AMENDED AND RESTATED SERVICING AGREEMENT EXHIBIT 4.10
21 NOVEMBER 2007
BANK OF SCOTLAND PLC
AS SERVICER AND SELLER
AND
PERMANENT MORTGAGES TRUSTEE LIMITED
AS MORTGAGES TRUSTEE
AND
PERMANENT FUNDING (NO. 1) LIMITED
AS FUNDING 1
AND
PERMANENT FUNDING (NO. 2) LIMITED
AS FUNDING 2
AND
THE BANK OF NEW YORK
AS FUNDING 1 SECURITY TRUSTEE AND FUNDING 2 SECURITY TRUSTEE
CONTENTS
CLAUSE PAGE
1. Definitions and Interpretation.......................................2
2. Appointment of Servicer..............................................3
3. The Administration Services..........................................4
4. Mortgages Trustee Variable Base Rate/Mortgages Trustee
Tracker Rate.........................................................6
5. Administration of Mortgages..........................................9
6. No Liability........................................................13
7. New Loans...........................................................13
8. Product Switching and Further Advances..............................14
9. Redemption of Mortgages.............................................14
10. Powers of Attorney..................................................15
11. Costs and Expenses..................................................15
12. Information.........................................................16
13. Remuneration........................................................17
14. Insurances..........................................................18
15. Halifax Insurance Policies..........................................18
16. Buildings Policies..................................................18
17. Title Deeds and Customer Files......................................19
18. Data Protection.....................................................20
19. Covenants of Servicer...............................................21
20. Services Non-Exclusive..............................................22
21. Termination.........................................................22
22. Further Assurance...................................................25
23. Miscellaneous.......................................................25
24. Confidentiality.....................................................26
25. Notices.............................................................27
26. No Partnership......................................................28
27. Assignment..........................................................28
28. Change of Funding 1 Security Trustee and/or Funding 2
Security Trustee....................................................28
29. Amendments, waivers and consents....................................29
30. Exclusion of Third Party Rights.....................................29
31. Counterparts and Severability.......................................29
32. Governing Law and Jurisdiction......................................29
33. Process Agent.......................................................30
SCHEDULE
1. The Services........................................................31
2. Form of Investor Monthly Report.....................................32
3. Minimum Servicing Standards.........................................33
Signatories..................................................................35
THIS AMENDED AND RESTATED SERVICING AGREEMENT (this AGREEMENT) is made as a
deed on 21 November 2007
BETWEEN:
(1) BANK OF SCOTLAND PLC (registered number SC327000), a public limited
company incorporated under the laws of Scotland whose registered
office is at ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ (acting in its capacities
as the SERVICER of the Loans and their Related Security, the SELLER
and a BENEFICIARY);
(2) PERMANENT MORTGAGES TRUSTEE LIMITED (registered number 83116), a
private limited company incorporated under the laws of Jersey, Channel
Islands whose registered office is at ▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇, Channel Islands (acting in its capacity as the MORTGAGES
TRUSTEE);
(3) PERMANENT FUNDING (NO. 1) LIMITED (registered number 4267660), a
private limited company incorporated under the laws of England and
Wales whose registered office is at ▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇▇'▇, ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ (acting in its capacities as FUNDING 1 and a BENEFICIARY);
(4) PERMANENT FUNDING (NO. 2) LIMITED (registered number 04441772), a
private limited company incorporated under the laws of England and
Wales whose registered office is at ▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇▇'▇, ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ (acting in its capacities as FUNDING 2 and a BENEFICIARY); and
(5) THE BANK OF NEW YORK, a New York banking corporation acting through
its office at ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (acting in
its capacities as the FUNDING 1 SECURITY TRUSTEE, which expression
shall include such company and all other persons or companies for the
time being acting as security trustee (or co-trustee) pursuant to the
terms of the Funding 1 Deed of Charge and the FUNDING 2 SECURITY
TRUSTEE, which expression shall include such company and all other
persons or companies for the time being acting as security trustee (or
co-trustee) pursuant to the terms of the Funding 2 Deed of Charge).
WHEREAS:
(A) Halifax (then in its capacity as the Servicer) carried on the business
of, inter alia, administering mortgage loans secured on residential
properties within England and Wales and Scotland.
(B) By the Mortgage Sale Agreement, Halifax (then in its capacity as the
Seller) sold certain mortgage loans it had originated to individual
borrowers together with their Related Security to the Mortgages
Trustee. The Mortgages Trustee held those mortgage loans as bare
trustee for Funding 1 and Halifax (then in its capacity as the Seller)
and, as of the Programme Date, Funding 2 pursuant to the terms of the
Mortgages Trust Deed.
(C) Halifax (then in its capacity as the Servicer) provided administration
and management services to the Mortgages Trustee, the Seller, Funding
1 and, as of the Programme Date, Funding 2 on the terms and subject to
the conditions contained in the Servicing Agreement in relation to,
inter alia, the Loans and their Related Security sold to the Mortgages
Trustee by Halifax (then in its capacity as the Seller).
(D) On the Reorganisation Date, pursuant to the HBOS Group Reorganisation
▇▇▇ ▇▇▇▇, The Governor and Company of the Bank of Scotland was
registered as a public company under the Companies ▇▇▇ ▇▇▇▇ and
changed its name to Bank of Scotland plc and the business and all
property and liabilities
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of Halifax (including its business of administering loans and its
rights and obligations under the Servicing Agreement) were transferred
to Bank of Scotland.
(E) The parties to the Servicing Agreement have agreed to further amend
and restate the terms of the Servicing Agreement on the date hereof as
set out herein.
IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 The amended and restated master definitions and construction schedule
signed by, amongst others, the parties to this Agreement and dated 21
November 2007 (as the same may be amended, varied or supplemented from
time to time with the consent of the parties to this Agreement) (the
MASTER DEFINITIONS AND CONSTRUCTION SCHEDULE) is expressly and
specifically incorporated into this Agreement and, accordingly, the
expressions defined in the Master Definitions and Construction
Schedule (as so amended, varied or supplemented from time to time)
shall, except where the context otherwise requires and save where
otherwise defined herein, have the same meanings in this Agreement,
including the Recitals hereto, and this Agreement shall be construed
in accordance with the interpretation provisions set out in clause 3
of the Master Definitions and Construction Schedule.
For the purposes of this Agreement:
COMMISSION means the United States Securities and Exchange Commission;
REGULATION AB means Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. [SECTION][SECTION]229.1100-229.1123, as
such may be amended from time to time, and subject to such
clarification and interpretation as have been provided by the
Commission in the adopting release (Asset-Backed Securities,
Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (7
January 2005)) or by the staff of the Commission, or as may be
provided by the Commission or its staff from time to time;
▇▇▇▇▇▇▇▇-▇▇▇▇▇ CERTIFICATION has the meaning specified in Clause
5.6(c);
SERVICING CRITERIA means the "servicing criteria" set forth in Item
1122(d) of Regulation AB; and
SUBCONTRACTOR means any vendor, subcontractor or other person that is
not responsible for the overall servicing (as "servicing" is commonly
understood by participants in the mortgage-backed securities market)
of the Loans and their Related Security but performs one or more
discrete functions identified in Item 1122(d) of Regulation AB with
respect to the Loans and their Related Security under the direction or
authority of the Servicer.
1.2 Any reference in this Agreement to any discretion, power or right on
the part of the Mortgages Trustee shall be exercised by the Mortgages
Trustee only as directed by the Beneficiaries but subject in each case
to the provisions Clause 16 of the Mortgages Trust Deed.
1.3 Save as expressly provided herein, any warranties or undertakings
provided under this Agreement are made to each other party to this
Agreement.
1.4 This Agreement amends and restates the Servicing Agreement made on 14
June 2002 as amended and restated on 6 March 2003, 25 November 2003,
12 March 2004, 22 July 2004, 18 November 2004, 23 March 2005, 22 June
2005, 22 March 2006 and 17 October 2006 (the PRINCIPAL AGREEMENT). As
of the date of this Agreement, any future rights or obligations
(excluding such obligations accrued to the date of this Agreement) of
a party under the Principal Agreement shall be extinguished and shall
instead be governed by this Agreement.
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2. APPOINTMENT OF SERVICER
2.1 Subject to Clauses 2.4 and 4.3(e), and until termination pursuant to
Clause 21, the Mortgages Trustee, the Seller and Funding 1 (according
to their respective estates and interests) each hereby appoints the
Servicer as its lawful agent on their respective behalf to administer
the Loans and their Related Security, to provide certain other
administration and management services and to exercise their
respective rights, powers and discretions, and to perform their
respective duties, under and in relation to the Loans and their
Related Security. The Servicer in each case hereby accepts such
appointment on the terms and subject to the conditions of this
Agreement. The Funding 1 Security Trustee consents to the appointment
of the Servicer on the terms of and subject to the conditions of this
Agreement.
2.2 Subject to Clauses 2.5 and 4.3(e) and, and until termination pursuant
to Clause 21, Funding 2 (according to its estates and interests)
hereby appoints the Servicer as its lawful agent on its behalf to
administer the Loans and their Related Security, to provide certain
other administration and management services and to exercise its
rights, powers and discretions, and to perform its duties, under and
in relation to the Loans and their Related Security. The Servicer
hereby accepts such appointment on the terms and subject to the
conditions of this Agreement. The Funding 2 Security Trustee consents
to the appointment of the Servicer on the terms of and subject to the
conditions of this Agreement.
2.3 For the avoidance of doubt and in connection with the rights, powers
and discretions conferred under Clause 2.1 and Clause 2.2, during the
continuance of its appointment hereunder, the Servicer shall, subject
to the terms and conditions of this Agreement, the Mortgage
Conditions, the Mortgage Sale Agreement and the Mortgages Trust Deed,
have the full power, authority and right to do or cause to be done any
and all things which it reasonably considers necessary, convenient or
incidental to the administration of the Loans and their Related
Security or the exercise of such rights, powers and discretions,
provided however that neither the Mortgages Trustee, Funding 1 nor
Funding 2 nor their respective directors shall be required or obliged
at any time to enter into any transaction or to comply with any
directions which the Servicer may give with respect to the operating
and financial policies of the Mortgages Trustee, Funding 1 or Funding
2 and the Servicer hereby acknowledges that all powers to determine
such policies (including the determination of whether or not any
particular policy is for the benefit of the Mortgages Trustee, Funding
1 or Funding 2) are, and shall at all times remain, vested, as the
case may be, in the Mortgages Trustee and/or Funding 1 and/or Funding
2 (and their respective directors) and none of the provisions of this
Agreement shall be construed in a manner inconsistent with this
proviso.
2.4 The appointment pursuant to Clause 2.1 is conditional upon the issue
of the First Issuer Notes having taken place and shall take effect
upon and from the Initial Closing Date automatically without any
further action on the part of any person PROVIDED THAT if the issue of
the First Issuer Notes has not occurred by 14 June 2002, or such later
date as the First Issuer and the Joint Lead Managers may agree, the
appointment of the Servicer as agent of Funding 1 under Clause 2.1
shall not take effect.
2.5 The appointment pursuant to Clause 2.2 is conditional upon the
acquisition by Funding 2 from the Seller of a portion of the Seller's
beneficial interest in the Mortgages Trust pursuant to the Seller
Mortgages Trust Assignment Agreement and shall take effect upon and
from the Programme Date automatically without any further action on
the part of any person PROVIDED THAT if Funding 2 has not acquired
from the Seller a portion of the Seller's beneficial interest in the
Mortgages Trust by 17 October 2006, or such later date as the Seller
and Funding 2 may agree, the appointment of the Servicer as agent of
Funding 2 under Clause 2.2 shall not take effect.
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3. THE ADMINISTRATION SERVICES
3.1 GENERAL
(a) The duty of the Servicer shall be to provide the services set out in
this Agreement including Schedule 1 hereto (the SERVICES).
(b) If and when the Servicer is requested to confirm or state the capacity
in which it is administering and servicing the Loans, their Related
Security and related matters pursuant to this Agreement by any
Borrower or any third party not being a party to this Agreement and to
whom the Servicer is obliged by law to disclose such information, the
Servicer shall confirm or state that it is acting in its capacity as
servicer of the Loans, their Related Security and related matters as
agent for and on behalf of the Mortgages Trustee and the Beneficiaries
and not on its own behalf.
3.2 SUB-CONTRACTS
(a) The Servicer may sub-contract or delegate the performance of all or
any of its powers and obligations under this Agreement, provided that
such sub-contracting or delegation would not prevent the Servicer, the
Mortgages Trustee, Funding 1 or Funding 2 from complying in all
material respects with any law, statute, judgment, decree, order,
licence, authorisation, rule, order and provided further that (subject
to Clause 3.2(b)):
(i) the prior written consent of Funding 1, Funding 2, the Funding
1 Security Trustee and the Funding 2 Security Trustee to the
proposed arrangement (including, if Funding 1, Funding 2, the
Funding 1 Security Trustee and the Funding 2 Security Trustee
consider it necessary, approving any contract which sets out
the terms on which such arrangements are to be made) has been
obtained and written notification has been given to each of
the Rating Agencies;
(ii) where the arrangements involve the custody or control of any
Customer Files and/or Title Deeds relating to the Portfolio
for the purpose of performing any delegated Services the
sub-contractor or delegate has executed an acknowledgement in
form and substance acceptable to Funding 1, Funding 2, the
Funding 1 Security Trustee and the Funding 2 Security Trustee
to the effect that any such Customer Files and/or Title Deeds
are and will be held to the order of the Mortgages Trustee (as
trustee for the Beneficiaries);
(iii) where the arrangements involve or may involve the receipt by
the sub-contractor or delegate of monies belonging to the
Beneficiaries which, in accordance with this Agreement, are to
be paid into the Mortgages Trustee GIC Account, the
sub-contractor or delegate has executed a declaration in form
and substance acceptable to the Beneficiaries that any such
monies held by it or to its order are held on trust for the
Beneficiaries and will be paid forthwith into, as applicable,
the Mortgages Trustee GIC Account in accordance with the terms
of the Mortgages Trust Deed;
(iv) any such sub-contractor or delegate has executed a written
waiver of any Security Interest arising in connection with
such delegated Services (to the extent that such Security
Interest relates to the Portfolio or any amount referred to in
(iii) above);
(v) neither the Funding 1 Security Trustee, the Funding 2 Security
Trustee, the Mortgages Trustee, Funding 1 nor Funding 2 shall
have any liability for any costs, charges or expenses payable
to or incurred by such sub-contractor or delegate or arising
from the entering into, the continuance or the termination of
any such arrangement; and
(vi) any such sub-contractor or delegate shall have confirmed to
the Servicer, Funding 1, Funding 2, the Funding 1 Security
Trustee and the Funding 2 Security Trustee that it has,
4
and shall maintain, all requisite consents, authorisations,
approvals, licences, and orders, including without limitation
all authorisations under the FSMA, to enable it to fulfil its
obligations under or in connection with any such arrangement.
(b) The provisos to Clause 3.2(a)(i), (ii) and (iii) shall not apply:
(i) to the engagement by the Servicer of:
(A) any receiver, solicitor, insurance broker, valuer,
surveyor, accountant, estate agent, insolvency
practitioner, auctioneer, bailiff, sheriff officer,
debt counsellor, tracing agent, property management
agent, licensed conveyancer, qualified conveyancer or
other professional adviser acting as such; or
(B) any locksmith, builder or other contractor acting as
such in relation to a Property,
in any such case being a person or persons whom the Servicer
would be willing to appoint in respect of its own mortgages in
connection with the performance by the Servicer of any of its
obligations or functions or in connection with the exercise of
its powers under this Agreement; or
(ii) to any delegation to any wholly-owned subsidiary of the Seller
or HBOS plc from time to time.
(c) The Mortgages Trustee and/or Funding 1 and/or Funding 2 and the
Funding 1 Security Trustee and the Funding 2 Security Trustee may by
notice in writing require the Servicer to assign to the Mortgages
Trustee any rights which the Servicer may have against any
sub-contractor or delegate arising from the performance of services by
such person relating to any matter contemplated by this Agreement and
the Servicer acknowledges that such rights assigned to the Mortgages
Trustee will be exercised by the Mortgages Trustee as trustee for the
Beneficiaries subject to the terms of the Mortgages Trust Deed.
(d) Notwithstanding any sub-contracting or delegation of the performance
of its obligations under this Agreement, the Servicer shall not
thereby be released or discharged from any liability hereunder and
shall remain responsible for the performance of all of the obligations
of the Servicer under this Agreement, and the performance or
non-performance or the manner of performance of any sub-contractor or
delegate of any of the Services shall not affect the Servicer's
obligations under this Agreement and any breach in the performance of
the Services by such sub-contractor or delegate shall, subject to the
Servicer being entitled for a period of 20 London Business Days from
receipt of any notice of the breach to remedy such breach by any
sub-contractor or delegate, be treated as a breach of this Agreement
by the Servicer.
3.3 NOTICES ETC.
(a) Within 20 London Business Days of the Initial Closing Date, the
Servicer will give notice (or procure that notice is given) by courier
or by special delivery to HBOS Insurance (PCC) Guernsey Limited of the
assignment to the Mortgages Trustee by the Seller of its interests in
the Halifax Mortgage Re Limited MIG Policies pursuant to the
Assignment of Halifax Mortgage Re Limited MIG Policies, which shall be
held by the Mortgages Trustee absolutely as bare trustee for the
Beneficiaries pursuant to the Mortgages Trust Deed, and the Servicer
shall take all reasonable steps to ensure the return by the relevant
recipient of the duplicate notices of assignment by way of
acknowledgement thereof.
(b) Promptly upon request by Funding 1, Funding 2, the Funding 1 Security
Trustee and the Funding 2 Security Trustee, the Servicer shall procure
that any notices permitted to be given by the Mortgages
5
Trustee under clause 6.4 of the Mortgage Sale Agreement are so given
by the Servicer on the Mortgages Trustee's behalf.
3.4 LIABILITY OF SERVICER
(a) The Servicer shall indemnify each of the Mortgages Trustee and the
Beneficiaries on demand on an after-tax basis for any loss, liability,
claim, expense or damage suffered or incurred by any of them in
respect of the negligence or wilful default of the Servicer in
carrying out its functions as Servicer under this Agreement or the
other Transaction Documents or as a result of a breach by the Servicer
of the terms and provisions of this Agreement or the other Transaction
Documents in relation to such functions.
(b) For the avoidance of doubt, the Servicer shall not be liable in
respect of any loss, liability, claim, expense or damage suffered or
incurred by the Mortgages Trustee and/or the Beneficiaries and/or any
other person as a result of the proper performance of the Services by
the Servicer save where such loss, liability, claim, expense or damage
is suffered or incurred as a result of any negligence or wilful
default of the Servicer or as a result of a breach by the Servicer of
the terms and provisions of this Agreement or the other Transaction
Documents in relation to such functions.
(c) Any indemnification under this Clause 3.4 in respect of loss suffered
by the Beneficiaries while Bank of Scotland is Servicer shall be paid
for by reducing the Seller Share of the Trust Property by an amount
equal to the relevant loss incurred by the Beneficiaries in accordance
with Clause 8.4 of the Mortgages Trust Deed and Schedule 2 to the Cash
Management Agreement.
4. MORTGAGES TRUSTEE VARIABLE BASE RATE/MORTGAGES TRUSTEE TRACKER RATE
4.1 The Mortgages Trustee and each of the Beneficiaries each hereby grants
the Servicer full right, liberty and authority from time to time, in
accordance with the relevant Mortgage Terms, to determine and set the
Mortgages Trustee Variable Base Rate and any variable margin
incorporated within the Mortgages Trustee Tracker Rate above the Bank
of England repo rate applicable in relation to Tracker Rate Loans
chargeable to Borrowers from time to time. In exercising such right,
liberty and authority the Servicer undertakes to each of the other
parties to this Agreement that it shall not at any time, without the
prior consent of the Mortgages Trustee, Funding 1 and Funding 2, set
or maintain the Mortgages Trustee Variable Base Rate at a rate which
is higher than (although it may be lower than or equal to) the then
prevailing Seller's Variable Base Rate, nor will it set or maintain a
margin incorporated within the Mortgages Trustee Tracker Rate above
the Bank of England repo rate in respect of any Tracker Rate Loan,
which is higher than the margin above the Bank of England repo rate
then applying to those Tracker Rate Loans beneficially owned by the
Seller outside the Portfolio except in the limited circumstances
described in this paragraph when the Mortgages Trustee will be
entitled to do so. The Servicer will not at any time, without the
prior consent of the Mortgages Trustee, Funding 1 and Funding 2, set
or maintain:
(a) the Mortgages Trustee Variable Base Rate at a rate which is
higher than (although it may be lower than or equal to) the
then prevailing Seller's Variable Base Rate which applies to
loans beneficially owned by the Seller outside the Portfolio;
(b) the margin incorporated within the Mortgages Trustee Tracker
Rate in respect of any Tracker Rate Loan in the Portfolio
which, where the offer conditions for that Tracker Rate Loan
provide that the margin above the Bank of England repo rate
shall be the same as the margin above the Bank of England repo
rate applicable to all other loans having the same offer
conditions in relation to interest rate setting as that
Tracker Rate Loan, is higher or lower than the margin above
the Bank of England repo rate then applying to those Tracker
Rate Loans beneficially owned by the Seller outside the
Portfolio; and
6
(c) the margin incorporated within the Mortgages Trustee Tracker
Rate above the Bank of England repo rate in respect of any
other Tracker Rate Loan which is higher than the margin above
the Bank of England repo rate which would then be set in
accordance with the Seller's Policy from time to time in
relation to that Tracker Rate Loan,
unless the Servicer is required to do so pursuant to Clause 4.3, and,
subject to that requirement, that it shall not change the Mortgages
Trustee Variable Base Rate nor the Mortgages Trustee Tracker Rate save
for the same reasons as the Seller was entitled, under the Mortgage
Conditions, to change the Seller's Variable Base Rate and the Seller's
Tracker Rate prior to the sale to the Mortgages Trustee of the Loans
comprised in the Portfolio and their Related Security. Each of the
Mortgages Trustee and the Beneficiaries shall be bound by the
Mortgages Trustee Variable Base Rate and the Mortgages Trustee Tracker
Rate set in accordance with this Agreement.
4.2 The Servicer shall take the steps rendered necessary by the relevant
Mortgage Terms and applicable law (including, without limitation, the
Guidance Note on Interest Variation Terms issued by the Office of Fair
Trading in February 2000 and the FSA's Statement of Good Practice on
Fairness of Terms in Consumer contracts published May 2005 and any
successor guideline or applicable additional guidelines) to bring each
change in such rate or rates of interest to the attention of the
relevant Borrowers, whether due to a change in the Mortgages Trustee
Variable Base Rate or the Mortgages Trustee Tracker Rate or as a
consequence of any provisions of the Mortgage Terms. All costs arising
in relation to such a notification of a change in such rate or rates
of interest shall be borne by the Servicer.
4.3 (a) On each Calculation Date following a debit to the Funding 1
General Reserve Fund Ledger and/or the Funding 2 General
Reserve Fund Ledger and continuing until the debit balance is
eliminated, the Servicer shall determine, having regard to the
aggregate of:
(i) the revenue which each of Funding 1 and Funding 2
would respectively expect to receive during the
Interest Period commencing on the next succeeding (in
the case of Funding 1) Funding 1 Interest Payment Date
and (in the case of Funding 2) Funding 2 Interest
Payment Date;
(ii) the Mortgages Trustee Variable Base Rate, any variable
margins applicable in relation to any Tracker Rate
Loans and the Variable Mortgage Rates in respect of
the Loans which the Servicer proposes to set under
this Clause 4; and
(iii) the other resources available to Funding 1 and Funding
2 including:
(A) (in the case of Funding 1) the Funding 1 Swap
Agreement, the Funding 1 Liquidity Facility,
the General Reserve Fund and the Liquidity
Reserve Fund; and
(B) (in the case of Funding 2) the Funding 2 Swap
Agreement and the Funding 2 General Reserve
Fund,
whether:
I. Funding 1 would receive an amount of revenue
during that Interest Period which when
aggregated with the funds otherwise available
to Funding 1 is less than the amount which is
the aggregate of (a) the amount of interest
which will be payable in respect of the Term
AAA Advances under the Intercompany Loan
Agreements and all amounts ranking higher in
priority to such amounts on the Funding 1
Interest Payment Date falling at the end of
that Interest Period and (b) the other senior
expenses of Funding 1 which
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rank in priority thereto (the amount (if any)
by which it is less being the FUNDING 1
INTEREST RATE SHORTFALL); and
II. Funding 2 would receive an amount of revenue
during that Interest Period which when
aggregated with the funds otherwise available
to Funding 2 is less than the amount which is
the aggregate of (a) the amount of interest
which will be payable in respect of the AAA
Loan Tranches under the Master Intercompany
Loan Agreement and all amounts ranking higher
in priority to such amounts falling at the end
of that Interest Period and (b) the other
senior expenses of Funding 2 which rank in
priority thereto (the amount (if any) by which
it is less being the FUNDING 2 INTEREST RATE
SHORTFALL).
(b) If the Servicer determines that there will be either a Funding
1 Interest Rate Shortfall or a Funding 2 Interest Rate
Shortfall, it will within one London Business Day of such
determination give written notice thereof to the Mortgages
Trustee, Funding 1, Funding 2, the Funding 1 Security Trustee
and the Funding 2 Security Trustee of such Funding 1 Interest
Rate Shortfall and/or Funding 2 Interest Rate Shortfall (as
the case may be) and of the Mortgages Trustee Variable Base
Rate and/or the Mortgages Trustee Tracker Rate which would
(taking into account the applicable Mortgage Conditions), in
the Servicer's reasonable opinion, need to be set in order for
no Funding 1 Interest Rate Shortfall and/or Funding 2 Interest
Rate Shortfall (as the case may be) to arise, having regard to
the date(s) (which shall be specified in the notice) on which
such change to the Mortgages Trustee Variable Base Rate and
the Mortgages Trustee Tracker Rate would take effect and at
all times acting in accordance with the standards of a
Reasonable, Prudent Mortgage Lender as regards the competing
interests of Borrowers with Mortgage Trustee Variable Base
Rate Loans and Borrowers with Mortgages Trustee Tracker Rate
Loans.
(c) If the Mortgages Trustee, Funding 1 and the Funding 1 Security
Trustee notify the Servicer that, having regard to the
obligations of Funding 1, the Mortgages Trustee Variable Base
Rate and/or the Mortgages Trustee Tracker Rate should be
increased but no notification is received by the Servicer
under Clause 4.3(d), the Servicer, as agent for and on behalf
of, inter alios, the Mortgages Trustee and the Beneficiaries,
shall take all steps which are necessary, including publishing
any notice which is required in accordance with the Mortgage
Terms, to effect such change in the Mortgages Trustee Variable
Base Rate and/or the Mortgages Trustee Tracker Rate on the
date(s) specified in the notice referred to in Clause 4.3(b).
(d) If the Mortgages Trustee, Funding 2 and the Funding 2 Security
Trustee notify the Servicer that, having regard to the
obligations of Funding 2, the Mortgages Trustee Variable Base
Rate and/or the Mortgages Trustee Tracker Rate should be
increased but no notification is received by the Servicer
under Clause 4.3(c), the Servicer, as agent for and on behalf
of, inter alios, the Mortgages Trustee and the Beneficiaries,
shall take all steps which are necessary, including publishing
any notice which is required in accordance with the Mortgage
Terms, to effect such change in the Mortgages Trustee Variable
Base Rate and/or the Mortgages Trustee Tracker Rate on the
date(s) specified in the notice referred to in Clause 4.3(b).
(e) If the Servicer receives notification from:
(i) the Mortgages Trustee, Funding 1 and the Funding 1
Security Trustee in accordance with Clause 4.3(c); or
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(ii) the Mortgages Trustee, Funding 2 and the Funding 2
Security Trustee in accordance with Clause 4.3(d),
then the Servicer, as agent for and on behalf of the Mortgages
Trustee and the Beneficiaries, shall take all steps which are
necessary, including publishing any notice which is required
in accordance with the Mortgage Terms, to effect such change
in the Mortgages Trustee Variable Base Rate and/or the
Mortgages Trustee Tracker Rate on the date(s) specified in the
notice referred to in Clause 4.3(b).
(f) The Mortgages Trustee and/or Funding 1 and/or Funding 2 and/or
the Funding 1 Security Trustee and/or the Funding 2 Security
Trustee may terminate the authority of the Servicer under
Clause 4.1 and Clause 4.3 to determine the Mortgages Trustee
Variable Base Rate and the Mortgages Trustee Tracker Rate on
or after the occurrence of a Servicer Termination Event, in
which case the Mortgages Trustee shall set the Mortgages
Trustee Variable Base Rate and the Mortgages Trustee Tracker
Rate in accordance with this Clause 4.
5. ADMINISTRATION OF MORTGAGES
5.1 DIRECT DEBITING SCHEME
(a) For the purposes of collecting amounts due from Borrowers under the
Loans and their Related Security comprised in the Portfolio in
accordance with this Agreement the Servicer will unless otherwise
agreed in writing with the Beneficiaries:
(i) act, or procure that another person approved in writing by the
Beneficiaries (such approval not to be unreasonably withheld)
(the THIRD PARTY COLLECTION AGENT) acts, as collection agent
for the Mortgages Trustee and the Beneficiaries under the
Direct Debiting Scheme and remains a member of the Direct
Debiting Scheme or any scheme which replaces the Direct
Debiting Scheme;
(ii) subject to Clauses 5.1(b) and 5.1(c), deliver to the Bankers
Automated Clearing System (BACS) or to the Account Bank such
instructions as may be necessary from time to time for the
debit of the account of each Borrower in respect of which
there is a direct debit mandate (the date of such delivery
being the D.D. Date) with the Monthly Payment due from such
Borrower, and for the amount of such Monthly Payment to be
credited to the Mortgages Trustee GIC Account on the day after
the D.D. Date or, if such day is not a London Business Day,
the following London Business Day unless the short-term
ratings of the Account Bank fall below A-1+ by S&P, P-1 by
▇▇▇▇▇'▇ or F1 by Fitch, in which case all further instructions
by the Servicer to debit the accounts of Borrowers that are
subject to direct debit bank mandates shall be made to another
bank which has a rating of at least A-1+ by S&P, P-1 by
▇▇▇▇▇'▇ or F1 by Fitch, or directly to the Mortgages Trustee
GIC Account;
(iii) subject to Clauses 5.1(b) and 5.1(c), deliver to the Account
Bank or BACS (as appropriate) instructions for the debit of
the account of each Borrower in respect of which there is a
direct debit mandate and the Monthly Payment due and owing
from such Borrower on the D.D. Date immediately preceding the
next succeeding Monthly Payment Date remains outstanding to
the extent that, on the date of presentation of such
instructions, such Monthly Payment has not been received in
full by the Servicer on behalf of the Mortgages Trustee and
where the instructions for the debit of the account of the
relevant Borrower for the Monthly Payment due and owing from
such Borrower was returned to the Servicer marked
"insufficient funds" within ten London Business Days of
receipt by the Servicer of any such returned instructions;
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(iv) subject to Clauses 5.1(b) and 5.1(c), deliver to the Account
Bank or BACS (as appropriate) such other instructions for the
debit of the account of each Borrower in respect of which
there is a direct debit mandate in accordance with the Direct
Debiting Scheme as may be appropriate for the recovery of sums
due by such Borrower; and
(v) comply in all material respects with the requirements from
time to time of the Direct Debiting Scheme including "The
Originator's Guide and Rules to the Direct Debiting Scheme" as
amended from time to time,
and take all such other steps as are reasonably appropriate, including
in particular the preparation and administration of appropriate
computer tapes in connection with BACS, to ensure that all monies
received from Borrowers during banking hours on any particular day are
credited on the next day to the Mortgages Trustee GIC Account.
(b) The Servicer may agree with a Borrower that the Direct Debiting Scheme
shall not apply to Monthly Payments to be made by such Borrower,
provided, subject to Clause 5.1(d), that (i) alternative payment
arrangements are made which are intended to ensure timely payment of
Monthly Payments due from the Borrower to the Mortgages Trustee on
behalf of the Beneficiaries, and (ii) the change in arrangements was
made at the instigation of the Borrower or by the Servicer in
accordance with the procedures which would be adopted by a Reasonable,
Prudent Mortgage Lender.
(c) The Servicer may, notwithstanding the proviso to Clause 5.1(b), agree
such procedures for the payment by a Borrower of (i) overdue amounts
and (ii) amounts payable on redemption of a Mortgage in whole or in
part other than through the Direct Debiting Scheme as would be agreed
by a Reasonable, Prudent Mortgage Lender.
(d) The Servicer shall, notwithstanding the proviso to Clause 5.1(b), use
its reasonable endeavours to credit Monthly Payments made by a
Borrower under a payment arrangement other than the Direct Debiting
Scheme to the Mortgages Trustee GIC Account as follows:
(i) where the Borrower pays by standing order, by close of
business on the second London Business Day following the day
on which such amount is received or credited by the Servicer;
(ii) where the Borrower pays by payment of cash, by transfer
payment from another account of the Seller or by cheque where
reference to the relevant Borrower is provided or payments are
made by way of paying-in book, by close of business on the
London Business Day which immediately follows the day on which
such amount is received or credited by the Servicer; and
(iii) where the Borrower pays by cheque where a reference to the
relevant Borrower is not provided, by close of business on the
next London Business Day after notification from the Seller of
the identity of the Borrower.
(e) Where a Borrower permits a direct debit to be made to his bank
account, the Servicer will endeavour to procure that such Borrower
maintains a valid and effective mandate relating to such direct debit
in relation to each Monthly Payment due from that Borrower, provided
that in any case where a Borrower will not permit a direct debit to be
made to his bank account the Servicer will endeavour to make
alternative arrangements acceptable to a Reasonable, Prudent Mortgage
Lender so that such Borrower nevertheless pays each Monthly Payment
within the month in which it falls due.
(f) If at any time the Servicer shall receive notice whether under the
Direct Debiting Scheme or otherwise that any amount (or part thereof),
which was paid in or credited pursuant to Clause 5.1 and which has
been transferred to the Mortgages Trustee GIC Account has not been
received as cleared
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funds or has otherwise been recalled, the Servicer shall notify the
Cash Manager and instruct the Cash Manager forthwith to debit the
Mortgages Trustee GIC Account and credit the relevant collection
account for the whole or any part of such amount (such amount
hereinafter referred to as the SHORTFALL) and, an amount equal to any
costs which are irrecoverable by the Servicer from the relevant
Borrower incurred by the Servicer as a result of such shortfall;
PROVIDED THAT no debit from the Mortgages Trustee GIC Account for the
credit of the collection accounts in respect of any shortfall may be
made on or after a Calculation Date in respect of the relevant period
between that Calculation Date and the next Distribution Date unless
sufficient funds are available after providing or making provision for
all payments to be made on the next succeeding Distribution Date.
After that following Distribution Date the Mortgages Trustee shall
transfer, or procure on its behalf the transfer, from the Mortgages
Trustee GIC Account to the relevant collection account of an amount
equal to such shortfall subject to it having sufficient funds
available to it or the Servicer shall deduct an amount equal to such
shortfall from payments otherwise due on a daily basis from the Seller
to the Mortgages Trustee in respect of Principal Receipts and Interest
Receipts received under the Loans.
5.2 ADMINISTRATION AND ENFORCEMENT OF MORTGAGES
(a) The Mortgages Trustee and the Beneficiaries hereby direct the Servicer
to administer the Loans comprised in the Portfolio and carry out its
specific obligations under this Agreement in accordance with the
Seller's Policy.
(b) The Servicer will, in relation to any default by a Borrower under or
in connection with a Loan or a Mortgage comprised in the Portfolio,
comply with the Enforcement Procedures or, to the extent that the
Enforcement Procedures are not applicable having regard to the nature
of the default in question, take such action as is not materially
prejudicial to the interests of the Mortgages Trustee (as trustee for
the Beneficiaries) and the Beneficiaries under the relevant MIG
Policy, provided that:
(i) the Servicer shall only become obliged to comply with the
Enforcement Procedures (to the extent applicable) or to take
action as aforesaid after it has become aware of the default;
(ii) it is acknowledged by the Beneficiaries that mortgage lenders
generally exercise discretion in pursuing their respective
enforcement procedures and that the Servicer may exercise such
discretion as would a Reasonable, Prudent Mortgage Lender in
applying the Enforcement Procedures to any particular
defaulting Borrower or taking action as aforesaid, provided
that in exercising such discretion the interest of Funding 1
and/or Funding 2 in the Portfolio is not materially
prejudiced; and
(iii) in any case where any of the Insurance Policies requires exact
compliance with certain enforcement procedures the Servicer
shall procure the prior written consent of the relevant
insurance company for any deviation by it from such
enforcement procedures.
5.3 RECORDS
The Servicer shall keep and maintain records in relation to the
Portfolio, on a Loan by Loan basis, for the purposes of identifying
amounts paid by each Borrower, any amount due from a Borrower and the
principal balance (and, if different, the total balance) from time to
time outstanding on a Borrower's account and such other records as
would be kept by a Reasonable, Prudent Mortgage Lender. The Servicer
will provide such information to the Mortgages Trustee and/or Funding
1 and/or Funding 2 and/or the Funding 1 Security Trustee and/or the
Funding 2 Security Trustee or to their order at any time upon
reasonable notice subject to the Servicer being reasonably capable of
providing such information without significant additional cost and
subject to the provisions of the Data Protection ▇▇▇ ▇▇▇▇ and other
applicable legislation from time to time and provided that no duty of
confidence and no industry code of practice will or may be breached
thereby.
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5.4 TRUST
(a) If the Servicer in carrying out its functions as Servicer under this
Agreement receives (including in its capacity as agent for the
Mortgages Trustee and the Beneficiaries) any money whatsoever arising
from the Loans and their Related Security, which money belongs to the
Mortgages Trustee (as trustee for the Beneficiaries) and is to be paid
to the Mortgages Trustee GIC Account pursuant to this Agreement or any
of the other Transaction Documents or otherwise, it will hold such
monies on trust for the Mortgages Trustee and shall, as soon as
reasonably practicable and in any event within the time limits
referred to in Clause 5.1, pay the monies into the Mortgages Trustee
GIC Account.
(b) All other sums received by the Servicer in respect of the Loans and
their Related Security shall be held by the Servicer for itself.
5.5 ANNUAL SERVICER COMPLIANCE STATEMENT
For so long as the Mortgages Trustee and/or Funding 1 and/or Funding 2
and/or any Funding 1 Issuer and/or the Master Issuer is subject to the
reporting requirements of Section 13(a) or 15(d) of the Exchange Act,
the Servicer shall deliver to the Mortgages Trustee and/or Funding 1
and/or Funding 2 (as applicable) a statement of compliance in the form
and at a time sufficient to comply with the requirements of Item 1123
of Regulation AB to the extent applicable; provided, however, that,
with regard to any issuance by a Funding 1 Issuer of securities
registered under the Securities Act with a Closing Date prior to 31
December 2005, for so long as such Funding 1 Issuer is subject to the
reporting obligations of Section 13 or 15(d) of the Exchange Act, the
Servicer may, at the sole discretion of Funding 1, deliver to Funding
1 at a time specified by Funding 1, in lieu of the foregoing, an
officer's certificate with respect to each such Funding 1 Issuer in
the form previously filed as Exhibit 99.1 to the annual report on Form
20-F of such Funding 1 Issuer.
5.6 REPORT ON ASSESSMENT OF COMPLIANCE AND ATTESTATION
For as long as the Mortgages Trustee and/or Funding I and/or Funding 2
and/or any Funding 1 Issuer and/or the Master Issuer is subject to the
reporting requirements of Section 13(a) or 15(d) of the Exchange Act,
the Servicer shall:
(a) with respect to any securities issued after 31 December 2005,
deliver to the Mortgages Trustee and/or Funding 1 and/or
Funding 2 (as applicable) a report regarding the Servicer's
assessment of compliance with the Servicing Criteria during
the immediately preceding calendar year, in the form and at a
time sufficient to comply with the requirements of Rule 13a-18
or 15d-18 of the Exchange Act and Item 1122(a) of Regulation
AB, as applicable; and
(b) cause each Subcontractor determined by the Servicer to be
"participating in the servicing function" within the meaning
of Item 1122 of Regulation AB, to deliver to the Mortgages
Trustee and/or Funding 1 and/or Funding 2 (as applicable) a
report on assessment of compliance with applicable servicing
criteria in the form and at a time sufficient to comply with
the requirements of Rule 13a-18 or Rule 15d-18 of the Exchange
Act and Item 1122(a) of Regulation AB; and
(c) deliver or cause to be delivered to any person that will be
responsible for signing the certification (a ▇▇▇▇▇▇▇▇-▇▇▇▇▇
CERTIFICATION) required by Rule 13a-14(d) or Rule 15d-14(d)
under the Exchange Act such certifications or information as
such person deems necessary to give the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Certification.
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5.7 INDEPENDENT AUDITORS' ATTESTATION REPORT
The Servicer shall cause a registered public accounting firm to
furnish an attestation report on assessment of compliance with the
Servicing Criteria with respect to the Servicer or any affiliate
thereof or any party or Subcontractor determined by the Servicer to be
"participating in the servicing function" (within the meaning of Item
1122 of Regulation AB) in the form and at a time sufficient to comply
with the requirements of Rule 13a-18 or Rule 15d-18 of the Exchange
Act and Item 1122(b) of Regulation AB, to the extent applicable;
provided, however, that with regard to any issuance by a Funding 1
Issuer of securities registered under the Securities Act with a
Closing Date prior to 31 December 2005, for so long as such Funding 1
Issuer is subject to the reporting obligations of Section 13 or 15(d)
of the Exchange Act, the Servicer may, at the sole discretion of
Funding 1, deliver to Funding 1 at a time specified by Funding 1, in
lieu of the foregoing, a report of independent accountants with
respect to each such Funding 1 Issuer in the form previously filed as
Exhibit 99.2 to the annual report on Form 20-F of such Funding 1
Issuer.
5.8 USE OF SUBCONTRACTORS
The Servicer shall promptly upon request provide the Mortgages Trustee
and/or Funding 1 and/or Funding 2 (as applicable) a written
description (in form and substance satisfactory to the Mortgages
Trustee and/or Funding 1 and/or Funding 2 (as applicable)) of the role
and function of each Subcontractor utilised by the Servicer,
specifying (a) the identity of each such Subcontractor, (b) which (if
any) of such Subcontractors are "participating in the servicing
function" within the meaning of Item 1122 of Regulation AB, and (c)
which elements of the Servicing Criteria will be addressed in
assessments of compliance provided by each Subcontractor identified
pursuant to (b) above of this Clause 5.8. As a condition to the
utilisation of any Subcontractor determined to be "participating in
the servicing function" within the meaning of Item 1122 of Regulation
AB, the Servicer shall cause any such Subcontractor used by the
Servicer for the benefit of the Mortgages Trustee to comply with the
provisions of Clause 5.6 of this Agreement to the same extent as if
such Subcontractor were the Servicer. The Servicer shall be
responsible for obtaining from each Subcontractor and delivering to
the Mortgages Trustee any assessment of compliance and attestation
required to be delivered by such Subcontractor under Clause 5.6, in
each case as and when required to be delivered.
6. NO LIABILITY
6.1 The Servicer shall have no liability for any obligation of a Borrower
under any Loan comprised in the Portfolio or any Related Security and
nothing herein shall constitute a guarantee, or similar obligation, by
the Servicer of any Loan, Mortgage or any Borrower.
6.2 Save as otherwise provided in this Agreement, the Servicer shall have
no liability for the obligations of the Mortgages Trustee or the
Beneficiaries under any of the Transaction Documents or otherwise and
nothing herein shall constitute a guarantee, or similar obligation, by
the Servicer of the Mortgages Trustee or the Beneficiaries in respect
of any of them.
7. NEW LOANS
7.1 The Portfolio may be augmented from time to time by the sale to the
Mortgages Trustee on any Sale Date of a New Portfolio by the Seller.
7.2 The sale of each New Portfolio to the Mortgages Trustee will in all
cases be subject to the terms set out in the Mortgage Sale Agreement
including, without limitation, the conditions set out in clause 4 of
the Mortgage Sale Agreement and the representations and warranties set
out in clause 8 of the Mortgage Sale Agreement.
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8. PRODUCT SWITCHING AND FURTHER ADVANCES
8.1 (a) The Servicer shall not send an offer of a Further Advance or a
Home Cash Reserve Advance without first having received
confirmation in writing from the Seller save where the Seller
and the Servicer are both Bank of Scotland that the Seller
would, if so offered by the Mortgages Trustee, purchase the
relevant Loan and its Related Security from the Mortgages
Trustee.
(b) The Servicer shall not send an offer of a Product Switch
without first having received confirmation in writing from the
Seller save where the Seller and the Servicer are both Bank of
Scotland that the Seller would, if so offered by the Mortgages
Trustee, purchase the relevant Loan and its Related Security
from the Mortgages Trustee if on the immediately preceding
Distribution Date, the Seller is in breach of the conditions
referred to in clauses 4.2(a) to (q) inclusive of the Mortgage
Sale Agreement as if references therein to NEW LOANS and NEW
PORTFOLIO were references to the Loan which would result from
the implementation of such Product Switch and as if references
to SALE DATE were references to the date when the Seller and
relevant Borrower complete such Product Switch.
(c) For the avoidance of doubt, neither the Servicer nor the
Seller shall make an offer to a Borrower for a Further
Advance, a Home Cash Reserve Advance or a Product Switch if it
would result in any Funding 1 Issuer and/or the Master Issuer
and/or Funding 1 and/or Funding 2 and/or the Mortgages Trustee
arranging or advising in respect of, administering (servicing)
or entering into a regulated mortgage contract or agreeing to
carry on any of these activities, if the relevant Funding 1
Issuer and/or the Master Issuer and/or Funding 1, Funding 2
and/or the Mortgages Trustee would be required to do so.
8.2 Subject to complying with the terms of Clause 8.1, where the Servicer
sends an offer of a Product Switch, a Further Advance or a Home Cash
Reserve Advance, the Servicer shall then notify the Seller save where
the Seller and the Servicer are both Bank of Scotland and the
Mortgages Trustee in writing.
8.3 Notwithstanding Clause 8.2, subject to complying with the terms of
Clause 8.1, the Servicer, on behalf of and as agent for the Seller may
send an offer to Borrowers for Product Switches, Further Advances and
Home Cash Reserve Advances provided that the Servicer acts in
accordance with the then applicable procedure which would be
acceptable to a Reasonable, Prudent Mortgage Lender.
8.4 For the avoidance of doubt, where the Servicer sends any offer
contemplated by this Clause 8, it shall do so pursuant to its
appointment under this Agreement.
9. REDEMPTION OF MORTGAGES
9.1 Upon repayment in full of all sums secured by a Mortgage and/or other
Related Security comprised in the Portfolio, the Servicer shall, and
is hereby authorised by the Mortgages Trustee and the Beneficiaries to
execute a receipt or discharge or relevant Land Registry Form DS1 of
the Mortgage and any such other or further instrument or deed of
satisfaction regarding such Mortgage and/or the Related Security as it
considers to be necessary or advisable, to implement an Electronic
Notification of Discharge to the Land Registry and to release the
relevant Title Deeds to the person or persons entitled thereto.
9.2 The Servicer undertakes that prior to any actual release by it of the
relevant Title Deeds it will take reasonable and appropriate steps to
satisfy itself that the relevant Title Deeds are being released to the
person or persons entitled thereto.
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9.3 The Servicer shall procure that if, upon completion of the Enforcement
Procedures, an amount in excess of all sums due by the relevant
Borrower is recovered or received, the balance, after discharge of all
sums due by the Borrower, is paid to the person or persons next
entitled thereto.
10. POWERS OF ATTORNEY
10.1 For good and valuable consideration and as security for the interests
of the Mortgages Trustee and the Beneficiaries hereunder, each of the
Seller, the Mortgages Trustee and the Beneficiaries hereby appoints
the Servicer as its attorney on its behalf, and in its own or the
attorney's name, for the following purposes:
(a) executing all documents necessary for the purpose of
discharging a Mortgage comprised in the Portfolio which has
been repaid in full and any Related Security or for the sale
of a Property as Mortgagee;
(b) executing all documents and implementing all Electronic
Notifications of Discharge to the Land Registry necessary for
the purpose of releasing a Borrower in accordance with Clause
9;
(c) executing all documents and doing all such acts and things
which in the reasonable opinion of the Servicer are necessary
or desirable for the efficient provision of the Services
hereunder; and
(d) exercising its rights, powers and discretion under the
Mortgages including the right to fix the Mortgages Trustee
Variable Base Rate and the Mortgages Trustee Tracker Rate or
any related rights,
provided that, for the avoidance of doubt, these Powers of Attorney
shall not authorise the Servicer to sell any of the Loans and/or their
Related Security comprised in the Portfolio except as specifically
authorised in the Transaction Documents. For the avoidance of doubt,
none of the Seller (where the Servicer is not Bank of Scotland), the
Mortgages Trustee, Funding 1 nor Funding 2 shall be liable or
responsible for the acts of the Servicer or any failure by the
Servicer to act under or in respect of these Powers of Attorney.
10.2 The appointments contained in Clause 10.1 shall be irrevocable unless
and until following a Servicer Termination Event the Mortgages Trustee
and/or Funding 1 and/or Funding 2 and/or the Funding 1 Security
Trustee and/or the Funding 2 Security Trustee serve notice pursuant to
Clause 21 to terminate the Servicer's appointment under this Agreement
upon which the appointments contained in Clause 10.1 shall be
automatically revoked.
11. COSTS AND EXPENSES
11.1 The Mortgages Trustee (on behalf of the Beneficiaries) will on each
Distribution Date reimburse, in accordance with Clause 10.2 of the
Mortgages Trust Deed, the Servicer for all out-of-pocket costs,
expenses and charges (together with any amounts in respect of
Irrecoverable VAT due thereon) properly incurred by the Servicer in
the performance of the Services including any such costs, expenses or
charges not reimbursed to the Servicer on any previous Distribution
Date and the Servicer shall supply the Mortgages Trustee with a copy
of an appropriate VAT invoice issued by the person making the supply.
11.2 The Servicer will use reasonable endeavours to recover from the
relevant Borrowers all costs and expenses incurred by the Servicer
which are properly recoverable from those Borrowers under the relevant
Mortgage Conditions.
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12. INFORMATION
12.1 MAINTENANCE OF RECORDS
(a) Subject to Clause 18, the Servicer shall keep the Customer Files
relating to the Portfolio in safe custody and shall take appropriate
technical and organisational measures against the unauthorised or
unlawful processing of personal data and against accidental loss or
destruction of, or damage to, personal data. The Servicer shall
maintain in an adequate form such records as are necessary to enforce
each Mortgage comprised in the Portfolio and, where relevant, any
other Related Security.
(b) A duplicate of any computer records held by the Servicer which
contains information relating to the Loans and the Related Security
shall be lodged by the Servicer on a daily basis at the offices of the
Seller at the Pudsey Data Centre or at such other locations selected
by the Servicer, so long as such location is a location separate from
that in which the original computer records are stored and in an
environment conducive to the safe storage of electronic media, such
records to be held to the order of the Mortgages Trustee and to be
replaced by a revised duplicate as and when the original records are
revised. The Servicer shall keep the Mortgages Trustee informed of the
location of the Customer Files and duplicate computer records.
12.2 USE OF I.T. SYSTEMS
(a) The Servicer covenants that at the date hereof in respect of the
software which is used by the Servicer in providing the Services, it
shall for the duration of this Agreement:
(i) ensure that it has in place all necessary licences and/or
consents from the respective licensor or licensors (if any) of
such software; and
(ii) except in so far as it would breach any other of its legal
obligations, grant to any person to whom it may sub-contract
or delegate the performance of all or any of its powers and
obligations under this Agreement and/or to such person as the
Mortgages Trustee and the Beneficiaries elect as a substitute
servicer in accordance with the terms of this Agreement a
licence to use any proprietary software together with any
updates which may be made thereto from time to time.
(b) The Servicer shall use reasonable endeavours to maintain in working
order the information technology systems used by the Servicer in
providing the Services.
(c) The Servicer shall pass to any person to whom it may sub-contract or
delegate the performance of all or any of its powers and obligations
under this Agreement and/or to such person as the Mortgages Trustee
and the Beneficiaries elect as a substitute servicer in accordance
with the terms of this Agreement the benefit of any warranties in
relation to the software insofar as the same are capable of
assignment.
12.3 ACCESS TO BOOKS AND RECORDS
Subject to all applicable laws, the Servicer shall permit the
Mortgages Trustee and/or Funding 1 and Funding 2 (and their respective
auditors) and/or the Funding 1 Security Trustee and/or the Funding 2
Security Trustee and any other person nominated by the Beneficiaries
(to whom the Servicer has no reasonable objection) upon reasonable
notice during normal office hours to have access, or procure that such
person or persons are granted access, to all books of record and
account (including, for the avoidance of doubt, the Title Deeds and
Customer Files) relating to the administration of the Loans and their
Related Security comprised in the Portfolio and related matters in
accordance with this Agreement.
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12.4 INFORMATION COVENANTS
(a) The Servicer shall, within ten (10) Business Days following each
Distribution Date, provide the Mortgages Trustee, the Beneficiaries,
each Manager and/or Dealer (if requested by such Manager or Dealer to
do so) and the Rating Agencies (on the terms agreed with each of the
Rating Agencies), monthly with a report in, or substantially in, the
form set out in Schedule 2 and shall assist the Cash Manager in the
production of quarterly reports substantially in the forms set out in
Schedule 3 and Schedule 4 of the Cash Management Agreement.
(b) The Servicer shall notify the Rating Agencies in writing of the
details of (i) any material amendment to the Transaction Documents,
(ii) any proposed material change in the valuation procedures or
policies applied or to be applied in relation to Properties by it in
connection with its mortgage business (details of which change may be
included in a report provided under paragraph (a)) and (iii) any other
information relating to its mortgage business and financial condition
as the Rating Agencies may reasonably request in connection with the
ratings of the Notes and other matters contemplated by the Transaction
Documents, provided that such request does not adversely interfere
with the Servicer's day to day provision of the Services under the
other terms of this Agreement.
(c) The Servicer shall, at the request of Funding 1, Funding 2, the
Funding 1 Security Trustee and the Funding 2 Security Trustee (where
the Servicer is the Seller) or at the request of the Beneficiaries
(where the Servicer is no longer the Seller), furnish Funding 1,
Funding 2, the Funding 1 Security Trustee, the Funding 2 Security
Trustee and/or the Beneficiaries (as appropriate) and the Rating
Agencies with such other information relating to its business and
financial condition as it may be reasonable for Funding 1, Funding 2,
the Funding 1 Security Trustee, the Funding 2 Security Trustee and/or
the Beneficiaries (as appropriate) to request in connection with the
ratings of the Notes and other matters contemplated by the Transaction
Documents, provided that Funding 1, Funding 2, the Funding 1 Security
Trustee, the Funding 2 Security Trustee or the Beneficiaries (as
appropriate) shall not make such a request more than once every three
months unless, in the belief of Funding 1, Funding 2, the Funding 1
Security Trustee, the Funding 2 Security Trustee or the Beneficiaries
(as appropriate) an Intercompany Loan Event of Default or a Master
Intercompany Loan Event of Default (as appropriate) or a Servicer
Termination Event shall have occurred and is continuing or may
reasonably be expected to occur.
(d) The Servicer shall make available to beneficial owners of the Notes,
who have provided beneficial ownership certification as described
herein, on a monthly basis a report containing information about the
Loans in the Mortgages Trust.
13. REMUNERATION
The Mortgages Trustee (on behalf of the Beneficiaries) shall pay to
the Servicer for its Services hereunder an administration fee (the
ADMINISTRATION FEE) (inclusive of VAT) which:
(a) shall be calculated in relation to each Calculation Period on
the basis of the number of days elapsed and a 365 day year at
the rate of 0.05% per annum, inclusive of VAT, on the
aggregate amount of the Trust Property as at open of business
on the preceding Calculation Date, provided that where the
appointment of the Servicer is terminated pursuant to Clause
21 and a substitute servicer is to be appointed, the
Administration Fee may be calculated on different terms agreed
with such substitute servicer; and
(b) shall be paid to the Servicer in arrear on each Distribution
Date in the manner contemplated by and in accordance with the
provisions of Clause 10.2 of the Mortgages Trust Deed.
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14. INSURANCES
14.1 The Servicer will administer the arrangements for insurance to which
the Mortgages Trustee is a party or in which either the Seller or the
Mortgages Trustee (on behalf of the Beneficiaries) has an interest and
which relate to the Loans and the Mortgages comprised in the Portfolio
or the business of the Mortgages Trustee. In particular, but without
limitation, the Servicer shall promptly notify the Mortgages Trustee,
the Beneficiaries, the Funding 1 Security Trustee and the Funding 2
Security Trustee of the existence of any insurance policies to which
the Seller is a party or in which it has an interest in addition to
those specifically referred to in the definition of "HALIFAX INSURANCE
POLICIES" in the Master Definitions and Construction Schedule.
14.2 The Servicer shall use its reasonable endeavours to credit to the
Mortgages Trustee GIC Account all proceeds received from any claim
made under any Insurance Policy in relation to any Loan or its Related
Security by close of business on the London Business Day which
immediately follows the day on which such amounts are received or
credited by the Servicer and which is to be applied either in whole or
in part in repayment of a Loan.
15. HALIFAX INSURANCE POLICIES
15.1 The Servicer shall not knowingly take or omit to take any action which
would:
(a) result in the avoidance or termination of any of the Halifax
Insurance Policies in relation to any Loans and Mortgages to
which any Halifax Insurance Policy applies; or
(b) reduce the amount payable on any claim made on behalf of the
Mortgages Trustee (as trustee for the Beneficiaries) under any
Halifax Insurance Policy; or
(c) invalidate any Halifax Insurance Policy.
15.2 The Servicer shall prepare and submit any claim under the Halifax
Insurance Policies in accordance with the requirements of the relevant
Halifax Insurance Policy and otherwise with the usual procedures
undertaken by a Reasonable, Prudent Mortgage Lender on behalf of the
Mortgages Trustee and the Beneficiaries and shall comply with the
other requirements of the insurer under the relevant Halifax Insurance
Policy.
15.3 If the Seller's Policy requires the Servicer to make a claim under the
relevant MIG Policy and the Servicer has failed to make such a claim,
then the Beneficiaries may direct the Mortgages Trustee on their
behalf to direct the Servicer to make a claim or, in default thereof
by the Servicer, the Beneficiaries may direct the Mortgages Trustee to
itself make a claim under such policy and the Servicer shall, within
ten London Business Days of receiving a written request from the
Mortgages Trustee (as trustee for the Beneficiaries), provide the
Mortgages Trustee with such information as the Mortgages Trustee may
require to enable it to make a claim under the relevant MIG Policy.
16. BUILDINGS POLICIES
16.1 The Servicer shall not knowingly take any action or omit to take any
action which would result in the avoidance or termination of any
applicable Buildings Policy or would reduce the amount payable on any
claim thereunder.
16.2 Upon receipt of notice that any Borrower whose Loan is secured by a
mortgage of or a standard security over a leasehold Property including
a Property in Scotland held under a long lease has failed to make a
payment when due of any sums due under the relevant lease in respect
of the insurance of the property the Servicer may debit that
Borrower's account with the relevant amount which shall
18
then be paid to the landlord or to the relevant insurance company
together with notice to the landlord.
16.3 If the Servicer becomes aware that a Borrower has failed to pay
premiums due under any Buildings Policy, the Servicer shall take such
action as would a Reasonable, Prudent Mortgage Lender with a view to
ensuring that the relevant Property continues to be insured in
accordance with the applicable Mortgage Terms or the Alternative
Insurance Recommendations.
17. TITLE DEEDS AND CUSTOMER FILES
17.1 The Servicer shall keep the Title Deeds, Customer Files and (where
applicable) Insurance Policies and the receipt of notes of assignment
relating to the Portfolio in safe custody and shall not without the
prior written consent of the Mortgages Trustee and the Beneficiaries
part with possession, custody or control of them otherwise than to a
sub-contractor or delegate appointed pursuant to Clause 3.2 or to a
solicitor, licensed conveyancer, qualified conveyancer or authorised
practitioner, subject to the usual undertaking to hold them to the
order of the Servicer (who in turn will hold them to the order of the
Mortgages Trustee (as trustee for the Beneficiaries) or in the case of
Scottish Loans, to the order of the Seller, in its capacity as trustee
for the Mortgages Trustee (as trustee for the Beneficiaries) or to the
Land Registry or Registers of Scotland or, upon redemption of the
relevant Loan, to the order of the Borrower).
17.2 The Title Deeds and Customer Files relating to the Portfolio shall be
kept in such manner so that a computer record is maintained of their
location and they are identifiable and retrievable by reference to an
account number and pool identifier and identifiable and
distinguishable from the title deeds relating to other properties and
mortgages and standard securities in respect of which the Servicer is
mortgagee or heritable creditor or servicer. In the event of receipt
by the Servicer of notice that the short-term, unsecured,
unsubordinated and unguaranteed debt of the Servicer is rated less
than A-1 by S&P and P-1 by ▇▇▇▇▇'▇ and F1 by Fitch, the Servicer shall
use reasonable endeavours to ensure that the Title Deeds are
identified as distinct from the title deeds of other properties and
mortgages and standard securities which do not form part of the
Portfolio.
17.3 The Servicer shall provide access or procure that access is provided
to the Title Deeds, Customer Files and other records relating to the
administration of the Loans and Mortgages in the Portfolio to the
Mortgages Trustee, the Beneficiaries, the Funding 1 Security Trustee,
the Funding 2 Security Trustee and their respective agents at all
reasonable times and upon reasonable written notice. The Servicer
acknowledges that the Title Deeds and Customer Files relating to the
Portfolio in its possession, custody or control will be held to the
order of the Mortgages Trustee (as trustee for the Beneficiaries) or
in the case of Scottish Loans, to the order of the Seller, in its
capacity as trustee for the Mortgages Trustee (as trustee for the
Beneficiaries), and that it has, in its capacity as Servicer, no
beneficial interest therein and the Servicer (in its capacity as such
but not in its capacity as a Beneficiary) irrevocably waives any
rights or any Security Interest which it might have therein or to
which it might at any time be entitled.
17.4 The Servicer shall, forthwith on the termination of the appointment of
the Servicer pursuant to Clause 21, deliver the Title Deeds and
Customer Files in its possession, custody or control or that of its
sub-contractors or agents to or to the order of the Mortgages Trustee
or to such person as the Mortgages Trustee elects as a substitute
servicer in accordance with the terms of this Agreement upon written
request by the Mortgages Trustee made at any time on or after notice
of, or on or after, termination of the appointment of the Servicer
pursuant to Clause 21.
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17.5 The Servicer undertakes that it will use all reasonable efforts to
obtain as soon as reasonably practicable:
(a) the title number to each Property in respect of which a
Mortgage is registered at the Land Registry to the extent that
such title number does not appear in the Exhibit to the
Mortgage Sale Agreement (or, as the case may be, the Schedule
to the relevant New Portfolio Notice); and
(b) the title number to each Property in respect of which a
Mortgage is registered in the Land Register of Scotland to the
extent that such title number does not appear in the Schedule
to the relevant New Portfolio Notice.
18. DATA PROTECTION
18.1 The Servicer and the Mortgages Trustee each represents that as at the
date hereof it has and hereafter it will maintain all appropriate
registrations, licences, consents and authorities (if any) required
under the Data Protection ▇▇▇ ▇▇▇▇ together, with its ancillary
legislation (the DATA PROTECTION ACT) to enable it to perform its
respective obligations under this Agreement. In addition to the
foregoing and notwithstanding any of the other provisions of this
Agreement, each of the Servicer and the Mortgages Trustee hereby agree
and covenant as follows:
(a) that only data that is not "personal data" (as defined in the
Data Protection Act) may be transferred by the Servicer to the
Mortgages Trustee or any other entity located in Jersey
(unless: (i) Jersey is determined, on the basis of Article
25(b) of Directive 95/46/EC, a third country which ensures an
adequate level of protection of "personal data" by the
European Commission or (ii) the Servicer and the Mortgages
Trustee have entered into a data transfer agreement in a form
approved by the EC Commission as meeting the requirements of
Article 26(2) of Directive 95/46/EC for the transfer of
personal data to third countries which do not ensure an
adequate level of protection (the STANDARD CONTRACTUAL
CLAUSES) in which case, subject to Clause 18.1(e), the
Servicer may transfer such personal data to the Mortgages
Trustee in Jersey);
(b) that if, at the date at which circumstances enable the
Mortgages Trustee to exercise its right to demand that the
Servicer transfer inter alia personal data to the Mortgages
Trustee, (i) Jersey has been determined, on the basis of
Article 25(b) of Directive 95/46/EC a third country which
ensures an adequate level of protection of personal data by
the European Commission or (ii) the Servicer and the Mortgages
Trustee have entered into the Standard Contractual Clauses
then, subject to the Clause 18.1(e), the Servicer shall
transfer the relevant personal data to the Mortgages Trustee
or to its order;
(c) that the Servicer will, if the Mortgages Trustee requires the
Servicer to do so, take all reasonable steps to notify each
Borrower that the Mortgages Trustee is a "data controller" (as
defined in the Data Protection Act) and provide each such
Borrower with such details as the Mortgage Trustee shall
reasonably request including but not limited to the Mortgages
Trustee's contact details for the purposes of the Data
Protection Act;
(d) that the Servicer and the Mortgages Trustee will only use any
data in relation to the Loans and the related Borrowers for
the purposes of administering and/or managing the Portfolio,
and will not sell such data to any third party or allow any
third party to use such data other than in compliance with the
Data Protection Act, the conditions stated in this Clause 18
and for the sole purpose of administering and/or managing the
Portfolio;
(e) that the Mortgages Trustee will comply with the provisions of
the Data Protection (Jersey) Law 2005 (as amended) or any law
which supersedes or replaces the Data Protection
20
(Jersey) Law 2005 and (so long as the provisions of the Data
Protection Act do not conflict with the provisions of the Data
Protection (Jersey) Law 2005 (as amended) or any law which
supersedes or replaces the Data Protection (Jersey) Law 2005)
with the provisions of the Data Protection Act; and
(f) that the Mortgages Trustee shall maintain a written record of
its reasons for applying the Data Protection Order 2000/185
(as set forth under the Conditions under paragraph 3 of Part
II of Schedule I of the Data Protection Act).
18.2 The Servicer will use all reasonable endeavours to ensure that, in the
event of the appointment of a sub-contractor in accordance with Clause
3.2 such sub-contractor shall obtain and maintain all appropriate
registrations, licences, consents and authorities required (including,
without limitation, those required under the Data Protection Act), and
comply with obligations equivalent to those imposed on the Servicer in
this Clause 18, to enable it to perform its obligations.
19. COVENANTS OF SERVICER
19.1 The Servicer hereby covenants with and undertakes to each of the
Mortgages Trustee, the Beneficiaries, the Funding 1 Security Trustee
and the Funding 2 Security Trustee that without prejudice to any of
its specific obligations hereunder it will:
(a) administer the Loans and their Related Security as if the same
had not been sold to the Mortgages Trustee but had remained on
the books of the Seller;
(b) provide the Services in such manner and with the same level of
skill, care and diligence as would a Reasonable, Prudent
Mortgage Lender;
(c) comply with any proper directions, orders and instructions
which the Mortgages Trustee or the Beneficiaries may from time
to time give to it in accordance with the provisions of this
Agreement and, in the event of any conflict, those of the
Mortgages Trustee shall prevail;
(d) keep in force all licences, approvals, authorisations,
permissions and consents which may be necessary in connection
with the performance of the Services and prepare and submit on
a timely basis all necessary applications and requests for any
further approval, authorisation, consent, registration or
licence required in connection with the performance of the
Services and in particular any necessary registrations under
the Data Protection Act;
(e) save as otherwise agreed with the Mortgages Trustee and each
of the Beneficiaries, provide free of charge to the Mortgages
Trustee and the Beneficiaries, office space, facilities,
equipment and staff sufficient to fulfil the obligations of
the Mortgages Trustee and the Beneficiaries under this
Agreement;
(f) not knowingly fail to comply with any legal requirements in
the performance of the Services, including without limitation
any rules of the FSA in MCOB, ICOB or otherwise;
(g) make all payments required to be made by it pursuant to this
Agreement on the due date for payment thereof in sterling (or
as otherwise required under the Transaction Documents) in
immediately available funds for value on such day without
set-off (including, without limitation, in respect of any fees
owed to it) or counterclaim but subject to any deductions
required by law;
(h) not without the prior written consent of the Funding Security
Trustees amend or terminate any of the Transaction Documents
save in accordance with their terms; and
21
(i) forthwith upon becoming aware of any event which may
reasonably give rise to an obligation of the Seller to
repurchase any Loan pursuant to the Mortgage Sale Agreement,
notify the Mortgages Trustee and the Beneficiaries in writing
of such event.
19.2 The covenants of the Servicer in Clause 19.1 shall remain in force
until this Agreement is terminated but without prejudice to any right
or remedy of the Mortgages Trustee and/or the Seller and/or Funding 1
and/or Funding 2 and/or the Funding 1 Security Trustee and/or the
Funding 2 Security Trustee arising from breach of any such covenant
prior to the date of termination of this Agreement.
20. SERVICES NON-EXCLUSIVE
Nothing in this Agreement shall prevent the Servicer from rendering or
performing services similar to those provided for in this Agreement to
or for itself or other persons, firms or companies or from carrying on
business similar to or in competition with the business of the
Mortgages Trustee and the Beneficiaries.
21. TERMINATION
21.1 If any of the following events (SERVICER TERMINATION EVENTS) shall
occur:
(a) default is made by the Servicer in the payment on the due date
of any payment due and payable by it under this Agreement and
such default continues unremedied for a period of five London
Business Days after the earlier of the Servicer becoming aware
of such default and receipt by the Servicer of written notice
from Funding 1, Funding 2, the Funding 1 Security Trustee, the
Funding 2 Security Trustee and/or the Mortgages Trustee
requiring the same to be remedied; or
(b) default is made by the Servicer in the performance or
observance of any of its other covenants and obligations under
this Agreement, which in the reasonable opinion of either:
(i) the Funding 1 Security Trustee is materially
prejudicial to the interests of Funding 1 and/or the
Funding 1 Issuers under the Intercompany Loans and/or
the interests of the holders of the Notes issued by a
Funding 1 Issuer from time to time; and/or
(ii) the Funding 2 Security Trustee is materially
prejudicial to the interests of Funding 2 and/or the
Master Issuer under the Master Intercompany Loan
and/or any other Funding 2 Issuer under any New
Intercompany Loan and/or the interests of the holders
of the Notes issued by the Master Issuer or any other
Funding 2 Issuer from time to time,
and (in either case) such default continues unremedied for a
period of 20 London Business Days after becoming aware of such
default provided however that where the relevant default
occurs as a result of a default by any person to whom the
Servicer has sub-contracted or delegated part of its
obligations hereunder, such default shall not constitute a
Servicer Termination Event if, within such period of ten
London Business Days of receipt of such notice from Funding 1,
Funding 2, the Funding 1 Security Trustee and the Funding 2
Security Trustee, the Servicer terminates the relevant
sub-contracting or delegation arrangements and takes such
steps as Funding 1, Funding 2, the Funding 1 Security Trustee
and the Funding 2 Security Trustee may in their absolute
discretion specify to remedy such default or to indemnify the
Mortgages Trustee and the Beneficiaries against the
consequences of such default; or
(c) the occurrence of an Insolvency Event in relation to the
Servicer; or
22
(d) Funding 1 and Funding 2 are of the opinion, after due
consideration and acting reasonably, that the appointment of
the Servicer should be terminated,
then the Mortgages Trustee and/or Funding 1, Funding 2, the Funding 1
Security Trustee and the Funding 2 Security Trustee may at once or at
any time thereafter while such default continues by notice in writing
to the Servicer terminate its appointment as Servicer under this
Agreement with effect from a date (not earlier than the date of the
notice) specified in the notice. Upon termination of the Servicer as
servicer under this Agreement, the Funding 1 Security Trustee and the
Funding 2 Security Trustee shall use their reasonable endeavours to
appoint a substitute servicer that satisfies the conditions set forth
in Clauses 21.2(c), (d) and (e).
21.2 The appointment of the Servicer under this Agreement may be terminated
upon the expiry of not less than 12 months' notice of termination
given by the Servicer to the Mortgages Trustee, the Beneficiaries, the
Funding 1 Security Trustee and the Funding 2 Security Trustee provided
that:
(a) the Mortgages Trustee and the Beneficiaries consent in writing
to such termination;
(b) a substitute servicer shall be appointed, such appointment to
be effective not later than the date of such termination and
the Servicer shall notify the Rating Agencies in writing of
the identity of such substitute servicer;
(c) such substitute servicer has experience of administering
mortgages of and standard securities over residential property
in the United Kingdom and is approved by the Mortgages Trustee
and the Beneficiaries;
(d) such substitute servicer enters into an agreement
substantially on the same terms as the relevant provisions of
this Agreement and the Servicer shall not be released from its
obligations under the relevant provisions of this Agreement
until such substitute servicer has entered into such new
agreement; and
(e) the then current ratings (if any) of the Notes are not
adversely affected as a result thereof, unless otherwise
agreed by an Extraordinary Resolution of the holders of the
relevant series and class of Notes.
21.3 On and after termination of the appointment of the Servicer under this
Agreement pursuant to this Clause 21, all authority and power of the
Servicer under this Agreement shall be terminated and be of no further
effect and the Servicer shall not thereafter hold itself out in any
way as the agent of the Mortgages Trustee and/or the Beneficiaries
pursuant to this Agreement.
21.4 Upon termination of the appointment of the Servicer under this
Agreement pursuant to this Clause 21 (but subject to Clause 18.1(e)),
the Servicer shall:
(a) forthwith deliver (and in the meantime hold on trust for, and
to the order of, the Mortgages Trustee) to the Mortgages
Trustee or as it shall direct the Customer Files, the Title
Deeds, all books of account, papers, records, registers,
correspondence and documents in its possession or under its
control relating to the affairs of or belonging to the
Mortgages Trustee (as trustee for the Beneficiaries) and the
Mortgages in the Portfolio and any other Related Security, (if
practicable, on the date of receipt) any monies then held by
the Servicer on behalf of the Mortgages Trustee and any other
assets of the Mortgages Trustee and the Beneficiaries;
(b) take such further action as the Mortgages Trustee, Funding 1,
Funding 2, the Funding 1 Security Trustee and the Funding 2
Security Trustee may reasonably direct at the expense of the
Beneficiaries (including in relation to the appointment of a
substitute servicer) provided
23
that the Mortgages Trustee shall not be required to take or
direct to be taken such further action unless it has been
indemnified to its satisfaction;
(c) provide all relevant information contained on computer records
in the form of magnetic tape, together with details of the
layout of the files encoded on such magnetic tapes;
(d) co-operate and consult with and assist the Mortgages Trustee,
Funding 1, Funding 2, the Funding 1 Security Trustee the
Funding 2 Security Trustee and their respective nominees
(which shall, for the avoidance of doubt, include any new
servicer appointed by any of them) for the purposes of
explaining the file layouts and the format of the magnetic
tapes generally containing such computer records on the
computer system of the Mortgages Trustee or such nominee; and
(e) permit the Mortgages Trustee, Funding 1, Funding 2, the
Funding 1 Security Trustee and the Funding 2 Security Trustee
upon request to have access at reasonable times to the Halifax
Insurance Policies.
21.5 The Servicer shall deliver to the Mortgages Trustee and the
Beneficiaries as soon as reasonably practicable but in any event
within five days of becoming aware thereof a notice of any Servicer
Termination Event or any event which with the giving of notice or
lapse of time or certification would constitute the same. Such
notification shall specify which event in Clause 21 has occurred and
was the cause of such Servicer Termination Event (or any event which
the giving of notice or lapse of time or certification would
constitute a Servicer Termination Event), a description of the details
of such Servicer Termination Event, and, if relevant, a reference to
the provision in this Agreement or the other Transaction Documents
which the Servicer has breached.
21.6 Termination of this Agreement or the appointment of the Servicer under
this Agreement shall be without prejudice to the liabilities of the
Mortgages Trustee and the Beneficiaries to the Servicer or vice versa
incurred before the date of such termination. The Servicer shall have
no right of set-off or any lien in respect of such amounts against
amounts held by it on behalf of the Mortgages Trustee.
21.7 This Agreement shall terminate at such time as Funding 1 and Funding 2
have no further interest in any of the Loans or the Mortgages which
have been comprised in the Portfolio.
21.8 On termination of the appointment of the Servicer under the provisions
of this Clause 21, the Servicer shall be entitled to receive all fees
and other monies accrued up to the date of termination but shall not
be entitled to any other or further compensation. Such monies so
receivable by the Servicer shall be paid by the Mortgages Trustee on
the dates on which they would otherwise have fallen due hereunder. For
the avoidance of doubt, such termination shall not affect the
Servicer's rights to receive payment of all amounts (if any) due to it
from the Mortgages Trustee other than under this Agreement.
21.9 Prior to termination of this Agreement, the Servicer, the Seller, the
Mortgages Trustee, the Funding 1 Security Trustee, the Funding 2
Security Trustee, Funding 1 and Funding 2 shall each co-operate to
obtain the agreement of the Borrowers to a new bank mandate permitting
the Mortgages Trustee to operate the Direct Debiting Scheme.
21.10 Any provision of this Agreement which is stated to continue after
termination of the Agreement shall remain in full force and effect
notwithstanding termination.
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22. FURTHER ASSURANCE
22.1 The parties hereto 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 Agreement.
22.2 Without prejudice to the generality of Clause 22.1, the Mortgages
Trustee and the Beneficiaries shall upon request by the Servicer
forthwith give to the Servicer such further powers of attorney or
other written authorisations, mandates or instruments as are necessary
to enable the Servicer to perform the Services.
22.3 In the event that there is any change in the identity of the Mortgages
Trustee or an additional Mortgages Trustee is appointed, the remaining
Mortgages Trustee and/or the retiring Mortgages Trustee, as the case
may be, shall execute such documents with any other parties to this
Agreement and take such actions as such new Mortgages Trustee may
reasonably require for the purposes of vesting in such new Mortgages
Trustee the rights of the Mortgages Trustee under this Agreement and
releasing the retiring Mortgages Trustee from further obligations
thereunder and while any Note remains outstanding shall give notice
thereof to the Rating Agencies.
22.4 Nothing herein contained shall impose any obligation or liability on
the Mortgages Trustee to assume or perform any of the obligations of
the Servicer hereunder or render it liable for any breach thereof.
23. MISCELLANEOUS
23.1 Subject to Clause 23.2, in the event that the funds available to the
Mortgages Trustee on any Distribution Date are not sufficient to
satisfy in full the aggregate amount payable to the Servicer by the
Mortgages Trustee on such Distribution Date then the amount payable to
the Servicer on such Distribution Date shall be reduced by the amount
of the shortfall and such shortfall shall (subject always to the
provisions of this Clause 23) be payable on the immediately succeeding
Distribution Date.
23.2 In the event that:
(a) after redemption in full of the Intercompany Loans and the
Master Intercompany Loan; or
(b) after service of an Intercompany Loan Acceleration Notice
and/or Master Intercompany Loan Acceleration Notice and
payment of all other prior claims,
the remaining sums available to the Mortgages Trustee or remaining
proceeds of enforcement are insufficient to satisfy in full the
outstanding fees or other claims of the Servicer, such fees shall be
reduced by the amount of the deficiency.
23.3 Each of the Seller and the Servicer agrees that it will not:
(a) set off or purport to set off any amount which the Mortgages
Trustee, Funding 1, Funding 2, any Funding 1 Issuer or the
Master Issuer is or will become obliged to pay to it under any
of the Transaction Documents against any amount from time to
time standing to the credit of or to be credited to the
Mortgages Trustee GIC Account, the Funding 1 GIC Account, the
Funding 1 Transaction Account, the Funding 2 GIC Account, the
Funding 2 Transaction Account, any Funding 1 Issuer Account or
any Master Issuer Account or in any other account prior to
transfer to the Mortgages Trustee GIC Account, the Funding 1
GIC Account, the Funding 1 Transaction Account, the Funding 2
GIC Account, the Funding 2
25
Transaction Account, any Funding 1 Issuer Account or any
Master Issuer Account, as appropriate; or
(b) make or exercise any claims or demands, any rights of
counterclaim or any other equities against or withhold payment
of any and all sums of money which may at any time and from
time to time be standing to the credit of the Mortgages
Trustee GIC Account, the Funding 1 GIC Account, the Funding 1
Transaction Account, the Funding 2 GIC Account, the Funding 2
Transaction Account, any Funding 1 Issuer Account or any
Master Issuer Account.
23.4 The Servicer agrees that for so long as any Notes are outstanding it
will not petition nor commence proceedings for the administration or
winding up of the Mortgages Trustee, Funding 1, Funding 2, any Funding
1 Issuer or the Master Issuer nor participate in any ex parte
proceedings with regard thereto.
23.5 In relation to all sums due and payable by the Mortgages Trustee to
the Servicer, the Servicer agrees that it shall have recourse only to
sums paid to or received by (or on behalf of) the Mortgages Trustee
pursuant to the provisions of the Mortgage Sale Agreement, the other
Transaction Documents and in relation to the Mortgages.
23.6 For the avoidance of doubt, neither Beneficiary shall be liable to pay
any amounts due under Clauses 11 and 13 without prejudice to the
obligations of the Mortgages Trustee in respect of such amounts.
23.7 Notwithstanding any other provisions of this Agreement, all
obligations to, and rights of (a) Funding 1 under or in connection
with this Agreement (other than its obligations under Clause 24) shall
automatically terminate upon the discharge in full of all amounts
owing by it under any Intercompany Loan Agreement and (b) Funding 2
under or in connection with this Agreement (other than its obligations
under Clause 24) shall automatically terminate upon the discharge in
full of all amounts owing by it under the Master Intercompany Loan
Agreement and, provided that this shall be without prejudice to any
claims in respect of such obligations and rights arising on or prior
to such date.
24. CONFIDENTIALITY
During the continuance of this Agreement or after its termination,
each of the Mortgages Trustee and the Beneficiaries shall use its best
endeavours not to disclose to any person, firm or company whatsoever
any information relating to the business, finances or other matters of
a confidential nature of any other party hereto of which it may
exclusively by virtue of being party to the Transaction Documents have
become possessed and shall use all reasonable endeavours to prevent
any such disclosure as aforesaid, provided however that the provisions
of this Clause 24 shall not apply:
(a) to any information already known to the Mortgages Trustee or
the Beneficiaries otherwise than as a result of entering into
any of the Transaction Documents;
(b) to any information subsequently received by the Mortgages
Trustee or the Beneficiaries which it would otherwise be free
to disclose;
(c) to any information which is or becomes public knowledge
otherwise than as a result of the conduct of the Mortgages
Trustee or the Beneficiaries;
(d) to any extent that the Mortgages Trustee or the Beneficiaries
is required to disclose the same pursuant to any law or order
of any court or pursuant to any direction, request or
requirement
26
(whether or not having the force of law) of any central bank
or any governmental or other authority (including, without
limitation, any official bank examiners or regulators);
(e) to the extent that the Mortgages Trustee or the Beneficiaries
needs to disclose the same for determining the existence of,
or declaring, an Intercompany Loan Event of Default, a Master
Intercompany Loan Event of Default or a Servicer Termination
Event, the protection or enforcement of any of its rights
under any of the Transaction Documents or in connection
herewith or therewith or for the purpose of discharging, in
such manner as it thinks fit, its duties under or in
connection with such agreements in each case to such persons
as require to be informed of such information for such
purposes; or
(f) in relation to any information disclosed to the professional
advisers of the Mortgages Trustee or the Beneficiaries or (in
connection with the review of current ratings of the Notes or
with a prospective rating of any debt to be issued by any
Funding 1 Issuer or the Master Issuer) to any credit rating
agency or any prospective new Servicer or Mortgages Trustee.
25. NOTICES
Any notices to be given pursuant to this Agreement to any of the
parties hereto shall be sufficiently served if sent by prepaid first
class post, by hand or facsimile transmission and shall be deemed to
be given (in the case of facsimile transmission) when despatched,
(where delivered by hand) on the day of delivery if delivered before
5.00 p.m. 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 Servicer: to Bank of Scotland plc, Halifax
Division, Level 3, Lovell Park, ▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ (facsimile number ▇▇▇ (▇) ▇▇▇ ▇▇▇ ▇▇▇▇) for the attention
of Mortgage Securitisation Manager with a copy to Bank of
Scotland plc, Treasury Division, ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ (facsimile number ▇▇▇ (▇)▇▇ ▇▇▇▇ ▇▇▇▇) for the
attention of Head of Mortgage Securitisation and Covered
Bonds;
(b) in the case of the Mortgages Trustee: to Permanent Mortgages
Trustee Limited, ▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
(facsimile number ▇▇▇ (▇) ▇▇▇▇ ▇▇▇▇▇▇) for the attention of
the Secretary; with a copy to Bank of Scotland plc, Treasury
Division, ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (facsimile
number ▇▇▇ (▇)▇▇ ▇▇▇▇ ▇▇▇▇) for the attention of Head of
Mortgage Securitisation and Covered Bonds;
(c) in the case of the Seller: to Bank of Scotland plc, Halifax
Division, Level 3, Lovell Park, ▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ (facsimile number ▇▇▇ (▇) ▇▇▇ ▇▇▇ ▇▇▇▇) for the attention
Mortgage Securitisation Manager with a copy to Bank of
Scotland plc, Treasury Division, ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ (facsimile number ▇▇▇ (▇)▇▇ ▇▇▇▇ ▇▇▇▇) for the
attention of Head of Mortgage Securitisation and Covered
Bonds;
(d) in the case of Funding 1: to Permanent Funding (No. 1)
Limited: to ▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇▇'▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (facsimile
number ▇▇▇ (▇)▇▇ ▇▇▇▇ ▇▇▇▇) for the attention of the
Secretary; with a copy to Bank of Scotland plc, Treasury
Division, ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (facsimile
number ▇▇▇ (▇)▇▇ ▇▇▇▇ ▇▇▇▇) for the attention of Head of
Mortgage Securitisation and Covered Bonds;
(e) in the case of Funding 2: to Permanent Funding (No. 2)
Limited: to ▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇▇'▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (facsimile
number ▇▇▇ (▇)▇▇ ▇▇▇▇ ▇▇▇▇) for the attention of the
Secretary; with a copy to Bank of Scotland plc, Treasury
Division, ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (facsimile
number ▇▇▇ (▇)▇▇ ▇▇▇▇ ▇▇▇▇) for the attention of Head of
Mortgage Securitisation and Covered Bonds; and
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(f) in the case of the Funding 1 Security Trustee and the Funding
2 Security Trustee: to The Bank of ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (facsimile number + ▇▇ (▇)▇▇ ▇▇▇▇ ▇▇▇▇,
for the attention of Corporate Trust Administration -
ABS/MBS),
or to such other address or facsimile number or for the attention of
such other person or entity as may from time to time be notified by
any party to the others by written notice in accordance with the
provisions of this Clause 25. All notices served under this Agreement
shall be simultaneously copied to the Funding 1 Security Trustee and
the Funding 2 Security Trustee by the person serving the same.
26. NO PARTNERSHIP
It is hereby acknowledged and agreed by the parties that nothing in
this Agreement shall be construed as giving rise to any partnership
between any of the parties.
27. ASSIGNMENT
27.1 The Mortgages Trustee may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of
each of the Beneficiaries.
27.2 The Servicer may not assign or transfer any of its rights and
obligations under this Agreement without the prior written consent of
the Mortgages Trustee (as trustee for the Beneficiaries) and each of
the Beneficiaries.
27.3 The Servicer acknowledges that Funding 1 has assigned its rights under
this Agreement to the Funding 1 Security Trustee pursuant to the
Funding 1 Deed of Charge and acknowledges that pursuant to the terms
of the Funding 1 Deed of Charge, Funding 1 has, inter alia, authorised
the Funding 1 Security Trustee, prior to the Funding 1 Security
becoming enforceable, to exercise, or refrain from exercising, all
rights, powers, authorities, discretions and remedies under or in
respect of the Transaction Documents, including this Agreement, in
such manner as in its absolute discretion it shall think fit.
27.4 The Servicer acknowledges that Funding 2 has assigned its rights under
this Agreement to the Funding 2 Security Trustee pursuant to the
Funding 2 Deed of Charge and acknowledges that pursuant to the terms
of the Funding 2 Deed of Charge, Funding 2 has, inter alia, authorised
the Funding 2 Security Trustee, prior to the Funding 2 Security
becoming enforceable, to exercise, or refrain from exercising, all
rights, powers, authorities, discretions and remedies under or in
respect of the Transaction Documents, including this Agreement, in
such manner as in its absolute discretion it shall think fit.
28. CHANGE OF FUNDING 1 SECURITY TRUSTEE AND/OR FUNDING 2 SECURITY TRUSTEE
28.1 If there is any change in the identity of the Funding 1 Security
Trustee and/or the Funding 2 Security Trustee in accordance with the
Funding 1 Deed of Charge and/or the Funding 2 Deed of Charge, the
Servicer, the Seller, Funding 1, Funding 2 and the Mortgages Trustee
shall execute such documents and take such action as the successor
Funding 1 Security Trustee and/or the successor Funding 2 Security
Trustee and the outgoing Funding 1 Security Trustee and/or the
outgoing Funding 2 Security Trustee may reasonably require for the
purpose of vesting in the successor Funding 1 Security Trustee and/or
the successor Funding 2 Security Trustee the rights and obligations of
the outgoing Funding 1 Security Trustee and/or the outgoing Funding 2
Security Trustee under this Agreement and releasing the outgoing
Security Trustee from its future obligations under this Agreement.
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28.2 It is hereby acknowledged and agreed that by its execution of this
Agreement neither the Funding 1 Security Trustee nor the Funding 2
Security Trustee shall assume or have any of the obligations or
liabilities of the Servicer, the Seller, Funding 1, Funding 2, the
Mortgages Trustee or each other under this Agreement.
29. AMENDMENTS, WAIVERS AND CONSENTS
29.1 Subject to Clause 2, 3 and 4 of the Controlling Beneficiary Deed (as
applicable) and (in the case of Funding 1) Clause 25 of the Funding 1
Deed of Charge and (in the case of Funding 2) Clause 12 of the Funding
2 Deed of Charge, no amendment or waiver of any provision of this
Agreement shall be effective unless the same shall be in writing and
signed by (or by some person duly authorised by) each of the parties
to this Agreement. In the case of a waiver, such waiver 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. No
single or partial exercise of, or failure or delay in exercising, any
right under this Agreement shall constitute a waiver or preclude any
other or further exercise of that or any other right.
29.2 Funding 1, Funding 2, the Funding 1 Security Trustee and the Funding 2
Security Trustee will each exercise all rights, powers, benefits
and/or discretions conferred on it under this Agreement (including,
without limitation, in giving its consent, approval or authorisation
to any event, matter or thing requested hereunder) in accordance with
Clauses 2, 3 and 4 of the Controlling Beneficiary Deed (as applicable)
and (in the case of Funding 1) Clause 25 of the Funding 1 Deed of
Charge and (in the case of Funding 2) Clause 12 of the Funding 2 Deed
of Charge.
30. EXCLUSION OF THIRD PARTY RIGHTS
The parties to this Agreement do not intend that any term of this
Agreement should be enforced, by virtue of the Contracts (Rights of
Third Parties) ▇▇▇ ▇▇▇▇, by any person who is not a party to this
Agreement.
31. COUNTERPARTS AND SEVERABILITY
31.1 This Agreement 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.
31.2 Where any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations
under this Agreement, or of such provision or obligation in any other
jurisdiction, shall not be affected or impaired thereby.
32. GOVERNING LAW AND JURISDICTION
32.1 This Agreement is governed by the laws of England (provided that any
terms of this Agreement which are particular to Scots law shall be
construed in accordance with the laws of Scotland).
32.2 Each party to this Agreement hereby irrevocably submits to the
exclusive jurisdiction of the English courts in any action or
proceeding arising out of or relating to this Agreement, and hereby
irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined by such courts. Each party to
this Agreement hereby irrevocably waives, to the fullest extent it may
possibly do so, any defence or claim that the English courts are an
inconvenient forum for the maintenance or hearing of such action or
proceeding.
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33. PROCESS AGENT
The Mortgages Trustee irrevocably and unconditionally appoints
Structured Finance Management Limited of ▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇▇'▇, ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ 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 Structured Finance Management Limited
ceasing so to act it will appoint another person with a registered
office in London as its agent for service of process.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed and
delivered as a deed the day and year first before written.
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SCHEDULE 1
THE SERVICES
In addition to the Services set out in the body of the Servicing Agreement, the
Servicer shall:
(a) keep records and books of account for the Mortgages Trustee in
relation to the Loans and their Related Security comprised in the
Portfolio;
(b) keep records for all taxation purposes and Value Added Tax;
(c) notify relevant Borrowers of any change in their Monthly Payments;
(d) assist the auditors of the Mortgages Trustee and provide information
to them upon reasonable request;
(e) provide a redemption statement upon the request of a Borrower or the
Borrower's solicitor, licensed conveyancer or qualified conveyancer;
(f) notify relevant Borrowers of any other matter or thing which the
applicable Mortgage Conditions or Offer Conditions require them to be
notified of in the manner and at the time required by the relevant
Mortgage Terms;
(g) subject to the provisions of this Agreement (including without
limitation Clause 5.2) take all reasonable steps to recover all sums
due to the Mortgages Trustee including without limitation by the
institution of proceedings and/or the enforcement of any Loan
comprised in the Portfolio or any Related Security;
(h) take all other action and do all other things which it would be
reasonable to expect a Reasonable, Prudent Mortgage Lender to do in
administering its loans and their related security; and
(i) act as collection agent for the Mortgages Trustee under the Direct
Debiting Scheme in accordance with the provisions of this Agreement.
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SCHEDULE 2
FORM OF INVESTOR MONTHLY REPORT
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SCHEDULE 3
MINIMUM SERVICING STANDARDS
1. GENERAL SERVICING CONSIDERATIONS
Policies and procedures are instituted to monitor any performance or
other triggers and events of default in accordance with the
transaction agreements.
2. CASH COLLECTION AND ADMINISTRATION
(a) Payments on pool assets are deposited into the appropriate custodial
bank accounts - the Permanent Mortgages Trustee GIC account - no more
than two business days after receipt.
(b) Advances of funds or guarantees regarding collections, cash flows or
distributions, and any interest or other fees charged for such
advances, are made, reviewed and approved as specified in the
transaction agreements.
(c) The related accounts for the transaction, such as cash reserve
accounts or accounts established as a form of overcollateralisation,
are separately maintained (e.g. with respect to commingling of cash)
as set forth in the transaction agreements.
(d) Reconciliations are prepared on a monthly basis for all asset-backed
securities related bank accounts, including custodial accounts and
related bank clearing accounts - namely, the Permanent Mortgages
Trustee GIC account, Permanent Funding (No. 1) GIC account, Permanent
Funding (No. 2) GIC account, each Funding 1 Issuer's capital account,
the Master Issuer's capital account, each Funding 1 Issuer's
transaction account and the Master Issuer's transaction account. These
reconciliations:
(i) Are mathematically accurate;
(ii) Are prepared within 30 calendar days after the bank statement
cut-off date;
(iii) Are reviewed and approved by someone other than the person who
prepared the reconciliation; and
(iv) Contain explanations for reconciling items. These reconciling
items are resolved within 90 calendar days of their original
identification.
3. INVESTOR REMITTANCES
Amounts due to investors are allocated and remitted in accordance with
timeframes, distribution priority and other terms set forth in the
transaction agreements.
4. POOL ASSET ADMINISTRATION
(a) The servicer has made reasonable endeavours to maintain collateral or
security on pool assets.
(b) Any additions, removals or substitutions to the asset pool are made,
reviewed and approved in accordance with any conditions or
requirements in the transaction agreements.
(c) The servicer's records regarding the pool assets agree with the
lender's records with respect to the unpaid principal balance.
33
(d) Changes with respect to the terms or status of a pool asset (for
example loan modifications or re-ageings) are made, reviewed and
approved by authorised personnel in accordance with the transaction
agreements and related pool asset documents.
(e) Loss mitigation or recovery actions (e.g., foreclosures or
repossessions) are initiated, conducted and concluded in accordance
with the timeframes or other requirements established by the
transaction agreements. Such programs include a hierarchy of workout
procedures (e.g., forbearance plans, modifications and deeds in lieu
of foreclosure, as applicable).
(f) Records documenting collection efforts are maintained during the
period a pool asset is delinquent in accordance with the transaction
agreements. Such records are maintained on at least a monthly basis
and describe the entity's activities in monitoring delinquent pool
assets including, for example, phone calls, letters and payment
rescheduling plans in cases where delinquency is deemed temporary
(e.g., illness or unemployment).
(g) Adjustments to interest rates or rates of return for pool assets with
variable rates are computed based on the related pool asset documents.
(h) Delinquencies, charge-offs and uncollectible accounts are recognised
and recorded in accordance with the transaction agreements.
(i) Any external enhancement or other support is maintained as set forth
in the transaction agreements.
34
SIGNATORIES
SERVICER AND SELLER
EXECUTED as a DEED by ) /S/ ▇▇▇ ▇▇▇▇▇▇▇
BANK OF SCOTLAND PLC ) /S/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
acting by its attorney )
in the presence of: )
Witness's signature: /S/ ▇▇▇▇▇ ▇▇▇▇
Name:
Address: ▇▇▇▇▇ & OVERY LLP
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
MORTGAGES TRUSTEE
EXECUTED as a DEED on behalf of )
PERMANENT MORTGAGES ) /S/ ▇▇▇ ▇▇▇▇▇▇▇
TRUSTEE LIMITED, )
a company incorporated in Jersey, )
Channel Islands, by )
being a person who, )
in accordance with the laws of that )
territory is acting under the authority of )
the company in the presence of: )
Witness's signature: /S/ ▇▇▇▇▇ ▇▇▇▇
Name:
Address: ▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
FUNDING 1
EXECUTED as a DEED by ) /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
PERMANENT FUNDING (NO. 1) )
LIMITED acting by two directors ) /S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
FUNDING 2
EXECUTED as a DEED by ) /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
PERMANENT FUNDING (NO. 2) )
LIMITED acting by two directors ) /S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
35
FUNDING 1 SECURITY TRUSTEE
EXECUTED as a DEED ) /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
for and on behalf of )
THE BANK OF NEW YORK )
by its authorised signatory )
in the presence of: )
Witness's signature: /S/ ▇▇▇▇▇ ▇▇▇▇
Name:
Address: ▇▇▇▇▇ & OVERY LLP
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
FUNDING 2 SECURITY TRUSTEE
EXECUTED as a DEED ) /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
for and on behalf of )
THE BANK OF NEW YORK )
by its authorised signatory )
in the presence of: )
Witness's signature: /S/ ▇▇▇▇▇ ▇▇▇▇
Name:
Address: ▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
36