EXHIBIT 4.2
Dated [o] 2005
NORTHERN ROCK PLC
as Seller, Cash Manager and a Beneficiary
GRANITE FINANCE FUNDING LIMITED
as Funding and a Beneficiary
- and -
GRANITE FINANCE TRUSTEES LIMITED
as Mortgages Trustee
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TENTH AMENDED
MORTGAGES TRUST DEED
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SIDLEY ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇
WOOLGATE EXCHANGE
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇
TELEPHONE ▇▇▇ ▇▇▇▇ ▇▇▇▇
FACSIMILE 020 7626 7937
CONTENTS
Clause Page No.
1. Definitions and Construction........................................................................1
2. Creation of Mortgages Trust.........................................................................2
3. Conditions Precedent................................................................................3
4. Consideration.......................................................................................4
5. Increasing and Decreasing the Seller Share of the Trust Property....................................9
6. Increasing the Funding Share and the Funding 2 Share of the Trust Property.........................10
7. Initial Funding Share and Initial Seller Share.....................................................13
8. Adjustment of Funding Share Percentage, Funding 2 Share Percentage and Seller Share Percentage.....14
9. Minimum Seller Share...............................................................................28
10. Distribution of Revenue Receipts...................................................................29
11. Distribution of Principal Receipts.................................................................34
12. Allocation of Losses...............................................................................39
13. Overpayments.......................................................................................39
14. Arrears............................................................................................40
15. Ledgers............................................................................................40
16. Fees and Expenses of the Mortgages Trustee.........................................................41
17. Directions from Beneficiaries......................................................................41
18. Early Termination of the Mortgages Trust...........................................................43
19. AUdit of Mortgage Loans Constituting the Trust Property............................................43
20. Transfers..........................................................................................44
21. Representations and Covenants......................................................................44
22. Power to Delegate..................................................................................46
23. Power of Investment................................................................................46
24. Other Provisions Regarding the Mortgages Trustee...................................................46
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25. No Retirement of Mortgages Trustee.................................................................48
26. Termination........................................................................................48
27. Further Assurances.................................................................................48
28. No Partnership or Agency...........................................................................48
29. Calculations.......................................................................................48
30. Confidentiality....................................................................................49
31. Non Petition Covenant; Limited Recourse............................................................49
32. Amendments and Waiver..............................................................................51
33. Notices............................................................................................52
34. Third Party Rights.................................................................................53
35. Execution in Counterparts; severability............................................................53
36. Governing Law and Submission to Jurisdiction.......................................................53
SCHEDULE 1 REPRESENTATIONS AND WARRANTIES...................................................................55
ii
THIS TENTH AMENDED MORTGAGES TRUST DEED DATED [o] ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ THE MORTGAGES TRUST DEED DATED 26 MARCH 2001 BETWEEN:
(1) NORTHERN ROCK PLC (registered number 03273685), a public limited company
incorporated under the laws of England and Wales whose registered office
is at Northern ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇, in its
capacity as Seller, in its capacity as Cash Manager and in its capacity
as a Beneficiary;
(2) GRANITE FINANCE FUNDING LIMITED (registered number 79308), a private
limited company incorporated under the laws of Jersey, but acting out of
its office established in England (registered overseas company number
FC022999 and branch number BR005916) at ▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇,
in its capacity as a Beneficiary;
(3) GRANITE FINANCE TRUSTEES LIMITED (registered number 79309), a private
limited company incorporated under the laws of Jersey, whose registered
office is at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, Channel
Islands in its capacity as Mortgages Trustee.
WHEREAS:
(A) The Mortgages Trustee wishes to declare the following trusts in respect
of the Trust Property (being on 26 March, 2001, the sum of (GBP)100
which monies have been received by and are presently held by the
Mortgages Trustee or to its order).
(B) The Mortgages Trustee (acting as principal and not as agent of any
party) has agreed to hold the Trust Property as bare trustee for the
Beneficiaries upon, with and subject to the trusts, powers and
provisions of this Deed. The Mortgages Trustee will receive amounts
arising from the Trust Property and will distribute such amounts for the
benefit of the Beneficiaries of the Mortgages Trust. It will delegate
certain tasks in relation to the Mortgages Trust to the Administrator
and the Cash Manager.
(C) The Seller carries on the business of, inter alia, originating
residential mortgage loans to individual Borrowers in England, Wales and
Scotland and of managing and administering such mortgage loans. The
Seller intends to sell and assign from time to time portfolios of such
mortgage loans to the Mortgages Trustee pursuant to the Mortgage Sale
Agreement entered into on or about 26 March 2001 (as the same have been
and may be amended, varied or supplemented from time to time), which
mortgage loans shall be held by the Mortgages Trustee as bare trustee
for the Beneficiaries upon, with and subject to the trusts, powers and
provisions of this Deed.
NOW THIS DEED WITNESSES:
1. Definitions and Construction
1.1 The provisions of the Programme Master Definitions Schedule signed for
identification purposes by Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ and ▇▇▇▇▇ & ▇▇▇▇▇
LLP on [o] 2005 (as the same have been and may be amended, varied or
supplemented from time to time with the consent of the parties hereto)
are expressly and specifically incorporated into and shall apply to this
Deed.
2. Creation of Mortgages Trust
2.1 Initial Trust Property
The Mortgages Trustee hereby declares itself as trustee of the Trust
Property, being, upon execution of this Deed, the sum of (GBP)100 (one
hundred pounds) (the "Initial Trust Property") which sum shall be held
on trust by the Mortgages Trustee absolutely as to both capital and
income for the benefit, as tenants in common (holding undivided
beneficial interests), of the Seller as to the Initial Seller Share
Percentage and Funding as to the Initial Funding Share Percentage. The
Initial Trust Property shall be held by the Mortgages Trustee on the
Mortgages Trust upon due execution of this Deed by all parties to it.
2.2 Closing Trust Property
Pursuant to the provisions of the Mortgage Sale Agreement, the Seller
intends to sell and assign the Initial Mortgage Portfolio to the
Mortgages Trustee on the Initial Closing Date, which Initial Mortgage
Portfolio including all related rights and benefits shall form part of
the Trust Property (the "Closing Trust Property").
2.3 New Trust Property
From time to time and pursuant to the Mortgage Sale Agreement, the
Seller intends to sell and assign New Mortgage Portfolios to the
Mortgages Trustee, which New Mortgage Portfolios including all related
rights and benefits shall form part of the Trust Property (the "New
Trust Property").
2.4 Other Trust Property
(A) In accordance with this Deed, from time to time Funding, the
Seller and (upon the acquisition by Funding 2 from the Seller of
part of the Seller Share in accordance with the Seller Share
Assignment Agreement) Funding 2 shall, subject to and in
accordance with Clause 4 (Consideration), Clause 5 (Increasing and
Decreasing the Seller Share of the Trust Property) and/or Clause 6
(Increasing the Funding Share and the Funding 2 Share of the Trust
Property) provide consideration to the Mortgages Trustee in the
form of Contributions to be applied by the Mortgages Trustee as
set out in this Deed. Any Contribution so provided to the
Mortgages Trustee shall, on receipt by the Mortgages Trustee and
until it has been applied by the Mortgages Trustee in accordance
with the terms of this Deed, form part of the Trust Property. [To
consider status of Funding 2 Contributions]
(B) Any Re-draws made under a Flexible Mortgage Loan which is included
in the Trust Property will also form part of the Trust Property.
(C) [Amounts on deposit (and interest earned on such amounts) from
time to time in the Mortgages Trustee Bank Accounts will also form
part of the Trust Property.]
(D) (If the Seller subsequently decides not to repurchase any Mortgage
Loan (which is the subject of a Further Advance) within the Trust
Property and/or to sell and assign the Further Advance to the
Mortgages Trustee in accordance
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with the Mortgage Sale Agreement) any Further Advance made in
respect of a Mortgage Loan in the Trust Property will also form
part of the Trust Property.
(E) Any Permitted Replacement Mortgage Loan and its Related Security
(including the rights under any related MIG Policy and other
insurance policies arranged by the Seller, but excluding any Early
Repayment Charge Receipts paid to the Seller) relating to a
Permitted Product Switch effected in relation to a Mortgage Loan
which forms part of the Trust Property will also form part of the
Trust Property.
(F) The proceeds of sale of any Mortgage Loan and its Related Security
forming part of the Trust Property pursuant to the Mortgage Sale
Agreement or other proceeds of sale of any Trust Property will
also form part of the Trust Property.
(G) Any Further Draws under a Personal Secured Loan which is included
in the Trust Property will also form part of the Trust Property.
2.5 Payments of Early Repayment Charges
Subject to and in accordance with the Mortgage Sale Agreement, the
Mortgages Trustee will agree to pay to the Seller any Early
Repayment Charge Receipts received by the Mortgages Trustee in
respect of any Mortgage Loan included in the Initial Mortgage
Portfolio or any New Mortgage Portfolio which the Seller sells and
assigns to the Mortgages Trustee. Upon any such payment to the
Seller, the benefit of such Early Repayment Charges will no longer
form part of the Trust Property.
3. Conditions Precedent
3.1 Trust Property
Subject to this Clause 3 (Conditions Precedent), the Mortgages Trustee
shall hold the Trust Property as to both capital and income on trust
absolutely for Funding, Funding 2 and for the Seller as tenants in
common upon, with and subject to all the trusts, powers and provisions
of this Deed (such that each Beneficiary shall have an undivided
beneficial interest in the Trust Property). As used herein, "Trust
Property" means the Initial Trust Property, the Closing Trust Property,
any New Trust Property (but excludes any Early Repayment Charge Receipts
which have been paid to the Seller and any Mortgage Loans which have
been purchased or repurchased (as applicable) by the Seller pursuant to
the Mortgage Sale Agreement) and all other Trust Property referred to
under Clause 2 (Creation of Mortgages Trust) less (a) any actual Losses
in relation to Mortgage Loans and any actual redemptions occurring in
respect of the Mortgage Loans as described in Clause 8.5 (Adjustments to
Trust Property) and (b) distributions of principal made from time to
time to the Beneficiaries.
3.2 Closing Trust Property
The Closing Trust Property shall be held by the Mortgages Trustee on the
Mortgages Trust subject to satisfaction of the following conditions
precedent:
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(A) the due execution and delivery of the Mortgage Sale Agreement by
all parties to it;
(B) the due execution and delivery of this Deed by all parties to it;
(C) the satisfaction or waiver in accordance with the terms of the
Mortgage Sale Agreement of the conditions to the sale and
assignment of the Initial Mortgage Portfolio as set out in Clause
2 (Sale and Purchase of Initial Mortgage Portfolio) and Clause 3
(Initial Closing Date) of the Mortgage Sale Agreement;
(D) the payment by Funding to the Mortgages Trustee of Funding's
Initial Contribution for the Initial Funding Share Percentage in
accordance with Clause 4 (Consideration); and
(E) the payment by the Mortgages Trustee to the Seller of the Initial
Purchase Price for the sale and assignment to the Mortgages
Trustee of the Initial Mortgage Portfolio.
3.3 New Trust Property
Any New Trust Property shall be held by the Mortgages Trustee on the
Mortgages Trust subject to the satisfaction or waiver, in accordance
with the terms of the Mortgage Sale Agreement, of the conditions
referred to in Clause 4 (Sale and Purchase of New Mortgage Loan
Portfolios) of the Mortgage Sale Agreement for the transfer of New
Mortgage Loan Portfolios to the Mortgages Trustee.
3.4 Funding 2 Share
The requirement for the Mortgages Trustee to hold the Trust Property on
trust for Funding 2 shall be subject to and conditional upon the
acquisition by Funding 2 from the Seller of part of the Seller Share in
accordance with the terms of the Seller Share Assignment Agreement.
4. Consideration
4.1 Consideration provided by Seller
The Seller in its capacity as a Beneficiary shall provide consideration
to the Mortgages Trustee for the Seller Share in the Trust Property:
(A) on the Initial Closing Date, by selling and assigning to the
Mortgages Trustee the Initial Mortgage Portfolio upon payment by
the Mortgages Trustee to the Seller of the Initial Purchase Price
for the Initial Mortgage Portfolio in accordance with the terms of
the Mortgage Sale Agreement;
(B) on each date after the Initial Closing Date on which (i) New
Mortgage Loans are acquired by the Mortgages Trustee from the
Seller in accordance with the Mortgage Sale Agreement and (ii) the
consideration provided to the Seller for that sale is or includes
the covenant of the Mortgages Trustee to hold the Trust Property
on trust for Funding, the Seller and, upon the acquisition by
Funding 2 from the Seller of part of the Seller Share in
accordance with the terms of the
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Seller Share Assignment Agreement, Funding 2, in accordance with
the terms of this Deed, by the sale on such date by the Seller of
such New Mortgage Loans either for the payment by the Mortgages
Trustee of the Initial Purchase Price paid on such date or (if no
Initial Purchase Price is paid) without payment on such date; and
(C) on each date on which the Seller increases the Seller Share of the
Trust Property in accordance with Clause 5 (Increasing and
Decreasing the Seller Share of the Trust Property) below, the
Seller will pay the consideration to the Mortgages Trustee
specified in that Clause.
4.2 Consideration provided by Funding
Funding in its capacity as a Beneficiary shall provide consideration to
the Mortgages Trustee for the Funding Share of the Trust Property:
(A) on the Initial Closing Date, by paying to the Mortgages Trustee
the Initial Contribution in respect of the Closing Trust Property
which shall be equal to (and from which the Mortgages Trustee
shall or shall procure that the Cash Manager on its behalf shall
pay) the Initial Purchase Price in respect of the Initial Mortgage
Portfolio payable by the Mortgages Trustee to the Seller pursuant
to the Mortgage Sale Agreement on such date;
(B) on each Distribution Date, by paying to the Mortgages Trustee a
Deferred Contribution equal to the amount (if any) of:
(1) Mortgages Trustee Available Revenue Receipts to which
Funding is entitled on such date in accordance with
paragraph (D)(i) of Clause 10.2 (Distribution of Mortgages
Trustee Available Revenue Receipts); and
(2) the Funding Proportion of the amount of any Early Repayment
Charge Receipts payable by the Mortgage Trustee to the
Seller under the Mortgage Sale Agreement.
The amounts listed under sub-clauses (B)(1) and (B)(2) are,
together, referred to as the "Funding Relevant Distribution". The
Funding Relevant Distribution and the Funding 2 Relevant
Distribution (as defined in Clause 4.3(A) below) are calculated as
at such Distribution Date, shall be equal to (and from which the
Mortgages Trustee shall or shall procure that the Cash Manager on
its behalf shall pay) such amount of Deferred Purchase Price as is
payable by the Mortgages Trustee to the Seller pursuant to the
Mortgage Sale Agreement on such date. The parties to this Deed
agree that on any Distribution Date, the Funding Relevant
Distribution and the Deferred Contribution payable by Funding (as
calculated pursuant to this sub-clause (B)) to the Mortgages
Trustee shall be set off against each other such that, as between
the Mortgages Trustee and Funding, no amount shall be payable in
respect of such Funding Relevant Distribution or such Deferred
Contribution on such date and the Cash Manager on behalf of the
Mortgages Trustee shall pay to the Seller (in satisfaction (in
part) of the Mortgages Trustee's obligation to pay Deferred
Purchase Price to the Seller under the Mortgage Sale
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Agreement) those funds which, were it not for such set off, would
have been payable to Funding as the Funding Relevant Distribution;
(C) on each date after the Initial Closing Date on which (i) an amount
of the Initial Purchase Price is payable in respect of New
Mortgage Loans which are sold and assigned by the Seller to the
Mortgages Trustee on such date and (ii) Funding receives the net
proceeds of a Funding Intercompany Loan from a Funding Issuer, by
paying to the Mortgages Trustee an Initial Contribution in respect
of the Funding Share of the Trust Property which shall be equal to
(and from which the Mortgages Trustee shall or shall procure that
the Cash Manager on its behalf shall pay) the Initial Purchase
Price in respect of such New Mortgage Loans payable by the
Mortgages Trustee to the Seller pursuant to the Mortgage Sale
Agreement on such date unless, in either case, Funding has given
notice to each relevant Funding Issuer of its intention to use the
proceeds of a Funding Intercompany Loan to repay one or more of
the Funding Intercompany Loans from such Funding Issuers, and
subject to Clause 6 (Increasing the Funding Share and the Funding
2 Share of the Trust Property) below;
(D) on each other date after the Initial Closing Date on which Funding
receives the net proceeds of a Funding Intercompany Loan from a
Funding Issuer, by paying to the Mortgages Trustee a Further
Contribution in respect of the Funding Share of the Trust Property
which shall be equal to (and from which the Mortgages Trustee
shall or shall procure that the Cash Manager on its behalf shall
pay) the Special Distribution payable to the Seller in accordance
with Clause 4.4 (Application by Mortgages Trustee) unless Funding
has given notice to each relevant Funding Issuer of its intention
to use the proceeds of a Funding Intercompany Loan to repay one or
more of the Funding Intercompany Loans from such Funding Issuers
subject to Clause 6 (Increasing the Funding Share and the Funding
2 Share of the Trust Property) below; and
(E) following the Final Repayment Date of the latest maturing Funding
Intercompany Loan made by any Funding Issuer to Funding and
provided that there are no further claims outstanding under any
Funding Intercompany Loan or on such earlier date provided that
all Funding Intercompany Loans have either been repaid in full or
there are no further claims outstanding under any Funding
Intercompany Loan, Funding will make a final payment of Deferred
Contribution to the Mortgages Trustee (the "Funding Final Deferred
Contribution") in an amount equal to the aggregate amount standing
to the credit of the Funding Bank Accounts (including any account
established for the purposes of the Issuer Reserve Fund and/or the
Issuer Liquidity Reserve Fund of any Funding Issuer) after making
any payments ranking in priority thereto, subject to and in
accordance with the relevant Funding Priority of Payments. The
Funding Final Deferred Contribution shall be in an amount equal to
(and from the Funding Final Deferred Contribution the Mortgages
Trustee shall or shall procure that the Cash Manager shall on its
behalf pay) an amount of Deferred Purchase Price payable by the
Mortgages Trustee to the Seller pursuant to and in accordance with
the Mortgage Sale Agreement.
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4.3 Consideration provided by Funding 2
Funding 2 in its capacity as a Beneficiary shall provide consideration
to the Mortgages Trustee for the Funding 2 Share of the Trust Property:
(A) on each Distribution Date, by paying to the Mortgages Trustee a
Deferred Contribution equal to the amount (if any) of:
(1) Mortgages Trustee Available Revenue Receipts to which
Funding 2 is entitled on such date in accordance with
paragraph (D)(ii) of Clause 10.2 (Distribution of Mortgages
Trustee Available Revenue Receipts); and
(2) the Funding 2 Proportion of the amount of any Early
Repayment Charge Receipts payable by the Mortgage Trustee to
the Seller under the Mortgage Sale Agreement.
The amounts listed under sub-clauses (A)(1) and (A)(2) are,
together, referred to as the "Funding 2 Relevant Distribution".
Together with the Funding Relevant Distribution, the Funding 2
Relevant Distribution shall be applied in accordance with Clause
4.2(B). The parties to this Deed agree that on any Distribution
Date, the Funding 2 Relevant Distribution and the Deferred
Contribution payable by Funding 2 (as calculated pursuant to this
sub-clause (A)) to the Mortgages Trustee shall be set off against
each other such that, as between the Mortgages Trustee and Funding
2, no amount shall be payable in respect of such Funding 2
Relevant Distribution or such Deferred Contribution on such date
and the Cash Manager on behalf of the Mortgages Trustee shall pay
to the Seller (in satisfaction (in part) of the Mortgages
Trustee's obligation to pay Deferred Purchase Price to the Seller
under the Mortgage Sale Agreement) those funds which, were it not
for such set-off, would have been payable to Funding 2 as the
Funding 2 Relevant Distribution;
(B) on each date after the Funding Programme Date on which (i) an
amount of Initial Purchase Price is payable in respect of New
Mortgage Loans which are sold and assigned by the Seller to the
Mortgages Trustee on such date and (ii) Funding 2 receives the net
proceeds of a Loan Tranche under the Global Intercompany Loan, by
paying to the Mortgages Trustee an Initial Contribution in respect
of the Funding 2 Share of the Trust Property which shall be equal
to (and from which the Mortgages Trustee shall or shall procure
that the Cash Manager on its behalf shall pay) the Initial
Purchase Price in respect of such New Mortgage Loans payable by
the Mortgages Trustee to the Seller pursuant to the Mortgage Sale
Agreement on such date unless Funding 2 has given notice to the
Funding 2 Issuer of its intention to use the proceeds of a Loan
Tranche under the Global Intercompany Loan to repay (in part or in
full) one or more of the Loan Tranches under the Global
Intercompany Loan from the Funding 2 Issuer and subject to Clause
6 (Increasing the Funding Share and the Funding 2 Share of the
Trust Property) below;
(C) on each other date after the Funding Programme Date on which
Funding 2 receives the net proceeds of a Loan Tranche from the
Funding 2 Issuer, by paying to the Mortgages Trustee a Further
Contribution in respect of the
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Funding 2 Share of the Trust Property which shall be equal to (and
from which the Mortgages Trustee shall or shall procure that the
Cash Manager on its behalf shall pay):
(1) the Special Distribution payable to the Seller in accordance
with Clause 4.4 (Application by Mortgages Trustee); and/or
(2) the Special Distribution payable to Funding in accordance
with Clause 4.4 (Application by Mortgages Trustee),
unless Funding 2 has given notice to the Funding 2 Issuer of its
intention to use the proceeds of a Loan Tranche to repay (in part
or in full) one or more of the Loan Tranches each relating to a
series and class of notes of the Funding 2 Issuer being refinanced
and subject to Clause 6 (Increasing the Funding Share and the
Funding 2 Share of the Trust Property) below.
(D) following the Final Repayment Date of the latest Maturing Funding
2 Intercompany Loan made by any Funding 2 Issuer to Funding 2 and
provided that there are no further claims outstanding under any
Funding 2 Intercompany Loan or on such earlier date provided that
all Funding 2 Intercompany Loans have either been repaid in full
or there are no further claims outstanding under any Funding 2
Intercompany Loan, Funding 2 will make a final payment of Deferred
Contribution to the Mortgages Trustee (the "Funding 2 Final
Deferred Contribution") in an amount equal to the aggregate amount
standing to the credit of the Funding 2 Bank Accounts after making
any payments ranking in priority thereto, subject to and in
accordance with the relevant Funding 2 Priority of Payments. The
Funding 2 Final Deferred Contribution shall be in an amount equal
to (and from the Funding 2 Final Deferred Contribution the
Mortgages Trustee shall or shall procure that the Cash Manager
shall on its behalf pay) an amount of Deferred Purchase Price
payable by the Mortgages Trustee to the Seller pursuant to and in
accordance with the Mortgage Sale Agreement.
Funding 2 shall pay or shall procure the payment of the amount of any
Initial Contribution or Further Contribution to be made by it to the
Mortgages Trustee into the Mortgages Trustee Transaction Account.
4.4 Application by Mortgages Trustee
(A) If the Mortgages Trustee receives any Initial Contribution,
Deferred Contribution or the Final Deferred Contribution from a
Funding Beneficiary, the parties hereto direct the Mortgages
Trustee to, and the Mortgages Trustee covenants that it shall, or
shall procure that the Cash Manager on its behalf shall, pay such
funds to the Seller in satisfaction of the Mortgages Trustee's
obligation to make payment of the Initial Purchase Price or, as
the case may be, Deferred Purchase Price in respect of the Initial
Mortgage Portfolio or any New Mortgage Loans which are sold and
assigned to the Mortgages Trustee by the Seller pursuant to the
Mortgage Sale Agreement.
(B) If the Mortgages Trustee receives a Further Contribution from any
Beneficiary, the parties hereto direct the Mortgages Trustee to,
and the
8
Mortgages Trustee covenants that it shall, or shall procure that
the Cash Manager on its behalf shall:
(1) where such Further Contribution is made by Funding 2:
(a) if Funding 2 so elects, in its sole discretion, pay
all or part of such Further Contribution as a Special
Distribution to Funding in accordance with the terms
of this Deed provided that the amounts of such Special
Distribution shall not exceed the aggregate
outstanding principal balance of all Funding
Intercompany Loans, and
(b) if Funding 2 so elects, pay all or part of such
Further Contribution as a Special Distribution to the
Seller in accordance with the terms of this Deed;
(2) where such Further Contribution is made by Funding, pay such
funds as a Special Distribution to the Seller in accordance
with the terms of this Deed; and
(3) where such Further Contribution is made by the Seller, pay
such funds in accordance with the terms of this Deed.
5. Increasing and Decreasing the Seller Share of the Trust Property
5.1 Re-draws under Flexible Mortgage Loans
(A) If, in respect of any Flexible Mortgage Loan which is in the Trust
Property, the relevant Borrower requests a Cash Re-draw and the
Administrator (on behalf of the Seller) grants such request
pursuant to and in accordance with the terms of the Administration
Agreement, the Seller as Beneficiary shall fund that Cash Re-draw
in the Mortgages Trust by making payment to the Borrower, in
accordance with the terms and conditions of the relevant Mortgage
Loan, of the Cash Re-draw Amount. Upon payment by the Seller to
the relevant Borrower of the Cash Re-draw Amount, the aggregate
Current Balance of the Mortgage Loans constituting the Trust
Property and the amount of the Seller Share of the Trust Property
shall be increased by an amount equal to the Cash Re-draw Amount.
(B) If, in respect of any Flexible Mortgage Loan which is in the Trust
Property, the relevant Borrower requests a Non-Cash Re-draw and
the Administrator grants such request or the Administrator
otherwise permits the relevant Borrower to take a Non-Cash Re-draw
pursuant to and in accordance with the terms of the Administration
Agreement, the Seller as Beneficiary shall fund such Non-Cash
Re-draw in the Mortgages Trust by making payment to the Mortgages
Trustee of a Further Contribution in an amount equal to the Unpaid
Interest Amount in respect of such Non-Cash Re-draw. Upon payment
by the Seller to the Mortgages Trustee of such Further
Contribution, the aggregate Current Balance of the Mortgage Loans
constituting the Trust Property and the Seller Share of the Trust
Property shall be increased by an amount equal to the
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amount of the Further Contribution so made to the Mortgages
Trustee. The parties agree that any such Further Contribution
received by the Mortgages Trustee from the Seller will be treated
as Revenue Receipts and will be distributed to the Beneficiaries
on the immediately succeeding Distribution Date in accordance with
Clause 10 (Distribution of Revenue Receipts) below.
5.2 Further Advances
If at a future date the Seller elects not to purchase any Mortgage Loan
which becomes the subject of a Further Advance from the Mortgages
Trustee, the Seller will be solely responsible for funding any such
Further Advance and, subject to the provisions of this Deed, upon the
making of such Further Advance by the Seller, the aggregate Current
Balance of the Mortgage Loans constituting the Trust Property and the
Seller Share of the Trust Property shall be increased by an amount equal
to the amount of the Further Advance paid to the relevant Borrower.
5.3 Together Connections Mortgage Loans and Connections Mortgage Loans
If, in respect of any Together Connections Mortgage Loan or any
Connections Mortgage Loan which is in the Trust Property, there has been
a reduction in the outstanding balance of such Mortgage Loan from the
relevant Borrower being allocated a portion of the Together Connections
Mortgage Benefit or Connections Benefit (as the case may be) under such
Mortgage Loan, the aggregate Current Balance of the Mortgage Loans
constituting the Trust Property and the amount of the Seller Share of
the Trust Property shall be decreased by an amount equal to the portion
of the Together Connections Benefit or Connections Benefit (as the case
may be) allocated to such Mortgage Loan.
5.4 Further Draws under Personal Secured Loans
If, in respect of any Personal Secured Loan in the Trust Property which
permits Further Draws, the relevant Borrower requests a Further Draw and
the Administrator grants such request, the Seller will as Beneficiary
fund such Further Draw in the Mortgages Trust by making payment to the
Borrower of the Further Draw in accordance with the terms and conditions
of the relevant Personal Secured Loan. Upon payment by the Seller to the
relevant Borrower of such Further Draw, the aggregate Current Balance of
the Mortgage Loans constituting the Trust Property and the amount of the
Seller Share of the Trust Property shall be increased by an amount equal
to the amount of the Further Draw paid to the relevant Borrower.
6. Increasing the Funding Share and the Funding 2 Share of the Trust Property
6.1 Conditions precedent to the increase of the Funding Share
Subject as provided below, Funding may increase the Funding Share (as
defined in Clause 7.1 (Initial Funding Share) below) of the Trust
Property, subject to satisfaction of the following conditions precedent:
(A) no Funding Event of Default under the Transaction Documents shall
have occurred which is continuing at the relevant date;
10
(B) no Intercompany Loan Enforcement Notice has been served in respect
of any Funding Intercompany Loan;
(C) the Rating Agencies have confirmed in writing to the Mortgages
Trustee, the Security Trustee, the Funding 2 Security Trustee and
each Issuer that the proposed increase in the Funding Share of the
Trust Property would not cause the then-current ratings by the
Rating Agencies (or any of them) of the existing Notes of any
Issuer to be reduced, withdrawn or qualified;
(D) the New Notes have been issued by a Funding Issuer, the
subscription proceeds received on behalf of such Funding Issuer
and advanced by such Funding Issuer to Funding pursuant to a
Funding Intercompany Loan Agreement (which proceeds Funding will
pay to the Mortgages Trustee to increase the Funding Share of the
Trust Property on the relevant date in accordance with Clause 6.3
(Completion));
(E) if necessary, each Funding Issuer, including any New Funding
Issuer (if any) has entered into appropriate hedging arrangements;
(F) as of the last day of the immediately preceding Trust Calculation
Period the aggregate Current Balance of Mortgage Loans in the
Trust Property which were at such time in arrears for at least 3
months is less than 4 per cent. of the aggregate Current Balance
of all Mortgage Loans in the Trust Property at such time unless
the Rating Agencies have confirmed that the then-current ratings
of the Notes of each Funding Issuer will not be adversely
affected;
(G) as of the last day of the immediately preceding Trust Calculation
Period the weighted average LTV ratio of Mortgage Loans in the
Trust Property (after application of the LTV Test) on such date
does not exceed the LTV ratio (based on the LTV Test) of Mortgage
Loans in the Trust Property on the Initial Closing Date plus 0.25
per cent.;
(H) in respect of each Funding Issuer, each Issuer Reserve Fund is
fully funded on the relevant date up to the relevant Issuer
Reserve Required Amount; and
(I) as at the most recent Payment Date no deficiency was recorded on
the Issuer Principal Deficiency Ledger of any Funding Issuer,
provided always that Funding shall not be entitled to increase the
Funding Share after the Payment Date falling in January 2008 if the
option to redeem the First Issuer Notes on the Payment Date in January
2008 pursuant Condition 5 of the First Issuer Notes is not exercised.
6.2 Conditions precedent to the increase of the Funding 2 Share
Subject as provided below, Funding 2 may increase the Funding 2 Share of
the Trust Property, subject to satisfaction of the following conditions
precedent:
(A) no Funding 2 Event of Default under the Transaction Documents
shall have occurred which is continuing at the relevant date;
11
(B) no Intercompany Loan Enforcement Notice has been served in respect
of any Funding 2 Intercompany Loan;
(C) the Rating Agencies have confirmed in writing to the Mortgages
Trustee, the Security Trustee, the Funding 2 Security Trustee and
each Funding 2 Issuer that the proposed increase in the Funding 2
Share of the Trust Property would not cause the then-current
ratings by the Rating Agencies (or any of them) of the existing
Notes of any Issuer to be reduced, withdrawn or qualified;
(D) the New Notes have been issued by the Funding 2 Issuer, the
subscription proceeds received on behalf of the Funding 2 Issuer
and advanced by the Funding 2 Issuer to Funding 2 pursuant to a
Funding 2 Intercompany Loan Agreement (which proceeds Funding 2
will pay to the Mortgages Trustee to increase the Funding 2 Share
of the Trust Property on the relevant date in accordance with
Clause 6.3 (Completion));
(E) if necessary, Funding 2 and/or the Funding 2 Issuer have entered
into appropriate hedging arrangements;
(F) as of the last day of the immediately preceding Trust Calculation
Period the aggregate Current Balance of Mortgage Loans in the
Trust Property which were at such time in arrears for at least 3
months is less than 4 per cent. of the aggregate Current Balance
of all Mortgage Loans in the Trust Property at such time unless
the Rating Agencies have confirmed that the then-current ratings
of the existing Notes of the Funding 2 Issuer will not be
adversely affected;
(G) as of the last day of the immediately preceding Trust Calculation
Period the weighted average LTV ratio of Mortgage Loans in the
Trust Property (after application of the LTV Test) on such date
does not exceed the LTV ratio (based on the LTV Test) of Mortgage
Loans in the Trust Property on the Initial Closing Date plus 0.25
per cent.; and
(H) as at the most recent Payment Date no deficiency was recorded on
the Funding 2 Principal Deficiency Ledger,
provided always that Funding 2 shall not be entitled to increase the
Funding 2 Share of the Trust Property after the date falling 12 months
after the occurrence of a Step-Up Date in respect of any Series and
Class of Notes of a Funding 2 Issuer, if the option to redeem such Notes
by such date pursuant to the terms and conditions of such Notes is not
exercised.
6.3 Completion
Subject to satisfaction of the conditions precedent set out in Clause
6.1 (Conditions precedent to the Increase of the Funding Share) or
Clause 6.2 (Conditions precedent to the Increase of the Funding 2 Share)
above, Funding or Funding 2, as applicable, shall pay to the Mortgages
Trustee the consideration for such increase in the Funding Share or the
Funding 2 Share, as applicable, in accordance with Clause 4
(Consideration).
12
6.4 Distribution
The parties hereto agree that any Principal Receipts received by the
Mortgages Trustee from a Funding Beneficiary in payment of an Initial
Contribution or a Further Contribution in accordance with Clause 4
(Consideration) on any date on which such Funding Beneficiary increases
its respective Share of the Trust Property shall be allocable and
payable by the Mortgages Trustee to:
(A) the Seller (in its capacity as a Beneficiary of the Mortgages
Trust) as Initial Purchase Price or as a Special Distribution;
and/or
(B) Funding (in its capacity as a Beneficiary of the Mortgages Trust)
as a Special Distribution (in respect of Further Contributions
made by Funding 2),
in each case, on such date whether or not such date is a Distribution
Date. Any such Initial Purchase Price or Special Distribution shall
reduce the Seller Share or the Funding Share of the Trust Property (as
applicable) by the amount of such Initial Purchase Price or Special
Distribution.
7. Initial Funding Share and Initial Seller Share
7.1 Initial Funding Share
The "Initial Funding Share" of the Trust Property shall be (GBP)86.61 at
26 March, 2001 and (GBP)1,500,000,000 at the Initial Closing Date and
the "Initial Funding Share Percentage" shall be the Initial Funding
Share expressed as a percentage of the Trust Property at such date, that
is to say, 86.61 per cent. References herein to the "Funding Share"
shall mean, prior to the first Distribution Date, the Initial Funding
Share and thereafter shall mean the Current Funding Share (as defined
below).
7.2 Initial Seller Share
The "Initial Seller Share" of the Trust Property shall be the sum which
remains of the Trust Property after deduction of the Initial Funding
Share. The Initial Seller Share of the Trust Property will be (GBP)13.39
at 26 March, 2001 and (GBP)232,000,000 at the Initial Closing Date and
the "Initial Seller Share Percentage" shall be equal to 100 per cent.
minus the Initial Funding Share Percentage, that is to say, 13.39 per
cent. The amount of the Initial Seller Share and the Initial Seller
Share Percentage on the Initial Closing Date will be determined
immediately after the Initial Closing Date. References herein to the
"Seller Share" shall mean, prior to the first Distribution Date, the
Initial Seller Share and thereafter shall mean the Current Seller Share
(as defined below).
7.3 Initial Funding 2 Share
The "Initial Funding 2 Share" of the Trust Property shall, following the
sale and assignment by the Seller of part of the Seller Share of the
Trust Property to Funding 2 in accordance with the Seller Share
Assignment Agreement, be (GBP)100. References herein to the "Funding 2
Share" shall, from (and including) the Funding 2 Programme Date to (but
excluding) the first Closing Date in relation to the issue of Notes by a
Funding 2 Issuer, mean the Initial Funding 2 Share and thereafter shall
mean the Current Funding 2 Share.
13
7.4 Rounding of percentage shares
Except for the Initial Closing Date on which the Funding Share
Percentage and the Seller Share Percentage shall be calculated to two
decimal places, and unless otherwise agreed by the Beneficiaries, the
Current Funding Share Percentage, the Current Funding 2 Share Percentage
and the Current Seller Share Percentage shall be calculated to five
decimal places.
8. Adjustment of Funding Share Percentage, Funding 2 Share Percentage and
Seller Share Percentage
8.1 Effective Periods
(A) Subject to Clause 8.1(B) below, the Cash Manager will (on behalf
of the Mortgages Trustee and the Beneficiaries) recalculate the
Funding Share, the Funding Share Percentage, the Funding 2 Share,
the Funding 2 Share Percentage, the Seller Share and the Seller
Share Percentage in respect of each Trust Calculation Period on
the Distribution Date occurring in such Trust Calculation Period,
based on the aggregate Current Balance of the Mortgage Loans
constituting the Trust Property (as adjusted from time to time) on
the last day of the Trust Calculation Period immediately preceding
such Distribution Date.
(B) Notwithstanding Clause 8.1(A) above, if during any Trust
Calculation Period the Seller sells and assigns New Mortgage Loans
to the Mortgages Trustee or if a Funding Beneficiary makes a
Contribution (excluding any Deferred Contribution) to the
Mortgages Trustee to increase its respective share of the Trust
Property, the recalculation of the Funding Share, the Funding
Share Percentage, the Funding 2 Share, the Funding 2 Share
Percentage, the Seller Share and the Seller Share Percentage made
by the Cash Manager on the Distribution Date occurring in such
Trust Calculation Period will be effective only in respect of the
period beginning on (and including) the first day of such Trust
Calculation Period and ending on (but excluding) the first
Assignment Date or Contribution Date, as applicable, to occur
during such Trust Calculation Period (such period in respect of
such Distribution Date, an "Interim Calculation Period"), based on
the aggregate Current Balance of the Mortgage Loans constituting
the Trust Property (as adjusted from time to time) on the last day
of the Trust Calculation Period immediately preceding such
Distribution Date.
(C) In addition to the foregoing, if during any Trust Calculation
Period the Seller sells and assigns New Mortgage Loans to the
Mortgages Trustee or if a Funding Beneficiary makes a Contribution
(excluding any Deferred Contribution) to the Mortgages Trustee to
increase its respective share of the Trust Property, the Cash
Manager will (on behalf of the Mortgages Trustee and the
Beneficiaries) recalculate the Funding Share, the Funding Share
Percentage, the Funding 2 Share, the Funding 2 Share Percentage,
the Seller Share and the Seller Share Percentage on such
Assignment Date or Contribution Date, as applicable, in respect of
the period beginning on (and including) such Assignment Date or
Contribution Date, as applicable, and ending on the last day of
such Trust Calculation Period (and including such
14
last day of such Trust Calculation Period) (each such period in
respect of each Assignment Date or Contribution Date, as
applicable, an "Interim Calculation Period"), based on the
aggregate Current Balance of the Mortgage Loans constituting the
Trust Property (as adjusted from time to time) on such Assignment
Date or Contribution Date, as applicable.
The parties acknowledge and agree that the Mortgage Sale Agreement
provides that (a) the Seller may not sell and assign New Mortgage Loans
to the Mortgages Trustee during any Trust Calculation Period prior to
the Distribution Date in such Trust Calculation Period, and (b) the
Seller may only make one sale and assignment of New Mortgage Loans to
the Mortgages Trustee during any Trust Calculation Period.
8.2 Current Funding Share Percentage and Current Funding 2 Share Percentage
I. Current Funding Share Percentage:
(A) On each Distribution Date (the "Relevant Distribution
Date"), the "Current Funding Share Percentage" will be
calculated by the Cash Manager in respect of the
then-current Trust Calculation Period or related Interim
Calculation Period, as applicable, for the purpose of
calculating the distributions to be made from the Trust
Property on the immediately succeeding Distribution Date,
and such Current Funding Share Percentage will be an amount,
expressed as a percentage (calculated to an accuracy of five
decimal places (rounded upwards)), equal to:
A-B-C+D x 100
-------
G
where,
A = the Current Funding Share as calculated (a) on the
later of the Distribution Date, the Assignment Date or
Contribution Date (if any) immediately preceding such
Relevant Distribution Date, or (b) in the case of the
first Distribution Date, the Initial Funding Share as
at the Initial Closing Date;
B = the amount of any Principal Receipts distributed to
Funding on such Relevant Distribution Date in
accordance with the provisions described in Clause 11
(Distribution of Principal Receipts) below;
C = the amount of any Losses sustained on the Mortgage
Loans during the Trust Calculation Period immediately
preceding such Relevant Distribution Date and the
amount of any reductions occurring in respect of the
Mortgage Loans as described in paragraphs (A through
(E of Clause 8.5 (Adjustments to Trust Property)
(inclusive) below which have been allocated to Funding
in the Trust Calculation Period ending on the Relevant
Distribution Date (based on (a) the Current Funding
Share Percentage thereof calculated on the
Distribution Date immediately preceding such Relevant
Distribution Date (provided that the Seller had not
sold and assigned New Mortgage Loans to the Mortgages
Trustee or that Funding had not paid a Further
Contribution
15
to the Mortgages Trustee in the Trust Calculation
Period immediately preceding such Relevant
Distribution Date), or (b) to the extent that the
Seller had sold and assigned New Mortgage Loans to the
Mortgages Trustee or that Funding had paid a Further
Contribution to the Mortgages Trustee during the Trust
Calculation Period immediately preceding such Relevant
Distribution Date, the Weighted Average Funding Share
Percentage (as defined below) thereof calculated on
such Relevant Distribution Date prior to the
distribution to be made on such Relevant Distribution
Date, or (c) in the case of the first Distribution
Date, the Initial Funding Share Percentage);
D = an amount equal to any Capitalised Arrears which
have been allocated to Funding during the Trust
Calculation Period immediately preceding such Relevant
Distribution Date (based on the Current Funding Share
Percentage thereof calculated on the Distribution Date
immediately preceding such Relevant Distribution Date
or, in the case of the first Distribution Date, the
Initial Funding Share Percentage); and
G = the amount of the Mortgages Trustee Retained
Principal Receipts (if any) plus the aggregate Current
Balance of all the Mortgage Loans in the Trust
Property as at the last day of the Trust Calculation
Period immediately preceding such Relevant
Distribution Date or, if applicable, on the relevant
Assignment Date or Contribution Date, after making the
distributions, allocations and additions referred to
in (B), (C) and (D) above and after taking account of
the following (being "Trust Property Calculation
Adjustments") (i) any distribution of Principal
Receipts to the Seller, Funding and Funding 2, (ii)
the amount of any Losses or Capitalised Arrears
allocated to the Seller, Funding and Funding 2, (iii)
the adjustments referred to in paragraphs (A through
(E of Clause 8.5 (Adjustments to Trust Property)
(inclusive) below; (iv) the amount of any other
additions to or removals from the Trust Property
during such Trust Calculation Period, including
without limitation, any additions to the Trust
Property resulting from Cash Re-draws, Non-Cash
Redraws and Further Draws by Borrowers under Flexible
Mortgage Loans which are in the Trust Property or (if
the Seller subsequently elects not to purchase
Mortgage Loans which are the subject of Further
Advances from the Mortgages Trustee) Further Advances
sold and assigned by the Seller; but excluding the
addition of Mortgage Loans on an Assignment Date and
any Initial Contribution or Further Contribution made
by Funding or Funding 2 during such Trust Calculation
Period and (v) any reduction in the outstanding
principal balances of Together Connections Mortgage
Loans and Connections Mortgage Loans resulting from
Borrowers being allocated a portion of the related
Together Connections Benefit and Connections Benefit,
respectively, under such Mortgage Loans.
(B) If during any Trust Calculation Period the Seller sells and
assigns New Mortgage Loans to the Mortgages Trustee, the
Cash Manager will recalculate the Current Funding Share
Percentage on each such Assignment Date which is
16
not also a Contribution Date (the "Relevant Assignment
Date") in respect of the related Interim Calculation Period,
for the purposes of calculating the distributions to be made
from the Trust Property on the immediately succeeding
Distribution Date and determining the amount of Losses to be
allocated to Funding, and such Current Funding Share
Percentage will be an amount, expressed as a percentage
(calculated to an accuracy of five decimal places (rounded
upwards)), equal to:
A+E x 100
---
H
where,
A = the Current Funding Share as calculated on the
Distribution Date immediately preceding such Relevant
Assignment Date;
E = an amount equal to any Initial Contribution paid by
Funding to the Mortgages Trustee on such Relevant
Assignment Date in relation to the Funding Share of
any New Mortgage Loans assigned to the Mortgages
Trustee on such Relevant Assignment Date (which amount
the Mortgages Trustee is required pursuant to Clause
4.4 (Application by Mortgages Trustee) to pay to the
Seller in satisfaction (in part) of the Mortgages
Trustee's obligation to pay to the Seller the Initial
Purchase Price in respect of New Mortgage Loans sold
and assigned to the Mortgages Trustee on such Relevant
Assignment Date); and
H = the amount of the Mortgages Trustee Retained
Principal Receipts (if any), plus the aggregate
Current Balance of all the Mortgage Loans in the Trust
Property as at the Distribution Date immediately
preceding such Relevant Assignment Date (after making
the distributions, allocations and additions on that
preceding Distribution Date), plus the aggregate
Current Balance of the New Mortgage Loans sold and
assigned to the Mortgages Trustee on such Relevant
Assignment Date and after taking account of Trust
Property Calculation Adjustments.
(C) If during any Trust Calculation Period a Funding Beneficiary
pays a Contribution (excluding a Deferred Contribution) to
the Mortgages Trustee to increase its share of the Trust
Property or receives from the Mortgages Trustee a Special
Distribution (where such Special Distribution is not made on
a Distribution Date) in accordance with Clause 11
(Distribution of Principal Receipts), the Cash Manager will
recalculate the Current Funding Share Percentage on each
such Contribution Date (the "Relevant Contribution Date") in
respect of the related Interim Calculation Period, for the
purposes of calculating the distributions to be made from
the Trust Property and determining the amount of Losses to
be allocated to Funding on the immediately succeeding
Distribution Date, and such Current Funding Share Percentage
will be an amount, expressed as a percentage (calculated to
an accuracy of five decimal places (rounded upwards)), equal
to:
17
A+E+F-I x 100
-------
J
where,
A = the Current Funding Share as calculated on the
Distribution Date immediately preceding such Relevant
Contribution Date;
E = (1) if that Relevant Contribution Date is also an
Assignment Date, the amount of any Initial
Contribution paid by Funding to the Mortgages Trustee
on that Contribution Date in respect of the Funding
Share of any New Trust Property, and (2) in all other
cases, zero;
F = an amount equal to any Further Contribution paid by
Funding to the Mortgages Trustee on such Relevant
Contribution Date to increase Funding's beneficial
interest in the Trust Property;
I = the amount of the Special Distribution distributed
to Funding on such date in accordance with the
provisions described in Clause 11 (Distribution of
Principal Receipts); and
J = the amount of the Mortgages Trustee Retained
Principal Receipts (if any) plus the aggregate Current
Balance of all the Mortgage Loans in the Trust
Property as at the Distribution Date immediately
preceding such Relevant Contribution Date (after
making the distributions, allocations and additions on
that preceding Distribution Date) plus the aggregate
Current Balance of the New Mortgage Loans sold and
assigned to the Mortgages Trustee on that Relevant
Assignment Date and after taking account of Trust
Property Calculation Adjustments.
II. Current Funding 2 Share Percentage
(A) On each Relevant Distribution Date falling after the Funding
2 Programme Date, the "Current Funding 2 Share Percentage"
will be calculated by the Cash Manager in respect of the
then-current Trust Calculation Period or related Interim
Calculation Period, as applicable, for the purpose of
calculating the distributions to be made from the Trust
Property on the immediately succeeding Distribution Date,
and such Current Funding 2 Share Percentage will be an
amount, expressed as a percentage (calculated to an accuracy
of five decimal places (rounded upwards)), equal to:
A-B-C+D x 100
-------
G
where, "A", "B", "C", "D" and "G" have the meanings
specified in Clause 8.2(I)(A), provided however that:
(1) references to Funding (including references in any
defined term) are to be read as references to Funding
2;
18
(2) references to the first Distribution Date are to be
read as the first Distribution Date following the
Funding 2 Programme Date; and
(3) references to the Initial Closing Date are to be read
as the Funding 2 Programme Date;
(4) prior to the Funding 2 Programme Date, each of the
Current Funding 2 Share and the Current Funding 2
Share Percentage shall be zero.
(B) On each Relevant Assignment Date, the Cash Manager will
recalculate the Current Funding 2 Share Percentage in
respect of the related Interim Calculation Period, for the
purposes of calculating the distributions to be made from
the Trust Property on the immediately succeeding
Distribution Date and determining the amount of Losses to be
allocated to Funding 2, and such Current Funding 2 Share
Percentage will be an amount, expressed as a percentage
(calculated to an accuracy of five decimal places (rounded
upwards)), equal to:
A+E x 100
---
H
where, "A", "E" and "H" have the meanings specified in
clause 8.2(I)(B), provided, however that references to
Funding (including references in any defined term) are to be
read as references to Funding 2.
(C) On each Relevant Contribution Date, the Cash Manager will
recalculate the Current Funding 2 Share Percentage in
respect of the related Interim Calculation Period, for the
purposes of calculating the distributions to be made from
the Trust Property and determining the amount of Losses to
be allocated to Funding 2 on the immediately succeeding
Distribution Date, and such Current Funding 2 Share
Percentage will be an amount, expressed as a percentage
(calculated to an accuracy of five decimal places (rounded
upwards)), equal to:
A+E+F x 100
-------
J
where, "A", "E", "F" and "J" have the meanings specified in
clause 8.2(I)(C), provided, however that references to
Funding (including references in any defined term) are to be
read as references to Funding 2.
(D) For the purposes of Clauses 8.2(II)(A), 8.2(II)(B) and
8.2(II)(C) above, in respect of the earliest to occur,
following the Funding 2 Programme Date, of (a) a
Distribution Date, (b) a Contribution Date or (c) an
Assignment Date, item "A" shall be the Initial Funding 2
Share.
19
8.3 Weighted Average Funding Share Percentage and Weighted Average Funding 2
Share Percentage
(A) Weighted Average Funding Share Percentage:
On any Distribution Date in respect to which:
(1) the Seller had sold and assigned New Mortgage Loans to the
Mortgages Trustee; or
(2) a Funding Beneficiary had made a Contribution (excluding any
Deferred Contribution) to the Mortgages Trustee to increase
its share of the Trust Property; or
(3) Funding had received a Special Distribution from the
Mortgages Trustee,
during the Trust Calculation Period immediately preceding such
Distribution Date, the Cash Manager (on behalf of the
Beneficiaries) will calculate (for the sole purpose of making the
distributions to be made on such Distribution Date) the Weighted
Average of the Current Funding Share Percentages that were
calculated previously in respect of each Interim Calculation
Period occurring in such immediately preceding Trust Calculation
Period based on the amount of Revenue Receipts and Principal
Receipts received and Losses sustained during each such Interim
Calculation Period. The "Weighted Average Funding Share
Percentage" for any such Distribution Date will be equal to:
(i) in respect of the distribution of Revenue Receipts to
be made on such Distribution Date, an amount
determined in accordance with the formula set forth
below:
(AxB) + (CxD)
where,
A = the related Current Funding Share Percentage
for Interim Calculation Period 1;
B = the number of days in Interim Calculation
Period 1 divided by the number of days in the
Trust Calculation Period;
C = the related Current Funding Share Percentage
for Interim Calculation Period 2; and
D = the number of days in Interim Calculation
Period 2 divided by the number of days in the
Trust Calculation Period;
(ii) in respect of the distribution of Principal Receipts
to be made on such Distribution Date, an amount
determined in accordance with the formula set forth
below:
(AxB) + (CxD)
▇▇
▇▇▇▇▇, "▇", "▇", "C" and "D" have the meanings
specified in Clause 8.3(A)(i) above.
(iii) in respect of the allocation of Losses to be made on
such Distribution Date, an amount determined in
accordance with the formula set forth below:
(AxB) + (CxD)
where, "A", "B", "C" and "D" have the meanings
specified in Clause 8.3(A)(i) above.
(B) Weighted Average Funding 2 Share Percentage
On any Distribution Date in respect to which:
(1) the Seller had sold and assigned New Mortgage Loans to
the Mortgages Trustee; or
(2) a Funding Beneficiary had made a Contribution
(excluding any Deferred Contribution) to the Mortgages
Trustee to increase its share of the Trust Property;
or
(3) Funding had received a Special Distribution from the
Mortgages Trustee,
during the Trust Calculation Period immediately preceding
such Distribution Date, the Cash Manager (on behalf of the
Beneficiaries) will calculate (for the sole purpose of
making the distributions to be made on such Distribution
Date) the Weighted Average of the Current Funding 2 Share
Percentages that were calculated previously in respect of
each Interim Calculation Period occurring in such
immediately preceding Trust Calculation Period based on the
amount of Revenue Receipts and Principal Receipts received
and Losses sustained during each such Interim Calculation
Period. The "Weighted Average Funding 2 Share Percentage"
for any such Distribution Date will be equal to:
(i) in respect of the distribution of Revenue Receipts to
be made on such Distribution Date, an amount
determined in accordance with the formula set forth
below:
(AxB) + (CxD)
where, "A", "B", "C" and "D" have the meanings
specified in Clause 8.3(A)(i) above; provided however
that the references to Current Funding Share
Percentage are to be read as references to Current
Funding 2 Share Percentage.
(ii) in respect of the distribution of Principal Receipts
to be made on such Distribution Date, an amount
determined in accordance with the formula set forth
below:
21
(AxB) + (CxD)
where, "A", "B", "C" and "D" have the meanings
specified in Clause 8.3(A)(i) above; provided however
that the references to Current Funding Share
Percentage are to be read as references to Current
Funding 2 Share Percentage.
(iii) in respect of the allocation of Losses to be made on
such Distribution Date, an amount determined in
accordance with the formula set forth below:
(AxB) + (CxD)
where, "A", "B", "C" and "D" have the meanings
specified in Clause 8.3(A)(i) above; provided however
that the references to Current Funding Share
Percentage are to be read as references to Current
Funding 2 Share Percentage.
8.4 Current Funding Share and Current Funding 2 Share
I. Current Funding Share
(A) On each Distribution Date, the "Current Funding Share" will be
calculated by the Cash Manager in respect of the then-current
Trust Calculation Period or the related Interim Calculation
Period, as applicable, and will be an amount equal to:
A-B-C+D
where "A", "B", "C" and "D" have the meanings specified in Clause
8.2(I)(A) above.
(B) On each Assignment Date (which is not also a Contribution Date),
the Current Funding Share will be calculated by the Cash Manager
in respect of the related Interim Calculation Period and will be
an amount equal to:
A + E
where "A" and "E" have the meanings specified in Clause 8.2(I)(B)
above.
(C) On each Contribution Date, the Current Funding Share will be
calculated by the Cash Manager in respect of the related Interim
Calculation Period and will be an amount equal to:
A+E+F-I
where "A", "E" and "F" and "I" have the meanings specified in
Clause 8.2(I)(C) above.
22
II. Current Funding 2 Share
(A) On each Distribution Date, the "Current Funding 2 Share" will be
calculated by the Cash Manager in respect of the then-current
Trust Calculation Period or the related Interim Calculation
Period, as applicable, and will be an amount equal to:
A-B-C+D
where "A", "B", "C" and "D" have the meanings specified in Clause
8.2(II)(A) above.
(B) On each Assignment Date (which is not also a Contribution Date),
the Current Funding 2 Share will be calculated by the Cash Manager
in respect of the related Interim Calculation Period and will be
an amount equal to:
A+E
where "A" and "E" have the meanings specified in Clause
8.2(II)(B).
(C) On each Contribution Date, the Current Funding 2 Share will be
calculated by the Cash Manager in respect of the related Interim
Calculation Period and will be an amount equal to:
A+E+F
where "A", "E" and "F" have the meanings specified in Clause
8.2(II)(C) above.
8.5 Adjustments to Trust Property
If any of the following events has occurred during a Trust Calculation
Period, then (subject to the Cash Manager receiving notice or otherwise
being aware of the occurrence of the event) for the purposes of making
the Trust Property Calculation Adjustments, the aggregate Current
Balance of the Mortgage Loans constituting the Trust Property shall be
reduced or, as the case may be, deemed to be reduced:
(A) any Borrower exercises a right of set-off in relation to any
Mortgage Loan in the Trust Property so that the amount of
principal and/or interest owing under such Mortgage Loan is
reduced but no corresponding payment is received by the Mortgages
Trustee, in which event the aggregate Current Balance of the
Mortgage Loans constituting the Trust Property shall be reduced by
an amount equal to the amount so set-off by such Borrower; and/or
(B) a Mortgage Loan or (as applicable) its Related Security (i) is in
breach of the Representations and Warranties in the Mortgage Sale
Agreement as at the Initial Closing Date or, as the case may be,
the relevant Assignment Date or (ii) is the subject of a Product
Switch or a Further Advance or in respect of which the Borrower
has accepted an offer by the Seller of a Personal Secured Loan and
the Seller has elected to purchase the relevant Mortgage Loan or
Mortgage Loans and Related Security, and in the case of (i) above
the Seller fails to repurchase and in the case of (ii) above the
Seller fails to purchase, the
23
relevant Mortgage Loan or Mortgage Loans under the relevant
Mortgage Account and their Related Security as required by the
terms of the Mortgage Sale Agreement; in which event the aggregate
Current Balance of the Mortgage Loans constituting the Trust
Property shall be deemed to be reduced for the purposes of making
the Trust Property Calculation Adjustments by an amount equal to
the Current Balance of the relevant Mortgage Loan or Mortgage
Loans under the relevant Mortgage Account (together with Arrears
of Interest and Accrued Interest) which the Seller has failed to
repurchase or purchase, as applicable; and/or
(C) both the Security Trustee and the Funding 2 Security Trustee are
notified that a Flexible Mortgage Loan or part thereof has been
determined by a court judgment on the point or as a result of a
determination by a relevant regulatory authority (whether or not
in relation to an analogous flexible mortgage loan product of
another UK mortgage lender):
(1) to be unenforceable; and/or
(2) not to fall within the first ranking charge by way of legal
mortgage or first ranking standard security over the
relevant Mortgaged Property,
and, in either case, such Flexible Mortgage Loan is not otherwise
subject to the repurchase obligation under the Mortgage Sale
Agreement, in which event, the aggregate Current Balance of the
Mortgage Loans constituting the Trust Property shall be deemed to
be reduced for the purposes of making the Trust Property
Calculation Adjustments by an amount equal to that portion of the
Current Balance of the Flexible Mortgage Loan which is so
determined to be unenforceable or not to fall within the first
ranking charge by way of legal mortgage or first ranking standard
security over the relevant Mortgaged Property; and/or
(D) (i) in respect of breaches of Representations and Warranties in
the Mortgage Sale Agreement, the Seller would be required to
repurchase a Mortgage Loan and its Related Security and (ii) in
respect of a Mortgage Loan subject to a Further Advance or a
Product Switch or in respect of which the Borrower has accepted an
offer by the Seller of a Personal Secured Loan, the Seller elects
to purchase the relevant Mortgage Loan or Mortgage Loans under the
relevant Mortgage Account (including any Personal Secured Loans
and any Further Draws made thereunder secured over the same
Mortgaged Property) and their Related Security in accordance with
the terms of the Mortgage Sale Agreement, but such Mortgage Loan
and its Related Security are not capable of being repurchased or
purchased, as applicable; in which event the aggregate Current
Balance of the Mortgage Loans constituting the Trust Property
shall be deemed to be reduced for the purposes of making the Trust
Property Calculation Adjustments by an amount equal to the Current
Balance of the relevant Mortgage Loan (together with Arrears of
Interest and Accrued Interest) which is not capable of being
repurchased or purchased, as applicable; and/or
(E) the Seller breaches any other material warranty under the Mortgage
Sale Agreement and/or (for so long as it is the Administrator) the
Administration
24
Agreement, in which event the aggregate Current Balance of
Mortgage Loans constituting the Trust Property shall be deemed for
the purposes of making the Trust Property Calculation Adjustments
to be reduced by an amount equivalent to all losses, costs,
liabilities, claims, expenses and damages incurred by the
Beneficiaries as a result of such breach.
The reductions and deemed reductions set out in paragraphs (A),
(B), (C), (D) and (E) (including any resulting loss in respect
thereof) of this Clause and any losses arising in respect of any
Personal Secured Loans shall, subject to Clause 9.1 (Initial
Minimum Seller Share), be allocated on the relevant Distribution
Date, Assignment Date or Contribution Date (as applicable) first
to the Seller Share of the Trust Property (or for the purposes of
calculating the Seller Share of the Trust Property as the case may
be) until the Seller Share is zero and thereafter shall be
allocated to the Funding Share and the Funding 2 Share of the
Trust Property pro rata in accordance with the Funding Proportion
and the Funding 2 Proportion. If at, or any time after the Initial
Closing Date the Mortgages Trustee holds, or there is held to its
order, or it receives, or there is received to its order, any
property, interest, right or benefit relating to the whole or that
portion of any Mortgage Loan and its Related Security which is or
has been subject to any matter described in paragraphs (A) through
(E) above or any Personal Loan in respect of which losses have
arisen and in respect of which the Seller Share of the Trust
Property has been reduced or deemed reduced such property,
interest, right or benefit will constitute a Revenue Receipt and
the Mortgages Trustee will remit, assign or transfer the same to
Funding and to Funding 2 pro rata in accordance with the Funding
Proportion and the Funding 2 Proportion (but only if and to the
extent that the related reductions or deemed reductions were
applied against the Funding Share and the Funding 2 Share of the
Trust Property) and thereafter to the Seller, as the case may
require, and until it does so or to the extent that the Mortgages
Trustee is unable to effect such remittance, assignment or
transfer, the Mortgages Trustee will hold such property, interest,
right or benefit and/or the proceeds thereof upon trust absolutely
for Funding and/or Funding 2 and/or the Seller (separate from the
Mortgages Trust), as the case may require.
8.6 Current Seller Share Percentage
(A) On each Relevant Distribution Date, the "Current Seller Share
Percentage" will be calculated by the Cash Manager in respect of
the then-current Trust Calculation Period or the related Interim
Calculation Period, as applicable, and the distributions to be
made from the Trust Property on the immediately succeeding
Distribution Date, and will be a percentage equal to:
100% minus the sum of the Current Funding Share Percentage and the
Current Funding 2 Share Percentage
where the Current Funding Share Percentage and the Current Funding
2 Share Percentage are calculated on such Relevant Distribution
Date in accordance with Clauses 8.2(I)(A) and 8.2(II)(A)
respectively.
(B) On each Relevant Assignment Date, the Cash Manager will
recalculate the Current Seller Share Percentage in respect of the
related Interim Calculation
25
Period and the distributions to be made from the Trust Property on
the immediately succeeding Distribution Date and will be a
percentage equal to:
100% minus the sum of the Current Funding Share Percentage and the
Current Funding 2 Share Percentage
where the Current Funding Share Percentage and the Current Funding
2 Share Percentage are as calculated on such Relevant Assignment
Date in accordance with Clauses 8.2(I)(B) and 8.2(II)(B)
respectively.
(C) On each Relevant Contribution Date, the Cash Manager will
recalculate the Current Seller Share Percentage in respect of the
related Interim Calculation Period and the distributions to be
made from the Trust Property on the immediately succeeding
Distribution Date and will be a percentage equal to:
100% minus the sum of the Current Funding Share Percentage and the
Current Funding 2 Share Percentage
where the Current Funding Share Percentage and the Current Funding
2 Share Percentage are as calculated on such Relevant Contribution
Date in accordance with Clauses 8.2(I)(C) and 8.2(II)(C)
respectively.
8.7 Weighted Average Seller Share Percentage
On any Distribution Date in respect to which:
(1) the Seller has assigned New Mortgage Loans to the Mortgages
Trustee; or
(2) a Funding Beneficiary has made a Contribution (excluding a
Deferred Contribution) to the Mortgages Trustee to increase its
share of the Trust Property; or
(3) Funding had received a Special Distribution from the Mortgages
Trustee,
during the Trust Calculation Period immediately preceding such
Distribution Date, the Cash Manager will calculate (for the sole purpose
of making the distributions to be made on such Distribution Date) the
Weighted Average of the Seller Share Percentages that were calculated
previously in respect of the Revenue Receipts and Principal Receipts
received, and Losses sustained, during each Interim Calculation Period
occurring in such immediately preceding Trust Calculation Period and
will be a percentage equal to:
(A) in respect of the distribution of Revenue Receipts to be made on
such Distribution Date:
100% minus the sum of the Weighted Average Funding Share
Percentage and the Weighted Average Funding 2 Share Percentage
where such Weighted Average Funding Share Percentage and Weighted
Average Funding 2 Share Percentage are as calculated on such
Distribution Date in accordance with Clauses 8.3(A)(i) and
8.3(B)(i) respectively;
26
(B) in respect of the distribution of Principal Receipts to be made on
such Distribution Date:
100% minus the sum of the Weighted Average Funding Share
Percentage and the Weighted Average Funding 2 Share Percentage
where such Weighted Average Funding Share Percentage and Weighted
Average Funding 2 Share Percentage are as calculated on such
Distribution Date in accordance with Clauses 8.3(A)(ii) and
8.3(B)(ii) respectively; and
(C) in respect of the allocation of Losses to be made on such
Distribution Date:
100% minus the sum of the Weighted Average Funding Share
Percentage and the Weighted Average Funding 2 Share Percentage
where such Weighted Average Funding Share Percentage and Weighted
Average Funding 2 Share Percentage are as calculated on such
Distribution Date in accordance with Clauses 8.3(A)(iii) and
8.3(B)(iii) respectively.
8.8 Current Seller Share
(A) On each Relevant Distribution Date, the "Current Seller Share"
will be calculated by the Cash Manager in respect of the
then-current Trust Calculation Period or the related Interim
Calculation Period, as applicable, and will be an amount equal to:
The aggregate amount of the Trust Property (excluding Revenue
Receipts) as at the Relevant Distribution Date minus the sum of
the Current Funding Share and the Current Funding 2 Share
where "Current Funding Share" and "Current Funding 2 Share" are as
calculated on such Relevant Distribution Date in accordance with
Clauses 8.4(I)(A) and 8.4(II)(A) respectively.
(B) On each Relevant Assignment Date, the Current Seller Share will be
calculated by the Cash Manager in respect of the related Interim
Calculation Period and will be an amount equal to:
The aggregate amount of the Trust Property (excluding Revenue
Receipts) as at an Assignment Date minus the sum of the Current
Funding Share and the Current Funding 2 Share
where "Current Funding Share" and "Current Funding 2 Share" are as
calculated on such Relevant Assignment Date in accordance with
Clauses 8.4(I)(B) and 8.4(II)(B) above.
(C) On each Relevant Contribution Date, the Current Seller Share will
be calculated by the Cash Manager in respect of the Interim
Calculation Period and will be an amount equal to:
27
The aggregate amount of the Trust Property (excluding Revenue
Receipts) as at a Contribution Date minus the sum of the Current
Funding Share and the Current Funding 2 Share
where "Current Funding Share" and "Current Funding 2 Share" are as
calculated on such Relevant Contribution Date in accordance with
Clauses 8.4(I)(C) and 8.4(II)(C) respectively.
8.9 Funding Share/Funding 2 Share/Seller Share
The Funding Share, the Funding 2 Share and the Seller Share may not be
reduced below zero. At all times the sum of the Funding Share
Percentage, the Funding 2 Share Percentage and the Seller Share
Percentage shall be equal to 100 per cent. of the Trust Property.
9. Minimum Seller Share
9.1 Initial Minimum Seller Share
The Seller Share of the Trust Property includes an amount equal to the
Minimum Seller Share. Unless and until both the Funding Share and the
Funding 2 Share of the Trust Property are in an amount equal to zero or
following the occurrence of an Asset Trigger Event, the Seller will not
be entitled to receive Mortgages Trustee Principal Receipts which would
reduce the Seller Share of the Trust Property to an amount less than the
Minimum Seller Share and the Seller consents and directs the Mortgages
Trustee accordingly.
9.2 Fluctuation of Minimum Seller Share on each Distribution Date
At the Initial Closing Date, the Minimum Seller Share will be
(GBP)50,000,000. The amount of the Minimum Seller Share will be
recalculated on each Distribution Date in accordance with the following
formula:
W+X+Y+Z
where:
W = 100% of the sum of the average cleared credit balance of all
applicable accounts linked to Together Connections Mortgage Loans
and Connections Mortgage Loans in respect of each calendar month
or any part of any such calendar month;
X = 2.0% of the aggregate Current Balance of all Mortgage Loans
comprised in the Trust Property as at the last day of the
immediately preceding Trust Calculation Period;
Y = the product of: p x q x r where:
p = 8%;
q = the sum of (i) the "Flexible Cash Re-Draw Capacity", being
an amount equal to the difference between (1) the maximum
amount of
28
Cash Re-draws that Borrowers may draw under Flexible
Mortgage Loans included in the Trust Property (whether or
not drawn) as at the last day of the immediately preceding
Trust Calculation Period and (2) the aggregate Current
Balance of Cash Re-draws which form part of the Trust
Property as at the last day of the immediately preceding
Trust Calculation Period; and (ii) the "Further Draw
Capacity", being an amount equal to the difference between
(1) the maximum amount of Further Draws that Borrowers may
make under Personal Secured Loans included in the Trust
Property (whether or not drawn) as at the last day of the
immediately preceding Trust Calculation Period and (2) the
aggregate Current Balance of Personal Secured Loans which
form part of the Trust Property as at the last day of the
immediately preceding Trust Calculation Period; and
r = 3; and
Z = the aggregate Current Balance of (i) Re-Draws and (ii) Personal
Secured Loans in the Trust Property, in each case as at the last
day of the immediately preceding Trust Calculation Period.
9.3 Recalculation of Minimum Seller Share following occurrence of
exceptional events
The calculation of the Minimum Seller Share in accordance with Clause
9.2 (Fluctuation of Minimum Seller Share on each Distribution Date)
above will be recalculated by the Cash Manager with the agreement of the
parties hereto subject to the approval of the Rating Agencies if the
Seller merges or otherwise combines its business with another bank or
other financial institution so as to increase the risks associated with
Borrowers holding deposits in Northern Rock accounts.
10. Distribution of Revenue Receipts
10.1 Distribution of Third Party Amounts
Pursuant to the Cash Management Agreement, the Cash Manager (at the
direction of the Mortgages Trustee acting on behalf of the Beneficiaries
at their direction and with their consent which is hereby given) will
deduct, as and when identified, Third Party Amounts from the Revenue
Receipts standing to the credit of the Mortgages Trustee GIC Account or
Mortgages Trustee Transaction Account, and pay over the same to the
proper recipients thereof. The Mortgages Trustee and the Beneficiaries
hereby consent to such deductions.
10.2 Distribution of Mortgages Trustee Available Revenue Receipts
Subject as provided in Clause 8.5 (Adjustments to Trust Property), on
each Distribution Date the Cash Manager (at the direction of the
Mortgages Trustee acting on behalf of the Beneficiaries at their
direction and with their consent which is hereby given) will distribute
Mortgages Trustee Available Revenue Receipts in the following order of
priority:
29
(A) first, in no order of priority between them but in proportion to
the respective amounts due of:
(1) any fees, costs, charges, liabilities and expenses then due
or to become due to the Mortgages Trustee under the
provisions of this Deed together with (if applicable) VAT
thereon (to the extent not already included) as provided
herein; and
(2) any amounts due and payable by the Mortgages Trustee to
third parties in respect of the Mortgages Trust but only if
incurred without breach by the Mortgages Trustee of the
documents to which it is a party and payment has not been
provided for elsewhere;
(B) second, in no order of priority between them but in proportion to
the respective amounts due of:
(1) any remuneration then due and payable to the Administrator
and any costs, charges, liabilities and expenses then due or
to become due to the Administrator under the provisions of
the Administration Agreement prior to the immediately
succeeding Distribution Date, in each case together with (if
applicable) VAT thereon (to the extent not already included)
as provided therein; and
(2) any remuneration then due and payable to the Cash Manager
and any costs, charges, liabilities and expenses then due or
to become due to the Cash Manager under the provisions of
the Cash Management Agreement prior to the immediately
succeeding Distribution Date, in each case together with (if
applicable) VAT thereon (to the extent not already included)
as provided therein;
(C) third, in no order of priority between them but in proportion to
the respective amounts due, and subject to the proviso below, to
allocate and pay Mortgages Trustee Available Revenue Receipts to:
(1) the Seller in an amount determined by multiplying the total
amount of the remaining Mortgages Trustee Available Revenue
Receipts by the Current Seller Share Percentage of the Trust
Property, as determined on the immediately preceding
Distribution Date or, in the case of the first Distribution
Date immediately following the relevant Closing Date, as of
such Closing Date; and
(1) Funding, in an amount equal to the Funding (Mortgages Trust)
Revenue Amount; and
(2) Funding 2, as an amount equal to the Funding 2 (Mortgages
Trust) Revenue Amount; and
(D) fourth, to allocate:
(i) to Funding but pay at the direction of Funding to the Seller
an amount equal to the Funding Proportion of YY - ZZ; and
30
(ii) to Funding 2 but pay at the direction of Funding 2 to the
Seller an amount equal to the Funding 2 Proportion of YY -
ZZ,
where "YY" is the amount of the Mortgages Trustee Available
Revenue Receipts and "ZZ" is the amount of such Mortgages Trustee
Available Revenue Receipts applied and/or allocated under items
(A) to (C) above, such amount to be in satisfaction of amounts of
Deferred Purchase Price due to the Seller under the terms of the
Mortgage Sale Agreement;
PROVIDED THAT if an Assignment Date or a Contribution Date has occurred
during the Trust Calculation Period immediately preceding such
Distribution Date, then the Cash Manager will use (i) the Weighted
Average Seller Share Percentage (instead of the Current Seller Share
Percentage) as calculated pursuant to Clause 8.7(A) above in determining
the amount of Mortgages Trustee Available Revenue Receipts to distribute
to the Seller pursuant to Clause 10.2(C)(1) above, (ii) the Weighted
Average Funding Share Percentage (instead of the Current Funding Share
Percentage) as calculated pursuant to Clause 8.3(A) above in determining
the Funding (Mortgages Trust) Revenue Amounts pursuant to Clause
10.2(C)(2) and Clause 10.3 (Calculation of Funding (Mortgages Trust)
Revenue Amount and Funding 2 (Mortgages Trust) Revenue Amount) and (iii)
the Weighted Average Funding 2 Share Percentage (instead of the Current
Funding 2 Share Percentage) as calculated pursuant to Clause 8.3(B)
above in determining the amount of Funding 2 (Mortgages Trust) Revenue
Amounts pursuant to Clause 10.2(C)(2) and Clause 10.3 (Calculation of
Funding (Mortgages Trust) Revenue Amount and Funding 2 (Mortgages Trust)
Revenue Amount).
10.3 Calculation of Funding (Mortgages Trust) Revenue Amount and Funding 2
(Mortgages Trust) Revenue Amount
The "Funding (Mortgages Trust) Revenue Amount" shall be the aggregate of
the amounts ascertained and allocated to Funding under items (a), (b)
and (c) below and the "Funding 2 (Mortgages Trust) Revenue Amount" shall
be the amounts ascertained and allocated to Funding 2 under items (a),
(b) and (c) below:
(a) firstly, in no order of priority between them but in proportion to
the respective amount due to:
(i) Funding in an amount which is equal to the lesser of:
(x) the aggregate of the amounts to be applied on the
immediately succeeding Payment Date for Group 1
Issuers and the immediately succeeding Payment Date
for Group 2 Issuers as set forth under the Funding
Pre-Enforcement Revenue Priority of Payments through
and including paragraph (J) thereof or, as they case
may be, the Funding Post-Enforcement Priority of
Payments (but excluding any principal amount due under
any Funding Intercompany Loan (save that, for the
avoidance of doubt, such exclusion shall not apply in
respect of any Funding Available Revenue Receipts
which are applied by a Funding Issuer to credit that
Funding Issuer's Principal Deficiency Ledger and
thereby reduce the principal payable under that
31
Funding Issuer's Intercompany Loan) and any amount of
Deferred Contribution due under paragraph (F) of the
Funding Post-Enforcement Priority of Payments), less
all other amounts (not derived from the distribution
of Mortgages Trustee Available Revenue Receipts under
this Deed) which will constitute Funding Available
Revenue Receipts on the immediately succeeding Payment
Date, such amount not to be less than zero; and
(y) an amount determined by multiplying the total amount
of the remaining Mortgages Trustee Available Revenue
Receipts by the Current Funding Share Percentage of
the Trust Property, as determined on the immediately
preceding Distribution Date or, in the case of the
first Distribution Date, the Initial Funding Share
Percentage);
(ii) Funding 2 in an amount which is equal to the lesser of:
(x) the aggregate of the amounts to be applied on the
immediately succeeding Payment Date as set forth under
the Funding 2 Pre-Enforcement Revenue Priority of
Payments through and including paragraph [(T)] thereof
or, as the case may be, the Funding 2 Post-Enforcement
Priority of Payments (but excluding any principal
amount due under the Global Intercompany Loan
Agreement (save that, for the avoidance of doubt, such
exclusion shall not apply in respect of any Funding 2
Available Revenue Receipts which are applied by
Funding 2 to credit any Principal Deficiency
Subledgers and thereby reduce the principal payable
under the related Loan Tranches) and any amount of
Deferred Contribution under paragraph [(N] of the
Funding 2 Post-Enforcement Priority of Payments), less
all other amounts (not derived from the distribution
of Mortgages Trustee Available Revenue Receipts under
this Deed) which will constitute Funding 2 Available
Revenue Receipts on the immediately succeeding Payment
Date, such amount not to be less than zero; and
(y) an amount determined by multiplying the total amount
of the remaining Mortgages Trustee Available Revenue
Receipts by the Current Funding 2 Share Percentage of
the Trust Property, as determined on the immediately
preceding Distribution Date;
(b) secondly, in no order of priority between them to Funding and
Funding 2, to the extent not already paid pursuant to item
(C)(2)(a) above, up to the amounts set forth in item (a)(i)(x) and
item (a)(ii)(x) above, respectively; provided, that if remaining
Mortgages Trustee Available Revenue Receipts are insufficient on
such Distribution Date to satisfy in full the amounts set forth in
item (a)(i)(x) and item (a)(ii)(x) above, then to Funding and
Funding 2 pro rata, based on the Funding Proportion and the
Funding 2 Proportion, and the remaining Mortgages Trustee
Available Revenue Receipts will continue to be
32
allocated on such Distribution Date in accordance with this item
(b) until such Mortgages Trustee Available Revenue Receipts are
fully allocated;
(c) thirdly, in no order of priority between them but in proportion to
the respective amounts due to:
(i) Funding in an amount equal to the aggregate of the amounts
to be applied on the immediately succeeding Payment Date for
Group 1 Issuers and the immediately succeeding Payment Date
for Group 2 Issuers as set forth under the Funding
Pre-Enforcement Revenue Priority of Payments following
paragraph (J) thereof or, as the case may be, the Funding
Post-Enforcement Priority of Payments (but excluding any
principal amount due under any Funding Intercompany Loan
(save that, for the avoidance of doubt, such exclusion shall
not apply in respect of any Funding Available Revenue
Receipts which are applied by Funding to credit that Funding
Issuer's Principal Deficiency Ledger and thereby reduce the
principal payable under that Funding Issuer's Intercompany
Loan) and any amount of Deferred Contribution under
paragraph (P) of the Funding Pre-Enforcement Revenue
Priority of Payments and/or paragraph (F) of the Funding
Post-Enforcement Priority of Payments), less all other
amounts (not derived from the distribution of Mortgages
Trustee Available Revenue Receipts under this Deed) which
will constitute Funding Available Revenue Receipts on the
immediately succeeding Payment Date, such amount not to be
less than zero; and
(ii) Funding 2 in an amount equal to the aggregate of the amounts
to be applied on the immediately succeeding Payment Date as
set forth under the Funding 2 Pre-Enforcement Revenue
Priority of Payments following paragraph [(T)] thereof or,
as the case may be, the Funding 2 Post-Enforcement Priority
of Payments (but excluding any principal amount due under
the Global Intercompany Loan Agreement (save that, for the
avoidance of doubt, such exclusion shall not apply in
respect of any Funding 2 Available Revenue Receipts which
are applied by Funding 2 to credit any Principal Deficiency
Subledgers and thereby reduce the principal payable under
the related Loan Tranches) and any amount of Deferred
Contribution under paragraph [(X)] of the Funding 2
Pre-Enforcement Revenue Priority of Payments and/or
paragraph [(N)] of the Funding 2 Post-Enforcement Priority
of Payments), less all other amounts (not derived from the
distribution of Mortgages Trustee Available Revenue Receipts
under this Deed) which will constitute Funding 2 Available
Revenue Receipts on the immediately succeeding Payment Date,
such amount not to be less than zero,
provided, that if remaining Mortgages Trustee Available Revenue
Receipts are insufficient on such Distribution Date to satisfy in
full the amounts set forth in item (c)(i) and item (c)(ii) above,
then to Funding and Funding 2 pro rata, based on the Funding
Proportion and the Funding 2 Proportion, and the remaining
Mortgages Trustee Available Revenue Receipts will continue to be
33
allocated on such Distribution Date in accordance with this item
(c) until such receipts are fully allocated.
11. Distribution of Principal Receipts
11.1 Distribution of Principal Receipts prior to the occurrence of a Trigger
Event
Subject as provided in Clause 8.6 (Adjustments to Trust Property), prior
to the occurrence of a Trigger Event (and whether or not there has been
an enforcement of the Funding Security, the Funding 2 Security, any
[Funding Issuer Security or any Funding 2 Issuer Security]), on each
Distribution Date (or, in respect of any Initial Purchase Price or
Special Distribution, on any Contribution Date), the Cash Manager (at
the direction of the Mortgages Trustee acting on behalf of the
Beneficiaries at their direction and with their consent which is hereby
given) shall, subject to the provisos below, allocate and distribute
Mortgages Trustee Principal Receipts as follows:
(A) first, to the Seller an amount in respect of any Initial Purchase
Price (if any) or Special Distribution which is then allocable and
payable to the Seller under Clause 6.4 (Distribution) above;
(B) second, to Funding the amount of any Special Distribution which is
then allocable and payable to Funding in accordance with Clause
6.4 (Distribution) above;
(C) third, in no order of priority between them but in proportion to
the respective amounts due:
(1) to Funding an amount in respect of each Funding Issuer which
is equal to the lesser of:
(a) (i) prior to the occurrence of an ACA Trigger
Event, the principal amount due on the Funding
Intercompany Loan of such Funding Issuer equal
to the Controlled Amortisation Amounts due, if
any, on such Funding Issuer's Payment Date
immediately succeeding such Distribution Date
(in each case determined on the assumption that
the Issuer Reserve Requirement, the Issuer
Arrears Test and the Subordinated Principal Test
(as applicable) are satisfied on such date; that
the Controlled Amortisation Amount is the
relevant amount as set forth in the tables
contained in Schedule 4 to the Current Issuer
Cash Management Agreement; and that the proviso
appearing at the end of such tables does not
apply); and
(ii) upon and after the occurrence of an ACA Trigger
Event, (x) in respect of each Funding Issuer
that is not an ACA Issuer, an amount as set
forth in (1)(a)(i) above; and (y) in respect of
each ACA Issuer, up to an amount equal to the
ACA Limit Amount in respect of such ACA Issuer;
and
34
(b) an amount in respect of each Funding Issuer equal to:
Current Funding Share Outstanding Principal
Percentage as calculated on Balance on such Funding
the immediately preceding Issuer's Funding
Mortgages Distribution Date (or, in Intercompany Loan
Trustee x the case of the first -----------------
Principal Distribution Date following x Aggregate Outstanding
Receipts the Closing Date in respect Principal Balance on
of such Issuer, as of the all Funding
relevant Closing Date) Intercompany Loans
(2) to Funding 2 in an amount equal to the lesser of:
(a) if Funding 2 has a Repayment Requirement on that
Distribution Date, the amount of such Repayment
Requirement; and
(b) an amount determined by multiplying the total amount
of remaining Mortgages Trustee Principal Receipts by
the Current Funding 2 Share Percentage of the Trust
Property;
(D) fourth, in no order between them but in proportion to the
respective amounts due to Funding and Funding 2, to the extent not
already paid pursuant to item (C) above, up to the amounts set
forth in item (C)(1)(a) and item (C)(2)(a) above, respectively,
provided, that if remaining Mortgages Trustee Principal Receipts
are insufficient on such Distribution Date to fully satisfy the
amounts set forth in item (C)(1)(a) and item (C)(2)(a) above, then
to Funding and Funding 2 pro rata according to their respective
Shares of the Trust Property as determined pursuant to this Deed;
and
(E) fifth, if such Distribution Date is not a Seller Share Event
Distribution Date, to allocate to the Seller an amount equal to AA
- BB, where "AA" is the amount of Mortgages Trustee Principal
Receipts and "BB" is the amount of such Mortgages Trustee
Principal Receipts applied and/or allocated under (A) through (D)
above;
provided that, if an Assignment Date or a Contribution Date has occurred
during the Trust Calculation Period immediately preceding that
Distribution Date, then the Cash Manager will use (i) the Weighted
Average Funding 2 Share Percentage (instead of the Funding 2 Share
Percentage) in determining the amount of Mortgages Trustee Principal
Receipts to distribute to Funding 2 on that Distribution Date and (ii)
the Weighted Average Funding Share Percentage in determining the amount
of Mortgages Trustee Principal Receipts to distribute to Funding on that
Distribution Date.
PROVIDED THAT in relation to (A) through (E) above the following rules (the
"Rules for the application of Mortgages Trustee Principal Receipts") shall
apply:
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(1) (a) If the Notes of any Funding Issuer have become
immediately due and payable as a result of the service of a
Note Enforcement Notice or if the Intercompany Loan of any
Funding Issuer has (and the other Intercompany Loans of any
other Funding Issuers have) become immediately due and
payable as a result of the service of an Intercompany Loan
Enforcement Notice on Funding, principal payments in respect
of the Intercompany Loan of that Funding Issuer may be made
in excess of any Controlled Amortisation Amount and
paragraph (C)(1)(a) above shall no longer apply in relation
to that Funding Issuer and, except following a Non-Asset
Trigger Event, the amount of Mortgages Trustee Principal
Receipts to be distributed to Funding in respect of that
Funding Issuer on that Distribution Date may not exceed the
amount determined under paragraph (C)(1)(b) above.
(2) (a) If the Notes of any Funding Issuer have become
immediately due and payable as a result of the service of a
Note Enforcement Notice or if the Intercompany Loan of any
Funding Issuer has (and the other Intercompany Loans of any
other Funding Issuers have) become immediately due and
payable as a result of the service of an Intercompany Loan
Enforcement Notice on Funding, then for the purpose of
calculating the amount in respect of that Funding Issuer
under paragraph (C)(1)(b) above, that amount may be reduced
to the extent of any remaining amounts standing to the
credit of the Issuer Reserve Ledger and/or the Issuer
Liquidity Reserve Ledger (if any) for that Funding Issuer
which are to be utilised on the immediately succeeding
Payment Date to repay principal on that Funding Issuer's
Intercompany Loan, but only to the extent that those amounts
would not otherwise be payable on that Funding Intercompany
Loan on that Payment Date.
(b) If the Notes of any Funding 2 Issuer have become immediately
due and payable as a result of the service of an Issuer
Enforcement Notice or if the Intercompany Loan of any
Funding 2 Issuer has (and the Intercompany Loans of any
other Funding 2 Issuers have) become immediately due and
payable as a result of the service of an Intercompany Loan
Enforcement Notice on Funding 2, then for the purpose of
calculating the amount under paragraph (C)(2)(b) above, that
amount will be reduced to the extent of any remaining
amounts standing to the credit of the Funding 2 Reserve
Ledger and/or the Funding 2 Liquidity Reserve Ledger] (if
any) which are to be utilised on the immediately succeeding
Payment Date to repay principal on that Funding 2 Issuer's
Intercompany Loan, but only to the extent that those amounts
would not otherwise be payable on any Funding 2 Intercompany
Loan on that Payment Date.
(3) (a) The amount of Mortgages Trustee Principal Receipts
payable to Funding in respect of each Funding Issuer on a
Distribution Date will be reduced in proportion to the
aggregate of the Issuer Available Revenue Receipts of that
Funding Issuer which are to be applied on the
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immediately succeeding Payment Date in reduction of
deficiencies recorded on the Issuer Principal Deficiency
Ledger of that Funding Issuer, but only to the extent that
the Funding Issuer Available Revenue Receipts which are to
be so applied on that Payment Date would not otherwise be
payable as principal on the relevant Notes on that Payment
Date.
(b) The amount of Mortgages Trustee Principal Receipts payable
to Funding 2 on a Distribution Date will be reduced in
proportion to the aggregate of Mortgages Trustee Available
Revenue Receipts allocable to Funding 2 on such Distribution
Date which are to be applied on the immediately succeeding
Payment Date in reduction of deficiencies recorded on the
Funding 2 Principal Deficiency Ledger, but only to the
extent that the Mortgages Trustee Available Revenue Receipts
which are to be so applied on that Payment Date would not
otherwise be payable as principal of the relevant Notes to
be paid on that Payment Date.
(4) For the purpose of determining the Mortgages Trustee Principal
Receipts to be distributed to Funding in respect of the amount due
on the Intercompany Loan of any Funding Issuer under (B) and (D)
above, the Outstanding Principal Balance of that Intercompany Loan
shall be deemed to be reduced by the amount of:
(a) any deficiency recorded on the Issuer Principal Deficiency
Ledger of that Issuer as at that Distribution Date, but only
to the extent that such deficiency has arisen under a result
of (i) Losses on the Mortgage Loans allocated by Funding to
that Issuer and/or (ii) the application of Funding Available
Principal Receipts to fund the Issuer Liquidity Reserve Fund
of that Issuer but not as a result of any other principal
deficiency of that Issuer; and
(b) the Outstanding Principal Balance as at such Distribution
Date of any Special Repayment Notes issued by that Issuer
(5) Funding will not be entitled to receive and the Cash Manager shall
procure that Funding does not receive any amount of Mortgages
Trustee Principal Receipts from the Mortgages Trustee on a
Distribution Date which is not required by Funding to repay
principal falling due on any Intercompany Loan on the immediately
succeeding Payment Date in order to fund payments of principal
falling due on any Notes issued by any Issuer on that Payment
Date.
(6) The Mortgages Trustee will not distribute any Overpayment (other
than a Capital Payment) in respect of any Non-Flexible Mortgage
Loan until the first Distribution Date following December 31 of
the year in which such Overpayment is received; provided that if a
Borrower has made an Underpayment of principal in respect of such
Non-Flexible Mortgage Loan following the Overpayment then the
Mortgages Trustee will distribute principal in an amount up to the
amount of such Underpayment (but not exceeding the amount of the
Overpayment previously made) on the immediately succeeding
Distribution Date.
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(7) On a Seller Share Event Distribution Date, the Cash Manager shall
not distribute the remaining Mortgages Trustee Principal Receipts
to the Seller and shall deposit all Mortgages Trustee Retained
Principal Receipts in the Mortgages Trustee GIC Account and make a
corresponding credit to the Mortgages Trustee Principal Ledger.
11.2 Distribution of Mortgages Trustee Principal Receipts on or after the
occurrence of an Asset Trigger Event
On or after the occurrence of an Asset Trigger Event, the Cash Manager
(at the direction of the Mortgages Trustee acting on behalf of the
Beneficiaries at their direction and with their consent which is hereby
given) shall, on each Distribution Date (including, if applicable, any
Distribution Date on which an Asset Trigger Event occurs), allocate and
distribute all Mortgages Trustee Principal Receipts as follows:
(a) if the immediately preceding Distribution Date was a Seller Share
Event Distribution Date, all of the Mortgages Trustee Retained
Principal Receipts to Funding and Funding 2 in no order of
priority among them and pro rata in accordance with the Funding
Proportion and the Funding 2 Proportion; and then
(b) among Funding, Funding 2 and the Seller, in no order of priority
among them and pro rata according to their respective Shares of
the Trust Property until the Funding Share and the Funding 2 Share
of the Trust Property are reduced to zero (and, for the avoidance
of doubt, such payments may reduce the Seller Share of the Trust
Property to an amount less than the Minimum Seller Share).
Notwithstanding the foregoing, if an Assignment Date or a
Contribution Date has occurred during the Trust Calculation Period
immediately preceding any such Distribution Date, the Cash Manager
will apply all Mortgages Trustee Principal Receipts remaining
after (a) above among Funding, Funding 2 and the Seller in no
order of priority between them but in proportion to the Weighted
Average Funding Share Percentage, the Weighted Average Funding 2
Share Percentage and the Weighted Average Seller Share Percentage,
each in respect of Mortgages Trustee Principal Receipts, for that
Distribution Date until the Funding Share and Funding 2 Share of
the Trust Property is zero.
11.3 Distribution of Principal Receipts on or after the occurrence of a
Non-Asset Trigger Event
On or after the occurrence of a Non-Asset Trigger Event and until the
occurrence of an Asset Trigger Event, the Cash Manager (at the direction
of the Mortgages Trustee acting on behalf of the Beneficiaries at their
direction and with their consent which is hereby given) shall, on each
Distribution Date (including, if applicable, any Distribution Date on
which a Non-Asset Trigger Event occurs), apply all Mortgages Trustee
Principal Receipts to Funding and Funding 2 in no order of priority
among them and pro rata in accordance with the Funding Proportion and
the Funding 2 Proportion until the Funding Share and the Funding 2 Share
of the Trust Property have been reduced to zero and shall thereafter, on
each Distribution Date, apply all Mortgages Trustee Principal Receipts
to the Seller.
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12. Allocation of Losses
12.1 Subject as provided otherwise herein (including Clause 8.5 (Adjustments
to Trust Property) of this Deed), all Losses sustained on the Mortgage
Loans (other than any Personal Secured Loans) during a Trust Calculation
Period shall be applied in reducing pro rata the Funding Share of the
Trust Property, the Funding 2 Share of the Trust Property and the Seller
Share of the Trust Property on the Distribution Date immediately
succeeding such Trust Calculation Period by multiplying the Losses
sustained in the relevant Trust Calculation Period by the Funding Share
Percentage and the Funding 2 Share Percentage, respectively, (in each
case as calculated on the Distribution Date immediately preceding such
Trust Calculation Period) until the Funding Share of the Trust Property
and the Funding 2 Share of the Trust Property are both zero, PROVIDED
THAT if during the Trust Calculation Period immediately preceding a
Distribution Date the Seller has sold and assigned New Mortgage Loans to
the Mortgages Trustee or if Funding or Funding 2 made a Further
Contribution to the Mortgages Trustee to increase the Funding Share or
the Funding 2 Share of the Trust Property, such Losses shall be
multiplied by the Weighted Average Funding Share Percentage and the
Weighted Average Funding 2 Share Percentage, as applicable (in each case
as calculated on such Distribution Date pursuant to Clause 8.3(A)(3) or
8.3(B)(3) above) rather than the Funding Share Percentage and/or the
Funding 2 Share Percentage. The remainder of such Losses shall be
allocated to the Seller.
12.2 All losses sustained during a Trust Calculation Period on Personal
Secured Loans forming part of the Trust Property shall be applied first
to reduce the Seller Share of the Trust Property (including, for the
avoidance of doubt, that portion of the Seller Share which represents
the Minimum Seller Share) on the Distribution Date immediately
succeeding such Trust Calculation Period until the Seller Share is zero
and thereafter shall be applied to reduce the Funding Share and the
Funding 2 Share of the Trust Property on a pro rata basis in accordance
with the Funding Proportion and the Funding 2 Proportion.
13. Overpayments
13.1 Non-Flexible Mortgage Loans
The Mortgages Trustee shall not distribute to the Beneficiaries any
Overpayment in respect of any Non-Flexible Mortgage Loan which does not
constitute a Capital Payment until the first Distribution Date following
31st December of the year in which such Overpayment is received, save to
the extent that any such Overpayment by a Borrower is applied in
reduction of an Underpayment by such Borrower in respect of such
Mortgage Loan prior to such date. Any such Overpayment shall be retained
in the Mortgages Trustee GIC Account and the Cash Manager will maintain
a separate ledger to record its receipt and subsequent payment from time
to time. Where any such Overpayment has been made in error the Cash
Manager and/or the Administrator will be authorised to refund the amount
of such Overpayment to the relevant Borrower at any time prior to 31st
December of the year in which such Overpayment was made.
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13.2 Flexible Mortgage Loans
Overpayments in respect of any Flexible Mortgage Loan (including the
amount of any Together Connections Benefit applied to the related
Together Connections Mortgage Loans or any Connections Benefit applied
to the related Connections Mortgage Loans) will not be retained in the
Mortgages Trustee GIC Account but will be distributed to the
Beneficiaries on the immediately succeeding Distribution Date as
Principal Receipts.
14. Arrears
The aggregate Current Balance of the Mortgage Loans in the Mortgages
Trust will be increased at any time by the amount in which the Mortgage
Loans that have been sold and assigned to the Mortgages Trustee are in
arrears and those arrears have been capitalised. Such increase shall be
allocated to the Beneficiaries at any time in proportion to their
respective percentage shares in the Trust Property as determined in
respect of the Trust Calculation Period or Interim Calculation Period,
as the case may be, in which the arrears occur.
15. Ledgers
The Mortgages Trustee shall maintain, or shall procure that the Cash
Manager shall maintain, the following Mortgages Trustee Ledgers:
(a) the Principal Ledger, which shall record (i) all receipts of
Principal Receipts and distribution of the same to Funding,
Funding 2 and the Seller and (ii) any Mortgages Trustee Retained
Principal Receipts;
(b) the Revenue Ledger, which shall record all receipts of Revenue
Receipts and distribution of the same in accordance with this
Deed;
(c) the Losses Ledger, which shall record Losses in relation to the
Mortgage Loans;
(d) the Funding Share/Funding 2 Share/Seller Share Ledger which shall
record the Funding Share, the Funding 2 Share and the Seller Share
of the Trust Property, and the Funding Share Percentage, the
Funding 2 Share Percentage and the Seller Share Percentage;
(e) the Overpayments Ledger; which shall be divided into sub ledgers
to record (i) Overpayments on Non-Flexible Mortgage Loans received
into and paid out of the Mortgages Trustee GIC Account from time
to time and (ii) Overpayments on Flexible Mortgage Loans;
(f) the Non-Flexible Underpayments Ledger; which shall record
Underpayments on Non-Flexible Mortgage Loans from time to time;
(g) the Re-Draw Ledger, which shall be divided into sub ledgers to
record (i) Cash Re-Draws made in respect of Flexible Mortgage
Loans and (ii) Non-Cash Re-Draws made in respect of Flexible
Mortgage Loans;
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(h) the Contributions Ledger, which will be divided into sub ledgers
to record (i) the making by Funding of Contributions to the
Mortgages Trust, (ii) the making by Funding 2 of Contributions to
the Mortgages Trust, (iii) the making by the Seller of
Contributions to the Mortgages Trust and the application of such
Contributions by the Mortgages Trustee in payment to the Seller of
(a) amounts of Initial Purchase Price for the sale of any New
Mortgage Portfolio which is acquired by the Mortgages Trustee from
the Seller under the provisions of the Mortgage Sale Agreement or
(b) amounts of Deferred Purchase Price in accordance with the
Mortgage Sale Agreement or (c) any Special Distribution in
accordance with the terms of this Deed and the application of such
Contributions by the Mortgages Trustee in payment to Funding of
any Special Distribution in accordance with the terms of this
Deed; and
(i) the Further Draw Ledger, which shall record all Further Draws in
relation to Personal Secured Loans.
16. Fees and Expenses of the Mortgages Trustee
16.1 Remuneration
The Mortgages Trustee shall be entitled to charge and be remunerated for
the work undertaken by it as trustee of the trusts created by this Deed.
The remuneration shall be on such terms (if any) as the Mortgages
Trustee may from time to time agree with the Beneficiaries in writing.
16.2 Expenses and Liabilities
Each Beneficiary shall indemnify the Mortgages Trustee from time to time
with such regularity as is reasonably agreed between the parties, in
respect of the Funding Share, the Funding 2 Share and the Seller Share,
respectively, of the documentable costs, expenses and/or liabilities
directly and properly incurred by the Mortgages Trustee in performing
its obligations hereunder or otherwise in acting as trustee in
accordance with the terms of this Deed and the other Transaction
Documents to which the Mortgages Trustee is a party inclusive (if
applicable) of any amounts in respect of Irrecoverable VAT incurred in
respect of such costs and expenses.
17. BENEFICIARY Directions
17.1 Administration Agreement and Cash Management Agreement
On the Initial Closing Date the Mortgages Trustee shall enter into the
Administration Agreement and the Cash Management Agreement.
17.2 Directions from Beneficiaries
Subject to Clause 17.3 (No Breach) below and to any agreement between
the Beneficiaries, the Mortgages Trustee covenants with the
Beneficiaries that the Mortgages Trustee shall take all necessary steps
and do everything which the Funding Beneficiaries and the Seller (acting
together) may reasonably request or direct it to do in order to give
effect to the terms of this Deed or the other Transaction Documents to
which the Mortgages Trustee is a party; provided that at any time after
the Funding
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Share and the Funding 2 Share have both been reduced to zero the
Mortgages Trustee shall not be required to act at the direction of the
Funding Beneficiaries and the Seller (acting together) and shall instead
act in accordance with any direction given solely by the Seller.
17.3 No breach
Each of Funding, Funding 2 and the Seller covenants with each other and
with the Mortgages Trustee that none of them shall direct or request the
Mortgages Trustee to do any act or thing which breaches the terms of, or
is otherwise expressly dealt with (such that the Mortgages Trustee has
no discretion) under any of the Transaction Documents.
17.4 Mortgages Trustee entitled to decline to follow directions
The Mortgages Trustee shall have the right to decline to follow any such
direction if the Mortgages Trustee, being advised by counsel, determines
that the proceedings, actions or steps may not be lawfully taken or if
the Mortgages Trustee in good faith determines that the proceedings,
actions or steps so directed would be illegal or involve it in personal
liability
17.5 Mortgages Trustee to provide information
When the Mortgages Trustee is required to take any proceedings, actions
or steps under or in connection with the Transaction Documents for which
it requires directions from the Funding Beneficiaries and the Seller, it
shall as soon as reasonably practicable, provide sufficient information
to the Funding Beneficiaries and the Seller as they may require in order
to be able to give such directions.
17.6 Timing of directions
Where a Beneficiary directs the Mortgages Trustee as to any mater, such
Beneficiary shall give written particulars of such direction to the
Mortgages Trustee and each other Beneficiary. If the Mortgages Trustee
does not receive any directions from such other Beneficiaries in respect
of such matter by 10 a.m. on the second London Business Day following
receipt by such other Beneficiary of such written notice (in accordance
with Clause 34 (Notices), such other Beneficiary shall be deemed to have
directed the Mortgages Trustee to follow such direction.
17.7 Controlling Directions
In the event of any conflict between the directions of the Beneficiaries
(including any deemed direction) then each Beneficiary irrevocably
agrees that the Controlling Directions shall apply and as such, the
Mortgages Trustee is to follow the Controlling Directions as if it were
the direction of all Beneficiaries but if there is no Controlling
Directions the Mortgages Trustee shall not act.
17.8 No requirement to act
The Mortgages Trustee will not be bound and shall have no power to take
any proceedings, actions or steps under or in connection with any of
this Deed or the other Transaction Documents to which it is a party
unless:
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(a) it shall have been directed to do so by the Beneficiaries or it is
required to do so under any express provision of this Deed or the
other Transaction Documents (but subject to Clause 17.2
(Directions from Beneficiaries) in respect of conflict of
directions); and
(b) it shall have been indemnified to its satisfaction against all
liabilities, proceedings, claims and demands to which it may be or
become liable and all costs, charges and expenses which may be
incurred by it in connection therewith and the terms of such
indemnity may include the provision of a fighting fund,
non-recourse loan or other similar arrangement.
17.9 Covenant of the Mortgages Trustee
Subject to Clause 17.2 (Directions from Beneficiaries) the Mortgages
Trustee covenants with each of the Seller, Funding and Funding 2 to
exercise all of its rights arising under or in respect of the Trust
Property (including without limitation any rights of enforcement) for
the benefit of and on behalf of the Beneficiaries.
17.10 Mortgages Trustee not liable
Provided that the Mortgages Trustee has complied with the provisions of
this Clause 17 (Beneficiary directions), the Mortgages Trustee shall not
be liable to the Beneficiaries notwithstanding that the way in which the
relevant discretion, trust, power or remedy was exercised by the
Mortgages Trustee did not reflect the particular wishes of any
Beneficiary.
18. Early Termination of the Mortgages Trust
Prior to its termination in accordance with Clause 26 (Termination),
provided that all amounts due from Funding to the Funding Secured
Creditors have been repaid in full and the Funding Share of the Trust
Property has been reduced to zero, and further provided that all amounts
due from Funding 2 to the Funding 2 Secured Creditors have been repaid
in full and the Funding 2 Share of the Trust Property has been reduced
to zero, the Mortgages Trust constituted by this Deed may be terminated
at the option of the Seller, following a request in writing by the
Seller to the Mortgages Trustee (which shall be copied to Funding,
Funding 2 and the Cash Manager) at any time on or after the date on
which all of the Intercompany Loans have been repaid in full or there is
no further claim under any Intercompany Loan or such other date as may
be agreed in writing between the Mortgages Trustee, Funding, Funding 2
and the Seller.
19. AUdit of Mortgage Loans Constituting the Trust Property
If the long term, unsecured, unguaranteed and unsubordinated debt
obligations of the Seller fall below A3 by ▇▇▇▇▇'▇ then, if required by
▇▇▇▇▇'▇, the Beneficiaries shall appoint a firm of independent auditors
(approved by the Rating Agencies) to determine whether the Mortgage
Loans and their Related Security (or any part of them) constituting the
Trust Property complied with the representations and warranties set out
in Schedule 1 (Representations and Warranties) of the Mortgage Sale
Agreement as at the date such Mortgage Loans were sold and assigned to
the Mortgages Trustee. The costs of such independent auditors shall be
borne by the
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Beneficiaries pro rata according to their respective current percentage
shares in the Trust Property.
20. Transfers
20.1 Funding shall not assign
Subject to the right of Funding to assign by way of security its right,
title, benefit and interest in the Trust Property and/or under this Deed
to the Security Trustee under the Funding Deed of Charge and subject to
the right of the Security Trustee or a Receiver to sell the Funding
Share of the Trust Property and/or such right and interest under this
Deed following the service on Funding of an Intercompany Loan
Enforcement Notice (which right is hereby conferred), Funding covenants
with each of the Seller and Funding 2 that it shall not, and shall not
purport to, sell, assign, transfer, convey, charge, declare a trust
over, create any beneficial interest in, or otherwise dispose of the
Funding Share in the Trust Property, or any of Funding's rights, title,
interest or benefit in any of the Mortgage Portfolio or the Trust
Property.
20.2 Funding 2 shall not assign
Subject to the right of Funding 2 to assign by way of security its
right, title, benefit and interest in the Trust Property and/or under
this Deed to the Funding 2 Security Trustee under the Funding 2 Deed of
Charge and subject to the right of the Funding 2 Security Trustee or a
Receiver to sell the Funding 2 Share of the Trust Property and/or such
right and interest under this Deed following the service on Funding 2 of
an Intercompany Loan Enforcement Notice (which right is hereby
conferred), Funding 2 covenants with each of the Seller and Funding that
it shall not, and shall not purport to, sell, assign, transfer, convey,
charge, declare a trust over, create any beneficial interest in, or
otherwise dispose of the Funding 2 Share in the Trust Property, or any
of Funding 2's rights, title, interest or benefit in any of the Mortgage
Portfolio or the Trust Property.
20.3 Seller shall not assign
The Seller covenants with each of Funding and Funding 2 that it shall
not, and shall not purport to, sell, assign, transfer, convey, charge,
declare a trust over, create any beneficial interest in, or otherwise
dispose of the Seller Share in the Trust Property or any of the Seller's
rights, title, interest or benefit in the Trust Property, other than
pursuant to the Transaction Documents.
21. Representations and Covenants
21.1 Representations
On the date hereof, each of the parties to this Deed makes the
representations and warranties set out in Schedule 1 (Representation and
Warranties) to this Deed to each of the other parties hereto.
21.2 Covenants of the Mortgages Trustee
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Save with the prior written consent of or at the direction of the
Beneficiaries or as provided in or envisaged by this Deed and/or the
other Transaction Documents, the Mortgages Trustee shall not, so long as
it is acting as Mortgages Trustee hereunder:
(a) Negative Pledge: create or permit to subsist any mortgage,
standard security, pledge, lien, charge or other security interest
whatsoever (unless arising by operation of law), upon the whole or
any part of its assets (including any uncalled capital) or its
undertakings (present or future) or (to the extent that it is
within the control of the Mortgages Trustee) upon the whole or any
part of the Trust Property;
(b) Disposal: transfer, sell, lend, part with or otherwise dispose of,
or deal with, or grant any option or present or future right to
acquire any of its assets or undertakings or (to the extent that
it is within the control of the Mortgages Trustee) the Trust
Property or any interest, estate, right, title or benefit therein
or thereto or agree or attempt or purport to do so;
(c) Equitable Interest: knowingly permit any person other than the
Beneficiaries to have any equitable or beneficial interest in any
of its assets or undertakings or (to the extent that it is within
the control of the Mortgages Trustee) the Trust Property or any
interest, estate, right, title or benefit therein;
(d) Bank Accounts: have an interest in any bank account, other than as
set out in the Transaction Documents.
(e) Restrictions on Activities: carry on any business other than as
described in this Deed and the Transaction Documents;
(f) Borrowings: incur any indebtedness in respect of borrowed money
whatsoever or give any guarantee or indemnity in respect of any
such indebtedness;
(g) Merger: consolidate or merge with any other person or convey or
transfer its properties or assets substantially or as an entirety
to any other person;
(h) Premises or Employees: have any premises or employees or
subsidiaries; or
(i) Further shares: issue any further shares;
(j) United States activities: engage in any activities in the United
States (directly or through agents) or derive any income from
United States sources as determined under United States income tax
principles or hold any property if doing so would cause it to be
engaged or deemed to be engaged in a trade or business within the
United States as determined under United States tax principles;
(k) Conduct of affairs: take any management decisions or direct the
conduct of its affairs in any Member State of the European Union,
including holding any board meetings in any Member State of the
European Union.
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22. Power to Delegate
22.1 Power to delegate
Subject to Clause 22.2 (No further appointments), the Mortgages Trustee
may (notwithstanding any rule of law or equity to the contrary) delegate
(revocably or irrevocably and for a limited or unlimited period of time)
the performance of all or any of its obligations and the exercise of all
or any of its powers under this Deed or imposed or conferred on it by
law or otherwise to any person or body of persons fluctuating in number
selected by it and any such delegation may be by power of attorney or in
such other manner as the Mortgages Trustee may think fit and may be made
upon such terms and conditions (including the power to sub-delegate) as
the Mortgages Trustee may think fit.
22.2 No further appointments
Notwithstanding the provisions of Clause 22.1 (Power to delegate), the
Mortgages Trustee shall not appoint any agent, attorney or other
delegate having power to act in respect of the Trust Property unless it
is directed in writing to do so by the Beneficiaries. The appointment of
any agent, attorney or other delegate hereunder above shall terminate
immediately upon the occurrence of a Trigger Event.
23. Power of Investment
The Mortgages Trustee may invest, and may appoint the Cash Manager to
invest on its behalf, any amounts standing to the credit of the
Mortgages Trustee Transaction Account in Authorised Investments. Save as
expressly provided in this Deed, the Mortgages Trustee Guaranteed
Investment Contract and the Bank Account Agreement, the Mortgages
Trustee shall have no further or other powers of investment with respect
to the Trust Property and (to the extent permitted by applicable law)
the Trustee ▇▇▇ ▇▇▇▇ shall not nor shall any other provision relating to
trustee powers of investment implied by statute or general law shall
apply to the Mortgages Trust.
24. Other Provisions Regarding the Mortgages Trustee
24.1 No action to impair Trust Property
Except for actions expressly authorised by this Deed, the Mortgages
Trustee shall take no action reasonably likely to impair the interests
of the Beneficiaries in any Trust Property now existing or hereafter
created or to impair the value of any Mortgage Loan or its Related
Security subject to the Mortgages Trust.
24.2 Litigation
The Mortgages Trustee must not prosecute or defend any legal or other
proceedings anywhere in the world (at the cost of the Trust Property)
unless it obtains legal or other advice that it is in the interests of
the Beneficiaries to do so.
24.3 No Implied Duties
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The duties and obligations of the Mortgages Trustee under the Mortgages
Trust shall be determined solely by the express provisions of this Deed
(but without prejudice to the duties and obligations of the Mortgages
Trustee under any of the other Transaction Documents). The Mortgages
Trustee shall not be liable under this Deed except for the performance
of such duties and obligations as shall be specifically set forth in
this Deed. No implied covenants or obligations shall be read into this
Deed against the Mortgages Trustee, and the permissible right of the
Mortgages Trustee to do things set out in this Deed shall not be
construed as a duty.
24.4 No Liability
Neither the Mortgages Trustee, Funding (in its capacity as a Beneficiary
hereunder), Funding 2 (in its capacity as a Beneficiary hereunder) nor
the Seller (in its capacity as a Beneficiary hereunder) shall be liable
to each other, in the absence of wilful default, gross negligence or
breach of the terms of this Deed, in respect of any loss or damage which
arises out of the exercise or attempted or purported exercise or failure
to exercise any of their respective powers.
24.5 Reliance on Certificates
The Mortgages Trustee may rely on and shall be protected in acting on,
or in refraining from acting in accordance with, any resolution,
officer's certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine
and to have been signed or presented to it pursuant to the Transaction
Documents by the proper party or parties.
24.6 Reliance on Third Parties
The Mortgages Trustee may, in relation to these presents, act on the
opinion or advice of or a certificate or any information obtained from
any lawyer, banker, valuer, broker, accountant, financial adviser,
securities dealer, merchant bank, computer consultant or other expert in
the United Kingdom or elsewhere and shall not, provided that it shall
not have acted fraudulently or in breach of any of the provisions of the
Transaction Documents, be responsible for any loss occasioned by so
acting. Any such opinion, advice, certificate or information may be sent
or obtained by letter, telemessage, telex, cable or facsimile device and
the Mortgages Trustee shall not be liable for acting on any opinion,
advice, certificate or information purporting to be so conveyed although
the same shall contain some error or shall not be authentic, provided
that such error or lack of authenticity shall not be manifest.
24.7 MIG Policies
The Mortgages Trustee is not required to maintain any MIG Policy with
the then-current insurer and may contract for mortgage indemnity
guarantee protection from any insurer then providing MIG insurance
policies, subject to prior agreement with the Rating Agencies and
confirmation that the then-current ratings by the Rating Agencies (or
any of them) of the Notes issued by any Issuer would not be adversely
affected.
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25. No Retirement of Mortgages Trustee
25.1 No Retirement
The Mortgages Trustee shall not, and shall not purport to, retire as the
trustee of the Mortgages Trust or appoint any additional trustee of the
Mortgages Trust and shall have no power to retire or appoint any
additional trustee under the Trustee ▇▇▇ ▇▇▇▇ or otherwise.
25.2 No Replacement
Neither the Seller, Funding nor Funding 2 shall at any time remove or
purport to remove and/or replace the Mortgages Trustee as the trustee of
the Mortgages Trust.
25.3 No Termination
Prior to the payment by Funding and Funding 2 of all amounts owing under
the Funding Intercompany Loan Agreements and/or the Funding 2
Intercompany Loan Agreements, as applicable, and under the Transaction
Documents, neither the Seller, Funding nor Funding 2 shall at any time,
except in accordance with the provisions of Clause 18 (Early Termination
of the Mortgages Trust) and Clause 26 (Termination), terminate or
purport to terminate the Mortgages Trust and, in particular, but without
prejudice to the generality of the foregoing, the Seller, Funding and
Funding 2 shall not in reliance on their absolute beneficial interests
in the Trust Property call for the transfer to them or vesting in them
of the legal estate in all or any part of the Trust Property.
26. Termination
Subject to Clause 18 (Early Termination of the Mortgages Trust), the
Mortgages Trust hereby constituted shall terminate upon the date upon
which the Trust Property is zero.
27. Further Assurances
The parties agree that they will co-operate fully to do all such further
acts and things and execute any further documents as may be necessary or
desirable to give full effect to the arrangements contemplated by this
Deed.
28. No Partnership or Agency
Nothing in this Deed shall be taken to constitute or create a
partnership between any of the parties to this Deed or to make or
appoint the Seller the agent of Funding (or vice versa) or the agent of
Funding 2 (or vice versa) or Funding the agent of Funding 2 (or vice
versa).
29. Calculations
In the absence of manifest error, any determination or calculation by or
on behalf of the Mortgages Trustee in connection with the provisions of
this Deed shall be deemed to be conclusive.
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30. Confidentiality
30.1 General Obligation of Confidentiality
Unless otherwise required by applicable law, and subject to Clause 30.2
(Exceptions) below, each of the parties agrees to maintain the
confidentiality of this Deed in its communications with third parties
and otherwise. None of the parties shall disclose to any person any
information relating to the business, finances or other matters of a
confidential nature of or relating to any other party to this Deed or
any of the Transaction Documents which it may have obtained as a result
of having entered into this Deed or otherwise.
30.2 Exceptions
The provisions of Clause 30.1 (General Obligation of Confidentiality)
above shall not apply:
(a) to the disclosure of any information to any person who is a party
to any of the Transaction Documents as expressly permitted by the
Transaction Documents;
(b) to the disclosure of any information which is or becomes public
knowledge otherwise than as a result of the wrongful conduct of
the recipient;
(c) to the extent that the recipient is required to disclose the same
pursuant to any law or order of any court or pursuant to any
direction or requirement (whether or not having the force of law)
of any central bank or any governmental or other regulatory or
Taxation authority;
(d) to the disclosure of any information to professional advisers who
receive the same under a duty of confidentiality;
(e) to the disclosure of any information with the consent of the
parties hereto;
(f) to the disclosure to the Rating Agencies or any of them of such
information as may be requested by any of them for the purposes of
setting or reviewing the rating assigned to the Notes (or any of
them), provided that no information which would disclose the
identity of a Borrower shall be disclosed to the Rating Agencies
or any of them;
(g) to the disclosure of any information disclosed to a prospective
assignee of Funding or Funding 2 (provided that it is disclosed on
the basis that the recipient will hold it confidential); or
(h) to any disclosure for the purposes of collecting in or enforcing
the Trust Property or any of it.
31. Non Petition Covenant; Limited Recourse
31.1 Non Petition Covenant
Each of the parties hereto hereby agrees that it shall not institute
against either Funding, Funding 2 or the Mortgages Trustee any
winding-up, administration,
49
insolvency or similar proceedings so long as any sum is outstanding
under any Intercompany Loan Agreement of any Issuer or for two years
plus one day since the last day on which any such sum was outstanding.
31.2 Limited Recourse
Each of the parties hereto agrees that:
(a) in relation to the Mortgages Trustee, any amount payable by the
Mortgages Trustee to any other party to this Deed under this Deed
not being an amount payable out of the Trust Property in
accordance with the terms of this Deed shall only be payable to
the extent that on that date the Mortgages Trustee has sufficient
funds to pay such amount out of fees paid to it under this Deed;
and
(b) in relation to Funding:
(A) only the Security Trustee may enforce the security created
in favour of the Security Trustee under the Funding Deed of
Charge in accordance with the provisions thereof;
(B) notwithstanding any other provision of this Deed or any
other Transaction Document, no sum due or owing to any party
to this Deed from or by Funding under this Deed shall be
payable by Funding except to the extent that Funding has
sufficient funds available or (following enforcement of the
Funding Security) the Security Trustee has realised
sufficient funds from the Funding Security to pay such sum
subject to and in accordance with the relevant Funding
Priority of Payments and provided that all liabilities of
Funding required to be paid in priority thereto or pari
passu therewith pursuant to such Funding Priority of
Payments have been paid, discharged and/or otherwise
provided for in full; and
(C) it shall not take any steps for the purpose of recovering
any amount payable by Funding or enforcing any rights
arising out of this Deed against Funding otherwise than in
accordance with the Funding Deed of Charge.
(c) in relation to Funding 2:
(A) only the Funding 2 Security Trustee may enforce the security
created in favour of the Funding 2 Security Trustee under
the Funding 2 Deed of Charge in accordance with the
provisions thereof;
(B) notwithstanding any other provision of this Deed or any
other Transaction Document, no sum due or owing to any party
to this Deed from or by Funding 2 under this Deed shall be
payable by Funding 2 except to the extent that Funding 2 has
sufficient funds available or (following enforcement of the
Funding 2 Security) the Funding 2 Security Trustee has
realised sufficient funds from the Funding 2 Security to pay
such sum subject to and in accordance with the relevant
Funding 2 Priority of Payments and provided that all
liabilities of
50
Funding 2 required to be paid in priority thereto or pari
passu therewith pursuant to such Funding 2 Priority of
Payments have been paid, discharged and/or otherwise
provided for in full; and
(C) it shall not take any steps for the purpose of recovering
any amount payable by Funding 2 or enforcing any rights
arising out of this Deed against Funding 2 otherwise than in
accordance with the Funding 2 Deed of Charge.
31.3 Corporate Obligations
To the extent permitted by law, no recourse under any obligation,
covenant, or agreement of any person contained in this Deed shall be had
against any shareholder, officer or director of such person as such, by
the enforcement of any assessment or by any legal proceeding, by virtue
of any statute or otherwise; it being expressly agreed and understood
that this Deed is a corporate obligation of each person expressed to be
a party hereto and no personal liability shall attach to or be incurred
by the shareholders, officers, agents or directors of such person as
such, or any of them, under or by reason of any of the obligations,
covenants or agreements of such person contained in this Deed, or
implied therefrom, and that any and all personal liability for breaches
by such person of any of such obligations, covenants or agreements,
either under any applicable law or by statute or constitution, of every
such shareholder, officer, agent or director is hereby expressly waived
by each person expressed to be a party hereto as a condition of and
consideration for the execution of this Deed.
32. Amendments and Waiver
32.1 Entire Agreement
This Deed sets out the entire agreement and understanding between the
parties with respect to the subject matter of this Deed superseding all
prior oral or written understandings other than the other Transaction
Documents.
32.2 Amendments and Waiver
No amendment or waiver of any provision of this Deed nor consent to any
departure by any of the parties therefrom shall in any event be
effective unless the same shall be in writing and signed by each of the
parties hereto. In the case of a waiver or consent, such waiver or
consent shall be effective only in the specific instance and as against
the party or parties giving it for the specific purpose for which it is
given.
32.3 Rights cumulative
The respective rights of each of the parties to this Deed are cumulative
and may be exercised as often as they consider appropriate. No failure
on the part of any party to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies in
this Deed are cumulative and not exclusive of any remedies provided by
law.
51
33. Notices
Any notices or other communication or document to be given or delivered
pursuant to this Deed to any of the parties hereto shall be sufficiently
served if sent by prepaid first class post, by hand or by facsimile
transmission and shall be deemed to be given (in the case of facsimile
transmission) when despatched or (where delivered by hand) on the day of
delivery if delivered before 17.00 hours on a London Business Day or on
the next London Business Day if delivered thereafter or (in the case of
first class post) when it would be received in the ordinary course of
the post and shall be sent:
(a) in the case of the Seller, to Northern Rock plc, ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ (facsimile number
0191 213 2203) for the attention of the Group Secretary;
(b) in the case of the Mortgages Trustee, to Granite Finance Trustees
Limited, ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, Channel
Islands (facsimile number 01534-609333) for the attention of the
Company Secretary (with a copy to the Seller in accordance with
(a) above);
(c) in the case of Funding, to Granite Finance Funding Limited ▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ (facsimile number 020 8409 8911) for the
attention of the Company Secretary (with a copy to the Seller in
accordance with (a) above);
(d) in the case of the Security Trustee, to The Bank of New York, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (facsimile number 020
7964 6399) for the attention of the Global Structured Finance
(Corporate Trust);
(e) in the case of Funding 2, to Granite Finance Funding 2 Limited
situated at ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
(facsimile number 020 7606 0643) for the attention of The Company
Secretary (with a copy to the Seller in accordance with (a)
above);
(f) in the case of the Funding 2 Security Trustee, to The Bank of New
York, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇ (facsimile
number 020 7964 6399) for the attention of the Global Structured
Finance (Corporate Trust);
(g) in the case of the Fitch Ratings Ltd, to Fitch Ratings Ltd, ▇▇▇▇▇
▇▇▇▇▇, ▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (facsimile number 020 7417
6262) for the attention of European Structured Finance
Surveillance;
(h) in the case of Moody's, to Moody's, 1st Floor, ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (facsimile number 020 7772 5400) for
the attention of Head of Monitoring Group, Structured Finance
(with a copy to the Seller in accordance with (a) above);
(i) in the case of Standard & Poor's, to Standard & Poor's, ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (facsimile number 020 7826
3598) for the attention of Structured Finance Surveillance Group
(with a copy to the Seller in accordance with (a) above),
52
or to such other address or facsimile number or for the attention of
such other person or entity as may from time to time be notified by any
party to the others by fifteen days prior written notice in accordance
with the provisions of this Clause 33.
34. Third Party Rights
A person who is not a party to this Deed may not enforce any of its
terms under the Contracts (Rights of Third Parties) ▇▇▇ ▇▇▇▇, but this
shall not affect any right or remedy of a third party which exists or is
available apart from that Act.
35. Execution in Counterparts; severability
35.1 Counterparts
This Deed may be executed in any number of counterparts (manually or by
facsimile) and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all
of which when taken together shall constitute one and the same
instrument.
35.2 Severability
Where any provision in or obligation under this Deed shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations under this
Deed, or of such provision or obligation in any other jurisdiction,
shall not be affected or impaired thereby.
36. Governing Law and Submission to Jurisdiction
36.1 Governing Law
This Deed is governed by, and shall be construed in accordance with,
English law.
36.2 Submission to Jurisdiction
Each of the parties hereto irrevocably agrees that the courts of England
shall have jurisdiction to hear and determine any suit, action or
proceeding, and to settle any disputes, which may arise out of or in
connection with this Deed and, for such purposes, irrevocably submits to
the jurisdiction of such courts.
36.3 Process Agent
The Mortgages Trustee irrevocably and unconditionally appoints Mourant &
Co. Capital (SPV) Limited at ▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ or otherwise
at its registered office for the time being as its agent for service of
process in England in respect of any proceedings in respect of this
Agreement and undertakes that in the event of Mourant & Co. Capital
(SPV) Limited ceasing so to act it will appoint another person with a
registered office in London as its agent for service of process.
36.4 Forum
Each of the parties hereto irrevocably waives any objection which it
might now or hereafter have to the courts of England being nominated as
the forum to hear and
53
determine any Proceedings and to settle any disputes, and agrees not to
claim that any such court is not a convenient or appropriate forum.
54
SCHEDULE 1
REPRESENTATIONS AND WARRANTIES
1. Status
It is duly incorporated and registered under the laws of the
jurisdiction in which it is incorporated, capable of being sued in its
own right and not subject to any immunity from any proceedings, and it
has the power to own its property and assets and to carry on its
business as it is being conducted.
2. Powers and authority
It has the power to enter into, perform and deliver, and has taken all
necessary corporate and other action to authorise the execution,
delivery and performance by it of each of the Transaction Documents to
which it is or will be a party, and each such Transaction Document has
been duly executed and delivered by it.
3. Legal validity
Each Transaction Document to which it is or will be a party constitutes
or when executed in accordance with its terms will constitute its legal,
valid and binding obligation.
4. Non-conflict
The execution by it of each of the Transaction Documents to which it is
a party and the exercise by it of its rights and the performance of its
obligations under such Transaction Documents will not:
(a) conflict with any document which is binding upon it or any of its
assets;
(b) conflict with its constitutional documents; or
(c) conflict with any law, regulation, rule or official or judicial
order of any government, governmental body or court, domestic or
foreign, having jurisdiction over it.
5. No litigation
It is not a party to any material litigation, arbitration or
administrative proceedings and, to its knowledge, no material
litigation, arbitration or administrative proceedings are pending or
threatened against it.
6. Consents and Licences
All governmental consents, licences and other approvals and
authorisations required in connection with the entry into, performance,
validity and enforceability of, and the transactions contemplated by,
the Transaction Documents have been obtained or effected (as
appropriate) and are in full force and effect.
55
Definitions
"Beneficiaries" means all of Funding, Funding 2 and the Seller together, as
beneficiaries of the Mortgages Trust and "Beneficiary" means any of them;
"Bullet Loan Tranche" means, in relation to Funding 2, any Loan Tranche which
is scheduled to be repaid in full on one Payment Date. Bullet Loan Tranches
will be deemed to be Pass-through Loan Tranches if:
(a) a date specified in relation to the same in the applicable Loan Tranche
Supplement occurs;
(b) a Trigger Event occurs;
(c) he Issuer Security, in respect of the Funding 2 Issuer which has funded
such Bullet Loan Tranche, is enforced;
(d) a Note Acceleration Notice is served in respect of the related Series
and Class of Notes; or
(e) a Step-Up Date (if any) in relation to such Loan Tranche occurs;
"Bullet Repayment Date" means, for any Bullet Loan Tranche, the Payment Date
specified as such for such Loan Tranche in the applicable Loan Tranche
Supplement.
"Bullet Repayment Loan Amount" means, in relation to Funding 2, the amount
required to be repaid on the Bullet Repayment Date in respect of a Bullet Loan
Tranche in order to pay such Bullet Loan Tranche in full;
"Cash Accumulation Period" means, in relation to an Original Bullet Loan
Tranche, the earliest to occur of :
(a) the commencement of the Anticipated Cash Accumulation Period relating to
the relevant Bullet Repayment Loan Amount; and
(b) [six] months prior to the Scheduled Repayment Date of that Original
Bullet Loan Tranche; and
ending when Funding 2 has fully repaid that Bullet Repayment Loan Amount.
"Cash Accumulation Requirement" means on a Trust Determination Date:
(a) the outstanding principal amounts in relation to each Bullet Repayment
Loan Amount that is within a Cash Accumulation Period;
(b) plus amounts due on the next following Payment Date in items (A), (B)
and (C) of the Funding 2 Pre-Enforcement Principal Priority of Payments;
(c) less the amount standing to the credit of the Funding 2 Cash
Accumulation Ledger at the last Payment Date (which amount was not to be
distributed on that Payment Date to fund the Bullet Repayment Loan
Amount of any Loan Tranche);
56
"Conditions" or "Terms and Conditions" means in relation to any Notes issued
by any Issuer, the terms and conditions to be endorsed (or incorporated by
reference) on such Notes in the form or substantially in the form scheduled to
the Trust Deed entered into by such Issuer with the Note Trustee, as any of
the same may from time to time be amended, varied or restated in accordance
with the provisions of such Trust Deed, and any reference to a numbered
Condition shall be construed accordingly;
"Contributions" means the consideration in the form of cash provided to the
Mortgages Trustee by any Beneficiary in respect of the share of such
Beneficiary in the Trust Property under the Mortgages Trust Deed, being any of
an Initial Contribution, a Further Contribution or a Deferred Contribution;
"Controlled Amortisation Loan Amount" means, in relation to Funding 2, for any
Controlled Amortisation Loan Tranche, on any Payment Date before the
occurrence of a Trigger Event or the enforcement of the [Issuer Security in
respect of the Funding 2 Issuer which has funded such Controlled Amortisation
Loan Tranche] and/or the Funding 2 Security, the maximum aggregate principal
amount which may be repaid by Funding 2 to such Issuer on that Payment Date;
"Controlled Amortisation Loan Tranches" means, in relation to Funding 2, any
Loan Tranche which by its terms imposes a limit on the amount of principal
which may be repaid on such Loan Tranche on any Payment Date. Controlled
Amortisation Loan Tranches will be deemed to be Pass-Through Loan Tranches if:
(a) a date specified in relation to the same in the applicable Loan Tranche
Supplement occurs;
(b) a Trigger Event occurs;
(c) the Issuer Security, in respect of the Funding 2 Issuer which has funded
such Controlled Amortisation Loan Tranche, is enforced;
(d) a Note Acceleration Notice is served in respect of the related Series
and Class of Notes; or
(e) a Step-Up Date (if any) in relation to such Loan Tranche occurs;
"Controlled Amortisation Requirement" means, in relation to Funding 2, on a
Trust Determination Date, the outstanding principal amounts in relation to
each Controlled Amortisation Loan Amount which is due on any of the three
Payment Dates immediately following such Trust Determination Date;
"Current Funding Share" means the amount of Trust Property beneficially owned
by Funding from time to time, as determined in accordance with Clause 8
(Adjustment of Funding Share Percentage, Funding 2 Share Percentage and Seller
Share Percentage) of the Mortgages Trust Deed;
"Current Funding 2 Share Percentage" means the percentage share of Funding in
the Trust Property from time to time, as determined in accordance with Clause
8 (Adjustment of Funding Share Percentage, Funding 2 Share Percentage and
Seller Share Percentage) of the Mortgages Trust Deed;
57
"Current Funding 2 Share" means the amount of Trust Property beneficially
owned by Funding 2 from time to time, as determined in accordance with Clause
8 (Adjustment of Funding Share Percentage, Funding 2 Share Percentage and
Seller Share Percentage) of the Mortgages Trust Deed;
"Current Funding Share 2 Percentage" means the percentage share of Funding 2
in the Trust Property from time to time, as determined in accordance with
Clause 8 (Adjustment of Funding Share Percentage, Funding 2 Share Percentage
and Seller Share Percentage) of the Mortgages Trust Deed;
"Current Seller Share" means the amount of Trust Property beneficially owned
by the Seller from time to time, as determined in accordance with Clause 8
(Adjustment of Funding Share Percentage, Funding 2 Share Percentage and Seller
Share Percentage) of the Mortgages Trust Deed;
"Current Seller Share Percentage" means the percentage share of the Seller in
the Trust Property from time to time as determined in accordance with Clause 8
(Adjustment of Funding Share Percentage, Funding 2 Share Percentage and Seller
Share Percentage) of the Mortgages Trust Deed;
"Deferred Contribution" means:
(a) the consideration in the form of cash payable by Funding to the
Mortgages Trustee from time to time in respect of the Funding Share of
the Trust Property pursuant to and in accordance with the Mortgages
Trust Deed and/or the Funding Deed of Charge including, for the
avoidance of doubt, the Funding Final Deferred Contribution; and
(b) the consideration in the form of cash payable by Funding 2 to the
Mortgages Trustee from time to time in respect of the Funding 2 Share of
the Trust Property pursuant to and in accordance with the Mortgages
Trust Deed and/or the Funding 2 Deed of Charge including, for the
avoidance of doubt, the Funding 2 Final Deferred Contribution,
which Contributions will fund the payment to the Seller by the Mortgages
Trustee of amounts of Deferred Purchase Price payable by the Mortgages Trustee
to the Seller from time to time pursuant to and in accordance with the
Mortgage Sale Agreement;
"Deferred Purchase Price" means that portion of the Purchase Price for the
sale and assignment of the Initial Mortgage Portfolio or of any New Mortgage
Portfolio sold and assigned to the Mortgages Trustee which is not paid to the
Seller [on the Initial Closing Date or, in the case of any New Mortgage
Portfolio, on the relevant Assignment Date or a Closing Date] and which is to
be paid by the Mortgages Trustee to the Seller from time to time from Deferred
Contributions received by the Mortgages Trustee from Funding and from Funding
2 and otherwise in accordance with the Mortgage Sale Agreement;
"Distribution Date" means the date on which the Mortgages Trust terminates and
the London Business Day as determined by the Cash Manager falling no later
than 6 Business Days after each Trust Determination Date;
"Event of Default" means, as the context requires, a Funding Event of Default
and/or a Funding 2 Event of Default;
58
"Final Deferred Contribution" means, as applicable, the Funding Final Deferred
Contribution and/or the Funding 2 Final Deferred Contribution;
"Funding Beneficiaries" means Funding and Funding 2, as beneficiaries of the
Mortgages Trust and "Funding Beneficiary" means either of them;
"Funding Event of Default" means, as the context requires, any of the
following:
(a) in relation to the Notes issued by any Funding Issuer, a Note Event of
Default pursuant to the Terms and Conditions of such Notes;
(b) in relation to any Funding Intercompany Loan Agreement, the occurrence
of an event of default pursuant to the terms of such Funding
Intercompany Loan Agreement;
"Funding Intercompany Loan" means a loan of the net proceeds of any issue of
Notes by a Funding Issuer, such loan being advanced to Funding by such Funding
Issuer pursuant to the terms of a Funding Intercompany Loan Agreement;
"Funding Intercompany Loan Agreement" means an intercompany loan agreement
entered into between Funding and a Funding Issuer in relation to a Funding
Intercompany Loan;
"Funding Intercompany Loan Event of Default" means the occurrence of an event
of default as specified in Clause 14 (Default) of the Intercompany Loan Terms
and Conditions;
"Funding Issuer" means a wholly-owned subsidiary of Funding, which is
established to issue Notes and to make a Funding Intercompany Loan to Funding;
"Funding Proportion" means, on a Distribution Date, Assignment Date or
Contribution Date, an amount equal to:
A
---
A+B
where:
A = the Funding Share on that date; and
B = the Funding 2 Share on that date;
"Funding Share" means, prior to the first Distribution Date, the Initial
Funding Share and thereafter means the Current Funding Share;
"Funding 2 Bank Accounts" means the Funding 2 GIC Account and the Funding 2
Transaction Account and each such additional or replacement account in the
name of Funding 2 that may be opened with the prior approval of the Funding 2
Security Trustee after the Funding Programme Date;
"Funding 2 Cash Accumulation Ledger" means the ledger on which the Cash
Manager will record the amounts accumulated by Funding 2 to pay Bullet
Repayment Loan Amounts;
"Funding 2 Deed of Charge" means the deed of charge entered into on or about
the Funding Programme Date between Funding 2, the Funding 2 Security Trustee,
the Issuer Security
59
Trustee, Granite Master Issuer plc, the Funding 2 Basis Rate Swap Provider,
the Corporate Services Provider, the Account Bank, the Funding 2 GIC Provider,
the Mortgages Trustee and the Cash Manager [others] and the Schedules thereto
and including each Deed of Accession or Accession Undertaking entered into in
connection therewith as may be amended, restated, novated, varied or
supplemented from time to time;
"Funding 2 Event of Default" means, as the context requires, any of the
following:
(a) in relation to the Notes issued by any Funding 2 Issuer, a Note Event of
Default pursuant to the Terms and Conditions of such Notes;
(b) in relation to any Funding 2 Intercompany Loan Agreement, the occurrence
of an event of default pursuant to the terms of such Funding 2
Intercompany Loan Agreement;
"Funding 2 Intercompany Loan" means a loan (or the aggregate of a number of
separate loans) of the net proceeds of any issue (or all issues) of Notes by a
Funding 2 Issuer, such loan(s) being advanced to Funding 2 by such Funding 2
Issuer pursuant to the terms of a Funding 2 Intercompany Loan Agreement;
"Funding 2 Intercompany Loan Agreement" means an intercompany loan agreement
entered into between Funding 2 and a Funding 2 Issuer in relation to a Funding
2 Intercompany Loan;
"Funding 2 Intercompany Loan Event of Default" means, in relation to the
Global Intercompany Loan Agreement, the occurrence of an event of default
specified as such in Clause 15 (Default) of the Global Intercompany Loan
Agreement and, in relation to any other Funding 2 Intercompany Loan Agreement,
the occurrence of an event of default specified as such in such Funding 2
Intercompany Loan Agreement;
"Funding 2 Issuer" means a wholly-owned subsidiary of Funding 2, which is
established to issue Notes and to make a Funding 2 Intercompany Loan to
Funding 2;
"Funding 2 Liquidity Reserve Fund" means the liquidity reserve fund which
Funding 2 will be required to establish if the long term, unsecured,
unsubordinated and unguaranteed debt obligations of the Seller cease to be
rated at least A3 by Moody's or A- by Fitch (unless Moody's or Fitch, as
applicable, confirms that the then-current ratings of the Notes of any Funding
2 Issuer will not be adversely affected). The Funding 2 Liquidity Reserve
Fund, if any, will be funded to the relevant Funding 2 Liquidity Reserve
Required Amount;
"Funding 2 Liquidity Reserve Required Amount" means [o];
"Funding 2 Post-Enforcement Priority of Payments" means the rules and the
order of priority in which Funding 2 Available Revenue Receipts, Funding 2
Available Principal Receipts and all other monies, income, receipts and
recoveries of Funding 2 or the Funding 2 Security Trustee or any Receiver of
Funding 2 and the proceeds of enforcement of the Funding 2 Security are to be
applied following service of an Intercompany Loan Enforcement Notice or
otherwise following an enforcement of the Funding 2 Security as set out in
Part [_____] of Schedule [_____] (Funding 2 Priority of Payments) to the
Funding 2 Deed of Charge, as the same may be amended, varied or superseded
from time to time in accordance with the terms of the Funding 2 Deed of
Charge;
60
"Funding 2 Pre-Enforcement Principal Priority of Payments" means the rules and
the order of priority in which Funding 2 Available Principal Receipts will be
applied prior to the enforcement of the Funding 2 Security as set out in Part
[_____] of Schedule [_____] (Funding 2 Priority of Payments) to the Funding 2
Deed of Charge, as the same may be amended, varied or superseded from time to
time in accordance with the terms of the Funding 2 Deed of Charge;
"Funding 2 Pre-Enforcement Revenue Priority of Payments" means the rules and
the order of priority in which Funding 2 Available Revenue Receipts will be
applied prior to the enforcement of the Funding 2 Security as set out in Part
[_____] of Schedule [_____] (Funding 2 Priority of Payments) to the Funding 2
Deed of Charge, as the same may be amended, varied or superseded from time to
time in accordance with the terms of the Funding 2 Deed of Charge;
"Funding 2 Priority of Payments" means, as applicable, any of the Funding 2
Pre-Enforcement Revenue Priority of Payments, the Funding 2 Pre-Enforcement
Principal Priority of Payments or the Funding 2 Post-Enforcement Priority of
Payments;
"Funding Programme Date" means [o];
"Funding 2 Proportion" means, on a Distribution Date, Assignment Date or
Contribution Date, an amount equal to:
B
---
A+B
where:
A = the Funding Share on that date; and
B = the Funding 2 Share on that date;
"Funding 2 Reserve Fund" means the reserve fund established in the name of
Funding 2 on the Funding Programme Date in an amount up to the Funding 2
Reserve Maximum Amount, which prior to enforcement may be allocated to help
meet any deficit in Funding Available Revenue Receipts and thereby any deficit
recorded on the Funding 2 Principal Deficiency Ledgers and/or utilised to fund
expenses in connection with the issuance of Notes by Funding 2 Issuers and/or
any deficit in Funding 2 Available Revenue Receipts available for the
repayment of Bullet Loan Tranches;
"Funding 2 Secured Creditors" means the Funding 2 Security Trustee (and any
Receiver of Funding 2 appointed pursuant to the Funding 2 Deed of Charge),
Granite Master Issuer plc, the Corporate Services Provider in relation to
Funding 2, the Account Bank, the Funding 2 GIC Provider, the Mortgages
Trustee, the [NR] Start-up Loan Provider, the Cash Manager and each New
Funding 2 Secured Creditor who accedes to the Funding 2 Deed of Charge from
time to time pursuant to a Deed of Accession (including, for the avoidance of
doubt, any new Funding 2 Issuer);
"Funding 2 Security" means the security granted by Funding 2 under or pursuant
to the Funding 2 Deed of Charge in favour of the Funding 2 Security Trustee
for the benefit of the
61
Funding 2 Secured Creditors or any of them including the security granted by
Funding 2 under or pursuant to any Deed of Accession;
"Funding 2 Share" means the Current Funding 2 Share;
"Further Contribution" means the consideration in the form of cash payable to
the Mortgages Trustee by any Beneficiary to increase the Funding Share, the
Funding 2 Share or, as the case may be, the Seller Share of the Trust Property
pursuant to and in accordance with the Mortgages Trust Deed but excluding any
Initial Contribution or Deferred Contribution paid by Funding or by Funding 2
to the Mortgages Trustee;
"Issuer" means, as applicable, a Funding Issuer or a Funding 2 Issuer;
"Initial Contribution" the consideration in the form of cash payable by
Funding to the Mortgages Trustee in respect of the Funding Share of the Trust
Property or by Funding 2 to the Mortgages Trustee in respect of the Funding 2
Share of the Trust Property pursuant to and in accordance with the Mortgages
Trust Deed, which Contribution is to fund the payment to the Seller by the
Mortgages Trustee of (and is equal to) the Initial Purchase Price in respect
of the Initial Mortgage Portfolio or (if any is payable) any New Mortgage
Portfolio sold and assigned to the Mortgages Trustee and is to be funded from
the proceeds of an Intercompany Loan;
"Initial Funding 2 Share" means the share of Funding 2 in the Trust Property
on the Funding 2 Programme Date being an amount equal to (GBP)100;
"Initial Purchase Price" means the sum of (GBP)1,480,000,000 payable by the
Mortgages Trustee to the Seller on the Initial Closing Date in consideration
of the Seller's sale and assignment to the Mortgages Trustee of the Initial
Mortgage Portfolio or the sum agreed to from time to time between the
Mortgages Trustee and the Seller and payable by the Mortgages Trustee to the
Seller on an Assignment Date in consideration of the Seller's sale and
assignment to the Mortgages Trustee of a New Mortgage Portfolio in respect of
which any Initial Purchase Price is payable (together with any accrued
principal, interest and expenses as at the Initial Closing Date or Assignment
Date, as applicable) in accordance with the provisions of the Mortgage Sale
Agreement;
"Intercompany Loan Agreements" means the Funding Intercompany Loan Agreements
and the Funding 2 Intercompany Loan Agreements and "Intercompany Loan
Agreement" means, as applicable, a Funding Intercompany Loan Agreement or the
Funding 2 Global Intercompany Loan Agreement;
"Intercompany Loan Enforcement Notice" means:
(a) an enforcement notice served by the Security Trustee on Funding in
relation to the enforcement of the Funding Security following the
occurrence of a Funding Intercompany Loan Event of Default; or
(b) an enforcement notice served by the Funding 2 Security Trustee on
Funding 2 in relation to the enforcement of the Funding 2 Security
following the occurrence of a Funding 2 Intercompany Loan Event of
Default;
62
"Intercompany Loans" means the Funding Intercompany Loans and the Funding 2
Global Intercompany Loan and "Intercompany Loan" means, as applicable, a
Funding Intercompany Loan or a Funding 2 Intercompany Loan;
"Issuer Security" means in relation any Issuer, the security created by such
Issuer pursuant to the relevant Issuer Deed of Charge for the benefit of the
relevant Issuer Secured Creditors;
"Loan Tranches" means the AAA loan tranches, the AA loan tranches, the A loan
tranches, the BBB loan tranches and the BB loan tranches, being the advances
made by a Funding 2 Issuer to Funding 2, pursuant to the Funding 2
Intercompany Loan Agreement between such Funding 2 Issuer and Funding 2, each
being funded from proceeds received by such Funding 2 Issuer from the issue of
a Series and Class of Notes;
"Mortgages Trust" means the bare trust of the Trust Property as to both
capital and income, held by the Mortgages Trustee on trust absolutely for
Funding (as to the Funding Share), Funding 2 (as to the Funding 2 Share) and
the Seller (as to the Seller Share) pursuant to the Mortgages Trust Deed so
that each Beneficiary has an undivided beneficial interest therein;
"Pass-Through Loan Tranche" means, in relation to Funding 2, a Loan Tranche
which has no specified repayment dates other than the Final Repayment Date. If
a date specified in relation to a Bullet Loan Tranche, a Scheduled Repayment
Loan Tranche or a Controlled Amortisation Loan Tranches in the applicable Loan
Tranche Supplement occurs or a Trigger Event occurs or the Funding 2 Security
is enforced or a Note Acceleration Notice is served in respect of the related
Series and Class of Notes or a Step-Up Date (if any) in relation to such Loan
Tranche occurs, then that Loan Tranche will be deemed to be Pass-Through Loan
Tranches;
"Pass-Through Requirement" means, on any trust determination date, the lesser
of:
(a) the aggregate of the Outstanding Principal Balance of each Pass-Through
Loan Tranche which has become due; and
(b) the greater of:
(i) the product of:
(A) the Funding 2 Share Percentage as at the start of the
immediately preceding Trust Calculation Period (provided
that if an Assignment date or a Contribution date has
occurred during such Trust Calculation Period then the
Weighted Average Funding 2 Share Percentage will be used);
(B) the aggregate amount of Principal Receipts received by the
Mortgages Trustee during the immediately preceding trust
Calculation Period; and
(C) the Outstanding Principal Balance of the Pass-Through Loan
Tranches which are due (in the case of Rule (2)) or the
Pass-Through Loan Tranches related to the Series and Class
of Notes in respect of which a Note Acceleration Notice has
been served (in the case of Rule (3)), each as of the most
recent Payment Date,
63
divided by the aggregate Outstanding Principal Balance of the Global
Intercompany Loan of the most recent Payment Date; and
(ii) the product of:
(A) the Funding 2 Share Percentage as at the start of the
immediately preceding Trust Calculation Period (provided
that if an Assignment Date or a Contribution Date has
occurred during such Trust Calculation Period then the
Weighted Average Funding 2 Share Percentage will be used);
(B) the aggregate amount of Principal Receipts received by the
Mortgages Trustee during the immediately preceding Trust
Calculation Period;
less
(C) the sum of the Cash Accumulation Requirement, the Scheduled
Amortisation Requirement and the Controlled Amortisation
Requirement as calculated for this Distribution Date as
described above;
"Repayment Requirement" means, on any Trust Determination Date, the amount, if
any, equal to the sum of:
(a) the Cash Accumulation Requirement;
(b) the Controlled Amortisation Requirement;
(c) the Scheduled Repayment Requirement; and
(d) the Pass-Through Requirement;
"Seller Share" means, prior to the first Distribution Date, the Initial Seller
Share and thereafter, shall mean the Current Seller Share;
"Seller Share Assignment Agreement" means the assignment agreement entered
into on or before the Funding 2 Programme Date between the Seller, Funding 2,
Funding, the Funding Security Trustees, the Mortgages Trustee and the Note
Trustees in respect of the existing Issuers;
"Scheduled Repayment Loan Instalment" means that part of a Scheduled Repayment
Loan Tranche which is payable on each of the Scheduled Repayment Dates of that
Loan Tranche;
"Scheduled Repayment Loan Tranches" means, in relation to Funding 2, any Loan
Tranche which is scheduled to be repaid on two or more instalments on
Scheduled Repayment Dates. Scheduled Repayment Loan Tranches will be deemed to
be Pass-Through Loan Tranches if:
(a) a date specified in relation to the same in the applicable Loan Tranche
Supplement occurs;
(b) a Trigger Event occurs;
64
(c) he Issuer Security, in respect of the Funding 2 Issuer which has funded
such Scheduled Repayment Loan Tranche, is enforced;
(d) a Note Acceleration Notice is served in respect of the related Series
and Class of Notes; or
(e) a Step-Up Date (if any) in relation to such Loan Tranche occurs;
"Scheduled Repayment Requirement" means, on a Trust Determination Date, the
outstanding principal amounts in relation to each Scheduled Repayment Loan
Instalment which is due and payable on any of the three Payment Dates
immediately following such Trust Determination Date;
"Special Distribution" has the meaning given to it in Clause 6.4
(Distribution) of the Mortgages Trust Deed;
65
Exhibit 4.2
Dated [o] January 2005
----------------------
NORTHERN ROCK PLC
as Seller, Cash Manager, and a Beneficiary
GRANITE FINANCE FUNDING LIMITED
as Funding and a Beneficiary
GRANITE FINANCE FUNDING 2 LIMITED
as Funding 2 and as Beneficiary
GRANITE FINANCE TRUSTEES LIMITED
as Mortgages Trustee
- and -
THE BANK OF NEW YORK
as Security Trustee and Funding 2 Security Trustee
---------------------------------------
MORTGAGES TRUST DEED
TENTH DEED OF AMENDMENT
---------------------------------------
SIDLEY ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇
WOOLGATE EXCHANGE
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
TELEPHONE ▇▇▇ ▇▇▇▇ ▇▇▇▇
FACSIMILE 020 7626 7937
THIS DEED is made on [o] January 2005
BETWEEN:
(1) NORTHERN ROCK PLC (registered number 03273685), a public limited company
incorporated under the laws of England and Wales whose registered office
is at Northern ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇, in its
capacity as Seller, and in its capacity as Cash Manager and in its
capacity as a Beneficiary;
(2) GRANITE FINANCE FUNDING LIMITED (registered number 79308), a private
limited company incorporated under the laws of Jersey, but acting out of
its office established in England (registered overseas company number
FC022999 and branch number BR005916) at ▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ in
its capacity as a Beneficiary;
(3) GRANITE FINANCE FUNDING 2 LIMITED (registered number 5249387) a private
limited company incorporated under the laws of England and Wales whose
registered office is at ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇
in its capacity as a Beneficiary;
(4) GRANITE FINANCE TRUSTEES LIMITED (registered number 79309), a private
limited company incorporated under the laws of Jersey whose registered
office is at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, Channel
Islands in its capacity as the Mortgages Trustee; and
(5) THE BANK OF NEW YORK, a New York banking corporation whose London branch
address is at One Canada Square, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, in its capacity as (1) Security Trustee and (2) Funding 2
Security Trustee.
WHEREAS:
(A) On 26 March 2001 (the "Initial Closing Date"), the Mortgages Trustee
declared the following trusts in respect of the Trust Property (being on
the Initial Closing Date, the sum of (GBP)100 which monies have been
received by, are presently beneficially owned by and are held by the
Mortgages Trustee or to its order).
(B) On the Initial Closing Date, the Mortgages Trustee (acting as principal
and not as agent of any party) agreed, in accordance with the Mortgages
Trust Deed dated 26 March 2001 among the parties hereto (the "Mortgages
Trust Deed") to hold the Trust Property as bare trustee for Funding and
the Seller (each a Beneficiary and together, the "Beneficiaries") upon,
with and subject to the trusts, powers and provisions of the Mortgages
Trust Deed. The Mortgages Trustee receives amounts arising from the
Trust Property and distributes such amounts for the benefit of the
Beneficiaries of the Mortgages Trust. It delegates certain tasks in
relation to the Mortgages Trust to the Administrator and the Cash
Manager.
(C) The Seller carries on the business of, inter alia, originating
residential first mortgage loans to individual Borrowers in England,
Wales and Scotland and of managing and administering such mortgage
loans. The Seller has sold and assigned and intends to sell and assign
from time to time portfolios of such mortgage loans to the Mortgages
Trustee pursuant to the
Mortgage Sale Agreement entered into on the Initial Closing Date, which
mortgage loans shall be held by the Mortgages Trustee as bare trustee
for the Beneficiaries upon, with and subject to the trusts, powers and
provisions of the Mortgages Trust Deed.
(D) The parties have agreed to amend and restate the Mortgages Trust Deed
(the "First Amended and Restated Mortgages Trust Deed") pursuant to the
provisions set out in a deed of amendment and restatement dated 23 July
2001 (the "First Deed of Amendment and Restatement").
(E) The parties have agreed to amend and restate the First Amended and
Restated Mortgages Trust Deed (the "Second Amended and Restated
Mortgages Trust Deed") pursuant to the provisions set out in a deed of
amendment and restatement dated 28 September 2001 (the "Second Deed of
Amendment and Restatement").
(F) The parties have agreed to amend and restate the Second Amended and
Restated Mortgages Trust Deed (the "Third Amended and Restated Mortgages
Trust Deed") pursuant to the provisions set out in a deed of amendment
and restatement dated 20 March 2002 (the "Third Deed of Amendment and
Restatement").
(G) The parties have agreed to amend and restate the Third Amended Mortgages
Trust Deed (the "Fourth Amended Mortgages Trust Deed") pursuant to the
provisions set out in a deed of amendment and restatement dated 23
September 2002 (the "Fourth Deed of Amendment and Restatement").
(H) The parties have agreed to amend and restate the Fourth Amended
Mortgages Trust Deed (the "Fifth Amended Mortgages Trust Deed") pursuant
to the provisions set out in a deed of amendment and restatement dated
27 January 2003 (the "Fifth Deed of Amendment and Restatement").
(I) The parties have agreed to amend and restate the Fifth Amended Mortgages
Trust Deed (the "Sixth Amended Mortgages Trust Deed") pursuant to the
provisions set out in a deed of amendment and restatement dated 21 May
2003 (the "Sixth Deed of Amendment and Restatement").
(J) The parties have agreed to amend and restate the Sixth Amended Mortgages
Trust Deed (the "Seventh Amended Mortgages Trust Deed") pursuant to the
provisions set out in a deed of amendment and restatement dated 24
September 2003 (the "Seventh Deed of Amendment and Restatement").
(K) The parties have agreed to amend and restate the Seventh Amended
Mortgages Trust Deed (the "Eighth Amended Mortgages Trust Deed")
pursuant to the provisions set out in a deed of amendment and
restatement dated 26 January 2004 (the "Eighth Deed of Amendment and
Restatement").
(L) The parties have agreed to amend and restate the Eighth Amended
Mortgages Trust Deed (the "Ninth Amended Mortgages Trust Deed") pursuant
to the provisions set out in a deed of amendment and restatement dated
26 May 2004 (the "Ninth Deed of Amendment and Restatement").
2
(M) The parties now wish to amend and restate, and Funding 2 and the Funding
2 Security Trustee wish to become a party to, the Tenth Amended and
Restated Mortgages Trust Deed.
(N) With effect from the date hereof, the provisions of the Mortgages Trust
Deed, the First Amended and Restated Mortgages Trust Deed, the Second
Amended and Restated Mortgages Trust Deed, the Third Amended and
Restated Mortgages Trust Deed, the Fourth Amended and Restated Mortgages
Trust Deed, the Fifth Amended and Restated Mortgages Trust Deed, the
Sixth Amended and Restated Mortgages Trust Deed, the Seventh Amended and
Restated Mortgages Trust Deed, the Eighth Amended and Restated Mortgages
Trust Deed, the Ninth Amended and Restated Mortgages Trust Deed and this
Deed shall be read and construed as one document.
NOW IT IS HEREBY AGREED as follows:
1. INTERPRETATION
1.1 The provisions of the Programme Master Definitions Schedule signed for
the purposes of identification on [o] January 2005 by Sidley ▇▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇ and ▇▇▇▇▇ & ▇▇▇▇▇ LLP (as the same may be amended, varied
or supplemented from time to time with the consent of the parties
hereto) is expressly and specifically incorporated into and shall apply
to this Deed.
1.2 The Mortgages Trust Deed as amended and restated pursuant to the First
Deed of Amendment and Restatement, the Second Deed of Amendment and
Restatement, the Third Deed of Amendment and Restatement, the Fourth
Deed of Amendment and Restatement, the Fifth Deed of Amendment and
Restatement, the Sixth Deed of Amendment and Restatement, the Seventh
Deed of Amendment and Restatement, the Eighth Deed of Amendment and
Restatement, the Ninth Deed of Amendment and pursuant hereto shall be
referred to herein as the "Amended and Restated Mortgages Trust Deed".
1.3 As used in the Amended and Restated Mortgages Trust Deed the terms
"Mortgages Trust Deed", "this Mortgages Trust Deed", "Trust Deed", "this
Trust Deed", "Deed", "this Deed", "herein", "hereinafter", "hereof",
"hereto" and other words of similar import shall mean or refer to the
Amended and Restated Mortgages Trust Deed, unless the context otherwise
specifically requires.
2. AMENDMENTS TO THE NINTH AMENDED AND RESTATED MORTGAGES TRUST DEED
Upon execution of this Deed by the parties hereto, the Ninth Amended and
Restated Mortgages Trust Deed shall be and hereby is amended and
restated in the form of Appendix I hereto.
3. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999
No person shall have any right to enforce any provision of this Deed or
any provision of the Amended and Restated Mortgages Trust Deed under the
Contract (Rights of Third Parties)
3
▇▇▇ ▇▇▇▇ but this shall not affect any right or remedy of a third party
which exists apart from that Act.
4. Security Trustee AND FUNDING 2 SECURITY TRUSTEE
The Security Trustee, for the purposes of Clause 15.2 (Negative
Covenants) of the Funding Deed of Charge and the Funding 2 Security
Trustee for the purposes of Clause 15.2 (Negative Covenants) of the
Funding 2 Deed of Charge hereby consents to the amendments to the Ninth
Amended and Restated Mortgages Trust Deed and are party to this Deed
solely for the purposes of providing such consent.
5. COUNTERPARTS
This Deed may be executed in any number of counterparts, and has the
same effect as if the signatures and/or seals on the counterparts were
on a single copy of this Deed.
6. GOVERNING LAW
6.1 This Deed is governed by, and shall be construed in accordance with,
English law.
6.2 Each of the parties hereto irrevocably agrees that the courts of England
shall have jurisdiction to hear and determine any suit, action or
proceeding, and to settle any disputes, which may arise out of or in
connection with this Deed and, for such purposes, irrevocably submits to
the jurisdiction of such courts.
4
EXECUTION PAGE
IN WITNESS WHEREOF this Deed has been executed as a deed and delivered by the
parties hereto on the day and year first above written.
Executed by By
NORTHERN ROCK PLC -------------------------------------
as its deed as follows: Duly Authorised Attorney/Signatory
Signed for and on its behalf by
one of its duly authorised Name
attorneys/signatories ------------------------------------
Signature
--------------------------
Witness
Full name
--------------------------
Occupation
--------------------------
Address
--------------------------
--------------------------
--------------------------
Executed by
GRANITE FINANCE FUNDING LIMITED
as its deed as follows: By
Signed for and on its behalf by one ---------------------------------
of its directors and by another of Director
its directors/its secretary
Name
--------------------------------
By
---------------------------------
Director/Secretary
Name
---------------------------------
Executed by
GRANITE FINANCE FUNDING 2 LIMITED
as its deed as follows: By
Signed for and on its behalf by one ---------------------------------
of its directors and by another of Director
its directors/its secretary
Name
--------------------------------
By
---------------------------------
Director/Secretary
Name
---------------------------------
5
Executed by
GRANITE FINANCE TRUSTEES LIMITED
as its deed as follows: By
Signed for and on its behalf by one ---------------------------------
of its directors and by another of Director
its directors/its secretary
Name
--------------------------------
By
---------------------------------
Director/Secretary
Name
---------------------------------
Executed by By
THE BANK OF NEW YORK -------------------------------------
as its deed as follows: Duly Authorised Attorney/Signatory
Signed for and on its behalf by
one of its duly authorised Name
attorneys/signatories ------------------------------------
6
Appendix I
Amended and Restated Mortgages Trust Deed
7
