The payment of principal and interest by the Borrowers under the Mortgage Loans will provide the principal source of funds for the Issuer to make payments of principal and payments of interest in respect of the Notes.
Funds Paid into the Transaction
Account . . . On each Loan Payment Date under the facility agreement with respect to each Mortgage Loan (together, the ‘‘Facility Agreements’’), the Servicer will transfer from each of the relevant Canary Wharf Control Accounts, the Mapeley Control Accounts, the Brunel Control Accounts and the St Enoch Control Accounts (each as defined in ‘‘The Mortgage Loans’’ and together, the ‘‘Borrower Control Accounts’’) to the Transaction Account (as defined in ‘‘Cash Management – Establishment of Accounts’’) an amount in respect of all amounts then due and that are to be paid under the related Mortgage Loan, including interest, principal and fees.
Cash Manager Calculations on
Determination Date. . . On every Determination Date, the Cash Manager will calculate the amount of any Liquidity Drawings which will be required to be made on the following Payment Date, and the Cash Manager will also be required to calculate and/or determine, based on and subject to receipt of information to be provided to it by the Servicer and/or the Special Servicer, the following:
(a) the amount of Revenue Receipts and Principal Receipts received during the Interest Period to which such Determination Date relates;
(b) the Available Funds available to the Issuer for distribution on the following Payment Date; and
(c) all amounts due according to the Pre-enforcement Priority of Payments set forth below.
Revenue Receipts. . . The Issuer’s interest and income receipts (the ‘‘Revenue Receipts’’) will comprise, on any day, payments of interest, fees (other than Prepayment Fees), if any, incurred by a Borrower, expenses, commissions and other sums, in each case made by a Borrower in respect of the Mortgage Loans or the Related Security (other than any payments in respect of principal), including recoveries of such amounts on enforcement of the Mortgage Loans and Related Security, upon a repurchase of any Mortgage Loan pursuant to the terms of the Loan Sale Agreement and standing to the credit of the Transaction Account on that day.
Principal Receipts . . . The Issuer’s principal receipts (the ‘‘Principal Receipts’’) will comprise:
(a) ‘‘Amortisation Funds’’, being scheduled amortisation payments received by or on behalf of the Issuer in
respect of the Mortgage Loans;
(b) ‘‘Prepayment Redemption Funds’’ being (i) principal payments received by or on behalf of the Issuer as a result of the prepayment of a Mortgage Loan in part or in full (excluding, for the avoidance of doubt, prepayments which constitute Principal Recovery Funds); and (ii) principal payments received by or on behalf of the Issuer as a result of the repurchase of a Mortgage Loan by the Originator pursuant to the Loan Sale Agreement;
(c) ‘‘Final Redemption Funds’’, being principal payments received by or on behalf of the Issuer in respect of the Mortgage Loans as a result of the repayment of any Mortgage Loan upon its scheduled final maturity date;
and
(d) ‘‘Principal Recovery Funds’’, being principal payments received or recovered by or on behalf of the Issuer as a result of actions taken in accordance with the enforcement procedures in respect of a Mortgage Loan and/or the Related Security.
PID Reserve Fund . . . The Issuer will establish a reserve fund (the ‘‘PID Reserve Fund’’) to be used solely to help meet any Prepayment Interest Deficiencies which arise in relation to the payment of interest on the Class D Notes as a result of a voluntary prepayment on a Mortgage Loan. The PID Reserve Fund will be funded up to the PID Reserve Fund Limit from PID Reserve Amounts on each Payment Date. The ‘‘PID Re-serve Fund Limit’’ is the amount of £225,000. Following confirmation being given by Moody’s to the Issuer and the Note Trustee that the PID Reserve Fund may be released, all amounts standing to the credit of the PID Reserve Fund will be released to the Originator or such other person then entitled to Class X Certificate Amounts and no further deposits will be made into the reserve.
Available Funds. . . ‘‘Available Funds’’ means, as at a Payment Date, an amount equal to the aggregate of:
(a) the Revenue Receipts and the Principal Receipts standing to the credit of the Transaction Account at the close of business on the day immediately prior to the Determination Date applicable to such Payment Date and all Revenue Receipts and Principal Receipts which are attributable to Liquidity Drawings on such Payment Date; and
(b) the net amounts paid or due to be paid to the Issuer under the Swap Agreement in respect of the Interest Period to which that Determination Date relates other than (i) collateral transferred to the Issuer thereunder (excluding amounts approved in satisfaction of termination payments due to the Issuer following the designation of an early termination date under any Swap Agreement) and (ii) any termination payment paid by any Swap Provider to the Issuer to the extent such termination payment is paid to a suitably rated replacement swap provider in consideration for such swap provider entering into a suitable replacement swap agreement.
Principal Distributions. . . On each Payment Date, the Notes will be subject to a mandatory redemption in part as described below. The
‘‘Principal Distribution Amount’’ for any Payment Date prior to the service of a Note Acceleration Notice will be equal to the sum, without duplication, of:
(a) all Amortisation Funds, Prepayment Redemption Funds, Final Redemption Funds and Principal Recovery Funds actually received during the Collection Period related to such Payment Date, less
(b) the amount of any Liquidation Fee or any portion of any Work-out Fee (which is payable or has been paid by the Issuer in respect of the Mortgage Loans and is calculated by reference to any Principal Receipts received by the Issuer).
On each Payment Date, prior to the occurrence of Sequential Payment Trigger, a portion of the Principal Distribution Amount then available for distribution will be applied on a sequential basis between the classes of Notes then outstanding and the remaining portion of the Principal Distribution Amount then available for distribution will be applied on a pro rata basis between the classes of Notes then outstanding. The portion of the Principal Distribution Amount that will be applied sequentially between each class of Notes is described in this Prospectus as the ‘‘Sequential Principal Distribution Amount’’.
The Sequential Principal Distribution Amount for any Payment Date will be equal to the Principal Distribution Amounts available on such Payment Date less the Pro Rata Principal Prepayment Amount for such Payment Date. The determination of the Pro Rata Principal Prepayment Amount is described below.
The ‘‘Pro Rata Principal Prepayment Amount’’ for any Payment Date will be equal to fifty per cent. of the aggregate of Prepayment Redemption Funds and Final Redemption Funds plus the amount which must be applied in prepayment of any Mortgage Loan on the disposal of any Mortgaged Property for application on that Payment Date.
Sequential Payment Trigger . . . Each of the following will be a ‘‘Sequential Payment Trigger’’:
(a) a payment default has occurred in respect of any Mortgage Loan; or
(b) the cumulative percentage of Mortgage Loans (calculated by reference to the principal amount outstanding of the Mortgage Loans as at the Cut-Off Date) which have defaulted since the Closing Date is greater than 10 per cent. of the aggregate principal amount outstanding of the Mortgage Loans as at the Cut-Off Date; provided that, in determining whether a Mortgage Loan has defaulted for the purposes of this paragraph:
(i) such determination shall be made solely on the basis of the terms of the relevant Facility Agreement as at the Closing Date by the Servicer and without
regard to any subsequent amendments to the relevant Facility Agreement or waivers granted in respect thereof; and
(ii) an event of default shall not be deemed to have occurred if (A) the default is with respect to payment and such default has been remedied or cured within five Business Days of such default, and/or (B) the default is other than with respect to payment, and the default is capable of being remedied or cured and such default has been remedied or cured within 30 days of such default being notified in accordance with the terms of the relevant Facility Agreement, and/or (C) enforcement procedures have been completed and the principal amount outstanding and all amounts of interest, fees, expenses and any other amounts payable by the relevant Borrower in respect of such defaulted Mortgage Loan have been received in full or the relevant Borrower has prepaid the defaulted Mortgage Loan in full (including, for the avoidance of doubt, all amounts of interest, fees, expenses and other amounts payable by the relevant Borrower in respect of such defaulted Mortgage Loan); or
(c) realised losses have been incurred on the Mortgage Loans, or there has been a failure to pay interest when due on any Note (other than the most senior class of Notes then outstanding); or
(d) the aggregate Principal Amount Outstanding of all the Notes on such Determination Date (less any Sequential Principal Distribution Amounts paid up to such Determination Date) is less than 50 per cent. of their Principal Amount Outstanding as at the Closing Date.
Priority Payments . . . Prior to the service of a Note Acceleration Notice, the Issuer and/or the Cash Manager shall pay from Revenue Receipts standing to the credit of the Transaction Account and in priority to all other payments required to be made by the Issuer on any day such payments are required, amounts due to third parties (other than the Issuer Secured Creditors), including the Issuer’s liability, if any, to corporation tax and/or value added tax and under obligations incurred in the course of the Issuer’s business.
Pre-enforcement Priority of Payments . . Prior to the service of a Note Acceleration Notice, on each Payment Date, the Issuer and/or the Cash Manager will apply Available Funds (excluding any Pro Rata Principal Prepayment Amount and any amounts standing to the credit of the PID Reserve Fund) and the amount of any Liquidity Drawing, each as determined on the immediately preceding Determination Date in the following manner and order of priority (the ‘‘Pre-enforcement Priority of Payments’’) (in each case only if and to the extent that payments or provisions of a higher priority have been made in full):
(a) firstly, in or towards satisfaction of the fees or other remuneration of (and amounts payable in respect of indemnity protection) and any costs, charges, liabilities
and expenses incurred by the Note Trustee and the appointees thereof;
(b) secondly, in or towards satisfaction on a pro rata and pari passu basis according to the respective amounts thereof of the amounts, including audit fees, fees due to the stock exchange where the Notes are then listed, fees due to Rating Agencies and company secretarial expenses, which are payable by the Issuer to third parties and incurred without breach by the Issuer of the Note Trust Deed or the Issuer Deed of Charge and not provided for payment elsewhere and to provide for any such amounts expected to become due and payable by the Issuer after that Payment Date and to provide for the Issuer’s liability or possible liability for corporation tax;
(c) thirdly, in or towards satisfaction on a pro rata and pari passu basis according to the respective amounts thereof of, (i) all amounts due to the Corporate Services Provider, (ii) all amounts due to the Servicer or the Special Servicer under the Servicing Agreement, (iii) all amounts due to the Operating Bank under the Cash Management Agreement, (iv) all amounts due to the Cash Manager under the Cash Management Agreement, (v) all amounts due to the Principal Paying Agent, Paying Agents, Transfer Agent and Agent Bank under the Agency Agreement and (vi) all amounts due to the Registrar and the Exchange Agent under the Agency Agreement;
(d) fourthly, in or towards all amounts of principal, interest and commitment fees due or accrued but unpaid to the Liquidity Facility Provider under the Liquidity Facility Agreement (other than Liquidity Subordinated Amounts);
(e) fifthly, in or towards satisfaction, on a pro rata and pari passu basis, according to the respective amounts thereof of:
(i) amounts due or overdue to the Interest Rate Swap Provider under the Interest Rate Swap Agreement (other than Interest Rate Swap Subordinated Amounts);
(ii) interest due or overdue on the Class A1 Notes;
(iii) PID Reserve Amounts which will be applied to fund or replenish the PID Reserve Fund up to the PID Reserve Fund Limit; and
(iv) the Class X Certificate Amount which will be paid to the Originator or other person then entitled thereto;
(f) sixthly, to redeem the Class A1 Notes in an amount equal to the lesser of the relevant Sequential Principal Distribution Amount and the Principal Amount Outstanding of the Class A1 Notes until the Class A1 Notes have been fully redeemed;
(g) seventhly, in or towards satisfaction of interest due or overdue on the Class A2 Notes;
(h) eighthly, to redeem the Class A2 Notes in an amount equal to the lesser of the remaining relevant Sequential Principal Distribution Amount and the Principal Amount Outstanding of the Class A2 Notes until the Class A2
Notes have been fully redeemed;
(i) ninthly, in or towards satisfaction of interest due or overdue on the Class B Notes;
(j) tenthly, to redeem the Class B Notes in an amount equal to the lesser of the remaining relevant Sequential Principal Distribution Amount and the Principal Amount Outstanding of the Class B Notes until the Class B Notes have been fully redeemed;
(k) eleventhly, in or towards satisfaction of interest due or overdue on the Class C Notes;
(l) twelfthly, to redeem the Class C Notes in an amount equal to the lesser of the remaining relevant Sequential Principal Distribution Amount and the Principal Amount Outstanding of the Class C Notes until the Class C Notes have been fully redeemed;
(m) thirteenthly, in or towards satisfaction of interest due or overdue on the Class D Notes;
(n) fourteenthly, to redeem the Class D Notes in an amount equal to the lesser of the remaining relevant Sequential Principal Distribution Amount and the Principal Amount Outstanding of the Class D Notes until the Class D Notes have been fully redeemed;
(o) fifteenthly, in or towards payment to the Issuer of the Issuer Profit of the Notes to be retained as profit and distributed by the Issuer;
(p) sixteenthly, in or towards satisfaction of any amounts in respect of withholding taxes, increased costs and other amounts payable under the Liquidity Facility Agreement to the Liquidity Facility Provider (excluding any amounts paid to the Liquidity Facility Provider under item (d) above) in aggregate in excess of 0.125 per cent per annum on the maximum aggregate amount available to be drawn under the Liquidity Facility Agreement (‘‘Liquidity Subordinated Amounts’’);
(q) seventeenthly, in or towards payment of any amounts payable by the Issuer to the Originator under the Loan Sale Agreement (to the extent not already provided for);
(r) eighteenthly, in or towards satisfaction of any Interest Rate Swap Subordinated Amounts; and
(s) nineteenthly, the surplus, if any, to the Issuer,
‘‘Interest Rate Swap Subordinated Amount’’ means any termination amount due to the Interest Rate Swap Provider as a result of the occurrence of a Swap Trigger.
Prior to confirmation being given by Moody’s to the Issuer and the Note Trustee that the PID Reserve Fund may be released amounts standing to the credit of the PID Reserve Fund will be applied solely to pay any interest shortfall on the Class D Notes which arises as a result of a Prepayment Interest Deficiency from a voluntary prepayment of a Mortgage Loan. The difference (if any) between (a) the amount of interest the Class D Noteholders would have received on that Payment Date had there existed no such Prepayment Interest Deficiency and (b) the amount of
interest actually paid to the Class D Noteholders (including from amounts standing to the credit of the PID Reserve Fund) on any Payment Date on which there is a Prepayment Interest Deficiency (and as a result of which Condition 5(i) applies) is referred to as the ‘‘Prepayment Interest Arrears’’.
No Prepayment Interest Arrears or any accrued interest thereon will be paid to the Class D Noteholders until the Final Maturity Date (or the date upon which the Notes have been repaid in full, if earlier). Following confirmation being given by Moody’s to the Issuer and the Note Trustee that the PID Reserve Fund may be released, all amounts standing to the credit of the PID Reserve Fund will be released to the Originator or such other person then entitled to Class X Certificate Amounts and no further deposits will be made into the reserve.
’’Prepayment Interest Deficiency’’ means any difference between (a) the amount that would be required on any Payment Date to pay all interest that has accrued on the Class D Notes at the relevant Payment Date and (b) the amount that is available to pay such interest to the Class D Noteholders on such Payment Date where such difference is attributable to reduction in the outstanding principal balance of the Mortgage Loans owned by the Issuer as a result of prepayments on the Mortgage Loans (whether arising voluntarily or as a result of a Final Recovery Determination having been made in respect thereof as determined by the Servicer or Special Servicer as applicable).
Distribution of Pro Rata
Principal Prepayments Amounts . . . On each Payment Date prior to the service of a Note Acceleration Notice, in respect of which the Pro Rata Principal Prepayment Amount is greater than zero, the Pro Rata Principal Prepayment Amount will be applied in repaying, pro rata and pari passu, the Principal Amount Outstanding on the Class A1 Notes, the Class A2 Notes, the Class B Notes, the Class C Notes and the Class D Notes in proportion to:
(a) if any Class A1 Notes are then outstanding, the Principal Amount Outstanding of each Class of Notes as at that Payment Date after application of any Sequential Principal Distribution Amounts (if any);
(b) if the Class A1 Notes have been redeemed in full but any Class A2 Notes are then outstanding, the Principal Amount Outstanding of each of the Class A2 Notes, the Class B Notes, the Class C Notes or the Class D Notes as at that Payment Date after application of any Sequential Principal Distribution Amounts (if any);
(c) if the Class A1 Notes and the Class A2 Notes have been redeemed in full but any Class B Notes are then outstanding, the Principal Amount Outstanding of the Class B Notes or the Class C Notes, or the Class D Notes as at that Payment Date after application of any Sequential Principal Distribution Amounts (if any);
(d) if the Class A1 Notes, the Class A2 Notes and the Class B Notes have been redeemed in full but any Class C Notes are then outstanding, the Principal Amount Outstanding of the Class C Notes or the Class D Notes,
as at that Payment Date after application of any Sequential principal Distribution Amounts (if any); and (e) if the Class A1 Notes, the Class A2 Notes, the Class B
as at that Payment Date after application of any Sequential principal Distribution Amounts (if any); and (e) if the Class A1 Notes, the Class A2 Notes, the Class B