervisory Authorities published a report which, among other things,
included certain recommendations to the European Commission relating to the
amendments of the EU Securitisation Regulation (JC of ESAs Article 44
Report). The recommendations in the JC of ESAs Article 44 Report relating to
due diligence and transparency requirements indicate a possible move towards
more proportionate and principles-based approach, although it should be noted
that some of the recommendations could also introduce new risks and new
compliance challenges and that the implementation of the recommendations will
also depend on the development of new technical standards and guidance which
could further delay the introduction of helpful changes. However, at this
stage, it is unclear to what extent any of such recommendations will be
reflected in the package of legislative amendments that the European
Commission will publish in June/July 2025 and which will be followed by the
negotiation with the European Parliament and the Council of the European Union
when further material amendments could be introduced before a compromise is
reached and all changes are finalised. It should also be noted that the
European Securities and Markets Authority ("ESMA") is reviewing technical
standards that prescribe EU template-based reporting and in February 2025
published proposals on the introduction of a new simplified regime for
European private securitisation. ESMA's work on this initiative and any
further amendments to the reporting technical standards will need to be
coordinated with the wider review of the EU Securitisation Regulation.
Therefore, when any such reforms (including any targeted amendments by ESMA to
the EU technical standards prescribing the reporting templates) will be
finalised and become applicable and whether such reforms will benefit the
parties to this Transaction and/or the Notes remains to be seen. The EU
Securitisation Regulation establishes certain common rules for all
securitisations that fall within its scope (including with respect to the
recasting of pre-1 January 2019 risk retention and investor due diligence
regimes).
The EU Securitisation Regulation has direct effect in member states of the EU
and, once the EU Securitisation Regulation is incorporated into the EEA
Agreement, it will apply more broadly in the EEA, including Iceland, Norway
and Liechtenstein.
Following the UK's withdrawal from the EU at the end of 2020, Regulation (EU)
2017/2402 as it formed part of domestic law of the United Kingdom by virtue of
the EUWA (the "UK Securitisation Regulation ") became applicable in the UK
largely mirroring (with some adjustments) the EU Securitisation Regulation as
it applied in the EU at the end of 2020. However, from 1 November 2024, the UK
Securitisation Regulation regime was revoked and replaced (subject to certain
grandfathering and transitional provisions) with a new recast regime
introduced under the Financial Services and Markets Act 2000, as amended
("FSMA") and related thereto (i) the Securitisation Regulations 2024 (SI
2024/102), as amended ("2024 UK SR SI"); as well as (ii) the Securitisation
Part of the Prudential Regulation Authority ("PRA") Rulebook ("PRA
Securitisation Rules") and the securitisation sourcebook ("SECN") of the
Financial Conduct Authority ("FCA") Handbook (collectively, the "UK
Securitisation Framework "). The UK Securitisation Framework applies to this
Transaction. Also note that in the second half of 2025 the UK government, the
PRA and the FCA will consult on some amendments to the requirements applicable
under the UK Securitisation Framework including, but not limited to,
amendments to the investor due diligence, risk retention, transparency and
reporting requirements. Therefore, at this stage, not all the details are
known on the implementation of the UK Securitisation Framework. Please note
that some divergence between EU and UK regimes exists already. While the UK
Securitisation Framework brings some alignment with the EU regime, it also
introduces new points of divergence and the risk of further divergence between
EU and UK regimes cannot be ruled out in the longer term as it is not known at
this stage how the ongoing reforms or any future reforms will be finalised and
implemented in the UK or the EU.
The UK Securitisation Framework and/or EU Securitisation Regulation
requirements will apply to the Notes and/or Residual Certificates. As such,
certain European-regulated institutional investors or UK-regulated
institutional investors, including credit institutions, investment firms,
authorised alternative investment fund managers, insurance and reinsurance
undertakings, certain undertakings for the collective investment of
transferable securities (UCITs) and certain regulated pension funds
(institutions for occupational retirement provision), are required to comply,
as applicable, with certain due diligence requirements prior to holding a
securitisation position and on an ongoing basis while holding the position
under Article 5 of the EU Securitisation Regulation or the relevant due
diligence provisions of the UK Securitisation Framework. Among other things,
prior to holding a securitisation position, such institutional investors are
required to verify under their respective EU or UK regime certain matters with
respect to compliance of the relevant transaction parties with credit granting
standards, risk retention and transparency requirements.
If the relevant European- or UK-regulated institutional investor elects to
acquire or holds the Notes having failed to comply with one or more of the
requirements, as applicable to them under their respective EU or UK regime,
this may result in the imposition of a penal capital charge on the Notes for
institutional investors subject to regulatory capital requirements or a
requirement to take a corrective action, in the case of a certain type of
regulated fund investors.
Aspects of the requirements of the EU Securitisation Regulation and the UK
Securitisation Framework and what is or will be required to demonstrate
compliance to national regulators remain unclear. Prospective investors
should therefore make themselves aware of the requirements (including any
changes arising as a result of the reforms) applicable to them in their
respective jurisdictions and are required to independently assess and
determine the sufficiency of the information described in this Prospectus
generally for the purposes of complying with such due diligence requirements,
as applicable.
Various parties to the securitisation transaction described in this Prospectus
(including the Issuer and the Seller) are also subject to the requirements of
the UK Securitisation Framework. However some uncertainty remains in
relation to the interpretation of some of these requirements and what is or
will be required to demonstrate compliance to national regulators. There can
be no assurance that the information in this Prospectus or to be made
available to investors in accordance with FCA Transparency Rules will be
adequate for any prospective institutional investors to comply with their due
diligence obligations under the UK Securitisation Framework or the EU
Securitisation Regulation.
In addition, various parties to the securitisation transaction described in
this Prospectus (including the Issuer) have contractually elected and agreed
to comply with the requirements of the EU Securitisation Regulation relating
to the risk retention, transparency and reporting as such requirements are
interpreted and applied solely on the Closing Date (there is no obligation to
comply with any amendments to applicable EU technical standards, guidance or
policy statements introduced in relation thereto after the Closing Date).
Non-compliance with the UK Securitisation Framework and/or the EU
Securitisation Regulation could adversely affect the regulatory treatment of
the Notes and the market value and/or liquidity of the Notes in the secondary
market.
Prospective investors in the Notes are responsible for analysing their own
regulatory position, and should consult their own advisors in this respect.
7.4 Change of Law
The transactions described in this Prospectus and the ratings which are to be
assigned to the Notes are based on the relevant law and administrative
practice in effect as at the date of this Prospectus, and having regard to the
expected tax treatment of all relevant entities under such law and practice.
No assurance can be given as to the impact of any possible change to the law
(including any change in regulation which may occur without a change in
primary legislation) and practice or tax treatment after the date of this
Prospectus, nor can any assurance be given as to whether any such change would
adversely affect the ability of the Issuer to make payments under the Notes.
In addition, it should be noted that regulatory requirements (including any
applicable retention, due diligence or disclosure obligations) may be recast
or amended and there can be no assurance that any such changes will not
adversely affect the compliance position of a transaction described in this
Prospectus or of any party under any applicable law or regulation.
A change in law or regulatory requirements could affect the compliance
position of the transaction as described in this Prospectus or of any party
under any applicable law or regulation and/or could affect the ability of the
Issuer to make payments under the Notes.
7.5 Risks relating to the Banking Act 2009
The Banking Act 2009 (the "Banking Act") includes provisions for a special
resolution regime, pursuant to which specified UK authorities have extended
tools to deal with the failure (or likely failure) of certain UK incorporated
entities, including (amongst others) authorised deposit-taking institutions
and certain investment firms, and powers to take certain resolution actions in
respect of third country institutions. In addition, powers may be used in
certain circumstances in respect of UK established banking group companies,
where such companies are in the same group as a relevant UK or third country
institution. Relevant transaction parties for these purposes include the
Seller, the Swap Providers, the Issuer Account Bank and the Collection Account
Bank.
The tools available under the Banking Act include share and property transfer
powers (including powers for partial property transfers), bail-in powers,
certain ancillary powers (including powers to modify contractual arrangements
in certain circumstances) and special insolvency procedures which may be
commenced by the UK authorities. It is possible that the tools described
above could be used prior to the point at which an application for insolvency
proceedings with respect to a relevant entity could be made and, in certain
circumstances, the UK authorities may exercise broad pre-resolution powers in
respect of relevant entities with a view to removing impediments to the
exercise of the stabilisation tools.
In general, the Banking Act requires the UK authorities to have regard to
specified objectives in exercising the powers provided for by the Banking
Act. One of the objectives (which is required to be balanced as appropriate
with the other specified objectives) refers to the protection and enhancement
of the stability of the financial system of the UK. The Banking Act includes
provisions related to compensation in respect of instruments and orders made
under it. In general, there is considerable uncertainty about the scope of
the powers afforded to UK authorities under the Banking Act and how the
authorities may choose to exercise them.
If an instrument or order were to be made under the provisions of the Banking
Act currently in force in respect of a relevant entity as described above,
such action may (among other things) affect the ability of such entity to
satisfy its obligations under the Transaction Documents and/or result in the
cancellation, modification or conversion of certain unsecured liabilities of
such entity under the Transaction Documents or in other modifications to such
documents. In particular, modifications may be made pursuant to powers
permitting (i) certain trust arrangements to be removed or modified, (ii)
contractual arrangements between relevant entities and other parties to be
removed, modified or created where considered necessary to enable a transferee
in the context of a property or share transfer to operate the transferred
business effectively, and (iii) in connection with the modification of an
unsecured liability through use of the bail-in tool, the discharge of a
relevant entity from further performance of its obligations under a
contract. In addition, subject to certain conditions, powers would apply to
require a relevant instrument or order (and related events) to be disregarded
in determining whether certain widely defined "default events" have occurred
(which events may include trigger events included in the Transaction Documents
in respect of the relevant entity, including termination events and (in the
case of the Seller) trigger events in respect of perfection of legal title to
the Loans). As a result, the making of an instrument or order in respect of
a relevant entity as described above may affect the ability of the Issuer to
meet its obligations in respect of the Notes.
As noted above, the stabilisation tools may be used in respect of certain
banking group companies provided certain conditions are met. If the Issuer
was regarded to be a banking group company and no exclusion applied, then it
would be possible in certain scenarios for the relevant authority to exercise
one or more relevant stabilisation tools (including the property transfer
powers and/or the bail-in powers) in respect of it, which could result in
reduced amounts being available to make payments in respect of the Notes
and/or in the modification, cancellation or conversion of any unsecured
portion of the liability of the Issuer under the Notes at the relevant time.
In this regard, it should be noted that the UK authorities have provided an
exclusion for certain securitisation companies, which exclusion is expected to
extend to the Issuer, although aspects of the relevant provisions are not
entirely clear.
At present, the UK authorities have not made an instrument or order under the
Banking Act in respect of the entities referred to above and there has been no
indication that any such instrument or order will be made, but there can be no
assurance that this will not change and/or that Noteholders will not be
adversely affected by any such instrument or order if made. While there is
provision for compensation in certain circumstances under the Banking Act,
there can be no assurance that Noteholders would recover compensation promptly
and equal to any loss actually incurred.
Lastly, as a result of Directive 2014/59/EU providing for the establishment of
an EU-wide framework for the recovery and resolution of credit institutions
and investment firms and any relevant national implementing measures, it is
possible that an institution with its head office in an EU state and/or
certain group companies could be subject to certain resolution actions in that
state. Once again, any such action may affect the ability of any relevant
entity to satisfy its obligations under the Transaction Documents and there
can be no assurance that Noteholders will not be adversely affected as a
result.
7.6 Security and insolvency considerations
The Issuer will enter into the Deed of Charge pursuant to which it will grant
the Security in respect of certain of its obligations, including its
obligations under the Notes (as to which, see "Summary of the Key Transaction
Documents - Deed of Charge"). If certain insolvency proceedings (including
administrations or liquidations) are commenced or certain pre-insolvency
events occur in respect of the Issuer, the ability to realise the Security may
be delayed and/or the value of the Security impaired.
In particular, it should be noted that significant changes to the UK
insolvency regime have been enacted under the Corporate Insolvency and
Governance Act 2020 ("CIGA"), which received Royal Assent on 25 June 2020 and
came into effect on 26 June 2020. The changes include, among other things:
(i) the introduction of a new moratorium regime that certain eligible
companies can obtain which will prevent creditors taking certain action
against the company for a specified period; (ii) a ban on the operation of or
exercise of ipso facto clauses preventing (subject to exemptions) termination,
variation or exercise of other rights under a contract due to a counterparty
entering into certain insolvency or restructuring procedures; and (iii) a new
compromise or arrangement under Part 26A of the Companies Act 2006 (the
"Restructuring Plan") that provides for ways of imposing a restructuring on
creditors and/or shareholders without their consent (so-called cross-class
cram-down procedure), subject to certain conditions being met and with a court
adjudicating on the fairness of the restructuring proposal as a whole in
determining whether or not to exercise its discretionary power to sanction the
Restructuring Plan. While the Issuer is expected to be exempt from the
application of the new moratorium regime and the ban on ipso facto clauses,
there is no guidance on how the new legislation will be interpreted and the
Secretary of State may by regulations modify the exceptions. For the
purposes of the Restructuring Plan, it should also be noted that there are
currently no exemptions, but the Secretary of State may by regulations provide
for the exclusion of certain companies providing financial services and the UK
government has expressly provided for changes to the Restructuring Plan to be
effected through secondary legislation, particularly in relation to the
cross-class cram-down procedure. It is therefore possible that aspects of
the legislation may change. While the transaction structure is designed to
minimise the likelihood of the Issuer becoming insolvent and/or subject to
pre-insolvency restructuring proceedings, no assurance can be given that any
modification of the exceptions from the application of the new insolvency
reforms referred to above will not be detrimental to the interests of the
Noteholders and there can be no assurance that the Issuer will not become
insolvent and/or the subject of insolvency or pre-insolvency restructuring
proceedings and/or that the Noteholders would not be adversely affected by the
application of insolvency laws (including English insolvency laws or the laws
affecting the creditors' rights generally).
In addition, it should be noted that, to the extent that the assets of the
Issuer are subject only to a floating charge (including any fixed charge
recharacterised by the courts as a floating charge), in certain circumstances
under the provisions of Sections 174A, 176ZA and 176A of the Insolvency Act
1986, certain floating charge realisations which would otherwise be available
to satisfy the claims of secured creditors under the Deed of Charge may be
used to satisfy any expenses of the insolvency proceeding, claims of unsecured
creditors or creditors who otherwise take priority over floating charge
recoveries. While certain of the covenants given by the Issuer in the
Transaction Documents are intended to ensure it has no significant creditors
other than the secured creditors under the Deed of Charge, it will be a matter
of fact as to whether the Issuer has any other such creditors at any time.
There can be no assurance that the Noteholders will not be adversely affected
by any such reduction in floating charge realisations upon the enforcement of
the Security.
In addition, CIGA may impact the ability of the Servicer or the Seller (acting
on behalf of the Issuer) to bring proceedings against a Borrower which is a
corporate entity or to enforce Mortgages and other Related Security in case of
a moratorium (unless the relevant Borrower is a corporate entity which is an
ineligible company under CIGA). The inability of the Servicer or the Seller
(acting on behalf of the Issuer) to obtain timely and complete payment of
debts from Borrowers may in turn have a material adverse effect on the ability
of the Issuer to make timely and complete payments under the Notes.
There is uncertainty as to the validity and/or enforceability of a provision
which (based on contractual and/or trust principles) subordinates certain
payment rights of a creditor to the payment rights of other creditors of its
counterparty upon the occurrence of insolvency proceedings relating to that
creditor. In particular, several cases have focused on provisions involving
the subordination of a hedging counterparty's payment rights in respect of
certain termination payments upon the occurrence of insolvency proceedings or
any other default on the part of such counterparty (so-called "flip
clauses"). Such provisions are similar in effect to the terms which will be
included in the Transaction Documents relating to the subordination of Hedge
Subordinated Amounts.
The English Supreme Court has held that a flip clause as described above is
valid under English law. Contrary to this, however, the U.S. Bankruptcy
Court has held that such a subordination provision is unenforceable under U.S.
bankruptcy law and that any action to enforce such provision would violate the
automatic stay which applies under such law in the case of a U.S. bankruptcy
of the counterparty. However, a subsequent 2016 U.S. Bankruptcy Court
decision held that in certain circumstances flip clauses are protected under
the U.S. Bankruptcy Code and therefore enforceable in bankruptcy. The 2016
decision was affirmed on 14 March 2018 by the U.S. District Court for the
Southern District of New York, which 2018 decision was further affirmed on 11
August 2020 by the U.S. Court of Appeals for the Second Circuit. The
implications of this conflict remain unresolved.
If a creditor of the Issuer (such as each Swap Provider) or a related entity
becomes subject to insolvency proceedings in any jurisdiction outside England
and Wales (including, but not limited to, the U.S.), and it is owed a payment
by the Issuer, a question arises as to whether the insolvent creditor or any
insolvency official appointed in respect of that creditor could successfully
challenge the validity and/or enforceability of subordination provisions
included in the English law governed Transaction Documents (such as a
provision of the relevant Priorities of Payments which refers to the ranking
of each Swap Provider's payment rights in respect of Hedge Subordinated
Amounts). In particular, based on the decision of the U.S. Bankruptcy Court
referred to above, there is a risk that such subordination provisions would
not be upheld under U.S. bankruptcy laws. Such laws may be relevant in certain
circumstances with respect to a Swap Provider, notwithstanding that it is a
non-U.S. established entity (and/or with respect to any replacement
counterparty, depending on certain matters in respect of that entity).
In general, if a subordination provision included in the Transaction Documents
was successfully challenged under the insolvency laws of any relevant
jurisdiction outside England and Wales and any relevant foreign judgment or
order was recognised by the English courts, there can be no assurance that
such actions would not adversely affect the rights of the Noteholders, the
market value of the Notes and/or the ability of the Issuer to satisfy its
obligations under the Notes.
Lastly, given the general relevance of the issues under discussion in the
judgments referred to above and that the Transaction Documents will include
terms providing for the subordination of Hedge Subordinated Amounts, there is
a risk that the final outcome of the dispute in such judgments (including any
recognition action by the English courts) may result in negative rating
pressure in respect of the Notes. If any rating assigned to the Notes is
lowered, the market value of the Notes may reduce.
7.7 Liquidation expenses
Prior to the House of Lords' decision in the case of Re Leyland Daf 2004
UKHL 9 ("Re Leyland Daf"), the general position was that, in a liquidation of
a company, the liquidation expenses ranked ahead of unsecured debts and
floating chargees' claims. Re Leyland Daf reversed this position so that
liquidation expenses could no longer be recouped out of assets subject to a
floating charge. However, Section 176ZA of the Insolvency Act 1986, which
came into force on 6 April 2008, effectively reversed by statute the House of
Lords' decision in Re Leyland Daf. As a result costs and expenses of
liquidation will be payable out of floating charge assets in priority to the
claims of the floating charge-holder. In respect of certain litigation
expenses of the liquidator only, this is subject to the approval of the amount
of such expenses by the floating charge-holder (or, in certain circumstances,
the court) pursuant to rules 4.218A to 4.218E of the Insolvency Rules 1986.
In general, the reversal of Re Leyland Daf applies in respect of all
liquidations commenced on or after 6 April 2008.
Therefore, floating charge realisations upon the enforcement of the floating
charge security to be granted by the Issuer which would otherwise have been
available to the Secured Creditors would be reduced by the amount of all, or a
significant proportion of, any liquidation expenses which could have an
adverse effect on the ability of the Issuer to make payments in respect of the
Notes.
7.8 Fixed charges may take effect under English law as floating
charges
The law in England and Wales relating to the characterisation of fixed charges
is unsettled. The fixed charges purported to be granted by the Issuer (other
than by way of assignment) may take effect under English law as floating
charges only if, for example, it is determined that the Security Trustee does
not exert sufficient control over the Charged Assets. If the charges take
effect as floating charges instead of fixed charges, then, as a matter of law,
certain claims would have priority over the claims of the Security Trustee in
respect of the floating charge assets.
The interest of the Secured Creditors in property and assets over which there
is a floating charge will rank behind the expenses of any administration or
liquidator and the claims of certain preferential creditors on enforcement of
the Security. Section 250 of the Enterprise Act 2002 abolishes Crown
Preference in relation to all insolvencies (and thus reduces the categories of
preferential debts that are to be paid in priority to debts due to the holder
of a floating charge) but Section 176A of the Insolvency Act 1986 requires a
"prescribed part" (up to a maximum amount of £600,000 (in respect of floating
charges created prior to 6 April 2020) or £800,000 (in respect of floating
charges created on or after 6 April 2020, as a result of the application of
the Insolvency Act 1986 (Prescribed Part) (Amendment) Order 2020)) of the
floating charge realisations available for distribution to be set aside to
satisfy the claims of unsecured creditors. This means that the expenses of
any administration, the claims of preferential creditors and the beneficiaries
of the prescribed part will be paid out of the proceeds of enforcement of the
floating charge ahead of amounts due to Noteholders. The prescribed part
will not be relevant to property subject to a valid fixed security interest or
to a situation in which there are no unsecured creditors.
7.9 Impact of EMIR on each Swap Agreement
UK EMIR came into force on 1 January 2021. UK EMIR and EU EMIR (each as
amended from time to time) prescribe a number of regulatory requirements for
counterparties to derivatives contracts including (i) a mandatory clearing
obligation for certain classes of "over the counter" ("OTC") derivative
contracts (the "Clearing Obligation"), (ii) a margin posting obligation and a
daily valuation obligation for OTC derivatives contracts not subject to
clearing (the "Collateral Obligation"), (iii) other risk-mitigation techniques
for OTC derivatives contracts not cleared by a central counterparty, and (iv)
certain reporting requirements (the "Reporting Obligation") and record-keeping
requirements.
Under UK EMIR and EU EMIR, counterparties can be classified as (a) financial
counterparties ("FCs") (which includes a sub-category of small FCs), and (b)
non-financial counterparties. The latter classification is further split
into: (i) non-financial counterparties whose positions, together with the
positions of all other non-financial counterparties in its "group" (as defined
in UK EMIR), in OTC derivatives (excluding hedging positions) exceed a
specified clearing threshold ("NFC+"); and (ii) non-financial counterparties
below the clearing threshold ("NFC-"). Whereas FCs and NFC+ entities may be
subject to the Clearing Obligation or, to the extent that any Swap
Transactions are not subject to clearing, to the margin posting obligation and
the daily valuation obligation under the Collateral Obligation, such
obligations do not apply in respect of NFC- entities. In addition, in
respect of the Reporting Obligation, UK FCs are solely responsible and legally
liable for reporting the details of OTC derivative contracts concluded with
NFC-s on behalf of both counterparties as well as for ensuring the correctness
of the reported details (known as "mandatory reporting"). Note that the
calculation of the UK EMIR clearing threshold (together with other aspects of
UK EMIR) may be impacted in due course by reforms although the scope of the UK
EMIR reforms is yet to be confirmed.
On the basis that the Issuer currently has the counterparty status of NFC- for
the purposes of UK EMIR and a third country equivalent to an NFC- (a "TCE
NFC-") for the purposes of EU EMIR, neither the Clearing Obligation nor the
Collateral Obligation should apply to it. If the Issuer's counterparty
status as an NFC- changes to an NFC+ or FC for the purposes of UK EMIR and/or
to a third country equivalent to a FC or NFC+ (a "TCE FC" or a "TCE NFC+",
respectively) for the purposes of EU EMIR, then certain Swap Transactions may
become subject to the Clearing Obligation or to the margin posting obligation
and daily valuation obligation under the Collateral Obligation. In this
regard, it should be noted that it is not clear that each Swap Transaction
under a Swap Agreement would be a relevant type of OTC derivative contract
that would be subject to the relevant Clearing Obligation under UK EMIR or EU
EMIR. Certain other risk mitigation requirements may also apply in a
different way (for example, the portfolio reconciliation requirement may
increase in frequency). In respect of the Reporting Obligation, "mandatory
reporting" would also cease to apply which means that the Issuer would be
legally liable and responsible for their own reporting obligations under UK
EMIR (although this requirement can be delegated).
Prospective investors should note that there is some uncertainty with respect
to the ability of the Issuer to comply with the Clearing Obligation and the
daily valuation obligation under the Collateral Obligation, certain risk
mitigation requirements and the Reporting Obligation if they were to be
applicable, which may (i) lead to regulatory sanctions, (ii) adversely affect
the ability of the Issuer to continue to be party to each Swap Agreement
(possibly resulting in a restructuring or termination of the Swap
Transactions), and/or (iii) significantly increase the cost of such
arrangements, thereby negatively affecting the ability of the Issuer to hedge
certain risks. As a result, the amounts available to the Issuer to meet its
obligations may be reduced, which may in turn result in investors receiving
less interest or principal than expected. Prospective investors should also
note that uncertainty remains as to the full impact on the Swap Transactions
of the reforms to UK EMIR.
The Issuer will be required to continually comply with UK EMIR while it is
party to any interest rate swaps and, given that the Santander Swap Provider
is established in the EU, EU EMIR while it is party to any interest rate swaps
with the Santander Swap Provider, including any additional provisions or
technical standards which may come into force after the Closing Date, and this
may necessitate amendments to the Transaction Documents. Subject to receipt
by the Note Trustee and the Security Trustee of a certificate from (a) the
Issuer signed by two directors, or (b) the Servicer on behalf of the Issuer,
in each case, certifying to the Note Trustee and the Security Trustee that the
amendments requested by the Issuer are to be made solely for the purpose of
enabling the Issuer to satisfy its requirements under UK EMIR and/or EU EMIR,
the Note Trustee, with the written consent of the Secured Creditors which are
a party to the relevant Transaction Documents shall, without the consent or
sanction of the Noteholders, the Certificateholders or any of the other
Secured Creditors, agree to (or direct the Security Trustee to agree to) any
modification to the Transaction Documents, the Conditions and/or the Residual
Certificates Conditions that are requested in writing by the Issuer (acting in
its own discretion or at the direction of any transaction party) in order to
enable the Issuer to comply with any requirements which apply to it under UK
EMIR and/or EU EMIR (as applicable). The Conditions of the Notes and the
Residual Certificates Condition require this to be done irrespective of
whether such modifications are (i) materially prejudicial to the interests of
the Noteholders of any Class of Notes or Residual Certificates or any other
Secured Creditor, or (ii) in respect of a Basic Terms Modification. Neither
the Note Trustee nor the Security Trustee shall be obliged to agree to any
modification if it would have the effect of exposing the Note Trustee and/or
the Security Trustee to any liability against which it has not been
indemnified and/or secured and/or pre-funded to its satisfaction or increasing
the obligations or duties, or decreasing rights or the protections of the Note
Trustee and/or the Security Trustee in the Transaction Documents and/or the
Conditions of the Notes.
7.10 Effects of the Volcker Rule on the Issuer
The Issuer is of the view that it is not now, and immediately following the
issuance of the Notes and the application of the proceeds thereof, should not
be, a "covered fund" for the purposes of the regulations adopted to implement
Section 619 of the Dodd Frank Act (such statutory provision together with such
implementing regulations, the "Volcker Rule"). Although other statutory or
regulatory exemptions under the Investment Company Act and the Volcker Rule
and its related regulations may be available to the Issuer, this conclusion is
based on the determination that the Issuer would satisfy all of the elements
of the exemption from the definition of "investment company" under the
Investment Company Act, provided by Section 3(c)(5) thereunder, and,
accordingly, may rely on the exemption from the definition of a "covered fund"
under the Volcker Rule made available to certain issuers that do not rely
solely on Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act for
their exemption from registration under the Investment Company Act. If the
Issuer is considered a "covered fund", the liquidity of the market for the
Notes may be materially and adversely affected, since banking entities could
be prohibited from, or face restrictions in, investing in the Notes.
The Volcker Rule generally prohibits "banking entities" (which is broadly
defined to include U.S. banks and bank holding companies and many non-U.S.
banking entities, together with their respective subsidiaries and other
affiliates) from (i) engaging in proprietary trading, (ii) acquiring or
retaining an ownership interest in or sponsoring a "covered fund", and (iii)
entering into certain relationships with a "covered fund", subject to certain
exceptions and exclusions.
Any prospective investor in the Notes or the Residual Certificates, including
a U.S. or foreign bank or a subsidiary or other affiliate thereof, should
consult its own legal advisers regarding such matters and other effects of the
Volcker Rule in respect of any investment in the Notes and should conduct its
own analysis to determine whether the Issuer is a "covered fund" for its
purposes.
The general effects of the Volcker Rule remain uncertain. There is limited
interpretive guidance regarding the Volcker Rule. Regulators in the United
States may promulgate further regulatory changes. No assurance can be given
as to the impact of such changes on the Notes, and prospective investors
should be aware that the Volcker Rule's prohibitions and lack of interpretive
guidance could negatively impact the liquidity and value of the Notes.
7.11 U.S. Risk Retention Requirements
Section 941 of the Dodd-Frank Wall Street Reform and Consumer Protection Act
of 2010 amended the Exchange Act to generally require the "securitizer" of a
"securitization transaction" to retain at least 5 per cent. of the "credit
risk" of "securitized assets", as such terms are defined for the purposes of
that statute, and generally prohibit a securitizer from directly or indirectly
eliminating or reducing its credit exposure by hedging or otherwise
transferring the credit risk that the securitizer is required to retain. The
U.S. Risk Retention Rules came into effect on 24 December 2015 with respect to
residential mortgage-backed securitizations. The U.S. Risk Retention Rules
provide that the securitizer of an asset backed securitization is its
sponsor. The U.S. Risk Retention Rules also provide for certain exemptions
from the risk retention obligation that they generally impose.
The Seller, as the sponsor under the U.S. Risk Retention Rules, does not
intend to retain at least 5 per cent. of the credit risk of the securitized
assets for purposes of compliance with the U.S. Risk Retention Rules, but
rather intends to rely on an exemption provided for in Section 20 of the U.S.
Risk Retention Rules regarding non-U.S. transactions. Such non-U.S.
transactions must meet certain requirements, including that (1) the
transaction is not required to be and is not registered under the Securities
Act; (2) no more than 10 per cent. of the dollar value (or equivalent amount
in the currency in which the "ABS interests" (as defined in Section 2 of the
U.S. Risk Retention Rules) are issued) of all classes of ABS interests issued
in the securitization transaction are sold or transferred to, or for the
account or benefit of, U.S. persons (as defined in the U.S. Risk Retention
Rules, "Risk Retention U.S. Persons"); (3) neither the sponsor nor the issuer
of the securitization transaction is organised under U.S. law or is a branch
located in the United States of a non-U.S. entity; and (4) no more than 25 per
cent. of the underlying collateral was acquired from a majority-owned
affiliate or branch of the sponsor or issuer organised or located in the
United States.
Prior to any Notes and the Residual Certificates which are offered and sold by
the Issuer being purchased by, or for the account or benefit of, any Risk
Retention U.S. Person, the purchaser of such Notes and Residual Certificates
must first disclose to the Joint Lead Managers that it is a Risk Retention
U.S. Person and obtain the written consent of the Seller in the form of a U.S.
Risk Retention Consent. Prospective investors should note that the
definition of "U.S. person" in the U.S. Risk Retention Rules is substantially
similar to, but not identical to, the definition of "U.S. person" under
Regulation S, and that persons who are not "U.S. persons" under Regulation S
may be "U.S. persons" under the U.S. Risk Retention Rules. The definition of
"U.S. person" in the U.S. Risk Retention Rules is excerpted below.
Particular attention should be paid to paragraphs (b) and (h)(i), which are
different than comparable provisions from Regulation S.
Under the U.S. Risk Retention Rules, and subject to limited exceptions, "U.S.
person" (and "Risk Retention U.S. Person" as used in this Prospectus) means
any of the following:
(a) any natural person resident in the United States;
(b) any partnership, corporation, limited liability company, or
other organisation or entity organised or incorporated under the laws of any
State or of the United States( 1 (#_ftn1) );
(c) any estate of which any executor or administrator is a U.S.
person (as defined under any other clause of this definition);
(d) any trust of which any trustee is a U.S. person (as defined
under any other clause of this definition);
(e) any agency or branch of a foreign entity located in the
United States;
(f) any non-discretionary account or similar account (other than
an estate or trust) held by a dealer or other fiduciary for the benefit or
account of a U.S. person (as defined under any other clause of this
definition);
(g) any discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary organised, incorporated,
or (if an individual) resident in the United States; and
(h) any partnership, corporation, limited liability company, or
other organisation or entity if:
(i) organised or incorporated under the laws of any foreign
jurisdiction; and
(ii) formed by a U.S. person (as defined under any other clause
of this definition) principally for the purpose of investing in securities not
registered under the Securities Act( 2 ).
Each holder of a Note or Residual Certificate, or beneficial interest therein,
acquired on the Closing Date, by its acquisition of a Note or Residual
Certificate or a beneficial interest in a Note, will be deemed, and, in
certain circumstances, will be required to represent to the Issuer, the Seller
and the Joint Lead Managers that it (1) either (i) is not a Risk Retention
U.S. Person, or (ii) has obtained a U.S. Risk Retention Consent, (2) is
acquiring such Note or Residual Certificate or a beneficial interest therein
for its own account and not with a view to distribute such Note or Residual
Certificate, and (3) is not acquiring such Note or Residual Certificate or a
beneficial interest therein as part of a scheme to evade the requirements of
the U.S. Risk Retention Rules (including acquiring such Note or Residual
Certificate through a non-Risk Retention U.S. Person, rather than a Risk
Retention U.S. Person, as part of a scheme to evade the 10 per cent. Risk
Retention U.S. Person limitation in the exemption provided for in Section
__.20 of the U.S. Risk Retention Rules described herein).
The Seller has advised the Issuer that they will not provide a U.S. Risk
Retention Consent to any investor if such investor's purchase would result in
more than 10 per cent. of the dollar value (or equivalent amount in the
currency in which the securities are issued) (as determined by fair value
under U.S. GAAP) of all Classes of Notes to be sold or transferred to Risk
Retention U.S. Persons on the Closing Date.
There can be no assurance that the requirement to request the Seller to give
its prior written consent to any Notes or Residual Certificates which are
offered and sold by the Issuer being purchased by, or for the account or
benefit of, any Risk Retention U.S. Person will be complied with or will be
made by such Risk Retention U.S. Persons.
There can be no assurance that the exemption provided for in Section __.20 of
the U.S. Risk Retention Rules regarding non-U.S. transactions will be
available. No assurance can be given as to whether a failure by the Seller
to comply with the U.S. Risk Retention Rules (regardless of the reason for
such failure to comply) may give rise to regulatory action which may adversely
affect the Notes, the Residual Certificates or the market value of the Notes
and the Residual Certificates. Furthermore, the impact of the U.S. Risk
Retention Rules on the securitization market generally is uncertain, and a
failure by the Seller to comply with the U.S. Risk Retention Rules could
therefore negatively affect the market value and secondary market liquidity of
the Notes and the Residual Certificates.
There can be no assurance as to whether the transactions described in this
Prospectus comply as a matter of fact with the U.S. Risk Retention Rules on
the Closing Date or at any time in the future. Investors should consult
their own advisors as to the U.S. Risk Retention Rules. No predictions can
be made as to the precise effects of such matters on any investor or
otherwise.
7.12 Certain risks in respect of the potential financing of the
Retained Interest by the Seller
The Seller (in its capacity as the holder of the Retained Interest) may, from
time to time, enter into financing arrangements in relation to the Retained
Interest. Such financing arrangements could include, amongst other things,
the incurrence of indebtedness by the Seller secured over the Retained
Interest or the entry into repurchase or other arrangements pursuant to which
the Seller may transfer title to the Retained Interest as collateral.
Noteholders should also be aware that any incurrence of debt by the Seller,
including that used to finance the acquisition of the Retained Interest, could
potentially lead to an increased risk of the Seller becoming insolvent and
therefore unable to fulfil its obligations in its capacity as retention
holder.
Although such arrangements are permitted by the UK Securitisation Framework
and the EU Securitisation Regulation (subject to meeting specified criteria),
if the Seller or the provider of such financing defaults in the performance of
its obligations, there could be circumstances in which the Seller may cease to
hold some or all of the Retained Interest (whether as a result of the
enforcement of a security interest or the retention of Notes provided pursuant
to a title transfer collateral arrangement). There can be no assurance that
any provider of finance to the Seller would be required to have regard to the
UK Securitisation Framework and/or the EU Securitisation Regulation when
exercising its rights under the relevant financing arrangement and any
associated security or collateral arrangements. The enforcement of those
rights could, therefore, cause the transaction described in this Prospectus to
be non-compliant with the risk retention requirements. This may affect the
price and liquidity of the Notes, and Notes held by other investors could be
subject to increased regulatory capital charges levied by a relevant regulator
with jurisdiction over any such investors. See further "Regulatory
initiatives may have an adverse impact on the regulatory treatment of the
Notes" and "Non-compliance with the securitisation regulation regimes in the
UK and/or the EU, as applicable, may have an adverse impact on the regulatory
treatment of the Notes and/or decrease the liquidity of the Notes".
Noteholders should also be aware that the terms of any retention financing
could be such that certain parties to it would benefit from a situation where
credit losses are incurred on the Retained Interest. Such parties may not
otherwise be parties to the Transaction Documents and, as such, have no direct
rights to control or influence the performance of the transactions
contemplated by the Transaction Documents. Furthermore, when exercising its
rights in connection with the retention financing, the relevant parties would
have no duties or obligations to consider the effect of any such actions to
the Noteholders.
8. TAX RISKS
8.1 UK taxation treatment of the Issuer
The Issuer has been advised that it should fall within the permanent regime
for the taxation of securitisation companies (as set out in the Taxation of
Securitisation Companies Regulations 2006 (SI 2006/3296) (as amended) (the
"Securitisation Tax Regulations")), and, as such, should be taxed only on the
amount of its "retained profit" (as that term is defined in the Securitisation
Tax Regulations), for so long as it satisfies the conditions of the
Securitisation Tax Regulations. However, if the Issuer does not in fact
satisfy the conditions of the Securitisation Tax Regulations (or subsequently
ceases to satisfy those conditions), then the Issuer may be subject to tax
liabilities not contemplated in the cash flows for the transaction described
in this Prospectus. Any such tax liabilities may reduce amounts available to
the Issuer to meet its obligations under the Notes and may result in investors
receiving less interest and/or principal than expected.
8.2 Withholding tax under the Notes
Provided that the Notes are and continue to be "listed on a recognised stock
exchange" (within the meaning of Section 1005 of the Income Tax Act 2007) (the
"Act"), as at the date of this Prospectus no withholding or deduction for or
on account of United Kingdom income tax will be required on payments of
interest of the Notes. However, there can be no assurance that the law in
this area will not change during the life of the Notes.
In the event that any withholding or deduction for or on account of any tax is
imposed on payments in respect of the Notes, neither the Issuer nor any other
person is obliged to gross-up or otherwise compensate the Noteholders for such
withholding or deduction. However, in such circumstances, the Issuer will,
in accordance with Condition 8.4 (Mandatory Redemption of the Notes for
Taxation or Other Reasons) of the Notes, be required (subject to certain
conditions) to appoint a Paying Agent in another jurisdiction or use its
reasonable endeavours to arrange the substitution of a company incorporated
and/or tax resident in another jurisdiction approved in writing by the Note
Trustee, as principal debtor under the Notes and the Trust Deed or, if such
action would not avoid such withholding or deduction, the Option Holder would
be entitled to exercise the Call Option, following which the Issuer will
redeem the Notes.
The applicability of any withholding or deduction for or on account of United
Kingdom tax on payments of interest on the Notes is discussed further under
"Taxation - United Kingdom Taxation" below.
8.3 Tax risks associated with non-owner occupied properties
The Loans are secured by non-owner occupied freehold or leasehold properties
(the "Buy-to-Let Mortgage Loans").
Since 6 April 2020 no deduction has been available for finance costs from
rental income and instead all rental income is only be eligible for a tax
credit at the basic rate of income tax (20%). This may result in less rental
income being available for individual Borrowers of Buy-to-Let Loans to meet
their repayment obligations under those Loans.
A higher rate of stamp duty land tax ("SDLT") (and Welsh land transactions tax
("WLTT")) applies to the purchase of additional residential properties (such
as buy-to-let properties). The current additional tax rates are as follows:
(i) in England the higher rate is 5 per cent. above the current SDLT rates;
and (ii) in Wales the additional residential rate is 5 per cent higher than
the main WLTT rate for the first £180,000 of purchase price, for subsequent
bands of purchase price, the additional rates remain higher than the main WLTT
rates (by differing percentages) and the bands of purchase price to which the
additional rates are applied are structured differently to the main WLTT
band.
Since 1 April 2021, a 2 per cent. SDLT surcharge has applied to non-UK
residents purchasing residential property in England. This applies in
addition to the 5 per cent. additional rate that applies to the purchase of
additional residential properties in England described above.
In addition, a different (and higher) rate of capital gains tax ("CGT")
applies in respect of a gain realised by an individual on the disposal of a
residential property which is not the taxpayer's principal private residence
(e.g. a second home or a buy-to-let property) than the rate of CGT that
applies in respect of taxable gains realised on the disposal of other assets.
These measures may adversely affect the private residential rental market in
the United Kingdom in general and (in the case of the restriction of income
tax relief) the ability of individual Borrowers of Buy-to-Let Loans to meet
their obligations under those Loans. Further, such measures may prompt
Borrowers to re-finance their loan or sell the underlying Property, which in
turn may adversely affect the yield to maturity of the Notes. See further
"Risks relating to the availability of funds to make payments on the Notes -
The yield to maturity on the Notes may be affected by, among other things,
prepayments made by Borrowers on their Loans" section above.
9. Risks Relating to the Characteristics of the Notes
9.1 Registered Definitive Notes and denominations in integral
multiples
The Notes have a denomination consisting of a minimum authorised denomination
of £100,000 plus higher integral multiples of £1,000. Accordingly, it is
possible that the Notes may be traded in amounts in excess of the minimum
authorised denomination that are not integral multiples of such
denomination. In such a case, if Registered Definitive Notes are required to
be issued, a Noteholder who holds a principal amount less than the minimum
authorised denomination at the relevant time may not receive a Registered
Definitive Note in respect of such holding and may need to purchase a
principal amount of Notes such that their holding amounts to the minimum
authorised denomination (or another relevant denomination amount).
If Registered Definitive Notes are issued, Noteholders should be aware that
Registered Definitive Notes which have a denomination that is not an integral
multiple of the minimum authorised denomination may be particularly illiquid
and difficult to trade.
9.2 Book-Entry Interests
Unless and until Registered Definitive Notes are issued in exchange for the
Book-Entry Interests, holders and beneficial owners of Book-Entry Interests
will not be considered the legal owners or holders of the Notes under the
Trust Deed. After payment to the Principal Paying Agent, the Issuer will not
have responsibility or liability for the payment of interest, principal or
other amounts in respect of the Notes to Euroclear or Clearstream, Luxembourg
or to holders or beneficial owners of Book-Entry Interests.
A nominee for the common safekeeper for Euroclear and Clearstream, Luxembourg
(the "Common Safekeeper") will be considered the registered holder of the
Notes as shown in the records of Euroclear or Clearstream, Luxembourg and will
be the sole legal holder of the Global Note under the Trust Deed while the
Notes are represented by the Global Note. Accordingly, each person owning a
Book-Entry Interest must rely on the relevant procedures of Euroclear and
Clearstream, Luxembourg and, if such person is not a participant in such
entities, on the procedures of the participant through which such person owns
its interest, to exercise any right of a Noteholder under the Trust Deed.
Except as noted in the previous paragraphs, payments of principal and interest
on, and other amounts due in respect of, the Global Note will be made by the
Principal Paying Agent to a nominee of the Common Safekeeper. Upon receipt
of any payment from the Principal Paying Agent, Euroclear and Clearstream,
Luxembourg, as applicable, will promptly credit participants' accounts with
payments in amounts proportionate to their respective ownership of Book-Entry
Interests as shown on their records. The Issuer expects that payments by
participants or indirect participants to owners of Book-Entry Interests held
through such participants or indirect participants will be governed by
standing customer instructions and customary practices, as is now the case
with the securities held for the accounts of customers registered in "street
name", and will be the responsibility of such participants or indirect
participants. None of the Issuer, the Note Trustee, the Security Trustee,
any Paying Agent or the Registrar will have any responsibility or liability
for any aspect of the records relating to, or payments made on account of, the
Book-Entry Interests or for maintaining, supervising or reviewing any records
relating to such Book-Entry Interests.
Unlike Noteholders, holders of the Book-Entry Interests will not have the
right under the Trust Deed to act upon solicitations by or on behalf of the
Issuer for consents or requests by or on behalf of the Issuer for waivers or
other actions from Noteholders. Instead, a holder of Book-Entry Interests
will be permitted to act only to the extent it has received appropriate
proxies to do so from Euroclear or Clearstream, Luxembourg (as the case may
be) and, if applicable, their participants. There can be no assurance that
procedures implemented for the granting of such proxies will be sufficient to
enable holders of Book-Entry Interests to vote on any requested actions on a
timely basis. Similarly, upon the occurrence of an Event of Default under
the Notes, holders of Book-Entry Interests will be restricted to acting
through Euroclear and Clearstream, Luxembourg unless and until Registered
Definitive Notes are issued in accordance with the relevant provisions
described herein under "Terms and Conditions of the Notes" below. There can
be no assurance that the procedures to be implemented by Euroclear and
Clearstream, Luxembourg under such circumstances will be adequate to ensure
the timely exercise of remedies under the Trust Deed.
Although Euroclear and Clearstream, Luxembourg have agreed to certain
procedures to facilitate transfers of Book-Entry Interests among account
holders of Euroclear and Clearstream, Luxembourg, they are under no obligation
to perform or continue to perform such procedures, and such procedures may be
discontinued at any time. None of the Issuer, the Note Trustee, the Security
Trustee, any Paying Agent, the Registrar or any of their agents will have any
responsibility for the performance by Euroclear or Clearstream, Luxembourg or
their respective participants or account holders of their respective
obligations under the rules and procedures governing their operations.
The lack of Notes in physical form could also make it difficult for a
Noteholder to pledge such Notes if Notes in physical form are required by the
party demanding the pledge and hinder the ability of the Noteholder to sell
such Notes because some investors may be unwilling to buy Notes that are not
in physical form.
Certain transfers of Notes or interests therein may only be effected in
accordance with, and subject to, certain transfer restrictions and
certification requirements.
Structure Diagrams
DIAGRAMMATIC OVERVIEW OF THE TRANSACTION
DIAGRAMMATIC OVERVIEW OF ONGOING CASH FLOWS
The Issuer will purchase the Closing Portfolio on the Closing Date.
OWNERSHIP STRUCTURE DIAGRAM OF THE ISSUER
Figure 3 illustrates the ownership structure of the special purpose companies
that are parties to the Transaction Documents, as follows:
· the Issuer is a wholly owned subsidiary of Holdings in
respect of its beneficial ownership;
· the entire issued share capital of Holdings is held on
trust by the Share Trustee under the terms of a trust, the benefit of which is
expressed to be for discretionary purposes; and
· none of the Issuer, Holdings or the Share Trustee is
either owned, controlled, managed, directed or instructed, whether directly or
indirectly, by the Seller or any member of the group of companies containing
the Seller.
Transaction Overview
The information set out below is an overview of various aspects of the
transaction. This overview is not purported to be complete and should be
read in conjunction with, and is qualified in its entirety by, references to
the detailed information presented elsewhere in this Prospectus.
TRANSACTION OVERVIEW - TRANSACTION PARTIES ON THE CLOSING DATE
Party Name Address Document under which appointed/Further Information
"Issuer" Atlas Funding 2025-1 PLC 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom See the section entitled "The Issuer" for further information.
"Holdings" Atlas Holdings 2025-1 Limited 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom See the section entitled "Holdings" for further information.
"Seller" and "Risk Retainer" Lendco Limited 33 Gracechurch Street, London, England, EC3V 0BT See the sections entitled "Summary of the Key Transaction Documents - Mortgage
Sale Agreement" and "The Seller, the Servicing Facilitator and the Risk
Retainer" for further information.
"Servicer" Lendco Mortgage Servicing Limited 33 Gracechurch Street, London, England, EC3V 0BT Servicing Agreement by the Issuer. See the sections entitled "Summary of the
Key Transaction Documents - Servicing Agreement" and "Servicer" for further
information.
"Cash Manager" Citibank, N.A., London Branch Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB Cash Management Agreement by the Issuer. See the sections entitled "Summary
of the Key Transaction Documents - Cash Management Agreement" and "The Agent
Bank, the Principal Paying Agent, the Cash Manager and the Issuer Account
Bank" for further information.
"Santander Swap Provider" Banco Santander, S.A. 2 Triton Square, Regent's Place, London, NW1 3AN Santander Swap Agreement by the Issuer. See the sections entitled "Credit
Structure - Interest Rate Risk for the Notes - Swap Agreement" and "The
Santander Swap Provider and the Liquidity Facility Provider" for further
information.
"HSBC Swap Provider" HSBC Bank plc 8 Canada Square, London E14 5HQ HSBC Swap Agreement by the Issuer. See the sections entitled "Credit
Structure- Interest Rate Risk for the Notes - Swap Agreement" and "The HSBC
Swap Provider" for further information.
"Issuer Account Bank" Citibank, N.A., London Branch Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB The Bank Account Agreement by the Issuer. See the sections entitled "Summary
of the Key Transaction Documents - The Bank Account Agreement" and "The Agent
Bank, the Principal Paying Agent, the Cash Manager and the Issuer Account
Bank" for further information.
"Collection Account Bank" HSBC Bank plc 60 Queen Victoria Street, Bank, London EC4N 4TR Collection Account Declaration of Trust and Expenses Account Declaration of
Trust. See sections entitled "Summary of the Key Transaction Documents - The
Collection Account Declaration of Trust" and "Summary of the Key Transaction
Documents - The Expenses Account Declaration of Trust".
"Security Trustee" Citicorp Trustee Company Limited Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB Deed of Charge. See the sections entitled "Terms and Conditions of the
Notes", "Terms and Conditions of the Residual Certificates" and "The Note
Trustee and Security Trustee" for further information.
"Note Trustee" Citicorp Trustee Company Limited Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB Trust Deed. See the sections entitled "Terms and Conditions of the Notes"
and "The Note Trustee and Security Trustee" for further information.
"Principal Paying Agent" and "Agent Bank" Citibank, N.A., London Branch Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB Agency Agreement by the Issuer. See the sections entitled "Terms and
Conditions of the Notes", "Terms and Conditions of the Residual Certificates"
and "The Agent Bank, the Principal Paying Agent, the Cash Manager and the
Issuer Account Bank" for further information.
"Registrar" Citibank, N.A., London Branch Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB In respect of the Notes and the Residual Certificates, the Agency Agreement,
by the Issuer. See the sections entitled "Terms and Conditions of the Notes"
and "Terms and Conditions of the Residual Certificates" for further
information.
"Corporate Services Provider" CSC Capital Markets UK Limited 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom Corporate Services Agreement by the Issuer and Holdings. See the section
entitled "The Corporate Services Provider and Back-Up Servicing Facilitator"
for further information.
"Back-Up Servicing Facilitator" CSC Capital Markets UK Limited 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom Servicing Agreement by the Issuer. See the section entitled "Summary of the
Key Transaction Documents - Servicing Agreement" for further information.
"Liquidity Facility Provider" Banco Santander, S.A., London Branch 2 Triton Square, Regent's Place, London, NW1 3AN Liquidity Facility Agreement. See the section entitled "Summary of the Key
Transaction Documents - The Liquidity Facility Agreement" for further
information.
"Share Trustee" CSC Corporate Services (UK) Limited 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom Share Trust Deed by the Share Trustee.
"Joint Arrangers" BNP Paribas 16 boulevard des Italiens Subscription Agreement. See the section entitled "Subscription and Sale" for
further information.
75009 Paris
France
HSBC Bank plc 8 Canada Square, London E14 5HQ
"Joint Lead Managers" Banco Santander, S.A. Ciudad Grupo Santander, Avenida de Cantabria s/n, Edificio Encinar, 28660, Subscription Agreement. See the section entitled "Subscription and Sale" for
Boadilla del Monte, Madrid, Spain further information.
BNP Paribas 16 boulevard des Italiens
75009 Paris
France
HSBC Bank plc 8 Canada Square, London E14 5HQ
Lloyds Bank Corporate Markets PLC 25 Gresham Street
London, EC2V 7HN
United Kingdom
Transaction Overview - Portfolio and Servicing
Please refer to the sections entitled "Summary of the Key Transaction
Documents - Mortgage Sale Agreement", "Summary of the Key Transaction
Documents - Servicing Agreement", "Characteristics of the Provisional
Portfolio" and "The Loans" for further detail in respect of the
characteristics of the Portfolio and the sale and the servicing arrangements
in respect of the Portfolio.
Sale of Portfolio: The Portfolio will consist of the Loans and their Related Security which will
be sold by the Seller to the Issuer on the Closing Date and on any date up to
and including the Final Additional Mortgage Loan Purchase Date pursuant to the
Mortgage Sale Agreement. The Loans and their Related Security are governed
by English law.
The sale by the Seller to the Issuer of each Loan and its Related Security in
the Portfolio will be given effect by an equitable assignment.
The Additional Mortgage Loans may be purchased by the Issuer on the Closing
Date or any Additional Mortgage Loan Purchase Date in accordance with the
terms of the Mortgage Sale Agreement and subject to the satisfaction of the
relevant Additional Mortgage Loan Conditions.
The terms "sale", "sell" and "sold" when used in this Prospectus in connection
with the Loans and their Related Security shall be construed to mean each such
creation of an equitable interest.
The terms "repurchase" and "repurchased" when used in this Prospectus in
connection with a Loan and its Related Security shall be construed to include
the purchase by the Seller of such Loan and its Related Security from the
Issuer pursuant to the terms of the Mortgage Sale Agreement.
Prior to the occurrence of a Perfection Event as set out below, notice of the
sale of the Loans and their Related Security comprising the Portfolio will not
be given to the relevant individual or individuals, or the relevant company,
limited liability partnership or trust registered, incorporated or formed (as
applicable) in the UK, Guernsey, Jersey, the Isle of Man or Gibraltar and (as
the case may be) specified as borrowers in the offer letter in respect of such
Loan or from time to time assuming an obligation to repay (under a guarantee
or otherwise) such Loan or any part of it (collectively, the "Borrowers" and
each a "Borrower") and the Issuer will not apply to the Land Registry to
register or record its equitable or beneficial interest in the Mortgages.
Prior to the occurrence of a Perfection Event, the legal title to each Loan
and its Related Security in the Portfolio will be held by the Seller on bare
trust for the Issuer. Following a Perfection Event and notice of the
transfer of the Loans and their Related Security to the Issuer being sent to
the relevant Borrowers, legal title to the Loans and their Related Security
(subject to appropriate registration or recording at the Land Registry) will
pass to the Issuer.
"Land Registry" means the body responsible for recording details of land in
England and Wales.
Please refer to the section entitled "Summary of the Key Transaction Documents
- Mortgage Sale Agreement" for further details.
Features of the Loans: The following is a summary of certain features of the Loans comprising the
Provisional Portfolio determined by reference to the features of each loan in
the Provisional Portfolio as at the Portfolio Reference Date and investors
should refer to, and carefully consider, further details in respect of the
Loans set out in the sections entitled "The Loans" and "Characteristics of the
Provisional Portfolio".
Type of Borrower Prime
Type of mortgage Interest Only
Buy-to-Let Loans Yes
Buy-to-Let Loans (as % of Current Balance) 100%
Owner-occupied properties No
Owner-occupied properties (as % of Current Balance) 0%
Number of loans in the Provisional Portfolio* (#_ftn2) 852
Average/Weighted Average Minimum Maximum
Current Balance* (#_ftn3) £371,755.07 £91,775.68 £2,738,658.00
Current LTV(*) 72.45% 22.43% 84.02%
Seasoning (months)(*) 2.92 0 12
Remaining Term (years)(*) 21.00 4.00 35.00
The "Current Balance" in relation to any Loan as at any date, all sums owing
by a Borrower to the Seller under that Loan and secured or intended to be
secured by the relevant Mortgage as at that date, including but not limited
to, any increase in the principal amount of a Loan due to any Permitted Fee
Capitalisation Amount, arrears and (where relevant) Accrued Interest in
respect of the period up to and including, but not beyond, that date and
including, without limitation, any:
(a) rent and service charge paid by the Seller to an applicable
Borrower's reversioner or landlord in relation to leasehold properties and not
reimbursed by the applicable Borrower; and
(b) any administration or service fee or third party fee
(including, without limitation, legal fees for litigation) or outgoings and
expenses owed in connection with a Loan which is added to the Current Balance
of such Loan.
Any reference to the Current Balance of a loan contained in the Provisional
Portfolio shall be construed as if it were a Loan contained in the Closing
Portfolio.
Consideration: The consideration from the Issuer to the Seller in respect of the sale of the
Portfolio shall be: (a) the initial consideration in an amount equal to
£316,736,833.48, which is due and payable on the Closing Date (the "Closing
Portfolio Initial Consideration") in respect of the Closing Portfolio; (b) in
respect of the Additional Mortgage Loans that do not form part of the Closing
Portfolio, the Additional Mortgage Loan Purchase Consideration (together with
the Closing Portfolio Initial Consideration, the "Initial Consideration") and
(c) deferred consideration consisting of the RC1 Payments and the RC2 Payments
in respect of the Portfolio payable pursuant to the applicable Priorities of
Payments, the right to such RC1 Payments and RC2 Payments being represented by
the RC1 Residual Certificates and the RC2 Residual Certificates to be issued
by the Issuer and delivered to the Seller on the Closing Date. The Seller has
agreed to transfer to the Issuer within two Business Days of the Closing Date
an amount equal to all Collections received on the Loans contained in the
Closing Portfolio and their Related Security from (and including) 1 April 2025
to (but excluding) the Closing Date (the Pre-Closing Collections).
On the Closing Date, the Issuer will credit an amount equal to £0 to the
Pre-Funding Reserve Ledger ("Pre-Funding Reserve Ledger") such reserve being
the "Pre-Funding Reserve").
Conditions for Acquisition of Additional Mortgage Loans: The Issuer will be entitled to apply amounts (if any) standing to the credit
of the Pre-Funding Reserve and (to the extent there are insufficient funds
standing to the credit of the Pre-Funding Reserve for such purpose) any
Principal Receipts available to the Issuer up until the Calculation Date
immediately prior to the First Interest Payment Date in purchasing Additional
Mortgage Loans on the Closing Date or on an Additional Mortgage Loan Purchase
Date (provided that such date falls on or prior to (and including) the
Calculation Date immediately preceding the Final Additional Mortgage Loan
Purchase Date) if and to the extent that the Issuer is permitted to do so by,
and in accordance with, the Mortgage Sale Agreement and the Servicing
Agreement. In particular, any such purchase of Additional Mortgage Loans,
where applicable, by the Issuer will be subject to certain conditions
including (the "Additional Mortgage Loan Conditions") (among other things):
(a) no Enforcement Notice having been served;
(b) either (i) the aggregate notional amounts of the existing
Swap Transactions will be equal to or greater than the aggregate principal
amount outstanding of the Fixed Rate Loans in the Portfolio following the
purchase of the relevant Additional Mortgage Loans; or (ii) one or more new
(or novated) hedging transactions substantially in the same form as the
existing Swap Transactions entered into by the Issuer on the Closing Date
(subject to any agreed changes in the notional amount and fixed rate(s)) have
been put in place in relation to the relevant Additional Mortgage Loans;
(c) the relevant Additional Mortgage Loan was originated in line
with the lending policy and pursuant to the Standard Documentation;
(d) the relevant Additional Mortgage Loan has a maturity date of
at least two years prior to the Final Maturity Date;
(e) the relevant Additional Mortgage Loan has no more than zero
months in arrears;
(f) the relevant Additional Mortgage Loan has a maximum current
LTV of 80%;
(g) the relevant Additional Mortgage Loan has a fixed term no
greater than five years; and
(h) the Additional Mortgage Loan Portfolio Tests have been
satisfied.
The Servicer shall confirm in writing to the Security Trustee and the Issuer
(and upon which confirmation the Security Trustee shall be entitled to rely
without enquiry or liability), that the Additional Mortgage Loan Conditions
and other conditions set out in the Servicing Agreement have been satisfied or
will be satisfied on the relevant Additional Mortgage Loan Purchase Date and
the Seller shall represent and warrant that no Insolvency Event has occurred
in respect to the Seller on such Additional Mortgage Loan Purchase Date.
Any outstanding balance in the Pre-Funding Reserve Ledger as at the First
Interest Payment Date (taking into account any amounts debited from that
ledger on or prior to such date) will be taken into account when determining
the Available Principal Receipts on the First Interest Payment Date.
See the section entitled "The Loans" for further information.
On the First Interest Payment Date, the outstanding balance (if any) of the
Pre-Funding Reserve Ledger (determined as at the Calculation Date immediately
preceding the First Interest Payment Date) will form part of the Available
Principal Receipts (the "Pre-Funding Unused Amount") which will be applied in
accordance with item (a) of the Pre-Enforcement Principal Priority of Payments
as pro rata repayment of the Collateralised Notes.
Representations and Warranties: The Seller will make certain Loan Warranties regarding the Loans and Related
Security to the Issuer and the Security Trustee on: (i) the Closing Date or
the relevant Additional Mortgage Loan Purchase Date, as applicable, in respect
of the Portfolio, and (ii) the relevant Testing Date in respect of the Loans
which are subject to Product Switches (including any related Permitted Fee
Capitalisation Amount made in connection with the relevant Product Switch).
In addition to representations and warranties in respect of the legal nature
of the Loans and their Related Security, there are also asset Loan Warranties
which include the following:
(a) all of the Borrowers are (i) individuals and were aged 18
years or older as at the date of execution of the Loan, (ii) companies
incorporated or registered in the UK, Guernsey, Jersey, the Isle of Man or
Gibraltar, (iii) UK, Guernsey, Jersey, the Isle of Man or Gibraltar limited
liability partnerships, or (iv) trusts formed or registered in the UK,
Guernsey, Jersey, the Isle of Man or Gibraltar;
(b) each Mortgage constitutes a legal, binding, enforceable,
non-cancellable, valid and subsisting first charge or security by way of legal
mortgage or legal charge over the relevant Property (subject to completion of
any registration or recording requirements at the Land Registry) with the
Seller having priority as first ranking mortgagee and secured for the full
amount payable by the Borrower under the Loan and Related Security;
(c) no Borrower is an employee or director of the Seller;
(d) Interest is charged on each Loan in accordance with the
provisions of the Loan and its related Mortgage;
(e) each Loan was at the time of origination and continues to be
denominated in Sterling;
(f) each Property is situated in England or Wales and each
Property is the subject of security or charged to secure the repayment of
those Loans and is of the kind permitted under the applicable Lending
Criteria; and
(g) each Loan was originated by the Seller in accordance with
the then current Lending Criteria and all preconditions to the making of the
Loan were satisfied in all material respects, subject only to such exceptions
and waivers as would be acceptable to a Prudent Mortgage Lender.
"Prudent Mortgage Lender" means a reasonably prudent mortgage lender of
mortgage loans of a type similar to the Loans, lending to borrowers of the
type contemplated in the Lending Criteria applicable at the date of
origination of the Loans on terms similar to those set out in the relevant
Lending Criteria in England and Wales.
"Lending Criteria" means in respect of a Loan, the lending criteria of the
Seller as at the date such Loan was granted. See the sections entitled
"Summary of the Key Transaction Documents- Mortgage Sale Agreement" and "The
Loans" for further details.
See the section entitled "Summary of the Key Transaction Documents - Mortgage
Sale Agreement - Representations and Warranties" for further details.
Repurchase of the Loans and Related Security: The Seller is liable for the repurchase of the relevant Loans and their
Related Security in the following circumstances:
· upon a material breach of Loan Warranties (which the
Seller fails to remedy within the agreed grace period) on the Closing Date or
the relevant Testing Date (as applicable);
· if the Servicer determines on the Portfolio Test Date
that in respect of a Loan is sold to the Issuer prior to the first monthly
payment being due on such loan, the first monthly payment is not made by the
relevant Borrower when due on the Loan; except where such first monthly
payment is not made for administrative or operational reasons and provided
that such payment is made on or prior to the next monthly payment date,
failing which any such Loan shall be repurchased (if a cash payment is not
made in relation to such Loan or such Loan is not substituted for another
Additional Mortgage Loan which satisfies the Additional Mortgage Loan
Conditions);
· if the Servicer determines on the Portfolio Test Date
that the Portfolio does not satisfy the Additional Mortgage Loan Conditions as
at the Portfolio Test Date, the Loans selected by the Seller (according
certain criteria) that would, if repurchased by the Seller, result in the
Additional Mortgage Loan Conditions being satisfied as at the Portfolio Test
Date (if a cash payment is not made in relation to such Loans or such Loans
are not substituted for other Additional Mortgage Loans which satisfy the
Additional Mortgage Loan Conditions);
· in certain circumstances upon making a Product Switch or
Permitted Fee Capitalisation Amount if the Seller has notified the Issuer that
the Product Switch/ Permitted Fee Capitalisation Amount Conditions (as
applicable) have not been met;
· if the Seller determines on a Calculation Date that a
Loan in the Portfolio was a Cross-collateralised Mortgage Loan on the
immediately preceding Collection Period Start Date; and
· a Further Advance is granted in respect of a Loan.
"Cross-collateralised Mortgage Loan" means a Loan subject to a
Cross-collateral Mortgage under the Cross-collateral Mortgage Rights Deed that
has been declared immediately due and repayable by the relevant mortgagee of
any such Cross-collateral Mortgage.
Repurchase of, Cash Payment for or substitution of Disqualified Loans If a Loan is a Disqualified Loan, the Seller shall repurchase or make a cash
payment to the Issuer in relation to (or subject to certain conditions
substitute) the relevant Disqualified Loan and its Related Security. Any such
repurchase or cash payment shall be for an amount equal to the relevant
Repurchase Price and any Loan which is substituted for a Disqualified Loan
must have a Current Balance at least equal to that Disqualified Loan.
Consideration for repurchase: The consideration payable by the Seller in respect of the repurchase of an
affected Loan and its Related Security shall be equal to the Current Balance
of such Loan (disregarding for the purposes of any such calculation in the
event that the Current Balance of such Loan has been reduced as a result of
the exercise of any set-off right which the relevant Borrower has against the
Seller, the amount of any such reduction in the Current Balance) as at the
last day of the Collection Period immediately preceding the date of
repurchase, plus the Issuer's costs and expenses (if any) associated with the
transfer of such Loan and its Related Security to the Seller, less an amount
equal to all Collections received by the Issuer on the relevant Loan(s) and
their Related Security from (but excluding) the last day of the Collection
Period immediately preceding the date of such repurchase to (but excluding)
the date of such repurchase. See the section entitled "Summary of the Key
Transaction Documents - Mortgage Sale Agreement - Repurchase by the Seller"
for further information.
Perfection Events: Transfer of the legal title of the Loans and their Related Security in the
Portfolio (other than any Loan and its Related Security which has been
repurchased by the Seller) to the Issuer will be completed on the occurrence
of certain Perfection Events which include, inter alia, the insolvency of the
Seller. See the section entitled "Transaction Overview - Triggers Tables -
Non-Rating Triggers Table- Perfection Events".
Prior to the completion of the transfer of legal title of the Loans and their
Related Security to the Issuer, the Issuer will hold only the equitable title
and will therefore be subject to certain risks as set out in the section
entitled " Risk Factors - Risks Relating to the Underlying Assets - Seller to
initially retain legal title to the Loans and risks relating to set-off".
Servicing of the Portfolio: The Servicer will be appointed by the Seller and the Issuer (and, in certain
circumstances, the Security Trustee) to service the Portfolio on a day-to-day
basis. The appointment of the Servicer may be terminated by the Issuer and
the Security Trustee upon the occurrence of certain Servicer Termination
Events, which include, inter alia, the insolvency of the Servicer (see
"Transaction Overview - Triggers Tables - Non-Rating Triggers Table- Servicer
Termination Events").
The Servicer may also resign, and the Seller may terminate the appointment of
the Servicer (in each case without any Servicer Termination Event having
occurred) by giving not less than 60 days' notice (or such shorter period as
may be agreed between the Seller and the Servicer) with a copy of such notice
to certain other parties to the Servicing Agreement, in each case subject to,
inter alia, a replacement servicer having been appointed. See the section
entitled "Summary of the Key Transaction Documents - Servicing Agreement"
below.
The Servicing Facilitator will also be appointed by the Seller and the Issuer
(and, in certain circumstances, the Security Trustee) to act as its lawful
agent, in its name and on its behalf, to provide instructions to the Servicer
and to do all things which the Servicing Facilitator reasonably considers
necessary, convenient or incidental to facilitate the servicing of the Loans
and their Related Security by the Servicer or the exercise of such rights,
powers and discretions. See the section entitled "Summary of the Key
Transaction Documents - Servicing Agreement" below.
Option Holder may exercise the Call Option: On or after (i) the Collection Period Start Date immediately preceding the
Optional Redemption Date, (ii) any Collection Period Start Date on which the
aggregate Current Balance of the Loans (excluding any Enforced Loans) was
equal to or less than 10 per cent. of the aggregate Principal Amount
Outstanding of the Notes on the Closing Date, or (iii) a change in tax law
that results in the Issuer being required to make a deduction or withholding
for or on account of tax or the occurrence of certain illegality events, the
Option Holder may, pursuant to and subject to the terms of the Deed Poll,
require (or, if the Option Holder is the Seller, request) the Issuer to:
(a) sell and transfer to a Beneficial Title Transferee the
beneficial title to all (but not some) of the Loans and their Related Security
comprising the Portfolio in consideration for the Optional Purchase Price,
which will result in the Notes being redeemed in full; and
(b) (if applicable) transfer the legal title to all (but not
some) of the Loans and their Related Security comprising the Portfolio, or if,
at the time the Call Option is exercised, the Issuer does not hold legal
title, the right to require the Issuer to procure that the Seller transfers
legal title, to a Legal Title Transferee.
See the section entitled "Early Redemption of the Notes" below.
Transaction Overview - Summary of the Terms and Conditions of the Notes and
the Residual Certificates
Please refer to the sections entitled "Terms and Conditions of the Notes" and
"Terms and Conditions of the Residual Certificates" for further detail in
respect of the terms of the Notes and Residual Certificates, respectively.
Full Capital Structure of the Notes and the Residual Certificates
Class A Notes Class B Notes Class C Notes Class D Notes Class E Notes Class X Notes RC1 Residual Certificates RC2 Residual Certificates
Principal Amount: £271,601,000 £21,380,000 £11,086,000 £7,919,000 £4,752,000 £3,168,000 N/A N/A
Credit enhancement features: Over-collateralisation funded by junior ranking Classes of Notes (other Over-collateralisation funded by junior ranking Classes of Notes (other Over-collateralisation funded by junior ranking Classes of Notes (other Over-collateralisation funded by the Class E Notes, the Revenue Over-collateralisation funded by the Revenue Receipts, Over-collateralisation funded by the Revenue Receipts, (on each Interest N/A N/A
than than than Receipts, (on (on each Interest Payment Date up to but excluding the Class B Redemption Date) the Class A
the Class X Notes), the Revenue Receipts, (on each Interest Payment Date the Class X Notes), the Revenue Receipts, (on each Interest Payment Date the Class X Notes), the Revenue Receipts, (on each Interest Payment Date each Interest Payment Date up to but excluding the Class B Redemption Payment Date up to but excluding the Class B Redemption and
up to up to up to Date) Date) the Class A and B Liquidity Reserve Fund Excess Amount and, following service of an
but excluding the Class B Redemption Date) the Class A and B Liquidity but excluding the Class B Redemption Date) the Class A and B Liquidity but excluding the Class B Redemption Date) the Class A and B Liquidity the Class A and B Liquidity Reserve Fund Excess Amount and, following B Liquidity Reserve Fund Excess Amount and, following Enforcement Notice, all amounts credited to the Class A and B Liquidity
Reserve Reserve Reserve service service of an Reserve Fund Account
Fund Excess Amount and following service of an Enforcement Notice, all Fund Excess Amount and, following service of an Enforcement Notice, all Fund Excess Amount and, following service of an Enforcement Notice, all of an Enforcement Notice, all amounts credited to the Class A and B Enforcement Notice, all amounts credited to the Class A
amounts amounts credited to the Class A and B Liquidity Reserve Fund Account amounts credited to the Class A and B Liquidity Reserve Fund Account Liquidity and B Liquidity
credited to the Class A and B Liquidity Reserve Fund Account Reserve Fund Account Reserve Fund Account
Liquidity support features Subordination in payment of the other Notes, Available Principal Subordination in payment of the other Notes (other than the Class A Subordination in payment of the Class D Notes, the Class E Notes, the Subordination in payment of the Class E Notes, the Class X Notes and Available Principal Receipts applied as Principal N/A N/A N/A
Receipts Notes) and Class X Available Addition Amounts to provide
applied as Principal Addition Amounts to provide for any Senior Expenses Available Principal Receipts applied as Principal Addition Amounts to Notes and Available Principal Receipts applied as Principal Addition Principal Receipts applied as Principal Addition Amounts to provide for for any Senior Expenses Deficit (if the Class E Notes
Deficit, the amounts credited to the Class A and B Liquidity Reserve provide Amounts any are the Most Senior
Fund for any Senior Expenses Deficit (if the Class B Notes are the Most to provide for any Senior Expenses Deficit (if the Class C Notes are the Senior Expenses Deficit (if the Class D Notes are the Most Senior Class Class of Notes at such time or the relevant PDL
Account and the Liquidity Facility available to cover any Class A Senior Most of Condition does not apply)
Liquidity Class of Notes at such time or the relevant PDL Condition does not Senior Class of Notes at such time or the relevant PDL Condition does Notes at such time or the relevant PDL Condition does not apply)
Deficit apply) and not
the amounts credited to the Class A and B Liquidity Reserve Fund Account apply)
Issue Price: 100% 100% 100% 100% 100% 100% N/A N/A
Reference Rate/ Fixed Rate: Compounded Daily SONIA Compounded Daily SONIA Compounded Daily SONIA Compounded Daily SONIA Compounded Daily SONIA Compounded Daily SONIA N/A N/A
Margin (payable up to and including the Optional Redemption Date) 0.800% p.a. 1.250% p.a. 1.650% p.a. 2.000% p.a. 4.000% p.a. 4.000% p.a. N/A N/A
Interest Accrual Method: Actual/365 (Fixed) Actual/365 (Fixed) Actual/365 (Fixed) Actual/365 (Fixed) Actual/365 (Fixed) Actual/365 (Fixed) N/A N/A
Interest Payment Dates: 20th day of each calendar month 20th day of each calendar month 20th day of each calendar month 20th day of each calendar month 20th day of each calendar month 20th day of each calendar month N/A N/A
First Interest Payment Date: 21 July 2025 21 July 2025 21 July 2025 21 July 2025 21 July 2025 21 July 2025 N/A N/A
Final Maturity Date: The Interest Payment Date falling in July 2062 The Interest Payment Date falling in July 2062 The Interest Payment Date falling in July 2062 The Interest Payment Date falling in July 2062 The Interest Payment Date falling in July 2062 The Interest Payment Date falling in July 2062 N/A N/A
Relevant Step-Up Margin (payable after the Optional Redemption Date) 1.200% p.a. 1.875% p.a. 2.475% p.a. 3.000% p.a. 5.000% p.a. N/A N/A N/A
Optional Redemption Date: The Interest Payment Date falling in February 2030 The Interest Payment Date falling in February 2030 The Interest Payment Date falling in February 2030 The Interest Payment Date falling in February 2030 The Interest Payment Date falling in February 2030 The Interest Payment Date falling in February 2030 N/A N/A
Application for Exchange Listing: London Stock Exchange London Stock Exchange London Stock Exchange London Stock Exchange London Stock Exchange London Stock Exchange N/A N/A
ISIN: XS3037718163 XS3037718247 XS3037718593 XS3037718916 XS3037719138 XS3037719302 XS3037710699 XS3037717868
Common Code: 303771816 303771824 303771859 303771891 303771913 303771930 303771069 303771786
CFI: DAVNPR DAVXPR DAVXPR DAVXPR DAVXPR DAVXPR DAVXPR DAVXPR
FISN: ATLAS FUNDING 2/VAR 99981231 ATLAS FUNDING 2/VAR 99981231 SUB ATLAS FUNDING 2/VAR 99981231 SUB ATLAS FUNDING 2/VAR 99981231 SUB ATLAS FUNDING 2/VAR 99981231 SUB ATLAS FUNDING 2/VAR 99981231 SUB ATLAS FUNDING 2/VAR 99981231 SUB ATLAS FUNDING 2/VAR 99981231 SUB
Ratings AAA (sf) / AAA (sf) AA (sf) / AA (high) (sf) A+ (sf) / A (high) (sf) BBB (sf) / BBB (high) (sf) BB (sf) / BB (high) (sf) BBB (sf) / BBB (high) (sf) Not rated Not rated
(S&P / DBRS):
Clearing/ Euroclear/ Euroclear/ Euroclear/ Euroclear/ Euroclear/ Euroclear/ Euroclear/ Euroclear/
Settlement
Clearstream, Luxembourg
Clearstream, Luxembourg
Clearstream, Luxembourg
Clearstream, Luxembourg
Clearstream, Luxembourg
Clearstream, Luxembourg
Clearstream, Luxembourg
Clearstream, Luxembourg
Minimum Denomination £100,000 £100,000 £100,000 £100,000 £100,000 £100,000 N/A N/A
Governing law of the Notes and Residual Certificates English English English English English English English English
As of the date of this Prospectus, each of the Rating Agencies is a credit
rating agency established in the UK and is registered under Regulation (EU) No
1060/2009 as it forms part of domestic law by virtue of EUWA.
Transaction Overview - Overview of the Characteristics of the Notes and the
Residual Certificates
Ranking and Form of the Notes: On the Closing Date, the Issuer will issue the following classes of Notes
under the Trust Deed:
(a) Class A Mortgage Backed Floating Rate Notes due July 2062
(the "Class A Notes");
(b) Class B Mortgage Backed Floating Rate Notes due July 2062
(the "Class B Notes");
(c) Class C Mortgage Backed Floating Rate Notes due July 2062
(the "Class C Notes");
(d) Class D Mortgage Backed Floating Rate Notes due July 2062
(the "Class D Notes");
(e) Class E Mortgage Backed Floating Rate Notes due July 2062
(the "Class E Notes"); and
(f) Class X Mortgage Backed Floating Rate Notes due July 2062
(the "Class X Notes"),
and together, the Class A Notes, the Class B Notes, the Class C Notes, the
Class D Notes, the Class E Notes and the Class X Notes are the "Notes" and the
holders thereof, the "Noteholders".
The Notes will be issued in registered form. Each Class of Notes will be
issued pursuant to Regulation S and will be cleared through Euroclear and/or
Clearstream, Luxembourg, as set out in "Description of the Global Notes"
below.
Residual Certificates: On the Closing Date, the Issuer will also issue to the Seller the RC1 Residual
Certificates and the RC2 Residual Certificates under the Trust Deed (the
"Residual Certificates" and the holders thereof, the "RC1 Certificateholders"
and the "RC2 Certificateholders", and, together the RC1 Certificateholders and
the RC2 Certificateholders, the "Certificateholders"), representing the right
to receive the RC1 Payments and the RC2 Payments, respectively, by way of
deferred consideration for the Issuer's purchase of the Portfolio.
Sequential Order: The Class A Notes rank pro rata and pari passu without preference or priority
among themselves in relation to payment of interest and principal at all
times.
The Class B Notes rank pro rata and pari passu without preference or priority
among themselves in relation to payment of interest and principal at all
times, but (subject to the distribution of the Pre-Funding Unused Amount on
the First Interest Payment Date) subordinate to the Class A Notes.
The Class C Notes rank pro rata and pari passu without preference or priority
among themselves in relation to payment of interest and principal at all
times, but (subject to the distribution of the Pre-Funding Unused Amount on
the First Interest Payment Date) subordinate to the Class A Notes and the
Class B Notes.
The Class D Notes rank pro rata and pari passu without preference or priority
among themselves in relation to payment of interest and principal at all
times, but (subject to the distribution of the Pre-Funding Unused Amount on
the First Interest Payment Date) subordinate to the Class A Notes, the Class B
Notes and the Class C Notes.
The Class E Notes rank pro rata and pari passu without preference or priority
among themselves in relation to payment of interest and principal at all
times, but (subject to the distribution of the Pre-Funding Unused Amount on
the First Interest Payment Date) subordinate to the Class A Notes, the Class B
Notes, the Class C Notes and the Class D Notes.
The Class X Notes rank pro rata and pari passu without preference or priority
among themselves in relation to payment of interest and principal at all
times, but subordinate to the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes and the Class E Notes provided however, that, on each
Interest Payment Date, Available Revenue Receipts will be applied towards
repayment of principal amounts outstanding on the Class X Notes pursuant to
the Pre-Enforcement Revenue Priority of Payments.
The RC1 Residual Certificates rank pro rata and pari passu without preference
or priority among themselves in relation to RC1 Payments at all times and the
RC2 Residual Certificates rank pro rata and pari passu without preference or
priority among themselves in relation to RC2 Payments at all times and are
subordinate to all payments due in respect of the Notes.
Certain amounts due by the Issuer to its other Secured Creditors (and, prior
to the service of an Enforcement Notice only, certain unsecured creditors)
will rank in priority to all Classes of the Notes and the Residual
Certificates.
Security: The Notes and the Residual Certificates are secured and will share the
Security with the other Secured Creditors. Pursuant to the Deed of Charge on
the Closing Date, the Notes and the Residual Certificates will be secured by,
among other things, the following (the "Security"):
(a) an assignment by way of security of (and, to the extent not
assigned, a charge by way of first fixed charge over) the Issuer's rights,
title, interest and benefit in and to the Transaction Documents (other than
the Trust Deed and the Deed of Charge) and any sums derived therefrom
(provided that the assignment by way of security of the Issuer's rights under
the Swap Agreements shall be subject to any rights of set off or netting
provided for thereunder);
(b) an assignment by way of security of (and, to the extent not
assigned, a charge by way of first fixed charge over) the Issuer's interest in
the Loans and their Related Security and other related rights comprised in the
Portfolio and any sums derived therefrom;
(c) an assignment by way of security of (and, to the extent not
assigned, a charge by way of first fixed charge over) the Issuer's rights,
title, interest and benefit to and under Insurance Policies assigned to the
Issuer pursuant to the Mortgage Sale Agreement;
(d) a charge by way of first fixed charge over the Issuer's
interest in its bank and/or securities accounts (including the Deposit
Account, the Class A and B Liquidity Reserve Fund Account, the Standby Account
and the Swap Cash Collateral Account in respect of each Swap Agreement)
maintained with the Issuer Account Bank and/or with any other bank or
custodian and any sums or securities standing to the credit thereof;
(e) an assignment by way of first fixed security of (and, to the
extent not assigned, a charge by way of first fixed charge over) (but subject
to the right of reassignment) the benefit of the Issuer's rights, title,
interest and benefit under the Collection Account Trust (created pursuant to
the Collection Account Declaration of Trust) and the Expenses Account Trust
(created pursuant to the Expenses Account Declaration of Trust);
(f) a charge by way of first fixed charge over the Issuer's
interest in all Authorised Investments permitted to be made by the Issuer or
the Cash Manager (acting on the instructions of the Servicing Facilitator) on
its behalf; and
(g) a floating charge over all assets of the Issuer not
otherwise subject to the charges referred to above or otherwise effectively
assigned by way of security (whether or not the subject of the charges
referred to above as aforesaid).
See "Summary of the Key Transaction Documents - Deed of Charge" below.
Interest Provisions: Please refer to the "Full Capital Structure of the Notes and the Residual
Certificates" table above and Condition 6 (Interest).
Deferral: Interest due and payable on the Most Senior Class of Notes may not be
deferred. Interest due and payable on the Notes (other than the Most Senior
Class of Notes) may be deferred in accordance with Condition 17 (Subordination
by Deferral). The non-payment of any deferred interest on any Notes will
not, if the Issuer has insufficient funds to make payment in full of such
deferred interest, be an Event of Default unless such Notes are the Most
Senior Class at the time of non-payment.
Gross-up: None of the Issuer or any Paying Agent or any other person will be obliged to
gross-up if there is any withholding or deduction in respect of the Notes on
account of taxes.
Notes Redemption: The Notes are subject to the following redemption events, amongst others set
out in Condition 8 (Redemption):
· mandatory redemption in whole on the Interest Payment
Date falling in July 2062 (the "Final Maturity Date"), as fully set out in
Condition 8.1 (Redemption at Maturity);
· mandatory redemption in part on any Interest Payment Date
commencing on the First Interest Payment Date but prior to the service of an
Enforcement Notice subject to:
(X) the availability of Available Principal Receipts (to the
extent not applied as Principal Addition Amounts to cover any Senior Expenses
Deficit) which shall be applied:
(a) first, on the First Interest Payment Date only, to redeem
the Collateralised Notes pari passu and pro rata in an aggregate amount equal
to the Pre-Funding Unused Amount;
(b) second, on a pari passu and pro rata basis to repay the
Class A Notes until they are repaid in full;
(c) third, on a pari passu and pro rata basis to repay the Class
B Notes until they are repaid in full;
(d) fourth, on a pari passu and pro rata basis to repay the
Class C Notes until they are repaid in full;
(e) fifth, on a pari passu and pro rata basis to repay the Class
D Notes until they are repaid in full; and
(f) sixth, on a pari passu and pro rata basis to repay the Class
E Notes until they are repaid in full; and
(Y) the availability (in respect of the Class X Notes) of
Available Revenue Receipts applied in accordance with the Pre-Enforcement
Revenue Priority of Payments to repay the Class X Notes on a pari passu and
pro rata basis until they are repaid in full;
· mandatory redemption of the Notes in full following the
exercise by the Option Holder of the Call Option, as fully set out in
Condition 8.3 (Mandatory Redemption of the Notes in Full), or mandatory
redemption of the Notes in full as set out in Condition 8.4 (Mandatory
Redemption of the Notes for Taxation or Other Reasons), following which
redemption the Residual Certificates will be redeemed and cancelled in full in
accordance with Residual Certificates Condition 6.6 (Termination of Payments).
Any Note redeemed pursuant to the above redemption provisions will be redeemed
at an amount equal to its Principal Amount Outstanding together with accrued
(and unpaid) interest on its Principal Amount Outstanding up to (but
excluding) the date of redemption.
Expected Average Lives of the Notes: The actual average lives of the Notes cannot be stated, as the actual rate of
repayment of the Loans and redemption of the Loans and a number of other
relevant factors are unknown. However, calculations of the possible average
lives of the Notes can be made based on certain assumptions as described under
the section entitled "Weighted Average Lives of the Notes".
Event of Default: As fully set out in Condition 11 (Events of Default) and the Residual
Certificates Condition 10 (Events of Default), which includes, inter alia
(where relevant, subject to the applicable grace period):
(a) subject to the deferral provisions in Condition 17
(Subordination by Deferral), non-payment of interest and/or principal and such
non-payment continues for a period of three Business Days in the case of
interest and five Business Days in the case of principal;
(b) in respect of the Residual Certificates only, failure to pay
any amount due and the default continues for more than 14 Business Days from
the due date for payment (provided that all of the notes have been redeemed in
full);
(c) breach of any other contractual obligations by the Issuer
under the Transaction Documents if such breach is incapable of remedy or, if
it is capable of remedy, has not been remedied within the applicable grace
period;
(d) any material representation or warranty made by the Issuer
(i) is incorrect on the date on which such material representation or warranty
was given, where the matters giving rise to such misrepresentation is
incapable of remedy, or (ii) where the matter is capable of remedy, is
incorrect and has not been remedied within the applicable grace period;
(e) the Issuer ceasing or threatening to cease to carry on the
whole or a substantial part of its business; and
(f) the occurrence of certain insolvency related events in
relation to the Issuer.
Enforcement: Following the occurrence of an Event of Default, the Note Trustee may (and, if
so directed in writing by the holders of not less than 25 per cent. in
aggregate Principal Amount Outstanding (or if no Notes remain outstanding, 25
per cent. in number of the holders of the relevant Class of Residual
Certificates then in issue) of the Most Senior Class or, if so directed by an
Extraordinary Resolution of the holders of the Most Senior Class outstanding
(or if no Notes remain outstanding, the relevant Class of Residual
Certificates then in issue), shall) serve an Enforcement Notice on the Issuer
that all Classes of Notes are immediately due and payable and that any RC1
Payments or RC2 Payments pursuant to the Residual Certificates are immediately
due and payable, provided that the Note Trustee is indemnified and/or
prefunded and/or secured to its satisfaction.
Following the service of an Enforcement Notice to the Issuer, the Security
Trustee may enforce the Security.
Limited Recourse and Non-Petition: The Notes are limited recourse obligations of the Issuer, and, if not repaid
in full, amounts outstanding are subject to a final write-off, which is
described in more detail in Condition 12.3 (Limited Recourse). In accordance
with Condition 12.2 (Limitations on Enforcement), no Noteholder may proceed
directly against the Issuer unless the Note Trustee or the Security Trustee,
having become bound to do so, fails to do so within a reasonable period of
time and such failure is continuing.
The Residual Certificateholders are only entitled to funds which are available
to the Issuer in accordance with the applicable Priority of Payments and
therefore the Residual Certificates are limited recourse obligations of the
Issuer.
Governing Law: English law.
Transaction Overview - Rights of Noteholders and Certificateholders and
Relationship with other Secured Creditors
Please refer to the sections entitled "Terms and Conditions of the Notes",
"Terms and Conditions of the Residual Certificates" and "Risk Factors" for
further detail in respect of the rights of Noteholders and Certificateholders,
conditions for exercising such rights and relationship with other Secured
Creditors.
Prior to an Event of Default: Prior to the occurrence of an Event of Default, Noteholders holding not less
than 10 per cent. of the Principal Amount Outstanding of the Notes then
outstanding or, as applicable, Certificateholders holding not less than 10 per
cent. of the number of Residual Certificates then in issue are entitled to
convene a Noteholders' meeting or a Certificateholders' meeting, respectively.
However, so long as no Event of Default has occurred and is continuing,
neither the Noteholders nor the Certificateholders are entitled to instruct or
direct the Issuer to take any actions, either directly or through the Note
Trustee, without the consent of the Issuer and, if applicable, certain other
Transaction Parties, unless the Issuer has an obligation to take such actions
under the relevant Transaction Documents.
Following an Event of Default: Following the occurrence of an Event of Default, Noteholders may, if they hold
not less than 25 per cent. of the Principal Amount Outstanding (or, in the
case of a Class of Residual Certificates, 25 per cent. in number of the
holders of such Class then in issue) of the Most Senior Class, or if an
Extraordinary Resolution of the holders of the Most Senior Class is passed,
direct the Note Trustee to give an Enforcement Notice to the Issuer that all
classes of the Notes are immediately due and repayable at their respective
Principal Amount Outstanding together with accrued (but unpaid) interest or
that all RC1 Payments or RC2 Payments pursuant to the Residual Certificates
are immediately due and payable, as applicable. The Note Trustee shall not
be bound to take any such action unless first indemnified and/or prefunded
and/or secured to its satisfaction.
Noteholders and Certificateholders Meeting provisions: Initial meeting Adjourned meeting
Notice period: At least 21 clear calendar days At least 10 clear calendar days
Quorum for Ordinary Resolution: One or more persons present and representing in aggregate not less than 25 per One or more persons present and representing in aggregate not less than 10 per
cent. of the Principal Amount Outstanding of the relevant Class of Notes or 25 cent. of the Principal Amount Outstanding of the relevant Class of Notes or 10
per cent. of the relevant Class of Residual Certificates then in issue. per cent. of the relevant Class of Residual Certificates then in issue.
Quorum for Extraordinary Resolution (other than a Basic Terms Modification) One or more persons present and representing in aggregate not less than 50 per One or more persons present and representing in aggregate not less than 25 per
cent. of the aggregate Principal Amount Outstanding of the relevant Class of cent. of the aggregate Principal Amount Outstanding of the relevant Class of
Notes or 50 per cent. of the relevant Class of the Residual Certificates then Notes or 25 per cent. of the relevant Class of the Residual Certificates then
in issue. in issue.
Quorum for Extraordinary Resolution to approve a Basic Terms Modification One or more persons present and representing in aggregate 75 per cent. of the One or more persons present and representing in aggregate 50 per cent. of the
Principal Amount Outstanding of the relevant Class of Notes or 75 per cent. of Principal Amount Outstanding of the relevant Class of Notes or 50 per cent. of
the relevant Class of Residual Certificates then in issue. the relevant Class of Residual Certificates then in issue.
Required majority for Ordinary Resolution: A clear majority of persons eligible to attend and vote at such meeting and
voting at that meeting upon a show of hands or, if a poll is duly demanded, by
a clear majority of the votes cast on such poll (an "Ordinary Resolution").
Required majority for Extraordinary Resolution: Majority consisting of not less than three-quarters of persons eligible to
attend and vote at such meeting and voting at such meeting upon a show of
hands or, if a poll is duly demanded, by a majority consisting of not less
than three-quarters of the votes cast on such poll (an "Extraordinary
Resolution").
Required majority for a written resolution: Extraordinary Resolution: Not less than 75 per cent. in aggregate Principal
Amount Outstanding of the relevant Class of Notes.
Ordinary Resolution: Not less than a clear majority in aggregate Principal
Amount Outstanding of the relevant Class of Notes.
A written resolution has the same effect as an Ordinary Resolution or an
Extraordinary Resolution.
Matters requiring Extraordinary Resolution: The following matters require an Extraordinary Resolution of the relevant
Noteholders (and, in the case of a Basic Terms Modification, an Extraordinary
Resolution of the Certificateholders), as set out in the Trust Deed:
(a) to sanction or to approve a Basic Terms Modification;
(b) to sanction any compromise or arrangement proposed to be
made between the Issuer, the Note Trustee, the Security Trustee, any Appointee
and the Noteholders or any of them or any other party to any Transaction
Document;
(c) to sanction any abrogation, modification, compromise or
arrangement in respect of the rights of the Note Trustee, the Security Trustee
any Appointee, the Noteholders, the Issuer or any other party to any
Transaction Document against any other or others of them or against any of
their property whether such rights arise under the Trust Deed, any other
Transaction Document or otherwise;
(d) to approve the substitution of any entity for the Issuer (or
any previous substitute) as principal debtor under the Notes or the
Certificates other than in accordance with Condition 8.4 (Mandatory Redemption
of the Notes for Taxation or Other Reasons) or Condition 13.10 (Issuer
Substitution Condition) or Residual Certificates Condition 12.18 (Issuer
Substitution Condition);
(e) to assent to any modification of the provisions of the Trust
Deed or any other Transaction Document which is proposed by the Issuer, the
Note Trustee, the Security Trustee or any other party to any Transaction
Document or any Noteholder or Certificateholder, other than those
modifications which are sanctioned by the Note Trustee without the consent or
sanction of the Noteholders in accordance with the terms of the Trust Deed;
(f) to approve of a person to be appointed a trustee and power
to remove any trustee or trustees for the time being in respect of the Notes
subject to and in accordance with the Trust Deed or the Deed of Charge;
(g) to approve the appointment of a substitute Servicer in
circumstances where a Servicer has resigned and the appointment of the
substitute Servicer could reasonably be expected to have an adverse effect on
the rating of the Notes or if it is not clear whether the rating of the Notes
will be maintained as the rating before the termination of the relevant
Servicer (in each case as indicated by a Rating Agency Confirmation or
otherwise by a relevant Rating Agency);
(h) to authorise the Note Trustee, the Security Trustee and/or
any Appointee (subject to all or any of them being indemnified and/or secured
and/or prefunded to their satisfaction) to concur in and execute and do all
such deeds, instruments, acts and things as may be necessary to carry out and
give effect to any Extraordinary Resolution;
(i) to discharge or exonerate the Note Trustee, the Security
Trustee and/or any Appointee from all Liability in respect of any act or
omission for which the Note Trustee, the Security Trustee, and/or such
Appointee may have become or may become responsible under any Transaction
Document;
(j) to give any authority or sanction which under the
provisions of the Trust Deed or any other Transaction Document is required to
be given by Extraordinary Resolution;
(k) to appoint any persons (whether Noteholders or not) as a
committee or committees to represent the interests of the Noteholders or the
Certificateholders and to confer upon such committee or committees any powers
or discretions which the Noteholders or the Certificateholders could
themselves exercise by Extraordinary Resolution;
(l) to sanction any scheme or proposal for the exchange, sale,
conversion or cancellation of the Notes or the Residual Certificates in
consideration of shares, stock, notes, bonds, debentures, debenture stock
and/or other obligations and/or securities of the Issuer or any other company
formed or to be formed, or for or into or in consideration of cash, or partly
for or into or in consideration of such shares, stock, notes, bonds,
debentures, debenture stock and/or other obligations and/or securities as
aforesaid and partly for or into or in consideration of cash; or
(m) to give any other authorisation or sanction which under the
Trust Deed or any other Transaction Document is required to be given by
Extraordinary Resolution.
Relationship between Classes of Noteholders and Certificateholders: Subject to the provisions governing a Basic Terms Modification, an
Extraordinary Resolution of a relevant Class of Notes shall be binding on all
other Classes of Notes which are subordinate to such Class of Notes in the
Post-Enforcement Priority of Payments and on the Residual Certificates,
irrespective of the effect upon them. No Extraordinary Resolution of any
other Class of Noteholders shall take effect for any purpose while the Most
Senior Class of Notes remains outstanding unless it shall have been sanctioned
by an Extraordinary Resolution of the holders of the Most Senior Class of
Notes, or the Note Trustee is of the opinion it would not be materially
prejudicial to the interests of the holders of the Most Senior Class of Notes.
The voting rights of the Certificateholders are limited to the extent that any
Ordinary Resolution or Extraordinary Resolution of the Certificateholders is
only effective if, while any Classes of Notes remain outstanding, such
resolution has been sanctioned by an Ordinary Resolution or Extraordinary
Resolution, respectively, of the Most Senior Class of Notes and all other
Classes of Notes then outstanding, or the Note Trustee is of the opinion that
it would not be materially prejudicial to the interests of the holders of the
Most Senior Class of Notes and all other Classes of Notes then outstanding.
A Basic Terms Modification requires an Extraordinary Resolution of the holders
of each affected Class or Classes of Notes and/or Residual Certificates then
in issue, as applicable.
Subject to the provisions governing a Basic Terms Modification and the
foregoing paragraphs, a resolution which, in the opinion of the Note Trustee,
affects the interests of the holders of:
(a) Notes and/or Residual Certificates of one Class only shall
be deemed to have been duly passed if passed at a meeting (or by a resolution
in writing or, by a resolution passed by way of consents received through the
relevant Clearing System(s)) of the holders of that Class of Notes and/or
Residual Certificates so affected;
(b) any two or more Classes of Notes and/or Residual
Certificates, but does not give rise to an actual or potential conflict of
interest between the holders of such Notes and/or Residual Certificates, shall
be deemed to have been duly passed if passed at a single meeting (or by a
single resolution in writing or, by a single resolution passed by way of
electronic consents received through the relevant Clearing System(s)) of the
holders of each such Class of Notes and/or Residual Certificates so affected;
and
(c) one or more Classes of Notes and/or Residual Certificates,
but does not give rise to an actual or potential conflict of interest between
the holders of such Classes of Notes and/or Residual Certificates, shall be
deemed to have been duly passed if passed at a single meeting (or by a single
resolution in writing or, by a single resolution passed by way of consents
received through the relevant Clearing System(s)) of the holders of such
Classes of Notes and/or Residual Certificates so affected. Where such a
resolution gives, or may give, rise to an actual or potential conflict of
interest between the holders of such Classes of Notes and/or Residual
Certificates, it shall be deemed to have been duly passed only if passed at
separate meetings (or by separate resolutions in writing or, by separate
resolutions passed by way of electronic consents received through the relevant
Clearing System(s)) of the holders of each such Class of Notes and/or Residual
Certificates so affected.
"Clearing System" means Euroclear and/or Clearstream, Luxembourg and includes
in respect of any Note and/or Residual Certificate any clearing system on
behalf of which such Note and/or Residual Certificate is held or which is the
holder or (directly or through a nominee) registered owner of a Note and/or a
Residual Certificate, in either case whether alone or jointly with any other
Clearing System(s).
Relationship between Noteholders and other Secured Creditors: So long as any of the Notes are outstanding, neither the Security Trustee nor
the Note Trustee shall have regard to the interests of the other Secured
Creditors.
So long as the Notes are outstanding, the Note Trustee will have regard to the
interests of each Class of the Noteholders, but if in the Note Trustee's sole
opinion there is a conflict between the interests of any Classes of Notes, it
will have regard solely to the interests of the holders of the relevant
affected Class of Notes ranking in priority to the other relevant Classes of
Notes in the Post-Enforcement Priority of Payments and the holders of such
subordinated Classes of Notes shall have no claim against the Note Trustee for
so doing.
"Secured Obligations" means any and all of the monies and liabilities which
the Issuer covenants and undertakes to pay or discharge under the Issuer's
covenant to pay as set out in the Deed of Charge.
Relevant Person as Noteholder or Certificateholder: For certain purposes, including the determination as to whether Notes are
deemed outstanding or Residual Certificates are deemed in issue, and for the
purposes of convening a meeting of the Noteholders or the Certificateholders,
those Notes or Residual Certificates (if any) which are for the time being
held by or on behalf of or for the benefit of any member of the Lendco group
of companies (each such entity a "Relevant Person"), in each case as a
beneficial owner, shall (unless and until ceasing to be so held) be deemed not
to remain outstanding or in issue, except where all of the Notes and/or the
Residual Certificates of any Classes are held by or on behalf of or for the
benefit of one or more Relevant Persons, in which case such Classes of Notes
and/or the Residual Certificates (the "Relevant Class") shall be deemed to
remain outstanding or in issue (as the case may be), except that, if there is
any other Class of Notes and/or the Residual Certificates ranking (with regard
to the definition of Most Senior Class) pari passu with, or junior to, the
Relevant Class and one or more Relevant Persons are not the beneficial owners
of all the Notes and/or the Residual Certificates of such Class, then the
Relevant Class of Notes shall be deemed not to remain outstanding and provided
that in relation to a matter relating to a Basic Terms Modification any Notes
or the Residual Certificates which are for the time being held by or on behalf
of or for the benefit of a Relevant Person, in each case as beneficial owner,
shall be deemed to remain outstanding or in issue, as applicable.
Provision of Information to the Noteholders and the Certificateholders: For so long as the Notes are outstanding, the Issuer shall procure that the
Cash Manager will prepare a monthly investor report detailing, among other
things, certain aggregated loan file data in relation to the Portfolio (the
"UK Investor Report") as required by and in accordance with SECN 6.2.1R(5),
SECN 11 (including its Annexes) and SECN 12 (including its Annexes) (and which
shall be provided in the form of the standardised template set out in SECN 11
Annex 12R and SECN 12 Annex 12R or as otherwise agreed between the Issuer and
the Cash Manager), and shall deliver such reports to the Servicing Facilitator
in accordance with the terms of the Cash Management Agreement.
In addition, for so long as the Notes are outstanding, the Issuer shall
procure that the Cash Manager will prepare a monthly investor report
detailing, among other things, certain aggregated loan file data in relation
to the Portfolio (the "EU Investor Report") and together with the UK Investor
Report, the "Investor Reports" as required by and in accordance with Article
7(1)(e) of the EU Securitisation Regulation and the EU Article 7 Technical
Standards, but solely as such articles and technical standards are interpreted
and applied on the Closing Date, and shall deliver such reports to the
Servicing Facilitator in accordance with the terms of the Cash Management
Agreement.
Based upon the requirements of the UK Securitisation Framework and EU
Securitisation Regulation that are applicable as at the date of this
Prospectus, until the Servicer and the Cash Manager are notified in writing by
the Issuer of any differences and/or deviations from the prescribed templates
to be used pursuant to the EU Securitisation Regulation or the UK
Securitisation Framework (as applicable) it is expected that each EU Investor
Report will be the same as each UK Investor Report (in which case the Servicer
will only be required to produce one report for both requirements) and each EU
Investor Report will be the same as each UK Investor Report (in which case the
Cash Manager will only be required to produce one report for both
requirements).
The Issuer will also procure that the Servicer will prepare on a monthly basis
certain loan-by-loan information in relation to the Portfolio in respect of
each Collection Period as required by SECN 6.2.1R(1) and SECN 11 (including
its Annexes) and SECN 12 (including its Annexes) (and which shall be provided
in the form of the standardised template set out in SECN 11 Annex 2R and SECN
12 Annex 2R or as otherwise agreed between the Issuer and the Servicer) (the
"UK SR Data Tape").
In addition, the Issuer will also procure that the Servicer will prepare on a
monthly basis certain loan-by-loan information in relation to the Portfolio in
respect of each Collection Period as required by Article 7(1)(a) of the EU
Securitisation Regulation and the EU Article 7 Technical Standards, but solely
as such articles and technical standards are interpreted and applied on the
Closing Date (the "EU SR Data Tape").
The Issuer: (a) (as designated reporting entity for the purposes of SECN
6.3.1R(1)) will provide (or will procure the provision of) certain information
and reports required pursuant to the UK Securitisation Framework, and (b)
subject to certain conditions, has contractually agreed to provide (or to
procure the provision of) certain information and reports required pursuant to
the EU Securitisation Regulation as such requirements exist on the Closing
Date, as more fully set out under "General Information - Post-issuance
information - UK Securitisation Framework Reporting" and "General Information
- Post-issuance information - EU Securitisation Regulation Reporting".
Communication with Noteholders and Certificateholders: Any notice to be given by the Issuer or the Note Trustee to Noteholders and/
or Certificateholders shall be given in the following manner:
(a) subject to paragraph (d) below, any notice to Noteholders
and/or Certificateholders shall be validly given if published in the Financial
Times, or, if such newspaper shall cease to be published or if timely
publication therein is not practicable, in such other English newspaper or
newspapers as the Note Trustee shall approve in advance having a general
circulation in the United Kingdom, provided that if, at any time, (i) the
Issuer procures that the information concerned in such notice shall appear on
a page of the Reuters screen, the Bloomberg screen or any other medium for
electronic display of data as may be previously approved in writing by the
Note Trustee and notified to Noteholders and/or Certificateholders (in each
case a "Relevant Screen"), or (ii) paragraph (c) below applies and the Issuer
has so elected, publication in the newspaper set out above or such other
newspaper or newspapers shall not be required with respect to such notice;
(b) in respect of Notes or Residual Certificates in definitive
form, notices to Noteholders or Certificateholders (as applicable) will be
sent to them by first class post (or its equivalent) or (if posted to an
address outside the United Kingdom) by airmail at the respective addresses on
the Register. Any such notice will be deemed to have been given on the
fourth day after the date of posting;
(c) while the Notes are represented by Global Notes, notices to
holders of the Notes will be valid if published as described above, or, at the
option of the Issuer, if submitted to Euroclear and/or Clearstream, Luxembourg
for communication by them to holders of the Notes. Any notice delivered to
Euroclear and/or Clearstream, Luxembourg, as aforesaid shall be deemed to have
been given on the day of such delivery; and
(d) so long as the relevant Notes are admitted to the Official
List and admitted to trading on the main market of the London Stock Exchange,
all notices to the Noteholders will be valid if published in a manner which
complies with the rules and regulations of the London Stock Exchange (which
includes delivering a copy of such notice to the London Stock Exchange) and
any such notice will be deemed to have been given on the date sent to the
London Stock Exchange.
The Note Trustee shall be at liberty to sanction some other method where, in
its sole opinion, the use of such other method would be reasonable having
regard to market practice then prevailing and to the requirements of the stock
exchanges, competent listing authorities and/or the quotation systems on or by
which the Notes and/or Residual Certificates are then listed, quoted and/or
traded and provided that advance notice of such other method is given to
Noteholders and Certificateholders in such manner as the Note Trustee shall
require.
Transaction Overview - Credit Structure and Cashflow
Please refer to the sections entitled "Credit Structure" and "Cashflows" for
further detail in respect of the credit structure and cashflow of the
transaction.
Available Funds of the Issuer: Prior to an Enforcement Notice being served on the Issuer, the Cash Manager on
behalf of the Issuer will apply Available Revenue Receipts and Available
Principal Receipts on each Interest Payment Date in accordance with the
Pre-Enforcement Revenue Priority of Payments and the Pre-Enforcement Principal
Priority of Payments, respectively, as set out below.
"Available Revenue Receipts" means, for each Interest Payment Date, an amount
equal to the aggregate of (without double counting):
(a) all Revenue Receipts or, if in a Determination Period, any
Calculated Revenue Receipts, in each case excluding any Reconciliation Amounts
to be applied as Available Principal Receipts on that Interest Payment Date,
received by the Issuer:
(i) during the immediately preceding Collection Period; or
(ii) if representing amounts received in respect of any
repurchases of Loans and their Related Security by the Seller pursuant to the
Mortgage Sale Agreement, from but excluding the Collection Period Start Date
immediately preceding the immediately preceding Interest Payment Date (or, in
the case of the first Interest Payment Date, from and including the Closing
Date) to and including the immediately preceding Collection Period Start Date;
(b) interest payable to the Issuer on the Issuer Accounts and
received in the immediately preceding Collection Period (other than the
Standby Account and any amount of interest or income received in respect of
any Swap Collateral) and income from any Authorised Investments to be received
on or prior to the Interest Payment Date (other than any amount of income
received in respect of the Swap Collateral);
(c) amounts received or to be received by the Issuer under or in
connection with a Swap Agreement (other than (i) any Early Termination Amount
(as defined in the relevant Swap Agreement) received by the Issuer under any
Swap Agreement, (ii) Swap Collateral, (iii) any Replacement Swap Premium paid
to the Issuer, and (iv) amounts in respect of Swap Tax Credits on such
Interest Payment Date other than, in each case, any Swap Collateral Account
Surplus which is to be applied as Available Revenue Receipts in accordance
with the Swap Collateral Account Priority of Payments);
(d) on each Interest Payment Date up to but excluding the Class
B Redemption Date, the Class A and B Liquidity Reserve Fund Excess Amount
(which, for the avoidance of doubt, shall be calculated prior to determining
any Class A and B Liquidity Reserve Fund Release Amount, Principal Addition
Amounts and Liquidity Drawings (if any) to be applied on such Interest Payment
Date in accordance with the Pre-Enforcement Revenue Priority of Payments);
(e) on the Class B Redemption Date, all amounts standing to the
credit of the Class A and B Liquidity Reserve Fund Account;
(f) on each Interest Payment Date following a Determination
Period, any Reconciliation Amounts deemed to be Available Revenue Receipts in
accordance with Condition 6.8(c) (Determinations and Reconciliation);
(g) amounts credited to the Deposit Account on the previous
Interest Payment Date in accordance with item (y) of the Pre-Enforcement
Revenue Priority of Payments;
(h) amounts representing the Optional Purchase Price received by
the Issuer upon the sale of the Loans and their Related Security comprising
the Portfolio further to the exercise of the Call Option;
(i) other net income of the Issuer received during the
immediately preceding Collection Period, excluding any Principal Receipts;
(j) amounts (which would otherwise constitute Available
Principal Receipts) determined to be applied as Available Revenue Receipts on
the immediately succeeding Interest Payment Date in accordance with item (i)
of the Pre-Enforcement Principal Priority of Payments; and
(k) any Liquidity Drawings (including drawings made from the
Standby Account as a deemed Liquidity Drawing) made with reference to such
Interest Payment Date to cure a Class A Liquidity Deficit but solely after
having applied other Available Revenue Receipts, Class A and B Liquidity
Reserve Fund Release Amounts and Principal Addition Amounts;
less:
(l) amounts (which would otherwise constitute Revenue
Receipts) applied from time to time during the immediately preceding
Collection Period and transferred to the Expenses Account pursuant to the
Servicing Agreement and the Cash Management Agreement towards making payment
of certain monies which properly belong to third parties (including the
Seller) such as (but not limited to):
(i) certain costs and expenses charged or incurred by the
Servicer in respect of its servicing of the Loans pursuant to the Servicing
Agreement, other than the Servicing Fee and not otherwise covered by the items
below;
(ii) any amounts required to be paid into the Expenses Account
in accordance with schedule 2 (Banking) of the Servicing Agreement;
(iii) payments of certain insurance premiums in respect of the
Borrower Buildings Policies and Title Indemnity Policies (to the extent
referable to the Loans);
(iv) amounts under a Direct Debit which are repaid to the bank
making the payment if such bank is unable to recoup or recall such amount
itself from its customer's account or is required to refund an amount
previously debited; and
(v) any amount received from a Borrower for the express purpose
of payment being made to a third party for the provision of a service to that
Borrower,
(items within this paragraph (l) being collectively referred to herein as
"Third Party Amounts");
(m) amounts standing to the credit of the Expenses Ledger of the
Deposit Account towards making payment of Transaction Expenses and to pay any
Expenses Unused Amount to the Seller on the First Interest Payment Date;
(n) any tax payments paid or payable by the Issuer during the
immediately preceding Collection Period to the extent not funded from amounts
standing to the credit of the Issuer Profit Account; and
(o) (taking into account any amount paid by way of Third Party
Amounts) amounts to remedy any overdraft in relation to the Collection Account
or to pay any amounts due to the Collection Account Bank.
"Direct Debit" means a written instruction of a Borrower authorising its bank
to honour a request of the Seller to debit a sum of money on specified dates
from the account of the Borrower for deposit into an account of the Seller.
"Available Principal Receipts" means, for any Interest Payment Date, an amount
equal to the aggregate of (without double counting):
(a) all Principal Receipts or, if in a Determination Period, any
Calculated Principal Receipts, in each case excluding an amount equal to any
Reconciliation Amounts to be applied as Available Revenue Receipts on that
Interest Payment Date, received by the Issuer:
(i) during the immediately preceding Collection Period; or
(ii) if representing amounts received in respect of any
repurchases of Loans and their Related Security that were repurchased by the
Seller pursuant to the Mortgage Sale Agreement, from but excluding the
Collection Period Start Date immediately preceding the immediately preceding
Interest Payment Date (or, in the case of the first Interest Payment Date,
from and including the Closing Date) to and including the immediately
preceding Collection Period Start Date;
(b) the amounts (if any) calculated on the Calculation Date
preceding that Interest Payment Date pursuant to the Pre-Enforcement Revenue
Priority of Payments, to be the amount by which the debit balance of each of
the Class A Principal Deficiency Sub-Ledger and/or the Class B Principal
Deficiency Sub-Ledger and/or the Class C Principal Deficiency Sub-Ledger
and/or the Class D Principal Deficiency Sub-Ledger and/or the Class E
Principal Deficiency Sub-Ledger is to be reduced on that Interest Payment
Date;
(c) any amounts deemed to be Available Principal Receipts in
accordance with item (v) of the Pre-Enforcement Revenue Priority of Payments
(the "Enhanced Amortisation Amounts");
(d) on the First Interest Payment Date only, the Pre-Funding
Unused Amount;
(e) on each Interest Payment Date following a Determination
Period, any Reconciliation Amounts deemed to be Available Principal Receipts
in accordance with Condition 6.8(c) (Determinations and Reconciliation); and
(f) in respect of the first Interest Payment Date only, the
amount paid into the Deposit Account on the Closing Date from the excess of
the proceeds of the Class A Notes, the Class B Notes, the Class C Notes, the
Class D Notes and the Class E Notes over the Initial Consideration,
less:
(g) the amount of Principal Receipts used during the immediately
preceding Collection Period to purchase any Permitted Fee Capitalisation
Amounts or Additional Mortgage Loans.
"Optional Redemption Date" means the Interest Payment Date falling in February
2030.
"Liquidity Drawing" means a drawing of the Liquidity Facility under the
Liquidity Facility Agreement.
"Final Redemption Date" means the Interest Payment Date in respect of which
the Cash Manager determines on the immediately preceding Calculation Date
that, following the application on such Interest Payment Date of (i) Available
Revenue Receipts in accordance with the Pre-Enforcement Revenue Priority of
Payments, (ii) Class A and B Liquidity Reserve Fund Release Amounts in meeting
any Class A and B Liquidity Deficit and any Liquidity Drawing in meeting any
Class A Liquidity Deficit, in each case, against the relevant items in the
Pre-Enforcement Revenue Priority of Payments in the order that they appear in
the Pre-Enforcement Revenue Priority of Payments, (iii) the sum of the
Available Principal Receipts (other than paragraph (c) of the definition
thereof), (iv) all amounts standing to the credit of the Class A and B
Liquidity Reserve Fund Account (after the application of any Class A and B
Liquidity Reserve Fund Release Amounts) and (v) all amounts which (but for the
occurrence of the Final Redemption Date) would have been available for
application pursuant to items (x) to (z) (inclusive) of the Pre-Enforcement
Revenue Priority of Payments, such amounts would be sufficient to redeem in
full the Notes on such Interest Payment Date, including, as the case may be,
as a result of the mandatory redemption of the Notes pursuant to Condition 8.3
(Mandatory Redemption of the Notes in Full) or Condition 8.4 (Mandatory
Redemption of the Notes for Taxation or Other Reasons).
Summary of Priorities of Payments: Below is a summary of the relevant payment priorities. Full details of the
payment priorities are set out in the section entitled "Cashflows".
Pre-Enforcement Revenue Priority of Payments: Pre-Enforcement Principal Priority of Payments: Post-Enforcement Priority of Payments:
(a) Amounts due to the Note Trustee and the Security Trustee and (a) On the First Interest Payment Date only, in redeeming the (a) Amounts due to the Receiver, the Note Trustee and the
any Appointee thereof including charges, liabilities, fees, costs and expenses Collateralised Notes on a pro rata and pari passu basis in an amount equal to Security Trustee and any Appointee thereof including charges, liabilities,
the Pre-Funding Unused Amount fees, costs and expenses
(b) Amounts due to the Agent Bank, the Registrar, the Paying
Agents, the Cash Manager, the Servicer, the Servicing Facilitator, the Back-Up (b) Principal Addition Amounts to be applied to meet any Senior (b) Amounts due to the Agent Bank, the Registrar, the Paying
Servicing Facilitator, the Corporate Services Provider, the Issuer Account Expenses Deficit (such amounts to be applied as Available Revenue Receipts), Agents, the Cash Manager, the Servicer, the Servicing Facilitator, the Back-Up
Bank, the Custodian and (if applicable) the securitisation repository or any provided that Principal Addition Amounts shall only be applied to provide for Servicing Facilitator, the Corporate Services Provider, the Issuer Account
other third-party website provider, in each case including all fees, costs, any such Senior Expenses Deficit in relation to item (i), (m), (o) or (q) of Bank, the Custodian and (if applicable) the securitisation repository or any
charges, liabilities and expenses the Pre-Enforcement Revenue Priority of Payments if the relevant PDL Condition other third-party website provider, in each case including all fees, costs,
applies charges, expenses and liabilities
(c) Third party expenses, any Transfer Costs
(c) on and from the LF Replacement Date, (so long as the Class A (c) Amounts due to the Liquidity Facility Provider
(d) In the following order of priority: first, on a pro rata and Notes remain outstanding following such Interest Payment Date) to credit the
pari passu basis, amounts due to the Liquidity Facility Provider other than Standby Account up to the LF Required Amount for such date (to the extent that (d) Pro rata and pari passu to amounts due to the Swap Providers
principal amounts and second, principal amounts due to the Liquidity Facility the amount standing to the credit of the Standby Account following the (including any termination payments to the extent not satisfied by any
Provider application of funds under item (j) of the Pre-Enforcement Revenue Priority of applicable Replacement Swap Premium and/or any amounts available to be applied
Payments is less than the LF Required Amount) in accordance with the Swap Collateral Account Priority of Payments but
(e) Pro rata and pari passu to amounts due to the Swap Providers
excluding any Hedge Subordinated Amounts)
(including, if applicable, any Early Termination Amount to the extent not (d) Pro rata and pari passu to the principal amounts due on the
satisfied by any applicable Replacement Swap Premium and/or any amounts Class A Notes until redeemed in full (e) Pro rata and pari passu to the amounts of interest and
available to be applied in accordance with the Swap Collateral Account
principal due on the Class A Notes until redeemed in full
Priority of Payments but excluding any Hedge Subordinated Amounts) (e) Pro rata and pari passu to the principal amounts due on the
Class B Notes until redeemed in full (f) Pro rata and pari passu to the amounts of interest and
(f) Issuer Profit Amount
principal due on the Class B Notes until redeemed in full
(f) Pro rata and pari passu to the principal amounts due on the
(g) Pro rata and pari passu to the interest due on the Class A Class C Notes until redeemed in full (g) Pro rata and pari passu to the amounts of interest and
Notes
principal due on the Class C Notes until redeemed in full
(g) Pro rata and pari passu to the principal amounts due on the
(h) Amounts to be credited to the Class A Principal Deficiency Class D Notes until redeemed in full (h) Pro rata and pari passu to the amounts of interest and
Sub-Ledger
principal due on the Class D Notes until redeemed in full
(h) Pro rata and pari passu to the principal amounts due on the
(i) Pro rata and pari passu to the interest due on the Class B Class E Notes until redeemed in full (i) Pro rata and pari passu to the amounts of interest and
Notes
principal due on the Class E Notes until redeemed in full
(i) All remaining amounts to be applied as Available Revenue
(j) on and from the LF Replacement Date (so long as the Class Receipts (j) Pro rata and pari passu to the amounts of interest and
A Notes remain outstanding following such Interest Payment Date) to credit the principal due on the Class X Notes until redeemed in full
Standby Account in an amount up to the LF Required Amount less amounts
standing to the credit of the Standby Account at that time (including the (k) Pro rata and pari passu to amounts due to the Swap Providers
amount of any Standby Drawing made under the Liquidity Facility Agreement on in respect of Hedge Subordinated Amounts (to the extent not satisfied by any
that Interest Payment Date) amounts available to be applied in accordance with the Swap Collateral Account
Priority of Payments)
(k) Amounts to be credited to the Class A and B Liquidity
Reserve Fund Account up to the Previous Cash Liquidity Reserve Accumulated (l) Issuer Profit Amount
(l) Amounts to be credited to the Class B Principal Deficiency (m) Pro rata and pari passu to the amounts due and payable to
Sub-Ledger third parties (if any)
(m) Pro rata and pari passu to the interest due on the Class C (n) On any date prior to (but excluding) the Optional Redemption
Notes Date, all remaining amounts to be applied as RC1 Payments to the RC1
Certificateholders on a pari passu basis and, on any date falling on or after
(n) Amounts to be credited to the Class C Principal Deficiency the Optional Redemption Date, all remaining amounts to be applied as RC2
Sub-Ledger Payments to the RC2 Certificateholders on a pari passu basis
(o) Pro rata and pari passu to the interest due on the Class D
Notes
(p) Amounts to be credited to the Class D Principal Deficiency
Sub-Ledger
(q) Pro rata and pari passu to the interest due on the Class E
Notes
(r) Amounts to be credited to the Class E Principal Deficiency
Sub-Ledger
(s) (so long as the Class A Notes and the Class B Notes remain
outstanding following such Interest Payment Date) to credit the Class A and B
Liquidity Reserve Fund Account up to the Class A and B Liquidity Reserve Fund
Required Amount
(t) Pro rata and pari passu to the interest due on the Class X
Notes
(u) Prior to the Optional Redemption Date, pro rata and pari
passu to the principal amounts due on the Class X Notes until redeemed in full
(v) On the Final Redemption Date or on or after the Optional
Redemption Date, an amount equal to the lesser of (i) all remaining amounts
(if any), and (ii) the amount required by the Issuer to pay in full all
amounts payable under items (d) to (h) (inclusive) of the Pre-Enforcement
Principal Priority of Payments, less any other Available Principal Receipts
(other than paragraph (c) of the definition thereof) otherwise available to
the Issuer, to be applied as Available Principal Receipts
(w) On or after Optional Redemption Date, pro rata and pari passu
to the principal amounts due on the Class X Notes to the extent not redeemed
under item (u) above
(x) Pro rata and pari passu to amounts due to the Swap Providers
in respect of Hedge Subordinated Amounts (to the extent not satisfied by any
amounts available to be applied in accordance with the Swap Collateral Account
Priority of Payments)
(y) On any Interest Payment Date falling within a Determination
Period, all remaining amounts to be credited to the Deposit Account to be
applied on the next Interest Payment Date as Available Revenue Receipts
(z) On any Interest Payment Date falling prior to (but
excluding) the Optional Redemption Date, all remaining amounts to be applied
as RC1 Payments to the RC1 Certificateholders on a pari passu basis and on any
Interest Payment Date falling on or after the Optional Redemption Date, all
remaining amounts to be applied as RC2 Payments to the RC2 Certificateholders
on a pari passu basis
General Credit Structure: The credit structure of the transaction includes the following elements:
· the availability of the Class A and B Liquidity Reserve
Fund to cover any shortfall of Available Revenue Receipts to pay senior
expenses and interest on the Class A Notes and the Class B Notes. On each
Interest Payment Date, an amount (if any) equal to the Class A and B Liquidity
Reserve Fund Excess Amount will be debited from the Class A and B Liquidity
Reserve Fund and will be applied as Available Revenue Receipts on that
Interest Payment Date .
· the availability of the Liquidity Facility to cover any
shortfall of Available Revenue Receipts and Principal Addition Amounts to pay
senior expenses and interest on the Class A Notes.
See the section entitled "Credit Structure - Liquidity Facility";
· a Principal Deficiency Ledger will be established to
record as a debit any Losses on the Portfolio, Principal Addition Amounts and
Available Principal Receipts applied to credit the Standby Account in
accordance with the Priority of Payments and record as a credit Available
Revenue Receipts applied as Available Principal Receipts (including any
amounts in respect of Enhanced Amortisation Amounts) pursuant to the
Pre-Enforcement Revenue Priority of Payments (if any). Investors should note
that realised Losses in any period will be calculated after applying any
recoveries following enforcement of a Loan firstly to outstanding fees and
interest amounts due and payable on the relevant Loan. The Principal
Deficiency Ledger will be credited by the amount of any Available Revenue
Receipts applied as Available Principal Receipts in accordance with the
relevant items of the Pre-Enforcement Revenue Priority of Payments.
See the section entitled "Credit Structure - Principal Deficiency Ledger"
below;
· on or after the Optional Redemption Date or on the Final
Redemption Date, the availability of Enhanced Amortisation Amounts pursuant to
item (v) of the Pre-Enforcement Revenue Priority of Payments, being any
surplus Available Revenue Receipts having paid or provided for items of higher
priority, which shall be applied as Available Principal Receipts in accordance
with the Pre-Enforcement Principal Priority of Payments until the Notes have
been redeemed in full. Any amount credited to the Principal Deficiency
Ledger in respect of Enhanced Amortisation Amounts will be reduced to the
extent of any future Losses arising in respect of the Portfolio;
· the availability of Available Principal Receipts pursuant
to item (b) of the Pre-Enforcement Principal Priority of Payments to cover any
shortfall of Available Revenue Receipts and Class A and B Liquidity Reserve
Funds to pay senior expenses and interest on the relevant Notes. Any
Available Principal Receipts applied as Principal Addition Amounts will be
recorded as a debit to the Principal Deficiency Ledger;
· the availability of the Pre-Funding Reserve and (to the
extent there are insufficient funds standing to the credit of the Pre-Funding
Reserve for such purpose) any Principal Receipts available to the Issuer up
until the Calculation Date immediately prior to the First Interest Payment
Date to fund the purchase of Additional Mortgage Loans by the Issuer on any
date from (and including) the Closing Date up to and including the Calculation
Date immediately preceding the Final Additional Mortgage Loan Purchase Date;
· the availability of the Expenses Ledger to fund
Transaction Expenses of the Issuer on any date from (and including) the
Closing Date up to (and including) the First Interest Payment Date;
· the availability of interest in respect of monies held in
the Issuer Accounts and income from any Authorised Investments (other than any
amount of interest and/or income received in respect of the Swap Collateral)
(see the section entitled "Cashflows" for further details); and
· the availability of the interest rate swaps provided by
the Swap Providers to hedge against the possible variance between the rates of
interest payable on the Fixed Rate Loans in the Portfolio and a rate of
interest on the Notes calculated by reference to Compounded Daily SONIA.
See the section entitled "Credit Structure - Interest Rate Risk for the Notes"
for further details.
Bank Accounts and Cash Management: The Issuer will open a deposit account (the "Deposit Account"), a swap cash
collateral account in respect of each Swap Agreement (each a "Swap Cash
Collateral Account"), a Class A and B Liquidity Reserve Fund account (the
"Class A and B Liquidity Reserve Fund Account"), a standby account (the
"Standby Account") and an Issuer profit account (the "Issuer Profit Account")
pursuant to the Bank Account Agreement with the Issuer Account Bank on or
prior to the Closing Date.
If required in accordance with the terms of the relevant Swap Agreement, the
Issuer will open a swap securities collateral account on demand in respect of
such Swap Agreement) (each a "Swap Securities Collateral Account", together
with the Swap Cash Collateral Accounts, the "Swap Collateral Accounts")
pursuant to the relevant Custody Agreement.
The Issuer may from time to time open additional or replacement accounts
(including, if applicable, any securities accounts (such accounts, together
with the Deposit Account, the Swap Collateral Accounts, the Class A and B
Liquidity Reserve Fund Account, the Standby Account and the Issuer Profit
Account, the "Issuer Accounts")) pursuant to the Bank Account Agreement, any
Custody Agreement and the Transaction Documents.
On each Interest Payment Date, the Cash Manager will transfer monies from the
Deposit Account to be applied in accordance with the applicable Priority of
Payments.
Swap Agreements: Payments received by the Issuer under certain of the Loans will be subject to
fixed rates of interest for an initial period of time. The interest amounts
payable by the Issuer in respect of the Notes will be calculated by reference
to Compounded Daily SONIA. To hedge against the potential variance between
the fixed rates of interest received on certain of the Loans in the Portfolio
and the rate of interest payable on the Class A Notes, the Class B Notes, the
Class C Notes, the Class D Notes, the Class E Notes and the Class X Notes, the
Issuer will enter into one or more Swap Transactions with the Swap Providers
under the Swap Agreements.
Transaction Overview - Triggers Tables
Rating Triggers Table
Transaction Party: Required Ratings/Triggers: Possible effects of Trigger being breached include the following:
Issuer Account Bank (a) DBRS: the higher of (i) if a COR is currently maintained in If the Issuer Account Bank no longer has the Account Bank Ratings, the Issuer
respect of the Issuer Account Bank, a rating of "A (high)" from DBRS, and (ii) shall use all reasonable endeavours to, within 60 calendar days following the
a long-term unsecured, unguaranteed and unsubordinated debt rating of "A" by first day on which such downgrade occurred either:
DBRS (either by way of a public rating or, in its absence, by way of a private
rating supplied by DBRS), or (iii) if none of item (i) or (ii) above are (a) close the Issuer Accounts with such Issuer Account Bank and
currently maintained in respect of the Issuer Account Bank, a DBRS Minimum open replacement accounts with a financial institution (i) having the Account
Equivalent Rating at least equal to "A" by DBRS; and Bank Ratings and (ii) which is a bank as defined in Section 991 of the Income
Tax Act 2007;
(b) S&P: a short-term unsecured, unguaranteed and
unsubordinated debt rating of at least "A-1" by S&P (if a short-term (b) obtain a guarantee of the obligations of such Issuer Account
unsecured, unguaranteed and unsubordinated debt rating is assigned by S&P) Bank under the Bank Account Agreement from a financial institution which has
and a long-term unsecured, unguaranteed and unsubordinated debt rating of at the Account Bank Ratings; or
least "A" by S&P, or should the Issuer Account Bank not benefit from a
short-term unsecured, unguaranteed and unsubordinated debt rating of at least (c) take such other reasonable actions as may be required to
"A-1" from S&P, a long-term unsecured, unguaranteed and unsubordinated ensure that the then current rating of the Notes are not adversely affected by
debt rating of at least "A+" by S&P, the Issuer Account Bank ceasing to have all of the Account Bank Ratings,
or, failing which, in each case such other ratings that are consistent with in each case as prescribed in the Bank Account Agreement, and shall transfer
the then current rating methodology of the Rating Agencies as being the amounts standing to the credit of the relevant Issuer Accounts and all Ledgers
minimum ratings that are required to support the then current ratings of the on the relevant Issuer Accounts to the replacement Issuer Accounts.
Notes (each an "Account Bank Rating").
Collection Account Bank In respect of any Collection Accounts, any two of: If the rating of the Collection Account Bank falls below the Collection
Account Bank Rating and there exists a financial institution having a rating
(a) DBRS: a Long-Term DBRS Rating of at least equal to "BBB of at least the Collection Account Bank Rating and which is a bank as defined
(low)"; and in Section 991 of the Income Tax Act 2007, the Servicers shall assist the
Sellers (or any other entity which may then hold legal title to the Loans and
(b) S&P: a short-term unsecured, unguaranteed and their Related Security), and the Sellers (or any other entity which may then
unsubordinated debt rating of at least "A-2" by S&P (if a short-term hold legal title to the Loans and their Related Security) shall, as soon as
unsecured, unguaranteed and unsubordinated debt rating is assigned by S&P) reasonably practicable (such time period to be not more than 35 calendar days)
and a long-term unsecured, unguaranteed and unsubordinated debt rating of at following such occurrence:
least "BBB" by S&P, or should the Collection Account Bank not benefit from
a short-term unsecured, unguaranteed and unsubordinated debt rating of at (a) open a replacement collection account in the name of the
least "A-2" by S&P, Sellers with a financial institution:
or, failing which, in each case such other ratings that are consistent with (i) having a rating of at least the Collection Account Bank
the then current rating methodology of the Rating Agencies as being the Rating;
minimum ratings that are required to support the then current ratings of the
Notes (each, the "Collection Account Bank Rating" and together, the (ii) approved in writing by the Issuer and the Security Trustee;
"Collection Account Bank Ratings"). and
(iii) which is a bank as defined in Section 991 of the Income Tax
Act 2007; or
(b) obtain an unconditional and unlimited guarantee of the
obligations of the Collection Account Bank from a financial institution having
the Collection Account Bank Rating; or
(c) take any other action as the Rating Agencies may confirm
will not result in a downgrade of the Notes.
Liquidity Facility Provider (a) S&P: a long-term rating of the Liquidity Facility If the Liquidity Facility Provider ceases to have the LF Required Ratings, the
Provider's unguaranteed, unsecured and unsubordinated debt obligations of at Liquidity Facility Provider shall use reasonable endeavours (without any
least A by S&P or such other lower rating which is consistent with the obligation to do so) to procure a replacement Liquidity Facility Provider with
then current rating methodology of S&P Global Ratings in respect of the the LF Required Ratings.
then current ratings of the Notes;
If the Liquidity Facility Provider ceases to have the LF Required Ratings and
a transfer to another liquidity facility provider would otherwise have to be
made but there is no other liquidity facility provider with the LF Required
Ratings or if no other liquidity facility provider agrees to such transfer,
the Issuer shall use reasonable endeavours, subject to it having sufficient
funds to do so, to seek to agree such other arrangement which (i) is approved
in writing by the Security Trustee and (ii) will not result in a downgrade,
withdrawal or suspension of the then current ratings assigned by a Rating
Agency to the Note.
If the Liquidity Facility Provider ceases to have the LF Required Ratings and
the Liquidity Facility Provider is unable to arrange for a substitute
Liquidity Facility Provider and the Issuer is unable to arrange for a
substitute Liquidity Facility Provider, then the Issuer shall, and subject to
the terms of the Liquidity Facility Agreement, require the Liquidity Facility
Provider to pay into the Standby Account a Standby Drawing equal to the
Available Liquidity Commitment under the Liquidity Facility Agreement not
later than (i) 30 days following the downgrade of the Liquidity Facility
Provider by S&P; (ii) 30 days following the downgrade of the Liquidity
Facility Provider by DBRS; or (iii) two Business Days prior to the last day of
the Liquidity Commitment Period in the event of an Extension Refusal by the
Liquidity Facility Provider (as applicable).
(b) DBRS:
(i) if DBRS has assigned a long-term COR to the institution
acting as Liquidity Facility Provider, a rating that is the higher of:
(A) the DBRS rating that is the COR for the relevant institution;
and
(B) the issuer rating or long-term senior unsecured debt or
deposit rating from DBRS for the relevant institution,
in each case as is commensurate with the ratings assigned to the Most Senior
Class of Notes from time to time as set out in the table below; or
(C) if a long-term COR is not available from DBRS for the relevant
institution, an issuer rating or long-term senior unsecured debt or deposit
rating from DBRS for the relevant institution (whichever is the higher) as is
commensurate with the ratings assigned to the Most Senior Class of Notes from
time to time as set out in the table below; or
DBRS
Current rating of the Most Senior Class of Notes Minimum LF Required Ratings
'AAA (sf)' 'A'
'AA (high) (sf)' 'A (low)'
'AA (sf)' 'BBB (high)'
'AA (low) (sf)' 'BBB (high)'
'A (high) (sf)' 'BBB'
'A (sf)' 'BBB (low)'
'A (low) (sf)' 'BBB (low)'
'BBB (high) (sf)' 'BBB (low)'
'BBB (sf)' 'BBB (low)'
'BBB (low) (sf)' 'BBB (low)'
(ii) to the extent that DBRS has not assigned a credit rating to
the Liquidity Facility Provider, the DBRS Minimum Equivalent Rating shall
apply to the DBRS rating as is commensurate with the ratings assigned to the
Most Senior Class of Notes from time to time as set out in the table above,
Swap Provider DBRS: A Swap Provider must, at its own cost, within 30 Business Days of the
occurrence of such Initial DBRS Rating Event, either: (a) post collateral in
DBRS: Failure by a Swap Provider to maintain a Long-Term DBRS Rating at least accordance with the terms of the relevant Swap Agreement; (b) transfer its
as high as "A" and provided that the highest Notes rated by DBRS have a rating rights and obligations under the relevant Swap Agreement to an appropriately
of at least AA(low) (the "Initial DBRS Rating Event"). rated replacement third party (or a replacement third party with an
appropriately rated guarantor); (c) procure a co-obligation or guarantee from
an appropriately rated third party in accordance with the terms of the
relevant Swap Agreement; or (d) take such other actions as will result in the
rating of the highest rated class of Notes will be rated by DBRS following the
taking of such action being maintained at, or restored to, the same level as
immediately prior to such Initial DBRS Rating Event.
The Issuer may terminate the relevant Swap Agreement if a Swap Provider fails
to take either of the relevant actions in items (a) to (d) above in the
relevant time period.
A failure by a Swap Provider to take such steps will, in certain
circumstances, allow the Issuer to terminate the relevant Swap Agreement.
DBRS: Failure by a Swap Provider to maintain a Long-Term DBRS Rating at least DBRS: A Swap Provider must, at its own cost, within 30 Business Days of the
as high as "BBB" (the "Subsequent DBRS Rating Event"). occurrence of such Subsequent DBRS Rating Event, as soon as practicable: (a)
post collateral in accordance with the terms of the relevant Swap Agreement;
and (b) use commercially reasonable efforts to either: (i) transfer its rights
and obligations under the relevant Swap Agreement to an appropriately rated
replacement third party (or a replacement third party with an appropriately
rated guarantor); (ii) procure a co-obligation or guarantee from an
appropriately rated third party in accordance with the terms of the relevant
Swap Agreement; or (iii) take such other actions as will result in the rating
of the highest rated class of the Notes will be rated by DBRS following the
taking of such action being maintained at, or restored to, the same level as
immediately prior to such Subsequent DBRS Rating Event.
The Issuer may terminate a relevant Swap Agreement if a Swap Provider fails to
provide collateral in respect of the relevant Swap Agreement in the relevant
time period. The Issuer may also terminate the relevant Swap Agreement if a
Swap Provider fails to take the relevant actions in items (b) (i) to (iii)
above in the relevant time period.
A failure by a Swap Provider to take such steps will, in certain
circumstances, allow the Issuer to terminate the relevant Swap Agreement.
For the purposes of the above:
"Long-Term DBRS Rating" means, at any time, with respect to an entity and its
long-term, unsecured and unsubordinated debt obligations:
(a) (i) its public Critical Obligations Rating or (ii) if a
public Critical Obligations Rating is not maintained by such entity, the
higher of (I) the issuer rating assigned by DBRS to such entity or (II) the
rating assigned by DBRS to such entity's long term senior unsecured debt
obligations; or
(b) if no such rating has been assigned by DBRS, the
corresponding "DBRS Minimum Equivalent Rating" in accordance with the terms of
the relevant Swap Agreement.
S&P: Initial Required Ratings: S&P: Initial Required Ratings:
S&P: The relevant S&P required ratings depend on which S&P S&P: The relevant Swap Provider must provide collateral within ten
framework is elected by a Swap Provider from time to time (the "S&P business days (to the extent required, depending on the value of the relevant
framework") and the rating of the highest Notes by S&P at such time. Swap Transaction) unless it (a) transfers its obligations to an entity that is
There are four S&P frameworks: "Strong", "Adequate", "Moderate" and eligible to be a swap provider under the S&P ratings criteria, (b) obtains
"Weak". On the date of the Santander Swap Agreement, the provisions relating a guarantee from an entity with the S&P subsequent required ratings, or
to S&P Adequate are elected in respect of the Santander Swap Agreement. On (c) takes such other action as is required to maintain, or restore, the rating
the date of the HSBC Swap Agreement, the provisions relating to S&P of the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes,
Adequate are elected in respect of the HSBC Swap Agreement. the Class E Notes and the Class X Notes.
S&P: A Swap Provider and any applicable guarantor fail to have the
relevant S&P initial required rating where S&P framework Strong,
Adequate or Moderate applies.
S&P: Subsequent Required Ratings: S&P: Subsequent Required Ratings:
S&P: A Swap Provider and any applicable guarantor fail to have the S&P: The relevant Swap Provider must use reasonable endeavours to, within
relevant S&P subsequent required rating where S&P framework Strong, 90 calendar days, either (a) transfer its rights and obligations to an entity
Adequate or Moderate applies. that is eligible to be a swap provider under the S&P ratings criteria, (b)
obtain a guarantee from an entity with at least the S&P subsequent
required ratings, or (c) take such other action as is required to maintain, or
restore, the rating of the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes and the Class X Notes.
Whilst this process is on-going, such Swap Provider must also provide
collateral within 10 business days (to the extent required, depending on the
value of the relevant Swap Transaction).
S&P: A Swap Provider and any applicable guarantor fail to have the S&P: The relevant Swap Provider must use reasonable endeavours to, within
relevant S&P required rating where S&P framework Weak applies. 90 calendar days, either (a) transfer its obligations to an entity that is
eligible to be a swap provider under the S&P ratings criteria, (b) obtain
a guarantee from an entity with at least the S&P subsequent required
ratings, or (c) take such other action as is required to maintain, or restore,
the rating of the Class A Notes, the Class B Notes, the Class C Notes, the
Class D Notes, the Class E Notes and the Class X Notes.
There is no requirement to provide collateral whilst the process is on-going.
(ii) to the extent that DBRS has not assigned a credit rating to
the Liquidity Facility Provider, the DBRS Minimum Equivalent Rating shall
apply to the DBRS rating as is commensurate with the ratings assigned to the
Most Senior Class of Notes from time to time as set out in the table above,
Swap Provider
DBRS: Failure by a Swap Provider to maintain a Long-Term DBRS Rating at least
as high as "A" and provided that the highest Notes rated by DBRS have a rating
of at least AA(low) (the "Initial DBRS Rating Event").
DBRS: A Swap Provider must, at its own cost, within 30 Business Days of the
occurrence of such Initial DBRS Rating Event, either: (a) post collateral in
accordance with the terms of the relevant Swap Agreement; (b) transfer its
rights and obligations under the relevant Swap Agreement to an appropriately
rated replacement third party (or a replacement third party with an
appropriately rated guarantor); (c) procure a co-obligation or guarantee from
an appropriately rated third party in accordance with the terms of the
relevant Swap Agreement; or (d) take such other actions as will result in the
rating of the highest rated class of Notes will be rated by DBRS following the
taking of such action being maintained at, or restored to, the same level as
immediately prior to such Initial DBRS Rating Event.
The Issuer may terminate the relevant Swap Agreement if a Swap Provider fails
to take either of the relevant actions in items (a) to (d) above in the
relevant time period.
A failure by a Swap Provider to take such steps will, in certain
circumstances, allow the Issuer to terminate the relevant Swap Agreement.
DBRS: Failure by a Swap Provider to maintain a Long-Term DBRS Rating at least
as high as "BBB" (the "Subsequent DBRS Rating Event").
DBRS: A Swap Provider must, at its own cost, within 30 Business Days of the
occurrence of such Subsequent DBRS Rating Event, as soon as practicable: (a)
post collateral in accordance with the terms of the relevant Swap Agreement;
and (b) use commercially reasonable efforts to either: (i) transfer its rights
and obligations under the relevant Swap Agreement to an appropriately rated
replacement third party (or a replacement third party with an appropriately
rated guarantor); (ii) procure a co-obligation or guarantee from an
appropriately rated third party in accordance with the terms of the relevant
Swap Agreement; or (iii) take such other actions as will result in the rating
of the highest rated class of the Notes will be rated by DBRS following the
taking of such action being maintained at, or restored to, the same level as
immediately prior to such Subsequent DBRS Rating Event.
The Issuer may terminate a relevant Swap Agreement if a Swap Provider fails to
provide collateral in respect of the relevant Swap Agreement in the relevant
time period. The Issuer may also terminate the relevant Swap Agreement if a
Swap Provider fails to take the relevant actions in items (b) (i) to (iii)
above in the relevant time period.
A failure by a Swap Provider to take such steps will, in certain
circumstances, allow the Issuer to terminate the relevant Swap Agreement.
For the purposes of the above:
"Long-Term DBRS Rating" means, at any time, with respect to an entity and its
long-term, unsecured and unsubordinated debt obligations:
(a) (i) its public Critical Obligations Rating or (ii) if a
public Critical Obligations Rating is not maintained by such entity, the
higher of (I) the issuer rating assigned by DBRS to such entity or (II) the
rating assigned by DBRS to such entity's long term senior unsecured debt
obligations; or
(b) if no such rating has been assigned by DBRS, the
corresponding "DBRS Minimum Equivalent Rating" in accordance with the terms of
the relevant Swap Agreement.
S&P: Initial Required Ratings:
S&P: The relevant S&P required ratings depend on which S&P
framework is elected by a Swap Provider from time to time (the "S&P
framework") and the rating of the highest Notes by S&P at such time.
There are four S&P frameworks: "Strong", "Adequate", "Moderate" and
"Weak". On the date of the Santander Swap Agreement, the provisions relating
to S&P Adequate are elected in respect of the Santander Swap Agreement. On
the date of the HSBC Swap Agreement, the provisions relating to S&P
Adequate are elected in respect of the HSBC Swap Agreement.
S&P: A Swap Provider and any applicable guarantor fail to have the
relevant S&P initial required rating where S&P framework Strong,
Adequate or Moderate applies.
S&P: Initial Required Ratings:
S&P: The relevant Swap Provider must provide collateral within ten
business days (to the extent required, depending on the value of the relevant
Swap Transaction) unless it (a) transfers its obligations to an entity that is
eligible to be a swap provider under the S&P ratings criteria, (b) obtains
a guarantee from an entity with the S&P subsequent required ratings, or
(c) takes such other action as is required to maintain, or restore, the rating
of the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes,
the Class E Notes and the Class X Notes.
S&P: Subsequent Required Ratings:
S&P: A Swap Provider and any applicable guarantor fail to have the
relevant S&P subsequent required rating where S&P framework Strong,
Adequate or Moderate applies.
S&P: Subsequent Required Ratings:
S&P: The relevant Swap Provider must use reasonable endeavours to, within
90 calendar days, either (a) transfer its rights and obligations to an entity
that is eligible to be a swap provider under the S&P ratings criteria, (b)
obtain a guarantee from an entity with at least the S&P subsequent
required ratings, or (c) take such other action as is required to maintain, or
restore, the rating of the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes and the Class X Notes.
Whilst this process is on-going, such Swap Provider must also provide
collateral within 10 business days (to the extent required, depending on the
value of the relevant Swap Transaction).
S&P: A Swap Provider and any applicable guarantor fail to have the
relevant S&P required rating where S&P framework Weak applies.
S&P: The relevant Swap Provider must use reasonable endeavours to, within
90 calendar days, either (a) transfer its obligations to an entity that is
eligible to be a swap provider under the S&P ratings criteria, (b) obtain
a guarantee from an entity with at least the S&P subsequent required
ratings, or (c) take such other action as is required to maintain, or restore,
the rating of the Class A Notes, the Class B Notes, the Class C Notes, the
Class D Notes, the Class E Notes and the Class X Notes.
There is no requirement to provide collateral whilst the process is on-going.
S&P required ratings: The S&P required ratings are set out in the
tables below.
Current rating of the relevant notes "S&P Strong" "S&P Adequate" "S&P Moderate" "S&P Weak"
Initial S&P Rating Event Subsequent S&P Rating Event Initial S&P Rating Event Subsequent S&P Rating Event Initial S&P Rating Event Subsequent S&P Rating Event Initial S&P Rating Event Subsequent S&P Rating Event
AAA A- BBB+ A- A- A A NA A+
AA+ A- BBB+ A- A- A- A- NA A+
AA A- BBB BBB+ BBB+ A- A- NA A
AA- A- BBB BBB+ BBB+ BBB+ BBB+ NA A-
A+ A- BBB- BBB BBB BBB+ BBB+ NA A-
A A- BBB- BBB BBB BBB BBB NA BBB+
A- A- BBB- BBB BBB- BBB BBB NA BBB+
BBB+ A- BBB- BBB BBB- BBB BBB- NA BBB
BBB A- BBB- BBB BBB- BBB BBB- NA BBB
BBB- A- BBB- BBB BBB- BBB BBB- NA BBB-
BB+ and below A- At least as high as 3 notches below the relevant notes rating BBB At least as high as 2 notches below the relevant notes rating BBB At least as high as 1 notch below the relevant notes rating NA At least as high as the relevant notes rating
The relevant Swap Provider or any relevant guarantor will have the relevant
S&P required rating if the issuer credit rating or resolution counterparty
rating assigned by S&P is at least as high as the applicable S&P
required rating corresponding to the then current rating of the relevant notes
and the applicable S&P framework as specified in the above table.
"COR" or "Critical Obligations Rating" means, in relation to a relevant
entity, the rating assigned by DBRS which addresses the risk of default of
particular obligations and/or exposures of the relevant entity that in the
view of DBRS have a higher probability of being excluded from bail-in and
remaining in a continuing bank in the event of the resolution of a troubled
bank than other senior unsecured obligations.
"DBRS Equivalent Chart" means:
DBRS Moody's S&P Fitch
AAA Aaa AAA AAA
AA(high) Aa1 AA+ AA+
AA Aa2 AA AA
AA(low) Aa3 AA- AA-
A(high) A1 A+ A+
A A2 A A
A(low) A3 A- A-
BBB(high) Baa1 BBB+ BBB+
BBB Baa2 BBB BBB
BBB(low) Baa3 BBB- BBB-
BB(high) Ba1 BB+ BB+
BB Ba2 BB BB
BB(low) Ba3 BB- BB-
B(high) B1 B+ B+
B B2 B B
B(low) B3 B- B-
CCC(high) Caa1 CCC+ CCC
CCC Caa2 CCC
CCC(low) Caa3 CCC-
CC Ca CC
C
D C D D
"DBRS Minimum Equivalent Rating" means:
(a) if a Fitch Ratings Inc. (Fitch) public rating, a
Moody's Investors Service Limited (Moody's) public rating and an S&P
public rating in respect of the relevant company or the relevant investment,
as applicable, (each, a Public Long Term Rating) are all available at such
date, the DBRS Minimum Equivalent Rating will be such Public Long Term Rating
remaining after disregarding the highest and lowest of such Public Long Term
Ratings from such rating agencies (provided that if such Public Long Term
Rating is under credit watch negative, or the equivalent, then it will be
considered one notch lower);
(b) if Public Long Term Ratings of the relevant company or
the relevant investment, as applicable, are available only by any two of
Fitch, Moody's and S&P at such date, the DBRS Minimum Equivalent Rating
will be the lower of such Public Long Term Ratings (provided that if such
Public Long Term Rating is under credit watch negative, or the equivalent,
then it will be considered one notch lower); and
(c) if a Public Long Term Rating is available only by any
one of Fitch, Moody's and S&P at such date, the DBRS Minimum Equivalent
Rating will be such Public Long Term Rating (provided that if such Public Long
Term Rating is under credit watch negative, or the equivalent, it will be
considered one notch lower)
(d) if at any time the DBRS Minimum Equivalent Rating
cannot be determined under paragraphs (a) to (c) above, then it will be the
rating that DBRS will confirm to the Issuer.
Non-Rating Triggers Table
Perfection Events: Prior to the completion of the transfer of legal title of the Loans to the
Issuer, the Issuer will be subject to certain risks as set out in the section
entitled "Risk Factors- Risks Relating to the Underlying Assets - Seller to
initially retain legal title to the Loans and risks relating to set-off".
Completion of transfer of the legal title of the Loans by the Seller to the
Issuer will be completed on or before the 30th Business Day after the earliest
to occur of the following:
(a) the Seller being required to perfect legal title to the
Loans (i) by an order of a court of competent jurisdiction, or (ii) by a
regulatory authority which has jurisdiction over the Seller, or (iii) by any
organisation of which the Seller is a member, or whose members comprise (but
are not necessarily limited to) mortgage lenders and with whose instructions
it is customary for the Seller to comply, to perfect legal title to the Loans;
(b) it becoming necessary by law to take any or all such actions
referred to in paragraph (a) above;
(c) the security created under or pursuant to the Deed of Charge
or any material part of that security being, in the opinion of the Security
Trustee, in jeopardy;
(d) the Seller calling for perfection by serving notice in
writing to that effect on the Issuer and the Security Trustee;
(e) an Insolvency Event occurring in relation to the Seller;
(f) it becoming unlawful in any applicable jurisdiction for the
Seller to hold legal title in respect of any Loan in the Portfolio;
(g) the occurrence of a Servicer Termination Event where no
replacement servicer has been appointed in accordance with the provisions of
the Servicing Agreement; or
(h) default is made by the Seller in the performance or
observance of any of its covenants and obligations under the Transaction
Documents to which it is a party, which is (in the opinion of the Note
Trustee) materially prejudicial to the interests of the Noteholders and such
default continues unremedied for a period of 20 Business Days after the
earlier of the Seller becoming aware of such default and receipt by the Seller
of written notice from the Issuer or (following delivery of an Enforcement
Notice) the Security Trustee, as appropriate, requiring the same to be
remedied.
If the Loans and their Related Security are sold pursuant to the exercise of
the Call Option, the Issuer or (if, at the time the Call Option is exercised,
the Issuer does not hold the Whole Legal Title) the Seller, upon receipt of a
direction from the Issuer and at the sole cost and expense of the Issuer,
shall promptly transfer the Whole Legal Title in the Loans and their Related
Security comprising the Portfolio to the Legal Title Transferee.
Servicer Termination Events: The appointment of the Servicer may be terminated by the Issuer (subject to
the prior written consent of the Security Trustee) if any of the following
events (each a "Servicer Termination Event") occurs and is continuing:
(a) the Servicer defaults in the payment on the due date of any
payment due and payable by it under the Servicing Agreement and the Servicer
fails to remedy it for a period of 10 Business Days after: (i) (where the
failure to pay has arisen other than as a result of a Disruption Event) upon
the earlier of the Servicer becoming aware of such default and the receipt by
the Servicer of written notice from the Issuer or (after the delivery of an
Enforcement Notice) the Security Trustee, as the case may be (with a copy to
the Servicing Facilitator and the Back-Up Servicing Facilitator) requiring the
same to be remedied; or (ii) (where the failure to pay has arisen as a result
of a Disruption Event) the cessation of the relevant Disruption Event or, if
earlier, 20 Business Days following the Servicer becoming aware of such
default and receipt by the Servicer of written notice from the Issuer or
(after the delivery of an Enforcement Notice) the Security Trustee, as the
case may be (with a copy to the Servicing Facilitator and the Back-Up
Servicing Facilitator) requiring the same to be remedied;
(b) the Servicer defaults in the performance or observance of
any of its other covenants and obligations under the Servicing Agreement,
which failure in the reasonable opinion of the Issuer (prior to the delivery
of an Enforcement Notice) or the opinion of the Security Trustee (after the
delivery of an Enforcement Notice) is materially prejudicial to the interests
of the Noteholders, and the Servicer does not remedy that failure within 20
Business Days after the earlier of the Servicer becoming aware of the failure
or of receipt by the Servicer of written notice from the Issuer or (after the
delivery of an Enforcement Notice) the Security Trustee, as the case may be,
(with a copy to the Servicing Facilitator and the Back-Up Servicing
Facilitator) requiring the Servicer's non-compliance to be remedied provided
that where the relevant default occurs as a result of a default by any person
to whom the Servicer has sub-contracted or delegated part of its obligations
hereunder, such default shall not constitute a Servicer Termination Event if,
within such period of 20 Business Days, the Servicer (i) terminates the
relevant sub-contracting or delegation arrangements, (ii) takes such steps as
the Issuer or (following receipt by the Servicer from the Security Trustee of
a copy of an Enforcement Notice) the Security Trustee may in its absolute
discretion specify to remedy such default and (iii) indemnifies the Issuer and
the Security Trustee against the consequences of such default;
(c) the occurrence of an Insolvency Event in relation to the
Servicer;
(d) the Servicer ceases to carry on the whole of its business or
ceases to carry on the whole or substantially the whole of its mortgage
servicing business; or
(e) it is or becomes unlawful for the Servicer to perform or
comply with any of its obligations under the Servicing Agreement.
In determining whether to give or withhold consent to the termination of the
Servicer by the Issuer, the Security Trustee will have regard to factors it
deems relevant (including, for this purpose, the availability of a substitute
servicer and the effect (including any potential regulatory implications) on
the Issuer of not having a servicer in place at any time).
The Servicer may also resign, and the Seller may terminate the appointment of
the Servicer (in each case without any Servicer Termination Event having
occurred) upon giving not less sixty (60) day's written notice to the other
(or such shorter period as may be agreed between the Servicer and the Seller)
with a copy of such notice to the Issuer, the Security Trustee, the Servicing
Facilitator and the Back-Up Servicing Facilitator, in each case provided that,
inter alia, a replacement servicer has been appointed by the Issuer.
The Servicer may also resign as Servicer on written notice to the Issuer, the
Security Trustee, the Seller, the Servicing Facilitator and the Back-Up
Servicing Facilitator in the event that:
(a) the Issuer is in material breach of the Servicing Agreement
(or commits a series of breaches which together constitute a material breach
of the Servicing Agreement) which is either: (i) incapable of being remedied;
or (ii) is capable of being remedied and remains unremedied within thirty (30)
days' after receipt by the Issuer of a written notice from the Servicer
specifying the breach and requiring it to be remedied; or
(b) the Issuer fails to pay any sum which is due under the
Servicing Agreement to the Servicer and that sum remains unpaid for five (5)
Business Days after receipt by the Issuer of a written notice from the
Servicer specifying the breach and requiring it to be remedied; or
(c) it becomes unlawful under any Regulatory Requirements for
the Servicer or any other party to comply with the Servicing Agreement or a
substantial part of it or in the event that a Competent Authority lawfully
directs the Servicing Agreement to terminate its appointment under the
Servicing Agreement.
Any termination of the Servicing Agreement pursuant to paragraphs (a) and (b)
above shall take effect on the later of (A) the date specified in the relevant
termination notice, and (B) the earlier of (I) the expiry of 60 days from the
date on which the relevant termination notice was given to the Issuer, the
Security Trustee, the Seller, the Servicing Facilitator and the Back-Up
Servicing Facilitator in accordance with the Servicing Agreement, and (II) the
appointment by the Issuer of a substitute servicer which satisfies the
conditions set out in clause 20.3 (Voluntary Termination) of the Servicing
Agreement.
In such circumstances, the Issuer shall use reasonable endeavours to promptly
appoint a substitute servicer which satisfies the conditions set out in clause
20.3 (Voluntary Termination) of the Servicing Agreement.
Servicing Facilitator Termination Event: The appointment of the Servicing Facilitator may be terminated by the Issuer
(subject to the prior written consent of the Security Trustee) if any of the
following events (each a "Servicing Facilitator Termination Event") occurs and
is continuing:
(a) the Servicing Facilitator defaults in the payment on the due
date of any payment due and payable by it under the Servicing Agreement and
the Servicing Facilitator fails to remedy it for a period of 20 Business Days
after: (i) (where the failure to pay has arisen other than as a result of a
Disruption Event) the earlier of the Servicing Facilitator becoming aware of
such default and the receipt by the Servicing Facilitator of written notice
from the Issuer or (after the delivery of an Enforcement Notice) the Security
Trustee, as the case may (with a copy to the Back-Up Servicing Facilitator) be
requiring the same to be remedied; or (ii) (where the failure to pay has
arisen as a result of a Disruption Event) the cessation of the relevant
Disruption Event or, if earlier, 60 Business Days following the Servicing
Facilitator becoming aware of such default and receipt by the Servicing
Facilitator of written notice from the Issuer or (after the delivery of an
Enforcement Notice) the Security Trustee, as the case may be, (with a copy to
the Back-Up Servicing Facilitator) requiring the same to be remedied; or
(b) default in the performance or observance by the Servicing
Facilitator of any of its other covenants and obligations under the Servicing
Agreement, which failure in the reasonable opinion of the Issuer (prior to the
delivery of an Enforcement Notice) or in the opinion of the Security Trustee
(after the delivery of an Enforcement Notice) is materially prejudicial to the
interests of the Noteholders, and the Servicing Facilitator does not remedy
that failure within 20 Business Days after the earlier of the Servicing
Facilitator becoming aware of the failure or of receipt by the Servicing
Facilitator of written notice from the Issuer or (after the delivery of an
Enforcement Notice) the Security Trustee, as the case may be, (with a copy to
the Back-Up Servicing Facilitator) requiring the Servicing Facilitator's
non-compliance to be remedied; or
(c) an Insolvency Event occurring in respect of the Servicing
Facilitator; or
(d) the Servicing Facilitator ceases to carry on the whole of
its business or ceases to carry on the whole or substantially the whole of its
servicing business; or
(e) it becomes unlawful in any applicable jurisdiction for the
Servicing Facilitator to perform any of its obligations as contemplated by the
Servicing Agreement, provided that this does not result or arise from
compliance by the Servicing Facilitator with any instruction from the Issuer
or the Security Trustee.
In determining whether to give or withhold consent to the termination of the
Servicing Facilitator by the Issuer, the Security Trustee will have regard to
factors it deems relevant (including, for this purpose, the availability of a
substitute servicer and the effect (including any potential regulatory
implications) on the Issuer of not having a servicing facilitator in place at
any time).
Unless the Issuer has instructed the Back-Up Servicing Facilitator to perform
the functions of the Servicing Facilitator pursuant to the Servicing
Agreement, the termination or resignation of the Servicing Facilitator is
conditional on:
(i) a replacement servicing facilitator being appointed, such
appointment to be effective not later than the date of such resignation or
termination;
(ii) such replacement servicing facilitator has obtained or made
(as applicable) all approvals, authorisations, consents and licences from, and
all filings, registrations and qualifications with, any court, government
department or any other regulatory body required pursuant to any Requirement
of Law or any Regulatory Direction in connection with its business, or the
execution, delivery and performance by it of the Servicing Agreement;
(iii) such replacement servicing facilitator entering into a
servicing agreement with the Issuer on terms commercially acceptable in the
market, pursuant to which the replacement servicing facilitator agrees to
assume and perform all the material duties and obligations of the Servicing
Facilitator under the Servicing Agreement; and
(iv) (if the Notes remain outstanding) the then current ratings of
the Notes not being adversely affected as a result thereof, unless the
Noteholders (acting by way of an Extraordinary Resolution) otherwise agree.
"Regulatory Direction" means, in relation to any person, a direction or
requirement of any governmental authority with whose directions or
requirements such person is accustomed to comply.
"Requirement of Law" in respect of any person shall mean:
(a) any law, treaty, rule, requirement or regulation;
(b) a notice by or an order of any court having jurisdiction;
(c) a mandatory requirement of any regulatory authority having
jurisdiction;
(d) a determination of an arbitrator or governmental authority;
(e) any rule or practice of any tax authority;
(f) any agreement between the relevant Transaction party and any
tax authority or between two or more tax authorities; or
(g) FATCA,
in each case applicable to or binding upon that person or to which that person
is subject or with which it is customary for it to comply.
See "Summary of the Key Transaction Documents - Servicing Agreement" below.
Transaction Overview - Fees
The following table sets out the ongoing fees to be paid by the Issuer to the
transaction parties.
Type of Fee Amount of Fee Priority in Cashflow Frequency
Servicing fees An amount equal to the aggregate of the Primary Servicing Fee, the Special Ahead of all outstanding Notes and Residual Certificates. Monthly in arrear on each Interest Payment Date.
Servicing Fee, the Redemption Fees, the Repeat Redemption Statement Fees, and
the Additional Servicing Costs in respect of the relevant Collection Period
(the "Servicing Fee").
Commitment fee under Liquidity Facility. SONIA plus 0.90 per cent. of undrawn amount under Liquidity Facility from time Ahead of all outstanding Notes. Monthly in arrear on each Interest Payment Date.
to time (inclusive of VAT, if any, chargeable thereon).
Other fees and expenses of the Issuer (including tax and audit costs) Estimated at £105,000 each year (exclusive of VAT, where so provided in the Ahead of all outstanding Notes and Residual Certificates. Monthly in arrear on each Interest Payment Date.
relevant Transaction Document).
Expenses related to the admission to trading of the Notes Estimated at £19,350 (exclusive of VAT). Ahead of all outstanding Notes and Residual Certificates. On or about the Closing Date.
As at the date of this Prospectus, the standard rate of UK value added tax
("VAT") is 20 per cent.
Regulatory Disclosures
UK Securitisation Framework and EU Securitisation Regulation
In this Prospectus:
(a) "FCA" means the Financial Conduct Authority.
(b) "FCA Due Diligence Rules" means SECN 4.
(c) "FCA Handbook" means the handbook of rules and guidance
adopted by the FCA.
(d) "FCA Transparency Rules" mean SECN 6 together with SECN 11
(including its Annexes) and SECN 12 (including its Annexes).
(e) "OPS" means an occupational pension scheme as defined in
section 1(1) of the Pension Schemes Act 1993 that has its main administration
in the United Kingdom.
(f) "OPS Due Diligence Rules" means regulations 32B, 32C and 32D
of the 2024 UK SR SI.
(g) "SECN" means the securitisation sourcebook of the FCA
Handbook.
(h) "UK Due Diligence Rules" means the PRA Due Diligence Rules,
the FCA Due Diligence Rules and the OPS Due Diligence Rules.
(i) "UK Securitisation Framework" means the 2024 UK SR SI,
SECN and PRA Securitisation Rules together with the relevant provisions of the
FSMA.
(j) "UK Securitisation Repository Operational Standards" means
SECN 9.5.
(k) "UK Transparency Rules" means requirements of FCA
Transparency Rules.
Risk Retention
The Seller will retain on an ongoing basis a material net economic interest of
not less than 5 per cent. in the securitisation as required by SECN 5 and as
determined in accordance with Article 6 of the EU Securitisation Regulation
(as required for the purposes of Article 5(1)(d) of the EU Securitisation
Regulation (not taking into account any relevant national measures)) and, in
respect of the EU Securitisation Regulation, as if it were applicable to it,
but solely as such articles are interpreted and applied on the Closing Date.
As at the Closing Date, such interest will comprise a material net economic
interest of not less than 5 per cent. of the nominal value of each Class of
Notes sold to investors (with the exception of the Class X Notes), in
accordance with SECN 5.2.8R(1)(a) and Article 6(3)(a) of the EU Securitisation
Regulation (as if it were applicable to it, but solely as such article is
interpreted and applied on the Closing Date) (the "Retained Interest"). Any
change to the manner in which such interest is held will be notified to the
Noteholders in accordance with the Terms and Conditions and the requirements
of the UK Securitisation Framework.
The Seller (in its capacity as originator for the purposes of the UK
Securitisation Framework and the EU Securitisation Regulation) has provided
undertakings with respect to the interest to be retained by it to (i) the
Joint Lead Managers and the Joint Arrangers in the Subscription Agreement, and
(ii) the Issuer and the Security Trustee in the Mortgage Sale Agreement that,
for so long as any Notes remain outstanding, it will:
(a) retain on an ongoing basis, the Retained Interest as
required by SECN 5 and as determined in accordance with Article 6 of the EU
Securitisation Regulation as required for the purposes of Article 5(1)(d) of
the EU Securitisation Regulation and, in respect of the EU Securitisation
Regulation, as if it were applicable to it, but solely as such articles are
interpreted and applied on the Closing Date;
(b) at all relevant times comply with the requirements of SECN
6.2.1R(5)(c) by confirming the risk retention of Lendco as contemplated by
SECN 5.2.1R;
(c) not sell, hedge or otherwise mitigate (and shall procure
that none of its affiliates shall sell, hedge or otherwise mitigate) the
credit risk under or associated with the Retained Interest except to the
extent permitted under the UK Securitisation Framework or as would be
permitted as determined in accordance with Article 6 of the EU Securitisation
Regulation as required for the purposes of Article 5(1)(d) of the EU
Securitisation Regulation;
(d) not change the manner or form in which it holds the Retained
Interest except to the extent permitted under the UK Securitisation Framework
and as would be permitted as determined in accordance with Article 6 of the EU
Securitisation Regulation as required for the purposes of Article 5(1)(d) of
the EU Securitisation Regulation; and
(e) as soon as reasonably possible notify the Joint Arrangers,
the Joint Lead Managers, the Issuer and the Security Trustee if for any reason
the Seller (i) ceases to hold the Retained Interest in accordance with
paragraph (a) above, or (ii) fails to comply with the covenants set out in
paragraphs (a) to (d) above.
Each prospective investor is required to independently assess and determine
the sufficiency of the information described above and in the Prospectus
generally for the purposes of complying with the applicable due diligence
requirements of the UK Securitisation Framework as prescribed under Article 5
of Chapter 2 of the PRA Securitisation Rules ("PRA Due Diligence Rules"), SECN
4 ("FCA Due Diligence Rules") and regulations 32B, 32C and 32D of the 2024 UK
SR SI ("OPS Due Diligence Rules", where OPS means an occupational pension
scheme as defined in section 1(1) of the Pension Schemes Act 1993 that has its
main administration in the United Kingdom), collectively the "UK Due Diligence
Rules", or Article 5 of the EU Securitisation Regulation, as applicable, and
any corresponding national measures which may be relevant and none of the
Issuer nor any Relevant Party makes any representation that the information
described above or in the Prospectus is sufficient in all circumstances for
such purposes.
The Seller undertakes that it will procure the provision to Noteholders of any
relevant additional data and information referred to in Article 5 of the EU
Securitisation Regulation and/or UK Due Diligence Rules (subject to all
applicable laws) which is reasonably requested by the Noteholders, provided
that it will not be in breach of the requirements of this paragraph if, due to
events, actions or circumstances beyond its control, it is not able to comply
with such undertakings.
For the purposes of the UK Due Diligence Rules and Article 5 of the EU
Securitisation Regulation, Lendco has made available the following information
(or has procured that such information is made available):
(i) confirmation that Lendco was not a credit institution as
defined in point (1) of Article 4(1) of Regulation (EU) No 575/2013 as it
forms part of domestic law by virtue of the EUWA at the time of origination of
the Loans in the Portfolio;
(ii) confirmation that Lendco (as originator) will retain on an
ongoing basis a material net economic interest of not less than 5 per cent. in
the securitisation in accordance with SECN 5.2.1R and as determined in
accordance with Article 6 of the EU Securitisation Regulation (as required for
the purposes of Article 5(1)(d) of the EU Securitisation Regulation) not
taking into account any relevant national measures, as if it were applicable
to it, but solely as such articles are interpreted and apply on the Closing
Date, and that the risk retention will be disclosed to investors in accordance
with the FCA Transparency Rules; and
(iii) confirmation that the Issuer (or the Servicing Facilitator
on its behalf) will make available the information required by the FCA
Transparency Rules in accordance with the frequency and modalities provided
for in such article.
Adverse Selection
The Seller has represented in the Mortgage Sale Agreement that it has not
selected Loans to be sold to the Issuer with the aim of rendering losses on
the Loans sold to the Issuer, measured over a period of four years, higher
than the losses over the same period on comparable assets held on the balance
sheet of the Seller.
Notes are not part of a re-securitisation
The Notes are not part of a securitisation of one or more exposures where at
least one of the underlying exposures is a securitisation position.
Transparency and Reporting
As to the information made available to potential investors by the Issuer,
reference is made to the information set out herein and forming part of this
Prospectus and to any other information provided separately (which information
shall not form part of this Prospectus) and, after the Closing Date, to the
Investor Reports prepared in accordance with the Cash Management Agreement and
the Servicing Agreement and published in a manner consistent with the
requirements of SECN 6.3 and, for these purposes the information is made
available to the Noteholders, the FCA, the Bank of England, the PRA and/or the
Pensions Regulator (or their successors) and, upon request, to potential
investors in the Notes, on the datasite hosted by SecRep Limited (the UK
Securitisation Repository) at https://www.euroabs.com/IH.aspx?d=27204.
The Servicing Facilitator will publish each UK Investor Report, each
Transaction Document and each UK SR Data Tape in a manner consistent with the
requirements of SECN 6.3 and, for these purposes, the information is made
available to the Noteholders, the FCA, the Bank of England, the PRA and/or the
Pensions Regulator (or their successors) and, upon request, to potential
investors in the Notes, on the datasite hosted by the UK Securitisation
Repository at https://www.euroabs.com/IH.aspx?d=27204 not later than one month
after the Interest Payment Date in relation to which such information was
prepared.
The Servicing Facilitator or another third party will publish without delay,
(i) any inside information relating to the Issuer which the Issuer determines
it is obliged to make pursuant to SECN 6.2.1R(6), SECN 11 (including its
Annexes) and SECN 12 (including its Annexes) and will be disclosed to the
public by the Issuer; or (ii) any significant event pursuant to SECN
6.2.1R(7), SECN 11 (including its Annexes) and SECN 12 (including its
Annexes).
The Issuer has been designated as the reporting entity (the UK Reporting
Entity) under SECN 6.3.1R(1) and has accepted such appointment.
In addition, subject to certain conditions, the Issuer has contractually
agreed to provide (or to procure the provision of) certain information and
reports under Article 7 of the EU Securitisation Regulation as such
requirements exist solely on the Closing Date.
Under the Servicing Agreement, the Issuer has appointed the Servicer and the
Servicing Facilitator to perform certain of the Issuer's obligations under the
FCA Transparency Rules and certain of the Issuer's contractually agreed
obligations under Article 7 of the EU Securitisation Regulation (as such
articles are interpreted on the Closing Date). For further information
please refer to the section entitled "General Information".
STS designation impacts on regulatory treatment of the Notes
The UK Securitisation Framework (and Regulation (EU) No 575/2013 as it forms
part of domestic law by virtue of the EUWA, including any applicable
regulations, rules, guidance or other implementing measures of the FCA, the
Bank of England or the PRA (or their successor) in relation thereto ("UK
CRR")) also includes provisions that implement the revised securitisation
framework developed by BCBS (with adjustments) and provides, among other
things, for harmonised foundation criteria and procedures applicable to
securitisations seeking designation as a UK simple, transparent and
standardised transaction (a "UK STS Securitisation").
The UK STS Securitisation designation impacts on the potential ability of the
Notes to achieve better or more flexible regulatory treatment from the
perspective of the applicable UK regulatory regimes, such as the prudential
regulation of UK CRR firms and UK Solvency II firms, and from the perspective
of the UK EMIR regime, as to which investors are referred to the section
entitled "Risk Factors - Legal Risks and Regulatory Risks - Impact of EMIR on
each Swap Agreement".
The Notes are not intended to be designated as an STS securitisation for the
purposes of the UK Securitisation Framework or the EU Securitisation
Regulation.
Investors to assess compliance
Prospective investors are themselves responsible for analysing their own
regulatory position, and should consult their own advisers in this respect and
should consider (and where appropriate, take independent advice on) the
consequence from a regulatory perspective of the Notes not being considered an
STS securitisation in the EU or the UK, including (but not limited to) that
the lack of such designation may negatively affect the regulatory position of,
and the capital charges on, the Notes and, in addition, have a negative effect
on the price and liquidity of the Notes in the secondary market.
CRA Regulation
The credit ratings included or referred to in this Prospectus are expected to
be assigned, on issue, by DBRS and S&P and endorsed for the purposes of
the EU CRA Regulation by DBRS Ratings GmbH and S&P Global Ratings Europe
Limited, respectively.
In general, European regulated investors are restricted under the EU CRA
Regulation from using credit ratings for regulatory purposes in the EEA,
unless such ratings are issued by a credit rating agency established in the
EEA and registered under the EU CRA Regulation (and such registration has not
been withdrawn or suspended, subject to transitional provisions that apply in
certain circumstances). Such general restriction will also apply in the case
of credit ratings issued by third country non-EEA credit rating agencies,
unless the relevant credit ratings are endorsed by an EEA-registered credit
rating agency or the relevant third country rating agency is certified in
accordance with the EU CRA Regulation (and such endorsement action or
certification, as the case may be, has not been withdrawn or suspended,
subject to transitional provisions that apply in certain circumstances). The
list of registered and certified rating agencies published by the European
Securities and Markets Authority ("ESMA") on its website in accordance with
the EU CRA Regulation is not conclusive evidence of the status of the relevant
rating agency included in such list, as there may be delays between certain
supervisory measures being taken against a relevant rating agency and the
publication of the updated ESMA list.
As at the date of this Prospectus, each of DBRS and S&P is a credit rating
agency established in the UK and registered under the UK CRA Regulation.
Investors regulated in the UK are subject to similar restrictions under the UK
CRA Regulation. As such, UK regulated investors are required to use for UK
regulatory purposes ratings issued by a credit rating agency established in
the UK and registered under the UK CRA Regulation. In the case of ratings
issued by third country non-UK credit rating agencies, third country credit
ratings can either be: (a) endorsed by a UK registered credit rating agency;
or (b) issued by a third country credit rating agency that is certified in
accordance with the UK CRA Regulation. Note this is subject, in each case,
to (i) the relevant UK registration, certification or endorsement, as the case
may be, not having been withdrawn or suspended, and (ii) transitional
provisions that apply in certain circumstances. In the case of third country
ratings, for a certain limited period of time, transitional relief
accommodates continued use for regulatory purposes in the UK, of existing
pre-2021 ratings, provided the relevant conditions are satisfied.
If the status of the rating agency rating the Notes changes for the purposes
of the EU CRA Regulation or the UK CRA Regulation, relevant regulated
investors may no longer be able to use the rating for regulatory purposes in
the EEA or the UK, as applicable, and the Notes may have a different
regulatory treatment, which may impact the value of the Notes and their
liquidity in the secondary market.
For further information, please refer to the sections entitled "Risk Factors -
Legal Risks and Regulatory Risks - Regulatory initiatives may have an adverse
impact on the regulatory treatment of the Notes" and "The Loans".
Weighted Average Lives of the Notes
Weighted average life refers to the average amount of time that will elapse
from the date of issuance of a security to the date of distribution to the
investor of amounts distributed in net reduction of principal of such security
(assuming no losses). The weighted average lives of the Notes will be
influenced by, among other things, the actual rate of redemption of the Loans.
The model used in this Prospectus for the Loans represents an assumed constant
per annum rate of prepayment ("CPR") each month relative to the then
outstanding principal balance of a pool of mortgage loans. CPR does not
purport to be either an historical description of the prepayment experience of
any pool of mortgage loans or a prediction of the expected rate of prepayment
of any mortgage loans, including the Loans to be included in the Portfolio.
The following tables were prepared based on the characteristics of the Loans
included in the Provisional Portfolio and the following additional assumptions
(the "Modelling Assumptions"):
(a) there are no arrears or enforcements;
(b) no Loan is sold by the Issuer;
(c) no Principal Deficiency arises;
(d) no Loan is required to be repurchased by the relevant Seller
due to any breach of Warranty;
(e) the portfolio of mortgages to be purchased by the Issuer
consists of Mortgage Loans acquired on the Closing Date, having the
characteristics of the Closing Portfolio as at the Portfolio Reference Date
but with an assumed aggregate Current Balance of approximately £400 million,
including Additional Mortgage Loans with an aggregate Current Balance of
approximately £80 million;
(f) the interest payment as well as the principal payment for
each Loan is calculated on a loan‑by‑loan basis assuming each Loan
amortises monthly (meaning the amortisation of each Loan is determined by the
loan specific (i) remaining term, (ii) principal outstanding and (iii)
interest rate);
(g) the amortisation of any Repayment Loan is calculated as an
annuity loan on a 30/360 basis, and the interest on any Loan is calculated on
a Act/365 basis;
(h) all Loans which are not Repayment Loans are assumed to be
Interest-only Loans;
(i) there are 74 days between the Issue Date and the first
Interest Payment Date;
(j) there is collateral of £400,000,000 and on the Issue Date
the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes and
the Class E Notes have an aggregate Principal Amount Outstanding of
£400,000,000, with the Class A Notes representing 85.75%, the Class B Notes
representing 6.75%, the Class C Notes representing 3.50%, the Class D Notes
representing 2.50%,the Class E Notes representing 1.50% and the Class X Notes
representing 0.75% of the Provisional Portfolio, representing in aggregate
100.75% of the Provisional Portfolio. The Class A Notes, the Class B Notes,
the Class C Notes, the Class D Notes, the Class E Notes and the Class X Notes
have been rounded to the nearest lower integral multiple of £1,000.
(k) the weighted average lives are calculated on an Act/365
basis;
(l) no further advances or product switches are made on a
Loan;
(m) the Cut-Off Date is 31 March 2025;
(n) the Issue Date is assumed to be 7 May 2025;
(o) payments on the Notes are made on the twentieth day of each
month and the first Interest Payment Date falls on 20 July 2025 (not adjusting
for Business Days);
(p) the first Interest Period for the Notes will include three
months of Revenue Receipts and Principal Receipts from the Loans in the
Portfolio;
(q) the senior fees in respect of the Closing Portfolio are
equal to the sum of: variable fees equal to 17.5 per cent. per annum of the
average Current Balance of the Loans at the beginning of each collection
period; and fixed fees of £126,000 per annum (inclusive of VAT) (distributed
equally through time);
(r) the Issuer Profit Amount is £100 on each Interest Payment
Date;
(s) a swap rate vector is being applied to calculate the fixed
swap payments of the SPV;
(t) the Swap Agreements are not terminated and the Swap
Providers fully comply with their respective obligations under the Swap
Agreements;
(u) the Class A and B Liquidity Reserve Fund is credited up to
the Class A and B Liquidity Reserve Fund Required Amount after the Closing
Date and the Liquidity Facility Agreement has been entered into at the Closing
Date;
(v) the amounts standing to credit of the Pre-Funding Reserve
are applied by the Issuer to purchase Additional Mortgage Loans having the
same characteristics as the Loans in the Provisional Portfolio, and such
Additional Mortgage Loans are purchased on the Closing Date and will not alter
the repayment profile of the Provisional Portfolio;
(w) the amount standing to the credit of the Pre-Funding Reserve
Ledger after the first Interest Payment Date is zero;
(x) Compounded Daily SONIA is equal to 4.50 per cent;
(y) the Bank of England Base rate is equal to 4.50 per cent;
(z) no interest accrues on the Deposit Account;
(aa) the Call Option is exercised once the aggregate Principal
Balance of the Loans is equal to or less than 10 per cent. of the aggregate
Principal Amount Outstanding of the Notes on the Closing Date;
(bb) the Option Holder exercises its option to redeem the Notes on
the Optional Redemption Date, in the first scenario, or the Option Holder does
not exercise its option to redeem the Notes on or after the Optional
Redemption Date (with the exception of the ten per cent. clean-up call as
stated under paragraph (aa)), in the second scenario;
(cc) the amount standing to the credit of the Standby Account is
zero on and from the Closing Date;
(dd) the LF Relevant Event does not occur;
(ee) Interest collections for the pre-funding period are assumed to
have the same percentage of interest collected as in 1 April - 30 June 2025;
(ff) the Class A and B Liquidity Reserve Fund Required Amount is
taking into account a Class A and B Liquidity Reserve Fund Scheduled Amount in
respect of that Interest Payment Date;
(gg) the Notes will be redeemed in accordance with the Conditions;
(hh) the Liquidity Facility is not drawn;
(ii) the Liquidity Commitment is zero on the Optional Redemption
Date; and
(jj) paragraphs (b), (g) to (i), (k) and (l) to (o) of the
definition of Available Revenue Receipts and paragraphs (b) and (g) of the
definition of Available Principal Receipts are considered to be zero.
The actual characteristics and performance of the Loans are likely to differ
from the assumptions used in constructing the tables set forth below, which
are hypothetical in nature and are provided only to give a general sense of
how the principal cashflows might behave under varying prepayment scenarios.
For example, it is not expected that the Loans will prepay at a constant rate
until maturity, that all of the Loans will prepay at the same rate or that
there will be no defaults or delinquencies on the Loans. Moreover, the
diverse remaining terms to maturity of the Loans could produce slower or
faster principal distributions than indicated in the tables at the various
percentages of CPR specified, even if the weighted average remaining term to
maturity of the Loans is assumed.
Any difference between such assumptions and the actual characteristics and
performance of the Loans will cause the weighted average lives of the Notes to
differ (which difference could be material) from the corresponding information
in the tables for each indicated percentage of CPR.
Weighted Average Life in Years
The weighted average lives shown below were determined by (i) multiplying the
net reduction, if any, of the Principal Amount Outstanding of each Class of
Notes by the number of years from the date of issue of the Notes to the
related Interest Payment Date, (ii) adding the results and (iii) dividing the
sum by the aggregate of the net reductions of the Principal Amount Outstanding
described in item (i) above.
Subject to the foregoing discussion and assumptions, the following tables
indicate the weighted average lives of the Notes. The weighted average lives
of the Notes have been calculated on an Actual/365 basis.
Class A Notes Class B Notes Class C Notes Class D Notes Class E Notes
CPR Notes are called on FORD (years) Clean-up call option exercised (years) Notes are called on FORD (years) Clean-up call option exercised (years) Notes are called on FORD (years) Clean-up call option exercised (years) Notes are called on FORD (years) Clean-up call option exercised (years) Notes are called on FORD (years) Clean-up call option exercised (years)
0.0% 4.79 12.28 4.79 19.12 4.79 19.50 4.79 19.61 4.79 19.65
5.0% 4.16 7.68 4.79 15.07 4.79 16.11 4.79 16.66 4.79 17.05
10.0% 3.59 5.29 4.79 12.47 4.79 13.83 4.79 14.53 4.79 14.95
15.0% 3.09 3.89 4.79 10.23 4.79 11.73 4.79 12.84 4.79 13.21
20.0% 2.64 2.96 4.79 8.80 4.79 9.83 4.79 9.87 4.79 9.87
25.0% 2.24 2.34 4.79 7.29 4.79 7.96 4.79 7.96 4.79 7.96
30.0% 1.89 1.90 4.79 6.03 4.79 6.46 4.79 6.46 4.79 6.46
Pricing CPR* 3.37 4.40 4.79 11.69 4.79 13.46 4.79 14.48 4.79 15.07
____________
(*) 5 per cent. CPR for 13 months, followed by 25
per cent. CPR for 10 months, followed by 10 per cent. CPR for 27 months,
followed by 30 per cent. CPR for 9 months and 10 per cent. CPR thereafter.
For more information in relation to the risks involved in the use of the
average lives estimated above, see "Risk Factors - Risks relating to the
availability of funds to make payments on the Notes - The yield to maturity on
the Notes may be affected by, among other things, prepayments made by
Borrowers on their Loans" above.
Early Redemption of the Notes
The Option Holder may exercise the Call Option granted by the Issuer pursuant
to the Deed Poll, requiring the Issuer to sell the Portfolio. The Issuer is
not permitted to dispose of the Portfolio in any other circumstances (other
than in relation to an enforcement of the Security or the repurchase of a Loan
and its Related Security by the Seller pursuant to the Mortgage Sale
Agreement).
Pursuant to and subject to the terms of the Deed Poll, the Issuer will grant
to the Option Holder the following rights (collectively, the "Call Option"),
which may be exercised at any time on or after the Optional Purchase
Commencement Date:
(a) the right to require the Issuer to sell and transfer to the
Option Holder or a Third Party Purchaser (as identified in the Exercise
Notice, the "Beneficial Title Transferee") the beneficial title to all (but
not some) of the Loans and their Related Security comprising the Portfolio
(the "Whole Beneficial Title") in consideration for the Optional Purchase
Price; and
(b) the right to require the Issuer to transfer the legal title
to all (but not some) of the Loans and their Related Security comprising the
Portfolio (the "Whole Legal Title"), or if, at the time the Call Option is
exercised, the Issuer does not hold legal title, the right to require the
Issuer to procure that the Seller transfers the Whole Legal Title, to the
Option Holder, a Third Party Purchaser or any nominee of the Option Holder
specified as such in the Exercise Notice (as identified in the Exercise
Notice, the "Legal Title Transferee").
The Call Option may be exercised at any time on or after the Optional Purchase
Commencement Date by notice from the Option Holder to the Issuer, with a copy
to the Security Trustee, the Seller and each of the Rating Agencies (such
notice, an "Exercise Notice"), that the Option Holder wishes to exercise the
Call Option, for effect on an Interest Payment Date following the service of
the Exercise Notice (the Interest Payment Date identified as the date on which
the purchase by the Beneficial Title Transferee of the Whole Beneficial Title
and (if applicable) the transfer of the Whole Legal Title to the Legal Title
Transferee is expected to be completed pursuant to the terms of the Deed Poll
being the "Optional Purchase Completion Date").
The sale of the Whole Beneficial Title and (if applicable) the transfer of the
Whole Legal Title pursuant to the Call Option shall also be subject to the
following conditions:
(a) either:
(i) the Beneficial Title Transferee and (if applicable) the
Legal Title Transferee are resident for tax purposes solely in the United
Kingdom; or
(ii) the Issuer, having received tax advice from an
appropriately qualified and experienced United Kingdom tax adviser in the form
and substance satisfactory to it (acting reasonably), or such other comfort as
may reasonably be required by it (including, without limitation, any clearance
or other confirmation granted by HM Revenue and Customs) ("Tax Advice"), is
satisfied that sale of the Whole Beneficial Title and (if applicable) transfer
of the Whole Legal Title should not create or increase any liabilities of the
Issuer to withholding tax imposed by the United Kingdom or the jurisdiction of
the Beneficial Title Transferee and (if applicable) the Legal Title Transferee
on interest. The costs relating to such Tax Advice shall be borne by the
Option Holder;
(b) either:
(i) the Legal Title Transferee has all the appropriate
licences, approvals, authorisations, consents, permissions and registrations
(including any approvals, authorisations, consents, permissions and
registrations required to be maintained under the FSMA and any rules and
regulations of the FCA) required to administer residential mortgage loans such
as the Loans and their Related Security comprising the Portfolio (the
"Relevant Authorisations"); or
(ii) the Beneficial Title Transferee has appointed a servicer
who has the Relevant Authorisations and the Seller has confirmed in writing
that it will hold legal title to the Loans and their Related Security
comprising the Portfolio on trust for the Beneficial Title Transferee; and
(c) the Beneficial Title Transferee shall not be permitted to
transfer the beneficial interest in any of the Loans and their Related
Security comprising the Portfolio to a further purchaser until the transfer of
the Whole Legal Title is perfected unless such transfer of beneficial interest
is made to an entity which is within the charge to UK corporation tax as
regards any payment relating to the Loans.
Optional Purchase Price
The purchase price for the Loans and their Related Security comprising the
Portfolio pursuant to the Call Option shall be an amount equal to the greater
of:
(a) the aggregate Current Balance of the Loans (excluding any
Enforced Loans) comprising the Portfolio determined as at the Collection
Period Start Date immediately preceding the Optional Purchase Completion Date;
and
(b) without double counting, the greater of:
(i) zero; and
(ii) an amount equal to:
(A) the amount required by the Issuer to pay in full all amounts
payable under items (a) to (m) of the Post-Enforcement Priority of Payments on
the immediately following Interest Payment Date;
less
(B) any Available Revenue Receipts and Available Principal
Receipts otherwise available to the Issuer,
in each case, plus (without double counting) (i) the Issuer's costs and
expenses associated with transferring its interests in any Loan and its
Related Security to the Option Holder or its nominee (if any) and (ii) an
amount agreed between the Issuer and the Option Holder in respect of costs
anticipated to be incurred by the Issuer after the Optional Purchase
Completion Date (the "Optional Purchase Price").
In connection with the exercise of the Call Option, the Beneficial Title
Transferee will agree with the Issuer to: (i) deposit an amount equal to the
Optional Purchase Price in either an escrow account in the name of the
Beneficial Title Transferee or in any other account as may be agreed between
the Issuer and the Beneficial Title Transferee; or (ii) provide irrevocable
payment instructions for an amount equal to the Optional Purchase Price for
value on the Optional Purchase Completion Date to the Deposit Account or such
other account as may be agreed between the Issuer and the Beneficial Title
Transferee, provided that such deposit shall be made or irrevocable payment
instructions shall be given no later than (x) two Business Days prior to the
Optional Purchase Completion Date or (y) such other date as the Issuer, at its
sole discretion, and the Beneficial Title Transferee may agree, provided
further that the Optional Purchase Price or irrevocable payment instructions
(as applicable) must be received by the Issuer in sufficient time to enable
the Issuer to provide notice of redemption of the Notes to the Noteholders
pursuant to Condition 8.3 (Mandatory Redemption of the Notes in Full) or 8.4
(Mandatory Redemption of the Notes for Taxation or Other Reasons) (as
applicable); and/or (iii) take any other action as may be agreed by the
Beneficial Title Transferee, the Issuer and the Security Trustee in relation
to the payment of the Optional Purchase Price.
At the cost of the Option Holder, the Issuer shall serve, or if, at the time
the Call Option is exercised, the Issuer does not hold the Whole Legal Title,
direct the Seller to serve all relevant notices and take all steps (including
carrying out requisite registrations and recordings) in order to effectively
vest the Whole Legal Title in the Legal Title Transferee, in each case subject
to the terms and conditions set out in the Deed Poll, such notices to be given
promptly after the Optional Purchase Completion Date.
Redemption of the Notes and the cancellation of the Residual Certificates
On the Optional Purchase Completion Date, the Optional Purchase Price will be
applied as Available Revenue Receipts in accordance with the Pre-Enforcement
Revenue Priority of Payments and will result in the Notes being redeemed in
full. The Residual Certificates will be cancelled following the redemption
in full of the Notes.
Any Revenue Receipts or Principal Receipts received by the Issuer from and
including the Collection Period Start Date immediately prior to the Optional
Purchase Completion Date to and including the Optional Purchase Completion
Date (such amounts being "Optional Purchase Collections") will be payable to
or for the account of the Beneficial Title Transferee and the Issuer shall
transfer all such amounts to or for the account of the Beneficial Title
Transferee on the Optional Purchase Completion Date.
The Issuer has covenanted in the Deed Poll in favour of the Option Holder
that, prior to the service of an Enforcement Notice, it shall not agree to any
sale of the Portfolio that is not already provided for under the Transaction
Documents.
In this Prospectus:
"Deed Poll" means the deed poll dated on or about the Closing Date, executed
by the Issuer, in favour of the Option Holder from time to time.
"Option Holder" means:
(a) (where the RC2 Residual Certificates are represented
by Definitive Residual Certificates) the holder of greater than 50 per cent.
in number of the RC2 Residual Certificates or (where the RC2 Residual
Certificates are represented by a Global Residual Certificate) the Indirect
Participant who holds the beneficial interest in more than 50 per cent. in
number of the RC2 Residual Certificates; or
(b) where no person holds (where the RC2 Residual
Certificates are represented by Definitive Residual Certificates) greater than
50 per cent. in number of the RC2 Residual Certificates or (where the RC2
Residual Certificates are represented by a Global Residual Certificate)
beneficial interest in more than 50 per cent. in number of the RC2 Residual
Certificates, the person who holds the greatest aggregate number of RC2
Residual Certificates or, as applicable, beneficial interest in the greatest
aggregate number of RC2 Residual Certificates.
"Optional Purchase Commencement Date" means the earlier of:
(a) the Collection Period Start Date immediately preceding
the Optional Redemption Date; or
(b) any Collection Period Start Date on which the
aggregate Current Balance of the Loans (excluding any Enforced Loans) is equal
to or less than 10 per cent. of the aggregate Principal Amount Outstanding of
the Notes on the Closing Date; or
(c) any Business Day following the occurrence of a
Redemption Event.
"Third Party Purchaser" means a third party purchaser of the beneficial title
to the Loans and their Related Security as nominated by the Option Holder in
the Exercise Notice.
Use of Proceeds
On the Closing Date, the Issuer will use the net proceeds of the Notes which
are estimated to be £319,906,000 to:
(a) pay the Closing Portfolio Initial Consideration payable by
the Issuer for the Closing Portfolio to be acquired from the Seller on the
Closing Date;
(b) establish the Pre-Funding Reserve which can be applied by
the Issuer to acquire Additional Mortgage Loans from the Seller from (and
including) the Closing Date until (and including) the Calculation Date
immediately preceding the Final Additional Mortgage Loan Purchase Date;
(c) establish, from part of the proceeds of the Class X Notes,
the Expenses Ledger which can be applied by the Issuer to fund Transaction
Expenses on any date from (and including) the Closing Date up to (and
including) the First Interest Payment Date; and
(d) credit excess amounts (if any, other than the remaining
proceeds from the Class X Notes which will be payable to the Seller) to the
Principal Ledger for application as Available Principal Receipts on the first
Interest Payment Date; and
(e) pay any applicable marked-to-market amount, if any, owing to
any Warehouse Swap Provider in relation to the novation, amendment or
termination of any Warehouse Swaps.
Ratings
The Notes, on issue, are expected to be assigned the following ratings by
S&P and DBRS. A security rating is not a recommendation to buy, sell or
hold securities and may be subject to revision, suspension or withdrawal at
any time by the assigning rating agency if, in its judgement, circumstances so
warrant.
Class of Notes S&P DBRS
Class A Notes AAA (sf) AAA (sf)
Class B Notes AA (sf) AA (high) (sf)
Class C Notes A+ (sf) A (high) (sf)
Class D Notes BBB (sf) BBB (high) (sf)
Class E Notes BB (sf) BB (high) (sf)
Class X Notes BBB (sf) BBB (high) (sf)
The ratings assigned to the Notes by each of S&P and DBRS address, inter
alia:
(a) the likelihood of full and timely payment to the holders of
the Most Senior Class of Notes (other than the Class X Notes) of all payments
of interest on each Interest Payment Date; and
(b) (i) (in respect of the ratings assigned by S&P) the
likelihood of full and ultimate payment to the holders of the Notes of
principal and (in relation to the Class B Notes, the Class C Notes, the Class
D Notes, the Class E Notes and the Class X Notes while they are not the Most
Senior Class of Notes) of interest on or prior to the Final Maturity Date and
(ii) (in respect of the ratings assigned by DBRS) the likelihood of full and
ultimate payment to the holders of the Notes of principal and (in relation to
the Class B Notes, the Class C Notes, the Class D Notes, and the Class E Notes
(while they are not the Most Senior Class of Notes) and the Class X Notes) of
interest on or prior to the Final Maturity Date.
The Residual Certificates will not be rated by the Rating Agencies.
As of the date of this Prospectus, each of the Rating Agencies is a credit
rating agency established in the UK and is registered under the UK CRA
Regulation.
The Issuer
Introduction
The Issuer was incorporated in England and Wales on 28 February 2025
(registered number 16284619) as a public limited company under the Companies
Act 2006. The registered office of the Issuer is 10th Floor, 5 Churchill
Place, London E14 5HU, United Kingdom. The telephone number of the Issuer's
registered office is +44 (0) 203 855 0285. The issued share capital of the
Issuer comprises 50,000 ordinary shares of £1 each of which one share is
fully paid up and 49,999 shares are quarter-paid and all shares are held by
Holdings (see "Holdings" below).
The Issuer has no Subsidiaries. The Seller does not own directly or
indirectly any of the share capital of Holdings or the Issuer.
The Issuer was established as a special purpose vehicle solely for the purpose
of issuing asset backed notes. The Issuer is permitted, pursuant to the
terms of its articles of association, inter alia, to issue the Notes and the
Residual Certificates. The Issuer will covenant to observe certain
restrictions on its activities which are set out in Condition 5(b) (Covenants)
and Residual Certificates Condition 5(b) (Covenants).
Under the Companies Act 2006 (as amended), the Issuer's governing documents
may be altered by a special resolution of shareholders.
In accordance with the Corporate Services Agreement, the Corporate Services
Provider will provide to the Issuer certain directors, a registered and
administrative office, the arrangement of meetings of directors and
shareholders, and procure the service of a company secretary. No
remuneration is paid by the Issuer to or in respect of any director or officer
of the Issuer for acting as such.
The Issuer has not engaged, since its incorporation, in any material
activities nor commenced operations other than those incidental to its
registration as a public company under the Companies Act 2006 (as amended) and
to the proposed issue of the Notes and Residual Certificates and the
authorisation of the other Transaction Documents referred to in this
Prospectus to which it is or will be a party and other matters which are
incidental or ancillary to the foregoing. The Issuer, as necessary, has made
the information filing and fee payment under the Data Protection (Charges and
Information) Regulations 2018. As at the date of this Prospectus, statutory
accounts have not yet been prepared or delivered to the Registrar of Companies
on behalf of the Issuer. The accounting reference date of the Issuer is 31
December and the first statutory accounts of the Issuer will be drawn up to 31
December 2025.
There is no intention to accumulate surpluses in the Issuer (other than
amounts standing to the credit of the Principal Ledger, the Revenue Ledger,
the Class A and B Liquidity Reserve Fund, the Pre-Funding Reserve Ledger, the
Principal Deficiency Ledger, the Expenses Ledger and the Issuer Profit
Account). The Issuer's ongoing activities principally comprise: (i) the
issue of the Notes; (ii) the entering into of the Transaction Documents to
which it is expressed to be a party; and (iii) the exercise of related rights
and powers and other activities referred to in this Prospectus or reasonably
incidental to those activities.
The legal entity identifier number of the Issuer is 635400YENQ7FY7ZJJS32.
The Issuer has its "centre of main interests" in the United Kingdom and will
be subject to the insolvency laws of England and Wales.
PricewaterhouseCoopers LLP, with its registered office at 1 Embankment Place,
London, WC2N 6RH, United Kingdom, is the auditor of the Issuer.
PricewaterhouseCoopers LLP is a registered auditor and is authorised by and is
a member of the Institute of Chartered Accountants in England and Wales to
practise in England and Wales.
Directors
The directors of the Issuer and their respective business addresses and
occupations are:
Name Business Address Business Occupation
CSC Directors (No. 1) Limited 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom Corporate Director
CSC Directors (No. 2) Limited 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom Corporate Director
Alasdair Watson 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom Director
The directors of CSC Directors (No. 1) Limited and CSC Directors (No. 2)
Limited and their principal activities are as follows:
Name Business Address Principal Activities
Jonathan Hanley 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom Director
Raheel Khan 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom Director
Renada Manyika 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom Director
Catherine McGrath 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom Director
Debra Parsall 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom Director
Aline Sternberg 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom Director
Oskari Tammenmaa 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom Director
Jordina Walker 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom Director
Alasdair Watson 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom Director
Helena Whitaker 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom Director
The Issuer has no loan capital, borrowings or material contingent liabilities
(including guarantees) as at the date of this Prospectus.
Holdings
Introduction
Holdings was incorporated in England and Wales on 28 February 2025 (registered
number 16284147) as a private limited company under the Companies Act 2006 (as
amended). The registered office of Holdings is 10th Floor, 5 Churchill
Place, London E14 5HU, United Kingdom. The issued share capital of Holdings
comprises one ordinary share of £1. CSC Corporate Services (UK) Limited
(the "Share Trustee") holds the entire beneficial interest in the issued share
under a discretionary trust for charitable purposes. Holdings holds the
beneficial interest in the issued share capital of the Issuer.
Neither the Seller nor any company connected with the Seller can direct the
Share Trustee and none of such companies has any control, direct or indirect,
over Holdings or the Issuer.
Pursuant to the terms of its articles of association, Holdings is permitted,
inter alia, to hold shares in the Issuer.
Holdings has not engaged since its incorporation in any material activities
other than those activities incidental to the authorisation and implementation
of the Transaction Documents referred to in this Prospectus to which it is or
will be a party and other matters which are incidental or ancillary to the
foregoing.
Directors
The directors of Holdings and their respective business addresses and
occupations are:
Name Business Address Business Occupation
CSC Directors (No. 1) Limited 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom Corporate Director
CSC Directors (No. 2) Limited 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom Corporate Director
Alasdair Watson 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom Director
The directors of CSC Directors (No. 1) Limited and CSC Directors (No. 2)
Limited and their respective occupations are:
Name Business Address Principal Activities
Jonathan Hanley 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom Director
Raheel Khan 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom Director
Renada Manyika 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom Director
Catherine McGrath 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom Director
Debra Parsall 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom Director
Aline Sternberg 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom Director
Oskari Tammenmaa 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom Director
Jordina Walker 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom Director
Alasdair Watson 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom Director
Helena Whitaker 10th Floor, 5 Churchill Place, London E14 5HU, United Kingdom Director
The accounting reference date of Holdings is 31 December and the first
statutory accounts of Holdings will be drawn up to 31 December 2025.
Holdings has no employees.
The Seller, the Servicing Facilitator and the Risk Retainer
Lendco Limited ("Lendco", the "Seller", the "Servicing Facilitator" and the
"Risk Retainer") was previously registered under the name Atlas Property
Finance Limited and was renamed on 26 April 2018. Lendco is a private
limited company incorporated under the laws of England and Wales on 30 January
2018. Lendco is registered in England and Wales under company number
11177105. The registered office of Lendco is at 33 Gracechurch Street,
London EC3V 0BT, United Kingdom.
Lendco is a provider of unregulated buy-to-let mortgage financing for the
purpose of purchasing or refinancing residential properties in England and
Wales which are to be held as investments and let to unrelated third
parties. As of 26 March 2025, Lendco has originated approximately £1.78bn
of buy-to-let mortgage loans.
Lendco is registered with the Financial Conduct Authority under registration
number 805730 for the purposes of carrying out lending, administration and
arranging activities in respect of consumer buy-to-let mortgage contracts.
Lendco (in its capacity as originator for the purposes of the UK
Securitisation Framework and the EU Securitisation Regulation) has given
certain undertakings in relation to the holding of the Retained Interest which
are set out in the section headed "Regulatory Disclosures - UK Securitisation
Framework and EU Securitisation Regulation".
For the purposes of UK Due Diligence Rules and Article 5 of the EU
Securitisation Regulation, Lendco (in its capacity as originator and as Risk
Retainer) has made available the following information (or has procured that
such information is made available):
(a) confirmation that Lendco was not a credit institution as
defined in point (1) of Article 4(1) of Regulation (EU) No 575/2013 as it
forms part of domestic law by virtue of the EUWA at the time of origination of
the Loans in the Portfolio;
(b) confirmation that Lendco (as originator) will retain on an
ongoing basis a material net economic interest of not less than 5 per cent. in
the securitisation as required by SECN 5.2.1R and as determined in accordance
with Article 6 of the EU Securitisation Regulation as required for the
purposes of Article 5(1)(d) of the EU Securitisation Regulation and that the
risk retention will be disclosed to investors in accordance with the FCA
Transparency Rules; and
(c) confirmation that the Issuer (or the Servicing Facilitator
on its behalf) will make available the information required by the FCA
Transparency Rules in accordance with the frequency and modalities provided
for in such article.
The management team of Lendco have significant relevant professional
experience in the origination and servicing of mortgage loans similar to the
Loans in the Portfolio. In particular, Simon Knight (Managing Director) has
over 30 years' experience in the UK, U.S. and international mortgage-lending
markets, Alex King (Executive Director) has over 25 years' financial services
experience and extensive sales management, marketing and operational
experience and Rory Withfield (Finance Director) has over 17 years' experience
in the financial services industry and has held a variety of roles in numerous
global financial services companies. In addition, staff who are responsible
for managing the origination by Lendco of mortgage loans similar to the Loans
in the Portfolio have significant relevant professional experience in the
origination of such loans.
Source - Lendco Limited
Servicer
Lendco Mortgage Servicing Limited is a private limited company incorporated in
England and Wales on 2 July 2021 and registered under company number
13490507. The registered office of Lendco Mortgage Servicing Limited is at
1st Floor 33 Gracechurch Street, London, United Kingdom, EC3V 0BT.
Lendco Mortgage Servicing Limited is a wholly owned subsidiary of Lendco
Limited, and acts as the primary and special mortgage servicing and
administration of all Lendco Limited originated mortgage loans. Lendco
Mortgage Servicing Limited is registered with the Financial Conduct Authority,
under registration number 969164, to undertake consumer buy-to-let
activities. Lendco Mortgage Servicing Limited is also registered under the
Data Protection Act 1998.
The Agent Bank, the Principal Paying Agent, the Cash Manager and the Issuer
Account Bank
Citibank, N.A. is registered in the United States of America and holds charter
no. 1461 issued by the Office of the Comptroller of the Currency. Citibank,
N.A.'s principal place of business is 388 Greenwich Street, New York, NY
10013, United States of America. Its registered office is at 701 East 60th
Street, North Sioux Falls, South Dakota 57104, United States of America.
Citibank, N.A.'s primary federal regulator is the Office of the Comptroller of
the Currency.
Citibank, N.A., London Branch, is a branch of Citibank, N.A. which is
authorised and regulated by the Office of the Comptroller of the Currency of
the United States of America with a foreign company number FC001835. Citibank,
N.A., London Branch is registered as a branch with UK establishment number
BR001018. Its UK establishment office address is Citigroup Centre, Canada
Square, London E14 5LB.
It is authorised in the UK by the PRA and subject to regulation by the FCA and
limited regulation by the PRA. It appears on the UK's financial services
register with firm reference number 124704.
The short-term unsecured obligations of Citibank, N.A. are rated A-1 by
Standard & Poor's Credit Market Services Europe Limited, P-1 by Moody's
Investors Service Ltd. and F1 by Fitch Ratings Limited and the long term
unsecured unsubordinated obligations of Citibank, N.A. are rated A+ by
Standard & Poor's Credit Market Services Europe Limited, Aa3 by Moody's
Investors Service Ltd. and AA- by Fitch Ratings Limited.
The Note Trustee and Security Trustee
Citicorp Trustee Company Limited was incorporated on 24 December 1928 under
the laws of England and Wales and has its registered office at Citigroup
Centre, Canada Square, Canary Wharf, London E14 5LB, with company number
235914.
Citicorp Trustee Company Limited is an indirect wholly owned subsidiary of
Citigroup Inc., a diversified global financial services holding company
incorporated in Delaware. Citicorp is regulated by the UK's Financial
Conduct Authority.
Neither the Note Trustee nor the Security Trustee will be responsible for (a)
supervising the performance by the Issuer or any other party to the
Transaction Documents of their respective obligations under the Transaction
Documents and will be entitled to assume, until it has written notice to the
contrary, that all such persons are properly performing their duties
thereunder, or (b) considering the basis on which approvals or consents are
granted by the Issuer or any other party to the Transaction Documents under
the Transaction Documents. Neither the Note Trustee nor the Security Trustee
will be liable to any Noteholder or other Secured Creditor for any failure to
make or to cause to be made on its behalf the searches, investigations and
enquiries which would normally be made by a prudent chargee in relation to the
Charged Assets and neither the Note Trustee nor the Security Trustee has any
responsibility in relation to the legality, validity, sufficiency or
enforceability of the Security and the Transaction Documents.
The Santander Swap Provider and the Liquidity Facility Provider
Banco Santander, S.A. is the parent bank of Grupo Santander ("Santander"). It
was established on 21 March 1857 and incorporated in its present form by a
public deed executed in the city of Santander, Spain, on 14 January 1875.
Banco Santander, S.A. and its consolidated subsidiaries are a financial group
operating through a network of offices and subsidiaries across Spain, the
United Kingdom and other European countries, Brazil and other South American
countries and the US and Mexico, offering a wide range of financial products.
In Latin America, Santander has majority shareholdings in banks in Argentina,
Brazil, Chile, Colombia, Mexico, Peru and Uruguay.
At 31 December 2024, Santander had a market capitalization of €67.6 billion,
stockholders' equity of €98.6 billion and total assets of €1,837.1
billion. Santander had €1,348.4 billion total customer funds at that date.
As of 31 December 2024, we had 65,746 employees and 3,022 branch offices in
Europe (of which 23,980 employees and 1,827 branches in Spain and 20,455
employees and 444 branches in the United Kingdom), 42,846 employees and 1,761
branches in North America, 79,571 employees and 2,902 branches in South
America (of which 56,619 employees and 2,202 branches in Brazil), 16,792
employees and 326 branches in Digital Consumer Bank Europe and 1,798 employees
in the Corporate Centre.
Banco Santander, S.A. has a long- term credit rating of "A-" by Fitch, "A+" by
Standard & Poor´s, "A2" by Moody´s and "A (high)" by DBRS.
The HSBC Swap Provider
HSBC Bank plc and its subsidiaries form a group providing a range of banking
products and services. HSBC Bank plc (formerly Midland Bank plc) was formed in
England in 1836 and subsequently incorporated as a company limited by shares
in 1880. In 1923, the company adopted the name Midland Bank Limited, which it
held until 1982 when it re-registered as a public limited company and changed
its name to Midland Bank plc. In 1992, Midland Bank plc became a wholly owned
subsidiary undertaking of HSBC Holdings plc, whose Group Head Office is at 8
Canada Square, London E14 5HQ. HSBC Bank plc adopted its current name,
changing from Midland Bank plc, in 1999. HSBC Holdings plc, the parent company
of the HSBC Group, is headquartered in London. As at 31 December 2024, the
HSBC Group serves over 41 million customers worldwide across 58 countries and
territories. With assets of USD 3.0 trillion at the calendar year end for
2024, HSBC is one of the world's largest banking and financial services
organisations. The short term senior unsecured and unguaranteed obligations of
HSBC Bank plc are, as at the date of this Prospectus, rated P-1 by Moody's and
A-1 by Standard & Poor's and HSBC Bank plc has a short term issuer default
rating of F1+ from Fitch. The long term senior unsecured and unguaranteed
obligations of HSBC Bank plc are rated A1 by Moody's and A+ by Standard &
Poor's and HSBC Bank plc has a long term issuer default rating of AA- from
Fitch. HSBC Bank plc is authorised by the Prudential Regulation Authority and
regulated by the Financial Conduct Authority and the Prudential Regulation
Authority. HSBC Bank plc's principal place of business in the United Kingdom
is 8 Canada Square, London E14 5HQ.
The Corporate Services Provider and Back-Up Servicing Facilitator
CSC Capital Markets UK Limited (registered number 10780001), having its
principal address at 10th Floor, 5 Churchill Place, London E14 5HU, United
Kingdom, will be appointed to provide corporate services to the Issuer and
Holdings pursuant to the Corporate Services Agreement. CSC Capital Markets
UK Limited will be appointed as a Back-Up Servicing Facilitator pursuant to
the Servicing Agreement.
CSC Capital Markets UK Limited has served and is currently serving as
corporate service provider and back-up servicing facilitator for numerous
securitisation transactions and programmes involving pools of mortgage loans.
The Loans
The Portfolio
Introduction
The following is a description of some of the characteristics of the Loans
including details of loan types and selected statistical information.
The Seller procured the selection of the Loans for transfer into the
Provisional Portfolio, using a system containing defined data on each of the
qualifying loans. This system allows the setting of exclusion criteria among
others corresponding to relevant Loan Warranties that the Seller will make in
the Mortgage Sale Agreement in relation to the Loans. Once the criteria have
been determined, the system identifies all loans owned by the Seller that are
consistent with the criteria. The Loans selected for transfer into the
Provisional Portfolio are representative of the Buy-to-Let Loans meeting the
selection criteria which the Seller holds immediately prior to the sale of the
Closing Portfolio. After a pool of Loans is selected in this way, the
constituent Loans are monitored so that they continue to comply with the Loan
Warranties on the Closing Date.
The characteristics of the Loans in the Provisional Portfolio may differ from
Loans in the Closing Portfolio as at the Closing Date due to any redemptions
of mortgage loans occurring, the death of any relevant Borrower, enforcement
procedures being completed or repurchases by the persons who sold the relevant
mortgage loan to the Seller. In addition, further Loans may be purchased by
the Issuer following the Closing Date as Additional Mortgage Loans. Additional
Mortgage Loans (for the avoidance of doubt, including the Additional Closing
Portfolio Mortgage Loans) may not have formed part of the Provisional
Portfolio.
Unless otherwise indicated, the description that follows relates to types of
loans that could be sold to the Issuer as part of the Closing Portfolio as at
the Closing Date.
The Portfolio
The Portfolio from time to time after the Closing Date will comprise loans
advanced to the Borrowers upon the security of residential property situated
in England or Wales in relation to the purchase or re-mortgage of a Property
for letting purposes, such loans acquired pursuant to the Mortgage Sale
Agreement, other than Loans which have been repaid or which have been
purchased from the Issuer pursuant to the Mortgage Sale Agreement.
Further Loans may be sold to the issuer by the Seller on any date falling in
the period from the Closing Date up to the First Interest Payment Date. Each
date following the Closing Date on which the Issuer purchases Additional
Mortgage Loans is referred to as an additional mortgage loan purchase date
(the "Additional Mortgage Loan Purchase Date"). Additional Mortgage Loans
(for the avoidance of doubt, including the Additional Closing Portfolio
Mortgage Loans) do not form part of the Provisional Portfolio.
There has been no revaluation of any Property for the purposes of the issuance
of the Notes and the valuations quoted are as at the date of the origination
of the Loans.
"Additional Mortgage Loans" means (i) the Additional Closing Portfolio
Mortgage Loans and (ii) any Mortgage Loans which are sold to the Issuer by the
Seller on any Additional Mortgage Loan Purchase Date up to (and including) the
Final Additional Mortgage Loan Purchase Date.
Origination of the Portfolio
The Loans in the Portfolio are originated by the Seller via a network of
mortgage brokers.
Security
All of the Loans in the Portfolio are secured by first ranking mortgages.
Each Property must be of residential use and planning status only, and must be
located in England or Wales.
In general, the following types of tenure are deemed by the Seller to
represent suitable security in respect of the Loans:
(a) Freehold (except certain flats or maisonettes);
(b) Leasehold, in respect of flats or maisonettes with a minimum
of 60 years of the lease remaining at the time the application by the relevant
Borrower is made (save where the lease is being simultaneously extended upon
completion of the transaction); and
(c) Flying Freehold, where the flying freehold element does not
exceed 25% of the total area of the relevant Property.
In general, the following property types (amongst others) are considered by
the Seller to be eligible as security in respect of a Loan: new-build
properties; residential houses; purpose-built or converted flats (including
maisonettes and studio flats (studio flats must have a minimum floor area of
30 square metres)); houses in multiple occupation ("HMO") (provided correct
planning permission is in place and the property is properly licenced (where
appropriate)); flats above commercial units (non-takeaway, public house, bar
or nightclub related); and multi-unit freehold.
Interest Rates in respect of the Loans
In respect of any Loan, if the relevant offer document specifies an initial
fixed rate of interest, that rate of interest shall apply during the initial
fixed rate period referred to in such offer document.
After the expiry of the initial fixed rate period specified in any such offer
document (or if such offer document does not specify an initial fixed rate
period), the interest rate applicable to the relevant Loan shall be (i) the
ICE Term SONIA Reference Rate published by ICE on the ICE Report Centre for a
tenor period of three months for pounds sterling as at the relevant
determination date ("3 month Term SONIA"), plus (ii) the margin referred to in
the relevant offer document. If 3 month Term SONIA is less than zero on any
relevant determination date, 3 month Term SONIA will be deemed to be zero.
Interest is calculated on the principal amount of the relevant Loan from time
to time (including any fees payable to the Seller and added to such principal
amount) on the basis of a 360-day year consisting of 12 months of 30 days.
Interest accrues daily and is payable on a monthly basis on a specified day of
each calendar month (for the purposes of this section, each such date is an
"Interest Payment Date").
In the event that SONIA ceases to be available or is no longer commonly
accepted as a benchmark rate, the Seller may exercise its discretion to select
any substitute reference rate.
Characteristics of the Loans
Types of Loans
The Loans in the Portfolio consist of buy-to-let mortgage loans in respect of
residential properties in England and Wales, purchased or refinanced for the
purpose of investment and let to unrelated third parties. The Loans each
have a contractual term of not less than five years and not more than 35
years.
Repayment Terms
Repayment of each Loan must take place on or before the final day of the term
specified in the relevant offer document or on the date on which the Seller
declares the Loan to be immediately due and payable following the occurrence
of an event of default in respect of the Loan. A Borrower is required to pay
all accrued and unpaid interest, and all applicable outstanding fees, on the
date on which a Loan becomes repayable in full.
Loans are repayable on an interest-only basis. Subject to the ability of a
Borrower to make overpayments (see "Overpayments and Early Repayment
Charges"), payments made by a Borrower on each Interest Payment Date will not
be deemed to repay any part of the relevant Loan. The entire outstanding
principal amount of the relevant Loan is required to be repaid on its maturity
date.
Further mortgage advances
The Seller is under no obligation to make further advances to any Borrower.
Further, Seller will undertake with the Issuer and the Security Trustee that
it (or the Servicer on its behalf) will not offer to any Borrower nor will it
agree to any request from any Borrower for a Further Advance in relation to a
Loan and its Related Security unless required to do so in accordance with
Applicable Laws.
If a Further Advance required to be granted in accordance with Applicable
Laws, the Servicer shall notify each of the Seller, the Issuer and the
Security Trustee as soon as reasonably practicable and following delivery of a
Loan Repurchase Notice by the Issuer to the Seller, the Seller shall
subsequently repurchase the relevant Loan within the timeframes and in the
manner set out in the Mortgage Sale Agreement.
"Further Advance" means, in relation to a Loan, any advance of further money
to the relevant Borrower following the Initial Advance which is secured by the
same Mortgage as the Initial Advance, but does not include the amount of any
retention advanced to the relevant Borrower as part of the Initial Advance
after completion of the Mortgage.
"Initial Advance" means the initial principal amount advanced by the Seller to
the relevant Borrower under a Loan.
Overpayments and Early Repayment Charges
Overpayments on a Loan may be made on any Business Day, subject to any
restrictions in the relevant offer document.
At the same time as making any overpayment, the relevant Borrower must pay to
the Seller accrued interest on the amount repaid (calculated up to and
including the date of repayment), together with any Early Repayment Charge or
similar fee specified in the relevant offer document. During the early
repayment charge period specified in an offer document, a Borrower may be
permitted to make repayments of up to 10 per cent. of the initial principal
amount of a Loan without incurring an early repayment fee. The minimum
overpayment permitted in respect of any Loan is £1,000.
The Seller may, in its absolute discretion and following a request from a
Borrower, permit a Borrower to make overpayments outside of the above
criteria. Any overpayment made outside of such criteria would be subject to
the payment by the Borrower of an Early Repayment Charge.
Payment Holidays
Initial screenings of applications by Borrowers for payment holidays are
performed by the Servicer.
Product Switches
From time to time a Borrower may request, or the Seller or the Servicer (on
behalf of the Seller) may offer, in limited circumstances, a variation in the
financial terms and conditions applicable to the Borrower's Loan. In
addition, in order to promote the retention of Borrowers, the Seller may
periodically contact certain Borrowers in respect of the Seller's total
portfolio of outstanding residential mortgage loans in order to encourage a
Borrower to review the Seller's other residential mortgage loans and to
discuss moving that Borrower to an alternative mortgage product.
A Loan which is subject to a Product Switch may remain in the Portfolio
subject to the terms contained in the Mortgage Sale Agreement. See "Summary
of the Key Transaction Documents - Mortgage Sale Agreement".
Permitted Fee Capitalisation Amounts
A Borrower may apply to the Seller to capitalise on their Loan any fee payable
by that Borrower in connection with a Product Switch under their Loan. This
fee will be secured by the same Property as the Loan. Any Permitted Fee
Capitalisation Amount elected by a Borrower in connection with a Product
Switch and purchased by the Issuer will be added to the Current Balance of
that Borrower's Loan on the relevant Switch Date. The aggregate of the
outstanding amount of the Loan and the Permitted Fee Capitalisation Amount may
be greater than the original amount of the Loan.
Title to the Portfolio
Pursuant to and under the terms of the Mortgage Sale Agreement dated on or
about the Closing Date, the Seller will transfer to the Issuer the equitable
title to (i) the Loans and their Related Security comprising the Closing
Portfolio on the Closing Date and (ii) each Additional Mortgage Loan and their
Related Security on the relevant Additional Mortgage Loan Purchase Date. The
Seller has agreed to transfer legal title to the Loans and their Related
Security to the Issuer, and the Issuer has undertaken to seek the transfer of
legal title, only following the occurrence of a Perfection Event (as set out
below).
None of the above mentioned transfers to the Issuer is to be completed by
registration at the Land Registry or notice given to the relevant Borrowers
until the occurrence of one of the events mentioned below. The Loans in the
Portfolio and their Related Security are accordingly owned in equity only by
the Issuer pending such registration and notification. Legal title in the
Loans and their Related Security will continue to be vested in the Seller
until the occurrence of a Perfection Event. In the case of the Loans secured
over registered land in England or Wales which will be transferred to the
Issuer on the Closing Date, the Seller has agreed to remain on the Land
Registry as the legal mortgagee. Following the occurrence of a Perfection
Event, the Seller has agreed, in the Mortgage Sale Agreement, to transfer
legal title to the Issuer, which transfer will be perfected by steps including
filing forms at the Land Registry and notifying the Borrowers of such
transfer, as applicable, by the Issuer.
The Issuer will grant a first fixed charge in favour of the Security Trustee
over its interest in the Loans.
Save as mentioned below, the Security Trustee has undertaken not to effect any
registration at the Land Registry to perfect the sale of the Loans to the
Issuer or the granting of security over the Loans by the Issuer in favour of
the Security Trustee nor, save as mentioned below, to obtain possession of
Title Deeds to the Properties.
Notices of the equitable assignments or declarations of trust in favour of the
Issuer and the security in favour of the Security Trustee will not, save as
mentioned below, be given to the Borrowers under the Loans.
As noted above, until the occurrence of a Perfection Event, the Issuer and the
Security Trustee will not take actions to effect a transfer of legal title to
the Loans and their Related Security to the Issuer. The following events
constitute Perfection Events:
(a) the Seller being required to perfect legal title to the
Loans by an order of a court of competent jurisdiction or by a regulatory
authority which has jurisdiction over the Seller or by any organisation of
which the Seller is a member, or whose members comprise (but are not
necessarily limited to) mortgage lenders and with whose instructions it is
customary for the Seller to comply, to perfect legal title to the Loans and
their Related Security; or
(b) it becoming necessary by law to do any or all of the acts
referred to in paragraph (a) above; or
(c) the security created under or pursuant to the Deed of Charge
or any material part of that security being, in the opinion of the Security
Trustee, in jeopardy; or
(d) the Seller calling for perfection by serving notice in
writing to that effect on the Issuer and the Security Trustee; or
(e) an Insolvency Event occurring in relation to the Seller; or
(f) it becoming unlawful in any applicable jurisdiction for the
Seller to hold legal title in respect of any Loan in the Portfolio; or
(g) the occurrence of a Servicer Termination Event where no
replacement servicer has been appointed in accordance with the provisions of
the Servicing Agreement; or
(h) default is made by the Seller in the performance or
observance of any of its covenants and obligations under the Transaction
Documents to which it is a party, which is (in the opinion of the Note
Trustee) materially prejudicial to the interests of the Noteholders, and such
default continues unremedied for a period of 20 Business Days after the
earlier of the Seller becoming aware of such default and receipt by the Seller
of written notice from the Issuer or (following delivery of an Enforcement
Notice) the Security Trustee, as appropriate, requiring the same to be
remedied.
Following the occurrence of a Perfection Event, the Issuer and the Security
Trustee will each be entitled to take all necessary steps to perfect legal
title to its interests in the Loans and their Related Security, including the
carrying out of any necessary registrations, recordings and notifications.
In furtherance of these rights, the Seller has granted the Issuer and the
Security Trustee an irrevocable power of attorney to take certain action in
the name of the Seller (including action required to perfect a legal transfer
of the Loans and their Related Security).
Warranties and Breach of Warranties in relation to the Loans
The Mortgage Sale Agreement contains certain representations and warranties
given by the Seller in favour of the Issuer in relation to the Loans and their
Related Security sold to the Issuer pursuant to the Mortgage Sale Agreement.
No searches, enquiries or independent investigations of title of the type
which a prudent purchaser or mortgagee would normally be expected to carry out
have been or will be made by the Issuer. The Issuer will rely entirely on
the benefit of the representations and warranties given to it under the
Mortgage Sale Agreement.
If there is an unremedied material breach of any of the Loan Warranties given
under the Mortgage Sale Agreement, then the Seller is required to repurchase
the relevant Loan pursuant to the Mortgage Sale Agreement for consideration in
cash equal to:
(a) the Current Balance of the Loan being repurchased (or the
aggregate of the Current Balance of the Loans being repurchased, as the case
may be) (disregarding, for the purposes of any such calculation (in the event
that the Current Balance of such Loan has been reduced as a result of the
exercise of any set-off right which the relevant Borrower has against the
Seller) the amount of any such reduction in the Current Balance) as at the
last day of the Collection Period immediately preceding the date of
repurchase; plus
(b) the repurchase costs (if any) in connection with such
repurchase; less
(c) an amount equal to all Collections received by the Issuer on
the relevant Loan(s) and their Related Security from (but excluding) the last
day of the Collection Period immediately preceding the date of such repurchase
to (but excluding) the date of such repurchase.
If a Loan has never existed, or has ceased to exist, such that it is not
outstanding on the date on which it is due to be repurchased, then the Seller
shall indemnify the Issuer and the Security Trustee against any loss, costs or
expenses suffered by reason of any Loan Warranty relating to or otherwise
affecting that Loan being untrue or incorrect.
Lending Criteria
The Loans consist of mortgage loans secured by way of legal mortgage over
residential property located in England and Wales. All Borrowers are
required to have good and marketable title to the relevant Property, and each
Property must be free from onerous restrictions and conditions.
The Seller considers applications from, amongst others:
(a) Portfolio landlords who own four or more mortgaged
buy-to-let Properties in respect of which Loans were provided by the Seller,
and who are able to demonstrate a good track record of managing similar assets
in their personal capacity (or as part of an associated corporate entity) in
the buy-to-let sector.
(b) First time landlords:
Single Units
For first time landlords of single unit BTL property may consider lending,
providing applicants are UK homeowners and are able to cover void periods from
their own resources, over and above personal expenditure/commitments.
Loans are restricted to a maximum of 65% LTV or to 75% if at least one
applicant has proven minimum income of £60k p.a.
HMO's
Borrowers looking to invest in HMO property for the first time must have owned
at least two single unit BTL properties for at least 12 months.
Consider lending to 75% for first time HMO landlords where they have a
demonstrable track record of owning a minimum of two single unit BTL
properties for at least 12 months.
MUFB's
Due to the varying number of units which may constitute MUFB security, it is
at the discretion of the underwriter to consider if the borrower has
sufficient experience to manage the property. Outside portfolio profile,
property management plans and financial position/ability to cover rental voids
should be key areas for consideration.
For all first time landlords it is at the discretion of the underwriter as to
whether it is acceptable to proceed if their main residence is unencumbered
and/or evidence of a 12 month record of mortgage payments is not available.
Such decisions must be clearly justified.
(c) Individuals who are UK nationals, EU nationals or nationals
of one of the following countries: Australia, Canada, China, Gibraltar,
Guernsey, Hong Kong, Iceland, India, Isle of Man, Israel, Japan, Jersey,
Malaysia, New Zealand, Norway, Singapore, South Africa, South Korea,
Switzerland and the USA.
(d) Limited companies and LLPs which are solvent and trading.
The Seller would usually require a personal guarantee from at least one key
individual (director or shareholder). Searches are also conducted in order
to assess the ultimate ownership of the company in order to ensure that the
Seller obtains personal guarantees from the most appropriate individuals,
unless there are strong mitigating factors and an exemption is granted by the
Seller's Credit Committee. Where there are mitigating factors, it may be
acceptable to limit, reduce or waive a Personal Guarantee ("PG"). Such
proposals may only be agreed by the Credit Committee to a maximum of 50% LTV
where a PG is waived, and to 65% LTV where a Corporate Guarantee is offered in
place of a PG. Where the relevant Borrower is part of a corporate group,
upstream, downstream, associated company or cross-company guarantees may be
considered. The relevant underwriter will also consider whether any relevant
director or shareholders' loan should be subordinated behind the Loan. For
Loans over £500,000, or at the relevant underwriter's discretion, the latest
available company accounts of the Borrower may be requested so that an
assessment of financial position can be made.
(e) Expats and foreign nationals who evidence an acceptable
credit profile on the basis of certain criteria, including evidence of a
minimum income of £75,000 per annum from employment with a traceable
company. Self-employed Ex Pat and foreign national applicants must have a
minimum income of £75,000 per annum confirmed by a recognised accountant or
evidenced by way of a tax return. Evidence of a UK bank account (held for at
least 12 months) Enhanced KYC and AML diligence is also undertaken prior to
any offer of a Loan being made to such persons.
(f) Offshore companies with simple structures incorporated in
Gibraltar, Jersey, Guernsey and the Isle of Man. The relevant underwriter
must fully understand the ownership structure of the borrowing entity and
assess where the beneficial ownership ultimately lies. If any part of the
ownership structure is based in another jurisdiction outside of the UK or
Gibraltar, Guernsey, the Isle of Man or Jersey, the application may only be
approved by the Seller's Credit Committee.
Loan to Value Criteria
The minimum loan amount in respect of any Loan is £100,000 (or such lower
amount as may be approved by the Seller's relevant underwriter), and the
maximum loan amount is £4,000,000 (in respect of (i) Borrowers who are UK
nationals and residents, (ii) limited companies and limited liability
partnerships incorporated under the laws of England and Wales and (iii)
Qualified Foreign Nationals), or £2,500,000 (in respect of Borrowers who are
expats or foreign nationals). The aggregate maximum permitted exposure to
any single Borrower is £10,000,000, although there is no restriction on the
number of Properties which may be taken by the Seller as security for any
Loan.
The loan to value in respect of each Loan is reported using the valuation of
the relevant Property. The Seller lends against the lower of the purchase
price and the value of the relevant Property, and will generally not consider
lending against any element of VAT, hope value, goodwill or fixtures and
fittings.
The maximum loan to value applied by the Seller in respect of any Loan to UK
nationals, limited companies or limited liability partnerships incorporated in
England and Wales, Ex Pats or foreign nationals fulfilling certain criteria
(including, among others, a requirement that (i) the Borrower holds and has
held a UK bank account for at least three years, and (ii) has been resident in
the UK for at least three years ("Qualified Foreign Nationals")) is 80% on
loan amounts of between £100,000 and £2,000,000. The maximum original loan
to value applied by the Seller in respect of Loans to other foreign nationals
is 65% to £2,500,000.
Remortgage
A Property must usually have been owned by the Borrower for a minimum of three
months before a remortgage application will be considered by the Seller,
unless the relevant Property has been purchased with cash or bridging finance,
or where works have been carried out on the Property following purchase which
have significantly enhanced its value.
Underwriting
Each lending proposal is assessed and approved by an underwriter with the
appropriate level of individual lending mandate approval authority, and is
assessed within the parameters of aggregated lending approval authorities.
The Seller's underwriters can approve individual Loans of up to £750,000 and
aggregated facilities of up to £1,500,000. The Senior Underwriters of the
Seller are authorised to approve individual Loans of up to £1,000,000, and
may also approve aggregated facilities of up to £2,500,000 to connected
parties of a Borrower, provided that the principal amount of each individual
Loan is no greater than £1,000,000. The Seller's Risk Director and Director
of Credit Operations are authorised to approve individual Loans of up to
£1,500,000, and may also approve aggregated facilities of up to £3,500,000
to connected parties of a Borrower, provided that the principal amount of each
individual Loan is no greater than £1,500,000. The Seller's credit
committee is responsible for the approval of individual Loans of greater than
£1,500,000 (up to a maximum cap of £4,000,000) and applications for Loans
which fall outside of the lending mandate parameters.
Individual and aggregated lending approval authorities are approved by the
Seller's risk committee and updated from time to time. Applications in
respect of Loans which fall outside of the Seller's lending criteria may be
approved by the Seller's Credit Committee, Risk Director, Director of Credit
Operations and Senior Underwriter (within agreed documented sanction
limits). Such exceptions are reported monthly.
The Seller also considers applications for Loans in respect of (i) Properties
valued at up to but no more than £10,000,000 (subject to LTV restrictions),
(ii) ex-local authority properties in prime areas or in areas with strong
rental demand, and (iii) office-to-residential conversions (subject to a
minimum interest cover ratio ("ICR") threshold of 160% and provided that (a)
the relevant Borrower has experience of owning and managing other similarly
converted units, and (b) acceptable planning permission for residential use is
in place upon completion).
Each application in respect of any Loan is assessed on its individual merits,
and the relevant underwriters apply sense-checks on the information provided
in support of each lending decision. The relevant underwriters assess the
applicant's borrowing strategy in the context of their age versus long term
affordability, gearing and property management. As a key element of the
Seller's credit appraisal and anti-money laundering checks, the relevant
underwriters analyse the source of the applicant's deposit and consider how
the relevant Property will be transferred between the vendor and purchaser, in
order to ensure that the details of the transaction appear reasonable and
consistent with the applicant's profile.
Valuations
Properties offered as security are professionally valued by a nominated panel
valuer having one of the following qualifications and whose compensation is
not affected by the approval or non-approval of the relevant mortgage; FRICS,
MRICS, RICS or AssocRICS (collectively referred to as "RICS qualified
valuers"). Properties are valued at origination in accordance with the
standards and practices of the "RICS Valuation Standards" (including those
relating to competency and required documentation). Each valuation report
includes at least three comparable properties providing evidence for the
valuation of the property offered as security. The panel of valuers is
maintained (including the appointment of valuer firms to the panel) by the
Credit Risk Team of the Seller with no involvement of sales staff. Likewise,
sales staff are not involved in the selection of the valuer firm from the
panel of valuers engaged to carry out the valuation of the Properties.
In respect of single-unit Properties, the Seller's surveyor will undertake an
assessment of both the current market value of the relevant Property and the
estimated market rent which is likely to be generated by it. The relevant
surveyor's estimate of market rent in respect of any such Property is
supported by comparable evidence of the rental income currently generated by
similar properties. For multi-unit Properties, the market commentary
provided by the Seller's surveyor in the relevant valuation report may be
sufficiently strong for the Seller to consider lending against the
'aggregated' value of the relevant Property (taking the individual values of
each unit in total).
For HMO Properties, the planning and licencing status of the relevant Property
is carefully considered alongside the market commentary contained in the
relevant valuation report.
Assessment of income and affordability
Income calculations are made on the basis of market rent (as confirmed by the
valuer). The Seller's underwriters also consider the impact on affordability
where the passing rent in respect of a Property is significantly lower than
the market rent. This rental income is used to calculate the ICR and
ultimately the maximum amount of any Loan. The minimum ICR threshold for
single-unit and multi-unit assets is 125-145% for individuals, expats and
foreign nationals, and 125% for limited companies and limited liability
partnerships. The minimum ICR threshold for HMO Properties is 150%.
For non HMO and Holiday Let applications, in the event that the projected
rental income in respect of any Property is likely to be insufficient to
satisfy the relevant ICR threshold, the Seller's underwriters may have regard
to income generated by the relevant Borrower from other sources (provided
that, in any event, the lower of (i) the passing rent, and (ii) the market
rent of the relevant Property generates an ICR of at least 110%). The
Seller's underwriters may only consider rental income generated by other
properties of the Borrower which are not the subject of security in favour of
the Seller.
In respect of High Net Worth ("HNW") applicants (being applicants who have an
annual net income of no less than £300,000, or net assets of at least
£3,000,000 (or whose obligations are guaranteed by a person with an income or
assets of such amount)) their wealth may, in accordance with the PRA
Supervisory Statement SS13/16 September 2016, be considered by the Seller's
underwriters when assessing affordability. In this regard, the Seller's
underwriters may consider evidence of liquid assets which could be disposed of
to generate income over the lifetime of the relevant Loan.
In respect of portfolio landlords, applications must be supported by portfolio
schedules. The Seller's underwriters expect that a portfolio landlord
applicant's outside portfolio should generate rental income to cover at least
125% of commitments in respect of the applicant's mortgage portfolio
commitments.
Servicing of the Portfolio
The Servicer will be required from the Closing Date to service the Portfolio
as an agent of the Issuer and the Security Trustee and, where applicable, the
Seller under and in accordance with the terms of the Servicing Agreement.
The duties of the Servicer will include, among other things:
· operating the Expenses Account and ensuring that payments
are made into and from the Expenses Account in accordance with the Servicing
Agreement;
· notifying the Borrowers of any change in their Monthly
Instalments;
· providing a redemption statement upon the request of a
Borrower or the Borrower's solicitor or licensed conveyancer;
· taking all reasonable steps to recover all sums due to
the Issuer, including by the institution of proceedings and/or the enforcement
of any Mortgage or any Related Security; and
· taking all action and doing all things which it would be
reasonable to expect a Prudent Mortgage Lender to do in administering its
mortgages.
The Seller shall instruct the Collection Account Bank to transfer all
Collections relating to the Loans and their Related Security and standing from
time to time to the credit of each Collection Account on each Business Day
into the Deposit Account.
"Collection Account" means the account held in the name of the Seller with the
Collection Account Bank into which amounts received in respect of the Loans
from the Borrowers shall be paid, and any other replacement or additional
collection account of Lendco in respect of which amounts are received in
respect of the Loans and their Related Security in the Portfolio.
"Collections" means Revenue Receipts and Principal Receipts.
"Expenses Account" means the account held in the name of the Seller with the
Collection Account Bank into which amounts shall be transferred by the Cash
Manager (acting on the instructions of the Issuer and the Servicing
Facilitator) in order to fund the payment by the Servicer of certain expenses
to be incurred by the Servicer in accordance with the provision of the
Services under the Servicing Agreement (or any replacement account).
Enforcement Procedures
The Seller has established procedures for managing loans which are in arrears,
including early contact with the Borrowers in order to find a solution to any
financial difficulties they may be experiencing. The procedures permit
discretion to be exercised by the appropriate officer of the Seller in many
circumstances. These procedures, as from time to time varied in accordance
with the practice of a Prudent Mortgage Lender, are required to be used by the
Seller in respect of arrears arising on the Loans.
"Prudent Mortgage Lender" means a reasonably prudent mortgage lender of
mortgage loans of a type similar to the Loans, lending to borrowers of the
type contemplated in the Lending Criteria applicable at the date of
origination of the Loans on terms similar to those set out in the relevant
Lending Criteria in England and Wales.
In order to realise its security in respect of a Property, the relevant
mortgagee (be it the legal owner (the Seller), the equitable or, as the case
may be, the beneficial owner (the Issuer), the Security Trustee or its
appointee (if the Security Trustee has taken enforcement action against the
Issuer)) will need to obtain possession. There are two means of obtaining
possession for this purpose: first, by taking physical possession (seldom done
in practice); and secondly, by obtaining a court order.
If a mortgagee takes physical possession, it will, as the mortgagee in
possession, have an obligation to account to the Borrower for the income
obtained from the Property, be liable for any damage to the Property, have a
limited liability to repair the Property and, in certain circumstances, may be
obliged to make improvements.
Actions for possession are regulated by statute and the courts have certain
powers to adjourn possession proceedings, to stay any possession order or to
postpone the date for delivery of possession. The court will exercise such
powers in favour of a Borrower, broadly, where it appears to the court that
such Borrower is likely to be able, within a reasonable period, to pay any
sums due under the loan or to remedy any default consisting of a breach of any
other obligation arising under or by virtue of the loan and/or mortgage. It
is also possible that further legislative and/or regulatory direction or
guidance may be issued to suspend repossessions or direct the way in which
repossessions should take place (such as the actions taken during the COVID-19
pandemic) and the Servicer will, where required, be obliged to comply with and
take into account such legislative and/or regulatory direction or guidance
where applicable.
The court has a very wide discretion and may adopt a sympathetic attitude
towards a Borrower faced with eviction. If a possession order or decree in
favour of the relevant mortgagee is granted, it may be suspended to allow the
Borrower more time to pay. Once possession of the Property has been
obtained, the relevant mortgagee has a duty to the Borrower to take reasonable
care to obtain a proper price for the Property. Any failure to do so will
put the relevant mortgagee at risk of an action for breach of such duty by the
Borrower, although it is for the Borrower to prove breach of such duty.
There is also a risk that a Borrower may also take court action to force the
relevant mortgagee to sell the Property within a reasonable time.
In some instances, the Seller may decide to appoint a Law of Property Act
("LPA") Receiver to protect its interest in the Property under its powers
under the Law of Property Act 1925 or the Mortgage. The LPA Receiver will
act as an agent of the Borrower and the Seller will not influence the actions
of the LPA Receiver.
Insurance Contracts
For certain Loans, the Seller may obtain a title insurance policy in order to
mitigate against the risk of financial loss arising from certain title defects
in respect of a Property. All such title insurance policies arranged by the
Seller in relation to any Property are entered into for the benefit of the
Seller and not for the benefit of any Borrower. No Borrower has any
entitlement under any such policy, nor does any Borrower have any claim of any
nature against any such policy or its proceeds.
Evidence of buildings insurance is required for each Property taken as
security.
Credit Risk Mitigation
The Seller has internal policies and procedures in relation to the granting of
credit, administration of credit-risk bearing portfolios and risk
mitigation.
The policies and procedures of the Seller in this regard broadly include the
following:
(a) criteria for the granting of credit and the process for
approving, amending, renewing and re-financing credits (as to which, in
relation to the Loans, please see the information set out in this Prospectus
headed " Lending Criteria" and "Summary of the Key Transaction Documents -
Servicing Agreement");
(b) systems in place to administer and monitor the various
credit-risk bearing portfolios and exposures (as to which it should be noted
that the Portfolio will be serviced in line with the servicing procedures of
the Seller and the Servicer - please see further the section of this
Prospectus headed "Summary of the Key Transaction Documents - Servicing
Agreement");
(c) diversification of credit portfolios taking into account the
Seller's target market and overall credit strategy (as to which, in relation
to the Portfolio, please see the section of this Prospectus headed
"Characteristics of the Provisional Portfolio"); and
(d) policies and procedures in relation to risk mitigation
techniques (as to which, please see further the sections of this Prospectus
headed " Lending Criteria" and "Summary of the Key Transaction Documents -
Servicing Agreement").
Governing Law
Each of the Loans and their Related Security and any non-contractual
obligations arising out of or in connection with them are governed by English
law.
Characteristics of the Provisional Portfolio
The statistical and other information contained in this Prospectus (including
the tables below) has been compiled by reference to loans originated by the
Seller in a provisional portfolio (the "Provisional Portfolio") and extracted
from the systems of the Seller on the Portfolio Reference Date.
As at the Portfolio Reference Date, the Provisional Portfolio comprised of 852
loans originated by the Seller and secured over properties located in England
and Wales. The aggregate Current Balance of the Loans in the Provisional
Portfolio as at the Portfolio Reference Date was £316,735,321.24.
The Closing Portfolio will comprise of (i) Loans that form part of the
Provisional Portfolio after exclusion of any mortgage loans that are no longer
eligible or will have been redeemed in full as at the Closing Date and (ii)
the Additional Closing Portfolio Mortgage Loans where the Seller has
determined that such Loans will meet the Loan Warranties.
The Properties over which the loans in the Provisional Portfolio are secured
have not been revalued for the purposes of the issue of the Notes. The
characteristics of the Closing Portfolio will differ from those set out below
as a result of, among other things, repayments and redemptions of loans in the
Provisional Portfolio from the Portfolio Reference Date to the Closing Date,
removal of any loans that do not comply with the Loan Warranties as at the
Closing Date and inclusion of the Additional Closing Portfolio Mortgage Loans
that meet the Loan Warranties. In respect of the first Interest Payment Date
only, the excess of the proceeds of the Notes over the Current Balance of the
Portfolio as at the Closing Date will be paid into the Pre-Funding Reserve
Ledger on the Closing Date and Pre-Funding Unused Amount will form part of the
Available Principal Receipts to be applied in accordance with the
Pre-Enforcement Principal Priority of Payments. If loans selected for the
Closing Portfolio are repaid in full between the Cut-Off Date and the Closing
Date, the principal recoveries from that loan will form part of the Available
Principal Receipts. Except as otherwise indicated, these tables have been
prepared using the Current Balance of each loan in the Provisional Portfolio
as at the Portfolio Reference Date, which includes all principal and accrued
interest for the loans in the Provisional Portfolio.
Additional Mortgage Loans may be sold to the Issuer by the Seller on any date
falling in the period from (but excluding) the Closing Date up to (and
including) the Calculation Date immediately preceding the Final Additional
Mortgage Loan Purchase Date. Additional Mortgage Loans sold to the Issuer by
the Seller following the Closing Date do not form part of the Provisional
Portfolio or the Closing Portfolio.
Summary table of the Provisional Portfolio as at the Portfolio Reference Date
Note all references to Current Balance mean Principal Outstanding Balance
Summary
Current Balance (£) 316,735,321.24
Original Balance (£) 316,794,830.02
Number of Loans 852
Weighted Average Original LTV (%) 72.46
Average Current Balance (£) 371,755.07
Average Original Balance (£) 371,824.92
Weighted Average Interest Rate (%) 5.17
Weighted Average Reversion Margin (%) 4.79
Weighted Average Term To Maturity (Years) 21.00
Weighted Average Current LTV (%) 72.45
Weighted Average Rental Income Coverage Ratio (%) 171.15
Self-Employed (%) 9.57
Company Borrowers (%) 86.84
Interest Only (%) 100.00
Buy-to-Let (%) 100.00
Weighted Average Seasoning (months) 2.92
Properties with Internal and External Full Valuation (%) 86.34
Bankruptcy/IVA (%) 0.00
CCJs (%) 0.00
Largest Loan Current Balance (£) 2,730,000.00
Minimum seasoning (months) 0
Maximum seasoning (months) 12
Distribution of Loans by Borrower Type
The following table shows the distribution of Loans by their Borrower Type as
determined in respect of each Loan on the Portfolio Reference Date.
Distribution of Loans by Borrower Type Current Balance (£) % of Current Balance No. of Loans % of Loans
Legal Entity 275,047,587.73 86.84% 721.00 84.62%
Individual 41,687,733.51 13.16% 131.00 15.38%
Total: 316,735,321.24 100.00% 852.00 100.00%
Distribution of Loans by Original Loan to Value (%)
The following table shows the range of "Original Loan to Value Ratios" or
"OLTV Ratios", which express the original balance of each Loan as at the
Portfolio Reference Date divided by the original valuation of the Property
securing that Loan. For these purposes, original valuation includes, in
respect of a Loan that is subject to a Product Switch, the original valuation
as at the relevant Switch Date.
Distribution of Loans by Original Loan to Value (%) Current Balance (£) % of Current Balance No. of Loans % of Loans
20.01 to 25.00 151,370.52 0.05% 1.00 0.12%
25.01 to 30.00 821,111.42 0.26% 4.00 0.47%
30.01 to 35.00 326,351.20 0.10% 2.00 0.23%
35.01 to 40.00 1,088,806.86 0.34% 4.00 0.47%
40.01 to 45.00 2,724,517.63 0.86% 9.00 1.06%
45.01 to 50.00 4,091,961.94 1.29% 15.00 1.76%
50.01 to 55.00 6,770,757.16 2.14% 26.00 3.05%
55.01 to 60.00 16,098,720.54 5.08% 36.00 4.23%
60.01 to 65.00 12,537,051.95 3.96% 37.00 4.34%
65.01 to 70.00 44,911,707.22 14.18% 133.00 15.61%
70.01 to 75.00 61,908,836.41 19.55% 156.00 18.31%
75.01 to 80.00 160,436,979.47 50.65% 417.00 48.94%
80.01 to 85.00 4,867,148.92 1.54% 12.00 1.41%
Total: 316,735,321.24 100.00% 852.00 100.00%
Weighted Average (%) 72.46%
Minimum (%) 24.85%
Maximum (%) 84.02%
The minimum, maximum and weighted average Loan to Value Ratio at origination
of the Loans as of the Portfolio Reference Date is 24.85%, 84.02% and 72.46%,
respectively.
Distribution of Loans by Current Loan to Value (%)
The following table shows the range of "Current Loan to Value Ratios" or "CLTV
Ratios", which are calculated by dividing the Current Balance of a Loan as at
the Portfolio Reference Date by the original valuation of the Property
securing that Loan. For these purposes, original valuation includes, in
respect of a Loan that is subject to a Product Switch, the original valuation
as at the relevant Switch Date.
Distribution of Loans by Current Loan to Value (%) Current Balance (£) % of Current Balance No. of Loans % of Loans
20.01 to 25.00 151,370.52 0.05% 1.00 0.12%
25.01 to 30.00 821,111.42 0.26% 4.00 0.47%
30.01 to 35.00 326,351.20 0.10% 2.00 0.23%
35.01 to 40.00 1,088,806.86 0.34% 4.00 0.47%
40.01 to 45.00 2,724,517.63 0.86% 9.00 1.06%
45.01 to 50.00 4,183,787.06 1.32% 16.00 1.88%
50.01 to 55.00 7,169,729.53 2.26% 27.00 3.17%
55.01 to 60.00 15,607,923.05 4.93% 34.00 3.99%
60.01 to 65.00 12,537,051.95 3.96% 37.00 4.34%
65.01 to 70.00 44,911,707.22 14.18% 133.00 15.61%
70.01 to 75.00 61,908,836.41 19.55% 156.00 18.31%
75.01 to 80.00 160,436,979.47 50.65% 417.00 48.94%
80.01 to 85.00 4,867,148.92 1.54% 12.00 1.41%
Total: 316,735,321.24 100.00% 852.00 100.00%
Weighted Average (%) 72.45%
Minimum (%) 22.43%
Maximum (%) 84.02%
The minimum, maximum and weighted average Current Loan to Value Ratio of the
Loans as of the Portfolio Reference Date is 22.43%, 84.02% and 72.45%,
respectively.
Original Balance
The following table shows the distribution of Loans by their Original Balance
as determined in respect of each Loan on the Portfolio Reference Date.
Distribution of Loans by Original Balance Current Balance (£) % of Current Balance No. of Loans % of Loans
0 < £ ≤ 100,000 1,314,674.12 0.42% 14.00 1.64%
100,000 < £ ≤ 150,000 17,266,457.37 5.45% 136.00 15.96%
150,000 < £ ≤ 200,000 17,026,331.42 5.38% 100.00 11.74%
200,000 < £ ≤ 250,000 20,358,800.24 6.43% 89.00 10.45%
250,000 < £ ≤ 300,000 27,035,207.11 8.54% 99.00 11.62%
300,000 < £ ≤ 350,000 28,792,909.50 9.09% 89.00 10.45%
350,000 < £ ≤ 400,000 22,457,852.83 7.09% 60.00 7.04%
400,000 < £ ≤ 450,000 12,867,075.10 4.06% 30.00 3.52%
450,000 < £ ≤ 500,000 17,564,578.64 5.55% 37.00 4.34%
500,000 < £ ≤ 750,000 76,355,699.02 24.11% 128.00 15.02%
750,000 < £ ≤ 1,000,000 33,041,714.68 10.43% 39.00 4.58%
1,000,000 < £ ≤ 1,250,000 13,379,934.18 4.22% 12.00 1.41%
1,250,000 < £ ≤ 1,500,000 17,902,524.53 5.65% 13.00 1.53%
1,500,000 < £ ≤ 3,000,000 11,371,562.50 3.59% 6.00 0.70%
Total: 316,735,321.24 100.00% 852.00 100.00%
Average (£) 371,824.92
Minimum (£) 91,799.69
Maximum (£) 2,730,000.00
The minimum, maximum and average Original Balance of the Loans as of the
Portfolio Reference Date is £91,799.69, £2,730,000.00 and £371,824.92,
respectively.
Outstanding Balance
The following table shows the distribution of Loans by their outstanding
principal balance as determined in respect of each Loan on the Portfolio
Reference Date.
Distribution of Loans by Outstanding Principal Balance Current Balance (£) % of Current Balance No. of Loans % of Loans
0 < £ ≤ 100,000 1,314,674.12 0.42% 14.00 1.64%
100,000 < £ ≤ 150,000 17,562,854.59 5.54% 138.00 16.20%
150,000 < £ ≤ 200,000 16,729,934.20 5.28% 98.00 11.50%
200,000 < £ ≤ 250,000 20,358,800.24 6.43% 89.00 10.45%
250,000 < £ ≤ 300,000 27,035,207.11 8.54% 99.00 11.62%
300,000 < £ ≤ 350,000 28,792,909.50 9.09% 89.00 10.45%
350,000 < £ ≤ 400,000 22,457,852.83 7.09% 60.00 7.04%
400,000 < £ ≤ 450,000 12,867,075.10 4.06% 30.00 3.52%
450,000 < £ ≤ 500,000 17,564,578.64 5.55% 37.00 4.34%
500,000 < £ ≤ 750,000 76,355,699.02 24.11% 128.00 15.02%
750,000 < £ ≤ 1,000,000 33,041,714.68 10.43% 39.00 4.58%
1,000,000 < £ ≤ 1,250,000 13,379,934.18 4.22% 12.00 1.41%
1,250,000 < £ ≤ 1,500,000 17,902,524.53 5.65% 13.00 1.53%
1,500,000 < £ ≤ 3,000,000 11,371,562.50 3.59% 6.00 0.70%
Total: 316,735,321.24 100.00% 852.00 100.00%
Average (£) 371,755.07
Minimum (£) 91,761.64
Maximum (£) 2,730,000.00
The minimum, maximum and average Outstanding Balance of the Loans as of the
Portfolio Reference Date is £91,761.64, £2,730,000 and £371,755.07
respectively.
Years to Maturity of Loans
The following table shows the distribution of Loans according to the number of
years remaining until their maturity as at the Portfolio Reference Date.
Distribution of Loans by Remaining Term to Maturity (years) Current Balance (£) % of Current Balance No. of Loans % of Loans
0.00 < x ≤ 5.00 1,548,560.33 0.49% 4.00 0.47%
5.00 < x ≤ 10.00 39,176,745.23 12.37% 106.00 12.44%
10.00 < x ≤ 15.00 23,284,301.80 7.35% 66.00 7.75%
15.00 < x ≤ 20.00 65,460,038.98 20.67% 174.00 20.42%
20.00 < x ≤ 25.00 138,416,605.54 43.70% 388.00 45.54%
25.00 < x ≤ 30.00 39,966,084.43 12.62% 98.00 11.50%
30.00 < x ≤ 35.00 8,882,984.93 2.80% 16.00 1.88%
Total: 316,735,321.24 100.00% 852.00 100.00%
Weighted Average (years) 21.00
Minimum (years) 4.00
Maximum (years) 35.00
The minimum, maximum and weighted average remaining term of the Loans as of
the Portfolio Reference Date is 4.00, 35.00 and 21.00 years, respectively.
Seasoning of Loans
Distribution of Loans by Seasoning (months) Current Balance (£) % of Current Balance No. of Loans % of Loans
0.00 < x ≤ 2.00 154,975,536.71 48.93% 404.00 47.42%
2.00 < x ≤ 3.00 46,608,806.22 14.72% 141.00 16.55%
3.00 < x ≤ 4.00 31,802,997.72 10.04% 92.00 10.80%
4.00 < x ≤ 6.00 58,482,087.92 18.46% 155.00 18.19%
6.00 < x ≤ 8.00 22,092,233.26 6.97% 51.00 5.99%
8.00 < x ≤ 10.00 1,209,413.03 0.38% 4.00 0.47%
10.00 < x ≤ 12.00 1,564,246.38 0.49% 5.00 0.59%
Total: 316,735,321.24 100.00% 852.00 100.00%
Weighted Average (months) 2.92
Minimum (months) 0.00
Maximum (months) 12.00
The minimum, maximum and weighted average seasoning of the Loans as of the
Portfolio Reference Date is 0.00, 12.00 and 2.92 (months), respectively.
Repayment Method
The following table shows the repayment method of the Loans as at the
Portfolio Reference Date.
Distribution of Loans by Repayment Method Current Balance (£) % of Current Balance No. of Loans % of Loans
Interest Only 316,735,321.24 100.00% 852.00 100.00%
Total: 316,735,321.24 100.00% 852.00 100.00%
Interest Rate Types
The following table shows the distribution of the interest rate types of the
Loans (the interest type of each Loan determined as at the Portfolio Reference
Date).
Distribution of Loans by Rate Type Current Balance % of Current Balance No. of Loans % of Loans
(£)
Fixed to Floating 307,356,980.44 97.04% 815.00 95.66%
Floating for life 9,378,340.80 2.96% 37.00 4.34%
Total: 316,735,321.24 100.00% 852.00 100.00%
Reversion Date
The following table shows the distribution of reversion dates as at the
Portfolio Reference Date for the Fixed Rate Loans in the Provisional
Portfolio.
Distribution of Loans by Rate Reversion Year Current Balance (£) % of Current Balance No. of Loans % of Loans
2026 60,644,401.11 19.15% 166.00 19.48%
2027 15,395,521.69 4.86% 51.00 5.99%
2028 0.00 0.00% 0.00 0.00%
2029 160,178,727.86 50.57% 433.00 50.82%
2030 80,516,670.58 25.42% 202.00 23.71%
Total: 316,735,321.24 100.00% 852.00 100.00%
Rental Income Coverage Ratio
The following table shows the distribution of varying income coverage ratios
for the Loans in the Portfolio as at the Portfolio Reference Date.
Distribution of Loans by Rental Income Coverage Ratio (%) Current Balance (£) % of Current Balance No. of Loans % of Loans
100.00% < % ≤ 125.00% 17,573,355.73 5.55% 41.00 4.81%
125.00% < % ≤ 150.00% 105,577,589.08 33.33% 265.00 31.10%
150.00% < % ≤ 175.00% 65,500,350.83 20.68% 203.00 23.83%
175.00% < % ≤ 200.00% 66,618,013.47 21.03% 163.00 19.13%
200.00% < % ≤ 225.00% 31,233,693.36 9.86% 77.00 9.04%
225.00% < % ≤ 250.00% 15,225,698.03 4.81% 44.00 5.16%
250.00% < % ≤ 300.00% 11,747,265.59 3.71% 41.00 4.81%
300.00% < % ≤ 350.00% 2,050,812.08 0.65% 13.00 1.53%
350.00% < % ≤ 400.00% 683,543.02 0.22% 4.00 0.47%
400.00% < % ≤ 450.00% 525,000.05 0.17% 1.00 0.12%
Total: 316,735,321.24 100.00% 852.00 100.00%
Weighted Average (%) 171.15%
Minimum (%) 102.75%
Maximum (%) 414.77%
The minimum, maximum and weighted average rental income coverage ratio as of
the Portfolio Reference Date is 102.75%, 414.77% and 171.15%, respectively.
Current Interest Rate
The following table shows the distribution of Loans by applicable interest
rate as at the Portfolio Reference Date.
Distribution of Loans by Interest Rate (%) Current Balance (£) % of Current Balance No. of Loans % of Loans
3.50% < % ≤ 4.00% 6,826,420.01 2.16% 23.00 2.70%
4.00% < % ≤ 4.50% 29,475,065.24 9.31% 61.00 7.16%
4.50% < % ≤ 5.00% 75,711,530.31 23.90% 217.00 25.47%
5.00% < % ≤ 5.50% 125,998,682.50 39.78% 327.00 38.38%
5.50% < % ≤ 6.00% 67,267,169.55 21.24% 191.00 22.42%
6.00% < % ≤ 6.50% 10,075,783.49 3.18% 30.00 3.52%
6.50% < % ≤ 7.50% 1,380,670.14 0.44% 3.00 0.35%
Total: 316,735,321.24 100.00% 852.00 100.00%
Weighted Average (%) 5.17%
Minimum (%) 3.79%
Maximum (%) 7.40%
The minimum, maximum and weighted average current interest rate as of the
Portfolio Reference Date is 3.79%, 7.40% and 5.17%, respectively.
Reversion Margin
The following table shows the distribution of reversion margins as at the
Portfolio Reference Date for the Fixed Rate Loans in the Provisional
Portfolio.
Distribution of Loans by Reversion Margin (%)* Current Balance (£) % of Current Balance No. of Loans % of Loans
4.79 316,735,321.24 100.00% 852.00 100.00%
Total: 316,735,321.24 100.00% 852.00 100.00%
*Applicable to Fixed to Floating and Floating for Life loans (excludes Fixed
for Life loans and Fixed to Floating Loans where reversion date equals
maturity date)
Loans by Arrears (Months)
The following table shows the number of Loans in the Provisional Portfolio in
arrears as at the Portfolio Reference Date.
Distribution of Loans by Arrears (Months) Current Balance (£) % of Current Balance No. of Loans % of Loans
0 316,735,321.24 100.00% 852.00 100.00%
Total: 316,735,321.24 100.00% 852.00 100.00%
Loan Purpose
The following table shows the purpose of the Loans as at the Portfolio
Reference Date.
Distribution of Loans by Loan Purpose Current Balance (£) % of Current Balance No. of Loans % of Loans
Re-mortgage 242,401,597.45 76.53% 600.00 70.42%
Purchase 74,333,723.79 23.47% 252.00 29.58%
Total: 316,735,321.24 100.00% 852.00 100.00%
Loans by Employment Type
The following table shows the distribution of employment status of the
borrower under the Loans as at the Portfolio Reference Date.
Distribution of Loans by Employment Type Current Balance (£) % of Current Balance No. of Loans % of Loans
Legal entity 275,047,587.73 86.84% 721.00 84.62%
Self-employed 30,305,080.82 9.57% 90.00 10.56%
Employed 11,382,652.69 3.59% 41.00 4.81%
Total: 316,735,321.24 100.00% 852.00 100.00%
Loans by Property Type
The following table shows the distribution of types of Properties secured by
the Loans as at the Portfolio Reference Date.
Distribution of Loans by Property Type Current Balance (£) % of Current Balance No. of Loans % of Loans
Basement Flat 236,250.00 0.07% 1.00 0.12%
Bungalow 1,082,687.19 0.34% 6.00 0.70%
Converted Flat 33,365,087.54 10.53% 131.00 15.38%
Detached House 9,616,783.30 3.04% 20.00 2.35%
End of Terrace House 5,648,984.01 1.78% 21.00 2.46%
Ex-local Authority Flat 3,810,398.20 1.20% 16.00 1.88%
Houses in Multiple Occupation - Flat 11,174,596.35 3.53% 23.00 2.70%
Houses in Multiple Occupation - House 74,926,954.35 23.66% 151.00 17.72%
Houses in Multiple Occupation - Multi 8,867,596.50 2.80% 11.00 1.29%
Maisonette 5,730,142.59 1.81% 15.00 1.76%
Multi-unit Freehold Block 54,064,663.08 17.07% 73.00 8.57%
New Flat Converted 4,337,281.90 1.37% 22.00 2.58%
New-build Flat 19,986,995.12 6.31% 64.00 7.51%
New-build House 4,260,272.97 1.35% 18.00 2.11%
Purpose-built Flat 31,845,175.33 10.05% 125.00 14.67%
Semi-commercial 3,375,985.69 1.07% 16.00 1.88%
Semi-detached House 15,628,315.52 4.93% 50.00 5.87%
Studio Flat 354,150.00 0.11% 2.00 0.23%
Terraced House 28,423,001.60 8.97% 87.00 10.21%
Total: 316,735,321.24 100.00% 852.00 100.00%
Geographical Distribution
The following table shows the regional distribution of Properties securing the
Loans throughout England and Wales (the region of a Property in respect of a
Loan determined as at the Portfolio Reference Date of such Loan).
Distribution of Loans by Region Current Balance (£) % of Current Balance No. of Loans % of Loans
London 214,158,478.81 67.61% 463.00 54.34%
South East 38,595,462.07 12.19% 139.00 16.31%
North West 15,093,950.97 4.77% 66.00 7.75%
South West 14,477,230.87 4.57% 51.00 5.99%
East of England 12,888,438.05 4.07% 36.00 4.23%
East Midlands 8,075,556.51 2.55% 36.00 4.23%
West Midlands 7,183,546.73 2.27% 30.00 3.52%
Yorkshire and the Humber 3,305,799.10 1.04% 20.00 2.35%
Wales 1,571,325.00 0.50% 7.00 0.82%
North East 1,385,533.13 0.44% 4.00 0.47%
Total: 316,735,321.24 100.00% 852.00 100.00%
Property EPC Rating
The following table shows the EPC rating of Properties securing the Loans.
Distribution of Loans by Property EPC Rating Current Balance (£) % of Current Balance No. of Loans % of Loans
Single Rating
A 951,323.91 0.30% 2.00 0.23%
B 49,887,138.30 15.75% 138.00 16.20%
C 119,549,941.86 37.74% 341.00 40.02%
D 109,631,949.57 34.61% 286.00 33.57%
E 36,623,205.96 11.56% 84.00 9.86%
G 91,761.64 0.03% 1.00 0.12%
Total: 316,735,321.24 100.00% 852.00 100.00%
Information Relating to the Regulation of Mortgages in the UK
Regulation of buy-to-let mortgage loans
Buy-to-let mortgage loans can fall under several different regulatory
regimes. They can be:
· unregulated;
· regulated by the Consumer Credit Act 1974 (the "CCA") as
a regulated credit agreement - as defined under Article 60B of the Financial
Services and Markets Act 2000 (Regulated Activities) Order 2001 (SI 2001/544)
(as amended) (the "RAO") (a "Regulated Credit Agreement");
· regulated by the Financial Services and Markets Act 2000
(the "FSMA") as a regulated mortgage contract - as defined by Article 61 of
the RAO) (a "Regulated Mortgage Contract"); or
· regulated as a consumer buy-to-let mortgage contract
under the consumer buy-to-let regime - as defined by the Mortgage Credit
Directive Order 2015 (a "Consumer Buy-to-Let Loan").
The Portfolio comprises Loans that the Seller believes are either unregulated
or are Consumer Buy-to-Let Loans, and as described below, the Seller has given
a warranty in the Mortgage Sale Agreement that no agreement for any Loan is in
whole or in part a Regulated Credit Agreement, an Article 3(1)(b) Credit
Agreement, or (other than a CBTL Loan) a Regulated Mortgage Contract. If any
of the Loans are in fact Regulated Credit Agreements or Regulated Mortgage
Contracts, then breach of the relevant regulations could give rise to a number
of consequences (as applicable), including but not limited to:
unenforceability of the Loans, interest payable under the Loans being
irrecoverable for certain periods of time or borrowers being entitled to claim
damages for losses suffered and being entitled to set off the amount of their
claims against the amount owing by the borrower under the Loans.
Unregulated buy-to-let mortgage loans
Many buy-to-let mortgage loans will be unregulated because they do not meet
the criteria for a Regulated Credit Agreement, Regulated Mortgage Contract or
Consumer Buy-to-Let Loan. There are, however, still some regulated
activities that apply to unregulated buy-to-let mortgage loans; the relevant
activities in respect of the Loans being, debt administration and debt
collection. The Seller (because, and whilst, it holds legal title to the
Loans and their Related Security) and Issuer (because, and whilst, it holds
beneficial title to the Loans and their Related Security) will be excluded as
lender from the regulated activities of debt administration and debt
collection in respect of any unregulated loan, Consumer Buy-To-Let Loans or
Regulated Credit Agreements.
Consumer buy-to-let loans
The "Consumer buy-to-let" ("CBTL") framework was implemented on 21 March 2016
and is only applicable to consumer borrowers, the majority of buy-to-let
lending in the UK being to non-consumers (based on HM Treasury's estimate that
only 11 per cent. of buy-to-let mortgages as at the date of implementation of
the CBTL framework would fall into this category).
The legislative framework is set out in the Mortgage Credit Directive Order
2015. The Mortgage Credit Directive Order 2015 defines a CBTL mortgage
contract as "a buy-to-let mortgage contract which is not entered into by the
borrower wholly or predominantly for the purposes of business carried on, or
intended to be carried on, by the borrower". It provides that a firm that
advises on, arranges, lends or administers CBTL mortgages must be registered
to do so. The Seller is registered as a Consumer buy-to-let lender, a
Consumer buy-to-let administrator and a Consumer buy-to-let arranger. The
Mortgage Credit Directive Order 2015 sets out a number of conduct standards
for firms carrying on CBTL business, which cover, amongst other things,
requirements for pre-contractual illustrations, assessing creditworthiness,
adequate explanations and arrears and repossessions. The FCA has amended the
FCA Handbook to provide it with supervisory and enforcement powers in respect
of such conduct standards.
Unfair relationships
Under the CCA, the "extortionate credit" regime was replaced by an "unfair
relationship" test. The "unfair relationship" test applies to all existing
and new credit agreements, except Regulated Mortgage Contracts under the FSMA
and regulated home purchase plans under the FSMA. If the court makes a
determination that the relationship between a lender and a borrower is unfair,
then it may make an order, among other things, requiring the Seller as legal
title holder, or any assignee such as the Issuer, to repay amounts received
from such borrower. In applying the "unfair relationship" test, the courts
are able to consider a wider range of circumstances surrounding the
transaction, including the creditor's conduct (or anyone acting on behalf of
the creditor) before and after making the agreement or in relation to any
related agreement. There is no statutory definition of the word "unfair" in
the CCA as the intention is for the test to be flexible and subject to
judicial discretion and it is therefore difficult to predict whether a court
would find a relationship "unfair". However, the word "unfair" is not an
unfamiliar term in UK legislation due to the UTCCR (as defined below). The
courts may, but are not obliged to, look solely to the CCA 2006 for
guidance. The principle of "treating customers fairly" under the FSMA, and
guidance published by the FSA and, as of 1 April 2013, the FCA on that
principle and by the Office of Fair Trading (the "OFT") on the unfair
relationship test, may also be relevant. Under the CCA, once the debtor
alleges that an "unfair relationship" exists, the burden of proof is on the
creditor to prove the contrary.
Plevin v Paragon Personal Finance Limited 2014 UKSC 61, a Supreme Court
judgment, has clarified that compliance with the relevant regulatory rules by
the creditor (or a person acting on behalf of the creditor) does not preclude
a finding of unfairness, as a wider range of considerations may be relevant to
the fairness of the relationship than those which would be relevant to the
application of the rules. If a mortgage loan subject to the unfair
relationship test is found to be unfair, the court has a wide range of powers
and may require the lender (and any associate or former associate of the
lender) to repay sums to the debtor, or to do, not do or cease doing anything
in relation to the agreement or any related agreement, and may require the
lender to reduce or discharge any sums payable by the debtor or surety, return
to a surety any security provided by him, alter the terms of the agreement,
direct accounts to be taken or otherwise set aside any duty imposed on the
debtor or surety. The term creditor i.e. lender as defined under Section 189
of the CCA means the person providing the credit under a consumer credit
agreement or the person to whom his rights and duties under the agreement have
passed by assignment or operation of law.
Distance Marketing
In the United Kingdom, the Financial Services (Distance Marketing) Regulations
2004 (the "Distance Marketing Regulations") apply to contracts for financial
services entered into on or after 31 October 2004 by a "consumer" within the
meaning of the Distance Marketing Regulations and by means of distance
communication (i.e. without any substantive simultaneous physical presence of
the originator and the borrower).
The Distance Marketing Regulations require suppliers of financial services by
way of distance communication to provide certain information to consumers.
This information generally has to be provided before the consumer is bound by
the contract and includes, but is not limited to, general information in
respect of the supplier and the financial service, the contractual terms and
conditions, and whether or not there is a right of cancellation.
Certain agreements for financial services (including Consumer Buy-to-Let
Loans) will be cancellable under the Distance Marketing Regulations in certain
circumstances. Where the credit agreement is cancellable under the Distance
Marketing Regulations, the borrower may send notice of cancellation at any
time before the expiry of 14 days beginning with (i) the day after the day on
which the contract is made (where all of the prescribed information has been
provided prior to the contract being entered into), or (ii) the day after the
day on which the last of the prescribed information is provided (where all the
of prescribed information was not provided prior to the contract being entered
into).
Compliance with the Distance Marketing Regulations may be secured by way of
injunction (interdict in Scotland) obtained by an enforcement authority,
granted on such terms as the court thinks fit to ensure such compliance, and
certain breaches of the Distance Marketing Regulations may render the
originator or intermediaries (and their respective relevant officers) liable
to a fine. If the borrower cancels the contract under the Distance Marketing
Regulations, then: (a) the borrower is liable to repay the principal and any
other sums paid by or on behalf of the originator to the borrower, under or in
relation to the contract, within 30 calendar days of cancellation; (b) the
borrower is liable to pay interest, early repayment charges and other charges
for services actually provided in accordance with the contract only if: (i)
the amount is in proportion to the extent of the service provided before
cancellation (in comparison with the full coverage of the contract) and is not
such that it could be construed as a penalty; (ii) the borrower received
certain prescribed information at the prescribed time about the amounts
payable; and (iii) the originator did not commence performance of the contract
before the expiry of the relevant cancellation period (unless requested to do
so by the borrower); and (c) any security provided in relation to the contract
is to be treated as never having had effect.
Consumer Rights Act 2015
The main provisions of the Consumer Rights Act 2015 (the "CRA") came into
force on 1 October 2015 and apply to agreements made on or after that date.
The CRA significantly reforms and consolidates consumer law in the UK. The
CRA involves the creation of a single regime out of the Unfair Contract Terms
Act 1977 (which essentially deals with attempts to limit liability for breach
of contract) and the UTCCR. The CRA has revoked the UTCCR in respect of
contracts made on or after 1 October 2015 and introduced a new regime for
dealing with unfair contractual terms as follows:
Under Part 2 of the CRA an unfair term of a consumer contract (a contract
between a trader and a consumer) is not binding on a consumer (an individual
acting for purposes that are wholly or mainly outside that individual's trade,
business, craft or profession). Additionally, an unfair notice is not
binding on a consumer, although a consumer may rely on the term or notice if
the consumer chooses to do so. A term will be unfair where, contrary to the
requirement of good faith, it causes significant imbalance in the parties'
rights and obligations under the contract to the detriment of the consumer.
In determining whether a term is fair it is necessary to: (i) take into
account the nature of the subject matter of the contract; (ii) refer to all
the circumstances existing when the term was agreed; and (iii) refer to all of
the other terms of the contract or any other contract on which it depends.
Schedule 2 of the CRA contains an indicative and non-exhaustive "grey list" of
terms of consumer contracts that may be regarded as unfair. Notably,
paragraph 11 lists "a term which has the object or effect of enabling the
trader to alter the terms of the contract unilaterally without a valid reason
which is specified in the contract", although paragraph 22 of schedule 2
provides that this does not include a term by which a supplier of financial
services reserves the right to alter the rate of interest payable by or due to
the consumer, or the amount of other charges for financial services without
notice where there is a valid reason if the supplier is required to inform the
consumer of the alteration at the earliest opportunity and the consumer is
free to dissolve the contract immediately.
A term of a consumer contract which is not on the "grey list" may nevertheless
be regarded as unfair.
Where a term of a consumer contract is "unfair" it will not bind the
consumer. However, the remainder of the contract will, so far as
practicable, continue to have effect in every other respect. Where a term in
a consumer contract is susceptible of multiple different meanings, the meaning
most favourable to the consumer will prevail. It is the duty of the court to
consider the fairness of any given term. This can be done even where neither
of the parties to proceedings have explicitly raised the issue of fairness.
Ultimately, only a court can decide whether a term is fair, however it may
take into account relevant guidance published by the Competition and Markets
Authority (the "CMA") or the FCA. On 19 December 2018, the FCA published new
guidance, "Fairness of variation terms in financial services consumer
contracts under the Consumer Rights Act 2015" (FG18/7), outlining factors the
FCA considers firms should have regard to when drafting and reviewing
variation terms in consumer contracts. This follows developments in case
law, including at the Court of Justice of the European Union (the "CJEU").
The finalised guidance relates to all financial services consumer contracts
entered into since 1 July 1995. The FCA states that firms should consider
both this guidance and any other rules that apply when they draft and use
variation terms in their consumer contracts. The FCA states that the
finalised guidance will apply to FCA authorised persons and their appointed
representative in relation to any consumer contracts which contain variation
terms.
The provisions in the CRA governing unfair contractual terms came into force
on 1 October 2015. The Unfair Contract Terms Regulatory Guide (UNFCOG in the
FCA Handbook) explains the FCA's policy on how it uses its formal powers under
the CRA and the CMA published guidance on the unfair terms provisions in the
CRA on 31 July 2015 (the "CMA Guidance"). The CMA indicated in the CMA
Guidance that the fairness and transparency provisions of the CRA are regarded
to be "effectively the same as those of the UTCCR" (save in applying the
consumer notices and negotiated terms). The document further notes that "the
extent of continuity in unfair terms legislation means that existing case law
generally, and that of the CJEU particularly, is for the most part as relevant
to the Act as it was the UTCCRs".
In general, the interpretation of the UTCCR and/or the CRA is open to some
doubt, particularly in the light of sometimes conflicting reported case law
between English courts and the CJEU. The extremely broad and general wording
of the CRA makes any assessment of the fairness of terms largely subjective
and makes it difficult to predict whether or not a term would be held by a
court to be unfair. It is therefore possible that any Loans which have been
made to Borrowers covered by the CRA may contain unfair terms which may result
in the possible unenforceability of the terms of the underlying loans. If
any term of the Loans entered into on or after 1 October 2015 is found to be
unfair for the purpose of the CRA, this may reduce the amounts available to
meet the payments due in respect of the Notes. The guidance issued by the
FSA (and as of 1 April 2013, the FCA), the OFT and the CMA has changed over
time and it is possible that it may change in the future.
Financial Ombudsman Service
Under the FSMA, the Financial Ombudsman Service (the "Ombudsman"), an
independent adjudicator, is required to make decisions on, among other things,
complaints relating to activities and transactions under its jurisdiction on
the basis of what, in the Ombudsman's opinion, would be fair and reasonable in
all the circumstances of the case, taking into account, among other things,
law and guidance, rather than strictly on the basis of compliance with law.
Complaints properly brought before the Ombudsman for consideration must be
decided on a case-by-case basis, with reference to the particular facts of any
individual case. Each case would first be adjudicated by an adjudicator.
Either party to the case may appeal against the adjudication. In the event
of an appeal, the case proceeds to a final decision by the Ombudsman. The
Ombudsman may order a money award to a debtor, which may adversely affect the
ability of the Issuer to meet its obligations under the Notes. As the
Ombudsman is required to make decisions on the basis of, among other things,
the principles of fairness, and may order a monetary award to a complaining
borrower, it is not possible to predict how any future decision of the
Ombudsman would affect the ability of the Issuer to make payments to
Noteholders.
Consumer Protection from Unfair Trading Regulations 2008
Consumer Protection from Unfair Trading Regulations 2008 and the Digital
Markets, Competition and Consumers Act 2024
The Consumer Protection from Unfair Trading Regulations 2008 (the "CPUTR")
came into force on 26 May 2008 and prohibits certain practices which are
deemed "unfair" within the terms of the CPUTR. Breach of the CPUTR does not
(of itself) render an agreement void or unenforceable, but is a criminal
offence punishable by a fine and/or imprisonment. In addition, under the
CPUTR, a commercial practice within the scope of the CPUTR may be regarded as
unfair and prohibited if it is:
(a) contrary to the standard of special skill and care which a
trader may reasonably be expected to exercise towards consumers, commensurate
with either honest market practice or general principles of good faith in the
trader's field of activity; and
(b) materially distorts or is likely to materially distort the
economic behaviour of the average consumer (who is reasonably well informed
and reasonably observant and circumspect).
Under the terms of the CPUTR, the possible liabilities for misrepresentation
or breach of contract in relation to the underlying credit agreements may
result in irrecoverable losses on amounts to which such agreements apply.
The Consumer Protection (Amendment) Regulations 2014 (SI No. 870/2014) came
into force on 1 October 2014 and amended the CPUTR. In certain
circumstances, these amendments to the CPUTR give consumers a right to redress
for misleading or aggressive commercial practices (as defined in the CPUTR),
including a right to unwind agreements.
On 24 May 2024 the Digital Markets, Competition and Consumers Bill received
Royal assent, becoming the Digital Markets, Competition and Consumers Act 2024
("DMCCA")). The DMCCA is not yet fully in force and most of its key provisions
will be brought into force through secondary legislation. Once fully in force,
the DMCCA will revoke the CPUTR and recreate their effect, with minor
amendments (Part 4 of the DMCCA), prohibiting unfair commercial practices in
business to consumer relationships. In addition to some minor amendments to
the CPUTR rules, the new regime will introduce new rules on consumer reviews,
drip pricing and consumer vulnerability. In addition, the DMCCA largely
replicates the list of specified banned practices contained in the CPUTR and
creates new powers to expand the list of automatically unfair practices. Under
the DMCCA, the unfair commercial practices regime, along with all other
consumer protection legislation, will become subject to a new enforcement
regime under which the CMA will enjoy new direct enforcement powers, which
will operate in parallel with a court-based enforcement regime.
The new unfair commercial practices regime established by the DMCCA will apply
to acts or omissions which take place on or after the commencement date (to be
determined by secondary legislation). It cannot be excluded that the new rules
and enforcement regime under the DMCCA will have an adverse impact on the
Loans.
FCA response to the cost of living crisis
On 10 April 2024, the FCA published PS24/2: Strengthening protections for
borrowers in financial difficulty: Consumer credit and mortgages and the
related Consumer Credit and Mortgages (Tailored Support) Instrument 2024 (FCA
2024/7). It also published FG24/2: Guidance for firms supporting existing
mortgage borrowers impacted by rising living costs. The FCA stated that they
wanted to build on the Mortgages Tailored Support Guidance (issued on 25 March
2021 to address exceptional circumstances arising out of coronavirus) and
provide a stronger framework for lenders to protect customers facing payment
difficulties, they would do this by incorporating relevant aspects of the
Mortgages Tailored Support Guidance into their Handbook, as well as
introducing further targeted changes. For mortgages, the FCA changed their
guidance to allow lenders more scope to capitalise payment shortfalls where
appropriate and to improve disclosure for all customers in payment shortfall.
The new rules came into force on 4 November 2024 and the Mortgages Tailored
Support Guidance was withdrawn at that time. It is worth noting that the rules
will not apply to unregulated buy-to-let loans.
There can be no assurance that the FCA, or other UK government or regulatory
bodies, will not take further steps in response to the rising cost of living
in the UK which may impact the performance of the Loans, including further
amending and extending the scope of the above guidance.
Mortgage repossession
The Mortgage Repossessions (Protection of Tenants etc.) Act 2010 came into
force on 1 October 2010. This Act gives courts in England and Wales the same
power to postpone and suspend repossession for up to two months on application
by an unauthorised tenant (i.e. a tenant in possession without the lender's
consent) as generally exists on application by an authorised tenant. The
lender has to serve notice at the property before enforcing a possession
order.
The protocol in the Mortgage Repossessions (Protection of Tenants etc.) Act
2010 may have adverse effects in markets experiencing above-average levels of
possession claims.
Consumer duty
The FCA has published final rules on the introduction of a new consumer duty
on regulated firms ("Consumer Duty"), which aim to set a higher level of
consumer protection in retail financial markets by requiring regulated firms
to act to ensure good retail customer outcomes. It applies from 31 July 2023
for products and services that remain open to sale or renewal and from 31 July
2024 for closed products and services.
The Consumer Duty applies to the regulated activities and ancillary activities
of all firms authorised under the FSMA.
There are three main elements to the new Consumer Duty, comprising a new
consumer principle, that "a firm must act to deliver good outcomes for the
retail consumers of its products", cross-cutting rules supporting the consumer
principle, and four outcomes, relating to the quality of firms' products and
services, price and value, consumer understanding and consumer support.
The Consumer Duty applies not only at origination of a product but throughout
its subsistence (so in the case of a mortgage loan, throughout the period the
mortgage loan is outstanding). The cross-cutting rules include an obligation
to avoid causing foreseeable harm to the consumer and the outcomes include an
obligation to ensure that the product (for example, a mortgage loan) provides
fair value to the retail customer. These obligations (as with the remainder
of the Consumer Duty) must be assessed on a regular basis throughout the life
of the product.
The Consumer Duty applies to product manufacturers and distributors, which
include purchasers of inscope mortgage loans, as well as firms administering
or servicing those mortgage loans. Although the Consumer Duty will not apply
retrospectively, the FCA will require firms to apply the Consumer Duty to
existing products on a forward-looking basis.
The FCA's guidance states that the Consumer Duty does not apply to unregulated
buy-to-let mortgage loans but there are some circumstances in which the
Consumer Duty would apply to the servicing of buy-to-let loans.
The Renting Homes (Wales) Act 2016
The Renting Home (Wales) Act (the "Renting Homes Act") received royal assent
on 18 January 2016 and fully entered into force on 1 December 2022. The
Renting Homes Act converts the majority of existing residential tenancies in
Wales into an 'occupation contract with retrospective effect. Subject to
certain criteria being met, residential lettings and tenancies granted on or
after 1 December 2022 will be 'occupation contracts'.
Under the Renting Homes Act, a landlord must, within the requisite time period
set out in the act, serve a written statement on the tenant of an occupation
contract which sets out certain terms of the occupation contract which are
specified in the Act.
Where a tenant has breached the occupation contract the minimum notice that
must be given to the tenant by the landlord of termination of the contract is
one month. The notice period can be shorter where it relates to acts of
anti-social behaviour or serious rent arrears. Where a 'no fault' notice is
issued, the minimum notice that must be given to a tenant is six months.
The Renting Homes Act (which only has effect in Wales) does not contain an
equivalent mandatory ground for possession that a lender had under the Housing
Act 1988 where a property was subject to a mortgage granted before the
beginning of the tenancy and the lender required possession in order to
dispose of the property with vacant possession. The Renting Homes Act may
result in lower recoveries in relation to buy-to-let mortgage loans over
Properties in Wales.
Energy Efficiency Regulations 2015
From 1 April 2018, landlords of relevant domestic properties in England and
Wales may not grant a tenancy to new or existing tenants if their property has
an Energy Performance Certificate ("EPC") rating of band F or G (as shown on a
valid EPC for the property) and from 1 April 2020, landlords must not continue
letting a relevant domestic property which is already let if that property has
an EPC rating of band F or G (as shown on a valid EPC for the property). In
both cases described above this is referred to in the Energy Efficiency
(Private Rented Property) (England and Wales) Regulations 2015 (the "Energy
Efficiency Regulations 2015") as the prohibition on letting substandard
property. Where a landlord wishes to continue letting property which is
currently substandard, they will need to ensure that energy efficiency
improvements are made which raise the EPC rating to a minimum of E. In
certain circumstances landlords may be able to claim an exemption from this
prohibition on letting sub-standard property; this includes situations where
the landlord is unable to obtain funding to cover the cost of making
improvements, or where all improvements which can be made have been made, and
the property remains below an EPC rating of Band E. Local authorities will
enforce compliance with the domestic minimum level of energy efficiency.
They may check whether a property meets the minimum level of energy
efficiency, and may issue a compliance notice requesting information where it
appears to them that a property has been let in breach of the Energy
Efficiency Regulations 2015 (or an invalid exemption has been registered in
respect of it). Where a local authority is satisfied that a property has
been let in breach of the Energy Efficiency Regulations 2015 it may serve a
notice on the landlord imposing financial penalties. On 4 December 2024, the
government launched a consultation with respect to reforming the energy
performance of buildings framework. As it is in the consultation stage, the
reforms proposed are subject to change and the impact of the proposals are not
yet known.
Assured Shorthold Tenancy (AST)
Depending on the level of ground rent payable at any one time, it is possible
that a long leasehold may also be an Assured Tenancy ("AT") or Assured
Shorthold Tenancy ("AST") under the Housing Act 1988 ("HA 1988"). If it is,
this could have the consequences set out below.
A tenancy or lease in England and Wales will be an AT if granted after 15
January 1989 and:
(i) the tenant or, as the case may be, each of the joint
tenants is an individual;
(ii) the tenant or, as the case may be, at least one of the
joint tenants occupies the dwelling-house as their only or principal home; and
(iii) if granted before 1 April 1990:
(A) the property had a rateable value at 31 March 1990 lower than
£1,500 in Greater London or £750 elsewhere; and
(B) the rent payable for the time being is greater than 2/3rds of
the rateable value at 31 March 1990;
(iv) if granted on or after 1 April 1990 the rent payable for the
time being is between £251 and £100,000 inclusive (or between £1,001 and
£100,000 inclusive in Greater London).
There is no maximum term for an AT and therefore any lease can constitute an
AT if it satisfies the relevant criteria.
Since 28 February 1997 all ATs will automatically be ASTs (unless the landlord
serves notice to the contrary), which gives landlords the right to recover the
property at the end of the term of the tenancy. The HA 1988 also entitles a
landlord to obtain an order for possession and terminate an AT/AST during its
fixed term on proving one of the grounds for possession specified in Section
7(6) of the HA 1988. The ground for possession of most concern in relation
to long leaseholds is Ground 8 - namely that if the rent is payable yearly (as
most ground rents are), at least three months' rent is more than three months
in arrears both at the date of service of the landlord's notice and the date
of the hearing.
Most leases give the landlord a right to forfeit the lease if rent is unpaid
for a certain period of time but the courts normally have power to grant
relief, cancelling the forfeiture as long as the arrears are paid off. There
are also statutory protections in place to protect long leaseholders from
unjustified forfeiture action. However, an action for possession under
Ground 8 is not the same as a forfeiture action and the court's power to grant
relief does not apply to Ground 8. In order to obtain possession, the
landlord will have to follow the notice procedure in Section 8 of the HA 1988
and, if the tenant does not leave on expiry of the notice, apply for a court
order. However, as Ground 8 is a mandatory ground, the court will have no
discretion and will be obliged to grant the order if the relevant conditions
are satisfied. There is government consultation underway to review
residential leasehold law generally and it is anticipated that this issue will
be addressed as part of any resulting reforms.
Currently, however, there is a risk that where:
(i) a long lease is also an AT/AST due to the level of the
ground rent;
(ii) the tenant is in arrears of ground rent for more than 3
months;
(iii) the landlord chooses to use the HA 1988 route to seek
possession under Ground 8; and
(iv) the tenant does not manage to reduce the arrears to below 3
months' ground rent by the date of the court hearing,
the long lease will come to an end and the landlord will be able to re-enter
the relevant property.
Breathing Space Regulations
The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis
Moratorium) (England and Wales) Regulations 2020 (SI 2020/1311) ("Breathing
Space Regulations") (which came into force on 4 May 2021) gives eligible
individuals in England and Wales the right to legal protection from their
creditors, including almost all enforcement action, during a period of
"breathing space". A standard breathing space will give an individual in
England and Wales with problem debt legal protection from creditor action for
up to 60 days; and a mental health crisis breathing space will give an
individual in England and Wales protection from creditor action for the
duration of their mental health crisis treatment (which is not limited in
duration) plus an additional 30 days.
However, the Breathing Space Regulations do not apply to mortgages, except for
arrears which are uncapitalised at the date of the application under the
Breathing Space Regulations. Interest can still be charged on the principal
secured debt during the breathing space period, but not on the arrears. Any
mortgage arrears incurred during any breathing space period are not protected
from creditor action. The Borrower must continue to make mortgage payments
in respect of any mortgage secured against its primary residence (save in
respect of arrears accrued prior to the moratorium) during the breathing space
period, otherwise the relevant debt adviser may cancel the breathing space
period.
In February 2021, the FCA issued a policy statement (PS21/1) on the
application of the Breathing Space Regulations, in which they confirm that no
changes are currently being made to the rules under MCOB in relation to how
mortgage lenders should treat a "breathing space" as an indicator of payment
difficulties. The FCA's view is that this is something that firms should
take into account, but should not be treated more specifically than other
potential indicators of payment difficulties.
Summary of the Key Transaction Documents
Mortgage Sale Agreement
Portfolio
Under a mortgage sale agreement entered into on or around the Closing Date
between, among others, the Seller, the Issuer, the Security Trustee and the
Servicer (the "Mortgage Sale Agreement"), on the Closing Date, the Seller
shall, subject to certain conditions being satisfied, sell, assign or
otherwise transfer to the Issuer pursuant to the Mortgage Sale Agreement a
portfolio of English and Welsh residential mortgage loans each secured by a
Mortgage and, where applicable, other Related Security (the "Closing Loans").
The Mortgage Sale Agreement also provides that the Seller may (but is not
obliged to) sell to the Issuer on an Additional Mortgage Loan Purchase Date
falling in the period from the Closing Date to (and including) the First
Interest Payment Date, Additional Mortgage Loans and their Related Security
subject to the terms of the Mortgage Sale Agreement and the Servicing
Agreement. The Issuer will have the right to all monies derived from each
Additional Mortgage Loan and its Related Security including interest from (and
including) the relevant Additional Mortgage Loan Purchase Date. The Closing
Loans and any further Additional Mortgage Loans are, together, the "Loans" and
the Closing Portfolio and any Additional Mortgage Loans sold on or after the
Closing Date (but excluding any Loan and its Related Security which is
repurchased by the Seller pursuant to the Mortgage Sale Agreement and no
longer beneficially owned by the Issuer) shall the be the "Portfolio".
The Loans and their Related Security comprising the Portfolio will be assigned
by way of equitable assignment to the Issuer and is referred to as the "sale"
by the Seller to the Issuer of the Loans and Related Security. The Loans and
Related Security and all monies derived therefrom from time to time are
referred to herein as the "Portfolio".
The consideration due to the Seller in respect of the sale of the Closing
Portfolio shall be:
(a) the Closing Portfolio Initial Consideration, which is due
and payable on the Closing Date;
(b) the deferred consideration consisting of the RC1 Payments
and the RC2 Payments payable pursuant to the applicable Priority of Payments,
the right to such RC1 Payments and RC2 Payments being represented by the
Residual Certificates to be issued by the Issuer and delivered to the Seller
on the Closing Date;
The consideration payable by the Issuer to the Seller for any Additional
Mortgage Loans on an Additional Mortgage Loan Purchase Date shall be equal to:
(a) 100 per cent. of the Current Balance of the relevant
Additional Mortgage Loans as at the relevant Additional Mortgage Loan Purchase
Date; plus
(b) an amount equal to all amounts (other than such amount as
set out at paragraph (a) above) which are payable by the Borrower as at the
relevant Additional Mortgage Loan Purchase Date under the relevant Additional
Mortgage Loan,
(the "Additional Mortgage Loan Purchase Consideration").
"Collateralised Notes" means the Notes (other than the Class X Notes).
Any RC1 Payments or RC2 Payments payable pursuant to the Residual Certificates
will be paid in accordance with the priority of payments set out in the
sections headed "Cashflows - Application of Available Revenue Receipts prior
to the service of an Enforcement Notice on the Issuer", "Cashflows -
Application of Available Principal Receipts prior to the service of an
Enforcement Notice on the Issuer" and "Cashflows - Distributions following the
service of an Enforcement Notice on the Issuer" below.
The Issuer shall pay Permitted Fee Capitalisation Amounts under a Loan to the
Seller from Principal Receipts on or prior to the last day of the calendar
month following the month in which the relevant Switch Date falls.
Title to the Mortgages, Registration and Notifications
The completion of the transfer of the Loans and their Related Security (and,
where appropriate, their registration or recording) to the Issuer is, save in
the limited circumstances referred to below, deferred. Legal title to the
Loans and their Related Security therefore remains with the Seller until the
occurrence of a Perfection Event. Notice of the sale of the Loans and their
Related Security to the Issuer will not be given to any Borrower until the
occurrence of a Perfection Event.
The transfers to the Issuer will be completed by or on behalf of the Seller on
or before the 30th Business Day after any of the following Perfection Events
occurs:
(a) the Seller being required to perfect legal title to the
Loans and/or for the Related Security by an order of a court of competent
jurisdiction or by a regulatory authority which has jurisdiction over the
Seller or by any organisation of which the Seller is a member, or whose
members comprise (but are not necessarily limited to) mortgage lenders and
with whose instructions it is customary for the Seller to comply; or
(b) it becoming necessary by law to do any or all of the acts
referred to in paragraph (a) above; or
(c) the security created under or pursuant to the Deed of Charge
or any material part of that security being, in the reasonable opinion of the
Security Trustee, in jeopardy; or
(d) the Seller calling for perfection by serving notice in
writing to that effect on the Issuer and the Security Trustee; or
(e) an Insolvency Event occurring in relation to the Seller; or
(f) it becoming unlawful in any applicable jurisdiction for the
Seller to hold legal title in respect of any Loan in the Portfolio; or
(g) the occurrence of a Servicer Termination Event where no
replacement servicer has been appointed in accordance with the provisions of
the Servicing Agreement; or
(h) default is made by the Seller in the performance or
observance of any of its covenants and obligations under the Transaction
Documents to which it is a party, which is (in the opinion of the Note
Trustee) materially prejudicial to the interests of the Noteholders and such
default continues unremedied for a period of 20 Business Days after the
earlier of the Seller becoming aware of such default and receipt by the Seller
of written notice from the Issuer or (following delivery of an Enforcement
Notice) the Security Trustee, as appropriate, requiring the same to be
remedied,
(each of the events set out in paragraphs (a) to (h) inclusive above being a
"Perfection Event"). Until such Perfection Event occurs, the Seller will
hold legal title to the Loans and their Related Security.
An "Insolvency Event" will occur in respect of an entity in the following
circumstances:
(a) an order is made or an effective resolution passed for the
winding up of the relevant entity (or it proposes or makes any compromise or
arrangement with its creditors); or
(b) the relevant entity stops or threatens to stop payment to
its creditors generally or the relevant entity ceases or threatens to cease to
carry on its business or substantially the whole of its business; or
(c) an encumbrancer takes possession or a Receiver is appointed
to the whole or any material part of the undertaking, property and assets of
the relevant entity or a distress, diligence or execution is levied or
enforced upon or sued out against the whole or any material part of the
chattels or property of the relevant entity and, in the case of any of the
foregoing events, is not discharged within 30 days; or
(d) the relevant entity is unable to pay its debts as they fall
due (after taking into account any relevant grace period or permitted
deferral) or it is deemed under Section 123 of the Insolvency Act 1986 to be
unable to pay its debts or announces an intention to suspend making payments
with respect to any class of undisputed debts; or
(e) if proceedings are initiated against the relevant entity
under any applicable liquidation, insolvency, composition, reorganisation or
other similar laws or an application is made (or documents filed with a court)
for the appointment of an administrative or other receiver, manager,
administrator or other similar official, or an administrative or other
receiver, manager, administrator or other similar official is appointed, in
relation to the relevant entity or, as the case may be, in relation to the
whole or any part of the undertaking or assets of any relevant entity, and in
any such case (other than the appointment of an administrator or an
administrative receiver appointed following presentation of a petition for an
administration order), unless initiated by the relevant entity, is not
discharged within 30 days or if the relevant entity takes steps with a view to
obtaining a moratorium in respect of any indebtedness.
Following a Perfection Event, notice of the legal assignments will be given to
the Borrowers and the Issuer will take steps to register and record such legal
assignments at the Land Registry.
Save for Title Deeds held at the Land Registry, all the Title Deeds and the
mortgage files and computer tapes relating to each of the Loans and their
Related Security are held by the Seller or the Servicer (on behalf of the
Seller) or its solicitors or agents and the Title Deeds are held in
dematerialised form or are returned to the Borrower's solicitors.
"Loan Files" means the file or files relating to each Loan (including files
kept in microfiche format or similar electronic data retrieval system or the
substance of which is transcribed and held on an electronic data retrieval
system) containing inter alia correspondence between the Borrower and the
Seller and including mortgage documentation applicable to each Loan, each
letter of offer for that Loan, the Valuation Report (if applicable) and, to
the extent available, the solicitor's or licensed conveyancer's certificate of
title.
"Title Deeds" means, in relation to each Loan, and its Related Security and
the Property relating thereto, all conveyancing deeds, certificates and all
other documents which relate to the title to the Property and the security for
the Loan and all searches and enquiries undertaken in connection with the
grant by the relevant Borrower of the related Mortgage.
"Valuation Report" means the valuation report or reports for mortgage
purposes, obtained by the Seller from a valuer in respect of each Property or
a valuation report in respect of a valuation made using a methodology which
would be acceptable to a Prudent Mortgage Lender and which has been approved
by the relevant officers of the Seller.
Representations and Warranties
The Seller will represent and warrant to the Issuer and the Security Trustee
in the Mortgage Sale Agreement, on the terms of the Loan Warranties (as
defined below) in each case subject to the conditions as set out in the
Mortgage Sale Agreement at the following times:
(a) in respect of each Loan and its Related Security sold by the
Seller to the Issuer on the Closing Date as at the Closing Date;
(b) in respect of each Loan and its Related Security sold by the
Seller to the Issuer on an Additional Mortgage Loan Purchase Date, as at such
Additional Mortgage Loan Purchase Date;
(c) in relation to any Permitted Fee Capitalisation Amount as at
the relevant Testing Date; and
(d) in relation to any Loan which is subject to a Product
Switch, as at the relevant Testing Date.
Neither the Security Trustee nor the Issuer has made, or has caused to be made
on its behalf, any enquiries, searches or investigations, but each is relying
entirely on the representations and warranties made by the Seller contained in
the Mortgage Sale Agreement.
If any of the Loan Warranties are breached in respect of a Loan as at the
Closing Date, or if any of the Loan Warranties in respect of a Loan which is
subject to a Product Switch is breached as at the relevant Testing Date, such
Loan is required to be repurchased by the Seller in accordance with the
provisions of the Mortgage Sale Agreement. If any of the Loan Warranties are
breached in respect of a Permitted Fee Capitalisation Amount as at the Testing
Date following the relevant Switch Date, such Loan will be repurchased by the
Seller in accordance with the provisions of the Mortgage Sale Agreement.
The warranties that will be given to the Issuer and separately to the Security
Trustee by the Seller pursuant to the Mortgage Sale Agreement (the "Loan
Warranties") are as follows:
1. The Loans
1.1 The Seller has good and marketable title to, and is the
absolute legal owner, and has the full legal interest and full beneficial
title in, each of the Loans, Mortgages and their Related Security free from,
in each case, any mortgages, charges, liens, financial encumbrances and
equities.
1.2 The whole of each Loan and any interest, which are now or
become in the future due or payable under a Loan constitutes a legal, valid,
binding and enforceable obligation of the relevant Borrower enforceable in
accordance with its terms, and the amount outstanding under each Loan is a
valid debt to the Seller from the Borrower, except that (i) enforceability may
be limited by bankruptcy or insolvency of any Borrower occurring after the
date of any advance or other similar laws of general applicability affecting
the enforcement of creditors' rights generally (other than FSMA or any rights
of set off to the extent the same are the subject of a separate warranty) and
the courts' discretion in relation to equitable remedies, and (ii) this
warranty shall not apply in respect of any Early Repayment Charge or similar
early repayment fees, mortgage administration charges, exit fees or charges
payable in the event of a Borrower Default or Delinquent Borrowers or other
fees and costs which are deemed irrecoverable by a competent regulatory
authority or court.
1.3 In respect of each Loan, (a) all formal approvals, consents
and other steps required to be taken by the Seller to permit a legal or
equitable transfer or other disposal, as and in the manner contemplated by the
Mortgage Sale Agreement, of the Loans and the related Mortgages to be sold
pursuant to the Mortgage Sale Agreement and to permit the Seller to enter into
and perform its obligations under the Mortgage Sale Agreement and to render
the Mortgage Sale Agreement legal, valid, binding and enforceable have been
obtained or taken, and (b) each Loan and Related Security is freely
transferable or assignable by the Seller.
1.4 The Seller has instructed Solicitors to ensure that all steps
necessary to perfect the Seller's title to each Loan, together with their
related Mortgages are duly taken at the appropriate time, including, for the
avoidance of doubt, within the applicable priority periods or time limits for
registration and stamping of all documents that may be needed to enforce any
Loan, its related Mortgage or Related Security.
1.5 In relation to each Loan in the Closing Portfolio, the
particulars of each Loan and its related Mortgage set out in exhibit 2
(Portfolio) of the Mortgage Sale Agreement are true, complete and accurate as
at the Cut-Off Date.
1.6 In relation to each Additional Mortgage Loan, the particulars
of each Loan and its related Mortgage set out in the data tape delivered
pursuant to the Mortgage Sale Agreement are true complete and accurate as at
the relevant Additional Mortgage Loan Purchase Date.
1.7 No Loan or its Related Security is subject to any lien or
right of set-off, compensation, counterclaim defence or claim for rescission.
1.8 The Seller has not entered into any arrangement with any
Borrower the effect of which would restrict the ability of the Seller (or the
Servicer on its behalf) to determine the rates of interest in relation to any
Loan in accordance with the Mortgage Conditions (other than in accordance with
the applicable Lending Criteria).
1.9 The Seller has not entered into any arrangement with any
Borrower the effect of which would be to restrict the ability of the Issuer to
enforce the terms of the Loan.
1.10 No Loan is a Flexible Loan.
1.11 The Seller has not waived or acquiesced in any breach of any of
its rights (i) in respect of a Loan, the related Mortgage or Related Security,
other than waivers and acquiescence such as a Prudent Mortgage Lender might
make on a case by case basis, or (ii) against any valuer, solicitor, licensed
conveyancer or other professional who has provided information, carried out
work or given advice in connection with any Loan or Related Security.
1.12 Interest is charged on each Loan in accordance with the
provisions of the Loan and its related Mortgage.
1.13 All fees are either charged to the relevant Borrower in
accordance with the Standard Documentation or waived in accordance with the
practice of a Prudent Mortgage Lender.
1.14 Interest in relation to each Loan is payable monthly in arrear,
unless otherwise agreed with the Borrower pursuant to a Permitted Variation or
a Product Switch that meets the Product Switch/ Permitted Fee Capitalisation
Amount Conditions.
1.15 No Loan is, or ever has been, subject to any provision for the
deferring of interest or the capitalisation of a corresponding amount.
1.16 In relation to the Closing Loans, all amounts received and
identified from the relevant Borrower on or before the Closing Date
(including, without limitation, principal, interest and/or fees) have been
applied on or before the Closing Date in reduction of the Current Balance
relating to that Closing Loan (whether or not such principal, interest and/or
fees have accrued or are due or are in respect of a day or period after the
Closing Date).
1.17 In relation to any Additional Mortgage Loans that do not form
part of the Closing Portfolio, all amounts received and identified from the
relevant Borrower on or before the Additional Mortgage Loan Purchase Date
(including, without limitation, principal, interest and/or fees) have been
applied on or before the Additional Mortgage Loan Purchase Date in reduction
of the Current Balance relating to that Additional Mortgage Loan) whether or
not such principal, interest and/or fees have accrued or are due or are in
respect of a day or period after the Additional Mortgage Loan Purchase Date.
1.18 Each Loan was originated in, is denominated in, and all amounts
in respect of such Loan are payable only in, sterling, and may not be changed
under the terms of the Mortgage Conditions by the relevant Borrower to any
other currency.
1.19 The Loan Files for each Loan are held in dematerialised form and
are and will be stored on the systems of the Seller (in its capacity as legal
title holder) and the Title Deeds for each related Property are held in
electronic form at the Land Registry.
1.20 In relation to each Loan, on the Closing Date no sums of
principal, interest or any other sum payable by the Borrower under the
relevant Loan is more than 30 days past due and, since the date of each Loan,
no Borrower is or has been in breach of any other material obligation owed in
relation to such Loan and/or Related Security.
1.21 No Borrower is an employee or director of the Seller.
1.22 No Loan had an original LTV greater than 85% as at the Cut-Off
Date in relation to such Loan, disregarding for such purposes any fees which
have been capitalised and added to the balance of the Loan on or after
origination.
1.23 All of the Borrowers are (i) individuals and were aged 18 years
or older as at the date of execution of the Loan, (ii) companies incorporated
or registered in the UK, Guernsey, Jersey, Isle of Man or Gibraltar, (iii) UK,
Guernsey, Jersey, Isle of Man or Gibraltar limited liability partnerships or
(iv) trusts formed or registered in the UK, Guernsey, Jersey, Isle of Man or
Gibraltar.
1.24 Each Loan and its Related Security is governed by and subject to
the laws of England and Wales.
1.25 No Loan advanced to a Borrower (or any Related Security in
relation to that Loan) that is an individual which is assigned under the
Mortgage Sale Agreement consists of or includes any "stock" or "marketable
securities" within the meaning of Section 125 of the Finance Act 2003,
"chargeable securities" for the purposes of Section 99 of the Finance Act 1986
or a "chargeable interest" for the purposes of Section 48 of the Finance Act
2003 or Section 4 of the Land Transaction Tax and Anti-avoidance of Devolved
Taxes (Wales) Act 2017.
1.26 No Loan advanced to a Borrower that is not an individual (or any
Related Security in relation to that Loan) which is assigned under the
Mortgage Sale Agreement consists of or includes any "chargeable securities"
for the purposes of Section 99 of the Finance Act 1986 or a "chargeable
interest" for the purposes of Section 48 of the Finance Act 2003 or Section 4
of the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act
2017 and each such Loan is "exempt loan capital" (that is, loan capital that
is exempt from stamp duty on transfer under Section 79(4) of the Finance Act
1986).
1.27 No Loan was marketed and underwritten on the premise that the
Borrower or, where applicable, intermediaries were made aware that the
information provided by the Borrower might not be verified by the Seller.
1.28 No Loan is a Cross-collateralised Mortgage Loan.
2. The Advance
The amount of each Loan has been fully advanced, released and disbursed to or
to the order of the relevant Borrower and such Loan does not contain an
obligation on the part of the Seller to make any further advance or pay or
repay any amount (including, without limitation, in relation to cashback
payments, interest, fees, charges and refunds) to any Borrower.
3. The Mortgages
3.1 Each Mortgage constitutes a legal, binding, enforceable,
non-cancellable, valid and subsisting first charge or security by way of legal
mortgage or legal charge over the relevant Property (subject to completion of
any registration or recording requirements at the Land Registry) with the
Seller having priority as first ranking mortgagee and secured for the whole of
the Current Balance on each Loan and all future interest, fees, costs and
expenses payable under or in respect of such Loan and Related Security.
3.2 In relation to a Mortgage where the title relating to the
Mortgage or relevant Property is registered at the Land Registry or
application for first registration has been made in respect of the same at the
Land Registry, the Seller has made, or caused to be made to the Land Registry,
an application for the registration against the relevant registered title, a
restriction to the effect that (except under order of the Land Registrar) no
subsequent disposition by the registered proprietor of such Property shall be
registered without the written consent of the mortgagee.
3.3 In respect of all Loans, if the title relating to a Mortgage
or relevant Property is registered at the Land Registry for which application
for first registration at the Land Registry has been made, the Seller has not
consented to any subsequent disposition or charge by the registered proprietor
or registered owner of such Property to be registered with the same ranking
priority as the Seller.
3.4 In relation to each Property where registration or recording
of the relevant Mortgage is pending at the relevant Land Registry, there is no
caution, notice, inhibition, restriction or other matter which would prevent
the registration or recording of that Mortgage.
3.5 The Seller has not received written notice and the Seller is
not aware that the holder of any other security interest in relation to a
Property has taken any step to enforce such security interest or entered into
possession of the relevant Property.
3.6 In the case of each Mortgage provided to a UK incorporated
registered limited company, such Mortgage and any floating charge together
with the instrument by which they were created have been duly registered at
Companies House.
3.7 In the case of each Mortgage provided to a UK incorporated
registered limited company, the Seller has not received written notice of any
steps having been taken for the liquidation or winding up of, or the making of
an administration order in relation to, any Borrower or of any steps having
been taken to enforce any security over the assets of any Borrower.
4. Properties
4.1 In relation to each Mortgage, the Borrower has a good and
marketable title to the relevant Property in England and Wales, and (a) where
the relevant Property is in the course of registration (or subject to first
registration) at the Land Registry, the Seller has instructed Solicitors to
ensure that the Borrower will be registered with such title to the relevant
Property as would be acceptable to a Prudent Mortgage Lender by reference to
the then-applicable Lending Criteria, and (b) without limiting the foregoing,
in the case of a leasehold Property (i) the lease cannot be forfeited on the
bankruptcy of the tenant, and (ii) any requisite consent of the landlord to,
or notice to the landlord of, the creation of the Related Security has been
obtained or given.
4.2 Each Property is situated in England or Wales and each
Property is the subject of security or charged to secure the repayment of
those Loans and is of the kind permitted under the applicable Lending
Criteria.
4.3 Each Loan is secured on a residential Property situated in
England and Wales.
4.4 None of the property (other than the Loans) which is assigned
under the Mortgage Sale Agreement consists of or includes any "stock" or
"marketable securities" within the meaning of Section 125 of the Finance Act
2003, "chargeable securities" for the purposes of Section 99 of the Finance
Act 1986 or a "chargeable interest" for the purposes of Section 48 of the
Finance Act 2003 or Section 4 of the Land Transaction Tax and Anti-avoidance
of Devolved Taxes (Wales) Act 2017.
5. Lending Criteria/Origination
5.1 Each Loan was originated by the Seller in accordance with the
then current Lending Criteria and all preconditions to the making of the Loan
were satisfied in all material respects, subject only to such exceptions and
waivers as would be acceptable to a Prudent Mortgage Lender.
5.2 At origination of each Loan, the documents on which such Loan,
the related Mortgages and Related Security have been granted are all in
materially the same form as the applicable Standard Documentation.
5.3 At origination of each Loan, each Borrower who is an
individual has been assessed in accordance with the documented underwriting
process and lending policy and on the basis of their own merits and
creditworthiness, without taking into account any guarantee of their
obligations under any of the Loans, which may be provided by any third party
as additional credit support.
5.4 At origination of each Loan, variable direct debit
instructions in favour of the Seller were completed in respect thereof and
such completed variable direct debit instructions are held by the Seller.
5.5 At the date of origination in relation to each Loan:
(a) the Seller instructed Solicitors in the terms of the
Solicitors' Instructions and pursuant to the applicable Lending Criteria and
received a Certificate of Title or Report on Title addressed to the Seller
from such Solicitors and a signed copy of that Certificate of Title or Report
on Title (as applicable) is with the Loan File and such Certificate of Title
or Report on Title did not disclose any matter which would (if applicable,
after further investigation) have caused a Prudent Mortgage Lender, having
regard to the then-applicable Lending Criteria, to decline to proceed with
that Mortgage on the proposed terms; and
(b) a valuation of the relevant Property was undertaken
(together with the relevant rental income estimate of the relevant Property in
the case of a Buy-to-Let Loan) on behalf of the Seller by a valuer pursuant to
the applicable Lending Criteria and a Valuation Report was obtained by the
Seller. The disclosures made by the valuation were not such that, in the
circumstances prevailing at that time, would have caused the relevant Property
or related Loan application not to comply with the then-applicable Lending
Criteria. An electronic copy of the valuation is contained in the Loan
File. Such Valuation Report is dated not more than six months prior to the
offer date of the relevant Loan and not more than twelve months prior to the
date of completion of the relevant Loan.
6. Insurance
6.1 Each Title Indemnity Policy is in full force and effect and
all premiums thereon due on or before the Closing Date have been paid in full.
6.2 At origination, each Property was insured under:
(a) a contingent buildings insurance policy arranged by the
Borrower in accordance with the relevant Mortgage Conditions or under the
buildings insurance policy arranged by the Seller; or
(b) in the case of a leasehold property or a commonhold
property, a buildings insurance policy arranged by the relevant landlord or
property management company.
7. Regulatory
7.1 No Loan is a Regulated Credit Agreement or an Article 3(1)(b)
Credit Agreement. For these purposes "Article 3(1)(b) Credit Agreement" has
the meaning given to the term in the FCA Handbook - Glossary.
7.2 No Loan (other than a CBTL Loan) is a Regulated Mortgage
Contract.
7.3 Each Loan has, where applicable, been originated in compliance
with the Mortgage Credit Directive Order 2015 or any modification or
re-enactment thereof and the Seller is registered with the FCA as a lender in
respect of CBTL Loans.
7.4 The documents on which the Loans, the related Mortgage and the
Related Security have been granted comply with the applicable requirements of
the Consumer Rights Act 2015 or any modification or re-enactment thereof.
7.5 The Seller has in connection with each Loan:
(a) carried out the identification and other procedures required
under the Money Laundering Regulations 2007, the Guidance for the UK financial
sector issued by the Joint Money Laundering Steering Group, and the Money
Laundering sourcebook of the FCA Handbook; and
(b) complied with the requirements of the Terrorism Act 2000 and
Proceeds of Crime Act 2002 to the extent (if any) that the same are
applicable.
7.6 The Borrower was verified at origination and so far as the
Seller is aware (the Seller having in place appropriate systems and controls
to identify fraud) there is no evidence of any fraud in connection with the
Loan.
7.7 The Seller has not at any time provided a Borrower with
mortgage advice (as defined under Article 53A of the FSMA 2000 (Regulated
Activities) Order 2001) in respect to the Loan.
7.8 The Seller is entitled to disclose information relating to
each Borrower to the Issuer under the terms of the Mortgage Sale Agreement
without contravening the Data Protection Legislation, and the Seller has
complied with all applicable requirements of the Data Protection Legislation
in relation to processing of personal data in connection with the Loans in all
material respects.
7.9 No circumstances exist which are capable of making the
relationship between the Seller and any Borrower who is an individual or a
relevant recipient of credit (as those terms are defined in the Consumer
Credit Act 1974) unfair under Sections 140A to 140D of that Act or any
modification or re-enactment thereof.
7.10 The Seller has created and maintained all records in respect of
the Loans relevant to the Seller in all material respects, in accordance with
any Requirement of Law, Regulatory Direction and to the standard of a Prudent
Mortgage Lender and has procured that, since the creation of each Loan, full
and proper accounts, books, records and the Loan File have been kept showing
clearly all material transactions, payments, receipts and proceedings relating
to that Loan and its Mortgage and all such accounts, books and records are up
to date and accurate in all material respects.
7.11 Since the making of each Loan such Loan has been serviced in
accordance with standards of care acceptable to a Prudent Mortgage Lender.
7.12 The Seller has not received any complaint in writing in relation
to a Loan from any regulatory body (including the Financial Ombudsman Service)
or any Borrower that the Seller has acted unfairly in relation to the setting
of the interest rate in respect of the Loan.
7.13 To the extent that any Loan is a consumer buy-to-let mortgage
contract under Article 4 of the Mortgage Credit Directive Order 2015, (i) the
Seller has the requisite FCA authorisation, registration and permissions (as
applicable) for making such Loans, and (ii) the Seller and the documents which
evidence such Loans are in compliance with all of the relevant legal
requirements of, and procedures set out in, FSMA, all secondary legislation
made pursuant thereto, the Mortgage Credit Directive Order 2015, the FCA
Handbook and the most recent relevant guidelines published by the FCA, as
applicable.
7.14 The Seller has complied with all applicable requirements of the
Financial Services (Distance Marketing) Regulations 2004 (as amended from time
to time) (the "DM Regulations") and no Loan is cancellable in whole or in part
as a result of any non-compliance with the DM Regulations.
8. General
8.1 The Seller has not received written notice of, or instigated,
any litigation or claim (including, without limitation, forfeiture
proceedings) relating to any Loan, the related Mortgage or Related Security
and no notice of any such proceedings or claims has been received by the
Seller (directly or indirectly) from a Borrower or any third party.
8.2 The Seller has not received any written notice of any
litigation or claim (including, without limitation, forfeiture proceedings)
brought by a third party relating to any Property.
8.3 The Seller is not required to make any deduction or
withholding for or on account of tax from any payment it makes in respect of
the Loans.
8.4 The Seller is a company that is resident for tax purposes only
in the UK, and is not and will not be a "financial institution" within the
meaning of Section 564B ITA 2007.
Neither the Security Trustee, the Joint Arrangers nor the Joint Lead Managers
have undertaken any additional due diligence in respect of the application of
the Lending Criteria and have relied entirely upon the representations and
warranties referred to above which will be made by the Seller to the Issuer
and the Security Trustee pursuant to the Mortgage Sale Agreement.
Product Switches
The Seller (or the Servicer on behalf of the Seller) may offer a Borrower (and
the Borrower may accept), or a Borrower may request, a Product Switch.
For the avoidance of doubt, any Permitted Variation shall not constitute a
Product Switch and may be made to the Loans without the requirement for the
Servicer or the Seller to obtain any further consent or comply with any
further condition.
If a Borrower requests, or the Seller or the Servicer (on behalf of the
Seller) offers, a Product Switch under a Loan, the Seller or the Servicer (on
behalf of the Seller) will be solely responsible for offering and documenting
that Product Switch. Any Loan which has been subject to a Product Switch
will remain in the Portfolio after the date that the Product Switch is made
(the Switch Date) unless and until it is repurchased in accordance with the
Mortgage Sale Agreement. The Seller shall notify the Issuer no later than
the date falling five Business Days following the Testing Date, if the Seller
determines beyond a reasonable doubt that any of the following conditions (the
"Product Switch/Permitted Fee Capitalisation Amount Conditions") are not
satisfied as at the Testing Date (a Notice of Non-Satisfaction of Product
Switch/Permitted Fee Capitalisation Amount Conditions):
(i) the Switch Date falls before the Optional Redemption Date;
(ii) no Event of Default has occurred and is continuing;
(iii) no Insolvency Event has occurred in relation to the Seller;
(iv) each Loan and its Related Security which is the subject of a
Product Switch (including in respect of any Permitted Fee Capitalisation
Amount made in connection with the relevant Product Switch) complies, as at
the Testing Date, with the Loan Warranties;
(v) the aggregate cumulative amount of Product Switches does not
exceed more than 10% of (i) the Portfolio as at the Closing Date plus (ii) any
Additional Mortgage Loans sold into the Portfolio before the First Interest
Payment Date as at the First Interest Payment Date;
(vi) the Class A and B Liquidity Reserve Fund is replenished up to
an amount equal to the Previous Cash Liquidity Reserve Accumulated and the LF
Replacement Date has not occurred;
(vii) no Liquidity Facility Event of Default has occurred and is
continuing;
(viii) the Asset Test has not been breached as a consequence of the
Seller granting the relevant Product Switch (including in respect of any
Permitted Fee Capitalisation Amount made in connection with the relevant
Product Switch);
(ix) the Seller has provided to the Issuer and the Note Trustee a
valid solvency certificate signed by an authorised signatory of the Seller
within six months of the relevant Switch Date;
(x) the Class E Principal Deficiency Sub-Ledger does not have a
debit balance as at the most recent Interest Payment Date after applying all
Available Revenue Receipts on that Interest Payment Date;
(xi) following the relevant Switch Date, the Current Balance of
the Loan which is the subject of a Product Switch (excluding the amount of any
Permitted Fee Capitalisation Amount in respect thereof) is not greater than
the Current Balance of that Loan immediately prior to the Switch Date;
(xii) the Product Switch does not result in an increase in amount or
frequency of the Borrower's payments under the relevant Loan compared with the
amount and frequency of the Borrower's payments immediately prior to the
Product Switch;
(xiii) the Seller's underwriters have no obligations to re-underwrite
the Loan in connection with, or as a result of, the Product Switch; and
(xiv) there are sufficient Principal Receipts for payment of the
Permitted Fee Capitalisation Amount.
"Permitted Fee Capitalisation Amount" means a fee payable by the relevant
Borrower in relation to a Product Switch which such fee the Borrower has
elected to capitalise and add to the balance of its Loan.
A solvency certificate shall be valid for six months following the date on
which it is issued.
The Seller must, in relation to the relevant Loan which is subject to a
Product Switch, give the Loan Warranties as at the relevant Testing Date.
If no Notice of Non-Satisfaction of Product Switch/Permitted Fee
Capitalisation Amount Conditions has been given in the required timeframe by
the Seller to the Issuer, or has been so given and subsequently revoked by the
Seller, then the Issuer must pay an amount equal to the Permitted Fee
Capitalisation Amount in respect of such Product Switch to the Seller. The
Permitted Fee Capitalisation Amount will be paid from Principal Receipts on or
prior to the last day of the calendar month following the month in which the
relevant Switch Date falls, to the extent that the Issuer has sufficient
Principal Receipts on such date to make such payment, and otherwise on each
succeeding Business Day until and to the extent that such Permitted Fee
Capitalisation Amount is paid in full.
If a Notice of Non-Satisfaction of Product Switch/Permitted Fee Capitalisation
Amount Conditions is served by the Seller in respect of the Loan subject to
such Product Switch, then the Seller will have an obligation to remedy such
breach within 30 days after delivering such Notice of Non-Satisfaction of
Product Switch/Permitted Fee Capitalisation Amount Conditions to the Issuer.
If such breach is not capable of remedy, or, if capable of remedy, is not
remedied within the 30 day period, the Issuer will serve a Loan Repurchase
Notice (as defined below) on the Seller. The Seller must then repurchase the
Loan within 30-days of receipt of such Loan Repurchase Notice (or such other
date as the Issuer may direct in the Loan Repurchase Notice, provided that the
date so specified by the Issuer shall not be later than 30 days after receipt
by the Seller of such Loan Repurchase Notice). Consideration for such
repurchase shall be provided by payment in cash. See "Repurchase by the
Seller" below.
Where, in relation to a proposed Product Switch or Permitted Fee
Capitalisation Amount, the Seller or the Servicer (on behalf of the Seller)
proposes making a Product Switch or a Permitted Fee Capitalisation Amount, the
Seller may elect to repurchase the relevant Loan and its Related Security from
the Issuer on or prior to the last day of the calendar month following the
calendar month in which the Switch Date falls for a consideration equal to its
Current Balance. Any such election must be made prior to the Testing Date
following the relevant Switch Date. The Seller must pay to the Issuer the
consideration for the relevant Loan and its Related Security which is the
subject of a Product Switch or a Permitted Fee Capitalisation Amount on the
last day of the calendar month following the calendar month in which such
Product Switch or Permitted Fee Capitalisation Amount is made. For the
avoidance of doubt, the Seller or the Servicer may make an offer to any
Borrower for a Permitted Fee Capitalisation Amount only in connection with a
Product Switch.
Permitted Fee Capitalisation Amounts
Under the Mortgage Sale Agreement, the Issuer has agreed that the Seller or
the Servicer may offer or permit any Borrower to capitalise a Permitted Fee
Capitalisation Amount in connection with a Product Switch. If a Borrower
requests, or the Seller or the Servicer (on behalf of the Seller) offers, a
Permitted Fee Capitalisation Amount to be capitalised under a Loan subject to
a Product Switch, the Seller or the Servicer (on behalf of the Seller) will be
solely responsible for offering and documenting that Permitted Fee
Capitalisation Amount. Any Permitted Fee Capitalisation Amount in connection
with a Product Switch shall be purchased by the Issuer on the Switch Date.
The Seller shall issue a Notice of Non-Satisfaction of Product
Switch/Permitted Fee Capitalisation Amount Conditions to the Issuer no later
than the date falling five Business Days following the Testing Date, if the
Seller determines beyond a reasonable doubt that any of the Product
Switch/Permitted Fee Capitalisation Amount Conditions are not satisfied as at
the Testing Date.
The Seller must, in relation to the Loan which is subject to the Permitted Fee
Capitalisation Amount, give the representations and warranties in respect of
the Permitted Fee Capitalisation Amounts set out in the Mortgage Sale
Agreement as at the relevant Switch Date. If no Notice of Non-Satisfaction
of Product Switch/Permitted Fee Capitalisation Amount Conditions has been
given in the required timeframe by the Seller to the Issuer, or has been so
given and subsequently revoked by the Seller, then the Issuer must pay an
amount equal to the Permitted Fee Capitalisation Amount to the Seller. An
amount equal to the Permitted Fee Capitalisation Amount will be paid from
Principal Receipts on or prior to the last day of the calendar month following
the month in which the relevant Switch Date falls, to the extent that the
Issuer has sufficient Principal Receipts on such date to make such payment,
and otherwise on each succeeding Business Day until and to the extent that the
amount of such Permitted Fee Capitalisation Amount is paid in full.
If a Notice of Non-Satisfaction of Product Switch/Permitted Fee Capitalisation
Amount Conditions is served by the Seller in respect of the Loan subject to
such Permitted Fee Capitalisation Amount, then the Seller will have an
obligation to remedy such breach within 30 days after delivering such Notice
of Non-Satisfaction of Product Switch/Permitted Fee Capitalisation Amount
Conditions to the Issuer. If such breach is not capable of remedy, or, if
capable of remedy, is not remedied within the 30 day period, the Issuer will
serve a Loan Repurchase Notice on the Seller. The Seller must then
repurchase the Loan within 30-days of receipt of such Loan Repurchase Notice
(or such other date as the Issuer may direct in the Loan Repurchase Notice,
provided that the date so specified by the Issuer shall not be later than 30
days after receipt by the Seller of such Loan Repurchase Notice).
Consideration for such repurchase shall be provided by payment in cash.
Neither the Seller nor the Servicer (as applicable) shall be permitted to
permit a Borrower to capitalise a Permitted Fee Capitalisation Amount relating
to its Loan where that Loan is Delinquent or in Default.
Repurchase by the Seller
The Seller will agree to be liable for the repurchase of any Loan and its
Related Security sold pursuant to the Mortgage Sale Agreement in the following
circumstances:
(a) Breach of Loan Warranties: if any Loan Warranty made by
the Seller in relation to that Loan and/or its Related Security proves to be
materially untrue as at the Closing Date and on any Additional Mortgage Loan
Purchase Date (as applicable) or in respect of a Loan subject to a Product
Switch (including in respect of any Permitted Fee Capitalisation Amount made
in connection with the relevant Product Switch), as at the Testing Date, and
that default has not been remedied in accordance with the Mortgage Sale
Agreement;
(b) Breach of Product Switch conditions: if a Notice of
Non-Satisfaction of Product Switch/Permitted Fee Capitalisation Amount
Conditions is served by the Seller to the Issuer in respect of the Loan
subject to such Product Switch (including in respect of any Permitted Fee
Capitalisation Amount made in connection with the relevant Product Switch),
and the Issuer subsequently delivers a Loan Repurchase Notice to the Seller;
(c) Additional Mortgage Loans:
(i) if the Servicer determines on the Portfolio Test Date that
in respect of a Loan sold to the Issuer prior to the first monthly payment
being due on such loan, the first monthly payment is not made by the relevant
Borrower when due on the Loan except where such payment is not made for
administrative or operational reasons and provided that such payment is made
on or prior to the next monthly payment date, failing which any such Mortgage
Loan shall be repurchased (if a cash payment is not made in relation to such
Loan or such Loan is not substituted for another Additional Mortgage Loan
which satisfies the Additional Mortgage Loan Conditions); or
(ii) if the Servicer determines on the Portfolio Test Date that
the Portfolio does not satisfy the Additional Mortgage Loan Conditions as at
the Portfolio Test Date, the Loans selected by the Seller (according certain
criteria) that would, if repurchased by the Seller, result in the Additional
Mortgage Loan Conditions being satisfied as at the Portfolio Test Date (if a
cash payment is not made in relation to such Loans or such Loans are not
substituted for other Additional Mortgage Loans which satisfy the Additional
Mortgage Loan Conditions);
(d) Cross-collateralised Mortgage Loan: the Seller will also
repurchase any Loan which the Seller has determined on any Calculation Date to
be a Cross-collateralised Mortgage Loan as at the immediately preceding
Collection Period Start Date.
(e) Further Advances: a Further Advance is granted in respect of
a Loan.
If there is a material breach of any of the Loan Warranties, on the relevant
date, the Issuer will notify the Seller (with a copy to the Security Trustee)
as soon as reasonably practicable and in any event within 30 days of discovery
of such breach or breaches, specifying the Loans and/or the Related Security
to which such breach or breaches relate and (in reasonable detail having
regard to its level of knowledge) the facts giving rise to such breach or
breaches and where practicable what, in its reasonable opinion, is its best
estimate (on a without prejudice basis) of the amount of any warranty claim,
and if such matter is capable of remedy, the Seller shall use all reasonable
endeavours to remedy such matter within 45 days from and including the date
upon which the Issuer or Security Trustee notifies it of the relevant breach.
If the matter giving rise to the breach of a Loan Warranty is capable of being
remedied but the Seller fails to remedy such matter within the above 45-day
period, or the relevant breach is not capable of being remedied, then the
Issuer shall serve upon the Seller (with a copy to the Security Trustee) a
loan repurchase notice in duplicate substantially in the form set out at
schedule 4 (Loan Repurchase Notice) of the Mortgage Sale Agreement (the "Loan
Repurchase Notice"), requiring the Seller to repurchase the relevant Loan and
its Related Security.
Upon receipt of a Loan Repurchase Notice duly signed on behalf of the Issuer,
the Seller shall promptly sign and return a duplicate copy, and the Seller
shall be required to repurchase from the Issuer, and the Issuer shall
accordingly assign or transfer to the Seller free from the Security created by
or pursuant to the Deed of Charge, the relevant Loan or Loans and its (or
their) Related Security. The repurchase of the relevant Loan and the payment
of the purchase price shall take place on the date specified by the Issuer in
the Loan Repurchase Notice, provided that the date so specified by the Issuer
shall be a date no earlier than 30 days and no later than 45 days after
receipt by the Seller of the Loan Repurchase Notice.
The consideration payable by the Seller in respect of the repurchase of an
affected Loan and its Related Security shall be equal to the Current Balance
of such Loan (disregarding for the purposes of any such calculation in the
event that the Current Balance of such Loan has been reduced as a result of
the exercise of any set-off right which the relevant Borrower has against the
Seller, the amount of any such reduction in the Current Balance) as at the
last day of the Collection Period immediately preceding the date of
repurchase, plus the Issuer's costs and expenses (if any) associated with the
transfer of such Loan and its Related Security to the Seller less an amount
equal to all Collections received on the relevant Loan(s) and their Related
Security from (but excluding) the last day of the Collection Period
immediately preceding the date of such repurchase to (but excluding) the date
of such repurchase.
Acquisition of Additional Mortgage Loans following the Closing Date
The Seller may (but is not obliged to) sell to the Issuer, in the period from
and including the Closing Date up to and including the Calculation Date
immediately preceding the Final Additional Mortgage Loan Purchase Date,
Additional Mortgage Loans, to the extent that the relevant conditions to
purchase in the Mortgage Sale Agreement are satisfied. The Issuer shall
purchase Additional Mortgage Loans using amounts (if any) standing to the
credit of the Pre-Funding Reserve and (to the extent there are insufficient
funds standing to the credit of the Pre-Funding Reserve for such purpose) any
Principal Receipts available to the Issuer up until the Calculation Date
immediately prior to the First Interest Payment Date if and to the extent that
the Issuer is permitted to do so by, and in accordance with, the Mortgage Sale
Agreement and the Servicing Agreement.
In particular, any purchase of Additional Mortgage Loans by the Issuer will be
subject to the following conditions (among other things) (the "Additional
Mortgage Loan Conditions"):
(a) no Enforcement Notice having been served;
(b) either (i) the aggregate notional amounts of the existing
Swap Transactions will be equal to or greater than the aggregate principal
amount outstanding of the Fixed Rate Loans in the Portfolio following the
purchase of the relevant Additional Mortgage Loans; or (ii) one or more new
(or novated) hedging transactions substantially in the same form as the
existing Swap Transactions entered into by the Issuer on the Closing Date
(subject to any agreed changes in the notional amount and fixed rate(s)) have
been put in place in relation to the relevant Additional Mortgage Loans;
(c) the relevant Additional Mortgage Loan was originated in line
with the lending policy and pursuant to the Standard Documentation;
(d) the relevant Additional Mortgage Loan has a maturity date of
at least two years prior to the Final Maturity Date;
(e) the relevant Additional Mortgage Loan has no more than zero
months in arrears;
(f) the relevant Additional Mortgage Loan has a maximum current
LTV of 80%;
(g) the relevant Additional Mortgage Loan has a fixed term no
greater than five years; and
(h) the Additional Mortgage Loan Portfolio Tests have been
satisfied.
The Servicer shall confirm in writing to the Security Trustee and the Issuer
(and upon which confirmation the Security Trustee shall be entitled to rely
without enquiry or liability), that the Additional Mortgage Loan Conditions
and other conditions set out in the Servicing Agreement have been satisfied or
will be satisfied on the relevant Additional Mortgage Loan Purchase Date and
the Seller shall represent and warrant that no Insolvency Event has occurred
in respect to the Seller on such Additional Mortgage Loan Purchase Date.
Repurchase of or Cash Payment or substitution for Disqualified Loans by the
Seller
The Seller shall be required to repurchase or make a cash payment in relation
to or substitute for an Additional Mortgage Loan which satisfies the
Additional Mortgage Loan Conditions and has a Current Balance at least equal
to the Loan being substituted (a Substitute Loan) if the Servicer determines
on the Portfolio Test Date that:
(a) the first monthly payment in respect of any Loan was not
paid by the relevant Borrower when due under that Loan except where such
payment was not made for administrative or operational reasons and provided
that such payment was made on or prior to the next monthly payment date (such
determination in respect of the Closing Portfolio to be made using the
information in the Servicer Reports delivered by the Servicer in respect of
each calendar month up to (and including) July 2025 and in respect of
Additional Mortgage Loans that do not form part of the Closing Portfolio to be
made using the information in the Servicer Reports delivered by the Servicer
in respect of each calendar month up to (and including) August 2025) (a "Loan
Non-Payment"); and/or
(b) the Portfolio does not satisfy the Additional Mortgage Loan
Conditions as at the Portfolio Test Date,
the Loans selected by the Seller (according the criteria below) that would, if
repurchased (or in respect of which cash payments are made or substituted for
Substitute Loans) by the Seller, result in the Additional Mortgage Loan
Conditions being satisfied as at the Portfolio Test Date (any Loan described
in paragraphs (a) and/or (b) being a "Disqualified Loan").
Following delivery of the Servicer Reports in respect of each calendar month
up to (and including) July 2025, the Servicer shall, on the Portfolio Test
Date, determine if a Loan Non-Payment applies in respect of any Loans as at
that date (such determination will be based on such Servicer Reports only) and
promptly notify the Issuer (copying the Security Trustee, the Seller, the Cash
Manager, the relevant Warehouse Borrower and the Swap Providers) of its
determination. The Servicer shall also promptly notify the Issuer (copying the
Security Trustee, the Seller, the Cash Manager, the relevant Warehouse
Borrower and the Swap Providers) if, on the Portfolio Test Date, the Servicer
determines that the Portfolio does not satisfy the Additional Mortgage Loan
Conditions as at the Portfolio Test Date.
The Seller shall select which Loans shall be Disqualified Loans by determining
which Loans would, if the Seller repurchased such Loans, or made a cash
payment in an amount equal to the (i) the Current Balance of the relevant Loan
(or the aggregate of the Current Balances of the relevant Loans, as the case
may be) (disregarding for the purposes of any such calculation, in the event
that the Current Balance of such relevant Loan(s) have been reduced as a
result of the exercise of any set‑off right which the relevant Borrower(s)
have against the Seller, the amount of any such reduction in the Current
Balance) as at the last day of the Collection Period immediately preceding the
date of repurchase plus an amount equal to the Repurchase Costs (if any) in
connection with such repurchase less (ii) an amount equal to all Collections
received on the relevant Loan(s) and their Related Security from (but
excluding) the last day of the monthly period immediately preceding the date
of such repurchase to (but excluding) the date of such repurchase (the
Repurchase Price) in relation to such Loans and/or or substituted such Loans
with Substitute Loans, result in the lowest aggregate Current Balance of Loans
being repurchased or substituted (or in relation to which a cash payment in an
amount equal to the Repurchase Price is made) by the Seller required in order
for the Portfolio (excluding such proposed Disqualified Loans, but including
any Substitute Loans) to satisfy the Additional Mortgage Loan Conditions as at
the Portfolio Test Date. The Seller shall subsequently request the Servicer to
(and the Servicer shall) re-run the Additional Mortgage Loan Conditions in
respect of the Portfolio (excluding the Disqualified Loans but including
Substitute Loans) on the Portfolio Test Date and promptly notify the Issuer,
the Security Trustee and the Seller of its determination. The Servicer and the
Seller shall repeat the procedure set forth above (as necessary) until the
Additional Loan Portfolio Conditions are satisfied by the Seller. Upon
receiving confirmation from the Servicer that the Portfolio (excluding the
Disqualified Loans but including Substitute Loans) would satisfy the
Additional Mortgage Loan Conditions, the Seller shall deliver a notice to the
Issuer (copying the Seller, the Servicer, the Cash Manager, the relevant
Warehouse Borrower and the Swap Providers) pursuant to the Mortgage Sale
Agreement, detailing which Disqualified Loans the Seller shall repurchase or
in respect of which the Seller shall make a cash payment or substitute for
Substitute Loans.
Upon the occurrence of such events, the Issuer shall serve a Loan Repurchase
Notice on the Seller requiring the Seller to repurchase or make a cash payment
in relation to or substitute for Substitute Loans each relevant Disqualified
Loan at the Repurchase Price on the relevant Disqualified Loan Sale Date. A
Disqualified Loan Sale Date must occur on or before the Interest Payment Date
following receipt by the Seller of the relevant Loan Repurchase Notice. Any
repurchase or cash payment made in relation to a Disqualified Loan will be in
an amount equal to the Repurchase Price.
As used in this Prospectus:
"Additional Mortgage Loan Portfolio Tests" means, as of the Closing Date, the
Portfolio Test Date or the relevant Additional Mortgage Loan Purchase Date (as
applicable), the following tests in respect of the Portfolio that shall be
satisfied on that date or in the case of the relevant Additional Mortgage Loan
Purchase Date by the sale of any Additional Mortgage Loans:
(a) the aggregate Current Balance of the largest ten Loans
by Current Balance is less than or equal to £23,500,000;
(b) the aggregate Current Balance of the largest 20 Loans
by Current Balance is less than or equal to £ 40,000,000;
(c) the Weighted Average Current LTV is less than or equal
to 72.50%;
(d) the aggregate Current Balance of Loans which have
Current LTV > 75% is less than or equal to 52.50% of the Portfolio by
Current Balance;
(e) the Weighted Average Asset Margin over all Swap
Transactions is at least equal to 2.1%;
(f) the Weighted Average Remaining Term is less than or
equal to 270 months;
(g) the Weighted Average Reversionary Margin is at least
equal to 4.79%;
(h) the aggregate Current Balance of Loans in Greater
London and the South East does not exceed 87.00% of the Portfolio by Current
Balance;
(i) the Weighted Average Rental Income Coverage Ratio is
at least equal to 160.00%;
(j) the number of Loans which are subject to a CCJ does
not exceed 0.00%;
(k) the aggregate Current Balance of Fixed Rate Loans
which are not subject to hedging transactions substantially in the same form
as the Swap Transactions entered into by the Issuer on the Closing Date
(subject to any agreed change in the notional amount schedule and fixed
rate(s)) does not exceed 3% of the Current Balance of all Fixed Rate Loans in
the Portfolio;
(l) the aggregate Current Balance of Loans which are
re-mortgaged loans is less than or equal to 80.00% of the Portfolio by Current
Balance; and
(m) the aggregate Current Balance of Loans of the largest 10
Borrowers is less than or equal to 15.00% of the Portfolio by Current Balance.
A Loan and its Related Security may also be repurchased by the Seller in
certain circumstances where a Product Switch, is made. See "Product
Switches" above.
"Asset Test" means,
(a) the Weighted Average Asset Margin over all Swap
Transactions is at least equal to 2.1%;
(b) the reversion date of any of relevant Fixed Rate Loan
which is subject to a Product Switch (including in respect of any Permitted
Fee Capitalisation Amount made in connection with the relevant Product
Switch), following the relevant Switch Date, is no later than five years from
the Optional Redemption Date;
(c) the relevant Loan which is subject to a Product Switch
(including in respect of any Permitted Fee Capitalisation Amount made in
connection with the relevant Product Switch) does not, following the relevant
Switch Date, have a final maturity date beyond the date falling two years
prior to the Final Maturity Date; and
(d) following the relevant Switch Date:
(i) the Current Balance of the 10 largest Loans in the
Portfolio is less than or equal to £23,500,000; and
(ii) the Current Balance of the 20 largest Loans in the
Portfolio is less than or equal to £40,000,000
(e) as a result of product fee capitalisation, the
individual Current LTV does not exceed 80.00%.
"Business Day" means a day (other than a Saturday or Sunday or a public
holiday) on which banks are open for general business in London, United
Kingdom.
"Borrower Buildings Policy" means, in relation to each Property, any
individual or block buildings insurance policy relating to a Property which
has been taken out in the name of the relevant Borrower and any other
insurance contracts in replacement, addition or substitution therefor from
time to time (including in each case any endorsements or extensions thereto as
issued from time to time), and "Borrower Buildings Policies" has the
corresponding meaning.
"Calculation Date" means, in relation to a Collection Period, the day falling
five Business Days prior to the Interest Payment Date immediately following
the end of such Collection Period.
"CBTL Loan" means any Loan that is a Consumer Buy-to-let Mortgage Contract as
defined by Article 4 of the Mortgage Credit Directive Order 2015 or any
modification or re-enactment thereof.
"CCJ" means a county court judgment.
"Certificate of Title" means, in respect of a Property, a solicitor's or
licensed conveyancer's report or certificate of title obtained by or on behalf
of the Seller in respect of such Property, substantially in the form of the
pro forma set out in the Standard Documentation.
"Collection Period" means the monthly period commencing on (and including) a
Collection Period Start Date and ending on (but excluding) the immediately
following Collection Period Start Date, except that the first Collection
Period will commence on the first calendar day of the month following the
Cut-Off Date and end on (and exclude) the Collection Period Start Date falling
in July 2025.
"Collection Period Start Date" means the first calendar day of each calendar
month (for the avoidance of doubt, the first Collection Period Start Date will
be the first calendar day of the month following the Cut-Off Date).
"Cut-Off Date" means 31 March 2025.
"Data Protection Legislation" means: (a) the DPA; (b) the Privacy and
Electronic Communications (EC Directive) Regulations 2003 (SI 2003/2426) as it
forms part of domestic law by virtue of EUWA; and (c) all United Kingdom laws
relating to processing of personal data and privacy (including, where
applicable, the guidance and codes of practice issued by the Information
Commissioner) and any laws or guidance that replaces them, including but not
limited to Regulation (EU) 2016/679 as it forms part of domestic law by virtue
of EUWA.
"Default" means any Loan in respect of which:
(a) one or more payments to be made by the Borrower in
respect of such Loan are overdue by more than 90 days; or
(b) a breach of the Offer Conditions in respect of such
Loan has occurred (unless the Servicer is notified in writing by the Seller
that any such breach has been waived).
"Delinquent" means, in respect of any Loan, that one or more payments due by
the Borrower in respect of such Loan are overdue by more than 30 days, or such
Loan is otherwise deemed to be in Default.
"Disqualified Loan Sale Date" means the date on which the Seller repurchases
(or makes a cash payment in relation to) or substitutes any Disqualified Loan.
"Enforced Loan" means a Loan in respect of which the Related Security has been
enforced and the related Property has been sold.
"Fixed Rate Loan" means a Loan to the extent that and for such time as the
interest rate payable by the relevant Borrower on all or part of the principal
balance does not vary and is fixed for a certain period of time by the Seller,
although the Seller may agree to further periods during which the rate is
fixed during the life of the Loan.
"Flexible Loan" means a Loan that incorporates features that give the Borrower
options (which may be subject to certain conditions) to, among other things,
make further drawings on the loan account and/or to overpay or underpay
interest and/or underpay principal in a given month and/or overpay principal
in excess of 10% per annum and/or take a payment holiday.
"Insurance Policies" means, with respect to the Loans and their Related
Security, the Borrower Buildings Policies and the Title Indemnity Policies and
any other insurance contracts in replacement, addition or substitution thereof
from time to time which relate to the Loans, and Insurance Policy means any
one of them.
"Monthly Instalment" means the amount which the relevant Mortgage Conditions
require a Borrower to pay on each monthly payment date in respect of that
Borrower's Loan.
"Mortgage" means, in respect of any Loan, each first fixed charge by way of
legal mortgage secured over a Property located in England or Wales, which is,
or is to be, sold, assigned or transferred by the Seller to the Issuer
pursuant to the Mortgage Sale Agreement which secures the repayment of the
relevant Loan pursuant to the Mortgage Conditions applicable to it.
"Mortgage Conditions" means, in respect of a Loan, all the terms and
conditions applicable to such Loan (including, without limitation, the
Seller's relevant general conditions) as varied from time to time by the
relevant loan agreement, the relevant Mortgage Deed and the Offer Conditions.
"Mortgage Deed" means, in respect of any Mortgage, the deed in written form
creating that Mortgage.
"Offer Conditions" means, in respect of a Loan, the terms and conditions
applicable to such Loan as set out in the offer letter to the relevant
Borrower.
"Permitted Fee Capitalisation Amount" means a fee payable by the relevant
Borrower in relation to a Product Switch which such fee the Borrower has
elected to capitalise and add to the balance of its Loan.
"Portfolio Test Date" means the Calculation Date immediately prior to the
First Interest Payment Date.
"Product Switch" means any variation in the financial terms and conditions
applicable to a Loan other than any variation:
(a) agreed with a Borrower to control or manage actual or
anticipated arrears on the Loan;
(b) agreed with a Borrower to extend the maturity date of
the Loan (unless the maturity date would be extended to a date later than
three years before the Final Maturity Date of the Notes, in which case such
variation will constitute a Product Switch);
(c) imposed or required by statute, regulation or
regulatory guidance;
(d) in the rate of interest payable in respect of a Loan;
or
(e) agreed with a Borrower to change the Loan from an
interest-only loan to a repayment loan requiring scheduled repayment of
principal,
provided that with respect to paragraph (d) above:
(i) any variation in the rate of interest payable in
respect of a Loan where the terms of the Loan change the rate of interest
payable by a Borrower on termination of an interest discount for a fixed
period of time or the terms of the Loan otherwise change the interest rate
payable shall not be considered a Product Switch;
(ii) any variation in the rate of interest payable in
respect of a Loan in order to reflect the amendment or replacement of the
relevant reference rate applied to such Loan shall not be considered a Product
Switch; and
(iii) any variation in the rate of interest payable in
respect of a Loan not permitted or otherwise contemplated by paragraphs (i)
and (ii) above or the relevant Mortgage Conditions (including any re-fixing of
an interest rate) shall be considered a Product Switch.
Any variation to the terms of a Loan in accordance with paragraphs (a) to (e)
above is a "Permitted Variation".
"Property" means a freehold, leasehold or commonhold property which is subject
to a Mortgage.
"Receiver" means any person or persons appointed (and any additional person or
persons appointed or substituted) as an administrative receiver, receiver,
manager, or receiver and manager of the Charged Assets by the Security Trustee
pursuant to the Deed of Charge.
"Regulated Mortgage Loan" means a Loan that is:
(a) a Regulated Mortgage Contract (as defined in Article
61(3)(a) of the Regulated Activities Order);
(b) a Regulated Credit Agreement (as defined in Section 8
of the Consumer Credit Act 1974 and Article 60B of The Financial Services and
Markets Act 2000 (Regulated Activities) Order 2001); or
(c) an Article 3(1)(b) Credit Agreement as defined in the
FCA Handbook - Glossary.
"Related Security" means, in relation to a Loan, the security granted for the
repayment of that Loan by the relevant Borrower, including the relevant
Mortgage and all rights, remedies or benefits related thereto, including:
(a) the benefit of all affidavits, declarations, consents,
renunciations, waivers and any deed of consent, deeds of postponement, ranking
agreements and any rights against any person or persons in connection with the
origination and completion of such Loan and Related Security;
(b) to the extent assignable, the benefit of Borrower
Buildings Policies and any life policies, life policy assignments,
assignations, priority letters, pension policies, deposited, charged, obtained
or held in connection with the relevant Loan and Related Security;
(c) to the extent assignable (without the consent of the
relevant counterparty), all causes and rights of action (whether assigned to
the Issuer or otherwise) against Valuers, Solicitors, the Land Registry or any
other person in connection with any report (including a report on title),
Valuation Report, opinion, certificate, consent or other statement of fact or
opinion given in connection with the relevant Loan or Related Security; and
(d) Title Indemnity Policies, assignments, searches,
indemnities and related documentation and any other deed or document providing
ancillary security or indemnity for repayment of any sums due from time to
time under the relevant Loan.
"Standard Documentation" means the standard documentation of the Seller, a
list or CD of which is set out in or appended to exhibit 1 (Standard
Documentation) to the Mortgage Sale Agreement, or any update or replacement in
respect of the same as the Seller may from time to time introduce (acting in
accordance with the standards of a Prudent Mortgage Lender) including, without
limitation, any amendments or variations thereto (such amendments to include,
for the avoidance of doubt, amendments to the interest reference rate applied
in respect of the Loans).
"Title Indemnity Policies" means, in relation to any Loan:
(a) on the Closing Date:
(i) the Properties-in-Possession insurance policy with
policy reference B1735ND00026221-15 (PIP) underwritten by Syndicate 1686
(managed by AXIS Managing Agency Ltd) at Lloyds;
(ii) the Lenders-Interest Only insurance policy with
policy B1735ND0002622-15 (LIO) underwritten by Syndicate 1686 (managed by AXIS
Managing Agency Ltd) at Lloyds;
(iii) the Failure to Insure insurance policy with policy
reference B1735ND0002622-15 (FTI) underwritten by Syndicate 1686 (managed by
AXIS Managing Agency Ltd) at Lloyds; and
(iv) the block title insurance policy in the name of the
Seller with policy number 00-37418418J0-2 (made available to the Seller by AXA
XL Insurance Company UK Limited and Royal & Sun Alliance Insurance
Limited); and
(b) each other title insurance policy or policies relating
to such Loan and referable to the relevant Property, together with any other
title insurance policies in replacement, addition or substitution thereof or
thereto from time to time which relate to such Loan and are referable to the
relevant Property.
"Weighted Average Asset Margin" means at any date of determination:
where (in each case as at the immediately preceding Additional Mortgage Loan
Purchase Date):
A = the weighted average interest rate of each Fixed Rate Loan within the
Portfolio
B = the weighted average rate of interest in respect of the Swap Transactions
C = the aggregate Current Balance of each Fixed Rate Loan in the Portfolio
D = The weighted average interest rate of each variable rate Loan within the
Portfolio
E = the SONIA Reference Rate
F = the aggregate Current Balance of each variable rate Loan within the
Portfolio.
Designated Reporting Entity
The Issuer has been designated as the UK Reporting Entity under SECN 6.3.1R(1)
and has accepted such appointment.
In addition, the Issuer has contractually agreed to provide (or to procure the
provision of) certain information and reports under Article 7 of the EU
Securitisation Regulation as such requirements exist solely on the Closing
Date.
Governing Law
The Mortgage Sale Agreement and any non-contractual obligations arising out of
or in connection with it shall be governed by English law.
Servicing Agreement
The Issuer, the Security Trustee, the Seller, the Servicer, the Servicing
Facilitator and the Back-Up Servicing Facilitator will enter into, on or
around the Closing Date, an agreement pursuant to which the Servicer agrees to
service the Loans and their Related Security (the "Servicing Agreement").
The Servicer will also be appointed to service the Additional Mortgage Loans
(if any). The services to be provided by the Servicer are set out in the
Servicing Agreement, and may include any services additional thereto as may be
agreed to by the Issuer, the Servicing Facilitator and the Servicer (the
"Services").
On or about the Closing Date, the Servicer will be appointed by the Issuer
and, as applicable, the Seller, to be its agent to service the Loans and their
Related Security. The Servicer must comply with any proper directions and
instructions that the Servicing Facilitator (acting with delegated authority
from the Issuer and the Seller), or, following the Security Trustee notifying
the Servicer that an Enforcement Notice has been served, the Security Trustee,
may from time to time give to it in accordance with the provisions of the
Servicing Agreement.
The Servicer's actions in servicing the Loans and their Related Security in
accordance with the terms of the Servicing Agreement (including the procedures
of the Servicer set out therein) are binding on the Issuer. The Servicer
will also be appointed by the Seller under the Servicing Agreement to be its
agent to service the Loans and their Related Security in the making of any
Product Switches (including any related Permitted Fee Capitalisation Amount
made in connection with the relevant Product Switch). For instance, the
Servicer shall, on behalf of the Seller, make offers to Borrowers and accept
applications from Borrowers.
Powers
The Servicer has the power, authority and right to do or cause to be done any
and all things which it reasonably considers necessary, convenient or
incidental to the provision of the Services on the terms and conditions of the
Servicing Agreement.
Undertakings by the Servicer
The Servicer has undertaken, among other things, to:
(a) give such time and attention and exercise such skill, care
and diligence in the performance of the Services and the other obligations
contained in the Servicing Agreement and will provide those Services and
perform such other obligations to the same standard as a Prudent Mortgage
Lender;
(b) service the Loans and the Related Security in accordance
with (i) the Servicing Agreement (including for the avoidance of doubt the
Client Manual); (ii) all applicable Regulatory Requirements; and (iii) the
Mortgage Conditions;
(c) at all times, employ and ensure that there are adequate
resources and suitably qualified personnel to execute, perform and undertake
the tasks and perform the obligations which the Servicer agrees to undertake
and perform under the Servicing Agreement and to maintain suitable premises
and equipment compatible with its obligations hereunder;
(d) to the extent practicable, comply with any proper and
reasonable directions, orders and instructions which the Issuer may from time
to time give to it in accordance with the provisions of the Servicing
Agreement and which in any event are not inconsistent with the terms upon
which it has been appointed under the Servicing Agreement nor with any
applicable Regulatory Requirements;
(e) keep good, orderly and tidy credit, deed and other files in
such a manner as would a Prudent Mortgage Lender including all material
communications with all Borrowers under the relevant Loans (including material
communications conducted by email, letter, phone or otherwise);
(f) keep in force all approvals, authorisations, permissions,
consents and licences required in order to properly service the Loans and
their Related Security and to perform or comply with its obligations under the
Servicing Agreement, and to prepare and submit all necessary applications and
requests for any further approvals, authorisations, permissions,
registrations, consents and licences required in connection with the
performance of the Services under the Servicing Agreement and in particular
any necessary notification under Data Protection Laws and any authorisation
and permissions under the FSMA;
(g) not knowingly fail to comply with any applicable legal and
Regulatory Requirements in the performance of the Services;
(h) notify the Issuer upon becoming aware of any legal
proceedings being taken against it or of any judgment or decree being given
against it in any proceedings, which would, in each case, materially and
adversely affect its ability to perform its obligations under the Servicing
Agreement;
(i) make all payments required under the Servicing Agreement
to be made by it on the due date for payment in Sterling (or as otherwise
required under the Transaction Documents) in immediately available funds for
value on such day without any set-off (including in respect of fees owed to
the Servicer) except any deductions required by law (or as expressly permitted
under the Servicing Agreement); and
(j) assist in the administration and performance, to the
standards of a Prudent Mortgage Lender, of the arrangements for any insurance
to which the Seller is a party or in which it has an interest and which relate
to the Loans and Related Security.
"Competent Authority" means any person having regulatory and/or supervisory
authority in the UK, or any part thereof, over all or any part of:
(a) the Services; or
(b) the business of the Servicer, the Seller, the
Servicing Facilitator or the Issuer in relation to the Services;
including, for the avoidance of doubt, the FCA and the Prudential Regulatory
Authority (to the extent applicable).
"Data Protection Laws" means to the extent applicable to the parties from time
to time:
(a) the GDPR; and
(b) all other applicable laws relating to or impacting on
the processing of Personal Data and privacy;
"GDPR" means Regulation (EU) 2016/679 of the European Parliament and of the
Council of 27 April 2016 on the protection of natural persons with regard to
the processing of personal data and on the free movement of such data as it
forms part of the domestic law by virtue of the EUWA;
"Personal Data" means any information of whatever nature satisfying the
definition of "personal data" in the Data Protection Laws processed under the
Master Definitions and Construction Schedule Agreement and other Transaction
Documents;
"Regulatory Requirements" means all laws (including statute law, common law
and the law of equity), binding court orders, judgments, decrees, regulations,
rules, regulatory policies, government- or regulator-approved codes of
practice issued by any Competent Authority (including, in the case of the
United Kingdom, the FSMA, the Data Protection Laws, the MCDO and the FCA's six
outcomes on Treating Customers Fairly) that are applicable:
(a) to the business of the Servicer;
(b) to the business of the Seller;
(c) to the business of the Issuer; and
(d) in any jurisdiction in which the Services are
provided.
FCA Transparency Rules
The Issuer has appointed the Servicer and the Servicing Facilitator to perform
certain of the Issuer's obligations under the FCA Transparency Rules.
The Servicer on behalf of the Issuer shall prepare the UK SR Data Tape as
required by and in accordance with SECN 6.2.1R(1), SECN 11 (including its
Annexes) and SECN 12 (including its Annexes) and (and which shall be provided
in the form of the standardised template set out in SECN 11 Annex 2R and SECN
12 Annex 2R or as otherwise agreed between the Issuer and the Servicer).
The Servicing Facilitator will publish each UK Investor Report, the
Prospectus, each Transaction Document and each UK SR Data Tape in a manner
consistent with the requirements of SECN 6.3 and, for these purposes, the
information is made available to the Noteholders, the FCA, the Bank of
England, the PRA and/or the Pensions Regulator (or their successors) and, upon
request, to potential investors in the Notes, on the datasite hosted by the UK
Securitisation Repository at https://www.euroabs.com/IH.aspx?d=27204, being a
website which conforms with the requirements set out in SECN 6.3.
The Servicing Facilitator shall publish without delay, (i) any inside
information relating to the Issuer which the Issuer determines it is obliged
to make pursuant to SECN 6.2.1R(6), SECN 11 (including its Annexes) and SECN
12 (including its Annexes) and will be disclosed to the public by the Issuer;
or (ii) any significant event pursuant to SECN 6.2.1R(7), SECN 11 (including
its Annexes) and SECN 12 (including its Annexes).
Article 7 of the EU Securitisation Regulation
The Issuer has appointed the Servicer and the Servicing Facilitator to perform
certain of the Issuer's contractually agreed obligations under Article 7 of
the EU Securitisation Regulation (as such requirements exist solely on the
Closing Date).
The Servicer, on behalf of the Issuer, shall prepare the EU SR Data Tape as
required by and in accordance with Article 7(1)(a) of the EU Securitisation
Regulation and the EU Article 7 Technical Standards applicable as at the
Closing Date.
The Servicing Facilitator will publish each EU Investor Report, the
Prospectus, each Transaction Document and each EU SR Data Tape in a manner
consistent with the requirements of Article 7(2) of the EU Securitisation
Regulation and, for these purposes, the information is made available to the
Noteholders, the competent authorities and, upon request, to potential
investors in the Notes, on the datasite hosted by EuroABS at
https://www.euroabs.com/IH.aspx?d=27204, (or such other website which may be
available for such purpose and notified by the Servicer to the Seller, the
Issuer, the Cash Manager, the Security Trustee, the Note Trustee, each Rating
Agency and the Noteholders from time to time).
The Servicing Facilitator shall publish without delay, (i) any inside
information relating to the Issuer which the Issuer determines it is obliged
to make public pursuant to Article 7(1)(f) of the EU Securitisation Regulation
and will be disclosed to the public by the Issuer; or (ii) any significant
event pursuant to Article 7(1)(g) of the EU Securitisation Regulation, in each
case in accordance with the EU Article 7 Technical Standards, as such
requirements exist solely on the Closing Date.
In the case of each of Issuer's contractually agreed obligations under Article
7 of the EU Securitisation Regulation described above, such obligations only
apply:
(a) as such articles and/or requirements under the EU
Securitisation Regulation and the EU Article 7 Technical Standards described
above are interpreted and applied solely on the Closing Date (and, for the
avoidance of doubt, neither the Issuer nor the Seller, the Servicer, the
Servicing Facilitator or the Cash Manager will be under any obligation to
comply with any amendments to applicable EU technical standards, guidance or
policy statements introduced after the Closing Date);
(b) in the form or template prescribed under the EU
Securitisation Regulation and the EU Article 7 Technical Standards as at the
Closing Date only, or as otherwise adopted by the Servicer (in its sole
discretion) from time to time;
(c) until such time as the Seller is able to certify to the
Issuer and the Note Trustee that a competent EU authority has confirmed that
the satisfaction of the requirements relating to the UK Securitisation
Framework will also satisfy the requirements of Article 7 of the EU
Securitisation Regulation due to the application of an equivalence regime or
similar analogous concept;
(d) subject always to any requirement of law; and
(e) provided that:
(i) neither the Issuer nor the Seller, the Servicer, the
Servicing Facilitator or the Cash Manager will be in breach of such obligation
if it fails to so comply due to events, actions or circumstances beyond its
control; and
(ii) the Issuer is only required to comply with such obligation
to the extent that the disclosure requirements under Article 7 of the EU
Securitisation Regulation and EU Article 7 Technical Standards (in each case,
as in force as at the Closing Date) remain in effect.
Back-Up Servicing Facilitator
The Issuer will appoint the Back-Up Servicing Facilitator in accordance with
the Servicing Agreement. If the Servicing Facilitator's and/or the
Servicer's appointments are terminated, the Back-Up Servicing Facilitator
shall use best efforts to identify, on behalf of the Issuer, and assist the
Issuer in the appointment of a suitable substitute servicing facilitator
and/or substitute servicer in accordance with the Servicing Agreement.
Setting of Interest Rates on the Loans
Subject to the terms of the Servicing Agreement, the Servicer has undertaken
to take certain steps once notified by the Seller of (a) any changes to be
made to the interest rate applicable to any one or more Loans, or (b) a
replacement of the benchmark rate currently applicable to any one or more
Loans with an alternative benchmark rate selected by the Seller (including, in
particular, (i) notifying such change to the affected Borrowers in accordance
with the terms of the relevant Loans, the Mortgage Conditions and any
applicable Regulatory Requirements and (ii) recording such change and any
consequential changes in the electronic systems used by the Servicer in
relation to any such Loans and notifying the Servicing Facilitator that such
change has been so recorded).
Operation of the Collection Account
The Seller will operate the Collection Account, opened in the name of the
Seller with HSBC Bank plc or such other bank with which the Collection Account
is held from time to time (the "Collection Account Bank") in accordance with
the terms of the Servicing Agreement and The Collection Account Declaration of
Trust (as to which, see "The Collection Account Declaration of Trust").
Revenue Receipts and Principal Receipts arising in relation to the Loans will
be paid directly into the Collection Account. On each Business Day, the
Seller shall transfer, or instruct the transfer of, all Collections in respect
of the Loans and/or their Related Security standing to the credit of the
Collection Account that are available to be withdrawn at that time to the
Deposit Account.
Operation of the Expenses Account
The Servicer will operate the Expenses Account, opened in the name of the
Seller with the Collection Account Bank or such other bank with which the
Expenses Account is held from time to time in accordance with the terms of the
Servicing Agreement. The Servicer shall have full access to monitor the
Expenses Account and to withdraw sums on behalf of the Legal Title Holder
(with the prior consent of the Servicing Facilitator where such consent is
required) as necessary (and to request that sums are deposited in the Expenses
Account where required) to (i) pay any expenses incurred by the Legal Title
Holder or the Servicer in connection with the services provided under the
Servicing Agreement and which are or are intended to be recoverable from the
related Borrower, (ii) reimburse to any Borrower any overpayments made by such
Borrower, or (iii) provide to any person so entitled any excess proceeds in
respect of any Loan and Related Security following the completion of the
Enforcement Procedures in respect of such Loan and Related Security.
The Servicer shall, in accordance with the provision of the Servicing
Agreement and Servicer's client manual set out at schedule 3 (Client Manual)
in the Servicing Agreement (as thereafter amended by the Servicer from time to
time in accordance with the terms of the Servicing Agreement (provided that
any changes which would adversely affect the interests of the Issuer, the
Seller or the Servicing Facilitator shall require the prior consent of such
person)) (the "Client Manual") (i) assess whether any claims notified to it
constitute expenses payable from the Expenses Account, (ii) (to the extent
there are funds available in the Expenses Account) promptly after obtaining
the consent of the Servicing Facilitator where such consent is required, pay
such expenses from the Expenses Account, (iii) provide the Servicing
Facilitator (on behalf of the Issuer), on the last day of each Collection
Period, with details of the expenses paid by it during such Collection Period
and (iv) not cause the Expenses Account to become overdrawn. The Servicer
shall not be liable for any breach or failure of its obligations to perform
the Services from time to time that may have arisen as a result of the failure
of the Servicer to pay the relevant expense as a result of insufficient funds
being available in the Expenses Account to make the payment of the relevant
expense.
In addition, the Servicer shall be required to obtain the prior written
consent (such consent not to be unreasonably withheld, conditioned or delayed)
of the Servicing Facilitator before paying any expense where the payment of
such expense will mean that the aggregate of the expenses paid in any
Collection Period in relation to the Portfolio exceeds £7,500 (or such
revised aggregate amount as may be agreed between the Servicer, the Cash
Manager (on behalf of the Issuer) and the Servicing Facilitator from time to
time) save that no such consent shall be required in respect of (a) any
overpayment or erroneous payment by any Borrower in relation to its Loan or
(b) any payment to any person so entitled of any excess proceeds of
enforcement in respect of any Loan and Related Security following the
completion of the enforcement proceeds in respect thereof.
The Servicer shall monitor the Expenses Account and shall calculate, not more
than eight nor less than four Business Days prior to the end of the
then-current Collection Period but before the provision of the Monthly
Request, the amount (the "Monthly Increase") by which the Expenses Account
needs to be credited so that the Expenses Account has a credit balance of at
least £7,500 at the start of the following Collection Period.
"Legal Title Holder" means, in respect of any Loan and its Related Security:
(a) the Seller (prior to the transfer of such Loans and
Related Security to the Issuer as a result of the occurrence of a Perfection
Event in respect of the same); or
(b) the Issuer (following the transfer of such Loans and
Related Security to the Issuer as a result of the occurrence of a Perfection
Event in respect of the same).
Replacement of Collection Account Bank
(i) Collection Account Bank Rating
The Servicing Facilitator shall monitor the Collection Account Bank Rating and
if the rating of the Collection Account Bank falls below the Collection
Account Bank Rating it shall notify the other parties to the Servicing
Agreement. If the rating of the Collection Account Bank falls below the
Collection Account Bank Rating and there exists a financial institution having
a rating of at least the Collection Account Bank Rating and which is a bank as
defined in Section 991 of the Income Tax Act 2007, the Servicing Facilitator
shall assist the Seller (or any other entity which may then hold legal title
to the Loans and their Related Security) to, and the Seller (or any other
entity which may then hold legal title to the Loans and their Related
Security) shall, as soon as reasonably practicable (such time period to be not
more than 35 calendar days) following such occurrence:
(a) open a replacement Collection Account and an Expenses
Account in the name of the Seller with a financial institution;
(i) having a rating of at least the Collection Account Bank
Rating;
(ii) approved in writing by the Issuer and the Security Trustee;
and
(iii) which is a bank as defined in Section 991 of the Income Tax
Act 2007; or
(b) obtain an unconditional and unlimited guarantee of the
obligations of the Collection Account Bank from a financial institution having
the Collection Account Bank Rating; or
(c) take any other action as the Rating Agencies may confirm
will not result in a downgrade of the Notes.
(ii) Insolvency Event
The Servicing Facilitator shall monitor the Collection Account Bank for any
Insolvency Event and notify the other parties to the Servicing Agreement in
the event of the occurrence of an Insolvency Event in respect of the
Collection Account Bank. Following notification of an Insolvency Event in
respect of the Collection Account Bank, the Seller shall, as directed by the
Issuer (or the Servicing Facilitator on its behalf) or, following the service
of an Enforcement Notice, the Security Trustee shall (as agreed in writing by
the Seller), terminate the appointment of the Collection Account Bank
immediately upon the giving of notice to it and the Seller shall open a
replacement Collection Account and a replacement Expenses Account, in each
case in the name of the Seller, with a financial institution which (a) is
approved in writing by the Issuer and the Security Trustee, (b) is a bank as
defined in Section 991 of the Income Tax Act 2007, and (c) is of reputable
standing, as soon as reasonably practicable and in any event within 30
calendar days. In the event a replacement collection account is opened, the
Seller shall procure that (i) all Direct Debit mandates are transferred to
such replacement collection account, (ii) all payments made by a Borrower
under a payment arrangement other than the Direct Debiting Scheme are made to
such replacement collection account from the date on which the replacement
collection account is opened and (iii) all amounts standing to the credit of
the Collection Account be transferred to the replacement collection account
promptly after the replacement collection account is opened.
"Direct Debiting Scheme" means the system for the manual or automated debiting
of bank accounts by Direct Debit operated in accordance with the detailed
rules of certain members of the Association for Payment Clearing Services.
In the event a replacement expenses account is opened, the Seller shall
procure that (i) all amounts standing to the credit of the Expenses Account
are transferred to the replacement expenses account promptly after such
replacement expenses account is opened and (ii) any payment instructions held
by the Cash Manager are updated to facilitate the payment of amounts from the
Deposit Account into such replacement expenses account where required in
accordance with the provisions of the Servicing Agreement and the Cash
Management Agreement.
Compensation of the Servicer
The Servicer receives fees under the terms of the Servicing Agreement. In
consideration for providing the Services set out in the Servicing Agreement,
the Issuer shall pay to the Servicer the following fees:
(a) the aggregate of the Primary Servicing Fee and the Special
Servicing Fee; plus
(b) the Redemption Fees; plus
(c) the Repeat Redemption Statement Fees; plus
(d) the Additional Servicing Costs.
"Additional Servicing Costs" means the fees set opposite each relevant
Additional Service in annex 1 (Additional Services and Associated Additional
Servicing Costs) of schedule 1 (Fees) in the Servicing Agreement, as amended
from time to time.
"Primary Servicing Fee" means a fee equivalent to 0.175% per annum (exclusive
of VAT) multiplied by the average of the total outstanding principal balance
of all of the Loans serviced by the Servicer during the relevant month (on the
basis of the actual number of days in that quarter and a year of 365 days (366
days in any leap year)) (exclusive of any applicable VAT).
"Redemption Fee" means a fee of £199.00 (exclusive of any applicable VAT) for
each Loan that is redeemed in full.
"Repeat Redemption Statement Fee" means a fee of £25.00 (exclusive of any
applicable VAT) for each occasion that a repeat redemption statement is
required by and provided to a borrower.
"Special Servicing" means the services provided by the Servicer in relation to
the servicing, management and maintenance of Loans in respect of which one or
more payments due by the Borrower in respect of such Loans are overdue and the
Related Security in accordance with the Servicing Agreement.
"Special Servicing Fee" means a fee of 0.35% per annum multiplied by the
average of the total outstanding principal balance of all of the Loans in
respect of which Special Servicing is performed by the Servicer during the
relevant month (on the basis of the actual number of days in that month and a
year of 365 days (366 days in any leap year)) (exclusive of any applicable
VAT).
The Servicing Fee is payable monthly in arrears on each Interest Payment Date
in the manner contemplated by and in accordance with the Pre-Enforcement
Revenue Priority of Payments or, as the case may be, the Post-Enforcement
Priority of Payments.
Removal of the Servicer
Subject to the prior written consent of the Security Trustee, the Issuer may,
by notice in writing to the Servicer (with a copy to the Security Trustee, the
Seller, the Servicing Facilitator and the Back-Up Servicing Facilitator),
terminate the Servicer's appointment under the Servicing Agreement if any of
the following events (each, a "Servicer Termination Event") occurs and is
continuing:
(a) the Servicer defaults on the payment on the due date of any
payment due and payable by it under the Servicing Agreement and such default
continues unremedied for a period of ten Business Days after:
(i) (where the failure to pay has arisen other than as a
result of a Disruption Event) the earlier of the Servicer becoming aware of
such default and the receipt by the Servicer of written notice from the Issuer
or (after the delivery of an Enforcement Notice) the Security Trustee, as the
case may be, (with a copy to the Servicing Facilitator and the Back-Up
Servicing Facilitator) requiring the same to be remedied; or
(ii) (where the failure to pay has arisen as a result of a
Disruption Event) the cessation of the Disruption Event or, if earlier, 20
Business Days following the Servicer becoming aware of such default and
receipt by the Servicer of written notice from the Issuer or (after the
delivery of an Enforcement Notice) the Security Trustee, as the case may be,
(with a copy to the Servicing Facilitator and the Back-Up Servicing
Facilitator) requiring the same to be remedied;
(b) the Servicer defaults in the performance or observance of
any of its other covenants and obligations under the Servicing Agreement,
which failure in the reasonable opinion of the Issuer (prior to the delivery
of an Enforcement Notice) or the opinion of the Security Trustee (after the
delivery of an Enforcement Notice) is materially prejudicial to the interests
of the Noteholders, and the Servicer does not remedy that failure within 20
Business Days after the earlier of the Servicer becoming aware of the failure
or of receipt by the Servicer of written notice from the Issuer or (after the
delivery of an Enforcement Notice) the Security Trustee, as the case may be,
(with a copy to the Servicing Facilitator and the Back-Up Servicing
Facilitator) requiring the Servicer's non-compliance to be remedied provided
that where the relevant default occurs as a result of a default by any person
to whom the Servicer has sub-contracted or delegated part of its obligations
hereunder, such default shall not constitute a Servicer Termination Event if,
within such period of 20 Business Days, the Servicer (i) terminates the
relevant sub-contracting or delegation arrangements, (ii) takes such steps as
the Issuer or (following receipt by the Servicer from the Security Trustee of
a copy of an Enforcement Notice) the Security Trustee may in its absolute
discretion specify to remedy such default and (iii) indemnifies the Issuer and
the Security Trustee against the consequences of such default;
(c) the occurrence of an Insolvency Event in relation to the
Servicer;
(d) the Servicer ceases to carry on the whole of its business or
ceases to carry on the whole or substantially the whole of its mortgage
servicing business; or
(e) it is or becomes unlawful for the Servicer to perform or
comply with any of its obligations under the Servicing Agreement.
In determining whether to provide or withhold consent to the termination of
the Servicer by the Issuer, the Security Trustee shall have regard to factors
it deems to be relevant (including for this purpose, the availability of a
substitute servicer and the effect (including any potential regulatory
implications) on the Issuer of not having a servicer in place at any time).
Upon the termination of the Servicer as servicer under the Servicing
Agreement, the Issuer shall use its reasonable endeavours to appoint a
substitute servicer that satisfies the conditions set forth in the Servicing
Agreement.
"Disruption Event" means either or both of:
(a) a material disruption to those payment or
communications systems or to those financial markets which are, in each case,
required to operate in order for the payments to be made in connection with a
Transaction Document (or otherwise in order for the transactions contemplated
by the Transaction Documents to be carried out) which disruption is not caused
by, and is beyond the control of, the relevant party seeking to rely on such
disruption; and/or
(b) the occurrence of any other event which results in the
disruption (of a technical or systems related nature) to the treasury or
payments operations of the party seeking to rely on such disruption which
prevents that party, or any other party to the Transaction Documents, from:
(i) performing its payment obligations under the
Transaction Documents; or
(ii) communicating with any other party to a Transaction
Document in accordance with the terms of the relevant Transaction Documents.
Servicer Termination with Cause
The Servicer may resign as servicer on written notice to the Issuer, the
Security Trustee, the Seller, the Servicing Facilitator and the Back-Up
Servicing Facilitator (a "Notice of Termination with Cause") in the event
that:
(a) the Issuer is in material breach of the Servicing Agreement
(or commits a series of breaches which together constitute a material breach
of the Servicing Agreement) which is either: (i) incapable of being remedied;
or (ii) is capable of being remedied and remains unremedied within thirty (30)
days' after receipt by the Issuer of a written notice from the Servicer
specifying the breach and requiring it to be remedied; or
(b) the Issuer fails to pay any sum which is due under the
Servicing Agreement to the Servicer and that sum remains unpaid for five (5)
Business Days after receipt by the Issuer of a written notice from the
Servicer specifying the breach and requiring it to be remedied; or
(c) it becomes unlawful under any Regulatory Requirements for
the Servicer or any other party to comply with the Servicing Agreement or a
substantial part of it or in the event that a Competent Authority lawfully
directs the Servicer to terminate its appointment under the Servicing
Agreement.
Any termination of the appointment of the Servicer under the Servicing
Agreement pursuant to paragraphs (a) and (b) above shall take effect on the
later of:
(a) the date specified in the relevant Notice of Termination
with Cause; and
(b) the earlier of:
(i) the expiry of 60 days from the date on which the relevant
Notice of Termination with Cause was given to the Issuer, the Security
Trustee, the Seller, the Servicing Facilitator and the Back-Up Servicing
Facilitator in accordance with clause 20.2(a) of the Servicing Agreement; and
(ii) the appointment by the Issuer of a substitute servicer
which satisfies the conditions set out in clause 20.3 (Voluntary Termination)
of the Servicing Agreement.
Upon receipt of a Notice of Termination with Cause, the Issuer shall use
reasonable endeavours to promptly appoint a substitute servicer which
satisfies the conditions set out in clause 20.3 (Voluntary Termination) of the
Servicing Agreement.
Voluntary Resignation and Termination
The Servicer may voluntarily resign by giving not less than sixty (60) days'
written notice to the Seller (or such shorter notice period as may be agreed
between the Servicer and the Seller) with a copy of such notice to the
Security Trustee, the Issuer, the Servicing Facilitator and the Back-Up
Servicing Facilitator.
The Seller may also terminate the appointment of the Servicer, without fault,
by giving not less than sixty (60) days' written notice to the Servicer (or
such shorter notice period as may be agreed between the Servicer and the
Seller) with a copy of such notice to the Security Trustee, the Issuer, the
Servicing Facilitator and the Back-Up Servicing Facilitator.
Any such resignation or termination shall not be effective unless: (i) a
substitute servicer shall be appointed, such appointment to be effective not
later than the date of such termination; (ii) where required, such substitute
servicer is authorised or exempt to act as such under the FSMA and has the
requisite experience of servicing residential mortgage loans in the United
Kingdom and is approved by the Issuer and the Security Trustee; (iii) such
substitute servicer enters into a servicing agreement with the Issuer on terms
commercially acceptable in the market, pursuant to which the substitute
servicer agrees to assume and perform all the material duties and obligations
of the Servicer under the Servicing Agreement; and (iv) (if the Notes remain
outstanding) the then-current ratings of the Notes are not adversely affected
as a result thereof, unless the Noteholders (acting by way of an Extraordinary
Resolution) otherwise agree.
Delivery of documents and records
If the appointment of the Servicer is terminated or the Servicer resigns, the
Servicer must deliver to the Issuer or the Security Trustee (or as the Issuer
or the Security Trustee shall direct in writing and, in the event of a
conflict between directions from the Issuer and directions from the Security
Trustee, the directions from the Security Trustee shall prevail), inter alia,
the Title Deeds and Loan Files relating to the Loans and their Related
Security in its possession.
Neither the Note Trustee nor the Security Trustee is obliged to act as
servicer under any circumstances.
Enforcement Procedures
The Servicer shall act in the manner of a Prudent Mortgage Lender to collect
all payments due under or in connection with the Loans and the Related
Security and to enforce all covenants and obligations of each Borrower in
accordance with the Enforcement Procedures in the event that they become
enforceable under the terms of the relevant Loan provided that the Servicer
may not, unless by prior written agreement with the Servicing Facilitator,
agree to (i) extend the term of any Loan (ii) grant any waiver of principal
due or interest under a Loan or (iii) vary or amend the terms and conditions
of a Loan.
Immediately upon the Servicer becoming aware of the commencement or intended
commencement of any proceedings against a Borrower by any third party in
relation to any Property which is the subject of any Related Security or Loan,
the Servicer shall forthwith, as agent of the Seller and at the Issuer's cost
take all such actions as a Prudent Mortgage Lender would take as owner of the
Loans, including actions which would enable the Seller to enforce its rights
under the Related Security in respect of the relevant Loan in accordance with
the provisions of the Servicing Agreement. The Servicer shall promptly
liaise with and notify the Servicing Facilitator of such proposed actions.
Neither the Seller nor the Issuer's prior authority for such actions shall be
required, but the Servicer shall act in accordance with the reasonable and
proper directions of the Co-ordination Committee (if any).
The Servicer shall procure that if, upon completion of the Enforcement
Procedures in respect of any Loan and Related Security, an amount in excess of
all sums due by the relevant Borrower is recovered or received into the
Collection Account, the balance, after discharge of all sums due by such
Borrower, is paid to the person or persons so entitled from amounts standing
to the credit of the Expenses Account in accordance with paragraph 5 (The
Expenses) of schedule 2 (Banking) to the Servicing Agreement.
"Co-ordination Committee" means, in relation to the servicing of the Loans, a
committee comprised of: (a) one delegate appointed by the Servicing
Facilitator on behalf of the Issuer; and (b) one delegate appointed by the
Servicer (two delegates in total), in each case in accordance with the
Servicing Agreement.
"Enforcement Procedures" means the exercise by the Servicer on behalf of the
Seller of the rights and remedies of the Seller against a Borrower in relation
to the security for the relevant Borrower's obligations arising as a result of
any Loan being in Default, or arising from any breach by the relevant Borrower
under or in connection with any Related Security, in each case in accordance
with the procedures described in the Client Manual or such other procedures as
may be agreed from time to time by (so long as the Servicing Facilitator is
the same entity as the Seller) the Servicing Facilitator or (in all other
cases) the Seller and the Servicer.
Limit to Servicer's Liability
The Servicer's aggregate liability under or in connection with the Servicing
Agreement (whether under contract including by way of indemnity, tort
including negligence, statute or otherwise) in any twelve (12) month period
shall not exceed one times the aggregate amount of fees paid and payable to
the Servicer under the Servicing Agreement during that twelve (12) month
period. The limitation of liability applies in the aggregate with respect to
any and all events or circumstances occurring during the relevant twelve (12)
month period, irrespective of when a claim, action or proceeding may be
brought or initiated against the Servicer with respect to such events or
circumstances. The relevant twelve (12) month period shall be calculated as
follows:
(a) in the event of a single claim, action or proceeding, the
relevant twelve (12) month period shall be the twelve (12) months preceding
the events or circumstances giving rise to such claim, action or proceeding;
and
(b) in the event of two or more claims, actions or proceedings
arising with respect to any events or circumstances occurring within the same
twelve (12) month period, the relevant twelve (12) month period shall be the
twelve (12) months preceding the last of the events or circumstances giving
rise to such claims, actions or proceedings.
Servicing Facilitator
The Servicing Facilitator will also be appointed by the Seller and the Issuer
(and, in certain circumstances, the Security Trustee) to act as its lawful
agent, in its name and on its behalf, to provide instructions to the Servicer
and to do all things which the Servicing Facilitator reasonably considers
necessary, convenient or incidental to facilitate the servicing of the Loans
and their Related Security by the Servicer or the exercise of such rights,
powers and discretions.
The Servicing Facilitator's duties and authority to act as Servicing
Facilitator hereunder are limited to the duties and authority specifically
provided for in the Servicing Agreement and the Client Manual. The Servicing
Facilitator shall not assume or be deemed to assume the rights or obligations
of the Issuer under the Transaction Documents or any other document or
agreement to which the Issuer is a party, except to the extent contemplated
pursuant to the terms of the Servicing Agreement. The Servicing Facilitator
shall not have any duties or obligations to the Issuer unless those duties and
obligations are specifically provided for in the Transaction Documents.
Removal of the Servicing Facilitator
The appointment of the Servicing Facilitator may be terminated by the Issuer
(subject to the prior written consent of the Security Trustee) if any of the
following events (each a "Servicing Facilitator Termination Event") occurs and
is continuing:
(a) the Servicing Facilitator defaults on the payment on the due
date of any payment due and payable by it under the Servicing Agreement and
the Servicing Facilitator fails to remedy it for a period of 20 Business Days
after: (i) (where the failure to pay has arisen other than as a result of a
Disruption Event) the earlier of the Servicing Facilitator becoming aware of
such default and the receipt by the Servicing Facilitator of written notice
from the Issuer or (after the delivery of an Enforcement Notice) the Security
Trustee, as the case may be (with a copy to the Back-Up Servicing Facilitator)
requiring the same to be remedied; or (ii) (where the failure to pay has
arisen as a result of a Disruption Event) the cessation of the relevant
Disruption Event or, if earlier, 60 Business Days following the Servicing
Facilitator becoming aware of such default and receipt by the Servicing
Facilitator of written notice from the Issuer or (after the delivery of an
Enforcement Notice) the Security Trustee, as the case may be (with a copy to
the Back-Up Servicing Facilitator) requiring the same to be remedied; or
(b) default in the performance or observance by the Servicing
Facilitator of any of its other covenants and obligations under the Servicing
Agreement, which failure in the reasonable opinion of the Issuer (prior to the
delivery of an Enforcement Notice) or in the opinion of the Security Trustee
(after the delivery of an Enforcement Notice) is materially prejudicial to the
interests of the Noteholders, and the Servicing Facilitator does not remedy
that failure within 20 Business Days after the earlier of the Servicing
Facilitator becoming aware of the failure or of receipt by the Servicing
Facilitator of written notice from the Issuer or (after the delivery of an
Enforcement Notice) the Security Trustee, as the case may be, (with a copy to
the Back-Up Servicing Facilitator) requiring the Servicing Facilitator's
non-compliance to be remedied; or
(c) an Insolvency Event occurs in respect of the Servicing
Facilitator; or
(d) the Servicing Facilitator ceases to carry on the whole of
its business or ceases to carry on the whole or substantially the whole of its
servicing business; or
(e) it is or becomes unlawful in any applicable jurisdiction for
the Servicing Facilitator to perform any of its obligations as contemplated by
the Servicing Agreement.
Unless the Issuer has instructed the Back-Up Servicing Facilitator to perform
the functions of the Servicing Facilitator pursuant to the Servicing
Agreement, the termination or resignation of the Servicing Facilitator is
conditional on:
(a) a replacement servicing facilitator being appointed, such
appointment to be effective not later than the date of such resignation or
termination;
(b) such replacement servicing facilitator having obtained or
made (as applicable) all approvals, authorisations, consents and licences
from, and all filings, registrations and qualifications with, any court,
government department or any other regulatory body required pursuant to any
Requirement of Law or any Regulatory Direction in connection with its
business, the execution, delivery and performance by it of the Servicing
Agreement;
(c) such replacement servicing facilitator entering into a
servicing agreement with the Issuer on terms commercially acceptable in the
market, pursuant to which the replacement servicing facilitator agrees to
assume and perform all the material duties and obligations of the Servicing
Facilitator under the Servicing Agreement; and
(d) (if the Notes remain outstanding) the then-current ratings
of the Notes not being adversely affected as a result thereof, unless the
Noteholders (acting by way of an Extraordinary Resolution) otherwise agree.
In determining whether to give or withhold consent to the termination of the
Servicing Facilitator by the Issuer, the Security Trustee will have regard to
factors it deems relevant (including, for this purpose, the availability of a
substitute servicer and the effect (including any potential regulatory
implications) on the Issuer of not having a servicing facilitator in place at
any time).
Governing Law
The Servicing Agreement and any non-contractual obligations arising out of or
in connection with it will be governed by English law.
Cross-collateral Mortgages and Cross-collateral Rights
The conditions of each of the Mortgages (each a "Cross-collateral Mortgage")
provide, among other things, some rights (the "Cross-collateral Rights") which
allow the relevant mortgagee of any such Cross-collateral Mortgage:
(a) to declare immediately due and repayable each liability
secured by that Cross-collateral Mortgage and to exercise the statutory power
of sale under that Cross-collateral Mortgage if and when the mortgagee of any
other Cross-collateral Mortgage in the name of the same mortgagor is entitled
to declare immediately due and repayable any liability secured by that other
Cross-collateral Mortgage; and
(b) to apply the proceeds of enforcement under the
Cross-collateral Mortgages of the relevant mortgagor against all liabilities
secured by the Cross-collateral Mortgages.
On or about the Closing Date, the Issuer will enter into an accession deed to
the cross-collateral mortgage rights deed dated 1 February 2021 entered into
by and amongst, inter alios, the Seller, Atlas Funding 2021-1 PLC, Talworth
Ltd. and Citibank N.A., London Branch (the "Cross-collateral Mortgage Rights
Deed") to regulate the respective rights between each person who, as of the
date of this Prospectus, has a beneficial interest in any Mortgage that is a
Cross-collateral Mortgage that includes Cross-collateral Rights which may
apply to one or more of the Mortgages.
The Cross-collateral Mortgage Rights Deed seeks to provide that each party
thereto who is a beneficial owner of a Cross-collateral Mortgage: (i) shall
only have Cross-collateral Rights in respect of Cross-collateral Mortgages
that it beneficially owns; (ii) waives all rights to exercise Cross-collateral
Rights in respect of other Cross-collateral Mortgages which are not
beneficially owned by it; (iii) waives all rights to take any action or
proceedings against any other beneficial owner of Cross-collateral Mortgages
to exercise the Cross-collateral Rights of that other beneficial owner; (iv)
waives any rights to the proceeds of enforcement of Cross-collateral Mortgages
not beneficially owned by it; and (v) agrees that if it enforces a
Cross-collateral Mortgage in respect of which Cross-collateral Rights attach,
the proceeds of such enforcement after deduction of all related costs and
expenses shall be applied by or on behalf of it in respect of the
Cross-collateral Mortgages beneficially owned by it firstly to repay all
amounts owing by the mortgagee under the enforced Cross-collateral Mortgage
beneficially owned by it in accordance with the applicable Mortgage Conditions
and, secondly, to the extent there are additional proceeds of enforcement,
apply such proceeds in accordance with the approach of a Prudent Mortgage
Lender.
The Seller covenants that it will use its reasonable endeavours to prevent,
and will not facilitate or otherwise permit, the enforcement of any
Cross-collateral Rights by any other party to the Cross-collateral Mortgage
Rights Deed in respect of any Mortgage (as defined in the Cross-collateral
Mortgage Rights Deed) except in the circumstances and to the extent that such
party is not prohibited by the provisions of a Cross-collateral Mortgage
Rights Accession Deed (as defined in the Cross-collateral Mortgage Rights
Deed) from exercising Cross-collateral Rights in respect of that Mortgage.
Deed of Charge
On the Closing Date, the Issuer will enter into the Deed of Charge with, inter
alios, the Security Trustee.
Security
Under the terms of the Deed of Charge, the Issuer will provide the Security
Trustee with the benefit of, inter alia, the following security (the
"Security") as trustee for itself and for the benefit of the Secured Creditors
(including the Noteholders and the Certificateholders):
(a) an assignment by way of security of (and, to the extent not
assigned, a charge by way of first fixed charge over) the Issuer's rights,
title, interest and benefit in, to and under the Transaction Documents (other
than the Trust Deed and the Deed of Charge) and any sums derived therefrom
(provided that the assignment by way of security of the Issuer's rights under
the Swap Agreements shall be subject to any rights of set-off or netting
provided for thereunder);
(b) an assignment by way of security of (and, to the extent not
assigned, a charge by way of first fixed charge over) the Issuer's interest in
the Loans and their Related Security and other related rights comprised in the
Portfolio and any sums derived therefrom;
(c) an assignment by way of security of (and, to the extent not
assigned, a charge by way of first fixed charge over) the Issuer's rights,
title, interest and benefit in, to and under Insurance Policies assigned to
the Issuer pursuant to the Mortgage Sale Agreement;
(d) a charge by way of first fixed charge over the Issuer's
interest in its bank and/or securities accounts (including the Deposit
Account, the Swap Cash Collateral Accounts, the Class A and B Liquidity
Reserve Fund Account, the Standby Account and the Issuer Profit Account and
any Swap Securities Collateral Accounts) maintained with the Issuer Account
Bank and/or with any other bank or custodian and any sums or securities
standing to the credit thereof;
(e) a charge by way of first fixed charge over the Issuer's
interest in all Authorised Investments permitted to be made by the Issuer (or
the Cash Manager on behalf of the Issuer) acting on the instructions of the
Servicing Facilitator on its behalf;
(f) an assignment by way of first fixed security (and, to the
extent not assigned, a charge by way of first fixed charge over) (but subject
to the right of reassignment) the benefit of the Issuer's rights, title,
interest and benefit under the Collection Account Trust (created pursuant to
the Collection Account Declaration of Trust) and the Expenses Account Trust
(created pursuant to the Expenses Account Declaration of Trust); and
(g) a floating charge over all assets of the Issuer not
otherwise subject to the charges referred to above or otherwise effectively
assigned by way of security (whether or not such assets are the subject of the
charges referred to above).
"Authorised Investments" means money market funds provided that, in all cases
such investments will only be made such that there is no withholding or
deduction for or on account of taxes applicable thereto and such investments:
(i) have a maturity date of 30 days or less and mature on or before the next
Interest Payment Date or within 30 days, whichever is the sooner; (ii) may be
broken or demanded by the Issuer (at no cost to the Issuer) before the next
following Interest Payment Date or within 30 days, whichever is sooner; and
(iii) are rated at least A by DBRS (if applicable) or have a DBRS Minimum
Equivalent Rating and at least A-1 (short term) by S&P, in respect of
money market funds, save that where such investments would result in the
recharacterisation of the programme, the Notes or any transaction under the
Transaction Documents as a "re-securitisation" or a "synthetic securitisation"
as defined in Articles 4(63) and 242(11), respectively, of Regulation (EU) No.
575/2013 as it forms part of domestic law by virtue of the EUWA, such
investments shall not qualify as authorised investments.
"Secured Creditors" means the Security Trustee, any Receiver appointed by the
Security Trustee pursuant to the Deed of Charge, the Note Trustee, the
Noteholders, the Certificateholders, Holdings, the Seller, the Servicer, the
Servicing Facilitator, the Back-Up Servicing Facilitator, the Cash Manager,
the Swap Providers, the Issuer Account Bank, the Custodian, the Corporate
Services Provider, the Liquidity Facility Provider, the Paying Agents, the
Registrar, the Agent Bank and any other person who is expressed in any deed
supplemental to the Deed of Charge to be a secured creditor.
"Transaction Documents" means the Servicing Agreement, the Liquidity Facility
Agreement, the Agency Agreement, the Bank Account Agreement, any Custody
Agreement, the Collection Account Declaration of Trust, the Expenses Account
Declaration of Trust, the Deed Poll, the Cash Management Agreement, the
Corporate Services Agreement, the Deed of Charge, the Swap Agreements, the
share trust deed dated 13 March 2025 (the "Share Trust Deed"), the power of
attorney granted by the Issuer in favour of the Security Trustee under the
Deed of Charge (the "Issuer Power of Attorney"), a master definitions and
construction schedule made between, among others, the Issuer, the Seller and
the Security Trustee (the "Master Definitions and Construction Schedule"), the
Mortgage Sale Agreement, the power of attorney granted by the Seller in favour
of the Issuer and the Security Trustee on the Closing Date (the "Seller Power
of Attorney"), the power of attorney granted by the Issuer in favour of the
Servicer on the Closing Date under the Servicing Agreement (the "Servicer
Power of Attorney"), the Cross-collateral Mortgage Rights Deed, the Trust Deed
and such other related documents which are referred to in the terms of the
above documents or which relate to the issue of the Notes and/or the Residual
Certificates.
The floating charge created by the Deed of Charge may "crystallise" and become
a fixed charge over the relevant class of assets owned by the Issuer at the
time of crystallisation. Crystallisation will occur automatically (subject
to applicable law) following the occurrence of specific events set out in the
Deed of Charge, including, among other events, service of an Enforcement
Notice. A crystallised floating charge will rank ahead of the claims of
unsecured creditors which are in excess of the prescribed part but will rank
behind the expenses of any administration or liquidator, the claims of
preferential creditors and the beneficiaries of the prescribed part on
enforcement of the Security.
Pre-Enforcement Revenue Priority of Payments and Pre-Enforcement Principal
Priority of Payments
Prior to the Note Trustee serving an Enforcement Notice on the Issuer pursuant
to Condition 11 (Events of Default) of the Notes, declaring the Notes or
Residual Certificates Condition 10 (Events of Default) to be immediately due
and payable or any RC1 Payments or RC2 Payments pursuant to the Residual
Certificates to be immediately due and payable, as the case may be, the Cash
Manager (on behalf of the Issuer) shall apply monies standing to the credit of
the Deposit Account as described in "Cashflows - Application of Available
Revenue Receipts prior to the service of an Enforcement Notice on the Issuer"
and "Cashflows - Application of Available Principal Receipts prior to the
service of an Enforcement Notice on the Issuer" below and apply monies and
securities standing to the credit of each Swap Collateral Accounts as
described in "Cashflows - Swap Collateral".
Post-Enforcement Priority of Payments
After the Note Trustee has served an Enforcement Notice on the Issuer pursuant
to Condition 11 (Events of Default) of the Notes, declaring the Notes to be
immediately due and payable or, if no Notes remain outstanding, pursuant to
Residual Certificates Condition 10 (Events of Default) declaring that any RC1
Payments or RC2 Payments pursuant to the Residual Certificates are immediately
due and payable, the Security Trustee (or the Cash Manager on its behalf) or
any Receiver appointed by it shall apply the monies standing to the credit of
the Deposit Account in accordance with the Post-Enforcement Priority of
Payments defined in "Cashflows - Distributions following the service of an
Enforcement Notice on the Issuer" below and apply the monies and securities
standing to the credit of each Swap Collateral Account in accordance with the
Swap Collateral Account Priority of Payments defined in "Cashflows - Swap
Collateral" below.
The Security will become enforceable after an Enforcement Notice has been
served on the Issuer pursuant to Condition 11 (Events of Default) of the Notes
or, if no Notes remain outstanding, pursuant to Residual Certificates
Condition 10 (Events of Default) declaring that any RC1 Payments or RC2
Payments pursuant to the Residual Certificates are immediately due and payable
provided that, if the Security has become enforceable otherwise than by reason
of a default in payment of any amount due on the Notes and/or the Residual
Certificates, the Security Trustee will not be entitled to dispose of the
assets comprised in the Security or any part thereof unless either: (a) the
Cash Manager certifies to the Security Trustee (upon which certification the
Security Trustee can rely absolutely and without enquiry or liability) that a
sufficient amount would be realised to allow discharge in full on a pro rata
and pari passu basis of all amounts owing to the Noteholders (and all persons
ranking in priority to the Noteholders as set out in the Post-Enforcement
Priority of Payments) or (b) the Security Trustee is of the opinion (which
shall be binding on the Secured Creditors) that the cash flow expected to be
received by the Issuer 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 the Issuer, to discharge in full in
due course all amounts owing: (i) to the Noteholders (and all persons ranking
in priority to the Noteholders in the order of priority set out in the
Post-Enforcement Priority of Payments); and (ii) once all the Noteholders (and
all such prior ranking persons) have been repaid, to the remaining Secured
Creditors (other than the Certificateholders) in the order of priority set out
in the Post-Enforcement Priority of Payments; and (iii) once all the
Noteholders and the Secured Creditors (other than the Certificateholders) have
been repaid, to the Certificateholders, which opinion shall be binding on the
Secured Creditors and reached after considering at any time and from time to
time the advice of any financial adviser (or such other professional adviser
selected by the Security Trustee for the purpose of giving such advice).
The fees and expenses of the aforementioned financial adviser or other
professional adviser selected by the Security Trustee shall be paid by the
Issuer in accordance with the applicable Priority of Payments. The Security
Trustee shall be entitled to rely upon any financial or other professional
advice referred to above without further enquiry and shall incur no liability
to any person for so doing.
Governing Law
The Deed of Charge and any non-contractual obligations arising out of or in
connection with it will be governed by English law.
Trust Deed
On or about the Closing Date, the Issuer, the Security Trustee and the Note
Trustee will enter into the Trust Deed pursuant to which the Issuer and the
Note Trustee will agree that the Notes and the Residual Certificates are
subject to the provisions in the Trust Deed. The Conditions and the
Certificates' Conditions and the forms of each class of Notes and the Residual
Certificates are each constituted by, and set out in, the Trust Deed.
The Note Trustee will agree to hold the benefit of the Issuer's covenant to
pay amounts due in respect of the Notes and the Residual Certificates on trust
for the Noteholders and the Certificateholders.
In accordance with the terms of the Trust Deed, the Issuer will pay a fee to
the Note Trustee for its services under the Trust Deed at the rate and times
agreed between the Issuer and the Note Trustee (exclusive of VAT) together
with payment of any liabilities incurred by the Note Trustee in relation to
the Note Trustee's performance of its obligations under or in connection with
the Trust Deed and the other Transaction Documents.
Retirement of Note Trustee
The Note Trustee may retire at any time upon giving not less than 60 days'
notice in writing to the Issuer without giving any reason therefor and without
being responsible for any liabilities occasioned by such retirement. The
holders of the Most Senior Class outstanding or (in the case of the Residual
Certificates) in issue may, by Extraordinary Resolution, remove all trustees
(but not some only) for the time being who are acting pursuant to the Trust
Deed and the Deed of Charge. The retirement of the Note Trustee shall not
become effective unless there remains a trust corporation entitled by rules
made under the Public Trustee Act 1906 to carry out the functions of a
custodian trustee (a "Trust Corporation") in office after such retirement or
removal by Extraordinary Resolution. The Issuer will agree in the Trust Deed
that, in the event of the sole trustee or the only trustee under the Trust
Deed giving notice of its retirement, it shall use its best endeavours to
procure a new trustee to be appointed as soon as practicable thereafter and
if, after 60 days from the date the Note Trustee gives its notice of
retirement or the applicable Extraordinary Resolution of the holders of the
Most Senior Class, the Issuer is not able to find such replacement, the Note
Trustee will be entitled to procure that a new trustee be appointed.
Governing Law
The Trust Deed and any non-contractual obligations arising out of or in
connection with it will be governed by English law.
Agency Agreement
Pursuant to an agency agreement (the "Agency Agreement") dated on or prior to
the Closing Date and made between the Issuer, the Note Trustee and the
Security Trustee, the Principal Paying Agent, the Registrar and the Agent
Bank, provision is made for, inter alia, the payment of principal and interest
in respect of the Notes.
Governing Law
The Agency Agreement and any non-contractual obligations arising out of or in
connection with it will be governed by English law.
Cash Management Agreement
On the Closing Date, the Cash Manager, the Issuer, the Seller, the Servicer,
the Servicing Facilitator, the Swap Providers and the Security Trustee will
enter into a cash management agreement (the "Cash Management Agreement").
Cash Management Services to be provided to the Issuer
Pursuant to the Cash Management Agreement, the Cash Manager will agree to
provide certain cash management and other services to the Issuer or, upon the
Security Trustee notifying the Cash Manager that an Enforcement Notice has
been served on the Issuer, the Security Trustee. The Cash Manager's
principal function will be effecting payments to and from the Issuer Accounts
in accordance with the Cash Management Agreement, the Bank Account Agreement,
the Custody Agreements and the Deed of Charge.
In addition, the Cash Manager will, among other things:
(a) on each Interest Payment Date prior to the delivery of an
Enforcement Notice, apply, or cause to be applied, Available Revenue Receipts
in accordance with the Pre-Enforcement Revenue Priority of Payments, Available
Principal Receipts in accordance with the Pre-Enforcement Principal Priority
of Payments and any Class A and B Liquidity Reserve Fund Release Amount to
meet any Class A and B Liquidity Deficit against the relevant items in the
Pre-Enforcement Revenue Priority of Payments in the order that they appear in
the Pre-Enforcement Revenue Priority of Payments;
(b) calculate, on the Calculation Date immediately prior to the
First Interest Payment Date only, the Pre-Funding Unused Amount;
(c) on each Calculation Date determine if there would be a Class
A Liquidity Deficit following the application of Available Revenue Receipts
(excluding any Liquidity Drawing to be made on that Interest Payment Date),
any Class A and B Liquidity Reserve Fund Release Amount to meet any Class A
and B Liquidity Deficit and Principal Addition Amounts on the immediately
following Interest Payment Date and, if required, make a Liquidity Drawing (on
behalf of the Issuer) under the Liquidity Facility Agreement;
(d) on each Calculation Date determine if there would be a
Senior Expenses Deficit following the application of Available Revenue
Receipts (excluding any Liquidity Drawing to be made on that Interest Payment
Date) and any Class A and B Liquidity Reserve Fund Release Amounts on the
immediately following Interest Payment Date;
(e) on each Calculation Date, determine whether the immediately
following Interest Payment Date is the Final Redemption Date;
(f) record credits to, and debits from, the Ledgers, as and when
required;
(g) record credits to, and debits from, the Issuer Accounts, as
and when required;
(h) if required (i) during the Determination Period, calculate
the Interest Determination Ratio, the Calculated Revenue Receipts and the
Calculated Principal Receipts; and (ii) following any Determination Period,
upon receipt by the Cash Manager of the Servicer Reports in respect of such
Determination Period, reconcile the calculations to the actual collections set
out in the Servicer Reports by allocating the Reconciliation Amounts in
accordance with Condition 6.8(c) (Determinations and Reconciliation) and the
Cash Management Agreement; and
(i) on each Business Day from (and including) the Closing Date
to (and including) the First Interest Payment Date, effect payment from monies
standing to the credit of the Expenses Ledger toward payment of any
Transaction Expenses due and payable by the Issuer on such Business Day.
In addition, the Cash Manager will also, among other things:
(a) maintain the following ledgers (the "Ledgers") on behalf of
the Issuer:
(i) the "Principal Ledger" on the Deposit Account, which will
record as a credit all Principal Receipts received by the Issuer and recorded
by the Servicer and communicated to the Cash Manager in the Servicer Reports
and as a debit the distribution of the Principal Receipts in accordance with
the Pre-Enforcement Principal Priority of Payments or the Post-Enforcement
Priority of Payments (as applicable);
(ii) the "Revenue Ledger" on the Deposit Account, which will
record all Revenue Receipts, any Swap Collateral Account Surplus, amounts
credited to the Deposit Account in accordance with item (y) of the
Pre-Enforcement Revenue Priority of Payments and recorded by the Servicer and
communicated to the Cash Manager in the Servicer Reports, and as a debit the
distribution of Available Revenue Receipts and any other relevant amounts
recorded on the Revenue Ledger in accordance with the Pre-Enforcement Revenue
Priority of Payments or the Post-Enforcement Priority of Payments (as
applicable) or by way of Third Party Amounts;
(iii) the "Pre-Funding Reserve Ledger" on the Deposit Account,
which will record as a credit an amount equal to £0 to be credited to the
Pre-Funding Reserve Ledger on the Closing Date and which will record as a
debit (A) the Additional Mortgage Loan Purchase Consideration to be paid in
accordance with the Mortgage Sale Agreement and the Servicing Agreement and
(B) on the First Interest Payment Date only, any amount standing to the credit
of the Pre-Funding Reserve Ledger to be applied (or the Pre-Funding Unused
Amount) as Available Principal Receipts in accordance with the Pre-Enforcement
Principal Priority of Payments;
(iv) the "Principal Deficiency Ledger" on the Deposit Account,
which (A) will record on the appropriate sub-ledger as a debit deficiencies
arising from Losses on the Portfolio (such Losses being "Principal
Deficiencies") (on the next Interest Payment Date after the Cash Manager is
informed of such Losses by the relevant Servicer), Principal Addition Amounts
(on the Calculation Date on which such Principal Addition Amounts are
determined by the Cash Manager) and any Available Principal Receipts applied
to credit the Standby Account pursuant to item (c) of the Pre-Enforcement
Principal Priority of Payments and (B) record as a credit Available Revenue
Receipts applied as Available Principal Receipts (including any amounts in
respect of Enhanced Amortisation Amounts) pursuant to the Pre-Enforcement
Revenue Priority of Payments (if any) on each Interest Payment Date; and
(v) the "Expenses Ledger" on the Deposit Account, which will
record as credit an amount equal to £600,000 to be credited to the Expenses
Ledger on the Closing Date from part of the proceeds of the Class X Notes and
which will record as a debit (A) amounts standing to the credit of this ledger
which from (and including) the Closing Date to (and including) the First
Interest Payment Date, are used to pay certain fees and expenses of the Issuer
incurred in connection with the issuance of the Notes and other closing
expenses and any amounts in connection with the Transaction (the "Transaction
Expenses") and (B) on the First Interest Payment Date only, any amounts
standing to the credit of the Expenses Ledger which have not been applied by
the Issuer to pay Transaction Expenses on the First Interest Payment Date
(such amounts the "Expenses Unused Amount") which shall be transferred to the
Seller on the First Interest Payment Date.
(b) instruct the operation of the following accounts on behalf
of the Issuer:
(i) the Deposit Account;
(ii) each Swap Collateral Account;
(iii) the Standby Account;
(iv) the "Class A and B Liquidity Reserve Fund Account" which will
record amounts (including, for the avoidance of doubt, any Liquidity Drawings)
credited to, and debited from, the Class A and B Liquidity Reserve Fund; and
(v) the "Issuer Profit Account", which shall record as a credit
any amounts retained by the Issuer as profit in accordance with the
Pre-Enforcement Revenue Priority of Payments and the Post-Enforcement Priority
of Payments and as a debit any amount used to discharge any tax liability of
the Issuer;
(c) calculate on each Calculation Date (prior to service of an
Enforcement Notice) the amount of Available Revenue Receipts and Available
Principal Receipts to be applied on the immediately following Interest Payment
Date in accordance with the Pre-Enforcement Revenue Priority of Payments or
the Pre-Enforcement Principal Priority of Payments (as applicable);
(d) calculate on each Calculation Date up to and including the
Calculation Date immediately preceding the Class B Redemption Date (prior to
the service of an Enforcement Notice) the amount of any Class A and B
Liquidity Reserve Fund Release Amount to be applied on the immediately
following Interest Payment Date (such amount to be determined after
calculation of any Available Revenue Receipts to be applied on such Interest
Payment Date in accordance with the Pre-Enforcement Revenue Priority of
Payments on such Interest Payment Date (including any Class A and B Liquidity
Reserve Fund Excess Amount to be applied as Available Revenue Receipts on such
Interest Payment Date));
(e) calculate on each Calculation Date up to and including the
Calculation Date immediately preceding the Final Redemption Date (prior to the
service of an Enforcement Notice) the amount of any Principal Addition Amounts
to be applied on the immediately following Interest Payment Date (such amount
to be determined after calculation of any Class A and B Liquidity Reserve Fund
Release Amounts to be applied to meet any Class A and B Liquidity Deficit and
the Available Revenue Receipts to be applied on such Interest Payment Date in
accordance with the Pre-Enforcement Revenue Priority of Payments on such
Interest Payment Date) and drawn from Available Principal Receipts on such
Interest Payment Date;
(f) determine on each Calculation Date up to and including the
Calculation Date immediately preceding the Class A Redemption Date (prior to
the service of an Enforcement Notice) if there would be a Class A Liquidity
Deficit following the application the Available Revenue Receipts (other than
any Liquidity Drawing to be made on such date) and Principal Addition Amounts;
(g) calculate, on the Calculation Date immediately prior to the
First Interest Payment Date only, the Pre-Funding Unused Amount and the
Expenses Unused Amount;
(h) provide the Investor Reports in accordance with the Cash
Management Agreement; and
(i) as soon as reasonably practicable upon receiving a request
from the Issuer and/or the Security Trustee and provided that it has all
information necessary to enable it to do so, calculate and provide to the
Issuer and the Security Trustee:
(i) the Optional Purchase Price (or where such calculation is
made prior to the Calculation Date immediately preceding the Optional Purchase
Completion Date, an estimate of the Optional Purchase Price); and/or
(ii) (where the initial calculation of the Optional Purchase
Price is made prior to the Calculation Date immediately preceding the Optional
Purchase Completion Date) the definitive Optional Purchase Price.
At the written direction of the Servicing Facilitator, the Cash Manager, on
behalf of and in the name of the Issuer, may invest monies standing from time
to time to the credit of the Deposit Account and the Class A and B Liquidity
Reserve Fund Account in Authorised Investments as determined by the Servicing
Facilitator, subject to the following provisions:
(a) any investment in any Authorised Investments shall be made
in the name of the Issuer;
(b) any costs properly incurred in making, changing or otherwise
disposing of any investment in any Authorised Investments will be reimbursed
to the Cash Manager by the Issuer;
(c) all income and other distributions arising on, or proceeds
following the disposal or maturity of, Authorised Investments shall be
credited to the Deposit Account; and
(d) the Servicing Facilitator obtaining and holding all
applicable regulatory consents and approvals required in respect of directing
investments in Authorised Investments.
The Cash Manager shall (assuming delivery by the Servicer of the Servicer
Reports by the relevant deadline specified in schedule 6 (Servicer Reports) to
the Servicing Agreement) provide the Servicing Facilitator with the Investor
Reports prior to the relevant Interest Payment Date in respect of the
immediately preceding Collection Period (except that the first Investor Report
shall relate to the period commencing (and including) the Closing Date and
ending on (but excluding) the Collection Period Start Date on 1 July 2025.
"Servicer Reports" means the reports to be provided by the Servicer to the
Issuer, the Servicing Facilitator, the Cash Manager and the Security Trustee
by no later than the 4th Business Day in each calendar month substantially in
the form set out in the Servicing Agreement, as they may be amended from time
to time including (without limitation) for the purposes of and in compliance
with the Servicing Agreement, and "Servicer Report" means any one of them.
Cash Manager and Directions from the Security Trustee
The Cash Manager will act upon the direction of the Security Trustee (given in
accordance with the terms and provisions of the Deed of Charge) upon the
Security Trustee notifying the Cash Manager that an Enforcement Notice has
been served on the Issuer.
Cash Manager to be provided with Swap Provider Swap Amount
Each Swap Provider shall use best efforts to provide the net value of the Swap
Provider Swap Amount and the Issuer Swap Amount in respect of a Swap
Calculation Period in respect of a relevant Swap Transaction under the
relevant Swap Agreement to the Cash Manager, by no later than 11:00 a.m.
London time on the fifth Business Day before the relevant Interest Payment
Date.
Remuneration of Cash Manager
The Cash Manager will be paid a cash management fee for its cash management
services under the Cash Management Agreement. Such fees will be determined
under a separate fee letter between the Issuer, the Seller and the Cash
Manager. Any sum (or other consideration) payable (or provided) by the
Issuer to the Cash Manager in respect of that fee shall be deemed to be
exclusive of VAT, if any, chargeable on any supply for which the cash
management fee is the consideration (in whole or in part) for VAT purposes.
The cash management fee is payable monthly in arrear on each Interest Payment
Date in the manner contemplated by and in accordance with the provisions of
the Pre-Enforcement Revenue Priority of Payments or, as the case may be, the
Post-Enforcement Priority of Payments.
Termination of Appointment and Replacement of Cash Manager
If any of the following events (the "Cash Manager Termination Events") shall
occur:
(a) default is made by the Cash Manager on the payment, on the
due date, of any payment due and payable by it under the Cash Management
Agreement (provided in each case there are funds available for such payment
standing to the credit of the relevant Issuer Accounts) and such default
continues unremedied for a period of three Business Days after the earlier of
the Cash Manager becoming aware of such default and receipt by the Cash
Manager of written notice from the Issuer or (following the service of an
Enforcement Notice) the Security Trustee, as the case may be, requiring the
same to be remedied; or
(b) default is made by the Cash Manager in the performance or
observance of any of its other covenants and obligations under the Cash
Management Agreement, which in the opinion of the Note Trustee as notified to
the Security Trustee is materially prejudicial to the interests of the
Noteholders, and such default continues unremedied for a period of 30 Business
Days after the earlier of the Cash Manager becoming aware of such default and
receipt by the Cash Manager of written notice from the Issuer or (following
the service of an Enforcement Notice) the Security Trustee, as the case may
be, requiring the same to be remedied; or
(c) an Insolvency Event occurs in respect of the Cash Manager;
or
(d) it becomes unlawful for the Cash Manager to perform its
obligations under the Cash Management Agreement or under any other Transaction
Document,
then prior to the delivery of an Enforcement Notice, the Issuer (with the
written consent of the Security Trustee), or following the delivery of an
Enforcement Notice, the Security Trustee, may, at once or at any time
thereafter while such default continues, by notice in writing to the Cash
Manager (with a copy to the Security Trustee if such notice is delivered by
the Issuer), terminate its appointment as Cash Manager under the Cash
Management Agreement with effect from a date (not earlier than the date of the
notice) specified in such notice. In determining whether to give or withhold
consent to the termination of the Cash Manager by the Issuer, the Security
Trustee will have regard to factors including, inter alia, the availability of
a substitute cash manager. Upon termination of the appointment of the Cash
Manager, the Issuer shall use reasonable endeavours to appoint a substitute
cash manager that satisfies the conditions set out below.
Any substitute cash manager:
(a) must agree to enter into an agreement with the Issuer on
terms commercially acceptable in the market, pursuant to which the substitute
cash manager agrees to assume and perform all material duties and obligations
of the Cash Manager under the Cash Management Agreement;
(b) (if Notes remain outstanding) must be a party that the
Rating Agencies have previously confirmed by whatever means such Rating
Agencies consider appropriate (provided that the Issuer is permitted to and
does confirm in writing (including by email) to the Security Trustee that such
confirmation has been obtained) the appointment of which will not cause the
then-current ratings of the Notes to be adversely affected unless the relevant
Class or Classes of Noteholders (acting by way of an Extraordinary Resolution)
otherwise agree; and
(c) will be subject to the prior written approval of the
Security Trustee (acting pursuant to the Deed of Charge).
For the avoidance of doubt, upon termination of the appointment of the Cash
Manager, if the Issuer is unable to find a suitable third party willing to act
as a substitute cash manager, this shall not constitute any breach of the
provisions of the Cash Management Agreement.
Resignation of the Cash Manager
The Cash Manager may resign on giving not less than 90 days' written notice
(or such shorter time as may be agreed between the Cash Manager, the Issuer,
the Servicer and the Security Trustee) of its resignation to the Issuer, the
Servicer, the Seller and the Security Trustee, provided that:
(a) a substitute cash manager shall be appointed by the Issuer,
such appointment to be effective not later than the date of such termination;
(b) such substitute cash manager has the requisite cash
management experience to perform the functions to be given to it under the
Cash Management Agreement and is approved by the Issuer and the Security
Trustee; and
(c) such substitute cash manager:
(i) must agree to enter into an agreement with the Issuer on
terms commercially acceptable in the market, pursuant to which the substitute
cash manager agrees to assume and perform all material duties and obligations
of the Cash Manager under the Cash Management Agreement;
(ii) (if Notes remain outstanding) must be a party that the
Rating Agencies have previously confirmed by whatever means such Rating
Agencies consider appropriate (provided that the Issuer is permitted to and
does confirm in writing (including by email) to the Security Trustee that such
confirmation has been obtained) the appointment of which will not cause the
then-current ratings of the Notes to be adversely affected unless the relevant
Class or Classes of Noteholders (acting by way of an Extraordinary Resolution)
otherwise agree; and
(iii) will be subject to the prior written approval of the
Security Trustee (acting pursuant to the Deed of Charge).
If, by the end of the notice period, a successor Cash Manager has not been
appointed, the Cash Manager may itself select a successor to be appointed in
accordance with the Cash Management Agreement.
Governing Law
The Cash Management Agreement and any non-contractual obligations arising out
of or in connection with it will be governed by English law.
The Liquidity Facility Agreement
On or prior to the Closing Date, the Issuer will enter into a liquidity
facility agreement with, among others, the Liquidity Facility Provider (the
"Liquidity Facility Agreement") which provides for a liquidity facility to
be made available to the Issuer which the Issuer may draw on in certain
specified circumstances during the Liquidity Commitment Period.
"Liquidity Commitment Period" means a period of 364 days from the Liquidity
Facility Agreement or, if the Liquidity Facility Agreement is extended in
accordance with its terms, the period ending on the date set out in the
relevant renewal request or, if such date is not a Business Day, the preceding
Business Day.
Liquidity Drawings and Standby Drawings may only be drawn in Sterling.
If the Liquidity Facility Provider does not intend to renew its commitment
under the Liquidity Facility Agreement (the "Liquidity Facility"), it will
inform the Issuer (who shall inform the Rating Agencies) and the Security
Trustee, upon which the Liquidity Facility Provider shall use its reasonable
endeavours to arrange, and to co-operate with the Issuer, as the case may be,
to appoint a replacement Liquidity Facility Provider. The Issuer must
promptly notify the Rating Agencies of any renewal request made or agreed to
or any renewal refusal by the Liquidity Facility Provider. The Liquidity
Facility Provider is not obliged to agree to extend the Liquidity Commitment
Period and in no event will the Liquidity Commitment be extended beyond the
earlier of (i) the date on which all the Notes have been redeemed in full and
(ii) the Final Maturity Date.
The Liquidity Facility
As of the Closing Date, the Liquidity Commitment is £2,929,810.00 (the
"Original Liquidity Commitment"). The aggregate amount of the loans advanced
under the Liquidity Facility shall not at any time exceed the lower of:
(a)
(i) as of the Closing Date, £0;
(ii) prior to the LF Replacement Date, the LF Required Amount;
(iii) from (and including) the LF Replacement Date to (but
excluding) the LF Cancellation Date, the greater of:
(A) zero; and
(B) the LF Required Amount less the amount standing to the credit
of the Standby Account; and
(iv) from (and including) the LF Cancellation Date, zero; and
(b) such lesser amount as results from the cancellation and
reduction in the Liquidity Commitment in accordance with the Liquidity
Facility Agreement,
(the "Liquidity Commitment"). At no time shall the Liquidity Facility
Provider be obliged to lend more than the Liquidity Commitment which applies
at that time.
The obligation of the Liquidity Facility Provider to make a loan under the
Liquidity Facility is subject to the further condition precedent that on both:
(a) the date a request is made by or on behalf of the Issuer for
a Liquidity Drawing or a Standby Drawing; and
(b) the LF Drawdown Date for that loan made pursuant to the
Liquidity Facility,
no Liquidity Facility Event of Default is outstanding or would result from the
making of the loan under the Liquidity Facility.
The amount available for drawdown under the Liquidity Facility will decrease
as amounts standing to the credit of the Class A and B Liquidity Facility
Reserve Fund increase.
Each of the following events is a "Liquidity Facility Event of Default"
(whether or not caused by any reason whatsoever outside the control of the
Issuer or any other person):
(a) the Issuer does not pay on the due date (other than by
reason of administrative or technical error remedied within three Business
Days) any amount payable by it under the Liquidity Documents at the place at
and in the currency in which it is expressed to be payable; or
(b) an Enforcement Notice is served; or
(c) it is or becomes unlawful for the Issuer to perform any of
its obligations under the Liquidity Facility Agreement.
"LF Cancellation Date" means the earlier of:
(a) the LRF Date;
(b) the end of the Liquidity Commitment Period;
(c) the Final Maturity Date;
(d) the Class A Redemption Date; and
(e) the occurrence of a Liquidity Facility Event of
Default.
"LF Class A and B Liquidity Reserve Fund Required Amount" means:
(a) on the Closing Date, zero;
(b) on any Interest Payment Date up to but excluding the
Class B Redemption Date, subject to a minimum floor of £250,000, an amount
equal to 1.00 per cent. of the aggregate current Principal Amount Outstanding
of the Class A Notes and Class B Notes prior to the application of Available
Principal Receipts on such Interest Payment Date; and
(c) on each Interest Payment Date on and from the Class B
Redemption Date, zero
"LF Relevant Event" means the occurrence of either or both of the following
events:
(a) the Liquidity Facility Provider ceasing to have the LF
Required Ratings; or
(b) the refusal by the Liquidity Facility Provider to
grant an extension of the Liquidity Commitment Period in accordance with the
terms and conditions of the Liquidity Facility Agreement or the failure of the
Liquidity Facility Provider to respond to a Renewal Request within the
applicable time periods and, in each case, the Liquidity Facility Provider is
unable to arrange for a Substitute Liquidity Facility Provider on
substantially the same terms and conditions as the Liquidity Facility
Agreement, in accordance with the terms of the Liquidity Facility Agreement.
"LF Replacement Date" means the date on which a LF Relevant Event has
occurred.
"LF Required Amount" means:
(a) on the Closing Date, £0;
(b) after the Closing Date, the higher of:
(i) the LF Class A and B Liquidity Reserve Fund Required
Amount less the Previous Cash Liquidity Reserve Accumulated; and
(ii) zero.
"Liquidity Documents" means the Liquidity Facility Agreement and any novation
certificate delivered pursuant to the Liquidity Facility Agreement or any
other document designated as such by the Liquidity Facility Provider and the
Issuer.
"Liquidity Repayment Amount" means, in respect of any Interest Payment Date,
an amount calculated in accordance with the following formula:
A-B
Where:
A = the amount of any previous Liquidity Drawings which are due to be repaid
on such Interest Payment Date
B = any Available Revenue Receipts available for application in accordance
with item (d) of the Pre-Enforcement Revenue Priority of Payments on such
Interest Payment Date, towards payment of such amount (or if any such amount
is less than zero, it will be zero);
"LRF Date" means the first Interest Payment Date on or after the LF
Replacement Date on which the aggregate amount of all Standby Drawings
standing to the credit of the Standby Account is equal to or greater than the
LF Required Amount.
"Previous Cash Liquidity Reserve Accumulated" means:
(a) on the Closing Date, zero; and
(b) on any Interest Payment Date up to but excluding the
Class B Redemption Date, the lower of:
(i) the LF Class A and B Liquidity Reserve Fund Required
Amount; and
(ii) the highest amount previously standing to the credit
of the Class A and B Liquidity Reserve Fund Account prior to the application
of the Pre-Enforcement Revenue Priority of Payments on that Interest Payment
Date.
Purpose
The Liquidity Facility may be used on any Interest Payment Date prior to the
Calculation Date immediately preceding the Class A Redemption Date (prior to
the service of an Enforcement Notice) to cure any Class A Liquidity Deficit
which exists on that Interest Payment Date after the application of Principal
Addition Amounts on that Interest Payment Date.
Liquidity Drawings
The Issuer will make (or will procure the making by the Cash Manager on behalf
of the Issuer of) a drawing pursuant to the Liquidity Facility Agreement in an
amount equal to any Class A Liquidity Deficit on the relevant Interest Payment
Date to cover such Class A Liquidity Deficit which exists on that Interest
Payment Date after the application of Principal Addition Amounts.
The Issuer shall use the proceeds of any Liquidity Drawing on the relevant
Interest Payment Date to cure a Class A Liquidity Deficit after the
application of Principal Addition Amounts.
No Liquidity Drawing may be made or requested to be made (i) if the Liquidity
Required Amount is zero, (ii) following the LF Cancellation Date; or (iii) if
any Liquidity Facility Event of Default is continuing or would result from the
maintaining of such Standby Drawing.
Priorities of Payments
All payments due to the Liquidity Facility Provider under the Liquidity
Facility Agreement will rank ahead of payments of interest on and repayments
of principal on the Notes and Certificates.
Extension of Liquidity Commitment Period
The Issuer may, no earlier than 50 calendar days and no later than 40 calendar
days before the end of the Liquidity Commitment Period, deliver to the
Liquidity Facility Provider, with a copy to the Security Trustee, the Cash
Manager and the Rating Agencies, an irrevocable request that the Liquidity
Commitment Period should be extended to a date that is not more than 364 days
from the last day of the then current Liquidity Commitment Period. The
Liquidity Facility Provider is not obliged to agree to extend the Liquidity
Commitment Period. If the Liquidity Facility Provider does not intend to
renew its commitment, it will inform the Issuer (who will inform the Rating
Agencies), the Cash Manager and the Security Trustee not less than 30 days
prior to the end of a Liquidity Commitment Period (an "Extension Refusal")
(and, where the Issuer has not received a response from the Liquidity Facility
Provider to a renewal request by close of business on the 30th day prior to
the end of a Liquidity Commitment Period then the Liquidity Facility Provider
shall be deemed to have delivered an Extension Refusal) and the Issuer shall
forthwith deliver a notice of the same to the Rating Agencies, the Cash
Manager and the Security Trustee.
On the issue of an Extension Refusal or the occurrence of a deemed Extension
Refusal, the Liquidity Facility Provider shall, before the end of the
Liquidity Commitment Period, use reasonable endeavours to arrange for a
replacement and to co-operate with the Issuer in order to appoint a Liquidity
Facility Provider, which shall comply with the criteria provided in the
Liquidity Facility Agreement including, inter alia, satisfying the LF Required
Ratings, to provide a facility to the Issuer on substantially the same terms
and conditions as provided under the Liquidity Facility Agreement (on economic
terms no more onerous to the Issuer than those set out in the Liquidity
Facility Agreement) and to accept a commitment of an amount equal to the
then-current Liquidity Commitment and to accede to the Deed of Charge as a
Secured Creditor.
In no event may the Liquidity Commitment be extended beyond the earlier of:
(a) Class A Redemption Date; and
(b) the Final Maturity Date (for the avoidance of doubt, no
Liquidity Drawing may be made on the Final Maturity Date).
LF Required Ratings
The Liquidity Facility Agreement will provide that, at all times, the
Liquidity Facility Provider will have:
(a) in respect of credit ratings assigned by S&P, a
long-term rating of the Liquidity Facility Provider's unguaranteed, unsecured
and unsubordinated debt obligations of at least A by S&P or such other
lower rating which is consistent with the then current rating methodology of
S&P Global Ratings in respect of the then current ratings of the Notes;
and
(b) in respect of DBRS (if the Liquidity Facility Provider has
been assigned a credit rating by DBRS):
(i) if DBRS has assigned a long-term COR to the institution
acting as Liquidity Facility Provider, a rating that is the higher of:
(A) the DBRS rating that is the COR for the relevant institution;
and
(B) the issuer rating or long-term senior unsecured debt or
deposit rating from DBRS for the relevant institution,
in each case as is commensurate with the ratings assigned to the Most Senior
Class of Notes from time to time as set out in the table below; or
(C) if a long-term COR is not available from DBRS for the relevant
institution, an issuer rating or long-term senior unsecured debt or deposit
rating from DBRS for the relevant institution (whichever is the higher) as is
commensurate with the ratings assigned to the Most Senior Class of Notes from
time to time as set out in the table below; or
DBRS
Current rating of the Most Senior Class of Notes Minimum LF Required Ratings
'AAA (sf)' 'A'
'AA (high) (sf)' 'A (low)'
'AA (sf)' 'BBB (high)'
'AA (low) (sf)' 'BBB (high)'
'A (high) (sf)' 'BBB'
'A (sf)' 'BBB (low)'
'A (low) (sf)' 'BBB (low)'
'BBB (high) (sf)' 'BBB (low)'
'BBB (sf)' 'BBB (low)'
'BBB (low) (sf)' 'BBB (low)'
(ii) to the extent that DBRS has not assigned a credit rating to
the Liquidity Facility Provider, the DBRS Minimum Equivalent Rating shall
apply to the DBRS rating as is commensurate with the ratings assigned to the
Most Senior Class of Notes from time to time as set out in the table above,
(the "LF Required Ratings").
Standby Drawings
If:
(a) the Liquidity Facility Provider ceases to have the LF
Required Ratings; or
(b) the Liquidity Facility Provider issues an Extension Refusal
(or is deemed to have issued an Extension Refusal);
and:
(c) the Liquidity Facility Provider is unable to arrange for a
substitute Liquidity Facility Provider; and
(d) the Issuer is unable to arrange for a substitute Liquidity
Facility Provider,
then the Issuer shall, and subject to the terms of the Liquidity Facility
Agreement, require the Liquidity Facility Provider to pay into the Standby
Account which is maintained with the Account Bank or a substitute appointed in
accordance with the requirements under the Bank Account Agreement, an amount
(a "Standby Drawing") equal to the Available Liquidity Commitment under the
Liquidity Facility Agreement not later than (i) 30 days following the
downgrade of the Liquidity Facility Provider by S&P; (ii) 30 days
following the downgrade of the Liquidity Facility Provider by DBRS; or (iii)
two Business Days prior to the last day of the Liquidity Commitment Period in
the event of an Extension Refusal by the Liquidity Facility Provider (as
applicable). No Standby Drawing may be made or requested to be made (A) if
the Liquidity Required Amount is zero, (B) following the LF Cancellation Date;
or (C) if any Liquidity Facility Event of Default is continuing or would
result from the maintaining of such Standby Drawing.
"Available Liquidity Commitment" means the undrawn balance of the Liquidity
Commitment less any amounts anticipated to be repaid and redrawn on the
immediately succeeding Interest Payment Date.
In addition, if a Liquidity Facility Provider ceases to have a LF Required
Rating, the Liquidity Facility Provider shall use reasonable endeavours
(without any obligation to do so) to procure a replacement Liquidity Facility
Provider with the LF Required Ratings. If the Liquidity Facility Provider
ceases to have the LF Required Ratings and a transfer to another liquidity
facility provider would otherwise have to be made but there is no other
liquidity facility provider with the LF Required Ratings or if no other
liquidity facility provider agrees to such transfer, the Issuer shall use
reasonable endeavours, subject to it having sufficient funds to do so, to seek
to agree such other arrangement which (i) is approved in writing by the
Security Trustee and (ii) will not result in a downgrade, withdrawal or
suspension of the then current ratings assigned by a Rating Agency to the
Notes. No replacement entity which does not fully meet the ratings
requirements of the Liquidity Facility Provider shall be appointed unless a
Rating Agency Confirmation has been given in relation to such appointment (it
being acknowledged that there is no obligation on any of the Rating Agencies
to provide any advice or Rating Agency Confirmation). The Issuer shall keep
the Security Trustee informed of any and all discussions which it has with the
Rating Agencies and shall take account of any views which they may express as
to the same (it being further acknowledged that there is no obligation on any
of the Rating Agencies to provide any advice or Rating Agency Confirmation).
Amounts standing to the credit of the Standby Account will be available to the
Issuer to be drawn in the same circumstances as the Liquidity Drawings (as
described above) and otherwise in the circumstances provided in the Liquidity
Facility Agreement in order to make a repayment of a Standby Drawing or, in
the case of interest earned on the Standby Account, in order to pay interest
on a Standby Drawing to the Liquidity Facility Provider (in each case, subject
to and in accordance with the terms of the Liquidity Facility Agreement) and
all repayments of Liquidity Drawings will, after a Standby Drawing has been
made, be paid into the Standby Account. If the amount standing to the credit
of the Standby Account exceeds the LF Required Amount, an amount equal to the
excess will be paid to the Liquidity Facility Provider.
A commitment fee will accrue with respect to the Liquidity Facility at the
rate of SONIA plus 0.90 per cent. per annum on the undrawn, uncancelled amount
of the Liquidity Commitment. The accrued commitment fee is payable monthly
in arrears on each Interest Payment Date.
Interest
Liquidity Drawings and Standby Drawings will bear interest. The rate of
interest payable to the Liquidity Facility Provider in relation to Liquidity
Drawings and Standby Drawings outstanding during the applicable Liquidity
Facility Interest Period will be a rate equal to the sum of Compounded Daily
SONIA and 0.90 per cent. per annum.
"LF Drawdown Date" means the date of the advance of a Liquidity Drawing or a
Standby Drawing, as the case may be.
"Liquidity Facility Interest Period" means in respect of a Liquidity Facility
drawing, each period beginning on (and including) the LF Drawdown Date (or
deemed LF Drawdown Date) thereof and ending on (but excluding) the following
Interest Payment Date and thereafter, for as long as the same is outstanding,
each period from (and including) an Interest Payment Date to (but excluding)
the following Interest Payment Date.
Interest on each Liquidity Drawing and each Standby Drawing shall accrue daily
and shall be calculated on the outstanding daily balance of such Liquidity
Drawing or Standby Drawing on the basis of actual days elapsed and a 365-day
year. The Cash Manager or, in certain circumstances where the Cash Manager
is unable to do so, the Liquidity Facility Provider shall calculate the rate
of interest applicable on each Liquidity Drawing and Standby Drawing for each
Liquidity Facility Interest Period and shall notify the Issuer and the
Liquidity Facility Provider of such amounts (including any interest due on any
Liquidity Drawing or Standby Drawings or fees due and payable to the Liquidity
Facility Provider) on each Calculation Date. The Cash Manager shall calculate
the amount of any Liquidity Repayment Amount in respect of each Interest
Payment Date and shall notify the Liquidity Facility Provider of such amount
on each Calculation Date.
Repayment and re-drawing
If a Liquidity Drawing is not repaid on the relevant Interest Payment Date,
the relevant Liquidity Drawing will be deemed to have been repaid (but only
for the purposes of the Liquidity Facility) and redrawn on such Interest
Payment Date in an amount equal to all amounts outstanding (including, for the
avoidance of doubt, any interest that has accrued and is payable on such
Liquidity Drawing pursuant to the Liquidity Facility Agreement) provided that
the aggregate of the amounts drawn together with other Liquidity Drawings will
not exceed the Liquidity Commitment. This procedure will be repeated on each
subsequent Interest Payment Date, up to the amount of the Liquidity
Commitment, until all amounts outstanding are paid and/or repaid or until the
earlier of the Final Maturity Date, the date on which the Notes have been
redeemed in full or the date on which a Liquidity Facility Event of Default
has occurred.
Cancellation of the Liquidity Commitment
Unless terminated in accordance with the terms of the Liquidity Facility
Agreement, the Liquidity Commitment shall be automatically cancelled on the LF
Cancellation Date.
The Issuer may, without premium or penalty, voluntarily cancel the undrawn and
un-cancelled part of the Liquidity Commitment in whole or in part at any time
provided that certain conditions are met, including that both of the Rating
Agencies have provided a Rating Agency Confirmation that such cancellation
will not result in a downgrade, suspension on or withdrawal of any of the
Notes or otherwise have a material adverse effect on the then-current rating
of any the Notes or, if the ratings of any of the Notes have previously been
downgraded suspended or withdrawn, such cancellation will not prevent the
restoration of the rating of such rating of the Notes. The Rating Agencies
are under no obligation to provide such confirmation.
The Liquidity Facility Provider may at any time assign, transfer or novate any
of its rights and/or obligations under the Liquidity Facility Agreement to a
"qualifying lender" which has the LF Required Ratings, provided that the
Issuer and the Security Trustee are promptly notified of any such assignment,
transfer or novation. The Issuer or the Security Trustee shall promptly
inform the Rating Agencies of the contents of any such notice.
The Liquidity Facility Provider
At the Closing Date, the Liquidity Facility Provider will be Banco Santander,
S.A., London Branch.
Governing Law
The Liquidity Facility Agreement and any non-contractual obligations arising
out of or in connection with it will be governed by English law.
The Bank Account Agreement
Pursuant to the terms of a bank account agreement entered into on or about the
Closing Date between the Issuer, the Issuer Account Bank, the Cash Manager and
the Security Trustee (the "Bank Account Agreement"), the Issuer will maintain
with the Issuer Account Bank the Deposit Account, the Swap Cash Collateral
Accounts, the Class A and B Liquidity Reserve Fund Account, the Standby
Account and the Issuer Profit Account which will be operated in accordance
with the Bank Account Agreement, the Cash Management Agreement, the Deed of
Charge and in relation to each Swap Cash Collateral Account, each
corresponding Swap Agreement. The Issuer Account Bank is required to have
the Account Bank Rating.
Interest
If any amount is standing to the credit of any Issuer Account, such amount
will bear or charge interest at a rate (the "Issuer Account Rate") that the
Issuer Account Bank and the Issuer may agree from time to time.
A negative interest rate would result in a charge payable by the Issuer to the
Issuer Account Bank and will be paid using Available Revenue Receipts subject
to and in accordance with the applicable Priority of Payments.
Governing Law
The Bank Account Agreement and any non-contractual obligations arising out of
or in connection with it will be governed by English law.
Custody Agreements
Pursuant to the terms of the Swap Agreements, the Issuer and the Security
Trustee may, upon request of a Swap Provider following a Swap Collateral
Trigger Event in accordance with the terms of the Swap Credit Support Annex
related to that Swap Agreement, enter into a custody agreement in relation to
that Swap Agreement with a Custodian within 30 days of such request (each a
"Custody Agreement"), pursuant to which the Issuer will maintain with the
relevant Custodian the relevant Swap Securities Collateral Account which will
be opened within 30 days of such request and operated in accordance with the
relevant Custody Agreement, Cash Management Agreement, the Deed of Charge and
the relevant Swap Agreement. The costs associated with opening such Swap
Securities Collateral Account and fees to the Custodian shall be borne by the
Issuer.
"Custodian" means a custodian appointed pursuant to the terms of a Custody
Agreement in respect of that Swap Agreement.
"Swap Collateral Trigger Event means, in respect of a Swap Provider, the
occurrence of an Initial S&P Rating Event and/or an Initial DBRS Rating
Event (each as defined in the relevant Swap Agreement).
Governing Law
The relevant Custody Agreement and any non-contractual obligations arising out
of or in connection with it will be governed by English law.
The Corporate Services Agreement
On or prior to the Closing Date, the Issuer, the Corporate Services Provider,
the Share Trustee, Holdings and the Security Trustee will enter into a
corporate services agreement (the "Corporate Services Agreement") pursuant to
which the Corporate Services Provider will provide the Issuer and Holdings
with certain corporate and administrative functions against the payment of a
fee. Such services include, inter alia, the performance of all general
book-keeping, secretarial, registrar and company administration services for
the Issuer and Holdings (including the provision of directors), providing the
directors with information in connection with the Issuer and Holdings, and the
arrangement for the convening of shareholders' and directors' meetings.
Governing Law
The Corporate Services Agreement and any non-contractual obligations arising
out of or in connection with it will be governed by English law.
The Collection Account Declaration of Trust
On or prior to the Closing Date, the Issuer, the Seller, and the Security
Trustee will enter into a collection account declaration of trust (the
"Collection Account Declaration of Trust") pursuant to which the Seller (as
Collection Account Trustee (as defined therein)) will declare a trust (the
"Collection Account Trust") in favour of, among others, the Issuer and
itself. The Issuer's share of the Collection Account Trust at any relevant
time (the "Collection Account Issuer Trust Share") shall equal all amounts
credited to the Collection Account at such time in respect of the Loans and
their Related Security, taking into account any amounts previously paid to the
Issuer in respect of the Loans and their Related Security.
Additional beneficiaries may from time to time, on and from the Closing Date,
accede to the Collection Account Declaration of Trust without the consent of
the Issuer or the Security Trustee, however any such accession will not affect
the manner in which the Collection Account Issuer Trust Share is calculated.
Governing Law
The Collection Account Declaration of Trust and any non-contractual
obligations arising out of or in connection with it will be governed by
English law.
The Expenses Account Declaration of Trust
On or prior to the Closing Date, the Issuer, the Seller, and the Security
Trustee will enter into an expenses account declaration of trust (the
"Expenses Account Declaration of Trust") pursuant to which the Seller (as
Expenses Account Trustee (as defined therein)) will declare a trust (the
"Expenses Account Trust") in favour of, among others, the Issuer and itself.
The Issuer's share of the Expenses Account Trust at any relevant time (the
"Expenses Account Issuer Trust Share") shall equal all amounts credited to the
Expenses Account at such time in respect of the Loans and their Related
Security taking into account any amounts previously paid to the Issuer in
respect of the Loans and their Related Security.
Additional beneficiaries may from time to time on and from the Closing Date
accede to the Expenses Account Declaration of Trust without the consent of the
Issuer or the Security Trustee, however any such accession will not affect the
manner in which the Expenses Account Issuer Trust Share is calculated.
Governing Law
The Expenses Account Declaration of Trust and any non-contractual obligations
arising out of or in connection with it will be governed by English law.
Other Agreements
For a description of the Swap Agreements, see "Credit Structure" below.
Credit Structure
The Notes are obligations of the Issuer only. The Notes are not obligations
of, or the responsibility of, or guaranteed by, any person other than the
Issuer. In particular, the Notes are not obligations of, or the
responsibility of, or guaranteed by, any of the Relevant Parties. No
liability whatsoever in respect of any failure by the Issuer to pay any amount
due under the Notes shall be accepted by any of the Relevant Parties or by any
other person other than the Issuer.
The structure of the credit support arrangements may be summarised as follows:
1. Liquidity Support for the Notes provided by Available
Revenue Receipts
It is anticipated that, during the life of the Notes, the interest payable by
Borrowers on the Loans will, assuming that all of the Loans are fully
performing (with a constant prepayment rate of zero per cent. on their Current
Balances), be sufficient so that the Available Revenue Receipts will be
sufficient to pay the amounts payable under items (a) to (z) (inclusive) of
the Pre-Enforcement Revenue Priority of Payments.
Available Revenue Receipts will be applied (after making payments ranking
higher in the Pre-Enforcement Revenue Priority of Payments) on each Interest
Payment Date in accordance with the Pre-Enforcement Revenue Priority of
Payments, towards reducing any Principal Deficiency Ledger entries which may
arise from Losses on the Portfolio, from the application of Available
Principal Receipts as Principal Addition Amounts to cure any Senior Expenses
Deficit in accordance with item (b) of the Pre-Enforcement Principal Priority
of Payments and from the application of Available Principal Receipts to credit
the Standby Account pursuant to item (c) of the Pre-Enforcement Principal
Priority of Payments. Available Principal Receipts shall only be applied to
provide for any such Senior Expenses Deficit in respect of item (i), (m), (o)
or (q) of the Pre-Enforcement Revenue Priority of Payments if the relevant PDL
Condition applies.
To the extent that the amount of Available Revenue Receipts on each Interest
Payment Date up to but excluding the Class B Redemption Date exceeds the
aggregate of the payments required to be met under items (a) to (g) and (i)
(inclusive) of the Pre-Enforcement Revenue Priority of Payments, such excess
is available to replenish the Class A and B Liquidity Reserve Fund up to an
amount equal to the Previous Cash Liquidity Reserve Accumulated.
On the Final Redemption Date or on each Interest Payment Date from and
including the Optional Redemption Date, to the extent that the amount of
Available Revenue Receipts exceeds the aggregate of the payments required to
be met under items (a) to (u) (inclusive) of the Pre-Enforcement Revenue
Priority of Payments, an amount equal to the lesser of (i) all remaining
amounts (if any); and (ii) the amount required by the Issuer to pay in full
all amounts payable under items (d) to (h) (inclusive) of the Pre-Enforcement
Principal Priority of Payments, less any Available Principal Receipts (other
than paragraph (c) of the definition thereof) otherwise available to the
Issuer, is available as Enhanced Amortisation Amounts to be applied as
Available Principal Receipts in accordance with the Pre-Enforcement Principal
Priority of Payments.
"Final Redemption Date" means the Interest Payment Date in respect of which
the Cash Manager determines on the immediately preceding Calculation Date
that, following the application on such Interest Payment Date of (i) Available
Revenue Receipts in accordance with the Pre-Enforcement Revenue Priority of
Payments, (ii) Class A and B Liquidity Reserve Fund Release Amounts in
meeting any Class A and B Liquidity Deficit and any Liquidity Drawing in
meeting any Class A Liquidity Deficit, in each case, against the relevant
items in the Pre-Enforcement Revenue Priority of Payments in the order that
they appear in the Pre-Enforcement Revenue Priority of Payments, (iii) the sum
of the Available Principal Receipts (other than paragraph (c) of the
definition thereof), (iv) all amounts standing to the credit of the Class A
and B Liquidity Reserve Fund Account (after the application of any Class A and
B Liquidity Reserve Fund Release Amounts) and (v) all amounts which (but for
the occurrence of the Final Redemption Date) would have been available for
application pursuant to items (x) to (z) (inclusive) of the Pre-Enforcement
Revenue Priority of Payments, such amounts would be sufficient to redeem in
full the Notes on such Interest Payment Date, including, as the case may be,
as a result of the mandatory redemption of the Notes pursuant to Condition 8.3
(Mandatory Redemption of the Notes in Full) or Condition 8.4 (Mandatory
Redemption of the Notes for Taxation or Other Reasons).
2. Class A and B Liquidity Reserve Fund and Class A and B
Liquidity Reserve Fund Account
On the Closing Date, the Cash Manager on behalf of the Issuer will establish a
fund (the "Class A and B Liquidity Reserve Fund" ) to provide liquidity
support (and ultimately, credit enhancement) for the Class A Notes and the
Class B Notes. The Class A and B Liquidity Reserve Fund will not be funded on
the Closing Date.
After the Closing Date, on each Interest Payment Date up to but excluding the
Class B Redemption Date, the Class A and B Liquidity Reserve Fund will be (as
applicable and using Available Revenue Receipts) replenished up to the
Previous Cash Liquidity Reserve Accumulated under item (k) of the
Pre-Enforcement Revenue Priority of Payments and funded up to the Class A and
B Liquidity Reserve Fund Required Amount under item (s) of the Pre-Enforcement
Revenue Priority of Payments and the Cash Manager will credit to the Class A
and B Liquidity Reserve Fund Account the amount of any Liquidity Drawing made
under the Liquidity Facility Agreement to cure any remaining Class A Liquidity
Deficit on that Interest Payment Date after having applied Principal Addition
Amounts.
The Issuer may invest the amounts standing to the credit of the Class A and B
Liquidity Reserve Fund Account from time to time in Authorised Investments.
The Cash Manager will maintain the Class A and B Liquidity Reserve Fund
Account pursuant to the Cash Management Agreement.
Following the determination by the Cash Manager on each Calculation Date (up
to and including the Calculation Date immediately preceding the Class B
Redemption Date) of the Class A and B Liquidity Reserve Fund Required Amount
in respect of the immediately following Interest Payment Date, the Cash
Manager shall determine the Class A and B Liquidity Reserve Fund Excess Amount
for application as Available Revenue Receipts on the immediately following
Interest Payment Date (if any). On each Interest Payment Date up to and
including the Class B Redemption Date, the Cash Manager will apply as
Available Revenue Receipts the Class A and B Liquidity Reserve Fund Excess
Amount (as determined on the immediately preceding Calculation Date).
On any Calculation Date up to but excluding the Calculation Date immediately
preceding the Class B Redemption Date (prior to the service of an Enforcement
Notice), if the Cash Manager determines that on the immediately following
Interest Payment Date, there would be a Class A and B Liquidity Deficit (after
the application of Available Revenue Receipts but prior to the application of
any Principal Addition Amounts), the Cash Manager will apply on such Interest
Payment Date an amount from the Class A and B Liquidity Reserve Fund equal to
the lesser of:
(a) the amount standing to the credit of the Class A and B
Liquidity Reserve Fund Account on such Interest Payment Date; and
(b) the amount of such Class A and B Liquidity Deficit,
(such amount being the "Class A and B Liquidity Reserve Fund Release Amount"),
in meeting such Class A and B Liquidity Deficit against the relevant items in
the Pre-Enforcement Revenue Priority of Payments in the order that they appear
in the Pre-Enforcement Revenue Priority of Payments (any such amount to be
debited from the Class A and B Liquidity Reserve Fund Account immediately
after the application of any Available Revenue Receipts pursuant to the
Pre-Enforcement Revenue Priority of Payments on such Interest Payment Date).
On the Class B Redemption Date, all amounts standing to the credit of the
Class A and B Liquidity Reserve Fund will be applied, as Available Revenue
Receipts in accordance with the Pre-Enforcement Revenue Priority of Payments.
As used in this Prospectus:
"Class A Liquidity Deficit" means, on any Interest Payment Date, an amount
equal to any shortfall in Available Revenue Receipts (excluding paragraphs (j)
and (k) of the definition of Available Revenue Receipts) to pay items (a) to
(g) (inclusive) of the Pre-Enforcement Revenue Priority of Payments, as
determined by the Cash Manager on the immediately preceding Calculation Date.
"Class A and B Liquidity Deficit" means, on any Interest Payment Date, an
amount equal to any shortfall in Available Revenue Receipts (excluding
paragraphs (j) and (k) of the definition of Available Revenue Receipts) to pay
items (a) to (g) and (i) (inclusive) of the Pre-Enforcement Revenue Priority
of Payments as determined by the Cash Manager on the immediately preceding
Calculation Date;
"Class A and B Liquidity Reserve Fund Account" means the account maintained by
the Cash Manager on behalf of the Issuer which records amounts credited to,
and debited from, the Class A and B Liquidity Reserve Fund.
"Class A and B Liquidity Reserve Fund Excess Amount" means on any Interest
Payment Date an amount equal to the greater of:
(a) zero; and
(b) the amount standing to the credit of the Class A and B
Liquidity Reserve Fund Account on such Interest Payment Date, less the Class A
and B Liquidity Reserve Fund Required Amount on such Interest Payment Date.
"Class A and B Liquidity Reserve Fund Required Amount" means:
(a) on the Closing Date, zero;
(b) on any Interest Payment Date up to but excluding the
Class B Redemption Date, the lower of:
(i) subject to a minimum floor of £250,000, an amount
equal to 1 per cent. of the aggregate current Principal Amount Outstanding of
the Class A Notes and the Class B Notes prior to the application of Available
Principal Receipts on such Interest Payment Date; and
(ii) the Class A and B Liquidity Reserve Fund Scheduled
Amount in respect of that Interest Payment Date; and
(c) on each Interest Payment Date on and from the Class B
Redemption Date, zero.
Class A and B Liquidity Reserve Fund Scheduled Amount means, in respect of
each Interest Payment Date specified in the table below, the corresponding
amount specified in the right hand column of the same row:
Interest Payment Date Liquidity Reserve Fund Scheduled Amount (£)
(occurring in)
July 2025 131,656.89
August 2025 262,752.22
September 2025 393,288.39
October 2025 523,267.78
November 2025 652,692.77
December 2025 781,565.72
January 2026 909,888.98
February 2026 1,037,664.91
March 2026 1,164,895.83
April 2026 1,291,584.07
May 2026 1,417,731.94
June 2026 1,543,341.75
July 2026 1,668,415.80
August 2026 1,792,956.37
September 2026 1,916,965.73
October 2026 2,040,446.15
November 2026 2,163,399.89
December 2026 2,285,829.19
January 2027 2,407,736.29
February 2027 2,529,123.42
March 2027 2,649,992.79
April 2027 2,770,346.62
May 2027 2,890,187.10
From the June 2027 Interest Payment Date onwards 2,929,810.00
"Class A Redemption Date" means the Interest Payment Date in respect of which
the Cash Manager determines on the immediately preceding Calculation Date
that, following the application on such Interest Payment Date of (i) Available
Revenue Receipts in accordance with the Pre-Enforcement Revenue Priority of
Payments and (ii) any Class A and B Liquidity Reserve Fund Release Amounts in
meeting any Class A and B Liquidity Deficit against the relevant items in the
Pre-Enforcement Revenue Priority of Payments in the order that they appear in
the Pre-Enforcement Revenue Priority of Payments, the sum of the Available
Principal Receipts would be sufficient to redeem in full the Class A Notes on
such Interest Payment Date.
"Class B Redemption Date" means the Interest Payment Date in respect of which
the Cash Manager determines on the immediately preceding Calculation Date
that, following the application on such Interest Payment Date of (i) Available
Revenue Receipts in accordance with the Pre-Enforcement Revenue Priority of
Payments and (ii) any Class A and B Liquidity Reserve Fund Release Amounts in
meeting any Class A and B Liquidity Deficit against the relevant items in the
Pre-Enforcement Revenue Priority of Payments in the order that they appear in
the Pre-Enforcement Revenue Priority of Payments, the sum of the Available
Principal Receipts would be sufficient to redeem in full the Class A Notes and
the Class B Notes on such Interest Payment Date.
3. Liquidity Facility
On any Calculation Date up to and including the Calculation Date immediately
preceding the Class A Redemption Date (prior to the service of an Enforcement
Notice), if the Cash Manager determines that, on the immediately following
Interest Payment Date, there would be a Class A Liquidity Deficit after the
application of Available Revenue Receipts (excluding paragraph (k) of the
definition of Available Revenue Receipts) and any Principal Addition Amounts,
the Issuer (or the Cash Manager on its behalf) must on such Interest Payment
Date request a Liquidity Drawing under the Liquidity Facility Agreement in an
amount equal to such remaining Class A Liquidity Deficit and apply that amount
in meeting such Class A Liquidity Deficit against the relevant items in the
Pre-Enforcement Revenue Priority of Payments in the order that they appear in
the Pre-Enforcement Revenue Priority of Payments.
Each Liquidity Drawing in respect of any Class A Liquidity Deficit will be the
lesser of the amount of the Class A Liquidity Deficit (after the application
of any Principal Addition Amounts) and the amount available for drawings under
the Liquidity Facility. A Liquidity Drawing may only be made by a duly
completed drawdown notice signed by an authorised signatory of the Issuer.
No Liquidity Drawing may be made if a Liquidity Facility Event of Default
exists under the Liquidity Facility Agreement.
4. Use of Available Principal Receipts to pay Senior Expenses
Deficit
On each Calculation Date prior to the service of an Enforcement Notice, and
with reference to the immediately following Interest Payment Date, the Cash
Manager will calculate whether there will be a shortfall of Available Revenue
Receipts and Class A and B Liquidity Reserve Fund Release Amounts to pay:
(a) items (a) to (g) of the Pre-Enforcement Revenue Priority of
Payments;
(b) item (i) of the Pre-Enforcement Revenue Priority of
Payments;
(c) item (m) of the Pre-Enforcement Revenue Priority of
Payments;
(d) item (o) of the Pre-Enforcement Revenue Priority of
Payments; and
(e) item (q) of the Pre-Enforcement Revenue Priority of
Payments,
on such Interest Payment Date.
If the Cash Manager determines that there will be a shortfall (such shortfall
being a "Senior Expenses Deficit"), then pursuant to item (b) of the
Pre-Enforcement Principal Priority of Payments, the Cash Manager on behalf of
the Issuer shall apply (after the application of Available Revenue Receipts
(excluding any Liquidity Drawing to be made on that Interest Payment Date) and
any Class A and B Liquidity Reserve Fund Release Amounts) an amount of
Available Principal Receipts equal to the lesser of:
(i) the amount of Available Principal Receipts available for
application pursuant to the Pre-Enforcement Principal Priority of Payments on
such Interest Payment Date; and
(ii) the amount of such Senior Expenses Deficit,
(such amount being the "Principal Addition Amount"), in meeting such Senior
Expenses Deficit against the relevant items in the Pre-Enforcement Revenue
Priority of Payments in the order that they appear in the Pre-Enforcement
Revenue Priority of Payments. Available Principal Receipts shall only be
applied as Principal Addition Amounts to provide for any such Senior Expenses
Deficit in respect of item (i), (m), (o) or (q) of the Pre-Enforcement Revenue
Priority of Payments if the relevant PDL Condition applies.
Any Available Principal Receipts applied as Principal Addition Amounts will be
recorded as a debit on the Principal Deficiency Ledger (as further described
below).
5. Principal Deficiency Ledger
A Principal Deficiency Ledger will be established to record any Losses
affecting the Loans in the Portfolio and/or any Principal Addition Amounts.
The Principal Deficiency Ledger will comprise the following sub-ledgers:
(a) the Principal Deficiency Ledger relating to the Class A
Notes (the "Class A Principal Deficiency Sub-Ledger");
(b) the Principal Deficiency Ledger relating to the Class B
Notes (the "Class B Principal Deficiency Sub-Ledger");
(c) the Principal Deficiency Ledger relating to the Class C
Notes (the "Class C Principal Deficiency Sub-Ledger");
(d) the Principal Deficiency Ledger relating to the Class D
Notes (the "Class D Principal Deficiency Sub-Ledger"); and
(e) the Principal Deficiency Ledger relating to the Class E
Notes (the "Class E Principal Deficiency Sub-Ledger"),
(each a "Principal Deficiency Sub-Ledger").
Any Losses on the Portfolio, and/or any Principal Addition Amounts and/or
amounts credited to the Standby Account pursuant to item (c) of the
Pre-Enforcement Principal Priority of Payments will be recorded as a debit (on
the date that the Cash Manager is informed of such Losses by the relevant
Servicer or such Principal Addition Amounts are determined by the Cash Manager
(as applicable)):
(i) first, to the Class E Principal Deficiency Sub-Ledger up
to a maximum amount equal to the Principal Amount Outstanding of the Class E
Notes;
(ii) second, to the Class D Principal Deficiency Sub-Ledger up
to a maximum amount equal to the Principal Amount Outstanding of the Class D
Notes;
(iii) third, to the Class C Principal Deficiency Sub-Ledger up to
a maximum amount equal to the Principal Amount Outstanding of the Class C
Notes;
(iv) fourth, to the Class B Principal Deficiency Sub-Ledger up to
a maximum amount equal to the Principal Amount Outstanding of the Class B
Notes; and
(v) fifth, to the Class A Principal Deficiency Sub-Ledger up to
a maximum amount equal to the Principal Amount Outstanding of the Class A
Notes.
Investors should note that realised Losses in any period will be calculated
after applying any recoveries following enforcement of a Loan to outstanding
fees and interest amounts due and payable on the relevant Loan.
The Cash Manager will record as a credit to the Principal Deficiency Ledger
(i) Available Revenue Receipts applied pursuant to items (h), (l), (n), (p)
and (r) of the Pre-Enforcement Revenue Priority of Payments (if any) (which
amounts shall, for the avoidance of doubt, thereupon become Available
Principal Receipts) and (ii) Enhanced Amortisation Amounts applied in
accordance with item (v) of the Pre-Enforcement Revenue Priority of Payments
(which amounts shall, for the avoidance of doubt, thereupon become Available
Principal Receipts).
Any amount credited to the Principal Deficiency Ledger in respect of Enhanced
Amortisation Amounts will be reduced to the extent of any future Losses
arising in respect of the Portfolio.
If there are any Losses on the Portfolio and/or any Principal Addition Amounts
and/or amounts credited to the Standby Account pursuant to item (c) of the
Pre-Enforcement Principal Priority of Payments recorded against the Principal
Deficiency Ledgers, then the Enhanced Amortisation Amounts shall be applied to
reduce:
(i) first, the Class A Principal Deficiency Sub-Ledger to
zero;
(ii) second, the Class B Principal Deficiency Sub-Ledger to
zero;
(iii) third, the Class C Principal Deficiency Sub-Ledger to zero;
(iv) fourth, the Class D Principal Deficiency Sub-Ledger to zero;
and
(v) fifth, the Class E Principal Deficiency Sub-Ledger to zero.
If there are no Losses on the Portfolio and/or any Principal Addition Amounts
recorded against the Principal Deficiency Ledgers and/or amounts credited to
the Standby Account pursuant to item (c) of the Pre-Enforcement Principal
Priority of Payments, then no adjustments will be made to the Principal
Deficiency Ledgers in accordance with item (v) of the Pre-Enforcement Revenue
Priority of Payments.
"Losses" means the aggregate of (a) all realised losses on the Loans
comprising the Portfolio which are not recovered from the proceeds following
the sale of the Property to which such Loan relates or any losses realised by
the Issuer on the Loans comprised in the Portfolio as a result of the failure
of the Collection Account Bank to remit funds to the Issuer and (b) any loss
to the Issuer as a result of an exercise of any set off by any Borrower in
respect of its Loan comprising the Portfolio.
6. Available Revenue Receipts and Available Principal Receipts
Available Revenue Receipts and Available Principal Receipts shall be applied
on each Interest Payment Date in accordance with the Pre-Enforcement Revenue
Priority of Payments and the Pre-Enforcement Principal Priority of Payments,
respectively. Other than amounts which the Issuer expects to generate in
each accounting period as its profit in respect of the business of the Issuer,
amounts standing to the credit of the Issuer Profit Account or the Class A and
B Liquidity Reserve Fund Account (other than any amounts representing Class A
and B Liquidity Reserve Fund Release Amounts or Class A and B Liquidity
Reserve Fund Excess Amounts) and amounts standing to the credit of any Swap
Collateral Accounts (if any), it is not intended that any surplus will be
accumulated by the Issuer.
If, on any Interest Payment Date while there are Notes outstanding, the Issuer
has insufficient Available Revenue Receipts, Class A and B Liquidity Reserve
Fund Release Amounts and Principal Addition Amounts to pay the interest that
would otherwise be payable absent the deferral provisions in respect of the
Notes other than in respect of the Most Senior Class of Notes, then the Issuer
will be entitled under Condition 17 (Subordination by Deferral) to defer
payment of that amount (to the extent of the insufficiency) until the
following Interest Payment Date. Any such deferral in accordance with the
deferral provisions contained in the Conditions will not constitute an Event
of Default. However, failure to pay interest on the Most Senior Class of
Notes within any applicable grace period in accordance with the Conditions
shall constitute an Event of Default under the Notes which may result in the
Security Trustee enforcing the Security.
7. Interest Rate Risk for the Notes
Swap Agreements
On or around the Closing Date, the Issuer will enter into:
(i) one or more interest rate swap transactions (each an "HSBC
Swap Transaction"), which will be governed by a 2002 ISDA Master Agreement
(together with a schedule and credit support annex thereto) to be entered into
between the Issuer and the HSBC Swap Provider on or around the Closing Date
(the "HSBC Swap Agreement"); and
(ii) one or more interest rate swap transactions (each a
"Santander Swap Transaction"), which will be governed by a 2002 ISDA Master
Agreement (together with a schedule and credit support annex thereto) to be
entered into between the Issuer and the Santander Swap Provider on or around
the Closing Date (the "Santander Swap Agreement"),
(the HSBC Swap Transaction(s) and the Santander Swap Transaction(s) together,
the "Swap Transactions" and the HSBC Swap Agreement and the Santander Swap
Agreement together, the "Swap Agreements").
Swap Transactions
Some of the Loans in the Portfolio pay or will pay a fixed rate of interest
for an initial period of time. However, the Issuer's liabilities under the
Notes are based on the Compounded Daily SONIA for the relevant period.
To provide a hedge against the possible variance between:
(a) the fixed rates of interest payable on the Fixed Rate Loans
in the Portfolio; and
(b) the rate of interest under the Notes being calculated by
reference to Compounded Daily SONIA,
the Issuer will enter into one or more Swap Transactions with the Swap
Providers under the Swap Agreements on the Closing Date.
Under each Swap Transaction, for each Swap Calculation Period falling prior to
the termination date of the Swap Transaction, the following amounts will be
calculated:
(a) the amount produced by applying Compounded Daily SONIA
(provided that, for the purposes of the relevant Swap Agreement, Compounded
Daily SONIA shall be determined on the relevant Swap Floating Rate
Determination Date and calculated by the relevant Swap Provider, as
calculation agent under that Swap Agreement) to the Notional Amount (as
defined below) of the relevant Swap Transaction for the relevant Swap
Calculation Period and multiplying the resulting amount by the Day Count
Fraction (as defined below) (the "Swap Provider Swap Amount"); and
(b) the amount in Sterling produced by applying the applicable
Fixed Rate (as defined in the relevant Swap Agreement) in respect of the
relevant Swap Calculation Period (as specified in the schedule to the
confirmation evidencing the Swap Transaction) to the Notional Amount of the
relevant Swap Transaction for the relevant Swap Calculation Period and
multiplying the resulting amount by the Day Count Fraction (the "Issuer Swap
Amount").
After these two amounts are calculated in relation to a Swap Payment Date, the
following payments will be made on that Swap Payment Date in respect of the
relevant Swap Transaction:
(a) if the Swap Provider Swap Amount for that Swap Payment Date
is greater than the Issuer Swap Amount for that Swap Payment Date, then the
relevant Swap Provider will pay an amount equal to the excess to the Issuer;
(b) if the Issuer Swap Amount for that Swap Payment Date is
greater than the Swap Provider Swap Amount for that Swap Payment Date, then
the Issuer will pay an amount equal to the excess to the relevant Swap
Provider; and
(c) if the two amounts are equal, neither party will make a
payment to the other.
For the purposes of calculating both the Issuer Swap Amount and the Swap
Provider Swap Amount in respect of a Swap Calculation Period, the notional
amount of the relevant Swap Transaction (the "Notional Amount") will be set
out in a pre-agreed table to the relevant Swap Transaction and based on the
expected repayment profile of the proportion of Fixed Rate Loans applicable to
such Swap Transaction with the relevant Swap Provider assuming constant
prepayment rate for each period based on the characteristics of the Loans in
the Closing Portfolio and applying the Seller's forecasted prepayment
behaviour on the Current Balance of the Fixed Rate Loans in the Portfolio as
at the Cut-Off Date.
Each Swap Transaction shall be entered into by way of (i) transferring by way
of novation and amendment one or more hedging transactions entered between any
Warehouse Borrower and the relevant Warehouse Swap Provider to the Issuer
(with the relevant Warehouse Swap Provider as the "remaining party" under the
relevant swap novation agreement); (ii) transferring by way of novation and
amendment one or more interest rate swap transactions entered into by the
Seller in conjunction with its origination pipeline; and/or (iii) new interest
rate swap transactions entered into between the Issuer and a Swap Provider, as
required.
For the purposes of determining the amounts payable under the Swap
Transaction, the following definitions apply:
"Day Count Fraction" means, in respect of the relevant Swap Transaction, in
respect of any Swap Calculation Period, the number of calendar days in that
Swap Calculation Period divided by 365;
"Period End Date" means, in respect of the relevant Swap Transaction and the
relevant Swap Agreement, the 20th day of each month in each year commencing on
20 July 2025 and ending on the termination date of that Swap Transaction, in
each case, subject to adjustment in accordance with the modified following
business day convention as set out in that Swap Agreement;
"Swap Calculation Period" means, in respect of a Swap Payment Date (other
than initial Swap Payment Date) under a Swap Transaction in respect of the
relevant Swap Agreement, each period that commences on a Period End Date under
that Swap Transaction and ends on (but excludes) the immediately following
Period End Date and in respect of the first Swap Calculation Period, means the
period commencing on (and including) the Closing Date and ending on (but
excluding) the first Period End Date under that Swap Transaction;
"Swap Floating Rate Determination Date" means, in respect of a Swap
Transaction, in respect of each Swap Calculation Period under that Swap
Transaction, the day which is 5 Business Days prior to the Period End Date for
such Swap Calculation Period; and
"Swap Payment Date" means, in respect of a Swap Transaction, each Period End
Date under that Swap Transaction, provided that the initial Swap Payment Date
shall be 21 July 2025.
The Swap Transactions may not fully hedge the Issuer's interest rate risk as
discussed under the section entitled "Risk Factors - Counterparty and Third
Party Risks - Interest Rate Risk".
General
If a payment is made by a Swap Provider in respect of the relevant Swap
Agreement (other than, in relation to that Swap Agreement (i) any Early
Termination Amount (as determined in accordance with that Swap Agreement)
received by the Issuer under that Swap Agreement, (ii) Swap Collateral in
respect of that Swap Agreement, (iii) any Replacement Swap Premium paid to the
Issuer in respect of that Swap Agreement, and (iv) amounts in respect of Swap
Tax Credits in respect of that Swap Agreement on such Interest Payment Date
other than, in each case, any Swap Collateral Account Surplus which is to be
applied as Available Revenue Receipts in accordance with the Swap Collateral
Account Priority of Payments), that payment will be included in the Available
Revenue Receipts and will be applied on the relevant Swap Payment Date
according to the applicable Priority of Payments. If a payment is to be made
by the Issuer, it will be made according to the applicable Priority of
Payments of the Issuer.
Under the terms of each Swap Agreement, in the event that the relevant
rating(s) of the relevant Swap Provider assigned by a Rating Agency falls
below the required swap rating (the "Required Swap Rating") (as to which see
further the section entitled "Transaction Overview - Triggers Tables"), the
relevant Swap Provider will, in accordance with the relevant Swap Agreement,
be required to take certain remedial measures within the timeframe stipulated
in the relevant Swap Agreement and at its own cost which may include providing
collateral for its obligations under the relevant Swap Transaction(s),
arranging for its obligations under the relevant Swap Transaction(s) to be
transferred to an entity with the Required Swap Ratings or procuring another
eligible entity with the Required Swap Ratings to become co-obligor or
guarantor, as applicable, in respect of its obligations under the relevant
Swap Transaction(s). If there is an early termination of that Swap
Agreement, the Cash Manager (on behalf of the Issuer) or, following the
service of an Enforcement Notice, the Security Trustee shall instruct the
custodian, if any, to liquidate any securities constituting Swap Collateral in
the Swap Securities Collateral Account in respect of that Swap Agreement on a
delivery versus payment basis promptly following such early termination of
that Swap Agreement. However, no assurance can be given that, at the time
that such actions are required, sufficient collateral will be available to
that Swap Provider in accordance with that Swap Agreement for posting or that
another entity with the Required Swap Rating will be available to become a
replacement swap provider, co-obligor or guarantor or that the applicable Swap
Provider will be able to take the requisite other action. If the remedial
measures following a downgrade below the Required Swap Rating are not taken
within the applicable time frames, this will, in certain circumstances, permit
the Issuer to terminate that Swap Agreement early.
The Swap Transactions may be terminated in certain circumstances, including
the following, each as more specifically defined in each Swap Agreement (an
"Early Termination Event"):
(a) if there is a failure by a party to pay amounts due under
that Swap Agreement and any applicable grace period has expired;
(b) if certain insolvency events occur with respect to the
relevant Swap Provider or the Issuer;
(c) if a material misrepresentation is made by that Swap
Provider under the Swap Agreement;
(d) if a breach of a provision of that Swap Agreement by that
Swap Provider is not remedied within the applicable grace period;
(e) if a change of law results in the obligations of one of the
parties to that Swap Agreement becoming illegal;
(f) if certain force majeure events occur and result in one of
the parties to that Swap Agreement being prevented from performing its
obligations, receiving payments or complying with any material provision of
that Swap Agreement;
(g) in certain circumstances, if a deduction or withholding for,
or on account of, taxes is imposed on payments under the relevant Swap
Transaction due to a change in law;
(h) in certain circumstances, if a deduction or withholding for,
or on account of, taxes is imposed on payments under the relevant Swap
Transaction following a merger event as more particularly described in that
Swap Agreement;
(i) if that Swap Provider is downgraded and fails to comply
with the requirements of the downgrade provisions contained in that Swap
Agreement and described above;
(j) service by the Note Trustee of an Enforcement Notice on
the Issuer pursuant to Condition 11 (Events of Default) of the Notes;
(k) if there is a redemption in full of the Notes pursuant to
Condition 8.2 (Mandatory Redemption prior to the service of an Enforcement
Notice or on the Call Option Redemption Date), Condition 8.3 (Mandatory
Redemption of the Notes in Full) or Condition 8.4 (Mandatory Redemption of the
Notes for Taxation or Other Reasons); and
(l) any of the Transaction Documents are modified, amended,
varied, supplemented, or a consent or waiver is given in respect of the
Transaction Documents, without the relevant Swap Provider's prior written
consent (such consent not to be unreasonably withheld), where: (A) such
amendment, modification, variation, supplement, waiver or consent would
adversely affect that Swap Provider's rights or obligations under, or
interests in respect of: (I) the Priorities of Payment or the Swap Collateral
Account Priority of Payments; (II) the timing or amount of any payments or
deliveries due from (x) the Issuer to that Swap Provider or (y) that Swap
Provider to the Issuer; (III) that Swap Provider's status as a Secured
Creditor or that Swap Provider's rights in relation to any Security (howsoever
described, and including as a result of changing the nature or the scope of,
or releasing such Security granted by the Issuer in favour of the Security
Trustee on behalf of the Secured Creditors); (IV) any requirement to obtain
that Swap Provider's prior consent (written or otherwise) in respect of any
matter; or (B) such amendment, modification, variation, supplement, waiver or
consent relates to Condition 8 (Redemption) of the Notes or any additional
redemption rights in respect of the Notes and such amendment, modification,
variation, supplement, waiver or consent would prejudice that Swap Provider.
Whether any modification, supplement, waiver or consent would or does
adversely affect that Swap Provider's rights or obligations under, or
interests in respect of a matter or would prejudice that Swap Provider or be
adverse to that Swap Provider's interests will be determined by the relevant
Swap Provider acting in good faith and in a commercially reasonable manner.
Under the terms of each Swap Agreement, upon an early termination of a Swap
Transaction, depending on the type of Early Termination Event and the
circumstances prevailing at the time of termination, the Issuer or the
relevant Swap Provider may be liable to pay an Early Termination Amount (as
defined in the relevant Swap Agreement) to the other. This Early Termination
Amount will be calculated and made in Sterling. The amount of any
termination payment may reflect, among other things, the cost of entering into
a replacement transaction at the time, third-party market data such as rates,
prices, yields and yield curves, or similar information derived from internal
sources of the party making the determination and will include any unpaid
amounts that became due and payable on or prior to the date of termination.
Depending on the terms of the relevant Swap Transaction and the circumstances
prevailing at the time of termination, any such Early Termination Amount (as
defined in the relevant Swap Agreement) could be substantial and may affect
the funds available for paying amounts due to the Noteholders.
The Issuer will use its reasonable endeavours, upon termination of a Swap
Agreement, to find a replacement Swap Provider or enter into replacement Swap
Transactions with another existing Swap Provider, although, in each case, no
guarantees can be given of such replacement Swap Agreement and/or replacement
Swap Transactions.
The Issuer is not obliged under each Swap Agreement to gross up payments made
by it if a withholding or deduction for or on account of taxes is imposed on
payments made under the relevant Swap Transaction.
Each Swap Provider will generally be obliged to gross up payments made by it
to the Issuer if a withholding or deduction for or on account of tax (other
than withholding tax imposed under FATCA) is imposed on payments made by it
under the relevant Swap Agreement, provided that each Swap Provider will not
be required to pay any additional amount to the Issuer under that Swap
Agreement to the extent that it would not be required to be paid but for the
failure of the Issuer to comply with or perform any agreement contained in
that Swap Agreement.
Partial Swap Unwind The Issuer and each Swap Provider may, at any time,
agree to reduce the Notional Amounts of all Swap Transactions (on a pro rata
basis across all Swap Transactions) in respect of any Swap Calculation Period
under the Swap Agreements (each such reduction under a Swap Agreement, a
"Partial Swap Unwind") two Local Business Days (as defined in the relevant
Swap Agreement) prior to a Reduction Date (as defined in the Swap Agreement),
provided that immediately following any such Partial Swap Unwind:
(a) the Servicer has confirmed in writing to the Seller and the
Issuer that, following any such Partial Swap Unwind, the overall amortisation
profile in respect of the aggregate notional amount under all Swap
Transactions under all Swap Agreements will not reflect a higher prepayment
scenario in respect of the underlying Portfolio than 12.5% as at the date of
such Partial Swap Unwind;
(b) the Issuer shall give notice of the completion of each
Partial Swap Unwind to the Security Trustee, the Seller, the Cash Manager and
the Rating Agencies; and
(c) there is no positive mark-to-market (MTM) in favour of the
relevant Swap Provider in respect of each Partial Swap Unwind under a Swap
Agreement.
Each Swap Agreement and any non-contractual obligations arising out of, or in
connection with, it will be governed by English law.
Cashflows
Definition of Revenue Receipts
"Revenue Receipts" means (a) payments of interest and other fees (including
Early Repayment Charges) due from time to time under the Loans (other than
Pre-Closing Collections comprising payments of interest in respect of the
Loans in an amount equal to £1,031,787.47) and other amounts received by the
Issuer in respect of the Loans and their Related Security other than payments
of interest, fees and other amounts comprising Optional Purchase Collections,
the Optional Purchase Price received by the Issuer pursuant to the exercise of
the Call Option and Principal Receipts, (b) recoveries of interest from
Borrowers under defaulted Loans being enforced, (c) recoveries of all amounts
from Borrowers under defaulted Loans following enforcement and sale of the
relevant property and (d) the proceeds of repurchase attributable to Accrued
Interest and Arrears of Interest only of any Loan repurchased by the Seller
from the Issuer pursuant to the Mortgage Sale Agreement.
Definition of Available Revenue Receipts
"Available Revenue Receipts" means, for each Interest Payment Date, an amount
equal to the aggregate of (without double counting):
(a) all Revenue Receipts or, if in a Determination Period,
any Calculated Revenue Receipts, in each case, excluding any Reconciliation
Amounts to be applied as Available Principal Receipts on that Interest Payment
Date, received by the Issuer:
(i) during the immediately preceding Collection Period;
or
(ii) if representing amounts received in respect of any
repurchases of Loans and their Related Security by the Seller pursuant to the
Mortgage Sale Agreement, from but excluding the Collection Period Start Date
immediately preceding the immediately preceding Interest Payment Date (or, in
the case of the first Interest Payment Date, from and including the Closing
Date) to and including the immediately preceding Collection Period Start Date;
(b) interest payable to the Issuer on the Issuer Accounts
and received in the immediately preceding Collection Period (other than the
Standby Account and any amount of interest or income received in respect of
any Swap Collateral) and income from any Authorised Investments to be received
on or prior to the Interest Payment Date (other than any amount of income
received in respect of the Swap Collateral);
(c) amounts received or to be received by the Issuer
under, or in connection with, each Swap Agreement (other than (i) any Early
Termination Amount (as defined in the relevant Swap Agreement) received by the
Issuer under any Swap Agreement, (ii) Swap Collateral, (iii) any Replacement
Swap Premium paid to the Issuer, and (iv) amounts in respect of Swap Tax
Credits on such Interest Payment Date other than, in each case, any Swap
Collateral Account Surplus which is to be applied as Available Revenue
Receipts in accordance with the Swap Collateral Account Priority of Payments);
(d) on each Interest Payment Date up to but excluding the
Class B Redemption Date, the Class A and B Liquidity Reserve Fund Excess
Amount (which, for the avoidance of doubt, shall be calculated prior to
determining any Class A and B Liquidity Reserve Fund Release Amount, Principal
Addition Amounts and Liquidity Drawings (if any) to be applied on such
Interest Payment Date in accordance with the Pre-Enforcement Revenue Priority
of Payments);
(e) on the Class B Redemption Date, all amounts standing
to the credit of the Class A and B Liquidity Reserve Fund Account;
(f) on each Interest Payment Date following a
Determination Period, any Reconciliation Amounts deemed to be Available
Revenue Receipts in accordance with Condition 6.8(c) (Determinations and
Reconciliation);
(g) amounts credited to the Deposit Account on the
previous Interest Payment Date in accordance with item (y) of the
Pre-Enforcement Revenue Priority of Payments;
(h) amounts representing the Optional Purchase Price
received by the Issuer upon sale of the Loans and their Related Security
comprising the Portfolio further to the exercise of the Call Option;
(i) other net income of the Issuer received during the
immediately preceding Collection Period, excluding any Principal Receipts;
(j) amounts (which would otherwise constitute Available
Principal Receipts) determined to be applied as Available Revenue Receipts on
the immediately succeeding Interest Payment Date in accordance with item (i)
of the Pre-Enforcement Principal Priority of Payments; and
(k) any Liquidity Drawings (including drawings made from
the Standby Account as a deemed Liquidity Drawing) made with reference to such
Interest Payment Date to cure a Class A Liquidity Deficit but solely after
having applied other Available Revenue Receipts, Class A and B Liquidity
Reserve Fund Release Amounts and Principal Addition Amounts,
less:
(l) amounts (which would otherwise constitute Revenue
Receipts) applied from time to time during the immediately preceding
Collection Period and transferred to the Expenses Account pursuant to the
Servicing Agreement and the Cash Management Agreement towards making payment
of certain monies which properly belong to third parties (including the
Seller) such as (but not limited to):
(i) certain costs and expenses charged or incurred by
the Servicer in respect of its servicing of the Loans pursuant to the
Servicing Agreement, other than the Servicing Fee and not otherwise covered by
the items below;
(ii) any amounts required to be paid into the Expenses
Account in accordance with schedule 2 (Banking) of the Servicing Agreement;
(iii) payments of certain insurance premiums in respect of
the Borrower Buildings Policies and Title Indemnity Policies (to the extent
referable to the Loans);
(iv) amounts under a Direct Debit which are repaid to the
bank making the payment if such bank is unable to recoup or recall such amount
itself from its customer's account or is required to refund an amount
previously debited; and
(v) any amount received from a Borrower for the express
purpose of payment being made to a third party for the provision of a service
to that Borrower,
(items within this paragraph (l) being collectively referred to herein as
"Third Party Amounts");
(m) amounts standing to the credit of the Expenses Ledger of
the Deposit Account towards making payment of Expenses and to pay any Expenses
Unused Amount to the Seller on the First Interest Payment Date;
(n) any tax payments paid or payable by the Issuer during
the immediately preceding Collection Period to the extent not funded from
amounts standing to the credit of the Issuer Profit Account; and
(o) (taking into account any amount paid by way of Third
Party Amounts) amounts to remedy any overdraft in relation to the Collection
Account or to pay any amounts due to the Collection Account Bank.
"Expenses" means (i) any expenses incurred by the Legal Title Holder or the
Servicer and which are or are intended to be recoverable from the related
Borrower (ii) amounts required to reimburse to any Borrower any overpayments
made by such Borrower or (iii) any excess proceeds in respect of any Loan and
Related Security following the completion of the Enforcement Procedures in
respect of such Loan and Related Security (such excess proceeds to be paid to
any persons so entitled).
Application of Available Revenue Receipts prior to the service of an
Enforcement Notice on the Issuer
On each relevant Interest Payment Date prior to the service of an Enforcement
Notice by the Note Trustee on the Issuer, the Cash Manager, on behalf of the
Issuer, shall apply or provide for the application of the Available Revenue
Receipts excluding item (k) of the Available Revenue Receipts (before the
application of any Class A and B Liquidity Reserve Fund Release Amounts and
then any Principal Addition Amounts) in the following order of priority (in
each case, only if and to the extent that payments or provisions of a higher
priority have been made in full) (the "Pre-Enforcement Revenue Priority of
Payments"):
(a) first, in or towards satisfaction, pro rata and pari passu,
according to the respective amounts thereof of:
(i) any fees, costs, charges, Liabilities, expenses and all
other amounts then due to the Note Trustee and any Appointee under the
provisions of the Trust Deed and the other Transaction Documents, together
with VAT (if payable) thereon as provided therein; and
(ii) any fees, costs, charges, Liabilities, expenses and all
other amounts then due to the Security Trustee and any Appointee under the
provisions of the Deed of Charge and the other Transaction Documents, together
with VAT (if payable) thereon as provided therein;
(b) second, in or towards satisfaction, pro rata and pari passu,
according to the respective amounts thereof (in each case without double
counting) of:
(i) any amounts then due and payable to the Agent Bank, the
Registrar and the Paying Agents and any fees, costs, charges, Liabilities and
expenses then due to them under the provisions of the Agency Agreement,
together with VAT (if payable) thereon as provided therein;
(ii) any amounts then due and payable to the Cash Manager and
any fees, costs, charges, Liabilities and expenses then due to it under the
provisions of the Cash Management Agreement, together with VAT (if payable)
thereon as provided therein;
(iii) any amounts then due and payable to the Servicer and any
fees (including the Servicing Fee), costs, charges, Liabilities and expenses
then due under the provisions of the Servicing Agreement, together with VAT
(if payable) thereon as provided therein;
(iv) any amounts then due and payable to the Servicing Facilitator
and any fees, costs, charges, Liabilities and expenses then due under the
provisions of the Servicing Agreement, together with VAT (if payable) thereon
as provided therein;
(v) any amounts then due and payable to the Back-Up Servicing
Facilitator and any fees, costs, charges, Liabilities and expenses then due
under the provisions of the Servicing Agreement, together with VAT (if
payable) thereon as provided therein;
(vi) any amounts then due and payable to the Corporate Services
Provider and any fees, costs, charges, Liabilities and expenses then due under
the provisions of the Corporate Services Agreement, together with VAT (if
payable) thereon as provided therein;
(vii) any amounts then due and payable to the Issuer Account Bank
and any fees, costs, charges, Liabilities and expenses then due under the
provisions of the Bank Account Agreement, together with VAT (if applicable)
thereon as provided therein;
(viii) any amounts then due and payable to the Custodian and any fees,
costs, charges, Liabilities and expenses then due under the provisions of the
relevant Custody Agreement, together with VAT (if applicable) thereon as
provided therein; and
(ix) if applicable, the fees, costs, liabilities and expenses of
the securitisation repository or any other third-party website provider;
(c) third, in or towards satisfaction, pro rata and pari passu,
according to the respective amounts thereof of:
(i) any amounts due and payable by the Issuer to third parties
and incurred without breach by the Issuer of the Transaction Documents to
which it is a party (and for which payment has not been provided for
elsewhere) and any amounts required to pay or discharge any liability of the
Issuer for corporation tax of the Issuer (but only to the extent not capable
of being satisfied out of amounts retained by the Issuer under item (f)
below); and
(ii) any Transfer Costs which the Servicer has failed to pay
pursuant to clause 21.2 of the Servicing Agreement;
(d) fourth, in the following order of priority, to pay, in or
towards satisfaction of first, on a pro rata and pari passu basis, any amounts
(including interest and fees) due to the Liquidity Facility Provider under the
Liquidity Facility Agreement other than principal amounts and second, any
principal amounts due to the Liquidity Facility Provider under the Liquidity
Facility Agreement;
(e) fifth, in or towards, pro rata and pari passu,
satisfaction of, any amounts due to the Swap Providers in respect of the
Swap Agreements (including, if applicable, any Early Termination Amount (as
defined in the relevant Swap Agreement) due and payable by the Issuer to a
Swap Provider to the extent such amount is not discharged pursuant to the Swap
Collateral Account Priority of Payments, but excluding, if applicable, any
related Hedge Subordinated Amounts in respect of that Swap Provider);
(f) sixth, to pay the Issuer an amount equal to £100 to be
retained by the Issuer as profit in respect of the business of the Issuer (the
"Issuer Profit Amount");
(g) seventh, to provide for amounts due on the relevant Interest
Payment Date, to pay, pro rata and pari passu, interest due and payable on the
Class A Notes;
(h) eighth, (so long as the Class A Notes remain outstanding
following such Interest Payment Date), to credit the Class A Principal
Deficiency Sub-Ledger in an amount sufficient to eliminate any debit thereon
(such amounts to be applied in repayment of principal as Available Principal
Receipts);
(i) ninth, to provide for amounts due on the relevant Interest
Payment Date, to pay, pro rata and pari passu, interest due and payable on the
Class B Notes;
(j) tenth, on and from the LF Replacement Date (so long as the
Class A Notes remain outstanding following such Interest Payment Date) to
credit the Standby Account in an amount up to the LF Required Amount less
amounts standing to the credit of the Standby Account at that time (including
the amount of any Standby Drawing made under the Liquidity Facility Agreement
on that Interest Payment Date);
(k) eleventh, (so long as the Class A Notes and the Class B
Notes remain outstanding following such Interest Payment Date) to credit the
Class A and B Liquidity Reserve Fund Account up to the Previous Cash Liquidity
Reserve Accumulated;
(l) twelfth, (so long as the Class B Notes remain outstanding
following such Interest Payment Date), to credit the Class B Principal
Deficiency Sub-Ledger in an amount sufficient to eliminate any debit thereon
(such amounts to be applied in repayment of principal as Available Principal
Receipts);
(m) thirteenth, to provide for amounts due on the relevant
Interest Payment Date, to pay, pro rata and pari passu, interest due and
payable on the Class C Notes;
(n) fourteenth, (so long as the Class C Notes remain outstanding
following such Interest Payment Date), to credit the Class C Principal
Deficiency Sub-Ledger in an amount sufficient to eliminate any debit thereon
(such amounts to be applied in repayment of principal as Available Principal
Receipts);
(o) fifteenth, to provide for amounts due on the relevant
Interest Payment Date, to pay, pro rata and pari passu, interest due and
payable on the Class D Notes;
(p) sixteenth, (so long as the Class D Notes remain outstanding
following such Interest Payment Date), to credit the Class D Principal
Deficiency Sub-Ledger in an amount sufficient to eliminate any debit thereon
(such amounts to be applied in repayment of principal as Available Principal
Receipts);
(q) seventeenth, to provide for amounts due on the relevant
Interest Payment Date, to pay, pro rata and pari passu, interest due and
payable on the Class E Notes;
(r) eighteenth, (so long as the Class E Notes remain outstanding
following such Interest Payment Date), to credit the Class E Principal
Deficiency Sub-Ledger in an amount sufficient to eliminate any debit thereon
(such amounts to be applied in repayment of principal as Available Principal
Receipts);
(s) nineteenth, (so long as the Class A Notes and the Class B
Notes remain outstanding following such Interest Payment Date) to credit the
Class A and B Liquidity Reserve Fund Account up to the Class A and B Liquidity
Reserve Fund Required Amount;
(t) twentieth, to provide for amounts due on the relevant
Interest Payment Date, to pay, pro rata and pari passu, interest due and
payable on the Class X Notes;
(u) twenty-first, on any Interest Payment Date occurring prior
to the Optional Redemption Date, to provide for amounts due on the relevant
Interest Payment Date, to pay, pro rata and pari passu, principal due and
payable on the Class X Notes until the Principal Amount Outstanding on the
Class X Notes has been reduced to zero;
(v) twenty-second, on any Interest Payment Date occurring on or
after the Optional Redemption Date or the Final Redemption Date an amount
equal to the lesser of:
(i) all remaining amounts (if any); and
(ii) the amount required by the Issuer to pay in full all
amounts payable under items (d) to (h) (inclusive) of the Pre-Enforcement
Principal Priority of Payments, less any Available Principal Receipts (other
than item (c) of the definition thereof) otherwise available to the Issuer,
to be applied as Available Principal Receipts;
(w) twenty-third, on any Interest Payment Date occurring on or
after the Optional Redemption Date, pro rata and pari passu to the principal
amounts due on the Class X Notes to the extent not redeemed under item (u)
above;
(x) twenty-fourth, pro rata and pari passu between the Swap
Providers, in accordance with the terms of each relevant Swap Agreement,
amounts due to the Swap Providers in respect of any Hedge Subordinated Amount
in respect of that Swap Provider (to the extent such amount is not discharged
pursuant to the Swap Collateral Account Priority of Payments);
(y) twenty-fifth, on any Interest Payment Date falling within a
Determination Period, all remaining amounts to be credited to the Deposit
Account to be applied on the next Interest Payment Date as Available Revenue
Receipts; and
(z) twenty-sixth, on any Interest Payment Date prior to (but
excluding) the Optional Redemption Date, all remaining amounts to be applied,
pro rata and pari passu, as RC1 Payments to the RC1 Certificateholders and on
any Interest Payment Date falling on or after the Optional Redemption Date,
all remaining amounts to be applied pro rata and pari passu, as RC2 Payments
to the holders of the RC2 Residual Certificates.
As used in this Prospectus:
"Accrued Interest" means, in respect of a Loan, as at any date, the aggregate
of all interest accrued but not yet due and payable on the Loan from (and
including) the monthly payment date immediately preceding the relevant date to
(but excluding) the relevant date.
"Appointee" means any attorney, manager, agent, delegate, nominee, custodian,
co-trustee, financial adviser or other professional adviser or other person
properly appointed or employed by the Note Trustee under the Trust Deed or the
Security Trustee under the Deed of Charge (as applicable) to discharge any of
its functions.
"Arrears of Interest" means, as at any date, in respect of any Loan, the
aggregate of all interest (other than Capitalised Amounts) on that Loan which
is currently due and payable and unpaid on that date.
"Call Option Redemption Date" means any Final Redemption Date falling on the
Optional Purchase Completion Date.
"Custody Agreement" means, in relation to a Swap Agreement, any custody
agreement entered into after the Closing Date within 30 days of the Swap
Collateral Trigger Event pursuant to the terms of that Swap Agreement and
between, among others, the Issuer, the Security Trustee and the Custodian.
"Early Repayment Charge" means any charge (other than a Redemption Fee)
described in the relevant Offer Conditions which a Borrower is required to pay
in the event that such Borrower repays all or any part of the relevant Loan
prior to certain dates specified in the Offer Conditions.
"Hedge Subordinated Amounts" means, in relation to a relevant Swap Agreement,
any Early Termination Amount (as determined in accordance with the terms of
that Swap Agreement) due and payable to the relevant Swap Provider as a result
of a Swap Provider Default or a Swap Provider Downgrade Event in respect of
that Swap Provider under that Swap Agreement, except to the extent such amount
has already been discharged pursuant to the Swap Collateral Account Priority
of Payments.
"Interest Period" means the period from (and including) an Interest Payment
Date (except in the case of the first Interest Period, which shall commence on
(and include) the Closing Date) to (but excluding) the next following Interest
Payment Date.
"Redemption Fee" means a fee of £199.00 (exclusive of any applicable VAT) for
each Loan that is redeemed in full.
"Repeat Redemption Statement Fee" means a fee of £25.00 (exclusive of any
applicable VAT) for each occasion that a repeat redemption statement is
required by and provided to a borrower.
"Replacement Swap Agreement" means an agreement between the Issuer and a
replacement swap provider to replace a Swap Transaction.
"Replacement Swap Premium" means an amount received by the Issuer from a
replacement swap provider, or an amount paid by the Issuer to a replacement
swap provider, upon entry by the Issuer into a Replacement Swap Agreement.
"Swap Collateral" means, in respect of the relevant Swap Agreement, the
collateral provided by the relevant Swap Provider to the Issuer under that
Swap Agreement and includes any interest and distributions in respect thereof.
"Swap Provider Default" means, in respect of a Swap Provider and the relevant
Swap Agreement, the occurrence of an Event of Default (as defined in that Swap
Agreement) where the relevant Swap Provider is the defaulting party (as
defined in that Swap Agreement) in accordance with the terms of that Swap
Agreement.
"Swap Provider Downgrade Event" means, in respect of the relevant Swap
Provider and the relevant Swap Agreement, the occurrence of an Additional
Termination Event (as defined in that Swap Agreement) following the failure by
that Swap Provider to comply with the requirements of the ratings downgrade
provisions set out in that Swap Agreement.
"Swap Tax Credits" means, in respect of the relevant Swap Agreement, any
credit, allowance, set-off or repayment received by the Issuer in respect of
tax from the tax authorities of any jurisdiction relating to any deduction or
withholding giving rise to an increased payment by the relevant Swap Provider
to the Issuer under the terms of that Swap Agreement.
"Transfer Costs" means the Issuer's costs and expenses associated with the
transfer of servicing to a substitute servicer.
Definition of Principal Receipts
"Principal Receipts" means (a) principal repayments under the Loans (including
payments of arrears of principal and Capitalised Amounts) other than any
principal repayments comprising Optional Purchase Collections and the Optional
Purchase Price received by the Issuer pursuant to the exercise of the Call
Option, (b) recoveries of principal from defaulting Borrowers under Loans
being enforced, (c) recoveries of principal from defaulting Borrowers under
Loans in respect of which enforcement procedures relating to the sale of the
property have been completed (including the proceeds of sale of the relevant
Property, to the extent such proceeds of sale are deemed to be principal but
excluding all amounts received following a sale of the relevant Property), (d)
any payment pursuant to any insurance policy in respect of a Property in
connection with a Loan in the Portfolio, to the extent such payment is deemed
to be principal, (e) the proceeds of the repurchase of any Loan by the Seller
from the Issuer pursuant to the Mortgage Sale Agreement (but, for the
avoidance of doubt, excluding amounts attributable to Accrued Interest and
Arrears of Interest thereon as at the relevant repurchase date), (f) any other
payment received by the Issuer in the nature of principal and (g) Pre-Closing
Collections comprising payments of interest in respect of the Loans in an
amount equal to £1,031,787.47.
"Capitalised Amounts" means, in relation to a Loan, at any date, amounts which
are due or overdue in respect of that Loan (other than any principal amounts)
and which as at that date have been capitalised in accordance with the
Mortgage Conditions or otherwise by arrangement with the relevant Borrower and
any other amounts (including fees and expenses), capitalised in accordance
with the Mortgage Conditions including, without limitation, Permitted Fee
Capitalisation Amounts.
Definition of Available Principal Receipts
"Available Principal Receipts" means for any Interest Payment Date an amount
equal to the aggregate of (without double counting):
(a) all Principal Receipts or, if in a Determination
Period, any Calculated Principal Receipts, in each case excluding an amount
equal to any Reconciliation Amounts to be applied as Available Revenue
Receipts on that Interest Payment Date, received by the Issuer:
(i) during the immediately preceding Collection Period;
or
(ii) if representing amounts received in respect of any
repurchases of Loans and their Related Security that were repurchased by the
Seller pursuant to the Mortgage Sale Agreement, received by the Issuer from
but excluding the Collection Period Start Date immediately preceding the
immediately preceding Interest Payment Date (or, in the case of the first
Interest Payment Date, from and including the Closing Date) to and including
the immediately preceding Collection Period Start Date;
(b) the amounts (if any) calculated on the Calculation
Date preceding that Interest Payment Date pursuant to the Pre-Enforcement
Revenue Priority of Payments, to be the amount by which the debit balance of
each of the Class A Principal Deficiency Sub-Ledger and/or the Class B
Principal Deficiency Sub-Ledger and/or the Class C Principal Deficiency
Sub-Ledger and/or the Class D Principal Deficiency Sub-Ledger and/or the Class
E Principal Deficiency Sub-Ledger is to be reduced on that Interest Payment
Date;
(c) any amounts deemed to be Available Principal Receipts
in accordance with item (v) of the Pre-Enforcement Revenue Priority of
Payments (the "Enhanced Amortisation Amounts");
(d) on the First Interest Payment Date only, the
Pre-Funding Unused Amount;
(e) on each Interest Payment Date following a
Determination Period, any Reconciliation Amounts deemed to be Available
Principal Receipts in accordance with Condition 6.8(c) (Determinations and
Reconciliation); and
(f) (in respect of the first Interest Payment Date only)
the amount paid into the Deposit Account on the Closing Date from the excess
of the proceeds of the Class A Notes, the Class B Notes, the Class C Notes,
the Class D Notes and the Class E Notes over the Initial Consideration,
less:
(g) the amount of Principal Receipts used during the
immediately preceding Collection Period to purchase any Permitted Fee
Capitalisation Amounts or Additional Mortgage Loans.
Application of Available Principal Receipts prior to the service of an
Enforcement Notice on the Issuer
Prior to the service of an Enforcement Notice on the Issuer, the Cash Manager
on behalf of the Issuer is required pursuant to the terms of the Cash
Management Agreement to apply Available Principal Receipts on each Interest
Payment Date in the following order of priority (the "Pre-Enforcement
Principal Priority of Payments") (in each case, only if and to the extent that
payments or provisions of a higher priority have been paid in full):
(a) first, on the First Interest Payment Date only, in redeeming
the Collateralised Notes on a pro rata and pari passu basis in an amount equal
to the Pre-Funding Unused Amount;
(b) second, any Principal Addition Amounts to be applied to meet
any Senior Expenses Deficit (such amounts to be applied as Available Revenue
Receipts), provided that Available Principal Receipts shall only be applied to
provide for any such Senior Expenses Deficit in relation to item (i), (m), (o)
or (q) of the Pre-Enforcement Revenue Priority of Payments if the relevant PDL
Condition applies;
(c) third, on and from the LF Replacement Date, (so long as the
Class A Notes remain outstanding following such Interest Payment Date) to
credit the Standby Account up to the LF Required Amount for such date (to the
extent that the amount standing to the credit of the Standby Account following
the application of funds under item (j) of the Pre-Enforcement Revenue
Priority of Payments is less than the LF Required Amount);
(d) fourth, in or towards repayment, pro rata and pari passu, of
principal amounts outstanding on the Class A Notes until the Principal Amount
Outstanding on the Class A Notes has been reduced to zero;
(e) fifth, in or towards repayment, pro rata and pari passu, of
principal amounts outstanding on the Class B Notes until the Principal Amount
Outstanding on the Class B Notes has been reduced to zero;
(f) sixth, in or towards repayment, pro rata and pari passu, of
principal amounts outstanding on the Class C Notes until the Principal Amount
Outstanding on the Class C Notes has been reduced to zero;
(g) seventh, in or towards repayment, pro rata and pari passu,
of principal amounts outstanding on the Class D Notes until the Principal
Amount Outstanding on the Class D Notes has been reduced to zero;
(h) eighth, in or towards repayment, pro rata and pari passu, of
principal amounts outstanding on the Class E Notes until the Principal Amount
Outstanding on the Class E Notes has been reduced to zero; and
(i) ninth, any excess amounts as Available Revenue Receipts on
the next Interest Payment Date.
"PDL Condition" means that, provided that the debit balance of the relevant
Principal Deficiency Ledger in respect of any Class of Notes does not exceed:
(a) for so long as the Class B Notes are not the Most
Senior Class of Notes, 10 per cent. of the Principal Amount Outstanding of the
Class B Notes;
(b) for so long as the Class C Notes are not the Most
Senior Class of Notes, 10 per cent. of the Principal Amount Outstanding of the
Class C Notes;
(c) for so long as the Class D Notes are not the Most
Senior Class of Notes, 10 per cent. of the Principal Amount Outstanding of the
Class D Notes; and
(d) for so long as the Class E Notes are not the Most
Senior Class of Notes, 10 per cent. of the Principal Amount Outstanding of the
Class E Notes,
and "relevant PDL Condition", in each case as calculated following the
application of Available Revenue Receipts, except paragraph (i) thereof, and
prior to the application of Available Principal Receipts on the relevant
Interest Payment Date, means the PDL Condition in respect of any particular
Class of Notes. For the avoidance of doubt, the PDL Condition will be
satisfied in respect of a Class of Notes if it is the Most Senior Class of
Notes.
Distributions following the service of an Enforcement Notice on the Issuer
After an Enforcement Notice has been served on the Issuer, the Security
Trustee (or the Cash Manager on its behalf) or any Receiver appointed by the
Security Trustee in connection with the enforcement of the Security will apply
all amounts received or recovered other than:
(a) any amount standing to the credit of each Swap Collateral
Account (including interest, distributions and redemption or sale proceeds
thereon or thereof) which will be applied, in respect of the Swap Agreement to
which such Swap Collateral Account relates, in accordance with the Swap
Collateral Account Priority of Payments (other than any amount to be applied
as Swap Collateral Account Surplus in accordance with the Swap Collateral
Account Priority of Payments); and
(b) any amount standing to the credit of the Issuer Profit
Account, which shall be applied by the Issuer in or towards satisfaction of
any liability of the Issuer for corporation tax of the Issuer,
in the following order of priority (in each case, only if and to the extent
that payments or provisions of a higher priority have been made in full) (the
"Post-Enforcement Priority of Payments" and, together with the
Pre-Enforcement Revenue Priority of Payments and the Pre-Enforcement Principal
Priority of Payments, the "Priority of Payments"):
(a) first, in or towards satisfaction, pro rata and pari passu,
according to the respective amounts thereof of:
(i) any fees, costs, charges, Liabilities, expenses and all
other amounts then due and payable to the Note Trustee, Receiver and any
Appointee under the provisions of the Trust Deed and the other Transaction
Documents, together with (if payable) VAT thereon as provided therein; and
(ii) any fees, costs, charges, Liabilities, expenses and all
other amounts then due and payable to the Security Trustee, Receiver and any
Appointee under the provisions of the Deed of Charge and the other Transaction
Documents, together with (if payable) VAT thereon as provided therein;
(b) second, in or towards satisfaction, pro rata and pari passu,
according to the respective amounts thereof of:
(i) any amounts then due and payable to the Agent Bank, the
Registrar and the Paying Agents and any costs, charges, Liabilities and
expenses then due and payable to them under the provisions of the Agency
Agreement, together with (if payable) VAT thereon as provided therein;
(ii) any amounts then due and payable to the Cash Manager and
any fees, costs, charges, Liabilities and expenses then due under the
provisions of the Cash Management Agreement, together with VAT (if payable)
thereon as provided therein;
(iii) any amounts then due and payable to the Servicer and any
fees (including the Servicing Fee), costs, charges, Liabilities and expenses
then due under the provisions of the Servicing Agreement, together with VAT
(if payable) as provided therein;
(iv) any amounts then due and payable to the Servicing Facilitator
and any fees, costs, charges, Liabilities and expenses then due under the
provisions of the Servicing Agreement, together with VAT (if payable) thereon
as provided therein;
(v) any amounts then due and payable to the Back-Up Servicing
Facilitator and any fees, costs, charges, Liabilities and expenses then due
under the provisions of the Servicing Agreement, together with (if payable)
VAT thereon as provided therein;
(vi) any amounts then due and payable to the Corporate Services
Provider and any fees, costs, charges, Liabilities and expenses then due and
payable to the Corporate Services Provider under the provisions of the
Corporate Services Agreement, together with (if payable) VAT thereon as
provided therein;
(vii) any amounts then due and payable to the Issuer Account Bank
and any fees, costs, charges, Liabilities and expenses then due and payable to
the Issuer Account Bank under the provisions of the Bank Account Agreement,
together with (if payable) VAT thereon as provided therein;
(viii) any amounts then due and payable to the Custodian and any fees,
costs, charges, Liabilities and expenses then due and payable to the Custodian
under the provisions of the relevant Custody Agreement, together with (if
payable) VAT thereon as provided therein; and
(ix) if applicable, the fees, costs, liabilities and expenses of
the securitisation repository or any other third-party website provider;
(c) third, to pay, in or towards satisfaction of any amounts
(including interest and fees) due to the Liquidity Facility Provider under the
Liquidity Facility Agreement;
(d) fourth, to pay, pro rata and pari passu between the Swap
Providers, in or towards satisfaction of any amounts due to the Swap Providers
in respect of the Swap Agreements, including, without limitation, any Early
Termination Amount (as defined in the relevant Swap Agreement) due and payable
by the Issuer to a Swap Provider to the extent such amount is not discharged
pursuant to the Swap Collateral Account Priority of Payments, but excluding,
in each case and if applicable, any related Hedge Subordinated Amounts;
(e) fifth, to pay, pro rata and pari passu, according to the
respective outstanding amounts thereof, interest and principal due and payable
on the Class A Notes until the Principal Amount Outstanding on the Class A
Notes has been reduced to zero;
(f) sixth, to pay, pro rata and pari passu, according to the
respective outstanding amounts thereof, interest and principal due and payable
on the Class B Notes until the Principal Amount Outstanding on the Class B
Notes has been reduced to zero;
(g) seventh, to pay, pro rata and pari passu, according to the
respective outstanding amounts thereof, interest and principal due and payable
on the Class C Notes until the Principal Amount Outstanding on the Class C
Notes has been reduced to zero;
(h) eighth, to pay, pro rata and pari passu, according to the
respective outstanding amounts thereof, interest and principal due and payable
on the Class D Notes until the Principal Amount Outstanding on the Class D
Notes has been reduced to zero;
(i) ninth, to pay, pro rata and pari passu, according to the
respective outstanding amounts thereof, interest and principal due and payable
on the Class E Notes until the Principal Amount Outstanding on the Class E
Notes has been reduced to zero;
(j) tenth, to pay, pro rata and pari passu, according to the
respective outstanding amounts thereof, interest and principal due and payable
on the Class X Notes until the Principal Amount Outstanding on the Class X
Notes has been reduced to zero;
(k) eleventh, to pay, pro rata and pari passu between the Swap
Providers, in accordance with the terms of each relevant Swap Agreement, in or
towards satisfaction of any Hedge Subordinated Amount (in each case, to the
extent such amount is not discharged pursuant to the Swap Collateral Account
Priority of Payments);
(l) twelfth, to pay the Issuer Profit Amount;
(m) thirteenth, to pay, pro rata and pari passu, amounts due and
payable to third parties (if any); and
(n) fourteenth, on any date falling prior to (but excluding) the
Optional Redemption Date, all remaining amounts to be applied pro rata and
pari passu, as RC1 Payments to the holders of the RC1 Residual Certificates
and on any date falling on or after the Optional Redemption Date, all
remaining amounts to be applied pro rata and pari passu, as RC2 Payments to
the holders of the RC2 Residual Certificates.
Swap Collateral
In the event that a Swap Provider is required to transfer collateral to the
Issuer in respect of its obligations under the swap credit support annex (the
"Swap Credit Support Annex") under a relevant Swap Agreement (the "Swap
Collateral") in accordance with the terms of such Credit Support Annex, that
Swap Collateral (and any interest and/or distributions earned thereon) will be
credited to a separate swap sterling cash collateral account in respect of
that Swap Agreement (each a "Swap Cash Collateral Account") or, if required, a
securities collateral account to be opened by the Issuer on demand in respect
of the relevant Swap Agreement (each a "Swap Securities Collateral Account",
and together with the Swap Cash Collateral Accounts, the "Swap Collateral
Accounts").
Each Swap Collateral Account will be established in the name of the Issuer and
maintained in respect of each Swap Agreement. For the avoidance of doubt, the
Swap Collateral Account Priority of Payments shall be applied separately in
respect of amounts and securities (including interest, distributions and
redemption or sale proceeds thereon or thereof) standing to the Swap
Collateral Account(s) opened in respect of the Santander Swap Agreement and
amounts and securities (including interest, distributions and redemption or
sale proceeds thereon or thereof) standing to the Swap Collateral Account(s)
opened in respect of the HSBC Swap Agreement.
In addition, upon any early termination of the relevant Swap Agreement, in
relation to that Swap Agreement (a) any Replacement Swap Premium received by
the Issuer from a replacement swap provider, (b) any Early Termination Amount
(as calculated in accordance with that Swap Agreement) received by the
Issuer from the outgoing relevant Swap Provider, and (c) any Swap Tax Credits
will be credited to the relevant Swap Cash Collateral Account.
In respect of a Swap Agreement and the relevant Swap Provider thereunder and
each Swap Collateral Account relating to that Swap Agreement, amounts and
securities standing to the credit of each such Swap Collateral Account in
respect of that Swap Agreement (including interest, distributions and
redemption or sale proceeds thereon or thereof) and credited on such Swap
Collateral Accounts in respect of that Swap Agreement will not be available
for the Issuer or the Security Trustee to make payments to the Secured
Creditors generally, but may be applied by the Cash Manager (subject to
receipt of all relevant data and information, including, without limitation,
the data and information to be provided by the Issuer in accordance with
clause 5.5 of the Cash Management Agreement) only in accordance with the
following provisions in accordance with the terms of that Swap Agreement and
with the instruction of that relevant Swap Provider and the following
provisions (the "Swap Collateral Account Priority of Payments"):
(a) to pay an amount equal to any Swap Tax Credits received by
the Issuer in respect of the relevant Swap Agreement to the relevant Swap
Provider;
(b) prior to the designation of an Early Termination Date (as
defined in the relevant Swap Agreement, the "Early Termination Date") in
respect of that Swap Agreement, solely in or towards payment or discharge of
any Return Amounts (as defined in the relevant Swap Credit Support Annex
relating to the relevant Swap Agreement), Interest Amounts and Distributions
(as defined in the relevant Swap Credit Support Annex relating to the relevant
Swap Agreement), on any day, directly to that Swap Provider;
(c) following the designation of an Early Termination Date in
respect of the relevant Swap Agreement where (A) such Early Termination Date
has been designated following a relevant Swap Provider Default or relevant
Swap Provider Downgrade Event in respect of the relevant Swap Provider in
accordance with the terms of the relevant Swap Agreement, and (B) the Issuer
enters into a Replacement Swap Agreement in respect of the relevant Swap
Agreement on or around the Early Termination Date of the relevant Swap
Agreement, on the later of the day on which such Replacement Swap Agreement is
entered into, the day on which an Early Termination Amount (as calculated in
accordance with the relevant Swap Agreement) (if any) payable to the Issuer
has been received and the day on which a Replacement Swap Premium (if any)
payable to the Issuer has been received in respect of the relevant Swap
Agreement, in the following order of priority:
(i) first, in or towards payment of a Replacement Swap Premium
(if any) payable by the Issuer to a replacement swap provider in order to
enter into a Replacement Swap Agreement with the Issuer with respect to the
relevant Swap Agreement being terminated;
(ii) second, in or towards the payment of any Early Termination
Amount (as calculated in accordance with the relevant Swap Agreement) due to
the relevant outgoing Swap Provider; and
(iii) third, the surplus (if any) in respect of the relevant Swap
Agreement on such day to be transferred to the Deposit Account to be applied
as Available Revenue Receipts or (following the service of an Enforcement
Notice) in accordance with clause 7.2 (Post-Enforcement Priority of Payments)
of the Deed of Charge;
(d) following the designation of an Early Termination Date in
respect of the relevant Swap Agreement where: (A) such Early Termination Date
has been designated otherwise than as a result of one of the events specified
at item (c)(A) above; and (B) the Issuer enters into a Replacement Swap
Agreement in respect of the relevant Swap Agreement on or around the Early
Termination Date of the relevant Swap Agreement, on the later of the day on
which such Replacement Swap Agreement is entered into, the day on which an
Early Termination Amount (as calculated in accordance with the relevant Swap
Agreement) (if any) payable to the Issuer has been received and the day on
which a Replacement Swap Premium (if any) payable to the Issuer has been
received in respect of the relevant Swap Agreement, in the following order of
priority:
(i) first, in or towards payment of any Early Termination
Amount (as calculated in accordance with the relevant Swap Agreement) due to
the relevant outgoing Swap Provider;
(ii) second, in or towards payment of a Replacement Swap Premium
(if any) payable by the Issuer to a replacement swap provider in order to
enter into a Replacement Swap Agreement with the Issuer with respect to the
relevant Swap Agreement being terminated; and
(iii) third, any surplus in respect of the relevant Swap Agreement
on such day to be transferred to the Deposit Account to be applied as
Available Revenue Receipts or (following the service of an Enforcement Notice)
in accordance with clause 7.2 (Post-Enforcement Priority of Payments) of the
Deed of Charge;
(e) following the designation of an Early Termination Date in
respect of the relevant Swap Agreement for any reason where the Issuer does
not enter into a Replacement Swap Agreement in respect of the relevant Swap
Agreement on or around the Early Termination Date of the relevant Swap
Agreement and, on the date on which the relevant payment is due, in or towards
payment of any Early Termination Amount (as calculated in accordance with the
relevant Swap Agreement) due to the relevant outgoing Swap Provider; and
(f) following payments of amounts due pursuant to item (e)
above, if amounts remain standing to the credit of a Swap Collateral Account
in respect of the relevant Swap Agreement, such amounts may be applied only in
accordance with the following provisions:
(i) first, in or towards payment of a Replacement Swap Premium
(if any) payable by the Issuer to a replacement swap provider in order to
enter into a Replacement Swap Agreement with the Issuer with respect to the
relevant Swap Agreement; and
(ii) second, any surplus in respect of the relevant Swap
Agreement remaining after payment of such Replacement Swap Premium to be
transferred to the Deposit Account to be applied as Available Revenue Receipts
or (following the service of an Enforcement Notice) in accordance with clause
7.2 (Post-Enforcement Priority of Payments) of the Deed of Charge,
provided that, for so long as the Issuer does not enter into a Replacement
Swap Agreement with respect to the relevant Swap Agreement, on each Swap
Payment Date in respect of the relevant Swap Agreement, the Issuer (or the
Cash Manager on its behalf) will be permitted to withdraw an amount from the
relevant Swap Collateral Account in respect of the relevant Swap Agreement,
equal to the excess of the Swap Provider Swap Amount over the Issuer Swap
Amount which would have been paid by the relevant Swap Provider to the Issuer
on such Swap Payment Date in respect of the relevant Swap Agreement but for
the designation of an Early Termination Date under the relevant Swap
Agreement, such surplus to be transferred to the Deposit Account to be applied
as Available Revenue Receipts; and provided further that for so long as the
Issuer does not enter into a Replacement Swap Agreement with respect to the
relevant Swap Agreement on or prior to the earlier of:
(A) the Calculation Date immediately before the Interest Payment
Date on which the Principal Amount Outstanding of all Notes would be reduced
to zero (taking into account any Swap Collateral Account Surplus in respect of
the relevant Swap Agreement to be applied as Available Revenue Receipts on
such Interest Payment Date); or
(B) the day on which an Enforcement Notice is given pursuant to
Condition 11 (Events of Default); or
(C) the date on which the Current Balance of the Fixed Rate Loans
(excluding any Enforced Loans) is reduced to zero,
then the amount standing to the credit of such Swap Collateral Account in
respect of the relevant Swap Agreement on such day shall be transferred to the
Deposit Account to be applied as Available Revenue Receipts as soon as
reasonably practicable thereafter.
"Swap Collateral Account Surplus" means the amounts applied as Available
Revenue Receipts pursuant to the Swap Collateral Account Priority of Payments.
The Swap Collateral Accounts will be opened in the name of the Issuer and will
be held by the Issuer Account Bank or the Custodian, as applicable. Each
Swap Collateral Account will be established and maintained in respect of each
Swap Agreement. As security for the payment of all monies payable in respect
of the Notes and the other Secured Obligations, the Issuer will grant a first
fixed charge over the Issuer's interest in each Swap Collateral Account and
the debts represented thereby (which may, however, take effect as a floating
charge and therefore rank behind the claims of any preferential creditors of
the Issuer).
For the avoidance of doubt, the Swap Collateral Account Priority of Payments
shall be applied separately in respect of amounts and securities (including
interest, distributions and redemption or sale proceeds thereon or thereof)
standing to the Swap Collateral Account(s) opened in respect of the Santander
Swap Agreement and amounts and securities (including interest, distributions
and redemption or sale proceeds thereon or thereof) standing to the Swap
Collateral Account(s) opened in respect of the HSBC Swap Agreement.
Description of the Global Notes
General
Each Class of Notes as at the Closing Date will each be represented by a
Global Note. All capitalised terms not defined in this paragraph shall be as
defined in the Conditions of the Notes.
The Global Notes representing the Notes will be registered in the name of the
nominee for the Common Safekeeper for both Euroclear and Clearstream,
Luxembourg. The Registrar will maintain a register in which it will register
the nominee for the Common Safekeeper as the owner of the Global Note.
Upon confirmation by the Common Safekeeper that it has custody of the Global
Notes, Euroclear or Clearstream, Luxembourg, as the case may be, will record
in book-entry form interests representing beneficial interests in the Global
Note attributable thereto ("Book-Entry Interests").
Book-Entry Interests in respect of each Global Note will be recorded in
denominations of £100,000 and higher integral multiples of £1,000 (an
"Authorised Denomination"). Ownership of Book-Entry Interests is limited to
persons that have accounts with Euroclear or Clearstream, Luxembourg
("Participants") or persons that hold interests in the Book-Entry Interests
through Participants or through other Indirect Participants ("Indirect
Participants"), including, as applicable, banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with
Euroclear or Clearstream, Luxembourg, either directly or indirectly.
Book-Entry Interests will not be held in definitive form. Instead, Euroclear
and Clearstream, Luxembourg, as applicable, will credit the Participants'
accounts with the respective Book-Entry Interests beneficially owned by such
Participants on each of their respective book-entry registration and transfer
systems. The accounts initially credited will be designated by the Joint
Lead Managers. Ownership of Book-Entry Interests will be shown on, and
transfers of Book-Entry Interests or the interests therein will be effected
only through, records maintained by Euroclear or Clearstream, Luxembourg (with
respect to the interests of their Participants) and on the records of
Participants or Indirect Participants (with respect to the interests of
Indirect Participants). The laws of some jurisdictions or other applicable
rules may require that certain purchasers of securities take physical delivery
of such securities in definitive form. The foregoing limitations may
therefore impair the ability to own, transfer or pledge Book-Entry Interests.
So long as a nominee for the Common Safekeeper is the registered holder of the
Global Note underlying the Book-Entry Interests, the nominee for the Common
Safekeeper will be considered the sole Noteholder of the Global Notes
representing the Notes for all purposes under the Trust Deed. Except as set
out under "Description of the Global Notes - Issuance of Registered Definitive
Notes" below, Participants or Indirect Participants will not be entitled to
have Notes registered in their names, will not receive or be entitled to
receive physical delivery of Notes in definitive registered form and will not
be considered the holders thereof under the Trust Deed. Accordingly, each
person holding a Book-Entry Interest must rely on the rules and procedures of
Euroclear or Clearstream, Luxembourg, as the case may be, and Indirect
Participants must rely on the procedures of the Participants or Indirect
Participants through which such person owns its interest in the relevant
Book-Entry Interests, to exercise any rights and obligations of a holder of
Notes under the Trust Deed. See "Description of the Global Notes - Action in
respect of the Global Notes and the Book-Entry Interests" below.
Unlike legal owners or holders of the Notes, holders of the Book-Entry
Interests will not have the right under the Trust Deed to act upon
solicitations by the Issuer or consents or requests by the Issuer for waivers
or other actions from holders of the Notes. Instead, a holder of Book-Entry
Interests will be permitted to act only to the extent it has received
appropriate proxies to do so from Euroclear or Clearstream, Luxembourg, as the
case may be, and, if applicable, their Participants. There can be no
assurance that procedures implemented for the granting of such proxies will be
sufficient to enable holders of Book-Entry Interests to vote on any requested
actions on a timely basis. Similarly, upon the occurrence of an Event of
Default under the Global Note, holders of Book-Entry Interests will be
restricted to acting through Euroclear or Clearstream, Luxembourg unless and
until Registered Definitive Notes are issued in accordance with the
Conditions. There can be no assurance that the procedures to be implemented
by Euroclear and Clearstream, Luxembourg under such circumstances will be
adequate to ensure the timely exercise of remedies under the Trust Deed.
In the case of a Global Note, unless and until Book-Entry Interests are
exchanged for Registered Definitive Notes, the Global Note held by the Common
Safekeeper may not be transferred except as a whole by the Common Safekeeper
to a successor of the Common Safekeeper.
Purchasers of Book-Entry Interests in a Global Note will hold Book-Entry
Interests in the Global Note relating thereto. Investors may hold their
Book-Entry Interests in respect of a Global Note directly through Euroclear or
Clearstream, Luxembourg (in accordance with the provisions set out under
"Description of the Global Notes - Transfers and Transfer Restrictions"
below), if they are account holders in such systems, or indirectly through
organisations which are account holders in such systems. Euroclear and
Clearstream, Luxembourg will hold Book-Entry Interests in the Global Note on
behalf of their account holders through securities accounts in the respective
account holders' names on Euroclear's and Clearstream, Luxembourg's respective
book-entry registration and transfer systems.
Although Euroclear and Clearstream, Luxembourg have agreed to certain
procedures to facilitate transfers of Book-Entry Interests among account
holders of Euroclear and Clearstream, Luxembourg, they are under no obligation
to perform or continue to perform such procedures, and such procedures may be
discontinued at any time. None of the Issuer, the Joint Arrangers, the Joint
Lead Managers, the Note Trustee, the Security Trustee or any of their
respective agents will have any responsibility for the performance by
Euroclear or Clearstream, Luxembourg or their respective Participants or
account holders of their respective obligations under the rules and procedures
governing their operations.
Payments on the Global Notes
Payment of principal and interest on, and any other amount due in respect of,
the Global Notes will be made in Sterling by or to the order of Citibank,
N.A., London Branch (the "Principal Paying Agent"), on behalf of the Issuer to
the order of the Common Safekeeper or its nominee as the registered holder
thereof with respect to the Global Notes. Each holder of Book-Entry
Interests must look solely to Euroclear or Clearstream, Luxembourg, as the
case may be, for its share of any amounts paid by, or on behalf of, the Issuer
to the order of the Common Safekeeper or their nominees in respect of those
Book-Entry Interests. All such payments will be distributed without
deduction or withholding for, or on account of, any taxes, duties, assessments
or other governmental charges of whatever nature, except as may be required by
law. If any such deduction or withholding is required to be made, then
neither the Issuer, the Paying Agents nor any other person will be obliged to
pay additional amounts in respect thereof.
In accordance with the rules and procedures for the time being of Euroclear
or, as the case may be, Clearstream, Luxembourg, after receipt of any payment
from the Principal Paying Agent to the order of the Common Safekeeper, the
respective systems will promptly credit their Participants' accounts with
payments in amounts proportionate to their respective ownership of Book-Entry
Interests as shown in the records of Euroclear or Clearstream, Luxembourg.
On each Record Date Euroclear and Clearstream, Luxembourg will determine the
identity of the holders of the Notes for the purposes of making payments to
the holders of the Notes. The "Record Date", in respect of the Notes where
the Notes are in global registered form, shall be at the close of the Business
Day (it being for this purpose a day on which Euroclear and Clearstream,
Luxembourg are open for business) prior to the relevant Interest Payment
Date. The Issuer expects that payments by Participants to owners of
interests in Book-Entry Interests held through such Participants or Indirect
Participants will be governed by standing customer instructions and customary
practices, as is now the case with the securities held for the accounts of
customers in bearer form or registered in "street name", and will be the
responsibility of such Participants or Indirect Participants. None of the
Issuer, any agent of the Issuer, the Joint Arrangers, the Joint Lead Managers,
the Note Trustee or the Security Trustee will have any responsibility or
liability for any aspect of the records relating to, or payments made on
account of a Participant's ownership of, Book-Entry Interests or for
maintaining, supervising or reviewing any records relating to a Participant's
ownership of Book-Entry Interests.
Information Regarding Euroclear and Clearstream, Luxembourg
Euroclear and Clearstream, Luxembourg have advised the Issuer as follows:
Euroclear and Clearstream, Luxembourg each hold securities for their account
holders and facilitate the clearance and settlement of securities transactions
by electronic book-entry transfer between their respective account holders,
thereby eliminating the need for physical movements of certificates and any
risk from lack of simultaneous transfers of securities.
Euroclear and Clearstream, Luxembourg each provide various services, including
safekeeping, administration, clearance and settlement of internationally
traded securities and securities lending and borrowing. Euroclear and
Clearstream, Luxembourg each also deal with domestic securities markets in
several countries through established depositary and custodial
relationships. The respective systems of Euroclear and of Clearstream,
Luxembourg have established an electronic bridge between their two systems
across which their respective account holders may settle trades with each
other.
Account holders in both Euroclear and Clearstream, Luxembourg are worldwide
financial institutions, including underwriters, securities brokers and
dealers, banks, trust companies and clearing corporations. Indirect access
to both Euroclear and Clearstream, Luxembourg is available to other
institutions that clear through, or maintain a custodial relationship with, an
account holder of either system.
An account holder's overall contractual relations with either Euroclear or
Clearstream, Luxembourg are governed by the respective rules and operating
procedures of Euroclear or Clearstream, Luxembourg and any applicable laws.
Both Euroclear and Clearstream, Luxembourg act under such rules and operating
procedures only on behalf of their respective account holders, and have no
record of, or relationship with, persons holding through their respective
account holders.
The Issuer understands that under existing industry practices, if any of the
Issuer, the Note Trustee or the Security Trustee requests any action of owners
of Book-Entry Interests or if an owner of a Book-Entry Interest desires to
give instructions or take any action that a holder is entitled to give or take
under the Trust Deed or the Deed of Charge, Euroclear or Clearstream,
Luxembourg, as the case may be, would authorise the Participants owning the
relevant Book-Entry Interests to give instructions or take such action, and
such Participants would authorise Indirect Participants to give or take such
action or would otherwise act upon the instructions of such Indirect
Participants.
Redemption
In the event that a Global Note (or portion thereof) is redeemed, the
Principal Paying Agent will deliver all amounts received by it in respect of
the redemption of such Global Note to the order of the Common Safekeeper and,
upon final payment, the Common Safekeeper will surrender such Global Note (or
portion thereof) to or to the order of the Principal Paying Agent for
cancellation. Appropriate entries will be made in the Register. The
redemption price payable in connection with the redemption of Book-Entry
Interests will be equal to the amount received by the Principal Paying Agent
in connection with the redemption of the Global Note (or portion thereof)
relating thereto. For any redemptions of the Global Note in part, selection
of the relevant Book-Entry Interest relating thereto to be redeemed will be
made by Euroclear or Clearstream, Luxembourg, as the case may be, on a pro
rata basis (or on such basis as Euroclear or Clearstream, Luxembourg, as the
case may be, deems fair and appropriate). Upon any redemption in part, the
Principal Paying Agent will mark down the schedule to such Global Note by the
principal amount so redeemed.
Cancellation
Cancellation of any Note represented by a Global Note and required by the
Conditions to be cancelled following its redemption will be effected by
endorsement by, or on behalf of, the Principal Paying Agent of the reduction
in the principal amount of the relevant Global Note on the relevant schedule
thereto and the corresponding entry on the Register.
Transfers and Transfer Restrictions
All transfers of Book-Entry Interests will be recorded in accordance with the
book-entry systems maintained by Euroclear or Clearstream, Luxembourg, as
applicable, pursuant to customary procedures established by each respective
system and its Participants. See "Description of the Global Notes - General"
above.
Issuance of Registered Definitive Notes
Holders of Book-Entry Interests in the Global Note will be entitled to receive
Notes in definitive registered form (such exchanged Global Notes in definitive
registered form, "Registered Definitive Notes") in exchange for their
respective holdings of Book-Entry Interests if (a) both Euroclear and
Clearstream, Luxembourg are closed for business for a continuous period of 14
calendar days (other than by reason of holiday, statutory or otherwise) or
announce an intention permanently to cease business or to cease to make
book-entry systems available for settlement of beneficial interests in such
Global Notes and do, in fact, do either of those things and no alternative
clearing system satisfactory to the Note Trustee is available, or (b) as a
result of any amendment to, or change in, the laws or regulations of the
United Kingdom (or of any political subdivision thereof) or of any authority
therein or thereof having power to tax or in the interpretation or
administration by a revenue authority or a court or in the administration of
such laws or regulations which becomes effective on or after the Closing Date,
the Issuer or any Paying Agent is or will be required to make any deduction or
withholding from any payment in respect of the Notes which would not be
required were the Notes in definitive registered form. Any Registered
Definitive Notes issued in exchange for Book-Entry Interests in the Global
Note will be registered by the Registrar in such name or names as the Issuer
shall instruct the Principal Paying Agent based on the instructions of
Euroclear or Clearstream, Luxembourg, as the case may be. It is expected
that such instructions will be based upon directions received by Euroclear or
Clearstream, Luxembourg from their Participants with respect to ownership of
the relevant Book-Entry Interests. Holders of Registered Definitive Notes
issued in exchange for Book-Entry Interests in the Global Note will not be
entitled to exchange such Registered Definitive Notes for Book-Entry Interests
in such Global Note. Any Notes issued in definitive form will be issued in
registered form only and will be subject to the provisions set out under
"Description of the Global Notes - Transfers and Transfer Restrictions" above
and provided that no transfer shall be registered for a period of 15 calendar
days immediately preceding any due date for payment in respect of the Note or,
as the case may be, the due date for redemption. Registered Definitive Notes
will be issued in a denomination that is an integral multiple of the minimum
Authorised Denomination. See "Risk Factors - Risks Relating to the
Characteristics of the Notes - Registered Definitive Notes and denominations
in integral multiples".
Action in respect of the Global Notes and the Book-Entry Interests
Not later than 10 calendar days after receipt by the Issuer of any notices in
respect of a Global Note or any notice of solicitation of consents or requests
for a waiver or other action by the holder of such Global Note, the Issuer
will deliver to Euroclear and Clearstream, Luxembourg a notice containing (a)
such information as is contained in such notice, (b) a statement that at the
close of business on a specified record date Euroclear and Clearstream,
Luxembourg will be entitled to instruct the Issuer as to the consent, waiver
or other action, if any, pertaining to the Book-Entry Interests or the Global
Note, and (c) a statement as to the manner in which such instructions may be
given. Upon the written request of Euroclear or Clearstream, Luxembourg, as
applicable, the Issuer shall endeavour, insofar as practicable, to take such
action regarding the requested consent, waiver or other action in respect of
the Book-Entry Interests or the Global Note in accordance with any
instructions set out in such request. Euroclear or Clearstream, Luxembourg
are expected to follow the procedures described under "Description of the
Global Notes - General" above with respect to soliciting instructions from
their respective Participants. The Registrar will not exercise any
discretion in the granting of consents or waivers or the taking of any other
action in respect of the Book-Entry Interests or the Global Notes.
Notices
Whilst the Notes are represented by Global Notes, the Issuer may, at its
option, send to Euroclear and Clearstream, Luxembourg a copy of any notices
addressed to the Noteholders for communication by Euroclear and Clearstream,
Luxembourg to the Noteholders. Alternatively, such notices regarding the
Notes may instead be published in the Financial Times or, if such newspaper
shall cease to be published or if timely publication therein is not
practicable, in such other English newspaper or newspapers as the Note Trustee
shall approve in advance having a general circulation in the United Kingdom,
provided that, if, at any time, the Issuer procures that the information
contained in such notice shall appear on a page of the Reuters screen, the
Bloomberg screen or any other medium for electronic display of data as may be
previously approved in writing by the Note Trustee and notified to
Noteholders, publication in such newspaper shall not be required with respect
to such information so long as the rules of the London Stock Exchange allow.
The Issuer may elect not to publish any notice in a newspaper for so long as
the Notes are held in global form and notice is given to Euroclear and
Clearstream, Luxembourg. The Note Trustee may, in accordance with Condition
16.2 (Note Trustee's Discretion to Select Alternative Method) sanction other
methods of giving notice to all or some of the Noteholders if such method is
reasonable having regard to, among other things, the market practice then
prevailing and the requirements of the relevant stock exchange. See also
Condition 16 (Notice to Noteholders) of the Notes.
New Safekeeping Structure and Eurosystem Eligibility
The Notes are intended to be held in a new safekeeping structure ("NSS") and
in a manner which would allow Eurosystem eligibility and will be deposited
with one of the International Central Securities Depositories (an "ICSD") as
common safekeeper. However, the deposit of the Notes with one of the ICSDs
as common safekeeper upon issuance or otherwise does not necessarily mean that
the Notes will be recognised as eligible collateral for Eurosystem monetary
policy and intraday credit operations by the Eurosystem at issuance or at any
time during their life. Such recognition will depend upon the European
Central Bank being satisfied that Eurosystem eligibility criteria have been
met.
Issuer-ICSDs Agreement
Prior to the issuance of the Notes, the Issuer will enter into an Issuer-ICSDs
Agreement with the ICSDs in respect of the Notes. The Issuer-ICSDs Agreement
provides that the ICSDs will, in respect of any of the Notes (while being held
in the NSS), maintain their respective portion of the issue outstanding amount
through their records. The Issuer-ICSDs Agreement will be governed by
English law.
Description of the Global Certificates
General
Each Class of Residual Certificates, as at the Closing Date, will be
represented by a Global Certificate. The Global Certificates will be
registered on issue on or around the Closing Date in the name of the nominee
for the Common Safekeeper for Euroclear Bank SA/NV ("Euroclear") and
Clearstream Banking, S.A. ("Clearstream, Luxembourg"). The Registrar will
maintain a register in which it will register the nominee for the Common
Safekeeper as the holder of the Global Certificate.
Upon confirmation by the Common Safekeeper that it has been issued with the
Global Certificates, Euroclear or Clearstream, Luxembourg, as the case may be,
will record the beneficial interests in the Global Certificate ("Certificate
Book-Entry Interests") representing beneficial interests in the Global
Certificate attributable thereto.
The Residual Certificates are intended to be held in a manner which will allow
Eurosystem eligibility. This simply means that the Residual Certificates are
intended upon issue to be deposited with one of the ICSDs as common safekeeper
and does not necessarily mean that the Residual Certificates will be
recognised as eligible collateral for Eurosystem monetary policy and intra-day
credit operations by the Eurosystem either upon issue or at any or all times
during their life. Such recognition will depend upon satisfaction of the
Eurosystem eligibility criteria.
Ownership of Certificate Book-Entry Interests will be limited to Participants
or Indirect Participants, including, as applicable, banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship
with Euroclear or Clearstream, Luxembourg, either directly or indirectly.
Indirect Participants will also include persons that hold beneficial interests
through such Indirect Participants. Certificate Book-Entry Interests will
not be held in definitive form. Instead, Euroclear and Clearstream,
Luxembourg, as applicable, will credit the Participants' accounts with the
respective Certificate Book-Entry Interests beneficially owned by such
Participants on each of their respective book-entry registration and transfer
systems. The accounts initially credited will be designated by the Seller
(or as the Seller may direct). Ownership of Certificate Book-Entry Interests
will be shown on, and transfers of Certificate Book-Entry Interests or the
interests therein will be effected only through, records maintained by
Euroclear or Clearstream, Luxembourg (with respect to the interests of their
Participants) and on the records of Participants or Indirect Participants
(with respect to the interests of Indirect Participants). The laws of some
jurisdictions or other applicable rules may require that certain purchasers of
securities take physical delivery of such securities in definitive form. The
foregoing limitations may therefore impair the ability to own, transfer or
pledge Certificate Book-Entry Interests.
So long as the nominee of the Common Safekeeper is the registered holder of
the Global Certificate underlying the Certificate Book-Entry Interests, it
will be considered the sole Certificateholder of the Residual Certificate
represented by that Global Certificate for all purposes under the Trust
Deed. Except as set out under the section below entitled "Issuance of
Definitive Certificates", Participants or Indirect Participants will not
receive or be entitled to receive physical delivery of Residual Certificates
in definitive form and will not be considered the holders thereof under the
Trust Deed. Accordingly, each person holding a Certificate Book-Entry
Interest must rely on the rules and procedures of Euroclear or Clearstream,
Luxembourg, as the case may be, and Indirect Participants must rely on the
procedures of the Participants or Indirect Participants through which such
person owns its interest in the relevant Certificate Book-Entry Interests, to
exercise any rights and obligations of a holder of Residual Certificates under
the Trust Deed. See the section below entitled "Description of the Global
Notes - Action in respect of the Global Certificate and the Certificate
Book-Entry Interests".
Unlike legal owners or holders of the Residual Certificates, holders of the
Certificate Book-Entry Interests will not have the right under the Trust Deed
to act upon solicitations by the Issuer or consents or requests by the Issuer
for waivers or other actions from Certificateholders. Instead, a holder of
Certificate Book-Entry Interests will be permitted to act only to the extent
it has received appropriate proxies to do so from Euroclear or Clearstream,
Luxembourg, as the case may be, and, if applicable, their Participants.
There can be no assurance that procedures implemented for the granting of such
proxies will be sufficient to enable holders of Certificate Book-Entry
Interests to vote on any requested actions on a timely basis. Similarly,
upon the occurrence of an Event of Default, holders of Certificate Book-Entry
Interests will be restricted to acting through Euroclear or Clearstream,
Luxembourg unless and until Definitive Certificates are issued in accordance
with the Residual Certificates Conditions. There can be no assurance that
the procedures to be implemented by Euroclear and Clearstream, Luxembourg
under such circumstances will be adequate to ensure the timely exercise of
remedies under the Trust Deed.
Unless and until Certificate Book-Entry Interests are exchanged for Definitive
Certificates, the Global Certificate held by the nominee for the Common
Safekeeper may not be transferred except as a whole by that nominee for the
Common Safekeeper to a successor nominee for that Common Safekeeper or a
nominee of a successor of the Common Safekeeper.
Purchasers of Certificate Book-Entry Interests in a Global Certificate will
hold Certificate Book-Entry Interests in the Global Certificates relating
thereto. Investors may hold their Certificate Book-Entry Interests in
respect of a Global Certificate directly through Euroclear or Clearstream,
Luxembourg (in accordance with the provisions set out in the section above
entitled "Description of the Global Notes - Transfers and Transfer
Restrictions"), if they are account holders in such systems, or indirectly
through organisations which are account holders in such systems. Euroclear
and Clearstream, Luxembourg will hold Certificate Book-Entry Interests in the
Global Certificate on behalf of their account holders through securities
accounts in the respective account holders' names on Euroclear's and
Clearstream, Luxembourg's respective book-entry registration and transfer
systems.
Although Euroclear and Clearstream, Luxembourg have agreed to certain
procedures to facilitate transfers of Certificate Book-Entry Interests among
account holders of Euroclear and Clearstream, Luxembourg, they are under no
obligation to perform or to continue to perform such procedures, and such
procedures may be discontinued at any time. None of the Issuer, the Joint
Arrangers, the Joint Lead Managers, the Note Trustee, the Security Trustee or
any of their respective agents will have any responsibility for the
performance by Euroclear or Clearstream, Luxembourg or their respective
Participants or account holders of their respective obligations under the
rules and procedures governing their operations.
Issuance of Definitive Certificates
Global Certificates will become exchangeable in whole, but not in part, for
Definitive Certificates at the request of the holder of the relevant Global
Certificate if Euroclear or Clearstream, Luxembourg closes for business on a
permanent basis without a successor to act as a clearing system with respect
to the Global Certificate (the "Exchange Event").
Any Definitive Certificate issued in exchange for Certificate Book-Entry
Interests in the Global Certificate will be registered by the Registrar in
such name or names as the Issuer shall instruct the Principal Paying Agent
based on the instructions of Euroclear or Clearstream, Luxembourg, as the case
may be. It is expected that such instructions will be based upon directions
received by Euroclear or Clearstream, Luxembourg from their Participants with
respect to ownership of the relevant Certificate Book-Entry Interests.
Whenever a Global Certificate is to be exchanged for Definitive Certificates,
the Issuer shall procure the prompt delivery (free of charge to the holders of
the Certificate Book-Entry Interests) of such Definitive Certificates, duly
authenticated and effectuated, in an aggregate principal amount equal to the
principal amount of the relevant Global Certificate within 30 days of the
occurrence of the Exchange Event.
Payments on the Global Certificates
Payment of amounts due in respect of the Global Certificates will be made in
Sterling by or to the order of the Principal Paying Agent on behalf of the
Issuer to the order of the Common Safekeeper or its nominee as the registered
holder thereof with respect to the Global Certificates.
Each holder of Certificate Book-Entry Interests must look solely to Euroclear
or Clearstream, Luxembourg, as the case may be, for its share of any amounts
paid by, or on behalf of, the Issuer to the order of the Common Safekeeper or
its nominee in respect of those Certificate Book-Entry Interests. All such
payments will be distributed without deduction or withholding for any taxes,
duties, assessments or other governmental charges of whatever nature, except
as may be required by law. If any such deduction or withholding is required
to be made, then none of the Issuer, the Principal Paying Agent or any other
person will be obliged to pay additional amounts in respect thereof.
In accordance with the rules and procedures for the time being of Euroclear
or, as the case may be, Clearstream, Luxembourg, after receipt of any payment
from the Principal Paying Agent to the Common Safekeeper, the respective
systems will promptly credit their Participants' accounts with payments in
amounts proportionate to their respective ownership of Certificate Book-Entry
Interests as shown in the records of Euroclear or Clearstream, Luxembourg.
On each record date (the "Record Date"), Euroclear and Clearstream, Luxembourg
will determine the identity of the Participants for the purposes of making
payments under the Residual Certificates. The Record Date in respect of the
Residual Certificates shall be as at the close of business on the Business Day
prior to the relevant Interest Payment Date. The Issuer expects that
payments by Participants to owners of interests in Certificate Book-Entry
Interests held through such Participants or Indirect Participants will be
governed by standing customer instructions and customary practices, as is now
the case with the securities held for the accounts of customers in bearer form
or registered in "street name", and will be the responsibility of such
Participants or Indirect Participants. None of the Issuer, any agent of the
Issuer, the Joint Arrangers, the Joint Lead Managers, the Note Trustee or the
Security Trustee will have any responsibility or liability for any aspect of
the records relating to, or payments made on account of a Participant's
ownership of, Certificate Book-Entry Interests or for maintaining, supervising
or reviewing any records relating to a Participant's ownership of Certificate
Book-Entry Interests.
Information Regarding Euroclear and Clearstream, Luxembourg
Euroclear and Clearstream, Luxembourg have advised the Issuer as follows:
· Euroclear and Clearstream, Luxembourg each hold
securities for their account holders and facilitate the clearance and
settlement of securities transactions by electronic book-entry transfer
between their respective account holders, thereby eliminating the need for
physical movements of Certificates and any risk from lack of simultaneous
transfers of securities.
· Euroclear and Clearstream, Luxembourg provide various
services, including safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing.
· Euroclear and Clearstream, Luxembourg each also deal with
domestic securities markets in several countries through established
depositary and custodial relationships. The respective systems of Euroclear
and of Clearstream, Luxembourg have established an electronic bridge between
their two systems across which their respective account holders may settle
trades with each other.
· Account holders in both Euroclear and Clearstream,
Luxembourg are worldwide financial institutions, including underwriters,
securities brokers and dealers, banks, trust companies and clearing
corporations. Indirect access to both Euroclear and Clearstream, Luxembourg
is available to other institutions that clear through or maintain a custodial
relationship with an account holder of either system.
· An account holder's overall contractual relations with
either Euroclear or Clearstream, Luxembourg are governed by the respective
rules and operating procedures of Euroclear or Clearstream, Luxembourg and any
applicable laws. Both Euroclear and Clearstream, Luxembourg act under such
rules and operating procedures only on behalf of their respective account
holders, and have no record of, or relationship with, persons holding through
their respective account holders.
The Issuer understands that under existing industry practices, if any of the
Issuer, the Note Trustee or the Security Trustee requests any action of owners
of Certificate Book-Entry Interests or if an owner of a Certificate Book-Entry
Interest desires to give instructions or to take any action that a holder is
entitled to give or take under the Trust Deed or the Deed of Charge, Euroclear
or Clearstream, Luxembourg, as the case may be, would authorise the
Participants owning the relevant Certificate Book-Entry Interests to give
instructions or take such action, and such Participants would authorise
Indirect Participants to give or take such action or would otherwise act upon
the instructions of such Indirect Participants.
Transfers and Transfer Restrictions
All transfers of Certificate Book-Entry Interests will be recorded in
accordance with the book-entry systems maintained by Euroclear or Clearstream,
Luxembourg, as applicable, pursuant to customary procedures established by
each respective system and its Participants (see the section above entitled
"Description of the Global Notes - General").
Beneficial interests in a Global Certificate may be held only through
Euroclear or Clearstream, Luxembourg. Each Global Certificate will bear a
legend similar to that appearing under the section of this Prospectus entitled
"Transfer Restrictions and Investor Representations" below, and neither a
Global Certificate nor any beneficial interest therein may be transferred
except in compliance with the transfer restrictions set out in the legend
appearing in the relevant Global Certificate.
Action in respect of the Global Certificate and the Certificate Book-Entry
Interests
Not later than 10 days after receipt by the Issuer of any notice in respect of
the Residual Certificates or any notice of solicitation of consents or
requests for a waiver or other action by the Certificateholder of the Residual
Certificates, the Issuer will deliver to Euroclear and Clearstream, Luxembourg
a notice containing (a) such information as is contained in such notice, (b) a
statement that at the close of business on a specified record date Euroclear
and Clearstream, Luxembourg will be entitled to instruct the Issuer as to the
consent, waiver or other action, if any, pertaining to the Certificate
Book-Entry Interests or the Certificates, and (c) a statement as to the manner
in which such instructions may be given. Upon the written request of
Euroclear or Clearstream, Luxembourg, as applicable, the Issuer shall
endeavour, insofar as practicable, to take such action regarding the requested
consent, waiver or other action in respect of the Certificate Book-Entry
Interests or the Certificates in accordance with any instructions set out in
such request. Euroclear and Clearstream, Luxembourg are expected to follow
the procedures described under the section above entitled "Description of the
Global Notes - General", with respect to soliciting instructions from their
respective Participants.
Notices
The Issuer will send to Euroclear and Clearstream, Luxembourg a copy of any
notices addressed to Certificateholders for communication by Euroclear and
Clearstream, Luxembourg to the Certificateholders and shall procure that the
information contained in such notice shall appear on a Relevant Screen (see
also Residual Certificates Condition 15 (Notice to Residual
Certificateholders)). The Note Trustee may, in accordance with the Residual
Certificates Condition 15.2 (Note Trustee's Discretion to Select Alternative
Method), sanction other methods of giving notice to all or some of the
Certificateholders, if such method is reasonable having regard to the then
prevailing market practice.
New Safekeeping Structure and Eurosystem Eligibility
The Certificates are intended to be held in an NSS and in a manner which would
allow Eurosystem eligibility and will be deposited with one of the ICSDs as
common safekeeper. However, the deposit of the Residual Certificates with
one of the ICSDs as common safekeeper upon issuance or otherwise does not
necessarily mean that the Residual Certificates will be recognised as eligible
collateral for Eurosystem monetary policy and intraday credit operations by
the Eurosystem at issuance or at any time during their life. Such
recognition will depend upon the European Central Bank being satisfied that
Eurosystem eligibility criteria have been met.
Issuer-ICSDs Agreement
Prior to the issuance of the Certificates, the Issuer will enter into an
Issuer-ICSDs Agreement with the ICSDs in respect of the Residual
Certificates. The Issuer-ICSDs Agreement provides that the ICSDs will, in
respect of any of the Residual Certificates (while being held in the NSS),
maintain their respective portion of the issue outstanding amount through
their records. The Issuer-ICSDs Agreement will be governed by English law.
Terms and Conditions of the Notes
The following are the terms and conditions of the Notes in the form (subject
to amendment) in which they will be set out in the Trust Deed (as defined
below).
1. GENERAL
The £271,601,000 Class A mortgage backed floating rate notes due July 2062
(the "Class A Notes"), the £21,380,000 Class B mortgage backed floating rate
notes due July 2062 (the "Class B Notes"), the £11,086,000 Class C mortgage
backed floating rate notes due July 2062 (the "Class C Notes"), the
£7,919,000 Class D mortgage backed floating rate notes due July 2062 (the
"Class D Notes"), the £4,752,000 Class E mortgage backed floating rate notes
due July 2062 (the "Class E Notes") and the £3,168,000 Class X mortgage
backed floating rate notes due July 2062 (the "Class X Notes") (the Class A
Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E
Notes and the Class X Notes together being the "Notes"), in each case of Atlas
Funding 2025-1 PLC (the "Issuer") are constituted by a trust deed (the "Trust
Deed") dated on or about 24 April 2025 (the "Closing Date") and made between,
among others, the Issuer and Citicorp Trustee Company Limited as trustee for
the Noteholders (in such capacity, the "Note Trustee"). Any reference in
these terms and conditions (the "Conditions") to a "Class" of Notes or of
Noteholders or (as applicable) of Residual Certificates or of
Certificateholders shall be a reference to the Class A Notes, the Class B
Notes, the Class C Notes, the Class D Notes, the Class E Notes, the Class X
Notes, the RC1 Residual Certificates or the RC2 Residual Certificates, as the
case may be, or to the respective holders thereof. Any reference in these
Conditions to the Residual Certificates (the "Residual Certificates
Conditions") will be to the terms and conditions of the Residual
Certificates. Any reference in these Conditions to the Noteholders means the
registered holders for the time being of the Notes, or if preceded by a
particular Class designation of Notes, the registered holders for the time
being of such Class of Notes. The security for the Notes is constituted by
and pursuant to a deed of charge and assignment (the "Deed of Charge") dated
on or about the Closing Date and made between, among others, the Issuer and
Citicorp Trustee Company Limited as trustee for the Secured Creditors (in such
capacity, the "Security Trustee").
Pursuant to an agency agreement (the "Agency Agreement") dated on or prior to
the Closing Date and made between the Issuer, the Note Trustee, the Security
Trustee, Citibank, N.A., London Branch as principal paying agent (in such
capacity, the "Principal Paying Agent" and, together with any further or other
paying agent appointed under the Agency Agreement, the "Paying Agents"),
Citibank, N.A., London Branch as registrar (in such capacity, the "Registrar")
and Citibank, N.A., London Branch as agent bank (in such capacity, the "Agent
Bank"), provision is made for, inter alia, the payment of principal and
interest in respect of the Notes.
The statements in these Conditions include summaries of, and are subject to,
the detailed provisions of the Trust Deed, the Deed of Charge and the Agency
Agreement and a master definitions and construction schedule (the "Master
Definitions and Construction Schedule") dated on or about the Closing Date and
the other Transaction Documents (as defined therein).
Electronic copies of the Trust Deed, the Deed of Charge, the Agency Agreement,
the Master Definitions and Construction Schedule and the other Transaction
Documents are available for inspection upon request during normal business
hours from the Paying Agents. The Noteholders are entitled to the benefit
of, are bound by, and are deemed to have notice of, all the provisions of the
Transaction Documents applicable to them.
2. INTERPRETATION
2.1 Definitions
Capitalised terms not otherwise defined in these Conditions shall bear the
meanings given to them in the Master Definitions and Construction Schedule.
2.2 Interpretation
These Conditions shall be construed in accordance with the principles of
construction set out in the Master Definitions and Construction Schedule.
3. FORM, DENOMINATION AND TITLE
3.1 Form and Denomination
Each Class of Notes will initially be represented by a global note certificate
in registered form (a "Global Note").
For so long as any of the Notes are represented by a Global Note, transfers
and exchanges of beneficial interests in such Global Note and entitlement to
payments thereunder will be effected subject to, and in accordance with, the
rules and procedures from time to time of Euroclear Bank SA/NV ("Euroclear")
or Clearstream Banking, S.A. ("Clearstream, Luxembourg"), as appropriate.
Each Global Note will be deposited with and registered in the name of a common
safekeeper (or a nominee thereof) for Euroclear and Clearstream, Luxembourg.
For so long as the Notes are represented by Global Notes, and for so long as
Euroclear and Clearstream, Luxembourg so permit, the Notes shall be tradable
only in the minimum nominal amount of £100,000 and higher integral multiples
of £1,000, notwithstanding that no Registered Definitive Notes (as defined
below) will be issued with a denomination above £199,000. A Global Note
will be exchanged for the relevant Note in definitive registered form (such
exchanged Global Notes in definitive registered form, the "Registered
Definitive Notes") only if either of the following applies:
(a) both Euroclear and Clearstream, Luxembourg:
(i) are closed for business for a continuous period of 14
calendar days (other than by reason of holiday, statutory or otherwise); or
(ii) announce an intention permanently to cease business or to
cease to make book-entry systems available for settlement of beneficial
interests in such Global Notes and do, in fact, do either of those things,
and, in either case, no alternative clearing system satisfactory to the Note
Trustee is available; or
(b) as a result of any amendment to, or change in, the laws or
regulations of the United Kingdom (or of any political subdivision thereof) or
of any authority therein or thereof having power to tax, or in the
interpretation or administration by a revenue authority or a court or in the
application of such laws or regulations, which becomes effective on or after
the Closing Date, the Issuer or any Paying Agent is or will be required to
make any deduction or withholding for or on account of tax from any payment in
respect of the Notes which would not be required were the relevant Notes in
definitive registered form.
If Registered Definitive Notes are issued in respect of Notes originally
represented by a Global Note, the beneficial interests represented by such
Global Note shall be exchanged by the Issuer for the relevant Notes in
registered definitive form. The aggregate principal amount of the Registered
Definitive Notes shall be equal to the Principal Amount Outstanding of the
Notes at the date on which notice of exchange is given of the Global Note,
subject to and in accordance with the detailed provisions of these Conditions,
the Agency Agreement, the Trust Deed and the relevant Global Note.
Registered Definitive Notes (which, if issued, will be in the denomination set
out below) will be serially numbered and will be issued in registered form
only.
The minimum denomination of the Notes in global and (if issued and printed)
definitive form will be £100,000.
References to "Notes" in these Conditions shall include the Global Notes and
the Registered Definitive Notes.
3.2 Title
Title to the Global Notes shall pass by and upon registration in the register
(the "Register") which the Issuer shall procure to be kept by the Registrar.
The registered holder of a Global Note may (to the fullest extent permitted by
applicable laws) be deemed and treated at all times, by all persons and for
all purposes (including the making of any payments), as the absolute owner of
such Global Note regardless of any notice of ownership, theft or loss or any
trust or other interest therein or of any writing thereon (other than the
endorsed form of transfer).
Title to a Registered Definitive Note shall only pass by and upon registration
of the transfer in the Register. Any such transfer shall be in an amount
equal to or greater than the minimum denominations specified in Condition 3.1
(Form and Denomination).
Registered Definitive Notes may be transferred upon the surrender of the
relevant Registered Definitive Note, with the form of transfer endorsed on it
duly completed and executed, at the specified office of the Registrar. Such
transfers shall be subject to the minimum denominations specified in Condition
3.1 (Form and Denomination). All transfers of Registered Definitive Notes
are subject to any restrictions on transfer set out on the Registered
Definitive Notes and the detailed regulations concerning transfers in the
Agency Agreement.
Each new Registered Definitive Note to be issued upon transfer of such
Registered Definitive Note will, within five Business Days of receipt and
surrender of such Registered Definitive Note (duly completed and executed) for
transfer, be available for delivery at the specified office of the Registrar
or be mailed at the risk of the transferee entitled to such Registered
Definitive Note to such address as may be specified in the relevant form of
transfer.
4. STATUS AND RELATIONSHIP BETWEEN THE NOTES AND SECURITY
4.1 Status and relationship between the Notes
(a) The Class A Notes constitute direct, secured and (subject to
the limited recourse provision in Condition 12 (Enforcement)) unconditional
obligations of the Issuer. The Class A Notes rank pro rata and pari passu
without preference or priority among themselves in relation to payment of
interest and principal at all times, as provided in these Conditions and the
Transaction Documents.
(b) The Class B Notes constitute direct, secured and (subject to
the limited recourse provision in Condition 12 (Enforcement) and Condition 17
(Subordination by Deferral)) unconditional obligations of the Issuer. The
Class B Notes rank pari passu without preference or priority among themselves
in relation to payment of interest and principal at all times but, subject to
the distribution of the Pre-Funding Unused Amount on the First Interest
Payment Date, subordinate to the Class A Notes, as provided in these
Conditions and the Transaction Documents. Accordingly, the interests of the
persons who for the time being are registered in the Register as holders of
Class B Notes (the "Class B Noteholders") will be, subject to the distribution
of the Pre-Funding Unused Amount on the First Interest Payment Date,
subordinated to the interests of the persons who for the time being are
registered in the Register as holders of Class A Notes (the "Class A
Noteholders") (so long as any Class A Notes remain outstanding).
(c) The Class C Notes constitute direct, secured and (subject to
the limited recourse provision in Condition 12 (Enforcement) and Condition 17
(Subordination by Deferral)) unconditional obligations of the Issuer. The
Class C Notes rank pari passu without preference or priority among themselves
in relation to payment of interest and principal at all times but, subject to
the distribution of the Pre-Funding Unused Amount on the First Interest
Payment Date, subordinate to the Class A Notes and the Class B Notes, as
provided in these Conditions and the Transaction Documents. Accordingly, the
interests of the persons who for the time being are registered in the Register
as holders of the Class C Notes (the "Class C Noteholders") will be, subject
to the distribution of the Pre-Funding Unused Amount on the First Interest
Payment Date, subordinated to the interests of each of the Class A Noteholders
and the Class B Noteholders (so long as any Class A Notes and/or any Class B
Notes remain outstanding).
(d) The Class D Notes constitute direct, secured and (subject to
the limited recourse provision in Condition 12 (Enforcement) and Condition 17
(Subordination by Deferral)) unconditional obligations of the Issuer. The
Class D Notes rank pari passu without preference or priority among themselves
in relation to payment of interest and principal at all times but, subject to
the distribution of the Pre-Funding Unused Amount on the First Interest
Payment Date, subordinate to the Class A Notes, the Class B Notes and the
Class C Notes, as provided in these Conditions and the Transaction
Documents. Accordingly, the interests of the persons who for the time being
are registered in the Register as holders of the Class D Notes (the "Class D
Noteholders") will be, subject to the distribution of the Pre-Funding Unused
Amount on the First Interest Payment Date, subordinated to the interests of
each of the Class A Noteholders, the Class B Noteholders and the Class C
Noteholders) (so long as any Class A Notes and/or any Class B Notes and/or any
Class C Notes remain outstanding).
(e) The Class E Notes constitute direct, secured and (subject to
the limited recourse provision in Condition 12 (Enforcement) and Condition 17
(Subordination by Deferral)) unconditional obligations of the Issuer. The
Class E Notes rank pari passu without preference or priority among themselves
in relation to payment of interest and principal at all times but, subject to
the distribution of the Pre-Funding Unused Amount on the First Interest
Payment Date, subordinate to the Class A Notes, the Class B Notes, the Class C
Notes and the Class D Notes, as provided in these Conditions and the
Transaction Documents. Accordingly, the interests of the persons who for the
time being are registered in the Register as holders of the Class E Notes (the
"Class E Noteholders") will be, subject to the distribution of the Pre-Funding
Unused Amount on the First Interest Payment Date, subordinated to the
interests of each of the Class A Noteholders, the Class B Noteholders, the
Class C Noteholders and the Class D Noteholders) (so long as any Class A Notes
and/or any Class B Notes and/or any Class C Notes and/or any Class D Notes
remain outstanding).
(f) The Class X Notes constitute direct, secured and (subject to
the limited recourse provision in Condition 12 (Enforcement) and Condition 17
(Subordination by Deferral)) unconditional obligations of the Issuer. The
Class X Notes rank pari passu without preference or priority among themselves
in relation to payment of interest and principal at all times but subordinate
to the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes
and the Class E Notes, as provided in these Conditions and the Transaction
Documents. Accordingly, the interests of the persons who for the time being
are registered in the Register as holders of the Class X Notes (the "Class X
Noteholders") will be subordinated to the interests of each of the Class A
Noteholders, the Class B Noteholders, the Class C Noteholders, the Class D
Noteholders and the Class E Noteholders (so long as any Class A Notes and/or
any Class B Notes and/or any Class C Notes and/or any Class D Notes and/or any
Class E Notes remain outstanding).
(g) On the First Interest Payment Date only, the Collateralised
Notes will be redeemed pro rata and pari passu in an aggregate amount equal to
the Pre-Funding Unused Amount.
(h) The Trust Deed contains provisions requiring the Note
Trustee to have regard to the interests of holders of each Class of the Notes
as regards all rights, powers, trusts, authorities, duties and discretions of
the Note Trustee (except where expressly provided otherwise) but requiring the
Note Trustee where there is a conflict of interests between one or more
Classes of Notes and/or Residual Certificates in any such case to have regard
(except as expressly provided otherwise) to the interests of the holders of
the Class or Classes of Notes or Residual Certificates ranking in priority to
the other relevant Classes of Notes and/or the Residual Certificates in the
Post-Enforcement Priority of Payments.
(i) The Trust Deed also contains provisions limiting the
powers of any Class of Noteholders to (i) request or direct the Note Trustee
to take any action, or (ii) pass an effective Extraordinary Resolution
according to the effect thereof on the interests of the holders of the Most
Senior Class of Notes. Except in certain circumstances described in
Condition 13 (Meetings of Noteholders, Modification, Waiver and Substitution),
the Trust Deed contains no such limitation on the powers of the holders of the
Most Senior Class of Notes, the exercise of which will be binding (save in
respect of a Basic Terms Modification) on the holders of all other Classes of
Notes and Certificateholders in each case irrespective of the effect thereof
on their respective interests.
As long as any Notes are outstanding but subject to Condition 13.5
(Modification to the Transaction Documents), the Security Trustee shall not
have regard to the interests of the other Secured Creditors.
4.2 Security
(a) The security constituted by or pursuant to the Deed of
Charge is granted to the Security Trustee for it to hold on trust for the
Noteholders and the other Secured Creditors, upon and subject to the terms and
conditions of the Deed of Charge.
(b) The Noteholders and the other Secured Creditors will share
in the benefit of the security constituted by or pursuant to the Deed of
Charge, upon and subject to the terms and conditions of the Deed of Charge.
5. Covenants
Save with the prior written consent of the Note Trustee or unless otherwise
permitted under these Conditions or any of the Transaction Documents, the
Issuer shall not, so long as any Note remains outstanding:
(a) Negative pledge: create or permit to subsist any encumbrance
(unless arising by operation of law) or other security interest whatsoever
over any of its assets or undertakings;
(b) Restrictions on activities: (i) engage in any activity
whatsoever which is not incidental to or necessary in connection with any of
the activities in which the Transaction Documents provide or envisage that the
Issuer will engage, or (ii) have any subsidiaries, any subsidiary undertaking
(as defined in the Companies Act 1985 and the Companies Act 2006 (as
applicable)) or any employees (but shall procure that, at all times, it shall
retain at least one independent director) or premises;
(c) Disposal of assets: assign, transfer, sell, lend, lease,
part with or otherwise dispose of, or deal with, or grant any option or
present or future right to acquire all or any of its assets or undertakings or
any interest, estate, right, title or benefit therein or attempt or purport to
do any of the foregoing;
(d) Equitable and Beneficial Interest: permit any person, other
than itself and the Security Trustee, to have any equitable or beneficial
interest in any of its assets or undertakings or any interest, estate, right,
title or benefit therein;
(e) Dividends or distributions: pay any dividend or make any
other distribution to its shareholders except out of amounts of profit
retained by the Issuer in accordance with the applicable Priority of Payments
which are available for distribution in accordance with the Issuer's
memorandum and articles of association and with applicable laws or issue any
further shares;
(f) Indebtedness: incur any financial indebtedness in respect of
borrowed money whatsoever or give any guarantee or indemnity in respect of any
indebtedness or of any other obligation of any person;
(g) Merger: consolidate or merge with any other person or convey
or transfer substantially all of its properties or assets to any other person;
(h) No modification or waiver: permit any of the Transaction
Documents to which it is a party to become invalid or ineffective or permit
the priority of the security interests created or evidenced thereby or
pursuant thereto to be varied, modified, terminated, postponed, waived or
agree to any modification of, or grant any consent, approval, authorisation or
waiver pursuant to, or in connection with, any of the Transaction Documents to
which it is a party or permit any party to any of the Transaction Documents to
which it is a party to be released from its obligations or exercise any right
to terminate any of the Transaction Documents to which it is a party;
(i) Bank accounts: have an interest in any bank account other
than the Issuer Accounts and the Issuer's interest in the Collection Account
Trust and the Expenses Account Trust, unless such account or interest therein
is charged to the Security Trustee on terms acceptable to the Security
Trustee;
(j) Purchase Notes: purchase or otherwise acquire any Notes;
or
(k) U.S. activities: engage in any activities in the United
States (directly or through agents), or derive any income from United States
sources as determined under United States income tax principles, or hold any
property if doing so would cause it to be engaged in a trade or business
within the United States as determined under United States income tax
principles.
6. Interest
6.1 Accrual of interest
Each Note bears interest on its Principal Amount Outstanding from (and
including) the Closing Date. Each Note (or, in the case of the redemption of
part only of a Note, that part only of such Note) will cease to bear interest
from and including the due date for redemption unless, upon due presentation
in accordance with Condition 7 (Payments), payment of the principal in respect
of the Note is improperly withheld or refused or default is otherwise made in
respect of the payment, in which event interest shall continue to accrue as
provided in the Trust Deed with the first Interest Payment Date falling in
July 2025.
6.2 Interest Payment Dates
The first Interest Payment Date in respect of all Notes will be the Interest
Payment Date falling in July 2025 (the "First Interest Payment Date").
Interest will be payable in arrear on each Interest Payment Date, for all
classes of Notes.
"Interest Payment Date" means the 20th day of each calendar month or, if such
day is not a Business Day, the immediately following Business Day unless it
would thereby fall into the next calendar month in which event it shall be
brought forward to the immediately preceding Business Day with the first
Interest Payment Date falling in July 2025.
Interest shall accrue in the case of the Notes, from (and including) an
Interest Payment Date (except in the case of the first Interest Period, which
shall commence on (and include) the Closing Date) to (but excluding) the next
following Interest Payment Date (each such period above, an "Interest
Period").
6.3 Rate of Interest
(a) The rate of interest payable from time to time in respect of
each class or sub-class of the Notes (each, a "Rate of Interest" and together,
the "Rates of Interest") will be in respect of the Notes and any related
Interest Period, determined on the basis of the following provisions:
(i) The Agent Bank will determine the Compounded Daily SONIA
as at the Interest Determination Date (as defined below) in question.
(ii) The Rates of Interest for the relevant Interest Period will
be the rate for the Compounded Daily SONIA determined as at the related
Interest Determination Date plus: (I) from and including the Closing Date to
(but excluding) the Optional Redemption Date, the Relevant Margin; or (II)
from (and including) the Optional Redemption Date, the Relevant Step-Up
Margin.
(iii) If the Rate of Interest is less than zero per cent., the
Rate of Interest shall be deemed to be zero per cent. There will be no
maximum Rate of Interest.
(iv) Notwithstanding the provisions of these Conditions, in the
event the Bank of England publishes guidance as to (i) how the SONIA Reference
Rate is to be determined or (ii) any rate that is to replace the SONIA
Reference Rate, the Agent Bank shall, subject to receiving written
instructions from the Issuer (upon which the Agent Bank shall be entitled to
rely conclusively and without enquiry or liability) and to the extent that it
is reasonably practicable, follow such guidance in order to determine SONIA
for the purpose of the Notes for so long as the SONIA Reference Rate is not
available or has not been published by the authorised distributors.
(v) If the Rate of Interest cannot be determined in accordance
with the foregoing provisions by the Agent Bank, the Rate of Interest shall be
(i) that determined as at the last preceding Interest Determination Date
(though substituting, where a different Relevant Margin or Relevant Step-Up
Margin is to be applied to the relevant Interest Period from that which
applied to the last preceding Interest Period, the Relevant Margin or Relevant
Step-Up Margin relating to the relevant Interest Period in place of the
Relevant Margin or Relevant Step-Up Margin relating to that last preceding
Interest Period), or (ii) if there is no such preceding Interest Determination
Date, the initial Rate of Interest which would have been applicable to the
relevant Class of Notes for the first Interest Period had the Notes been in
issue for a period equal in duration to the scheduled first Interest Period
but ending on (and excluding) that first Interest Payment Date (but applying
the Relevant Margin applicable to the first Interest Period).
(vi) Notwithstanding any other provision of these Conditions, if
in the Agent Bank's opinion there is any uncertainty between two or more
alternative courses of action in making any determination or calculation under
this Condition 6, the Agent Bank shall promptly notify the Issuer thereof and
the Issuer shall direct the Agent Bank in writing as to which alternative
course of action to adopt. If the Agent Bank is not promptly provided with
such direction, or is otherwise unable (other than due to its own gross
negligence, wilful default or fraud) to make such calculation or determination
for any reason, it shall notify the Issuer thereof and the Agent Bank shall be
under no obligation to make such calculation or determination and (in the
absence of such gross negligence, wilful default or fraud) shall not incur any
liability for not doing so.
(b) In these Conditions (except where otherwise defined), the
expression:
(i) "Business Day" means a day (other than a Saturday or
Sunday or a public holiday) on which banks are generally open for business in
London;
(ii) "Compounded Daily SONIA" means, with respect to an Interest
Period, the rate of return of a daily compound interest investment (with the
daily Sterling overnight reference rate as reference rate for the calculation
of interest) and will be calculated by the Agent Bank as at the Interest
Determination Date in question, as follows, and the resulting percentage will
be rounded if necessary to the fourth decimal place, with 0.00005 per cent.
being rounded upwards:
Where:
"d" is the number of calendar days in the relevant Interest Period;
"d(o)" is the number of Business Days in the relevant Interest Period;
"i" is a series of whole numbers from one to d(o), each representing the
relevant Business Day in chronological order from, and including, the first
Business Day in the relevant Interest Period;
"LBD" means a Business Day;
"n(i)", for any day "i", means the number of calendar days from and including
such day "i" up to but excluding the following Business Day; and
"SONIA(i-5LBD)" means, in respect of any Business Day falling in the relevant
Interest Period, the SONIA Reference Rate for the Business Day falling five
Business Days prior to that Business Day "i";
(iii) "Interest Determination Date" means the fifth Business Day
before the Interest Payment Date for which the relevant Rate of Interest will
apply;
(iv) "Observation Period" means the period from and including the
date falling five Business Days prior to the first day of the relevant
Interest Period (and the first Interest Period shall begin on and include the
Closing Date) and ending on, but excluding, the date falling five Business
Days prior to the Interest Payment Date for such Interest Period (or, if
applicable, the date falling five Business Days prior to any other date on
which a payment of interest is to be made in respect of the Notes);
(v) "Relevant Margin" means:
(A) in respect of the Class A Notes, 0.800 per cent. per annum;
(B) in respect of the Class B Notes, 1.250 per cent. per annum;
(C) in respect of the Class C Notes, 1.650 per cent. per annum;
(D) in respect of the Class D Notes, 2.000 per cent. per annum;
(E) in respect of the Class E Notes, 4.000 per cent. per annum;
and
(F) in respect of the Class X Notes, 4.000 per cent. per annum;
(vi) "Relevant Step-Up Margin" means:
(A) in respect of the Class A Notes, 1.200 per cent. per annum;
(B) in respect of the Class B Notes, 1.875 per cent. per annum;
(C) in respect of the Class C Notes, 2.475 per cent. per annum;
(D) in respect of the Class D Notes, 3.000 per cent. per annum;
(E) in respect of the Class E Notes, 5.000 per cent. per annum;
(vii) "Reuters Screen SONIA Page" means Reuters Screen SONIA Page or
such other page as may replace Reuters Screen SONIA Page on that service for
the purpose of displaying such information or if that service ceases to
display such information, such page as displays such information on such
service as may replace such screen; and
(viii) "SONIA Reference Rate" means, in respect of any Business Day, a
reference rate equal to the daily Sterling Overnight Index Average ("SONIA")
rate for such Business Day as provided by the administrator of SONIA to, and
published by, authorised distributors of the rate as of 9:00 a.m. London time
on the Reuters Screen SONIA Page or, if the Reuters Screen SONIA Page is
unavailable, as otherwise published by such authorised distributors (on the
Business Day immediately following such Business Day).
If, in respect of any Business Day in the relevant Observation Period, the
Agent Bank determines that the SONIA Reference Rate is not available on the
Reuters Screen SONIA Page or has not otherwise been published by the relevant
authorised distributors, such SONIA Reference Rate shall be: (A) the Bank of
England's Bank Rate (the "Bank Rate") prevailing at close of business on the
relevant Business Day; plus (B) the mean of the spread of the SONIA Reference
Rate to the Bank Rate over the previous five calendar days on which a SONIA
Reference Rate has been published, excluding the highest spread (or, if there
is more than one highest spread, one only of those highest spreads) and lowest
spread (or, if there is more than one lowest spread, one only of those lowest
spreads) to the Bank Rate.
6.4 Determination of Rates of Interest and Interest Amounts
The Agent Bank shall, as soon as practicable after 11.00 a.m. (London time) on
each Interest Determination Date falling in such Interest Period, but in no
event later than the third Business Day thereafter, determine the Sterling
amount (the "Interest Amounts") payable in respect of interest on the
Principal Amount Outstanding of each Class of the Notes for the relevant
Interest Period.
The Interest Amounts shall be determined by applying the relevant Rate of
Interest to the Principal Amount Outstanding of such Class of Notes and
multiplying the sum by the actual number of calendar days in the Interest
Period concerned divided by 365 and rounding the figure downwards to the
nearest penny.
If the Agent Bank defaults, at any time, in its obligation to determine or is
unable to determine the Rates of Interest and the Interest Amounts in
accordance with this Condition 6.4, the Issuer may, at the expense of the
Issuer, engage an expert to make such determination and any such determination
shall be deemed to be determinations made by the Agent Bank.
6.5 Publication of Rates of Interest and Interest Amounts
The Agent Bank shall as soon as reasonably practicable after determining the
Rate of Interest and the Interest Amounts for each Class of Notes in respect
of each Interest Period and each Interest Payment Date (as applicable)
pursuant to these Conditions (and, in any event, no later than two Business
Days prior to the immediately succeeding Interest Payment Date), cause the
relevant Rate of Interest and Interest Amount to be notified to the Issuer,
the Cash Manager, the Note Trustee, the Paying Agents and the Registrar and to
be published in accordance with Condition 16 (Notice to Noteholders), and the
Issuer shall notify any stock exchange or other relevant authority on which
the Notes are at the relevant time listed, as soon as reasonably practicable,
after their determination and in no event later than two Business Days prior
to the immediately succeeding Interest Payment Date. The Interest Amounts
and Interest Payment Date may subsequently be amended (or appropriate
alternative arrangements made by way of adjustment) without notice in the
event of an extension or shortening of the Interest Period.
6.6 Notifications to be Final
All notifications, opinions, determinations, certificates, calculations,
quotations and decisions given, expressed, made or obtained for the purposes
of the provisions of this Condition 6, whether by the Agent Bank or the Cash
Manager, will (in the absence of manifest error) be binding on the Issuer, the
Cash Manager, the Note Trustee, the Agent Bank, the Paying Agents and all
Noteholders and (in the absence of wilful default, gross negligence or fraud)
no liability to the Issuer or the Noteholders shall attach to the Cash Manager
or the Agent Bank in connection with the exercise or non-exercise by any of
them of their powers, duties and discretions under this Condition 6.
6.7 Agent Bank
The Issuer shall procure that, so long as any of the Notes remain outstanding,
there is, at all times, an agent bank for the purposes of the Notes. The
Issuer may, subject to the prior written approval of the Note Trustee,
terminate the appointment of the Agent Bank and shall, in the event of the
appointed office of any bank being unable or unwilling to continue to act as
the agent bank or failing duly to determine the Rate of Interest or the
Interest Amounts in respect of any Class of Notes for any Interest Period,
subject to the prior written approval of the Note Trustee, appoint another
major bank engaged in the relevant interbank market to act in its place. The
Agent Bank may not resign its duties or be removed without a successor having
been appointed on terms commercially acceptable in the market and such
successor having acquired and become subject to such rights and obligations as
if it had entered into an agency agreement in a form commercially acceptable
in the market.
6.8 Determinations and Reconciliation
(a) In the event that the Cash Manager does not receive the
Servicer Reports with respect to a Collection Period (each such period, a
"Determination Period"), then the Cash Manager may, in accordance with the
Cash Management Agreement, estimate the amount of Principal Receipts and
Revenue Receipts for such Determination Period based on the three most
recently received Servicer Reports in respect of the preceding Collection
Periods or, where there are not at least three previous Servicer Reports, any
previous Servicer Reports for the purposes of calculating the amounts
available to the Issuer to make payments, as set out in Condition 6.8(b)
below. When the Cash Manager receives the Servicer Report relating to the
Determination Period, it will make the reconciliation calculations and
reconciliation payments as set out in Condition 6.8(c) below. Any (i)
calculations properly made on the basis of such estimates in accordance with
Conditions 6.8(b) below and/or 6.8(c) below; (ii) payments made under any of
the Notes and Transaction Documents in accordance with such calculations; and
(iii) reconciliation calculations and reconciliation payments made as a result
of such reconciliation calculations, each in accordance with Conditions 6.8(b)
and/or 6.8(c) below, shall be deemed to be made in accordance with the
provisions of the Transaction Documents and will in themselves not lead to an
Event of Default and no liability will attach to the Cash Manager in
connection with the exercise by it of its powers, duties and discretion for
such purposes.
(b) In respect of any Determination Period, the Cash Manager
shall on the Calculation Date immediately following the Determination Period:
(i) determine the Interest Determination Ratio by reference to
the three most recently received Servicer Reports (or, where there are not at
least three previous Servicer Reports, any previous Servicer Reports) received
in the preceding Collection Periods;
(ii) calculate the Revenue Receipts for such Determination
Period as the product of (A) the Interest Determination Ratio and (B) all
collections received by the Issuer during such Determination Period (the
"Calculated Revenue Receipts"); and
(iii) calculate the Principal Receipts for such Determination
Period as the product of (A) 1 minus the Interest Determination Ratio and (B)
all collections received by the Issuer during such Determination Period (the
"Calculated Principal Receipts").
(c) Following the end of any Determination Period, upon receipt
by the Cash Manager of the Servicer Report in respect of such Determination
Period, the Cash Manager shall reconcile the calculations made in accordance
with Condition 6.8(b) above to the actual collections set out in the Servicer
Report by allocating the Reconciliation Amount (as defined above) as follows:
(i) if the Reconciliation Amount is a positive number, the
Cash Manager shall apply an amount equal to the lesser of (A) the absolute
value of the Reconciliation Amount and (B) the amount standing to the credit
of the Revenue Ledger, as Available Principal Receipts (with a corresponding
debit of the Revenue Ledger); and
(ii) if the Reconciliation Amount is a negative number, the Cash
Manager shall apply an amount equal to the lesser of (A) the absolute value of
the Reconciliation Amount and (B) the amount standing to the credit of the
Principal Ledger, as Available Revenue Receipts (with a corresponding debit of
the Principal Ledger),
provided that the Cash Manager shall apply such Reconciliation Amount in
determining Available Revenue Receipts and Available Principal Receipts for
such Collection Period in accordance with the terms of the Cash Management
Agreement and the Cash Manager shall promptly notify the Issuer, the Note
Trustee and the Security Trustee of such Reconciliation Amount.
(d) In these Conditions (except where otherwise defined), the
expression:
(i) "Interest Determination Ratio" means, on any Interest
Payment Date, (A) the aggregate Revenue Receipts calculated in the three
preceding Servicer Reports (or, where there are not at least three previous
Servicer Reports, any previous Servicer Reports), divided by (B) the aggregate
of all Revenue Receipts and all Principal Receipts calculated on the basis of
such Servicer Reports; and
(ii) "Reconciliation Amount" means in respect of any Collection
Period (A) the actual Principal Receipts as determined on the basis of the
available Servicer Report, less (B) the Calculated Principal Receipts in
respect of such Collection Period, plus (C) any Reconciliation Amount not
applied in previous Collection Periods.
7. PAYMENTS
7.1 Payment of Interest and Principal
Payments in respect of principal and interest in respect of any Global Note
will be made only against presentation of such Global Note to or to the order
of the Principal Paying Agent or such other Paying Agent as shall have been
notified to the Noteholders in accordance with Condition 16 (Notice to
Noteholders) for such purpose. Each payment of principal or interest made in
respect of a Global Note will be recorded by the Clearing Systems in their
records (which records are the records each relevant Clearing System holds for
its customers and reflect such customers' interest in the Notes) and such
records shall be prima facie evidence that the payment in question has been
made. No person appearing from time to time in the records of either of the
Clearing Systems as the holder of a Note shall have any claim directly against
the Issuer in respect of payments due on such Note whilst such Note is
represented by a Global Note and the Issuer shall be discharged by payment of
the relevant amount to the bearer of the relevant Global Note. The Issuer
shall procure that each payment shall be entered pro rata in the records of
the relevant Clearing System but any failure to make such entries shall not
affect the discharge referred to above.
In the event that any Notes represented by Global Notes are exchanged for
Notes in definitive form, payments in respect of such Notes shall be made by
transfer to the accounts specified by the holders of such Notes to the
Registrar in accordance with the terms of the Agency Agreement.
7.2 Laws and Regulations
Payments of any amount in respect of a Note including principal and interest
in respect of the Notes are subject, in all cases, to (i) any fiscal or other
laws and regulations applicable thereto and (ii) any withholding or deduction
required pursuant to an agreement described in Section 1471(b) of the U.S.
Internal Revenue Code of 1986 (the "Code") or otherwise imposed pursuant to
Sections 1471 to 1474 of the Code, any regulations or agreements thereunder,
any official interpretations thereof or any law implementing an
intergovernmental approach thereto ("FATCA"). Noteholders will not be
charged commissions or expenses on payments.
7.3 Payment of Interest following a Failure to pay Principal
If payment of principal is improperly withheld or refused on or in respect of
any Note or part thereof, the interest which continues to accrue in respect of
such Note in accordance with Condition 6.1 (Accrual of interest) and Condition
6.3 (Rate of Interest) will be paid in accordance with this Condition 7.
7.4 Change of Paying Agents
The Issuer reserves the right, subject to the prior written approval of the
Note Trustee, at any time to vary or terminate the appointment of the
Principal Paying Agent or the Registrar and to appoint additional or other
agents provided that there will at all times be a person appointed to perform
the obligations of the Principal Paying Agent with a specified office in
London and the Registrar with a specified office in London.
Except where otherwise provided in the Trust Deed or the Agency Agreement, the
Issuer will cause notice of no more than 30 calendar days and no less than 15
calendar days of any change in or addition to the Paying Agents or the
Registrar or their specified offices to be given to the Noteholders in
accordance with Condition 16 (Notice to Noteholders) and will notify the
Rating Agencies of such change or addition.
7.5 No Payment on non-Business Day
If the date for payment of any amount in respect of a Note is not a
Presentation Date, Noteholders shall not be entitled to payment until the next
following Presentation Date and shall not be entitled to further interest or
other payment in respect of such delay. In this Condition 7.5, the
expression "Presentation Date" means a day which is (a) a Business Day and (b)
a day on which banks are generally open for business in the relevant place.
7.6 Partial Payment
If a Paying Agent makes a partial payment in respect of any Note, the
Registrar will, in respect of the relevant Note, annotate the Register
indicating the amount and date of such payment.
7.7 Payment of Interest
If interest is not paid in respect of a Note of any Class on the date when due
and payable (other than because the due date is not a Presentation Date (as
defined in Condition 7.5 (No Payment on non-Business Day)) or by reason of
non-compliance by the Noteholder with Condition 7.1 (Payment of Interest and
Principal)), then such unpaid interest shall itself bear interest at the Rate
of Interest applicable from time to time to such Note until such interest and
interest thereon are available for payment and notice thereof has been duly
given in accordance with Condition 16 (Notice to Noteholders).
8. Redemption
8.1 Redemption at Maturity
Unless previously redeemed in full or purchased and cancelled as provided
below, the Issuer will redeem the Notes at their respective Principal Amount
Outstanding on the Interest Payment Date falling in July 2062 (the "Final
Maturity Date").
8.2 Mandatory Redemption prior to the service of an Enforcement
Notice or on the Call Option Redemption Date
(a) On each Interest Payment Date prior to the service of an
Enforcement Notice or on the Call Option Redemption Date:
(X) each Class of Notes (other than the Class X Notes) shall
be redeemed in an amount equal to the Available Principal Receipts (to the
extent not applied as Principal Addition Amounts to cover any Senior Expenses
Deficit) available for such purpose in accordance with the Pre-Enforcement
Principal Priority of Payments which shall be applied in the following order
of priority:
(i) on the First Interest Payment Date only, to redeem all
Collateralised Notes pro rata and pari passu in an aggregate amount equal to
the Pre-Funding Unused Amount; and thereafter to be applied
(ii) to repay the Class A Notes on a pari passu and pro rata
basis until they are each repaid in full; and thereafter to be applied
(iii) to repay the Class B Notes on a pari passu and pro rata
basis until they are each repaid in full; and thereafter to be applied
(iv) to repay the Class C Notes on a pari passu and pro rata basis
until they are each repaid in full; and thereafter to be applied
(v) to repay the Class D Notes on a pari passu and pro rata
basis until they are each repaid in full; and thereafter to be applied;
(vi) to repay the Class E Notes on a pari passu and pro rata basis
until they are each repaid in full; and
(Y) in the case of the Class X Notes, such class of Notes
shall be redeemed on a pari passu and pro rata basis in an amount equal to the
Available Revenue Receipts available for such purpose in accordance with the
Pre-Enforcement Revenue Priority of Payments which shall be applied to repay
the Class X Notes until they are each repaid in full.
(b) The Principal Amount Outstanding of each Class of Notes
shall be redeemed on each Interest Payment Date in accordance with the
relevant Priority of Payments. The principal amount to be redeemed in
respect of a Note of a particular Class (the "Note Principal Payment") on any
Interest Payment Date prior to the service of an Enforcement Notice shall be
(i) in respect of Notes of a particular Class other than the Class X Notes,
the Available Principal Receipts available for such purpose on such Interest
Payment Date in accordance with the Pre-Enforcement Principal Priority of
Payments and (ii) in respect of the Class X Notes, the Available Revenue
Receipts available for such purpose on such Interest Payment Date in
accordance with the Pre-Enforcement Revenue Priority of Payments, each as
calculated on the Calculation Date immediately preceding such Interest Payment
Date multiplied by the relevant Pool Factor. With respect to each Note of a
particular Class on (or as soon as practicable after) each Calculation Date,
the Issuer shall determine (or cause the Cash Manager to determine) (i) the
amount of any Note Principal Payment due on the Interest Payment Date next
following such Calculation Date, (ii) the Principal Amount Outstanding of each
such Note and (iii) the fraction expressed as a decimal to the sixth decimal
point (the "Pool Factor"), of which the numerator is the Principal Amount
Outstanding of that Note (as referred to in item (ii) above) and the
denominator is the Principal Amount Outstanding of the relevant Class of
Notes. Each determination by or on behalf of the Issuer of any principal
repayment, the Principal Amount Outstanding of a Note and the Pool Factor
shall in each case (in the absence of wilful default, gross negligence, fraud
or manifest error) be final and binding on all persons.
(c) The Issuer will cause each determination of a principal
repayment, Principal Amount Outstanding and Pool Factor to be notified by not
less than two Business Days prior to the relevant Interest Payment Date to the
Note Trustee, the Paying Agents, the Agent Bank, the Swap Providers and (for
so long as the Notes are listed on the Official List of London Stock Exchange
and admitted to trading on the main market of the London Stock Exchange) the
London Stock Exchange, and will immediately cause notice of each such
determination to be given in accordance with Condition 16 (Notice to
Noteholders) not later than two Business Days prior to the relevant Interest
Payment Date. If no principal repayment is due to be made on the Notes on
any Interest Payment Date a notice to this effect will be given to the holders
of the Notes.
8.3 Mandatory Redemption of the Notes in Full
(a) On or after the Optional Redemption Date
On giving not more than 60 calendar days' nor fewer than two Business Days'
notice to the Noteholders in accordance with Condition 16 (Notice to
Noteholders) and the Note Trustee, on any Interest Payment Date on or after
the Optional Redemption Date upon the occurrence of a sale of the Loans and
their Related Security comprising the Portfolio in accordance with the
provisions of the Deed Poll, the Optional Purchase Price received by the
Issuer will be applied as Available Revenue Receipts in accordance with the
Pre-Enforcement Revenue Priority of Payments with the result that the Notes
will be redeemed in full in accordance with Condition 8.2 (Mandatory
Redemption prior to the service of an Enforcement Notice or on the Call Option
Redemption Date) together with any accrued (and unpaid) interest up to (but
excluding) the date of redemption, and any other amounts due to the
Noteholders.
(b) Ten per cent. clean-up call
On giving not more than 60 calendar days' nor fewer than 14 Business Days'
notice to the Noteholders in accordance with Condition 16 (Notice to
Noteholders) and the Note Trustee, on any Interest Payment Date upon the
occurrence of a sale of the Loans and their Related Security comprising the
Portfolio in accordance with the provisions of the Deed Poll where the
aggregate Current Balance of the Loans was equal to or less than 10 per cent.
of the aggregate Principal Amount Outstanding of the Notes on the Closing
Date, the Optional Purchase Price received by the Issuer will be applied as
Available Revenue Receipts in accordance with the Pre-Enforcement Revenue
Priority of Payments with the result that the Notes will be redeemed in full,
on such Interest Payment Date in accordance with Condition 8.2 (Mandatory
Redemption prior to the service of an Enforcement Notice or on the Call Option
Redemption Date) together with any accrued (and unpaid) interest up to (but
excluding) the date of redemption, and any other amounts due to the
Noteholders.
8.4 Mandatory Redemption of the Notes for Taxation or Other
Reasons
If:
(a) by reason of a change in tax law (or the application or
official interpretation thereof), which change becomes effective on or after
the Closing Date, on or before the next Interest Payment Date the Issuer or
the Paying Agents would be required to deduct or withhold from any payment of
principal or interest on any Notes (other than because the relevant holder has
some connection with the United Kingdom other than the holding of such Notes)
any amount for, or on account of, any present or future taxes, duties,
assessments or governmental charges of whatever nature imposed, levied,
collected, withheld or assessed by or on behalf of the United Kingdom or any
political sub-division thereof or any authority thereof or therein having
power to tax; or
(b) by reason of a change in law (or the application or official
interpretation thereof), which change becomes effective on or after the
Closing Date, it has become or will become unlawful for the Issuer to make,
fund or allow to remain outstanding all or any of the Notes; or
(c) by reason of a change in law (or the application or official
interpretation thereof), which change becomes effective on or after the
Closing Date, on or before the next Interest Payment Date the Issuer or the
relevant Swap Provider would be required to deduct or withhold from any
payment under the relevant Swap Agreement any amount for, or on account of,
any present or future taxes, duties, assessments or governmental charges of
whatever nature,
then the Issuer shall, if the same would avoid the effect of such relevant
event described in Condition 8.4(a), 8.4(b) or 8.4(c) above, appoint a Paying
Agent in another jurisdiction or use its reasonable endeavours to arrange the
substitution of a company incorporated and/or tax resident in another
jurisdiction approved in writing by the Note Trustee as principal debtor under
the Notes and the Trust Deed, provided that:
(i) the Note Trustee is satisfied that such substitution will
not be materially prejudicial to the interests of the holders of the Notes
(and in making such determination, the Note Trustee may rely absolutely,
without investigation or inquiry and without liability, on (A) any
confirmation made orally to the Issuer (in which case the Seller on behalf of
the Issuer shall confirm the same in writing to the Note Trustee) or in
writing from each of the Rating Agencies that the then current ratings of the
Notes would not be adversely affected by such substitution or (B) if no such
confirmation from the Rating Agencies is forthcoming and the Seller on behalf
of the Issuer has certified the same in writing to the Security Trustee and
the Note Trustee (an "Issuer Certificate") that such proposed action (i)
(while any Notes remain outstanding) has been notified to the Rating Agencies,
(ii) would not have an adverse impact on the Issuer's ability to make payment
when due in respect of the Notes, (iii) would not affect the legality,
validity and enforceability of any of the Transaction Documents or any
Security and (iv) (while any of the Notes remain outstanding) would not have
an adverse effect on the rating of the Notes) (upon which confirmation or
certificate the Note Trustee and the Security Trustee shall be entitled to
rely absolutely without enquiry or liability to any person for so doing); and
(ii) such substitution would not require registration of any new
security under U.S. securities laws or materially increase the disclosure
requirements under U.S. law.
A "Redemption Event" shall occur if the Issuer satisfies the Note Trustee
immediately before giving the notice referred to below that one or more of the
events described in Condition 8.4(a), 8.4(b) or 8.4(c) is continuing and that
the appointment of a Paying Agent or a substitution as referred to above would
not avoid the effect of the relevant event or that, having used its reasonable
endeavours, the Issuer is unable to arrange such appointment or substitution.
On any Interest Payment Date on which the Loans and their Related Security
comprising the Portfolio are sold pursuant to the Deed Poll following the
occurrence of a Redemption Event, the Optional Purchase Price received by the
Issuer will be applied as Available Revenue Receipts in accordance with the
Pre-Enforcement Revenue Priority of Payments with the result that the Notes
will be redeemed in full, in accordance with Condition 8.2 (Mandatory
Redemption prior to the service of an Enforcement Notice or on the Call Option
Redemption Date) together with any accrued (and unpaid) interest up to (but
excluding) the date of redemption, and any other amounts due to the
Noteholders. The Issuer shall give not more than 60 calendar days' nor fewer
than 15 Business Days' notice of any such redemption of the Notes to the
Noteholders in accordance with Condition 16 (Notice to Noteholders) and the
Note Trustee.
8.5 Principal Amount Outstanding
The "Principal Amount Outstanding" of each Class of Notes on any date shall
be, in each case, their original principal amount, in respect of the Class A
Notes of £271,601,000, in respect of the Class B Notes of £21,380,000, in
respect of the Class C Notes of £11,086,000, in respect of the Class D Notes
of £7,919,000, in respect of the Class E Notes of £4,752,000 and in respect
of the Class X Notes of £3,168,000, in each case less the aggregate amount of
all principal payments in respect of such Class of Notes which have been made
since the Closing Date.
8.6 Notice of Redemption
Any such notice as is referred to in Condition 8.3 (Mandatory Redemption of
the Notes in Full) or Condition 8.4 (Mandatory Redemption of the Notes for
Taxation or Other Reasons) shall be irrevocable and, upon the expiry of such
notice, the Issuer shall be bound to redeem the relevant Notes at the
applicable amounts specified above. Any certificate or legal opinion given
by, or on behalf of, the Issuer pursuant to clause 3.13(c) of the Deed Poll
may be relied on by the Note Trustee without further investigation and, if so
relied on, shall be conclusive and binding on the Noteholders.
8.7 No Purchase by the Issuer
The Issuer will not be permitted to purchase any of the Notes.
8.8 Cancellation on redemption in full and/or exercise of the Call
Option
All Notes redeemed in full will be cancelled upon redemption. Notes
cancelled upon redemption in full may not be resold or re-issued.
9. TAXATION
All payments in respect of the Notes by or on behalf of the Issuer shall be
made without withholding or deduction for, or on account of, all present and
future taxes, levies, imposts, duties, fees, deductions, withholdings or
charges of any nature whatsoever and wheresoever imposed, including income
tax, corporation tax, value added tax or other tax in respect of added value
and any franchise, transfer, sales, gross receipts, use, business, occupation,
excise, personal property, real property or other tax imposed by any national,
local or supranational taxing or fiscal authority or agency together with any
penalties, fines or interest thereon ("Taxes"), unless the withholding or
deduction of the Taxes is required by applicable law. In that event, subject
to Condition 8.4 (Mandatory Redemption of the Notes for Taxation or Other
Reasons), the Issuer or, as the case may be, the Paying Agent shall make such
payment after the withholding or deduction has been made and shall account to
the relevant authorities for the amount required to be withheld or deducted.
Neither the Issuer nor any Paying Agent nor any other person shall be obliged
to make any additional payments to Noteholders in respect of such withholding
or deduction.
10. PRESCRIPTION
Claims in respect of principal and interest on the Notes will be prescribed
after ten years (in the case of principal) and five years (in the case of
interest) from the Relevant Date in respect of the relevant payment.
In this Condition 10, the "Relevant Date", in respect of a payment, is the
date on which such payment first becomes due or (if the full amount of the
monies payable on that date has not been duly received by the Principal Paying
Agent or the Note Trustee on or prior to such date) the date on which, the
full amount of such monies having been received, notice to that effect is duly
given to the relevant Noteholders in accordance with Condition 16 (Notice to
Noteholders).
11. Events of Default
11.1 Notes
The Note Trustee at its absolute discretion may, and if so directed in writing
by the holders of at least 25 per cent. in aggregate Principal Amount
Outstanding of the Most Senior Class of Notes or if so directed by an
Extraordinary Resolution of the holders of the Most Senior Class of Notes
shall, (subject to being indemnified and/or prefunded and/or secured to its
satisfaction as more particularly described in the Trust Deed) give a notice
(an "Enforcement Notice") to the Issuer (with a copy to the Swap Providers,
the Cash Manager, the Security Trustee, the Servicer, the Seller, the
Custodian and the Issuer Account Bank) that all Classes of the Notes are
immediately due and payable at their respective Principal Amount Outstanding,
together with accrued (but unpaid) interest as provided in the Trust Deed, if
any of the following events (each, an "Event of Default") occur:
(a) subject to Condition 17 (Subordination by Deferral), if
default is made in the payment of any principal or interest due in respect of
the Notes and the default continues for: (i) a period of five Business Days in
the case of principal, or (ii) three Business Days in the case of interest; or
(b) if the Issuer fails to perform or observe any of its other
material obligations under these Conditions or any Transaction Document to
which it is a party and the failure continues for a period of 15 calendar days
(or such longer period as the Note Trustee may permit) following the service
by the Note Trustee on the Issuer of notice requiring the same to be remedied
(except that in any case where the Note Trustee considers the failure to be
incapable of remedy, then no continuation or notice as is aforementioned will
be required); or
(c) if (in the opinion of the Note Trustee) any material
representation or warranty made by the Issuer under any Transaction Document
is incorrect when made and the matters giving rise to such misrepresentation
are not remedied within a period of 15 calendar days (or such longer period as
the Note Trustee may permit) (except that in any case where the Note Trustee
considers the matters giving rise to such misrepresentation to be incapable of
remedy, then no continuation or notice as is hereinafter mentioned will be
required) following the service by the Note Trustee on the Issuer of notice
requiring the same to be remedied; or
(d) if any order is made by any competent court or any
resolution is passed for the winding up or dissolution of the Issuer, save for
the purposes of reorganisation on terms approved in writing by the Note
Trustee or by Extraordinary Resolution of the Noteholders; or
(e) if (i) the Issuer ceases or threatens to cease to carry on
the whole or a substantial part of its business, save for the purposes of
reorganisation on terms approved in writing by the Note Trustee or by
Extraordinary Resolution of the Noteholders, or (ii) the Issuer stops or
threatens to stop payment of, or is unable to, or admits inability to, pay its
debts (or any class of its debts) as they fall due or the value of its assets
falls to less than the amount of its liabilities (taking into account its
contingent and prospective liabilities) or (iii) the Issuer is deemed unable
to pay its debts pursuant to or for the purposes of any applicable law or is
adjudicated or found bankrupt or insolvent; or
(f) if proceedings are initiated against the Issuer under any
applicable liquidation, insolvency, composition, reorganisation or other
similar laws or an application is made (or documents filed with the court) for
the appointment of an administrative or other receiver, manager, administrator
or other similar official, or an administrative or other receiver, manager,
administrator or other similar official is appointed, in relation to the
Issuer or, as the case may be, in relation to the whole or any part of the
undertaking or assets of the Issuer, and in any such case (other than the
appointment of an administrator or an administrative receiver appointed
following presentation of a petition for an administration order), unless
initiated by the Issuer, is not discharged within 30 calendar days; or
(g) if the Issuer (or its directors or shareholders) initiates
or consents to judicial proceedings relating to itself under any applicable
liquidation, insolvency, composition, reorganisation or other similar laws or
makes a conveyance or assignment for the benefit of, or enters into any
composition or other arrangement with, its creditors generally (or any class
of its creditors) or takes steps with a view to obtaining a moratorium in
respect of any of its indebtedness or any meeting is convened to consider a
proposal for an arrangement or composition with its creditors generally (or
any class of its creditors).
11.2 General
Upon the service of an Enforcement Notice by the Note Trustee in accordance
with Condition 11.1 (Notes), all the Notes then outstanding shall thereby
immediately become due and payable at their respective Principal Amount
Outstanding, together with accrued interest as provided in the Trust Deed.
12. Enforcement
12.1 General
Each of the Note Trustee and the Security Trustee may, at any time, at its
absolute discretion and without notice, take (and in the case of the Note
Trustee, may direct the Security Trustee to take) such proceedings, actions or
steps against the Issuer or any other party to any of the Transaction
Documents as it may think fit to enforce the provisions of (in the case of the
Note Trustee) the Notes, the Residual Certificates or the Trust Deed
(including these Conditions or the Residual Certificates Conditions) or (in
the case of the Security Trustee) the Deed of Charge or (in either case) any
of the other Transaction Documents to which it is a party and, at any time
after the service of an Enforcement Notice, the Security Trustee may, at its
discretion and without notice, take such proceedings, actions or steps as it
may think fit to enforce the Security, but neither of them shall be bound to
take any such proceedings, action or steps unless:
(a) in the case of the Note Trustee, it shall have been so
directed by an Extraordinary Resolution of the holders of the Most Senior
Class of Notes then outstanding or directed in writing by the holders of at
least 25 per cent. in aggregate of the Principal Amount Outstanding of the
Most Senior Class of Notes and, in the case of the Security Trustee, it shall
have been so directed by the Note Trustee or, if there are no Notes
outstanding, all of the other Secured Creditors; and
(b) in all cases, it shall have been indemnified and/or
prefunded and/or secured to its satisfaction.
12.2 Limitations on Enforcement
No Noteholder shall be entitled to proceed directly against the Issuer or any
other party to any of the Transaction Documents to enforce the performance of
any of these Conditions or any of the provisions of the Transaction Documents
and/or to take any other proceedings (including lodging an appeal in any
proceedings) in respect of or concerning the Issuer unless (i) the Note
Trustee or, as the case may be, the Security Trustee, having become bound so
to do, fails to do so within a reasonable period and such failure shall be
continuing or (ii) the Note Trustee or, as the case may be, the Security
Trustee, is unable to do so and such inability is continuing, provided that no
Noteholder shall be entitled to take any steps or proceedings to procure the
winding up, administration or liquidation of the Issuer. Any proceeds
received by a Noteholder pursuant to any such proceedings shall be paid to the
Note Trustee promptly following receipt thereof for application pursuant to
the applicable Priorities of Payment.
12.3 Limited Recourse
Notwithstanding any other Condition or any provision of any Transaction
Document, all obligations of the Issuer to the Noteholders are limited in
recourse to the property, assets and undertakings of the Issuer which are the
subject of any security created under and pursuant to the Deed of Charge (the
"Charged Assets"). If:
(a) there are no Charged Assets remaining which are capable of
being realised or otherwise converted into cash;
(b) all amounts available from the Charged Assets have been
applied to meet or provide for the relevant obligations specified in, and in
accordance with, the provisions of the Deed of Charge; and
(c) there are insufficient amounts available from the Charged
Assets to pay in full, in accordance with the provisions of the Deed of
Charge, amounts outstanding under the Notes,
then the Noteholders shall have no further claim against the Issuer in respect
of any amounts owing to them which remain due or to be paid in respect of the
Notes (including, for the avoidance of doubt, payments of principal, premium
(if any) or interest in respect of the Notes) and the Issuer shall be deemed
to be discharged from making any further payments in respect of the Notes and
any further payment rights shall be extinguished.
13. Meetings of Noteholders, Modification, Waiver and Substitution
13.1 The Trust Deed contains provisions for convening meetings
(including by way of conference call, including by means of an audioconference
or videoconference platform) of the Noteholders and/or Certificateholders of
each Class and, in certain cases, more than one Class to consider any matter
affecting their interests, including the sanctioning by Extraordinary
Resolution of a modification of these Conditions or the provisions of any of
the Transaction Documents.
13.2 For the purposes of these Conditions, "Most Senior Class" means
the Class A Notes or, if there are no Class A Notes then outstanding, the
Class B Notes or, if there are no Class A Notes or Class B Notes then
outstanding, the Class C Notes or, if there are no Class A Notes, Class B
Notes or Class C Notes then outstanding, the Class D Notes or, if there are no
Class A Notes, Class B Notes, Class C Notes or Class D Notes then outstanding,
the Class E Notes or, if there are no Class A Notes, Class B Notes, Class C
Notes, Class D Notes or Class E Notes then outstanding, the Class X Notes or,
if there are no Notes then outstanding, prior to (but excluding) the Optional
Redemption Date, the RC1 Residual Certificates and, thereafter, the RC2
Residual Certificates.
13.3 Most Senior Class and Limitations on other Noteholders and
Certificateholders
(a) Other than in relation to a Basic Terms Modification, which
additionally require an Extraordinary Resolution of the holders of each
affected Class or Classes of Notes then outstanding, as applicable:
(i) subject to Conditions 13.3(a)(ii) and (iii) below, an
Extraordinary Resolution passed at any meeting of the holders of the Most
Senior Class shall be binding on such Noteholders and all other Classes of
Noteholders and Certificateholders irrespective of the effect upon them;
(ii) subject to Condition 13.3(a)(iii) below, an Extraordinary
Resolution passed at any meeting of a relevant Class of Noteholders shall be
binding on (A) such Noteholders and all other Classes of Noteholders ranking
junior to such Class of Noteholders in the Post-Enforcement Priority of
Payments in each case and (B) the Certificateholders, irrespective of the
effect it has upon them;
(iii) no Extraordinary Resolution of any Class of Noteholders or
Certificateholders shall take effect for any purpose while any of the Most
Senior Class remain outstanding or (in the case of the Residual Certificates
remain in issue) unless it shall have been sanctioned by an Extraordinary
Resolution of the holders of the Most Senior Class and in the case of the
Residual Certificates all Notes ranking in priority thereto or the Note
Trustee is of the opinion that it would not be materially prejudicial to the
interests of the holders of the Most Senior Class; and
(iv) no Ordinary Resolution that is passed by the holders of any
Class of Noteholders shall take effect for any purpose while any of the Most
Senior Class of Notes remain outstanding or unless it shall have been
sanctioned by an Ordinary Resolution of the holders of the Most Senior Class
of Notes, or the Note Trustee is of the opinion that it would not be
materially prejudicial to the interests of the holders of the Most Senior
Class of Notes,
provided that, the prior written consent of each Swap Provider is also
required in respect of any Extraordinary Resolution of a Class or Classes of
Notes and/or Residual Certificates relating to any amendment, modification,
variation, supplement, consent or waiver of any of the Transaction Documents
where:
(A) such amendment, modification, variation, supplement, waiver or
consent would adversely affect the relevant Swap Provider's rights or
obligations under, or interests in respect of:
I. the Priorities of Payments or the Swap Collateral Account
Priority of Payments;
II. the timing or amount of any payments or deliveries due
from (x) the Issuer to that Swap Provider or (y) that Swap Provider to the
Issuer;
III. that Swap Provider's status as a Secured Creditor or that
Swap Provider's rights in relation to any Security (howsoever described, and
including as a result of changing the nature or the scope of, or releasing
such Security granted by the Issuer in favour of the Security Trustee on
behalf of the Secured Creditors);
IV. any requirement to obtain that Swap Provider's prior consent
(written or otherwise) in respect of any matter; or
(B) such amendment, modification, variation, supplement, waiver or
consent relates to Condition 8 (Redemption) or any additional redemption
rights in respect of the Notes and such amendment, modification, variation,
supplement, waiver or consent would prejudice that Swap Provider.
Whether any modification, supplement, waiver or consent would or does
adversely affect a Swap Provider's rights or obligations under, or interests
in respect of a matter or would prejudice a Swap Provider or be adverse to a
Swap Provider's interests will be determined by that Swap Provider acting in
good faith and in a commercially reasonable manner. Where required by the Note
Trustee and the Security Trustee, the Issuer may provide written confirmation
to the Note Trustee and the Security Trustee (upon which the Note Trustee and
the Security Trustee shall be entitled to rely absolutely without liability or
enquiry) that that Swap Provider's consent pursuant to this Condition 13.3(a)
is not needed because the relevant modification, supplement, consent or waiver
does not affect any of the items listed in paragraphs (I) to (IV) above or any
redemption rights in respect of the Notes. Such confirmation will be provided
prior to such modification, supplement, consent or waiver taking effect. If
such confirmation is required by the Note Trustee and the Security Trustee but
the Issuer is unable to provide the confirmation, the Issuer shall notify in
writing each Swap Provider, the Note Trustee and the Security Trustee of the
proposed modification, supplement, consent or waiver as soon as reasonably
practicable prior to such modification, supplement, consent or waiver taking
effect and request that each Swap Provider determines if its consent is
required. Each Swap Provider must notify the Issuer, the Note Trustee,
Security Trustee and any other Swap Provider of its determination, and if
relevant whether or not it consents and the Note Trustee and Security Trustee
shall be entitled to rely on such determination.
(b) Other than in relation to Basic Terms Modifications and
subject as provided in Conditions 13.3(a) and 13.4 (Quorum), a resolution
which, in the opinion of the Note Trustee, affects the interests of the
holders of:
(i) any Class of Notes and/or Residual Certificates of one
class only shall be deemed to have been duly passed if passed at a meeting (or
by a resolution in writing or, in respect of the Notes represented by Global
Notes only, by a resolution passed by way of consents received through the
relevant Clearing System(s)) of the holders of that Class of Notes and/or
Residual Certificates so affected;
(ii) any two or more Classes of Notes and/or Residual
Certificates, but does not give rise to an actual or potential conflict of
interest between the holders of such Classes of Notes and/or Residual
Certificates, shall be deemed to have been duly passed if passed at a single
meeting (or by a single resolution in writing or, in respect of the Notes
represented by Global Notes, by a single resolution passed by way of consents
received through the relevant Clearing System(s)) of the holders of each such
Class of Notes and/or Residual Certificates; and
(iii) one or more Classes of Notes and/or Residual Certificates,
but does not give rise to an actual or potential conflict of interest between
the holders of such Classes of Notes and/or Residual Certificates, shall be
deemed to have been duly passed if passed at a single meeting (or by a single
resolution in writing or, in respect of the Notes represented by Global Notes
only, by a single resolution passed by way of consents received through the
relevant Clearing System(s)) of the holders of such Classes of Notes. Where
such a resolution gives, or may give rise to, an actual or potential conflict
of interest between the holders of such Classes of Notes, it shall be deemed
to have been duly passed only if passed at separate meetings (or by separate
resolutions in writing or, in respect of the Notes represented by Global Notes
only, by separate resolutions passed by way of electronic consents received
through the relevant Clearing System(s)) of the holders of each such Class of
Notes and/or Residual Certificates so affected.
(c) No Extraordinary Resolution of the holders of a Class or
Classes of Notes and/or Residual Certificates which would have the effect of
sanctioning a Basic Terms Modification in respect of any Class of Notes or
Residual Certificates shall take effect unless it has been sanctioned by an
Extraordinary Resolution of the holders of each affected Class of Notes then
outstanding and/or the holders of each affected Class of Residual Certificates
then in issue which are affected by such Basic Terms Modification.
(d) No Ordinary Resolution that is passed by the holders of any
Class of Notes or Residual Certificates shall take effect for any purpose
while any of the Most Senior Class remain outstanding or (in the case of the
Residual Certificates) remain in issue unless it shall have been sanctioned by
an Ordinary Resolution of the holders of the Most Senior Class and, in the
case of the Residual Certificates, all Notes ranking in priority thereto or
the Note Trustee is of the opinion that it would not be materially prejudicial
to the interests of the holders of the Most Senior Class.
13.4 Quorum
(a) Subject as provided below, the quorum at any meeting of
Noteholders of any Class or Classes for passing an Ordinary Resolution will be
one or more persons holding or representing not less than 25 per cent. of the
aggregate Principal Amount Outstanding of such Class or Classes of Notes then
outstanding.
(b) Subject as provided below, the quorum at any meeting of
Noteholders of any Class or Classes for passing an Extraordinary Resolution
will be one or more persons holding or representing not less than 50 per cent.
of the aggregate Principal Amount Outstanding of such Class or Classes of
Notes then outstanding.
(c) Subject to the more detailed provisions set out in the Trust
Deed, the quorum at any meeting of any holders of any Class or Classes of
Notes or holders of any Class or Classes of Residual Certificates passing an
Extraordinary Resolution to (i) sanction a modification of the date of
maturity of Notes, (ii) sanction a modification of the date of payment of
principal or interest in respect of the Notes, or, where applicable, of the
method of calculating the date of payment of principal or interest in respect
of the Notes (other than pursuant to Condition 13.6(a)(vii) (Additional Right
of Modification) or in relation to any Swap Rate Modification), (iii) sanction
a modification of the amount of principal or the rate of interest payable in
respect of the Notes (other than pursuant to Condition 13.6(a)(vii)
(Additional Right of Modification) or in relation to any Swap Rate
Modification), or, where applicable, of the method of calculating the amount
payable of any principal or interest in respect of the Notes (other than
pursuant to Condition 13.6(a)(vii) (Additional Right of Modification)) or in
relation to any Swap Rate Modification, (iv) alter the currency in which
payments under any Class of Notes or the Residual Certificates are to be made,
(v) alter the quorum or majority required in relation to a resolution or
meeting of holders of any Class of Notes, (vi) sanction any scheme or proposal
for the sale, conversion or cancellation of any Class of Notes or any Class of
the Residual Certificates, or (vii) any change to the definition of a Basic
Terms Modification, (each, a "Basic Terms Modification") shall be one or more
persons holding or representing in aggregate not less than three-quarters of
the aggregate Principal Amount Outstanding of such Class of Notes then
outstanding. Any Extraordinary Resolution in respect of a Basic Terms
Modification shall only be effective if duly passed at separate meetings (or
by separate resolutions in writing or, in respect of the Notes represented by
Global Notes only, by separate resolutions passed by way of electronic
consents received through the relevant Clearing System(s)) of each relevant
affected Class of Noteholders and if affected the Certificateholders in
accordance with the Residual Certificates Conditions.
(d) Subject as provided below, the quorum at any adjourned
meeting of Noteholders of any Class or Classes for passing an Ordinary
Resolution will be one or more persons holding or representing not less than
10 per cent. of the aggregate Principal Amount Outstanding of such Class or
Classes of Notes then outstanding.
(e) Subject as provided below, the quorum at any adjourned
meeting of Noteholders of any Class or Classes for passing an Extraordinary
Resolution will be one or more persons holding or representing not less than
25 per cent. of the aggregate Principal Amount Outstanding of such Class or
Classes of Notes then outstanding.
(f) Subject to the more detailed provisions set out in the Trust
Deed, the quorum at any adjourned meeting of any holders of any Class or
Classes of Notes or holders of any Class of Residual Certificates passing an
Extraordinary Resolution to sanction a Basic Terms Modification shall be one
or more persons holding or representing in aggregate not less than (i) 50 per
cent. of the aggregate Principal Amount Outstanding of such Class of Notes
then outstanding, or (ii) 50 per cent. of such Class of Residual Certificates
then in issue. Any Extraordinary Resolution in respect of a Basic Terms
Modification shall only be effective if duly passed at separate meetings (or
by separate resolutions in writing or, by separate resolutions passed by way
of electronic consents received through the relevant Clearing System(s)) of
each affected Class of Noteholders and each affected Class of Residual
Certificates in accordance with the relevant Residual Certificates Conditions.
The terms of the Trust Deed and the Deed of Charge provide for the Noteholders
to give directions in writing to the Note Trustee and the Security Trustee
upon which the Note Trustee or, as the case may be, the Security Trustee is
bound to act.
13.5 Modification to the Transaction Documents
The Note Trustee may at any time and from time to time (and may direct the
Security Trustee at any time), with the written consent of the Liquidity
Facility Provider (prior to the LF Cancellation Date) and the Secured
Creditors which are a party to the relevant Transaction Document (such consent
to be conclusively demonstrated by such Secured Creditor entering into any
deed or document purporting to modify such Transaction Document) but without
the consent or sanction of the Noteholders, the Certificateholders or any
other Secured Creditors agree with the Issuer and any other parties in making
or sanctioning any modification:
(a) other than in respect of a Basic Terms Modification, to the
Conditions, the Residual Certificates Conditions, the Trust Deed or any other
Transaction Document, which in the opinion of the Note Trustee (acting in
accordance with the Trust Deed), will not be materially prejudicial to the
interests of the Noteholders (or if there are no Notes outstanding, the
interests of the Certificateholders) and, for the avoidance of doubt, any
modification of the Collection Account Declaration of Trust and/or the
Expenses Account Declaration of Trust which does not affect the manner in
which the Issuer's Trust Share (as defined in each of the Collection Account
Declaration of Trust and Expenses Account Declaration of Trust respectively)
is calculated will not be materially prejudicial to the interests of the
Noteholders (or if there are no Notes outstanding, the interests of the
Certificateholders); or
(b) to these Conditions, the Residual Certificates Conditions,
the Trust Deed or any other Transaction Document if in the opinion of the Note
Trustee (acting in accordance with the Trust Deed), such modification is of a
formal, minor or technical nature or to correct a manifest error,
provided that, the prior written consent of each Swap Provider is also
required in respect of any amendment, modification, variation, supplement,
waiver or consent in respect of any of the Transaction Documents where:
(A) such amendment, modification, variation, supplement, waiver or
consent would adversely affect the relevant Swap Provider's rights or
obligations under, or interests in respect of:
I. the Priorities of Payment or the Swap Collateral Account
Priority of Payments;
II. the timing or amount of any payments or deliveries due
from (x) the Issuer to that Swap Provider or (y) that Swap Provider to the
Issuer;
III. that Swap Provider's status as a Secured Creditor or that
Swap Provider's rights in relation to any Security (howsoever described, and
including as a result of changing the nature or the scope of, or releasing
such Security granted by the Issuer in favour of the Security Trustee on
behalf of the Secured Creditors);
IV. any requirement to obtain that Swap Provider's prior consent
(written or otherwise) in respect of any matter; or
(B) such amendment, modification, variation, supplement, waiver or
consent relates to Condition 8 (Redemption) or any additional redemption
rights in respect of the Notes and such amendment, modification, variation,
supplement, waiver or consent would prejudice the relevant Swap Provider.
Whether any modification, supplement, waiver or consent would or does
adversely affect a Swap Provider's rights or obligations under, or interests
in respect of a matter or would prejudice a Swap Provider or be adverse to a
Swap Provider's interests will be determined by that Swap Provider acting in
good faith and in a commercially reasonable manner. Where required by the Note
Trustee and the Security Trustee, the Issuer may provide written confirmation
to the Note Trustee and the Security Trustee (upon which the Note Trustee and
the Security Trustee shall be entitled to rely absolutely without liability or
enquiry) that that Swap Provider's consent pursuant to this Condition 13.5 is
not needed because the relevant modification, supplement, consent or waiver
does not affect any of the items listed in paragraphs (I) to (IV) above or any
redemption rights in respect of the Notes. Such confirmation will be provided
prior to such modification, supplement, consent or waiver taking effect. If
such confirmation is required by the Note Trustee and the Security Trustee but
the Issuer is unable to provide the confirmation, the Issuer shall notify in
writing each Swap Provider, the Note Trustee and the Security Trustee of the
proposed modification, supplement, consent or waiver as soon as reasonably
practicable prior to such modification, supplement, consent or waiver taking
effect and request that each Swap Provider determines if its consent is
required. Each Swap Provider must notify the Issuer, the Note Trustee and
Security Trustee and any other Swap Provider of its determination, and if
relevant whether or not it consents and the Note Trustee and Security Trustee
shall be entitled to rely on such determination.
13.6 Additional Right of Modification
(a) Notwithstanding the provisions of Condition 13.5
(Modification to the Transaction Documents), the Note Trustee shall be obliged
and shall direct the Security Trustee, without any consent or sanction of the
Noteholders, the Certificateholders or any other Secured Creditor, subject to
the written consent of the Liquidity Facility Provider (prior to the LF
Cancellation Date) and the Secured Creditors which are a party to the relevant
Transaction Documents (such consent to be conclusively demonstrated by such
Secured Creditor entering into any deed or document purporting to modify such
Transaction Document), to concur with the Issuer in making any modification
(other than in respect of a Basic Terms Modification) to these Conditions, the
Residual Certificates Conditions, the Trust Deed or any other Transaction
Document to which it is a party or in relation to which it holds security or
to enter into any new, supplemental or additional documents that the Issuer
(in each case) considers necessary:
(i) for the purpose of complying with, or implementing or
reflecting, any change in the criteria of one or more of the Rating Agencies
which may be applicable from time to time, provided that:
(A) the Issuer certifies in writing to the Note Trustee and the
Security Trustee that such modification is necessary to comply with such
criteria or, as the case may be, is solely to implement and reflect such
criteria; and
(B) in the case of any modification to a Transaction Document
proposed by any of the Seller, the Servicer and the Swap Providers (for the
purpose of this Condition 13.6 only, each a "Relevant Party"), in order (x) to
remain eligible to perform its role in such capacity in conformity with such
criteria, and/or (y) to avoid taking action which it would otherwise be
required to take to enable it to continue performing such role (including,
without limitation, posting collateral or advancing funds):
I. the Relevant Party certifies in writing to the Issuer,
the Note Trustee and the Security Trustee that such modification is necessary
for the purposes described in items (B)(x) and/or (B)(y) above;
II. either:
(aa) the Issuer, the Relevant Party or the Seller (on behalf
of the Issuer) obtains from each of the Rating Agencies, a Rating Agency
Confirmation that such modification would not result in a downgrade,
withdrawal or suspension of the then current ratings assigned to any Class of
the Notes by such Rating Agency and would not result in any Rating Agency
placing any Class of Notes on rating watch negative (or equivalent) and
delivers a copy of each such confirmation to the Issuer (in the case of the
Relevant Party), the Note Trustee and the Security Trustee; or
(bb) the Issuer, the Relevant Party or the Seller (on behalf
of the Issuer) certifies in writing to the Note Trustee and the Security
Trustee that the Rating Agencies have been informed of the proposed
modification and none of the Rating Agencies has indicated within 30 calendar
days that such modification would result in (x) a downgrade, withdrawal or
suspension of the then current ratings assigned to any Class of the Notes by
such Rating Agency or (y) such Rating Agency placing any Class of Notes on
rating watch negative (or equivalent) and, if requested by the Note Trustee or
the Security Trustee, procures that an Issuer Certificate is provided to the
Note Trustee and the Security Trustee in accordance with Condition 18
(Non-Responsive Rating Agency); and
III. the Relevant Party pays all costs and expenses (including
legal fees) incurred by the Issuer, the Note Trustee and the Security Trustee
in connection with such modification;
(ii) for the purpose of complying with any changes in the
requirements of, or enabling the Issuer to comply with an obligation in
respect of, the UK Securitisation Framework and/or the EU Securitisation
Regulation (including in respect of risk retention) after the Closing Date,
including as a result of the adoption of regulatory or implementing technical
standards in relation to the UK Securitisation Framework and/or the EU
Securitisation Regulation or any other legislation or regulations or official
guidance in relation thereto (including, without limitation, the appointment
of a third party pursuant to the Servicing Agreement and/or the Cash
Management Agreement to assist with the Issuer's reporting obligations
pursuant to the UK Securitisation Framework and/or the EU Securitisation
Regulation), provided that the Issuer certifies to the Note Trustee and the
Security Trustee in writing that such modification is required solely for such
purpose and has been drafted solely to such effect;
(iii) for the purpose of enabling the Notes to be (or to remain)
listed on the London Stock Exchange, provided that the Issuer certifies to the
Note Trustee and the Security Trustee in writing that such modification is
required solely for such purpose and has been drafted solely to such effect;
(iv) for the purposes of enabling the Issuer or any of the other
Parties to the Transaction Documents to comply with FATCA, provided that the
Issuer or the Relevant Party, as applicable, certifies to the Note Trustee and
the Security Trustee in writing that such modification is required solely for
such purpose and has been drafted solely to such effect;
(v) for the purpose of complying with, or implementing or
reflecting, any changes in the manner in which the Notes are held which will
allow the Bank of England's sterling monetary framework, that is, in a manner
which would allow such Notes to be recognised as eligible collateral for the
Bank of England's monetary policy and intra-day credit operations by the Bank
of England either upon issue or at any or all times during the life of the
Notes, provided that the Issuer certifies in writing to the Note Trustee and
the Security Trustee that such modification is required solely for such
purpose and has been drafted solely to such effect;
(vi) for the purpose of complying with any changes in the
requirements of the UK CRA Regulation or the EU CRA Regulation after the
Closing Date, provided that the Issuer certifies to the Note Trustee and the
Security Trustee in writing that such modification is required solely for such
purpose and has been drafted solely to such effect,
(the certificate to be provided by the Issuer, the Seller, any of the Servicer
and/or the Relevant Party and/or Party (in each case on behalf of the Issuer),
as the case may be, pursuant to Conditions 13.6(a)(i) to 13.6(a)(vi) or
Condition 13.6(a)(ix) being a "Modification Certificate"); or
(vii) for the purpose of changing the reference rate or the base
rate in respect of the Notes from SONIA to an alternative base rate (including
where such base rate may remain linked to SONIA but may be calculated in a
different manner) (any such rate, an "Alternative Base Rate") and make such
other amendments as are necessary or advisable in the reasonable judgment of
the Issuer (or the Seller on its behalf) to facilitate such change (a "Base
Rate Modification"), provided that the Issuer (or the Seller on behalf of the
Issuer), certifies to the Agents, the Note Trustee and the Security Trustee in
writing (such certificate, a "Base Rate Modification Certificate") that:
(A) such Base Rate Modification is being undertaken due to any one
or more of the following:
I. a material disruption to SONIA, an adverse change in the
methodology of calculating SONIA or SONIA ceasing to exist or be published;
II. the insolvency or cessation of business of the SONIA
administrator (in circumstances where no successor SONIA administrator has
been appointed);
III. a public statement by the SONIA administrator that it will
cease publishing SONIA permanently or indefinitely (in circumstances where no
successor SONIA administrator has been appointed that will continue
publication of SONIA) and such cessation is reasonably expected by the Issuer
to occur prior to the Final Maturity Date;
IV. a public statement by the supervisor of the SONIA
administrator that SONIA has been or will be permanently or indefinitely
discontinued or will be changed in an adverse manner and such discontinuation
or change is reasonably expected by the Issuer to occur prior to the Final
Maturity Date;
V. a public statement by the supervisor of the SONIA
administrator that means SONIA may no longer be used or that its use is
subject to restrictions or adverse consequences;
VI. an alternative manner of calculating a SONIA-based rate being
introduced and becoming a standard means of calculating interest for similar
transactions;
VII. a change in the generally accepted market practice in the
publicly listed asset backed floating rate notes market to refer to a
benchmark rate endorsed in a public statement by the Bank of England, the FCA
or the PRA or any relevant committee or other body established, sponsored or
approved by any of the foregoing, including the Working Group on Sterling
Risk-Free Reference Rates, despite the continued existence of SONIA;
VIII. following the implementation of a Base Rate Modification, it
becomes generally accepted market practice in the publicly listed asset backed
floating rate notes market to use a benchmark rate of interest which is
different from the Alternative Base Rate which had already been adopted by the
Issuer in respect of the Notes pursuant to a Base Rate Modification; or
IX. the reasonable expectation of the Seller that any of the
events specified in sub-paragraphs I to VIII above will occur or exist within
six months of the proposed effective date of such Base Rate Modification; and
(B) such Alternative Base Rate is:
I. a base rate published, endorsed, approved or recognised
by the Bank of England, any regulator in the United Kingdom or the European
Union or any stock exchange on which the Notes are listed (or any relevant
committee or other body established, sponsored or approved by any of the
foregoing);
II. a base rate utilised in a material number of
publicly-listed new issues of Sterling-denominated asset backed floating rate
notes prior to the effective date of such Base Rate Modification;
III. a base rate utilised in a publicly-listed new issue of
Sterling-denominated asset backed floating rate notes where the originator of
the relevant assets is an affiliate of any of the Seller; or
IV. such other base rate as the Seller reasonably determines,
(viii) for the purpose of changing the base rate that then applies in
respect of each Swap Agreement to an alternative base rate as is necessary or
advisable in the commercially reasonable judgment of the Issuer (or the Seller
on its behalf) and the relevant Swap Provider solely as a consequence of a
Base Rate Modification and solely for the purpose of aligning the base rate of
that Swap Agreement to the base rate of the Notes following such Base Rate
Modification and making any associated amendment (a "Swap Rate Modification"),
provided that the Issuer or the Seller (on behalf of the Issuer) certifies to
the Agents, the Note Trustee and the Security Trustee in writing that such
modification is required solely for such purpose and it has been drafted
solely to such effect (such certificate being a "Swap Rate Modification
Certificate");
(ix) for the purposes of enabling the Issuer and/or the relevant
Swap Provider to comply with any requirements which may apply to it under
European Regulation 648/2012 of 4 July 2012 ("EU EMIR"), known as the European
Market Infrastructure Regulation, and /or EU EMIR as it forms part of domestic
law by virtue of English law ("UK EMIR") as amended, irrespective of whether
such modifications are materially prejudicial to the interests of the holders
of any Class of Notes or any other Secured Creditor (any such modification, a
"EMIR Amendment") and subject to receipt by the Note Trustee and the Security
Trustee of a Modification Certificate of (A) the Issuer signed by two
directors or the Seller on behalf of the Issuer or (B) that Swap Provider (as
applicable) certifying to the Note Trustee and the Security Trustee that the
amendments (which may be requested by the Issuer or that Swap Provider) are to
be made solely for the purpose of enabling the Issuer (or that Swap Provider
(as applicable)) to satisfy its requirements under UK EMIR as amended and/or
EU EMIR as amended (as applicable),
provided that (in the case of each of paragraphs (a)(i) to (a)(viii) above):
I. at least 30 calendar days' prior written notice of any
such proposed modification has been given to the Note Trustee and the Security
Trustee;
II. the Modification Certificate, Swap Rate Modification
Certificate or Base Rate Modification Certificate in relation to such
modification shall be provided to the Agents, the Note Trustee and the
Security Trustee both at the time the Agents, the Note Trustee and the
Security Trustee are notified of the proposed modification and on the date
that such modification takes effect; and
III. the consent of each Secured Creditor which is party to the
relevant Transaction Document has been obtained,
provided further that:
(x) other than in the case of a modification pursuant to
Condition 13.6(a)(i)(B), either:
(aa) the Issuer, the Relevant Party or the Seller (on behalf
of the Issuer) obtains from each of the Rating Agencies a Rating Agency
Confirmation that such modification would not result in (x) a downgrade,
withdrawal or suspension of the then current ratings assigned to any Class of
Notes by such Rating Agency or (y) such Rating Agency placing any Class of
Notes on rating watch negative (or equivalent) and delivers each such
confirmation to the Issuer (in the case of the Relevant Party), the Note
Trustee and the Security Trustee; or
(bb) the Issuer, the Relevant Party or the Seller (on behalf
of the Issuer) certifies in the Modification Certificate, Swap Rate
Modification Certificate or the Base Rate Modification Certificate that it has
informed the Rating Agencies of the proposed modification and none of the
Rating Agencies has indicated within 30 calendar days that such modification
would result in (x) a downgrade, withdrawal or suspension of the then current
ratings assigned to any Class of Notes by such Rating Agency or (y) such
Rating Agency placing any Notes on rating watch negative (or equivalent) and,
if requested by the Note Trustee or the Security Trustee, procures that an
Issuer Certificate is provided to the Note Trustee and the Security Trustee in
accordance with Condition 18 (Non-Responsive Rating Agency); and
(y) the Issuer certifies in writing to the Note Trustee
and the Security Trustee that (X) the Issuer has provided at least 30 calendar
days' notice to the Noteholders of each Class of the proposed modification in
accordance with Condition 16 (Notice to Noteholders) and by publication on
Bloomberg on the "Company News" screen relating to the Notes, and (Y)
Noteholders representing at least 10 per cent. of the aggregate Principal
Amount Outstanding of the Most Senior Class of Notes then outstanding have not
contacted the Issuer and the Note Trustee in writing (or otherwise in
accordance with the then current practice of any applicable clearing system
through which any Notes may be held) within such notification period notifying
the Issuer and the Note Trustee that such Noteholders do not consent to the
modification.
and provided further that, the prior written consent of each Swap Provider is
also required in respect of any amendment, modification, variation,
supplement, waiver or consent in respect of any of the Transaction Documents
where:
(A) such amendment, modification, variation, supplement, waiver or
consent would adversely affect the relevant Swap Provider's rights or
obligations under, or interests in respect of:
I. the Priorities of Payments or the Swap Collateral Account
Priority of Payments;
II. the timing or amount of any payments or deliveries due
from (x) the Issuer to that Swap Provider or (y) that Swap Provider to the
Issuer;
III. that Swap Provider's status as a Secured Creditor or that
Swap Provider's rights in relation to any Security (howsoever described, and
including as a result of changing the nature or the scope of, or releasing
such Security granted by the Issuer in favour of the Security Trustee on
behalf of the Secured Creditors);
IV. any requirement to obtain that Swap Provider's prior consent
(written or otherwise) in respect of any matter; or
(B) such amendment, modification, variation, supplement, waiver or
consent relates to Condition 8 (Redemption) or any additional redemption
rights in respect of the Notes and such amendment, modification, variation,
supplement, waiver or consent would prejudice that Swap Provider.
Whether any modification, supplement, waiver or consent would or does
adversely affect a Swap Provider's rights or obligations under, or interests
in respect of a matter or would prejudice a Swap Provider or be adverse to a
Swap Provider's interests will be determined by that Swap Provider acting in
good faith and in a commercially reasonable manner. Where required by the Note
Trustee and the Security Trustee, the Issuer may provide written confirmation
to the Note Trustee and the Security Trustee (upon which the Note Trustee and
the Security Trustee shall be entitled to rely absolutely without liability or
enquiry) that that Swap Provider's consent pursuant to this Condition 13.6(a)
is not needed because the relevant modification, supplement, consent or waiver
does not affect any of the items listed in paragraphs (I) to (IV) above or any
redemption rights in respect of the Notes. Such confirmation will be provided
prior to such modification, supplement, consent or waiver taking effect. If
such confirmation is required by the Note Trustee and the Security Trustee but
the Issuer is unable to provide the confirmation, the Issuer shall notify in
writing the Swap Providers, the Note Trustee and the Security Trustee of the
proposed modification, supplement, consent or waiver as soon as reasonably
practicable prior to such modification, supplement, consent or waiver taking
effect and request that each Swap Provider determines if its consent is
required. Each Swap Provider must notify the Issuer, the Note Trustee and
Security Trustee and any other Swap Provider of its determination, and if
relevant whether or not it consents and the Note Trustee and Security Trustee
shall be entitled to rely on such determination.
If Noteholders representing at least 10 per cent. of the aggregate Principal
Amount Outstanding of the Most Senior Class of Notes then outstanding have
notified the Issuer and the Note Trustee in writing (or otherwise in
accordance with the then current practice of any applicable clearing system
through which any Notes may be held) within the notification period referred
to above that they do not consent to the modification, then such modification
will not be made unless an Extraordinary Resolution of the holders of the Most
Senior Class of Notes then outstanding is passed in favour of such
modification in accordance with this Condition 13.
Objections made in writing other than, in respect of the Notes represented by
Global Notes, through the applicable clearing system must be accompanied by
evidence to the Issuer's and the Note Trustee's satisfaction (having regard to
prevailing market practices) of the relevant Noteholder's holding of the
Notes.
(b) Other than where specifically provided in this Condition
13.6 or any Transaction Document:
(i) when implementing any modification pursuant to this
Condition 13.6 (save to the extent the Note Trustee considers that the
proposed modification would constitute a Basic Terms Modification), neither
the Note Trustee nor the Security Trustee shall consider the interests of the
Noteholders, the Certificateholders, any other Secured Creditor (other than
the Note Trustee and Security Trustee, as provided below) or any other person
but may act and rely solely and without investigation or liability on any
certificate or evidence provided to it by the Issuer or the Servicer (as the
case may be), the Seller or the Relevant Party or Party, as the case may be,
pursuant to this Condition 13.6 and shall not be liable to the Noteholders or
any other Secured Creditor for so acting or relying, irrespective of whether
any such modification is or may be materially prejudicial to the interests of
any such person; and
(ii) none of the Note Trustee nor the Security Trustee shall be
obliged to agree to any modification which, in the opinion of the Note Trustee
and/or the Security Trustee would have the effect of (A) exposing the Note
Trustee and/or the Security Trustee to any liability against which it has not
been indemnified and/or secured and/or pre-funded to its satisfaction or (B)
increasing the obligations or duties, or decreasing the rights or protections,
of the Note Trustee and/or the Security Trustee in the Transaction Documents,
the Residual Certificates Conditions and/or these Conditions.
(c) Any such modification shall be binding on all Noteholders
and shall be notified by the Issuer as soon as reasonably practicable to:
(i) so long as any of the Notes rated by the Rating Agencies
remains outstanding, each Rating Agency;
(ii) the Secured Creditors; and
(iii) the Noteholders in accordance with Condition 16 (Notice to
Noteholders).
13.7 Authorisation or Waiver of Breach
The Note Trustee may, and may direct the Security Trustee to, without the
consent or sanction of the Noteholders, the Certificateholders or the other
Secured Creditors and without prejudice to its rights in respect of any
further or other breach, from time to time and at any time, on such terms and
conditions (if any) as shall seem expedient to it determine that an Event of
Default shall not, or shall not subject to any specified conditions, be
treated as such or authorise or waive any proposed or actual breach of any of
the covenants or provisions contained in or arising pursuant to these
Conditions, the Residual Certificates Conditions or any of the Transaction
Documents by any party thereto but only if in the Note Trustee's sole opinion
the interests of the Most Senior Class will not be materially prejudiced
thereby, provided that the Note Trustee shall not exercise any powers
conferred on it by this Condition 13.7 in contravention of any express
direction given by Extraordinary Resolution of the holders of the Most Senior
Class or by a direction under Condition 11 (Events of Default) but so that no
such direction or request shall affect any waiver, authorisation or
determination previously given or made.
13.8 Notification of modifications, waivers, authorisations or
determinations
Any such modification, waiver, authorisation or determination by the Note
Trustee and/or the Security Trustee, as applicable, in accordance with these
Conditions, the Residual Certificates Conditions or the Transaction Documents
shall be binding on the Noteholders and the Secured Creditors and shall be
notified by the Issuer to the Noteholders in accordance with Condition 16
(Notice to Noteholders), the Rating Agencies (while any Notes remain
outstanding) and the other Secured Creditors as soon as practicable
thereafter.
13.9 Additional modifications; rating agency confirmations; and regard
to Noteholder interests
(a) In connection with any such substitution of principal debtor
referred to in Condition 8.4 (Mandatory Redemption of the Notes for Taxation
or Other Reasons), the Note Trustee may also agree, without the consent of the
Noteholders, Certificateholders or the other Secured Creditors, to a change of
the laws governing the Notes, these Conditions and/or any of the Transaction
Documents, provided that such change would not, in the opinion of the Note
Trustee, be materially prejudicial to the interests of the Noteholders of any
Class.
(b) In determining whether a proposed action will not be
materially prejudicial to the Noteholders or any Class thereof or
Certificateholders or any Class thereof (as applicable), the Note Trustee and
the Security Trustee may, among other things, have regard to whether the
Rating Agencies have provided a Rating Agency Confirmation to the Issuer or
any other party to the Transaction Documents that any proposed action will not
result in the withdrawal or reduction of, or entail any other adverse action
with respect to, the then current ratings of the Notes. It is agreed and
acknowledged by the Note Trustee and the Security Trustee that,
notwithstanding the foregoing, a credit rating is an assessment of credit and
does not address other matters that may be of relevance to the Noteholders.
In being entitled to take into account that each of the Rating Agencies has
confirmed that the then current ratings of the Notes would not be adversely
affected, it is agreed and acknowledged by the Note Trustee and the Security
Trustee this does not impose or extend any actual or contingent liability for
each of the Rating Agencies to the Security Trustee, the Note Trustee, the
Noteholders or any other person, or create any legal relations between each of
the Rating Agencies and the Security Trustee, the Note Trustee, the
Noteholders or any other person, whether by way of contract or otherwise.
(c) Where, in connection with the exercise or performance by
each or either of them of any right, power, trust, authority, duty or
discretion under or in relation to these Conditions or any of the Transaction
Documents (including in relation to any modification, waiver, authorisation,
determination, substitution or change of laws as referred to above), the Note
Trustee or the Security Trustee is required to have regard to the interests of
the Noteholders of any Class or Classes, it shall (i) have regard to the
general interests of the Noteholders of such Class or Classes but shall not
have regard to any interests arising from circumstances particular to
individual Noteholders (whatever their number) and, in particular but without
limitation, shall not have regard to the consequences of any such exercise or
performance for individual Noteholders (whatever their number) 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 Note Trustee or, as the case may be,
the Security Trustee shall not be entitled to require, nor shall any
Noteholder be entitled to claim, from the Issuer, the Note Trustee or the
Security Trustee or any other person any indemnification or payment in respect
of any tax consequences of any such exercise upon individual Noteholders and
(ii) subject to the more detailed provisions of the Trust Deed and the Deed of
Charge, as applicable, have regard to the interests of holders of each Class
of Notes (except where expressly provided otherwise) but requiring the Note
Trustee and the Security Trustee where there is a conflict of interests
between one or more Classes of Notes and/or Residual Certificates in any such
case to have regard (except as expressly provided otherwise) to the interests
of the holders of the Class or Classes of Notes ranking in priority to the
other relevant Classes of Notes.
(d) Other than in respect of any matter requiring an
Extraordinary Resolution, Noteholders are required to vote by way of an
Ordinary Resolution.
(e) "Ordinary Resolution" means, in respect of the holders of
any Class of Notes,
(i) a resolution passed at a meeting duly convened and held in
accordance with the Trust Deed and these Conditions by a clear majority of the
Eligible Persons voting thereat on a show of hands or, if a poll is duly
demanded, by a clear majority of the votes cast on such poll;
(ii) a resolution in writing signed by or on behalf of the
Noteholders of not less than a clear majority in aggregate Principal Amount
Outstanding of the relevant Class of Notes, which resolution may be contained
in one document or in several documents in like form each signed by or on
behalf of one or more of the Noteholders of the relevant Class; or
(iii) consent given by way of electronic consents through the
relevant Clearing System(s) (in a form satisfactory to the Note Trustee) by or
on behalf of the Noteholders of not less than a clear majority in aggregate
Principal Amount Outstanding of the relevant Class of Notes.
(f) "Extraordinary Resolution" means, in respect of the holders
of any Class of Notes:
(i) a resolution passed at a meeting of Noteholders duly
convened and held in accordance with the Trust Deed and these Conditions by a
majority consisting of not less than three-quarters of the Eligible Persons
voting at such meeting upon a show of hands or, if a poll is duly demanded, by
a majority consisting of not less than three quarters of the votes cast on
such poll;
(ii) a resolution in writing signed by or on behalf of the
Noteholders of not less than three quarters in aggregate Principal Amount
Outstanding of the relevant Class of Notes which resolution may be contained
in one document or in several documents in like form each signed by or on
behalf of one or more of the Noteholders of the relevant Class; or
(iii) consent given by way of electronic consents through the
relevant Clearing System(s) (in a form satisfactory to the Note Trustee) by or
on behalf of the Noteholders of not less than three quarters in aggregate
Principal Amount Outstanding of the relevant Class of Notes;
(g) "Eligible Person" means, in respect of the Notes, any one of
the following persons who shall be entitled to attend and vote at a meeting:
(i) a bearer of any Voting Certificate; and
(ii) a proxy specified in any Block Voting Instruction.
(h) "Voting Certificate" means an English language certificate
issued by a Paying Agent in which it is stated:
(i) that on the date thereof the Notes and/or Residual
Certificates (not being the Notes and/or Residual Certificates (as applicable)
in respect of which a Block Voting Instruction has been issued and is
outstanding in respect of the meeting specified in such Voting Certificate)
are blocked in an account with a clearing system and that no such Notes and/or
Residual Certificates will cease to be so blocked until the first to occur of:
(A) the conclusion of the meeting specified in such Voting
Certificate; and
(B) the surrender of the Voting Certificate to the Paying Agent
who issued the same; and
(ii) that the bearer thereof is entitled to attend and vote at
such meeting in respect of the Notes and/or Residual Certificates represented
by such Voting Certificate.
(i) "Block Voting Instruction" means an English language
document issued by a Paying Agent in which:
(i) it is certified that on the date thereof the Notes and/or
Residual Certificates (not being Notes and/or Residual Certificates (as
applicable) in respect of which a Voting Certificate has been issued and is
outstanding in respect of the meeting specified in such Block Voting
Instruction) are blocked in an account with a clearing system and that no such
Notes and/or such Residual Certificates will cease to be so blocked until the
first to occur of:
(A) the conclusion of the meeting specified in such Block Voting
Instruction; and
(B) the Notes and/or the Residual Certificates ceasing with the
agreement of the Paying Agent to be so blocked and the giving of notice by the
Paying Agent to the Issuer of the necessary amendment to the Block Voting
Instruction;
(ii) it is certified that each holder of such Notes and/or the
Residual Certificates has instructed such Paying Agent that the vote(s)
attributable to the Notes and/or the Residual Certificates so blocked should
be cast in a particular way in relation to the resolution(s) to be put to such
meeting and that all such instructions are, during the period commencing 48
hours prior to the time for which such meeting is convened and ending at the
conclusion or adjournment thereof, neither revocable nor capable of amendment;
(iii) the aggregate principal amount or aggregate total amount of
the Notes and/or the Residual Certificates so blocked is listed distinguishing
with regard to each such resolution between those in respect of which
instructions have been given that the votes attributable thereto should be
cast in favour of the resolution and those in respect of which instructions
have been so given that the votes attributable thereto should be cast against
the resolution; and
(iv) one or more persons named in such Block Voting Instruction
(each hereinafter called a "proxy") is or are authorised and instructed by
such Paying Agent to cast the votes attributable to the Notes and/or the
Residual Certificates so listed in accordance with the instructions referred
to in Condition 13.9(i)(iii) as set out in such Block Voting Instruction,
provided that no such person shall be named as a proxy:
(A) whose appointment has been revoked and in relation to whom the
relevant Paying Agent has been notified in writing of such revocation by the
time which is 48 hours before the time fixed for such meeting; and
(B) who was originally appointed to vote at a meeting which has
been adjourned for want of a quorum and who has not been re-appointed to vote
at the meeting when it is resumed.
(j) Details of any Extraordinary Resolution and any Ordinary
Resolution passed in accordance with the provisions of the Trust Deed shall be
notified to each of the Rating Agencies by the Issuer.
13.10 Issuer Substitution Condition
The Note Trustee may agree, subject to such amendment of these Conditions, the
Residual Certificates Conditions and of any of the Transaction Documents, and
to such other conditions as the Note Trustee may require and subject to the
terms of the Trust Deed, but without the consent of the Noteholders, to the
substitution of another body corporate in place of the Issuer as principal
debtor under the Trust Deed, the Notes and the Residual Certificates and in
respect of the other Secured Obligations, provided that the conditions set out
in the Trust Deed are satisfied including, inter alia, that the Notes are
unconditionally and irrevocably guaranteed by the Issuer (unless all of the
assets of the Issuer are transferred to such body corporate) and that such
body corporate is a single purpose vehicle and undertakes itself to be bound
by provisions corresponding to those set out in Condition 5 (Covenants) (the
"Issuer Substitution Condition"). In the case of a substitution pursuant to
this Condition 13.10, the Note Trustee may in its absolute discretion agree,
without the consent of the Noteholders, to a change in law governing the Notes
and/or any of the Transaction Documents unless such change would, in the
opinion of the Note Trustee, be materially prejudicial to the interests of the
Noteholders of any Class.
14. INDEMNIFICATION AND EXONERATION OF THE NOTE TRUSTEE AND THE
SECURITY TRUSTEE
The Trust Deed and the Deed of Charge contain provisions governing the
responsibility (and relief from responsibility) of the Note Trustee and the
Security Trustee respectively and providing for their indemnification in
certain circumstances, including provisions relieving them from taking any
steps, actions or proceedings including, in the case of the Security Trustee,
enforcing the Security, unless indemnified and/or prefunded and/or secured to
their satisfaction.
The Trust Deed and the Deed of Charge also contain provisions pursuant to
which the Note Trustee and the Security Trustee are entitled, inter alia, (a)
to enter into business transactions with the Issuer and/or any other party to
any of the Transaction Documents and to act as trustee for the holders of any
other securities issued or guaranteed by, or relating to, the Issuer and/or
any other party to any of the Transaction Documents, (b) to exercise and
enforce its rights, comply with its obligations and perform its duties under
or in relation to any such transactions or, as the case may be, any such
trusteeship without regard to the interests of, or consequences for,
individual Noteholders and (c) to retain and not be liable to account for any
profit made or any other amount or benefit received thereby or in connection
therewith.
15. REPLACEMENT OF NOTES
If any Note is mutilated, defaced, lost, stolen or destroyed, it may be
replaced at the specified office of the Registrar subject to all applicable
laws and stock exchange requirements. Replacement of any mutilated, defaced,
lost, stolen or destroyed Note will only be made on payment of such costs as
may be incurred in connection therewith and on such terms as to evidence and
indemnity as the Issuer may reasonably require. A mutilated or defaced Note
must be surrendered before a new one will be issued.
16. Notice to Noteholders
16.1 Publication of Notice
(a) Subject to Condition 16.1(d) below, any notice to
Noteholders shall be validly given if published in the Financial Times or, if
such newspaper shall cease to be published or if timely publication therein is
not practicable, in such other English newspaper or newspapers as the Note
Trustee shall approve in advance having a general circulation in the United
Kingdom, provided that if, at any time, (i) the Issuer procures that the
information concerned in such notice shall appear on a page of the Reuters
screen, the Bloomberg screen or any other medium for electronic display of
data as may be previously approved in writing by the Note Trustee and notified
to Noteholders (in each case a "Relevant Screen"), or (ii) Condition 16.1(c)
below applies and the Issuer has so elected, publication in the newspaper set
out above or such other newspaper or newspapers shall not be required with
respect to such notice. Any such notice shall be deemed to have been given
on the date of such publication or, if published more than once or on
different dates, on the first date on which publication shall have been made
in the newspaper or newspapers in which (or on the Relevant Screen)
publication is required.
(b) In respect of Notes in definitive form, notices to
Noteholders will be sent to them by first class post (or its equivalent) or
(if posted to an address outside the United Kingdom) by airmail at the
respective addresses on the Register. Any such notice will be deemed to have
been given on the fourth day after the date of posting.
(c) While the Notes are represented by Global Note, notices to
holders of the Notes will be valid if published as described above or, at the
option of the Issuer, if submitted to Euroclear and/or Clearstream, Luxembourg
for communication by them to Noteholders. Any notice delivered to Euroclear
and/or Clearstream, Luxembourg, as aforesaid shall be deemed to have been
given on the day of such delivery.
(d) So long as the relevant Notes are admitted to trading on the
main market of the London Stock Exchange and listed on the Official List of
the London Stock Exchange, all notices to the Noteholders will be valid if
published in a manner which complies with the rules and regulations of the
London Stock Exchange (which includes delivering a copy of such notice to
London Stock Exchange) and any such notice will be deemed to have been given
on the date sent to London Stock Exchange.
(e) The Note Trustee shall be at liberty to sanction any method
of giving notice to the holders of Notes which are not represented by Global
Notes if, in its opinion, such method is reasonable having regard to market
practice then prevailing and provided that advance notice of such other method
is given to the holders of such Notes in such manner as the Note Trustee shall
deem appropriate.
16.2 Note Trustee's Discretion to Select Alternative Method
The Note Trustee shall be at liberty to sanction some other method of giving
notice to the Noteholders or category of them if, in its sole opinion, such
other method is reasonable having regard to market practice then prevailing
and to the requirements of the stock exchanges, competent listing authorities
and/or quotation systems on or by which the Notes are then listed, quoted
and/or traded and provided that advance notice of such other method is given
to the Noteholders in such manner as the Note Trustee shall require.
17. Subordination by Deferral
17.1 Interest
If, on any Interest Payment Date, the Issuer has insufficient funds to make
payment in full of all amounts of interest (which shall, for the purposes of
this Condition 17, include any interest previously deferred under this
Condition 17.1 and accrued interest thereon) payable in respect of the Notes
other than the Most Senior Class of Notes after having paid or provided for
items of higher priority in the Pre-Enforcement Revenue Priority of Payments,
then the Issuer shall be entitled to defer to the next Interest Payment Date
the payment of interest (such interest, the "Deferred Interest") in respect of
the Notes other than the Most Senior Class of Notes to the extent only of any
insufficiency of funds.
17.2 General
Any amounts of Deferred Interest in respect of a Class of Notes shall accrue
interest ("Additional Interest") at the same rate and on the same basis as
scheduled interest in respect of the corresponding Class of Notes, but shall
not be capitalised. Such Deferred Interest and Additional Interest shall, in
any event, become payable on the next Interest Payment Date (unless and to the
extent that Condition 17.1 (Interest) applies) or on such earlier date as the
relevant Class of Notes becomes due and payable in full in accordance with
these Conditions.
17.3 Notification
As soon as practicable after becoming aware that any part of a payment of
interest on a Class of Notes will be deferred or that a payment previously
deferred will be made in accordance with this Condition 17, the Issuer will
give notice thereof to the relevant Class of Noteholders, as appropriate, in
accordance with Condition 16 (Notice to Noteholders). Any deferral of
interest in accordance with this Condition 17 will not constitute an Event of
Default. The provisions of this Condition 17 shall cease to apply on the
Final Maturity Date, or any earlier date on which the Notes are redeemed in
full or, are required to be redeemed in full, at which time all deferred
interest and accrued interest thereon shall become due and payable.
18. Non-Responsive Rating Agency
18.1 In respect of the exercise of any power, duty, trust, authority
or discretion as contemplated hereunder or in relation to the Notes and any of
the Transaction Documents, the Note Trustee and the Security Trustee shall be
entitled but not obliged to take into account any written confirmation or
affirmation (in any form acceptable to the Note Trustee and the Security
Trustee) from the relevant Rating Agencies that the then current ratings of
the Notes will not be reduced, qualified, adversely affected or withdrawn
thereby (a "Rating Agency Confirmation").
18.2 If a Rating Agency Confirmation or other response by a Rating
Agency is a condition to any action or step under any Transaction Document and
a written request for such Rating Agency Confirmation or response is delivered
to each Rating Agency by or on behalf of the Issuer (copied to the Note
Trustee and the Security Trustee, as applicable) and:
(a) (A) one Rating Agency (such Rating Agency, a "Non-Responsive
Rating Agency") indicates that it does not consider such Rating Agency
Confirmation or response necessary in the circumstances or that it does not,
as a matter of practice or policy, provide such Rating Agency Confirmation or
response or (B) within 30 calendar days of delivery of such request, no Rating
Agency Confirmation or response is received and/or such request elicits no
statement by such Rating Agency that such Rating Agency Confirmation or
response could not be given; and
(b) one Rating Agency gives such Rating Agency Confirmation or
response based on the same facts,
then such condition to receive a Rating Agency Confirmation or response from
each Rating Agency shall be modified so that there shall be no requirement for
the Rating Agency Confirmation or response from the Non-Responsive Rating
Agency if the Issuer provides to the Note Trustee and the Security Trustee a
certificate signed by two directors certifying and confirming that each of the
events in Condition 18.2(a)(A) or 18.2(a)(B) and 18.2(b) has occurred. If no
such Rating Agency Confirmation is forthcoming and two directors of the Issuer
have certified the same in writing to the Note Trustee and the Security
Trustee (an "Issuer Certificate"), the Note Trustee and Security Trustee shall
be entitled (but not obliged) to assume that such proposed action:
(i) (while any of the Notes remain outstanding) has been
notified to the Rating Agencies;
(ii) would not adversely impact on the Issuer's ability to make
payment when due in respect of the Notes;
(iii) would not affect the legality, validity and enforceability
of any of the Transaction Documents or any Security; and
(iv) (while any of the Notes remain outstanding) the then current
rating of the Notes would not be reduced, qualified, adversely affected or
withdrawn,
upon which confirmation from the Rating Agencies and/or Issuer Certificate,
the Note Trustee and the Security Trustee shall be entitled to rely absolutely
without enquiry or liability to any person for so doing. In being entitled
to take into account any such confirmation from the Rating Agencies, it is
agreed and acknowledged by the Note Trustee and the Security Trustee that this
does not impose or extend any actual or contingent liability for each of the
Rating Agencies to the Security Trustee, the Note Trustee, the Noteholders or
any other person or create any legal relations between each of the Rating
Agencies and the Security Trustee, the Note Trustee, the Noteholders or any
other person whether by way of contract or otherwise.
19. JURISDICTION AND GOVERNING LAW
19.1 The Courts of England (the "Courts") are to have exclusive
jurisdiction to settle any disputes that may arise out of or in connection
with the Notes, the Residual Certificates and the Transaction Documents
(including a dispute relating to non-contractual obligations or a dispute
regarding the existence, validity or termination of any of the Notes, the
Residual Certificates or the Transaction Documents or the consequences of
their nullity) and accordingly any legal action or proceedings arising out of
or in connection with the Notes and/or the Residual Certificates and/or the
Transaction Documents may be brought in such Courts.
19.2 The Transaction Documents, the Notes, the Residual Certificates
and these Conditions (and any non-contractual obligations arising out of or in
connection with them) are governed by, and shall be construed in accordance
with, English law.
20. RIGHTS OF THIRD PARTIES
No rights are conferred on any person under the Contracts (Rights of Third
Parties) Act 1999 to enforce any term of the Notes or these Conditions, but
this does not affect any right or remedy of any person which exists or is
available apart from that Act.
Terms and Conditions of the Residual Certificates
The following are the terms and conditions of the Residual Certificates in the
form (subject to amendment) in which they will be set out in the Trust Deed
(as defined below)
1. GENERAL
The 1000 RC1 Residual Certificates (the "RC1 Residual Certificates") and the
1000 RC2 Residual Certificates (the "RC2 Residual Certificates" and together
with the RC1 Residual Certificates, the "Residual Certificates") of Atlas
Funding 2025-1 PLC (the "Issuer") are constituted by a trust deed (the "Trust
Deed") dated on or about 24 April 2025 (the "Closing Date") and made between,
among others, the Issuer and Citicorp Trustee Company Limited as trustee for
the registered holders for the time being of the Residual Certificates (the
"Residual Certificateholders") (in such capacity, the "Note Trustee"). Any
reference in these residual certificates terms and conditions (the "Residual
Certificates Conditions") to a "Class" of Notes or of Noteholders or (as
applicable) of Residual Certificates or of Certificateholders shall be a
reference to the Class A Notes, the Class B Notes, the Class C Notes, the
Class D Notes, the Class E Notes, the Class X Notes, the RC1 Residual
Certificates or the RC2 Residual Certificates, as the case may be, or to the
respective holders thereof. The security for the Residual Certificates is
constituted by and pursuant to a deed of charge and assignment (the "Deed of
Charge") dated on or about the Closing Date and made between, among others,
the Issuer and Citicorp Trustee Company Limited as trustee for the Secured
Creditors (in such capacity, the "Security Trustee").
Pursuant to an agency agreement (the "Agency Agreement") dated on or prior to
the Closing Date and made between the Issuer, the Security Trustee, the Note
Trustee, Citibank, N.A., London Branch as principal paying agent (in such
capacity, the "Principal Paying Agent" and, together with any further or other
paying agent appointed under the Agency Agreement, the "Paying Agent"),
Citibank, N.A., London Branch as registrar (in such capacity, the "Registrar")
and Citibank, N.A., London Branch as agent bank (in such capacity, the "Agent
Bank"), provision is made for, inter alia, the payment of amounts in respect
of the Residual Certificates.
The statements in these Residual Certificates Conditions include summaries of,
and are subject to, the detailed provisions of the Trust Deed, the Deed of
Charge, the Agency Agreement and a master definitions and construction
schedule (the "Master Definitions and Construction Schedule") entered into by,
among others, the Issuer, the Note Trustee and the Security Trustee on or
about the Closing Date and the other Transaction Documents (as defined
therein).
Electronic copies of the Trust Deed, the Deed of Charge, the Agency Agreement,
the Master Definitions and Construction Schedule and the other Transaction
Documents are available for inspection upon request during normal business
hours from the Paying Agents. The Certificateholders are entitled to the
benefit of, are bound by, and are deemed to have notice of, all the provisions
of the Transaction Documents applicable to them.
2. INTERPRETATION
2.1 Definitions
Capitalised terms not otherwise defined in these Residual Certificates
Conditions shall bear the meanings given to them in the Master Definitions and
Construction Schedule available as described above.
2.2 Interpretation
These Residual Certificates Conditions shall be construed in accordance with
the principles of construction set out in the Master Definitions and
Construction Schedule.
3. FORM AND TITLE
3.1 Form and Denomination
The RC1 Residual Certificates and the RC2 Residual Certificates will initially
be represented by a global residual certificate in registered form (a "Global
Residual Certificate").
For so long as any of the Residual Certificates are represented by a Global
Residual Certificate, transfers and exchanges of beneficial interests in such
Global Residual Certificate and entitlement to payments thereunder will be
effected subject to and in accordance with the rules and procedures from time
to time of Euroclear Bank SA/NV ("Euroclear") or Clearstream Banking, S.A.
("Clearstream, Luxembourg"), as appropriate. The Global Residual Certificate
will be deposited with and registered in the name of a common safekeeper (or a
nominee thereof) for Euroclear and Clearstream, Luxembourg.
A Global Residual Certificate will be exchanged for the relevant Residual
Certificate in definitive registered form (such exchanged Global Residual
Certificate in definitive registered form, the "Definitive Residual
Certificates") only if either of the following applies:
(a) both Euroclear and Clearstream, Luxembourg:
(i) are closed for business for a continuous period of 14
calendar days (other than by reason of holiday, statutory or otherwise); or
(ii) announce an intention permanently to cease business or to
cease to make book-entry systems available for settlement of beneficial
interests in such Global Residual Certificate and do in fact do either of
those things,
and, in either case, no alternative clearing system satisfactory to the Note
Trustee is available; or
(b) as a result of any amendment to, or change in, the laws or
regulations of the United Kingdom (or of any political subdivision thereof) or
of any authority therein or thereof having power to tax, or in the
interpretation or administration by a revenue authority or a court or in the
application of such laws or regulations, which becomes effective on or after
the Closing Date, the Issuer or any Paying Agent is or will be required to
make any deduction or withholding for, or on account of, tax from any payment
in respect of the Residual Certificates which would not be required were the
relevant Residual Certificates in definitive registered form.
If Definitive Residual Certificates are issued in respect of Residual
Certificates originally represented by a Global Residual Certificate, the
beneficial interests represented by such Global Residual Certificate shall be
exchanged by the Issuer for the relevant Residual Certificates in registered
definitive form.
Definitive Residual Certificates will be serially numbered and will be issued
in registered form only.
References to "Residual Certificates" in these Residual Certificates
Conditions shall include the Global Residual Certificate and the Definitive
Residual Certificates.
3.2 Title
Title to the Global Residual Certificate shall pass by and upon registration
in the register (the "Register") which the Issuer shall procure to be kept by
the Registrar. The registered holder of a Global Residual Certificate may
(to the fullest extent permitted by applicable laws) be deemed and treated at
all times, by all persons and for all purposes (including the making of any
payments), as the absolute owner of such Global Residual Certificate
regardless of any notice of ownership, theft or loss or any trust or other
interest therein or of any writing thereon (other than the endorsed form of
transfer).
Title to Definitive Residual Certificates shall only pass by and upon
registration of the transfer in the Register.
Definitive Residual Certificates may be transferred upon the surrender of the
relevant Definitive Residual Certificate, with the form of transfer endorsed
on it duly completed and executed, at the specified office of the Registrar.
All transfers of Definitive Residual Certificates are subject to any
restrictions on transfer set out on the Definitive Residual Certificates and
the detailed regulations concerning transfers in the Agency Agreement.
Each new Definitive Residual Certificate to be issued upon transfer of such
Definitive Residual Certificate will, within five Business Days of receipt and
surrender of such Definitive Residual Certificate (duly completed and
executed) for transfer, be available for delivery at the specified office of
the Registrar or be mailed at the risk of the transferee entitled to such
Definitive Residual Certificate to such address as may be specified in the
relevant form of transfer.
Registration of a Definitive Residual Certificate on transfer will be effected
without charge by the Registrar, but subject to payment of (or the giving of
such indemnity as the Registrar may require for) any tax, stamp duty or other
government charges which may be imposed in relation to it.
4. STATUS AND SECURITY
4.1 Status of the Residual Certificates
The Residual Certificates constitute direct, secured and (subject to the
limited recourse provision in Residual Certificates Condition 11.3 (Limited
Recourse)) unconditional obligations of the Issuer, and represent part of the
Issuer's obligation to pay deferred consideration for its purchase of the
Portfolio, consisting of the RC1 Payments and the RC2 Payments. The RC1
Residual Certificates rank pro rata and pari passu without preference or
priority among themselves in relation to RC1 Payments and the RC2 Residual
Certificates rank pro rata and pari passu without preference or priority among
themselves in relation to RC2 Payments. RC1 Payments and RC2 Payments will
be made subject to and in accordance with the Pre-Enforcement Revenue Priority
of Payments, Pre-Enforcement Principal Priority of Payments and
Post-Enforcement Priority of Payments.
The Trust Deed and the Deed of Charge contain provisions requiring the Note
Trustee and the Security Trustee, respectively, to have regard to the
interests of the holders of each Class of Certificates as regards all rights,
powers, trusts, authorities, duties and discretions of the Note Trustee and
the Security Trustee (except where expressly provided otherwise) but requiring
the Note Trustee and the Security Trustee where there is a conflict of
interest between one or more classes of Notes and/or Certificates in any such
case to have regard (except as expressly provided otherwise) to the interests
of the Noteholders for so long as there are any Notes outstanding and, if
there are no Notes outstanding, to have regard (except as expressly provided
otherwise), prior to (but excluding) the Optional Redemption Date, to the
holders of the RC1 Residual Certificates and, thereafter, to the holders of
the RC2 Residual Certificates.
4.2 Security
The security constituted by, or pursuant to, the Deed of Charge is granted to
the Security Trustee for it to hold on trust for the Residual
Certificateholders and the other Secured Creditors, upon and subject to the
terms and conditions of the Deed of Charge.
The Residual Certificateholders and the other Secured Creditors will share in
the benefit of the security constituted by, or pursuant to, the Deed of
Charge, upon and subject to the terms and conditions of the Deed of Charge.
5. Covenants
Save with the prior written consent of the Note Trustee or unless otherwise
permitted under any of these Residual Certificates Conditions or any of the
Transaction Documents, the Issuer shall not, so long as any Residual
Certificate remains outstanding:
(a) Negative pledge: create or permit to subsist any encumbrance
(unless arising by operation of law) or other security interest whatsoever
over any of its assets or undertakings;
(b) Restrictions on activities: (i) engage in any activity
whatsoever which is not incidental to or necessary in connection with any of
the activities in which the Transaction Documents provide or envisage that the
Issuer will engage, or (ii) have any subsidiaries, any subsidiary undertaking
(as defined in the Companies Act 1985 and the Companies Act 2006 (as
applicable)) or any employees (but shall procure that, at all times, it shall
retain at least one independent director) or premises;
(c) Disposal of assets: assign, transfer, sell, lend, lease,
part with or otherwise dispose of, or deal with, or grant any option or
present or future right to acquire all or any of its assets or undertakings or
any interest, estate, right, title or benefit therein or attempt or purport to
do any of the foregoing;
(d) Equitable and Beneficial Interest: permit any person, other
than itself and the Security Trustee, to have any equitable or beneficial
interest in any of its assets or undertakings or any interest, estate, right,
title or benefit therein;
(e) Dividends or distributions: pay any dividend or make any
other distribution to its shareholders except out of amounts of profit
retained by the Issuer in accordance with the applicable Priority of Payments
which are available for distribution in accordance with the Issuer's
memorandum and articles of association and with applicable laws or issue any
further shares;
(f) Indebtedness: incur any financial indebtedness in respect of
borrowed money whatsoever or give any guarantee or indemnity in respect of any
indebtedness or of any other obligation of any person;
(g) Merger: consolidate or merge with any other person or convey
or transfer substantially all of its properties or assets to any other person;
(h) No modification or waiver: permit any of the Transaction
Documents to which it is a party to become invalid or ineffective or permit
the priority of the security interests created or evidenced thereby or
pursuant thereto to be varied, modified, terminated, postponed, waived or
agree to any modification of, or grant any consent, approval, authorisation or
waiver pursuant to, or in connection with, any of the Transaction Documents to
which it is a party or permit any party to any of the Transaction Documents to
which it is a party to be released from its obligations or exercise any right
to terminate any of the Transaction Documents to which it is a party;
(i) Bank accounts: have an interest in any bank account other
than the Issuer Accounts and the Issuer's interest in the Collection Account
Trust and Expenses Account Trust, unless such account or interest therein is
charged to the Security Trustee on terms acceptable to the Security Trustee;
(j) Purchase Residual Certificates: purchase or otherwise
acquire any Residual Certificates; or
(k) U.S. activities: engage in any activities in the United
States (directly or through agents), or derive any income from United States
sources as determined under United States income tax principles, or hold any
property if doing so would cause it to be engaged in a trade or business
within the United States as determined under United States income tax
principles.
6. RESIDUAL PAYMENTS
6.1 Right to RC1 Payments and RC2 Payments
Each RC1 Residual Certificate represents a pro rata entitlement to receive RC1
Payments and each RC2 Residual Certificate represents a pro rata entitlement
to receive RC2 Payments, by way of deferred consideration for the purchase by
the Issuer of the Portfolio.
6.2 Payment
An RC1 Payment and a RC2 Payment may be payable in respect of the Residual
Certificates on each Interest Payment Date, other than an Interest Payment
Date falling within a Determination Period and each date on which amounts are
to be applied in accordance with the Post-Enforcement Priority of Payments.
(a) "Determination Period" has the meaning set out in
Condition 6.8 (Determinations and Reconciliation).
(b) "Interest Payment Date" means each date determined as an
Interest Payment Date in accordance with the Conditions of the Notes.
(c) "RC1 Payment" means:
(i) prior to (but excluding) the Optional Redemption Date, an
amount equal to the Residual Payment; and
(ii) thereafter, zero.
(d) "RC1 Payment Amount" means for an RC1 Residual Certificate
on any date on which amounts are to be applied in accordance with the
applicable Priority of Payments, the RC1 Payment for that date, divided by the
number of RC1 Residual Certificates then in issue.
(e) "RC2 Payment" means:
(i) on and following the Optional Redemption Date, an amount
equal to the Residual Payment; and
(ii) at all other times, zero.
(f) "RC2 Payment Amount" means for a RC2 Residual Certificate on
any date on which amounts are to be applied in accordance with the applicable
Priority of Payments, the RC2 Payment for that date, divided by the number of
RC2 Residual Certificates then in issue.
(g) "Residual Payment" means payment, by way of deferred
consideration for the Issuer's purchase of the Portfolio, of an amount equal
to:
(i) prior to the delivery of an Enforcement Notice, in respect
of each Interest Payment Date, the sum of the amount (if any) by which
Available Revenue Receipts exceeds the amounts required to satisfy items (a)
to (y) of the Pre-Enforcement Revenue Priority of Payments on that Interest
Payment Date; and
(ii) following the delivery of an Enforcement Notice, in respect
of each date on which amounts are to be applied in accordance with the
Post-Enforcement Priority of Payments, the amount by which amounts available
for payment in accordance with the Post-Enforcement Priority of Payments
exceeds the amounts required to satisfy items (a) to (m) of the
Post-Enforcement Priority of Payments on that date.
(h) "Residual Payment Amount" means, in respect of the RC1
Residual Certificates, the RC1 Payment Amount and/or in respect of the RC2
Residual Certificates, the RC2 Payment Amount.
6.3 Determination of RC1 Payment and RC2 Payment
The Cash Manager shall on each Calculation Date determine the RC1 Payment and
the RC2 Payment payable on the immediately following Interest Payment Date and
the Residual Payment Amount payable in respect of each Residual Certificate on
such Interest Payment Date.
6.4 Publication of RC1 Payment, RC2 Payment and Residual Payment
Amount
The Cash Manager shall cause the RC1 Payment, RC2 Payment and Residual Payment
Amount (if any) for each Interest Payment Date to be notified to the Issuer,
the Cash Manager, the Note Trustee, the Registrar and the Paying Agents (as
applicable) and to be published in accordance with Residual Certificates
Condition 15 (Notice to Residual Certificateholders) as soon as reasonably
practicable after their determination and in no event later than two Business
Days prior to the immediately succeeding Interest Payment Date.
6.5 Notifications to be Final
All notifications, opinions, determinations, certificates, calculations,
quotations and decisions given, expressed, made or obtained for the purposes
of the provisions of this Residual Certificates Condition 6.5, by the Cash
Manager, will (in the absence of manifest error) be binding on the Issuer, the
Cash Manager, the Note Trustee, the Registrar, the Paying Agents and all
Certificateholders and (in the absence of wilful default, gross negligence or
fraud) no liability to the Issuer or the Certificateholders shall attach to
the Cash Manager in connection with the exercise or non-exercise by any of
them of their powers, duties and discretions under this Residual Certificates
Condition 6.5.
6.6 Termination of Payments
Following the redemption in full of the Notes, the realisation of the Charged
Assets and payment of the proceeds of realisation in accordance with the
applicable Priority of Payments, no more RC1 Payments or RC2 Payments will be
made by the Issuer and the Residual Certificates shall be redeemed and
cancelled.
7. Payments
7.1 Payment of Residual Payment Amounts
Subject to the second paragraph of Residual Certificates Condition 3.1 (Form
and Denomination), payments of Residual Payment Amounts shall be made:
(a) (other than in the case of final cancellation) upon
application by the relevant Residual Certificateholder to the specified office
of the Principal Paying Agent not later than the 15th day before the due date
for any such payment, by transfer to a Sterling account maintained by the
payee with a bank in London; and
(b) (in the case of final cancellation) by transfer to a
Sterling account maintained by the payee with a bank in London upon surrender
(or, in the case of part-payment only, endorsement) of the relevant Global
Residual Certificate or Definitive Residual Certificate (as the case may be)
at the specified office of any Paying Agent.
7.2 Laws and Regulations
Payments of any Residual Payment Amounts are subject, in all cases, to (a) any
fiscal or other laws and regulations applicable thereto and (b) any
withholding or deduction required pursuant to an agreement described in
Section 1471(b) of the U.S. Internal Revenue Code of 1986 (the "Code") or
otherwise imposed pursuant to Sections 1471 to 1474 of the Code, any
regulations or agreements thereunder, any official interpretations thereof or
any law implementing an intergovernmental approach thereto ("FATCA").
Certificateholders will not be charged commissions or expenses on payments.
7.3 Change of Paying Agents
The Issuer reserves the right, subject to the prior written approval of the
Note Trustee, at any time to vary or terminate the appointment of the
Principal Paying Agent or the Registrar and to appoint additional or other
agents, provided that there will at all times be a person appointed to perform
the obligations of the Principal Paying Agent with a specified office in
London and the Registrar with a specified office in Ireland or in London.
Except where otherwise provided in the Trust Deed or the Agency Agreement, the
Issuer will cause notice of no more than 30 calendar days and no less than 15
calendar days of any change in or addition to the Paying Agents or the
Registrar or their specified offices to be given to the Residual
Certificateholders in accordance with Residual Certificates Condition 15
(Notice to Residual Certificateholders) and will notify the Rating Agencies of
such change or addition.
7.4 No Payment on non-Business Day
If the date for payment of any amount in respect of a Residual Certificate is
not a Presentation Date, the Residual Certificateholders shall not be entitled
to payment until the next following Presentation Date and shall not be
entitled to interest or other payment in respect of such delay. In this
Residual Certificates Condition 7.4, the expression "Presentation Date" means
a day which is (a) a Business Day and (b) a day on which banks are generally
open for business in the relevant place.
8. TAXATION
All payments of Residual Payment Amounts by or on behalf of the Issuer shall
be made without withholding or deduction for, or on account of, all present
and future taxes, levies, imposts, duties, fees, deductions, withholding or
charges of any nature whatsoever and wheresoever imposed, including income
tax, corporation tax, value added tax or other tax in respect of added value
and any franchise, transfer, sales, gross receipts, use, business, occupation,
excise, personal property, real property or other tax imposed by any national,
local or supranational taxing or fiscal authority or agency together with any
penalties, fines or interest thereon ("Taxes"), unless the withholding or
deduction of the Taxes is required by applicable law. In that event, the
Issuer or, as the case may be, the Paying Agent shall make such payment after
the withholding or deduction has been made and shall account to the relevant
authorities for the amount required to be withheld or deducted. Neither the
Issuer nor any Paying Agent nor any other person shall be obliged to make any
additional payments to Certificateholders in respect of such withholding or
deduction.
9. PRESCRIPTION
Claims in respect of Residual Payment Amounts will be prescribed after ten
years from the Relevant Date in respect of the relevant payment.
In this Residual Certificates Condition 9, the "Relevant Date", in respect of
a payment, is the date on which such payment first becomes due or (if the full
amount of the monies payable on that date has not been duly received by the
Principal Paying Agent or the Note Trustee on or prior to such date) the date
on which, the full amount of such monies having been received, notice to that
effect is duly given to the relevant Certificateholders in accordance with
Residual Certificates Condition 15 (Notice to Residual Certificateholders).
10. Events of Default
10.1 Residual Certificates
The Note Trustee at its absolute discretion may, and, provided all of the
Notes have been redeemed in full, if so directed in writing by the holders of
at least 25 per cent. of the Most Senior Class in number or if so directed by
an Extraordinary Resolution of the holders of the Most Senior Class shall
(subject to being indemnified and/or prefunded and/or secured to its
satisfaction as more particularly described in the Trust Deed), give a notice
(an "Enforcement Notice") to the Issuer that any RC1 Payments or RC2 Payments
pursuant to the Residual Certificates are immediately due and payable in any
of the following events (each, an "Event of Default") with a copy of such
Enforcement Notice being sent simultaneously to the Seller, the Security
Trustee, the Swap Providers, the Servicer, the Issuer Account Bank and the
Cash Manager:
(a) if default is made in the payment of any amount due in
respect of the Residual Certificates and the default continues for a period of
14 Business Days; or
(b) if the Issuer fails to perform or observe any of its other
obligations under these Residual Certificates Conditions or any Transaction
Document to which it is a party and the failure continues for a period of 30
days (following the service by the Note Trustee on the Issuer of notice
requiring the same to be remedied (or such longer period as the Note Trustee
may permit)), except in any case where the Note Trustee considers the failure
to be incapable of remedy, in which case no continuation or notice as is
aforementioned will be required; or
(c) if any order is made by any competent court or any
resolution is passed for the winding up or dissolution of the Issuer, save for
the purposes of reorganisation on terms approved in writing by the Note
Trustee or by Extraordinary Resolution of the Residual Certificateholders; or
(d) if (i) the Issuer ceases or threatens to cease to carry on
the whole or a substantial part of its business, save for the purposes of
reorganisation on terms approved in writing by the Note Trustee or by
Extraordinary Resolution of the Residual Certificateholders, or (ii) the
Issuer stops or threatens to stop payment of, or is unable to, or admits
inability to, pay its debts (or any class of its debts) as they fall due or
the value of its assets falls to less than the amount of its liabilities
(taking into account its contingent and prospective liabilities) or (iii) the
Issuer is deemed unable to pay its debts pursuant to or for the purposes of
any applicable law or is adjudicated or found bankrupt or insolvent; or
(e) if proceedings are initiated against the Issuer under any
applicable liquidation, insolvency, composition, reorganisation or other
similar laws or an application is made (or documents filed with a court) for
the appointment of an administrative or other receiver, manager, administrator
or other similar official, or an administrative or other receiver, manager,
administrator or other similar official is appointed, in relation to the
Issuer or, as the case may be, in relation to the whole or any part of the
undertaking or assets of the Issuer, and in any such case (other than the
appointment of an administrator or an administrative receiver appointed
following presentation of a petition for an administration order) unless
initiated by the Issuer, is not discharged within 30 days; or
(f) if the Issuer (or its directors or shareholders) initiates
or consents to judicial proceedings relating to itself under any applicable
liquidation, insolvency, composition, reorganisation or other similar laws or
makes a conveyance or assignment for the benefit of, or enters into any
composition or other arrangement with, its creditors generally (or any class
of its creditors) or takes steps with a view to obtaining a moratorium in
respect of any of its indebtedness or any meeting is convened to consider a
proposal for an arrangement or composition with its creditors generally (or
any class of its creditors).
10.2 General
Upon the service of an Enforcement Notice by the Note Trustee in accordance
with Residual Certificates Condition 10.1 (Residual Certificates), any RC1
Payments or RC2 Payments pursuant to the Residual Certificates shall thereby
immediately become due and payable.
11. Enforcement
11.1 General
Each of the Note Trustee and the Security Trustee may, at any time, at its
absolute discretion and without notice, take (and in the case of the Note
Trustee, may direct the Security Trustee to take) such proceedings, actions or
steps against the Issuer or any other party to any of the Transaction
Documents as it may think fit to enforce the provisions of (in the case of the
Note Trustee) the Residual Certificates or the Trust Deed (including these
Residual Certificates Conditions) or (in the case of the Security Trustee) the
Deed of Charge or (in either case) any of the other Transaction Documents to
which it is a party and, at any time after the service of an Enforcement
Notice, the Security Trustee may, at its discretion and without notice, take
such steps as it may think fit to enforce the Security, but neither of them
shall be bound to take any such proceedings, actions or steps unless,
following redemption of the Notes in full:
(a) the Note Trustee shall have been so directed by an
Extraordinary Resolution of the holders of the Most Senior Class or directed
in writing by the holders of at least 25 per cent. of the Most Senior Class of
Residual Certificates in number; and
(b) in all cases, it shall have been indemnified and/or
prefunded and/or secured to its satisfaction.
No Certificateholder may proceed directly against the Issuer unless the
Security Trustee or Note Trustee, having become bound to do so, fails to do so
within a reasonable period of time and such failure is continuing.
11.2 Limitations on Enforcement
No Residual Certificateholder shall be entitled to proceed directly against
the Issuer or any other party to any of the Transaction Documents to enforce
the performance of any of the Residual Certificates Conditions or any of the
provisions of the Transaction Documents and/or to take any other proceedings
(including lodging an appeal in any proceedings) in respect of or concerning
the Issuer unless (i) the Note Trustee or, as the case may be, the Security
Trustee, having become bound so to do, fails to do so within a reasonable
period and such failure shall be continuing or (ii) the Note Trustee or, as
the case may be, the Security Trustee, is unable to do so and such inability
is continuing, provided that no Residual Certificateholder shall be entitled
to take any steps or proceedings to procure the winding up, administration or
liquidation of the Issuer.
11.3 Limited Recourse
Notwithstanding any other Residual Certificates Condition or any provision of
any Transaction Document, all obligations of the Issuer to the Residual
Certificateholders are limited in recourse to the property, assets and
undertakings of the Issuer the subject of any security created under and
pursuant to the Deed of Charge (the "Charged Assets"). If:
(a) there are no Charged Assets remaining which are capable of
being realised or otherwise converted into cash;
(b) all amounts available from the Charged Assets have been
applied to meet or provide for the relevant obligations specified in, and in
accordance with, the provisions of the Deed of Charge; and
(c) there are insufficient amounts available from the Charged
Assets to pay, in accordance with the provisions of the Deed of Charge, any
further amounts under the Residual Certificates (including payments of
Residual Payment Amounts),
then the Certificateholders shall have no further claim against the Issuer in
respect of any further amounts due or to be paid in respect of the Residual
Certificates (including, for the avoidance of doubt, payments of Residual
Payment Amounts in respect of the Residual Certificates) and the Issuer shall
be deemed to be discharged from making any further payments in respect of the
Residual Certificates and any further payment rights shall be extinguished.
12. Meetings of Certificateholders, Modification, Waiver and
Substitution
12.1 The Trust Deed contains provisions for convening meetings
(including by way of conference call, including by use of a videoconference
platform) of the Noteholders and/or Certificateholders of each Class and, in
certain cases, more than one Class to consider any matter affecting their
interests, including the sanctioning by Extraordinary Resolution of a
modification of these Residual Certificates Conditions and the Conditions or
the provisions of any of the Transaction Documents.
12.2 For the purposes of these Residual Certificates Conditions, "Most
Senior Class" means the Class A Notes or, if there are no Class A Notes then
outstanding, the Class B Notes or, if there are no Class A Notes or Class B
Notes then outstanding, the Class C Notes or, if there are no Class A Notes,
Class B Notes or Class C Notes then outstanding, the Class D Notes or, if
there are no Class A Notes, Class B Notes, Class C Notes or Class D Notes then
outstanding, the Class E Notes, or if there are no Class A Notes, Class B
Notes, Class C Notes, Class D Notes or Class E Notes then outstanding, the
Class X Notes or, if there are no Notes then outstanding, prior to (but
excluding) the Optional Redemption Date, the RC1 Residual Certificates and,
thereafter, the RC2 Residual Certificates.
12.3 Most Senior Class and Limitations on other Noteholders and
Certificateholders
(a) Other than in relation to a Basic Terms Modification, which
additionally require an Extraordinary Resolution of the holders of each
affected Class or Classes of Notes and/or Residual Certificates then in issue,
as applicable:
(i) subject to Residual Certificates Conditions 12.3(a)(ii)
and (iii) below, an Extraordinary Resolution passed at any meeting of the
holders of the Most Senior Class shall be binding on all other Classes of
Noteholders and Certificateholders irrespective of the effect it has upon
them;
(ii) subject to Residual Certificates Condition 12.3(a)(iii)
below, an Extraordinary Resolution passed at any meeting of a relevant Class
of Noteholders shall be binding on (A) all other Classes of Noteholders
ranking junior to such Class of Noteholders in the Post-Enforcement Priority
of Payments in each case and (B) the Certificateholders, irrespective of the
effect it has upon them;
(iii) no Extraordinary Resolution of any Class of Noteholders or
Certificateholders shall take effect for any purpose while any of the Most
Senior Class remain outstanding or (in the case of the Residual Certificates
remain in issue) unless it shall have been sanctioned by an Extraordinary
Resolution of the holders of the Most Senior Class and in the case of the
Residual Certificates all Notes ranking in priority thereto or the Note
Trustee is of the opinion that it would not be materially prejudicial to the
interests of the holders of the Most Senior Class; and
(iv) no Ordinary Resolution that is passed by the holders of any
Class of Noteholders shall take effect for any purpose while any of the Most
Senior Class of Notes remain outstanding or unless it shall have been
sanctioned by an Ordinary Resolution of the holders of the Most Senior Class
of Notes, or the Note Trustee is of the opinion that it would not be
materially prejudicial to the interests of the holders of the Most Senior
Class of Notes,
provided that, the prior written consent of each Swap Provider is also
required in respect of any Extraordinary Resolution of a Class or Classes of
Notes and/or Residual Certificates relating to any amendment, modification,
variation, supplement, consent or waiver of any of the Transaction Documents
where:
(A) such amendment, modification, variation, supplement, waiver or
consent would adversely affect the relevant Swap Provider's rights or
obligations under, or interests in respect of:
I. the Priorities of Payments or the Swap Collateral Account
Priority of Payments;
II. the timing or amount of any payments or deliveries due
from (x) the Issuer to that Swap Provider or (y) that Swap Provider to the
Issuer;
III. that Swap Provider's status as a Secured Creditor or that
Swap Provider's rights in relation to any Security (howsoever described, and
including as a result of changing the nature or the scope of, or releasing
such Security granted by the Issuer in favour of the Security Trustee on
behalf of the Secured Creditors);
IV. any requirement to obtain that Swap Provider's prior consent
(written or otherwise) in respect of any matter; or
(B) such amendment, modification, variation, supplement, waiver or
consent relates to Condition 8 (Redemption) of the Notes or any additional
redemption rights in respect of the Notes and such amendment, modification,
variation, supplement, waiver or consent would prejudice that Swap Provider.
Whether any modification, supplement, waiver or consent would or does
adversely affect a Swap Provider's rights or obligations under, or interests
in respect of a matter or would prejudice a Swap Provider or be adverse to a
Swap Provider's interests will be determined by that Swap Provider acting in
good faith and in a commercially reasonable manner. Where required by the Note
Trustee and the Security Trustee, the Issuer may provide written confirmation
to the Note Trustee and the Security Trustee (upon which the Note Trustee and
the Security Trustee shall be entitled to rely absolutely without liability or
enquiry) that that Swap Provider's consent pursuant to this Condition 12.3(a)
is not needed because the relevant modification, supplement, consent or waiver
does not affect any of the items listed in paragraphs (I) to (IV) above or any
redemption rights in respect of the Notes. Such confirmation will be provided
prior to such modification, supplement, consent or waiver taking effect. If
such confirmation is required by the Note Trustee and the Security Trustee but
the Issuer is unable to provide the confirmation, the Issuer shall notify in
writing each Swap Provider, the Note Trustee and the Security Trustee of the
proposed modification, supplement, consent or waiver as soon as reasonably
practicable prior to such modification, supplement, consent or waiver taking
effect and request that that Swap Provider determines if its consent is
required. Each Swap Provider must notify the Issuer, the Note Trustee,
Security Trustee and any other Swap Provider of its determination, and if
relevant whether or not it consents and the Note Trustee and Security Trustee
shall be entitled to rely on such determination.
(b) Other than in relation to Basic Terms Modifications and
subject as provided in Residual Certificates Conditions 12.3(a) (Most Senior
Class and Limitations on other Noteholders and Certificateholders) and 12.4
(Quorum), a resolution which, in the opinion of the Note Trustee, affects the
interests of the holders of:
(i) any Class of Notes and/or Residual Certificates of one
class only shall be deemed to have been duly passed if passed at a meeting (or
by a resolution in writing or, in respect of the Notes represented by Global
Notes only, by a resolution passed by way of consents received through the
relevant Clearing System(s)) of the holders of that Class of Notes and/or
Residual Certificates so affected;
(ii) any two or more Classes of Notes and/or Residual
Certificates, but does not give rise to an actual or potential conflict of
interest between the holders of such Classes of Notes and/or Residual
Certificates, shall be deemed to have been duly passed if passed at a single
meeting (or by a single resolution in writing or, in respect of the Notes
represented by Global Notes, by a single resolution passed by way of consents
received through the relevant Clearing System(s)) of the holders of each such
Class of Notes and/or Residual Certificates; and
(iii) one or more Classes of Notes and/or Residual Certificates,
but does not give rise to an actual or potential conflict of interest between
the holders of such Classes of Notes and/or Residual Certificates, shall be
deemed to have been duly passed if passed at a single meeting (or by a single
resolution in writing or, in respect of the Notes represented by Global Notes
only, by a single resolution passed by way of consents received through the
relevant Clearing System(s)) of the holders of such Classes of Notes. Where
such a resolution gives, or may give rise to, an actual or potential conflict
of interest between the holders of such Classes of Notes, it shall be deemed
to have been duly passed only if passed at separate meetings (or by separate
resolutions in writing or, in respect of the Notes represented by Global Notes
only, by separate resolutions passed by way of electronic consents received
through the relevant Clearing System(s)) of the holders of each such Class of
Notes and/or Residual Certificates so affected.
(c) No Extraordinary Resolution of the holders of a Class or
Classes of Notes and/or Residual Certificates which would have the effect of
sanctioning a Basic Terms Modification in respect of any Class of Notes or
Residual Certificates shall take effect unless it has been sanctioned by an
Extraordinary Resolution of the holders of each affected Class of Notes then
outstanding and/or the holders of each affected Class of Residual Certificates
then in issue which are affected by such Basic Terms Modification.
(d) No Ordinary Resolution that is passed by the holders of any
Class of Residual Certificates shall take effect for any purpose while any of
the Most Senior Class remain outstanding or (in the case of the Residual
Certificates) remain in issue unless it shall have been sanctioned by an
Ordinary Resolution of the holders of the Most Senior Class and, in the case
of the Residual Certificates, all Notes ranking in priority thereto or the
Note Trustee is of the opinion that it would not be materially prejudicial to
the interests of the holders of the Most Senior Class.
12.4 Quorum
(a) Subject as provided below, the quorum at any meeting of any
Class of Residual Certificates for passing an Ordinary Resolution will be one
or more persons holding or representing not less than 25 per cent. of each
Class or Classes of Residual Certificates then in issue.
(b) Subject as provided below, the quorum at any meeting of any
Class of any Residual Certificates for passing an Extraordinary Resolution
will be one or more persons holding or representing not less than 50 per cent.
of such Class of Residual Certificates then in issue.
(c) Subject to the more detailed provisions set out in the Trust
Deed, the quorum at any meeting of any holders of any Residual Certificates
passing an Extraordinary Resolution to (i) sanction a modification of the date
of maturity of Notes, (ii) sanction a modification of the date of payment of
principal or interest in respect of the Notes, or, where applicable, of the
method of calculating the date of payment of principal or interest in respect
of the Notes (other than pursuant to Condition 13.6(a)(vii) (Additional Right
of Modification), Residual Certificates Condition 12.6(a)(vii) (Additional
Right of Modification) or in relation to any Swap Rate Modification), (iii)
sanction a modification of the amount of principal or the rate of interest
payable in respect of the Notes (other than pursuant to Condition 13.6(a)(vii)
(Additional Right of Modification), Residual Certificates Condition
12.6(a)(vii) (Additional Right of Modification) or in relation to any Swap
Rate Modification), or, where applicable, of the method of calculating the
amount payable of any principal or interest in respect of the Notes (other
than pursuant to Condition 13.6(a)(vii) (Additional Right of Modification)),
Residual Certificates Condition 12.6(a)(vii) (Additional Right of
Modification) or in relation to any Swap Rate Modification, (iv) alter the
currency in which payments under any Class of Notes or the Residual
Certificates are to be made, (v) alter the quorum or majority required in
relation to a resolution or meeting of holders of any Class of Notes, (vi)
sanction any scheme or proposal for the sale, conversion or cancellation of
any Class of Notes or the Residual Certificates, or (vii) any change to the
definition of a Basic Terms Modification, (each a "Basic Terms Modification")
shall be one or more persons holding or representing in aggregate not less
than three-quarters of the aggregate Principal Amount Outstanding of such
Class of Notes then outstanding. Any Extraordinary Resolution in respect of
a Basic Terms Modification shall only be effective if duly passed at separate
meetings (or by separate resolutions in writing or, in respect of the Notes
represented by Global Notes only, by separate resolutions passed by way of
electronic consents received through the relevant Clearing System(s)) of each
relevant affected Class of Noteholders and by a meeting of each relevant
affected Class of Residual Certificates.
(d) Subject as provided below, the quorum at any adjourned
meeting of Residual Certificateholders for passing an Ordinary Resolution will
be one or more persons holding or representing not less than 10 per cent. of
the Residual Certificates of such Class then in issue.
(e) Subject as provided below, the quorum at any adjourned
meeting of Residual Certificateholders for passing an Extraordinary Resolution
will be one or more persons holding or representing not less than 25 per cent.
of the Residual Certificates of such Class then in issue.
(f) Subject to the more detailed provisions set out in the Trust
Deed, the quorum at any adjourned meeting of any holders of any Class of
Residual Certificates passing an Extraordinary Resolution to sanction a Basic
Terms Modification shall be one or more persons holding or representing in
aggregate not less than (i) 50 per cent. of the aggregate Principal Amount
Outstanding of such Class of Notes then outstanding or (ii) 50 per cent. of
such Class of Residual Certificates then in issue. Any Extraordinary
Resolution in respect of a Basic Terms Modification shall only be effective if
duly passed at separate meetings (or by separate resolutions in writing or by
separate resolutions passed by way of consents received through the relevant
Clearing System(s)) of each relevant affected Class of Noteholders and by a
meeting of each relevant affected Class of Certificates.
12.5 Modification to the Transaction Documents
The Note Trustee may at any time and from time to time (and may direct the
Security Trustee at any time), with the written consent of the Liquidity
Facility Provider (prior to the LF Cancellation Date) and the Secured
Creditors which are a party to the relevant Transaction Document (such consent
to be conclusively demonstrated by such Secured Creditor entering into any
deed or document purporting to modify such Transaction Document) but without
the consent or sanction of the Noteholders, the Certificateholders or any
other Secured Creditors agree with the Issuer and any other parties in making
or sanctioning any modification:
(a) other than in respect of a Basic Terms Modification, to
these Residual Certificates Conditions, the Conditions, the Trust Deed or any
other Transaction Document, which in the opinion of the Note Trustee (acting
in accordance with the Trust Deed), will not be materially prejudicial to the
interests of the Noteholders (or if there are no Notes outstanding, the
interests of the Certificateholders) and, for the avoidance of doubt, any
modification of the Collection Account Declaration of Trust and/or the
Expenses Account Declaration of Trust which does not affect the manner in
which the Issuer's Trust Share (as defined in each of the Collection Account
Declaration of Trust and Expenses Account Declaration of Trust respectively)
is calculated will not be materially prejudicial to the interests of the
Noteholders (or if there are no Notes outstanding, the interests of the
Certificateholders or any Class); or
(b) to these Residual Certificates Conditions, the Conditions,
the Trust Deed or any other Transaction Document if in the opinion of the Note
Trustee (acting in accordance with the Trust Deed), such modification is of a
formal, minor or technical nature or to correct a manifest error,
provided that, the prior written consents of the Swap Providers are also
required in respect of any amendment, modification, variation, supplement,
consent or waiver of any of the Transaction Documents where:
(A) such amendment, modification, variation, supplement, waiver or
consent would adversely affect the relevant Swap Provider's rights or
obligations under, or interests in respect of:
I. the Priorities of Payments or the Swap Collateral Account
Priority of Payments;
II. the timing or amount of any payments or deliveries due
from (x) the Issuer to that Swap Provider or (y) that Swap Provider to the
Issuer;
III. that Swap Provider's status as a Secured Creditor or that
Swap Provider's rights in relation to any Security (howsoever described, and
including as a result of changing the nature or the scope of, or releasing
such Security granted by the Issuer in favour of the Security Trustee on
behalf of the Secured Creditors);
IV. any requirement to obtain that Swap Provider's prior consent
(written or otherwise) in respect of any matter; or
(B) such amendment, modification, variation, supplement, waiver or
consent relates to Condition 8 (Redemption) of the Notes or any additional
redemption rights in respect of the Notes and such amendment, modification,
variation, supplement, waiver or consent would prejudice the relevant Swap
Provider.
Whether any modification, supplement, waiver or consent would or does
adversely affect a Swap Provider's rights or obligations under, or interests
in respect of a matter or would prejudice a Swap Provider or be adverse to a
Swap Provider's interests will be determined by that Swap Provider acting in
good faith and in a commercially reasonable manner. Where required by the Note
Trustee and the Security Trustee, the Issuer may provide written confirmation
to the Note Trustee and the Security Trustee (upon which the Note Trustee and
the Security Trustee shall be entitled to rely absolutely without liability or
enquiry) that that Swap Provider's consent pursuant to this Condition 12.5 is
not needed because the relevant modification, supplement, consent or waiver
does not affect any of the items listed in paragraphs (I) to (IV) above or any
redemption rights in respect of the Notes. Such confirmation will be provided
prior to such modification, supplement, consent or waiver taking effect. If
such confirmation is required by the Note Trustee and the Security Trustee but
the Issuer is unable to provide the confirmation, the Issuer shall notify in
writing each Swap Provider, the Note Trustee and the Security Trustee of the
proposed modification, supplement, consent or waiver as soon as reasonably
practicable prior to such modification, supplement, consent or waiver taking
effect and request that each Swap Provider determines if its consent is
required. Each Swap Provider must notify the Issuer, the Note Trustee and
Security Trustee and any other relevant Swap Provider of its determination,
and if relevant whether or not it consents and the Note Trustee and Security
Trustee shall be entitled to rely on such determination.
12.6 Additional Right of Modification
(a) Notwithstanding the provisions of Residual Certificates
Condition 12.5 (Modification to the Transaction Documents), the Note Trustee
shall be obliged and shall direct the Security Trustee, without any consent or
sanction of the Noteholders, the Certificateholders or any other Secured
Creditor, subject to the written consent of the Liquidity Facility Provider
(prior to the LF Cancellation Date) and the Secured Creditors which are a
party to the relevant Transaction Documents (such consent to be conclusively
demonstrated by such Secured Creditor entering into any deed or document
purporting to modify such Transaction Document), to concur with the Issuer in
making any modification (other than in respect of a Basic Terms Modification)
to these Residual Certificates Conditions, the Conditions, the Trust Deed or
any other Transaction Document to which it is a party or in relation to which
it holds security or to enter into any new, supplemental or additional
documents that the Issuer (in each case) considers necessary:
(i) for the purpose of complying with, or implementing or
reflecting, any change in the criteria of one or more of the Rating Agencies
which may be applicable from time to time, provided that:
(A) the Issuer certifies in writing to the Note Trustee and the
Security Trustee that such modification is necessary to comply with such
criteria or, as the case may be, is solely to implement and reflect such
criteria; and
(B) in the case of any modification to a Transaction Document
proposed by any of the Seller, the Servicer and the Swap Provider (for the
purpose of this Residual Certificates Condition 12.6 only, each a "Relevant
Party"), in order (x) to remain eligible to perform its role in such capacity
in conformity with such criteria and/or (y) to avoid taking action which it
would otherwise be required to take to enable it to continue performing such
role (including, without limitation, posting collateral or advancing funds):
I. the Relevant Party certifies in writing to the Issuer,
the Note Trustee and the Security Trustee that such modification is necessary
for the purposes described in items (B)(x) and/or (B)(y) above; and
II. either:
(aa) the Issuer, the Relevant Party or the Seller (on behalf
of the Issuer) obtains from each of the Rating Agencies, a Rating Agency
Confirmation that such modification would not result in a downgrade,
withdrawal or suspension of the then current ratings assigned to any Class of
the Notes by such Rating Agency and would not result in any Rating Agency
placing any Class of Notes on rating watch negative (or equivalent) and
delivers a copy of each such confirmation to the Issuer (in the case of the
Relevant Party), the Note Trustee and the Security Trustee; or
(bb) the Issuer, the Relevant Party or the Seller (on behalf
of the Issuer) certifies in writing to the Note Trustee and the Security
Trustee that the Rating Agencies have been informed of the proposed
modification and none of the Rating Agencies has indicated within 30 calendar
days that such modification would result in (x) a downgrade, withdrawal or
suspension of the then current ratings assigned to any Class of the Notes by
such Rating Agency or (y) such Rating Agency placing any Class of Notes on
rating watch negative (or equivalent) and, if requested by the Note Trustee or
the Security Trustee, procures that an Issuer Certificate is provided to the
Note Trustee and the Security Trustee in accordance with Condition 18
(Non-Responsive Rating Agency); and
III. the Relevant Party pays all costs and expenses (including
legal fees) incurred by the Issuer, the Note Trustee and the Security Trustee
in connection with such modification;
(ii) for the purpose of complying with any changes in the
requirements of, or enabling the Issuer to comply with an obligation in
respect of, the UK Securitisation Framework and/or the EU Securitisation
Regulation (including in respect of risk retention) after the Closing Date,
including as a result of the adoption of regulatory or implementing technical
standards in relation to the UK Securitisation Framework and/or the EU
Securitisation Regulation or any other legislation or regulations or official
guidance in relation thereto (including, without limitation, the appointment
of a third party pursuant to the Servicing Agreement and/or the Cash
Management Agreement to assist with the Issuer's reporting obligations
pursuant to the UK Securitisation Framework and/or the EU Securitisation
Regulation), provided that the Issuer certifies to the Note Trustee and the
Security Trustee in writing that such modification is required solely for such
purpose and has been drafted solely to such effect;
(iii) for the purpose of enabling the Notes to be (or to remain)
listed on the London Stock Exchange, provided that the Issuer certifies to the
Note Trustee and the Security Trustee in writing that such modification is
required solely for such purpose and has been drafted solely to such effect;
(iv) for the purposes of enabling the Issuer or any of the other
Parties to the Transaction Documents to comply with FATCA, provided that the
Issuer or the Relevant Party, as applicable, certifies to the Note Trustee and
the Security Trustee in writing that such modification is required solely for
such purpose and has been drafted solely to such effect;
(v) for the purpose of complying with, or implementing or
reflecting, any changes in the manner in which the Notes are held which will
allow the Bank of England's sterling monetary framework, that is, in a manner
which would allow such Notes to be recognised as eligible collateral for the
Bank of England's monetary policy and intra-day credit operations by the Bank
of England either upon issue or at any or all times during the life of the
Notes, provided that the Issuer certifies in writing to the Note Trustee and
the Security Trustee that such modification is required solely for such
purpose and has been drafted solely to such effect;
(vi) for the purpose of complying with any changes in the
requirements of the UK CRA Regulation or the EU CRA Regulation after the
Closing Date, provided that the Issuer certifies to the Note Trustee and the
Security Trustee in writing that such modification is required solely for such
purpose and has been drafted solely to such effect,
(the certificate to be provided by the Issuer, the Seller, any of the Servicer
and/or the Relevant Party and/or Party (in each case on behalf of the Issuer),
as the case may be, pursuant to the Residual Certificates Conditions
12.6(a)(i) to 12.6(a)(vi) or Residual Certificates Condition 12.6(a)(ix)
being a "Modification Certificate"); or
(vii) for the purpose of changing the reference rate or the base
rate in respect of the Notes from SONIA to an alternative base rate (including
where such base rate may remain linked to SONIA but may be calculated in a
different manner) (any such rate, an "Alternative Base Rate") and make such
other amendments as are necessary or advisable in the reasonable judgment of
the Issuer (or the Seller on its behalf) to facilitate such change (a "Base
Rate Modification"), provided that, the Issuer (or the Seller on behalf of the
Issuer), certifies to the Agents, the Note Trustee and the Security Trustee in
writing (such certificate, a "Base Rate Modification Certificate") that:
(A) such Base Rate Modification is being undertaken due to any one
or more of the following:
I. a material disruption to SONIA, an adverse change in the
methodology of calculating SONIA or SONIA ceasing to exist or be published;
II. the insolvency or cessation of business of the SONIA
administrator (in circumstances where no successor SONIA administrator has
been appointed);
III. a public statement by the SONIA administrator that it will
cease publishing SONIA permanently or indefinitely (in circumstances where no
successor SONIA administrator has been appointed that will continue
publication of SONIA) and such cessation is reasonably expected by the Issuer
to occur prior to the Final Maturity Date;
IV. a public statement by the supervisor of the SONIA
administrator that SONIA has been or will be permanently or indefinitely
discontinued or will be changed in an adverse manner and such discontinuation
or change is reasonably expected by the Issuer to occur prior to the Final
Maturity Date;
V. a public statement by the supervisor of the SONIA
administrator that means SONIA may no longer be used or that its use is
subject to restrictions or adverse consequences;
VI. an alternative manner of calculating a SONIA-based rate being
introduced and becoming a standard means of calculating interest for similar
transactions;
VII. a change in the generally accepted market practice in the
publicly listed asset backed floating rate notes market to refer to a
benchmark rate endorsed in a public statement by the Bank of England, the FCA
or the PRA or any relevant committee or other body established, sponsored or
approved by any of the foregoing, including the Working Group on Sterling
Risk-Free Reference Rates, despite the continued existence of SONIA;
VIII. following the implementation of a Base Rate Modification, it
becomes generally accepted market practice in the publicly listed asset backed
floating rate notes market to use a benchmark rate of interest which is
different from the Alternative Base Rate which had already been adopted by the
Issuer in respect of the Notes pursuant to a Base Rate Modification; or
IX. the reasonable expectation of the Seller that any of the
events specified in sub-paragraphs I to VIII above will occur or exist within
six months of the proposed effective date of such Base Rate Modification; and
(B) such Alternative Base Rate is:
I. a base rate published, endorsed, approved or recognised
by the Bank of England, any regulator in the United Kingdom or the European
Union or any stock exchange on which the Notes are listed (or any relevant
committee or other body established, sponsored or approved by any of the
foregoing);
II. a base rate utilised in a material number of
publicly-listed new issues of Sterling-denominated asset backed floating rate
notes prior to the effective date of such Base Rate Modification;
III. a base rate utilised in a publicly-listed new issue of
Sterling-denominated asset backed floating rate notes where the originator of
the relevant assets is an affiliate of any of the Seller; or
IV. such other base rate as the Seller reasonably determines,
(viii) for the purpose of changing the base rate that then applies in
respect of each Swap Agreement to an alternative base rate as is necessary or
advisable in the commercially reasonable judgment of the Issuer (or the Seller
on its behalf) and the relevant Swap Provider solely as a consequence of a
Base Rate Modification and solely for the purpose of aligning the base rate of
that Swap Agreement to the base rate of the Notes following such Base Rate
Modification and making any associated amendment (a "Swap Rate Modification"),
provided that the Issuer or the Seller (on behalf of the Issuer) certifies to
the Agents, the Note Trustee and the Security Trustee in writing that such
modification is required solely for such purpose and it has been drafted
solely to such effect (such certificate being a "Swap Rate Modification
Certificate");
(ix) for the purposes of enabling the Issuer and/or the relevant
Swap Provider to comply with any requirements which may apply to it under
European Regulation 648/2012 of 4 July 2012 ("EU EMIR"), known as the European
Market Infrastructure Regulation, and/or EU EMIR as it forms part of domestic
law by virtue of English law ("UK EMIR") as amended, irrespective of whether
such modifications are materially prejudicial to the interests of the holders
of any Class of Notes or any other Secured Creditor (any such modification, a
" EMIR Amendment") and subject to receipt by the Note Trustee and the Security
Trustee of a Modification Certificate of (A) the Issuer signed by two
directors or the Seller on behalf of the Issuer or (B) that Swap Provider (as
applicable) certifying to the Note Trustee and the Security Trustee that the
amendments (which may be requested by the Issuer or that Swap Provider) are to
be made solely for the purpose of enabling the Issuer (or that Swap Provider
(as applicable)) to satisfy its requirements under UK EMIR as amended and/or
EU EMIR as amended (as applicable),
provided that (in the case of each of sub-paragraphs 13.6(a)(i) -
13.6(a)(viii) above):
I. at least 30 calendar days' prior written notice of any
such proposed modification has been given to the Note Trustee and the Security
Trustee;
II. the Modification Certificate, Swap Rate Modification
Certificate or Base Rate Modification Certificate in relation to such
modification shall be provided to the Agents, the Note Trustee and the
Security Trustee both at the time the Agents, the Note Trustee and the
Security Trustee are notified of the proposed modification and on the date
that such modification takes effect; and
III. the consent of each Secured Creditor which is party to the
relevant Transaction Document has been obtained,
provided further that:
(x) other than in the case of a modification pursuant to
Residual Certificates Condition 12.6(a)(i)(B), either:
(aa) the Issuer, the Relevant Party or the Seller (on behalf
of the Issuer) obtains from each of the Rating Agencies a Rating Agency
Confirmation that such modification would not result in (x) a downgrade,
withdrawal or suspension of the then current ratings assigned to any Class of
Notes by such Rating Agency or (y) such Rating Agency placing any Class of
Notes on rating watch negative (or equivalent) and delivers each such
confirmation to the Issuer (in the case of the Relevant Party), the Note
Trustee and the Security Trustee; or
(bb) the Issuer, the Relevant Party or the Seller (on behalf
of the Issuer) certifies in the Modification Certificate, Swap Rate
Modification Certificate or the Base Rate Modification Certificate that it has
informed the Rating Agencies of the proposed modification and none of the
Rating Agencies has indicated within 30 calendar days that such modification
would result in (x) a downgrade, withdrawal or suspension of the then current
ratings assigned to any Class of Notes by such Rating Agency or (y) such
Rating Agency placing any Notes on rating watch negative (or equivalent) and,
if requested by the Note Trustee or the Security Trustee, procures that an
Issuer Certificate is provided to the Note Trustee and the Security Trustee in
accordance with Condition 18 (Non-Responsive Rating Agency); and
(y) the Issuer certifies in writing to the Note Trustee
and the Security Trustee that (X) the Issuer has provided at least 30 calendar
days' notice to the Certificateholders of each Class of the proposed
modification in accordance with Residual Certificates Condition 15 (Notice to
Residual Certificateholders) and by publication on Bloomberg on the "Company
News" screen relating to the Notes, and (Y) Noteholders representing at least
10 per cent. of the aggregate Principal Amount Outstanding of the Most Senior
Class of Notes then outstanding have not contacted the Issuer and the Note
Trustee in writing (or otherwise in accordance with the then current practice
of any applicable clearing system through which any Notes may be held) within
such notification period notifying the Issuer and the Note Trustee that such
Noteholders do not consent to the modification.
and provided further that, the prior written consent of each Swap Provider is
also required in respect of any amendment, modification, variation,
supplement, consent or waiver of any of the Transaction Documents where:
(A) such amendment, modification, variation, supplement, waiver or
consent would adversely affect the relevant Swap Provider's rights or
obligations under, or interests in respect of:
I. the Priorities of Payments or the Swap Collateral Account
Priority of Payments;
II. the timing or amount of any payments or deliveries due
from (x) the Issuer to that Swap Provider or (y) that Swap Provider to the
Issuer;
III. that Swap Provider's status as a Secured Creditor or that
Swap Provider's rights in relation to any Security (howsoever described, and
including as a result of changing the nature or the scope of, or releasing
such Security granted by the Issuer in favour of the Security Trustee on
behalf of the Secured Creditors);
IV. any requirement to obtain that Swap Provider's prior consent
(written or otherwise) in respect of any matter; or
(B) such amendment, modification, variation, supplement, waiver or
consent relates to Condition 8 (Redemption) of the Notes or any additional
redemption rights in respect of the Notes and such amendment, modification,
variation, supplement, waiver or consent would prejudice that Swap Provider.
Whether any modification, supplement, waiver or consent would or does
adversely affect a Swap Provider's rights or obligations under, or interests
in respect of a matter or would prejudice a Swap Provider or be adverse to a
Swap Provider's interests will be determined by that Swap Provider acting in
good faith and in a commercially reasonable manner. Where required by the Note
Trustee and the Security Trustee, the Issuer may provide written confirmation
to the Note Trustee and the Security Trustee (upon which the Note Trustee and
the Security Trustee shall be entitled to rely absolutely without liability or
enquiry) that that relevant Swap Provider's consent pursuant to this Condition
12.6(a) is not needed because the relevant modification, supplement, consent
or waiver does not affect any of the items listed in paragraphs (I) to (IV)
above or any redemption rights in respect of the Notes. Such confirmation will
be provided prior to such modification, supplement, consent or waiver taking
effect. If such confirmation is required by the Note Trustee and the Security
Trustee but the Issuer is unable to provide the confirmation, the Issuer shall
notify in writing each Swap Provider, the Note Trustee and the Security
Trustee of the proposed modification, supplement, consent or waiver as soon as
reasonably practicable prior to such modification, supplement, consent or
waiver taking effect and request that each Swap Provider determines if its
consent is required. Each Swap Provider must notify the Issuer, the Note
Trustee and Security Trustee and any other relevant Swap Provider of its
determination, and if relevant whether or not it consents and the Note Trustee
and Security Trustee shall be entitled to rely on such determination.
If Noteholders representing at least 10 per cent. of the aggregate Principal
Amount Outstanding of the Most Senior Class of Notes then outstanding have
notified the Issuer and the Note Trustee in writing (or otherwise in
accordance with the then current practice of any applicable clearing system
through which any Notes may be held) within the notification period referred
to above that they do not consent to the modification, then such modification
will not be made unless an Extraordinary Resolution of the holders of the Most
Senior Class of Notes then outstanding is passed in favour of such
modification in accordance with this Residual Certificates Condition 12.
Objections made in writing other than, in respect of the Notes represented by
Global Notes, through the applicable clearing system must be accompanied by
evidence to the Issuer's and the Note Trustee's satisfaction (having regard to
prevailing market practices) of the relevant Noteholder's holding of the
Notes.
(b) Other than where specifically provided in this Residual
Certificates Condition 12.6 or any Transaction Document:
(i) when implementing any modification pursuant to this
Residual Certificates Condition 12.6 (save to the extent the Note Trustee
considers that the proposed modification would constitute a Basic Terms
Modification), neither the Note Trustee nor the Security Trustee shall
consider the interests of the Noteholders, the Certificateholders, any other
Secured Creditor (other than the Note Trustee and the Security Trustee as
provided below) or any other person but may act and rely solely and without
investigation or liability on any certificate or evidence provided to it by
the Issuer or the Servicer (as the case may be), the Seller or the Relevant
Party or Party, as the case may be, pursuant to this Residual Certificates
Condition 12.6 and shall not be liable to the Noteholders or any other Secured
Creditor for so acting or relying, irrespective of whether any such
modification is or may be materially prejudicial to the interests of any such
person; and
(ii) none of the Agents, the Note Trustee nor the Security
Trustee shall be obliged to agree to any modification which, in the opinion of
the Agents, the Note Trustee and/or the Security Trustee would have the effect
of (A) exposing the Agents, the Note Trustee and/or the Security Trustee to
any liability against which it has not been indemnified and/or secured and/or
pre-funded to its satisfaction or (B) increasing the obligations or duties, or
decreasing the rights or protection, of the Agents, the Note Trustee and/or
the Security Trustee in the Transaction Documents, these Residual Certificates
Conditions and/or the Conditions.
(c) Any such modification shall be binding on all Noteholders
and shall be notified by the Issuer as soon as reasonably practicable to:
(i) so long as any of the Notes rated by the Rating Agencies
remains outstanding, each Rating Agency;
(ii) the Secured Creditors; and
(iii) the Certificateholders in accordance with Residual
Certificates Condition 16 (Notice to Noteholders).
12.7 Authorisation or Waiver of Breach
The Note Trustee may and may direct the Security Trustee to, without the
consent or sanction of the Noteholders, the Residual Certificateholders or the
other Secured Creditors and without prejudice to its rights in respect of any
further or other breach, from time to time and at any time, on such terms and
conditions (if any) as shall seem expedient to it determine that an Event of
Default shall not, or shall not subject to any specified conditions, be
treated as such or authorise or waive any proposed or actual breach of any of
the covenants or provisions contained in or arising pursuant to the
Conditions, the Residual Certificates Conditions or any of the Transaction
Documents by any party thereto, but only if in the Note Trustee's sole
opinion, the interests of the Most Senior Class will not be materially
prejudiced thereby provided that the Note Trustee shall not exercise any
powers conferred on it by this Residual Certificates Condition 12.7 in
contravention of any express direction given by Extraordinary Resolution of
the holders of the Most Senior Class or by a direction under Residual
Certificates Condition 10 (Events of Default) but so that no such direction or
request shall affect any waiver, authorisation or determination previously
given or made.
12.8 Notification of modifications, waivers, authorisations or
determinations
Any such modification, waiver, authorisation or determination by the Note
Trustee and/or the Security Trustee, as applicable, in accordance with the
Conditions, these Residual Certificates Conditions or the Transaction
Documents shall be binding on the Residual Certificateholders and, unless the
Note Trustee or, as the case may be, the Security Trustee agrees otherwise,
any such modification shall be notified by the Issuer to the Residual
Certificateholders in accordance with Residual Certificates Condition 15
(Notice to Residual Certificateholders), the Rating Agencies (while any Notes
remain outstanding) and the other Secured Creditors as soon as practicable
thereafter.
12.9 In connection with any such substitution of principal debtor
referred to in Condition 8.4 (Mandatory Redemption of the Notes for Taxation
or Other Reasons), the Note Trustee and the Security Trustee may also agree,
without the consent of the Residual Certificateholders or the other Secured
Creditors, to a change of the laws governing the Residual Certificates, these
Residual Certificates Conditions and/or any of the Transaction Documents,
provided that such change would not, in the opinion of the Note Trustee or, as
the case may be, the Security Trustee (in the case of the Security Trustee,
acting in accordance with the Deed of Charge) be materially prejudicial to the
interests of the Residual Certificateholders of any Class.
12.10 Where, in connection with the exercise or performance by each of
them of any right, power, trust, authority, duty or discretion under or in
relation to these Residual Certificates Conditions or any of the Transaction
Documents (including in relation to any modification, waiver, authorisation,
determination, substitution or change of laws as referred to above), the Note
Trustee or the Security Trustee is required to have regard to the interests of
the Residual Certificateholders of any Class or Classes, it shall (a) have
regard to the general interests of the Residual Certificateholders of such
Class or Classes but shall not have regard to any interests arising from
circumstances particular to individual Residual Certificateholders (whatever
their number) and, in particular but without limitation, shall not have regard
to the consequences of any such exercise or performance for individual
Residual Certificateholders (whatever their number) 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 Note Trustee or, as the case may be, the
Security Trustee shall not be entitled to require, nor shall any Residual
Certificateholders be entitled to claim from the Issuer, the Note Trustee or
the Security Trustee or any other person, any indemnification or payment in
respect of any tax consequences of any such exercise upon individual Residual
Certificateholders and (b) subject to the more detailed provisions of the
Trust Deed and the Deed of Charge, as applicable, have regard to the interests
of holders of each Class of Residual Certificates (except where expressly
provided otherwise) but requiring the Note Trustee and the Security Trustee
where there is a conflict of interests between one or more Classes of Residual
Certificates in any such case to have regard (except as expressly provided
otherwise) prior to (but excluding) the Optional Redemption Date, to the
holders of the RC1 Residual Certificates and thereafter, to the holders of the
RC2 Residual Certificates.
12.11 Other than in respect of any matter requiring an Extraordinary
Resolution, Residual Certificateholders are required to vote by way of an
Ordinary Resolution.
12.12 "Ordinary Resolution" means, in respect of the holders of any of the
Classes of Residual Certificates:
(a) a resolution passed at a meeting of Residual
Certificateholders duly convened and held in accordance with the Trust Deed
and the Residual Certificates Conditions by a clear majority of the Eligible
Persons voting thereat on a show of hands or, if a poll is duly demanded, by a
clear majority of the votes cast on such poll;
(b) a resolution in writing signed by or on behalf of the
Residual Certificateholders of not less than a clear majority in number of the
holders of the relevant Class of Residual Certificates then in issue, which
resolution may be contained in one document or in several documents in like
form each signed by or on behalf of one or more of the Residual
Certificateholders of the relevant Class; or
(c) consent given by way of electronic consents through the
relevant Clearing System(s) (in a form satisfactory to the Note Trustee) by or
on behalf of the Residual Certificateholders of not less than a clear majority
in number of the relevant Class of Residual Certificates then in issue.
12.13 "Extraordinary Resolution" means, in respect of the holders of any
of the Classes of Residual Certificates:
(a) a resolution passed at a meeting of Residual
Certificateholders duly convened and held in accordance with the Trust Deed
and the Residual Certificates Conditions by a majority consisting of not less
than three-quarters of the Eligible Persons voting at such meeting upon a show
of hands or, if a poll is duly demanded, by a majority consisting of not less
than three-quarters of the votes cast on such poll;
(b) a resolution in writing signed by or on behalf of the
Residual Certificateholders of not less than three-quarters in number of the
holders of the relevant Class of Residual Certificates, which resolution may
be contained in one document or in several documents in like form each signed
by or on behalf of one or more of the Residual Certificateholders of the
relevant Class; or
(c) consent given by way of electronic consents through the
relevant Clearing System(s) (in a form satisfactory to the Note Trustee) by or
on behalf of the Residual Certificateholders of not less than three-quarters
in number of the holders of the relevant Class of Residual Certificates then
in issue.
12.14 "Eligible Person" means any one of the following persons who shall
be entitled to attend and vote at a meeting:
(a) a bearer of any Voting Certificate; and
(b) a proxy specified in any Block Voting Instruction.
12.15 "Voting Certificate" means an English language certificate issued by
a Paying Agent in which it is stated:
(a) that on the date thereof the Notes and/or Certificates (not
being the Notes and/or Certificates (as applicable) in respect of which a
Block Voting Instruction has been issued and is outstanding in respect of the
meeting specified in such Voting Certificate) are blocked in an account with a
clearing system and that no such Notes and/or Certificates will cease to be so
blocked until the first to occur of:
(i) the conclusion of the meeting specified in such Voting
Certificate; and
(ii) the surrender of the Voting Certificate to the Paying Agent
who issued the same; and
(b) that the bearer thereof is entitled to attend and vote at
such meeting in respect of the Notes and/or Certificates represented by such
Voting Certificate.
12.16 "Block Voting Instruction" means an English language document issued
by a Paying Agent in which:
(a) it is certified that on the date thereof Notes and/or
Certificates (not being Notes and/or Certificates (as applicable) in respect
of which a Voting Certificate has been issued and is outstanding in respect of
the meeting specified in such Block Voting Instruction) are blocked in an
account with a clearing system and that no such Notes and/or such Certificates
will cease to be so blocked until the first to occur of:
(i) the conclusion of the meeting specified in such Block
Voting Instruction; and
(ii) the Notes and/or the Certificates ceasing with the
agreement of the Paying Agent to be so blocked and the giving of notice by the
Paying Agent to the Issuer of the necessary amendment to the Block Voting
Instruction;
(b) it is certified that each holder of such Notes and/or such
Certificates has instructed such Paying Agent that the vote(s) attributable to
the Notes and/or the Certificates so blocked should be cast in a particular
way in relation to the resolution(s) to be put to such meeting and that all
such instructions are, during the period commencing 48 hours prior to the time
for which such meeting is convened and ending at the conclusion or adjournment
thereof, neither revocable nor capable of amendment;
(c) the aggregate principal amount or aggregate total amount of
the Notes and/or the number of Certificates so blocked is listed
distinguishing with regard to each such resolution between those in respect of
which instructions have been given that the votes attributable thereto should
be cast in favour of the resolution and those in respect of which instructions
have been so given that the votes attributable thereto should be cast against
the resolution; and
(d) one or more persons named in such Block Voting Instruction
(each hereinafter called a "proxy") is or are authorised and instructed by
such Paying Agent to cast the votes attributable to the Notes and/or the
Certificates so listed in accordance with the instructions referred to in
paragraph (c) above as set out in such Block Voting Instruction, provided that
no such person shall be named as a proxy:
(i) whose appointment has been revoked and in relation to whom
the relevant Paying Agent has been notified in writing of such revocation by
the time which is 48 hours before the time fixed for such meeting; and
(ii) who was originally appointed to vote at a meeting which has
been adjourned for want of a quorum and who has not been re-appointed to vote
at the meeting when it is resumed.
12.17 Details of any Extraordinary Resolution and any Ordinary Resolution
passed in accordance with the provisions of the Trust Deed shall be notified
to each of the Rating Agencies by the Principal Paying Agent on behalf of the
Issuer.
12.18 Issuer Substitution Condition
The Note Trustee may agree, subject to such amendment of these Residual
Certificates Conditions, the Conditions, and of any of the Transaction
Documents, and to such other conditions as the Note Trustee may require and
subject to the terms of the Trust Deed, but without the consent of the
Residual Certificateholders, to the substitution of another body corporate in
place of the Issuer as principal debtor under the Trust Deed, the Notes, the
Residual Certificates and in respect of the other Secured Obligations,
provided that the conditions set out in the Trust Deed are satisfied
including, inter alia, that the Residual Certificates are unconditionally and
irrevocably guaranteed by the Issuer (unless all of the assets of the Issuer
are transferred to such body corporate) and that such body corporate is a
single purpose vehicle and undertakes itself to be bound by provisions
corresponding to those set out in Residual Certificates Condition 5
(Covenants) (the "Issuer Substitution Condition"). In the case of a
substitution pursuant to this Residual Certificates Condition 12.18, the Note
Trustee may in its absolute discretion agree, without the consent of the
Residual Certificateholders, to a change in law governing the Residual
Certificates and/or any of the Transaction Documents unless such change would,
in the opinion of the Note Trustee, be materially prejudicial to the interests
of the Residual Certificateholders or any Class.
13. INDEMNIFICATION AND EXONERATION OF THE NOTE TRUSTEE AND THE
SECURITY TRUSTEE
The Trust Deed and the Deed of Charge contain provisions governing the
responsibility (and relief from responsibility) of the Note Trustee and the
Security Trustee respectively and providing for their indemnification in
certain circumstances, including provisions relieving them from taking action
or, in the case of the Security Trustee, enforcing the Security, unless
indemnified and/or prefunded and/or secured to their satisfaction.
The Trust Deed and the Deed of Charge also contain provisions pursuant to
which the Note Trustee and the Security Trustee are entitled, inter alia, (a)
to enter into business transactions with the Issuer and/or any other party to
any of the Transaction Documents and to act as trustee for the holders of any
other securities issued or guaranteed by, or relating to, the Issuer and/or
any other party to any of the Transaction Documents, (b) to exercise and
enforce its rights, comply with its obligations and perform its duties under
or in relation to any such transactions or, as the case may be, any such
trusteeship without regard to the interests of, or consequences for,
individual Residual Certificateholders and (c) to retain and not be liable to
account for any profit made or any other amount or benefit received thereby or
in connection therewith.
14. REPLACEMENT OF RESIDUAL CERTIFICATES
If any Residual Certificate is mutilated, defaced, lost, stolen or destroyed,
it may be replaced at the specified office of the Registrar subject to all
applicable laws. Replacement of any mutilated, defaced, lost, stolen or
destroyed Residual Certificate will only be made on payment of such costs as
may be incurred in connection therewith and on such terms as to evidence and
indemnity as the Issuer may reasonably require. A mutilated or defaced
Residual Certificate must be surrendered before a new one will be issued.
If the Issuer Substitution Condition is satisfied, the Issuer may, without the
consent of the Certificateholders, issue replacement residual certificates to
replace the Residual Certificates, which shall have terms and conditions which
may differ from the terms and conditions of the Residual Certificates which it
replaces.
15. Notice to Residual Certificateholders
15.1 Publication of Notice
While the Residual Certificates are represented by a Global Residual
Certificate, notices to Residual Certificateholders will be valid if submitted
to Euroclear and/or Clearstream, Luxembourg for communication by them to
Residual Certificateholders. Any notice delivered to Euroclear and/or
Clearstream, Luxembourg, as aforesaid, shall be deemed to have been given on
the day of such delivery.
While the Residual Certificates are represented by Definitive Residual
Certificates, the Note Trustee shall be at liberty to sanction any method of
giving notice to the Residual Certificateholders if, in its opinion, such
method is reasonable having regard to market practice then prevailing and
provided that notice of such other method is given to the Residual
Certificateholders in such manner as the Note Trustee shall deem appropriate.
15.2 Note Trustee's Discretion to Select Alternative Method
The Note Trustee shall be at liberty to sanction some other method of giving
notice to the Residual Certificateholders or category of them if, in its sole
opinion, such other method is reasonable having regard to market practice then
prevailing and to the requirements of the quotation systems on or by which the
Residual Certificates are then quoted and/or traded and provided that notice
of such other method is given to the Residual Certificateholders in such
manner as the Note Trustee shall require.
16. JURISDICTION AND GOVERNING LAW
(a) The Courts of England (the "Courts") are to have exclusive
jurisdiction to settle any disputes that may arise out of or in connection
with the Notes, the Residual Certificates and the Transaction Documents
(including a dispute relating to non-contractual obligations or a dispute
regarding the existence, validity or termination of any of the Notes, the
Residual Certificates or the Transaction Documents or the consequences of
their nullity) and accordingly any legal action or proceedings arising out of
or in connection with the Notes and/or the Residual Certificates and/or the
Transaction Documents may be brought in such Courts.
(b) The Transaction Documents, the Notes, the Residual
Certificates and these Residual Certificates Conditions (and any
non-contractual obligations arising out of or in connection with them) are
governed by, and shall be construed in accordance with, English Law.
17. RIGHTS OF THIRD PARTIES
No rights are conferred on any person under the Contracts (Rights of Third
Parties) Act 1999 to enforce any term of the Residual Certificates or these
Residual Certificates Conditions, but this does not affect any right or remedy
of any person which exists or is available apart from that Act.
Taxation
United Kingdom Taxation
The following is a summary of the Issuer's understanding of current United
Kingdom law and published HM Revenue and Customs practice relating only to the
United Kingdom withholding tax treatment of payments of interest (as that term
is understood for United Kingdom tax purposes) in respect of the Notes. It
does not deal with any other United Kingdom taxation implications of
acquiring, holding or disposing of the Notes. The United Kingdom tax
treatment of prospective Noteholders depends on their individual circumstances
and may be subject to change in the future. Prospective Noteholders who may
be subject to tax in a jurisdiction other than the United Kingdom or who may
be unsure as to their tax position should seek their own professional advice.
Payments of interest on the Notes may be made without deduction of or
withholding on account of United Kingdom income tax provided that the Notes
carry a right to interest and the Notes are and continue to be: (a) listed on
a "recognised stock exchange" within the meaning of Section 1005 of the Income
Tax Act 2007 ("ITA 2007"); or (b) admitted to trading on a multilateral
trading facility operated by a regulated recognised stock exchange (within the
meaning of Section 987 of the Income Tax Act 2007). The London Stock Exchange
is a recognised stock exchange. Securities will be treated as listed on the
London Stock Exchange if they are included in the Official List (within the
meaning of and in accordance with the provisions of Part 6 of the Financial
Services and Markets Act 2000) and admitted to trading on the London Stock
Exchange. Provided, therefore, that the Notes carry a right to interest and
are and remain so listed on a "recognised stock exchange", interest on the
Notes will be payable without deduction of or withholding on account of United
Kingdom income tax.
In other cases, an amount must generally be withheld from payments of interest
on the Notes that has a United Kingdom source on account of United Kingdom
income tax at the basic rate (currently 20 per cent.), subject to any
available exemptions or reliefs. However, where an applicable double tax
treaty provides for a lower rate of withholding tax (or for no tax to be
withheld) in relation to a Noteholder, HMRC can issue a notice to the Issuer
to pay interest to that Noteholder without deduction of tax (or for interest
to be paid with tax deducted at the rate provided for in the relevant double
tax treaty).
Foreign Account Tax Compliance Act
Pursuant to certain provisions of the U.S. Internal Revenue Code of 1986,
commonly known as FATCA, a "foreign financial institution" may be required to
withhold on certain payments it makes ("foreign passthru payments") to persons
that fail to meet certain certification, reporting, or related requirements.
The Issuer may be a foreign financial institution for these purposes. A
number of jurisdictions (including the United Kingdom) have entered into, or
have agreed in substance to, intergovernmental agreements with the United
States to implement FATCA ("IGAs"), which modify the way in which FATCA
applies in their jurisdictions. Under the provisions of IGAs as currently in
effect, a foreign financial institution in an IGA jurisdiction would generally
not be required to withhold under FATCA or an IGA from payments that it
makes. Certain aspects of the application of the FATCA provisions and IGAs
to instruments such as the Notes or the Residual Certificates, including
whether withholding would ever be required pursuant to FATCA or an IGA with
respect to payments on instruments such as the Notes or the Residual
Certificates, are uncertain and may be subject to change. Even if
withholding would be required pursuant to FATCA or an IGA with respect to
payments on instruments such as the Notes and the Residual Certificates, such
withholding would not apply prior to the date that is two years after the date
on which the final regulations defining "foreign passthru payment" are
published in the U.S. Federal Register and Notes or the Residual Certificates
characterised as debt (or which are not otherwise characterised as equity and
have a fixed term) for U.S. federal tax purposes that are issued on or prior
to the date that is six months after the date on which final regulations
defining "foreign passthru payments" are filed with the U.S. Federal Register
generally would be "grandfathered" for purposes of FATCA withholding unless
materially modified after such date (including by reason of a substitution of
the Issuer). Holders should consult their own tax advisers regarding how
these rules may apply to their investment in the Notes or the Residual
Certificates. In the event any withholding would be required pursuant to
FATCA or an IGA with respect to payments on the Notes or the Residual
Certificates, no person will be required to pay additional amounts as a result
of the withholding.
EU financial transaction tax
On 14 February 2013, the European Commission issued proposals, including a
draft Directive (the "Commission's Proposal"), for a financial transaction tax
("FTT") to be adopted in certain participating member states of the European
Union ("Member States") (including Belgium, Germany, Estonia (although Estonia
has since stated that it will not participate), Greece, Spain, France, Italy,
Austria, Portugal, Slovenia and Slovakia). If the Commission's Proposal were
adopted, the FTT would be a tax primarily on "financial institutions" (which
would include the Issuer) in relation to "financial transactions" (which would
include the conclusion or modification of derivative contracts and the
purchase and sale of financial instruments).
Under the Commission's Proposal, the FTT could apply in certain circumstances
to persons both within and outside of the participating Member States.
Generally, it would apply where at least one party is a financial institution,
and at least one party is established in a participating Member State. A
financial institution may be, or be deemed to be, "established" in a
participating Member State in a broad range of circumstances, including (a) by
transacting with a person established in a participating Member State or (b)
where the financial instrument which is subject to the financial transaction
is issued in a participating Member State.
The FTT may give rise to tax liabilities for the Issuer with respect to
certain transactions if the conditions for a charge to arise are satisfied and
the FTT is adopted based on the Commission's Proposal. Any such tax
liabilities may reduce amounts available to the Issuer to meet its obligations
under the Notes and may result in investors receiving less interest and/or
principal than expected. To the extent that such liabilities may arise at a
time when winding up proceedings have been commenced in respect of the Issuer,
such liabilities may be regarded as an expense of the liquidation and, as
such, be payable out of the floating charge assets of the Issuer (and its
general estate) in priority to the claims of Noteholders and other secured
creditors. It should also be noted that the FTT could be payable in relation
to relevant transactions by investors in respect of the Notes (including
secondary market transactions) if the conditions for a charge to arise are
satisfied and the FTT is adopted based on the Commission's Proposal. Primary
market transactions referred to in Article 5(c) of Regulation (EC) No
1287/2006 are expected to be exempt.
However, the FTT proposal remains subject to negotiation between participating
Member States. It may therefore be altered prior to any implementation, the
timing of which remains unclear. Additional Member States may decide to
participate. Prospective holders of the Notes are advised to seek their own
professional advice in relation to the FTT.
Subscription and Sale
BNP Paribas and HSBC Bank plc (the "Joint Arrangers"), together with Banco
Santander, S.A. and Lloyds Bank Corporate Markets PLC (together with the Joint
Arrangers, the "Joint Lead Managers" in respect of the Notes) and the Seller
have, pursuant to a subscription agreement dated on or around 22 April 2025
between the Joint Arrangers, the Joint Lead Managers, the Seller and the
Issuer (the "Subscription Agreement"), agreed with the Issuer (subject to
certain conditions) to subscribe and pay for:
(a) in the case of the Joint Lead Managers, (i) 95 per cent. of
the aggregate principal amount of each of the Class A Notes, the Class B
Notes, the Class C Notes, the Class D Notes and the Class E Notes and (ii) 100
per cent. of the aggregate principal amount of each of the Class X Notes; and
(b) in the case of the Seller, 5 per cent. of the aggregate
principal amount of each of the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes and the Class E Notes,
in each case as at the Closing Date.
The Issuer and the Seller have agreed to indemnify the Joint Arrangers and the
Joint Lead Managers against certain liabilities in connection with the issue
of the Notes and the Residual Certificates.
Except with the prior written consent of the Seller in the form of a U.S. Risk
Retention Consent and where such sale falls within the exemption provided by
Section __.20 of the U.S. Risk Retention Rules, the Notes or the Residual
Certificates offered and sold on the Closing Date may not be purchased by, or
for the account or benefit of Risk Retention U.S. Persons.
Prospective investors should note that the definition of "U.S. persons" in the
U.S. Risk Retention Rules is substantially similar to, but not identical to,
the definition of "U.S. person" in Regulation S, the definitions are not
identical and that persons who are not "U.S. Persons" under Regulation S may
be "U.S. Persons" under the U.S. Risk Retention Rules. In any event, no more
than 10 per cent. of the dollar value (or equivalent amount in the currency in
which the "ABS interests" (as defined in Section __.2 of the U.S. Risk
Retention Rules) are issued) of all Classes of Notes or the Residual
Certificates may be sold or transferred to, or for the account or benefit of,
Risk Retention U.S. Persons. Each purchaser of the Notes or the Residual
Certificates, or a beneficial interests therein, acquired in the initial
syndication of the Notes or the Residual Certificates, by its acquisition of
the Notes or the Residual Certificates or beneficial interest therein, will be
deemed to have made certain representations and agreements, including that it
(1) either (i) is not a Risk Retention U.S. Person or (ii) has obtained a U.S.
Risk Retention Consent from the Seller, (2) is acquiring such Note or Residual
Certificate or a beneficial interest therein for its own account and not with
a view to distribute such Note or Residual Certificate; and (3) is not
acquiring such Note or Residual Certificate or a beneficial interest therein
as part of a scheme to evade the requirements of the U.S. Risk Retention Rules
(including acquiring such Note or Residual Certificate through a non-Risk
Retention U.S. Person, rather than a Risk Retention U.S. Person, as part of a
scheme to evade the 10 per cent. Risk Retention U.S. Person limitation in the
exemption provided for in Section __.20 of the U.S. Risk Retention Rules
described herein). Any Risk Retention U.S. Person wishing to purchase Notes
or the Residual Certificates must inform the Seller and the Joint Lead
Managers that it is a Risk Retention U.S. Person.
This Prospectus does not constitute, and may not be used for the purpose of,
an offer or a solicitation by anyone to subscribe for or purchase any of the
Notes or the Residual Certificates in or from any country or jurisdiction
where such an offer or solicitation is not authorised or is unlawful.
United States
The Notes have not been and will not be registered under the Securities Act or
the securities laws or "blue sky" laws of any state or any other relevant
jurisdiction of the United States and therefore may not be offered or sold
within the United States or to, or for the account or benefit of, U.S. persons
(as defined in Regulation S) except pursuant to an exemption from registration
requirements. Accordingly, the Notes are being offered and sold by the Joint
Lead Managers solely to non-U.S. persons in offshore transactions in reliance
on Regulation S.
Each of the Joint Lead Managers and the Seller (in each case only in respect
of the Notes subscribed for by each of them) has agreed that, except as
permitted by the Subscription Agreement, they will not offer, sell or deliver
the Notes (a) as part of their distribution (if any) at any time or (b)
otherwise until 40 days after the later of the commencement of the offering or
the Closing Date (the "Distribution Compliance Period") within the United
States or to, or for the account or benefit of, U.S. persons, and it will have
sent to each affiliate or other dealer (if any) to which it sells Notes during
the Distribution Compliance Period a confirmation or other notice setting
forth the restrictions on offers and sales of the Notes within the United
States or to, or for the account or benefit of, U.S. persons. Terms used in
this paragraph have the meanings given to them by Regulation S under the
Securities Act. See the section entitled "Transfer Restrictions and Investor
Representations". In addition, the Notes cannot be resold in the United
States or to U.S. persons unless they are subsequently registered or an
exemption from registration is available.
In addition, until 40 days after the commencement of the offering, an offer or
sale of Notes within the United States by any dealer (whether or not
participating in the offering) may violate the registration requirements of
the Securities Act.
This Prospectus has been prepared by the Issuer for use in connection with the
offer and sale of the Notes outside the United States. The Issuer and each
of the Joint Lead Managers reserve the right to reject any offer to purchase
the Notes, in whole or in part, for any reason. This Prospectus does not
constitute an offer to any person in the United States or to any U.S.
person. Distribution of this Prospectus by any non U.S. person outside the
United States to any U.S. person or to any other person within the United
States, other than those persons, if any, retained to advise such non U.S.
person with respect thereto, is unauthorised and any disclosure, without the
prior written consent of the Issuer, of any of its contents to any such U.S.
person or other person within the United States, other than those persons, if
any, retained to advise such non U.S. person, is prohibited.
United Kingdom
Prohibition of sales to UK Retail Investors
Each of the Joint Arrangers and the Joint Lead Managers has represented and
agreed that it has not offered, sold or otherwise made available and will not
offer, sell or otherwise make available any Notes to any retail investor in
the United Kingdom. For the purposes of this provision, the expression
"retail investor" means a person who is one (or more) of the following:
(a) a retail client, as defined in point (8) of Article 2 of
Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the
European Union (Withdrawal) Act 2018 (as amended by the European Union
(Withdrawal Agreement) Act 2020) as amended, varied, superseded or substituted
from time to time ("EUWA"); or
(b) a customer within the meaning of the provisions of the FSMA
and any rules or regulations made under the FSMA to implement Directive (EU)
2016/97, where that customer would not qualify as a professional client, as
defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it
forms part of domestic law by virtue of the EUWA; or
(c) not a qualified investor as defined in Article 2 of
Regulation (EU) 2017/1129 as it forms part of domestic law by virtue of the
EUWA; and
the expression "offer" includes the communication in any form and by any means
of sufficient information on the terms of the offer and the Notes to be
offered so as to enable an investor to decide to purchase or subscribe the
Notes.
Other regulatory restrictions
Each of the Joint Lead Managers has represented to and agreed with the Issuer
that:
(a) it has only communicated or caused to be communicated, and
will only communicate or cause to be communicated, an invitation or inducement
to engage in investment activity (within the meaning of Section 21 of the
FSMA) received by it in connection with the issue or sale of any Notes in
circumstances in which Section 21(1) of the FSMA does not apply to the Issuer;
and
(b) it has complied and will comply with all applicable
provisions of the FSMA with respect to anything done by it in relation to the
Notes in, from or otherwise involving the United Kingdom.
Prohibition of Sales to EEA Retail Investors
Each of the Joint Arrangers and the Joint Lead Managers has represented and
agreed that it has not offered, sold or otherwise made available and will not
offer, sell or otherwise make available any Notes to any retail investor in
the European Economic Area. For the purposes of this provision, the
expression "retail investor" means a person who is one (or more) of the
following:
(a) a retail client as defined in point (11) of Article 4(1) of
Directive 2014/65/EU (as amended, "MiFID II"); or
(b) a customer within the meaning of Directive (EU) 2016/97 (as
amended, the "Insurance Distribution Directive"), where that customer would
not qualify as a professional client as defined in point (10) of Article 4(1)
of MiFID II; or
(c) not a qualified investor as defined in the Regulation (EU)
2017/1129; and
(d) the expression "offer" includes the communication in any
form and by any means of sufficient information on the terms of the offer and
the Notes to be offered so as to enable an investor to decide to purchase or
subscribe the Notes.
General
Each of the Issuer, the Joint Arrangers, the Joint Lead Managers and the
Seller has acknowledged that, save for having obtained the approval of the
Prospectus as a prospectus in accordance with the UK Prospectus Regulation,
applying for the admission of the Notes to listing on the Official List and to
trading on the London Stock Exchange and applying for the admission of the
Notes to trading on its regulated market, no action has been taken by the
Issuer, the Joint Arrangers, the Joint Lead Managers or the Seller that would,
or is intended to, permit a public offer of the Notes or the Residual
Certificates in any country or jurisdiction where any such action for that
purpose is required. Accordingly, each of the Issuer, the Joint Arrangers
and the Joint Lead Managers has undertaken that it will not, directly or
indirectly, offer or sell any Notes or the Residual Certificates or have in
its possession, distribute or publish any offering circular, prospectus, form
of application, advertisement or other document or information in respect of
the Notes or the Residual Certificates in any country or jurisdiction except
under circumstances that will, to the best of its knowledge and belief, result
in compliance with any applicable laws and regulations and all offers and
sales of Notes or the Residual Certificates by it will be made on the same
terms. Notwithstanding the foregoing, none of the Joint Lead Managers will
have any liability to the Issuer or the Seller for compliance by the Issuer or
the Seller or any other person with the U.S. Risk Retention Rules.
Transfer Restrictions and Investor Representations
Offers and Sales
Neither the Notes (including interests therein represented by a Global Note, a
Registered Definitive Note or a Book-Entry Interest) nor any Residual
Certificates (including interests therein represented by a Global Certificate,
a Registered Definitive Certificate or a Book-Entry Interest have been and
will not be registered under the Securities Act or any state securities laws,
and may not be offered or sold in the United States or to, or for the account
or benefit of, U.S. persons (as defined in Regulation S)) except pursuant to
such registration requirements. Accordingly, the Notes are being offered and
sold in offshore transactions pursuant to Regulation S.
Any offers, sales or deliveries of the Notes and Residual Certificates in the
United States or to U.S. persons by an investor purchasing in an offshore
transaction pursuant to Regulation S prior to the date that is 40 days after
the later of (i) the commencement of the offering of the Notes and Residual
Certificates and (ii) the Closing Date, may constitute a violation of United
States law.
Investor Representations and Restrictions on Resale
Each purchaser of the Notes or the Residual Certificates (which term for the
purposes of this section will be deemed to include any interests in the Notes
or the Residual Certificates, including Book-Entry Interests) (each initial
purchaser of Notes or Residual Certificates, together with each subsequent
transferee of Notes or Residual Certificates, is referred to herein as the
Purchaser) will be deemed to have represented and agreed as follows (terms
used in this section but not otherwise defined have the meaning given to them
under Regulation S):
(a) if the purchaser purchased the Notes or the Residual
Certificates during the initial syndication of the Notes or the Residual
Certificates, such purchaser (1) either (i) is not a Risk Retention U.S.
Person or (ii) has obtained a U.S. Risk Retention Consent, (2) is acquiring
such Note, Residual Certificate or a beneficial interest therein for its own
account and not with a view to distribute such Notes or Residual Certificates
and (3) is not acquiring such Note, Residual Certificate or a beneficial
interest therein as part of a scheme to evade the requirements of the U.S.
Risk Retention Rules (including acquiring such Note through a non-Risk
Retention U.S. Person, rather than a Risk Retention U.S. Person, as part of a
scheme to evade the 10 per cent. Risk Retention U.S. Person limitation in the
exemption provided for in Section 20 of the U.S. Risk Retention Rules);
(b) the Notes or the Residual Certificates have not been and
will not be registered under the Securities Act and such Notes or the Residual
Certificates are being offered only in a transaction that does not require
registration under the Securities Act and, if such purchaser decides to resell
or otherwise transfer such Notes or the Residual Certificates, then it agrees
that it will offer, resell, pledge or transfer such Notes or the Residual
Certificates only (i) to a Purchaser who is not a U.S. person (as defined in
Regulation S) or an affiliate of the Issuer or a person acting on behalf of
such an affiliate, and who is not acquiring the Notes or the Residual
Certificates for the account or benefit of a U.S. person and who is acquiring
the Notes or the Residual Certificates in an offshore transaction pursuant to
an exemption from registration in accordance with Rule 903 or Rule 904 of
Regulation S, or (ii) pursuant to another exemption from the registration
requirements under the Securities Act, in each case in accordance with any
applicable securities laws of any state or other jurisdiction of the United
States, provided that the agreement of such purchaser is subject to any
requirement of law that the disposition of the purchaser's property shall at
all times be and remain within its control;
(c) during the applicable distribution compliance period, such
Purchaser shall notify each transferee of Notes or the Residual Certificates
(as applicable) from it that (i) such Notes or the Residual Certificates have
not been registered under the Securities Act, (ii) the holder of such Notes or
the Residual Certificates is subject to the restrictions on the resale or
other transfer thereof described in paragraph (b) above, (iii) such
transferee shall be deemed to have represented that such transferee is
acquiring the Notes or the Residual Certificates in an offshore transaction
and that such transfer is made pursuant to an exemption from registration in
accordance with Rule 903 or Rule 904 of Regulation S and (iv) such transferee
shall be deemed to have agreed to notify its subsequent transferees as to the
foregoing; and
(d) the Issuer, the Registrar, the Joint Arrangers, the Joint
Lead Managers and their affiliates and others will rely upon the truth and
accuracy of the foregoing acknowledgements, representations and agreements.
The Notes bear a legend to the following effect:
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE SECURITIES
LAWS OR "BLUE SKY" LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED
STATES AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, A
U.S. PERSON (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) (1) AS PART
OF THEIR DISTRIBUTION AT ANY TIME OR (2) OTHERWISE PRIOR TO THE DATE THAT IS
40 DAYS AFTER THE LATER OF THE COMMENCEMENT OF THE OFFERING OF THE NOTES AND
THE CLOSING OF THE OFFERING OF THE NOTES, EXCEPT PURSUANT TO AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH ANY
APPLICABLE STATE SECURITIES LAWS.
PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE COMMENCEMENT OF THE
OFFERING OF THE NOTES AND THE CLOSING OF THE OFFERING OF THE NOTES, ANY
TRANSFER OF THE NOTES MAY ONLY BE MADE TO A NON-U.S. PERSON IN AN OFFSHORE
TRANSACTION MEETING EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT
(REGULATION S). ANY PURPORTED TRANSFER OF THIS NOTE THAT DOES COMPLY WITH
THE FOREGOING REQUIREMENTS SHALL BE NULL AND VOID AB INITIO. THE ISSUER HAS
NOT BEEN REGISTERED AND DOES NOT INTEND TO REGISTER AS AN INVESTMENT COMPANY
UNDER THE U.S. INVESTMENT COMPANY ACT OF 1940, AS AMENDED.
EXCEPT WITH THE PRIOR WRITTEN CONSENT OF THE SELLERS (A "U.S. RISK RETENTION
CONSENT") AND WHERE SUCH SALE FALLS WITHIN THE EXEMPTION PROVIDED BY SECTION
20 OF THE FINAL RULES PROMULGATED UNDER SECTION 15G OF THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED (THE "U.S. RISK RETENTION RULES"), THIS NOTE AND
BENEFICIAL INTERESTS HEREIN MAY NOT BE PURCHASED BY, OR FOR THE ACCOUNT OR
BENEFIT OF, ANY "U.S. PERSON" AS DEFINED IN THE U.S. RISK RETENTION RULES
("RISK RETENTION U.S. PERSONS"). EACH PURCHASER OF THE NOTES OR THE RESIDUAL
CERTIFICATES OR A BENEFICIAL INTEREST HEREIN ACQUIRED IN THE INITIAL
SYNDICATION OF THE NOTES OR THE RESIDUAL CERTIFICATES BY ITS ACQUISITION OF
THIS NOTE OR RESIDUAL CERTIFICATE OR A BENEFICIAL INTEREST HEREIN, WILL BE
DEEMED TO HAVE MADE, AND IN CERTAIN CIRCUMSTANCES WILL BE REQUIRED TO MAKE,
CERTAIN REPRESENTATIONS AND AGREEMENTS, INCLUDING THAT IT (1) EITHER (i) IS
NOT A RISK RETENTION U.S. PERSON OR (ii) IT HAS OBTAINED A U.S. RISK RETENTION
CONSENT FROM THE SELLER, (2) IS ACQUIRING SUCH NOTE OR A BENEFICIAL INTEREST
THEREIN FOR ITS OWN ACCOUNT AND NOT WITH A VIEW TO DISTRIBUTE SUCH NOTE, AND
(3) IS NOT ACQUIRING SUCH NOTE OR RESIDUAL CERTIFICATE OR A BENEFICIAL
INTEREST THEREIN AS PART OF A SCHEME TO EVADE THE REQUIREMENTS OF THE U.S.
RISK RETENTION RULES (INCLUDING ACQUIRING SUCH NOTE THROUGH A NON-RISK
RETENTION U.S. PERSON, RATHER THAN A RISK RETENTION U.S. PERSON, AS PART OF A
SCHEME TO EVADE THE 10 PER CENT. RISK RETENTION U.S. PERSON LIMITATION IN THE
EXEMPTION PROVIDED FOR IN SECTION 20 OF THE U.S. RISK RETENTION RULES).
EACH PURCHASER OR HOLDER OF THIS NOTE OR RESIDUAL CERTIFICATE (OR ANY INTEREST
HEREIN) SHALL BE DEEMED TO HAVE REPRESENTED, WARRANTED AND AGREED BY SUCH
PURCHASE AND/OR HOLDING THAT IT IS NOT, AND IS NOT USING THE ASSETS OF, AND
SHALL NOT AT ANY TIME HOLD THIS NOTE FOR OR ON BEHALF OF, A BENEFIT PLAN
INVESTOR OR A GOVERNMENTAL, CHURCH OR NON-U.S. PLAN WHICH IS SUBJECT TO ANY
FEDERAL, STATE, LOCAL OR NON-U.S. LAW OR REGULATION THAT IS SUBSTANTIALLY
SIMILAR TO THE PROHIBITED TRANSACTION PROVISIONS OF SECTION 406 OF THE U.S.
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, ("ERISA") OR
SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"). THE TERM "BENEFIT PLAN INVESTOR" SHALL MEAN (I) AN "EMPLOYEE
BENEFIT PLAN" (AS DEFINED IN SECTION 3(3) OF ERISA), WHICH IS SUBJECT TO TITLE
I OF ERISA, (II) A "PLAN" AS DEFINED IN AND SUBJECT TO SECTION 4975 OF THE
CODE, OR (III) AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON
OF ANY SUCH EMPLOYEE BENEFIT PLAN'S OR PLAN'S INVESTMENT IN THE ENTITY UNDER
U.S. DEPARTMENT OF LABOR REGULATIONS AT 29 C.F.R. § 2510-101, AS MODIFIED BY
SECTION 3(42) OF ERISA.
THE PURCHASER OR ACQUIROR ACKNOWLEDGES THAT THE ISSUER RESERVES THE RIGHT
PRIOR TO ANY SALE OR OTHER TRANSFER TO REQUIRE THE DELIVERY OF SUCH
CERTIFICATIONS, LEGAL OPINIONS AND OTHER INFORMATION AS THE ISSUER MAY
REASONABLY REQUIRE TO CONFIRM THAT THE PROPOSED SALE OR OTHER TRANSFER
COMPLIES WITH THE FOREGOING RESTRICTIONS. Because of the foregoing
restrictions, purchasers of Notes or Residual Certificates are advised to
consult legal counsel prior to making any offer, resale, pledge or transfer of
such securities offered and sold.
General Information
Authorisation
The issue of the Notes and Residual Certificates was authorised pursuant to a
resolution of the board of directors of the Issuer passed on 8 April 2025.
Listing of Notes
Application has been made to the Official List of the FCA for the Notes to be
admitted to the official list and to trading on the main market of the London
Stock Exchange. There can be no assurance that any such approval will be
granted or, if granted, that such listing will be maintained. The main
market of the London Stock Exchange is a regulated market for the purposes of
UK MiFIR.
The Residual Certificates will neither be listed on the London Stock
Exchange's main market nor be admitted to the Official List.
Documents Available
For the life of the Prospectus and for so long as the Notes are listed on the
Official List and admitted to trading on the main market of the London Stock
Exchange, physical copies of the following documents may be inspected at the
registered office of the Issuer (and, with the exception of paragraph (a)
below at the specified office of the Paying Agents) during usual business
hours, on any weekday (public holidays excepted) and electronic copies of the
following documents may be inspected in a manner consistent with the
requirements of SECN 6.3 and, for these purposes, the information is made
available to the Noteholders, the FCA, the Bank of England, the PRA and/or the
Pensions Regulator (or their successors) and, upon request, to potential
investors in the Notes, on the datasite hosted by the UK Securitisation
Repository at https://www.euroabs.com/IH.aspx?d=27204:
(a) the memorandum and articles of association of each of the
Issuer and Holdings;
(b) the Agency Agreement, the Deed of Charge, the Cash
Management Agreement, the Master Definitions and Construction Schedule, the
Mortgage Sale Agreement, the Corporate Services Agreement, the Bank Account
Agreement, any Custody Agreement, the Collection Account Declaration of Trust,
the Expenses Account Declaration of Trust, the Servicing Agreement, the
Liquidity Facility Agreement, the Bank Account Agreement, the Share Trust
Deed, the Cross-collateral Mortgage Rights Deed, the Deed Poll, the Trust Deed
and the Swap Agreements; and
(c) the most recently published audited annual financial
statements of the Issuer. The Issuer does not publish interim accounts.
Cleared Notes
The Notes and the Residual Certificates have been accepted for clearance
through Euroclear and Clearstream, Luxembourg under the following ISINs and
Common Codes:
Class of Notes/ Residual Certificates ISIN Common Code
Class A Notes XS3037718163 303771816
Class B Notes XS3037718247 303771824
Class C Notes XS3037718593 303771859
Class D Notes XS3037718916 303771891
Class E Notes XS3037719138 303771913
Class X Notes XS3037719302 303771930
RC1 Residual Certificates XS3037710699 303771069
RC2 Residual Certificates XS3037717868 303771786
The Notes and the Residual Certificates have the following CFIs and FISNs
codes:
Class of Notes CFI FISN
Class A Notes DAVNPR ATLAS FUNDING 2/VAR 99981231
Class B Notes DAVXPR ATLAS FUNDING 2/VAR 99981231 SUB
Class C Notes DAVXPR ATLAS FUNDING 2/VAR 99981231 SUB
Class D Notes DAVXPR ATLAS FUNDING 2/VAR 99981231 SUB
Class E Notes DAVXPR ATLAS FUNDING 2/VAR 99981231 SUB
Class X Notes DAVXPR ATLAS FUNDING 2/VAR 99981231 SUB
RC1 Residual Certificates DAVXPR ATLAS FUNDING 2/VAR 99981231 SUB
RC2 Residual Certificates DAVXPR ATLAS FUNDING 2/VAR 99981231 SUB
Significant or Material Change
Since 28 February 2025 (being the date of incorporation of each of the Issuer
and Holdings), there has been (a) no material adverse change in the financial
position or prospects of the Issuer or Holdings and (b) no significant change
in the financial or trading position of the Issuer or Holdings.
Litigation
None of the Issuer or Holdings is or has been involved in any governmental,
legal or arbitration proceedings (including any such proceedings which are
pending or threatened of which the Issuer or Holdings respectively is aware)
since 28 February 2025 (being the date of incorporation of each of the Issuer
and Holdings) which may have, or have had in the recent past, significant
effects upon the financial position or profitability of the Issuer or Holdings
(as the case may be).
Accounts
No statutory or non-statutory accounts within the meaning of Sections 434 and
435 of the Companies Act 2006 (as amended) in respect of any financial year of
the Issuer have been prepared. The accounting reference date of the Issuer
is 31 December and the first statutory accounts of the Issuer will be drawn up
to 31 December 2025.
Post-issuance information
UK Securitisation Framework Reporting
The Issuer will procure that the Cash Manager will prepare the monthly UK
Investor Report detailing, inter alia, certain aggregated loan data in
relation to the Portfolio as required by and in accordance with Article SECN
6.2.1R(5), SECN 11 (including its Annexes) and SECN 12 (including its
Annexes), and shall procure that the Cash Manager delivers such reports to the
Servicing Facilitator in accordance with the provisions of the Cash Management
Agreement.
The Issuer will procure that the Servicer will prepare on a monthly basis
certain loan-level information in relation to the Portfolio in respect of each
Collection Period as required by and in accordance with SECN 6.2.1R(1) and
SECN 11 (including its Annexes) and SECN 12 (including its Annexes) (and which
shall be provided in the form of the standardised template set out in SECN 11
Annex 2R and SECN 12 Annex 2R or as otherwise agreed between the Issuer and
the Servicer) (the "UK SR Data Tape").
The Servicing Facilitator will publish each Investor Report and each UK SR
Data Tape in a manner consistent with the requirements of SECN 6.3 and, for
these purposes, the information is made available to the Noteholders, the FCA,
the Bank of England, the PRA and/or the Pensions Regulator (or their
successors) and, upon request, to potential investors in the Notes, on the
datasite hosted by the UK Securitisation Repository at
https://www.euroabs.com/IH.aspx?d=27204 being a website which conforms with
the requirements set out in SECN 6.3, no later than one month after the
Interest Payment Date in relation to which such reports were prepared.
The Issuer shall also procure that the Servicing Facilitator shall publish in
a manner consistent with the requirements of SECN 6.3 and, for these purposes,
the information is made available to the Noteholders, the FCA, the Bank of
England, the PRA and/or the Pensions Regulator (or their successors) and, upon
request, to potential investors in the Notes, on the datasite hosted by the UK
Securitisation Repository at https://www.euroabs.com/IH.aspx?d=27204, being a
website which conforms with the requirements set out in SECN 6.3:
(a) any information required to be reported pursuant to SECN
6.2.1R(6), SECN 6.2.1R(7), SECN 11 (including its Annexes) and SECN 12
(including its Annexes) (as applicable) without delay. Such information will
also be made available, on request, to potential holders of the Notes; and
(b) as soon as reasonably practical post the issuance of the
Notes, copies of the Transaction Documents and this Prospectus.
The Servicing Facilitator shall make the information referred to above
available to the holders of any of the Notes, relevant competent authorities
and, upon request, to potential investors in the Notes not later than one
month after the Interest Payment Date in relation to which such information
was prepared. To the extent any technical standards prepared under the UK
Securitisation Framework come into effect after the date of this Prospectus
and require such reports or information to be published in a different manner
or on a different website, the Issuer shall procure that the Servicing
Facilitator complies with the requirements of such technical standards when
publishing such reports or information.
The Issuer confirms that the Servicing Facilitator has made available the
draft Transaction Documents, the draft Prospectus as required by SECN
6.2.1R(2) prior to the pricing of the Notes to the competent authorities and
(upon request) to potential investors in the Notes in a manner consistent with
the requirements of SECN 6.3 and, for these purposes, the information is made
available to the Noteholders, the FCA, the Bank of England, the PRA and/or the
Pensions Regulator (or their successors) and, upon request, to potential
investors in the Notes, on the datasite hosted by the UK Securitisation
Repository at https://www.euroabs.com/IH.aspx?d=27204.
Other than as outlined above, the Issuer does not intend to provide post
issuance transaction information regarding the Notes or the Loans.
EU Securitisation Regulation Reporting
The Issuer has appointed the Servicer and the Servicing Facilitator to perform
certain of the Issuer's contractually agreed obligations under Article 7 of
the EU Securitisation Regulation, as such requirements exist solely on the
Closing Date.
The Servicer on behalf of the Issuer shall prepare the EU SR Data Tape as
required by and in accordance with Article 7(1)(a) of the EU Securitisation
Regulation and the EU Article 7 Technical Standards applicable as at the
Closing Date.
The Servicing Facilitator will publish each EU Investor Report, the
Prospectus, each Transaction Document and each EU SR Data Tape in a manner
consistent with the requirements of Article 7(2) of the EU Securitisation
Regulation (as such requirements exist solely on the Closing Date) and, for
these purposes, the information is made available to the Noteholders, the
competent authorities and, upon request, to potential investors in the Notes,
on the datasite hosted by EuroABS at https://www.euroabs.com/IH.aspx?d=27204
(or such other website which may be available for such purpose and notified by
the Servicer to the Seller, the Issuer, the Cash Manager, the Security
Trustee, the Note Trustee, each Rating Agency and the Noteholders from time to
time).
The Servicing Facilitator shall publish without delay, (i) any inside
information relating to the Issuer which the Issuer determines it is obliged
to make pursuant to Article 7(1)(f) of the EU Securitisation Regulation and
will be disclosed to the public by the Issuer; or (ii) any significant event
pursuant to Article 7(1)(g) of the EU Securitisation Regulation, in each case
in accordance with the EU Article 7 Technical Standards, as such requirements
exist solely on the Closing Date.
In the case of each of the Issuer's contractually agreed obligations under
Article 7 of the EU Securitisation Regulation described above such obligations
only apply:
(a) as such articles and/or requirements under the EU
Securitisation Regulation and the EU Article 7 Technical Standards described
above are interpreted and applied solely on the Closing Date (and, for the
avoidance of doubt, neither the Issuer nor the Seller, Servicer, the Servicing
Facilitator or Cash Manager will be under any obligation to comply with any
amendments to applicable EU technical standards, guidance or policy statements
introduced after the Closing Date);
(b) in the form or template prescribed under the EU
Securitisation Regulation and the EU Article 7 Technical Standards as at the
Closing Date only or as otherwise adopted by the Servicer (in its sole
discretion) from time to time;
(c) until such time when the Seller is able to certify to the
Issuer and the Note Trustee that a competent EU authority has confirmed that
the satisfaction of the requirements relating to the UK Securitisation
Framework will also satisfy the requirements of Article 7 of the EU
Securitisation Regulation due to the application of an equivalence regime or
similar analogous concept;
(d) subject always to any requirement of law; and
(e) provided that:
(i) neither the Issuer nor the Seller, Servicer, the Servicing
Facilitator or Cash Manager will be in breach of such obligation if it fails
to so comply due to events, actions or circumstances beyond its control; and
(ii) the Issuer is only required to comply with such obligation
to the extent that the disclosure requirements under Article 7 of the EU
Securitisation Regulation and EU Article 7 Technical Standards (in each case,
as in force as at the Closing Date) remain in effect.
"EU Article 7 ITS" means Commission Implementing Regulation (EU) 2020/1225
including any relevant guidance and policy statements in relation thereto
published by the EBA, the ESMA, the EIOPA (or their successor) or by the
European Commission.
"EU Article 7 RTS" means Commission Delegated Regulation (EU) 2020/1224
including any relevant guidance and policy statements in relation thereto
published by the EBA, the ESMA, the EIOPA (or their successor) or by the
European Commission.
"EU Article 7 Technical Standards" means the EU Article 7 RTS and the EU
Article 7 ITS.
"EBA" means the European Banking Authority.
"EEA" means the European Economic Area.
"EIOPA" means the European Insurance and Occupational Pensions Authority.
"ESMA" means the European Securities and Markets Association.
No other activities since incorporation
Since the date of its incorporation, the Issuer has not entered into any
contracts or arrangements not being in the ordinary course of business.
Websites
Any website referred to in this document does not form part of the Prospectus.
Miscellaneous
The Issuer confirms that the Loans backing the issue of the Notes have
characteristics that demonstrate capacity to produce funds to service any
payments due and payable on the Notes. Investors are advised that this
confirmation is based on the information available to the Issuer at the date
of this Prospectus and may be affected by the future performance of such
assets backing the issue of the Notes. Investors are advised to review
carefully any disclosure in the Prospectus together with any amendments or
supplements thereto.
Index of Terms
$................................................................... 6
£................................................................... 6
€................................................................... 6
3 month Term SONIA.............................. 136
ABS interests.............................................. 47
Account...................................................... 92
Account Bank Rating.................................. 94
Accrued Interest....................................... 234
Act.............................................................. 50
Additional Closing Portfolio Mortgage Loans ii
Additional Interest.................................... 289
Additional Mortgage Loan Conditions 62, 177
Additional Mortgage Loan Portfolio Tests 179
Additional Mortgage Loan Purchase Consideration 164
Additional Mortgage Loan Purchase Date ii, 135
Additional Mortgage Loans.................. iii, 135
Additional Servicing Costs........................ 191
Adequate.................................................... 99
Agency Agreement................... 200, 254, 291
Agent Bank................................. 58, 254, 291
Alternative Base Rate....................... 279, 307
Appointee................................................. 234
Arrears of Interest..................................... 234
Article 3(1)(b) Credit Agreement.............. 172
Asset Test................................................. 180
AST.................................................... 21, 161
AT...................................................... 21, 161
Authorised Denomination......................... 244
Authorised Investments............................ 198
Available Liquidity Commitment.............. 212
Available Principal Receipts............... 85, 236
Available Revenue Receipts............... 83, 229
Back-Up Servicing Facilitator..................... 58
Bank Account Agreement......................... 213
Bank accounts.......................................... 259
Bank Rate................................................. 262
Banking Act................................................ 41
Base Rate Modification.................... 279, 307
Base Rate Modification Certificate... 279, 307
Basic Terms Modification................. 275, 303
BCBS.......................................................... 38
Beneficial Title Transferee....................... 118
billion........................................................... 7
Block Voting Instruction........................... 286
Block Votingn Instruction......................... 313
Book-Entry Interests................................. 244
Borrower.................................................... 60
Borrower Buildings Policies...................... 180
Borrower Buildings Policy........................ 180
Borrowers................................................... 60
Breathing Space Regulations..................... 162
Business Day.................................... 180, 261
Buy-to-Let Loans........................................ 17
Buy-to-Let Mortgage Loans........................ 50
Calculated Principal Receipts.................... 264
Calculated Revenue Receipts.................... 264
Calculation Date....................................... 180
Call Option............................................... 118
Call Option Redemption Date................... 234
Capitalised Amounts................................. 235
Cash Management Agreement.................. 200
Cash Manager............................................. 56
Cash Manager Termination Events........... 204
CBTL........................................................ 155
CBTL Loan............................................... 180
CCA......................................................... 155
CCJ........................................................... 180
Certificate Book-Entry Interests................ 249
Certificate of Title.................................... 181
Certificateholders....................................... 70
CGT............................................................ 50
Charged Assets................................. 272, 300
CIGA.......................................................... 42
CJEU........................................................ 158
Class................................................. 254, 291
Class A and B Liquidity Reserve Fund..... 217
Class A and B Liquidity Reserve Fund Account 203, 218
Class A and B Liquidity Reserve Fund Excess Amount 218
Class A and B Liquidity Reserve Fund Release Amount 217
Class A and B Liquidity Reserve Fund Required Amount 218
Class A Liquidity Deficit.......................... 218
Class A Noteholders................................. 257
Class A Notes..................................... 70, 254
Class A Principal Deficiency Sub-Ledger. 221
Class A Redemption Date......................... 220
Class B Liquidity Deficit.......................... 218
Class B Noteholders................................. 257
Class B Notes..................................... 70, 254
Class B Principal Deficiency Sub-Ledger. 221
Class B Redemption Date......................... 220
Class C Noteholders................................. 257
Class C Notes..................................... 70, 254
Class C Principal Deficiency Sub-Ledger. 221
Class D Noteholders................................. 257
Class D Notes..................................... 70, 254
Class D Principal Deficiency Sub-Ledger. 221
Class E Noteholders.................................. 257
Class E Notes...................................... 70, 254
Class E Principal Deficiency Sub-Ledger.. 221
Class X Noteholders................................. 257
Class X Notes..................................... 70, 254
Clearing Obligation..................................... 45
Clearing System.......................................... 79
Clearstream, Luxembourg......... 249, 255, 292
Client Manual........................................... 189
Closing Date................................. ii, 254, 291
Closing Loans........................................... 164
Closing Portfolio........................................... ii
Closing Portfolio Initial Consideration........ 62
CLTV Ratios............................................. 149
CMA......................................................... 158
CMA Guidance......................................... 158
COBS........................................................... 5
Code........................................... vii, 265, 297
CODE....................................................... 324
Collateral Obligation................................... 45
Collateralised Notes.................................. 164
Collection Account................................... 144
Collection Account Bank.................... 57, 188
Collection Account Bank Rating................. 94
Collection Account Bank Ratings............... 94
Collection Account Declaration of Trust.. 215
Collection Account Trust.......................... 215
Collection Period...................................... 181
Collection Period Start Date...................... 181
Collections................................................ 144
Colllection Account Issuer Trust Share..... 215
Commission's Proposal............................. 318
Common Safekeeper.................................. 51
Competent Authority................................ 186
Compounded Daily SONIA...................... 261
Conditions................................... iv, 254, 261
Consumer Buy-to-Let Loan...................... 155
Consumer Duty.................................. 21, 160
Co-ordination Committee......................... 194
COR......................................................... 101
Corporate Services Agreement.................. 214
Corporate Services Provider....................... 58
Courts............................................... 290, 316
CPR.......................................................... 115
CPUTR..................................................... 158
CRA......................................................... 157
Critical Obligations Rating........................ 101
Cross-collateral Mortgage......................... 196
Cross-collateral Mortgage Rights Deed..... 196
Cross-collateral Rights.............................. 196
Cross-collateralised Mortgage Loan............ 65
Current Balance.......................................... 61
Current Loan to Value Ratios................... 149
Custodian................................................. 214
Custody Agreement.......................... 214, 234
Cut-Off Date............................................ 181
d............................................................... 261
Data Protection Laws................................ 186
Data Protection Legislation....................... 181
Day Count Fraction.................................. 224
DBRS............................................... v, 94, 98
DBRS Equivalent Chart............................ 101
DBRS Minimum Equivalent Rating.......... 102
DBRS:........................................................ 98
Deed of Charge................................ 254, 291
Deed Poll.................................................. 120
Default..................................................... 181
Deferred Interest....................................... 289
Definitive Residual Certificates................ 292
Delinquent................................................ 181
Deposit Account......................................... 92
Determination Period........................ 263, 295
Direct Debit................................................ 85
Direct Debiting Scheme............................ 190
Disposal of assets............................. 258, 294
Disqualified Loan..................................... 178
Disqualified Loan Sale Date..................... 181
Disruption Event....................................... 192
Distance Marketing Regulations................ 156
Distribution Compliance Period................ 320
distributor..................................................... 5
Dividends or distributions......................... 259
DM Regulations........................................ 173
DMCCA................................................... 159
d(o).............................................................. 261
Early Repayment Charge.......................... 234
Early Termination Date............................. 240
Early Termination Event........................... 226
EBA.......................................................... 329
EEA...................................................... 4, 329
EIOPA...................................................... 329
Eligible Person.................................. 285, 313
EMIR Amendment............................ 281, 308
Energy Efficiency Regulations 2015........ 161
Enforced Loan.......................................... 181
Enforcement Notice.......................... 270, 298
Enforcement Procedures........................... 194
Enhanced Amortisation Amounts....... 86, 236
EPC.......................................................... 161
Equitable and Beneficial Interest.............. 259
ERISA................................................ vii, 324
ESMA............................................... 113, 329
EU Article 7 ITS....................................... 329
EU Article 7 RTS...................................... 329
EU Article 7 Technical Standards............. 329
EU CRA Regulation...................................... v
EU EMIR.................................... 25, 281, 308
EU Investor Report..................................... 80
EU Retained Interest.................................... vi
EU Risk Retention Requirements................. vi
EU Securitisation Regulation....................... vi
EU SR Data Tape........................................ 81
euro.............................................................. 6
Euroclear.................................. 249, 255, 292
EUWA.................................................. ii, 320
Event of Default............................... 270, 298
Exchange Event........................................ 250
Exercise Notice......................................... 118
Expenses.................................................. 231
Expenses Account.................................... 144
Expenses Account Declaration of Trust.... 215
Expenses Account Issuer Trust Share....... 215
Expenses Account Trust........................... 215
Expenses Ledger....................................... 202
Expenses Unused Amount........................ 202
Extension Refusal..................................... 210
Extraordinary Resolution............ 76, 285, 313
FATCA....................................... 25, 265, 297
FCA.................................................. ii, 7, 110
FCA Due Diligence Rules......................... 110
FCA Handbook........................................ 110
FCA Transparency Rules.......................... 110
FCs............................................................. 45
Final Additional Mortgage Loan Purchase Date iii
Final Maturity Date............................. 72, 266
Final Redemption Date....................... 86, 216
First Interest Payment Date................. 13, 259
Fitch......................................................... 102
Fixed Rate Loan....................................... 181
Flexible Loan............................................ 181
flip clauses................................................. 43
foreign passthru payments........................ 317
FSA.............................................................. 7
FSMA....................................................... 155
FTT........................................................... 318
Further Advance....................................... 137
GBP.............................................................. 6
GDPR....................................................... 186
Global Note.......................................... 1, 255
Global Residual Certificate................... 1, 292
HA 1988............................................. 21, 161
Hedge Subordinated Amounts.................. 234
HMO........................................................ 136
HNW........................................................ 143
Holdings..................................................... 56
HSBC Swap Agreement............................... iv
HSBC Swap Provider............................ 56, 57
i................................................................ 261
ICR........................................................... 142
ICSD......................................................... 248
IGAs......................................................... 317
Indebtedness............................................. 259
Indirect Participants.................................. 244
Initial Advance......................................... 137
Initial Consideration................................... 62
Initial DBRS Rating Event.......................... 98
Insolvency Event...................................... 165
Insurance Distribution Directive........... 5, 321
Insurance Policies..................................... 181
Insurance Policy....................................... 181
Interest Amounts...................................... 262
Interest Determination Date...................... 261
Interest Determination Ratio..................... 264
Interest Payment Date............... 136, 260, 295
Interest Period................................... 234, 260
Investment Company Act........................... vii
Investor Reports......................................... 80
Issuer.......................................... 56, 254, 291
Issuer Account Bank.................................. 57
Issuer Account Rate.................................. 214
Issuer Accounts.......................................... 93
Issuer Certificate......................... 30, 269, 290
Issuer Power of Attorney.......................... 198
Issuer Profit Account.......................... 92, 203
Issuer Profit Amount................................ 232
Issuer Substitution Condition............ 287, 314
Issuer Swap Amount................................. 224
ITA 2007.................................................. 317
Joint Arrangers................................... 59, 319
Joint Lead Managers........................... 59, 319
Land Registry............................................. 60
LBD.......................................................... 261
Lead Manager Related Person..................... 31
Ledgers..................................................... 201
Legal Title Holder..................................... 189
Legal Title Transferee............................... 118
Lendco................................................. ii, 128
Lending Criteria.......................................... 64
LF Cancellation Date................................ 208
LF Drawdown Date.................................. 212
LF Relevant Event.................................... 208
LF Replacement Date............................... 208
LF Required Amount................................ 208
LF Required Ratings................................. 211
Liquidity Commitment.............................. 207
Liquidity Commitment Period................... 206
Liquidity Documents................................ 208
Liquidity Drawing....................................... 86
Liquidity Facility...................................... 206
Liquidity Facility Agreement.................... 206
Liquidity Facility Interest Period............... 212
Liquidity Facility Provider.......................... 59
Liquidity Repayment Amount.................. 209
Loan Files................................................. 166
Loan Note Payment.................................. 178
Loan Repurchase Notice........................... 177
Loan Warranties....................................... 167
Loans........................................................ 164
Long-Term DBRS Rating............................ 99
Losses....................................................... 222
LPA.......................................................... 145
LRF Date.................................................. 209
Master Definitions and Construction Schedule 198, 254, 291
Member States.......................................... 318
Merger...................................................... 259
MiFID II............................................... 4, 321
Modelling Assumptions............................ 115
Moderate.................................................... 99
Modification Certificate.................... 279, 307
Monthly Increase...................................... 189
Monthly Instalment................................... 181
Moody's................................................... 102
Mortgage................................................... 182
Mortgage Conditions................................. 182
Mortgage Deed......................................... 182
Mortgage Sale Agreement......................... 164
Most Senior Class............................. 273, 300
Negative pledge........................................ 258
NFC-........................................................... 45
NFC+.......................................................... 45
n(i).............................................................. 261
NISAs......................................................... 17
No modification or waiver........................ 259
Non-Responsive Rating Agency......... 29, 289
Note Principal Payment............................ 267
Note Trustee............................... 58, 254, 291
Noteholders................................................ 70
Notes...................................... v, 70, 254, 256
Notice of Non-Satisfaction of Product Switch/Permitted Fee Capitalisation
Amount Conditions 173
Notice of Termination with Cause............ 192
Notional Amount...................................... 224
NSS.......................................................... 248
Observation Period................................... 261
offer................................................. 320, 321
Offer Conditions...................................... 182
Official List.................................................. ii
OFT.......................................................... 156
OLTV Ratios............................................ 148
Ombudsman....................................... 21, 158
OPS.......................................................... 110
OPS Due Diligence Rules......................... 110
Option Holder........................................... 120
Optional Purchase Collections.................. 120
Optional Purchase Commencement Date.. 120
Optional Purchase Completion Date......... 118
Optional Purchase Price............................ 119
Optional Redemption Date......................... 86
Ordinary Resolution................... 76, 285, 312
Original Liquidity Commitment................ 207
Original Loan to Value Ratios................... 148
OTC............................................................ 45
Partial Swap Unwind................................ 227
Participants............................................... 244
Paying Agent............................................ 291
Paying Agents........................................... 254
PDL Condition.......................................... 237
PEPs........................................................... 17
Perfection Event....................................... 165
Period End Date........................................ 225
Permitted Fee Capitalisation Amount 174, 182
Permitted Variation................................... 182
Personal Data............................................ 186
PG............................................................ 141
Pool Factor............................................... 267
Portfolio............................................... ii, 164
Portfolio Reference Date............................ 16
Portfolio Test Date.................................... 182
Post-Enforcement Priority of Payments.... 238
pounds.......................................................... 6
PRA.............................................................. 7
Pre-Closing Collections............................... 62
Pre-Enforcement Principal Priority of Payments 236
Pre-Enforcement Revenue Priority of Payments 231
Pre-Funding Reserve................................... 62
Pre-Funding Reserve Ledger............... 62, 202
Pre-Funding Unused Amount..................... 63
Presentation Date.............................. 266, 297
Previous Cash Liquidity Reserve Accumulated 209
PRIIPs Regulation......................................... 5
Primary Servicing Fee............................... 191
Principal Addition Amount....................... 221
Principal Amount Outstanding.................. 269
Principal Deficiencies............................... 202
Principal Deficiency Ledger..................... 202
Principal Deficiency Sub-Ledger.............. 221
Principal Ledger........................................ 202
Principal Paying Agent........ 58, 245, 254, 291
Principal Receipts..................................... 235
Priority of Payments................................. 238
Product Switch.......................................... 182
Product Switch/Permitted Fee Capitalisation Amount Conditions
173
Property.................................................... 182
Proposed Amendment................................ 25
Prospectus.................................................... ii
Provisional Portfolio................................. 146
proxy................................................ 286, 314
Prudent Mortgage Lender.................... 64, 144
Public Long Term Rating.......................... 102
Purchase Notes......................................... 259
Purchaser.................................................. 322
Qualified Foreign Nationals...................... 141
RAO......................................................... 155
Rate of Interest......................................... 260
Rates of Interest........................................ 260
rating.......................................................... 29
Rating Agencies............................................ v
Rating Agency Confirmation.............. 29, 289
ratings......................................................... 29
RC1 Certificateholders............................... 70
RC1 Payment............................................ 295
RC1 Payment Amount.............................. 295
RC1 Residual Certificates......................... 291
RC2 Certificateholders............................... 70
RC2 Payment............................................ 295
RC2 Payment Amount.............................. 295
RC2 Residual Certificates......................... 291
Re Leyland Daf.......................................... 44
Receiver................................................... 183
Reconciliation Amount............................. 264
Record Date...................................... 245, 251
Redemption Event.................................... 269
Redemption Fee................................ 191, 234
Register............................................. 256, 292
Registered Definitive Notes.............. 247, 255
Registrar..................................... 58, 254, 291
Regulated Credit Agreement..................... 155
Regulated Mortgage Contract.................... 155
Regulated Mortgage Loan......................... 183
Regulation S............................................... vii
REGULATION S....................................... i, 2
Regulatory Direction................................. 107
Regulatory Requirements.......................... 186
Related Security........................................ 183
Relevant Authorisations............................ 119
Relevant Class............................................ 80
Relevant Date................................... 270, 298
Relevant Information.................................. 32
Relevant Margin....................................... 261
Relevant Parties............................................ 1
Relevant Party.................................. 278, 305
relevant PDL Condition............................ 237
Relevant Person.......................................... 80
RELEVANT PERSONS................................ ii
Relevant Screen.................................. 81, 288
Relevant Step-Up Margin.......................... 262
Renting Homes Act................................... 160
Repeat Redemption Statement Fee............ 235
Replacement Swap Agreement................. 235
Replacement Swap Premium.................... 235
repurchase.................................................. 60
repurchased................................................ 60
Required Swap Rating.............................. 225
Requirement of Law................................. 107
Residual Certificateholders....................... 291
Residual Certificates................... 70, 291, 292
Residual Certificates Conditions....... 254, 291
Residual Payment..................................... 295
Residual Payment Amount....................... 296
Restrictions on activities........................... 258
Restructuring Plan....................................... 42
retail investor................................ 5, 320, 321
Retained Interest.................................. vi, 110
Reuters Screen SONIA Page..................... 262
Revenue Ledger........................................ 202
Revenue Receipts..................................... 229
RICS qualified valuers.............................. 142
RICS Valuation Standards........................ 142
Risk Retainer...................................... 56, 128
Risk Retention U.S. Person......................... 47
Risk Retention U.S. Persons................... 6, 47
RISK RETENTION U.S. PERSONS... i, 2, 323
S&P.......................................... v, 94, 99, 100
Initial Required Ratings........................... 99
Initial Required Ratings:.......................... 99
Subsequent Required Ratings................ 100
S&P framework.......................................... 99
S&P:......................................................... 100
sale..................................................... 60, 164
SDLT.......................................................... 50
SEC............................................................ vii
SECN........................................................ 110
Secured Creditors..................................... 198
Secured Obligations.................................... 79
Securities Act.............................................. vii
SECURITIES ACT............................. i, 1, 323
Securitisation Tax Regulations.................... 49
Security.............................................. 71, 197
Security Trustee.......................... 57, 254, 291
sell.............................................................. 60
Seller.............................................. ii, 56, 128
Seller Power of Attorney.......................... 198
Senior Expenses Deficit............................ 221
Servicer...................................................... 56
Servicer Power of Attorney...................... 198
Servicer Report......................................... 204
Servicer Reports....................................... 204
Servicer Termination Event.............. 104, 191
Services.................................................... 184
Servicing Agreement................................. 184
Servicing Facilitator.................................. 128
Servicing Facilitator Termination Event 106, 195
Servicing Fee............................................ 109
Share Trust Deed...................................... 198
Share Trustee...................................... 59, 126
Similar Law................................................ vii
sold............................................................. 60
SONIA................................................. iv, 262
SONIA Reference Rate............................. 262
SONIA(i-5LBD).............................................. 261
Special Servicing...................................... 191
Special Servicing Fee................................ 191
Standard Documentation.......................... 183
Standby Account........................................ 92
Standby Drawing...................................... 211
Statistical Information................................... 8
Sterling......................................................... 6
Strong......................................................... 99
Subscription Agreement............................ 319
Subsequent DBRS Rating Event................. 98
Swap Agreement.................................. iv, 223
Swap Calculation Period........................... 225
Swap Cash Collateral Account............ 92, 240
Swap Collateral................................. 235, 240
Swap Collateral Account Priority of Payments 240
Swap Collateral Account Surplus.............. 242
Swap Collateral Accounts................... 93, 240
Swap Collateral Trigger Event................... 214
Swap Credit Support Annex..................... 240
Swap Floating Rate Determination Date.... 225
Swap Payment Date.................................. 225
Swap Provider Default.............................. 235
Swap Provider Downgrade Event............. 235
Swap Provider Swap Amount................... 224
Swap Rate Modification................... 281, 308
Swap Rate Modification Certificate.. 281, 308
Swap Securities Collateral Account.... 93, 240
Swap Tax Credits...................................... 235
Switch Date.............................................. 173
Tax Advice............................................... 118
Taxes................................................ 270, 297
TCE FC....................................................... 45
TCE NFC-................................................... 45
TCE NFC+.................................................. 45
Testing Date................................................ 18
Third Party Amounts.......................... 85, 230
Third Party Purchaser............................... 120
Title Deeds............................................... 166
Title Indemnity Policies............................ 183
Transaction................................................... 4
Transaction Documents............................ 198
Transaction Expenses............................... 202
Transaction Parties....................................... vi
Transaction Party......................................... vi
Transfer Costs.......................................... 235
Trust Corporation..................................... 200
Trust Deed.................................. 27, 254, 291
U.S. activities............................................ 259
U.S. dollars................................................... 6
U.S. person................................................. 47
U.S. PERSONS............................................. 2
U.S. Risk Retention Consent......................... 5
U.S. RISK RETENTION CONSENT.. i, 2, 323
U.S. Risk Retention Rules........................ vi, 6
U.S. RISK RETENTION RULES....... i, 2, 323
U.S.$............................................................ 6
UK................................................................ v
UK Benchmarks Regulation.................. iv, 34
UK CRA Regulation..................................... v
UK CRR................................................... 112
UK Due Diligence Rules........................... 110
UK EMIR................................... 25, 281, 308
UK Investor Report.................................... 80
UK MiFIR................................................. ii, 5
UK MiFIR Product Governance Rules.......... 5
UK PRIIPs Regulation.................................. 5
UK Prospectus Regulation............................ ii
UK Reporting Entity................................. 112
UK Retained Interest.................................... v
UK Risk Retention Requirements................. v
UK Securitisation Framework..................... 39
UK Securitisation Regulation...................... 39
UK Securitisation Repository.................... 112
UK SR Data Tape............................... 81, 327
UK STS Securitisation.............................. 112
UK Transparency Rules............................ 110
Valuation Report...................................... 166
VAT......................................................... 109
Volcker Rule........................................ vii, 46
Voting Certificate............................. 286, 313
Warehouse Borrowers................................. iv
Warehouse Swap Provider........................... iv
Weak.......................................................... 99
Weighted Average Asset Margin............... 184
Whole Beneficial Title.............................. 118
Whole Legal Title..................................... 118
WLTT......................................................... 50
ISSUER
Atlas Funding 2025-1 PLC
10th Floor, 5 Churchill Place
London E14 5HU
United Kingdom
SELLER
Lendco Limited
33 Gracechurch Street
London
EC3V 0BT
SERVICER
Lendco Mortgage Servicing Limited
33 Gracechurch Street
London EC3V 0BT
CASH MANAGER, AGENT BANK, ISSUER ACCOUNT BANK, REGISTRAR
AND PRINCIPAL PAYING AGENT
Citibank, N.A., London Branch
Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB
JOINT ARRANGERS
BNP Paribas HSBC Bank plc
16 boulevard des Italiens 8 Canada Square
75009 Paris London E14 5HQ
France
JOINT LEAD MANAGERS
Banco Santander, S.A. BNP Paribas HSBC Bank plc Lloyds Bank Corporate Markets PLC
Ciudad Grupo Santander 16 boulevard des Italiens 8 Canada Square 25 Gresham Street
Avenida de Cantabria s/n 75009 Paris London E14 5HQ London, EC2V 7HN
France
Edificio Encinar United Kingdom
28660, Boadilla del Monte
Madrid, Spain
NOTE TRUSTEE AND SECURITY TRUSTEE
Citicorp Trustee Company Limited
Citigroup Centre, Canada Square, Canary Wharf,
London E14 5LB
LEGAL ADVISERS TO THE SELLER
Slaughter and May
One Bunhill Row
London EC1Y 8YY
LEGAL ADVISERS TO THE JOINT ARRANGERS AND JOINT LEAD MANAGERS
Allen Overy Shearman Sterling LLP
One Bishops Square
London E1 6AD
LEGAL ADVISERS TO THE NOTE TRUSTEE AND THE SECURITY TRUSTEE
Allen Overy Shearman Sterling LLP
One Bishops Square
London E1 6AD
1 (#_ftnref1) The comparable provision from Regulation S
is "(ii) any partnership or corporation organised or incorporated under the
laws of the United States."
2 The comparable provision from Regulation S is
"(vii)(B) formed by a U.S. person principally for the purpose of investing in
securities not registered under the Securities Act, unless it is organised or
incorporated, and owned, by accredited investors (as defined in 17 CFR
230.501(a)) who are not natural persons, estates or trusts."
* (#_ftnref2) As at the Portfolio Reference Date.
* (#_ftnref3) As at the Portfolio Reference Date.
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