EXHIBIT 4.10
Dated [ ], 2006
NORTHERN ROCK PLC
as Servicer
GRANITE FINANCE TRUSTEES LIMITED
as Mortgages Trustee
NORTHERN ROCK PLC
as Seller and Beneficiary
GRANITE FINANCE FUNDING LIMITED
as Beneficiary
GRANITE FINANCE FUNDING 2 LIMITED
as Beneficiary
- and -
THE BANK OF NEW YORK
as Security Trustee and Funding 2 Security Trustee
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EIGHTH AMENDED AND RESTATED
ADMINISTRATION AGREEMENT
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CONTENTS
1. Definitions and Interpretation.........................................2
2. Appointment of Servicer................................................3
3. The Administration Services............................................4
4. Interest Rates.........................................................7
5. Administration of Mortgages...........................................11
6. No Liability..........................................................19
7. New Mortgage Loans....................................................19
8. Product Switching and Further Advances................................19
9. Redemption of Mortgages...............................................19
10. Powers of Attorney....................................................20
11. Costs and Expenses....................................................21
12. Information...........................................................21
13. Remuneration..........................................................23
14. Insurances............................................................24
15. Title Deeds...........................................................26
16. Data Protection.......................................................26
17. Covenants and Representations and Warranties of Servicer..............28
18. Services Non-exclusive................................................29
19. Termination...........................................................29
20. Further Assurances....................................................32
21. Miscellaneous.........................................................33
22. Confidentiality.......................................................34
23. No Partnership........................................................35
24. Assignment............................................................35
25. Security Trustee; Authorised Third Party..............................36
26. New Intercompany Loan Agreements......................................37
27. Non Petition Covenant; Limited Recourse...............................37
28. Amendments and Waiver.................................................38
29. Notices...............................................................39
30. Third Party Rights....................................................40
31. Execution in Counterparts; Severability...............................40
32. Governing Law and Submission to Jurisdiction..........................40
33. Process Agent.........................................................41
34. Appropriate Forum.....................................................41
SCHEDULE 1 THE SERVICES....................................................42
SCHEDULE 2 FORM OF INVESTORS' MONTHLY REPORT...............................43
SCHEDULE 3 SERVICER REPRESENTATIONS AND WARRANTIES.........................48
SCHEDULE 4 AUTHORISED THIRD PARTY..........................................50
SCHEDULE 5 MINIMUM SERVICING STANDARDS.....................................53
SCHEDULE 6 FORM OF ANNUAL CERTIFICATION....................................55
SCHEDULE 7 FORM OF SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT
OF COMPLIANCE STATEMENT................................................57
THIS AGREEMENT IS MADE ON 26 MARCH, 2001 AND AMENDED AND RESTATED PURSUANT TO
THE DEEDS OF AMENDMENT AND RESTATEMENT DATED 28 SEPTEMBER 2001, 27 JANUARY
2003, 21 MAY 2003, 24 SEPTEMBER 2003, 28 JANUARY 2004, 25 JUNE 2004, 19
JANUARY 2005, 24 AUGUST 2005 AND [ ], 2006 BETWEEN:
(1) NORTHERN ROCK PLC (registered number 3273685), a public limited company
incorporated under the laws of England and Wales whose registered
office is at ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇
in its capacity as servicer (the "Servicer" or the "Administrator");
(2) 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;
(3) NORTHERN ROCK PLC (registered number 3273685), a public limited company
incorporated under the laws of England and Wales whose registered
office is at ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇
in its capacity as Seller and its capacity as a Beneficiary;
(4) GRANITE FINANCE FUNDING LIMITED (registered number 79308), a private
limited company incorporated under the laws of Jersey but acting out of
its branch office established in England (registered overseas company
number FC022999 and branch number BR0051916) at ▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ in its capacity as a Beneficiary;
(5) 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; and
(6) THE BANK OF NEW YORK, a New York banking corporation whose London
branch address is at One Canada Square, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, in
its capacity as Security Trustee and as Funding 2 Security Trustee.
WHEREAS:
(A) The Servicer carries on the business of, inter alia, administering and
servicing mortgage loans secured on residential properties located
within the United Kingdom.
(B) By the Mortgage Sale Agreement, the Seller has agreed to sell and
assign Mortgage Loans and their Related Security to the Mortgages
Trustee. The Mortgages Trustee shall hold the Mortgage Portfolio
together with any New Mortgage Portfolio on trust
for Funding, Funding 2 and the Seller pursuant to the terms of the
Mortgages Trust Deed.
(C) The Servicer is willing to administer and service the Mortgage Loans on
behalf of the Mortgages Trustee and to provide certain other
administration and management services to the Mortgages Trustee, the
Seller, Funding and Funding 2 on the terms and subject to the
conditions contained in this Agreement in relation to, inter alia, the
Mortgage Loans and Related Security sold and assigned to the Mortgages
Trustee by the Seller.
IT IS HEREBY AGREED as follows:
1. Definitions and Interpretation
1.1 Definitions: The provisions of the Programme Master Definitions
Schedule signed for the purposes of identification by Sidley ▇▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇ and ▇▇▇▇▇ & ▇▇▇▇▇ LLP on 19 January 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 Agreement.
For the purposes of this Agreement:
"Commission" means the United States Securities and Exchange
Commission;
"Regulation AB" means Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be
amended from time to time, and subject to such clarification and
interpretation as have been provided by the Commission in the adopting
release (Asset-Backed Securities, Securities Act Release No. 33-8518,
70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff of the
Commission, or as may be provided by the Commission or its staff from
time to time;
"▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification" has the meaning specified in Clause
5.8(a)(iv);
"Servicing Criteria" means the "servicing criteria" set forth in Item
1122(d) of Regulation AB; and
"Subcontractor" means any vendor, subcontractor or other Person that is
not responsible for the overall servicing (as "servicing" is commonly
understood by participants in the mortgage-backed securities market) of
Mortgage Loans but performs one or more discrete functions identified
in Item 1122(d) of Regulation AB with respect to the Mortgage Loans
under the direction or authority of the Servicer.
1.2 Exercise of Discretion: Any reference in this Agreement to any
discretion, power or right on the part of the Mortgages Trustee shall
be exercised by the Mortgages Trustee only as directed by the
Beneficiaries but subject in each case to the provisions of the
Mortgages Trust Deed and the Controlling Beneficiary Deed.
1.3 Schedules: For the avoidance of doubt, the parties hereto agree that
the Schedules attached to this Agreement shall form a part of this
Agreement, and the provisions of this Agreement shall be construed in
accordance with such Schedules.
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2. Appointment of Servicer
2.1 Appointment: Subject to Clause 4.5 (Termination of Authority) herein,
and until termination pursuant to Clause 19 herein (Termination), the
Mortgages Trustee hereby appoints the Servicer to administer and
service the Mortgages Loans on its behalf, and each of the Mortgage
Trustee, the Seller and Funding (according to their respective estates
and interests) hereby appoints the Servicer as its lawful agent on its
behalf to provide certain other administration and management services
and to exercise their respective rights, powers and discretions, and to
perform their respective duties, under and in relation to the Mortgage
Loans, their Related Security and the applicable Mortgage Conditions.
The Servicer in each case hereby accepts such appointment on the terms
and subject to the conditions of this Agreement. The Security Trustee
consents to the appointment of the Servicer on the terms of and subject
to the conditions of this Agreement.
2.2 Appointment by Funding 2: Subject to Clause 4.5 (Termination of
Authority) herein, and until termination pursuant to Clause 19
(Termination) herein, Funding 2 (according to its estates and
interests) hereby appoints the Servicer as its lawful agent on its
behalf to provide certain other administration and management services
and to exercise its rights, powers and discretions, and to perform its
duties, under and in relation to the Mortgage Loans, their Related
Security and the applicable Mortgage Conditions. The Servicer hereby
accepts such appointment on the terms and subject to the conditions of
this Agreement. The Funding 2 Security Trustee consents to the
appointment of the Servicer on the terms of and subject to the
conditions of this Agreement.
2.3 Power and Authority: For the avoidance of doubt and in connection with
the rights, powers and discretions conferred under Clause 2.1
(Appointment) and Clause 2.2 (Appointment by Funding 2) herein, during
the continuance of its appointment hereunder, the Servicer shall,
subject to the terms and conditions of this Agreement, the Mortgage
Conditions, the Mortgage Sale Agreement and the Mortgages Trust Deed,
have the full power, authority and right to do or cause to be done any
and all things which it reasonably considers necessary, convenient or
incidental to the administration of the Mortgage Loans and their
Related Security or the exercise of such rights, powers and
discretions, provided however that neither the Mortgages Trustee, the
Funding Beneficiaries nor their respective directors shall be required
or obliged at any time to enter into any transaction or to comply with
any directions which the Servicer may give with respect to the
operating and financial policies of the Mortgages Trustee and/or the
Funding Beneficiaries and the Servicer hereby acknowledges that all
powers to determine such policies (including the determination of
whether or not any particular policy is for the benefit of the
Mortgages Trustee or any Funding Beneficiary) are, and shall at all
times remain, vested, as the case may be, in the Mortgages Trustee
and/or each Funding Beneficiary (and their respective directors) and
none of the provisions of this Agreement shall be construed in a manner
inconsistent with this proviso.
2.4 Appointment Conditional: The appointment pursuant to Clause 2.1
(Appointment) herein is conditional upon the issue of the First Issuer
Notes having taken place and shall take effect upon and from the
Initial Closing Date automatically without any further action on the
part of any person PROVIDED THAT if the issue of the First Issuer Notes
has not occurred by 30 April 2001, or such later date as the First
Issuer
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and the Lead Manager may agree, this Agreement shall cease to be of
further effect.
2.5 Appointment by Funding 2 Conditional: The appointment pursuant to
Clause 2.2 (Appointment by Funding 2) herein is conditional upon the
acquisition by Funding 2 from the Seller of a portion of the Seller's
beneficial interest in the Mortgages Trust pursuant to the Seller
(Mortgages Trust) Assignment Agreement and shall take effect upon and
from the Funding 2 Programme Date automatically without any further
action on the part of any person PROVIDED THAT if Funding 2 has not
acquired from the Seller a portion of the Seller's beneficial interest
in the Mortgages Trust by 31 January, 2005, or such later date as
Funding 2 and the Seller may agree, the appointment of the Servicer as
agent of Funding 2 under Clause 2.2 (Appointment by Funding 2) shall
not take effect.
3. The Administration Services
3.1 General:
(a) The duty of the Servicer shall be to provide the services set out
in this Agreement including Schedule 1 (the "Services").
(b) If and when the Servicer is required to confirm or state the
capacity in which it is administering or servicing the Mortgage
Loans and their Related Security in the Mortgage Portfolio and
related matters pursuant to this Agreement by any Borrower or any
third party to this Agreement and to whom the Servicer is by law
obliged to disclose such information, unless otherwise indicated
herein, the Servicer shall confirm or state that it is acting in
its capacity as Servicer of such Mortgage Loans and their Related
Security and related matters as agent for and on behalf of the
Mortgages Trustee and not on its own behalf.
3.2 Sub-contracts:
(a) The Servicer may sub-contract or delegate the performance of all
or any of its powers and obligations under this Agreement,
provided that (but subject to Clause 3.2(b) herein):
(i) the prior written consent of the Mortgages Trustee to the
proposed arrangement (including, if the Funding
Beneficiaries consider it necessary after consulting with
the Funding Security Trustees, approving any contract which
sets out the terms on which such arrangements are to be
made) has been obtained, the Funding Security Trustees have
been consulted and notification has been given to each of
the Rating Agencies;
(ii) where the arrangements involve the custody or control of
any Mortgage Loan Files and/or Title Deeds relating to the
Mortgage Portfolio for the purpose of performing any
delegated Services, the Subcontractor [or delegate] has
executed an acknowledgement in writing acceptable to the
Funding Beneficiaries and the Funding Security Trustees to
the effect that any such Mortgage Loan Files and/or Title
Deeds are and will be held to the order of the Mortgages
Trustee (as trustee for the Beneficiaries);
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(iii) where the arrangements involve or may involve the receipt
by the Subcontractor [or delegate] of monies belonging to
the Mortgages Trustee and/or the Beneficiaries which, in
accordance with this Agreement, are to be paid into the
relevant Collection Account, the Subcontractor [or
delegate] has executed a declaration in writing acceptable
to the Funding Beneficiaries and the Funding Security
Trustees that any such monies held by it or to its order
are held on trust for the Mortgages Trustee (as trustee for
the Beneficiaries) and will be paid forthwith into the
relevant Collection Account in accordance with the terms of
the Mortgages Trust Deed;
(iv) any such Subcontractor [or delegate] has executed a written
waiver of any Security Interest arising in connection with
such delegated Services (to the extent that such Security
Interest relates to the Mortgage Portfolio or any amount
referred to in (iii) above); and
(v) neither the Mortgages Trustee, the Funding Security
Trustees nor the Beneficiaries shall have any liability for
any costs, charges or expenses payable to or incurred by
such Subcontractor [or delegate] or arising from the
entering into, the continuance or the termination of any
such arrangement.
(b) The provisos in Clause 3.2(a) (i), (ii) and (iii) herein shall not
apply:
(i) to the engagement by the Servicer of:
(A) any receiver, solicitor, insurance broker, valuer,
surveyor, accountant, estate agent, insolvency
practitioner, auctioneer, bailiff, debt counsellor,
tracing agent, property management agent, licensed or
qualified conveyancer or other professional adviser
acting as such; or
(B) any locksmith, builder or other contractor acting as
such in relation to a Mortgaged Property,
in any such case being a person or persons whom the
Servicer would be willing to appoint in respect of its own
mortgages in connection with the performance by the
Servicer of any of its obligations or functions or in
connection with the exercise of its powers under this
Agreement; or
(ii) to any delegation to any wholly-owned subsidiary of the
Seller from time to time.
(c) The Mortgages Trustee and/or the Funding Beneficiaries and the
Funding Security Trustees may require the Servicer to assign to
the Mortgages Trustee any rights which the Servicer may have
against any Subcontractor [or delegate] arising from the
performance of services by such person in association with any
matter contemplated by this Agreement and the Servicer
acknowledges that such rights assigned to the Mortgages Trustee
will be
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exercised by the Mortgages Trustee as trustee for the
Beneficiaries subject to the terms of the Mortgages Trust Deed.
(d) Notwithstanding any sub-contracting or delegation of the
performance of the Servicer's obligations under this Agreement:
(i) the Servicer shall not thereby be released or discharged
from any liability hereunder;
(ii) the Servicer shall remain responsible for the performance
of the obligations of the Servicer under this Agreement;
(iii) the performance or non-performance or the manner of
performance of any Subcontractor [or delegate] of any of
the Services shall not affect the Servicer's obligations
under this Agreement;
(iv) any breach in the performance of the Services by any
Subcontractor [or delegate] shall, subject to the Servicer
being entitled for a period of twenty (20) Business Days
from receipt of notice of the breach to remedy such breach
by any Subcontractor [or delegate], be treated as a breach
of this Agreement by the Servicer; and
(v) the Funding Security Trustees shall have no liability for
any act or omission of the Subcontractor [or delegate] and
shall have no responsibility for monitoring or
investigating the suitability of any such Subcontractor [or
delegate].
3.3 Notices etc.
(a) Within fifteen (15) days after the Initial Closing Date, the
Servicer will:
(i) on behalf of the Mortgages Trustee (at the direction of the
Beneficiaries or with their consent), give to third parties
such notices as any of the Beneficiaries are required to
give pursuant to the Mortgage Sale Agreement; and
(ii) submit for registration at the Companies Registry a duly
completed Form 395 and original executed copy of the First
Issuer Deed of Charge pursuant to Chapter 1 of Part XII of
the Companies ▇▇▇ ▇▇▇▇,
and in each case, the Servicer shall take all reasonable steps to
ensure the return by the relevant recipient of the duplicate
notices of assignment by way of acknowledgement thereof.
(b) Promptly upon request by the Funding Beneficiaries and the Funding
Security Trustees, the Servicer shall procure that any notices
permitted to be given by the Mortgages Trustee under Clause 6.4
(Prior to Perfection) of the Mortgage Sale Agreement are so given
by the Servicer on the Mortgages Trustee's behalf.
3.4 Liability of Servicer:
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(a) The Servicer shall indemnify each of the Mortgages Trustee and the
Beneficiaries on demand on an after-tax basis for any loss,
liability, claim, expense or damage suffered or incurred by either
of them in respect of the negligence or wilful default of the
Servicer in carrying out its functions as Servicer under this
Agreement or the other Transaction Documents or as a result of a
breach by the Servicer of the terms and provisions of this
Agreement or the other Transaction Documents in relation to such
functions.
(b) For the avoidance of doubt, the Servicer shall not be liable in
respect of any loss, liability, claim, expense or damage suffered
or incurred by the Mortgages Trustee and/or the Beneficiaries
and/or any other person as a result of the proper performance of
the Services by the Servicer save where such loss, liability,
claim, expense or damage is suffered or incurred as a result of
any negligence or wilful default of the Servicer or as a result of
a breach by the Servicer of the terms and provisions of this
Agreement or the other Transaction Documents in relation to such
functions.
(c) Any indemnification under this Clause 3.4 in respect of loss
suffered by the Beneficiaries whilst Northern Rock is the
Servicer, shall be paid for by reducing the Seller Share of the
Trust Property by an amount equal to the relevant loss incurred by
the Beneficiaries in accordance with Clause 8.5 (Adjustments to
Trust Property) of the Mortgages Trust Deed and Schedule 2 to the
Cash Management Agreement.
3.5 Perfection of Mortgages Trustee's and Beneficiaries' Title to the
Mortgage Loans
Subject to Clause 6 of the Mortgage Sale Agreement:
(a) upon the receipt by the Seller of a written request in accordance
with Clause 6.2 (Perfection) of the Mortgage Sale Agreement to
execute transfers and/or assignments, the Servicer shall execute
or procure the execution of such transfers and/or assignments on
behalf of the Seller or shall provide sufficient information to
enable the Mortgages Trustee, either Funding Beneficiary or either
Funding Security Trustee to do so; and
(b) upon the Seller being required to do so in accordance with Clause
6.1 (Perfection Events) of the Mortgage Sale Agreement, the
Servicer shall do all or any of the acts, matters or things
referred to in Clauses 6.2 (Perfection) and 6.3 (Transfer
Documents) of the Mortgage Sale Agreement.
4. Interest Rates
4.1 Determination of Interest Rates: Subject to the provisions of
applicable law, regulations and rules and any regulatory undertakings
binding on the Servicer or the Issuer from time to time and subject to
the following provisions of this Clause 4, the Mortgages Trustee and
each of the Beneficiaries each hereby grants the Servicer full right,
liberty and authority from time to time to determine:
(a) in accordance with the applicable Mortgage Conditions, Mortgage
Terms and the Base Rate Pledge, the Standard Variable Rate and any
other discretionary
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rates and margins applicable to the Mortgage Loans chargeable to
Borrowers from time to time; and
(b) the Existing Borrowers' Re-Fix Rate in accordance with Clause 4.4
(Existing Borrowers' Re-Fix Rate) herein.
In exercising such right, liberty and authority the Servicer undertakes
to each of the other parties to this Agreement that it shall not at any
time set or maintain the Standard Variable Rate and any other
discretionary rates and margins applicable to the Mortgage Loans at
rates which are higher than the then prevailing equivalent rates
offered by the Seller, unless the Servicer is required to do so
pursuant to Clause 4.3 (Interest Rate Shortfall) herein, and, subject
to that requirement, that it shall not change the Standard Variable
Rate and any other discretionary rates and margins applicable to the
Mortgage Loans save for the same reasons as the Seller was entitled,
under the Mortgage Conditions, to change the then prevailing equivalent
rates offered by the Seller prior to the sale and assignment to the
Mortgages Trustee of the Mortgage Loans comprised in the Mortgage
Portfolio and their Related Security. Each Issuer, Funding Beneficiary
and Funding Security Trustee shall be bound by any Mortgage Rates
(including the Existing Borrowers' Re-Fix Rate) determined by the
Servicer in accordance with this Clause 4.
4.2 Notification to Borrowers: The Servicer shall take all steps necessary
pursuant to the relevant Mortgage Conditions and/or applicable law,
regulations and rules to bring each change in the Standard Variable
Rate and any other discretionary rate or margin applicable to the
Mortgage Loans and any consequent changes in Monthly Payments to the
attention of the relevant Borrowers and shall, as soon as reasonably
practicable after any change in such rates, provide details of such
changes to the Mortgages Trustee, each Funding Security Trustee and
each Beneficiary, and shall, upon receipt of a request from any of such
parties, notify such requesting party of any changes in the Monthly
Payments in relation to the Mortgage Loans.
4.3 Interest Rate Shortfall:
(a) On each Monthly Payment Date the Servicer shall determine, having
regard to:
(i) the income which each of Funding and Funding 2 would expect
to receive during the next succeeding Interest Period;
(ii) the Mortgage Rates in respect of the Mortgage Loans which
the Servicer proposes to set under this Clause 4; and
(iii) the other resources available to Funding including (but not
limited to) the Funding Reserve Fund and amounts standing
to the credit of any applicable Issuer Reserve Fund and/or
any applicable Issuer Liquidity Reserve Fund and the other
resources available to Funding 2 including (but not limited
to) the Funding 2 Reserve Fund, the Funding 2 Liquidity
Reserve Fund and any applicable Issuer Reserve Fund,
whether:
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(A) Funding would receive an amount of income during that
Interest Period which when aggregated with the funds
otherwise available to it is less than the amount
which is the aggregate of (1) the amount of interest
which will be payable by Funding in order to fund
(whether by payment to a swap provider or otherwise)
the amount of interest payable in respect of the Class
A Notes of the Funding Issuers and all amounts which
rank in priority thereto on the Payment Date occurring
at the end of such Interest Period, and (2) all other
amounts payable by Funding which rank in priority to
or pari passu with interest due on each Funding
Intercompany Loan in respect of interest which is
payable on the Class A Notes of the Funding Issuers
(the amount (if any) by which it is less being the
"Funding Interest Rate Shortfall"); and
(B) Funding 2 would receive an amount of income during
that Interest Period which when aggregated with the
funds otherwise available to it is less than the
amount which is the aggregate of (1) the amount of
interest which would be payable by Funding 2 in order
to fund (whether by payment to a swap provider or
otherwise) the amount of interest payable in respect
of the AAA Loan Tranches of each Funding 2
Intercompany Loan and all amounts which rank in
priority thereto on the Monthly Payment Date occurring
at the end of such Interest Period and (2) all other
amounts payable by Funding 2 which rank in priority to
or pari passu with interest due on each Funding 2
Intercompany Loan in respect of the AAA Loan Tranches
(the amount (if any) by which it is less being a
"Funding 2 Interest Rate Shortfall").
(b) If the Servicer determines that there will be either a Funding
Interest Rate Shortfall or a Funding 2 Interest Rate Shortfall, it
will within one (1) London Business Day of such determination give
written notice thereof to the Mortgages Trustee, each Funding
Beneficiary and each Funding Security Trustee of such Interest
Rate Shortfall(s) and of the Standard Variable Rate and other
discretionary rates and margins applicable to the Mortgage Loans
which would, in the Servicer's opinion, need to be set in order
for:
(i) no Funding Interest Rate Shortfall to arise, having regard
to the obligations of Funding under all Funding
Intercompany Loans;
(ii) no Funding 2 Interest Rate Shortfall to arise, having
regard to the obligations of Funding 2 under all Funding 2
Intercompany Loans; and
(iii) no Interest Rate Shortfalls to arise, having regard to the
obligations of Funding and Funding 2 under all Intercompany
Loans.
(c) If the Mortgages Trustee, Funding and/or the Security Trustee
notify the Servicer that, having regard to the obligations of
Funding, the Standard Variable Rate and other discretionary rates
and margins should be increased in order for no Funding Interest
Rate Shortfall to arise, but no notification is
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provided to the Servicer in accordance with Clause 4.3(d) then the
Servicer, as agent for and on behalf of the Mortgages Trustee,
shall take all steps which are necessary, including publishing any
notice which is required in accordance with the Mortgage Terms,
to effect the changes in such rates (such changes being those
previously notified in relation to Clause 4.3(b)(i)) on the date(s)
specified in the notice referred to in Clause 4.3(b) herein.
(d) If the Mortgage Trustee, Funding 2 and/or the Funding 2 Security
Trustee notify the Servicer that having regard to the obligations
of Funding 2, the Standard Variable Rate and the other
discretionary rates and margins should be increased in order for
no Funding 2 Interest Rate Shortfall to arise, but no notification
is provided to the Servicer in accordance with Clause 4.3(c) then
the Servicer, as agent for and on behalf of the Mortgages Trustee,
shall take all steps which are necessary, including publishing any
notice which is required in accordance with the Mortgage Terms, to
effect the changes in such rates (such changes being those
previously notified in relation to Clause 4.3(b)(ii)) on the
date(s) specified in the notice referred to in Clause 4.3(b)
herein.
(e) If the Servicer receives notification from:
(i) the Mortgages Trustee, Funding and/or the Security Trustee
in accordance with Clause 4.3(c); and
(ii) the Mortgage Trustee, Funding 2 and/or the Funding 2
Security Trustee in accordance with Clause 4.3(d),
then the Servicer, as agent for and on behalf of the Mortgages
Trustee, shall take all steps which are necessary, including
publishing any notice which is required in accordance with the
Mortgage Terms, to effect the changes in such rates (such changes
being those previously notified in relation to Clause 4.3(b)(iii))
on the date(s) specified in the notice referred to in Clause 4.3(b)
herein.
4.4 Existing Borrowers' Re-Fix Rate:
(a) The Servicer shall, in relation to each Fixed Rate Mortgage Loan,
serve on the Seller as agent for and on behalf of, inter alios,
the Mortgages Trustee and the Beneficiaries the notice referred to
in Clause 8.6(a) of the Mortgage Sale Agreement sixty (60) days
before the expiry of the initial fixed rate period (as defined in
Clause 8.6(a) of the Mortgage Sale Agreement) applicable to that
Fixed Rate Mortgage Loan.
(b) If Clause 8.6(b) of the Mortgage Sale Agreement applies to any
Fixed Rate Mortgage Loan, the Servicer shall take all steps which
are necessary to perform the obligations of the Seller and
exercise the rights under such Clause.
(c) The Servicer shall, on behalf of the Seller, whenever Clause
8.6(d) of the Mortgage Sale Agreement applies to a Fixed Rate
Mortgage Loan, determine (after consultation with the Swap
Providers, and any other swap provider the Servicer (acting
reasonably) determines appropriate) the rate (and terms) upon
which the Existing Borrowers' Re-Fix Rate should be set having
regard to the
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interests of each Swap Provider (except to the extent that the
Servicer believes that the interests of any Swap Provider are
materially prejudicial to the interests of the Noteholders in
respect of the Funding Issuers and/or the Noteholders in respect
of the Funding 2 Issuers). The Servicer will give written notice
of such determination within one Business Day thereof to the
Mortgages Trustee and the Beneficiaries recommending what the
Existing Borrowers' Re-Fix Rate should be and the terms at which
it should be offered, having regard to the interests of the Swap
Providers (except to the extent that the Servicer believes that
the interests of any Swap Provider are materially prejudicial to
the interests of the Noteholders in respect of the Funding Issuers
and/or the Noteholders in respect of the Funding 2 Issuers). The
Servicer will solicit quotations on rates from each of (i) the
Mortgages Trustee, (ii) Funding, (iii) Funding 2 and (iv) other
trustees for re-fixed mortgage loans in relation to other
outstanding securitisations of the Seller (if any), and shall
notify the Mortgages Trustee and the Beneficiaries as to the
higher of (x) any rate provided by any of the parties in (i)
through (iv) herein and (y) current rates for re-fixed mortgage
loans (not included in any Mortgage Portfolio) in relation to
other Mortgage Loans of the Servicer. If the Mortgages Trustee
agrees in writing with such recommendation, or (whether or not it
has received the Servicer's recommendation) requires alternative
rates and/or terms (such agreement or requirement being the "EBRR
Determination") the Servicer shall immediately notify the Seller,
each Funding Beneficiary and each Issuer of the EBRR
Determination, and take all steps which are necessary to enable
each Funding Beneficiary and each Issuer to enter into the
relevant swap agreement with the applicable Swap Provider(s) (or
other swap provider whose appointment would not adversely affect
the then current ratings of the Notes) at the rate (and on the
terms) required in accordance with the EBRR Determination (the
"Required Rate and Terms"). Nothing in this Clause 4.4(c) shall
prevent the Mortgages Trustee from setting the Existing Borrowers'
Re-Fix Rate in accordance with its powers under the Mortgage Sale
Agreement.
(d) If Clause 8.6 (Purchase of Product Switches, Further Advances and
purchases relating to Personal Secured Loans) of the Mortgage Sale
Agreement applies to any Fixed Rate Mortgage Loan, and the Seller
fails to set the Existing Borrowers' Re-Fix Rate immediately upon
being required to do so in accordance with the Required Rate and
Terms or otherwise to perform its obligations under Clause 8.6(d)
of the Mortgage Sale Agreement, the Servicer as attorney for the
Mortgages Trustee and the Beneficiaries shall set the Existing
Borrowers' Re-Fix Rate on the Required Rate and Terms.
4.5 Termination of Authority: The Mortgages Trustee and/or the Funding
Beneficiaries and the Funding Security Trustees may terminate the
authority of the Servicer under Clauses 4.1 (Determination of Interest
Rates) and 4.3 (Interest Rate Shortfall) herein to determine either of
the Mortgage Rate(s) or Existing Borrowers' Re-Fix Rate on or after the
occurrence of a Termination Event pursuant to Clause 19 (Termination)
herein, in which case the Mortgages Trustee shall set the Mortgage
Rate(s) or Existing Borrowers' Re-Fix Rate, as applicable, in
accordance with this Clause 4.
5. Administration of Mortgages
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5.1 Collection of Payments:
(a) For the purposes of collecting amounts due from any Borrower in
respect of a Mortgage Loan, where such Borrower makes a Monthly
Payment by way of Direct Debit, Northern Rock (whether or not it
is the Servicer) will, unless otherwise agreed in writing with the
Beneficiaries:
(i) act as collecting agent for the Mortgages Trustee and for
the Beneficiaries under the Direct Debiting Scheme;
(ii) comply with the obligations on its part set out in the Bank
Account Agreement including, without limitation, the
specific provisions relating to the collection of monies
set out in Clause 4 of the Bank Account Agreement;
(iii) comply in all material respects with the requirements from
time to time of the Direct Debiting Scheme; and;
(iv) using its reasonable endeavours, credit any Monthly Payment
made by a Borrower by way of Direct Debit to the relevant
Collection Account within one (1) London Business Day of
receipt (and in any event within three (3) London Business
Days of such receipt) into the relevant Collection Account.
(b) The Servicer may agree with a Borrower that the Direct Debiting
Scheme shall not apply to Monthly Payments to be made by such
Borrower, provided that (i) alternative payment arrangements are
made which are intended to ensure the timely making of Monthly
Payments due from the Borrower to the Mortgages Trustee, and (ii)
the change in arrangements was made at the instigation of the
Borrower or by the Servicer in accordance with the procedures
which would be adopted by a reasonable and prudent mortgage
lender. Northern Rock (whether or not it is the Servicer) shall,
using its reasonable endeavours, credit Monthly Payments made by a
Borrower under an alternative payment arrangement as follows to
the relevant Collection Account:
(i) by standing order, by close of business on the second (2nd)
London Business Day following the day on which such amount
is received or credited by it;
(ii) by payment of cash, transfer payment from another account
of the Seller or check where reference to the relevant
Borrower is provided or payments made by way of paying-in
book, by close of business on the London Business Day which
immediately follows the day on which such amount is
received or credited by it; and
(iii) in the case of any payment by check where a reference to
the relevant Borrower is not provided, by close of business
on the next London Business Day after notification to it of
the identity of the Borrower,
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provided however, that in any event Northern Rock shall credit Monthly
Payments made by a Borrower under an alternative payment arrangement
within three (3) London Business Days of such receipt.
(c) The Servicer may, notwithstanding the proviso in Clause 5.2(b)
herein, agree such procedures for the payment by a Borrower of (i)
overdue amounts and (ii) amounts payable on redemption of a
Mortgage in whole or in part other than through the Direct
Debiting Scheme as would be agreed by a reasonable and prudent
mortgage lender.
(d) Where a Borrower permits a Direct Debit to be made to his bank
account, the Servicer will endeavour to procure that such Borrower
maintains a valid and effective mandate relating to such Direct
Debit in relation to each Monthly Payment due from that Borrower,
provided that in any case where a Borrower will not permit a
Direct Debit to be made to his bank account the Servicer will
endeavour to make alternative arrangements acceptable to a
reasonable and prudent mortgage lender so that such Borrower
nevertheless pays each Monthly Payment on the due date.
(e) In the event that the Bankers Automated Clearing System ceases to
operate for any reason Northern Rock will use reasonable
endeavours to make alternative arrangements for the use of the
back-up systems available to each Account Bank.
5.2 Administration and Enforcement of Mortgages:
(a) The Mortgages Trustee as trustee for the Beneficiaries hereby
directs the Servicer to administer and service the Mortgage Loans
comprised in the Mortgage Portfolio and carry out its specific
obligations under this Agreement in accordance with the
Administration Procedures.
(b) The Servicer will, in relation to any default by a Borrower in
connection with a Mortgage Loan or a Mortgage comprised in the
Mortgage Portfolio, comply with the Enforcement Procedures or, to
the extent that the Enforcement Procedures are not applicable
having regard to the nature of the default in question, take such
action as is not materially prejudicial to the interests of the
Mortgages Trustee (as trustee for the Beneficiaries) and the
Beneficiaries under the relevant MIG Policy, provided that:
(i) the Servicer shall only become obliged to comply with the
Enforcement Procedures (to the extent applicable) or to
take action as aforesaid after it has become aware of the
default;
(ii) it is acknowledged by the Beneficiaries that mortgage
lenders generally exercise discretion in pursuing their
respective enforcement procedures and that the Servicer may
exercise such discretion as would a reasonable and prudent
mortgage lender in applying the Enforcement Procedures to
any particular defaulting Borrower or taking action as
aforesaid, provided that in exercising such discretion the
interest of Funding and/or Funding 2 in the Mortgage
Portfolio is not materially prejudiced; and
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(iii) in any case where any of the Insurance Policies requires
exact compliance with certain enforcement procedures, the
Servicer shall procure the prior written consent of the
relevant insurance company for any deviation by it from
such enforcement procedures.
5.3 Records: The Servicer shall keep and maintain records in relation to
the Mortgage Portfolio, on a Mortgage Loan by Mortgage Loan basis, for
the purposes of identifying amounts paid by each Borrower, any amount
due from a Borrower and the balance from time to time outstanding on a
Borrower's account and such other records as would be kept by a
reasonable and prudent mortgage lender. Subject always to the
restrictions and conditions set forth in Clause 16 (Data Protection),
the Servicer will provide such information to the Mortgages Trustee
and/or each Funding Beneficiary and/or each Funding Security Trustee at
any time upon reasonable notice, subject to the Servicer being
reasonably capable of providing such information without significant
additional cost and subject to the provisions of the Data Protection
▇▇▇ ▇▇▇▇ and other applicable legislation from time to time, and
provided that no duty of confidence and no industry code of practice
will or may be breached thereby.
5.4 Trust:
(a) If the Servicer, in carrying out its functions as Servicer under
this Agreement, receives (including in its capacity as agent for
the Mortgages Trustee as trustee for the Beneficiaries) any money
whatsoever arising from the Mortgage Loans and their Related
Security, which money belongs to the Mortgages Trustee (as trustee
for the Beneficiaries) and is to be paid to the relevant
Collection Account pursuant to this Agreement or any of the other
Transaction Documents or otherwise, it will hold such monies on
trust for the Mortgages Trustee and shall keep such money separate
from all other monies held by the Servicer and shall, as soon as
reasonably practicable and in any event within three (3) London
Business Days of receipt of the same, pay the monies into the
relevant Collection Account.
(b) All other sums received by the Servicer in respect of the Mortgage
Loans and their Related Security shall be held by the Servicer for
itself.
5.5 Together Connections Mortgage Loans and Connections Mortgage Loans:
(a) The Seller shall, upon request, use its reasonable endeavours to:
(i) provide the Mortgages Trustee, each Funding Beneficiary and
the Servicer with such information (including, but not
limited to documentary information) in its possession; and
(ii) do such other acts and things,
that the Mortgages Trustee, each Funding Beneficiary and the
Servicer may require in order for such parties to exercise their
rights and comply with their obligations under the Mortgage
Conditions relating to the Together Connections Mortgage Loans and
the Connections Mortgage Loans and under the Transaction Documents
with respect to the administration of such Mortgage Loans.
14
(b) Each of the Mortgages Trustee, each Funding Beneficiary and the
Servicer shall, upon request, use their reasonable endeavours to:
(i) provide the Seller with such information (including, but
not limited to documentary information) in its possession;
and
(ii) do such other acts and things,
that the Seller may require in order for the Seller to exercise
its rights and comply with its obligations under the Together
Connection Conditions and the Connection Conditions (where such
rights and obligations are not required to be administered and
serviced by the Mortgages Trustee, any Funding Beneficiary or the
Servicer under the Transaction Documents) and in respect of the
products linked to the Together Connections Mortgage Loans and
Connections Mortgage Loans.
(c) Any notice, letter or other communication:
(i) received or given by the Seller under the Together
Connection Conditions or the Connection Conditions shall be
copied by the Seller to the Servicer; and
(ii) received or given by the Mortgages Trustee, any Funding
Beneficiary or the Servicer under the Together Connection
Conditions or the Connection Conditions shall be copied by
such parties to the Seller.
(d) The Servicer shall act in accordance with the instructions of the
Seller in any matter where the powers, rights, obligations or
commercial interests of the Seller under the Together Connection
Conditions or the Connection Conditions or with respect to the
products linked to the Together Connections Mortgage Loan or the
Connections Mortgage Loan may be affected in a material manner.
Such matters may include, but not limited to, the following:
(i) any request from a Borrower to amend the allocation of the
Together Connections Benefit or the Connections Benefit
that may accrue to such Borrower under the terms of the
relevant Together Connection Conditions or Connection
Conditions;
(ii) any amendment to the Together Connection Conditions or the
Connection Conditions;
(iii) except where the Servicer is required to act in accordance
with Clause 4.3 (Interest Rate Shortfall), the
determination or variation of the Connection Interest Rate
(provided that such rate shall not at any time be set at a
rate which is higher than the equivalent rate offered by
the Seller);
(iv) any change to the availability or amendment to the
eligibility of any product to be linked to a Together
Connections Mortgage Loan or a Connections Mortgage Loan;
and
15
(v) the termination of the Together Connection Conditions or
the Connection Conditions.
In all other cases where the Servicer, on behalf of the other
parties hereto is required to exercise its judgment or discretion
in the application of the Together Connection Conditions or the
Connection Conditions, the Servicer shall undertake the same in
consultation with the Seller.
(e) The Seller shall not have any right to provide instructions to the
Servicer in respect of any amendment to the Together Connection
Conditions or Connection Conditions where such amendment will
result in a Product Switch in respect of the applicable Together
Connections Mortgage Loans or Connections Mortgage Loans unless
the Seller has given confirmation in accordance with the terms of
the Mortgage Sale Agreement that it has elected to repurchase such
Together Connections Mortgage Loans or Connections Mortgage Loans.
5.6 Annual Servicer Compliance Statement: On or before March 31 of each
calendar year, commencing in 2007, the Servicer shall deliver to the
Mortgages Trustee a statement of compliance with respect to such
calendar year, which statement will be in the form of an officer's
certificate stating, as to the authorised signatory thereof, that (i) a
review of the activities of the Servicer during the immediately
preceding calendar year (or applicable portion thereof) and of its
performance under this Agreement during such period has been made under
such officer's supervision and (ii) to the best of such officer's
knowledge, based on such review, the Servicer has fulfilled all of its
obligations under this Agreement in all material respects throughout
such calendar year (or applicable portion thereof), or, if there has
been a failure to fulfill any such obligation in any material respect,
specifying each such failure known to such officer and the nature and
status thereof.
5.7 [Independent Auditors' Annual Servicer Compliance Certificate: On or
before March 31 of each calendar year, commencing in 2007, the Servicer
shall cause a registered public accounting firm to furnish to the
Servicer and the Mortgages Trustee an attestation report on assessment
of compliance with the Servicing Criteria with respect to the Servicer
or any affiliate thereof during the immediately preceding calendar year
delivered by such accountants pursuant to Rule 13(a)-18 or Rule
15(d)-18 of the Exchange Act and Item 1122 of Regulation AB; provided,
however, that solely with respect to the fiscal year ending December
31, 2006, the Servicer, in its sole and absolute discretion, rather
than cause the report described above to be furnished, may cause a
registered public accounting firm to furnish to the Servicer and the
Mortgages Trustee:
(a) an attestation report on assessment of compliance with the
Servicing Criteria with respect to the Servicer during the [
]-month period ending December 31, 2006 delivered by such
accountants pursuant to Rule 13(a)-18 or Rule 15(d)-18 of the
Exchange Act and Item 1122 of Regulation AB; and
(b) a report substantially to the effect that (a) such accounting firm
has examined certain documents and records of the Servicer
relating to the servicing of Mortgage Loans under this Agreement
during the period from January 1, 2006 to and including [ ], 2006,
(b) such examination (i) included such tests and
16
auditing procedures as such firm considered necessary in the
circumstances, and (ii) was conducted in compliance with the
attestation standards of the American Institute of Certified
Public Accountants, (c) management of the Servicer has asserted to
such firm that the Servicer has complied with the minimum
servicing standards set out in Schedule 5 and (d) in the opinion
of such firm, such assertion of the Servicer's management is
fairly stated in all material respects (or, if such assertion of
the Servicer's management is not correct, stating why such
assertion is not correct).](1)
5.8 Report on Assessment of Compliance and Attestation:
(a) On or before March 31 of each calendar year, commencing in 2007,
the Servicer shall:
(i) deliver to the Mortgages Trustee a report regarding the
Servicer's assessment of compliance with the Servicing
Criteria during the immediately preceding calendar year, as
required under Rules 13a-18 and 15d-18 of the Exchange Act
and Item 1122 of Regulation AB. Such report shall be
addressed to the Mortgages Trustee and signed by an
authorized officer of the Servicer, and shall address each
of Servicing Criteria specified on a certification
substantially in the form of Schedule 7 delivered to the
Mortgages Trustee concurrently with the execution of this
Agreement. To the extent any of the Servicing Criteria are
not applicable to the Servicer, with respect to
asset-backed securities transactions taken as a whole
involving the Servicer and that are backed by the same
asset type backing the Notes, such report shall include a
statement to that effect;
(ii) deliver to the Mortgages Trustee a report of a registered
public accounting firm reasonably acceptable to the
Mortgages Trustee that attests to, and reports on, the
assessment of compliance made by the Servicer and delivered
pursuant to paragraph (i) above. Such attestation shall be
in accordance with Rules 1-02(a)(3) and 2-02(g) of
Regulation S-X under the Securities Act and the Exchange
Act, including, without limitation that in the event that
an overall opinion cannot be expressed, such registered
public accounting firm shall state in such report why it
was unable to express such an opinion. Such report must be
available for general use and not contain restricted use
language. To the extent any of the Servicing Criteria are
not applicable to the Servicer, with respect to
asset-backed securities transactions taken as a whole
involving the Servicer and that are backed by the same
asset type backing the Notes, such report shall include a
statement to that effect;
(iii) cause each Subcontractor determined by the Servicer
pursuant to Clause 5.8(b) to be "participating in the
servicing function" within the meaning of Item 1122 of
Regulation AB, to deliver to the Mortgages
-------------
(1) Clause 5.7 to be deleted in the event the 2006 attestation report needs to
cover Item 1122(d) servicing criteria for the entire 2006 fiscal year.
17
Trustee an assessment of compliance and accountants'
attestation as and when provided in paragraphs (a) and (b)
of this Clause 5.8; and
(iv) deliver or cause to be delivered to any Person that will be
responsible for signing the certification (a "Sarbanes
Certification") required by Rules 13a-14(d) and 15d-14(d)
under the Exchange Act (pursuant to Section 302 of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations of
the Commission promulgated thereunder (including any
interpretations thereof by the Commission's staff) a
certification in the form attached hereto as Schedule 6.
The Servicer acknowledges that any Person identified in clause
(a)(iv) above may rely on the certification provided by the
Servicer pursuant to such clause in signing a Sarbanes
Certification and filing such with the Commission.
(b) Each assessment of compliance provided by a Subcontractor pursuant
to Clause 5.8(a)(iv) shall address each of the Servicing Criteria
specified on a certification substantially in the form of Schedule
6 hereto delivered to the Mortgages Trustee concurrently with the
execution of this Agreement. An assessment of compliance provided
by a Subcontractor pursuant to Clause 5.8(a)(iv) need not address
any elements of the Servicing Criteria other than those specified
by the Servicer pursuant to Clause 5.8(a)(i).
5.9 Use of Subcontractors: The Servicer shall promptly upon request provide
the Mortgages Trustee a written description (in form and substance
satisfactory to the Mortgages Trustee) of the role and function of each
Subcontractor utilized by the Servicer, specifying (i) the identity of
each such Subcontractor, (ii) which (if any) of such Subcontractors are
"participating in the servicing function" within the meaning of Item
1122 of Regulation AB, and (iii) which elements of the Servicing
Criteria will be addressed in assessments of compliance provided by
each Subcontractor identified pursuant to clause (ii) of this
paragraph. As a condition to the utilization of any Subcontractor
determined to be "participating in the servicing function" within the
meaning of Item 1122 of Regulation AB, the Servicer shall cause any
such Subcontractor used by the Servicer for the benefit of the
Mortgages Trustee to comply with the provisions of Clause 5.8 of this
Agreement to the same extent as if such Subcontractor were the
Servicer. The Servicer shall be responsible for obtaining from each
Subcontractor and delivering to the Mortgages Trustee any assessment of
compliance and attestation required to be delivered by such
Subcontractor under Clause 5.8, in each case as and when required to be
delivered.
5.10 ▇▇▇▇▇'▇ Portfolio Variation Test: Where it is so required under the
terms of the Transaction Documents, or where it is otherwise agreed
between the Seller and ▇▇▇▇▇'▇, the Servicer shall use reasonable
efforts to operate the ▇▇▇▇▇'▇ Portfolio Variation Test to the Mortgage
Loans in the Mortgage Portfolio in accordance with instructions
provided by ▇▇▇▇▇'▇ to the Servicer from time to time. The Servicer
will, as soon as practicable after operating the ▇▇▇▇▇'▇ Portfolio
Variation Test, send written notification to ▇▇▇▇▇'▇ of the ▇▇▇▇▇'▇
Portfolio Variation Test Value determined thereunder. The Servicer
shall be entitled to rely upon the opinion or advice of ▇▇▇▇▇'▇ in
relation to the ▇▇▇▇▇'▇ Portfolio Valuation Test and shall not be
responsible for any loss, liability, damage or expenses that my be
caused by the operation of the ▇▇▇▇▇'▇ Portfolio Variation Test.
18
6. No Liability
6.1 No Guarantee of Mortgage Loan: The Servicer shall have no liability for
any obligation of a Borrower in respect of any Mortgage Loan comprised
in the Mortgage Portfolio or any Related Security and nothing herein
shall constitute a guarantee, or similar obligation, by the Servicer of
any Mortgage Loan, Mortgage or any Borrower.
6.2 No Guarantee to Mortgages Trustee or Beneficiaries: Save as otherwise
provided in this Agreement, the Servicer shall have no liability for
the obligations of the Mortgages Trustee or the Beneficiaries under any
of the Transaction Documents or otherwise and nothing herein shall
constitute a guarantee, or similar obligation, by the Servicer of the
Mortgages Trustee or the Beneficiaries in respect of any of them.
7. New Mortgage Loans
7.1 New Mortgage Portfolio: The Mortgage Portfolio may be augmented from
time to time by the sale and assignment to the Mortgages Trustee on any
Distribution Date of a New Mortgage Portfolio by the Seller.
7.2 Sale and Assignment subject to Terms: The sale and assignment of each
New Mortgage Portfolio to the Mortgages Trustee will in all cases be
subject to the terms set out in the Mortgage Sale Agreement including,
without limitation, the conditions set out in Clause 4 (Sale and
Purchase of New Mortgage Portfolios) of the Mortgage Sale Agreement and
the representations and warranties set out in Clause 8 (Warranties and
Repurchase by the Seller) of the Mortgage Sale Agreement.
8. Product Switching and Further Advances
8.1 Acceptance of Application: The Servicer may accept an application for a
Further Advance or a Product Switch on behalf of the Seller, upon
receipt of written confirmation from the Seller that the Seller would,
if invited to do so by the Mortgages Trustee, purchase the relevant
Mortgage Loan and its Related Security from the Mortgages Trustee.
8.2 Notification: Subject to complying with the terms of Clause 8.1
(Acceptance of Application) herein, where the Servicer accepts a
Product Switch or a Further Advance, the Servicer shall then promptly
notify the Seller and the Mortgages Trustee in writing.
8.3 Existing Borrowers Re-Fix Rate: Notwithstanding Clause 8.1 (Acceptance
of Application) herein, whenever Clause 8.6 (Existing Borrowers' Re-Fix
Rate) of the Mortgage Sale Agreement applies to a Fixed Rate Mortgage
Loan, the Servicer may accept the exercise of an option by a Borrower
to set the Existing Borrowers' Re-Fix Rate, subject to the terms of
Clause 4.4 (Existing Borrowers' Re-Fix Rate) herein.
8.4 Procedures: Subject to complying with the terms of Clauses 8.1
(Acceptance of Application) and 8.3 (Existing Borrowers' Re-Fix Rate)
herein, the Servicer may accept requests from Borrowers for Product
Switches and Further Advances provided that the Servicer acts in
accordance with its then procedure which would be acceptable to a
reasonable and prudent mortgage lender.
9. Redemption of Mortgages
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9.1 Receipt or Discharge: Upon repayment in full of all sums secured by a
Mortgage and/or other Related Security comprised in the Mortgage
Portfolio, the Servicer shall, and is hereby authorised by the
Mortgages Trustee as trustee for the Beneficiaries to, execute a
receipt or discharge or relevant Form DS1 (of the Land Registry) of the
Mortgage and any such other or further instrument or deed of
satisfaction regarding such Mortgage and/or the Related Security as it
considers to be necessary or advisable and to release the relevant
Title Deeds (if any) to the person or persons entitled thereto.
9.2 Title Deeds: The Servicer undertakes that prior to any actual release
by it of any relevant Title Deeds it will take reasonable and
appropriate steps to satisfy itself that the relevant Title Deeds are
being released to the person or persons entitled thereto.
9.3 Payment of Sums Due: The Servicer shall procure that if, upon
completion of the Enforcement Procedures, an amount in excess of all
sums due from the relevant Borrower is recovered or received, the
balance, after discharge of all sums due from the Borrower, is paid to
the person or persons next entitled thereto.
10. Powers of Attorney
10.1 Appointment: The Mortgages Trustee hereby appoints the Servicer as its
attorney on its behalf, and in its own or the attorney's name, for the
following purposes:
(a) executing all documents necessary for the purpose of discharging a
Mortgage comprised in the Mortgage Portfolio which has been repaid
in full and any Related Security or for the sale of a Mortgaged
Property as Mortgagee;
(b) executing all documents necessary for the purpose of releasing a
Borrower in accordance with Clause 9 (Redemption of Mortgages)
herein;
(c) executing all documents and doing all acts and things which in the
reasonable opinion of the Servicer are necessary or desirable for
the efficient provision of the Services hereunder; and
(d) exercising its rights, powers and discretion under Mortgage
Conditions including the right to fix the rate of interest payable
in respect of the Mortgage Loans or any related rights (but
subject, in relation to the right to set the interest rate under
the Base Rate Pledge and the Existing Borrowers' Re-Fix Rate, to
the limitations, conditions and qualifications set out in the
Mortgage Sale Agreement and the powers of attorney executed
pursuant to it),
provided that, for the avoidance of doubt, these powers of attorney
shall not authorise the Servicer to sell any of the Mortgage Loans
and/or their Related Security comprised in the Mortgage Portfolio
except as specifically authorised in the Transaction Documents. For
the avoidance of doubt, neither the Mortgages Trustee nor the Funding
Beneficiaries shall be liable or responsible for the acts of the
Servicer or any failure by the Servicer to act under or in respect of
these powers of attorney.
10.2 Appointments Irrevocable: The appointments contained in Clause 10.1
(Appointment) herein shall be irrevocable unless and until the
Mortgages Trustee and/or the Funding Beneficiaries and the Funding
Security Trustees serve notice
20
pursuant to Clause 19 (Termination) herein to terminate the Servicer's
appointment under this Agreement upon which the appointments contained
in Clause 10.1 (Appointment) herein shall be automatically revoked.
11. Costs and Expenses
The Mortgages Trustee will on each Distribution Date reimburse, in
accordance with Clause 10.2(b) of the Mortgages Trust Deed, the
Servicer for all out-of-pocket costs, expenses and charges (inclusive
of any amounts in respect of Irrecoverable VAT due thereon) properly
incurred by the Servicer in the performance of the Services including
any such costs, expenses or charges not reimbursed to the Servicer on
any previous Distribution Date and the Servicer shall supply the
Mortgages Trustee with an appropriate VAT invoice issued by the person
making the supply.
12. Information
12.1 Maintenance of Records:
(a) The Servicer shall keep the Mortgage Loan Files relating to the
Mortgage Portfolio in safe custody and shall take appropriate
technical and organisational measures against the unauthorised or
unlawful processing of personal data and against accidental loss
or destruction of, or damage to, personal data. The Servicer shall
maintain in an adequate form such records as are necessary to
enforce each Mortgage comprised in the Mortgage Portfolio and,
where relevant, any other Related Security. The Servicer shall
keep the Mortgage Loan Files in relation to the Mortgage Portfolio
in such a way that they can be distinguished from information held
by the Servicer for its own behalf as mortgagee or heritable
creditor or for other third persons.
(b) A duplicate of any computer records held by the Servicer which
contains information relating to the Mortgage Loans and the
Related Security shall be lodged by the Servicer on a quarterly
basis in a location separate from that in which the original
computer records are stored and in an environment conducive to the
safe storage of electronic media and which allows the information
to be stored in an incorruptible form, such records to be held to
the order of the Mortgages Trustee and to be replaced by a revised
duplicate as and when the original records are revised. The
Servicer shall keep the Mortgages Trustee informed of the location
of the Mortgage Loan Files and duplicate computer records.
12.2 Use of information technology systems:
(a) The Servicer will use all reasonable endeavours to negotiate with
the relevant parties so that any intellectual property rights not
owned by it but used by it in connection with the performance of
its obligations under this Agreement and in particular all
software programmes used in connection with the Mortgage Loans and
the Related Security therefor and their administration are
licensed or sub-licensed to the Mortgages Trustee as trustee for
the Beneficiaries so as to permit the Mortgages Trustee as trustee
for the Beneficiaries to use such intellectual property rights
only in connection with the administration of the Mortgage Loans
free of charge for so long as any of the Mortgage Loans are
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outstanding. For the avoidance of doubt, the Servicer shall not be
in breach of its obligations under this Agreement if such rights
and/or software programmes are not so licensed or sub-licensed to
the Mortgages Trustee as trustee for the Beneficiaries at any time
after it has ceased to be the Servicer:
(b) If this Agreement is terminated, then for a period of six months
following such termination (or such shorter period as may be
necessary to allow the administration and servicing of the
Mortgage Loans to be transferred to another person) the Servicer
shall use reasonable endeavours to assist the Mortgages Trustee
and/or the Beneficiaries and/or any substitute or successor
Servicer to:
(i) establish and implement a computer system for administering
and servicing the Mortgage Loans; and
(ii) load the data held by the Servicer in relation to Borrowers
and the Mortgage Loans on to such computer system,
and, prior to (i) and (ii) having taken place, the Servicer will
provide all necessary access and assistance to the Mortgages
Trustee and/or the Beneficiaries and/or the substitute Servicer in
respect of its own intellectual property rights in relation to the
administration and servicing of the Mortgage Loans.
(c) Subject always to the restrictions and conditions set forth in
Clause 16, upon termination of the appointment of the Servicer
under this Agreement, the Servicer shall forthwith deliver to the
Mortgages Trustee and/or the Beneficiaries and/or the substitute
Servicer all computer and data records in its possession or under
its control relating to the affairs of or belonging to the
Mortgages Trustee and the Beneficiaries and/or relating to the
Mortgage Loans and the Related Security in a form agreeable to
each of the Servicer, the Mortgages Trustee and/or the
Beneficiaries and/or the substitute Servicer which accords with
the standard practice of the electronic data processing industry
at the time the event occurs.
(d) The Servicer covenants that it will take no action, nor omit to
take any action, the effect or likely effect of such action or
omission will be to terminate any existing licence agreement in
relation to any such intellectual property rights, provided that a
licence agreement may be terminated if it is replaced by a
substitute arrangement under which the intellectual property
rights, including rights to computer software, are such that the
services resulting therefrom are equivalent to the previous
arrangement.
12.3 Access to Books and Records: Subject to all applicable laws, and
subject always to the restrictions and conditions set forth in Clause
16 (Data Protection), the Servicer shall permit the Mortgages Trustee
(and its auditors), each Funding Beneficiary (and their auditors), each
Funding Security Trustee and any other person nominated by any of the
Beneficiaries or the Funding Security Trustees (to whom the Servicer
has no reasonable objection) upon reasonable notice during normal
office hours to have access, or procure that such person or persons are
granted access, to all books of record and account (including, for the
avoidance of doubt, the Title Deeds and
22
Mortgage Loan Files) relating to the administration and servicing of the
Mortgage Loans and the Related Security comprised in the Mortgage
Portfolio and related matters in accordance with this Agreement.
12.4 Information Covenants:
(a) The Servicer shall, within ten (10) Business Days following each
Monthly Payment Date, provide the Mortgages Trustee, the
Beneficiaries, the Rating Agencies, the Lead Manager, Bloomberg
L.P. (unless otherwise prohibited by law) and any other party as
the Mortgages Trustee may direct with a monthly report in, or
substantially in, the form set out in Schedule 2 (Form of
Investors' Monthly Report) hereto (or such other form reasonably
requested by the Mortgages Trustee and approved by the
Beneficiaries and the Rating Agencies) and shall assist the Cash
Manager in the production of reports substantially in the forms
set out in Schedule 3 of the Cash Management Agreement.
(b) The Servicer shall notify the Rating Agencies in writing of the
details of (i) any material amendment to the Transaction
Documents, (ii) any proposed material change in the valuation
procedures or policies applied or to be applied in relation to
Mortgaged Properties by it in connection with its mortgage
business (details of which change may be included in a report
provided under subparagraph (a) above) and (iii) any other
information relating to its mortgage business and financial
condition or the Mortgage Portfolio as the Rating Agencies may
reasonably request in connection with the ratings of the Notes of
any Issuer and other matters contemplated by the Transaction,
provided that such request does not adversely interfere with the
Servicer's day to day provision of the Services under the other
terms of this Agreement.
(c) The Servicer shall, at the request of Funding and the Security
Trustee or Funding 2 and the Funding 2 Security Trustee (where the
Servicer is the Seller) and at the request of any of the
Beneficiaries (where the Servicer is no longer the Seller),
furnish Funding and the Security Trustee and/or Funding 2 and the
Funding 2 Security Trustee and/or the Beneficiaries (as
appropriate) and the Rating Agencies with such other information
relating to its business and financial condition as it may be
reasonable for Funding and the Security Trustee and/or Funding 2
and the Funding 2 Security Trustee and/or the Beneficiaries (as
appropriate) to request in connection with the ratings of the
Notes of any Issuer and other matters contemplated by the
Transaction, provided that Funding and the Security Trustee or
Funding 2 and the Funding 2 Security Trustee or the Beneficiaries
(as is appropriate) shall not make such a request more than once
every three months unless, in the belief of Funding and the
Security Trustee or Funding 2 and the Funding 2 Security Trustee
or the Beneficiaries (as is appropriate), an Intercompany Loan
Event of Default or a Termination Event pursuant to Clause 19
(Termination) herein shall have occurred and is continuing or may
reasonably be expected to occur.
13. Remuneration
13.1 Administration Fee: The Mortgages Trustee shall pay to the Servicer for
its Services hereunder an administration fee (the "Administration Fee")
(inclusive of VAT)
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which:
(a) shall be calculated in relation to each Trust Calculation Period
on the basis of the number of days elapsed and a 365 day year (or,
in the case of a Trust Calculation Period ending in a leap year, a
366 day year) at the Administration Fee Rate, inclusive of VAT, on
the aggregate amount of the Funding Share and the Funding 2 Share
of the Trust Property as at close of business of such Trust
Calculation Period; and
(b) shall be paid to the Servicer on each Distribution Date in the
manner contemplated by and in accordance with the provisions of
Clause 10 (Distribution of Revenue Receipts) of the Mortgages
Trust Deed.
13.2 Substitute or Successor Servicer: If a substitute or successor Servicer
shall be appointed under this Agreement with respect to any of the
Mortgage Loans, the Mortgages Trustee shall set the Administration Fee
Rate with such substitute or successor Servicer at the time such
substitute or successor Servicer enters into an administration
agreement.
14. Insurances
14.1 Administration: The Servicer will administer the arrangements for
insurance to which the Mortgages Trustee is a party or in which either
the Seller or the Mortgages Trustee has an interest and which relate to
the Mortgage Loans and the Mortgages comprised in the Mortgage
Portfolio or the business of the Mortgages Trustee.
14.2 Action of Servicer: The Servicer shall not knowingly take or omit to
take any action which would:
(a) result in the avoidance or termination of any of the Insurance
Policies in relation to any Mortgage Loans and Mortgages to which
any Insurance Policy applies;
(b) reduce the amount payable on any claim made on behalf of the
Mortgages Trustee (as trustee for the Beneficiaries) under any
Insurance Policy; or
(c) invalidate any Insurance Policy.
14.3 Submission of Claims: The Servicer shall prepare and submit any claim
under the Insurance Policies in accordance with the requirements of the
relevant Insurance Policy and otherwise with the usual procedures
undertaken by a reasonable and prudent mortgage lender on behalf of the
Mortgages Trustee as trustee for the Beneficiaries and shall comply
with the other requirements of the insurer under the relevant Insurance
Policy.
14.4 Proceeds: The Servicer shall use its reasonable endeavours to credit to
the relevant Collection Account all proceeds received from any claim
made under each Insurance Policy in relation to any Mortgage Loan by
close of business on the London Business Day which immediately follows
the day on which such amounts are received or credited by the Servicer
(and in any event within three (3) London Business Days of such
receipt) and which is applied either in whole or in part in repayment
of a Mortgage Loan.
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14.5 MIG Policies:
(a) Without prejudice to Clause 3 (The Administration Services)
herein, the Mortgages Trustee as trustee for the Beneficiaries
acknowledges that the Servicer may settle or compromise claims on
a Mortgage Loan by Mortgage Loan basis in respect of any MIG
Policy in a manner consistent with its normal practice in respect
of mortgage indemnity polices, provided that the Servicer shall
not, without the prior written consent of the Mortgages Trustee,
settle any claims or initiate any legal proceedings or other legal
process in respect of a group of class of mortgages or in respect
of the MIG Policies as a whole and provided further that each such
MIG Policy and all proceeds thereof remain as Trust Property.
If the Enforcement Procedures require the Servicer to make a claim
under the relevant MIG Policy and the Servicer has failed to make
such a claim, then the Beneficiaries may direct the Mortgages
Trustee on their behalf to direct the Servicer to make a claim or,
in default thereof by the Servicer, the Beneficiaries may direct
the Mortgages Trustee to make a claim itself under such policy and
the Servicer shall, within ten (10) London Business Days of
receiving a written request from the Mortgages Trustee (as trustee
for the Beneficiaries), provide the Mortgages Trustee with such
information as the Mortgages Trustee may require to enable it to
make a claim under the relevant MIG Policy.
(b) Without prejudice to the rights of the Servicer under Clause
14.5(b) herein, the Servicer shall, in administering and servicing
the Mortgage Loans, ensure that the cover under any MIG Policy
relating to any Mortgage is not adversely affected.
14.6 Buildings Policies:
(a) Upon receipt of notice that any Borrower whose Mortgage Loan is
secured by a mortgage of a leasehold (or, in Scotland, a standard
security of a long leasehold) Mortgaged Property has failed to
make a payment when due of any sums due under the relevant lease
in respect of the insurance of the property, the Servicer may
debit such Borrower's account with the relevant amount which shall
then be paid to the relevant landlord.
(b) If the Servicer becomes aware that a Borrower has failed to pay
premiums due under any Buildings Policy, the Servicer shall take
such action as would a reasonable and prudent mortgage lender with
a view to ensuring that the relevant Mortgaged Property continues
to be insured in accordance with the applicable Mortgage Terms or
the Alternative Insurance Requirements.
14.7 Life Policies:
(a) The Servicer shall use its reasonable endeavours to ensure that
upon maturity of a Life Policy or on the death of a Borrower, if
earlier, all sums which it is agreed between the Seller and the
relevant Borrower are due to be paid under the Life Policy are
paid by the relevant insurance company in repayment of
25
the Mortgage for which such Life Policy is collateral security and
credited to the relevant Collection Account.
(b) If so requested by a Borrower the Servicer may, on behalf of the
Beneficiaries, exercise its discretion as a reasonable and prudent
mortgage lender to agree to the release of a Life Policy from the
relevant legal or equitable charge granted by the related Borrower
in favour of the Seller.
15. Title Deeds
15.1 Custody: To the extent not held in electronic form by the Land
Registry, the Servicer shall keep the Title Deeds relating to the
Mortgage Portfolio in safe custody and shall not without the prior
written consent of the Mortgages Trustee and the Beneficiaries part
with possession, custody or control of them otherwise than to a
Subcontractor [or delegate] appointed pursuant to Clause 3.2
(Sub-Contracts) herein or to a solicitor, licensed or qualified
conveyancer or authorised practitioner, subject to the usual
undertaking to hold them to the order of the Seller (who in turn will
hold them to the order of the Mortgages Trustee (as trustee for the
Beneficiaries)) or to the Land Registry or the Registers of Scotland
or, upon repayment in full of the relevant Mortgage Loan, to the order
of the Borrower.
15.2 Identification: Subject to Clause 15.1 (Custody), the Title Deeds
relating to the Mortgage Portfolio shall be kept in a manner such that
a computer record is maintained of their location and they are
identifiable and retrievable by reference to an account number and pool
identifier and identifiable and distinguishable from the title deeds
relating to other properties and mortgages in respect of which the
Servicer is mortgagee or heritable creditor or Servicer.
15.3 Access: Subject to Clause 15.1 (Custody), the Servicer shall provide
access, or procure that access is provided to, the Title Deeds relating
to the Mortgage Portfolio to the Mortgages Trustee, the Beneficiaries
and their respective agents at all reasonable times and upon reasonable
notice. The Servicer acknowledges that the Title Deeds and Mortgage
Loan Files relating to the Mortgage Portfolio in its possession,
custody or control will be held to the order of the Mortgages Trustee
(as trustee for the Beneficiaries) and that it has, in its capacity as
Servicer, no beneficial interest therein and the Servicer (in its
capacity as such but not in its capacity as a Beneficiary) irrevocably
waives any rights or any Security Interest which it might have therein
or to which it might at any time be entitled.
15.4 Delivery upon Termination: Subject to Clause 15.1 (Custody), the
Servicer shall, forthwith on the termination of the appointment of the
Servicer pursuant to Clause 19 (Termination) herein, deliver the Title
Deeds and Mortgage Loan Files to or to the order of the Mortgages
Trustee or to such person as the Mortgages Trustee elects as a
substitute Servicer in accordance with the terms of this Agreement upon
written request by the Mortgages Trustee made at any time on or after
notice of, or on or after, termination of the appointment of the
Servicer pursuant to Clause 19 (Termination) herein.
16. Data Protection
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The Servicer represents that as at the date hereof the Servicer has and
hereafter it will maintain on behalf of itself and on behalf of the
Mortgages Trustee (as trustee for the Beneficiaries) all appropriate
registrations, licences and authorities (if any) required under the
Data Protection ▇▇▇ ▇▇▇▇ to enable each of them to perform their
respective obligations under this Agreement. In addition to the
foregoing and notwithstanding any of the other provisions of this
Agreement, each of the Servicer and the Mortgages Trustee hereby agree
and covenant as follows:
(a) that only non-"personal data" (as described in the Data Protection
Act 1998) may be transferred by the Servicer to the Mortgages
Trustee or any other entity located in Jersey (unless Jersey is
declared an "approved state" by the European Commission, in which
case the Servicer may transfer such personal data to the Mortgages
Trustee in Jersey);
(b) that, to the extent that circumstances enable the Mortgages
Trustee to exercise its right to demand that the Servicer transfer
inter alia personal data to the Mortgages Trustee, the Servicer
shall only transfer such personal data to an agent of the
Mortgages Trustee that is located in the United Kingdom and
maintains all appropriate registrations, licences and authorities
(if any) required under the Data Protection ▇▇▇ ▇▇▇▇ (unless
Jersey is declared an "approved state" by the European Commission,
in which case the Servicer may transfer such personal data to the
Mortgages Trustee in Jersey);
(c) that, to the extent that circumstances enable the Mortgages
Trustee to exercise its right to demand that the Servicer transfer
inter alia personal data to the Mortgages Trustee, the Servicer
notify each Borrower that the Mortgages Trustee is a "data
controller" (as defined in the Data Protection Act 1998) and
provide each such Borrower with the address of the Mortgages
Trustee;
(d) that the Servicer and the Mortgages Trustee will only use any data
in relation to the Mortgage Loans and the related Borrowers for
the purposes of administering and/or managing the Mortgage
Portfolio, and will not sell such data to any third party or allow
any third party to use such data other than in compliance with the
conditions stated in this Clause 16 and for the sole purpose of
administering and/or managing the Mortgage Portfolio;
(e) that the Mortgages Trustee will comply with the provisions of the
Data Protection (Jersey) Law 1987 (as amended) and (so long as the
provisions of the Data Protection ▇▇▇ ▇▇▇▇ do not conflict with
the provisions of the Data Protection (Jersey) Law 1987) with the
provisions of the Data Protection Act 1998 (as amended);
(f) that, upon the request of a Borrower, the Servicer will inform
such Borrower that both the Servicer and the Mortgages Trustee are
"data controllers" as described in the Data Protection ▇▇▇ ▇▇▇▇;
and
(g) that both the Servicer and the Mortgages Trustee shall maintain a
written record of their reasons for applying the Data Protection
Order 2000 (as set forth under the Conditions under paragraph 3 of
Part II of Schedule I of such Order).
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17. Covenants and Representations and Warranties of Servicer
17.1 Covenants: The Servicer hereby covenants with and undertakes to the
Mortgages Trustee, each Beneficiary and each Funding Security Trustee
that, without prejudice to any of its specific obligations hereunder,
it will:
(a) administer and service the Mortgage Loans and their Related
Security as if the same had not been sold and assigned to the
Mortgages Trustee but had remained on the books of the Seller;
(b) provide the Services in such manner and with the same level of
skill, care and diligence as would a reasonable and prudent
mortgage lender;
(c) comply with any reasonable directions, orders and instructions
which the Mortgages Trustee or the Beneficiaries may from time to
time give to it in accordance with the provisions of this
Agreement and, in the event of any conflict, those of the
Mortgages Trustee shall prevail;
(d) keep in force all licences, approvals, authorisations, permissions
and consents which may be necessary in connection with the
performance of the Services and prepare and submit all necessary
applications and requests for any further approval, authorisation,
consent or licence required in connection with the performance of
the Services and in particular any necessary registrations under
the Data Protection ▇▇▇ ▇▇▇▇;
(e) not knowingly fail to comply with any legal requirements in the
performance of the Services;
(f) make all payments required to be made by it pursuant to this
Agreement on the due date for payment thereof in pounds sterling
(or as otherwise required under the Transaction Documents) in
immediately available funds for value on such day without set-off
(including, without limitation, any fees owed to it) or
counterclaim, but subject to any deductions required by law;
(g) not without the prior written consent of the Mortgages Trustee
amend or terminate any of the Transaction Documents save in
accordance with their terms;
(h) whilst the Seller is the Servicer, forthwith upon becoming aware
of any event which may reasonably give rise to an obligation of
the Seller to repurchase any Mortgage Loan pursuant to Clause 8
(Warranties and Repurchase by the Seller) of the Mortgage Sale
Agreement, notify the Mortgages Trustee and the Beneficiaries in
writing of such event;
17.2 Covenants to Survive: The covenants of the Servicer in Clause 17.1
(Covenants) herein shall remain in force until this Agreement is
terminated but without prejudice to any right or remedy of the
Mortgages Trustee and/or the Seller and/or each Funding Beneficiary
arising from breach of any such covenant prior to the date of
termination of this Agreement.
17.3 Representations and Warranties: The Servicer hereby makes the
representations and warranties to the Mortgages Trustee, each
Beneficiary and each Funding Security
28
Trustee that are specified on Schedule 3 (Servicer Representations and
Warranties) hereto.
18. Services Non-exclusive
Nothing in this Agreement shall prevent the Servicer from rendering or
performing services similar to those provided for in this Agreement to
or for itself or other persons or from carrying on business similar to
or in competition with the business of the Mortgages Trustee and the
Beneficiaries.
19. Termination
19.1 Termination Event: If any of the following events (each a "Termination
Event") shall occur:
(a) default is made by the Servicer in the payment on the due date of
any payment due and payable by it under this Agreement and such
default continues unremedied for a period of five London Business
Days after the Servicer becoming aware of such default;
(b) default is made by the Servicer in the performance or observance
of any of its other covenants and material obligations under this
Agreement or any of the other Transaction Documents, where:
(i) the Security Trustee, having been informed thereof in
accordance with Clause 19.5 (Notification of Termination
Event), is of the opinion that such default is materially
prejudicial to the interests of the holders of the Notes
issued by the Funding Issuers and then outstanding; and/or
(ii) the Funding 2 Security Trustee, having been informed
thereof in accordance with Clause 19.5 (Notification of
Termination Event), is of the opinion that such default is
materially prejudicial to the interests of the holders of
the Notes issued by the Funding 2 Issuers and then
outstanding,
and such default continues unremedied for a period of twenty (20)
days after the Servicer becoming aware of such default, provided
however that where the relevant default occurs as a result of a
default by any person to whom the Servicer has sub-contracted or
delegated part of its obligations hereunder, such default shall
not constitute a Termination Event if within such twenty (20) day
period the Servicer replaces the relevant Subcontractor [or
delegate] with an entity capable of remedying such default or
alternatively indemnifies the Mortgages Trustee and the
Beneficiaries against the consequences of such default;
(c) the Servicer at any time fails to obtain or maintain the necessary
license, permission or regulatory approval required by any UK
mortgage or credit regulatory regime which would be required in
order to enable it to continue administering and servicing the
Mortgage Loans; or
(d) the Servicer becomes subject to an Insolvency Event,
29
then the Mortgages Trustee and/or Funding and the Security Trustee
and/or Funding 2 and the Funding 2 Security Trustee may at once or at
any time thereafter while such default continues, by notice in
writing to the Servicer, terminate its appointment as Servicer under
this Agreement with effect from a date (not earlier than the date of
the notice) specified in such notice. Upon termination of the
appointment of the Servicer, the Funding Security Trustees shall use
their reasonable endeavours (subject to the terms of the Funding
Beneficiary Deed) to appoint a substitute Servicer that satisfies the
conditions set forth in Clause 19.2(c), (d) and (e), provided that in
the event the Funding Security Trustees have not, having used
reasonable endeavours (subject to the terms of the Funding Beneficiary
Deed) appointed a substitute Servicer, they shall have no liability to
any person and, notwithstanding any other provision of the Transaction
Documents, shall not themselves be required to perform any duties of
the Servicer.
19.2 Resignation: The Servicer may resign under this Agreement at any time
following the expiry of not less than 12 months' notice of resignation
given by the Servicer to the Mortgages Trustee and the Beneficiaries
provided that:
(a) the Mortgages Trustee and the Beneficiaries consent in writing to
such termination;
(b) a substitute Servicer is appointed by the Mortgages Trustee, the
Funding Beneficiaries and the Funding Security Trustees (and in
the event of failure to agree, by the Funding Security Trustees),
such appointment to be effective not later than the date of such
termination (and the Servicer shall notify the Rating Agencies in
writing of the identity of such substitute Servicer);
(c) if required to be qualified to act as Servicer under the FSMA,
such substitute Servicer is so qualified;
(d) if possible, such substitute Servicer has experience in
administering and servicing mortgage loans secured on residential
property in England, Wales and Scotland and, in any event (in so
far as is required by any applicable laws and regulations) has all
authorisations, permissions and licences for the purposes of
administering and servicing mortgages of residential property in
England, Wales and Scotland;
(e) such substitute Servicer enters into an agreement on substantially
the same terms as the relevant provisions of this Agreement and
the Servicer shall not be released from its obligations under the
relevant provisions of this Agreement until such substitute
Servicer has entered into such new agreement; and
(f) the then current ratings (if any) of the Notes of any Issuer are
not reduced, withdrawn or qualified as a result thereof, unless
otherwise agreed by an Extraordinary Resolution (as defined in the
applicable Note Trust Deed) of the holders of the relevant class
or classes of Notes.
19.3 Termination of Authority: On and after resignation by, or termination
of the appointment of, the Servicer under this Agreement pursuant to
this Clause 19, all authority and power of the Servicer under this
Agreement and each other Transaction
30
Document to which it is a party shall be terminated and be of no
further effect and the Servicer shall not thereafter hold itself out in
any way as the agent of the Mortgages Trustee and/or the Beneficiaries
pursuant to this Agreement and each other Transaction Document to which
it is a party.
19.4 Delivery of Files: Upon resignation by, or termination of the
appointment of, the Servicer under this Agreement pursuant to this
Clause 19, the Servicer shall:
(a) forthwith deliver to (and in the meantime hold on trust for, and
to the order of) the Mortgages Trustee or as it shall direct the
Mortgage Loan Files, the Title Deeds (if any), all books of
account, papers, records, registers, correspondence and documents
in its possession or under its control relating to the affairs of,
or belonging to, the Mortgages Trustee (as trustee for the
Beneficiaries) and the Mortgages in the Mortgage Portfolio and any
other Related Security, (if practicable, on the date of receipt)
any monies then held by the Servicer on behalf of the Mortgages
Trustee and any other assets of the Mortgages Trustee as trustee
for the Beneficiaries;
(b) take such further action as the Mortgages Trustee, the Funding
Beneficiaries and the Funding Security Trustees may reasonably
direct at the expense of the Beneficiaries (including in relation
to the appointment of a substitute Servicer) provided that neither
the Mortgages Trustee nor each Funding Security Trustee shall be
required to take or direct to be taken such further action unless
it has been indemnified to its satisfaction;
(c) provide all relevant information contained on computer records in
the form of magnetic tape, together with details of the layout of
the files encoded on such magnetic tapes; and
(d) co-operate and consult with and assist the Mortgages Trustee, each
Funding Beneficiary, each Funding Security Trustee and their
nominees (which shall, for the avoidance of doubt, include any new
Servicer appointed by any of them) for the purposes of explaining
the file layouts and the format of the magnetic tapes generally
containing such computer records on the computer system of the
Mortgages Trustee or such nominee.
19.5 Notification of Termination Event: The Servicer shall notify the
Mortgages Trustee, each Funding Security Trustee and each Beneficiary
as soon as reasonably practicable but in any event within five (5) days
of becoming aware of any Termination Event or any event which with the
giving of notice or lapse of time or certification would constitute the
same. Such notification shall specify which event in Clause 19
(Termination) occurred and was the cause of such Termination Event (or
any event which with the giving of notice or lapse of time or
certification would constitute a Termination Event), a description of
the details of such Termination Event, and a reference to the provision
in this Agreement or the other Transaction Documents which the Servicer
has breached.
19.6 No Prejudice: Termination of this Agreement or the appointment of the
Servicer under this Agreement shall be without prejudice to the
liabilities of the Mortgages Trustee as trustee for the Beneficiaries
to the Servicer or vice versa incurred before the date of such
termination. The Servicer shall have no right of set-off or any lien in
31
respect of such amounts against amounts held by it on behalf of the
Mortgages Trustee.
19.7 Automatic Termination: This Agreement shall terminate at such time as
the Mortgages Trustee has no further interest in any of the Mortgage
Loans or the Mortgages which have been comprised in the Mortgage
Portfolio.
19.8 Further Compensation: Upon resignation by, or termination of the
appointment of, the Servicer under the provisions of this Clause 19,
the Servicer shall be entitled to receive all fees and other monies
accrued up to the date of resignation or termination, as the case may
be, but shall not be entitled to any other or further compensation.
Such monies so receivable by the Servicer shall be paid by the
Mortgages Trustee on the dates on which they would otherwise have
fallen due hereunder. For the avoidance of doubt, such resignation or
termination shall not affect the Servicer's rights to receive payment
of all amounts (if any) due to it from the Mortgages Trustee other than
under this Agreement.
19.9 Co-operation: Prior to termination of this Agreement, the Servicer, the
Seller, the Mortgages Trustee and the Funding Beneficiaries shall
co-operate to obtain the agreement of the Borrowers to a new bank
mandate permitting the Mortgages Trustee to operate the Direct Debiting
Scheme.
19.10 Survival of Terms: Any provision of this Agreement which is stated to
continue after termination of the Agreement shall remain in full force
and effect notwithstanding termination.
19.11 No Supervision: Neither Funding Security Trustee shall be obliged to
monitor or supervise the performance by any substitute Servicer of its
duties hereunder or in relation to the other Transaction Documents, nor
shall the Funding Security Trustees be responsible or liable for any
act or omission of such substitute Servicer or for any loss caused
thereby.
20. Further Assurances
20.1 Co-operation: The parties hereto agree that they will co-operate fully
to do all such further acts and things and execute any further
documents as may be necessary or desirable to give full effect to the
arrangements contemplated by this Agreement.
20.2 Powers of Attorney: Without prejudice to the generality of Clause 20.1
(Co-Operation) herein, the Mortgages Trustee as trustee for the
Beneficiaries shall upon request by the Servicer forthwith give to the
Servicer such further powers of attorney or other written
authorisations, mandates or instruments as are necessary to enable the
Servicer to perform the Services.
20.3 Notice to Rating Agencies: In the event that there is any change in the
identity of the Mortgages Trustee or an additional Mortgages Trustee is
appointed, the remaining Mortgages Trustee and/or the retiring
Mortgages Trustee, as the case may be, shall execute such documents
with any other parties to this Agreement and take such actions as such
new Mortgages Trustee may reasonably require for the purposes of
vesting in such new Mortgages Trustee the rights of the Mortgages
Trustee under this Agreement and releasing the retiring Mortgages
Trustee from further obligations
32
thereunder and while any Note remains outstanding shall give notice
thereof to the Rating Agencies.
20.4 No Obligations: Nothing herein contained shall impose any obligation or
liability on the Mortgages Trustee to assume or perform any of the
obligations of the Servicer hereunder or render it liable for any
breach hereof.
21. Miscellaneous
21.1 Insufficient Funds: Subject to Clause 21.2 (Reduction of Fees) herein,
in the event that the funds available to the Mortgages Trustee on any
Distribution Date are not sufficient to satisfy in full the aggregate
amount payable to the Servicer by the Mortgages Trustee on such
Distribution Date then the amount payable to the Servicer on such
Distribution Date shall be reduced by the amount of the shortfall and
such shortfall shall (subject always to the provisions of this Clause
21) be payable on the immediately succeeding Distribution Date.
21.2 Reduction of Fees: In the event that:
(a) after redemption in full of the Intercompany Loans; or
(b) after service of an Intercompany Loan Enforcement Notice and
payment of all other prior claims,
the remaining sums available to the Mortgages Trustee or remaining
proceeds of enforcement are insufficient to satisfy in full the
outstanding fees or other claims of the Servicer, such fees shall be
reduced by the amount of the deficiency.
21.3 Set-Off: Each of the Seller and the Servicer agrees that it will not:
(a) set off or purport to set off any amount which the Mortgages
Trustee, each Funding Beneficiary or each Issuer is or will become
obliged to pay to it under any of the Transaction Documents
against any amount from time to time standing to the credit of or
to be credited to any Collection Account, any Mortgages Trustee
Bank Account, any Funding Bank Account, any Funding 2 Bank
Account, any Issuer Transaction Account or in any other account
prior to transfer to any Collection Account, any Mortgages Trustee
Bank Account, any Funding Bank Account, any Funding 2 Bank Account
or any Issuer Transaction Account, as appropriate; or
(b) make or exercise any claims or demands, any rights of counterclaim
or any other equities against or withhold payment of any and all
sums of money which may at any time and from time to time be
standing to the credit of any Collection Account, any Mortgages
Trustee Bank Account, any Funding Bank Account, any Funding 2 Bank
Account or any Issuer Transaction Account.
21.4 No Petition: The Servicer agrees that for so long as any Notes of any
Issuer are outstanding it will not petition nor commence proceedings
for the administration or winding up of the Mortgages Trustee, any
Funding Beneficiary or any Issuer nor participate in any ex parte
proceedings with regard thereto.
21.5 Limited Recourse: In relation to all sums due and payable by the
Mortgages Trustee
33
to the Servicer, the Servicer agrees that it shall have recourse only
to sums paid to or received by (or on behalf of) the Mortgages Trustee
pursuant to the provisions of the Mortgage Sale Agreement, the other
Transaction Documents and in relation to the Mortgages.
21.6 No Prejudice: For the avoidance of doubt, no Beneficiary shall be
liable to pay any amounts due under Clauses 11 (Costs and Expenses) or
13 (Remuneration) herein without prejudice to the obligations of the
Mortgages Trustee in respect of such amounts.
21.7 Termination: Notwithstanding any other provisions of this Agreement:
(a) all obligations to, and rights of, Funding under or in connection
with this Agreement (other than its obligations under Clause 22
(Confidentiality) herein) shall automatically terminate upon the
discharge in full of all amounts owing by it under any Funding
Intercompany Loan Agreement, provided that this shall be without
prejudice to any claims in respect of such obligations and rights
arising on or prior to such date; and
(b) all obligations to, and rights of, Funding 2 under or in
connection with this Agreement (other than its obligations under
Clause 22 (Confidentiality) herein) shall automatically terminate
upon the discharge in full of all amounts owing by it under any
Funding 2 Intercompany Loan Agreement provided that this shall be
without prejudice to any claims in respect of such obligations and
rights arising on or prior to such date.
22. Confidentiality
From the date of this Agreement and notwithstanding its termination,
each of the Mortgages Trustee and the Beneficiaries shall use its best
endeavours not to disclose to any person whatsoever any information
relating to the business, finances or other matters of a confidential
nature of any other party hereto of which it may by virtue of being
party to the Transaction Documents have become possessed and shall use
all reasonable endeavours to prevent any such disclosure as aforesaid,
provided however that the provisions of this Clause 22 shall not apply:
(a) to any information already known to the Mortgages Trustee or the
Beneficiaries otherwise than as a result of entering into any of
the Transaction Documents;
(b) to any information subsequently received by the Mortgages Trustee
or the Beneficiaries which it would otherwise be free to disclose;
(c) to any information which is or becomes public knowledge otherwise
than as a result of the conduct of the Mortgages Trustee or the
Beneficiaries;
(d) to the extent that any of the Mortgages Trustee or the
Beneficiaries is required to disclose the same pursuant to any
Transaction Document, pursuant to any law or order of any court or
pursuant to any direction, request or requirement (whether or not
having the force of law) of any central bank or any
34
governmental or other authority (including, without limitation,
any official bank examiners or regulators);
(e) to the extent that any of the Mortgages Trustee or the
Beneficiaries needs to disclose the same for determining the
existence of, or declaring, an Intercompany Loan Event of Default
or a Termination Event, the protection or enforcement of any of
its rights under any of the Transaction Documents or in connection
herewith or therewith or for the purpose of discharging, in such
manner as it thinks fit, its duties under or in connection with
such agreements in each case to such persons as require to be
informed of such information for such purposes; or
(f) in relation to any information disclosed to the professional
advisers of the Mortgages Trustee or the Beneficiaries or (in
connection with the review of current ratings of the Notes of any
Issuer or with a prospective rating of any debt to be issued by an
Issuer) to any credit rating agency or any prospective new
Servicer or Mortgages Trustee.
23. No Partnership
It is hereby acknowledged and agreed by the parties that nothing in
this Agreement shall be construed as giving rise to any partnership
between any of the parties.
24. Assignment
24.1 Consent: The Mortgages Trustee may not assign or transfer any of its
rights and obligations under this Agreement without the prior written
consent of each of the Beneficiaries.
24.2 Agreement: The Servicer may not assign or transfer any of its rights or
obligations under this Agreement (a) without the prior written consent
of the Mortgages Trustee (as trustee for the Beneficiaries) and each of
the Beneficiaries and (b) other than to a person who agrees to be bound
by the provisions contained in Clause 5 of the Funding Deed of Charge
and Clause 5 of the Funding 2 Deed of Charge as if such person had been
named as an original party thereto in place of Northern Rock but
without prejudice to their obligations under such Clause.
24.3 Assignment of Rights to Security Trustee: The Servicer acknowledges
that Funding has assigned its rights under this Agreement to the
Security Trustee pursuant to the Funding Deed of Charge and
acknowledges that pursuant to the terms of the Funding Deed of Charge,
Funding has, inter alia, authorised the Security Trustee, following the
Funding Security becoming enforceable, to exercise, or refrain from
exercising, all of Funding's rights, powers, authorities, discretions
and remedies under or in respect of the Funding Transaction Documents,
including this Agreement, in such manner as in the Security Trustee's
absolute discretion it shall think fit.
24.4 Assignment of Rights to Funding 2 Security Trustee: The Servicer
acknowledges that Funding 2 has assigned its rights under this
Agreement to the Funding 2 Security Trustee pursuant to the Funding 2
Deed of Charge and acknowledges that pursuant to the terms of the
Funding 2 Deed of Charge, Funding 2 has, inter alia, authorised the
Funding 2 Security Trustee, following the Funding 2 Security becoming
enforceable,
35
to exercise, or refrain from exercising, all of Funding 2's rights,
powers, authorities, discretions and remedies under or in respect of
the Funding 2 Transaction Documents, including this Agreement, in such
manner as in the Funding 2 Security Trustee's absolute discretion it
shall think fit.
25. Security Trustee; Authorised Third Party
25.1 Vesting of Rights: If there is any change in the identity of the
security trustee in accordance with the Funding Deed of Charge, the
Servicer, the Seller, each Funding Beneficiary, the Funding 2 Security
Trustee and the Mortgages Trustee shall execute such documents and take
such action as the successor security trustee and the outgoing security
trustee may reasonably require for the purpose of vesting in the
successor security trustee the rights and obligations of the outgoing
security trustee under this Agreement and releasing the outgoing
security trustee from its future obligations under this Agreement. If
there is any change in the identity of the security trustee in
accordance with the Funding 2 Deed of Charge, the Servicer, the Seller,
each Funding Beneficiary, the Security Trustee and the Mortgages
Trustee shall execute such documents and take such action as the
successor security trustee and the outgoing security trustee may
reasonably require for the purpose of vesting in the successor security
trustee the rights and obligations of the outgoing security trustee
under this Agreement and releasing the outgoing security trustee from
its future obligations under this Agreement.
25.2 No Assumption: It is hereby acknowledged and agreed that by its
execution of this Agreement, each Funding Security Trustee shall not
assume or have any of the obligations or liabilities of the Servicer,
the Seller, each Funding Beneficiary, the Mortgages Trustee or the
other Funding Security Trustee under this Agreement. Furthermore, any
liberty or power which may be exercised or any determination which may
be made hereunder by each Funding Security Trustee may, subject to the
terms of the Funding Beneficiary Deed:
(a) in relation to the Security Trustee, be exercised or made in the
Security Trustee's absolute discretion without any obligation to
give reasons therefor, but in any event must be exercised or made
in accordance with the provisions of the Funding Deed of Charge
and Schedule 4 (Authorised Third Party) hereto;
(b) in relation to the Funding 2 Security Trustee, be exercised or
made in the Funding 2 Security Trustee's absolute discretion
without any obligation to give reasons therefor, but in any event
must be exercised or made in accordance with the provisions of the
Funding 2 Deed of Charge and Schedule 4 (Authorised Third Party)
hereto.
25.3 Delegation: Each Funding Security Trustee may delegate the performance
of all or any of its powers and obligations under all or any of the
Operating Agreements pursuant to the terms of Schedule 4 (Authorised
Third Party) of this Agreement and subject always to the provisions of
the Funding Deed of Charge or the Funding 2 Deed of Charge (as
applicable) and the Funding Beneficiary Deed.
36
26. New Intercompany Loan Agreements
On each occasion that a Funding Beneficiary enters into an Intercompany
Loan Agreement or is the recipient of a loan advance under an
Intercompany Loan Agreement, then the Servicer, the Seller, each
Funding Beneficiary, each Funding Security Trustee and the Mortgages
Trustee shall execute such documents and take such action as may be
necessary or required by the Rating Agencies for the purpose of
including the relevant Issuer, any Swap Provider, any Start-up Loan
Provider and any other person who has executed an Accession Undertaking
or any such Intercompany Loan Agreement in the Transaction Documents or
to take account of such Intercompany Loan or loan advance.
27. Non Petition Covenant; Limited Recourse
27.1 Non Petition Covenant: Each of the parties hereto (except for, in the
case of Funding, the Security Trustee and, in the case of Funding 2,
the Funding 2 Security Trustee) hereby agrees that it shall not
institute against any Funding Beneficiary or the Mortgages Trustee any
winding-up, administration, insolvency or similar proceedings so long
as any sum is outstanding under any Intercompany Loan Agreement of any
Issuer or for two years plus one day since the last day on which any
such sum was outstanding.
27.2 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 Agreement under this
Agreement not being an amount payable out of the Trust Property in
accordance with the terms of the Mortgages Trust 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 the Mortgages Trust Deed; and
(b) in relation to Funding:
(i) only the Security Trustee may enforce the security created
in favour of the Security Trustee under the Funding Deed of
Charge in accordance with the provisions thereof;
(ii) notwithstanding any other provision of this Agreement or
any other Transaction Document, no sum due or owing to any
party to this Agreement from or by Funding under this
Agreement shall be payable by Funding except to the extent
that Funding has sufficient funds available or (following
enforcement of the Funding Security) the Security Trustee
has realised sufficient funds from the Funding Security to
pay such sum subject to and in accordance with the relevant
Funding Priority of Payments and provided that all
liabilities of Funding required to be paid in priority
thereto or pari passu therewith pursuant to such Funding
Priority of Payments have been paid, discharged and/or
otherwise provided for in full; and
(iii) it shall not take any steps for the purpose of recovering
any amount payable by Funding or enforcing any rights
arising out of this
37
Agreement against Funding otherwise than in accordance with
the Funding Deed of Charge.
(c) in relation to Funding 2:
(i) 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;
(ii) notwithstanding any other provision of this Agreement or
any other Transaction Document, no sum due or owing to any
party to this Agreement from or by Funding 2 under this
Agreement 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 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
(iii) 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 Agreement against Funding 2 otherwise
than in accordance with the Funding 2 Deed of Charge.
27.3 Corporate Obligations: To the extent permitted by law, no recourse
under any obligation, covenant, or agreement of any person contained in
this Agreement 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 Agreement 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 Agreement, 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 Agreement.
28. Amendments and Waiver
28.1 Entire Agreement: This Agreement sets out the entire agreement and
understanding between the parties with respect to the subject matter of
this Agreement superseding all prior oral or written understandings
other than the other Transaction Documents.
28.2 Amendments and Waiver: No amendment or waiver of any provision of this
Agreement 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
38
only in the specific instance and as against the party or parties
giving it for the specific purpose for which it is given.
28.3 Rights Cumulative: The respective rights of each of the parties to this
Agreement 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 Agreement are cumulative and not
exclusive of any remedies provided by law.
28.4 Variation or Waiver: No variation or waiver of this Agreement shall be
made if the same would adversely affect the then current ratings of any
of the Notes.
29. Notices
Any notices or other communication or document to be given or delivered
pursuant to this Agreement 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 Servicer and the Seller, to Northern Rock PLC,
Northern ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇
(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, c/o ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇,
Channel Islands (facsimile number 01534 609 333) for the attention
of the Company Secretary;
(c) in the case of Funding, to Granite Finance Funding Limited, ▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (facsimile number 020 8409 8911) for
the attention of the Company Secretary;
(d) in the case of the Security Trustee, to The Bank of New York, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (facsimile number 020
7964 6399) for the attention of Corporate Trust (Global Structured
Finance);
(e) in the case of Funding 2, to Granite Finance Funding 2 Limited 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 Global Structured
Finance (Corporate Trust);
39
(g) in the case of Fitch, to Fitch Ratings Ltd., at ▇▇▇▇▇ ▇▇▇▇▇, ▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (facsimile number 020 7417 6262) for
the attention of European Structured Finance Surveillance;
(h) in the case of Moody's, to ▇▇▇▇▇'▇ Investors Services, Inc., at
1st Floor, ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
(facsimile number 020 7772 5400) for the attention of RMBS
Monitoring;
(i) in the case of S&P, to Standard & Poor's Ratings Services, a
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., at ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (facsimile number 020 7826 3598)
for the attention of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇;
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 or by any Rating Agency to the others by written notice in
accordance with the provisions of this Clause 29. All notices served
under this Agreement shall be simultaneously copied to each Funding
Security Trustee by the person serving the same.
30. Third Party Rights
A person who is not a party to this Agreement 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.
31. Execution in Counterparts; Severability
31.1 Counterparts: This Agreement may be executed in any number of
counterparts (manually or by facsimile) and by different parties hereto
in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which when taken together shall
constitute one and the same instrument.
31.2 Severability: Where any provision in or obligation under this Agreement
shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations under this Agreement, or of such provision or obligation in
any other jurisdiction, shall not be affected or impaired thereby.
32. Governing Law and Submission to Jurisdiction
32.1 Governing Law: This Agreement is governed by, and shall be construed in
accordance with, English law.
32.2 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 Agreement and, for
such purposes, irrevocably submits to the jurisdiction of such courts.
40
33. 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.
34. Appropriate Forum
Each of the parties hereto irrevocably waives any objection which it
might now or hereafter have to the courts of England being nominated as
the forum to hear and determine any Proceedings and to settle any
disputes, and agrees not to claim that any such court is not a
convenient or appropriate forum.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed as a
deed the day and year first before written.
41
SCHEDULE 1
THE SERVICES
In addition to the Services set out in the body of the Administration
Agreement, the Servicer shall:
(a) keep records (written or computerised) and books of account for the
Mortgages Trustee in relation to the Mortgage Loans comprised in the
Mortgage Portfolio;
(b) keep records for all taxation purposes and VAT;
(c) notify relevant Borrowers of any change in their Monthly Payments;
(d) assist the auditors of the Mortgages Trustee and each Funding
Beneficiary and provide information to them upon reasonable request;
(e) provide a redemption statement to a Borrower or any person acting on
the Borrower's behalf, in each case upon written request or otherwise
at the discretion of the Servicer;
(f) notify relevant Borrowers of any other matter or thing which the
applicable Mortgage Conditions or Offer Conditions require them to be
notified of in the manner and at the time required by the relevant
Mortgage Terms;
(g) subject to the provisions of this Agreement (including, without
limitation, Clause 5.2 herein (Administration and Enforcement of
Mortgages)) take all reasonable steps to recover all sums due to the
Mortgages Trustee including without limitation by the institution of
proceedings and/or the enforcement of any Mortgage Loan comprised in
the Mortgage Portfolio or any New Mortgage Portfolio or any Related
Security;
(h) take all other action and do all other things which it would be
reasonable to expect a reasonable and prudent mortgage lender to do in
administering and servicing its mortgages;
(i) keep a Mortgage Account for each Mortgage Loan which shall record all
proceeds received in respect of that Mortgage Loan and all amounts
debited to such Mortgage Account;
(j) at its discretion, prepare and send on request an annual statement to
Borrowers in relation to each calendar year in the agreed form; and
(k) assist the Cash Manager in the preparation of the reports substantially
in the form set out in the Cash Management Agreement.
42
SCHEDULE 2
FORM OF INVESTORS' MONTHLY REPORT
[Prior to the initial takedown, the information below will be revised to
include all information required by Item 1121 of Regulation AB]
Granite Finance Trustees Limited
Monthly Report
Date of Report [ ]
Mortgages
Number of Mortgages in Pool [ ]
Current Balance (GBP)[ ]
Opening Trust Assets (GBP)[ ]
Funding Share (GBP)[ ]
Funding Share Percentage [ ]%
Funding 2 Share (GBP)[ ]
Funding 2 Share Percentage [ ]%
Seller Share (GBP)[ ]
Seller Share Percentage [ ]%
Minimum Seller Share (Amount) (GBP)[ ]
Minimum Seller Share (% of Total) [ ]%
Arrears Analysis of Non Repossessed Mortgages
Number Principal Arrears
Less than [ ] month [ ] [ ] [ ]
[ ] - [ ] months [ ] [ ] [ ]
[ ] - [ ] months [ ] [ ] [ ]
43
[ ] - [ ] months [ ] [ ] [ ]
[ ] - [ ] months [ ] [ ] [ ]
[ ] months + [ ] [ ] [ ]
Total [ ] [ ] [ ]
Properties in Possession Number Principal Arrears
Total [ ] [ ] [ ]
Properties in Possession
Number Brought Forward [ ]
Repossessed [ ]
Sold [ ]
Number Carried Forward [ ]
Average Time from Possession to [ ]
Sale
Average Arrears at Sale [ ]
Repossessed [ ]
MIG Claims Submitted [ ]
MIG Claims Outstanding [ ]
Average Time from Claim to Payment [ ]
Note: The arrears analysis and repossession information is as at close of
business for the report month
Substitution Number Principal
Substituted this period
(this month) [ ] [ ]
Substituted to dated (since [ ]) [ ] [ ]
44
CPR Analysis Monthly Annualised
Current [ ] Month CPR Rate [ ]% [ ]%
Previous [ ] Month CPR Rate [ ]% [ ]%
Weighted Average Seasoning (by value) [ ]
Average Loan Size [ ]
Weighted Average LTV (by value) [ ]%
Product Breakdown
Fixed Rate [ ]%
Flexible -Together [ ]%
LTV Levels Breakdown Number Value
[ ] - [ ]% [ ] [ ]
[ ] - [ ]% [ ] [ ]
[ ] - [ ]% [ ] [ ]
[ ] - [ ]% [ ] [ ]
[ ] - [ ]% [ ] [ ]
[ ] - [ ]% [ ] [ ]
[ ] - [ ]% [ ] [ ]
[ ] - [ ]% [ ] [ ]
[ ] - [ ]% [ ] [ ]
[ ] - [ ]% [ ] [ ]
[ ] - [ ]% [ ] [ ]
[ ] - [ ]% [ ] [ ]
[ ] - [ ]% [ ] [ ]
[ ] - [ ]% [ ] [ ]
[ ] - [ ]% [ ] [ ]
[ ]% + [ ] [ ]
Totals [ ] [ ]
45
NR Current Existing Borrowers' SVR [ ]
Effective Date of Change [ ]
46
Outstanding Rating Reference Rate
Notes Moodys/S&P/Fitch
Funding
Notes
[ ] [relevant currency [ ] / [ ] / [ ] [ ]% [ ]%
amount]
Funding 2
Notes
[ ] [relevant currency [ ] / [ ] / [ ] [ ]% [ ]%
amount]
[Issuer Reserve Fund Requirement] (GBP)[ ]
Balance brought forward (GBP)[ ]
Drawings this period
Reserve Fund Top-up this period* (GBP)[ ]
Excess Spread (GBP)[ ]
Current Balance (GBP)[ ]
Funding Reserve Balance (GBP)[ ]
Funding Reserve % [ ]%
Funding 2 Reserve Balance (GBP)[ ]
Funding 2 Reserve % [ ]%
*Top-ups only occur at the end of each quarter.
47
SCHEDULE 3
SERVICER REPRESENTATIONS AND WARRANTIES
The Servicer makes the following representations and warranties to the
Mortgages Trustee, each Funding Beneficiary and each Funding Security Trustee:
1. Status: It is a public limited company duly incorporated, validly
existing 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) result in the existence or imposition of, nor oblige it to create,
any Security Interest in favour of any person over all or any of
its present or future revenues or assets;
(b) conflict with any document which is binding upon it or any of its
assets;
(c) conflict with its constitutional documents; or
(d) conflict with any law, regulation or official or judicial order of
any government, governmental body or court, domestic or foreign,
having jurisdiction over it.
5. No litigation: It is not a party to any material litigation,
arbitration or administrative proceedings and, to its knowledge, no
material litigation, arbitration or administrative proceedings are
pending or threatened against it.
6. Consents and Licences: All governmental consents, licences and other
approvals, permissions and authorisations required by it (in its
capacity as Servicer) 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.
7. Solvency: No Insolvency Event has occurred in respect of the Servicer,
and the Servicer is not insolvent.
48
8. Financial Statements: The most recent financial statements of the
Servicer:
(a) were prepared in accordance with accounting principles generally
accepted in England and Wales consistently applied;
(b) disclose all liabilities (contingent or otherwise) and all
unrealised and or anticipated losses of the Servicer; and
(c) save as disclosed therein, give a true and fair view of the
financial condition and operations of the Servicer during the
relevant financial year.
9. No Adverse Change: Since the date as of which the most recent financial
statements of the Servicer were stated to be prepared, there has been:
(a) no significant change in the financial position of the Servicer;
and
(b) no material adverse change in the financial position or prospects
of the Servicer.
10. Ranking of Claims
Under the laws of England and Wales in force as at the date of making
this representation, claims against the Servicer under the Transaction
Documents will rank at least pari passu with the claims of all its
other unsecured and unsubordinated creditors, save those whose claims
are preferred solely by any bankruptcy, liquidation or other similar
laws of general application.
11. Information in Prospectus and Reg S Prospectus:
(a) All information in the Prospectus and the Reg S Prospectus with
regard to the Servicer, its business and its experience in
administering and servicing mortgage loans (including its arrears
and repossession experience) are true and accurate in all material
respects and not misleading in any material respect.
(b) Any opinions, predictions and intentions expressed in the
Prospectus and/or the Reg S Prospectus on the part of the Servicer
are honestly held and not misleading in any material respect.
(c) Each of the Prospectus and the Reg S Prospectus does not omit to
state any material fact necessary to make such information,
opinions, predictions or intentions not misleading in any material
respect.
(d) The Servicer has made all proper inquiries to ascertain and to
verify the foregoing.
49
SCHEDULE 4
AUTHORISED THIRD PARTY
1. Agreement to Allow Delegation
1.1. The Seller and the Servicer agree (subject to the other provisions of
this Schedule, including paragraph 2 (Appointment and Payment) and
subject to the Funding Deed of Charge or the Funding 2 Deed of Charge,
as applicable) that a Funding Security Trustee may appoint or
facilitate the appointment of an Authorised Third Party to implement,
administer and carry out the duties and powers of such Funding Security
Trustee:
(a) under the Seller's Power of Attorney;
(b) in connection with and following a Completion Event; and
(c) in connection with and following a Termination Event,
(together the "Back-up Functions").
1.2. Each of the Seller and the Servicer shall authorise such Authorised
Third Party on their behalf and in their name or otherwise to sign or
execute or make any alteration or addition or deletion in or to any
agreements or documents or certificates or instructions or notices
which they are entitled or required to give, receive, implement,
transact or become a party to in relation to the Back-up Functions or
for doing any other act or thing required to be done by them under or
in connection with the Back-up Functions and otherwise generally to
sign, seal and deliver any agreement, assurance, document, certificate,
instruction or act which may be required by such Authorised Third Party
acting in connection with the Back-up Functions.
2. Appointment and Payment
The appointment of such Authorised Third Party shall be on the terms
and conditions as negotiated between the relevant Funding Security
Trustee, the Seller and/or the Servicer (as the case may be) and such
Authorised Third Party. The fees, costs and expenses payable to such
Authorised Third Party shall be considered as part of the additional
remuneration and expenses of the relevant Funding Security Trustee and
therefore shall be payable in the manner contemplated, in the case of
the Security Trustee, by and in accordance with Clause 18 of the
Funding Deed of Charge from funds that the Security Trustee receives in
accordance with the Funding Priority of Payments and in the case of the
Funding 2 Security Trustee, by and in accordance with Clause 17 of the
Funding 2 Deed of Charge from funds that the Funding 2 Security Trustee
receives in accordance with the Funding 2 Priority of Payments.
3. Delegation
3.1. On the appointment by a Funding Security Trustee of one or more persons
to act as an Authorised Third Party in respect of its Back-up Functions
(on any terms other than the power to appoint a delegate), references
in the Operating Agreements to the
50
"Security Trustee" or the "Funding 2 Security Trustee" (as applicable)
shall be construed accordingly and, unless the context does not permit,
include such Authorised Third Party. The appointment of such Authorised
Third Party may be revoked by the Funding Security Trustee at any time.
3.2. In the event that a Funding Security Trustee has not, having used such
reasonable endeavours, appointed such Authorised Third Party, such
Funding Security Trustee shall have no liability to any person and,
notwithstanding any other provision of the Operating Agreements, shall
not itself be required to perform any Back-up Functions or any other
duties of the Seller or the Servicer either during the period it is
seeking to appoint an Authorised Third Party or thereafter.
3.3. As conditions precedent to the appointment of such Authorised Third
Party, the arrangements to be entered into between such Authorised
Third Party and the Seller or Servicer (as the case may be) shall
provide that (1) the Authorised Third Party shall make timely transfer
of information to the Seller or Servicer (as appropriate); and (2) each
Funding Security Trustee shall provide any Authorised Third Party
appointed by it hereunder with a copy of the Operating Agreements and,
where the Security Trustee is the Funding Security Trustee, the Funding
Deed of Charge or, where the Funding 2 Security Trustee is the Funding
Security Trustee, the Funding 2 Deed of Charge, and shall request such
Authorised Third Party to confirm in writing to the Seller, the
Servicer and the relevant Funding Security Trustee that it has read and
understood the terms of this Agreement and the other Operating
Agreements.
4. Ratification
Each of the Seller and the Servicer shall, upon the written request of
a Funding Security Trustee or its Authorised Third Party, ratify and
confirm all documents, deeds, certificates, instructions, acts and
things which such Funding Security Trustee or such Authorised Third
Party shall execute or do in the exercise of any of the powers
conferred, or purported to be conferred, on him by this Agreement and
the other Operating Agreements. The terms of appointment of such
Authorised Third Party shall oblige the Authorised Third Party to
provide information concerning its activities on a regular basis and on
request to:
(a) the Seller;
(b) the Servicer;
(c) where the Security Trustee is the Funding Security Trustee,
Funding and the Security Trustee; and
(d) where the Funding 2 Security Trustee is the Funding Security
Trustee, Funding 2 and the Funding 2 Security Trustee.
5. Limitations on the Responsibility of the Funding Security Trustee
A Funding Security Trustee shall not be obliged to monitor or supervise
the performance by any Authorised Third Party appointed by it hereunder
of its duties hereunder or in relation to the Operating Agreements and
shall not be responsible or liable for any act or omission of such
Authorised Third Party or for any loss caused
51
thereby, provided that if any party to a Transaction Document notifies
a Funding Security Trustee that an Authorised Third Party appointed by
it is implementing, administering or carrying out the duties and powers
of that Funding Security Trustee in breach of the terms and conditions
of the relevant Operating Agreement pursuant to which such duties and
powers are to be performed, that Funding Security Trustee shall use its
reasonable endeavours to appoint or facilitate the appointment of a
substitute Authorised Third Party to implement, administer and carry
out such duties and powers. The terms of appointment of an Authorised
Third Party and the appointing Funding Security Trustee's
responsibilities in relation thereto as set out in this Schedule 4
shall apply to the appointment of a substitute Authorised Third Party.
Nothing in this Schedule constitutes a Funding Security Trustee in its
role as specified in this schedule as trustee or fiduciary for any
person. Each Funding Security Trustee shall assume, until it receives
notice thereof pursuant to the relevant Operating Agreement, that no
Back-up Trigger Event has occurred and until such time that it receives
such notification and is first indemnified and/or secured to its
satisfaction, is not entitled to take any action in respect of the
Back-up Functions under the Operating Agreements.
6. Exoneration
6.1. Without limiting paragraph 6.2 below, each Funding Security Trustee
shall not be liable to any Person for any action taken or not taken by
it or its Authorised Third Party under or in connection with the
Operating Agreements, other than in respect of any loss, liability,
claim, expense or damage suffered or incurred by such Person in respect
of the gross negligence or wilful default of the Funding Security
Trustee or such Authorised Third Party in carrying out its functions
under the relevant Operating Agreement.
6.2. No Person may take any proceedings against any officer, employee or
agent of a Funding Security Trustee in respect of any claim it might
have against such Funding Security Trustee in respect of any act or
omission of any kind by their officer, employee or agent.
7. Controlling Beneficiary Deed
The rights and powers in respect of a Funding Security Trustee which
have been delegated to an Authorised Third Party hereunder shall be
delegated subject to the terms of the Funding Beneficiary Deed.
52
SCHEDULE 5
[SCHEDULE 5 TO BE DELETED IF AN ATTESTATION REPORT PURSUANT TO
5.7(b) WILL NOT BE DELIVERED]
MINIMUM SERVICING STANDARDS
The following list sets forth (i) certain of the Services provided for in the
body of the Administration Agreement and (ii) certain of the functions
required of the Cash Manager under the terms of the Cash Management Agreement,
which together are known as the "minimum servicing standards" for purposes of
Clause 5.7(b) (Independent Auditors' Annual Servicer Compliance Certificate)
of the Administration Agreement.
1. (Maintain records) keep and maintain records in relation to the
Mortgage Portfolio on a Mortgage Loan by Mortgage Loan basis for the
purposes of identifying amounts paid by each Borrower, any amount due
from a Borrower and the balance from time to time outstanding on a
Borrower's account (5.3).
2. (Collections) using reasonable endeavours credit all monthly payments
made by a Borrower to the relevant Collection Account within three (3)
London Business Days of receipt (5.1).
3. (Qualifications and compliance of laws) maintain all licences,
approvals, authorisations and consents necessary in connection with the
Servicer's performance of its obligations under the Administration
Agreement and not knowingly to fail to comply with any legal
requirements in the performance of those obligations. (17.1(d) and
(e)).
4. (Enforcement) in relation to any default by a Borrower in relation to a
Mortgage Loan or a Mortgage, enforce the terms of such Mortgage Loan or
Mortgage in accordance with the Enforcement Procedures and as otherwise
provided in the Administration Agreement (5.2).
5. (Insurance) (a) administer the arrangements for insurance in which the
Mortgages Trustee or the Seller has an interest (14.1); (b) not
knowingly take or omit to take any action that could result in
avoidance, termination or invalidity of any Insurance Policy in
relation to any Mortgage Loans and Mortgages or reduce the amount
payable on any claim made on behalf of the Mortgage Trustees under any
Insurance Policy (14.2); (c) prepare and submit any claim under the
Insurance Policies in accordance with their terms (14.3); and (d) use
reasonable endeavours to credit all proceeds received under any
Insurance Policy to the relevant Collection Account within three (3)
London Business Days of such receipt (14.4).
6. (Determination of interest rates) (a) determine the Standard Variable
Rate chargeable to Borrowers from time to time and the Existing
Borrowers' Re-Fix Rate in accordance with section 4.1 of the
Administration Agreement; and (b) take all steps necessary pursuant to
the relevant Mortgage Conditions or applicable law to bring such change
in the Standard Variable Rate to the attention of the relevant
borrowers and notify details of such change to the Mortgages Trustee,
the Security Trustee, the Funding 2 Security Trustee and the
Beneficiaries (4.2).
53
7. (Provision of information) provide such information from its records in
relation to the Mortgage Loans to the Mortgages Trustee, Funding,
Funding 2, the Security Trustee or the Funding 2 Security Trustee at
any time upon reasonable notice, subject to the conditions set forth in
the Administration Agreement (5.3).
8. (Access to books and records) permit the Mortgages Trustee, Funding,
Funding 2 (and their auditors), the Security Trustee and the Funding 2
Security Trustee and any other person nominated by the beneficiaries
(to whom the Servicer has no reasonable objection) upon reasonable
notice during normal office hours to have access to all books of record
and account (including Title Deeds and Mortgage Loan Files) relating to
the administration of the Mortgage Loans and the Related Security,
subject to applicable law and the conditions set forth in the
Administration Agreement (12.3).
9. (Custody of records) keep the Mortgage Loan Files relating to the
Mortgage Portfolio in safe custody and shall take appropriate technical
and organisational measures against the unauthorised or unlawful
processing of personal data and against accidental loss or destruction
of, or damage to, personal data. The Servicer shall maintain in an
adequate form such records as are necessary to enforce each Mortgage
comprised in the Mortgage Portfolio and, where relevant, any other
Related Security. The Servicer shall keep the Mortgage Loan Files in
relation to the Mortgage Portfolio in such a way that they can be
distinguished from information held by the Servicer for its own behalf
as mortgagee or heritable creditor or for other third persons
(12.1(a)).
10. (Ledgers)
(a) establish and maintain memorandum ledgers in the books of the
Mortgages Trustee to enable the ongoing identification and
segregation of principal, revenue, and overpayments;
(b) on a monthly basis ensure that the memorandum ledgers are
reconciled to the Mortgages Trustee Bank Accounts;
(c) establish and maintain memorandum ledgers in the books of Funding
to enable the ongoing identification and segregation of principal,
revenue and amounts constituting the Funding Reserve Fund and any
Issuer Reserve Funds and any Issuer Liquidity Reserve Funds;
(d) establish and maintain memorandum ledgers in the books of Funding
2 to enable the ongoing identification and segregation of
principal, revenue and amounts constituting the Funding 2 Reserve
Fund and the Funding 2 Liquidity Reserve Fund;
(e) on a monthly basis ensure that the memorandum ledgers are
reconciled to the Funding Bank Accounts and the Funding 2 Bank
Accounts (as applicable); and
(f) establish and maintain ledgers in the books of Funding, Funding 2
and each Issuer to record the Intercompany Loans and, where
applicable, the Loan Tranches and subsequent payments of interest
and principal on each of the Intercompany Loans and, where
applicable, the Loan Tranches.
54
SCHEDULE 6
FORM OF ANNUAL CERTIFICATION
Re: Eight Amended and Restated Administration Agreement (as amended,
supplemented or otherwise modified from time to time, the
"Administration Agreement") dated as of [ ], 2006, among Northern Rock
plc, as Seller and Servicer, the Mortgages Trustee, the Beneficiaries
and the Bank of New York
I, ________________________________, the _______________________ of
[NAME OF COMPANY], certify that:
(1) I have reviewed the servicer compliance statement of the Company
provided in accordance with Item 1123 of Regulation AB (the "Compliance
Statement"), the report on assessment of the Servicer's compliance with
the servicing criteria set forth in Item 1122(d) of Regulation AB (the
"Servicing Criteria"), provided in accordance with Rules 13a-18 and
15d-18 under Securities Exchange Act of 1934, as amended (the "Exchange
Act") and Item 1122 of Regulation AB (the "Servicing Assessment"), the
registered public accounting firm's attestation report provided in
accordance with Rules 13a-18 and 15d-18 under the Exchange Act and
Section 1122(b) of Regulation AB (the "Attestation Report"), and all
servicing reports, officer's certificates and other information
relating to the servicing of the Mortgage Loans by the Servicer during
200[ ] that were delivered by the Servicer to the Mortgages Trustee
pursuant to the Administration Agreement (collectively, the "Servicing
Information");
(2) Based on my knowledge, the Servicing Information, taken as a whole,
does not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made,
in the light of the circumstances under which such statements were
made, not misleading with respect to the period of time covered by the
Servicing Information;
(3) Based on my knowledge, all of the Servicing Information required to
be provided by the Servicer under the Administration Agreement has been
provided to the Mortgages Trustee;
(4) I am responsible for reviewing the activities performed by the
Servicer and based on my knowledge and the Compliance Statement
required in this report under Item 1123 of Regulation AB, and except as
disclosed in the Compliance Statement, the Servicing Assessment or the
Attestation Report, the Servicer has fulfilled its obligations under
the Agreement in all material respects; and
(5) The Compliance Statement, the Servicing Assessment and Attestation
Report required to be provided by the Servicer pursuant to the
Agreement, have been provided to the Mortgages Trustee. Any material
instance of noncompliance with the Servicing Criteria has been
disclosed in such reports.
55
Date: _________________________
By:
Name: ________________________________
Title: ________________________________
56
SCHEDULE 7
FORM OF SERVICING CRITERIA
TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE STATEMENT
The assessment of compliance to be delivered by the Servicer
shall address, at a minimum, the criteria identified as below as "Applicable
Servicing Criteria":
------------------------------------------------------------------------------------------ ----------------------
Applicable Servicing
Servicing Criteria Criteria
------------------------------------------------------------------------------------------ ----------------------
Reference Criteria
-------------------- --------------------------------------------------------------------- ----------------------
-------------------- General Servicing Considerations ----------------------
Policies and procedures are instituted to monitor any
performance or other triggers and events of default in
1122(d)(1)(i) accordance with the transaction agreements.
-------------------- ----------------------
If any material servicing activities are outsourced to
third parties, policies and procedures are instituted to
monitor the third party's performance and compliance with
1122(d)(1)(ii) such servicing activities.
-------------------- ----------------------
Any requirements in the transaction agreements to
maintain a back-up servicer for the mortgage loans are
1122(d)(1)(iii) maintained.
-------------------- ----------------------
A fidelity bond and errors and omissions policy is in
effect on the party participating in the servicing
function throughout the reporting period in the amount of
coverage required by and otherwise in accordance with the
1122(d)(1)(iv) terms of the transaction agreements.
-------------------- ----------------------
-------------------- Cash Collection and Administration ----------------------
Payments on mortgage loans are deposited into the
appropriate custodial bank accounts and related bank
clearing accounts no more than two business days
following receipt, or such other number of days specified
1122(d)(2)(i) in the transaction agreements.
-------------------- ----------------------
Disbursements made via wire transfer on behalf of an
obligor or to an investor are made only by authorized
1122(d)(2)(ii) personnel.
-------------------- ----------------------
Advances of funds or guarantees regarding collections,
cash flows or distributions, and any interest or other
fees charged for such advances, are made, reviewed and
1122(d)(2)(iii) approved as specified in the transaction agreements.
-------------------- ----------------------
The related accounts for the transaction, such as cash
reserve accounts or accounts established as a form of
overcollateralization, are separately maintained (e.g.,
with respect to commingling of cash) as set forth in the
1122(d)(2)(iv) transaction agreements.
-------------------- ----------------------
Each custodial account is maintained at a federally
insured depository institution as set forth in the
transaction agreements. For purposes of this criterion,
"federally insured depository institution" with respect
to a foreign financial institution means a foreign
financial institution that meets the requirements of Rule
1122(d)(2)(v) 13k-1(b)(1) of the Securities Exchange Act.
-------------------- ----------------------
Unissued checks are safeguarded so as to prevent
1122(d)(2)(vi) unauthorized access.
-------------------- ----------------------
57
------------------------------------------------------------------------------------------ ----------------------
Applicable Servicing
Servicing Criteria Criteria
------------------------------------------------------------------------------------------ ----------------------
Reference Criteria
-------------------- --------------------------------------------------------------------- ----------------------
Reconciliations are prepared on a monthly basis for all
asset-backed securities related bank accounts, including custodial
accounts and related bank clearing accounts. These reconciliations
are (A) mathematically accurate; (B) prepared within 30 calendar
days after the bank statement cutoff date, or such other number of
days specified in the transaction agreements; (C) reviewed and
approved by someone other than the person who prepared the
reconciliation; and (D) contain explanations for reconciling items.
These reconciling items are resolved within 90 calendar days of
their original identification, or such other number of days
1122(d)(2)(vii) specified in the transaction agreements.
-------------------- ----------------------
-------------------- Investor Remittances and Reporting ----------------------
Reports to investors, including those to be filed with the
Commission, are maintained in accordance with the transaction
agreements and applicable Commission requirements. Specifically,
such reports (A) are prepared in accordance with timeframes and
other terms set forth in the transaction agreements; (B) provide
information calculated in accordance with the terms specified in
the transaction agreements; (C) are filed with the Commission as
required by its rules and regulations; and (D) agree with
investors' or the trustee's records as to the total unpaid
principal balance and number of mortgage loans serviced by the
1122(d)(3)(i) Servicer.
-------------------- ----------------------
Amounts due to investors are allocated and remitted in
accordance with timeframes, distribution priority and
1122(d)(3)(ii) other terms set forth in the transaction agreements.
-------------------- ----------------------
Disbursements made to an investor are posted within two
business days to the Servicer's investor records, or such
other number of days specified in the transaction
1122(d)(3)(iii) agreements.
-------------------- ----------------------
Amounts remitted to investors per the investor reports
agree with cancelled checks, or other form of payment, or
1122(d)(3)(iv) custodial bank statements.
-------------------- ----------------------
-------------------- Pool Asset Administration ----------------------
Collateral or security on mortgage loans is maintained as
required by the transaction agreements or related
1122(d)(4)(i) mortgage loan documents.
-------------------- ----------------------
Mortgage loan and related documents are safeguarded as required
1122(d)(4)(ii) by the transaction agreements.
-------------------- ----------------------
Any additions, removals or substitutions to the asset
pool are made, reviewed and approved in accordance with
any conditions or requirements in the transaction
1122(d)(4)(iii) agreements.
-------------------- ----------------------
Payments on mortgage loans, including any payoffs, made in
accordance with the related mortgage loan documents are posted to
the Servicer's obligor records maintained no more than two business
days after receipt, or such other number of days specified in the
transaction agreements, and allocated to principal, interest or
other items (e.g., escrow) in accordance with the related mortgage
1122(d)(4)(iv) loan documents.
-------------------- ----------------------
The Servicer's records regarding the mortgage loans agree
with the Servicer's records with respect to an obligor's
1122(d)(4)(v) unpaid principal balance.
-------------------- ----------------------
Changes with respect to the terms or status of an
obligor's mortgage loans (e.g., loan modifications or
re-agings) are made, reviewed and approved by authorized
personnel in accordance with the transaction agreements
1122(d)(4)(vi) and related pool asset documents.
-------------------- ----------------------
Loss mitigation or recovery actions (e.g., forbearance
plans, modifications and deeds in lieu of foreclosure,
foreclosures and repossessions, as applicable) are
initiated, conducted and concluded in accordance with the
timeframes or other requirements established by the
1122(d)(4)(vii) transaction agreements.
-------------------- ----------------------
58
------------------------------------------------------------------------------------------ ----------------------
Applicable Servicing
Servicing Criteria Criteria
------------------------------------------------------------------------------------------ ----------------------
Reference Criteria
-------------------- --------------------------------------------------------------------- ----------------------
Records documenting collection efforts are maintained during the
period a mortgage loan is delinquent in accordance with the
transaction agreements. Such records are maintained on at least a
monthly basis, or such other period specified in the transaction
agreements, and describe the entity's activities in monitoring
delinquent mortgage loans including, for example, phone calls,
letters and payment rescheduling plans in cases where delinquency
1122(d)(4)(viii) is deemed temporary (e.g., illness or unemployment).
-------------------- ----------------------
Adjustments to interest rates or rates of return for
mortgage loans with variable rates are computed based on
1122(d)(4)(ix) the related mortgage loan documents.
-------------------- ----------------------
Regarding any funds held in trust for an obligor (such as escrow
accounts): (A) such funds are analyzed, in accordance with the
obligor's mortgage loan documents, on at least an annual basis, or
such other period specified in the transaction agreements; (B)
interest on such funds is paid, or credited, to obligors in
accordance with applicable mortgage loan documents and state laws;
and (C) such funds are returned to the obligor within 30 calendar
days of full repayment of the related mortgage loans, or such other
1122(d)(4)(x) number of days specified in the transaction agreements.
-------------------- ----------------------
Payments made on behalf of an obligor (such as tax or
insurance payments) are made on or before the related
penalty or expiration dates, as indicated on the
appropriate bills or notices for such payments, provided
that such support has been received by the servicer at
least 30 calendar days prior to these dates, or such
other number of days specified in the transaction
1122(d)(4)(xi) agreements.
-------------------- ----------------------
Any late payment penalties in connection with any payment
to be made on behalf of an obligor are paid from the
servicer's funds and not charged to the obligor, unless
the late payment was due to the obligor's error or
1122(d)(4)(xii) omission.
-------------------- ----------------------
Disbursements made on behalf of an obligor are posted
within two business days to the obligor's records
maintained by the servicer, or such other number of days
1122(d)(4)(xiii) specified in the transaction agreements.
-------------------- ----------------------
Delinquencies, charge-offs and uncollectible accounts are
recognized and recorded in accordance with the
1122(d)(4)(xiv) transaction agreements.
-------------------- ----------------------
Any external enhancement or other support, identified in
Item 1114(a)(1) through (3) or Item 1115 of Regulation
1122(d)(4)(xv) AB, is maintained as set forth in the transaction agreements.
-------------------- ----------------------
-------------------- --------------------------------------------------------------------- ----------------------
[NAME OF SERVICER]
Date: _________________________
By: __________________________
Name:
Title:
59
EXECUTION PAGE
as Servicer, Seller and Beneficiary
EXECUTED for and on behalf of )
NORTHERN ROCK PLC )
by: )
-------------------------
Name:
as Mortgages Trustee
EXECUTED for and on behalf of )
GRANITE FINANCE TRUSTEES LIMITED )
by: )
-------------------------
Name:
as Seller and Beneficiary
EXECUTED for and on behalf of )
NORTHERN ROCK PLC )
by: )
-------------------------
Name:
60
as Beneficiary
EXECUTED for and on behalf of )
GRANITE FINANCE FUNDING LIMITED )
by: )
-------------------------
Name:
as Beneficiary
EXECUTED for and on behalf of )
GRANITE FINANCE FUNDING 2 LIMITED )
by: )
-------------------------
Name:
as Security Trustee and Funding 2 Security Trustee
EXECUTED for and on behalf of )
THE BANK OF NEW YORK )
by: )
-------------------------
Name:
61