Exhibit 10.1


 


EXECUTION COPY


 


AMENDED AND RESTATED FUNDING 1 LIQUIDITY

FACILITY AGREEMENT


 


 


DATED 12th March, 2004


 


 


PERMANENT FUNDING (NO. 1) LIMITED


as Funding 1


 


and


 


JPMORGAN CHASE BANK


as Funding 1 Liquidity Facility Provider


 


and


 


HALIFAX plc


as Cash Manager


 


and


 


THE BANK OF NEW YORK 

as Security Trustee


 


 





 


London


 

















 


CONTENTS


 


	
  Clause

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Definitions and Interpretation

  	
   

  
	
  2.

  	
  The Funding 1 Liquidity Facility

  	
   

  
	
  3.

  	
  Purpose

  	
   

  
	
  4.

  	
  Conditions Precedent

  	
   

  
	
  5.

  	
  Drawdown

  	
   

  
	
  6.

  	
  Repayment

  	
   

  
	
  7.

  	
  Cancellation

  	
   

  
	
  8.

  	
  Interest

  	
   

  
	
  9.

  	
  Payments

  	
   

  
	
  10.

  	
  Taxes

  	
   

  
	
  11.

  	
  Market Disruption

  	
   

  
	
  12.

  	
  Increased Costs

  	
   

  
	
  13.

  	
  Illegality

  	
   

  
	
  14.

  	
  Representations and Warranties

  	
   

  
	
  15.

  	
  Undertakings

  	
   

  
	
  16.

  	
  Default

  	
   

  
	
  17.

  	
  Fees

  	
   

  
	
  18.

  	
  Enforcement and Subordination

  	
   

  
	
  19.

  	
  Expenses

  	
   

  
	
  20.

  	
  Stamp
  Duties

  	
   

  
	
  21.

  	
  Indemnities

  	
   

  
	
  22.

  	
  Evidence and Calculations

  	
   

  
	
  23.

  	
  Amendments and Waivers

  	
   

  
	
  24.

  	
  Changes to the Parties

  	
   

  
	
  25.

  	
  Disclosure of Information

  	
   

  
	
  26.

  	
  Set-Off

  	
   

  
	
  27.

  	
  Severability

  	
   

  
	
  28.

  	
  Counterparts

  	
   

  
	
  29.

  	
  Notices

  	
   

  
	
  30.

  	
  Third Party Rights

  	
   

  
	
  31.

  	
  Governing
  Law

  	
   

  
	
  32.

  	
  Submission to Jurisdiction

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Conditions Precedent Documents

  	
   

  
	
  2.

  	
  Calculation of the Mandatory Liquid Asset
  Cost

  	
   

  
	
  3.

  	
  Form of Funding 1 Liquidity Facility
  Request

  	
   

  
	
  4.

  	
  Form of Novation Certificate

  	
   

  
	
  5.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signatories

  	
   

  



 

















 


THIS AMENDED AND RESTATED FUNDING 1 LIQUIDITY
FACILITY AGREEMENT is dated 12th March, 2004


 


BETWEEN:


 


(1)                                  PERMANENT FUNDING (NO. 1) LIMITED, (registered number 4267660) whose
registered office is Blackwell House, Guildhall Yard, London EC2V 5AE (Funding 1);


 


(2)                                  JPMORGAN CHASE BANK, acting through its offices at 125 London Wall, London EC2Y 5AJ acting
in its capacity as the Funding 1 Liquidity Facility Provider;


 


(3)                                  HALIFAX plc,
a public limited company incorporated under the laws of England and Wales whose
registered office is at Trinity Road, Halifax, West Yorkshire HX1 2RG acting in
its capacity as Cash Manager; and


 


(4)                                  THE BANK OF NEW YORK, acting
through its offices at 48th Floor, One Canada Square, London E14 5AL in its
capacity as Security Trustee, which expression shall include such company and
all other persons or companies for the time being acting as security trustee
(or co-trustee) pursuant to the terms of the Funding 1 Deed of Charge.


 


WHEREAS:


 


(A)                              The parties hereto entered into the Funding
1 Liquidity Facility Agreement (as amended and restated by this Agreement and
from time to time, the Funding 1 Liquidity Facility Agreement) to
assist Funding 1 in, among other things, (i) making Eligible Liquidity Facility
Principal Repayments and (ii) meeting its interest payment liabilities in
respect of relevant Term Advances from time to time.


 


(B)                                Upon the terms and subject to the conditions
set out in the Funding 1 Liquidity Facility Agreement, the Funding 1 Liquidity
Facility Provider agreed to make a Funding 1 Liquidity Facility available to
Funding 1 on and subject to the terms set out in the Funding 1 Liquidity
Facility Agreement.


 


(C)                                The parties to the Funding 1 Liquidity
Facility Agreement have agreed to amend and restate the terms of that Agreement
as set out herein.


 


IT IS AGREED as
follows:


 


1.                                      DEFINITIONS
AND INTERPRETATION


 


1.1                               Definitions


 


The amended and restated master definitions
and construction schedule signed by, amongst others, the parties to this
Agreement and dated 12th March, 2004 (as the same may be amended, varied or supplemented from time to
time with the consent of the parties to this Agreement) (the Master Definitions
and Construction Schedule) is expressly and specifically
incorporated into this Agreement and, accordingly, the expressions defined in
the Master Definitions and Construction Schedule (as so amended, varied or
supplemented from time to time) shall, except where the context otherwise
requires and save where otherwise defined herein, have the same meanings in
this Agreement and this Agreement shall be construed in accordance with the
interpretation provisions set out in Clause 2 of the Master Definitions and
Construction Schedule.


 


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1.2                               This Agreement amends and restates the
Funding 1 Liquidity Facility Agreement made on 14th June, 2002 as amended and
restated on the 6th March, 2003 and as further amended and restated on 25th
November, 2003 (the Principal Agreement).  As of the date of this Agreement, any future
rights or obligations (excluding such obligations accrued to the date of this
Agreement) of a party under the Principal Agreement shall be extinguished and
shall instead be governed by this Agreement.


 


1.3                               Construction


 


The Security Trustee has agreed to become a
party to this Agreement only for the purpose of taking the benefit of Clauses 2.3
(Extension), 5.1(b) (Funding 1 Liquidity Drawings), 5.2(a), (b) and (d) (Stand by Drawings), 6(b)
and (c)
(Repayment), 14.1 (Representations and warranties by Funding 1), 7.2
(Voluntary Cancellation), 7.3 (Additional right of prepayment and
cancellation), 14 (Representations and warranties). 15.2 (Financial information),
18 (Enforcement
and Subordination), 24 (Changes to the Parties) and 29
(Notices) and for agreeing amendments to this Agreement pursuant to Clause
23
(Amendments and waivers) and for the better preservation and enforcement of its
rights under the Funding 1 Deed of Charge and (without prejudice to the terms
of the Funding 1 Deed of Charge), other than as specified above, the Security
Trustee shall assume no obligations or liabilities whatsoever to the Funding 1
Liquidity Facility Provider or Funding 1 by virtue of the provisions of this
Agreement.


 


2.                                      THE
FUNDING 1 LIQUIDITY FACILITY


 


2.1                               Facility


 


Subject to the terms of this Agreement, the
Funding 1 Liquidity Facility Provider grants to Funding 1 the  Funding 1 Liquidity Facility.  The Funding 1 Liquidity Facility may be
utilised by way of Funding 1 Liquidity Facility Drawings or Funding 1 Liquidity
Facility Stand-by Drawings.


 


2.2                               Facility Limits


 


The aggregate principal amount of the Funding
1 Liquidity Facility Loan shall not at any time exceed the Funding 1 Liquidity
Facility Commitment.  The Funding 1
Liquidity Facility Provider is not obliged to lend more than the Funding 1
Liquidity Facility Commitment.


 


Save as otherwise provided in the Agreement (including, for the
avoidance of doubt, Clause 7 (Cancellation)), if any of the
following shall occur, the Funding 1 Liquidity Facility Commitment shall be
reduced in the manner provided:


 


(a)                                  if
the First Issuer Intercompany Loan is repaid in full or is otherwise cancelled,
the Liquidity Facility Commitment shall be reduced by the lesser of £60,000,000
and an amount which the Rating Agencies have confirmed will have no material
adverse effect on the then current ratings of any Notes of any Issuer (or if
the rating of any of the Notes of any Issuer has been downgraded, an amount
which will not prevent the restoration of such rating); or


 


(b)                                 if
the Second Issuer Intercompany Loan is repaid in full or is otherwise
cancelled, the Liquidity Facility Commitment shall be reduced by the lesser of
£47,500,000 and an amount which the Rating Agencies have confirmed will have no
material adverse effect on the then current ratings of any Notes of any Issuer
(or if the rating of any of the Notes of any Issuer has been downgraded, an
amount which will not prevent the restoration of such rating); or


 


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(c)                                  if
the Third Issuer Intercompany Loan is repaid in full or is otherwise cancelled,
the Liquidity Facility Commitment shall be reduced by the lesser of £42,500,000
and an amount which the Rating Agencies have confirmed will have no material
adverse effect on the then current ratings of any Notes of any Issuer (or if
the rating of any of the Notes of any Issuer has been downgraded, an amount
which will not prevent the restoration of such rating);


 


(d)                                 if
the Fourth Issuer Intercompany Loan is repaid in full or is otherwise
cancelled, the Liquidity Facility Commitment shall be reduced by an amount
which the Rating Agencies have confirmed will have no material adverse effect
on the then current ratings of any Notes of any Issuer (or if the rating of any
of the Notes of any Issuer has been downgraded, an amount which will not
prevent the restoration of such rating.


 


2.3                               Extension


 


(a)                                  Save as otherwise provided in this
Agreement, Funding 1 (or the Security Trustee or the Cash Manager on its
behalf) may deliver, not more than 60 days and not less than 30 days before the
end of the Funding 1 Liquidity Facility Commitment Period, to the Funding 1
Liquidity Facility Provider an irrevocable request in writing that the Funding
1 Liquidity Facility Commitment Period should be extended (an Extension
Request) to a date that is not more than (subject to Clause
2.3(d) below) 364 days from the last day of the then current Funding
1 Liquidity Facility Commitment Period.


 


(b)                                 The Funding 1 Liquidity Facility Provider
shall promptly send the Security Trustee a copy of any Extension Request
received by it.


 


(c)                                  If the Funding 1 Liquidity Facility Provider
wishes to accept an Extension Request then the Funding 1 Liquidity Facility
Provider shall, not more than 15 days after receipt of the Extension Request,
deliver to Funding 1 (with a copy to the Security Trustee) an irrevocable
notice (a Notice
of Extension) that the Funding 1 Liquidity Facility Provider has
consented to the Extension Request. 
Failure to deliver such a Notice of Extension within the 15-day time
period referred to above shall be deemed to constitute a refusal to grant an
extension of the Funding 1 Liquidity Facility Commitment Period.


 


(d)                                 The Funding 1 Liquidity Facility Provider is
not obliged to agree to extend the Funding 1 Liquidity Facility Commitment
Period and in no event may it be extended beyond the Repayment Date, being the
earlier to occur of:


 


(i)                                     the date when the First Issuer Intercompany
Loan, the Second Issuer Intercompany Loan, the Third Issuer Intercompany Loan
and the Fourth Issuer Intercompany Loan have been repaid in full; and


 


(ii)                                  the Funding 1 Interest Payment Date in June
2042 (unless the parties hereto agree to extend the provision of the Funding 1
Liquidity Facility beyond such date).


 


2.4                               Change of currency


 


(a)                                  If more than one currency or currency unit
are at the same time recognised by the central bank of any country as the
lawful currency of that country, then:


 


(i)                                     any reference in the Funding 1 Liquidity
Documents to, and any obligations arising under the Funding 1 Liquidity
Documents in, the currency of that country shall be


 


5

















 


translated into, or paid in, the currency or
currency unit of that country designated by the Funding 1 Liquidity Facility
Provider; and


 


(ii)                                  any translation from one currency or
currency unit to another shall be at the official rate of exchange recognised
by the central bank for the conversion of that currency or currency unit into
the other, rounded up or down by the Funding 1 Liquidity Facility Provider
acting reasonably.


 


(b)                                 If a change in any currency of a country
occurs, this Agreement will be amended to the extent the Funding 1 Liquidity
Facility Provider specifies to be necessary to reflect the change in currency
and to put the Funding 1 Liquidity Facility Provider in the same position, so
far as possible, that it would have been in if no change in currency had
occurred.


 


3.                                      PURPOSE


 


(a)                                  Funding 1 (or the Cash Manager on
behalf of Funding 1) shall apply each Funding 1 Liquidity Facility Drawing to
meet a Funding 1 Liquidity Shortfall existing at that time, to the extent that
it relates to payment obligations of Funding 1 arising in connection with the
First Issuer Intercompany Loan Agreement, the Second Issuer Intercompany Loan
Agreement, the Third Issuer Intercompany Loan Agreement or the Fourth Issuer
Intercompany Loan Agreement.  For the
avoidance of doubt, the parties agree that the Funding 1 Liquidity Facility
will be available notwithstanding that one or more (but not all) of the First
Issuer Intercompany Loan Agreement, the Second Issuer Intercompany Loan
Agreement, the Third Issuer Intercompany Loan Agreement or the Fourth Issuer
Intercompany Loan Agreement may have been repaid in full or cancelled, subject
to any reduction of the Funding 1 Liquidity Facility Commitment in accordance
with Clause
2.2  (Facility Limits).


 


(b)                                 Funding 1 (or the Cash Manager on behalf of
Funding 1) shall apply a Funding 1 Liquidity Facility Stand-by Drawing for the
purposes set out in Clause 5.2 (Stand-by Drawings).


 


(c)                                  Without affecting the obligations of Funding
1 in any way, the Funding 1 Liquidity Facility Provider is not bound to monitor
or verify the application of any Funding 1 Liquidity Facility Drawing.


 


4.                                      CONDITIONS
PRECEDENT


 


4.1                               Documentary conditions
precedent


 


The obligations of the Funding 1 Liquidity
Facility Provider to Funding 1 under this Agreement are subject to the
condition precedent that the Funding 1 Liquidity Facility Provider has notified
Funding 1 that it has received all of the documents set out in Schedule 1 and
that each is in form and substance satisfactory to it.


 


4.2                               Further conditions
precedent


 


(a)                                  The obligation of the Funding 1 Liquidity
Facility Provider to make a Funding 1 Liquidity Facility Drawing available is
subject to the further conditions precedent that on both the date of the
Funding 1 Liquidity Facility Request and the Funding 1 Liquidity Facility
Drawdown Date for that Funding 1 Liquidity Facility Drawing:


 


(i)                                     no Asset Trigger Event has occurred;


 


(ii)                                  no Funding 1 Liquidity Facility Default is
outstanding or would result from the making of the Funding 1 Liquidity Facility
Drawing; and


 


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(iii)                               no or insufficient amounts are available for
drawing from the Reserve Funds in order to pay the liabilities in respect of
which the relevant Funding 1 Liquidity Facility Drawing is to be applied.


 


(b)                                 The obligation of the Funding 1 Liquidity
Facility Provider to make a Funding 1 Liquidity Facility Drawing available for
the purpose of a Funding 1 Liquidity Revenue Shortfall is subject to the
further conditions precedent that, on the Funding 1 Liquidity Facility Drawdown
Date for that Funding 1 Liquidity Facility Drawing, Funding 1 (or the Cash
Manager on its behalf) provides confirmation to the Funding 1 Liquidity
Facility Provider that:


 


(i)                                     in respect of any Funding 1 Liquidity
Facility Drawing to assist the payment of interest on the relevant Term AAA
Advances, the debit balance on the relevant AAA Principal Deficiency Sub-Ledger
is not in an amount equal to or in excess of 50 per cent. of the principal
amount outstanding of the relevant Term AAA Advances;


 


(ii)                                  in respect of any Funding 1 Liquidity
Facility Drawing to assist the payment of interest on the relevant Term AA
Advances, the debit balance on the relevant AA Principal Deficiency Sub-Ledger
is not in an amount equal to or in excess of 50 per cent. of the principal
amount outstanding of the relevant Term AA Advances;


 


(iii)                               in respect of any Funding 1 Liquidity Facility Drawing to assist the
payment of interest on the relevant Term A Advances, the debit balance on the
relevant A Principal Deficiency Sub-Ledger is not in an amount equal to or in
excess of 50 per cent. of the principal amount outstanding of the relevant Term
A Advances; and


 


(iv)                              in respect of any Funding 1 Liquidity
Facility Drawing to assist the payment of interest on the relevant Term BBB
Advances, the debit balance on the relevant BBB Principal Deficiency Sub-Ledger
is not in an amount equal to or in excess of 50 per cent. of the principal
amount outstanding of the relevant Term BBB Advances.


 


(c)                                  The obligation of the Funding 1 Liquidity
Facility Provider to make a Funding 1 Liquidity Facility Drawing available for
the purpose of a Funding 1 Liquidity Principal Shortfall is subject to the
further conditions precedent that, on the Funding 1 Liquidity Facility Drawdown
Date for that Funding 1 Liquidity Facility Drawing, Funding 1 (or the Cash
Manager on its behalf) provides confirmation to the Funding 1 Liquidity
Facility Provider that:


 


(i)                                     if a Non-Asset Trigger Event has occurred,
then a Funding 1 Liquidity Facility Drawing will be utilised only to make
Eligible Liquidity Facility Principal Repayments on the respective Final
Repayment Date of each relevant Term Advance (in accordance with paragraph
(b) of the definition of Eligible Liquidity Facility Principal
Repayments); and


 


(ii)                                  if an Asset Trigger Event has occurred, then
a Funding 1 Liquidity Facility Drawing will not be utilised to make Eligible
Liquidity Facility Principal Repayments (in accordance with the last paragraph
of the definition of Eligible Liquidity Facility Principal Repayments).


 


5.                                      DRAWDOWN


 


5.1                               Funding 1 Liquidity
Facility Drawings


 


(a)                                  If, on the Business Day immediately
preceding a relevant Funding 1 Interest Payment Date,


 


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the Cash Manager determines that, on the
relevant Funding 1 Interest Payment Date, a Funding 1 Liquidity Shortfall will
arise, the Cash Manager will direct Funding 1 to make a Funding 1 Liquidity
Facility Drawing on the Business Day immediately preceding that Funding 1
Interest Payment Date, subject to the terms of this Agreement, for all or any
of the purposes set out in Clause 3 (Purpose) (as appropriate) and,
subject to the limits set out in Clause 2.2 (Facility limits), in an amount
equal to the Funding 1 Liquidity Shortfall.


 


(b)                                 Funding 1 (or Cash Manager on behalf of
Funding 1) will serve on the Funding 1 Liquidity Facility Provider a Funding 1
Liquidity Facility Request (substantially in the form set out in Schedule 3
to this Agreement) for each Funding 1 Liquidity Facility Drawing, such request
to be given by facsimile in accordance with Clause 29 (Notices) of this
Agreement to be received by the Funding 1 Liquidity Facility Provider not later
than 10.00 a.m. on the Business Day immediately preceding the proposed Funding
1 Liquidity Facility Drawdown Date.


 


(c)                                  No Funding 1 Liquidity Drawing may be made,
or requested to be made, on or after the last day of the then current Funding 1
Liquidity Facility Commitment Period.


 


5.2                               Funding 1 Liquidity
Facility Stand-by Drawings


 


(a)                                  The Funding 1 Liquidity Provider shall, upon
becoming aware of a Relevant Event, promptly notify Funding 1, the Security
Trustee and the Cash Manager in writing of that fact.


 


(b)                                 If a Relevant Event occurs, Funding 1 (or
the Security Trustee or the Cash Manager on behalf of Funding 1) may, subject
to the terms of this Agreement, and after serving a Funding 1 Liquidity
Facility Request on the Funding 1 Liquidity Facility Provider, make a Funding 1
Liquidity Facility Stand-by Drawing equal to the undrawn portion of the Funding
1 Liquidity Facility Commitment at that time provided that such Funding 1
Liquidity Facility Stand-by Drawing shall be used only in accordance with paragraph
(e) below.  No Funding 1
Liquidity Facility Stand-by Drawing may be made or requested to be made after
the end of the Funding 1 Liquidity Facility Commitment Period.


 


(c)                                  Upon making a Funding 1 Liquidity Facility
Stand-by Drawing, Funding 1 (or the Security Trustee or the Cash Manager on
behalf of Funding 1) shall forthwith pay the Funding 1 Liquidity Facility
Stand-by Drawing into the Funding 1 Liquidity Facility Stand-by Account, which
shall be an account with the Funding 1 Liquidity Facility Provider if the
Relevant Event leading to the making of the Funding 1 Liquidity Facility
Stand-by Drawing is of the type described in paragraph (b) of the
definition of Relevant Event, and, otherwise with the Account Bank.


 


(d)                                 Subject to the terms of the Funding 1 Deed
of Charge, interest earned on the Funding 1 Liquidity Facility Stand-by
Account, together with any income derived from any Authorised Investments made
in accordance with paragraph (e)(iii) below using amounts
standing to the credit of the Funding 1 Liquidity Facility Stand-by Account
from time to time, shall belong to and be for the account of Funding 1 (and
Funding 1 shall be entitled to withdraw and retain such interest earned).


 


(e)                                  Amounts from time to time standing to the
credit of the Funding 1 Liquidity Facility Stand-by Account shall belong to
Funding 1 and the Funding 1 Liquidity Facility Provider shall not have any
proprietary interest or Security Interest in such amounts save as arises under
the Funding 1 Deed of Charge.  Other
than as referred to in paragraph (d) above, Funding 1 (or the
Security Trustee or the Cash Manager on behalf of Funding 1) shall only make
withdrawals from the Funding 1 Liquidity Facility Stand-by Account:


 


8

















 


(i)                                     in such circumstances and in such amount as
it would otherwise have been able to make a Funding 1 Liquidity Drawing
pursuant to Clause  5.1 (Funding 1 Liquidity Drawings), which
withdrawal shall be deemed to be a Funding 1 Liquidity Drawing made under Clause 5.1;
or


 


(ii)                                  in order to make a repayment of a Funding 1
Liquidity Facility Stand-by Drawing in accordance with Clause 6 (Repayment); or


 


(iii)                               in order to invest funds standing to the
credit of the Funding 1 Liquidity Facility Stand-by Account in Authorised
Investments (the nature and characteristics of which Authorised Investments Funding
1 will notify to the Funding 1 Liquidity Facility Provider at the same time as
making the payment described in Clause 5.2(d)),


 


but not otherwise, and the amounts of the
Funding 1 Liquidity Facility Stand-by Drawing shall be reduced by the amount of
such deemed Funding 1 Liquidity Drawings or, as the case may be, repayment.


 


5.3                               Payment of Proceeds


 


Subject to the terms of this Agreement, the
Funding 1 Liquidity Facility Provider shall make each Funding 1 Liquidity
Facility Loan available for Funding 1 on the relevant Funding 1 Liquidity
Facility Drawdown Date and shall remit each Funding 1 Liquidity Facility Loan
to Funding 1 by noon on the relevant Funding 1 Liquidity Facility Drawdown Date
or, if LIBOR is determined otherwise than in accordance with paragraph
(a) of its definition, by 2.00 p.m. on the relevant Funding 1
Liquidity Facility Drawdown Date.


 


6.                                      REPAYMENT


 


(a)                                  Subject as provided below and subject to Clause 7.2
(Voluntary Cancellation), Clause 18 (Enforcement and Subordination)
and Clause
21.2 (Other indemnities) on the earlier of:


 


(i)                                     the immediately succeeding Funding 1
Interest Payment Date; and


 


(ii)                                  the Repayment Date,


 


Funding 1 shall repay the outstanding balance
of the Funding 1 Liquidity Drawing, if any, from Funding 1 Available Principal
Receipts (but only to the extent that the Funding 1 Liquidity Drawing has been
made to meet Funding 1 Liquidity Principal Shortfalls (if any)) and from
Funding 1 Available Revenue Receipts (but only to the extent that the Funding 1
Liquidity Drawing has been made to meet Funding 1 Liquidity Revenue Shortfalls
(if any)) as at the opening of business on such date.  Other than on the Repayment Date and subject to the terms of this
Agreement, Funding 1 may draw a new Funding 1 Liquidity Drawing or rollover an
existing Funding 1 Liquidity Drawing for the purposes of this paragraph
(a).  Funding 1 Liquidity
Drawings so repaid may be redrawn in accordance with and subject to the terms
of this Agreement.


 


(b)                                 While a Funding 1 Liquidity Facility
Stand-by Drawing is outstanding, any amount that has been withdrawn from the
Funding 1 Liquidity Facility Stand-by Account shall be repaid by crediting such
amount to the Funding 1 Liquidity Facility Stand-by Account as if it were a
Funding 1 Liquidity Drawing repayable in accordance with paragraph (a) above and the
Funding 1 Liquidity Facility Stand-by Account shall be increased by the amount
of the Funding 1 Liquidity Drawing repaid. 
For the avoidance of doubt, any repayment pursuant to this paragraph
(b) shall not be applied to reduce the amount of the Funding 1
Liquidity Facility Stand-by Drawing.


 


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(c)                                  The Funding 1 Liquidity Facility Stand-by
Drawing shall, subject to Clause 18 (Enforcement and Subordination),
be repayable to the Funding 1 Liquidity Facility Provider, together with
accrued interest pursuant to Clause 8 (Interest), on the earlier of:


 


(i)                                    (A)          if
the Relevant Event resulting in the making of the Funding 1 Liquidity Facility
Stand-by Drawing was of the type described in paragraph (a) of the
definition of Relevant Event:


 


I.                                         Funding 1 cancelling the Funding 1 Liquidity
Facility Commitment in full (in accordance with Clause 7.2(b) (Voluntary
cancellation)) or the Funding 1 Liquidity Facility Provider entering into a
Novation Certificate with a Qualifying Lender having the Requisite Ratings; or


 


II.                                     the day which is two London Business Days
after the date on which the Funding 1 Liquidity Facility Provider has given
notice to Funding 1 that it again has the Requisite Ratings; or


 


(B)                                if the Relevant Event resulting in the
making of the Funding 1 Liquidity Facility Stand-by Drawing was of the type
described in paragraph (b) of the definition of Relevant Event, Funding 1
entering into a replacement liquidity facility on terms acceptable to the
Security Trustee and the Rating Agencies;


 


(ii)                                  the Repayment Date; and


 


(iii)                               Funding 1 electing to repay the Funding 1
Liquidity Facility Stand-by Drawing as a result of Funding 1 not having
available to it sufficient funds to pay interest and other amounts due and
payable in respect of the Funding 1 Liquidity Facility Stand-by Drawing.


 


7.                                      CANCELLATION


 


7.1                               Automatic cancellation of
the Funding 1 Liquidity Facility Commitment


 


The Funding 1 Liquidity Facility Commitment
shall be automatically cancelled at close of business on the last day of the
Funding 1 Liquidity Facility Commitment Period.


 


7.2                               Voluntary cancellation


 


(a)                                  Funding 1 may with the prior written consent
of the Security Trustee and provided that:


 


(i)                                     the Rating Agencies have confirmed that such
cancellation will have no material adverse effect on the then current ratings
of any of the Notes of any Issuer; or


 


(ii)                                  if the ratings of any of the Notes of any
Issuer has previously been downgraded that such cancellation will not prevent
the restoration of such rating,


 


without premium or penalty, cancel the
undrawn and uncancelled part of the Funding 1 Liquidity Facility Commitment in
whole or in part (but if in part, in multiples of not less than £50,000 unless
the Funding 1 Liquidity Facility Commitment is less than £50,000) at any time
provided that it has given the Funding 1 Liquidity Facility Provider not less
than seven London Business Days’ prior notice (which notice Funding 1 shall
copy to the Security Trustee, the Cash Manager and to the Rating Agencies)
stating the principal amount to be cancelled. 
During such seven Business Day period Funding 1may not serve a Funding 1


 


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Liquidity Facility Request purporting to draw
all or any part of the amount the subject of such notice of such cancellation.


 


(b)                                 If a Relevant Event of the type described in
paragraph
(a) or (b) of the definition of such term occurs,
Funding 1 may, without premium or penalty, by notice to the Funding 1 Liquidity
Facility Provider (which notice Funding 1 shall copy to the Security Trustee
and the Cash Manager):


 


(i)                                     cancel the undrawn and uncancelled part of
the Funding 1 Liquidity Facility, provided that Funding 1 shall first have made
arrangements for a replacement liquidity facility provider which is a
Qualifying Lender and has the Requisite Ratings to enter into an agreement on
substantially the same terms as this Agreement and provided that the Funding 1
Liquidity Facility Provider has been repaid all amounts outstanding to it under
this Agreement in full; or


 


(ii)                                  require the Funding 1 Liquidity Facility
Provider to enter into a novation agreement (at the cost of Funding 1) in a
form reasonably satisfactory to the Funding 1 Liquidity Facility Provider,
Funding 1 and the Security Trustee with, or otherwise transfer the Funding 1
Liquidity Facility Provider’s rights and obligations under this Agreement in
such manner as is required by Funding 1 and the Security Trustee to, a replacement
liquidity facility provider which is a Qualifying Lender and has the Requisite
Ratings, provided that the Funding 1 Liquidity Facility Provider has been
repaid all amounts outstanding to it under this Agreement in full as a result
of the novation.


 


(c)                                  Without prejudice to Funding 1’s rights
under paragraph
(b) above, if a Relevant Event of the type described in paragraph
(a) or (b) of the definition of such term occurs,
the Funding 1 Liquidity Facility Provider may make arrangements either:


 


(i)                                     to replace itself with a replacement
liquidity facility provider which is acceptable to Funding 1 which is a
Qualifying Lender and has the Requisite Ratings to enter into an agreement on
substantially the same terms as this Agreement; or


 


(ii)                                  request Funding 1, the Security Trustee and
the Cash Manager to enter into a novation agreement in a form reasonably
satisfactory to Funding 1 and the Security Trustee with, or otherwise to
transfer the Funding 1 Liquidity Facility Provider’s rights and obligations under
this Agreement in such manner as is required by Funding 1 and the Security
Trustee to, a replacement liquidity facility provider which is a Qualifying
Lender and has the Requisite Ratings,


 


and in either case, Funding 1 shall take all
reasonable steps to effect such arrangement.


 


(d)                                 To the extent that there is any conflict
between Funding 1’s rights under paragraph (b) and the Funding 1 Liquidity
Facility Provider’s rights under paragraph (c) above, the views of Funding 1
will prevail with the result that if each of Funding 1 and the Funding 1
Liquidity Facility Provider had selected a replacement liquidity facility
provider, or wished to adopt a different approach under paragraph  (b) above
or paragraph
(c) above,
as appropriate, the selection and/or the approach to be adopted will be that
selected or adopted (as the case may be) by Funding 1.


 


(e)                                  Funding 1 may also, without premium or
penalty, by notice to the Funding 1 Liquidity Facility Provider, cancel the
whole of the Funding 1 Liquidity Facility Commitment on the Repayment Date.


 


11

















 


7.3                               Additional right of
prepayment and cancellation


 


If:


 


(a)                                  Funding 1 is required to pay to the Funding
1 Liquidity Facility Provider any additional amounts under Clause 10 (Taxes); or


 


(b)                                 Funding 1 is required to pay to the Funding
1 Liquidity Facility Provider any amount under Clause 12 (Increased costs),


 


then, without prejudice to the obligations of
Funding 1 under those Clauses, Funding 1 may, whilst the circumstances
continue, give a notice of prepayment and cancellation to the Funding 1
Liquidity Facility Provider with a copy to the Security Trustee.  On the date falling five London Business
Days after the date of giving of the notice:


 


(i)                                     Funding 1 shall prepay the Funding 1
Liquidity Facility Loans; and


 


(ii)                                  the Funding 1 Liquidity Facility Commitment
shall be cancelled.


 


7.4                               Miscellaneous provisions


 


(a)                                  Any notice of prepayment and/or cancellation
under this Agreement is irrevocable.


 


(b)                                 All prepayments under this Agreement shall
be made together with accrued interest on the amount prepaid and, subject to Clause 21
(Indemnities), without premium or penalty.


 


(c)                                  No prepayment or cancellation is permitted
except in accordance with the express terms of this Agreement.


 


(d)                                 No amount of the Funding 1 Liquidity
Facility Commitment cancelled under this Agreement may subsequently be
reinstated except with the prior written consent of the Funding 1 Liquidity
Facility Provider, Funding 1 and the Security Trustee.


 


8.                                      INTEREST


 


8.1                               Interest rate (Funding 1
Liquidity Facility Drawings)


 


The rate of interest on each Funding 1
Liquidity Facility Drawing for each Funding 1 Liquidity Facility Interest
Period is the rate per annum determined by the Funding 1 Liquidity Facility Provider
to be the aggregate of the applicable:


 


(a)                                  Funding 1 Liquidity Facility Margin;


 


(b)                                 LIBOR; and


 


(c)                                  subject to Clause 18 (Enforcement and
Subordination), Mandatory Liquid Asset Cost.


 


8.2                               Interest
rate (Funding 1 Liquidity Facility Stand-by Drawings)


 


For so long as any amount is outstanding under the First Issuer
Intercompany Loan, and without prejudice to Clause 17.1(a) (Commitment
Fee and Contingent Fee), the rate of interest on each Funding 1 Liquidity
Facility Stand-by Drawing shall be:


 


12

















 


(a)                                  in
respect of a Funding 1 Liquidity Facility Stand-by Drawing up to (and
including) the first £60,000,000, the amount of interest payable will be
determined in accordance with Clause 8.1 (Interest Rate (Funding 1
Liquidity Facility Drawing)); and


 


(b)                                 in
respect of a Funding 1 Liquidity Facility Stand-by Drawing equal to and in
excess of £60,000,001, interest will not be payable.


 


In the event that the First Issuer Intercompany Loan is repaid or is
otherwise cancelled, interest will not be payable in respect of any part of a
Funding 1 Liquidity Facility Stand-by Drawing.


 


8.3                               Due dates


 


Except as otherwise provided in this
Agreement (including, without limitation, Clause 6 (Repayment)), accrued interest on
each Funding 1 Liquidity Facility Loan is payable by Funding 1 on each Funding
1 Interest Payment Date.


 


8.4                               Default interest


 


(a)                                  If Funding 1 fails to pay any amount payable
by it under this Agreement, it shall forthwith on demand by the Funding 1 Liquidity
Facility Provider pay interest on the overdue amount from the due date up to
the date of actual payment, as well after as before judgment, at a rate (the Default Rate)
determined by the Funding 1 Liquidity Facility Provider to be one per cent. per
annum above the higher of:


 


(i)                                     the rate on the overdue amount under Clause 8.1
(Interest rate) immediately before the due date (if of principal); and


 


(ii)                                  the rate which would have been payable if
the overdue amount had, during the period of non-payment, constituted a Funding
1 Liquidity Facility Drawing in the currency of the overdue amount for such
successive Funding 1 Liquidity Facility Interest Periods of such duration as
the Funding 1 Liquidity Facility Provider may determine (each a Designated
Interest Period).


 


(b)                                 The Default Rate will be determined on each
Business Day or the first day of the relevant Designated Interest Period, as
appropriate.


 


(c)                                  If LIBOR is to be determined in accordance
with paragraph
(b) of its definition and the Funding 1 Liquidity Facility Provider
determines that deposits in the currency of the overdue amount are not at the
relevant time being made available by the Reference Banks to leading banks in
the London interbank market, the Default Rate will be determined by reference
to the cost of funds to the Funding 1 Liquidity Facility Provider from whatever
sources it reasonably selects.


 


(d)                                 Default interest will be compounded at the
end of each Designated Interest Period.


 


(e)                                  This Clause 8.4 shall not apply to amounts
deferred as a result of the operation of Clause 18 (Enforcement and Subordination).


 


8.5                               Notification of rates of
interest


 


The Funding 1 Liquidity Facility Provider
shall promptly notify each relevant party of the determination of a rate of
interest under this Agreement.


 


13

















 


9.                                      PAYMENTS


 


9.1                               Place


 


All payments by Funding 1 under this
Agreement shall be made to the Funding 1 Liquidity Facility Provider’s account
at JPMorgan Chase Bank, Sort Code: 60-92-42, Account Reference: European Loans
or to its account at such office or bank as it may notify to Funding 1 for this
purpose.


 


9.2                               Funds


 


Payments under this Agreement to the Funding
1 Liquidity Facility Provider shall be made for value on the due date at such
times and in such funds as the Funding 1 Liquidity Facility Provider may
specify to the party concerned as being customary at the time for the
settlement of transactions in Sterling.


 


9.3                               Currency


 


(a)                                  Amounts payable in respect of costs,
expenses, taxes and the like are payable in the currency in which they are
incurred.


 


(b)                                 Any other amount payable under this
Agreement is, except as otherwise provided in this Agreement, payable in
Sterling.


 


9.4                               Set-off and counterclaim


 


All payments made by the Funding 1 under this
Agreement shall be made without set-off or counterclaim.


 


9.5                               Non-Business Days


 


(a)                                  If a payment under this Agreement is due on
a day which is not a London Business Day, the due date for that payment shall
instead be the next London Business Day in the same calendar month (if there is
one) or the preceding London Business Day (if there is not).


 


(b)                                 During any extension of the due date for
payment of any principal under this Agreement interest is payable on the
principal at the rate payable on the original due date.


 


10.                               TAXES


 


10.1                        Gross-up


 


Subject to Clause 18 (Enforcement and
Subordination) and Clause 10.3 (Qualifying Lender), all
payments by Funding 1 under the Funding 1 Liquidity Documents shall be made
free and clear of and without deduction or withholding for or on account of any
Taxes, except to the extent that Funding 1 is required by law to make payment
subject to any such deduction or withholding for or on account of any
Taxes.  If any Tax or amount in respect
of Tax is required by law to be deducted or withheld from any amounts payable
or paid by Funding 1 under the Funding 1 Liquidity Documents, subject to Clause 18
(Enforcement and Subordination) the payment due from Funding 1 shall be
increased to include such additional amounts as may be necessary to ensure that
(after any deduction or withholding required including in respect of such
additional amounts) the Funding 1 Liquidity Facility Provider receives a net
amount equal to the full amount which would have been due had no deduction or
withholding for or on account of any Taxes been required.


 


14

















 


10.2                        Tax receipts


 


Subject to Clause 18 (Enforcement and
Subordination), all Taxes required by law to be deducted or withheld by Funding
1 from any amounts paid or payable under the Funding 1 Liquidity Documents
shall be paid by Funding 1 no later than when due and Funding 1 shall, within
30 days of making either the deduction or withholding for or on account of any
Tax or the payment in respect of such deduction or withholding, deliver to the
Funding 1 Liquidity Facility Provider evidence satisfactory to the Funding 1
Liquidity Facility Provider (acting reasonably) (including all relevant Tax
receipts) that the payment has been duly remitted to the appropriate authority.


 


10.3                        Qualifying Lender


 


Funding 1 shall not be required to pay an
additional amount as referred to in Clause 10.1 (Gross-up) above in respect of
any deduction or withholding for or on account of any Taxes levied or imposed
by the United Kingdom (or any taxing authority of or in the United Kingdom)
from a payment of interest, if on the date on which the payment falls due:


 


(a)                                  the payment could have been made to the
Funding 1 Liquidity Facility Provider in the absence of a deduction or
withholding for or on account of any Taxes if the Funding 1 Liquidity Facility
Provider were a Qualifying Lender, but on that date the Funding 1 Liquidity
Facility Provider is not or has ceased to be a Qualifying Lender other than as
a result of any change occurring after the date of this Agreement in (or in the
interpretation, administration or application of) any law or regulation or
applicable Double Taxation Treaty or any published practice or concession of
any relevant Tax authority;


 


(b)                                 (i)            the
Funding 1 Liquidity Facility Provider is a Qualifying Lender solely because it
is a UK Non-Bank Lender;


 


(ii)                                  the Board of the United Kingdom Inland
Revenue has given (and not revoked) a direction (a Direction) under Section 349C
ICTA (as that provision has effect on the date of this Agreement) which relates
to such payment and Funding 1 has notified the Funding 1 Liquidity Facility
Provider of the precise terms of that notice; and


 


(iii)                               the payment could have been made to the Funding 1 Liquidity Facility
Provider without any deduction
or withholding for or on account of Tax in the absence of that Direction;


 


(c)                                  the Funding 1 Liquidity Facility Provider is
a Treaty Lender and Funding 1 is able to demonstrate that the additional
amounts referred to in Clause 10.1 (Gross-up) above would not have
been required if the Funding 1 Liquidity Facility Provider had complied with
its obligations under Clause 10.6 (Treaty Lender) below.


 


10.4                        Refund of Tax Credits


 


If Funding 1 makes a payment under Clause 10.1
(Gross-up) (a Tax Payment) in respect of a payment to the Funding 1
Liquidity Facility Provider under this Agreement and the Funding 1 Liquidity
Facility Provider determines that it has obtained a refund of Tax or obtained
and used a credit against Tax on its overall net income (a Tax Credit) which the Funding
1 Liquidity Facility Provider determines to be attributable to that Tax
Payment, then the Funding 1 Liquidity Facility Provider shall reimburse Funding
1 such amount as the Funding 1 Liquidity Facility Provider determines to be
such proportion of that Tax Credit as will leave


 


15

















 


the Funding 1 Liquidity Facility Provider
(after that reimbursement) in no better or worse position than it would have
been in if no Tax Payment had been required. 
The Funding 1 Liquidity Facility Provider shall not be obliged to
disclose to any party to this Agreement or otherwise any information regarding
its Tax affairs and computations.


 


10.5                        Status of Qualifying Lender


 


If the Funding 1 Liquidity Facility Provider
or replacement liquidity facility provider (as applicable) ceases, for whatever
reason, to be a Qualifying Lender, it shall promptly notify Funding 1 in
writing of that change in its status.


 


10.6                        Treaty Lender


 


A Treaty Lender and Funding 1 shall
co-operate in completing any procedural formalities necessary for Funding 1 to
obtain authorisation to make payments under the Funding 1 Liquidity Documents
free and clear of and without deduction or withholding for or on account of any
Taxes levied or imposed by the United Kingdom or any taxing authority of or in
the United Kingdom.


 


10.7                        Tax Indemnity


 


(a)                                  Funding 1 shall (within three Business Days
of demand by the Funding 1 Liquidity Facility Provider (the Protected
Party)) pay to a Protected Party an amount equal to the loss,
liability or cost which that Protected Party determines will be or has been
(directly or indirectly) suffered for on and account of Tax by that Protected
Party in respect of the Funding 1 Liquidity Documents.


 


(b)                                 Paragraph (a) above shall not apply:


 


(i)                                     with respect to any Tax assessed on a
Protected Party:


 


(A)                              under the law of the jurisdiction in which
that Protected Party is incorporated or, if different, the jurisdiction in
which that Protected Party is treated as resident for tax purposes; or


 


(B)                                under the law of the jurisdiction in which
that Protected Party’s Facility Office is located in respect of amounts
received or receivable in that jurisdiction,


 


if that Tax is imposed or calculated by reference
to the net income received or receivable (but not any sum deemed to be received
or receivable) by that Protected Party;


 


(ii)                                  to the extent a loss, liability or cost:


 


(A)                              is compensated for by an increased payment
under Clause
10.1 (Gross-up); or


 


(B)                                would have been compensated for by an
increased payment under Clause 10.1 (Gross-up) but was not so
compensated solely because one of the exclusions in Clause 10.3 (Qualifying
Lender) applied.


 


16

















 


11.                               MARKET DISRUPTION


 


(a)                                  If LIBOR is to be determined in accordance
with paragraph
(b) of its definition and a Reference Bank does not supply an
offered rate by 1.00 p.m. on a Funding 1 Liquidity Facility Drawdown Date, the
applicable LIBOR shall, subject to paragraph  (b) below,
be determined on the basis of the quotations of the remaining Reference
Bank(s).


 


(b)                                 If, in relation to any Funding 1 Liquidity
Facility Drawing or proposed Funding 1 Liquidity Facility Drawing:


 


(i)                                     LIBOR is to be determined in accordance with
paragraph
(b) of its definition and no, or only one, Reference Bank supplies a
rate for the purposes of determining the applicable LIBOR or the Funding 1
Liquidity Facility Provider otherwise determines that adequate and fair means
do not exist for ascertaining the applicable LIBOR; or


 


(ii)                                  in the Funding 1 Liquidity Facility
Provider’s opinion:


 


(A)                              matching deposits may not be available to it
in the London interbank market in the ordinary course of business to fund that
Funding 1 Liquidity Facility Loan for the relevant Funding 1 Liquidity Facility
Interest Period; or


 


(B)                                the cost to it of matching deposits in the
London interbank market would be in excess of the relevant LIBOR,


 


the Funding 1 Liquidity Facility Provider
shall promptly notify Funding 1 of the fact and that this Clause 11 is in operation.


 


(c)                                  After any notification under paragraph
(b)
above, the Funding 1 Liquidity Facility Loan shall bear interest at the rate
per annum equal to the sum of the applicable Funding 1 Liquidity Facility
Margin, Mandatory Liquid Asset Cost and the cost to the Funding 1 Liquidity
Facility Provider (expressed as a rate per annum) of funding the Funding 1
Liquidity Facility Loan by whatever means it reasonably determines to be
appropriate.


 


12.                               INCREASED COSTS


 


12.1                        Increased costs


 


(a)                                  Subject to Clause 12.2 (Exceptions) and Clause 18
(Enforcement and Subordination), Funding 1 shall forthwith on demand by the
Funding 1 Liquidity Facility Provider pay the Funding 1 Liquidity Facility
Provider the amount of any increased cost incurred by it as a result of:


 


(i)                                     the introduction of, or any change in, or
any change in the interpretation by any court or official authority or
application of, any law or regulation or in the case of Tax, the introduction
of or any change in or any change in the interpretation, administration or
application of any law or regulation or published practice or concession of any
relevant tax authority (in each case occurring after the date of this
Agreement);


 


(ii)                                  compliance with any regulation made or
modified after the date of this Agreement,


 


including any law or regulation relating to
change in currency of a country or reserve asset, special deposit, cash ratio,
liquidity or capital adequacy requirements or any other form of banking or
monetary control or in the case of taxation, any law, regulation, published
practice or concession relating to Tax.


 


17

















 


(b)                                 In this Agreement increased cost means:


 


(i)                                     an additional cost incurred by the Funding 1
Liquidity Facility Provider or its holding company as a result of it having
entered into, or performing, maintaining or funding its obligations under, the
Funding 1 Liquidity Documents; or


 


(ii)                                  that portion of an additional cost incurred
by the Funding 1 Liquidity Facility Provider or its holding company in making,
funding or maintaining all or any advances comprised in a class of advances
formed by or including the Funding 1 Liquidity Facility Loans made or to be
made under the Funding 1 Liquidity Documents as is attributable to it making,
funding or maintaining those participations; or


 


(iii)                               a reduction in any amount payable to the
Funding 1 Liquidity Facility Provider or its holding company or the effective
return to a Funding 1 Liquidity Facility Provider under this Agreement or (to
the extent that it is attributable to this Agreement) on its capital, including
any reduction in the effective return from the Funding 1 Liquidity Facility
Margin or the commitment fee payable under Clause 17 (Fees) of this Agreement; or


 


(iv)                              the amount of any payment made by the
Funding 1 Liquidity Facility Provider or its holding company, or the amount of
interest or other return foregone by the Funding 1 Liquidity Facility Provider,
calculated by reference to any amount received or receivable by the Funding 1
Liquidity Facility Provider from any other Party under this Agreement.


 


12.2                        Exceptions


 


Clause 12.1 does not apply to any increased cost:


 


(a)                                  to the extent compensated for by the payment
of the Mandatory Liquid Asset Cost;


 


(b)                                 to the extent compensated for by the
operation of Clause 10.7 (Tax Indemnity); or


 


(c)                                  to the extent that any such increased cost
is attributable to any deduction or withholding for or on account of any Tax
required to be made by Funding 1.


 


13.                               ILLEGALITY


 


If it is or becomes unlawful in any
jurisdiction for the Funding 1 Liquidity Facility Provider to give effect to
any of its obligations as contemplated by this Agreement or to fund or maintain
any Funding 1 Liquidity Facility Loan, then:


 


(a)                                  the Funding 1 Liquidity Facility Provider
may notify Funding 1 accordingly; and


 


(b)                                 (i)                                     subject to Clause 18 (Enforcement and
Subordination), Funding 1 shall forthwith prepay the Funding 1 Liquidity
Facility Loans together with all interest and all other amounts payable by it
to the Funding 1 Liquidity Facility Provider under this Agreement; and


 


(ii)                                  the Funding 1 Liquidity Facility Commitment
shall be cancelled.


 


18

















 


14.                               REPRESENTATIONS
AND WARRANTIES


 


14.1                        Representations and
warranties by Funding 1


 


Funding 1 makes the representations and
warranties set out in this Clause 14.1 to the Funding 1 Liquidity
Facility Provider and the Security Trustee:


 


(a)                                  Status


 


(i)                                     It is a limited liability company, duly
incorporated and validly existing under the laws of England and Wales; and


 


(ii)                                  it has the power to own its assets and carry
on its business as it is being conducted.


 


(b)                                 Powers and
authority


 


It has the power to enter into and perform,
and has taken all necessary action to authorise the entry into, performance and
delivery of, the Funding 1 Liquidity Documents to which it is or will be a
party and the transactions contemplated by those Funding 1 Liquidity Documents.


 


(c)                                  Legal
validity


 


Each Funding 1 Liquidity Document to which it
is or will be a party constitutes, or when executed in accordance with its
terms will constitute, its legal, valid and binding obligation enforceable in
accordance with its terms.


 


(d)                                 Non-conflict


 


The entry into and performance by it of, and
the transactions contemplated by, the Funding 1 Liquidity Documents do not and
will not:


 


(i)                                     result in the existence or imposition of nor
oblige it to create any Security Interest in favour of any person (other than
the Funding 1 Secured Creditors) over all or any of its present or future
revenues or assets;


 


(ii)                                  conflict with any law or regulation or
judicial or official order;


 


(iii)                               conflict with its constitutional documents; or


 


(iv)                              conflict with any document which is binding upon it or any of its
assets.


 


(e)                                  No default


 


No Liquidity Facility Default is outstanding
or might result from the making of any Funding 1 Liquidity Facility Loan.


 


(f)                                    Authorisations


 


All authorisations required or desirable in
connection with the entry into, performance, validity and enforceability of,
and the transactions contemplated by, the Funding 1 Liquidity Documents have
been obtained or effected (as appropriate) and are in full force and effect.


 


19

















 


(g)                                 Litigation


 


No litigation, arbitration or administrative
proceedings involving Funding 1 are current or, to its knowledge, pending or
threatened, which might, if adversely determined, have a material adverse
effect on the business or financial condition of Funding 1 or the ability of
Funding 1 to perform its obligations under this Agreement.


 


(h)                                 Security
Interests


 


None of the assets of Funding 1 is affected
by any Security Interest, and Funding 1 is not a party to, nor is it or any of
its assets bound by, any order, agreement or instrument under which Funding 1
is, or in certain events may be, required to create, assume or permit to arise
any Security Interest, other than the Security Interests created by the Funding
1 Deed of Charge.


 


(i)                                     No other business


 


(i)                                     It has not traded or carried on any business
since its date of incorporation or engaged in any activity whatsoever that is
not incidental to or necessary in connection with any of the activities in
which the Transaction Documents provide or envisage that it will engage; and


 


(ii)                                  it is not party to any material agreements
other than the Transaction Documents.


 


(j)                                     Ownership


 


(i)                                     Its entire issued share capital is legally
and beneficially owned and controlled by Holdings; and


 


(ii)                                  its shares are fully paid.


 


(k)                                  Good title as
to assets


 


Funding 1 is and will remain the absolute
beneficial owner of the Funding 1 Share and absolute legal and beneficial owner
of all other assets charged or assigned by the Funding 1 Deed of Charge to
which it is a party.


 


(l)                                     Tax


 


(i)                                     It is tax resident and legally domiciled in
its jurisdiction of incorporation; and


 


(ii)                                  it has no branch, business establishment or
other fixed establishment outside the United Kingdom.


 


(m)                               Funding 1
Deed of Charge


 


The Funding 1 Deed of Charge creates, or will
create when the Funding 1 Liquidity Facility Stand-by Account is opened and the
Funding 1 Liquidity Facility Stand-By Deposit is credited to such account, a
first priority Security Interest of the type described in the Funding 1 Deed of
Charge over the Funding 1 Liquidity Facility Stand-by Deposit in favour of the
Security Trustee.


 


For the avoidance of doubt, a breach by
Funding 1 of any representation or warranty contained in this Clause 14.1
or otherwise in this Agreement shall not entitle the Funding 1


 


20

















 


Liquidity Facility Provider to terminate this
Agreement or declare the Funding 1 Liquidity Drawing or the Funding 1 Liquidity
Facility Stand-by Drawing or any other amounts payable under this Agreement due
and payable or to prevent any utilisation of the Funding 1 Liquidity Facility
or the Standby-by Facility or any Funding 1 Liquidity Facility Loan being made.


 


14.2                        Representations and
warranties by the Funding 1 Liquidity Facility Provider


 


The Funding 1 Liquidity Facility Provider
makes the representations and warranties set out in this Clause 14.2 to Funding 1 and
the Security Trustee.


 


(a)                                  Status


 


It is duly incorporated with limited
liability under the laws of the jurisdiction of its incorporation and is an
authorised institution under the FSMA 2000.


 


(b)                                 Tax status


 


It is a Qualifying Lender.


 


(c)                                  Powers and
authorisations


 


The documents which contain or establish its
constitution include provisions which give power, and all necessary corporate
authority has been obtained and action taken, for it to sign and deliver, and
perform the transactions contemplated in this Agreement and the agreements
entered into in connection herewith and this Agreement and the agreements
entered into in connection herewith constitute its valid, legal and binding
obligations.


 


(d)                                 Rating


 


It has the Requisite Ratings (and will
promptly notify both Funding 1 and the Security Trustee of the occurrence of
any downgrading by the Rating Agencies of any of its rated debt obligations to
a level below the Requisite Ratings).


 


(e)                                  Non-violation


 


Neither the signing and delivery of this
Agreement nor the performance of any of the transactions contemplated in it
does or will contravene or constitute a default under, or cause to be exceeded
any limit on the Funding 1 Liquidity Facility Provider or the powers of its
directors imposed by or contained in (i) any law by which it or any of its
assets is bound or affected, or (ii) any agreement to which it is a party or by
which any of its assets is bound.


 


14.3                        Times for making
representations and warranties


 


The representations and warranties set out in
this Clause
14 (Representations and warranties):


 


(a)                                  are made on the date of this Agreement; and


 


(b)                                 save in respect of the warranty of the
Funding 1 Liquidity Facility Provider given under Clause 14.2(b) (Tax Status),
are deemed to be repeated by the relevant Party on the date of each Funding 1
Liquidity Facility Request, each Funding 1 Liquidity Facility Drawdown Date and
each Funding 1 Interest Payment Date with reference to the facts and
circumstances then existing.


 


21

















 


15.                               UNDERTAKINGS


 


15.1                        Duration


 


The undertakings in this Clause 15 remain in force
from the date of this Agreement for so long as any amount is or may be
outstanding under this Agreement or any Funding 1 Liquidity Facility Commitment
is in force.


 


15.2                        Financial information


 


Funding 1 shall supply to the Funding 1
Liquidity Facility Provider and the Security Trustee:


 


(a)                                  as soon as the same are available (and in
any case before the latest date for publication in accordance with the
Companies Act 1985, as amended), its audited accounts for that financial year
which shall be in such form as will comply with relevant legal and
accounting requirements for the time being; and


 


(b)                                 promptly such other information as the
Security Trustee may reasonably request.


 


15.3                        Information - miscellaneous


 


Funding 1 shall supply to the Funding 1
Liquidity Facility Provider promptly, such further information in its
possession or control regarding its financial condition and operations as it
supplies to the Security Trustee, if the Funding 1 Liquidity Facility Provider
so requests.


 


15.4                        Notification of Default


 


Funding 1 shall notify the Funding 1
Liquidity Facility Provider of any Funding 1 Liquidity Facility Default (and
the steps, if any, being taken to remedy it) promptly upon its occurrence.


 


15.5                        Authorisations


 


Funding 1 shall promptly:


 


(a)                                  obtain, maintain and comply with the terms
of; and


 


(b)                                 supply certified copies to the Funding 1
Liquidity Facility Provider of,


 


any authorisation required under any law or
regulation to enable it to perform its obligations under, or for the validity
or enforceability of, any Funding 1 Liquidity Document.


 


15.6                        United States Activities


 


Funding 1 will not engage in any activities
in the United States (directly or through agents), will not derive any income
from United States sources as determined under United States income tax
principles, and will not hold any property if doing so would cause it to be
engaged or deemed to be engaged in a trade or business within the United States
as determined under United States income tax principles.


 


16.                               DEFAULT


 


16.1                        Funding 1 Liquidity
Facility Default


 


Each of the events set out in Clauses 16.2
(Non-Payment) to 16.4 (Unlawfulness) (inclusive) is a Funding 1 Liquidity
Facility Default (whether or not caused by any reason whatsoever


 


22

















 


outside the control of Funding 1 or any other
person).


 


16.2                        Non-payment


 


(a)                                  Subject to paragraph (b) below, Funding
1 does not pay within 3 London Business Days of the due date any amount payable
by it under the Funding 1 Liquidity Documents at the place at and in the
currency in which it is expressed to be payable.


 


(b)                                 The Funding 1 Liquidity Facility Provider
agrees that the non-payment of any Funding 1 Liquidity Subordinated Amounts
shall only constitute a Funding 1 Liquidity Facility Default under paragraph
(a) above in circumstances where Funding 1 has the requisite funds
to pay such amounts in accordance with the Funding 1 Deed of Charge on the
relevant due date and any such Funding 1 Liquidity Subordinated Amounts are not
then paid.


 


16.3                        Intercompany Loan
Acceleration Notice


 


An Intercompany Loan Acceleration Notice is
served or the Security Trustee having become bound to serve an Intercompany
Loan Acceleration Notice fails to do so within 30 days of becoming so bound.


 


16.4                        Unlawfulness


 


It is or becomes unlawful for Funding 1 to
perform any of its obligations under the Funding 1 Liquidity Documents.


 


16.5                        Acceleration


 


On and at any time after the occurrence of a
Funding 1 Liquidity Facility Default and subject to Clause 18 (Enforcement and
Subordination) and if such Funding 1 Liquidity Facility Default is continuing
the Funding 1 Liquidity Facility Provider may by notice to Funding 1:


 


(a)                                  cancel the Funding 1 Liquidity Facility
Commitment; and/or


 


(b)                                 demand that all or part of the Funding 1
Liquidity Facility Loans, together with accrued interest, and all other amounts
accrued under this Agreement be immediately due and payable, whereupon they
shall become immediately due and payable; and/or


 


(c)                                  demand that all or part of the Funding 1 Liquidity
Facility Loans be payable on demand, whereupon they shall immediately become
payable on demand.


 


17.                               FEES


 


17.1                        Commitment Fee and
Contingent Fee


 


(a)                                  Funding 1 shall (subject to Clause
17.1(b) and (c) below and to Clause 18 (Enforcement and
Subordination)) pay to the Funding 1 Liquidity Facility Provider a commitment
fee computed at the rate of 0.08 per cent. per annum on the undrawn,
uncancelled amount of the Funding 1 Liquidity Facility Commitment during the
period from the date of this Agreement up to and including the last day of the
Funding 1 Liquidity Facility Commitment Period.


 


(b)                                 In the event that a Funding 1 Liquidity
Facility Stand-by Drawing is made, and for so long as any amount is outstanding
under the First Issuer Intercompany Loan:


 


(i)                                     in respect of a Funding 1 Liquidity Facility
Stand-by Drawing up to (and including) the first £60,000,000, the Commitment
Fee referred to in Clause 17.1(a)


 


23

















 


(Commitment Fee and Contingent Fee) will not
be payable and in its place Funding 1 will (subject to Clause 18 (Enforcement and
Subordination)) pay to the Funding 1 Liquidity Facility Provider interest as
determined in accordance with Clause 8.1 (Interest Rate (Funding 1 Liquidity
Facility Drawing)) and Clause 8.2(b) (Interest Rate (Funding 1 Liquidity
Facility Stand-by Drawing)); and


 


(ii)                                  in respect of a Funding 1 Liquidity Facility
Stand-by Drawing equal to and in excess of £60,000,001, the Commitment Fee
referred to in Clause 17.1(a) (Commitment Fee and Contingent Fee) will not be
payable and in its place Funding 1 will (subject to Clause 18 (Enforcement and
Subordination) pay to the Funding 1 Liquidity Facility Provider a contingent
fee computed at the rate of 0.38 per cent. per annum on the amount of the
Funding 1 Liquidity Facility Stand-by Drawing in excess of £60,000,000, plus an
amount equal to any interest received by Funding 1 on the Funding 1 Liquidity
Facility Stand-by Account insofar as it relates to the amount in excess of
£60,000,000.


 


(c)                                  In the event that the First Issuer
Intercompany Loan is repaid or is otherwise cancelled and a Funding 1 Liquidity
Stand-by Drawing is made, the Commitment Fee referred to in Clause
17.1(a) (Commitment Fee and Contingent Fee) will not be payable and
in its place Funding 1 will (subject to Clause 18 (Enforcement and Subordination)
pay to the Funding 1 Liquidity Facility Provider a contingent fee computed at
the rate of 0.38 per cent. per annum on the amount of the Funding 1 Liquidity
Stand-by Drawing, plus an amount equal to any interest received by Funding 1 on
the Funding 1 Liquidity Facility Stand-by Account.


 


(d)                                 Subject to Clause 18 (Enforcement and
Subordination), the accrued commitment fee and contingent fee is payable
quarterly in arrear on each Funding 1 Interest Payment Date.  The accrued commitment fee and contingent
fee is also payable to the Funding 1 Liquidity Facility Provider on the
cancelled amount of the Funding 1 Liquidity Facility Commitment at the time the
cancellation takes effect.


 


17.2                        VAT


 


(a)                                  All payments to be made by Funding 1 under
the Funding 1 Liquidity Documents are exclusive of VAT chargeable thereon and
Funding 1 shall pay to the Funding 1 Liquidity Facility Provider a sum in
respect of any VAT chargeable in respect of any supply made by the Funding 1
Liquidity Facility Provider for the purposes of VAT in connection with the
Funding 1 Liquidity Documents.


 


(b)                                 If VAT is chargeable
on any supply made by the Funding 1 Liquidity Facility Provider to any other
person in connection with a Funding 1 Liquidity Document and Funding 1 is
required by the terms of any Funding 1 Liquidity Document to pay an amount
equal to the consideration for such supply to the Funding 1 Liquidity Facility
Provider, Funding 1 shall also pay to the Funding 1 Liquidity Facility Provider
(in addition to and at the same time as paying such amount) an amount equal to
the amount of such VAT.


 


(c)                                  Where under the Funding 1 Liquidity
Documents, Funding 1 is required to reimburse or indemnify the Funding 1 Liquidity
Facility Provider against any costs, expenses (including legal fees), loss or
liability or otherwise, such obligation to reimburse or indemnify shall extend
to any VAT charged to the Funding 1 Liquidity Facility Provider on such costs,
expenses (including legal fees) or in respect of such loss, liability or
otherwise which is irrecoverable by the Funding 1 Liquidity Facility Provider.


 


24

















 


18.                               ENFORCEMENT
AND SUBORDINATION


 


(a)                                  The Funding 1 Liquidity Facility Provider
acknowledges to the Security Trustee that it is bound by the terms of the
Funding 1 Deed of Charge and, in particular, confirms that no sum, whether in
respect of principal or interest or otherwise relating to any Funding 1
Liquidity Facility Loan, shall be paid by Funding 1 except in accordance with
the provisions of the Funding 1 Cash Management Agreement and the Funding 1
Deed of Charge unless and until all sums required by the Funding 1 Cash
Management Agreement or the Funding 1 Deed of Charge, as the case may be, to be
paid or provided for in priority thereto have been paid or discharged in full.


 


(b)                                 The Funding 1 Liquidity Facility Provider
further agrees that only the Security Trustee may enforce the security created
in favour of, inter alia, the Funding 1 Liquidity Facility Provider and
the Security Trustee by the Funding 1 Deed of Charge and that the Funding 1
Liquidity Facility Provider shall not take any steps for the purpose of:


 


(i)                                     recovering any debts whatsoever owing to it by
Funding 1 save as provided for in accordance with the terms of the Funding 1
Deed of Charge (including, without limitation, by exercising any right of
set-off); or


 


(ii)                                  enforcing any rights arising out of this
Agreement against Funding 1; or


 


(iii)                               procuring the winding-up, administration or
liquidation of Funding 1 in respect of any of its liabilities whatsoever,


 


unless the Security Trustee, having become
bound to serve an Intercompany Loan Acceleration Notice, fails to do so within
30 days of becoming so bound and that failure is continuing (in which case the
Funding 1 Liquidity Facility Provider shall be entitled to take any such steps
and proceedings as it shall deem necessary other than (i) any legal proceedings
for the winding-up of, or for an administration order  or (ii) filing documents with the court for the appointment of an
administrator or (iii) serving a notice of intention to appoint an
administrator, in respect of Funding 1) provided that the Funding 1 Liquidity
Facility Provider shall not be entitled to take any steps or proceedings
pursuant to this Agreement which would contravene Clauses 5 to 9
of the Funding 1 Deed of Charge.


 


(c)                                  Subject to paragraph (b) above, the
Funding 1 Liquidity Facility Provider agrees to defer taking any action or
proceedings against Funding 1 to recover any amounts payable by Funding 1 to
the Funding 1 Liquidity Facility Provider under this Agreement except to the
extent expressly permitted by the provisions of the Funding 1 Deed of Charge
unless and until (then only to the extent that) Funding 1 has assets sufficient
to meet such claim in full having taken into account all other liabilities
(actual, contingent or prospective) of Funding 1 which under the Funding 1 Deed
of Charge rank pari passu with or in priority to its liabilities to the
Funding 1 Liquidity Facility Provider under this Agreement, provided however
that nothing in this paragraph (c) shall prevent the Funding 1
Liquidity Facility Provider from proving for the full amount owed to it by
Funding 1 under this Agreement in the liquidation of Funding 1.


 


(d)                                 Without prejudice to the other provisions of
this Clause
18, the Funding 1 Liquidity Facility Provider covenants with the
Security Trustee that if, whether in the liquidation of Funding 1 or otherwise
(and notwithstanding the provisions of this Clause 18), any payment
(whether of principal, interest or otherwise) is received by it in respect of a
Funding 1 Liquidity Facility Loan other than in accordance with Clauses
4
and 6
of the Funding 1 Cash Management Agreement and Clauses  7 and 8 of the Funding 1 Deed of
Charge, the amount so paid shall be received and held by the Funding 1
Liquidity Facility Provider upon trust for the Security


 


25

















 


Trustee and shall be paid over to the Security Trustee forthwith upon
receipt provided however that this paragraph (d) shall have effect only to the
extent that it does not constitute or create and is not deemed to constitute or
create any mortgage, charge or other Security Interest of any kind.


 


19.                               EXPENSES


 


19.1                        Initial and special costs


 


Subject to Clause 18 (Enforcement and Subordination),
Funding 1 shall forthwith on demand pay the Funding 1 Liquidity Facility
Provider the amount of all costs and expenses (including reasonable legal fees)
incurred by it in connection with:


 


(a)                                  the negotiation, preparation, printing and
execution of:


 


(i)                                     this Agreement and any other documents
referred to in this Agreement;


 


(ii)                                  any other Funding 1 Liquidity Document
(other than a Novation Certificate) executed after the date of this Agreement;


 


(b)                                 any amendment, waiver, consent or suspension
of rights (or any proposal for any of the foregoing) requested by or on behalf
of Funding 1 or, in the case of Clause 2.4 (Change of currency), the
Funding 1 Liquidity Facility Provider and relating to a Funding 1 Liquidity
Document or a document referred to in any Funding 1 Liquidity Document; and


 


(c)                                  any other matter, not of an ordinary
administrative nature, arising out of or in connection with a Funding 1
Liquidity Document.


 


19.2                        Enforcement costs


 


Subject to Clause 18 (Enforcement and Subordination),
Funding 1 shall forthwith on demand pay to the Funding 1 Liquidity Facility
Provider the amount of all costs and expenses (including legal fees) incurred
by it:


 


(a)                                  in connection with the enforcement of, or
the preservation of any rights under, any Funding 1 Liquidity Document; or


 


(b)                                 in investigating any possible Funding 1
Liquidity Facility Default.


 


20.                               STAMP DUTIES


 


Subject to Clause 18 (Enforcement and Subordination),
Funding 1 shall pay and forthwith on demand indemnify the Funding 1 Liquidity
Facility Provider against any liability it incurs in respect of any United
Kingdom stamp, registration and similar tax which is or becomes payable in
connection with the entry into, performance or enforcement of any Funding 1
Liquidity Document.


 


21.                               INDEMNITIES


 


21.1                        Currency indemnity


 


(a)                                  Subject to Clause 18 (Enforcement and
Subordination), if the Funding 1 Liquidity Facility Provider receives an amount
in respect of Funding 1’s liability under the Funding 1 Liquidity Documents or
if that liability is converted into a claim, proof, judgment or order in a
currency


 


26

















 


other than the currency (the contractual currency) in which the amount
is expressed to be payable under the relevant Funding 1 Liquidity Document:


 


(i)                                     Funding 1 shall indemnify the Funding 1
Liquidity Facility Provider as an independent obligation against any loss or
liability arising out of or as a result of the conversion;


 


(ii)                                  if the amount received by the Funding 1
Liquidity Facility Provider, when converted into the contractual currency at a
market rate in the usual course of its business, is less than the amount owed
in the contractual currency, Funding 1 shall forthwith on demand pay to the
Funding 1 Liquidity Facility Provider an amount in the contractual currency
equal to the deficit; and


 


(iii)                               Funding 1 shall forthwith on demand pay to
the Funding 1 Liquidity Facility Provider on demand any exchange costs and
taxes payable in connection with any such conversion.


 


(b)                                 Funding 1 waives any right it may have in
any jurisdiction to pay any amount under the Funding 1 Liquidity Documents in a
currency other than that in which it is expressed to be payable.


 


21.2                        Other indemnities


 


Subject to Clause 18 (Enforcement and Subordination),
Funding 1 shall forthwith on demand indemnify the Funding 1 Liquidity Facility
Provider against any loss or liability which that Funding 1 Liquidity Facility
Provider incurs as a consequence of:


 


(a)                                  the operation of Clause 16.6 (Acceleration) or
if the loss or liability is caused by Funding 1 making a payment other than in
accordance with Clause 9 (Payments);


 


(b)                                 any payment of principal or an overdue
amount being received from any source otherwise than on its Funding 1 Interest
Payment Date and, for the purposes of this paragraph (b), the Funding 1 Interest
Payment Date of an overdue amount is the last day of each Designated Interest
Period (as defined in Clause 8.4 (Default interest)); or


 


(c)                                  (other than by reason of negligence or
default by the Funding 1 Liquidity Facility Provider) a Funding 1 Liquidity
Facility Loan not being made after Funding 1 has delivered a Funding 1
Liquidity Facility Request for that Funding 1 Liquidity Facility Loan; or


 


(d)                                 any reasonable costs, including legal fees,
which the Funding 1 Liquidity Facility Provider may sustain or incur as a
consequence of any default by Funding 1 in the performance of any of the obligations
expressed to be assumed by it in this Agreement.


 


Funding 1’s liability in each case includes any loss of margin or other
loss or expense on account of funds borrowed, contracted for or utilised to
fund any amount payable under any Funding 1 Liquidity Document, any amount
repaid or prepaid or any Funding 1 Liquidity Facility Loan.


 


22.                               EVIDENCE
AND CALCULATIONS


 


22.1                        Accounts


 


27

















 


Accounts maintained by the Funding 1
Liquidity Facility Provider in connection with this Agreement are prima facie
evidence of the matters to which they relate.


 


22.2                        Certificates and
determinations


 


Any certification or determination by the Funding 1 Liquidity Facility
Provider of a rate or amount under this Agreement is, in the absence of
manifest error, conclusive evidence of the matters to which it relates.


 


22.3                        Calculations


 


Interest (including any applicable Mandatory Liquid Asset Cost) and the
fee payable under Clause 17.1 (Commitment fee) accrue from
day to day and are calculated on the basis of the actual number of days elapsed
and a year of 365 days or, if market practice dictates, 360 days.


 


23.                               AMENDMENTS AND
WAIVERS


 


23.1                        Procedure


 


Subject to Clause 25 of the Funding 1 Deed of Charge
(Supplemental Provisions Regarding the Security Trustee), any term of the
Funding 1 Liquidity Documents may be amended or waived with the written
agreement of Funding 1, the Security Trustee and the Funding 1 Liquidity
Facility Provider.


 


23.2                        Waivers and remedies
cumulative


 


The rights of the Funding 1 Liquidity Facility Provider under the
Funding 1 Liquidity Documents:


 


(a)                                  may be exercised as often as necessary;


 


(b)                                 are cumulative and not exclusive of its
rights under the general law; and


 


(c)                                  may be waived only in writing and specifically.


 


Delay in exercising or non-exercise of any such right is not a waiver
of that right.


 


24.                               CHANGES TO THE
PARTIES


 


24.1                        Transfers by Funding 1


 


Funding 1 may not assign, transfer, novate or dispose of any of, or any
interest in, the Funding 1 Liquidity Facility Commitment and/or rights and/or
obligations under this Agreement except that Funding 1 may assign its rights
under this Agreement to the Security Trustee pursuant to the Funding 1 Deed of
Charge.


 


24.2                        Transfer by the Security
Trustee


 


The Security Trustee may assign its rights under this Agreement to any
successor security trustee under the Funding 1 Deed of Charge.


 


24.3                        Transfers by the Cash
Manager


 


The Cash Manager may assign its rights under this Agreement to any
successor Cash Manager under the Cash Management Agreement.


 


28

















 


24.4                        Transfers by the Funding 1
Liquidity Facility Provider


 


(a)                                  The Funding 1 Liquidity Facility Provider
(the Existing
Funding 1 Liquidity Facility Provider) may, subject to paragraph
(b) below, at any time assign, transfer or novate any of its rights
and/or obligations under this Agreement to another person with the Requisite
Ratings (the New Funding 1 Liquidity Facility Provider) provided that the
then current ratings of the Notes of an Issuer are not adversely affected
thereby and further provided that if, at the time of such assignment, transfer
or novation, the Funding 1 Liquidity Facility Provider is a Qualifying Lender,
such other person is also at such time a Qualifying Lender.


 


(b)                                 The prior written consent of Funding 1 and
the Security Trustee is required for any such assignment, transfer or novation,
unless a Funding 1 Liquidity Facility Default is outstanding in which case no
consent is required from Funding 1. 
However, the prior written consent of Funding 1 and the Security Trustee
must not be unreasonably withheld or delayed and will be deemed to have been
given if, within 14 days of receipt by Funding 1 or the Security Trustee (as
applicable) of an application for consent, it has not been expressly refused.


 


(c)                                  A transfer of obligations will be effective
only if either:


 


(i)                                     the obligations are novated in accordance
with Clause
24.5 (Procedure for novations); or


 


(ii)                                  the New Funding 1 Liquidity Facility
Provider confirms to the Security Trustee and Funding 1 in writing that it
undertakes to be bound by the terms of this Agreement (including, without
limitation, the representations and warranties) to be made by it in accordance
with Clause
14.2 (Representations and warranties by the Funding 1 Liquidity
Facility Provider) and the Funding 1 Deed of Charge.  On the transfer becoming effective in this manner the Existing
Funding 1 Liquidity Facility Provider shall be relieved of its obligations
under this Agreement to the extent that they are transferred to the New Funding
1 Liquidity Facility Provider.


 


(d)                                 Nothing in this Agreement restricts the
ability of the Funding 1 Liquidity Facility Provider to sub-contract an
obligation if the Funding 1 Liquidity Facility Provider remains primarily
liable under this Agreement for that obligation.


 


(e)                                  The Existing Funding 1 Liquidity Facility
Provider is not responsible to a New Funding 1 Liquidity Facility Provider for:


 


(i)                                     the execution, genuineness, validity, enforceability
or sufficiency of any Funding 1 Liquidity Document or any other document;


 


(ii)                                  the collectability of amounts payable under
any Funding 1 Liquidity Document; or


 


(iii)                               the accuracy of any statements (whether
written or oral) made in or in connection with any Funding 1 Liquidity
Document.


 


(f)                                    The New Funding 1 Liquidity Facility
Provider confirms to the Existing Funding 1 Liquidity Facility Provider and the
other Finance Parties that it:


 


(i)                                     has made its own independent investigation
and assessment of the financial condition and affairs of each of Funding 1 and
its related entities in connection with its participation in this Agreement and
has not relied exclusively on any information provided to it by the Existing
Funding 1 Liquidity Facility Provider in connection with any Funding 1
Liquidity Document; and


 


29

















 


(ii)                                  will continue to make its own independent
appraisal of the creditworthiness of each of Funding 1 and its related entities
while any amount is or may be outstanding under this Agreement or any Funding 1
Liquidity Facility Commitment is in force.


 


(g)                                 Nothing in any Funding 1 Liquidity Document
obliges the Existing Funding 1 Liquidity Facility Provider to:


 


(i)                                     accept a re-transfer from a New Funding 1
Liquidity Facility Provider of the Funding 1 Liquidity Facility Commitment
and/or rights and/or obligations assigned, transferred or novated under this
Clause; or


 


(ii)                                  support any losses incurred by the New
Funding 1 Liquidity Facility Provider by reason of the non-performance by
Funding 1 of its obligations under this Agreement or otherwise.


 


(h)                                 Any reference in this Agreement to the
Funding 1 Liquidity Facility Provider includes a New Funding 1 Liquidity
Facility Provider.


 


24.5                        Procedure for novations


 


(a)                                  A novation is effected if:


 


(i)                                     the Existing Funding 1 Liquidity Facility
Provider and the New Funding 1 Liquidity Facility Provider deliver to the
Security Trustee a duly completed Novation Certificate, substantially in the
form of Schedule
4; and


 


(ii)                                  the Security Trustee executes such Novation
Certificate.


 


(b)                                 To the extent that they are expressed to be
the subject of the novation in the Novation Certificate:


 


(i)                                     the Existing Funding 1 Liquidity Facility
Provider and the other Parties (the Existing Parties) will be released from
their obligations to each other (the Discharged Obligations);


 


(ii)                                  the New Funding 1 Liquidity Facility
Provider and the Existing Parties will assume obligations towards each other
which differ from the Discharged Obligations only insofar as they are owed to
or assumed by the New Funding 1 Liquidity Facility Provider instead of the
Existing Funding 1 Liquidity Facility Provider;


 


(iii)                               the rights of the Existing Funding 1
Liquidity Facility Provider against the Existing Parties and vice versa (the Discharged
Rights) will be cancelled; and


 


(iv)                              the New Funding 1 Liquidity Facility
Provider and the Existing Parties will acquire rights against each other which
differ from the Discharged Rights only insofar as they are exercisable by or
against the New Funding 1 Liquidity Facility Provider instead of the Existing
Funding 1 Liquidity Facility Provider,


 


all on the date of execution of the Novation Certificate by the
Security Trustee or, if later, the date specified in the Novation Certificate.


 


25.                               DISCLOSURE
OF INFORMATION


 


The Funding 1 Liquidity Facility Provider may
disclose to any person with whom it is


 


30

















 


proposing to enter, or has entered into, any
kind of transfer, participation or other agreement in relation to this
Agreement:


 


(a)                                  a copy of any Funding 1 Liquidity Document;
and


 


(b)                                 any information which the Funding 1
Liquidity Facility Provider has acquired under or in connection with any
Funding 1 Liquidity Document,


 


if that person undertakes to Funding 1 and the Security Trustee to keep
the information confidential.


 


26.                               SET-OFF


 


(a)                                  The Funding 1 Liquidity Facility Provider
undertakes with Funding 1 and the Security Trustee not to exercise or claim any
right of set-off or combination or consolidation of accounts in respect of any
account of Funding 1 with the Funding 1 Liquidity Facility Provider and/or
interest accruing on amounts in any such account or any part of such account in
or towards, or conditionally upon satisfaction of any liabilities to the
Funding 1 Liquidity Facility Provider of Funding 1 or itself in any other
capacity whatsoever or any other person.


 


(b)                                 In the event that the Funding 1 Liquidity
Facility Provider (in breach of its undertaking in paragraph (a) above)
exercises any right of set-off or combination or consolidation of accounts, the
Funding 1 Liquidity Facility Provider shall pay to Funding 1 such additional
amount so that the net amount received by Funding 1 will equal the full amount
which would have been received by it if the Funding 1 Liquidity Facility
Provider had not exercised or claimed such right of set-off or combination or
consolidation of accounts.


 


27.                               SEVERABILITY


 


If a provision of any Funding 1 Liquidity Document is or becomes
illegal, invalid or unenforceable in any jurisdiction, that shall not affect:


 


(a)                                  the legality, validity or enforceability in
that jurisdiction of any other provision of the Funding 1 Liquidity Documents;
or


 


(b)                                 the legality, validity or enforceability in
other jurisdictions of that or any other provision of the Funding 1 Liquidity
Documents.


 


28.                               COUNTERPARTS


 


This Agreement may be executed in any number of counterparts (manually
or by facsimile) each of which, when executed and delivered, shall constitute
an original, but all the counterparts shall together constitute but one and the
same instrument provided, however, that this Agreement shall have no force or
effect until it is executed by the last party to execute the same and shall be deemed
to have been executed and delivered in the place where such last party executed
this Agreement.


 


29.                               NOTICES


 


29.1                        Giving of notices


 


Any notice, communication or demand made under or in connection with
this Agreement shall be in writing and shall be delivered personally, or by
post, fax or cable to the addresses given in Clause 29.2 (Addresses) or at
such other address as the recipient may have notified


 


31

















 


to the other party in writing. 
Proof of posting or despatch of any notice or communication shall be
deemed to be proof of receipt:


 


(a)                                  in the case of a letter, on the third
business day after posting; and


 


(b)                                 in the case of a facsimile on the business
day of despatch.


 


29.2                        Addresses for notices


 


The addresses referred to in this Clause 29 (Notices) are as follows:


 


(a)                                  in the case of Funding 1, to Permanent
Funding (No. 1) Limited at Blackwell House, Guildhall Yard, London EC2V 5AE
(facsimile number +44 (0) 20 7556 0975) for the attention of the Secretary with
a copy to HBOS Treasury Services plc, 33 Old Broad Street, London EC2N 1HZ
(facsimile no. +44 (0) 20 7574 8784) for the attention of Head of Capital
Markets and Securitisation;


 


(b)                                 in the case of the Cash Manager, to Halifax
plc at Trinity Road, Halifax, West Yorkshire HX1 2RG (LP/3/3/SEC) (facsimile
number +44 (0) 113 235 7511) for the attention of Head of Mortgage
Securitisation with a copy to HBOS Treasury Services plc, 33 Old Broad Street,
London EC2N 1HZ (facsimile no. +44 (0) 20 7574 8784) for the attention of Head
of Capital Markets and Securitisation;


 


(c)                                  in the case of the
Security Trustee, to The Bank of New York, One Canada Square, London E14 5AL
(facsimile number + 44 (020) 7964 6061/6399) for the attention of Corporate
Trust Services; and


 


(d)                                 in the case of the Funding 1 Liquidity
Facility Provider, to JPMorgan Chase Bank, 125 London Wall, London EC2Y 5AJ
(facsimile no. +44 20 7777 5305/5311) for the attention of European Loans,


 


or to such other address or facsimile number or for the attention of
such other person or entity as may from time to time be notified by any party
to the others by written notice in accordance with the provisions of this Clause 29.


 


30.                               THIRD PARTY RIGHTS


 


A person who is not a party to this Agreement has no right under the
Contracts (Rights of Third Parties) Act 1999 to enforce any term of this
Agreement, but this does not affect any right or remedy of a third party which
exists or is available apart from that Act.


 


31.                               GOVERNING LAW


 


This Agreement is governed by and construed in accordance with English
law.


 


32.                               SUBMISSION
TO JURISDICTION


 


Each party to this Agreement hereby
irrevocably submits to the non-exclusive jurisdiction of the English courts in
any action or proceeding arising out of or relating to this Agreement, and
hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined by such courts.  Each party to this Agreement hereby
irrevocably waives, to the fullest extent it may possibly do so, any defence or
claim that the English courts are an inconvenient forum for the maintenance or
hearing of such action or proceeding.


 


32

















 


This Agreement has been entered
into on the date stated at the beginning of this Agreement.


 


33

















 


SCHEDULE 1


 


CONDITIONS PRECEDENT
DOCUMENTS


 


1.                                       A copy of the memorandum and articles of
association and certificate of incorporation of Funding 1.


 


2.                                       A copy of a resolution of the board of
directors of Funding 1:


 


(a)                                  approving the terms of, and the transactions
contemplated by, this Agreement and resolving that it execute this Agreement;


 


(b)                                 authorising a specified person or persons to
execute this Agreement on its behalf; and


 


(c)                                  authorising a specified person or persons,
on its behalf, to sign and/or despatch all other documents and notices to be
signed and/or despatched by it under or in connection with this Agreement.


 


3.                                       A specimen of the signature of each person
authorised by the resolution referred to in paragraph 2 above.


 


4.                                       A certificate of an authorised signatory of
Funding 1 certifying that each copy document specified in this Schedule 1
is correct, complete and in full force and effect as at a date no earlier than
the date of this Agreement.


 


5.                                       The
Transaction Documents.


 


6.                                       Confirmation
from Clifford Chance as legal counsel to the Security Trustee that they have
received, on behalf of the Security Trustee, a transaction legal opinion from
Allen & Overy.


 


34

















 


SCHEDULE 2


 


CALCULATION OF THE
MANDATORY LIQUID ASSET COST


 


(a)                                  For the purposes of paragraph (a) of the
definition of Mandatory Liquid Asset Cost, the Mandatory Liquid Asset Cost for
a Funding 1 Liquidity Facility Loan for its Funding 1 Liquidity Facility
Interest Period is the rate determined by the Funding 1 Liquidity Facility
Provider (rounded upward, if necessary, to four decimal places) calculated in
accordance with the following formulae:


 





 


where on the day of application of the formula:


 


B                                        is the
percentage of the Funding 1 Liquidity Facility Provider’s eligible liabilities
(in excess of any stated minimum) which the Bank of England requires the
Funding 1 Liquidity Facility Provider to hold on a non-interest-bearing deposit
account in accordance with its cash ratio requirements;


 


Y                                        is the
applicable LIBOR for that Funding 1 Liquidity Facility Provider;


 


S                                         is the
percentage of the Funding 1 Liquidity Facility Provider’s eligible liabilities
which the Bank of England requires the Funding 1 Liquidity Facility Provider to
place as a special deposit;


 


Z                                        is the
lower of Y and the interest rate per annum paid by the Bank of England on
special deposits; and


 


F                                         is the
charge payable by the Funding 1 Liquidity Facility Provider to the Financial
Services Authority under the fees rules (but, for this purpose, calculated by
the Funding 1 Liquidity Facility Provider on a notional basis as being the
average of the fee tariffs within fee block Category A1 (Deposit acceptors) of
the fees rules, applying any applicable discount and ignoring any minimum fee
required under the fees rules) and expressed in pounds per £1 million of the
tariff base of the Funding 1 Liquidity Facility Provider.


 


(b)                                 For the purposes of this Schedule 2:


 


(i)                                     eligible liabilities and special deposits have the meanings given to them at the time
of application of the formula under or pursuant to the Bank of England Act 1998
or by the Bank of England; and


 


(ii)                                  fee base
means the then current rules on periodic fees in the Supervision Manual of the
FSA Handbook; and


 


(iii)                               tariff base
has the meaning given to it in the fees rules.


 


(c)                                  In the
application of the formula, B, Y, S and Z are included in the formula as
figures and not as percentages, e.g. if B = 0.5% and Y = 15%, BY is calculated
as 0.5 x 15.  A negative result obtained
by subtracting Z from Y is taken as zero.


 


35

















 


(d)                                 (i)            Each formula is applied on the first
day of the relevant Funding 1 Liquidity Interest Period.


 


(ii)                                  Each rate calculated in accordance with the
formula is, if necessary, rounded upward to four decimal places.


 


(iii)                               If the formula produces a negative
percentage, the percentage shall be taken as zero.


 


(e)                                  If the
Funding 1 Liquidity Facility Provider determines, after consultation with
Funding 1 that a change in circumstances has
rendered, or will render, the formula inappropriate, the Funding 1 Liquidity
Facility Provider shall notify Funding 1 of the manner in which the Mandatory
Liquidity Asset Cost will subsequently be calculated. The manner of calculation
so notified by the Funding 1 Liquidity Facility Provider shall, in the absence
of manifest error, be binding on all the parties.


 


36

















 


SCHEDULE 3


 


FORM OF
FUNDING 1 LIQUIDITY FACILITY REQUEST


 


To:          JPMorgan
Chase Bank as Funding 1 Liquidity Facility Provider


 


Copy:                The Bank of
New York (as Security Trustee)


 


From:      Permanent
Funding (No. 1) Limited


 


Date:[          ]


 


PERMANENT FUNDING (NO. 1) LIMITED


£[•,000,000] Funding 1
Liquidity Facility Agreement (as amended and/or restated from time to time)


 


1.                                       We wish to borrow a Funding 1 Liquidity
[Facility Drawing/Facility Stand-by Drawing] as follows:


 


(a)                                  Funding 1 Liquidity Facility Drawdown Date:
[                      ]


 


(b)                                 Funding 1 Liquidity Facility


 


(c)                                  Amount:
£[                      ]


 


(d)                                 Payment Instructions:
[                      ].**


 


(e)                                  Term of Funding 1 Liquidity [Facility
Drawing/Facility Stand-by Drawing]:
[          ]


 


2.                                       We confirm that each condition specified in Clause 4.2
(Further conditions precedent) is satisfied on the date of this Funding 1
Liquidity Facility Request.


 


3.                                       We confirm that the Funding 1 Liquidity
Facility Drawing is to be used for one of the purposes specified in Clause 3
(Purpose).


 


By:


 


PERMANENT FUNDING (NO. 1) LIMITED


Authorised
Signatory


 












**           This will be the Funding 1 Liquidity Facility Stand-by
Account if this is a Funding 1 Liquidity Facility Stand-by Drawing.


 


37

















 


SCHEDULE 4


 


FORM OF NOVATION CERTIFICATE


 


To:                              [The Bank
of New York] (as Security Trustee)


 


From:      [THE
EXISTING FUNDING 1 LIQUIDITY FACILITY PROVIDER] and


[THE NEW FUNDING 1 LIQUIDITY
FACILITY PROVIDER]                                                                                                                                                                                                                                                                                  Date:
[          ]


 


PERMANENT FUNDING (NO. 1) LIMITED


£[l,000,000] Funding 1 Liquidity Facility Agreement as amended
and/or restated from time to time)


 


We refer to Clause 24.5 (Procedure for
novations).


 


1.                                       We JPMorgan Chase Bank (the Existing
Funding 1 Liquidity Facility Provider) and [                      ]
(the New
Funding 1 Liquidity Facility Provider) agree to the Existing Funding
1 Liquidity Facility Provider and the New Funding 1 Liquidity Facility Provider
novating all the Existing Funding 1 Liquidity Facility Provider’s Funding 1
Liquidity Facility Commitment (or part) and/or rights and
obligations referred to in the Schedule in accordance with Clause 24.5 (Procedure for novations).


 


2.                                       The specified date for the purposes of Clause
24.5(b) (Procedure for novations) is [date of novation].


 


3.                                       The New
Funding 1 Liquidity Facility Provider makes the representations and warranties
to be made by it in accordance with Clause 14
(Representations and warranties) as at [date of novation].


 


4.                                       The address
for notices of the New Funding 1 Liquidity Facility Provider for the purposes
of Clause
29.2 (Addresses
for notices) is set out in the Schedule to this Novation Certificate.


 


5.                                       This
Novation Certificate is governed by English law.


 


38

















 


THE SCHEDULE


 


Funding 1 Liquidity Facility Commitment and
rights and obligations to be novated


 


[insert
relevant details]


 


[New Funding 1 Liquidity Facility Provider]


 


[Address for notices]


 


	
  [Existing Funding 1

  	
  [New Funding 1 Liquidity

  	
  [SECURITY TRUSTEE]

  
	
  Liquidity Facility Provider]

  	
  Facility Provider]

  	
   

  
	
  By:

  	
  By:

  	
  By:

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  Date:

  	
  Date:

  



 


39

















 


SIGNATORIES


 


	
  FUNDING 1

  	
   

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  PERMANENT
  FUNDING (NO. 1) LIMITED

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  FUNDING 1 LIQUIDITY
  FACILITY PROVIDER

  	
   

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  JPMORGAN
  CHASE BANK

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  CASH MANAGER

  	
   

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  HALIFAX plc

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  SECURITY TRUSTEE

  	
   

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  THE BANK OF
  NEW YORK

  	
  )

  



 


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