DATED 21 MAY 2003
-----------------
NORTHERN ROCK PLC
as Seller, Cash Manager and a Beneficiary
GRANITE FINANCE FUNDING LIMITED
as Funding and a Beneficiary
- and -
GRANITE FINANCE TRUSTEES LIMITED
as Mortgages Trustee
________________________________________________________________
SIXTH AMENDED
MORTGAGES TRUST DEED
________________________________________________________________
SIDLEY XXXXXX XXXXX & XXXX
0 XXXXXXXXXXXX XXXXXX
XXXXXX XX0X 0XX
TELEPHONE 000 0000 0000
FACSIMILE 020 7626 7937
REF:30507-17/602120
CONTENTS
CLAUSE PAGE NO.
1. Definitions and Construction.............................................1
2. Creation of Mortgages Trust..............................................1
3. Conditions Precedent.....................................................2
4. Consideration............................................................3
5. Increasing and Decreasing the Seller Share of the Trust Property.........7
6. Increasing the Funding Share of the Trust Property.......................8
7. Initial Funding Share and Initial Seller Share...........................9
8. Adjustment of Funding Share Percentage and Seller Share Percentage......10
9. Minimum Seller Share....................................................21
10. Distribution of Revenue Receipts........................................22
11. Distribution of Principal Receipts......................................25
12. Allocation of Losses....................................................29
13. Overpayments............................................................29
14. Arrears.................................................................30
15. Ledgers.................................................................30
16. Fees and Expenses of the Mortgages Trustee..............................31
17. Directions from Beneficiaries...........................................31
18. Early Termination of the Mortgages Trust................................32
19. Audit of Mortgage Loans constituting the Trust Property.................33
20. Transfers...............................................................33
21. Representations and Covenants...........................................34
22. Power to Delegate.......................................................35
23. Powers of Investment....................................................35
24. Other Provisions regarding the Mortgages Trustee........................36
25. No retirement of Mortgages Trustee......................................37
26. Termination.............................................................38
27. Further Assurances......................................................38
28. No Partnership or Agency................................................38
29. Calculations............................................................38
30. Confidentiality.........................................................38
31. Perpetuity Period.......................................................39
32. Non Petition Covenant; Limited Recourse.................................39
33. Amendments and Waiver...................................................41
34. Notices.................................................................41
35. Third Party Rights......................................................42
36. Execution in Counterparts; Severability.................................42
37. Governing Law and Submission to Jurisdiction............................43
SCHEDULE 1 REPRESENTATIONS AND WARRANTIES.....................................44
1
THIS SIXTH AMENDED MORTGAGES TRUST DEED DATED 21 MAY 2003 FURTHER AMENDS AND
RESTATES THE MORTGAGES TRUST DEED DATED 26 MARCH 2001 BETWEEN:
(1) NORTHERN ROCK PLC (registered number 03273685), a public limited company
incorporated under the laws of England and Wales whose registered office
is at Northern Xxxx Xxxxx, Xxxxxxxx, Xxxxxxxxx xxxx Xxxx XX0 0XX, in its
capacity as Seller, and in its capacity as Cash Manager and in its
capacity as a Beneficiary;
(2) GRANITE FINANCE FUNDING LIMITED (registered number 79308) a private
limited company incorporated under the laws of Jersey, but acting out of
its office established in England (registered overseas company number
FC022999 and branch number BR005916) at 0 Xxxxx Xxxx Xxxxx, Xxxxxx XX0X
0XX in its capacity as a Beneficiary; and
(3) GRANITE FINANCE TRUSTEES LIMITED (registered number 79309) a private
limited company incorporated under the laws of Jersey whose registered
office is at 00 Xxxxxxxxx Xxxxxx, Xx. Xxxxxx, Xxxxxx XX0 0XX, Channel
Islands in its capacity as Mortgages Trustee.
WHEREAS:
(A) The Mortgages Trustee wishes to declare the following trusts in respect
of the Trust Property (being on the date of this Deed, the sum of
{pound-sterling}100 which monies have been received by, are presently
held by the Mortgages Trustee or to its order).
(B) The Mortgages Trustee (acting as principal and not as agent of any party)
has agreed to hold the Trust Property as bare trustee for the
Beneficiaries upon, with and subject to the trusts, powers and provisions
of this Deed. The Mortgages Trustee will receive amounts arising from
the Trust Property and will distribute such amounts for the benefit of
the Beneficiaries of the Mortgages Trust. It will delegate certain tasks
in relation to the Mortgages Trust to the Administrator and the Cash
Manager.
(C) The Seller carries on the business of, inter alia, originating
residential first mortgage loans to individual Borrowers in England and
Wales and of managing and administering such mortgage loans. The Seller
intends to assign from time to time portfolios of such mortgage loans to
the Mortgages Trustee pursuant to the Mortgage Sale Agreement entered
into on or about 26 March 2001, which mortgage loans shall be held by the
Mortgages Trustee as bare trustee for the Beneficiaries upon, with and
subject to the trusts, powers and provisions of this Deed.
NOW THIS DEED WITNESSES:
1. DEFINITIONS AND CONSTRUCTION
1.1. The provisions of the Master Definitions Schedule as amended and restated
by (and appearing in Appendix 1 to) the Master Definitions Schedule Fifth
Amendment and Restatement Deed made on 21 May 2003 between, amongst
others, the Seller, Funding and the Mortgages Trustee (as the same have
been and may be amended, varied or supplemented from time to time with
the consent of the parties hereto) are expressly and specifically
incorporated into and shall apply to this Deed.
2. CREATION OF MORTGAGES TRUST
2.1 INITIAL TRUST PROPERTY: The Mortgages Trustee hereby declares itself as
trustee of the Trust Property, being, upon execution of this Deed, the
sum of {pound-sterling}100 (one hundred pounds) (the "INITIAL TRUST
PROPERTY") which sum shall be held on trust by the Mortgages Trustee
absolutely as to both capital and income for the benefit, as tenants in
common, of the Seller as to the Initial Seller Share Percentage and
Funding as to the Initial Funding Share Percentage. The Initial Trust
Property shall be held by the Mortgages Trustee on the Mortgages Trust
upon due execution of this Deed by all parties to it.
2.2 CLOSING TRUST PROPERTY: Pursuant to the provisions of the Mortgage Sale
Agreement, the Seller intends to assign the Initial Mortgage Portfolio to
the Mortgages Trustee on the Initial Closing Date, which Initial Mortgage
Portfolio including all related rights and benefits shall form part of
the Trust Property (the "CLOSING TRUST PROPERTY").
2.3 NEW TRUST PROPERTY: From time to time and pursuant to the Mortgage Sale
Agreement, the Seller intends to assign New Mortgage Portfolios to the
Mortgages Trustee, which New Mortgage Portfolios including all related
rights and benefits shall form part of the Trust Property (the "NEW TRUST
PROPERTY").
2.4 OTHER TRUST PROPERTY:
(a) In accordance with this Deed, from time to time Funding and the
Seller shall, subject to and in accordance with Clause 4
(Consideration), Clause 5 (Increasing the Seller Share of the
Trust Property) and/or Clause 6 (Increasing the Funding Share of
the Trust Property) provide consideration to the Mortgages Trustee
in the form of Contributions to be applied by the Mortgages
Trustee as set out in this Deed. Any Contribution so provided to
the Mortgages Trustee shall, on receipt by the Mortgages
1
Trustee and until it has been applied by the Mortgages Trustee in
accordance with the terms of this Deed, form part of the Trust
Property.
(b) Any Re-draws made under a Flexible Mortgage Loan which is included
in the Trust Property will form part of the Trust Property.
(c) Amounts on deposit (and interest earned on such amounts) from time
to time in the Mortgages Trustee Bank Accounts will form part of
the Trust Property.
(d) (If the Seller subsequently decides to retain any Mortgage Loan
which is the subject of a Further Advance within the Trust
Property and/or to assign the Further Advance to the Mortgages
Trustee in accordance with the Mortgage Sale Agreement) any
Further Advance made in respect of a Mortgage Loan in the Trust
Property will also form part of the Trust Property.
(e) Any Permitted Replacement Mortgage Loan and its Related Security
(including the rights under any related MIG Policy and other
insurance policies arranged by the Seller, but excluding any Early
Repayment Charge Receipts paid to the Seller) relating to a
Permitted Product Switch effected in relation to a Mortgage Loan
which forms part of the Trust Property will also form part of the
Trust Property.
(f) The proceeds of sale of any Mortgage Loan and its Related Security
forming part of the Trust Property pursuant to the Mortgage Sale
Agreement or other proceeds of sale of any Trust Property will
form part of the Trust Property.
2.5 PAYMENTS OF EARLY REPAYMENT CHARGES: Subject to and in accordance with
the Mortgage Sale Agreement, the Mortgages Trustee will agree to pay to
the Seller any Early Repayment Charge Receipts received by the Mortgage
Trustee in respect of any Mortgage Loan included in the Initial Mortgage
Portfolio or any New Mortgage Portfolio which the Seller assigns to the
Mortgages Trustee. Upon any such payment to the Seller, the benefit of
such Early Repayment Charges will no longer form part of the Trust
Property.
3. CONDITIONS PRECEDENT
3.1 TRUST PROPERTY: Subject to this Clause 3 (Conditions Precedent), the
Mortgages Trustee shall hold the Trust Property as to both capital and
income on trust absolutely for Funding (as to the Funding Share) and for
the Seller (as to the Seller Share) as tenants in common upon, with and
subject to all the trusts, powers and provisions of this Deed (such that
each Beneficiary shall have an undivided beneficial interest in the Trust
Property). As used herein, "TRUST
2
PROPERTY" means the Initial Trust Property, the Closing Trust Property,
any New Trust Property, (but excludes any Early Repayment Charge Receipts
which have been paid to the Seller and any Mortgage Loans which have been
repurchased by the Seller pursuant to the Mortgage Sale Agreement) and all
other Trust Property referred to under Clause 2 (Creation of Mortgages
Trust) less (a) any actual Losses in relation to Mortgage Loans and any
actual redemptions occurring in respect of the Mortgage Loans as described
in Clause 8.5 (Adjustments to Trust Property) and (b) distributions of
principal made from time to time to the Beneficiaries.
3.2 CLOSING TRUST PROPERTY: The Closing Trust Property shall be held by the
Mortgages Trustee on the Mortgages Trust subject to satisfaction of the
following conditions precedent:
(a) the due execution and delivery of the Mortgage Sale Agreement by
all parties to it;
(b) the due execution and delivery of this Deed by all parties to it;
(c) the satisfaction or waiver in accordance with the terms of the
Mortgage Sale Agreement of the conditions to the sale and
assignment of the Initial Mortgage Portfolio as set out in Clause
2 (Sale and Purchase of Initial Mortgage Portfolio) and Clause 3
(Initial Closing Date) of the Mortgage Sale Agreement;
(d) the payment by Funding to the Mortgages Trustee of Funding's
Initial Contribution for the Initial Funding Share Percentage in
accordance with Clause 4 (Consideration); and
(e) the payment by the Mortgages Trustee to the Seller of the Initial
Purchase Price for the sale and assignment to the Mortgages
Trustee of the Initial Mortgage Portfolio.
3.3 NEW TRUST PROPERTY: Any New Trust Property shall be held by the
Mortgages Trustee on the Mortgages Trust subject to the satisfaction or
waiver in accordance with the terms of the Mortgage Sale Agreement of the
conditions referred to in Clause 4 (Sale and Purchase of New Mortgage
Loan Portfolios) of the Mortgage Sale Agreement for the transfer of New
Mortgage Loan Portfolios to the Mortgages Trustee.
4. CONSIDERATION
4.1 CONSIDERATION PROVIDED BY SELLER: The Seller in its capacity as a
Beneficiary shall provide consideration to the Mortgages Trustee for the
Seller Share in the Trust Property:
3
(a) on the Initial Closing Date, by assigning to the Mortgages Trustee
the Initial Mortgage Portfolio upon payment by the Mortgages
Trustee to the Seller of the Initial Purchase Price for the
Initial Mortgage Portfolio in accordance with the terms of the
Mortgage Sale Agreement;
(b) on each date after the Initial Closing Date on which (i) New
Mortgage Loans are acquired by the Mortgages Trustee from the
Seller in accordance with the Mortgage Sale Agreement and (ii) the
consideration provided to the Seller for that sale is or includes
the covenant of the Mortgages Trustee to hold the Trust Property
on trust for Funding (as to the Funding Share) and the Seller (as
to the Seller Share) in accordance with the terms of this Deed, by
the sale on such date by the Seller of such New Mortgage Loans
either for the payment by the Mortgages Trustee of the Initial
Purchase Price paid on such date or (if no Initial Purchase Price
is paid) without payment on such date; and
(c) on each date on which the Seller increases the Seller Share of the
Trust Property in accordance with Clause 5 (Increasing the Seller
Share of the Trust Property) below, the Seller will pay the
consideration to the Mortgages Trustee specified in that Clause.
4.2 CONSIDERATION PROVIDED BY FUNDING: Funding in its capacity as a
Beneficiary shall provide consideration to the Mortgages Trustee for the
Funding Share in the Trust Property:
(a) on the Initial Closing Date, by paying to the Mortgages Trustee
the Initial Contribution in respect of the Closing Trust Property
which shall be equal to (and from which the Mortgages Trustee
shall or shall procure that the Cash Manager on its behalf shall
pay) the Initial Purchase Price in respect of the Initial Mortgage
Portfolio payable by the Mortgages Trustee to the Seller pursuant
to the Mortgage Sale Agreement on such date;
(b) on each Distribution Date, by paying to the Mortgages Trustee a
Deferred Contribution equal to the amount (if any) of:
(i) Mortgages Trustee Available Revenue Receipts to which
Funding is entitled on such date in accordance with
paragraph (d) of Clause 10.2 (Distribution of Mortgages
Trustee Available Revenue Receipts); and
4
(ii) the amount of any Early Repayment Charge Receipts payable by
the Mortgage Trustee to the Seller under the Mortgage Sale
Agreement,
(together the "RELEVANT DISTRIBUTION") which shall be equal to
(and from which the Mortgages Trustee shall or shall procure that
the Cash Manager on its behalf shall pay) such amount of Deferred
Purchase Price as is payable by the Mortgages Trustee to the
Seller pursuant to the Mortgage Sale Agreement on such date. The
parties to this Deed agree that on any Distribution Date the
Relevant Distribution and the Deferred Contribution payable by
Funding to the Mortgages Trustee shall be set off against each
other such that as between the Mortgages Trustee and Funding no
amount shall be payable in respect of such Relevant Distribution
or such Deferred Contribution on such date and the Cash Manager on
behalf of the Mortgages Trustee shall pay to the Seller (in
satisfaction of the Mortgages Trustee's obligation to pay Deferred
Purchase Price to the Seller under the Mortgage Sale Agreement)
those funds which, were it not for such set-off, would have been
payable to Funding as the Relevant Distribution;
(c) unless Funding has given notice to each relevant Previous Issuer
of its intention to use the proceeds of a New Intercompany Loan to
repay one or more of the Intercompany Loans from the Previous
Issuers, and subject to Clause 6 (Increasing the Funding Share of
the Trust Property) below, on each date after the Initial Closing
Date on which (i) an amount of Initial Purchase Price is payable
in respect of New Mortgage Loans which are assigned by the Seller
to the Mortgages Trustee on such date and (ii) Funding receives
the net proceeds of a New Intercompany Loan from a New Issuer, by
paying to the Mortgages Trustee an Initial Contribution in respect
of such New Trust Property which shall be equal to (and from which
the Mortgages Trustee shall or shall procure that the Cash Manager
on its behalf shall pay) the Initial Purchase Price in respect of
such New Mortgage Loans payable by the Mortgages Trustee to the
Seller pursuant to the Mortgage Sale Agreement on such date;
(d) unless Funding has given notice to each relevant Previous Issuer
of its intention to use the proceeds of a New Intercompany Loan to
repay one or more of the Intercompany Loans from the Previous
Issuers subject to Clause 6 (Increasing the Funding Share of the
Trust Property) below, on each other date after the Initial
Closing Date on which Funding receives the net proceeds of a New
Intercompany Loan from a New Issuer, by paying to the Mortgages
Trustee a Further Contribution in respect of the Funding Share of
the Trust Property which shall be equal to (and
5
from which the Mortgages Trustee shall or shall procure that the
Cash Manager on its behalf shall pay) the Initial Consideration
payable to the Seller in accordance with Clause 6.3 (Initial
Consideration); and
(e) following the Final Repayment Date of the latest maturing
Intercompany Loan made by any Issuer to Funding and provided that
there are no further claims outstanding under any Intercompany
Loan or on such earlier date provided that all Intercompany Loans
have either been repaid in full or there are no further claims
outstanding under any Intercompany Loan, Funding will make a final
payment of Deferred Contribution to the Mortgages Trustee (the
"FINAL DEFERRED CONTRIBUTION") in an amount equal to the aggregate
amount standing to the credit of the Funding Bank Accounts
(including any account established for the purposes of the Issuer
Reserve Fund and/or the Issuer Liquidity Reserve Fund of any
Issuer) after making any payments ranking in priority thereto,
subject to and in accordance with the relevant Funding Priority of
Payments. The Final Deferred Contribution shall be in an amount
equal to (and from that Final Deferred Contribution the Mortgages
Trustee shall or shall procure that the Cash Manager shall on its
behalf pay) the final amount of Deferred Purchase Price payable by
the Mortgages Trustee to the Seller pursuant to and in accordance
with the Mortgage Sale Agreement.
4.3 APPLICATION BY MORTGAGES TRUSTEE:
(a) If the Mortgages Trustee receives any Initial Contribution,
Deferred Contribution or the Final Deferred Contribution from
Funding, the parties hereto direct the Mortgages Trustee to, and
the Mortgages Trustee covenants that it shall, or shall procure
that the Cash Manager on its behalf shall, pay such funds to the
Seller in satisfaction of the Mortgages Trustee's obligation to
make payment of the Initial Purchase Price or, as the case may be,
Deferred Purchase Price in respect of the Initial Mortgage
Portfolio or any New Mortgage Loans which are assigned to the
Mortgages Trustee by the Seller pursuant to the Mortgage Sale
Agreement.
(b) If the Mortgages Trustee receives a Further Contribution from any
Beneficiary, the parties hereto direct the Mortgages Trustee to,
and the Mortgages Trustee covenants that it shall, or shall
procure that the Cash Manager on its behalf shall, distribute such
funds to a Beneficiary or the Beneficiaries as required at the
time and in the manner and otherwise in accordance with the terms
of this Deed.
6
5. INCREASING AND DECREASING THE SELLER SHARE OF THE TRUST PROPERTY
5.1 RE-DRAWS UNDER FLEXIBLE MORTGAGE LOANS:
(a) If, in respect of any Flexible Mortgage Loan which is in the Trust
Property, the relevant Borrower requests a Cash Re-draw and the
Administrator (on behalf of the Mortgages Trustee) grants such
request pursuant to and in accordance with the terms of the
Administration Agreement, the Seller as Beneficiary shall fund
that Cash Re-draw in the Mortgages Trust by making payment to the
Borrower, in accordance with the terms and conditions of the
relevant Mortgage Loan, of the Cash Re-draw Amount. Upon payment
by the Seller to the relevant Borrower of the Cash Re-draw Amount,
the aggregate Current Balance of the Mortgage Loans constituting
the Trust Property and the amount of the Seller Share of the Trust
Property shall be increased by an amount equal to the Cash Re-draw
Amount.
(b) If, in respect of any Flexible Mortgage Loan which is in the Trust
Property, the relevant Borrower requests a Non-Cash Re-draw and
the Administrator grants such request or the Administrator
otherwise permits the relevant Borrower to take a Non-Cash Re-draw
pursuant to and in accordance with the terms of the Administration
Agreement, the Seller as Beneficiary shall fund such Non-Cash Re-
draw in the Mortgages Trust by making payment to the Mortgages
Trustee of a Further Contribution in an amount equal to the Unpaid
Interest Amount in respect of such Non-Cash Re-draw. Upon payment
by the Seller to the Mortgages Trustee of such Further
Contribution, the aggregate Current Balance of the Mortgage Loans
constituting the Trust Property and the Seller Share of the Trust
Property shall be increased by an amount equal to the amount of
the Further Contribution so made to the Mortgages Trustee. The
parties agree that any such Further Contribution received by the
Mortgages Trustee from the Seller will be treated as Revenue
Receipts and will be distributed to the Beneficiaries on the
immediately succeeding Distribution Date in accordance with Clause
10 (Distribution of Revenue Receipts) below.
5.2 FURTHER ADVANCES: If at a future date the Seller elects not to
repurchase any Mortgage Loan which becomes the subject of a Further
Advance from the Mortgages Trustee, the Seller will be solely responsible
for funding any such Further Advance and, subject to the provisions of
this Deed, upon the making of such Further Advance by the Seller, the
aggregate Current Balance of the Mortgage Loans constituting the Trust
Property and the Seller Share of the Trust Property shall be increased by
an amount equal to the amount of the Further Advance paid to the relevant
Borrower.
7
5.3 TOGETHER CONNECTIONS MORTGAGE LOANS: If, in respect of any Together
Connections Mortgage Loan which is in the Trust Property, there has been
a reduction in the outstanding balance of such Mortgage Loan from the
relevant Borrower being allocated a portion of the Together Connections
Mortgage Benefit under such Mortgage Loan, the aggregate Current Balance
of the Mortgage Loans constituting the Trust Property and the amount of
the Seller Share of the Trust Property shall be decreased by an amount
equal to the portion of the Together Connections Benefit allocated to
such Mortgage Loan.
6. INCREASING THE FUNDING SHARE OF THE TRUST PROPERTY
6.1 CONDITIONS PRECEDENT: Subject as provided below, Funding may increase the
Funding Share (as defined in Clause 7.1 (Initial Funding Share) below) of
the Trust Property, subject to satisfaction of the following conditions
precedent:
(a) no Event of Default under the Transaction Documents shall have
occurred which is continuing at the relevant date;
(b) no Intercompany Loan Enforcement Notice has been served in respect
of any Intercompany Loan;
(c) the Rating Agencies have confirmed in writing to the Mortgages
Trustee, the Security Trustee and each Issuer that the proposed
increase in the Funding Share of the Trust Property would not
adversely affect the then-current ratings by the Rating Agencies
(or any of them) of the Notes issued by any Issuer;
(d) the New Notes have been issued by the New Issuer, the subscription
proceeds received on behalf of such New Issuer and advanced by
such Issuer to Funding pursuant to an Intercompany Loan Agreement
(which proceeds Funding will pay to the Mortgages Trustee to
increase the Funding Share of the Trust Property on the relevant
date in accordance with Clause 6.2 (Completion));
(e) if necessary, each Issuer, including any New Issuer (if any) has
entered into appropriate hedging arrangements;
(f) as of the last day of the immediately preceding Trust Calculation
Period the aggregate Current Balance of Mortgage Loans in the
Trust Property which were at such time in arrears for at least 3
months is less than 4 per cent. of the aggregate Current Balance
8
of all Mortgage Loans in the Trust Property at such time unless the
Rating Agencies have confirmed that the then-current ratings of the
Notes will not be adversely affected;
(g) as of the last day of the immediately preceding Trust Calculation
Period the weighted average LTV ratio of Mortgage Loans in the
Trust Property (after application of the LTV Test) on such date
does not exceed the LTV ratio (based on the LTV Test) of Mortgage
Loans in the Trust Property on the Initial Closing Date plus 0.25
per cent.;
(h) each Issuer Reserve Fund is fully funded on the relevant date up
to the relevant Issuer Reserve Required Amount; and
(i) as at the most recent Payment Date no deficiency was recorded on
the Issuer Principal Deficiency Ledger of any Issuer,
provided always that Funding shall not be entitled to increase the
Funding Share after the Payment Date falling in January 2008 if the
option to redeem the First Issuer Notes on the Payment Date in January
2008 pursuant Condition 5 of the First Issuer Notes is not exercised.
6.2 COMPLETION: Subject to satisfaction of the conditions precedent set out
in Clause 6.1 (Conditions precedent) above, Funding shall pay to the
Mortgages Trustee the consideration for such increase in the Funding
Share in accordance with Clause 4 (Consideration).
6.3 INITIAL CONSIDERATION: The parties hereto agree that Principal Receipts
received by the Mortgages Trustee from Funding in payment of a Further
Contribution in accordance with Clause 4 (Consideration) on any date on
which Funding increases the Funding Share of the Trust Property shall be
allocable and payable by the Mortgages Trustee to the Seller (in its
capacity as a Beneficiary of the Mortgages Trust) as an Initial
Consideration on such date whether or not such date is a Distribution
Date. Any such Initial Consideration shall reduce the Seller Share of
the Trust Property by the amount of the Initial Consideration.
7. INITIAL FUNDING SHARE AND INITIAL SELLER SHARE
7.1 INITIAL FUNDING SHARE: The "INITIAL FUNDING SHARE" of the Trust Property
shall be {pound-sterling}86.61 at the date of this Deed and
{pound-sterling}1,500,000,000 at the Initial Closing Date and the
"INITIAL FUNDING SHARE PERCENTAGE" shall be the Initial Funding Share
expressed as a percentage of the Trust Property at such date, that is to
say, 86.61 per cent. References herein to the "FUNDING SHARE" shall
mean, prior to the first Distribution Date, the Initial Funding Share and
thereafter shall mean the Current Funding Share (as defined below).
9
7.2 INITIAL SELLER SHARE: The "Initial Seller Share" of the Trust Property
shall be the sum which remains of the Trust Property after deduction of
the Initial Funding Share. The Initial Seller Share of the Trust Property
will be {pound-sterling}13.39 at the date of this Deed and
{pound-sterling}232,000,000 at the Initial Closing Date and the "INITIAL
SELLER SHARE PERCENTAGE" shall be equal to 100 per cent. minus the
Initial Funding Share Percentage, that is to say, 13.39 per cent. The
amount of the Initial Seller Share and the Initial Seller Share
Percentage on the Initial Closing will be determined immediately after
the Initial Closing Date. References herein to the "SELLER SHARE" shall
mean, prior to the first Distribution Date, the Initial Seller Share and
thereafter shall mean the Current Seller Share (as defined below).
7.3 ROUNDING OF PERCENTAGE SHARES: Except for the Initial Closing Date on
which the Funding Share Percentage and the Seller Share Percentage shall
be calculated to two decimal places, and unless otherwise agreed by the
Beneficiaries, the Current Funding Share Percentage and the Current
Seller Share Percentage shall be calculated to five decimal places.
8. ADJUSTMENT OF FUNDING SHARE PERCENTAGE AND SELLER SHARE PERCENTAGE
8.1 EFFECTIVE PERIODS:
(a) Subject to Clause 8.1(b) below, the Cash Manager will (on behalf
of the Mortgages Trustee and the Beneficiaries) recalculate the
Funding Share, the Funding Share Percentage, the Seller Share and
the Seller Share Percentage in respect of each Trust Calculation
Period on the Distribution Date occurring in such Trust
Calculation Period, based on the aggregate Current Balance of the
Mortgage Loans constituting the Trust Property (as adjusted from
time to time) on the last day of the Trust Calculation Period
immediately preceding such Distribution Date.
(b) Notwithstanding Clause 8.1(a) above, if during any Trust
Calculation Period the Seller assigns New Mortgage Loans to the
Mortgages Trustee or if Funding pays a Further Contribution to the
Mortgages Trustee to increase the Funding Share of the Trust
Property, the recalculation of the Funding Share, the Funding
Share Percentage, the Seller Share and the Seller Share Percentage
made by the Cash Manager on the Distribution Date occurring in
such Trust Calculation Period will be effective only in respect of
the period beginning on (and including) the first day of such
Trust Calculation Period and ending on (but excluding) the first
Assignment Date or Funding Contribution Date, as applicable, to
occur during such Trust Calculation Period (such period in respect
of such Distribution Date, an "INTERIM CALCULATION PERIOD"), based
on the aggregate Current Balance of the Mortgage Loans
constituting
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the Trust Property (as adjusted from time to time) on the last day
of the Trust Calculation Period immediately preceding such
Distribution Date.
(c) In addition to the foregoing, if during any Trust Calculation
Period the Seller assigns New Mortgage Loans to the Mortgages
Trustee or if Funding pays a Further Contribution to the Mortgages
Trustee to increase the Funding Share of the Trust Property, the
Cash Manager will (on behalf of the Mortgages Trustee and the
Beneficiaries) recalculate the Funding Share, the Funding Share
Percentage, the Seller Share and the Seller Share Percentage on
such Assignment Date or Funding Contribution Date, as applicable,
in respect of the period beginning on (and including) such
Assignment Date or Funding Contribution Date, as applicable, and
ending on the last day of such Trust Calculation Period (and
including such last day of such Trust Calculation Period) (each
such period in respect of each Assignment Date or Funding
Contribution Date, as applicable, an "INTERIM CALCULATION
PERIOD"), based on the aggregate Current Balance of the Mortgage
Loans constituting the Trust Property (as adjusted from time to
time) on such Assignment Date or Funding Contribution Date, as
applicable.
The parties acknowledge and agree that the Mortgage Sale Agreement provides
that (a) the Seller may not assign New Mortgage Loans to the Mortgages Trustee
during any Trust Calculation Period prior to the Distribution Date in such
Trust Calculation Period, and (b) the Seller may only make one assignment of
New Mortgage Loans to the Mortgages Trustee during any Trust Calculation
Period.
8.2 CURRENT FUNDING SHARE PERCENTAGE:
(a) On each Distribution Date (the "RELEVANT DISTRIBUTION DATE"), or
at such time as the Mortgages Trust terminates, the "CURRENT
FUNDING SHARE PERCENTAGE" will be calculated by the Cash Manager
in respect of the then-current Trust Calculation Period or related
Interim Calculation Period, as applicable, for the purpose of
calculating the distributions to be made from the Trust Property
on the immediately succeeding Distribution Date, and such Current
Funding Share Percentage will be an amount, expressed as a
percentage (calculated to an accuracy of five decimal places
(rounded upwards)), equal to:
A - B - C + D
------------- x 100
G
where,
11
A = the Current Funding Share as calculated (a) on the later of
the Distribution Date, the Assignment Date or Funding
Contribution Date (if any) immediately preceding such
Relevant Distribution Date, or (b) in the case of the first
Distribution Date, the Initial Funding Share as at the
Initial Closing Date;
B = the amount of any Principal Receipts distributed to Funding
on such Relevant Distribution Date in accordance with the
provisions described in Clause 11 (Distribution of Principal
Receipts) below;
C = the amount of any Losses sustained on the Mortgage Loans
during the Trust Calculation Period immediately preceding
such Relevant Distribution Date and the amount of any
reductions occurring in respect of the Mortgage Loans as
described in paragraphs (a) through (e) of Clause 8.5
(Adjustments to Trust Property) (inclusive) below which have
been allocated to Funding in the Trust Calculation Period
ending on the Relevant Distribution Date (based on (a) the
Funding Share Percentage thereof calculated on the
Distribution Date immediately preceding such Relevant
Distribution Date (provided that the Seller had not assigned
New Mortgage Loans to the Mortgages Trustee or that Funding
had not paid a Further Contribution to the Mortgages Trustee
in the Trust Calculation Period immediately preceding such
Relevant Distribution Date), or (b) to the extent that the
Seller had assigned New Mortgage Loans to the Mortgages
Trustee or that Funding had paid a Further Contribution to
the Mortgages Trustee during the Trust Calculation Period
immediately preceding such Relevant Distribution Date, the
Weighted Average Funding Share Percentage (as defined below)
thereof calculated on such Relevant Distribution Date prior
to the distribution to be made on such Relevant Distribution
Date, or (c) in the case of the first Distribution Date, the
Initial Funding Share Percentage);
D = an amount equal to any Capitalised Arrears which have been
allocated to Funding during the Trust Calculation Period
immediately preceding such Relevant Distribution Date (based
on the Funding Share Percentage thereof calculated on the
Distribution Date immediately preceding such Relevant
Distribution Date or, in the case of the first Distribution
Date, the Initial Funding Share Percentage);
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G = the amount of the Mortgages Trustee Retained Principal
Receipts (if any) plus the aggregate Current Balance of all
the Mortgage Loans in the Trust Property as at the last day
of the Trust Calculation Period immediately preceding such
Relevant Distribution Date or, if applicable, on the
relevant Assignment Date or Funding Contribution Date, after
making the distributions, allocations and additions referred
to in (B), (C) and (D) above and after taking account of (i)
any distribution of Principal Receipts to the Seller and to
Funding, (ii) the amount of any Losses allocated to the
Seller and to Funding, (iii) the adjustments referred to in
paragraphs (a) through (e) of Clause 8.5 (Adjustments to
Trust Property) (inclusive) below; (iv) the amount of any
other additions to or removals from the Trust Property
during such Trust Calculation Period, including without
limitation, any additions to the Trust Property resulting
from Cash Re-draws and Non-Cash Redraws by Borrowers under
Flexible Mortgage Loans which are in the Trust Property or
(if the Seller subsequently elects not to repurchase
Mortgage Loans which are the subject of Further Advances
from the Mortgages Trustee) Further Advances assigned by the
Seller; but excluding the addition of mortgage loans on an
Assignment Date and any Initial Contribution or Further
Contribution made by Funding during such Trust Calculation
Period and (v) any reduction in the outstanding principal
balances of Together Connections Mortgage Loans resulting
from Borrowers being allocated a portion of the related
Together Connections Benefit under such Mortgage Loans.
(b) If during any Trust Calculation Period the Seller assigns New
Mortgage Loans to the Mortgages Trustee, the Cash Manager will
recalculate the Current Funding Share Percentage on each such
Assignment Date (the "RELEVANT ASSIGNMENT DATE") in respect of
the related Interim Calculation Period, for the sole purpose of
calculating the distributions to be made from the Trust Property
on the immediately succeeding Distribution Date, and such Current
Funding Share Percentage will be an amount, expressed as a
percentage (calculated to an accuracy of five decimal places
(rounded upwards)), equal to:
A + E
----- x 100
G
where,
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A = the Current Funding Share as calculated on the Distribution Date
immediately preceding such Relevant Assignment Date;
E = an amount equal to any Initial Contribution paid by Funding to the
Mortgages Trustee on such Relevant Assignment Date in relation to
the Funding Share of any New Mortgage Loans assigned to the
Mortgages Trustee on such Relevant Assignment Date (which amount
the Mortgages Trustee is required pursuant to Clause 4.3
(Application by Mortgages Trustee) to pay to the Seller in
satisfaction of the Mortgages Trustee's obligation to pay to the
Seller the Initial Purchase Price in respect of New Mortgage Loans
assigned to the Mortgages Trustee on such Relevant Assignment
Date); and
G = the sum of (a) the amount of the Mortgages Trustee Retained
Principal Receipts (if any), (b) the aggregate Current Balance of
all the Mortgage Loans in the Trust Property as at the
Distribution Date immediately preceding such Relevant Assignment
Date, and (c) the aggregate Current Balance of the New Mortgage
Loans assigned to the Mortgages Trustee on such Relevant
Assignment Date.
(c) If during any Trust Calculation Period the Seller assigns New
Mortgage Loans to the Mortgages Trustee, the Cash Manager will
recalculate the Current Funding Share Percentage on each such
Funding Contribution Date (the "RELEVANT FUNDING CONTRIBUTION
DATE") in respect of the related Interim Calculation Period, for
the sole purpose of calculating the distributions to be made from
the Trust Property on the immediately succeeding Distribution
Date, and such Current Funding Share Percentage will be an amount,
expressed as a percentage (calculated to an accuracy of five
decimal places (rounded upwards)), equal to:
A + F
----- x 100
G
where,
A = the Current Funding Share as calculated on the Distribution Date
immediately preceding such Relevant Funding Contribution Date;
F = an amount equal to any Further Contribution paid by Funding to the
Mortgages Trustee on such Relevant Funding Contribution Date to
increase Funding's beneficial interest in the Trust Property; and
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G = the sum of (a) the amount of the Mortgages Trustee Retained
Principal Receipts (if any) and (b) the aggregate Current Balance
of all the Mortgage Loans in the Trust Property as at the
Distribution Date immediately preceding such Relevant Funding
Contribution Date.
8.3 WEIGHTED AVERAGE FUNDING SHARE PERCENTAGE: On any Distribution Date in
respect to which the Seller had assigned New Mortgage Loans to the
Mortgages Trustee during the Trust Calculation Period immediately
preceding such Distribution Date, the Cash Manager (on behalf of the
Beneficiaries) will calculate (for the sole purpose of making the
distributions to be made on such Distribution Date) the weighted average
of the Current Funding Share Percentages that were calculated previously
in respect of each Interim Calculation Period occurring in such
immediately preceding Trust Calculation Period based on the amount of
Revenue Receipts and Principal Receipts received and Losses sustained
during each such Interim Calculation Period. The "WEIGHTED AVERAGE
FUNDING SHARE PERCENTAGE" for any such Distribution Date will be equal
to:
(a) in respect of the distribution of Revenue Receipts to be made on
such Distribution Date, the sum, in respect of all Interim
Calculation Periods during the Trust Calculation Period
immediately preceding such Distribution Date, of (i) for each
Interim Calculation Period during such Trust Calculation Period,
the product of (1) the related Current Funding Share Percentage
for such Interim Calculation Period, and (2) the amount of all
Revenue Receipts received by the Mortgages Trustee during such
Interim Calculation Period, divided by (ii) the aggregate of all
Revenue Receipts received by the Mortgages Trustee during the
Trust Calculation Period immediately preceding such Distribution
Date;
(b) in respect of the distribution of Principal Receipts to be made on
such Distribution Date, the sum, in respect of all Interim
Calculation Periods during the Trust Calculation Period
immediately preceding such Distribution Date, of (i) for each
Interim Calculation Period during such Trust Calculation Period,
the product of (1) the related Current Funding Share Percentage
for such Interim Calculation Period, and (2) the amount of all
Principal Receipts received by the Mortgages Trustee during such
Interim Calculation Period, divided by (ii) the aggregate of all
Principal Receipts received by the Mortgages Trustee during the
Trust Calculation Period immediately preceding such Distribution
Date; and
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(c) in respect of the allocation of Losses to be made on such
Distribution Date, the sum, in respect of all Interim Calculation
Periods during the Trust Calculation Period immediately preceding
such Distribution Date, of (i) for each Interim Calculation Period
during such Trust Calculation Period, the product of (1) the
related Current Funding Share Percentage for such Interim
Calculation Period, and (2) the amount of all Losses sustained on
the Mortgage Loans during such Interim Calculation Period, divided
by (ii) the aggregate of all Losses sustained on the Mortgage
Loans during the Trust Calculation Period immediately preceding
such Distribution Date.
8.4 CURRENT FUNDING SHARE:
(a) On each Distribution Date, the "CURRENT FUNDING SHARE" will be
calculated by the Cash Manager in respect of the then-current
Trust Calculation Period or the related Interim Calculation
Period, as applicable, and will be an amount equal to:
A - B - C + D
where "A", "B", "C" and "D" have the meanings specified in Clause
8.2(a) above.
(b) On each Assignment Date, the Current Funding Share will be
calculated by the Cash Manager in respect of the related Interim
Calculation Period and will be an amount equal to:
A + E
where "A" and "E" have the meanings specified in Clause 8.2(b)
above.
(c) On each Funding Contribution Date, the Current Funding Share will
be calculated by the Cash Manager in respect of the related
Interim Calculation Period and will be an amount equal to:
A + F
where "A" and "F" have the meanings specified in Clause 8.2(c)
above.
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8.5 ADJUSTMENTS TO TRUST PROPERTY: If any of the following events has
occurred during a Trust Calculation Period, then (subject to the Cash
Manager receiving notice or otherwise being aware of the occurrence of
the event) for the purposes of the calculation in "G" of Clauses 8.2(a),
8.2(b) or 8.2(c) above, the aggregate Current Balance of the Mortgage
Loans constituting the Trust Property shall be reduced or, as the case
may be, deemed to be reduced:
(a) any Borrower exercises a right of set-off in relation to any
Mortgage Loan in the Trust Property so that the amount of
principal and/or interest owing under such Mortgage Loan is
reduced but no corresponding payment is received by the Mortgages
Trustee, in which event the aggregate Current Balance of the
Mortgage Loans constituting the Trust Property shall be reduced by
an amount equal to the amount so set-off by such Borrower; and/or
(b) a Mortgage Loan or (as applicable) its Related Security (i) is in
breach of the Loan Warranties in the Mortgage Sale Agreement as at
the Initial Closing Date or, as the case may be, the relevant
Assignment Date or (ii) is the subject of a Product Switch or a
Further Advance in respect of which the Seller has elected to
repurchase the relevant Mortgage Loan, and the Seller fails to
repurchase the relevant Mortgage Loan or Mortgage Loans under the
relevant Mortgage Account and their Related Security as required
by the terms of the Mortgage Sale Agreement; in which event the
aggregate Current Balance of the Mortgage Loans constituting the
Trust Property shall be deemed to be reduced for the purposes of
the calculation in "G" above by an amount equal to the Current
Balance of the relevant Mortgage Loan or Mortgage Loans under the
relevant Mortgage Account (together with Arrears of Interest and
Accrued Interest) which the Seller has failed to repurchase;
and/or
(c) the Security Trustee is notified that a Flexible Mortgage Loan or
part thereof has been determined by a court judgment on the point
or as a result of a determination by a relevant regulatory
authority (whether or not in relation to an analogous flexible
mortgage loan product of another UK mortgage lender):
(i) to be unenforceable; and/or
(ii) not to fall within the first ranking charge by way of legal
mortgage over the relevant Mortgaged Property,
and, in either case, such Flexible Mortgage Loan is not otherwise
subject to the repurchase obligation under the Mortgage Sale
Agreement, in which event, the
17
aggregate Current Balance of the Mortgage Loans constituting the
Trust Property shall be deemed to be reduced for the purposes of
the calculation in "G" above by an amount equal to that portion of
the Current Balance of the Flexible Mortgage Loan which is so
determined to be unenforceable or not to fall within the first
ranking charge by way of legal mortgage over the relevant
Mortgaged Property; and/or
(d) the Seller would be required to repurchase a Mortgage Loan and its
Related Security in accordance with the terms of the Mortgage Sale
Agreement, but such Mortgage Loan and its Related Security are not
capable of being repurchased; in which event the aggregate Current
Balance of the Mortgage Loans constituting the Trust Property
shall be deemed to be reduced for the purposes of the calculation
in "G" above by an amount equal to the Current Balance of the
relevant Mortgage Loan (together with Arrears of Interest and
Accrued Interest) which is not capable of being repurchased;
and/or
(e) the Seller breaches any other material warranty under the Mortgage
Sale Agreement and/or (for so long as it is the Administrator) the
Administration Agreement, in which event the aggregate Current
Balance of Mortgage Loans constituting the Trust Property shall be
deemed for the purposes of the calculation in "G" above to be
reduced by an amount equivalent to all losses, costs, liabilities,
claims, expenses and damages incurred by the Beneficiaries as a
result of such breach.
The reductions and deemed reductions set out in paragraphs (a), (b), (c),
(d) and (e) of this Clause and any resulting loss shall, subject to
Clause 9.1 (Initial Minimum Seller Share), be allocated on the relevant
Distribution Date, Assignment Date or Funding Contribution Date (as
applicable) first to the Seller Share of the Trust Property (or for the
purposes of calculating the Seller Share of the Trust Property as the
case may be) until the Seller Share is zero and thereafter shall be
allocated to the Funding Share of the Trust Property. If at, or any time
after the Initial Closing Date the Mortgages Trustee holds, or there is
held to its order, or it receives, or there is received to its order, any
property, interest, right or benefit relating to the whole or that
portion of any Mortgage Loan and its Related Security which is or has
been subject to any matter described in paragraphs (a) though (e) above
and in respect of which the Seller Share of the Trust Property has been
reduced or deemed reduced such property interest right or benefit will
constitute a Revenue Receipt and the Mortgages Trustee will remit, assign
or transfer the same to Funding (but only if and to the extent that the
related reductions or deemed reductions were applied against the Funding
Share of the Trust Property) and thereafter to the Seller, as the case
may require, and until it does so or to the extent that the
18
Mortgage Trustee is unable to effect such remittance, assignment or
transfer, the Mortgages Trustee will hold such property, interest, right
or benefit and/or the proceeds thereof upon trust absolutely for Funding
and/or the Seller (separate from the Mortgages Trust), as the case may
require.
8.6 CURRENT SELLER SHARE PERCENTAGE:
(a) On each Distribution Date, the "CURRENT SELLER SHARE PERCENTAGE"
will be calculated by the Cash Manager in respect of the then-
current Trust Calculation Period or the related Interim
Calculation Period, as applicable, and the distributions to be
made from the Trust Property on the immediately succeeding
Distribution Date, and will be an amount equal to:
100% - Current Funding Share Percentage
where the Current Funding Share Percentage is calculated on such
Distribution Date in accordance with Clause 8.2(a) above.
(b) On each Assignment Date, the Cash Manager will recalculate the
Current Seller Share Percentage in respect of the related Interim
Calculation Period and the distributions to be made from the Trust
Property on the immediately succeeding Distribution Date and will
be an amount equal to:
100% - Current Funding Share Percentage
where the Current Funding Share Percentage is as calculated on
such Assignment Date in accordance with Clause 8.2(b) above.
(c) On each Funding Contribution Date, the Cash Manager will
recalculate the Current Seller Share Percentage in respect of the
related Interim Calculation Period and the distributions to be
made from the Trust Property on the immediately succeeding
Distribution Date and will be an amount equal to:
100% - Current Funding Share Percentage
where the Current Funding Share Percentage is as calculated on
such Funding Contribution Date in accordance with Clause 8.2(c)
above.
19
8.7 WEIGHTED AVERAGE SELLER SHARE PERCENTAGE: On any Distribution Date in
respect of which the Seller had assigned New Mortgage Loans to the
Mortgages Trustee during the Trust Calculation Period immediately
preceding such Distribution Date, the Cash Manager will calculate (for
the sole purpose of making the distributions to be made on such
Distribution Date) the weighted average of the Seller Share Percentages
that were calculated previously in respect of the Revenue Receipts and
Principal Receipts received, and Losses sustained, during each Interim
Calculation Period occurring in such immediately preceding Trust
Calculation Period and will be an amount equal to:
(a) in respect of the distribution of Revenue Receipts to be made on
such Distribution Date:
100% - Weighted Average Funding Share Percentage
where such Weighted Average Funding Share Percentage is as
calculated in Clause 8.3(a) above;
(b) in respect of the distribution of Principal Receipts to be made on
such Distribution Date:
100% - Weighted Average Funding Share Percentage
where such Weighted Average Funding Share Percentage is as
calculated in Clause 8.3(b) above; and
(c) in respect of the allocation of Losses to be made on such
Distribution Date:
100% - Weighted Average Funding Share Percentage
where such Weighted Average Funding Share Percentage is as
calculated in Clause 8.3(c) above.
8.8 CURRENT SELLER SHARE:
(a) On each Distribution Date, the "CURRENT SELLER SHARE" will be
calculated by the Cash Manager in respect of the then-current
Trust Calculation Period or the related Interim Calculation
Period, as applicable, and will be an amount equal to:
The aggregate amount of the Trust Property as at the Relevant Distribution Date
- Current Funding Share
where "Current Funding Share" has the meaning given in Clause
8.4(a) above.
20
(b) On each Assignment Date, the Current Seller Share will be
calculated by the Cash Manager in respect of the related Interim
Calculation Period and will be an amount equal to:
The aggregate amount of the Trust Property as at the Relevant Assignment Date -
Current Funding Share
where "Current Funding Share" has the meaning given in Clause
8.4(b) above.
(c) On each Funding Contribution Date, the Current Seller Share will
be calculated by the Cash Manager in respect of the Interim
Calculation Period and will be an amount equal to:
The aggregate amount of the Trust Property as at the Relevant Funding
Contribution Date - Current Funding Share
where "Current Funding Share" has the meaning given in Clause
8.4(c) above.
8.9 FUNDING SHARE/SELLER SHARE: Neither the Funding Share nor the Seller
Share may be reduced below zero. At all times the Funding Share
Percentage and the Seller Share Percentage shall be equal to 100 per
cent. of the Trust Property.
9. MINIMUM SELLER SHARE
9.1 INITIAL MINIMUM SELLER SHARE: The Seller Share of the Trust Property
includes an amount equal to the Minimum Seller Share. Unless and until
the Funding Share of the Trust Property is in an amount equal to zero, or
following the occurrence of an Asset Trigger Event, the Seller will not
be entitled to receive Mortgages Trustee Principal Receipts which would
reduce the Seller Share of the Trust Property to an amount less than the
Minimum Seller Share and the Seller consents and directs the Mortgages
Trustee accordingly.
9.2 FLUCTUATION OF MINIMUM SELLER SHARE ON EACH DISTRIBUTION DATE:
At the Initial Closing Date, the Minimum Seller Share will be
{pound-sterling}50,000,000. The amount of the Minimum Seller Share will
be recalculated on each Distribution Date in accordance with the
following formula:
W + X + Y + Z
where:
21
W = 100% of the average cleared credit balance of all
applicable accounts linked to Together Connections
Mortgage Loans in respect of each month or any part of
any such month.
X = 2.0% of the aggregate Current Balance of all Mortgage
Loans comprised in the Trust Property as at the last
day of the immediately preceding Trust Calculation
Period;
Y = the product of: (p x q) x r where:
p = 8%;
q = the "Flexible Cash Re-Draw Capacity", being an
amount equal to the difference between (i) the
maximum amount of Cash Re-draws that Borrowers
may draw under Flexible Mortgage Loans included
in the Trust Property (whether or not drawn) as
at the last day of the immediately preceding
Trust Calculation Period and (ii) the aggregate
Current Balance of Cash Re-draws which form
part of the Trust Property as at the last day
of the immediately preceding Trust Calculation
Period; and
r = 3; and
Z = the aggregate Current Balance of Re-Draws in the Trust
Property as at the last day of the immediately
preceding Trust Calculation Period.
9.3 RECALCULATION OF MINIMUM SELLER SHARE FOLLOWING OCCURRENCE OF EXCEPTIONAL
EVENTS: The calculation of the Minimum Seller Share in accordance with
Clause 9.2 (Fluctuation of Minimum Seller Share on each Distribution
Date) above will be recalculated by the Cash Manager with the agreement
of the parties hereto subject to the approval of the Rating Agencies if
the Seller merges or otherwise combines its business with another bank or
other financial institution so as to increase the risks associated with
Borrowers holding deposits in Northern Rock accounts.
10. DISTRIBUTION OF REVENUE RECEIPTS
10.1 DISTRIBUTION OF THIRD PARTY AMOUNTS: Pursuant to the Cash Management
Agreement, the Cash Manager (at the direction of the Mortgages Trustee
acting on behalf of the Beneficiaries
22
at their direction and with their consent which is hereby given) will
deduct, as and when identified, Third Party Amounts from the Revenue
Receipts standing to the credit of the Mortgages Trustee GIC Account or
other Mortgages Trustee Bank Account, and pay over the same to the proper
recipients thereof. The Mortgages Trustee and the Beneficiaries hereby
consent to such deductions.
10.2 DISTRIBUTION OF MORTGAGES TRUSTEE AVAILABLE REVENUE RECEIPTS: Subject as
provided in Clause 8.8 (Adjustments on Distribution Dates), on each
Distribution Date the Cash Manager (at the direction of the Mortgages
Trustee acting on behalf of the Beneficiaries at their direction and with
their consent which is hereby given) will distribute Mortgages Trustee
Available Revenue Receipts as follows:
(a) firstly, in no order of priority between them but in or towards
satisfaction pro rata according to the respective amounts due of:
(i) any fees, costs, charges, liabilities and expenses then due
or to become due to the Mortgages Trustee under the
provisions of this Deed together with (if applicable) VAT
thereon (to the extent not already included) as provided
herein; and
(ii) any amounts due and payable by the Mortgages Trustee to
third parties in respect of the Mortgages Trust but only if
incurred without breach by the Mortgages Trustee of the
documents to which it is a party and payment has not been
provided for elsewhere;
(b) secondly, in no order of priority between them but in or towards
satisfaction pro rata according to the respective amounts due of:
(i) any remuneration then due and payable to the Administrator
and any costs, charges, liabilities and expenses then due or
to become due to the Administrator under the provisions of
the Administration Agreement prior to the immediately
succeeding Distribution Date, in each case together with (if
applicable) VAT thereon (to the extent not already included)
as provided therein; and
(ii) any remuneration then due and payable to the Cash Manager
and any costs, charges, liabilities and expenses then due or
to become due to the Cash Manager under the provisions of
the Cash Management Agreement prior to
23
the immediately succeeding Distribution Date, in each case
together with (if applicable) VAT thereon (to the extent not
already included) as provided therein;
(c) thirdly, in no order of priority between them but in proportion to
the respective amounts due, and subject to the proviso below, to
allocate and pay Mortgages Trustee Available Revenue Receipts to:
(i) (subject as provided in Clause 8.8 (Adjustments on
Distribution Dates)) the Seller in an amount determined by
multiplying the total amount of the remaining Mortgages
Trustee Available Revenue Receipts by the Current Seller
Share Percentage of the Trust Property, as determined on the
immediately preceding Distribution Date or, in the case of
the first Distribution Date, the Initial Seller Share
Percentage; and
(ii) (subject as provided in Clause 8.8 (Adjustments on
Distribution Dates)) Funding in an amount equal to the
lesser of:
(A) an amount determined by multiplying the total amount
of the remaining Mortgages Trustee Available Revenue
Receipts by the Current Funding Share Percentage of
the Trust Property, as determined on the immediately
preceding Distribution Date or, in the case of the
first Distribution Date, the Initial Funding Share
Percentage); and,
(B) the aggregate of the amounts to be applied on the
immediately succeeding Payment Date under the relevant
Funding Pre-Enforcement Revenue Priority of Payments
or the Funding Post-Enforcement Priority of Payments
(but excluding any principal amount due under any
Intercompany Loan and any amount due under Item (P) of
the Funding Pre-Enforcement Revenue Priority of
Payments and/or Item (F) of the Funding Post-
Enforcement Priority of Payments), less (in each case
only to the extent that such amounts of interest or
other income would not otherwise be payable under any
Intercompany Loan made by any Issuer or, as
applicable, any Notes issued by any Issuer, on the
immediately succeeding Payment Date) the sum of (i)
interest or other income (including, for the avoidance
of doubt, amounts standing to the credit of any Issuer
Reserve Fund
24
or Issuer Liquidity Reserve Fund after the Intercompany
Loan relating to that Issuer has been fully repaid)
credited or to be credited to each Funding Bank Account
on the immediately succeeding Payment Date (ii) all
other income (not derived from the distribution of
Revenue Receipts under this Deed) which will constitute
Funding Available Revenue Receipts and/or Issuer
Available Revenue Receipts on the immediately succeeding
Payment Date; and
(d) finally, to allocate to Funding but pay at the direction of
Funding to the Seller an amount equal to YY - ZZ, where "YY" is
the amount of the Mortgages Trustee Available Revenue Receipts and
"ZZ" is the amount of such Mortgages Trustee Available Revenue
Receipts applied and/or allocated under items (a) to (c) above,
such amount to be in satisfaction of amounts of Deferred Purchase
Price due to the Seller under the terms of the Mortgage Sale
Agreement;
PROVIDED THAT if an Assignment Date or a Funding Contribution Date has occurred
during the Trust Calculation Period immediately preceding such Distribution
Date, then the Cash Manager will use (i) the Weighted Average Seller Share
Percentage (instead of the Current Seller Share Percentage) as calculated
pursuant to Clause 8.7(a) above in determining the amount of Mortgages Trustee
Available Revenue Receipts to distribute to the Seller pursuant to Clause
10.2(c)(i) above, and (ii) the Weighted Average Funding Share Percentage
(instead of the Current Funding Share Percentage) as calculated pursuant to
Clause 8.3(a) above in determining the amount of Mortgages Trustee Available
Revenue Receipts to distribute to Funding pursuant to Clause 10.2(c)(ii)(A)
above.
11. DISTRIBUTION OF PRINCIPAL RECEIPTS
11.1 DISTRIBUTION OF PRINCIPAL RECEIPTS PRIOR TO THE OCCURRENCE OF A TRIGGER
EVENT: Subject as provided in Clause 8.8 (Adjustments on Distribution
Dates), prior to the occurrence of a Trigger Event (and whether or not
there has been an enforcement of the Funding Security or any Issuer
Security), on each Distribution Date, the Cash Manager (at the direction
of the Mortgages Trustee acting on behalf of the Beneficiaries at their
direction and with their consent which is hereby given) shall, subject to
the provisos below, allocate and distribute Mortgages Trustee Principal
Receipts as follows:
(a) to the Seller an amount in respect of any Initial Consideration
(if any) which is then allocable and payable to the Seller under
Clause 6.3 (Initial Consideration) above;
(b) to Funding an amount in respect of each Issuer which is equal to
the lesser of:
25
(i) the principal amount due on the Intercompany Loan of such
Issuer equal to the Controlled Amortisation Amount due, if
any, on the Payment Date immediately succeeding such
Distribution Date; and
(ii) an amount equal to:
Outstanding Principal Balance on such
Issuer's Intercompany Loan
Mortgages Trustee Principal Receipts x Current Funding Share Percentage x -------------------------------------------------
Aggregate Outstanding Principal Balance
on all Intercompany Loans
(c) to Funding an amount in respect of each Issuer towards any
principal amount remaining due and payable (following the payment
to Funding set forth in (b) above) on the immediately succeeding
Payment Date under any Intercompany Loan; and
(d) if such Distribution Date is not a Seller Share Event Distribution
Date, all remaining Mortgages Trustee Principal Receipts to the
Seller (as Beneficiary),
PROVIDED THAT in relation to (a) through (d) above the following rules (the
"RULES FOR THE APPLICATION OF MORTGAGES TRUSTEE PRINCIPAL RECEIPTS") shall
apply:
(1) If the Notes of any Issuer have become immediately due and payable as a
result of the service of a Note Enforcement Notice or if the Intercompany
Loan of any Issuer (and the other Intercompany Loans of any other
Issuers) have become immediately due and payable as a result of the
service of an Intercompany Loan Enforcement Notice, or otherwise upon the
occurrence of any Trigger Event, principal payments in respect of the
Intercompany Loan of that Issuer may be made in excess of any Controlled
Amortisation Amount and paragraph (b)(i) above shall no longer apply in
relation to that Issuer and, except following a Non-Asset Trigger Event,
the amount of Mortgages Trustee Principal Receipts to be distributed to
Funding in respect of that Issuer on that Distribution Date may not
exceed the amount determined under paragraph (b)(ii) above.
(2) If the Notes of any Issuer have become immediately due and payable as a
result of the service of a Note Enforcement Notice or if the Intercompany
Loan of any Issuer (and the other Intercompany Loans of any other
Issuers) have become immediately due and payable as a result of the
service of an Intercompany Loan Enforcement Notice, then for the purpose
of calculating the amount in respect of that Issuer under paragraph
(b)(ii) above, that amount may be reduced to the extent of any remaining
amounts standing to the credit of the Issuer Reserve Ledger and/or the
Issuer Liquidity Reserve Ledger (if any) for that Issuer which are to be
utilised on the immediately succeeding Payment Date to repay principal on
that Issuer's
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Intercompany Loan, but only to the extent that those amounts would not
otherwise be payable on that Intercompany Loan on that Payment Date.
(3) The amount of Mortgages Trustee Principal Receipts payable to Funding in
respect of each Issuer on a Distribution Date will be reduced in
proportion to the aggregate of the Issuer Available Revenue Receipts of
that Issuer which are to be applied on the immediately succeeding Payment
Date in reduction of deficiencies recorded on the Issuer Principal
Deficiency Ledger of that Issuer, but only to the extent that the Issuer
Available Revenue Receipts which are to be so applied on that Payment
Date would not otherwise be payable as principal on the relevant Notes on
that Payment Date.
(4) For the purpose of determining the Mortgages Trustee Principal Receipts
to be distributed to Funding in respect of the amount due on the
Intercompany Loan of any Issuer under (b) and (c) above, the Outstanding
Principal Balance of that Intercompany Loan shall be deemed to be reduced
by the amount of:
(e) any deficiency recorded on the Issuer Principal Deficiency Ledger
of that Issuer as at that Distribution Date, but only to the
extent that such deficiency has arisen under a result of (i)
Losses on the Mortgage Loans allocated by Funding to that Issuer
and/or (ii) the application of Funding Available Principal
Receipts to fund the Issuer Liquidity Reserve Fund of that Issuer
but not as a result of any other principal deficiency of that
Issuer; and
(b) the Outstanding Principal Balance as at such Distribution Date of
any Special Repayment Notes issued by that Issuer.
(5) Funding will not be entitled to receive and the Cash Manager shall
procure that Funding does not receive any amount of Mortgages Trustee
Principal Receipts from the Mortgages Trustee on a Distribution Date
which is not required by Funding to repay principal falling due on any
Intercompany Loan on the immediately succeeding Payment Date in order to
fund payments of principal falling due on any Notes issued by any Issuer
on that Payment date.
(6) The Mortgages Trustee will not distribute any Overpayment (other than a
Capital Payment) in respect of any Non-Flexible Mortgage Loan until the
first Distribution Date following December 31 of the year in which such
Overpayment is received; provided that if a Borrower has made an
Underpayment of principal in respect of such Non-Flexible Mortgage Loan
following the Overpayment then the Mortgages Trustee will distribute
principal in an amount
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up to the amount of such Underpayment (but not exceeding the amount of the
Overpayment previously made) on the immediately succeeding Distribution
Date.
(7) If an Assignment Date or a Funding Contribution Date has occurred during
the Trust Calculation Period immediately preceding a Distribution Date,
then the Cash Manager shall use the Weighted Average Funding Share
Percentage (instead of the Current Funding Share Percentage) as
calculated pursuant to Clause 8.3(b) above in determining the amount of
Mortgages Trustee Principal Receipts to be distributed to Funding in
respect of each Issuer pursuant to Clause 11.1(b)(ii) above.
(8) On a Seller Share Event Distribution Date, the Cash Manager shall not
distribute the remaining Mortgages Trustee Principal Receipts to the
Seller and shall deposit all Mortgages Trustee Retained Principal
Receipts in the Mortgages Trustee GIC Account and make a corresponding
credit to the Mortgages Trustee Principal Ledger.
11.2 DISTRIBUTION OF MORTGAGES TRUSTEE PRINCIPAL RECEIPTS FOLLOWING THE
OCCURRENCE OF AN ASSET TRIGGER EVENT: After the occurrence of an Asset
Trigger Event, the Cash Manager (at the direction of the Mortgages
Trustee acting on behalf of the Beneficiaries at their direction and with
their consent which is hereby given) shall, on each Distribution Date,
allocate and distribute all Mortgages Trustee Principal Receipts as
follows:
(a) if the immediately preceding Distribution Date was a Seller Share
Event Distribution Date, all of the Mortgages Trustee Retained
Principal Receipts to Funding; and then
(b) between Funding and the Seller, in no order of priority between
them and pro rata according to the Funding Share Percentage of the
Trust Property and the Seller Share Percentage of the Trust
Property, respectively, until the Funding Share of the Trust
Property is zero (and, for the avoidance of doubt, such payments
may reduce the Seller Share to an amount less than the Minimum
Seller Share),
PROVIDED THAT if an Assignment Date or a Funding Contribution Date has
occurred in the Trust Calculation Period immediately preceding any such
Distribution Date, the Cash Manager will apply all Mortgages Trustee
Principal Receipts after (a) above between Funding and the Seller pro
rata according to the Weighted Average Funding Share Percentage (as
calculated pursuant to Clause 8.3 above) and Weighted Average Seller
Share Percentage (as calculated pursuant to Clause 8.7 above) for such
Distribution Date until the Funding Share of the Trust Property is zero.
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11.3 DISTRIBUTION OF PRINCIPAL RECEIPTS FOLLOWING THE OCCURRENCE OF A NON-
ASSET TRIGGER EVENT: After the occurrence of a Non-Asset Trigger Event
and until the occurrence of an Asset Trigger Event, the Cash Manager (at
the direction of the Mortgages Trustee acting on behalf of the
Beneficiaries at their direction and with their consent which is hereby
given) shall, on each Distribution Date, apply all Mortgages Trustee
Principal Receipts to Funding until the Funding Share of the Trust
Property has been reduced to zero and shall thereafter, on each
Distribution Date, apply all Mortgages Trustee Principal Receipts to the
Seller.
12. ALLOCATION OF LOSSES
Subject as provided otherwise herein (including Clause 8.4 (Adjustments
to Trust Property) of this Deed), all Losses sustained on the Mortgage
Loans during a Trust Calculation Period shall be applied in reducing pro
rata both the Funding Share and the Seller Share of the Trust Property on
the Distribution Date immediately succeeding such Trust Calculation
Period by multiplying the Losses sustained in such relevant Trust
Calculation Period by the Current Funding Share Percentage (as calculated
on the Distribution Date immediately preceding such Trust Calculation
Period), until the Funding Share of the Trust Property is zero, PROVIDED
THAT, if during the Trust Calculation Period immediately preceding a
Distribution Date the Seller had assigned New Mortgage Loans to the
Mortgages Trustee, or if Funding paid a Further Contribution to the
Mortgages Trustee to increase the Funding Share of the Trust Property
such Losses shall be multiplied by the Weighted Average Funding Share
Percentage (as calculated on such Distribution Date pursuant to Clause
8.3(c) above) rather than the Current Funding Share Percentage. The
remainder of such Losses shall be allocated to the Seller.
13. OVERPAYMENTS
13.1 NON-FLEXIBLE MORTGAGE LOANS: The Mortgages Trustee shall not distribute
to the Beneficiaries any Overpayment in respect of any Non-Flexible
Mortgage Loan which does not constitute a Capital Payment until the first
Distribution Date following 31st December of the year in which such
Overpayment is received, save to the extent that any such Overpayment by
a Borrower is applied in reduction of an Underpayment by such Borrower in
respect of such Mortgage Loan prior to such date. Any such Overpayment
shall be retained in the Mortgages Trustee GIC Account and the Cash
Manager will maintain a separate ledger to record its receipt and
subsequent payment from time to time. Where any such Overpayment has
been made in error the Cash Manager and/or the Administrator will be
authorised to refund the amount of such Overpayment to the relevant
Borrower at any time prior to 31st December of the year in which such
Overpayment was made.
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13.2 FLEXIBLE MORTGAGE LOANS: Overpayments in respect of any Flexible Mortgage
Loan (including the amount of any Together Connections Benefit applied to
the related Together Connections Mortgage Loans) will not be retained in
the Mortgages Trustee GIC Account but will be distributed to the
Beneficiaries on the immediately succeeding Distribution Date as
Principal Receipts.
14. ARREARS
The aggregate Current Balance of the Mortgage Loans in the Mortgages
Trust will be increased at any time by the amount in which the Mortgage
Loans that have been assigned to the Mortgages Trust are in arrears and
those arrears have been capitalised. Such increase shall be allocated to
the Beneficiaries at any time in proportion to their respective
percentage shares in the Trust Property as determined in respect of the
Trust Calculation Period or Interim Calculation Period, as the case may
be, in which the arrears occur.
15. LEDGERS
The Mortgages Trustee shall maintain, or shall procure that the Cash
Manager shall maintain, the following Mortgages Trustee Ledgers:
(a) the Principal Ledger, which shall record (i) all receipts of
Principal Receipts and distribution of the same to Funding and the
Seller and (ii) any Mortgages Trustee Retained Principal Receipts;
(b) the Revenue Ledger, which shall record all receipts of Revenue
Receipts and distribution of the same in accordance with this
Deed;
(c) the Losses Ledger, which shall record Losses in relation to the
Mortgage Loans;
(d) the Funding Share/Seller Share Ledger which shall record the
Funding Share, the Seller Share of the Trust Property, the Funding
Share Percentage and the Seller Share Percentage;
(e) the Overpayments Ledger; which shall be divided into sub ledgers
to record (i) Overpayments on Non-Flexible Mortgage Loans received
into and paid out of the Mortgages Trustee GIC Account from time
to time and (ii) Overpayments on Flexible Mortgage Loans;
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(f) the Non-Flexible Underpayments Ledger; which shall record
Underpayments on Non-Flexible Mortgage Loans from time to time;
(g) the Re-Draw Ledger, which shall be divided into sub ledgers to
record (i) Cash Re-Draws made in respect of Flexible Mortgage
Loans and (ii) Non-Cash Re-Draws made in respect of Flexible
Mortgage Loans; and
(h) the Contributions Ledger, which will be divided into sub ledgers
to record (i) the making by Funding of Contributions to the
Mortgages Trust, (ii) the making by the Seller of Contributions to
the Mortgages Trust and the application of such Contributions by
the Mortgages Trustee in payment to the Seller of (a) amounts of
Initial Purchase Price for the sale of any New Mortgage Portfolio
which is acquired by the Mortgages Trustee from the Seller under
the provisions of the Mortgage Sale Agreement or (b) amounts of
Deferred Purchase Price in accordance with the Mortgage Sale
Agreement or (c) any Initial Consideration in accordance with this
Deed.
16. FEES AND EXPENSES OF THE MORTGAGES TRUSTEE
16.1 REMUNERATION: The Mortgages Trustee shall be entitled to charge and be
remunerated for the work undertaken by it as trustee of the trusts
created by this Deed. The remuneration shall be on such terms (if any)
as the Mortgages Trustee may from time to time agree with the
Beneficiaries in writing.
16.2 EXPENSES AND LIABILITIES: Each Beneficiary shall indemnify the Mortgages
Trustee from time to time with such regularity as is reasonably agreed
between the parties, in respect of the Funding Share and the Seller
Share, respectively, of the documentable costs, expenses and/or
liabilities directly and properly incurred by the Mortgages Trustee in
performing its obligations hereunder or otherwise in acting as trustee in
accordance with the terms of this Deed and the other Transaction
Documents to which the Mortgages Trustee is a party inclusive (if
applicable) of any amounts in respect of Irrecoverable VAT incurred in
respect of such costs and expenses.
17. DIRECTIONS FROM BENEFICIARIES
17.1 ADMINISTRATION AGREEMENT AND CASH MANAGEMENT AGREEMENT: On the Initial
Closing Date the Mortgages Trustee shall enter into the Administration
Agreement and the Cash Management Agreement.
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17.2 DIRECTIONS FROM BENEFICIARIES: Subject to Clause 17.3 (No Breach) below,
the Mortgages Trustee covenants with the Beneficiaries that the Mortgages
Trustee shall take all necessary steps and do everything which both
Funding and the Seller (acting together) may reasonably request or direct
it to do in order to give effect to the terms of this Deed or the other
Transaction Documents to which the Mortgages Trustee is a party; provided
that at any time after the Funding Share has been reduced to zero the
Mortgages Trustee shall not be required to act at the direction of both
Funding and the Seller (acting together) and shall instead act in
accordance with any direction given solely by the Seller.
17.3 NO BREACH: Each of Funding and the Seller covenant with each other and
with the Mortgage Trustee that neither shall direct or request the
Mortgages Trustee to do any act or thing which breaches the terms of, or
is otherwise expressly dealt with (such that the Mortgages Trustee has no
discretion) under any of the Transaction Documents.
17.4 NO REQUIREMENT TO ACT: The Mortgages Trustee will not be bound and shall
have no power to take any proceedings, actions or steps under or in
connection with any of this Deed or the other Transaction Documents to
which it is a party unless:
(a) it shall have been directed to do so by the Beneficiaries or it is
required to do so under any express provision of this Deed or the
other Transaction Documents (but subject to Clause 17.2
(Directions from Beneficiaries) in respect of conflict of
directions); and
(b) it shall have been indemnified to its satisfaction against all
liabilities, proceedings, claims and demands to which it may be or
become liable and all costs, charges and expenses which may be
incurred by it in connection therewith and the terms of such
indemnity may include the provision of a fighting fund, non-
recourse loan or other similar arrangement.
17.5 COVENANT OF THE MORTGAGES TRUSTEE: Subject to Clause 17.2 (Directions
from Beneficiaries) the Mortgages Trustee covenants with each of the
Seller and Funding to exercise all of its rights arising under or in
respect of the Trust Property (including without limitation any rights of
enforcement) for the benefit of and on behalf of the Beneficiaries.
18. EARLY TERMINATION OF THE MORTGAGES TRUST
Prior to its termination in accordance with Clause 26 (Termination),
provided that all amounts due from Funding to the Funding Secured
Creditors have been repaid in full, the Mortgages Trust constituted by
this Deed may be terminated at the option of the Seller, following a
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request in writing by the Seller to the Mortgages Trustee (which shall be
copied to Funding and the Cash Manager) at any time on or after the date
on which all of the Intercompany Loans have been repaid in full or there
is no further claim under any Intercompany Loan and/or the Funding Share
of the Trust Property is reduced to zero or such other date as may be
agreed in writing between the Mortgages Trustee, Funding and the Seller.
19. AUDIT OF MORTGAGE LOANS CONSTITUTING THE TRUST PROPERTY
If the long term, unsecured, unguaranteed and unsubordinated debt
obligations of the Seller fall below A3 by Moody's then, if required by
Moody's, the Beneficiaries shall appoint a firm of independent auditors
(approved by the Rating Agencies) to determine whether the Mortgage Loans
and their Related Security (or any part of them) constituting the Trust
Property complied with the representations and warranties set out in
Schedule 1 (Representations and Warranties) of the Mortgage Sale
Agreement as at the date such Mortgage Loans were assigned to the
Mortgages Trustee. The costs of such independent auditors shall be borne
by the Beneficiaries pro rata according to their respective current
percentage shares in the Trust Property.
20. TRANSFERS
20.1 FUNDING SHALL NOT ASSIGN: Subject to the right of Funding to assign by
way of security its right, title, benefit and interest in the Trust
Property and/or under this Deed to the Security Trustee under the Funding
Deed of Charge and subject to the right of the Security Trustee or a
Receiver to sell the Funding Share of the Trust Property and/or such
right and interest under this Deed following the service of an
Intercompany Loan Enforcement Notice (which right is hereby conferred),
Funding covenants with the Seller that it shall not, and shall not
purport to, sell, assign, transfer, convey, charge, declare a trust over,
create any beneficial interest in, or otherwise dispose of the Funding
Share in the Trust Property, or any of Funding's rights, title, interest
or benefit in any of the Mortgage Portfolio or the Trust Property.
20.2 SELLER SHALL NOT ASSIGN: The Seller covenants with Funding that it shall
not, and shall not purport to, sell, assign, transfer, convey, charge,
declare a trust over, create any beneficial interest in, or otherwise
dispose of the Seller Share in the Trust Property or any of the Seller's
rights, title, interest or benefit in the Trust Property, other than
pursuant to the Transaction Documents.
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21. REPRESENTATIONS AND COVENANTS
21.1 REPRESENTATIONS: On the date hereof, each of the parties to this Deed
makes the representations and warranties set out in Schedule 1
(Representation and Warranties) to this Deed to each of the other parties
hereto.
21.2 COVENANTS OF THE MORTGAGES TRUSTEE: Save with the prior written consent
of or at the direction of the Beneficiaries or as provided in or
envisaged by this Deed and/or the other Transaction Documents, the
Mortgages Trustee shall not, so long as it is acting as Mortgages Trustee
hereunder:
(a) Negative Pledge: create or permit to subsist any mortgage,
pledge, lien, charge or other security interest whatsoever (unless
arising by operation of law), upon the whole or any part of its
assets (including any uncalled capital) or its undertakings
(present or future) or (to the extent that it is within the
control of the Mortgages Trustee) upon the whole or any part of
the Trust Property;
(b) Disposal: transfer, sell, lend, part with or otherwise dispose
of, or deal with, or grant any option or present or future right
to acquire any of its assets or undertakings or (to the extent
that it is within the control of the Mortgages Trustee) the Trust
Property or any interest, estate, right, title or benefit therein
or thereto or agree or attempt or purport to do so;
(c) Equitable Interest: knowingly permit any person other than the
Beneficiaries to have any equitable interest in any of its assets
or undertakings or (to the extent that it is within the control of
the Mortgages Trustee) the Trust Property or any interest, estate,
right, title or benefit therein;
(d) Bank Accounts: have an interest in any bank account, other than
as set out in the Transaction Documents.
(e) Restrictions on Activities: carry on any business other than as
described in this Deed and the Transaction Documents;
(f) Borrowings: incur any indebtedness in respect of borrowed money
whatsoever or give any guarantee or indemnity in respect of any
such indebtedness;
(g) Merger: consolidate or merge with any other person or convey or
transfer its properties or assets substantially or as an entirety
to any other person;
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(h) Premises or Employees: have any premises or employees or
subsidiaries; or
(i) Further shares: issue any further shares;
(j) United States activities: engage in any activities in the United
States (directly or through agents) or derive any income from
United States sources as determined under United States income tax
principles or hold any property if doing so would cause it to be
engaged or deemed to be engaged in a trade or business within the
United States as determined under United States tax principles;
(k) Conduct of affairs: take any management decisions or direct the
conduct of its affairs in any Member State of the European Union,
including holding any board meetings in any Member State of the
European Union.
22. POWER TO DELEGATE
22.1 POWER TO DELEGATE: Subject to Clause 22.2 (No further appointments), the
Mortgages Trustee may (notwithstanding any rule of law or equity to the
contrary) delegate (revocably or irrevocably and for a limited or
unlimited period of time) the performance of all or any of its
obligations and the exercise of all or any of its powers under this Deed
or imposed or conferred on it by law or otherwise to any person or body
of persons fluctuating in number selected by it and any such delegation
may be by power of attorney or in such other manner as the Mortgages
Trustee may think fit and may be made upon such terms and conditions
(including the power to sub-delegate) as the Mortgages Trustee may think
fit.
22.2 NO FURTHER APPOINTMENTS: Notwithstanding the provisions of Clause 22.1
(Power to delegate), the Mortgages Trustee shall not appoint any agent,
attorney or other delegate having power to act in respect of the Trust
Property unless it is directed in writing to do so by the Beneficiaries.
The appointment of any agent, attorney or other delegate hereunder above
shall terminate immediately upon the occurrence of a Trigger Event.
23. POWERS OF INVESTMENT
The Mortgages Trustee may invest, and may appoint the Cash Manager to
invest on its behalf, any amounts standing to the credit of the Mortgages
Trustee Transaction Account in Authorised Investments. Save as expressly
provided in this Deed, the Mortgages Trustee Guaranteed Investment
Contract and the Bank Account Agreement, the Mortgages Trustee shall have
no further or other powers of investment with respect to the Trust
Property and (to the extent permitted by applicable law) the Trustee Xxx
0000 shall not nor shall any other
35
provision relating to trustee powers of investment implied by statute or
general law shall apply to the Mortgages Trust.
24. OTHER PROVISIONS REGARDING THE MORTGAGES TRUSTEE
24.1 NO ACTION TO IMPAIR TRUST PROPERTY: Except for actions expressly
authorised by this Deed, the Mortgages Trustee shall take no action
reasonably likely to impair the interests of the Beneficiaries in any
Trust Property now existing or hereafter created or to impair the value
of any Mortgage Loan or its Related Security subject to the Mortgages
Trust.
24.2 LITIGATION: The Mortgages Trustee must not prosecute or defend any legal
or other proceedings anywhere in the world (at the cost of the Trust
Property) unless it obtains legal or other advice that it is in the
interests of the Beneficiaries to do so.
24.3 NO IMPLIED DUTIES: The duties and obligations of the Mortgages Trustee
under the Mortgages Trust shall be determined solely by the express
provisions of this Deed (but without prejudice to the duties and
obligations of the Mortgages Trustee under any of the other Transaction
Documents). The Mortgages Trustee shall not be liable under this Deed
except for the performance of such duties and obligations as shall be
specifically set forth in this Deed. No implied covenants or obligations
shall be read into this Deed against the Mortgages Trustee, and the
permissible right of the Mortgages Trustee to do things set out in this
Deed shall not be construed as a duty.
24.4 NO LIABILITY: Neither the Mortgages Trustee, Funding (in its capacity as
a Beneficiary hereunder) nor the Seller (in its capacity as a Beneficiary
hereunder) shall be liable to each other, in the absence of wilful
default, gross negligence or breach of the terms of this Deed, in respect
of any loss or damage which arises out of the exercise or attempted or
purported exercise or failure to exercise any of their respective powers.
24.5 RELIANCE ON CERTIFICATES: The Mortgages Trustee may rely on and shall be
protected in acting on, or in refraining from acting in accordance with,
any resolution, officer's certificate, certificate of auditors or any
other certificate, statement, instrument, opinion, report, notice,
request, consent, order, appraisal, bond or other paper or document
believed by it to be genuine and to have been signed or presented to it
pursuant to the Transaction Documents by the proper party or parties.
24.6 RELIANCE ON THIRD PARTIES: The Mortgages Trustee may, in relation to
these presents, act on the opinion or advice of or a certificate or any
information obtained from any lawyer, banker,
36
valuer, broker, accountant, financial adviser, securities dealer, merchant
bank, computer consultant or other expert in the United Kingdom or
elsewhere and shall not, provided that it shall not have acted
fraudulently or in breach of any of the provisions of the Transaction
Documents, be responsible for any loss occasioned by so acting. Any such
opinion, advice, certificate or information may be sent or obtained by
letter, telemessage, telex, cable or facsimile device and the Mortgages
Trustee shall not be liable for acting on any opinion, advice, certificate
or information purporting to be so conveyed although the same shall
contain some error or shall not be authentic, provided that such error or
lack of authenticity shall not be manifest.
24.7 MIG POLICIES: The Mortgages Trustee is not required to maintain any MIG
Policy with the then-current insurer and may contract for mortgage
indemnity guarantee protection from any insurer then providing MIG
insurance policies, subject to prior agreement with the Rating Agencies
and confirmation that the then-current ratings by the Rating Agencies (or
any of them) of the Notes issued by any Issuer would not be adversely
affected.
25. NO RETIREMENT OF MORTGAGES TRUSTEE
25.1 NO RETIREMENT: The Mortgages Trustee shall not, and shall not purport
to, retire as the trustee of the Mortgages Trust or appoint any
additional trustee of the Mortgages Trust and shall have no power to
retire or appoint any additional trustee under the Trustee Xxx 0000 or
otherwise.
25.2 NO REPLACEMENT: Neither the Seller nor Funding shall at any time remove
or purport to remove and/or replace the Mortgages Trustee as the trustee
of the Mortgages Trust.
25.3 NO TERMINATION: Prior to the payment by Funding of all amounts owing
under the Intercompany Loan Agreements and under the Transaction
Documents, neither the Seller nor Funding shall at any time, except in
accordance with the provisions of Clause 18 (Early Termination of the
Mortgages Trust) and Clause 26 (Termination), terminate or purport to
terminate the Mortgages Trust and, in particular, but without prejudice
to the generality of the foregoing, the Seller and Funding shall not in
reliance on their absolute beneficial interests in the Trust Property
call for the transfer to them or vesting in them of the legal estate in
all or any part of the Trust Property.
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26. TERMINATION
Subject to Clause 18 (Early Termination of the Mortgages Trust), the
Mortgages Trust hereby constituted shall terminate upon the date upon
which the Trust Property is zero.
27. FURTHER ASSURANCES
The parties agree that they will co-operate fully to do all such further
acts and things and execute any further documents as may be necessary or
desirable to give full effect to the arrangements contemplated by this
Deed.
28. NO PARTNERSHIP OR AGENCY
Nothing in this Deed shall be taken to constitute or create a partnership
between any of the parties to this Deed or to make or appoint the Seller
the agent of Funding (or vice versa).
29. CALCULATIONS
In the absence of manifest error, any determination or calculation by or
on behalf of the Mortgages Trustee in connection with the provisions of
this Deed shall be deemed to be conclusive.
30. CONFIDENTIALITY
30.1 GENERAL OBLIGATION OF CONFIDENTIALITY: Unless otherwise required by
applicable law, and subject to Clause 30.2 (Exceptions) below, each of
the parties agrees to maintain the confidentiality of this Deed in its
communications with third parties and otherwise. None of the parties
shall disclose to any person any information relating to the business,
finances or other matters of a confidential nature of or relating to any
other party to this Deed or any of the Transaction Documents which it may
have obtained as a result of having entered into this Deed or otherwise.
30.2 EXCEPTIONS: The provisions of Clause 30.1 (General Obligation of
Confidentiality) above shall not apply:
(a) to the disclosure of any information to any person who is a party
to any of the Transaction Documents as expressly permitted by the
Transaction Documents;
(b) to the disclosure of any information which is or becomes public
knowledge otherwise than as a result of the wrongful conduct of
the recipient;
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(c) to the extent that the recipient is required to disclose the same
pursuant to any law or order of any court or pursuant to any
direction or requirement (whether or not having the force of law)
of any central bank or any governmental or other regulatory or
Taxation authority;
(d) to the disclosure of any information to professional advisers who
receive the same under a duty of confidentiality;
(e) to the disclosure of any information with the consent of the
parties hereto;
(f) to the disclosure to the Rating Agencies or any of them of such
information as may be requested by any of them for the purposes of
setting or reviewing the rating assigned to the Notes (or any of
them), provided that no information which would disclose the
identity of a Borrower shall be disclosed to the Rating Agencies
or any of them;
(g) to the disclosure of any information disclosed to a prospective
assignee of Funding (provided that it is disclosed on the basis
that the recipient will hold it confidential); or
(h) to any disclosure for the purposes of collecting in or enforcing
the Trust Property or any of it.
31. PERPETUITY PERIOD
The perpetuity period for the purposes of this Mortgages Trust Deed shall
be the period of 80 years commencing on the date hereof.
32. NON PETITION COVENANT; LIMITED RECOURSE
32.1 NON PETITION COVENANT: Each of the parties hereto hereby agrees that it
shall not institute against either Funding or the Mortgages Trustee any
winding-up, administration, insolvency or similar proceedings so long as
any sum is outstanding under any Intercompany Loan Agreement of any
Issuer or for two years plus one day since the last day on which any such
sum was outstanding.
32.2 LIMITED RECOURSE: Each of the parties hereto agrees that:
(a) in relation to the Mortgages Trustee, any amount payable by the
Mortgages Trustee to any other party to this Deed under this Deed
not being an amount payable out of the Trust Property in
accordance with the terms of this Deed shall only be payable to
the
39
extent that on that date the Mortgages Trustee has sufficient funds
to pay such amount out of fees paid to it under this Deed; and
(b) in relation to Funding:
(i) only the Security Trustee may enforce the security created
in favour of the Security Trustee under the Funding Deed of
Charge in accordance with the provisions thereof;
(ii) notwithstanding any other provision of this Deed or any
other Transaction Document, no sum due or owing to any party
to this Deed from or by Funding under this Deed shall be
payable by Funding except to the extent that Funding has
sufficient funds available or (following enforcement of the
Funding Security) the Security Trustee has realised
sufficient funds from the Funding Security to pay such sum
subject to and in accordance with the relevant Funding
Priority of Payments and provided that all liabilities of
Funding required to be paid in priority thereto or pari
passu therewith pursuant to such Funding Priority of
Payments have been paid, discharged and/or otherwise
provided for in full; and
(iii) it shall not take any steps for the purpose of recovering
any amount payable by Funding or enforcing any rights
arising out of this Deed against Funding otherwise than in
accordance with the Funding Deed of Charge.
32.3 CORPORATE OBLIGATIONS: To the extent permitted by law, no recourse under
any obligation, covenant, or agreement of any person contained in this
Deed shall be had against any shareholder, officer or director of such
person as such, by the enforcement of any assessment or by any legal
proceeding, by virtue of any statute or otherwise; it being expressly
agreed and understood that this Deed is a corporate obligation of each
person expressed to be a party hereto and no personal liability shall
attach to or be incurred by the shareholders, officers, agents or
directors of such person as such, or any of them, under or by reason of
any of the obligations, covenants or agreements of such person contained
in this Deed, or implied therefrom, and that any and all personal
liability for breaches by such person of any of such obligations,
covenants or agreements, either under any applicable law or by statute or
constitution, of every such shareholder, officer, agent or director is
hereby expressly waived by each person expressed to be a party hereto as
a condition of and consideration for the execution of this Deed.
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33. AMENDMENTS AND WAIVER
33.1 ENTIRE AGREEMENT: This Deed sets out the entire agreement and
understanding between the parties with respect to the subject matter of
this Deed superseding all prior oral or written understandings other than
the other Transaction Documents.
33.2 AMENDMENTS AND WAIVER: No amendment or waiver of any provision of this
Deed nor consent to any departure by any of the parties therefrom shall
in any event be effective unless the same shall be in writing and signed
by each of the parties hereto. In the case of a waiver or consent, such
waiver or consent shall be effective only in the specific instance and as
against the party or parties giving it for the specific purpose for which
it is given.
33.3 RIGHTS CUMULATIVE: The respective rights of each of the parties to this
Deed are cumulative and may be exercised as often as they consider
appropriate. No failure on the part of any party to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any
other right. The remedies in this Deed are cumulative and not exclusive
of any remedies provided by law.
34. NOTICES
Any notices or other communication or document to be given or delivered
pursuant to this Deed to any of the parties hereto shall be sufficiently
served if sent by prepaid first class post, by hand or by facsimile
transmission and shall be deemed to be given (in the case of facsimile
transmission) when despatched or (where delivered by hand) on the day of
delivery if delivered before 17.00 hours on a London Business Day or on
the next London Business Day if delivered thereafter or (in the case of
first class post) when it would be received in the ordinary course of the
post and shall be sent:
(a) in the case of the Seller, to Northern Rock plc, Xxxxxxxx Xxxx
Xxxxx, Xxxxxxxx, Xxxxxxxxx xxxx Xxxx XX0 0XX (facsimile number
0191 213 2203) for the attention of the Group Secretary;
(b) in the case of the Mortgages Trustee, to Granite Finance Trustees
Limited, 00 Xxxxxxxxx Xxxxxx, Xx. Xxxxxx, Xxxxxx XX0 0XX, Channel
Islands (facsimile number 01534-609333) for the attention of the
Company Secretary (with a copy to the Seller in accordance with
(a) above);
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(c) in the case of Funding, to Granite Finance Funding Limited, 0
Xxxxx Xxxx Xxxxx, Xxxxxx XX0X 0XX (facsimile number 020 7073 7874)
for the attention of the Company Secretary (with a copy to the
Seller in accordance with (a) above);
(d) in the case of the Security Trustee, to The Bank of New York, 00xx
Xxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxx X00 0XX (facsimile number 020
7964 6399) for the attention of the Global Structured Finance
(Corporate Trust);
(e) in the case of the Fitch Ratings Ltd, to Fitch Ratings Ltd, Xxxxx
Xxxxx, 0 Xxxxx Xxxxxx, Xxxxxx XX0X 0XX (facsimile number 020 7417
6262) for the attention of European Structured Finance
Surveillance;
(f) in the case of Moody's, to Moody's, 1st Floor, 0 Xxxxxxx Xxxxx,
Xxxxxxx Xxxx, Xxxxxx XX0X 0XX (facsimile number 020 7772 5400) for
the attention of Head of Monitoring Group, Structured Finance
(with a copy to the Seller in accordance with (a) above);
(g) in the case of Standard & Poor's, to Standard & Poor's, Xxxxxx
Xxxxx, 00 Xxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX (facsimile number 020
7826 3598) for the attention of Structured Finance Surveillance
Group (with a copy to the Seller in accordance with (a) above),
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 fifteen days prior written notice in accordance with the
provisions of this Clause 34.
35. THIRD PARTY RIGHTS
A person who is not a party to this Deed may not enforce any of its terms
under the Contracts (Rights of Third Parties) Xxx 0000, but this shall
not affect any right or remedy of a third party which exists or is
available apart from that Act.
36. EXECUTION IN COUNTERPARTS; SEVERABILITY
36.1 COUNTERPARTS: This Deed may be executed in any number of counterparts
(manually or by facsimile) and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and
the same instrument.
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36.2 SEVERABILITY: Where any provision in or obligation under this Deed shall
be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations
under this Deed, or of such provision or obligation in any other
jurisdiction, shall not be affected or impaired thereby.
37. GOVERNING LAW AND SUBMISSION TO JURISDICTION
37.1 GOVERNING LAW: This Deed is governed by, and shall be construed in
accordance with, English law.
37.2 SUBMISSION TO JURISDICTION: Each of the parties hereto irrevocably agrees
that the courts of England shall have jurisdiction to hear and determine
any suit, action or proceeding, and to settle any disputes, which may
arise out of or in connection with this Deed and, for such purposes,
irrevocably submits to the jurisdiction of such courts.
37.3 PROCESS AGENT: The Mortgages Trustee irrevocably and unconditionally
appoints Mourant & Co. Capital (SPV) Limited at 0 Xxxxx Xxxx Xxxxx,
Xxxxxx XX0X 0XX or otherwise at its registered office for the time being
as its agent for service of process in England in respect of any
proceedings in respect of this Agreement and undertakes that in the event
of Mourant & Co. Capital (SPV) Limited ceasing so to act it will appoint
another person with a registered office in London as its agent for
service of process.
37.4 FORUM: Each of the parties hereto irrevocably waives any objection which
it might now or hereafter have to the courts of England being nominated
as the forum to hear and determine any Proceedings and to settle any
disputes, and agrees not to claim that any such court is not a convenient
or appropriate forum.
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SCHEDULE 1
REPRESENTATIONS AND WARRANTIES
1. STATUS: It is duly incorporated and registered under the laws of the
jurisdiction in which it is incorporated, capable of being sued in its
own right and not subject to any immunity from any proceedings, and it
has the power to own its property and assets and to carry on its business
as it is being conducted.
2. POWERS AND AUTHORITY: It has the power to enter into, perform and
deliver, and has taken all necessary corporate and other action to
authorise the execution, delivery and performance by it of each of the
Transaction Documents to which it is or will be a party, and each such
Transaction Document has been duly executed and delivered by it.
3. LEGAL VALIDITY: Each Transaction 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.
4. NON-CONFLICT: The execution by it of each of the Transaction Documents
to which it is a party and the exercise by it of its rights and the
performance of its obligations under such Transaction Documents will not:
(a) conflict with any document which is binding upon it or any of its
assets;
(b) conflict with its constitutional documents; or
(c) conflict with any law, regulation or official or judicial order of
any government, governmental body or court, domestic or foreign,
having jurisdiction over it.
5. NO LITIGATION: It is not a party to any material litigation, arbitration
or administrative proceedings and, to its knowledge, no material
litigation, arbitration or administrative proceedings are pending or
threatened against it.
6. CONSENTS AND LICENCES: All governmental consents, licences and other
approvals and authorisations required in connection with the entry into,
performance, validity and enforceability of, and the transactions
contemplated by, the Transaction Documents have been obtained or effected
(as appropriate) and are in full force and effect.
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