Document:

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.

 

3

 

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

 

4

 

(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

 

6

 

(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,

 

7

 

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.

 

9

 

(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

 

10

 

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

  	
  )

  

 

40Exhibit 10.5.1

 

EXECUTION COPY

 

AMENDED AND RESTATED MASTER DEFINITIONS AND

CONSTRUCTION SCHEDULE

 

 

DATED 12th March, 2004

 

PERMANENT FUNDING (NO. 1) LIMITED

 

PERMANENT MORTGAGES TRUSTEE LIMITED

 

 

 

 

London

ICM:744616.6

 

1

 

CONTENTS

 

Clause

 

	
  1.

  	
  Definitions

  	
   

  
	
  2.

  	
  Interpretation
  and Construction

  	
   

  
	
  3.

  	
  Amendments

  	
   

  
	
  4.

  	
  Governing Law

  	
   

  
	
   

  	
   

  	
   

  
	
  Signatories

  	
   

  

 

 

1.                                      DEFINITIONS

 

In any
agreement, instrument or deed expressly and specifically incorporating by
reference this Master Definitions and Construction Schedule, the undersigned
hereby agree that the following words and expressions shall, unless otherwise
defined therein or unless the context otherwise requires, have the following
meanings:

 

A Principal Deficiency Sub-Ledger means one of four sub-ledgers
of the Principal Deficiency Ledger corresponding to the Term A Advances which
will be established and maintained pursuant to Clause 4.3(b) of the Cash
Management Agreement;

 

AA Principal Deficiency Sub-Ledger means one of four sub-ledgers
of the Principal Deficiency Ledger corresponding to the Term AA Advances which
will be established and maintained pursuant to Clause 4.3(b) of the Cash
Management Agreement;

 

AAA Principal Deficiency Sub-Ledger means one of four sub-ledgers
of the Principal Deficiency Ledger corresponding to the Term AAA Advances,
which will be established and maintained pursuant to Clause 4.3(b) of the Cash
Management Agreement;

 

Accession Undertaking means a form of deed of accession to the
Funding 1 Deed of Charge substantially in the form set out in Schedule 2 to the
Funding 1 Deed of Charge;

 

Account Bank means the bank at which the Mortgages Trustee GIC
Account, the Funding 1 GIC Account, and the Funding 1 Transaction Account are
maintained from time to time, being as at the Closing Date, The Governor and
Company of the Bank of Scotland situated at 116 Wellington Street, Leeds LS1
4LT and thereafter such other Authorised Entity as Funding 1 may choose with
the prior written approval of the Security Trustee or as the Mortgages Trustee
may choose with the prior written consent of the Beneficiaries;

 

Accrued Interest means as at any date (the determination
date) on or after the date hereof and in relation to any Loan,
interest on such Loan (not being interest which is currently payable on the
determination date) which has accrued from and including the Monthly Payment
Day immediately prior to the determination date to and including the
determination date;

 

Act means the Data Protection Act
1998;

 

Additional Funding 1 Liquidity Facility Provider has the meaning given in Clause
10.6(a) of the Funding 1 Deed of Charge;

 

Additional Funding 1 Security means the security created under or
pursuant to the Second Supplemental Funding 1 Deed of Charge;

 

Adjusted Reserve Fund Level means the sum of:

 

(a)                                  the amount standing to the
credit of the General Reserve Fund; and

 

(b)                                 the amount (if any) then
outstanding in respect of item (b) of the relevant Funding 1 Pre-Enforcement
Principal Priority of Payments;

 

Advance means the aggregate of the amount advanced by the
First Start-up Loan Provider to Funding 1 on the Initial Closing Date pursuant
to the First Start-up Loan Agreement, the amount advanced by the Second
Start-up Loan Provider to Funding 1 on the Second Issuer

 

1

 

Closing Date pursuant to the Second
Start-up Loan Agreement, the amount advanced by the Third Start-up Loan
Provider to Funding 1 on the Third Issuer Closing Date, the amount advanced by
the Fourth Start-up Loan Provider to Funding 1 on the Fourth Issuer Closing
Date and the amount advanced by the Start-up Loan Provider or any New Start-up
Loan Provider on the New Issuer Closing Date pursuant to any New Start-up Loan
Agreement, or such part of such amount as shall be outstanding from time to
time;

 

Amended and Restated Master Definitions and Construction
Schedule,
Master
Definitions Schedule and Master Definitions and Construction Schedule means
this schedule as amended and restated from time to time;

 

Alternative Insurance Recommendations means the recommendations
contained in the Offer Conditions provided by the Seller to Borrowers who elect
to arrange independent buildings insurance for their Properties;

 

Annualised CPR means the result of:

 

 

where “M” is expressed as a percentage and
determined as at the most recent Normal Calculation Date as indicated in the
definition of Anticipated Cash Accumulation Period;

 

Anticipated Cash Accumulation Period means on any Normal
Calculation Date, the anticipated number of months required to accumulate
sufficient Principal Receipts to pay the Relevant Accumulation Amount in
relation to the relevant Cash Accumulation Advance, which will be equal to:

 

 

calculated in months and rounded up to the
nearest whole number, where:

 

J =           the
Relevant Accumulation Amount;

 

K =          the
aggregate principal amount outstanding on that Normal Calculation Date of:

 

(a)                                  each Bullet Term Advance and
Scheduled Amortisation Term Advance that was not fully repaid on its relevant
Scheduled Repayment Date; and

 

(b)                                 each other Bullet Term Advance
and Scheduled Amortisation Instalment, the Scheduled Repayment Date of which
falls on or before the Scheduled Repayment Date of the relevant Bullet Term
Advance or Scheduled Amortisation Instalment;

 

L =                               the amount of any available
cash already standing to the credit of the Cash Accumulation Ledger at the
start of that Normal Calculation Date plus the aggregate amount of Cash
Accumulation Requirement paid to Funding 1 since the previous Funding 1
Interest Payment Date;

 

M =                          means:

 

(a)                                  on any date prior to or
including the 12th Normal Calculation Date to occur following the Initial
Closing Date, the sum of each Monthly CPR on the

 

2

 

Normal Calculation Dates which have
occurred since the Initial Closing Date divided by the number of those
Calculation Dates; and

 

(b)                                 on any subsequent date, the
sum of each Monthly CPR on the 12 most recent Normal Calculation Dates which
have occurred prior to that date divided by 12;

 

N =          0.85;
and

 

O =                             the aggregate Outstanding
Principal Balance of the Loans comprising the Trust Property on the previous
Normal Calculation Date (or, if none, the Initial Closing Date);

 

in Arrears or in  arrears means, in respect of a Mortgage
Account, that one or more Monthly Payments in respect of such Mortgage Account
have become due and unpaid by a Borrower;

 

Arrears of Interest means, in respect of a Loan on a given
date, interest, principal (if applicable) and expenses which are due and
payable on that date;

 

Asset Trigger Event means the event that occurs when there is
an amount being debited to the AAA Principal Deficiency Sub-Ledger;

 

Assignment of Halifax Mortgage Re Limited MIG Policies means an assignment of the
Halifax Mortgage Re Limited MIG Policies substantially in the form set out in
Schedule 8 to the Mortgage Sale Agreement;

 

Assignment of Third Party Rights means an assignment of
Related Security and rights of action against third parties substantially in
the form set out in Schedule 7 to the Mortgage Sale Agreement;

 

Auditors means KPMG Audit Plc of 1 Canada Square, Canary
Wharf, London E14 5AG or such other internationally independent firm of
auditors selected from time to time by, (in the case of the Mortgages Trustee),
the Mortgages Trustee and the Security Trustee, or (in the case of Funding 1),
Funding 1 and the Security Trustee;

 

Authorised Entity means (a) any entity the short term
unsecured, unsubordinated and unguaranteed debt of which is rated at least A-1+
by S&P, P-1 by Moody’s, and F1+ by Fitch or (b) any other entity approved
in writing by the Security Trustee and the Rating Agencies, in each case being
an institution authorised to carry on banking business (including accepting
deposits) under the Financial Services and Markets Act 2000;

 

Authorised Investments means:

 

(a)                                  Sterling gilt-edged
securities; and

 

(b)                                 Sterling demand or time
deposits, certificates of deposit and short-term debt obligations (including
commercial paper) provided that in all cases such investments have a maturity
date of 90 days or less and mature on or before the next following Funding 1
Interest Payment Date and the short-term unsecured, unguaranteed and
unsubordinated debt obligations of the issuing or guaranteeing entity or the
entity with which the demand or time deposits are made (being an authorised
person under the Financial Services and Markets Act 2000) are rated at least
A-1+ by Standard & Poor’s, P-1 by Moody’s and F1+ by Fitch or their
equivalents by three other internationally recognised rating agencies;

 

3

 

Authorised Signatory means any authorised signatory referred to
in, as applicable, the Funding 1 Transaction Account Mandate, the Funding 1 GIC
Account Mandate and the Mortgages Trustee GIC Account Mandate;

 

Average Fixed Rate Loan Balance has the meaning given in the
Funding 1 Swap Agreement;

 

Average Tracker Rate Loan Balance has the meaning given in the
Funding 1 Swap Agreement;

 

Average Variable Rate Loan Balance has the meaning given in the
Funding 1 Swap Agreement;

 

BACS means the Bankers’ Automated Clearing Service as
amended from time to time or any scheme replacing the same;

 

Bank Account Agreement means the agreement entered into on the
Initial Closing Date between the Account Bank, the Mortgages Trustee, Funding
1, the Cash Manager and the Security Trustee which governs the operation of the
Bank Accounts (excluding the Funding 1 Liquidity Stand-by Account) (as the same
may be amended and/or supplemented from time to time);

 

Bank Accounts means the Mortgages Trustee GIC Account,
the Funding 1 GIC Account, the Funding 1 Transaction Account, the Funding 1
Liquidity Facility Stand-by Account and any additional or replacement bank
accounts opened in the name of either the Mortgages Trustee and/or Funding 1 from
time to time with the prior written consent of the Security Trustee and the
Rating Agencies;

 

BBB Principal Deficiency Sub-Ledger means one of four sub-ledgers
of the Principal Deficiency Ledger corresponding to the Term BBB Advances which
will be established and maintained pursuant to Clause 4.3(b) of the Cash
Management Agreement;

 

Beneficiaries means both Funding 1 and the Seller together, as
beneficiaries of the Mortgages Trust, and shall include any other beneficiary
of the Mortgages Trust from time to time pursuant to the terms of the Mortgages
Trust Deed;

 

Borrower means, in relation to a Loan, the individual or
individuals specified as such in the relevant Mortgage Terms together with the
individual or individuals (if any) from time to time assuming an obligation to
repay such Loan or any part of it;

 

Buildings Policies means:

 

(a)                                  all buildings insurance
policies relating to freehold or heritable Properties which have been taken out
in the name of the relevant Borrower (and, in the case of the Halifax Policies,
the Seller) in accordance with the applicable Mortgage Terms or the Alternative
Insurance Recommendations; and

 

(b)                                 all landlord’s buildings
insurance policies relating to leasehold Properties including Properties in
Scotland held under a long lease;

 

Bullet Accumulation Liability means, on any Funding 1 Interest Payment
Date prior to any payment under item (d) of the Funding 1 Pre-Enforcement
Principal Priority of Payments, the aggregate of each Relevant Accumulation
Amount at that time of each Bullet Term Advance which is within a Cash
Accumulation Period;

 

4

 

Bullet Accumulation Shortfall means at any time that the Cash
Accumulation Ledger Amount is less than the Bullet Accumulation Liability;

 

Bullet Term Advance means any term advance where the full
amount of principal in respect of that term advance is scheduled for repayment
on a single Funding 1 Interest Payment Date (being the Scheduled Repayment
Date);

 

Business Day means a day which is a London Business Day, a New
York Business Day and a TARGET Business Day;

 

Calculation Date means the first day (or, if not a London
Business Day, the next succeeding London Business Day) of each month or the
date on which Funding 1 acquires a further interest in the Trust Property;

 

Calculation Period means the period from and including a
Calculation Date to but excluding the next following Calculation Date;

 

Calendar Year means a year from the beginning of 1st January to the
end of 31st December;

 

Capitalised Arrears means, in relation to a Loan at any date
(the determination
date), the amount (if any) at such date of any Arrears of Interest
in respect of which, at the determination date, each of the following
conditions have been satisfied:

 

(a)           the
Seller has, by arrangement with the relevant Borrower, agreed to capitalise
such Arrears of Interest; and

 

(b)                                 such Arrears of Interest have
been capitalised and added, in the accounts of the Seller (or, if the
determination date occurs after the Initial Closing Date, the Mortgages
Trustee), to the principal amount outstanding in respect of such Loan;

 

Capitalised Expenses means, in relation to a Loan, the amount
of any expense, charge, fee, premium or payment (excluding, however, any
Arrears of Interest) capitalised and added to the principal amount outstanding
in respect of such Loan in accordance with the relevant Mortgage Terms
(including for the avoidance of doubt, any High Loan-to-Value Fee);

 

Capitalised Interest means the amount of interest that would have
been paid on a Loan if not for the Borrower under that Loan taking a Payment
Holiday;

 

Cash means cash and/or amounts standing to the credit of a
bank account, as the context shall require;

 

Cash Accumulation Advance means a Bullet Term Advance or a Scheduled
Amortisation Instalment which is within a Cash Accumulation Period;

 

Cash Accumulation Ledger means the ledger established and
maintained by the Cash Manager pursuant to Clause 4.3(a) of the Cash Management
Agreement;

 

Cash Accumulation Ledger Amount means, at any time, the
amount standing to the credit of the Cash Accumulation Ledger at that time
(immediately prior to any drawing to be applied on that Interest Payment Date
and prior to any payment under item (h) of the Funding 1 Pre-Enforcement Principal
Priority of Payments);

 

5

 

Cash Accumulation Liability means, on any Funding 1 Interest Payment
Date, prior to any payment under item (d) of the Funding 1 Pre-Enforcement
Principal Priority of Payments, the sum of:

 

(a)           the
Bullet Accumulation Liability at that time; and

 

(b)                                 the aggregate of each Relevant
Accumulation Amount at that time of each Scheduled Amortisation Instalment
which is within a Cash Accumulation Period;

 

Cash Accumulation Period means the period beginning on
the earlier of:

 

(a)                                  the commencement of the
Anticipated Cash Accumulation Period relating to the Relevant Accumulation
Amount; and

 

(b)                                 in respect of an Original
Bullet Term Advance, six months prior to the Scheduled Repayment Date of that
Original Bullet Term Advance and, in respect of an Original Scheduled
Amortisation Instalment, three months prior to the Scheduled Repayment Date of
that Original Scheduled Amortisation Instalment;

 

and ending
when Funding 1 has fully repaid the Bullet Term Advance or Scheduled
Amortisation Instalment, as applicable;

 

Cash Accumulation Requirement means on a Calculation Date:

 

(a)                                  the outstanding principal
amounts in relation to each Cash Accumulation Advance;

 

(b)                                 plus amounts due in paragraphs
2.2(a) and 2.2(b) of the Funding 1 Pre-Enforcement Principal Priority of
Payments;

 

(c)                                  less the amount standing to
the credit of the Cash Accumulation Ledger at the last Funding 1 Interest
Payment Date (which amount was not distributed on that Funding 1 Interest
Payment Date to the Issuer with the relevant Cash Accumulation Requirement);

 

(d)                                 less the sum of the Cash
Accumulation Requirement paid to Funding 1 on a previous Distribution Date
during the relevant Interest Period;

 

Cash Accumulation Shortfall means, at any time, that the Cash
Accumulation Ledger Amount is less than the Cash Accumulation Liability;

 

Cash Management Agreement means the cash management agreement entered
into on the Initial Closing Date between the Cash Manager, the Mortgages Trustee,
Funding 1, and the Security Trustee (as the same may be amended and/or
supplemented from time to time);

 

Cash Management Services means the cash management services set out
in the Cash Management Agreement;

 

Cash Manager means Halifax acting, pursuant to the Cash Management
Agreement, as agent for the Mortgages Trustee, Funding 1 and the Security
Trustee inter
alia to manage all cash transactions and maintain certain ledgers on
behalf of the Mortgages Trustee, Funding 1 and the Security Trustee (which
expression shall include such other person as may be appointed from time to
time as Cash Manager pursuant to the Cash Management Agreement);

 

6

 

Cash Manager Termination Event has the meaning given in Clause 13.1
of the Cash Management Agreement;

 

Certificate of Title means a solicitor’s, licensed conveyancer’s
or (in Scotland) qualified conveyancer’s report or certificate of title
obtained by or on behalf of the Seller in respect of each Property substantially
in the form of the pro-forma set out in the Standard Documentation;

 

Class A Notes means the Class A First Issuer Notes, the
Class A Second Issuer Notes, the Class A Third Issuer Notes, the Class A Fourth
Issuer Notes and any class A notes issued by any New Issuer;

 

Clearing Agency means an agency registered under
provisions of section 17A of the United States Securities Exchange Act of 1934;

 

Clearing Corporation means a corporation within the meaning of
the New York Uniform Commercial Code;

 

Clearstream, Luxembourg means Clearstream Banking,
société anonyme;

 

Closing Date means the Initial Closing Date (or the First Issuer
Closing Date), the Second Issuer Closing Date, the Third Issuer Closing Date,
the Fourth Issuer Closing Date and any New Issuer Closing Date;

 

Collection Account means the collection account in the name
of the Servicer which is from time to time used for the purpose of collecting,
directly or indirectly, monies due in respect of the Loans and/or the Related
Security forming part of the Trust Property;

 

Completion means the completion of the sale and purchase of the
relevant Portfolio pursuant to and in accordance with Clause 3 or 4
(as applicable) of the Mortgage Sale Agreement;

 

Convention means the Modified Following Business Day Convention
as defined in the 2000 ISDA Definitions published by the International Swaps
and Derivatives Associations;

 

Corporate Services Agreements means, together, the Funding 1 Corporate
Services Agreement, the First Issuer Corporate Services Agreement, the Second
Issuer Corporate Services Agreement, the Third Issuer Corporate Services
Agreement, the Fourth Issuer Corporate Services Agreement and the Mortgages
Trustee Corporate Services Agreement;

 

CPR means on any Calculation Date the annualised
principal repayment rate of all the Loans comprised in the Trust Property
during the previous Calculation Period calculated as follows:

 

 

where “R’’ equals the result (expressed as a
percentage) of the total Principal Receipts received during the period of one
month (or, if shorter, from and including the Closing Date) ending on that
Calculation Date divided by the aggregate Outstanding Principal Balance of the
Loans comprised in the Trust Property as at the first day of that period;

 

Current Funding 1 Share means the amount of Trust Property
beneficially owned by Funding 1 from time to time, as determined in accordance
with Clause
8 of the Mortgages Trust Deed;

 

7

 

Current Funding 1 Share Percentage means the percentage share of
Funding 1 in the Trust Property from time to time, as determined in accordance
with Clause
8 of the Mortgages Trust Deed;

 

Current Seller Share means the amount of Trust Property,
beneficially owned by the Seller from time to time, as determined in accordance
with Clause
8 of the Mortgages Trust Deed;

 

Current Seller Share Percentage means the percentage share of
the Seller in the Trust Property from time to time as determined in accordance
with Clause
8 of the Mortgages Trust Deed;

 

Current Swap Excluded Termination Amount means, in relation to an
Issuer  Swap Agreement, an amount equal
to:

 

(a)                                  the amount of any termination
payment due and payable to the relevant Issuer Swap Provider as a result of an
Issuer Swap Provider Default or following an Issuer Swap Provider Downgrade
Termination Event;

 

less

 

(b)                                 the amount, if any, received
by the relevant Issuer from a replacement swap provider upon entry by that
Issuer into an agreement with such replacement swap provider to replace such
swap agreement which has terminated as a result of an Issuer Swap Provider
Default or following an Issuer Swap Provider Downgrade Termination Event.

 

Customer Files means the file or files relating to each
Loan containing, inter alia:

 

(a)                                  all material correspondence
relating to that Loan; and

 

(b)                                 the completed mortgage
documentation applicable to the Loan (other than the Title Deeds) including the
Valuation Report and the solicitor’s or licensed conveyancer’s Certificate of
Title,

 

whether original documentation, electronic
form or otherwise;

 

Data Controller means the Mortgages Trustee and the
Beneficiaries;

 

Data Processor means the Servicer;

 

Data Processor Agreement means the agreement entered into by, inter alios,
the Data Controllers and the Data Processor dated 25th November, 2003 pursuant
to which the Data Controllers appointed the Data Processor to process data on
their respective behalfs;

 

Data Subject has the same meanings as
assigned to that term in the Act;

 

D.D. Date means the date of delivery to the Account Bank or
BACS (as the case may be) of such instructions as may be necessary from time to
time for the debit of a Borrower’s account in respect of which there is a
direct debit mandate;

 

Deed of Accession means, as applicable, the First Deed of
Accession, the Second Deed of Accession, the Third Deed of Accession and any
New Deed of Accession;

 

8

 

Deed of Accession  and Release Supplemental to the Funding 1 Deed of
Charge means the deed so named dated 31st July, 2002;

 

Deed of Consent means a deed whereby a person in or
intended to be in occupation of a Property situated in England and Wales agrees
with the Seller to postpone his or her interest (if any) in the Property so
that it ranks after the interest created by the relevant Mortgage;

 

Deed of Postponement means a deed or agreement whereby a
mortgagee of or the heritable creditor in relation to a Property agrees with
the Seller to postpone its mortgage or standard security (as applicable) over
the Property so that the sums secured by it will rank for repayment after the
sums secured by the relevant Mortgage;

 

Deedstore Loan means a type of Loan product that gives
the Borrower the option to leave a small balance owing on the loan account so
that the relevant Title Deeds can continue to be lodged with Halifax;

 

Deemed AAA Rating means the deemed rating of a Term Advance
Rating where the corresponding Notes are rated, on the Closing Date thereof,
A-1+ by S&P, P-1 by Moody’s and F1+ by Fitch;

 

Delayed Cashback means in relation to any Loan, the
agreement by the Seller to pay an amount to the relevant Borrower after a
specified period of time following completion of the relevant Loan;

 

Designated Interest Period has the meaning given to it in Clause 8.3
of the Funding 1 Liquidity Facility Agreement;

 

Direct Debiting Scheme means the scheme for the manual or
automated debiting of bank accounts operated in accordance with the detailed
rules of certain members of the Association for Payment Clearing Services;

 

Distribution Date means the date which is two London
Business Days after each Calculation Date, being the date that the Mortgages
Trustee shall distribute the Mortgages Trust Available Revenue Receipts and the
Mortgages Trust Available Principal Receipts to Funding 1 and the Seller;

 

Double Taxation Treaty means any convention between the
government of the United Kingdom and any other government for the avoidance of
double taxation;

 

Drawdown Date means, in respect of:

 

(a)                                  the First Issuer Intercompany
Loan, the Initial Closing Date;

 

(b)                                 the Second Issuer Intercompany
Loan, the Second Issuer Closing Date;

 

(c)                                  the Third Issuer Intercompany
Loan, the Third Issuer Closing Date;

 

(d)                                 the Fourth Issuer Intercompany
Loan, the Fourth Issuer Closing Date; and

 

(e)                                  any New Intercompany Loan, the
date on which the New Term Advances thereunder are made;

 

9

 

Drawdown Notice means, in respect of an Intercompany Loan,
a notice delivered by Funding 1 to the Issuer and the Security Trustee
requesting a drawing under that Intercompany Loan Agreement;

 

DTC means The Depository Trust Company;

 

Early Repayment Fee means any fee (other than a Redemption Fee)
which a Borrower is required to pay in the event that the Borrower is in default
or his or her Loan becomes repayable for any other mandatory reason or he or
she repays all or any part of the relevant Loan before a specified date;

 

Eligible General Reserve Fund Principal Repayments means:

 

(a)                                  prior to the occurrence of a
Trigger Event:

 

(i)                                     repayments of principal which
are then due and payable in respect of the Original Bullet Term Advances; and

 

(ii)                                  repayments of principal in
respect of Original Scheduled Amortisation Term Advances on their respective
final maturity dates only; and

 

(b)                                 on or after the occurrence of
a Non-Asset Trigger Event but prior to the occurrence of an Asset Trigger
Event, repayments of principal in respect of Original Bullet Term Advances and
Original Scheduled Amortisation Term Advances on their respective final
maturity dates only,

 

in each case prior to the service of an
Intercompany Loan Acceleration Notice on Funding 1 and taking into account any
allocation of principal to meet any deficiency in Funding 1’s Available Revenue
Receipts;

 

Eligible Liquidity Facility Principal Repayments means:

 

(a)                                  prior to the occurrence of a
Trigger Event:

 

(i)                                     repayments of principal which
are then due and payable in respect of the Original Bullet Term Advances; and

 

(ii)                                  repayments of principal in
respect of Original Scheduled Amortisation Term Advances on their respective
Final Repayment Dates only; and

 

(b)                                 on or after the occurrence of
a Non-Asset Trigger Event but prior to the occurrence of an Asset Trigger
Event, repayments of principal in respect of Original Bullet Term Advances and
Original Scheduled Amortisation Term Advances on their respective Final
Repayment Dates,

 

in each case prior to the service of an Intercompany
Loan Acceleration Notice on Funding 1 and taking into account any allocation of
principal to meet any deficiency in Funding 1’s Available Revenue Receipts.

 

Following the occurrence of an Asset
Trigger Event, the Funding 1 Liquidity Facility will not be available to repay
principal in respect of Original Bullet Term Advances or Original Scheduled Term
Advances;

 

Eligible Liquidity Fund Principal Repayments means:

 

10

 

(a)                                  prior to the occurrence of a
Trigger Event:

 

(i)                                     repayments of principal which
are then due and payable in respect of the Original Bullet Term Advances; and

 

(ii)                                  repayments of principal in
respect of Original Scheduled Amortisation Term Advances on their respective
Final Repayment Dates only; and

 

(b)                                 on or after the occurrence of
a Non-Asset Trigger Event but prior to the occurrence of an Asset Trigger
Event, repayments of principal in respect of Original Bullet Term Advances and
Original Scheduled Amortisation Term Advances on their respective Final
Repayment Dates,

 

in each case prior to the service of an Intercompany
Loan Acceleration Notice on Funding 1 and taking into account any allocation of
principal to meet any deficiency in Funding 1’s Available Revenue Receipts;

 

Encumbrance has the same meaning as Security Interest;

 

Enforcement Procedures means the procedures for the enforcement
of Mortgages undertaken by the Servicer from time to time in accordance with
the Seller’s Policy;

 

English Loan means a Loan which is secured by an English Mortgage;

 

English Mortgage means a Mortgage secured over a property
in England or Wales;

 

Euroclear means Euroclear Bank S.A./N.V., as operator of the
Euroclear System or the successor for the time being to such business;

 

Exchange Act means the United States Securities Exchange Act of
1934, as amended;

 

Exhibit means the exhibit to the Mortgage Sale Agreement
which sets out details of the Provisional Portfolio and the Standard
Documentation;

 

Extension  Request has the meaning given in Clause
2.3(a) of the Funding 1 Liquidity Facility Agreement;

 

Facility Office means the office through which the Funding
1 Liquidity Facility Provider (or any replacement liquidity facility provider)
will perform all or any of its obligations under the Funding 1 Liquidity
Facility Agreement;

 

Final Repayment Date means the final repayment date of each
Term Advance, as specified in the relevant Issuer Master Definitions and
Construction Schedule;

 

Financial Year means the 12 month period ending on the
last day of the calendar year;

 

First Deed of Accession means the first deed of accession to the
Funding 1 Deed of Charge entered into on the Second Issuer Closing Date between
Funding 1, the First Issuer, the Second Issuer, the Corporate Services
Provider, the Account Bank, the Security Trustee, the Seller, the First
Start-up Loan Provider, the Second Start-up Loan Provider, the Cash Manager,
the Funding 1 Swap Provider and the Funding 1 Liquidity Facility Provider as
supplemented, amended and/or restated from time to time;

 

11

 

First Deed of Amendment to the Intercomany Loan Terms and
Conditions means the first deed of amendment to the Intercompany Loan Terms and
Conditions entered into on the Third Issuer Closing Date between Funding 1, the
First Issuer, the Second Issuer, the Security Trustee and the Agent Bank;

 

First Issuer means Permanent Financing (No. 1) PLC (registered
number 4416192), a public limited company incorporated under the laws of
England and Wales, whose registered office is at Blackwell House, Guildhall
Yard, London EC2V 5AE;

 

First Issuer Closing Date or the Initial Closing Date means 14th June,
2002;

 

First Issuer Intercompany Loan Agreement means the First Issuer
Intercompany Loan Confirmation and the Intercompany Loan Terms and Conditions
together entered into on the Initial Closing Date by the First Issuer, Funding
1 and the Security Trustee (as the same may be amended and/or supplemented from
time to time);

 

First Issuer Security means security created by the First Issuer
pursuant to the First Issuer Deed of Charge in favour of the First Issuer
Secured Creditors;

 

First Start-up Loan means the start-up loan that the First
Start-up Loan Provider made available to Funding 1 pursuant to the First
Start-up Loan Agreement;

 

First Start-up Loan Agreement means the agreement entered into on the
Initial Closing Date between Funding 1, the First Start-up Loan Provider and
the Security Trustee relating to the provision of the First Start-up Loan to
Funding 1 (as the same may be amended and/or supplemented from time to time);

 

First Start-up Loan Provider means Halifax in its capacity as provider
of the First Start-up Loan;

 

Fitch means Fitch Ratings Limited;

 

Fixed Rate Loans means those Loans to the extent that and
for such time that the interest rate payable by the Borrower on all or part of
the Outstanding Principal Balance does not vary and is fixed for a certain
period of time by the Seller;

 

Flexible Draw Capacity means an amount equal to the excess of (a)
the maximum amount that Borrowers may draw under Flexible Loans included in the
Trust Property (whether or not drawn) over (b) the aggregate principal balance
of actual Flexible Loan advances in the Trust Property on the relevant
Calculation Date;

 

Flexible Loan means a type of Loan product that typically
incorporates features that give the Borrower options to, among other things,
make further drawings on the loan account and/or to overpay or underpay
interest and principal in a given month;

 

Flexible Loan Conditions means Mortgage Conditions applicable to
any Flexible Loan;

 

Flexible Loan Drawing means any further drawing of monies made
by a Borrower under a Flexible Loan other than the Initial Advance;

 

Fourth Issuer means Permanent Financing (No. 4) PLC (registered
number 4988201), a public limited company incorporated under the laws of
England and Wales, whose registered office is at Blackwell House, Guildhall
Yard, London EC2V 5AE;

 

12

 

Fourth Issuer Closing Date means on or about 12th March, 2004;

 

Fourth Issuer Intercompany Loan Agreement means the Fourth Issuer
Intercompany Loan Confirmation and the Intercompany Loan Terms and Conditions
together entered into on the Fourth Issuer Closing Date by the Fourth Issuer,
Funding 1 and the Security Trustee (as the same may be amended and/or
supplemented from time to time);

 

Fourth Issuer Security means the security created by the Fourth
Issuer pursuant to the Fourth Issuer Deed of Charge in favour of the Fourth
Issuer Secured Creditors;

 

Fourth Start-up Loan means the start-up loan that the Fourth
Start-up Loan Provider has made available to Funding 1 pursuant to the Fourth
Start-up Loan Agreement;

 

Fourth Start-up Loan Agreement means the agreement entered into on the
Fourth Issuer Closing Date between Funding 1, the Fourth Start-up Loan Provider
and the Security Trustee relating to the provision of the Fourth Start-up Loan
to Funding 1 (as the same may be amended and/or supplemented from time to
time);

 

Fourth Start-up Loan Provider means Halifax in its capacity as provider
of the Fourth Start-up Loan;

 

Freedom of Agency Indemnity Policy means the freedom of agency
indemnity policy written by Royal & Sun Alliance Insurance PLC in favour of
the Seller and any endorsements or extensions thereto as issued from time to
time, or any such similar alternative or replacement policy or policies as may
in future be issued in favour of the Seller;

 

FSMA 2000 or FSMA means the Financial Services and
Markets Act 2000 (as amended from time to time);

 

Funding 1 means Permanent Funding (No. 1) Limited (registered
number 4267660), a limited company incorporated under the laws of England and
Wales, whose registered office is at Blackwell House, Guildhall Yard, London
EC2V 5AE;

 

Funding 1 Agreements or Funding 1 Transaction Documents means each
of the Transaction Documents to which Funding 1 is a party (as the same may be
amended, varied and/or supplemented from time to time) including (but not
limited to) the Master Definitions and Construction Schedule the Servicing
Agreement, the Mortgages Trust Deed, the Halifax Deed and Power of Attorney,
the Funding 1 Deed of Charge (including, for the avoidance of doubt the Second
Supplemental Funding 1 Deed of Charge), the Funding 1 Swap Agreement, the
Funding 1 Corporate Services Agreement, the Funding 1 Liquidity Facility
Agreement, each Intercompany Loan Agreement, the First Deed of Amendment to the
Intercompany Loan Terms and Conditions, the Cash Management Agreement, the Bank
Account Agreement, the Funding 1 Guaranteed Investment Contract, each Start-up
Loan Agreement, the Mortgage Sale Agreement, each Scottish Declaration of
Trust, the Seller Power of Attorney, the Insurance Acknowledgements, the
Insurance Endorsements and all other agreements referred to therein or
otherwise referred to as “Funding 1 Agreements” in each Accession Undertaking entered
into by, inter
alios, Funding 1 and the Security Trustee, from time to time;

 

Funding 1 Available Principal Receipts means on the day falling four
Business Days prior to each Funding 1 Interest Payment Date, an amount equal to
the aggregate of:

 

(a)                                  all Funding 1 Principal
Receipts received by Funding 1 during the Interest Period ending on the
relevant Funding 1 Interest Payment Date;

 

13

 

(b)                                 all other Funding 1 Principal
Receipts standing to the credit of the Cash Accumulation Ledger which are to be
applied on the next Funding 1 Interest Payment Date to repay a Bullet Term
Advance and/or, subject to Rule 1 as set out in paragraph 2.2(a) of Part II of
Schedule 3 to the Funding 1 Deed of Charge, a Scheduled Amortisation
Instalment, or to make a payment under items (a) (b) or (c) of the Funding 1
Pre-Enforcement Principal Priority of Payments and, if such Funding 1 Interest
Payment Date occurs on or after a Trigger Event, the remainder of such receipts
standing to the credit of the Cash Accumulation Ledger;

 

(c)                                  the amounts (if any) to be
credited to the Principal Deficiency Ledger pursuant to paragraphs (g), (i),
(k) and (m) in the Funding 1 Pre-Enforcement Revenue Priority of Payments on
the relevant Funding 1 Interest Payment Date;

 

(d)                                 in so far as available for and
needed to make Eligible Liquidity Facility Principal Repayments, any amounts
available to be drawn under the Funding 1 Liquidity Facility (but less any
amounts applied or to be applied on the relevant date in payment of interest
and other revenue expenses as set out in paragraphs (a) to (f), (h) and (l) of
the Funding 1 Pre-Enforcement Revenue Priority of Payments plus any amounts
which will be repaid to the Funding 1 Liquidity Facility Provider under item
(a) of the relevant priority of payments (relating to the allocation of Funding
1 Available Principal Receipts) on the next Funding 1 Interest Payment Date
(i.e. occurring at the end of such period of four Business Days) to the extent
that such repayment is available to be redrawn on that Funding 1 Interest
Payment Date); and

 

(e)                                  in so far as available for and
needed to make Eligible General Reserve Fund Principal Repayments, the amount
that would then be standing to the credit of the General Reserve Ledger (but
less any amounts applied or to be applied on the relevant date in payment of
interest and other revenue expenses as set out in paragraphs (a) to (n)
(inclusive) of the Funding 1 Pre-Enforcement Revenue Priority of Payments plus
any amounts which will be credited to the General Reserve Ledger under item (b)
of the relevant priority of payments (relating to the allocation of Funding 1
Available Principal Receipts) on the next Funding 1 Interest Payment Date (i.e.
occurring at the end of such period of four Business Days),

 

(f)                                    in so far as available for and
needed to make Eligible Liquidity Reserve Fund Principal Repayments, the amount
that would then be standing to the credit of the Liquidity Reserve Ledger (but
less any amounts applied or to be applied on the relevant date in payment of
interest and other revenue expenses as set out in paragraphs (a) to (f)
(inclusive) and (h), (j) and (l) of the Funding 1 Pre-Enforcement Revenue
Priority of Payments plus any amounts which will be credited to the Liquidity
Reserve Ledger under item (c) of the relevant priority of payments (relating to
the allocation of Funding 1 Available Principal Receipts) on the next Funding 1
Interest Payment Date (i.e. occurring at the end of such period of four Business
Days),

 

less

 

(g)                                 the amounts to be applied on
the relevant Funding 1 Interest Payment Date to pay paragraphs (a) to (f)
(inclusive), (h), (j) and (l) of the Funding 1 Pre-Enforcement Revenue Priority
of Payments;

 

Funding 1 Available Revenue Receipts means for each Funding 1
Interest Payment Date, an amount calculated on the day falling four Business
Days prior to such Funding 1 Interest Payment Date, and equal to the aggregate
of:

 

14

 

(a)                                  all Mortgages Trust Available
Revenue Receipts distributed or to be distributed to Funding 1 during the then
current Interest Period;

 

(b)                                 any amounts paid or to be paid
by the Seller to Funding 1 during the then current Interest Period in
consideration of the seller acquiring a further interest in the Trust Property;

 

(c)                                  other net income of Funding 1
including all amounts of interest received on the Funding 1 GIC Account, the
Funding 1 Transaction Account and/or Authorised Investments and amounts
received by Funding 1 under the Funding 1 Swap Agreement (other than any early
termination amount received by Funding 1 under the Funding 1 Swap Agreement),
in each case to be received during the then current Interest Period; and

 

(d)                                 the amounts then standing to
the credit of the General Reserve Ledger,

 

(e)                                  if a Liquidity Reserve Fund
Rating Event has occurred and is continuing, and there are no amounts standing
to the credit of the General Reserve Ledger, the amounts then standing to the
credit of the Liquidity Reserve Ledger and available to be drawn, to the extent
necessary to pay the items in paragraphs (a) to (f), (h), (j) and (l) in the
Funding 1 Pre-enforcement Revenue Priority of Payments; and

 

(f)                                    if a Liquidity Reserve Fund
Rating Event has occurred but is no longer continuing due to an increase in the
Seller’s Rating since the preceding Funding Interest Payment Date, and Funding
1 elects to terminate the Liquidity Reserve Fund, all amounts standing to the
credit of the Liquidity Reserve Ledger,

 

less:

 

(a)                                  any payment made by the Seller
to Funding 1 during the then current Interest Period of the amount outstanding
under an Intercompany Loan; and

 

(b)                                 the proceeds of any New
Intercompany Loan received by Funding 1 during the then current Interest
Period;

 

Funding 1 Bank Accounts means the Funding 1 GIC Account, the
Funding 1 Transaction Account, the Funding 1 Liquidity Facility Stand-by
Account and such other bank account(s) held in the name of Funding 1 with the
approval of the Security Trustee from time to time;

 

Funding 1 Charged Property means the property charged by Funding 1
pursuant to the Funding 1 Deed of Charge and includes, for the avoidance of
doubt, the property charged by Funding 1 pursuant to the Second Supplemental
Funding 1 Deed of Charge;

 

Funding 1 Corporate Services Agreement means in respect of Holdings,
Funding 1 and the Post-Enforcement Call Option Holder, the agreement dated on
the Initial Closing Date and made between the Funding 1 Corporate Services
Provider, the Share Trustee, Holdings, Funding 1, the Post-Enforcement Call
Option Holder, Halifax and the Security Trustee for the provision by the
Funding 1 Corporate Services Provider of certain corporate services and
personnel to Funding 1, Holdings and the Post-Enforcement Call Option Holder (as
the same may be amended and/or supplemented from time to time);

 

Funding 1 Corporate Services Fee Letter means the letter dated the
date of the Funding 1 Corporate Services Agreement between, inter alios,
Funding 1, PECOH, Holdings, the

 

15

 

Security Trustee and the Funding 1
Corporate Services Provider, setting out the amount of fees payable to the
Funding 1 Corporate Services Provider by Funding 1;

 

Funding 1 Corporate Services Provider means Structured Finance
Management Limited or such other person or persons for the time being acting as
corporate services provider to Funding 1, Holdings and the Post-Enforcement
Call Option Holder under the Funding 1 Corporate Services Agreement;

 

Funding 1 Deed of Charge means the deed of charge entered into on
the Initial Closing Date between Funding 1, the First Issuer, the Corporate
Services Provider, the Account Bank, the Security Trustee, the Seller, the
First Start-up Loan Provider, the Cash Manager, the Funding 1 Swap Provider and
the Funding 1 Liquidity Facility Provider, as supplemented and amended by the
Deed of Accession and Release Supplemental to the Funding 1 Deed of Charge, the
Second Supplemental Funding 1 Deed of Charge and as supplemented and amended by
the First Deed of Accession, the Second Deed of Accession and the Third Deed of
Accession and as the same may be further supplemented, amended and/or restated
or varied from time to time;

 

Funding 1 GIC Account means the account in the name of Funding 1
and the Security Trustee (sort code 12-24-55, account number 00998203) held at
the Account Bank and maintained subject to the terms of the Funding 1
Guaranteed Investment Contract, the Bank Account Agreement and the Funding 1
Deed of Charge or such additional or replacement account as may for the time
being be in place with the prior consent of the Security Trustee;

 

Funding 1 GIC Account Agreement has the same meaning as Funding 1
Guaranteed Investment Contract;

 

Funding 1 GIC Account Mandate means the bank account mandate between
Funding 1 and the Account Bank relating to the operation of the Funding 1 GIC
Account;

 

Funding 1 GIC Balance means, on any day during an Interest
Period, the amount standing to the credit of the Funding 1 GIC Account as at
the opening of business on such day;

 

Funding 1 GIC Provider means The Governor and Company of the Bank
of Scotland acting pursuant to the Funding 1 Guaranteed Investment Contract and
or such other person for the time being acting as provider of a guaranteed
investment contract to Funding 1;

 

Funding 1 GIC Rate means the rate of interest accruing on the
balance standing to the credit of the Funding 1 GIC Account equal to a rate of
three month LIBOR less 0.25 per cent. per annum;

 

Funding 1 Guaranteed Investment Contract or Funding 1 GIC Account Agreement means
the guaranteed investment contract entered into on the Initial Closing Date
between Funding 1, the Funding 1 GIC Provider, the Cash Manager and the
Security Trustee, in relation to interest to be earned on the Funding 1 GIC
Balance (as the same may be amended and/or supplemented from time to time);

 

Funding 1 Income Deficit means the amount of the shortfall between
Funding 1 Available Revenue Receipts and the amounts required to pay items (a)
to (f) (inclusive), (h), (j), and (i) of the Funding 1 Pre-Enforcement Revenue
Priority of Payments

 

Funding 1 Interest Payment Date means the 10th day of
September, December, March and June in each year (or, if such day is not a
Business Day, the next succeeding Business Day);

 

16

 

Funding 1 Ledgers means the Funding 1 Principal Ledger, the
Funding 1 Revenue Ledger, the General Reserve Ledger, the Liquidity Reserve
Ledger, the Principal Deficiency Ledger, the Intercompany Loan Ledger, the Cash
Accumulation Ledger and the Funding 1 Liquidity Facility Ledger;

 

Funding 1 Liquidity Documents means the Funding 1 Liquidity Facility
Agreement, a Novation Certificate or any other document designated as such by
the Funding 1 Liquidity Facility Provider and Funding 1;

 

Funding 1 Liquidity Drawing means a Funding 1 Liquidity Facility
Drawing or a Funding 1 Liquidity Facility Stand-by Drawing as the context so
requires;

 

Funding 1 Liquidity Facility means the sterling advances facility made in
respect of certain of the payment obligations of Funding 1 arising out of the
First Issuer Intercompany Loan Agreement, and/or the Second Issuer Intercompany
Loan Agreement and/or the Third Issuer Intercompany Loan Agreement and/or the
Fourth Issuer Intercompany Loan made available by the Funding 1 Liquidity
Facility Provider to Funding 1 under the Funding 1 Liquidity Facility Agreement
and drawable by way of Funding 1 Liquidity Facility Drawings and/or Funding 1
Liquidity Facility Stand-by Drawings;

 

Funding 1 Liquidity Facility Agreement means the liquidity facility
agreement made on the Initial Closing Date as amended and restated on the
Second Issuer Closing Date, the Third Issuer Closing Date and as further
amended and restated on the Fourth Issuer Closing Date and from time to time
between Funding 1, the Funding 1 Liquidity Facility Provider, the Cash Manager
and the Security Trustee pursuant to which the Funding 1 Liquidity Facility
Provider agreed to provide Funding 1, from time to time during the Funding 1
Liquidity Facility Commitment Period, with advances for the purposes specified
therein, subject to and in accordance with the terms thereof (as the same may
be further amended and/or supplemented from time to time);

 

Funding 1 Liquidity Facility Commitment means, as at the Fourth Issuer
Closing Date, £150,000,000, or such other amount as may be calculated in
accordance with Clause 2.2 (Facility Limits) and/or Clause 7.2 (Voluntary
Cancellation) of the Funding 1 Liquidity Facility Agreement from time to time;

 

Funding 1 Liquidity Facility Commitment Period means, subject to Clause 2.3
of the Funding 1 Liquidity Facility Agreement, the period from and including
the Initial Closing Date up to and excluding the Funding 1 Liquidity Facility
Commitment Termination Date;

 

Funding 1 Liquidity Facility Commitment Termination Date means, subject to being
extended in accordance with Clause 2.3 of the Funding 1 Liquidity
Facility Agreement, the date falling 364 days after the  Initial Closing Date or, if such date is not
a Business Day, the preceding Business Day or, if earlier, the date on which
the Funding 1 Liquidity Facility Commitment is reduced to zero pursuant to the
provisions of the Funding 1 Liquidity Facility Agreement;

 

Funding 1 Liquidity Facility Default means an event specified as
such in Clause
16.1 of the Funding 1 Liquidity Facility Agreement;

 

Funding 1 Liquidity Facility Drawdown Date means the date of the advance
of a Funding 1 Liquidity Facility Drawing or a Funding 1 Liquidity Facility
Stand-by Drawing which date shall be an Funding 1 Interest Payment Date;

 

17

 

Funding 1 Liquidity Facility Drawdown Notice means a notice substantially
in the form set out in Schedule 3 to the Funding 1 Liquidity Facility
Agreement;

 

Funding 1 Liquidity Facility Drawing means a drawing (other than a
Funding 1 Liquidity Facility Stand-by Drawing) made or to be made under the
Funding 1 Liquidity Facility;

 

Funding 1 Liquidity Facility Interest Period means, with respect to a
Funding 1 Liquidity Facility Loan, each successive period beginning on (and
including) an Funding 1 Interest Payment Date and ending on (but excluding) the
next following Funding 1 Interest Payment Date except that the first Funding 1
Liquidity Facility Interest Period shall start on the Funding 1 Liquidity
Facility Drawdown Date for that Funding 1 Liquidity Facility Loan and end on
the day before the next following Funding 1 Interest Payment Date;

 

Funding 1 Liquidity Facility Ledger means a ledger to be
maintained by the Cash Manager pursuant to Clause 4.3 of the Cash Management
Agreement;

 

Funding 1 Liquidity Facility Loan means the aggregate principal
amount of all Funding 1 Liquidity Facility Drawings and Funding 1 Liquidity
Facility Stand-by Drawings for the time being advanced and outstanding under
the Funding 1 Liquidity Facility;

 

Funding 1 Liquidity Facility Margin means nought point five per
cent. (0.50%) per annum;

 

Funding 1 Liquidity Facility Provider means JPMorgan Chase Bank,
acting through its office at 125 London Wall, London EC2Y 5AJ and/or such other
bank or banks with at least the Requisite Ratings which agrees to provide a
liquidity facility to Funding 1 on substantially similar terms to the Funding 1
Liquidity Facility Agreement;

 

Funding 1 Liquidity Facility Request means a request substantially
in the form set out in Schedule 3 to the Funding 1 Liquidity Facility Agreement
made by Funding 1 for a Funding 1 Liquidity Facility Drawing or a Funding 1
Liquidity Facility Stand-by Drawing pursuant to a Funding 1 Liquidity Drawdown
Notice;

 

Funding 1 Liquidity Facility Stand-by Account means an account to be opened
in the name of Funding 1 with the Funding 1 Liquidity Facility Provider or, if
the Funding 1 Liquidity Facility Provider ceases to have the Requisite Ratings,
the Funding 1 Account Bank or, if the Funding 1 Account Bank ceases to have the
Requisite Ratings, a bank which has the Requisite Ratings;

 

Funding 1 Liquidity Facility Stand-by Deposit means the amount standing to
the credit of the Funding 1 Liquidity Facility Stand-by Account from time to
time together with interest on such deposit;

 

Funding 1 Liquidity Facility Stand-by Drawing means a drawing (other than a
Funding 1 Liquidity Facility Drawing) made or to be made under the Funding 1
Liquidity Facility Agreement;

 

Funding 1 Liquidity Principal Shortfall means as applicable, at any
time, the amount by which:

 

(a)                                  prior to the occurrence of a
Trigger Event, the aggregate amount of Funding 1’s obligation to repay when due
and payable:

 

(i)                                     the principal amount due and
payable in respect of the relevant Original Bullet Term Advances on their
respective Scheduled Repayment Dates (and

 

18

 

to the extent not repaid on such Scheduled
Repayment Dates, on each Funding 1 Interest Payment Date thereafter); and

 

(ii)                                  the principal amount due and
payable in respect of the relevant Original Scheduled Amortisation Term
Advances on their respective Final Repayment Dates;

 

(b)                                 following the occurrence of a
Non-Asset Trigger Event but prior to the occurrence of an Asset Trigger Event,
the aggregate amount of Funding 1’s obligation to repay when due and payable:

 

(i)                                     the principal amount due and
payable in respect of the relevant Original Bullet Term Advances on their
respective Final Repayment Dates; and

 

(ii)                                  the principal amount due and
payable in respect of the relevant Original Scheduled Amortisation Term
Advances on their respective Final Repayment Dates; or

 

exceeds the sum of:

 

(A)                              the Funding 1 Available
Principal Receipts

 

less:

 

(B)                                amounts (if any) ranking prior
to the applicable payment described in paragraph (a) or  (b) above in the Funding 1
Pre-Enforcement Principal Priority of Payments at that date;

 

Funding 1 Liquidity Revenue Shortfall means at any time, the amount
by which the aggregate of Funding 1’s obligations in respect of items listed in
paragraph
2.2 (a) to (f), (h) (j) and (l) of the Funding 1
Pre-Enforcement Revenue Priority of Payments exceeds the amount of Funding 1 Available
Revenue Receipts.

 

Funding 1 Liquidity Shortfall means a Funding 1 Liquidity Revenue
Shortfall and/or a Funding 1 Liquidity Principal Shortfall, as applicable;

 

Funding 1 Liquidity Subordinated Amounts means the sum of (a) any
additional amounts due to any withholding taxes and increased costs on the
provision of the Funding 1 Liquidity Facility and (b) any additional costs
incurred by the Funding 1 Liquidity Facility Provider to comply with the
requirements of the Bank of England, the Financial Services Authority and/or
the European Central Bank and/or changes to the capital adequacy rules
applicable to the Funding 1 Liquidity Facility Provider and Funding 1;

 

Funding 1 Post-Enforcement Priority of Payments means the order of priority in
which the Security Trustee will apply all monies following an Intercompany Loan
Event of Default and enforcement of the Funding 1 Security (as set out in Part
III of Schedule 3 to the Funding 1 Deed of Charge);

 

Funding 1 Power of Attorney means the Security Power of Attorney;

 

Funding 1 Pre-Enforcement Principal Priority of Payments means the order in which,
prior to enforcement of the Funding 1 Security, the Cash Manager will apply the
Funding 1 Available Principal Receipts on each Funding 1 Interest Payment Date,
as set out in Part II of Schedule 3 to the Funding 1 Deed of Charge;

 

19

 

Funding 1 Pre-Enforcement Revenue Priority of Payments means the order of priority
in which Funding 1 Available Revenue Receipts will be applied prior to the
enforcement of the Funding 1 Security as set out in Part I of Schedule 3 to the
Funding 1 Deed of Charge;

 

Funding 1 Principal Ledger means the ledger on which receipts and
payments of Funding 1 Principal Receipts will be recorded by the Cash Manager;

 

Funding 1 Principal Priority of Payments means the order of priority
for the application of Funding 1 Available Principal Receipts, prior to
enforcement of the Funding 1 Security, set out in each Intercompany Loan
Agreement and in Part II of Schedule 3 to the Funding 1 Deed of Charge;

 

Funding 1 Principal Receipts means the Funding 1 Share of Principal
Receipts received by Funding 1 from the Mortgages Trustee on each Distribution
Date;

 

Funding 1 Priority of Payments means, as applicable, the Funding 1
Post-Enforcement Priority of Payments, the Funding 1 Pre-Enforcement Revenue
Priority of Payments and/or, as the case may be, the Funding 1 Principal
Priorities of Payment;

 

Funding 1 Revenue Ledger means the ledger on which the Cash Manager
will record all monies received by Funding 1 during an Interest Period other
than the Funding 1 Principal Receipts;

 

Funding 1 Revenue Receipts means the Funding 1 Share of Mortgages
Trust Available Revenue Receipts received by Funding 1 from the Mortgages
Trustee on each Distribution Date;

 

Funding 1 Secured Creditors means the Security Trustee, the Funding 1
Swap Provider, the Cash Manager, the Funding 1 Liquidity Facility Provider, the
Account Bank, the First Issuer, the Second Issuer, the Third Issuer, the Fourth
Issuer, the Seller, the Corporate Services Provider, the First Start-up Loan
Provider, the Second Start-up Loan Provider, the Third Start-up Loan Provider,
the Fourth Start-up Loan Provider, the Funding 1 GIC Provider and such other
creditors of Funding 1 who may accede to the Funding 1 Deed of Charge from time
to time pursuant to an Accession Undertaking (including, for the avoidance of
doubt, any New Issuer);

 

Funding 1 Secured Obligations means the moneys and liabilities which
Funding 1 covenants and undertakes in Clause 2 of the Funding 1 Deed of Charge to
pay or discharge and all claims, demands or damages for breach of any such
covenant, and references to Funding 1 Secured Obligations includes references
to any of them;

 

Funding 1 Security means the security granted by Funding 1 to
the Security Trustee under and pursuant to the terms of the Funding 1 Deed of
Charge;

 

Funding 1 Share means, prior to the first Calculation
Date, the Initial Funding 1 Share and thereafter means the Current Funding 1
Share;

 

Funding 1 Share Percentage means, prior to the first Calculation
Date, the Initial Funding 1 Share Percentage and thereafter means the Current
Funding 1 Share Percentage;

 

Funding 1 Share/Seller Share Ledger means the ledger to be
maintained by the Cash Manager (in accordance with the Cash Management
Agreement and the Mortgages Trust Deed), on behalf of the Mortgages Trustee and
the Beneficiaries, to record the Current

 

20

 

Funding 1 Share, the Current Funding 1
Share Percentage, the Current Seller Share and the Current Seller Share
Percentage of the Trust Property;

 

Funding 1 Swap means the swap documented under the
Funding 1 Swap Agreement which enables Funding 1 to hedge against the possible
variance between the Mortgages Trustee Variable Base Rate payable on the
Variable Rate Loans, the fixed rates of interest payable on the Fixed Rate
Loans and the rates of interest payable on the Tracker Rate Loans and a LIBOR
based rate for three-month sterling deposits;

 

Funding 1 Swap Agreement means the ISDA Master Agreement and
schedule relating to the Funding 1 Swap entered into on the Initial Closing
Date (as amended and restated on the Second Issuer Closing Date on the Third
Issuer Closing Date and as further amended and restated on the Fourth Issuer
Closing Date and from time to time) and any confirmation documented thereunder
from time to time, each between Funding 1, the Funding 1 Swap Provider and the
Security Trustee (as the same may be further amended and/or restated from time
to time);

 

Funding 1 Swap Excluded Termination Amount means in relation to the
Funding 1 Swap Agreement an amount equal to:

 

(a)                                  the amount of any termination
payment due and payable to the Funding 1 Swap Provider as a result of a Funding
1 Swap Provider Default or a Funding 1 Swap Provider Downgrade Termination
Event;

 

less

 

(b)                                 the amount, if any, received
by Funding 1 from a replacement swap provider upon entry by Funding 1 into an
agreement with such replacement swap provider to replace the Funding 1 Swap
Agreement which has terminated as a result of such Funding 1 Swap Provider
Default or following the occurrence of such Funding 1 Swap Provider Downgrade
Termination Event;

 

Funding 1 Swap Provider means Halifax acting in its capacity as
the Funding 1 Swap Provider pursuant to the Funding 1 Swap Agreement;

 

Funding 1 Swap Provider Default means the occurrence of an
Event of Default (as defined in the Funding 1 Swap Agreement) where the Funding
1 Swap Provider is the Defaulting Party (as defined in the Funding 1 Swap
Agreement);

 

Funding 1 Swap Provider Downgrade Termination Event means the occurrence of an
Additional Termination Event (as defined in the Funding 1 Swap Agreement)
following the failure by the Funding 1 Swap Provider to comply with the
requirements of the ratings downgrade provisions set out in the Funding 1 Swap
Agreement;

 

Funding 1 Transaction Account means the account in the name of Funding 1
(account no. 00998318, sort code 12-24-55) held with the Account Bank and
maintained subject to the terms of the Bank Account Agreement and the Funding 1
Deed of Charge or such other account as may for the time being be in place with
the prior consent of the Security Trustee and designated as such;

 

Funding 1 Transaction Account Mandate means the bank account
mandate between Funding 1 and the Account Bank relating to the operation of the
Funding 1 Transaction Account;

 

21

 

Funding 1 Transaction Documents has the same meaning as
“Funding 1 Agreements”;

 

Funding 2 means Permanent Funding (No. 2) PLC (registered
number 4441772), a public limited company incorporated under the laws of
England and Wales, whose registered office is at Blackwell House, Guildhall
Yard, London EC2V 5AE;

 

Further Advance means, in relation to a Loan, any advance
of further money to the relevant Borrower following the making of the Initial
Advance which is secured by the same Mortgage as the Initial Advance but does
not include the amount of any retention advanced to the relevant Borrower as
part of the Initial Advance after completion of the Mortgage and does not
include a Flexible Loan Drawing nor a Home Cash Reserve Advance;

 

Future Trust Property means any or all New Portfolios to be sold
to the Mortgages Trustee on any Sale Date;

 

General Reserve Fund means the fund established from the
proceeds of the First Start-up Loan Agreement, the Second Start-up Loan, the
Third Start-up Loan and any New Start-up Loan Agreement which may be used by
Funding 1 to meet any deficit in Revenue Receipts or Principal Receipts;

 

General Reserve Fund Required Amount means £330,000,000;

 

General Reserve Fund  Threshold means the lesser of:

 

(a)                                  the General Reserve Fund
Required Amount, and

 

(b)                                 the highest amount which the
Adjusted Reserve Fund Level has been since the first Funding 1 Interest Payment
Date upon which interest is due and payable in respect of Term Advances made
upon the Closing Date relating to the then most recent issue of Issuer Notes;

 

General Reserve Ledger means the ledger established and
maintained by the Cash Manager pursuant to Clause 4.3(b) of the Cash Management
Agreement;

 

Halifax means Halifax plc (registered number 02367076), a
public limited company incorporated under the laws of England and Wales, whose
registered office is at Trinity Road, Halifax, West Yorkshire HX1 2RG;

 

Halifax Collection Account Amounts means all amounts from time
to time standing to the credit of the Collection Account to the extent that
such amounts represent payments into the Collection Account of sums derived or
resulting from mortgage loans originated by Halifax which have not been sold to
the Mortgages Trustee pursuant to the Mortgage Sale Agreement;

 

Halifax Deed and Power of Attorney means the deed and power of
attorney made by Halifax in favour of Funding 1 and its successors and assigns,
on the Initial Closing Date, pursuant to the Mortgages Trust Deed;

 

Halifax Insurance Policies means:

 

(a)                                  the MIG Policies;

 

(b)                                 the Properties in Possession
Cover;

 

(c)                                  the Freedom of Agency
Indemnity Policy;

 

22

 

(d)                                 the Halifax Policies; and

 

(e)                                  the Search Indemnity Policy;

 

Halifax Intermediary means Halifax General Insurance Services
Limited and/or such other person as may be authorised to issue Buildings
Policies to Borrowers on behalf of the Halifax Policies Insurer;

 

Halifax Policies means those of the Buildings Policies
which are issued to Borrowers by the Seller and/or a Halifax Intermediary on
behalf of the Halifax Policies Insurer;

 

Halifax Policies Insurer means in relation to policies issued
before 1st January, ,2004 Royal & Sun Alliance Insurance plc and in
relation to policies or renewals issued after 1st January, 2004, St Andrew’s
Insurance and/or any other insurer who agrees with the Seller to issue
buildings insurance policies to Borrowers from time to time as a consequence of
an introduction or intermediation by a Halifax Intermediary;

 

Halifax Variable Base Rate means the standard variable rate of
interest or if the Seller has more than one standard variable rate of interest,
the relevant standard variable rate of interest set by the Seller which applies
to the Variable Rate Loans beneficially owned by the Seller on the Seller’s
residential mortgage book;

 

High Loan-to-Value Fee means any fee incurred by a Borrower as a
result of taking out a loan with an LTV Ratio in excess of a certain percentage
specified in the Offer Conditions;

 

Holding Company means a holding company within the meaning
of section 736 of the Companies Act 1985;

 

Holdings means Permanent Holdings Limited (registered number
4267664), a limited company incorporated under the laws of England and Wales,
whose registered office is at Blackwell House, Guildhall Yard, London EC2V 5AE;

 

Home Cash Reserve Advance means, in relation to a Loan, an advance
of further money in a sum of not less than £25,005 to the relevant Borrower
following the making of the Initial Advance which is secured by the same
Mortgage as the Initial Advance and against which sum the Borrower can make
drawings of not less than £1,000 at any time;

 

Home Cash Reserve Drawing means any drawing of monies made by a
Borrower under a Home Cash Reserve Advance;

 

Home Improvement Loan means a type of Further Advance product
that can only be used by the Borrower for the purposes of making repairs,
alterations and/or improvements to the relevant Property;

 

Home Owner Loan means a type of Further Advance product
that is a regulated agreement under section 8 of the Consumer Credit Act 1974
and which can be used by the Borrower for any purpose, including but not
limited to, the purchase of a car;

 

HVR 1 means the Variable Mortgage Rate set by the Seller
which applies to certain loans beneficially owned by the Seller on the Seller’s
residential mortgage book;

 

HVR 2 means the second Variable Base Rate that was made
available to Borrowers between 1st March, 2001 and 1st February, 2002;

 

23

 

ICTA means the Income and Corporation Taxes Act 1988;

 

Initial Advance means, in respect of any Loan, the
original principal amount advanced by the Seller including any retention(s)
advanced to the relevant Borrower after the date of the Mortgage but excluding
any (a) High Loan-to-Value Fee, (b) Further Advance, (c) Flexible Loan Drawing,
(d) Home Cash Reserve Advance and (e) Early Repayment Fee relating to any such
Loan;

 

Initial Closing Date means 14th June, 2002;

 

Initial Closing Trust Property means the Initial Portfolio assigned by
the Seller to the Mortgages Trustee on the Initial Closing Date;

 

Initial Funding 1 Share means the share of Funding 1 in the Trust
Property on the Initial Closing Date, being an amount equal to £3,500,000,035;

 

Initial Funding 1 Share Percentage means the percentage share of
Funding 1 in the Trust Property on the Initial Closing Date being 35 per cent.;

 

Initial Loans means the portfolio of residential first
mortgage loans assigned by the Seller to the Mortgages Trustee on the Initial
Closing Date pursuant to the Mortgage Sale Agreement;

 

Initial Portfolio means the Provisional Portfolio other than
any Loan and its Related Security redeemed in full on or before the Initial
Closing Date;

 

Initial Related Security means the Related Security assigned by the
Seller to the Mortgages Trustee on the Initial Closing Date pursuant to the
Mortgage Sale Agreement;

 

Initial Relevant Screen Rate has the meaning given in Condition 4(C);

 

Initial Seller Share means the share of the Seller in the Trust
Property on the Initial Closing Date being an amount equal to £6,500,000,065;

 

Initial Seller Share Percentage means the percentage share of
the Seller in the Trust Property on the Initial Closing Date being 65 per
cent.;

 

Initial Trust Property means the sum of £100 (one hundred pounds)
that SFM Offshore Limited (as the Share Trustee of the Mortgages Trustee)
settled on trust and held on trust absolutely as to both capital and income by
the Mortgages Trustee for the benefit of the Seller and Funding 1 pursuant to Clause 2.1
of the Mortgages Trust Deed;

 

Insolvency Event in respect of the Seller, the Servicer, the
Cash Manager, or any Issuer Cash Manager (each, for the purposes of this
definition, a Relevant Entity) means:

 

(a)                                  an order is made or an
effective resolution passed for the winding up, bankruptcy, liquidation or
sequestration of the Relevant Entity;

 

(b)                                 the Relevant Entity ceases or
threatens to cease to carry on its business or stops payment or threatens to
stop payment of its debts or is deemed unable to pay its debts within the
meaning of section 123(a), (b), (c) or (d) of the Insolvency Act 1986 (as
amended) or becomes unable to pay its debts as they fall due or the value of
its assets falls to less than the amounts of its liabilities (taking into
account, for both these purposes, contingent and prospective liabilities) or
otherwise becomes insolvent; and

 

24

 

(c)                                  proceedings (including, but
not limited to, presentation of an application for an administration order, the
filing of documents with the court for the appointment of an administrator or
the service of a notice of intention to appoint an administrator) are initiated
against the Relevant Entity under any applicable liquidation, administration,
winding up, sequestration, insolvency, bankruptcy, composition, reorganisation
(other than a reorganisation where the Relevant Entity is solvent) or other
similar laws, save where such proceedings are being contested in good faith; or
an administrative or other receiver, administrator, trustee or other similar
official is appointed in relation to the whole or any substantial part of the
undertaking or assets of the Relevant Entity or the appointment of an
administrator takes effect; or a distress, execution or diligence or other
process shall be levied or enforced upon or sued out against the whole or any
substantial part of the undertaking or assets of the Relevant Entity and in any
of the foregoing cases it is not discharged within 15 London Business Days; or
if the Relevant Entity initiates or consents to judicial proceedings relating
to itself under any applicable liquidation, administration, winding up,
sequestration, bankruptcy, composition, insolvency, reorganisation or other
similar laws or makes a conveyance, assignment or assignation for the benefit
of, or enters into any composition with, its creditors generally or takes steps
with a view to obtaining a moratorium in respect of any indebtedness;

 

Insurance Acknowledgements means a letter from the relevant insurer
substantially in the form set out in Schedule 11 to the Mortgage Sale Agreement
or such other form as the relevant insurer shall require in respect of (a) the
MIG Policies numbers GECM-UK-003 and GECM-UK-004 issued by GE Mortgage
Insurance Limited and (b) the MIG Policies numbers 227001, 227001(A), 227002,
227003 and 227006;

 

Insurance Endorsements means an endorsement from the relevant
insurer substantially in the form set out in Schedule 10 to the Mortgage Sale
Agreement or such other form as the relevant insurer shall require in respect of
(a) each of the MIG Policies excluding the Halifax Mortgage Re Limited MIG
Policies, (b) the Freedom of Agency Indemnity Policy, (c) the Search Indemnity
Policy, (d) Halifax Policies and (e) the insurance policy maintained by the
Seller in respect of the Title Deeds stored by the Seller;

 

Insurance Policies means the Buildings Policies and the
Halifax Insurance Policies and Insurance Policy shall be construed
accordingly;

 

Intercompany Loan Acceleration Notice means a notice served by the
Security Trustee on Funding 1 following the occurrence of an Intercompany Loan
Event of Default, pursuant to Clause 14.10 of the Intercompany Loan Terms
and Conditions;

 

Intercompany Loan Agreements means the First Issuer Intercompany Loan
Agreement, the Second Issuer Intercompany Loan Agreement, the Third Issuer
Intercompany Loan Agreement, the Fourth Issuer Intercompany Loan Agreement and
any New Intercompany Loan Agreement and Intercompany Loan Agreement means any one
of them;

 

Intercompany Loan Confirmation means a document substantially in the form
set out in Schedule 3 to the Intercompany Loan Terms and Conditions confirming
the principal terms of each Intercompany Loan Agreement between Funding 1 and
the relevant Issuer;

 

Intercompany Loan Determination Date means the first day of the
relevant Interest Period;

 

Intercompany Loan Events of Default means the occurrence of an
event of default as specified in Clause 14 of the Intercompany Loan Terms
and Conditions;

 

25

 

Intercompany Loan Ledger means a ledger maintained by the Cash
Manager to record payments of interest and repayments of principal made on each
of the current Term Advances and any New Term Advances under any Intercompany
Loans;

 

Intercompany Loans means the loan made available pursuant to
an Intercompany Loan Agreement;

 

Intercompany Loan Terms and Conditions means the standard terms and
conditions incorporated into each Intercompany Loan Agreement, signed for the
purposes of identification on  the
Initial Closing Date by Funding 1, the Security Trustee and the Agent Bank as
amended and restated on 25th November, 2003;

 

Interest Period means the period from (and including) a
Funding 1 Interest Payment Date (or in respect of the first Interest Period,
the relevant Closing Date) to (but excluding) the next following (or first)
Funding 1 Interest Payment Date;

 

Irrecoverable VAT means any amount in respect of VAT
incurred by a party to the Transaction Documents (for the purposes of this
definition, a Relevant Party) as part of a payment in respect of which it is
entitled to be indemnified under the relevant Transaction Documents to the
extent that the Relevant Party does not or will not receive and retain a credit
or repayment of such VAT as input tax (as that expression is defined in section
24(1) of the Value Added Tax Act 1994) for the prescribed accounting period (as
that expression is used in section 25(1) of the Value Added Tax Act 1994) to
which such input tax relates;

 

Issuer means the First Issuer, the Second Issuer, the Third
Issuer, the Fourth Issuer or, as the context may require, any New Issuer;

 

Issuer Account Bank means the First Issuer Account Bank, the
Second Issuer Account Bank, the Third Issuer Account Bank, the Fourth Issuer
Account Bank and/or, as the context requires, the bank at which the accounts of
any New Issuer are maintained;

 

Issuer Accounts means any of the First Issuer Accounts,
the Second Issuer Accounts, the Third Issuer Accounts, the Fourth Issuer
Accounts or, as the context may require, any accounts held by any New Issuer;

 

Issuer Agreements means those agreements to which any Issuer
is party (including, for the avoidance of doubt, in the case of the First
Issuer, the First Issuer Transaction Documents, in the case of the Second Issuer,  the Second Issuer Transaction Documents, in
the case of the Third Issuer, the Third Issuer Transaction Documents, in the
case of the Fourth Issuer, the Fourth Issuer Transaction Documents and any, in
the case of any New Issuer, New Issuer Transaction Documents);

 

Issuer Master Definitions and Construction Schedule means, as the context so
requires, the First Issuer Master Definitions and Construction Schedule dated
the Initial Closing Date, the Second Issuer Master Definitions and Construction
Schedule dated the Second Issuer Closing Date and the Third Issuer Master
Definitions and Construction Schedule dated the Third Issuer Closing Date, the
Fourth Issuer Master Definitions and Construction Schedule dated the Fourth
Issuer Closing Date each signed for the purposes of identification by Allen
& Overy and Sidley Austin Brown & Wood, and/or each other master
definitions and construction schedule which relates to a New Issuer;

 

Issuer Notes includes all of the Class A First Issuer Notes, the
Class B First Issuer Notes, Class C First Issuer Notes, the Class A Second
Issuer Notes, the Class B Second Issuer Notes, the Class C Second Issuer Notes,
the Class A Third Issuer Notes, the Class B Third Issuer Notes, the Class C
Third Issuer

 

26

 

Notes the Class A Fourth Issuer Notes, the
Class B Fourth Issuer Notes, the Class M Fourth Issuer Notes, the Class C
Fourth Issuer Notes and, as the context may require, any New Notes;

 

Issuer Security means the security created by the First
Issuer pursuant to the First Issuer Deed of Charge in favour of the First
Issuer Secured Creditors, the security created by the Second Issuer pursuant to
the Second Issuer Deed of Charge in favour of the Second Issuer Secured
Creditors, the security created by the Third Issuer pursuant to the Third
Issuer Deed of Charge in favour of the Third Issuer Secured Creditors, the
security created by the Fourth Issuer pursuant to the Fourth Issuer Deed of
Charge in favour of the Fourth Issuer Secured Creditors, and/or, as the context
may require, security created by any New Issuers;

 

Issuer Swap Agreements means, the First Issuer Swap Agreements
and/or the Second Issuer Swap Agreements and/or the Third Issuer Swap
Agreements and/or the Fourth Issuer Agreement and Issuer Swap Agreement means
any one of them;

 

Issuer Swap Provider means the First Issuer Swap Providers
and/or the Second Issuer Swap Providers and/or the Third Issuer Swap Providers
and/or the Fourth Issuer Swap providers and/or any New Issuer Swap Providers;

 

Issuer Swap Provider Default means an Event of Default where the
relevant Issuer Swap Provider is the defaulting party (as defined in the
relevant Issuer Swap Agreement);

 

Issuer Swap Provider Downgrade Termination Event means the occurrence of an
additional termination event following the failure by a First Issuer Swap
Provider and/or a Second Issuer Swap Provider and/or a Third Issuer Swap
Provider and/or a Fourth Issuer Swap Provider to comply with the requirements
of the ratings down grade provisions (as set out in the relevant swap
agreement);

 

Large Loan Discount means the discount which allows a Borrower
to pay interest at a discretionary discount to the standard variable rate of
interest charged on Variable Rate Loans in, or to be included in, the Mortgages
Trust (other than the Tracker Rate Loans) based on the aggregate size of the
Loans under the Mortgage Account (a) at origination or (b) when a Further
Advance is made;

 

Law includes common or customary law and any
constitution, decree, judgment, legislation, order, ordinance, regulation,
statute, treaty or other legislative measure in any jurisdiction and any
present or future directive, regulation, guideline, practice, concession,
request or requirement whether or not having the force of law issued by any
governmental body, agency or department or any central bank or other fiscal,
monetary, taxation, regulatory, self regulatory or other authority or agency;

 

Lending Criteria means the criteria contained in Schedule 4
to the Mortgage Sale Agreement or such other criteria as would be acceptable to
a reasonable, prudent mortgage lender;

 

LIBOR means:

 

(a)                                  in relation to any Funding 1
Liquidity Facility Drawing or, as the case may be, Funding 1 Liquidity Facility
Stand-by Drawing:

 

(i)                                     the display rate per annum of
the offered quotation for deposits in the currency of the relevant Funding 1
Liquidity Drawing or unpaid sum for a period equal to the required period which
appears on Moneyline Telerate

 

27

 

Page 3750 or Moneyline Telerate Page 3740
(as appropriate) at or about 11.00 a.m. on the relevant Quotation Date; or

 

(ii)                                  if the display rate cannot be
determined under paragraph (a) above, the rate determined by the Funding 1
Liquidity Facility Provider to be the arithmetic mean (rounded, if necessary,
to the nearest five decimal places with the midpoint rounded upwards) of the
rates notified to the Liquidity Facility Provider by each of the Reference
Banks quoting (provided that at least two Reference Banks are quoting) as the
rate at which such Reference Bank is offering deposits in the required currency
and for the required period in an amount comparable to that amount to prime
banks in the London inter-bank market at or about 11.00 a.m. on the relevant
Quotation Date for such period;

 

for the
purposes of this definition:

 

Quotation Date means, in relation to any
Interest Period for which an interest rate is to be determined under the
Funding 1 Liquidity Facility Agreement, the day on which quotations would
ordinarily be given by banks in the London inter-bank market for deposits in
the relevant currency for delivery on the first day of that Interest Period;
provided that if, for any such period, quotations would ordinarily be given on
more than one date, the Quotation Date for that period shall be the last of
those dates;

 

Reference Banks means the principal London
office of each of ABN AMRO Bank N.V., Barclays Bank PLC, Citibank, N.A. and the
Royal Bank of Scotland plc or any bank that replaces any of them; and

 

Moneyline Telerate Page
3750
means the display designated as Page 3750; and Moneyline Telerate Page 3740
means the display designated as Page 3740, in each case on the Moneyline
Telerate Service (or such other pages as may replace Page 3750 or Page 3740 on
that service or such other service as may be nominated by the British Bankers’
Association (including the Reuters Screen) as the information vendor for the
purposes of displaying British Bankers’ Association Interest Settlement Rates
for deposits in the currency concerned);

 

(b)                                 in relation to the Mortgages
Trustee GIC Rate, the Funding 1 GIC Rate and the rate of interest payable on
the Start-up Loans, LIBOR as determined in accordance with the Intercompany
Loan Agreements;

 

Liquidity Reserve Fund means the fund established pursuant to the
Funding 1 Deed of Charge in the event that a Liquidity Reserve Fund Rating
Event occurs;

 

Liquidity Reserve Fund Rating Event means the Seller’s long-term,
unsecured, unsubordinated and unguaranteed debt obligations are rated below A-
by S&P, A3 by Moody’s or A- by Fitch (unless the relevant Rating Agency
confirms that its then current ratings of the Fourth Issuer Notes will not be
adversely affected as a consequence of a ratings downgrade of the Seller);

 

Liquidity Reserve Ledger means the ledger that shall be maintained
by the Cash Manager pursuant to the Cash Management Agreement to record the
balance from time to time of the Liquidity Reserve Fund;

 

Liquidity Reserve Required Amount means, on any Interest
Payment Date, an amount equal to 3 per cent. of the aggregate outstanding
balance of the Fourth Issuer Notes on that date;

 

28

 

Loan means each loan referenced by its loan identifier
number and comprising the aggregate of all principal sums, interest, costs,
charges, expenses and other monies (including all further advances including
Further Advances) due or owing with respect to that loan under the relevant
Mortgage Terms by a Borrower on the security of a Mortgage from time to time
outstanding or, as the context may require, the Borrower’s obligations in
respect of the same;

 

Loan Repurchase Notice means a notice in the form set out in
Schedule 6 to the Mortgage Sale Agreement;

 

Loan Warranties means the Representations and Warranties;

 

London Business Day means a day (other than a Saturday or
Sunday) on which banks are generally open for business in London;

 

London Stock Exchange means the London Stock Exchange plc;

 

Loss Amount means the amount of any costs, expenses, losses or
other claims suffered or incurred by, as applicable, the Mortgages Trustee
and/or Funding 1 in connection with any recovery of interest on the Loans to
which the Seller, the Mortgages Trustee or Funding 1 was not entitled or could
not enforce as a result of any of the matters referred to in paragraphs (a),
(b), (c) or (d) of Clause 7.3 of the Mortgage Sale Agreement;

 

Losses means all realised losses on the Loans;

 

Losses Ledger means the ledger of such name maintained by the Cash
Manager pursuant to the Cash Management Agreement to record the Losses;

 

LTV ratio or loan-to-value ratio means the ratio
(expressed as a percentage) of the outstanding balance of a Loan to the value
of the Mortgaged Property securing that Loan;

 

LTV Test means a test which assigns a credit enhancement value
to each loan in the portfolio based on its current loan-to-value ratio and the
amount of mortgage indemnity cover on that loan.  The weighted average credit enhancement value for the portfolio
is then determined;

 

Managers has the meaning given to it in the relevant Issuer
Master Definitions and Construction Schedule;

 

Mandate means the Funding 1 Transaction Account Mandate, the
Funding 1 GIC Account Mandate and/or the Mortgages Trustee GIC Account Mandate,
as the case may be;

 

Mandatory Liquid Asset Cost means the cost imputed to the Funding 1
Liquidity Facility Provider of compliance with:

 

(a)                                  cash and special deposit
requirements of the Bank of England and/or the banking supervision or other
costs imposed by the Financial Services Authority, as determined in accordance
with Schedule 2 of the Funding 1 Liquidity Facility Agreement; and

 

(b)                                 any reserve asset requirements
of the European Central Bank;

 

MHA Documentation means an affidavit, consent or
renunciation granted in terms of the Matrimonial Homes (Family Protection)
(Scotland) Act 1981 in connection with a Scottish Mortgage or the Property
secured thereby;

 

29

 

MIG Policies means the mortgage indemnity guarantee policies
written by General Accident Fire and Life Assurance Corporation PLC, GE Capital
Mortgage (UK) Limited, Royal & Sun Alliance Insurance Plc and Halifax
Mortgage Re Limited in favour of the Seller, or any other mortgage indemnity
guarantee policy as may be effected from time to time to cover the Seller in
respect of New Loans and their Related Security, such other mortgage indemnity
guarantee policy to provide such level of cover as would be acceptable to a
reasonable, prudent mortgage lender at the date of such other policy;

 

Minimum Seller Share means an amount included in the Current
Seller Share which is calculated in accordance with Clause 9.2 of the Mortgages
Trust Deed and which, as at the Fourth Issuer Closing Date, will be
£1,406,739,244;

 

Monthly CPR on any Normal Calculation Date means the total
Principal Receipts received during the period of one month (or, if shorter,
from and including the Initial Closing Date) ending on that Normal Calculation
Date divided by the aggregate Outstanding Principal Balance of the Loans
comprised in the Trust Property as at the immediately preceding Normal
Calculation Date;

 

Monthly Payment means the amount which the relevant
Mortgage Terms require a Borrower to pay on each Monthly Payment Day in respect
of that Borrower’s Loan;

 

Monthly Payment Day means the date on which interest (and
principal in relation to a repayment mortgage) is due to be paid by a Borrower
on a Loan or, if any such day is not a business day, the next following
business day;

 

Moody’s means Moody’s Investors Service Limited and includes
any successor to its rating business;

 

Mortgage Account means all Loans secured on the same
Property and thereby forming a single mortgage account;

 

Mortgage Conditions or Loan Conditions means the terms and
conditions applicable to a Loan as contained in the Seller’s “Mortgage
Conditions” booklet applicable from time to time;

 

Mortgagee means the person for the time being entitled to
exercise the rights of the mortgagee or heritable creditor (as applicable)
under a Mortgage;

 

Mortgage Sale Agreement means the mortgage sale agreement dated
the Initial Closing Date and made between the Seller, Funding 1, the Mortgages
Trustee and the Security Trustee in relation to the assignment of the Initial
Portfolio and the sale of any New Portfolio to the Mortgages Trustee from time
to time, as amended and restated on the Second Issuer Closing Date, the Third
Issuer Closing Date and as further amended and restated on the Fourth Issuer
Closing Date and from time to time;

 

Mortgage Terms means all the terms and conditions
applicable to a Loan, including without limitation the applicable Mortgage
Conditions and Offer Conditions;

 

Mortgages means first fixed charges by way of legal mortgage (in
relation to English Loans) and first ranking standard securities (in relation
to Scottish Loans) sold by the Seller to the Mortgages Trustee pursuant to the
Mortgage Sale Agreement, which secure the repayment of the relevant Loans and a Mortgage
means any one of them;

 

Mortgages Trust means the trust of the Trust Property as
to both capital and income, including the Initial Trust Property, held by the
Mortgages Trustee on trust absolutely for

 

30

 

Funding 1 (as to the Funding 1 Share) and
the Seller (as to the Seller Share) pursuant to the Mortgages Trust Deed;

 

Mortgages Trust Available Principal Receipts means the Principal Receipts
available to the Mortgages Trustee to distribute in accordance with Clause 11
of the Mortgages Trust Deed;

 

Mortgages Trust Available Revenue Receipts means an amount equal to the
aggregate of the following amounts, as calculated on each Calculation Date:

 

(a)                                  Revenue Receipts on the Loans
(but excluding Principal Receipts); and

 

(b)                                 interest payable to the
Mortgages Trustee on the Mortgages Trustee GIC Account; less

 

(c)                                  Third Party Amounts,

 

which amounts may be paid daily from monies
on deposit in the Mortgages Trustee GIC Account;

 

Mortgages Trust Deed means the mortgages trust deed made
between the Mortgages Trustee, Funding 1, the Seller and SFM Offshore Limited
on 13th June, 2002, as amended and restated on the Second Issuer Closing Date,
the Third Issuer Closing Date and as further amended and restated on the Fourth
Issuer Closing Date and from time to time;

 

Mortgages Trustee means Permanent Mortgages Trustee Limited
(registered number 83116), a private company with limited liability
incorporated in Jersey, Channel Island, whose registered office is at 47
Esplanade, St. Helier, Jersey JE1 0BD, Channel Islands;

 

Mortgages Trustee Collection Account Amounts means all amounts from time
to time standing to the credit of the Collection Account to the extent that
such amounts represent payments into the Collection Account of sums derived or
resulting from mortgage loans originated by Halifax which have been sold to the
Mortgages Trustee pursuant to the Mortgage Sale Agreement;

 

Mortgages Trustee Corporate Services Agreement means the agreement dated the
Initial Closing Date and made between the Mortgages Trustee Corporate Services
Provider, the Mortgages Trustee and the Security Trustee for the provision by
the Mortgages Trustee Corporate Services Provider of certain corporate services
and personnel to the Mortgages Trustee;

 

Mortgages Trustee Corporate Services Fee Letter means the letter dated the
date of the Mortgages Trustee Corporate Services Agreement between the
Mortgages Trustee, the Mortgages Trustee Corporate Services Provider and the
Security Trustee, setting out the amount of fees payable to the Mortgages
Trustee Corporate Services Provider by the Mortgages Trustee;

 

Mortgages Trustee Corporate Services Provider means SFM Offshore Limited or
such other person or persons for the time being acting as corporate services
provider to the Mortgages Trustee under the Mortgages Trustee Corporate
Services Agreement;

 

Mortgages Trustee GIC Account means the account in the name of the
Mortgages Trustee (sort code 12-24-55, account number 00998406) maintained with
the Account Bank pursuant to the Bank Account Agreement and the Mortgages
Trustee Guaranteed Investment Contract, or such additional or replacement bank
account of the Mortgages Trustee as may for the time

 

31

 

being be in place with the prior consent of
the Security Trustee which is subject to a Guaranteed Investment Contract;

 

Mortgages Trustee GIC Account Agreement has the same meaning as Mortgages
Trustee Guaranteed Investment Contract;

 

Mortgages Trustee GIC Account Mandate means the bank account
mandate between the Mortgages Trustee and the Account Bank relating to the
operation of the Mortgages Trustee GIC Account;

 

Mortgages Trustee GIC Balance means, on any day during an Interest
Period, the amount standing to the credit of the Mortgages Trustee GIC Account
as at the opening of business on such day;

 

Mortgages Trustee GIC Provider means The Governor and Company of the Bank
of Scotland acting pursuant to the Mortgages Trustee Guaranteed Investment Contract
or its successor or assignee and any provider of a replacement Mortgages
Trustee GIC Account;

 

Mortgages Trustee GIC Rate means the rate of interest accruing on the
balance standing to the credit of the Mortgages Trustee GIC Account equal to a
rate of three month LIBOR less 0.25 per cent. per annum;

 

Mortgages Trustee Guaranteed Investment Contract or Mortgages Trustee GIC Account Agreement
means the guaranteed investment contract entered into on the Initial Closing
Date between the Mortgages Trustee, the Mortgages Trustee GIC Provider, the
Cash Manager and the Security Trustee in relation to interest to be earned on
the Mortgages Trustee GIC Balance (as the same may be amended and/or
supplemented from time to time);

 

Mortgages Trustee Ledgers means the Principal Ledger, the Revenue
Ledger, the Losses Ledger and the Funding 1 Share/Seller Share Ledger;

 

Mortgages Trustee Tracker Rate means the rate of interest (before
applying any cap or minimum rate) which is set by the Servicer from time to
time in respect of Tracker Rate Loans pursuant to Clause 4.1 of the Servicing
Agreement;

 

Mortgages Trustee Variable Base Rate means the variable base rates
which apply to the Variable Rate Loans in the Portfolio as set, other than in
limited circumstances, by the Servicer, as set out in Clause 4.1 of the Servicing
Agreement;

 

Mortgages Trust Principal Priority of Payments means the order in which the
Cash Manager applies Principal Receipts on the Loans on each Distribution Date
to each of Funding 1 and the Seller, depending on whether a Trigger Event has
occurred, as set out in Clause 11 of the Mortgages Trust Deed;

 

Mortgages Trust Revenue Priority of Payments means the order in which the
Cash Manager applies the Mortgages Trust Available Revenue Receipts on each Distribution
Date, as set out in Clause 10 of the Mortgages Trust Deed;

 

New Bullet Term Advance means any term advance made under a New
Intercompany Loan Agreement where the full amount of principal on such term
advance is scheduled for repayment on a single interest payment date (other
than the final repayment date);

 

New Deed of Accession means any new deed of accession to the
Funding 1 Deed of Charge entered into on any New Issuer Closing Date
between Funding 1, each Issuer, the Corporate

 

32

 

Services Provider, the Account Bank, the
Security Trustee, the Seller, each Start-up Loan Provider, the Cash Manager,
the Funding 1 Swap Provider and the Funding 1 Liquidity Facility Provider as
supplemented, amended and/or restated from time to time;

 

New Funding 1 Secured Creditor means such other creditor of Funding 1 who
accedes to the Funding 1 Deed of Charge from time to time including pursuant to
an Accession Undertaking;

 

New Funding 1 Swap means a new swap under the existing
Funding 1 Swap Agreement;

 

New Intercompany Loan means a loan of the proceeds of any issue
of New Notes, such loan being advanced to Funding 1 by a New Issuer pursuant to
the terms of a New Intercompany Loan Agreement;

 

New Intercompany Loan Agreement means a new intercompany loan
agreement entered into between Funding 1 and a New Issuer in relation to a New
Intercompany Loan;

 

New Intercompany Loan Confirmation means a new Intercompany Loan
Confirmation confirming the terms of the New Intercompany Loan Agreement;

 

New Issuer means a new wholly owned subsidiary of Holdings,
which is established to issue New Notes and to make a New Intercompany Loan to
Funding 1;

 

New Issuer Closing Date means the date of any new issue of New
Notes by a New Issuer;

 

New Issuer Security means security created by any New Issuer;

 

New Issue Swap Provider means any entity who enters into a hedging
arrangement with a New Issuer;

 

New Issuer Transaction Document means any document or
agreement to which any New Issuer is a party (together the New Issuer Transaction Documents);

 

New Liquidity Facility Provider means a new liquidity
facility provider to Funding 1 and/or, as the context may require, to the
Issuer(s);

 

New Loans means Loans, other than the Initial Loans, which the
Seller may sell, to the Mortgages Trustee after the Initial Closing Date
pursuant to the Mortgage Sale Agreement;

 

New Loan Type means on any date a type of Loan:

 

(a)                                  which has one or more features
(including, without limitation, relating to the applicable lending criteria
used to originate such type of Loan, the purpose of such type of Loan, the
manner of calculating interest or fixing the interest rate in relation to such
type of Loan and/or the terms for repayment of principal in relation to such
type of Loan) which mean that such type of Loan is generally regarded as a
distinct category of mortgage loan within the UK mortgage industry and/or by
one of more of the Rating Agencies; and

 

(b)                                 where no such type of Loan is
at that date, or has previously been, comprised in the Mortgages Trust,

 

33

 

(and such types include Flexible Loans,
HomeOwner Loans, Deedstore Loans, capped rate loans, buy-to-let loans,
right-to-buy loans, limited recourse loans, equity release loans and drawdown
loans as at the Initial Closing Date);

 

New Notes means the notes issued and/or to be issued by the New
Issuers to investors;

 

New Portfolio means in each case the portfolio of Loans and their
Related Security (other than any Loans and their Related Security which have
been redeemed in full prior to the Sale Date or which do not otherwise comply
with the terms of Clause 4 of the Mortgage Sale Agreement as
at the Sale Date), particulars of which are set out in the relevant New
Portfolio Notice or in a document stored upon electronic media (including, but
not limited to, a CD-ROM), and all right, title, interest and benefit of the
Seller in and to:

 

(a)                                  all payments of principal and
interest (including, for the avoidance of doubt, all Accrued Interest, Arrears
of Interest, Capitalised Expenses and Capitalised Arrears) and other sums due
or to become due in respect of such Loans and their Related Security including,
without limitation, the right to demand, sue for, recover and give receipts for
all principal monies, interest and costs and the right to sue on all covenants
and any undertakings made or expressed to be made in favour of the Seller under
the applicable Mortgage Terms;

 

(b)                                 subject where applicable to
the subsisting rights of redemption of Borrowers, all Deeds of Consent, Deeds
of Postponement, MHA Documentation and all third party guarantees and any other
collateral security for the repayment of the relevant New Loans secured by the
relevant New Mortgages;

 

(c)                                  the right to exercise all the
powers of the Seller in relation thereto;

 

(d)                                 all the estate and interest in
the relevant Properties vested in the Seller;

 

(e)                                  each relevant Certificate of
Title and Valuation Report and any right of action of the Seller against any
solicitor, licensed conveyancer, qualified conveyancer, valuer or other person
in connection with any report, valuation, opinion, certificate or other
statement of fact or opinion given in connection with such Loans and their
Related Security, or any part thereof or affecting the decision of the Seller
to make or offer to make any such Loan or part thereof;

 

(f)                                    the proceeds of all claims to
which the Seller is entitled under the Buildings Policies and the Properties in
Possession Cover;

 

(g)                                 the MIG Policies, so far as
they relate to the New Loans comprised in the relevant portfolio of Loans and
their Related Security, including the right to receive the proceeds of any
claims; and

 

(h)                                 all proceeds from the
enforcement of such Loans and their Related Security;

 

New Portfolio Notice means a notice in the form set out in
Schedule 12 to the Mortgage Sale Agreement served in accordance with the terms
of the Mortgage Sale Agreement;

 

New Related Security means the Related Security for the New
Loans (including any Mortgages) sold to the Mortgages Trustee by the Seller;

 

34

 

New Scheduled Amortisation Term Advance means any Term Advance made
under a New Intercompany Loan Agreement which is referred to as a Scheduled Amortisation
Term Advance in the offering document or prospectus relating to any relevant
New Issuer;

 

New Start-up Loan means a loan issued to Funding 1 under a
New Start-up Loan Agreement;

 

New Start-up Loan Agreement means a loan agreement under which the
Start-up Loan Provider or a New Start-up Loan Provider shall provide Funding 1
with a New Start-up Loan for the purposes of meeting the costs of the New Issue
and/or further funding the Reserve Fund, if required;

 

New Start-up Loan Provider means an entity who shall supply a New
Start-up Loan to Funding 1;

 

New Term Advance means an advance of funds by a New Issuer
to Funding 1 under the terms of a New Intercompany Loan Agreement, which
advance is funded by a corresponding class of New Notes;

 

New York Business Day means a day (other than a Saturday or a
Sunday) on which banks are generally open for business (including dealings in
foreign currency) in the city of New York;

 

Non-Asset Trigger Event means the occurrence of any of the
following events on a Calculation Date:

 

(a)                                  an Insolvency Event occurs in
relation to the Seller on or about that Calculation Date;

 

(b)                                 the role of the Seller as
Servicer under the Servicing Agreement is terminated and a new Servicer is not
appointed within 60 days of such termination;

 

(c)                                  as at the Calculation Date
immediately preceding the relevant Calculation Date the Current Seller Share is
equal to or less than the Minimum Seller Share; or

 

(d)                                 on any Calculation Date, the
Outstanding Principal Balance of Loans comprising the Trust Property at that
date (i) during the period from and including the Fourth Issuer Closing Date up
to and excluding the Funding 1 Interest Payment date in June 2006 is less than
£21,500,000,000 or (ii) during the period from and including the Funding 1
Interest Payment in June 2006 Date to but excluding the Interest Payment Date
in June 2008 is less than £15,750,000,000

 

Normal Calculation Date means the first day (or, if not a London
Business Day, the next succeeding London Business Day) of each month;

 

Note Acceleration Notice means a First Issuer Note Acceleration
Notice, a Second Issuer Note Acceleration Notice, a Third Issuer Note
Acceleration Notice, a Fourth Issuer Note Acceleration Notice or such other
acceleration notice served in relation to the Notes pursuant to the relevant
terms and conditions thereof;

 

Note Determination Date means two Business Days prior to each
Funding 1 Interest Payment Date;

 

Note Event of Default means the occurrence of an event of
default by the relevant Issuer as specified in the relevant Conditions of the
Notes (including a First Issuer Note Event of

 

35

 

Default, a Second Issuer Note Event of
Default, a Third Issuer Note Event of Default and a Fourth Issuer Note Event of
Default);

 

Notes means the First Issuer Notes, the Second Issuer
Notes, the Third Issuer Notes, the Fourth Issuer Notes and/or as the context
may require, any New Notes;

 

Note Trustee means The Bank of New York, acting through its
offices at 48th Floor, One Canada Square, London E14 5AL or such other person
or companies as may from time to time be appointed as Note Trustee (or
co-trustee) pursuant to the First Issuer Trust Deed and/or the Second Issuer
Trust Deed and/or the Third Issuer Trust Deed and/or the Fourth Issuer Trust
Deed;

 

Notice of Extension has the meaning given to it in Clause
2.3(c) of the Funding 1 Liquidity Facility Agreement;

 

Novation Certificate means a certificate to effect a novation
of the Funding 1 Liquidity Facility under the Funding 1 Liquidity Facility
Agreement, substantially in the form set out in Schedule 4 to the Funding 1
Liquidity Facility Agreement;

 

Offer Conditions means the terms and conditions applicable
to a specified Loan as set out in the relevant offer letter to the Borrower;

 

Original Bullet Term Advance means a Term Advance which at any time has
been a Bullet Term Advance (even if such Term Advance has subsequently become a
Pass-Through Term Advance);

 

Original Pass-Through Term Advance means a Term Advance which,
at the time it was advanced, was a Pass-Through Term Advance;

 

Original Scheduled Amortisation Instalment means that part of a Term
Advance which at any time has been a Scheduled Amortisation Instalment (even if
such Term Advance has subsequently become a Pass-Through Term Advance);

 

Original Scheduled Amortisation Term Advance means a Term Advance which at
any time has been a Scheduled Amortisation Term Advance (even if such Term
Advance has subsequently become a Pass-Through Term Advance);

 

Outstanding Principal Balance:

 

(a)                                  in relation to a Loan at any
date (the determination
date), means the aggregate principal balance of the Loan at such
date (but avoiding double counting) including:

 

(i)                                     the Initial Advance;

 

(ii)                                  Capitalised Expenses;

 

(iii)                               Capitalised Arrears; and

 

(iv)                              in increase in the principal
amount due under that Loan due to the Borrower making Flexible Drawings and/or
taking Payment Holidays or making Underpayments,

 

in each
case relating to such Loan less any prepayment, repayment or payment of the
foregoing made on or prior to the determination date;

 

36

 

(b)                                 in relation to an Intercompany
Loan at any date, means the unpaid principal balance of that Intercompany Loan
at that date (including any capitalised arrears) or, as the context so
requires, of a Term Advance made under that Intercompany Loan; and

 

(c)                                  in relation to any Notes at
any date, means the unpaid principal balance of those Notes, or, as the context
so requires, any series and/or class of such Notes as at that date;

 

Overpayment means a payment by a Borrower in an amount greater
than the Monthly Payment then due on the Loan;

 

Pass-Through Repayment Restrictions means, at any time on a
Funding 1 Interest Payment Date, no amount may be applied in repayment of any
Original Pass-Through Term Advance unless:

 

(a)                                  the sum of the Cash
Accumulation Ledger Amount and the amount of Funding 1 Available Principal
Receipts after the application of items (a), (b) and (c) and before item (d) of
the Funding 1 Pre-Enforcement Principal Priority of Payments,

 

is
greater than or equal to

 

(b)                                 the sum of the Cash
Accumulation Liability and the aggregate amount of all Original Pass-Through
Term Advances which are due and payable as at that time;

 

Pass-Through Term Advance means a Term Advance which has no
Scheduled Repayment Date(s) other than a Final Repayment Date; or if a Trigger
Event occurs or, the relevant Issuer Security and/or Funding 1 Security is
enforced, the Bullet Term Advance or the Scheduled Amortisation Term Advance
will be deemed to be a Pass-Through Term Advance;

 

Payable Pass-Through Term Advances in relation to the
Intercompany Loan has the meaning given in Part II of Schedule 3 to the Funding
1 Deed of Charge;

 

Payment Holiday means the period of time that a Borrower
under a Loan refrains from making payments of interest and principal on his
Loan as expressly permitted by the terms of the Borrower’s Loan;

 

Perfection means the perfection of certain matters relating to
the sale and purchase of the Portfolio as contemplated in, pursuant to and in
accordance with Clause 6 of the Mortgage Sale Agreement;

 

Personal Data means any information of what
ever nature satisfying the definition of ‘personal data’ in the Act that , by
whatever means, is provided to the Data Processor by the Data Controller, is
accessed by the Data Processor on the authority of the Data Controller or is
otherwise received by the Data Processor on the Data Controller’s behalf, for
the purposes of the Processing specified in Clause 3.1(a) of the Data
Processor Agreement dated on or about the Closing Date and made between the
Data Controller and the Data Processor;

 

Portfolio means the Initial Portfolio and any New Portfolio
(other than any Loan and its Related Security which has been redeemed in full
or repurchased by the Seller pursuant to Clause 8 of the Mortgage Sale Agreement);

 

Post-Enforcement Call Option Holder means Permanent PECOH Limited
(registered number 4267666), a limited company incorporated under the laws of
England and Wales, whose registered office is at Blackwell House, Guildhall
Yard, London EC2V 5AE;

 

37

 

Potential Intercompany Loan Event of Default means the occurrence of any
event which with the giving of notice, any relevant certificate, the lapse of
time or fulfilment of any other condition (or any combination of the foregoing)
would become an Intercompany Loan Event of Default;

 

Potential Note Event of Default means the occurrence of an
event which with the giving of notice, any relevant certificate, the lapse of
time or fulfilment of any other conditions (or any combination of the
foregoing), would become a Note Event of Default;

 

Principal Deficiency means any losses arising in relation to a
Loan in the Portfolio which causes a shortfall in the amount available to pay
principal on the Term Advances;

 

Principal Deficiency Ledger means the ledger of such name maintained
by the Cash Manager pursuant to the Cash Management Agreement, comprising, as
at the date hereof, four sub-ledgers, the AAA Principal Deficiency Sub-Ledger,
the AA Principal Deficiency Sub-Ledger, the A Principal Deficiency Sub-Ledger
and the BBB Principal Deficiency Sub-Ledger, but which may comprise additional
sub ledgers as required;

 

Principal Deficiency Sub-Ledger means singly or together (as
the context requires) the AAA Principal Deficiency Sub-Ledger, the AA Principal
Deficiency Sub-Ledger, the A Principal Deficiency Sub-Ledger, the BBB Principal
Deficiency Sub-Ledger and/or such additional principal deficiency sub ledgers
that may be established from time to time after the Initial Closing Date;

 

Principal Issuers has the meaning given in Clause 5.4
of the Funding 1 Deed of Charge;

 

Principal Ledger means the ledger of such name maintained
by the Cash Manager, pursuant to the Cash Management Agreement and Clause 14
of the Mortgages Trust Deed to record the Principal Receipts on the Loans and
distributions of such Principal Receipts to the Beneficiaries;

 

Principal Payment Rate or PPR means the average monthly rolling
principal payment rate on the Loans for the 12 months immediately preceding the
relevant Distribution Date calculated on each such date by:

 

(a)                                  dividing (i) the aggregate
Principal Receipts received in relation to the Loans during the immediately
preceding month on such calculation date by (ii) the aggregate Outstanding
Principal Balance of the Loans or the previous calculation date;

 

(b)                                 aggregating the result of the
calculation in (a) above with the results of the equivalent calculation made on
each of the eleven most recent calculation dates during the relevant 12 month
period; and

 

(c)                                  dividing the result of the
calculation in (b) above by 12;

 

Principal Receipts means any payment in respect of principal
received in respect of any Loan (including payments pursuant to any Insurance
Policies), whether as all or part of a Monthly Payment in respect of such Loan,
on redemption (including partial redemption) of such Loan, on enforcement of
such Loan (including the proceeds of sale of the relevant Property) or on the
disposal of such Loan plus on any Monthly Payment Date an amount equal to the
amount (if any) by which arrears in respect of the Loans comprised in the
Portfolio on the relevant Closing Date exceeds such arrears on such Monthly
Payment Date (without double counting but including principal received or
treated as received after completion of the enforcement procedures);

 

38

 

Principal Term Advances has the meaning given in Clause 5.4
of the Funding 1 Deed of Charge;

 

Processing has the meaning given to it in the Act;

 

Product Switch means a variation to the financial terms
or conditions included in the Mortgage Terms applicable to a Loan other than:

 

(a)                                  any variation agreed with a
Borrower to control or manage arrears on a Loan;

 

(b)                                 any variation to the interest
rate as a result of Borrowers being linked to HVR2;

 

(c)                                  any variation in the maturity
date of a Loan unless, while the First Issuer Intercompany Loan, the Second
Issuer Intercompany Loan, the Third Issuer Intercompany Loan and/or Fourth
Issuer Intercompany Loan is outstanding, it is extended beyond June, 2040;

 

(d)                                 any variation imposed by
statute;

 

(e)                                  any variation of the rate of
interest payable in respect of the loan where that rate is offered to the
Borrowers of more than 10 per cent. of the outstanding principal amount of
loans in the Trust Property in any Interest Period; or

 

(f)                                    any variation in the frequency
with which the interest payable in respect of the Loan is charged;

 

Properties in Possession Cover means in relation to policies issued
before 1st January, 2004, the properties in possession cover written by Royal
& Sun Alliance Insurance PLC and in relation to policies or renewals issued
on or after 1st January, 2004, the properties in possession cover written by St
Andrew’s Insurance, in favour of the Seller and any endorsements or extensions
thereto as issued from time to time, or any such similar alternative or
replacement policy or policies as may in future be issued in favour of the
Seller;

 

Property means a freehold, heritable or leasehold property (or
in Scotland a property held under a long lease) which is subject to a Mortgage;

 

Provisional Portfolio means the portfolio of Loans and their
Related Security, particulars of which are set out in Part 1 of the Exhibit to
the Mortgage Sale Agreement or in a document stored upon electronic media
(including, but not limited to, a CD-ROM), and all right, title, interest and
benefit of the Seller in and to:

 

(a)                                  all payments of principal and
interest (including, for the avoidance of doubt, all Accrued Interest, Arrears
of Interest, Capitalised Expenses and Capitalised Arrears) and other sums due
or to become due in respect of such Loans and Related Security including,
without limitation, the right to demand, sue for, recover and give receipts for
all principal monies, interest and costs and the right to sue on all covenants
made or expressed to be made in favour of the Seller under the applicable Mortgage
Terms;

 

(b)                                 subject where applicable to
the subsisting rights of redemption of Borrowers, all Deeds of Consent, Deeds
of Postponement or any collateral security for the repayment of the relevant
Loans secured by the Mortgages;

 

(c)                                  the right to exercise all the
powers of the Seller in relation thereto;

 

39

 

(d)                                 all the estate and interest in
the Properties vested in the Seller;

 

(e)                                  each Certificate of Title and
Valuation Report and any right of action of the Seller against any solicitor,
valuer or other person in connection with any report, valuation, opinion,
certificate or other statement of fact or opinion given in connection with such
Loans and Related Security, or any part thereof or affecting the decision of
the Seller to make or offer to make any such Loan or part thereof;

 

(f)                                    all rights, title and
interests of the Seller (including, without limitation, the proceeds of all
claims) to which the Seller is entitled under the Buildings Policies and the
Properties in Possession Cover; and

 

(g)                                 the MIG Policies, so far as
they relate to the Loans comprised in that portfolio of Loans and their Related
Security, including the right to receive the proceeds of any claim;

 

Purchase Price is the sum of £3,500,000,000 paid by
Funding 1 to the Seller in consideration of the Seller’s assignment of the
Initial Portfolio (together with any Accrued Interest and Arrears of Interest
as at the Initial Closing Date) to the Mortgages Trustee and the Funding 1
Share thereof;

 

Qualifying Lender means a lender which is (on a date that
any payment of interest to it under the Funding 1 Liquidity Documents falls
due):

 

(a)                                  (i)            a bank (as defined for the purpose of section 349 ICTA);
or

 

(ii)                                  in respect of an advance made
under a Funding 1 Liquidity Document by a person that was a bank (as defined
for the purpose of section 349 as above) at the time that such advance was
made, a person, which is within the charge to United Kingdom corporation tax as
regards any payments of interest received by it under the Funding 1 Liquidity
Documents and is the beneficial owner of that interest at the time the interest
is paid; or

 

(b)                                 (i)            a company resident in the United Kingdom for United
Kingdom tax purposes; or

 

(ii)                                  a partnership each member of
which is:

 

(aa)                            a company resident in the
United Kingdom for United Kingdom tax purposes; or

 

(bb)                          a company not so resident in
the United Kingdom which carries on a trade in the United Kingdom through a
permanent establishment and which brings into account in computing its
chargeable profits (within the meaning of Section 11(2) ICTA) the whole of any
share of interest payable under a Funding 1 Liquidity Document that falls to it
by reason by Sections 114 and 115 ICTA;

 

(iii)                               a company not so resident in
the United Kingdom which carries on a trade in the United Kingdom through a
permanent establishment and which brings into account payments of interest made
to it under a Funding 1 Liquidity Document in computing its chargeable profits
(within the meaning given by section 11(2) ICTA),

 

40

 

which,
in each case, is beneficially entitled to the relevant  payment of interest made to it under the
Funding 1 Liquidity Documents at the time the interest is paid; or

 

(c)                                  a Treaty Lender; or

 

(d)                                 a building society authorised
under the Building Societies Act 1986 and entitled to receive interest without
deduction or withholding on account of United Kingdom Tax to which the Income
Tax (Building Societies) (Dividends and Interest) Regulations 1990 (or other
regulations made under sub-section 477A(1) of the Income and Corporation Taxes
Act 1988) apply;

 

Quarterly CPR on any date means the average of the three most
recent CPRs;

 

Rating Agencies means S&P, Moody’s and Fitch;

 

Reasonable, Prudent Mortgage Lender means a reasonably prudent
prime residential mortgage lender lending to borrowers in England, Wales and
Scotland who generally satisfy the lending criteria of traditional sources of
residential mortgage capital;

 

Receiver means any person or persons appointed (and any
additional person or persons appointed or substituted) as an administrative
receiver, receiver, manager, or receiver and manager of the Funding 1 Charged
Property by the Security Trustee pursuant to Clause 13.1 of the Funding 1
Deed of Charge;

 

Redemption Fee means the standard redemption fee charged
to the Borrower by the Seller where the Borrower makes a repayment of the full
outstanding principal of a Loan;

 

Reference Banks means the principal London office of each
of ABN AMRO Bank N.V., Barclays Bank PLC, Citibank, N.A. and the Royal Bank of
Scotland plc and/or such other bank as may be appointed agent bank from time to
time pursuant to the Fourth Issuer Paying Agent and Agent Bank Agreement or, as
the context may require, the Third Issuer Paying Agent and Agent Bank
Agreement, the Second Issuer Paying Agent and Agent Bank Agreement or First
Issuer Paying Agent and Agent Bank Agreement;

 

Registered Land means land in England and Wales, title to
which is, or is required to be, registered at H.M. Land Registry;

 

Registered Transfer means a deed of transfer of a Mortgage or
Mortgages over Registered Land substantially in the form set out in Schedule 2
to the Mortgage Sale Agreement with such modifications as may be required from
time to time;

 

Related Security means, in relation to a Loan, the security
for the repayment of that Loan including the relevant Mortgage and all other
matters applicable thereto acquired as part of the Portfolio sold to the
Mortgage Trustee pursuant to Clause 2.1 or Clause 4.1 of the Mortgage
Sale Agreement including (without limitation):

 

(a)                                  the benefit of all affidavits,
consents, renunciations, guarantees, indemnities, waivers and postponements
(including, without limitation, Deeds of Consent, Deeds of Postponement and MHA
Documentation) from occupiers and other persons having an interest in or rights
in connection with the relevant Property;

 

(b)                                 each right of action of the
Seller against any person (including, without limitation, any valuer, licensed
or qualified conveyancer, solicitor and any registrar or registry) in
connection with any report, valuation, opinion, certificate or other statement
of fact

 

41

 

or opinion (including, without limitation,
each Certificate of Title and Valuation Report) given or received in connection
with all or part of any Loan and its Related Security or affecting the decision
of the Seller to make or offer to make all or part of the relevant Loan; and

 

(c)                                  the benefit of (including,
without limitation, the rights as the insured person under and as notations of
interest on, returns of premium and proceeds of claims under) insurance and
assurance policies (including, the Buildings Policies and MIG Policies)
deposited, charged, obtained, or held in connection with the relevant Loan,
Mortgage and/or Property and Loan Files;

 

(but excluding, for the avoidance of doubt,
the Properties in Possession Cover in respect of which the Mortgages Trustee,
Funding 1 and the Security Trustee have received the Insurance
Acknowledgement);

 

Relevant Accumulation Amount means the amount of funds to be
accumulated over a Cash Accumulation Period in order to repay a Bullet Term
Advance or a Scheduled Amortisation Instalment on its Scheduled Repayment Date;

 

Relevant Event means, in relation to the Funding 1
Liquidity Facility Provider:

 

(a)                                  the downgrade on any day of
the Funding 1 Liquidity Facility Provider’s short-term, unsecured,
unsubordinated and unguaranteed debt to below the Requisite Ratings; or

 

(b)                                 the refusal by the Funding 1
Liquidity Facility Provider, to grant an extension of the Funding 1 Liquidity
Facility Commitment Period, in accordance with Clause 2.3 of the Funding 1
Liquidity Facility Agreement;

 

Relevant Screen Rate in relation to each Intercompany Loan
means (a) in respect of the first Interest Period, the Initial Relevant Screen
Rate specified in the relevant Intercompany Loan Confirmation; and (b) in
respect of subsequent Interest Periods, means the arithmetic mean of offered
quotations for three-month Sterling deposits in the London inter-bank market
displayed on the Dow-Jones/Telerate Monitor at Telerate Page No. 3750; in each
case, displayed on the above mentioned page of the Dow-Jones/Telerate Monitor
(or such replacement page on that service which displays the information) or,
if that service ceases to display the information, such other screen service as
may be determined by Funding 1 with the approval of the Security Trustee
(rounded upwards, if necessary, to five decimal places);

 

Relevant Share Calculation Date means the Calculation Date at
the start of the most recently completed Calculation Period;

 

Repayment Date has the meaning given to it in Clause
2.3(d) of the Funding 1 Liquidity Facility Agreement;

 

Repayment Requirement means on a Calculation Date, the amount,
if any, by which the aggregate of all amounts that will be payable by Funding 1
on the next Funding 1 Interest Payment Date as described in paragraphs 2.1 (d)
to (f) (inclusive) of Part II of Schedule 3 to the Funding 1 Deed of Charge on
the basis:

 

(a)                                  that there would be no
deferral in relation to Term Advances pursuant to Rule (1) set out in paragraph
2.2(a) of Part II of Schedule 3;

 

(b)                                 that where Rule (2) or Rule
(3) as set out in paragraph 2.2(a) of Part II of Schedule 3 applies to an
Intercompany Loan, the amount so payable by Funding 1 in respect of

 

42

 

Term Advances (other than Bullet Term
Advances and Scheduled Amortisation Instalments) under that Intercompany Loan
shall be treated as the lesser of (A) the amount due and payable in respect of
those Term Advances, and (B) the product of (i) the Funding 1 Share Percentage
as at the start of the most recently ended Calculation Period (provided
that if during the most recently ended Calculation Period Loans and their
Related Security are sold to the Mortgages Trustee or Funding 1 has acquired
part of the Seller Share of the Trust Property from the Seller, then the
Funding 1 Share Percentage will be calculated for purposes of this paragraph as
the weighted average of the Funding 1 Share Percentages as of the first day of
such Calculation Period and as of the date immediately after such sale or
acquisition, (ii) the aggregate amount of principal receipts received by the
mortgages trustee during the most recently ended Calculation Period (iii) the
Outstanding Principal Balance of Intercompany Loan A (in the case of Rule (2))
or Intercompany Loan B (in the case of Rule (3)), divided by the aggregate
outstanding principal balance of all Intercompany Loans, each as of the most
recent Funding 1 Interest Payment Date;

 

(c)                                  that Term Advances will be
treated as due and payable if they are already due and payable, or would become
due and payable on or before the next Funding 1 Interest Payment Date if all
Principal Receipts were paid to Funding 1 on that Calculation Date; and

 

(d)                                 excluding amounts due and
payable in respect of Bullet Term Advances and Scheduled Amortisation
Instalments,

 

exceeds
the sum of:

 

(e)                                  the amounts standing to the
credit of the Funding 1 Principal Ledger as at the last Funding 1 Interest
Payment Date (which amount was not distributed on that Funding 1 Interest
Payment Date to the First Issuer); and

 

(f)                                    the sum of each Repayment
Requirement amount paid to Funding 1 on a previous Distribution Date during the
relevant interest period;

 

Representations and Warranties means the representations and warranties
set out in Schedule 1 to the Mortgage Sale Agreement;

 

Requisite Rating means in respect of the Funding 1
Liquidity Facility Provider as provider of the Funding 1 Liquidity Facility, a
rating of P-1 by Moody’s, F1 by Fitch and A+ by S&P;

 

Reserve Funds means the General Reserve Fund and the Liquidity
Reserve Fund;

 

Revenue Ledger means the ledger maintained by the Cash
Manager pursuant to the Cash Management Agreement and Clause 14 of the Mortgages
Trust Deed to record Revenue Receipts received by the Mortgage Trustee and
payment of the same to Beneficiaries;

 

Revenue Receipts means each payment received in respect of
any Loan, whether as all or part of a Monthly Payment in respect of such Loan,
on redemption (including partial redemption) of such Loan, on enforcement of
such Loan (including the proceeds of sale of such Loan), on the disposal of
such Loan or otherwise (including payments pursuant to any Insurance Policy)
which in any such case is not a Principal Receipt in respect of such Loan;

 

S&P and Standard & Poor’s means Standard &
Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc. and
includes any successor to its rating business;

 

43

 

Sale Date means the date on which any New Portfolio is sold to
the Mortgages Trustee in accordance with Clause 4 of the Mortgage Sale Agreement;

 

Sasine Transfer means, in relation to Properties situated
in Scotland title to which is recorded in the General Register of Sasines, each
assignation of the relevant Scottish Loans and their related Scottish Mortgages
in the relevant form set out in Schedule 14 to the Mortgage Sale Agreement with
such modifications as may be required from time to time;

 

Scheduled Amortisation Instalment means that part of a
Scheduled Amortisation Term Advance which is payable on each of the Scheduled
Repayment Dates of that Term Advance;

 

Scheduled Amortisation Repayment Restrictions means at any time on a
Funding 1 Interest Payment Date:

 

(a)                                  where there is not a Bullet
Accumulation Shortfall at that time, the total amount withdrawn from the Cash
Accumulation Ledger on that Funding 1 Interest Payment Date for repayment of
the relevant Scheduled Amortisation Instalments shall not exceed the Cash
Accumulation Ledger Amount less the Bullet Accumulation Liability at that time;
and

 

(b)                                 where there is a Bullet
Accumulation Shortfall at that time:

 

(i)                                     no amount may be withdrawn
from the Cash Accumulation Ledger on that Funding 1 Interest Payment Date to be
applied in repayment of the relevant Scheduled Amortisation Instalments; and

 

(ii)                                  no amount may be applied in
repayment of the relevant Scheduled Amortisation Instalments unless:

 

(A)                              the sum of the Cash
Accumulation Ledger Amount and the amount of Funding 1 Available Principal
Receipts after the application of items (a), (b) and (c) and before item (d) of
the Funding 1 Pre-Enforcement Principal Priority of Payments,

 

is
greater than or equal to

 

(B)                                the sum of the Bullet
Accumulation Liability and the aggregate amount of Scheduled Amortisation
Instalments which are due and payable as at that time;

 

Scheduled Amortisation Term Advance means the Second Issuer
Series 3 Term AAA Advance, the Third Issuer Series 3 Term AAA Advance, the
Third Issuer Series 4 Term AAA Advances and any New Scheduled Amortisation Term
Advance;

 

Scheduled Repayment Date in relation to a Term Advance means its
Scheduled Repayment Date(s), as defined in the relevant Issuer Master
Definitions and Construction Schedule relating to the corresponding class of
Issuer Notes;

 

Scottish Declaration of Trust means each declaration of trust entered
into among the Seller, the Mortgage Trustee and Funding 1 pursuant to Clauses
4.5(a)(vi) of the Mortgage Sale Agreement substantially in the form set out in
Schedule 15 to the Mortgage Sale Agreement;

 

Scottish Loan means a Loan secured by a standard security over a
Property located in Scotland;

 

44

 

Scottish Mortgage means a Mortgage securing a Scottish Loan;

 

Scottish Transfers means each Sasine Transfer and each SLR
Transfer;

 

Scottish Trust Property means the aggregate of all Scottish Trust
Property as defined in each relevant Scottish Declaration of Trust;

 

Search Indemnity Policy means the search indemnity policy written
by Royal & Sun Alliance Insurance PLC in favour of the Seller and any endorsements
or extensions thereto as issued from time to time, or any such similar
alternative or replacement policy or policies as may in future be issued in
favour of the Seller;

 

SEC or Securities and Exchange Commission means
the United States Securities and Exchange Commission;

 

Second Issuer means Permanent Financing (No. 2) PLC (registered
number 4623188), a public limited company incorporated under the laws of
England and Wales, whose registered office is at Blackwell House, Guildhall
Yard, London EC2V 5AE;

 

Second Issuer Closing Date means on or about 6th March, 2003;

 

Second Issuer Intercompany Loan Agreement means the Second Issuer
Intercompany Loan Confirmation and the Intercompany Loan Terms and Conditions
together entered into on the Second Issuer Closing Date by the Second Issuer,
Funding 1 and the Security Trustee (as the same may be amended and/or
supplemented from time to time);

 

Second Issuer Security means the security created by the Second
Issuer pursuant to the Second Issuer Deed of Charge in favour of the Second
Issuer Secured Creditors;

 

Second Start-up Loan means the start-up loan that the Second
Start-up Loan Provider has made available to Funding 1 pursuant to the Second
Start-up Loan Agreement;

 

Second Start-up Loan Agreement means the agreement entered into on the
Second Issuer Closing Date between Funding 1, the Second Start-up Loan Provider
and the Security Trustee relating to the provision of the Second Start-up Loan
to Funding 1 (as the same may be amended and/or supplemented from time to
time);

 

Second Start-up Loan Provider means Halifax in its capacity as provider
of the Second Start-up Loan;

 

Second Supplemental Funding 1 Deed of Charge means the second supplemental
Funding 1 deed of charge entered into on or around the date of Fourth Issuer
Closing Date between Funding 1, the First Issuer, the Second Issuer, the Third
Issuer, the Fourth Issuer, the Security Trustee, the Mortgages Trustee, the
Cash Manager, the Account Bank, the Funding 1 GIC Provider, the Funding 1 Swap
Provider, the First Start-up Loan Provider, the Second Start-up Loan Provider,
the Third Start-up Loan Provider and the Fourth Start-up Loan Provider, the
Funding 1 Liquidity Facility Provider and the Funding 1 Corporate Services
Provider and the Seller;

 

Secured Amounts means any and all of the moneys and
liabilities which an Issuer covenants to pay or discharge under of the relevant
Issuer Deed of Charge and all other amounts owed by it to the Beneficiaries
under and pursuant to the relevant Transaction Documents;

 

Securities Act means the United States Securities Act of
1933, as amended;

 

45

 

Security Interest or Encumbrance means any mortgage, sub
mortgage, standard security, charge, sub charge, pledge, lien (other than a
lien arising in the ordinary course of business or by operation of law)
assignation in security or other encumbrance or security interest howsoever
created or arising;

 

Security Power of Attorney means the power of attorney granted by
Funding 1 in favour of the Security Trustee under the Funding 1 Deed of Charge
on the Initial Closing Date substantially in the form set out in Schedule 1 to
the Funding 1 Deed of Charge;

 

Security Trustee means The Bank of New York, acting through
its offices at 48th Floor, One Canada Square, London E14 5AL or such other
persons or companies as may from time to time be appointed as Security Trustee
(or co-trustee) pursuant to the term of the First Issuer Deed of Charge and/or
the Second Issuer Deed of Charge and /or the Third Issuer Deed of Charge and/or
the Fourth Issuer Deed of Charge and/or the Funding 1 Deed of Charge;

 

Seller means Halifax;

 

Seller Bank Accounts means the bank account(s) of the Seller
into which monies may be paid from time to time pursuant to the terms of the
Mortgages Trust Deed, details of which will be given to the Mortgages Trustee
and Funding 1;

 

Seller Power of Attorney means the power of attorney granted by the
Seller in favour of Funding 1, the Mortgages Trustee and the Security Trustee
on the Initial Closing Date and on the Fourth Issuer Closing Date,
substantially in the form set out in Schedule 5 to the Mortgage Sale Agreement;

 

Seller Share means, only in respect of the period prior to the
first Distribution Date, the Initial Seller Share and thereafter means the
Current Seller Share;

 

Seller Share Percentage means, only in respect of the period prior
to the first Distribution Date, the Initial Seller Share Percentage and
thereafter means the Current Seller Share Percentage;

 

Seller’s Policy means the originating, underwriting,
administration, arrears and enforcement policy applied by the Seller from time
to time to loans and the security for their repayment which are beneficially
owned solely by the Seller;

 

Servicer means Halifax, or such other person as may from time
to time be appointed as servicer of the Portfolio pursuant to the Servicing
Agreement;

 

Servicer Termination Event means any of the events listed in Clause 21
of the Servicing Agreement;

 

Services has the meaning set out in Clause 3.1(a) of the
Servicing Agreement;

 

Servicing Agreement means the agreement entered into on the
Initial Closing Date between the Servicer, the Mortgages Trustee, the Security
Trustee, Funding 1 and the Seller (as amended and restated on the Second Issuer
Closing Date, the Third Issuer Closing Date and as further amended and restated
on the Fourth Issuer Closing Date and from time to time) pursuant to which the
Servicer agrees to administer the Loans and their Related Security comprised in
the Portfolio (as the same may be further amended and/or supplemented from time
to time);

 

46

 

Share Trustee means, in respect of Holdings, SFM Corporate Services
Limited of Blackwell House, Guildhall Yard, London EC2V 5AE; and in respect of
Mortgages Trustee, SFM Offshore Limited of 47 Esplanade, St. Helier, Jersey JE1
0BD, Channel Islands;

 

SLR Transfer means, in relation to Properties situated in Scotland
title to which is registered or is in the course of being registered in the
Land Register of Scotland, each assignation of the relevant Scottish Loans and
their related Scottish Mortgages in the relevant form set out in Schedule 12 to
the Mortgage Sale Agreement with such modifications as may be required from
time to time;

 

standard security means a standard security as defined in
Part II of the Conveyancing and Feudal Reform (Scotland) Act 1970;

 

Standard Documentation means the standard documentation, a list
of which is set out in Part 2 of the Exhibit to the Mortgage Sale Agreement and
copies of which have been initialled on behalf of the parties thereto for the
purposes of identification, or any update or replacement therefor as the Seller
may from time to time introduce acting in accordance with the standards of a
reasonable, prudent mortgage lender;

 

St Andrew’s Insurance means St Andrew’s Insurance, a non-life
insurance company incorporated on 15th September, 2003 whose offices are at St
Andrew’s House, Portsmouth Road, Esher, Surrey;

 

Start-up Loan Agreements means the First Start-up Loan Agreement,
the Second Start-up Loan Agreement, the Third Start up Loan Agreement, the
Fourth Start-up Loan Agreement and any New Start-up Loan Agreements and Start-up
Loan Agreement means any of them;

 

Start-up Loan Providers means the First Start-up Loan Provider,
the Second Start-up Loan Provider, the Third Start-up Loan Provider, the Fourth
Start-up Loan Provider or, as the context may require, any New Start-up Loan
Provider and Start-up Loan Provider means any of them;

 

Start-up Loans means the First Start-up Loan, the Second
Start-up Loan, the Third Start-up Loan, the Fourth Start-up Loan and any New
Start-up Loan;

 

Step-up Date means:

 

(a)                                  in respect of any Intercompany
Loan, the Funding 1 Interest Payment Date on which the interest rate payable in
respect of the relevant Term Advances made thereunder increases by a
pre-determined amount; and

 

(b)                                 in respect of any Notes, the
date on which the interest rate payable by the Issuer in respect of those Notes
increases by a pre-determined amount;

 

Subsidiary means a subsidiary as defined in section 736 of the
Companies Act 1985;

 

TARGET Business Day means a day on which the Trans-European
Automated Real-time Gross settlement Express (TARGET) system is open;

 

Tax Credit means a credit against Tax obtained on the Funding 1
Liquidity Facility Provider’s overall net income which the Funding 1 Liquidity
Facility Provider is able to identify as attributable to a specific Tax
Payment;

 

47

 

Tax Payment means a payment made by Funding 1 to the Funding 1
Liquidity Facility Provider as per Clause 10.1 of the Funding 1 Liquidity
Facility Agreement;

 

Taxes means all present and future taxes, levies, imposts,
duties (other than stamp duty), fees, deductions, withholdings or charges of
any nature whatsoever and wheresoever imposed, including, without limitation,
income tax, corporation tax, value added tax or other tax in respect of added
value and any franchise, transfer, sales, gross receipts, use, business,
occupation, excise, personal property, real property or other tax imposed by
any national, local or supranational taxing or fiscal authority or agency
together with any penalties, fines or interest thereon and Tax and Taxation shall be construed accordingly;

 

Term AAA Advances means the First Issuer Term AAA Advances,
the Second Issuer Term AAA Advances, the Third Issuer Term AAA Advances, the
Fourth Issuer Term AAA Advance and any term AAA advances made by any New
Issuer;

 

Term Advance Rating means the designated rating of each Term
Advance which reflects the rating assigned to the corresponding class of Notes
used to fund each such Term Advance on the relevant Closing Date of that Term
Advance;

 

Term Advances has the meaning given in each Issuer Master
Definitions and Construction Schedule as prefixed by the definition of each
respective Issuer (being by way of example the

 

Third Deed of Accession means the third deed of accession to the
Funding 1 Deed of Charge entered into on the Fourth Issuer Closing Date
between Funding 1, the First Issuer, the Second Issuer, the Third Issuer, the
Fourth Issuer the Corporate Services Provider, the Account Bank, the Security
Trustee, the Seller, the First Start-up Loan Provider, the Second Start-up Loan
Provider, the Third Start-up Loan Provider, the Fourth Start-up Loan Provider
the Cash Manager, the Funding 1 Swap Provider and the Funding 1 Liquidity
Facility Provider as supplemented, amended and/or restated from time to time;

 

Third Issuer means Permanent Financing (No. 3) PLC (registered
number 4907355), a public limited company incorporated under the laws of
England and Wales, whose registered office is at Blackwell House, Guildhall
Yard, London EC2V 5AE;

 

Third Issuer Closing Date means 25th November, 2003;

 

Third Issuer Intercompany Loan Agreement means the Third Issuer
Intercompany Loan Confirmation and the Intercompany Loan Terms and Conditions
together entered into on the Third Issuer Closing Date by the Third Issuer,
Funding 1 and the Security Trustee (as the same may be amended and/or
supplemented from time to time);

 

Third Issuer Security means the security created by the Third
Issuer pursuant to the Third Issuer Deed of Charge in favour of the Third
Issuer Secured Creditors;

 

Third Party Amounts includes:

 

(a)                                  amounts under a direct debit
which are repaid to the bank making the payment if such a bank is unable to
recoup that amount itself from the customer’s account;

 

(b)                                 payments by Borrowers of any
fees and other charges which are due to the Seller; or

 

(c)                                  recoveries in respect of
amounts deducted from Loans as described in paragraphs (i) to (iv) of Clause
8.4(a) of the Mortgages Trust Deed, which will belong to and be paid
to Funding 1 and/or the Seller as described therein;

 

48

 

Third Party Collection Agent means an entity that shall act as
collection agent for the Mortgages Trustee and the Beneficiaries under the
Direct Debiting Scheme or any successor to that scheme pursuant to Clause
5.1(a)(i) of the Servicing Agreement;

 

Third Start-up Loan means the start-up loan that the Third
Start-up Loan Provider has made available to Funding 1 pursuant to the Third
Start-up Loan Agreement;

 

Third Start-up Loan Agreement means the agreement  entered into on the Third Issuer Closing
Date between Funding 1, the Third Start-up Loan Provider and the Security
Trustee relating to the provision of the Third Start-up Loan to Funding 1 (as
the same may be amended and/or supplemented from time to time);

 

Third Start-up Loan Provider means Halifax in its capacity as provider
of the Third Start-up Loan;

 

Title Deeds means, in relation to each Loan and its Related
Security and the Property relating thereto, all conveyancing deeds, MHA
Documentation and all other documents which make up the title to the Property
and the security for the Loan and all searches and enquiries undertaken in
connection with the grant by the Borrower of the related Mortgage;

 

Total Property means at any time the aggregate amount
standing to the credit of the Collection Account and held by Halifax on trust
for the Issuer, the Mortgages Trustee and Halifax, subject to and in accordance
with the Bank Agreement;

 

Tracker Rate means the rate of interest applicable to a Tracker
Rate Loan (before applying any cap or minimum rate);

 

Tracker Rate Loan means those Loans to the extent that and
for such period that their Mortgage Terms provide that they are subject to an
interest rate which is linked to a variable interest rate other than the
Variable Base Rates.  For example, the
rate on a Tracker Rate Loan may be set at a margin above sterling LIBOR or
above rates set by the Bank of England;

 

Tracker Swap Rate means a rate linked to the Bank of England
repo rate, as shall be determined by the Cash Manager in accordance with the
provisions of the Cash Management Agreement;

 

Transaction Documents means the Funding 1 Agreements, the First
Issuer Transaction Documents, the Second Issuer Transaction Documents, the
Third Issuer Transaction Documents, the Fourth Issuer Transaction Documents and
any documents and agreements to which any New Issuer is a party, the Mortgages
Trustee Guaranteed Investment Contract and all other documents and agreements
referred to therein;

 

Treaty Lender means a person who is resident (as such term is
defined in the appropriate Double Taxation Treaty) in a country with which the
United Kingdom has a Double Taxation Treaty giving residents of that country
complete exemption from United Kingdom taxation on interest and does not carry
on business in the United Kingdom through a permanent establishment with which
any payment under the Funding 1 Liquidity Documents is effectively connected;

 

Trigger Event means an Asset Trigger Event and/or a Non-Asset
Trigger Event, as the case may be;

 

Trust Corporation means a corporation entitled by rules made
under the Public Trustee Act 1906 to carry out the functions of a custodian
trustee;

 

49

 

Trust Indenture Act means the United States Trust Indenture
Act of 1939, as amended;

 

Trust Property means:

 

(a)                                  the Initial Trust Property,
the Initial Closing Trust Property and any Future Trust Property (together with
the proceeds of sale of any of them) including, without limitation, the
Mortgage Trustee’s whole right, title and beneficial interest in and to all
Scottish Trust Property pursuant to any relevant Scottish Declaration of Trust;
but excludes any Loans that have been repaid or which have been repurchased by
the Seller pursuant to the Mortgage Sale Agreement or other actual adjustments
and, for the avoidance of doubt, which are not deemed adjustments to the Trust
Property as set out in the Mortgages Trust Deed;

 

(b)                                 any increase in the
Outstanding Principal Balance of a Loan due to Borrowers taking Payment Holidays
or making Underpayments or making drawings under any Flexible Loans;

 

(c)                                  any interest and principal
paid by Borrowers on their Loans;

 

(d)                                 any other amounts received
from Borrowers under their Loans or in respect of their Loans and Related
Security (but excluding Third Party Amounts);

 

(e)                                  rights under the Insurance
Policies that are sold to the Mortgages Trustee or which the Mortgages Trustee
has the benefit of; and

 

(f)                                    amounts on deposit (and
interest earned on those amounts) in the Mortgages Trustee GIC Account;

 

less

 

(g)                                 any losses in relation to
Loans and any actual reductions (and for the avoidance of doubt, not deemed
reductions) occurring in respect of the Loans as set out in Clause
8.4(a) of the Mortgages Trust Deed ; and

 

(h)                                 allocations of Mortgages Trust
Available Principal Receipts to the Beneficiaries in accordance with Clause 11
of the Mortgages Trust Deed;

 

UK Non-Bank Lender means a lender within the meaning of
paragraph (b) of the definition of Qualifying Lender;

 

Uncured Funding 1 Revenue Shortfall has the meaning given to it
in Part 1 of Schedule 3 to the Funding 1 Deed of Charge;

 

Underpayment means a payment made by a Borrower in an amount less
than the Monthly Payment then due on the Loan being a sum not exceeding the
aggregate of any previous Overpayments;

 

United Kingdom means The United Kingdom of Great Britain
and Northern Ireland;

 

United States means The United States of America;

 

Unregistered Land means land in England and Wales title to
which is not, and is not required to be, registered at H.M. Land Registry;

 

50

 

Unregistered Transfer means a deed of transfer of a Mortgage or
Mortgages over Unregistered Land substantially in the form set out in Schedule
3 to the Mortgage Sale Agreement with such modifications as may be required
from time to time;

 

Valuation Report means the valuation report or reports for
mortgage purposes, in the form of the pro-forma contained in the Standard
Documentation, obtained by the Seller from a Valuer in respect of each Property
or a valuation report in respect of a valuation made using a methodology which
would be acceptable to a reasonable prudent mortgage lender and which has been
approved by the Director of Group Property and Survey of the Seller (or his
successor);

 

Valuer means an Associate or Fellow of the Royal Institution
of Chartered Surveyors or the Incorporated Society of Valuers and Auctioneers
who was at the relevant times either a member of a firm which was on the list
of Valuers approved by or on behalf of the Seller from time to time or an
Associate or Fellow of the Royal Institute of Chartered Surveyors or the
Incorporated Society of Valuers and Auctioneers employed in-house by the Seller
acting for the Seller in respect of the valuation of a Property;

 

Variable Base Rates means HVR 1, HVR 2 or the Mortgages
Trustee Variable Base Rate, as applicable;

 

Variable Mortgage Rate means the rate of interest which
determines the amount of interest payable each month on a Variable Rate Loan;

 

Variable Rate Loans means those Loans to the extent that and
for such period that their Mortgage Terms provide that they are subject to a
rate of interest which may at any time be varied in accordance with the
relevant Mortgage Terms (and shall, for the avoidance of doubt, exclude Loans
during the period that they are Fixed Rate Loans or Tracker Rate Loans);

 

WAFF means the weighted average repossession frequency in
respect of the Portfolio; and

 

WALS means the weighted average loss severity in respect
of the Portfolio.

 

2.                                      INTERPRETATION AND CONSTRUCTION

 

Any
reference in any Transaction Document or in any document to which this Master
Definitions and Construction Schedule is expressed to be incorporated or apply
to:

 

affiliate of any person shall be construed as a reference to
the ultimate holding company of that person or an entity of which that person
or its ultimate holding company (a) has direct or indirect control or (b) owns
directly or indirectly more than fifty per cent. (50%) of the share capital or
similar rights of ownership;

 

the assets of any person shall be construed as
a reference to the whole or any part of its business, undertakings, property,
intellectual property, shares, securities, debts, accounts, revenues (including
any right to receive revenues), goodwill, shareholdings and uncalled capital
including premium whether now or hereafter acquired and any other assets
whatsoever;

 

an authorisation includes an authorisation,
consent, approval, resolution, licence, exemption, filing or registration;

 

disposal shall be construed as any sale, lease, transfer,
conveyance, assignment, assignation, licence, sub-licence or other disposal and
dispose
shall be construed accordingly;

 

51

 

a guarantee means any guarantee, bond,
indemnity, letter of credit, third party security or other legally binding
assurance against financial loss granted by one person in respect of any
indebtedness of another person, or any agreement to assume any indebtedness of
any other person or to supply funds or to invest in any manner whatsoever in
such other person by reason of, or otherwise in relation to, indebtedness of
such other person;

 

indebtedness shall be construed so as to include any obligation
(whether incurred as principal or as surety or guarantor) for the payment or
repayment of money, whether present or future, actual or contingent;

 

a month is a reference to a period starting
on one day in a calendar month and ending on the numerically corresponding day
in the next calendar month save that, where any such period would otherwise end
on a day which is not a business day, it shall end on the next business day,
unless that day falls in the calendar month succeeding that in which it would
otherwise have ended, in which case it shall end on the preceding business day
Provided that, if a period starts on the last business day in a calendar month
or if there is no numerically corresponding day in the month in which that
period ends, that period shall end on the last business day in that later month
(and references to months shall be construed accordingly);

 

a regulation includes any regulation, rule,
official directive, request or guideline (whether or not having the force of
law) of any governmental, inter-governmental or supranational body, agency,
department or regulatory, self-regulatory or other authority or organisation;

 

set-off shall be deemed to inclde analogous rights in other
relevant jurisdictions;

 

VAT means value added tax imposed by the United Kingdom
as referred to in the Value Added Tax Act 1994 and legislation (whether
delegated or otherwise) replacing the same or supplemental thereto or in any
primary or subordinate legislation promulgated by the European Union or any
official body or agency thereof, and any similar turnover tax replacing or
introduced in addition to any of the same;

 

a wholly-owned subsidiary of a company or
corporation shall be construed as a reference to any company or corporation
which has no other members except that other company or corporation and that
other company’s or corporation’s wholly-owned subsidiaries or persons acting on
behalf of that other company or corporation or its wholly-owned subsidiaries;
and

 

the winding-up, dissolution or administration
of a company or corporation shall be construed so as to include any equivalent
or analogous proceedings under the law of the jurisdiction in which such
company or corporation is incorporated or any jurisdiction in which such
company or corporation carries on business including the seeking of
liquidation, winding-up, bankruptcy, reorganisation, dissolution,
administration, arrangement, adjustment, protection or relief of debtors.

 

2.1                                 £, sterling or pounds  sterling denotes the lawful
currency for the time being of the United Kingdom and e or Euro denotes the single
currency introduced at the start of the third stage of European Economic
Monetary Union pursuant to the Treaty of Rome of 25th March, 1957, as amended
by, inter
alia, the Single European Act of 1986 and the Treaty of European
Union of 7th February, 1992 and the Treaty of Amsterdam of 2nd October, 1997
establishing the European Community, as further amended from time to time.

 

2.2                                 In this Amended and Restated
Master Definitions and Construction Schedule and in any of the Transaction
Documents in which this Master Definitions and Construction Schedule is
expressed to be incorporated or to which this Master Definitions and
Construction Schedule is expressed to apply:

 

52

 

(a)                                  words denoting the singular
number only shall include the plural number also and vice versa;

 

(b)                                 words denoting one gender only
shall include the other genders;

 

(c)                                  words denoting persons only
shall include firms and corporations and vice versa;

 

(d)                                 references to any statutory
provision shall be deemed also to refer to any statutory modification or
re-enactment thereof or any statutory instrument, order or regulation made
thereunder or under any such re-enactment;

 

(e)                                  references to any agreement or
other document (including any of the Transaction Documents) shall be deemed
also to refer to such agreement or document as amended, varied, supplemented or
novated from time to time;

 

(f)                                    clause, paragraph and schedule
headings are for ease of reference only;

 

(g)                                 reference to a statute shall
be construed as a reference to such statute as the same may have been, or may
from time to time be, amended or re-enacted to the extent such amendment or
re-enactment is substantially to the same effect as such statute on the date
hereof;

 

(h)                                 reference to a time of day
shall be construed as a reference to London time (unless otherwise specified);
and

 

(i)                                     references to any person shall
include references to his successors, transferees and assigns and assignees and
any person deriving title under or through him.

 

2.3                                 Any definition that appears in
the Funding 1 Agreements or the Mortgages Trustee Guarantee Investment Contract
that does not appear in this Amended and Restated Master Definitions and
Construction Schedule, shall have the meaning given in the relevant Issuer
Master Definitions and Construction Schedule or each Issuer Master Definitions
and Construction Schedule, as the context so requires.

 

2.4                                 Terms used in
any Transaction Document which incorporates both this Amended and Restated
Master Definitions and Construction Schedule and an Issuer Master Definitions
and Construction Schedule, unless otherwise defined in therein or unless the context
otherwise requires, shall, in the event of conflict between this Amended
and Restated Master Definitions and Construction Schedule and an Issuer Master
Definitions and Construction Schedule, be construed in accordance with the
relevant Issuer Master Definitions and Construction Schedule.

 

3.                                      AMENDMENTS

 

Subject
to Clause
25 of the Funding 1 Deed of Charge (Supplemental Provisions
Regarding the Security Trustee), any amendments to this Amended and Restated
Master Definitions and Construction Schedule will be made only with the prior
written consent of each party to this Amended and Restated Master Definitions
and Construction Schedule.

 

4.                                      COUNTERPARTS

 

This
Amended and Restated Master Definitions and Construction Schedule may be signed
in any number of counterparts each of which, when signed, shall constitute one
and the same instrument.

 

53

 

5.                                      GOVERNING LAW

 

This
Amended and Restated Master Definitions and Construction Schedule is governed
by the laws of England (provided that any terms of this Amended and Restated
Master Definitions and Construction Schedule which are particular to Scots law
shall be construed in accordance with the laws of Scotland).

 

54

 

SIGNATORIES

 

	
  Funding 1 Liquidity Facility Provider

  	
   

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  JPMORGAN CHASE BANK

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  Seller,
  Servicer, Beneficiary, Cash Manager, Issuer Cash Manager, Funding 1 Swap
  Provider and Start-up Loan Providers

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  HALIFAX plc

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  Funding 1 and Beneficiary

  	
   

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  PERMANENT FUNDING (NO. 1) LIMITED

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  Mortgages Trustee

  	
   

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  PERMANENT MORTGAGES

  	
  )

  
	
  TRUSTEE LTD

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  Share Trustee  and Mortgages Trustee
  Corporate Services Provider

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  SFM OFFSHIRE LIMITED

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  The Fourth Issuer

  	
   

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  PERMANENT FINANCING (NO.  4) PLC

  	
  )

  

 

55

 

	
  The Third Issuer

  	
   

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  PERMANENT FINANCING (NO.  3) PLC

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  The Second Issuer

  	
   

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  PERMANENT FINANCING (NO. 2) PLC

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  The First Issuer

  	
   

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  PERMANENT FINANCING (NO. 1) PLC

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  Funding 1 Corporate Services Provider and
  Issuer Corporate Services Provider

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  STRUCTURED FINANCE

  	
  )

  
	
  MANAGEMENT LIMITED

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  Permanent Holdings Limited

  	
   

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  PERMANENT HOLDINGS LIMITED

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  Permanent PECOH Limited

  	
   

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  PERMANENT PECOH LIMITED

  	
  )

  

 

56

 

	
  The First Issuer Security Trustee, the
  Second Issuer Security Trustee, the Third Issuer Security Trustee, the Fourth
  Issuer Security Trustee and the Security Trustee

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  THE BANK OF NEW YORK

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  The First Issuer Note Trustee, the Second
  Issuer Note Trustee, the Third Issuer Note Trustee and the Fourth Issuer Note
  Trustee

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  THE BANK OF NEW YORK

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  Agent Bank, Principal Paying Agent,
  Registrar and Transfer Agent for the First Issuer Notes the Second Issuer
  Notes, the Third Issuer Notes  and the
  Fourth Issuer Notes

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  for and on behalf of CITIBANK, N.A.

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  Account Bank, Issuer Account Bank,
  Mortgage Trustee GIC Provider and Funding 1 GIC Provider

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  for and on behalf of THE GOVERNOR AND

  	
  )

  
	
  COMPANY OF THE BANK OF

  	
  )

  
	
  SCOTLAND

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  U.S. Paying Agent for the First Issuer
  Notes, the Second Issuer Notes, the Third Issuer Notes and the Fourth Issuer
  Notes

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  CITIBANK, N.A., NEW YORK BRANCH

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  Series 4 First Issuer Swap Provider,
  Series 1 Third Issuer Swap Provider and Series 2 Third Issuer Swap Provider

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  CREDIT SUISSE FIRST BOSTON

  	
  )

  
	
  INTERNATIONAL

  	
  )

  

 

57

 

	
  Series 3 First Issuer Swap Provider,
  Series 4 Second Issuer Dollar Swap Provider, Series 4 Second Issuer Euro Swap
  Provider, Series 3 Third Issuer Swap Provider, Series 5 Third Issuer Currency
  Swap Provider, Series 3 Fourth Issuer Swap Provider

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  BANQUE AIG, LONDON BRANCH

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  Series 1 First Issuer Swap Provider,
  Series 2 First Issuer Swap Provider, Series 2 Second Issuer Swap Provider and
  Series 4 Third Issuer Swap Provider

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  JPMORGAN CHASE BANK

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  Series 1 Second Issuer Swap Provider and
  Series 3 Second Issuer Swap Provider

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  CDC IXIS CAPITAL MARKETS

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  Interest Rate  Swap Provider for the Series 5 Class A Third Issuer Notes and
  the Series 5 Class A1 Fourth Issuer 
  Notes

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  HBOS TREASURY SERVICES PLC

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  Series 2 Fourth Issuer Swap Provider and
  the Series 4 Fourth Issuer Swap Provider

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  CITIBANK, N.A., LONDON BRANCH

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  Series 1 Fourth Issuer Swap Provider

  	
   

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  WESTLB AG, LONDON BRANCH

  	
  )

  

 

58

 

	
  Series 
  5 Class A1 Fourth Issuer Swap Provider

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  SWISS RE FINANCIAL PRODUCTS

  	
  )

  
	
  CORPORATION

  	
  )

  

 

59

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